-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UN7sLaNO9wJFxPeNiXNcS9WwRX+70WfKZXGrqIu49WnEemmkpW7HTuRA5oBGavZT I3j6LH+LqY+tHaeMYl9qCA== /in/edgar/work/20000717/0000930661-00-001719/0000930661-00-001719.txt : 20000920 0000930661-00-001719.hdr.sgml : 20000920 ACCESSION NUMBER: 0000930661-00-001719 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000531 FILED AS OF DATE: 20000717 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RF MONOLITHICS INC /DE/ CENTRAL INDEX KEY: 0000922204 STANDARD INDUSTRIAL CLASSIFICATION: [3663 ] IRS NUMBER: 751638027 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-24414 FILM NUMBER: 673942 BUSINESS ADDRESS: STREET 1: 4347 SIGMA RD CITY: DALLAS STATE: TX ZIP: 75244 BUSINESS PHONE: 9722332903 10-Q 1 0001.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended May 31, 2000 Commission File No. 0-24414 RF Monolithics, Inc. (Exact name of registrant as specified in its charter) -------------------- Delaware 75-1638027 (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification) 4441 Sigma Road, Dallas, Texas 75244 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (972) 233-2903 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No As of June 30, 2000, 6,196,318 shares of the Registrant's Common Stock, $.001 par value, were outstanding. RF MONOLITHICS, INC. FORM 10-Q QUARTER ENDED MAY 31, 2000 TABLE OF CONTENTS Item Number Page ------ ---- Part I. Condensed Financial Information 1. Condensed Financial Statements: Condensed Balance Sheets May 31, 2000 (Unaudited), and August 31, 1999 1 Condensed Statements of Operations - Unaudited Three Months Ended May 31, 2000 and May 31, 1999, and Nine months ended May 31, 2000 and May 31, 1999 2 Condensed Statements of Cash Flows - Unaudited Nine months ended May 31, 2000 and May 31, 1999 3 Notes to Condensed Financial Statements 4 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 PART II. OTHER INFORMATION 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 PART I. CONDENSED FINANCIAL INFORMATION ITEM 1. CONDENSED FINANCIAL STATEMENTS
RF MONOLITHICS, INC. CONDENSED BALANCE SHEETS (In Thousands) - ------------------------------------------------------------------------------------------------------------ May August 31, 2000 31, 1999 ASSETS (Unaudited) CURRENT ASSETS: Cash and cash equivalents $ 17 $ 672 Short-term investments 3,494 4,516 Trade receivables - net 9,034 10,840 Inventories 10,920 11,593 Prepaid expenses and other 1,100 1,208 Income taxes receivable 1,092 851 Deferred income tax benefits -- 647 -------------------- --------------- Total Current Assets 25,657 30,327 PROPERTY AND EQUIPMENT - Net 15,169 17,645 OTHER ASSETS AND DEFERRED TAX BENEFITS - Net 3,497 536 -------------------- --------------- TOTAL ASSETS $ 44,323 $ 48,508 ==================== =============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt and line of credit $ 6,898 $ 5,452 Accounts payable - trade 3,829 4,305 Accounts payable - construction and equipment 639 844 Accrued expenses and other liabilities 2,074 2,340 -------------------- --------------- Total Current Liabilities 13,440 12,941 LONG-TERM DEBT - 68 STOCKHOLDERS' EQUITY: Common stock $.001 par value: 6,117 and 5,875 shares issued 6 6 Additional paid-in capital 29,745 28,043 Treasury stock, 36 common shares (227) (227) Retained earnings 1,710 8,082 Unearned compensation (351) (405) -------------------- --------------- Total Stockholders' Equity 30,883 35,499 -------------------- --------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 44,323 $ 48,508 ==================== =============== See notes to condensed financial statements.
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RF MONOLITHICS, INC. CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED (In Thousands, Except Per-Share Amounts) - ------------------------------------------------------------------------------------------------------------------------------- Three months Nine months Ended May 31 Ended May 31 ---------------------------------- ---------------------------------- 2000 1999 2000 1999 SALES $12,697 $12,967 $34,212 $38,949 COST OF SALES 10,642 8,263 32,225 25,117 ---------------- ------------- --------------- -------------- GROSS PROFIT 2,055 4,704 1,987 13,832 OPERATING EXPENSES: Research and development 1,263 1,155 3,520 3,808 Sales and marketing 1,493 1,378 4,490 3,996 General and administrative 746 785 2,716 2,175 ---------------- ------------- --------------- -------------- Total Operating Expenses 3,502 3,318 10,726 9,979 ---------------- ------------- --------------- -------------- INCOME (LOSS) FROM OPERATIONS (1,447) 1,386 (8,739) 3,853 OTHER INCOME (EXPENSE): Interest income 65 55 173 176 Interest expense (228) (101) (601) (269) Other income(expense) 9 (3) (428) (86) ---------------- ------------- --------------- -------------- Total Other Income(Expense) (154) (49) (856) (179) ---------------- ------------- --------------- -------------- INCOME (LOSS) BEFORE INCOME TAXES (1,601) 1,337 (9,595) 3,674 INCOME TAX (BENEFIT) EXPENSE (488) 475 (2,796) 1,337 ---------------- ------------- --------------- -------------- NET INCOME (LOSS) $(1,113) $ 862 $(6,799) $ 2,337 ================ ============= =============== ============== EARNINGS (LOSS) PER SHARE: Basic $(0.18) $0.15 $(1.06) $0.42 ================ ============= =============== ============== Diluted $(0.18) $0.15 $(1.06) $0.41 ================ ============= =============== ============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: Basic 6,116 5,818 5,998 5,757 ================ ============= =============== ============== Diluted 6,116 5,894 5,998 5,907 ================ ============= =============== ============== See notes to condensed financial statements.
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RF MONOLITHICS, INC. CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED (In Thousands) - ---------------------------------------------------------------------------------------------------- -------------------- Nine Months Ended May 31 --------------------------------------------- 2000 1999 OPERATING ACTIVITIES: Net income (loss) $(6,371) $ 2,430 Noncash items included in net income (loss): Deferred taxes (2,257) 307 Depreciation and amortization 3,788 3,114 Provision for doubtful accounts 46 95 Other 102 53 Cash from (used in) operating working capital: Trade receivables 1,760 (157) Inventories 673 (4,489) Prepaid expenses and other 108 33 Accounts payable - trade (475) 728 Accrued expenses and other liabilities (298) (435) Income taxes receivable (241) (169) ------------------- -------------------- NET CASH (USED IN) FROM OPERATIONS (3,165) 1,510 INVESTING ACTIVITIES: Increase in short-term investments (4,639) (4,458) Decrease in short-term investments 5,661 5,107 Acquisition of property and equipment (1,251) (4,208) Increase in other assets (118) (12) ------------------- -------------------- NET CASH USED IN INVESTING ACTIVITIES (347) (3,571) FINANCING ACTIVITIES: Borrowings on notes payable and line of credit 2,298 3,000 Repayments on notes payable and line of credit (568) (375) Repayments on capital leases (321) (479) (Repayments)Borrowings of accounts payable - construction and equipment (205) 133 Treasury Stock transactions - (227) Common stock issued for options exercised 1,493 204 Common stock issued under the Purchase Plan 160 273 ------------------- -------------------- NET CASH FROM FINANCING ACTIVITIES 2,857 2,529 ------------------- -------------------- (DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS (655) 468 CASH AND CASH EQUIVALENTS: Beginning of period 672 199 ------------------- -------------------- End of period $ 17 $ 667 =================== ==================== SUPPLEMENTAL INFORMATION: Interest paid $ 601 $ 284 =================== ==================== Income taxes (received)paid - net $ (709) $ 1,178 =================== ==================== Property and equipment acquisitions by debt $ - $ 53 =================== ==================== See notes to condensed financial statements.
3 RF MONOLITHICS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. INTERIM FINANCIAL STATEMENTS The accompanying condensed financial statements include all adjustments, consisting only of normal recurring adjustments and accruals, that in the opinion of the management of RF Monolithics, Inc. (the "Company" or "RFM") are necessary for a fair presentation of the Company's financial position as of May 31, 2000, the results of operations for the three and nine months ended May 31, 2000 and May 31, 1999, and cash flows for the nine months ended May 31, 2000 and May 31, 1999. These unaudited interim condensed financial statements should be read in conjunction with the audited financial statements of the Company and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended August 31, 1999, filed with the Securities and Exchange Commission. Operating results for the nine months ended May 31, 2000, are not necessarily indicative of the results to be achieved for the full fiscal year ending August 31, 2000. 2. INVENTORIES Inventories consist of the following (in thousands):
May August 31, 2000 31, 1999 Raw materials and supplies $ 5,794 $ 5,713 Work in process 2,288 3,099 Finished goods 2,838 2,781 ---------------- ---------------- Total $ 10,920 $ 11,593 ================ ================
3. PROPERTY AND EQUIPMENT Property and equipment includes construction in progress of $2,157,338 at May 31, 2000, and $2,679,000 at August 31, 1999, which is composed of equipment and other assets not yet placed in service primarily related to increasing the capacity of the Company's manufacturing facilities. 4. CREDIT FACILITIES As of May 31, 2000, the Company was in violation of certain covenants under its line of credit with a commercial bank. The bank has waived the covenant violations. The amount of the credit line was reduced to the amount outstanding as of May 31, 2000, to $6,897,879, and the interest rate was increased from 1 percent to 2 percent over prime rate. The structure of the loan was previously modified in February, 2000, to tie amounts borrowed under the agreement to a borrowing base consisting of certain receivables, inventory, cash and marketable securities, all of which are pledged as collateral. The current credit facility contains restrictions and financial covenants relating to various matters, including net worth, interest coverage and levels of debt. There is no assurance that these covenants can be met. The expiration date of the current line of credit is December 31, 2000. As a result, the debt is classified as current. The Company is currently negotiating a new credit facility that is intended to extend beyond that date. Although the Company believes that this effort will be successful, there is no assurance that a satisfactory new facility will be in place by December 31, 2000. Should that not occur, there could be a significant adverse impact on the Company's operations. No adjustments have been made to the financial statements to reflect that possibility. During the current fiscal year, the Company has utilized approximately $4.6 million under an equipment-collateralized lease facility. This utilization has been recorded as an operating lease. As of May 31, 2000, there is no additional availability remaining under this lease facility. 4 5. EARNINGS PER SHARE Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE, requires a reconciliation of both the numerator and denominator of the earnings per share calculations. There are no adjustments to net earnings/loss to arrive at income/loss for either per share calculation. Reconciliation of share amounts is as follows (in thousands):
Three months Nine months Ended May 31 Ended May 31 ------------------------------- ------------------------------ 2000 1999 2000 1999 Shares outstanding for basic earnings per share 6,116 5,818 5,998 5,757 Effect of dilutive stock -- 76 -- 150 options ------------- -------------- ------------- ------------- Shares outstanding for dilutive earnings per share 6,116 5,894 5,998 5,907 ============= ============== ============= =============
6. CAPITAL STOCK On April 18, 2000, the Company granted to employees Non-Qualified Stock Options to purchase 3,000 shares of the Company's Common Stock and Incentive Stock Options to purchase 89,500 shares of the Company's Common Stock, at an exercise price of $10.25. The options were granted in accordance with the Company's 1999 Equity Incentive Plan and the 1997 Equity Incentive Plan, respectively, resulting in approximately 19,000 and 175,000 shares of common stock remaining available for grant under the plans, respectively, at May 31, 2000. On June 20, 2000, the Company granted to employees Non-Qualified Stock Options to purchase 3,500 shares of the Company's Common Stock and Incentive Stock Options to purchase 49,000 shares of the Company's Common Stock, at an exercise price of $13.0625. The options were granted in accordance with the Company's 1999 Equity Incentive Plan and the 1997 Equity Incentive Plan, respectively. 7. LITIGATION AND CONTINGENCIES Included in the accounts receivable balance is a past-due receivable totaling $889,000. The Company is seeking to recover the entire $889,000 of this past due account, plus an additional $819,000 for custom finished goods manufactured and raw material purchased. The Company believes that reserves are not necessary with regard to this mater. As a result, no additional allowance for uncollectible amounts has been established. In April 1999, the Company became involved in a lawsuit filed in the US District Court in Connecticut (Civil Action No. 399cv00311) seeking to collect outstanding receivables that were incurred by Akom Technologies, Inc. (Akom) in connection with Raytheon Company's (Raytheon) Goldmine Project. Also named in the action were Raytheon, Raycom, Inc. (Raycom), and sixteen other companies who supplied materials and services for the Goldmine Project. No party is seeking to collect monetary amounts from the Company, rather the parties are seeking declaration from the courts that they do not owe monetary amounts to the Company. The Company has filed a counter claim against Akom and cross claims against Raytheon and Raycom and asserts damages to the extent of unpaid invoices and custom inventory parts and materials approximating $1.7 million. Akom, Raytheon and Raycom have denied liability. In an opinion issued on March 31, 2000, the court denied Raytheon's and Raycom's motion to dismiss the Company's breach of contract claims, but dismissed the Company's claims for misrepresentation, fraud, and unfair trade practices. When the case began there were 17 suppliers seeking recovery for products provided to Akom for and at the request of Raytheon and Raycom. Raytheon has now settled with all but 4 of the suppliers. The Company believes it has meritorious claims and continues to prepare for trial. 5 8. SALES REVENUE The following table sets forth the components of the Company's sales by product area for the periods ended as indicated (in thousands):
Amounts ------------------------------------------------------------------------ Three Months Nine Months Ended May 31 Ended May 31 ---------------------------------- --------------------------------- 2000 1999 2000 1999 Low-power components $ 8,504 $ 9,116 $22,760 $27,470 Virtual Wire(R) short-range radio products 1,456 2,129 5,175 4,688 --------------- --------------- --------------- --------------- Low-Power Products Group 9,960 11,245 27,935 32,158 Frequency control modules 515 875 1,543 3,047 Filters 2,164 791 4,465 3,624 --------------- --------------- --------------- --------------- Communications Products Group 2,679 1,666 6,008 6,671 Technology development sales 58 56 269 120 --------------- --------------- --------------- --------------- Total Sales $12,697 $12,967 $34,212 $38,949 =============== =============== =============== ===============
9. DEFERRED TAX ASSET The Company's deferred tax asset of approximately $2.9M at May 31, 2000 is primarily due to the tax effect of unused net operating loss carryforwards ("NOL's"), tax credit carryforwards and tax effected net taxable deductions. There is no reserve against this asset. As of May 31, 2000, the Company has NOL's of approximately $11.9M for federal income tax purposes. While the Company believes that it is likely that it will realize these carryforwards, there can be no assurance that they will be available to such extent and be fully realized. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion may be understood more fully by reference to the financial statements, notes to the financial statements, and management's discussion and analysis contained in the Company's Annual Report on Form 10-K for the year ended August 31, 1999, filed with the Securities and Exchange Commission. General RFM offers products in four product areas: low-power components, Virtual Wirea short-range radio device systems, frequency control modules and filters. In the Second Quarter of fiscal year 2000, marketing and product development efforts for these four product areas were realigned into two product groups. The Low-Power Product Group consists of the low power component products and the Virtual Wirea short range radio products. The Communications Product Group includes the filter and frequency control product areas. The Company sells to original equipment manufacturers and distributors in automotive, computer, consumer, industrial and telecommunications market segments worldwide. This report and other presentations made by us contain "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results expressed or implied by such statements, including general economic and business 6 conditions, conditions affecting the industries served by us, conditions affecting our customers and suppliers, competition, the overall market acceptance of the Company's services, and other factors disclosed in this report and our Form 10-K for the year ended August 31, 1999. Accordingly although we believe that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Any forward-looking statement speaks only as of the date on which such statement was made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for us to predict all of such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. The Company incurred significant losses in the first three quarters of its fiscal year 2000. As a result, it does not expect to overcome these losses this year and anticipates reporting a loss for fiscal year 2000. Results of Operations The following discussion relates to the financial statements of the Company for the three months ended May 31, 2000 (current quarter), of the fiscal year ending August 31, 2000, in comparison to the three months ended May 31, 1999 (comparable quarter of the prior fiscal year). In addition, certain comparisons with the three months ended February 29, 1999 (previous quarter), are provided where management believes it is useful to the understanding of trends. The selected financial data for the periods presented may not be indicative of the Company's future financial condition or results of operations. The following table sets forth, for the three months and nine months ended May 31, 2000, and May 31, 1999, (i) the percentage relationship of certain items from the Company's statements of income to sales and (ii) the percentage change in these items between the current period and the comparable period of the prior year:
