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 as April 13, 2001, effective as of
February 28, 2001, among LaSalle Bank National Association, a national banking
association ("LaSalle"), Harris Trust and Savings Bank ("Harris," and together
with LaSalle, the "Lenders"), LaSalle, in its separate capacity as agent for the
Lenders under the Loan Agreement (as hereinafter defined) ("Agent"), 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," and collectively with WTI, Inc., WII
and CPI, the "Borrowers").
BACKGROUND
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A. Lenders, Agent and Borrowers are party to that certain
Amended and Restated Loan and Security Agreement dated as of August 31, 2000 (as
amended prior to the date hereof, the "Loan Agreement"), pursuant to which
Agent, with and on behalf of the Lenders, have made loans and advances to
Borrowers, and as security therefor, Borrowers have granted to Agent a lien on
Borrowers' real, personal and intellectual property.
B. Borrowers have informed Agent that they are currently in
violation of certain covenants under the Loan Agreement and have requested that
Agent and Lenders waive the violations specifically identified herein and any
events of default created thereby.
C. Borrowers have also requested that Agent and Lenders modify
certain financial covenants under the Agreement.
D. Agent and Lenders are willing to modify such covenants and
grant such waivers provided that Borrowers enter into this Amendment upon the
terms and conditions set forth herein.
E. Capitalized terms used but not defined herein shall have
the meanings ascribed 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
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1.1 The following definition of "Tangible Net Worth" is hereby
added to the Loan Agreement in the appropriate alphabetical place:
"Tangible Net Worth" shall mean the Net Worth of the
Borrowers as of the date of reference, less the sum of (A)
intangible assets, classified as such in accordance with
Generally Accepted Accounting Principles and (B) prepaid
expenses, classified as such in accordance with Generally
Accepted Accounting Principles.
1.2 Section 11.1 of the Loan Agreement is hereby amended
by deleting it in its entirety and replacing it with the following:
"11.1 Interest Coverage Ratio. Borrowers shall have:
(i) an Interest Coverage Ratio, measured on a Fiscal
Year-to-date basis as of the end of each calendar month
commencing with June 2001 and continuing through September
2001, of at least 4.00:1.00; and (ii) an Interest Coverage
Ratio, measured on a rolling basis as of the end of each
subject calendar quarter commencing with the calendar quarter
ending December 31, 2001, including the subject calendar
quarter and the three (3) consecutive calendar quarters
immediately preceding the subject calendar quarter, of at
least 4.00:1.00. For purposes of calculating subject Interest
Coverage Ratios under clause (i) above (but not clause (ii)
above), Borrower's EBITDA for the relevant measurement period
shall be increased by any "First Equity Funds" or "Second
Equity Funds" received by Borrowers (and deposited into the
Depository Account) during the relevant measurement period as
required under Section 4 below."
1.3 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
$2,105,000 as of June 30, 2001, of not less than negative
$2,100,000 as of July 31, 2001, of not less than negative
$2,150,000 as of August 31, 2001, and of not less than
negative $2,350,000 as of September 30, 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, measured
on a rolling twelve-month basis as of the end of the Fiscal
Quarter ending on such date:
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Date EBITDA
---- ------
December 31, 2001 $32,000,000
March 31, 2002 $35,500,000
June 30, 2002 $37,000,000
September 30, 2002 $38,500,000
December 31, 2002 $40,000,000
March 31, 2003 $42,000,000
June 30, 2003 $42,000,000"
1.4 Section 11.3 of the Loan Agreement is hereby amended
by deleting it in its entirety and replacing it with the following:
"11.3 (a) Net Worth Commencing with the
fiscal quarter ending December 31, 2001, Borrowers shall
maintain at all times, measured on a quarterly basis, a Net
Worth of not less than (i) $250,000,000 plus (ii) fifty
percent (50%) of Borrowers' positive Net Income for each
Fiscal Quarter ending on and after September 30, 2000.
