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EXHIBIT 10.40
[UNION BANK OF CALIFORNIA LETTERHEAD]
AMENDMENT AND WAIVER LETTER
Commercial Portfolio Administration
Union Bank of California
000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
October 1, 1998
Xx. Xxxxxxx Xxxxxx, President
Smartflex Systems, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Re: FIRST AMENDMENT ("Amendment") to the Amended and Restated Loan Agreement
dated September 26, 1997 (this Amendment and the Amended and Restated
Loan Agreement together called the "Agreement")
Dear Xx. Xxxxxx:
In reference to the Agreement defined above between UNION BANK OF CALIFORNIA,
N.A. ("BANK") and SMARTFLEX SYSTEMS, INC. ("BORROWER"), Bank and Borrower desire
to amend the Agreement and waive certain breaches of the Agreement. Capitalized
terms used herein which are not otherwise defined shall have the meanings given
them in the Agreement.
1. Amendments to the Agreement:
(a) Section 1.1.1, line 5, is hereby amended by substituting
the date "October 2, 2000" for the date "September 30,
1999".
(b) Section 1.1.1.1, line 10, is hereby amended by
substituting the date "October 2, 2000" for the date
"September 30, 1999".
(c) Section 1.1.3, is hereby added in its entirety as follows:
"THE TERM LOAN I. Bank will loan to Borrower the sum of
THREE MILLION DOLLARS ($3,000,000) (the "Term Loan I") at
Borrower's request, in one disbursement on or before
December 31, 1998 in accordance with the terms of the Term
Note I. In the event of a prepayment of principal and
payment of any resulting fees, any prepaid amounts shall
be applied to the scheduled
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Smartflex Systems, Inc.
1st Amendment to Amended and Restated Loan Agreement
October 1, 1998
Page 2
principal payments in the reverse order of their maturity.
The Term Loan I shall be evidenced by a promissory note
(the "Term Note I") on the standard form used by Bank for
commercial loans."
(d) Section 1.3, is hereby amended by adding the following
language:
"The proceeds of the Term Loan I shall be used to purchase
real property."
(e) Section 1.4, is hereby amended in its entirety to read as
follows:
"INTEREST. The unpaid principal balance of the Loans shall
bear interest at the rate or rates provided in the Notes.
The Loans may be prepaid in full or in part only in
accordance with the terms of the Notes and any such
prepayment shall be subject to the prepayment fee provided
for therein."
(f) Section 1.5, line 3, is hereby amended by substituting the
date "October 2, 2000" for the date "September 30, 1999".
(g) Section 1.5.2, is hereby added in its entirety to read as
follows:
"TERM LOAN I COMMITMENT FEE. A NON-REFUNDABLE one eighth
of one percent (1/8%) fee shall be paid upon the funding
on the amount of the Term Loan I.
(h) Section 4.5(b), line 2, is hereby amended by deleting the
words "and consolidating".
(i) Section 4.6, is hereby amended in its entirety to read as
follows:
"TANGIBLE NET WORTH. From December 31, 1997, Borrower will
at all times maintain Tangible Net Worth of not less than
FORTY SEVEN MILLION DOLLARS ($47,000,000). Thereafter,
Borrower will at all times maintain a minimum Tangible Net
Worth that increases from said amount as of the end of
each Borrower's fiscal years by seventy-five percent (75%)
of Borrower's net profit after taxes plus one hundred
percent (100%) of any new equity capital additions.
"Tangible Net Worth" shall mean net worth increased by
indebtedness of Borrower subordinated to Bank and
decreased by patents, licenses, trademarks, trade names,
goodwill and other similar intangible assets,
organizational expenses, and monies due from affiliates
(including officers, shareholders and directors)."
2. Waivers to the Agreement:
(a) Bank hereby provides a waiver of Borrower's breach of
Section 5.3, of the Agreement.
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Smartflex Systems, Inc.
1st Amendment to Amended and Restated Loan Agreement
October 1, 1998
Page 3
"SALE OF ASSETS, LIQUIDATION OR MERGER. Borrower will
neither liquidate nor dissolve nor enter into any
consolidation, merger, partnership or other combination,
nor convey, nor sell, nor lease all or the greater part of
its assets or business, nor purchase or lease all or the
greater part of the assets or business of another."
(b) Bank hereby provides a waiver of Borrower's breach of
Section 5.5, of the Agreement.
"INVESTMENT. Borrower will not purchase the debt or equity
of another person or entity except for savings accounts
and certificate of deposit of Bank, direct U.S. Government
obligations and commercial paper issued by corporations
with the top ratings of Xxxxx'x or Standard & Poor's,
provided all such permitted investments shall mature
within two years of purchase."
Except as specifically amended hereby, the Agreement shall remain in full force
and effect and is hereby ratified and confirmed. This First Amendment and Waiver
shall not be a waiver of any existing or future default or breach of a condition
or covenant unless specified herein.
This First Amendment shall become effective when Bank shall have received the
acknowledgment copy of this First Amendment and Waiver executed by Borrower.
Very truly yours,
UNION BANK OF CALIFORNIA, N.A.
By: //s// Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
Title: Vice President
By: //s// Xxx Xxxx
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Xxx Xxxx
Title: Vice President
AGREED AND ACCEPTED TO THIS 13TH DAY OF OCTOBER, 1998.
SMARTFLEX SYSTEMS, INC.
By: //s// Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
Title: President