Percentage of Total Sales Percentage Change From --------------------------------------------------------------- ------------------------------------------ Three Months Nine Months Three Months Nine Months Ended May 31 Ended May 31 Ended May Ended May ----------------------------- ----------------------------- 2000 1999 2000 1999 1999 to 2000 1999 to 2000 ------------------- ----------------- Sales 100 % 100 % 100 % 100 % (2)% (12)% Cost of sales 84 64 94 64 29 28 ------------ ------------ ------------ ------------ ------------------- ----------------- Gross profit 16 36 6 36 (56) (86) Research and 10 9 10 10 9 (8) development Sales and marketing 12 11 13 10 8 12 General and 6 6 8 6 (5) 25 administrative ------------ ------------ ------------ ------------ ------------------- ----------------- Total operating 28 26 31 26 6 8 expenses ------------ ------------ ------------ ------------ ------------------- ----------------- Income from (12) 10 (25) 10 (204) (327) operations Other income (1) (1) 214 398 (expense), net ------------ ------------ ------------ ------------ ------------------- ----------------- Income before (13) 10 (26) 10 (220) (343) income taxes Income tax expense (4) 3 (8) 4 (203) (309) ------------ ------------ ------------ ------------ ------------------- ----------------- Net Income(Loss) (9)% 7 % (18)% 6 % (229)% (362)% ============ ============ ============ ============ =================== =================
7 Sales The following table sets forth the components of the Company's sales and the percentage relationship of the components to sales by product area for the periods ended as indicated (in thousands, except percentage data):
Amounts % of Total ------------------------------------------------------- ----------------------------------------------- Three Months Nine Months Three Months Nine Months Ended May 31 Ended May 31 Ended May 31 Ended May 31 -------------------------- -------------------------- ----------------------------------------------- 2000 1999 2000 1999 2000 1999 2000 1999 Low-power components $ 8,504 $ 9,116 $22,760 $27,470 67 % 70 % 67 % 71 % Virtual Wire(R) short-range radio products 1,456 2,129 5,175 4,688 11 16 15 12 -------------------------- ------------ ----------- -------- ---------------------- --------- Low-Power Products 9,960 11,245 27,935 32,158 78 86 82 83 Group Frequency control modules 515 875 1,543 3,047 4 7 5 8 Filters 2,164 791 4,465 3,624 17 6 13 9 -------------------------- ------------ ----------- -------- ---------------------- --------- Communications 2,679 1,666 6,008 6,671 21 13 18 17 Products Group Technology development 58 56 269 120 1 1 - - sales -------------------------- ------------ ----------- -------- ---------------------- --------- Total Sales $12,697 $12,967 $34,212 $38,949 100 % 100 % 100 % 100 % ========================== ============ =========== ======== ====================== =========
Net sales for the third quarter ended May 31, 2000, were $12.7 million, as compared to $13.0 million in the third quarter of the prior fiscal year and $12.2 million for the second quarter of fiscal year 2000. Sales decreased in the Low Power Products Group from prior year's third quarter due to lower average selling prices resulting from anticipated competitive pricing pressures. Low- power component sales were the highest that they have been the four quarters since the third quarter of the prior year and average selling prices have stabilized during this period, as a result of the Company's discontinuation of special sales promotion programs used to stimulate quarterly turns business. The Company believes that stabilizing prices will allow for low-power component sales to stabilize. Sales of Virtual Wire(R) short-range radio products declined from $2.2 million in the previous quarter to $1.5 million in the current quarter due to the anticipated slow down in the number of units shipped. Customers for second generation Virtual Wire(R) radio products which took prototype quantities of product in prior quarters are completing their designs and getting qualifications from their customers. The Company believes these products offer robust operation, small size, low-power consumption and low costs for short- range wireless data applications. The Company is helping a number of customers incorporate these products into a wide variety of new applications. The timing of when any sales resulting from such new applications reach the production phase is dependent upon the timing of both the customers' product development cycles and their product introduction cycles. As a result, it is difficult to predict when, or if, these new products will have a significant impact on the Company's sales. In the current quarter, the Company completed a last time buy opportunity for its customers to buy first generation receiver products and took orders for approximately $1.5 million, which will ship in the next few quarters. First generation Virtual Wire(R) short-range radio products have relatively low gross margins, so that will likely have an adverse impact on gross margins during those periods. A last time buy opportunity for first generation transmitter products will be completed by the end of the calendar year. Sales of Filter products increased 174% over prior year's third quarter due primarily to an increase in the number of units shipped. This was the Company's highest quarterly shipment of filter products into the communication markets. The Company continues to devote significant resources to developing and supporting the growth of its filter products. The product development and introduction cycle for filter products takes between six to eighteen months to complete. As a result, it is difficult to predict when or if, this strategy to focus on filter products will have a significant impact on Company sales. 8 The Company's top five customers accounted for approximately 39%, 28% and 36% of the Company's sales in the current quarter, the comparable quarter of the prior year and the previous quarter, respectively. One customer accounted for approximately 14% of sales in the current quarter, while no customer accounted for more than 10% of sales in the comparable quarter of the prior year and the same customer accounted for 11% of sales in the previous quarter. International sales (primarily to Europe and Asia) were approximately 67%, 53% and 67% of the Company's sales during the current quarter, the comparable quarter of the prior year and the previous quarter, respectively. The Company considers all product sales with a delivery destination outside of North America to be international sales. These sales are denominated primarily in U.S. currency. The Company intends to continue its focus on international sales in the future and expects that international sales will continue to represent a significant portion of its business. However, international sales are subject to fluctuations as a result of local economic conditions and competition. Therefore, the Company cannot predict whether it will continue to derive a significant portion of its business from international sales. While the Company has achieved sales increases in prior periods, there can be no assurance that this can be achieved in future periods. The Company's success is highly dependent on achieving technological advances in its product design and manufacturing capabilities, as well as its ability to sell its products in a competitive marketplace that can be influenced by outside factors such as economic and regulatory conditions. Competition, including alternative technologies or competitors duplicating the Company's technologies, may adversely affect the selling prices and market share. Gross Profit The current quarter gross margin of 16% decreased from 36% in the comparable quarter of the prior year but increased from an 11% gross margin in the previous quarter. Year-to-date gross margins were 6%, compared to 35% for the comparable year-to-date period. The decrease from the prior year was due to several factors and occurred in most of the product lines. The first factor decreasing gross margins was the continuing decline in per-unit selling prices, for the Company's Low Power Component and Virtual Wirea short-range radio products due to competitive pressures. There was not a corresponding decrease in manufacturing costs per unit, and in fact manufacturing costs increased, as explained below. Therefore gross margins for those product lines decreased in the current quarter, as well as the current year-to-date period. While prices have stabilized for these products in recent quarters, the Company believes this trend towards reduced sales prices could continue for both of these product lines. It is not certain if the Company can reduce per unit manufacturing costs in future periods to the same extent as the decrease in selling prices. If sufficient cost reductions are not made, gross margins would be adversely impacted in a material way. The second factor was the decline in sales that resulted in the large fixed cost portion of overhead costs to be a higher percentage of total sales. The decrease in selling prices caused the need to produce more units to reach the same sales dollars. The Company has added equipment and other manufacturing overhead costs to increase the capacity in each of its facilities. This has increased fixed manufacturing costs by approximately $300,000 per quarter. If additional sales dollars are not obtained in future periods, manufacturing overhead costs may not decline as a percentage of total sales. A third factor that has impacted recent quarters, but not the current quarter has been the fact that the Company has experienced a significant change in the mix of its product sales. On a year to date basis, Virtual Wirea short- range radio product sales increased to 15% of total sales in the current year, compared to 12% in the prior year. These products include both first generation products, for which costs have been historically very high relative to sales, and second generation products, which have been ramping to production rates and are still experiencing yield and process issues. This shift in product sales mix from a historically higher margin product to a currently lower margin product has produced an overall reduction in gross profit. The Company expects the change in mix to continue but also believes that the negative impact on gross margins will be reduced significantly as the second generation of the transceiver and related Virtual Wirea short-range radio products represent the majority of total production in the second half of the next fiscal year. The second-generation products are designed to be more cost-effective than first generation products. There may be an increase in sales of first generation products until then as the Company is offering customers the opportunity to buy more of these products before they are discontinued. Because of the uncertainty of volume and the new product introduction process, the Company may not be able to 9 manufacture these future generation products at a cost low enough to produce an improved gross profit margin result. Gross margins in the current quarter increased 5 margin points from the previous quarter. Management efforts to return manufacturing productivity yield and production rates closer to historic levels resulted in lower per unit manufacturing costs. Management intends to continue this focus on improved operations, although there can be no assurance these efforts will result in lower per unit costs. The Company has started a program to outsource some of its assembly operations offshore. The initial focus is to enhance the Company's capability to produce filter products. A successful offshore manufacturing program could result in a material reduction in manufacturing costs. The Company plans to have some production offshore by the end of the calendar year: however, there can be no assurance if this program will be successful. The Company has experienced sudden increases in demand in the past which pressured the manufacturing facilities to increase capacity in order to meet this demand. In addition, new products sometimes require different manufacturing processes than the Company currently possesses. The Company has devoted the bulk of its capital expenditures over the past few years to increase capacity and improve its manufacturing processes. The Company may not be able to continue to increase its manufacturing capacity and improve its manufacturing processes in a timely manner so as to take advantage of any increased market demand. Failure to do this would result in a loss of potential sales in the periods impacted. Research and Development Research and development expenses in the current quarter increased approximately $108,000 or 9%, from the comparable quarter of the prior year. These expenses were comparable to first quarter levels. The Company believes that the continued development of its technology and new products is essential to its success and is committed to continue to devote significant resources to research and development. The Company expects that research and development expenses may increase, or stay approximately the same in future periods. Sales and Marketing Current quarter sales and marketing expenses increased approximately $115,000, or 8%, from the prior year comparable quarter. This increase was due primarily to increased sales commission expenses related to the completion of the Company's sales program to increase coverage around the world. The Company expects to incur higher sales and marketing expenses in absolute dollars in future periods as it continues to expand its sales and marketing efforts. General and Administrative General and administrative expenses for the current quarter decreased approximately $39,000, or 5%, from the prior year comparable quarter. The Company expects general and administrative expenses may increase, or stay approximately the same in absolute dollars in future periods. Income Tax (Benefit) Expense The Company's income tax benefit was $488,000 in the current quarter, compared to income tax expenses of $475,000 in the prior year comparable quarter, reflecting the comparable income before income taxes for the respective periods. The Company's effective tax benefit rate was approximately 31% in the current quarter, compared to approximately 36% in the prior year due to the Foreign Sales Corporation. Net (Loss) Income Net income/(loss) was ($1.1) million, or ($0.18) per diluted share, in the current quarter, compared to net income of $862,000, or $0.15 per diluted share, for the prior year comparable quarter. The net loss declined from the previous quarter's $1.4 million loss. The current fiscal year-to-date loss is $6.4 million, compared to a $2.4 million net income in the prior year-to-date period. The Company does not expect to overcome this loss this year and anticipates reporting a loss for fiscal year 2000. 