(b) Tangible Net Worth.
Commencing with June 2001, Borrowers shall maintain
at all times through September 2001, measured on a monthly
basis, a Tangible Net Worth of not less than (i) $50,200,000
as of June 30, 2001, (ii) $48,300,000 as of July 31, 2001,
(iii) $46,400,000 as of August 31, 2001 and (iv) $44,300,000
as of September 30, 2001."
1.5 The Loan Agreement is hereby amended by adding a new
Section 12.13 as follows:
"12.13 Projections Opinion." If Borrowers
fail to deliver to Agent by May 15, 2001 a favorable opinion
(in form and substance satisfactory to Lenders in their sole
discretion and paid for by Borrowers) from a third party
consultant acceptable to Lenders in their sole discretion, as
to the reasonableness and achievability of the projections,
taken as a whole, prepared by Borrowers' management and which
are attached hereto as Exhibit A. Any concerns or exceptions
raised in the opinion will be addressed to the satisfaction of
the Lenders by June 30, 2001."
1.6 Section 12.2(a) of the Loan Agreement is hereby
amended by adding "10.3," after "9.9,".
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1.7 Annex A to the Loan Agreement is hereby deleted in its
entirety and the Annex A in the form of Exhibit B hereto is inserted
in substitution therefor. The parties agree that the Annex A attached
hereto as Exhibit B shall be effective as of April 13, 2001, and
interest and other charges due under the Loan Agreement shall be
calculated per the Annex A attached hereto from and after that date.
1.8 Borrowers jointly and severally acknowledge and agree
that, from and after the date hereof, they shall not have any further
rights to request any Eurodollar Loans, and the Loan Agreement is
hereby deemed to be amended accordingly to effect such termination of
rights. Borrowers further jointly and severally acknowledge and agree
that Agent, on behalf of the Lenders, shall have the right, in its
absolute discretion, but not any obligation, at any time and from time
to time after the date hereof, to convert any or all Eurodollar Loans
existing on the date hereof into Reference Rate Loans, and that any
such conversions (i) shall be deemed to be at the request of Borrowers
and (ii) shall be subject to Sections 2.19, 2.20 and other appropriate
provisions of the Loan Agreement.
SECTION 2 REPRESENTATIONS AND WARRANTIES
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To induce Agent and Lenders to amend the Loan Agreement and
grant the waivers set forth herein, Borrowers jointly and severally represent
and warrant to Agent and Lenders 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.
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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 any Borrower, (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 3 CONDITIONS PRECEDENT.
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The agreement by Agent and Lenders to amend the Loan Agreement
and grant the waivers herein is subject to the following conditions precedent:
3.1 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 Agent in the form of Exhibit C hereto.
3.2 Corporate Authority. Borrowers shall have provided to
Agent certified copies of the unanimous written consent of their Boards of
Directors in a form reasonably acceptable to Agent and Lenders authorizing the
execution, delivery and performance by the Borrowers of this Amendment and the
agreements, instruments and documents executed in connection herewith.
SECTION 4 WAIVERS
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The Lenders hereby waive Borrowers' failure to be in
compliance with the EBITDA covenant as of February 28, 2001 and the EBITDA,
Interest Coverage Ratio and Net Worth covenants as of March 31, 2001, and any
Events of Default created thereby, solely as of those dates.
The Lenders further waive the Borrowers' failure to comply
with the terms of Section 4 of that certain Amendment to Amended and Restated
Loan and Security Agreement dated as of February 15, 2001 among Borrowers,
Lenders and Agent, and any Events of Default created thereby (but such waiver
shall not apply to Borrowers' covenants set forth below in this Section 4).
The foregoing waivers shall be limited waivers 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 they constitute a course of
conduct or dealing.