10 Liquidity and Capital Resources The prime source of liquidity at May 31, 2000, consisted of $3.5 million of cash and short-term investments. As of May 31, 2000, the Company was in violation of certain covenants under its line of credit with a commercial bank. The bank has waived the covenant violations. The amount of the credit line was reduced to the amount outstanding as of May 31, 2000, to $6,897,879, and the interest rate was increased from 1 percent to 2 percent over prime rate. The structure of the loan was previously modified in February, 2000, to tie amounts borrowed under the agreement to a borrowing base consisting of certain receivables, inventory, cash and marketable securities, all of which are pledged as collateral. The current credit facility contains restrictions and financial covenants relating to various matters, including net worth, interest coverage and levels of debt. There is no assurance that these covenants can be met. The expiration date of the current line of credit is December 31, 2000. As a result, the debt is classified as current. The Company is currently negotiating a new credit facility that is intended to extend beyond that date. Although the Company believes that this effort will be successful, there is no assurance that a satisfactory new facility will be in place by December 31, 2000. Should that not occur, there could be a significant adverse impact on the Company's operations. No adjustments have been made to the financial statements to reflect that possibility. During the current fiscal year, the Company has utilized approximately $4.6 million under an equipment-collateralized lease facility. This utilization has been recorded as an operating lease. As of May 31, 2000, there is no additional availability remaining under this lease facility. To move the leased manufacturing equipment to support an expansion of the Company's offshore manufacturing initiative, it will be necessary to purchase the equipment. There is no assurance that this can be done on favorable terms. Should that not occur, there could be a slowdown in the company's plans to expand offshore production. Net cash used in operating activities was $3.3 million in the year-to-date period of fiscal 2000 as compared to net cash provided from operating activities of $1.5 million for the year-to-date period of fiscal 1999. The decrease in cash available from operations is due to the $6.4 million net loss in the current year-to-date period that was partially offset by a $2.5 million reduction in accounts receivable and inventories. The Company's internal plan is to achieve nearly a breakeven cash flow from operations by the end of its current fiscal year. There can be no assurance that this will be achieved. Cash used in investing activities was $0.3 million for the current year-to- date period, as compared to, $3.6 million of cash used in investing activities for the comparable year-to-date period of the prior year, primarily as a result of approximately $1.2M in capital expenditures offset by a net reduction of $1.0M in short-term investments. Cash used in investing activities was $3.6M million in the prior year, due to $4.2 million in capital expenditures. The Company expects to acquire a total of approximately $1.3 million to $1.7 million of capital equipment by the end of fiscal 2000, consisting primarily of equipment needed for its manufacturing facilities. Net cash generated from financing activities was $3.0 million and $2.6 million for the year-to-date period of fiscal 2000 and 1999, respectively. In the current year, approximately $1.2 million was raised from a net increase in borrowings and $1.7 million in sales of stock from stock options and the employee stock purchase plan. In the prior year, $2.3 million was raised in a net increase in borrowings and $500,000 in sales of stock. The Company believes that cash generated from operations and the $3.5 million balance in cash and short-term investments will be sufficient to meet the Company's operating cash requirements through the rest of the fiscal year. To the extent that these sources of funds are insufficient to meet the Company's capital or operating requirements, the Company may be required to raise additional funds. No assurance can be given that additional financing will be available or, if available, that it will be available on acceptable terms. Should that occur, there could be significant adverse impact on the Company's operations. No adjustments have been made to the financial statements to reflect that possibility. Year 2000 Readiness Disclosure The Company completed its plan to prepare for the Year 2000 computer issue. The Company did not experience any significant problems related to the Year 2000 issue in the current quarter and does not expect to experience any in future periods. 11 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. The Company hereby incorporates by reference all exhibits filed in connection with Form 10-K for the year ended August 31, 1999. (b) The Company did not file any reports on Form 8-K during the quarter ended May 31, 2000. (c) Exhibits Included Description ----------------- ----------- 10.31 Waiver and Fourth Amendment to Loan Agreement, dated as of May 31, 2000, among RF Monolithics, Inc., Banc One Leasing Corporation, and Bank One, Texas, National Association 10.32 Promissory Note, dated May 31, 2000, in the principal amount of $7,500,000, executed and delivered by RF Monolithics, Inc. to Bank One, Texas, National Association 10.33 Waiver and Amendment to Master Lease Agreement dated as of May 31, 2000, by and between RF Monolithics, Inc. and Banc One Leasing Corporation 10.34 Collateral Pledge Agreement dated as of May 31, 2000, by RF Monolithics, Inc. in favor of Bank One, Texas, National Association 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RF MONOLITHICS, INC. Dated: July 17, 2000 By: /s/ JAMES P. FARLEY ------------------------------------ James P. Farley Authorized Officer By: /s/ JAMES P. FARLEY ------------------------------------ James P. Farley VP Finance, Controller 13 EX-10.31 2 0002.txt WAIVER AND FOURTH AMENDMENT TO MASTER LEASE AGR. Exhibit 10.31 WAIVER AND FOURTH AMENDMENT TO LOAN AGREEMENT --------------------------------------------- This WAIVER AND FOURTH AMENDMENT TO LOAN AGREEMENT ("Amendment") is --------- entered into as of June 30, 2000 (the "Amendment Date"), by and between RF -------------- MONOLITHICS, INC., a Delaware corporation ("Borrower") and BANK ONE, TEXAS, -------- NATIONAL ASSOCIATION ("Bank"), a national banking association, acting in its ---- capacity as "Bank" under the Loan Documents and as collateral agent for itself and Banc One Leasing Corporation ("BOLC"). ---- RECITALS: A. Pursuant to that certain Letter Loan Agreement dated as of March 8, 1996, by and between Borrower and Bank (as amended by that certain First Amendment to Loan Agreement dated as of December 31, 1997 between Borrower and Bank, that certain Second Amendment to Loan Agreement dated as of July 15, 1999 between Borrower and Bank, and that certain Waiver and Third Amendment to Loan Agreement dated as of February 29, 2000 among Borrower, BOLC, and Bank, and as such agreement may be further amended, restated, or otherwise modified from time to time, the "Loan Agreement"), Bank has agreed to provide to Borrower a secured -------------- credit facility as set forth therein. B. Borrower and Bank have agreed to amend certain provisions of the Loan Agreement. C. Subject to satisfaction of the conditions set forth herein, Bank is willing to amend the Loan Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE 1 Definitions ----------- Section 1.1 Definitions. Unless otherwise defined in this Amendment, ----------- each capitalized term used in this Amendment has the meaning given to such term in the Loan Agreement. ARTICLE 2 Waiver of Event of Default -------------------------- Section 2.1 Waiver of Events of Default. Pursuant to paragraph 9(e) --------------------------- -------------- of the Loan Agreement, Borrower was required to maintain a minimum EBITDA for the three (3) month period ended May 31, 2000 of not less than $1,007,000 (the "EBITDA Covenant"). For the three (3) month period ended May 31, 2000, Borrower --------------- failed to maintain the EBITDA Covenant. WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 1 Borrower's failure to maintain the EBITDA Covenant as of the three month period ended May 31, 2000, constitutes an Event of Default under paragraph 11(b) of the Loan Agreement (the "EBITDA Default"). Additionally, certain events of default occurred under the Lease Agreements which could result in acceleration of the payments due thereunder and as more specifically set forth in the waiver letter agreement between Borrower and BOLC dated concurrently herewith (the "Lease Defaults"). Each of the Lease Defaults constitutes an Event of Default under paragraph 11(e) of the Loan Agreement. Effective as of the date of this Amendment, and subject to the conditions precedent contained herein, Bank hereby waives the Events of Default resulting from the EBITDA Default and the Lease Defaults. ARTICLE 3 Amendment to Loan Agreement and other Loan Documents ---------------------------------------------------- Section 3.1 Amendment to Paragraph 1 of the Loan Agreement. Effective as of the Amendment Date, paragraph 1 of the Loan Agreement is hereby amended and restated in its entirety to read as follows: 1. Loan. Subject to the terms and conditions set ---- forth in this Loan Agreement and the other agreements, instruments, and documents at any time evidencing, securing, governing, guaranteeing, and/or pertaining to the Indebtedness, as hereinafter defined (collectively, together with this Loan Agreement, referred to hereinafter as the "Loan Documents"), Bank and Borrower hereby agree as -------------- follows: Subject to the terms and conditions set forth herein, Bank agrees to lend to Borrower an amount equal to $6,897,878.91; provided, however, the total principal amount outstanding at any time shall not exceed the Borrowing Base (as such term is defined hereinbelow) (the "Loan"). If at any time the ---- aggregate principal amount outstanding under the Loan shall exceed the Borrowing Base, unless Bank otherwise consents, Borrower agrees to immediately repay to Bank such excess amount, plus all accrued but unpaid interest thereon. All sums advanced hereunder, together with all accrued but unpaid interest thereon, shall be due and payable in full at 11:00 a.m. (Dallas, Texas time) on December 31, 2000 (the "Termination Date"). The sums advanced under the Loan shall ---------------- be used for working capital purposes. The term "Indebtedness", as used herein, shall mean the Loan and all ------------ other indebtedness owing from time to time to Bank by Borrower. As used in this Loan Agreement, the term "Borrowing Base" -------------- shall have the meaning set forth hereinbelow: An amount equal to eighty percent (80.0%) of Borrower's Eligible Accounts, plus twenty-five ---- percent (25.0%) of Borrower's Eligible Inventory; provided, however, the outstanding amount advanced with respect to Eligible Inventory at any time shall not exceed $1,000,000, plus one hundred ---- percent (100%) of the balance of cash and ninety percent (90.0%) of the value of U.S. Treasury securities, respectively, held in the securities account described in paragraph 3(d) hereof. -------------- As used herein, the term "Eligible Accounts" shall mean at ----------------- any time, an amount equal to the aggregate net invoice or ledger amount owing on all WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 2 trade accounts receivable of Borrower for goods sold or leased or services rendered in the ordinary course of business, in which Bank has a perfected, first priority lien, after deducting (without duplication): (i) each such account that is unpaid ninety (90) days or more after the original invoice date thereof, (ii) the amount of all discounts, allowances, rebates, credits, and adjustments to such accounts, (iii) the amount of all contra accounts, set- offs, defenses, or counterclaims asserted by or available to the account debtors, (iv) all accounts with respect to which goods are placed on consignment or subject to a guaranteed sale or other terms by reason of which payment by the account debtor may be conditional, (v) all accounts with respect to which Borrower has furnished a payment and/or performance bond and that portion of any accounts for or representing retainage, if any, until all prerequisites to the immediate payment of retainage have been satisfied, (vi) all accounts owing by account debtors for which there has been instituted a proceeding in bankruptcy or reorganization under the United States Bankruptcy Code or other law, whether state or federal, now or hereafter existing for relief of debtors, (vii) all accounts owing by any Affiliate (as such term is defined hereinbelow) of Borrower, (viii) all accounts in which the account debtor is the United States or any department, agency, or instrumentality of the United States, except to the extent an acknowledgment of assignment to Bank of such account in compliance with the Federal Assignment of Claims Act and other applicable laws has been received by Bank, (ix) all accounts due Borrower by any account debtor whose principal place of business is located outside the United States and its territories; provided that if any such account is supported by either a letter of credit or an agreement of indemnity or insurance, each in form and substance satisfactory to Bank, Bank may, in its discretion, include such accounts, or any portion thereof, in "Eligible Accounts", (x) all accounts subject to any provision prohibiting assignment or requiring notice of or consent to such assignment, (xi) that portion of all account balances owing by any single account debtor which exceeds twenty-five percent (25.0%) of the aggregate of all accounts which are owing to Borrower by all account debtors, and (xii) any other accounts deemed unacceptable by Bank in its discretion exercising its reasonable credit judgment; provided, however, if more than ten percent (10.0%) of the then balance owing by any single account debtor does not qualify as an Eligible Account under the foregoing provisions, then the aggregate amount of all accounts owing by such account debtor shall be excluded from Eligible Accounts. As used herein, the term "Eligible Inventory" shall mean as ------------------ of any date, the aggregate value of all inventory of raw materials (excluding specifically work in progress and packaging materials, supplies, finished goods, and any advertising costs capitalized into inventory) then owned by Borrower and held for use in the ordinary course of Borrower's business, in which Bank has a first priority lien, excluding (i) inventory which is damaged, defective, obsolete, or otherwise unusable in the ordinary course of Borrower's business, (ii) inventory which is not in the possession of Borrower or which has been rejected by Borrower for any reason, and (iii) inventory subject to any consignment arrangement between Borrower and any other person or entity. For purposes of this definition, Eligible Inventory shall be valued at the lower of cost (excluding the cost of labor) or market value. Section 3.2 Amendment to Paragraph 2 of the Loan Agreement. Effective ---------------------------------------------- as of the Amendment Date, paragraph 2 of the Loan Agreement is hereby amended ----------- and restated in its entirety to read as follows: WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 3 2. Promissory Note. The Loan shall be evidenced by a --------------- promissory note (together with all renewals, extensions, or other modifications thereto, the "Note") duly executed by ---- Borrower in the stated principal amount of $6,897,878.91 and otherwise in form and substance acceptable to Bank. Interest on the Note shall accrue at the rate set forth therein. The principal of and interest on the Note shall be due and payable in accordance with the terms and conditions set forth in the Note and in this Loan Agreement. Section 3.3 Amendment to Paragraph 9 of the Loan Agreement. Effective ---------------------------------------------- as of the Amendment Date, paragraph 9 of the Loan Agreement is hereby amended by ----------- adding thereto, immediately following the last sentence thereof, the following sentence which shall read in its entirety as follows: Notwithstanding any other provision of this Loan Agreement to the contrary, Borrower shall certify its compliance with each of the covenants set forth in this paragraph 9 for the ----------- period ending August 31, 2000 by reference to the quarterly financial statements of Borrower prepared for such period end as required by paragraph 10(b), such certification to be --------------- received by Bank not later than October 15, 2000. Section 3.4 Amendment Loan Documents. Effective as of the Amendment ------------------------ Date, each and every reference in the Loan Documents to the "Revolving Line of Credit", as defined in the Loan Agreement prior to the effectiveness of this Amendment, is hereby amended to refer to the "Loan", as defined in the Loan Agreement, as amended by this Amendment. ARTICLE 4 Conditions ---------- Section 4.1 Items to be Delivered By Borrower. The effectiveness of --------------------------------- this Amendment is subject to Borrower's delivery to Bank of each of the following items prior to or simultaneously with execution and delivery of this Amendment: (a) Amendment Documents. Each other agreement, certificate, ------------------- document, or instrument required by Bank to be executed or delivered by Borrower (including, without limitation, a Pledge Agreement in form and substance satisfactory to Bank) or any other party in connection with this Amendment or the transactions contemplated in connection herewith (the "Amendment Documents"), duly executed or delivered by ------------------- the parties thereto; (b) Amendment Fee. Payment to Bank of a fee of $7,000 in respect ------------- of the amendments contained herein; and (c) Fees and Expenses. Payment or reimbursement to Bank for all ----------------- expenses, costs, and fees (including, without limitation, fees and costs of Bank's legal counsel) incurred by, or due to, Bank in connection with negotiating and documenting this Amendment, the other Amendment Documents, and any other Loan Documents; WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 4 Section 4.2 Other Conditions. This Amendment shall become effective ---------------- upon the following conditions precedent being performed to Bank's satisfaction. Borrower's failure to comply with the following conditions shall be an Event of Default under the Loan Agreement: (a) Continued Effect of Representations and Warranties. All -------------------------------------------------- representations and warranties contained in the Loan Documents (as amended hereby) shall be true, correct, and complete in all material respects (as determined by Bank in its sole discretion) except as disclosed otherwise to Bank in writing and as acceptable to Bank or representations specifically relating to a prior date or no longer relevant due to the occurrence of an event or circumstances specifically permitted hereunder or by