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In consideration for these waivers, Borrowers jointly and
severally covenant and agree that after the date hereof, one or more of the
Borrowers shall issue and sell capital stock for minimum aggregate
considerations of (a) $5 million in cash net to Borrowers by May 15, 2001 (the
"First Equity Funds") and (b) an additional $20 million in cash net to Borrowers
(the "Second Equity Funds") by June 30, 2001, all of which First and Second
Equity Funds shall be deposited into the Depository Account in accordance with
Section 3.5(ii) of the Loan Agreement. Failure either to raise the First Equity
Funds in full by May 15, 2001, or to raise the Second Equity Funds in full by
June 30, 2001, and to deposit all said funds into the Depository Account by the
aforesaid due dates, shall constitute an Event of Default (without any cure or
grace period) under the Loan Agreement. Neither the First or the Second Equity
Funds paid into the Depository Account pursuant hereto shall reduce the amount
or calculation of Revolving Loans available to Borrowers, and Borrowers may
continue to request Revolving Loans, pursuant to the Loan Agreement, as amended
hereby.
SECTION 5 REAFFIRMATION
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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 (together, the "Security Agreements") pursuant to which Pledgors
granted to Agent 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 Agent 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 GENERAL PROVISIONS.
-------------------
6.1 Except as amended by this Amendment, 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 Agent 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 Agent, including but not limited to, all loans
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made by Agent 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 Agent 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 Agent'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.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Borrowers, Agent and Lenders 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: 750 North Commons Drive
Aurora, Illinois 60504
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LASALLE BANK NATIONAL ASSOCIATION,
a national banking association, as Agent
By: ___________________________
Title: ___________________________
Address: 135 S. LaSalle Street
Chicago, Illinois 60603
Attn: Stephanie Patterson
LASALLE BANK NATIONAL ASSOCIATION
By: ___________________________
Title: ___________________________
Address: 135 South LaSalle Street
Chicago, Illinois 60603
Attn: Stephanie Patterson
HARRIS TRUST AND SAVINGS BANK
By: ___________________________
Title: ___________________________
Address: 111 West Monroe Street
Chicago, Illinois 60690
Attn: M. James Barry, III
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Exhibit B to Amendment to Amended and Restated Loan Agreement
- -------------------------------------------------------------
Annex A - Applicable Margins
LIBOR Margin 3.00%*
Reference Rate Margin 1.00%
Unused Fee 0.50%
Standby L/C Fee Rate 3.00%
Trade L/C Fee Rate 1.50%
Borrowers understand and agree that the foregoing margins,
fees and rates are permanently fixed as of April 13, 2001 and will not fluctuate
with fluctuations in the Interest Coverage Ratio or otherwise.
*To apply until all existing Eurodollar Loans are converted
per Section 1.8 of this Amendment.
Exhibit C to Amendment to Amended and Restated Loan Agreement
- -------------------------------------------------------------
REAFFIRMATION OF STOCK PLEDGE AGREEMENT
This Reaffirmation of Stock Pledge Agreement dated as of April
13, 2001, effective as of February 28, 2001 (this "Reaffirmation") is entered
into between WESTELL TECHNOLOGIES, INC., a Delaware corporation (herein called
the "Pledgor"), and LASALLE BANK NATIONAL ASSOCIATION as agent on behalf of
LaSalle Bank National Association and the other "Lenders" (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, (as previously amended and
herein as amended or modified from time to time, the "Loan and Security
Agreement") between Pledgee, certain Lenders, 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 have notified Pledgee of the occurrence of
certain Events of Default existing under the Loan and Security Agreement.
C. Borrowers desire to enter into an Amendment to the Loan and
Security Agreement dated the date hereof (the "Amendment") pursuant to which
Pledgee and Lenders will waive certain specified Events of Default and will
amend certain financial covenants and other terms under the Loan and Security
Agreement.
D. Pledgor is financially interested in Borrowers.
E. Pledgor desires that Pledgee enter into the Amendment.
F. 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 and Lenders, including but
not limited to, all loans made by Lenders 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: _______________________