any other Loan Document; (b) Absence of Default. No Default or Event of Default shall ------------------ have occurred and be continuing (after giving effect to this Amendment); (c) Corporate Proceedings. All corporate proceedings taken in --------------------- connection with the transactions contemplated by this Amendment and all other agreements, documents, and instruments executed and/or delivered pursuant hereto, and all legal matters incident thereto, shall be satisfactory to Bank and its legal counsel; (d) Additional Information. Bank shall have received such ---------------------- additional agreements, certificates, documents, instruments, and information as Bank or its respective legal counsel may request to effect the transactions contemplated hereby. ARTICLE 5 Representations and Warranties ------------------------------ Section 5.1 Representations and Warranties. Borrower hereby ------------------------------ represents and warrants to Bank that, as of the date of and after giving effect to this Amendment: (a) the execution, delivery, and performance of this Amendment and any and all other Amendment Documents executed and/or delivered in connection herewith have been authorized by all requisite action on the part of Borrower and will not violate Borrower's certificate of incorporation, bylaws, or other similar charter documents; (b) except as set forth in Exhibit A hereto, all representations --------- and warranties set forth in the Loan Agreement, the other Loan Documents, and the Lease Agreements are true and correct in all material respects as if made again on and as of such date (except as disclosed otherwise to Bank and BOLC in writing and as acceptable to Bank and BOLC or representations specifically relating to a prior date or no longer relevant due to the occurrence of an event or circumstances specifically permitted hereunder, by any other Loan Document, or the Lease Agreements); (c) no Default or Event of Default has occurred and is continuing; and WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 5 (d) the Loan Agreement and the other Loan Documents (as amended by this Amendment) are and remain legal, valid, binding, and enforceable obligations of each of the parties thereto. ARTICLE 6 Miscellaneous ------------- Section 6.1 The waiver specifically described in Section 2.1 of this ----------- Amendment shall not constitute and shall not be deemed a waiver of any other Default or Event of Default, whether arising as a result of the further violation of the EBITDA Covenant, additional default under the Lease Agreements, or otherwise, or a waiver of any rights or remedies arising as a result of such other Defaults or Events of Default. Section 6.2 Governing Law. THIS AMENDMENT, AND ALL DOCUMENTS AND ------------- INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS. Section 6.3 Agreement Remains in Effect; No Waiver. Except as -------------------------------------- expressly provided herein, all terms and provisions of the Loan Agreement, the other Loan Documents, and the Lease Agreements shall remain unchanged and in full force and effect and are hereby ratified and confirmed. No delay or omission by Bank in exercising any power, right, or remedy shall impair such power, right, or remedy or be construed as a waiver thereof or an acquiescence therein, and no single or partial exercise of any such power, right, or remedy shall preclude other or further exercise thereof or the exercise of any other power, right, or remedy under the Loan Agreement, the other Loan Documents, the Lease Agreements, or otherwise. Section 6.4 Survival of Representations and Warranties. All ------------------------------------------ representations and warranties made in this Amendment or any other Loan Document shall survive the execution and delivery of this Amendment and the other Loan Documents, and no investigation by Bank or any closing shall affect the representations and warranties or the right of Bank to rely upon them. Section 6.5 Reference to Loan Documents. Each of the Loan Documents, --------------------------- including, without limitation, the Loan Agreement, the Amendment Documents, and any and all other agreements, documents, or instruments now or hereafter executed and/or delivered pursuant to the terms hereof or pursuant to the terms of the Loan Agreement as amended hereby, are hereby amended so that any reference in such Loan Documents to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby, and the term Loan Documents as defined in the Loan Agreement and as used in any of the "Loan Documents" includes, without limitation, the Amendment Documents. Section 6.6 Severability. Any provision of this Amendment held by a ------------ court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 6 Section 6.7 Successors and Assigns. This Amendment is binding upon ---------------------- and shall inure to the benefit of Borrower and Bank and their respective successors in interest and assigns. Borrower may not assign any right, power, duty, or obligation hereunder without the prior written consent of Bank. Section 6.8 Headings. The headings, captions, and arrangements used -------- in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. Section 6.9 Expenses of Bank. As provided in the Loan Agreement, ---------------- Borrower agrees to pay on demand all, third party out-of-pocket costs and expenses incurred by Bank in connection with the preparation, negotiation, and execution of this Amendment, the Amendment Documents, or any other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto (including, without limitation, fees and costs of Bank's legal counsel) and all costs and expenses incurred by Bank in connection with the enforcement or preservation of any rights under the Loan Agreement, as amended hereby, or any other Loan Document, including, without limitation, the costs and fees of Bank's legal counsel. Section 6.10 Counterparts. This Amendment may be executed ------------ simultaneously in one or more multiple originals and on telecopy counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. Section 6.11 Waiver of Claims and Defenses. To induce Bank to enter ----------------------------- into this Amendment, Borrower represents and warrants that as of the Amendment Date there are no claims or offsets against or defenses or counterclaims to Borrower's obligations under the Loan Documents or the Lease Agreements, and Borrower waives any and all such claims, offsets, defenses, or counterclaims whether known or unknown, arising prior to the Amendment Date. Additionally, Borrower hereby releases Bank and each of its legal representatives, successors, affiliates, parent, subsidiaries, predecessors, assigns, shareholders, partners, trustees, beneficiaries, administrators, heirs, former and current officers, directors, agents, attorneys, and employees, and its respective successors, assigns, heirs, executors, and administrators (collectively, the "Creditor -------- Parties") from any and all claims, actions, suits, causes of action, accounts, - ------- judgments, agreements, promises, executions, debts, damages, demands, rights, obligations, liabilities, and controversies now in existence concerning or in connection with the Loan Agreement, this Amendment, or any other Loan Document (collectively, the "Claims") of every nature and description, in law or in ------ equity, whether known or unknown, foreseen or unforseen, and regardless of whether Borrower hereafter discovers any facts which may give rise to any Claim. THIS AMENDMENT, TOGETHER WITH THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS WRITTEN, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 7 IN WITNESS WHEREOF, Borrower and Bank have caused this Amendment to be executed and delivered by their duly authorized officers effective as of the date first written above. BORROWER: RF MONOLITHICS, INC. By: _______________________________ Name: _____________________________ Title: ____________________________ BANK: ---- BANK ONE, TEXAS, NATIONAL ASSOCIATION By: _______________________________ Name: _____________________________ Title: ____________________________ CONSENT TO WAIVER AND AMENDMENT: Each of the undersigned hereby consents and agrees to the foregoing agreement and agrees that the Security Agreement to which it is a party, shall remain in full force and effect. BOLC: - ---- BANC ONE LEASING CORPORATION By: ______________________________ Name: ____________________________ Title: ___________________________ SECURED PARTY: - ------------- BANK ONE, TEXAS, NATIONAL ASSOCIATION By: ______________________________ Name: ____________________________ Title: ___________________________ WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 8 EXHIBIT A --------- Exceptions to Representations and Warranties -------------------------------------------- Section 5(a) of the Loan Agreement - Litigation: Borrower's lawsuit filed in the US District Court in Connecticut (Civil action no. 399cv00311) seeking to collect outstanding receivables from Akom Technologies, Inc. as more particularly described in note no. 7 of the "Notes to Condensed Financial Statements" which form a part of the Condensed Financial Information attached to Borrower's Form 10-Q dated February 29, 2000 filed with the United States Securities and Exchange Commission EX-10.32 3 0003.txt PROMISSORY NOTE Exhibit 10.32 PROMISSORY NOTE $6,897,878.91 As of June 30, 2000 FOR VALUE RECEIVED, on or before December 31, 2000 (the "Maturity Date") RF ------------- MONOLITHICS, INC. ("Borrower"), does hereby unconditionally promise to pay to -------- the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Bank"), at its offices in ---- Dallas County, Texas at 1717 Main Street, Dallas, Texas 75201, the principal amount of SIX MILLION EIGHT HUNDRED NINETY-SEVEN THOUSAND EIGHT HUNDRED SEVENTY- EIGHT and 91/100 DOLLARS ($6,897,878.91) ("Total Principal Amount"), in lawful ---------------------- money of the United States of America, together with interest on the Total Principal Amount until paid at the rates per annum provided below. 1. Definitions. For purposes of this promissory note ("Note"), unless the ----------- ---- context otherwise requires, in addition to the other terms defined herein, the following terms shall have the definitions assigned to such terms as follows: "Adjusted LIBOR Rate" shall mean with respect to each Interest Period, on ------------------- any day thereof an amount equal to the sum of (i) four percent (4.0%), plus, (ii) the quotient of (a) the LIBOR Rate with respect to such Interest Period, divided by (b) the remainder of 1.0 less the Reserve Requirement in effect on such day. Each determination by Bank of the Adjusted LIBOR Rate shall, in the absence of manifest error, be conclusive and binding. "Business Day" shall mean any day other than a Saturday, Sunday, or any ------------ other day on which national banking associations are authorized to be closed. "Consequential Loss" shall mean, with respect to Borrower's payment of all ------------------ or any portion of the then-outstanding principal amount of any LIBOR Balance on a day other than the last day of the Interest Period related thereto, any loss, cost or expense incurred by Bank in redepositing such principal amount, including the sum of (i) the interest which, but for such payment, Bank would have earned in respect of such principal amount so paid, for the remainder of the Interest Period applicable to such sum, reduced, if Bank is able to redeposit such principal amount so paid for the balance of such Interest Period, by the interest earned by Bank as a result of so redepositing such principal amount plus (ii) any expense or penalty incurred by Bank on redepositing such ---- principal amount. "Contract Rate" shall mean a rate of interest based upon the Adjusted LIBOR ------------- Rate or Prime Rate in effect at any time. "Dollars" shall mean lawful currency of the United States of America. ------- "Event of Default" shall mean the occurrence of an "Event of Default" as ---------------- defined in the Loan Agreement. PROMISSORY NOTE - Page 1 "Excess Interest Amount" shall mean, on any date, the amount by which (i) ---------------------- the amount of all interest which would have accrued prior to such date on the principal of this Note, had the applicable Contract Rate at all times been in effect without limitation by the Maximum Rate, exceeds (ii) the aggregate amount of interest accrued on this Note on or prior to such date. "Interest Payment Date" shall mean (i) in the case of the Prime Rate --------------------- Balance, on the first day of each month during the term of this Note beginning on March 1, 2000, and on the Maturity Date, and (ii) in the case of any LIBOR Balance, the last day of the corresponding Interest Period with respect to such LIBOR Balance and on the Maturity Date. "Interest Period" shall mean, with respect to any LIBOR Balance, a period --------------- commencing on the date which the principal amount of such LIBOR Balance began to accrue interest at the Adjusted LIBOR Rate and ending one (1) month, two (2) months, or three (3) months thereafter as Borrower previously elected in accordance with a notice to Bank, provided that (A) any Interest Period which would otherwise end on a day which is not a London Business Day shall be extended to the next succeeding London Business Day and (B) any Interest Period which would otherwise end after the Maturity Date shall end on the Maturity Date. "LIBOR Balance" shall mean any principal balance of this Note which bears ------------- interest at a rate based upon the Adjusted LIBOR Rate. "LIBOR Rate" shall mean, with respect to each Interest Period, the offered ---------- rate for U.S. Dollar deposits of not less than $1,000,000.00 for a period of time equal to the Interest Period as of 11:00 a.m. City of London, England time two (2) London Business Days prior to the first date of each Interest Period as shown on the display designated as "British Bankers Association Interest Settlement Rates" on the Telerate System ("Telerate"), Page 3750 or Page 3740, or such other page or pages as may replace such pages on Telerate for the purpose of displaying such rate; provided, however, that if such rate is not available on the Telerate then such offered rate shall be otherwise independently determined by Bank from an alternate, substantially similar independent source available to Lender or shall be calculated by Bank by a substantially similar methodology as that theretofore used to determine such offered rate in Telerate. The LIBOR Rate for the Interest Period to which it relates shall be rounded upward, if necessary, to the nearest one-one hundredth of one percent. "Loan Agreement" shall mean that certain Letter Loan Agreement dated March -------------- 8, 1996 by and between Bank and Borrower as amended by that certain First Amendment to Loan Agreement dated as of December 31, 1997 by and between Borrower and Bank, by that certain Second Amendment to Loan Agreement dated as of July 15, 1999 by and between Borrower and Bank, by that certain Waiver and Third Amendment to Loan Agreement dated as of February 29, 2000 by and among Borrower, Bank, and Banc One Leasing Corporation, by that certain Waiver and Fourth Amendment to Loan Agreement dated concurrently herewith by and between Borrower and Bank, and as such agreement may be further amended, restated, or otherwise modified from time to time. "Loan Documents" shall mean this Note, the Loan Agreement, and all other -------------- documents evidencing, securing, governing, guaranteeing, and/or pertaining to this Note. PROMISSORY NOTE - Page 2 "London Business Day" shall mean any day other than a Saturday, Sunday, or ------------------- a day on which banking institutions are generally authorized or obligated by law or executive order to close in the City of London, England. "Maximum Rate" shall mean, with respect to the holder hereof, the maximum ------------ nonusurious interest rate, if any, that at any time, or from time to time, may be contracted for, taken, reserved, charged, or received on the indebtedness evidenced by this Note under the laws which are presently in effect in the United States and the State of Texas applicable to such holder and such indebtedness or, to the extent permitted by law, under such applicable laws of the United States and the State of Texas which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow. To the extent that Chapter 303 of the Texas Credit Code, as supplemented by the Texas Credit Title, is relevant to any holder of this Note for the purposes of determining the Maximum Rate, each such holder elects to determine such applicable legal rate under the Act pursuant to the "weekly rate ceiling," from time to time in effect, as referred to in said Chapter 303; subject, however, to the limitations on such applicable ceiling referred to and defined in said Chapter 303, and further subject to any right such holder may have subsequently, under applicable law, to change the method of determining the Maximum Rate. If no Maximum Rate is established by applicable law, then the Maximum Rate shall be equal to eighteen percent (18.0%). "Prime Rate" shall mean the rate established from time to time by Bank as ---------- its Prime Rate of interest (which may not be the lowest, best or most favorable rate of interest which Bank may charge on loans to its customers). "Prime Rate Balance" shall mean that portion of the principal balance of ------------------ this Note bearing interest at a rate based upon the Prime Rate. "Regulation D" shall mean Regulation D of the Board of Governors of the ------------ Federal Reserve System from time to time in effect and shall include any successor or other regulation relating to reserve requirements applicable to member banks of the Federal Reserve System. "Reserve Requirement" shall, on any day, mean that percentage (expressed as ------------------- a decimal fraction) which is in effect on such day, as provided by the Board of Governors of the Federal Reserve System (or any successor governmental body) for determining the reserve requirements (including, without limitation, basic, supplemental, marginal, and emergency reserves) under Regulation D with respect to "Eurocurrency liabilities" as currently defined in Regulation D, or under any similar or successor regulation. For purposes of this definition, any LIBOR Balances hereunder shall be deemed "Eurocurrency liabilities" under Regulation D without benefit of or credit for prorations, exemptions, or offsets under Regulation D. Bank's determination of the Reserve Requirement shall be conclusive. 2. Payments of Interest and Principal. Interest on the unpaid principal ---------------------------------- balance of this Note shall be due and payable on each Interest Payment Date as it accrues and the entire unpaid principal balance of this Note, and all accrued but unpaid interest thereon, shall be due and payable on the Maturity Date. PROMISSORY NOTE - Page 3 3. Rates of Interest. The unpaid principal of the Prime Rate Balance ----------------- shall bear interest at a rate per annum which shall from day to day be equal to the lesser of (i) the Prime Rate in effect from day to day, plus two percent (2.0%), or (ii) the Maximum Rate. The unpaid principal of each LIBOR Balance shall bear interest at a rate per annum which shall from day to day be equal to the lesser of (i) the Adjusted LIBOR Rate for the Interest Period in effect with respect to such LIBOR Balance, or (ii) the Maximum Rate. Each change in the interest rate applicable to a Prime Rate Balance shall become effective without prior notice to Borrower automatically as of the opening of business on the date of such change in the Prime Rate. Interest on this Note shall be calculated on the basis of the actual days elapsed in a year consisting of 360 days. 4. Interest Recapture. On each Interest Payment Date or any other date on ------------------ which interest payments are required hereunder, if Bank does not receive interest on this Note computed at the Contract Rate because such Contract Rate exceeds or has exceeded the Maximum Rate, then Borrower shall, upon the written demand of Bank, pay to Bank in addition to the interest otherwise required to be paid hereunder, on each Interest Payment Date thereafter, the Excess Interest Amount (calculated as of such later Interest Payment Date); provided that in no event shall Borrower be required to pay interest at a rate exceeding the Maximum Rate. 5. Interest on Past Due Amounts. To the extent any interest is not paid ---------------------------- on or before the fifth day after it becomes due and payable, Bank may, at its option, add such accrued but unpaid interest to the principal of this Note. Notwithstanding anything herein to the contrary, upon an Event of Default or on the Maturity Date, whether by acceleration or otherwise, all principal of this Note shall, at the option of Bank, bear interest at the Maximum Rate until paid. 6. Interest Option. Effective as of the date of this Note, Borrower shall --------------- not have the option of designating any portion of the unpaid balance of this Note to bear interest at a rate based upon the Adjusted LIBOR Rate. Any amounts outstanding hereunder as of the date of this Note shall upon expiration of the applicable Interest Period be converted to the Prime Rate Balance. 7. Special Provisions For LIBOR Pricing. If the adoption of any ------------------------------------ applicable law, rule, or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by Bank with any request or directive (whether or not having the force of law) of any such authority, central bank, or comparable agency shall make it unlawful or impossible for Bank to maintain a LIBOR Balance, Bank shall so notify Borrower. Upon receipt of such notice, Borrower shall be deemed to have converted any LIBOR Balance to the Prime Rate Balance, on either (i) the last day of the then-current Interest Period applicable to such LIBOR Balance if Bank may lawfully continue to maintain such LIBOR Balance to such day, or (ii) immediately, if Bank may not lawfully continue to maintain such LIBOR Balance to such day. 8. Extension, Place, and Application of Payments. Should the principal --------------------------------------------- of, or any interest on, this Note become due and payable on any day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day, and interest shall be payable with respect to such extension. All payments of principal of, and interest on, this Note shall be made in lawful money of the United States of America in immediately available funds. Payments made to PROMISSORY NOTE - Page 4 Bank by Borrower hereunder shall be applied first to accrued but unpaid interest and then to outstanding principal. Notwithstanding any other provision of this Note, the Loan Agreement or any other Loan Document to the contrary, Borrower may not prepay and reborrow any amount hereunder. 9. [Reserved]. 10. Loan Agreement. This Note is subject to the terms and provisions of -------------- the Loan Agreement, which is incorporated herein by reference for all purposes. The holder of this Note is entitled to the benefits provided in the Loan Agreement. 11. Prepayments; Consequential Loss. Any prepayment made hereunder shall ------------------------------- be made together with all interest accrued but unpaid on this Note through the date of such prepayment. Contemporaneously with each prepayment of principal, Borrower shall give Bank written or oral notice indicating whether such prepayment is to be applied to the Prime Rate Balance or a particular LIBOR Balance. If such notice is not timely received by Bank, Borrower shall be deemed to have selected to prepay the LIBOR Balance as Bank determines in its sole discretion and, if any sums remain after satisfying all of the LIBOR Balance, the remaining sums shall be applied to the Prime Rate Balance. Borrower agrees to indemnify and hold Bank harmless from any loss or liability incurred by Bank in connection with honoring telephonic or other oral notices indicating how a prepayment is to be applied. If Borrower makes any payment of principal with respect to any LIBOR Balance on any day prior to the last day of the Interest Period applicable to such LIBOR Balance, Borrower shall reimburse Bank on demand the Consequential Loss incurred by Bank as a result of the timing of such payment. A certificate of Bank setting forth the basis for the determination of a Consequential Loss shall be delivered to Borrower and shall, in the absence of manifest error, be conclusive and binding as to such determination and amount. 12. Additional Costs. Borrower agrees to pay to Bank all Additional Costs ---------------- within ten (10) days of receipt by Borrower from Bank of a statement setting forth the amount or amounts due and the basis for the determination from time to time of such amount or amounts, which statement shall be conclusive and binding upon Borrower absent manifest error. Failure on the part of Bank to demand compensation for any Additional Costs in any Interest Period shall not constitute a waiver of Bank's right to demand compensation for any Additional Costs incurred during any such Interest Period or in any other subsequent or prior Interest Period. The term "Additional Costs" shall mean such additional ---------------- amount or amounts as Bank shall reasonably determine will compensate Bank for actual costs incurred by Bank in maintaining LIBOR Rates on the LIBOR Balances or any portion thereof as a result of any change, after the date of this Note, in applicable law, rule or regulation or in the interpretation or administration thereof by, or the compliance by Bank with any request or directive from, any domestic or foreign governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) or by any domestic or foreign court changing the basis of taxation of payments to Bank of the LIBOR Balances or interest on the LIBOR Balances or any portion thereof at an Adjusted LIBOR Rate or any other fees or amounts payable under this Note or the Loan Agreement (other than taxes imposed on all or any portion of the overall net income of Bank by the State of Texas or the Federal government), or imposing, modifying, or applying any reserve, special deposit, or similar requirement against assets of, deposits with or for the account of, credit extended by, or any other acquisition of funds for loans by Bank, or imposing PROMISSORY NOTE - Page 5 on Bank, as the case may be, or on the London interbank market any other condition affecting this Note, the Loan Agreement, or the LIBOR Balances so as to increase the cost of Bank making or maintaining Adjustable LIBOR Rates with respect to the LIBOR Balances or any portion thereof or to reduce the amount of any sum received or receivable by Bank under this Note or the Loan Agreement (whether of principal, interest, or otherwise), by an amount deemed by Bank in good faith to be material, but without duplication for any Reserve Requirement. 13. Notices. Except as otherwise specified herein, all notices and ------- requests required or permitted hereunder shall be given in accordance with paragraph 16 of the Loan Agreement. 14. Legal Fees. If this Note is placed in the hands of any attorney for ---------- collection, or if it is collected through any legal proceeding at law or in equity or in bankruptcy, receivership, or other court proceedings, Borrower agrees to pay all costs of collection including, but not limited to, court costs and reasonable attorneys' fees. 15. Waivers. Borrower and each surety, endorser, guarantor, and any other ------- party ever liable for payment of any sums of money payable on this Note, jointly and severally waive presentment and demand for payment, protest, notice of protest, intention to accelerate, acceleration and non-payment, or other notice of default, and agree that their liability under this Note shall not be affected by any renewal or extension in the time of payment hereof, or in any indulgences, or by any release or change in any security for the payment of this Note, and hereby consent to any and all renewals, extensions, indulgences, releases, or changes, regardless of the number of such renewals, extensions, indulgences, releases, or changes; provided, however, this Note may not be amended or modified except by a written instrument signed by the Borrower and the holder hereof. No waiver by Bank of any of its rights or remedies hereunder or under any other document evidencing or securing this Note or otherwise shall be considered a waiver of any other subsequent right or remedy of Bank; no delay or omission in the exercise or enforcement by Bank of any rights or remedies shall ever be construed as a waiver of any right or remedy of Bank; and no exercise or enforcement of any such rights or remedies shall ever be held to exhaust any right or remedy of Bank. 16. Remedies. Upon the occurrence of any Event of Default, the holder -------- hereof may, at its option, (i) declare the entire unpaid balance of principal and accrued but unpaid interest on this Note to be immediately due and payable, (ii) foreclose all liens securing payment hereof, (iii) pursue any and all other rights, remedies, and recourses available to the holder hereof, including but not limited to, any such rights, remedies, or recourses under the Loan Documents, at law or in equity, or (iv) pursue any combination of the foregoing. 17. Spreading. Any provision herein, or in any document securing this --------- Note, or any other document executed or delivered in connection herewith, or in any other agreement or commitment, whether written or oral, expressed or implied, to the contrary notwithstanding, neither Bank nor any holder hereof shall in any event be entitled to receive or collect, nor shall or may amounts received hereunder be credited, so that Bank or any holder hereof shall be paid, as interest, a sum greater than the maximum amount permitted by applicable law to be charged to the person, partnership, firm or corporation primarily obligated to pay this Note at the time in question. If any construction of this Note or any document securing this Note, or any and all other papers, agreements or commitments, PROMISSORY NOTE - Page 6 indicate a different right given to Bank or any holder hereof to ask for, demand or receive any larger sum as interest, such is a mistake in calculation or wording which this clause shall override and control, it being the intention of the parties that this Note, and all other instruments securing the payment of this Note or executed or delivered in connection herewith shall in all things comply with the applicable law and proper adjustments shall automatically be made accordingly. In the event that Bank or any holder hereof ever receives, collects or applies as interest any sum in excess of the Maximum Rate, if any, such excess amount shall be applied to the reduction of the unpaid principal balance of this Note, and if this Note is paid in full, any remaining excess shall be paid to Borrower. In determining whether or not the interest paid or payable, under any specific contingency, exceeds the Maximum Rate, if any, Borrower and Bank or any holder hereof shall, to the maximum extent permitted under applicable law: (a) characterize any nonprincipal payment as an expense or fee rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) "spread" the total amount of interest throughout the entire term of this Note; provided that if this Note is paid and performed in full prior to the end of the full contemplated term hereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, if any, Bank or any holder hereof shall refund to Borrower the amount of such excess, or credit the amount of such excess against the aggregate unpaid principal balance of all advances made by the Bank or any holder hereof under this Note at the time in question. 18. Choice of Law. This Note is being executed and delivered, and is ------------- intended to be performed in the State of Texas. Except to the extent that the laws of the United States may apply to the terms hereof, the substantive laws of the State of Texas shall govern the validity, construction, enforcement and interpretation of this Note. In the event of a dispute involving this Note or any other instruments executed in connection herewith, the undersigned irrevocably agrees that venue for such dispute shall lie in any court of competent jurisdiction in Dallas County, Texas. 19. Renewal. This Note renews amounts unpaid as of this date under, and ------- modifies the terms of, that certain Promissory Note dated February 29, 2000 in the stated principal amount of $7,500,000.00 executed by Borrower and payable to the order of Bank. 20. Entire Agreement. THIS NOTE (TOGETHER WITH THE OTHER LOAN DOCUMENTS) ---------------- CONTAINS THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. RF MONOLITHICS, INC. By: _________________________ Name: _______________________ Title:_______________________ PROMISSORY NOTE - Page 7 EX-10.33 4 0004.txt WAIVER AND SECOND AMEND. TO MASTER LEASE AGR. Exhibit 10.33 WAIVER AND SECOND AMENDMENT TO MASTER LEASE AGREEMENT RF Monolithics, Inc. Dated as of June 30, 2000 Sigma Road Dallas, Texas 75244 Re: Master Lease Agreement dated as of November 3, 1995 (as amended, the "Master Lease") between RF Monolithics, Inc. ("Lessee") and Banc One Leasing Corporation ("Lessor") Ladies and Gentlemen: Lessee has informed Lessor that each of the following events have occurred: (a) Lessee has failed to repay by April 30, 2000 the outstanding balance of Lessee's lease line of credit outstanding with Lessor as required by Section ------- 4.3(b) of that certain Waiver and First Amendment to Master Lease Agreement, - ------ dated as of February 29, 2000 (the "Amendment Default"); (b) Lessee has failed to comply with Section 18(e) of the Master Lease as of May 31, 2000 (the "EBITDA ------------- Default"), and (c) certain "Events of Default" have occurred under that certain Letter Loan Agreement between Lessee and Bank One, Texas, National Association (the "Loan Default"). The occurrence of the Amendment Default, the EBITDA Default, and the Loan Default each constitutes an event of default under paragraph 14(d) of the Master Lease (such events of default being referred to - --------------- collectively herein as the "Events of Default"). Lessee has requested that Lessor waive the Events of Default as of May 31, 2000. This Waiver and Second Amendment to Master Lease Agreement ("Amendment") ----------- confirms that Lessee hereby waives the Events of Default; provided that this -------- waiver is expressly limited as provided herein and all other requirements of the Master Lease, including, without limitation, the provisions of paragraph 14(d), --------------- shall remain in full force and effect. The waiver contained in this Amendment shall be limited strictly as written and shall not be deemed to constitute a waiver of, or any consent to noncompliance with, any term or provision of the Master Lease except as expressly set forth herein. Further, the waiver contained herein shall not constitute a waiver of any future default or event of default that may occur under the Master Lease. No delay or omission by Lessor in exercising any power, right, or remedy shall impair such power, right, or remedy or be construed as a waiver thereof or an acquiescence therein, and no single or partial exercise of any such power, right, or remedy shall preclude other or further exercise thereof or the exercise of any other power, right, or remedy under the Master Lease or otherwise. Lessee and Lessor hereby agree that paragraph 2 of the Covenant Addendum to ----------- Master Lease Agreement is hereby amended by adding the following sentence immediately following the last sentence thereof which shall read in its entirety as follows: Notwithstanding any other provision of this Lease to the contrary, Lessee shall certify its compliance with each of the covenants set forth above for the period ending August 31, 2000 by reference to the quarterly financial statements of Lessee prepared for such period end, such certification to be received by Lessor not later than October 15, 2000. To induce Lessor to provide the waiver and amendment contained herein, Lessee represents and warrants that as of the date of this Amendment, there are no claims or offsets against or defenses or counterclaims to Lessee's obligations under the Master Lease, and Lessee waives any and all such claims, offsets, defenses, or counterclaims whether known or unknown, arising prior to the date hereof. Additionally, Lessee hereby releases Lessor and each of its legal representatives, successors, affiliates, parent, subsidiaries, predecessors, assigns, shareholders, partners, trustees, beneficiaries, administrators, heirs, former and current officers, directors, agents, attorneys, and employees, and its respective successors, assigns, heirs, executors, and administrators (collectively, the "Lessor Parties") from any and -------------- all claims, actions, suits, causes of action, accounts, judgments, agreements, promises, executions, debts, damages, demands, rights, obligations, liabilities, and controversies now in existence concerning or in connection with the Master Lease or any other agreement or document executed or delivered in connection therewith (collectively, the "Claims") of every nature and description, in law ------ or in equity, whether known or unknown, foreseen or unforseen, and regardless of whether Lessee hereafter discovers any facts which may give rise to any Claim. BANC ONE LEASING CORPORATION By: _________________________ Name: _______________________ Title:_______________________ ACKNOWLEDGED AND ACCEPTED: - ------------------------- RF MONOLITHICS, INC. By:______________________________ James Farley Vice President and Controller EX-10.34 5 0005.txt PLEDGE AGREEMENT Exhibit 10.34 PLEDGE AGREEMENT ---------------- THIS PLEDGE AGREEMENT ("Agreement") is made effective as of the 29th day of --------- February, 2000, by RF MONOLITHICS, INC. (hereinafter called "Pledgor"), in favor ------- of BANK ONE, TEXAS, NATIONAL ASSOCIATION, acting in its capacity as agent for itself and Banc One Leasing Corporation ("Secured Party"). Pledgor hereby agrees ------------- with Secured Party as follows: 1. Definitions. As used in this Agreement, the following terms shall ----------- have the meanings indicated below: (a) The term "Additional Property" shall mean as specified in ------------------- paragraph 3 of this Agreement. (a) The term "Bank" shall mean Bank One, Texas, National Association, ---- acting in its individual capacity, its successors and assigns, including, without limitation, any party to whom Bank, or its successors and assigns may assign its rights and interests under this Agreement or the Loan Documents. (b) The term "BOLC" shall mean Banc One Leasing Corporation and its ---- successors and assigns. (c) The term "Code" shall mean the Uniform Commercial Code as in ---- effect in the State of Texas on the date of this Agreement or as it may hereafter be amended from time to time. (d) The term "Collateral" shall mean all property specifically ---------- described on Schedule A attached hereto and made a part hereof. The term ---------- Collateral, as used herein, shall also include (i) all certificates, instruments, and/or other documents evidencing the foregoing, (ii) all renewals, replacements, and substitutions of all of the foregoing, (iii) all Additional Property, and (iv) all PRODUCTS and PROCEEDS of all of the foregoing. The designation of proceeds does not authorize Pledgor to sell, transfer, or otherwise convey any of the foregoing property. The delivery at any time by Pledgor to Secured Party of any property as a pledge to secure payment or performance of any indebtedness or obligation whatsoever shall also constitute a pledge of such property as Collateral hereunder. (e) The term "Creditor" shall mean each of Bank and BOLC, and their -------- respective successors and assigns, and "Creditors" means all of such --------- entities, collectively. (f) The term "Event of Default" shall mean as specified in paragraph ---------------- --------- 10 of this Agreement. -- (f) The term "Indebtedness" shall mean (i) all indebtedness, ------------ obligations, and liabilities of Pledgor to the Creditors (including, without limitation, all indebtedness, liabilities, and obligations of Pledgor to Bank pursuant to the Loan Documents and of PLEDGE AGREEMENT - Page 1 Pledgor to BOLC pursuant to the Master Lease) of any kind or character, now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, and regardless of whether such indebtedness, liabilities, and obligations may, prior to their acquisition by the Creditors, be or have been payable to or in favor of a third party and subsequently acquired by the Creditors (it being contemplated that the Creditors may make such acquisitions from third parties), including, without limitation, all indebtedness, liabilities, and obligations of Pledgor to any Creditor now existing or hereafter arising by note, draft, acceptance, guaranty, endorsement, letter of credit, assignment, purchase, overdraft, discount, indemnity agreement or otherwise, (ii) all accrued but unpaid interest on any of the indebtedness, liabilities, and obligations described in clause (i) preceding, (iii) all indebtedness, liabilities, and ---------- obligations described in clauses (i) and (ii) preceding, (iv) all costs and ----------- ---- expenses incurred by Secured Party in connection with the collection and administration of all or any part of the indebtedness, liabilities, and obligations described in clauses (i), (ii), and (iii) preceding or the ----------- ---- ----- protection or preservation of, or realization upon, the collateral securing all or any part of such indebtedness, liabilities, and obligations, including, without limitation, all reasonable attorneys' fees, and (v) all renewals, extensions, modifications, and rearrangements of the indebtedness, liabilities, and obligations described in clauses (i), (ii), ----------- ---- (iii), and (iv) preceding. ----- ---- (g) The term "Loan Documents" shall mean the certain Letter Loan -------------- Agreement dated as of March 8, 1996, as such agreement may be amended, restated, or otherwise modified, between Pledgor and Bank (the "Loan ---- Agreement") and all instruments and documents evidencing, securing, --------- governing, guaranteeing and/or pertaining to the Indebtedness. (h) The Term "Master Lease" shall mean that certain Master Lease ------------ Agreement, dated as of November 3, 1995, between Pledgor, as "Lessee," and BOLC, as "Lessor," including, without limitation, all "Schedules" (as defined therein) and amendments thereto, as such agreement may be amended, restated, or otherwise modified from time to time. (i) The term "Obligated Party" shall mean any party other than --------------- Pledgor who secures, guarantees, and/or is otherwise obligated to pay all or any portion of the Indebtedness. All words and phrases used herein which are expressly defined in Section 1.201 or in Chapter 8 or Chapter 9 of the Code shall have the meaning provided for therein. Other words and phrases defined elsewhere in the Code shall have the meaning specified therein except to the extent such meaning is inconsistent with a definition in Section 1.201 or in Chapter 8 or Chapter 9 of the Code. 2. Security Interest. As security for the Indebtedness, Pledgor, for ----------------- value received, hereby grants to Secured Party, for the benefit of the Creditors, a continuing security interest in the Collateral. 3. Additional Property. Collateral shall also include the following ------------------- property (collectively, the "Additional Property") which Pledgor becomes entitled to receive or shall receive in connection PLEDGE AGREEMENT - Page 2 with any other Collateral: (a) any stock certificate, including, without limitation, any certificate representing a stock dividend or any certificate in connection with any recapitalization, reclassification, merger, consolidation, conversion, sale of assets, combination of shares, stock split, or spin-off; (b) any option, warrant, subscription, or right, whether as an addition to or in substitution of any other Collateral; (c) any dividends or distributions of any kind whatsoever, whether distributable in cash, stock, or other property; (d) any interest, premium, or principal payments; and (e) any conversion or redemption proceeds; provided, however, that until the occurrence of an Event of Default, Pledgor shall be entitled to all cash dividends and all interest paid on the Collateral (except interest paid on any certificate of deposit pledged hereunder) free of the security interest created under this Agreement. All Additional Property received by Pledgor shall be received in trust for the benefit of Secured Party. All Additional Property and all certificates or other written instruments or documents evidencing and/or representing the Additional Property that is received by Pledgor, together with such instruments of transfer as Secured Party may request, shall immediately be delivered to or deposited with Secured Party and held by Secured Party as Collateral under the terms of this Agreement. If the Additional Property received by Pledgor shall be shares of stock or other securities, such shares of stock or other securities shall be duly endorsed in blank or accompanied by proper instruments of transfer and assignment duly executed in blank with, if requested by Secured Party, signatures guaranteed by a member or member organization in good standing of an authorized Securities Transfer Agents Medallion Program, all in form and substance satisfactory to Secured Party. Secured Party shall be deemed to have possession of any Collateral in transit to Secured Party or its agent. 4. Voting Rights. As long as no Event of Default shall have occurred ------------- hereunder, any voting rights incident to any stock or other securities pledged as Collateral may be exercised by Pledgor; provided, however, that Pledgor will not exercise, or cause to be exercised, any such voting rights, without the prior written consent of Secured Party, if the direct or indirect effect of such vote will result in an Event of Default hereunder. 5. Maintenance of Collateral. Other than the exercise of reasonable care ------------------------- to assure the safe custody of any Collateral in Secured Party's possession from time to time, Secured Party does not have any obligation, duty, or responsibility with respect to the Collateral. Without limiting the generality of the foregoing, Secured Party shall not have any obligation, duty or responsibility to do any of the following: (a) ascertain any maturities, calls, conversions, exchanges, offers, tenders, or similar matters relating to the Collateral or informing Pledgor with respect to any such matters; (b) fix, preserve, or exercise any right, privilege, or option (whether conversion, redemption, or otherwise) with respect to the Collateral unless (i) Pledgor makes written demand to Secured Party to do so, (ii) such written demand is received by Secured Party in sufficient time to permit Secured Party to take the action demanded in the ordinary course of its business, and (iii) Pledgor provides additional collateral, acceptable to Secured Party in its sole discretion; (c) collect any amounts payable in respect of the Collateral (Secured Party being liable to account to Pledgor only for what Secured Party may actually receive or collect thereon); (d) sell all or any portion of the Collateral to avoid market loss; (e) sell all or any portion of the Collateral unless and until (i) Pledgor makes written demand upon Secured Party to sell the Collateral, and (ii) Pledgor provides additional collateral, acceptable to Secured Party in its sole discretion; or (f) hold the Collateral for or on behalf of any party other than Pledgor. PLEDGE AGREEMENT - Page 3 6. Representations and Warranties. Pledgor hereby represents and warrants ------------------------------ the following to Secured Party: (a) Due Authorization. The execution, delivery, and performance of ----------------- this Agreement and all of the other Loan Documents and the Master Lease by Pledgor have been duly authorized by all necessary corporate action of Pledgor. (b) Enforceability. This Agreement and the other Loan Documents -------------- constitute legal, valid, and binding obligations of Pledgor, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency, or similar laws of general application relating to the enforcement of creditors' rights and except to the extent specific remedies may generally be limited by equitable principles. (c) Ownership and Liens. Pledgor has good and marketable title to the ------------------- Collateral free and clear of all liens, security interests, encumbrances, or adverse claims, except for the security interest created by this Agreement. No dispute, right of set-off, counterclaim, or defense exists with respect to all or any part of the Collateral. Pledgor has not executed any other security agreement currently affecting the Collateral and no financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording office except as may have been executed or filed in favor of Secured Party. (d) No Conflicts or Consents. Neither the ownership, the intended use ------------------------ of the Collateral by Pledgor, the grant of the security interest by Pledgor to Secured Party herein, nor the exercise by Secured Party of its rights or remedies hereunder, will (i) conflict with any provision of (A) any domestic or foreign law, statute, rule, or regulation, (B) the articles of incorporation or bylaws of Pledgor, or (C) any agreement, judgment, license, order, or permit applicable to or binding upon Pledgor or otherwise affecting the Collateral, or (ii) result in or require the creation of any lien, charge, or encumbrance upon any assets or properties of Pledgor or of any person except as may be expressly contemplated in the Loan Documents and the Master Lease. Except as expressly contemplated in the Loan Documents and the Master Lease, no consent, approval, authorization, or order of, and no notice to or filing with, any court, governmental authority, or third party is required in connection with the grant by Pledgor of the security interest herein or the exercise by Secured Party of its rights and remedies hereunder. (e) Security Interest. Pledgor has and will have at all times full ----------------- right, power, and authority to grant a security interest in the Collateral to Secured Party in the manner provided herein, free and clear of any lien, security interest, or other charge or encumbrance. This Agreement creates a legal, valid, and binding security interest in favor of Secured Party in the Collateral. (f) Location. Pledgor's chief executive office and the office where -------- the records concerning the Collateral are kept is located at its address set forth on the signature page hereof. PLEDGE AGREEMENT - Page 4 (g) Solvency of Pledgor. As of the date hereof, and after giving ------------------- effect to this Agreement and the completion of all other transactions contemplated by Pledgor at the time of the execution of this Agreement, (i) Pledgor is and will be solvent, (ii) the fair saleable value of Pledgor's assets exceeds and will continue to exceed Pledgor's liabilities (both fixed and contingent), (iii) Pledgor is paying and will continue to be able to pay its debts as they mature, and (iv) Pledgor has and will have sufficient capital to carry on Pledgor's businesses and all businesses in which Pledgor is about to engage. (h) Securities. Any certificates evidencing securities pledged as ---------- Collateral are valid and genuine and have not been altered. All securities pledged as Collateral have been duly authorized and validly issued, are fully paid and non-assessable, and were not issued in violation of the preemptive rights of any party or of any agreement by which Pledgor or the issuer thereof is bound. No restrictions or conditions exist with respect to the transfer or voting of any securities pledged as Collateral, except as has been disclosed to Secured Party in writing. To the best of Pledgor's knowledge, no issuer of such securities (other than securities of a class which are publicly traded) has any outstanding stock rights, rights to subscribe, options, warrants, or convertible securities outstanding or any other rights outstanding entitling any party to have issued to such party capital stock of such issuer, except as has been disclosed to Secured Party in writing. 7. Affirmative Covenants. Pledgor will comply with the covenants --------------------- contained in this paragraph 7 at all times during the period of time this ----------- Agreement is effective unless Secured Party shall otherwise consent in writing. (a) Ownership and Liens. Pledgor will maintain good and marketable ------------------- title to all Collateral free and clear of all liens, security interests, encumbrances, or adverse claims, except for the security interest created by this Agreement and the security interests and other encumbrances expressly permitted by the other Loan Documents and the Master Lease. Pledgor will not permit any dispute, right of set-off, counterclaim, or defense to exist with respect to all or any part of the Collateral. Pledgor will cause any financing statement or other security instrument with respect to the Collateral to be terminated, except as may exist or as may have been filed in favor of Secured Party. Pledgor will defend at its expense Secured Party's right, title, and security interest in and to the Collateral against the claims of any third party. (b) Inspection of Books and Records. Pledgor will keep adequate ------------------------------- records concerning the Collateral and will permit Secured Party and all representatives and agents appointed by Secured Party to inspect Pledgor's books and records of or relating to the Collateral at any time during normal business hours, to make and take away photocopies, photographs and printouts thereof and to write down and record any such information. (c) Adverse Claim. Pledgor covenants and agrees to promptly notify ------------- Secured Party of any claim, action, or proceeding affecting title to the Collateral, or any part thereof, or the security interest created hereunder and, at Pledgor's expense, defend Secured Party's security interest in the Collateral against the claims of any third party. Pledgor also PLEDGE AGREEMENT - Page 5 covenants and agrees to promptly deliver to Secured Party a copy of all written notices received by Pledgor with respect to the Collateral, including, without limitation, notices received from the issuer of any securities pledged hereunder as Collateral. (d) Delivery of Instruments and/or Certificates. Contemporaneously ------------------------------------------- herewith, Pledgor covenants and agrees to deliver to Secured Party any certificates, documents, or instruments representing or evidencing the Collateral, with Pledgor's endorsement thereon and/or accompanied by proper instruments of transfer and assignment duly executed in blank with, if requested by Secured Party, signatures guaranteed by a member or member organization in good standing of an authorized Securities Transfer Agents Medallion Program, all in form and substance satisfactory to Secured Party. (e) Further Assurances. Pledgor will contemporaneously with the ------------------ execution hereof and from time to time thereafter at its expense promptly execute and deliver all further instruments and documents and take all further action necessary or appropriate or that Secured Party may request in order (i) to perfect and protect the security interest created or purported to be created hereby and the first priority of such security interest, (ii) to enable Secured Party to exercise and enforce its rights and remedies hereunder in respect of the Collateral, and (iii) to otherwise effect the purposes of this Agreement, including, without limitation: (A) executing and filing any financing or continuation statements, or any amendments thereto; (B) obtaining written confirmation from the issuer of any securities pledged as Collateral of the pledge of such securities, in form and substance satisfactory to Secured Party; (C) cooperating with Secured Party in registering the pledge of any securities pledged as Collateral with the issuer of such securities; (D) delivering notice of Secured Party's security interest in any securities pledged as Collateral to any securities or financial intermediary, clearing corporation, or other party required by Secured Party, in form and substance satisfactory to Secured Party; and (E) obtaining written confirmation of the pledge of any securities constituting Collateral from any securities or financial intermediary, clearing corporation, or other party required by Secured Party, in form and substance satisfactory to Secured Party. If all or any part of the Collateral is securities issued by an agency or department of the United States, Pledgor covenants and agrees, at Secured Party's request, to cooperate in registering such securities in Secured Party's name or with Secured Party's account maintained with a Federal Reserve Bank. When applicable law provides more than one method of perfection of Secured Party's security interest in the Collateral, Secured Party may choose the method(s) to be used. 8. Negative Covenants. Pledgor will comply with the covenants contained ------------------ in this Section at all times during the period of time this Agreement is effective, unless Secured Party shall otherwise consent in writing. (a) Transfer or Encumbrance. Pledgor will not (i) sell, assign (by ----------------------- operation of law or otherwise), or transfer Pledgor's rights in any of the Collateral, (ii) grant a lien or security interest in or execute, file, or record any financing statement or other security instrument with respect to the Collateral to any party other than Secured Party, or (iii) deliver PLEDGE AGREEMENT - Page 6 actual or constructive possession of any certificate, instrument, or document evidencing and/or representing any of the Collateral to any party other than Secured Party. (b) Impairment of Security Interest. Pledgor will not take or fail to ------------------------------- take any action which would in any manner impair the value or enforceability of Secured Party's security interest in any Collateral. (c) Dilution of Ownership. As to any securities pledged as Collateral --------------------- (other than securities of a class which are publicly traded), Pledgor will not consent to or approve of the issuance of (i) any additional shares of any class of securities of such issuer (unless immediately upon issuance additional securities are pledged and delivered to Secured Party pursuant to the terms hereof to the extent necessary to give Secured Party a security interest after such issuance in at least the same percentage of such issuer's outstanding securities as Secured Party had before such issuance), (ii) any instrument convertible voluntarily by the holder thereof or automatically upon the occurrence or non-occurrence of any event or condition into, or exchangeable for, any such securities, or (iii) any warrants, options, contracts, or other commitments entitling any third party to purchase or otherwise acquire any such securities. (d) Restrictions on Securities. Pledgor will not enter into any -------------------------- agreement creating, or otherwise permit to exist, any restriction or condition upon the transfer, voting, or control of any securities pledged as Collateral, except as consented to in writing by Secured Party. 9. Rights of Secured Party. Secured Party shall have the rights contained ----------------------- in this paragraph 9 at all times during the period of time this Agreement is ----------- effective. (a) Power of Attorney. Pledgor hereby irrevocably appoints Secured ----------------- Party as Pledgor's attorney-in-fact, such power of attorney being coupled with an interest, with full authority in the place and stead of Pledgor and in the name of Pledgor or otherwise, to take any action and to execute any instrument which Secured Party may from time to time in Secured Party's discretion deem necessary or appropriate to accomplish the purposes of this Agreement, including, without limitation, the following action: (i) transfer any securities, instruments, documents, or certificates pledged as Collateral in the name of Secured Party or its nominee; (ii) use any interest, premium, or principal payments, conversion or redemption proceeds or other cash proceeds received in connection with any Collateral to reduce any of the Indebtedness; (iii) exchange any of the securities pledged as Collateral for any other property upon any merger, consolidation, reorganization, recapitalization or other readjustment of the issuer thereof, and, in connection therewith, to deposit and deliver any and all of such securities with any committee, depository, transfer agent, registrar, or other designated agent upon such terms and conditions as Secured Party may deem necessary or appropriate; (iv) exercise or comply with any conversion, exchange, redemption, subscription, or any other right, privilege, or option pertaining to any securities pledged as Collateral; provided, however, except as provided herein, Secured Party -------- ------- shall not have a duty to exercise or comply with any such right, privilege, or option (whether conversion, redemption, or otherwise) and shall not be responsible for any delay or failure to do so; and PLEDGE AGREEMENT - Page 7 (v) file any claims or take any action or institute any proceedings which Secured Party may deem necessary or appropriate for the collection and/or preservation of the Collateral or otherwise to enforce the rights of Secured Party with respect to the Collateral. (b) Performance by Secured Party. If Pledgor fails to perform any ---------------------------- agreement or obligation provided herein, Secured Party may itself perform, or cause performance of, such agreement or obligation, and the expenses of Secured Party incurred in connection therewith shall be a part of the Indebtedness, secured by the Collateral and payable by Pledgor on demand. Notwithstanding any other provision herein to the contrary, Secured Party does not have any duty to exercise or continue to exercise any of the foregoing rights and shall not be responsible for any failure to do so or for any delay in doing so. 10. Events of Default. Each of the following constitutes an "Event of ----------------- Default" under this Agreement: (a) Failure to Pay Indebtedness. The failure of Pledgor to make any --------------------------- payment of principal or interest on the Indebtedness, or any portion thereof, as the same shall become due and payable and the continuation of such failure for a period of five (5) days; (b) Non-Performance of Covenants. The failure of Pledgor or any ---------------------------- Obligated Party to timely and properly observe, keep, or perform any covenant, agreement, warranty, or condition required herein, in any of the other Loan Documents, or in the Master Lease; (c) Default Under Loan Documents and Master Lease. The occurrence of --------------------------------------------- an event of default under any of the other Loan Documents or the Master Lease; (d) False Representation. Any representation contained herein, in any -------------------- of the other Loan Documents, or in the Master Lease made by Pledgor or any Obligated Party is false or misleading in any material respect; (e) Default to Third Party. The occurrence of any event which permits ---------------------- the acceleration of the maturity of any indebtedness owing by Pledgor or any Obligated Party to any third party under any agreement or undertaking; (f) Bankruptcy or Insolvency. If Pledgor or any Obligated Party: (i) ------------------------ becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts as they become due; (ii) generally is not paying its debts as such debts become due; (iii) has a receiver, trustee, or custodian appointed for, or take possession of, all or substantially all of the assets of such party or any of the Collateral, either in a proceeding brought by such party or in a proceeding brought against such party and such appointment is not discharged or such possession is not terminated within sixty (60) days after the effective date thereof or such party consents to or acquiesces in such appointment or possession; (iv) files a petition for relief under the United PLEDGE AGREEMENT - Page 8 States Bankruptcy Code or any other present or future federal or state insolvency, bankruptcy, or similar laws (all of the foregoing hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary petition ------------------------- for relief is filed against such party under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within sixty (60) days after the filing thereof, or an order for relief naming such party is entered under any Applicable Bankruptcy Law, or any composition, rearrangement, extension, reorganization, or other relief of debtors now or hereafter existing is requested or consented to by such party; (v) fails to have discharged within a period of sixty (60) days any attachment, sequestration, or similar writ levied upon any property of such party; or (vi) fails to pay within thirty (30) days any final money judgment against such party; (g) Execution on Collateral. The Collateral or any portion thereof is ----------------------- taken on execution or other process of law in any action against Pledgor; (h) Abandonment. Pledgor abandons the Collateral or any portion ----------- thereof; (i) Action by Other Lienholder. The holder of any lien or security -------------------------- interest on any of the assets of Pledgor, including, without limitation, the Collateral (without hereby implying the consent of Secured Party to the existence or creation of any such lien or security interest on the Collateral), declares a default thereunder or institutes foreclosure or other proceedings for the enforcement of its remedies thereunder; (j) Liquidation, Death and Related Events. The liquidation, ------------------------------------- dissolution, merger, or consolidation of Pledgor or any Obligated Party (if an entity) or the death or legal incapacity of any individual (if any Obligated Party is an individual); (k) Bankruptcy of Issuer. (i) The issuer of any securities -------------------- constituting Collateral files a petition for relief under any Applicable Bankruptcy Law, (ii) an involuntary petition for relief is filed against any such issuer under any Applicable Bankruptcy Law and such involuntary petition is not dismissed within thirty (30) days after the filing thereof, or (iii) an order for relief naming any such issuer is entered under any Applicable Bankruptcy Law. 11. Remedies and Related Rights. If an Event of Default shall have --------------------------- occurred, and without limiting any other rights and remedies provided herein, under any of the other Loan Documents or otherwise available to Secured Party, Secured Party may exercise one or more of the rights and remedies provided in this paragraph 11. (a) Remedies. Secured Party may from time to time at its discretion, -------- without limitation and without notice except as expressly provided in any of the Loan Documents: (i) exercise in respect of the Collateral all the rights and remedies of a secured party under the Code (whether or not the Code applies to the affected Collateral); PLEDGE AGREEMENT - Page 9 (ii) reduce its claim to judgment or foreclose or otherwise enforce, in whole or in part, the security interest granted hereunder by any available judicial procedure; (iii) sell or otherwise dispose of, at its office, on the premises of Pledgor or elsewhere, the Collateral, as a unit or in parcels, by public or private proceedings, and by way of one or more contracts (it being agreed that the sale or other disposition of any part of the Collateral shall not exhaust Secured Party's power of sale, but sales or other dispositions may be made from time to time until all of the Collateral has been sold or disposed of or until the Indebtedness has been paid and performed in full), and at any such sale or other disposition it shall not be necessary to exhibit any of the Collateral; (iv) buy the Collateral, or any portion thereof, at any public sale; (v) buy the Collateral, or any portion thereof, at any private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations; (vi) apply for the appointment of a receiver for the Collateral, and Pledgor hereby consents to any such appointment; and (vii) at its option, retain the Collateral in satisfaction of the Indebtedness whenever the circumstances are such that Secured Party is entitled to do so under the Code or otherwise. Pledgor agrees that in the event Pledgor is entitled to receive any notice under the Uniform Commercial Code, as it exists in the state governing any such notice, of the sale or other disposition of any Collateral, reasonable notice shall be deemed given when such notice is deposited in a depository receptacle under the care and custody of the United States Postal Service, postage prepaid, at Pledgor's address set forth on the signature page hereof, five (5) days prior to the date of any public sale, or after which a private sale, of any of such Collateral is to be held. Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Pledgor further acknowledges and agrees that the redemption by Secured Party of any certificate of deposit pledged as Collateral shall be deemed to be a commercially reasonable disposition under Section 9.504(c) of the Code. (b) Private Sale of Securities. Pledgor recognizes that Secured Party -------------------------- may be unable to effect a public sale of all or any part of the securities pledged as Collateral because of restrictions in applicable federal and state securities laws and that Secured Party may, therefore, determine to make one or more private sales of any such securities to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such PLEDGE AGREEMENT - Page 10 securities for their own account, for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges that each any such private sale may be at prices and other terms less favorable then what might have been obtained at a public sale and, notwithstanding the foregoing, agrees that each such private sale shall be deemed to have been made in a commercially reasonable manner and that Secured Party shall have no obligation to delay the sale of any such securities for the period of time necessary to permit the issuer to register such securities for public sale under any federal or state securities laws. Pledgor further acknowledges and agrees that any offer to sell such securities which has been made privately in the manner described above to not less than five (5) bona fide offerees shall be deemed to involve a "public sale" for the purposes of Section 9.504(c) of the Code, notwithstanding that such sale may not constitute a "public offering" under any federal or state securities laws and that Secured Party may, in such event, bid for the purchase of such securities. (c) Application of Proceeds. If any Event of Default shall have ----------------------- occurred, Secured Party may at its discretion apply or use any cash held by Secured Party as Collateral, and any cash proceeds received by Secured Party in respect of any sale or other disposition of, collection from, or other realization upon, all or any part of the Collateral as follows in such order and manner as Secured Party may elect: (i) to the repayment or reimbursement of the reasonable costs and expenses (including, without limitation, reasonable attorneys' fees and expenses) incurred by Secured Party in connection with (A) the administration of the Loan Documents and the Master Lease, (B) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, the Collateral, and (C) the exercise or enforcement of any of the rights and remedies of Secured Party hereunder; (ii) to the payment or other satisfaction of any liens and other encumbrances upon the Collateral; (iii) to the satisfaction of the Indebtedness; (iv) by holding such cash and proceeds as Collateral; (v) to the payment of any other amounts required by applicable law (including, without limitation, Section 9.504(a)(3) of the Code or any other applicable statutory provision); and (vi) by delivery to Pledgor or any other party lawfully entitled to receive such cash or proceeds whether by direction of a court of competent jurisdiction or otherwise. Notwithstanding any other provision of this Agreement, unless Bank consents otherwise, in the event Secured Party applies the proceeds of any Collateral to payment of the PLEDGE AGREEMENT - Page 11 Indebtedness, all of the Indebtedness owing to Bank shall be paid in full before any of such proceeds may be applied to any of the Indebtedness owing to BOLC. (d) Deficiency. In the event that the proceeds of any sale of, ---------- collection from, or other realization upon, all or any part of the Collateral by Secured Party are insufficient to pay all amounts to which Bank, BOLC, or Secured Party are legally entitled, Pledgor and any party who guaranteed or is otherwise obligated to pay all or any portion of the Indebtedness shall be liable for the deficiency, together with interest thereon as provided in the Loan Documents. (e) Non-Judicial Remedies. In granting to Secured Party the power to --------------------- enforce its rights hereunder without prior judicial process or judicial hearing, Pledgor expressly waives, renounces, and knowingly relinquishes any legal right which might otherwise require Secured Party to enforce its rights by judicial process. Pledgor recognizes and concedes that non- judicial remedies are consistent with the usage of trade, are responsive to commercial necessity, and are the result of a bargain at arm's length. Nothing herein is intended to prevent Secured Party or Pledgor from resorting to judicial process at either party's option. (f) Other Recourse. Pledgor waives any right to require Secured Party -------------- to proceed against any third party, exhaust any Collateral or other security for the Indebtedness, or to have any third party joined with Pledgor in any suit arising out of the Indebtedness, any of the Loan Documents or the Master Lease, or pursue any other remedy available to Bank, BOLC, or Secured Party. Pledgor further waives any and all notice of acceptance of this Agreement and of the creation, modification, rearrangement, renewal, or extension of the Indebtedness. Pledgor further waives any defense arising by reason of any disability or other defense of any third party or by reason of the cessation from any cause whatsoever of the liability of any third party. Until all of the Indebtedness shall have been paid in full, Pledgor shall have no right of subrogation and Pledgor waives the right to enforce any remedy which Secured Party has or may hereafter have against any third party, and waives any benefit of and any right to participate in any other security whatsoever now or hereafter held by Secured Party. Pledgor authorizes Secured Party, and without notice or demand and without any reservation of rights against Pledgor and without affecting Pledgor's liability hereunder or on the Indebtedness, to (i) take or hold any other property of any type from any third party as security for the Indebtedness, and exchange, enforce, waive, and release any or all of such other property, (ii) apply such other property and direct the order or manner of sale thereof as Secured Party may in its discretion determine, (iii) renew, extend, accelerate, modify, compromise, settle, or release any of the Indebtedness or other security for the Indebtedness, (iv) waive, enforce, or modify any of the provisions of any of the Loan Documents or the Master Lease executed by any third party, and (v) release or substitute any third party. (g) Voting Rights. Upon the occurrence of an Event of Default, Pledgor will not exercise any voting rights with respect to securities pledged as Collateral. Pledgor hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact (such power of attorney being coupled with an interest) and proxy to exercise any voting rights with respect to Pledgor's securities pledged as Collateral upon the occurrence of an Event of Default. PLEDGE AGREEMENT - Page 12 (h) Dividend Rights and Interest Payments. Upon the occurrence of an ------------------------------------- Event of Default: (i) all rights of Pledgor to receive and retain the dividends and interest payments which it would otherwise be authorized to receive and retain pursuant to paragraph 3 shall automatically cease, and all ----------- such rights shall thereupon become vested with Secured Party which shall thereafter have the sole right to receive, hold, and apply as Collateral such dividends and interest payments; and (ii) all dividend and interest payments which are received by Pledgor contrary to the provisions of clause (i) of this paragraph ---------- --------- 11(h) shall be received in trust for the benefit of Secured Party, ----- shall be segregated from other funds of Pledgor, and shall be forthwith paid over to Secured Party in the exact form received (properly endorsed or assigned if requested by Secured Party), to be held by Secured Party as Collateral. 12. Indemnity. Pledgor hereby indemnifies and agrees to hold harmless --------- Secured Party, and its officers, directors, employees, agents, and representatives (each an "Indemnified Person") from and against any and all liabilities, obligations, claims, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature (collectively, the "Claims") which may be imposed on, incurred by, or asserted against, any Indemnified Person arising in connection with the Loan Documents, the Master Lease, the Indebtedness, or the Collateral (including, without limitation, the enforcement of the Loan Documents and the Master Lease and the defense of any Indemnified Person's actions and/or inactions in connection with the Loan Documents and the Master Lease). WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH AND/OR ANY OTHER INDEMNIFIED PERSON, EXCEPT TO THE LIMITED EXTENT THE CLAIMS AGAINST AN INDEMNIFIED PERSON ARE PROXIMATELY CAUSED BY SUCH INDEMNIFIED PERSON'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. If Pledgor or any third party ever alleges such gross negligence or willful misconduct by any Indemnified Person, the indemnification provided for in this paragraph 12 shall nonetheless be paid upon demand, subject to later adjustment or reimbursement, until such time as a court of competent jurisdiction enters a final judgment as to the extent and effect of the alleged gross negligence or willful misconduct. The indemnification provided for in this paragraph 12 shall survive the termination of this Agreement and shall extend and continue to benefit each individual or entity who is or has at any time been an Indemnified Person hereunder. 13. Miscellaneous. ------------- (a) Entire Agreement. This Agreement contains the entire agreement of ---------------- Secured Party and Pledgor with respect to the Collateral. If the parties hereto are parties to any prior agreement, either written or oral, relating to the Collateral, the terms of this Agreement shall amend and supersede the terms of such prior agreements as to transactions on or after the effective date of this Agreement, but all security agreements, financing statements, PLEDGE AGREEMENT - Page 13 guaranties, other contracts, and notices for the benefit of Secured Party shall continue in full force and effect to secure the Indebtedness unless Secured Party specifically releases its rights thereunder by separate release. (b) Amendment. No modification, consent, or amendment of any --------- provision of this Agreement or any of the other Loan Documents or the Master Lease shall be valid or effective unless the same is in writing and signed by the party against whom it is sought to be enforced. (c) Actions by Secured Party. The lien, security interest, and other ------------------------ security rights of Secured Party hereunder shall not be impaired by (i) any renewal, extension, increase, or modification with respect to the Indebtedness, (ii) any surrender, compromise, release, renewal, extension, exchange, or substitution which Secured Party may grant with respect to the Collateral, or (iii) any release or indulgence granted to any endorser, guarantor, or surety of the Indebtedness. The taking of additional security by Secured Party shall not release or impair the lien, security interest, or other security rights of Secured Party hereunder or affect the obligations of Pledgor hereunder. (d) Waiver by Secured Party. Secured Party may waive any Event of ----------------------- Default without waiving any other prior or subsequent Event of Default. Secured Party may remedy any default without waiving the Event of Default remedied. Neither the failure by Secured Party to exercise, nor the delay by Secured Party in exercising, any right or remedy upon any Event of Default shall be construed as a waiver of such Event of Default or as a waiver of the right to exercise any such right or remedy at a later date. No single or partial exercise by Secured Party of any right or remedy hereunder shall exhaust the same or shall preclude any other or further exercise thereof, and every such right or remedy hereunder may be exercised at any time. No waiver of any provision hereof or consent to any departure by Pledgor therefrom shall be effective unless the same shall be in writing and signed by Secured Party and then such waiver or consent shall be effective only in the specific instances, for the purpose for which given and to the extent therein specified. No notice to or demand on Pledgor in any case shall of itself entitle Pledgor to any other or further notice or demand in similar or other circumstances. (e) Costs and Expenses. Pledgor will upon demand pay to Bank, BOLC, ------------------ and Secured Party, as applicable, the amount of any and all costs and expenses (including, without limitation, attorneys' fees and expenses), which Secured Party may incur in connection with (i) the transactions which give rise to the Loan Documents and the Master Lease, (ii) the preparation of this Agreement and the perfection and preservation of the security interests granted under the Loan Documents, (iii) the administration of the Loan Documents and the Master Lease, (iv) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, the Collateral, (v) the exercise or enforcement of any of the rights of Bank, BOLC, or Secured Party under the Loan Documents or the Master Lease, as applicable, or (vi) the failure by Pledgor to perform or observe any of the provisions hereof. PLEDGE AGREEMENT - Page 14 (f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ------------- IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR NON- PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS. (g) Venue. This Agreement has been entered into in the county in ----- Texas where Bank's address for notice purposes is located, and it shall be performable for all purposes in such county. Courts within the State of Texas shall have jurisdiction over any and all disputes arising under or pertaining to this Agreement and venue for any such disputes shall be in the county or judicial district where this Agreement has been executed and delivered. (h) Severability. If any provision of this Agreement is held by a ------------ court of competent jurisdiction to be illegal, invalid, or unenforceable under present or future laws, such provision shall be fully severable, shall not impair or invalidate the remainder of this Agreement, and the effect thereof shall be confined to the provision held to be illegal, invalid, or unenforceable. (i) No Obligation. Nothing contained herein shall be construed as an obligation on the part of Bank, BOLC, or Secured Party to extend or continue to extend credit to Pledgor. (j) Notices. All notices, requests, demands, or other communications required or permitted to be given pursuant to this Agreement shall be in writing and given by (i) personal delivery, (ii) expedited delivery service with proof of delivery, or (iii) United States mail, postage prepaid, registered or certified mail, return receipt requested, sent to the intended addressee at the address set forth on the signature page hereof or to such different address as the addressee shall have designated by written notice sent pursuant to the terms hereof and shall be deemed to have been received either, in the case of personal delivery, at the time of personal delivery, in the case of expedited delivery service, as of the date of first attempted delivery at the address and in the manner provided herein, or in the case of mail, upon deposit in a depository receptacle under the care and custody of the United States Postal Service. Either party shall have the right to change its address for notice hereunder to any other location within the continental United States by notice to the other party of such new address at least thirty (30) days prior to the effective date of such new address. (k) Binding Effect and Assignment. This Agreement (i) creates a ----------------------------- continuing security interest in the Collateral, (ii) shall be binding on Pledgor and the administrators, personal representatives, successors, and assigns of Pledgor, and (iii) shall inure to the benefit of Bank, BOLC, and Secured Party and their respective successors and assigns. Without limiting the generality of the foregoing, each of Bank and BOLC may pledge, assign, or otherwise transfer the Indebtedness and their respective rights under this Agreement and any of the other Loan Documents or the Master Lease to any other party. PLEDGE AGREEMENT - Page 15 Pledgor's rights and obligations hereunder may not be assigned or otherwise transferred without the prior written consent of Secured Party. (l) Termination. It is contemplated by the parties hereto that from ----------- time to time there may be no outstanding Indebtedness, but notwithstanding such occurrences, this Agreement shall remain valid and shall be in full force and effect as to subsequent outstanding Indebtedness. Upon (i) the satisfaction in full of the Indebtedness, (ii) the termination or expiration of any commitment of Bank or BOLC to extend credit to Pledgor, (iii) written request for the termination hereof delivered by Pledgor to Secured Party, and (iv) written release delivered by Secured Party to Pledgor, this Agreement and the security interests created hereby shall terminate. Upon termination of this Agreement and Pledgor's written request, Secured Party will, at Pledgor's sole cost and expense, return to Pledgor such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination . (m) Cumulative Rights. All rights and remedies of Bank, BOLC, and ----------------- Secured Party hereunder are cumulative of each other and of every other right or remedy which Bank, BOLC, and Secured Party may otherwise have at law or in equity or under any of the other Loan Documents and the Master Lease, and the exercise of one or more of such rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of any other rights or remedies. (n) Gender and Number. Within this Agreement, words of any gender ----------------- shall be held and construed to include the other gender, and words in the singular number shall be held and construed to include the plural and words in the plural number shall be held and construed to include the singular, unless in each instance the context requires otherwise. (o) Descriptive Headings. The headings in this Agreement are for --------------------- convenience only and shall in no way enlarge, limit, or define the scope or meaning of the various and several provisions hereof. [Remainder of page intentionally left blank] PLEDGE AGREEMENT - Page 16 EXECUTED as of the date first written above. PLEDGOR: ------- RF MONOLITHICS, INC. By:________________________________ Name:______________________________ Title:_____________________________ Pledgor's Address: 4441 Sigma Road Dallas, Texas 75244 Secured Party's Address: Bank One, Texas, National Association 1717 Main Street, 3rd Floor Dallas, Texas 75201 Attention: Julie Smith PLEDGE AGREEMENT - Page 17 SCHEDULE A TO PLEDGE AGREEMENT DATED FEBRUARY 29, 2000 BY AND BETWEEN BANK ONE, TEXAS, NATIONAL ASSOCIATION AND RF MONOLITHICS, INC. The following property is a part of the Collateral as defined in paragraph 1(d): Account No. 60Y519683 in the name of "Bank One Texas Collateral Loan Account FBO RF Monolithics, Inc." and maintained with Banc One Securities Corporation, and all securities, cash, and all other property contained from time to time in such Account. EX-27 6 0006.txt FINANCIAL DATA SCHEDULE
5 1,000 9-MOS AUG-31-2000 SEP-01-1999 MAY-31-2000 17 3,494 9,554 520 10,920 25,657 38,243 23,077 44,323 13,440 0 0 0 29,751 1,132 44,323 12,697 12,697 10,642 10,642 3,428 0 228 (1,601) (488) (1,113) 0 0 0 (1,113) (0.18) (0.18)
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