Exhibit 10.1


 


FOURTH AMENDMENT TO LOAN AND
SECURITY AGREEMENT


 


This Fourth Amendment to Loan
and Security Agreement (this “Amendment”) is entered into as of December 22,
2005, by and between COMERICA BANK (“Bank”) and WJ COMMUNICATIONS, INC. (“Borrower”).


 


RECITALS


 


Borrower and Bank are parties to
that certain Amended and Restated Loan and Security Agreement dated as of September 23,
2003, as amended from time to time including by that certain First Amendment to
Loan and Security Agreement dated as of June 13, 2005, that certain Second
Amendment to Loan and Security Agreement dated as of July 12, 2005 and
that certain Third Amendment to Loan and Security Agreement dated as of September 28,
2005 (the “Agreement”).  The parties
desire to amend the Agreement in accordance with the terms of this Amendment.


 


NOW, THEREFORE, the
parties agree as follows:


 


1.             The
following defined terms in Section 1.1 of the Agreement hereby are amended
or restated as follows:


 


Credit
Card Services Sublimit” means a sublimit for corporate credit cards under the
Revolving Line not to exceed One Hundred Thousand Dollars ($200,000).


 


“Revolving
Line” means a credit extension of up to Ten Million Dollars ($10,000,000).


 


“Revolving
Maturity Date” means December 21, 2006


 


2.             Section 2.1.1(c) of
the Agreement is hereby amended and restated in its entirety to read as
follows:


 


“Prime Rate Advances.  Each Prime Rate Advance shall be in an amount
of not less than Five Hundred Thousand Dollars ($500,000).  The outstanding principal balance of each
Prime Rate Advance shall bear interest until principal is due (computed daily
on the basis of a 360 day year and actual days elapsed), at a floating rate per
annum equal to the Prime Rate.  Borrower
shall pay the entire outstanding principal amount of each Prime Rate Advance on
the Revolving Maturity Date.”


 


3.             Section 2.1.1(d) of
the Agreement is hereby amended and restated in its entirety to read as
follows:


 


“LIBOR Rate Advances.  Each LIBOR Rate Advance shall be in an amount
of not less than One Million Dollars ($1,000,000).  The outstanding principal balance of each
LIBOR Rate Advance shall bear interest until principal is due (computed daily
on the basis of a 360 day year and actual days elapsed) at a rate per annum
equal to the LIBOR Rate plus Two


 





















 


Percent (2.0%) for such LIBOR Rate Advance.  Unless converted or continued pursuant to Section 2.6,
the entire outstanding principal amount of each LIBOR Rate Advance shall be due
and payable on the earlier of (i) the last day of the LIBOR Rate Interest
Period for such LIBOR Rate Advance, and (ii) the Revolving Maturity
Date.  At no time may the outstanding
LIBOR Rate Advances be subject to more than three LIBOR Rate Interest Periods.”


 


4.             The
first sentence of Section 2.1.2(a) of the Agreement is hereby amended
and restated in its entirety to read as follows:


 


“Subject to the terms
and conditions of this Agreement, at any time until ten (10) days prior to
the Revolving Maturity Date, Bank agrees to issue or cause to be issued
standby, documentary, or performance Letters of Credit for the account of
Borrower in an aggregate outstanding amount of undrawn Letters of Credit not to
exceed the Revolving Line minus the then outstanding principal balance of the
Advances (including Advances that arise by virtue of amounts paid by Bank under
Letters of Credit) ACH Reserves, Credit Card Services and the FX Amount;
provided the aggregate face amount of such Letters of Credit shall not in any
case exceed Five Million Dollars ($5,000,000) in aggregate.”


 


5.             Section 2.1.5
of the Agreement is hereby amended and restated in its entirety to read as
follows:


 


“Credit Card Services Sublimit.  Subject to the terms and conditions of this
Agreement, Borrower may request corporate credit cards from Bank (collectively,
the “Credit Card Services”).  The
aggregate limit of the corporate credit cards and merchant credit card
processing reserves shall not exceed the Credit Card Services Sublimit,
provided that availability under the Revolving Line shall be reduced by the
aggregate limits of the corporate credit cards issued to Borrower and merchant
credit card processing reserves.  In
addition, Bank may, in its sole discretion, charge as Advances any amounts that
become due or owing to Bank in connection with the Credit Card Services.  The terms and conditions (including repayment
and fees) of such Credit Card Services shall be subject to the terms and
conditions of the Bank’s standard forms of application and agreement for the
Credit Card Services, which Borrower hereby agrees to execute.


 


6.             A
new Section 2.1.6 is hereby added to the Agreement as follows:


 


“Foreign
Exchange Sublimit.  Subject to
and upon the terms and conditions of this Agreement and any other agreement
that Borrower may enter into with the Bank in connection with foreign exchange
transactions (“FX Contracts”), Borrower may request Bank to enter into FX
Contracts with Borrower due not later than the Revolving Maturity Date.  Borrower shall pay any standard issuance and
other fees that Bank notifies Borrower will be charged for issuing and
processing FX Contracts for Borrower. 
The FX Amount shall at all times be equal to or less than Two Hundred
Fify Thousand Dollars ($250,000).  The “FX
Amount” shall equal the amount determined by multiplying (i) the aggregate
amount, in United States Dollars, of FX Contracts between Borrower and Bank
remaining outstanding as of any date of determination by (ii) the
applicable Foreign Exchange Reserve Percentage as of such date.  The “Foreign Exchange Reserve Percentage”
shall be a percentage as determined by Bank,


 





















 


in
its sole discretion from time to time. 
The initial Foreign Exchange Reserve Percentage shall be ten percent
(10%).”


 


7.             A
new Section 2.1.7 is hereby added to the Agreement as follows:


 


“Collateralization
of Obligations Extending Beyond Maturity.  If Borrower has not secured to Bank’s
satisfaction its obligations with respect to any Letters of Credit, Credit Card
Services, ACH origination services, or Foreign Exchange Contracts by the
Revolving Maturity Date, then, effective as of such date, the balance in any
deposit accounts held by Bank and the certificates of deposit or time deposit
accounts issued by Bank in Borrower’s name (and any interest paid thereon or
proceeds thereof, including any amounts payable upon the maturity or
liquidation of such certificates or accounts), shall automatically secure such
obligations to the extent of the then continuing or outstanding and undrawn
Letters of Credit, Credit Card Services, ACH origination services, or Foreign
Exchange Contracts.  Borrower authorizes
Bank to hold such balances in pledge and to decline to honor any drafts thereon
or any requests by Borrower or any other Person to pay or otherwise transfer
any part of such balances for so long as the Letters of Credit, Credit Card
Services, ACH origination services, or Foreign Exchange Contracts are
outstanding or continue.”


 


8.             A
new Section 5.18 is hereby added to the Agreement as follows:


 


“Collateral.  Borrower
has rights in or the power to transfer the Collateral, and its title to the
Collateral is free and clear of Liens, adverse claims, and restrictions on
transfer or pledge except for Permitted Liens. 
Except as set forth in the Schedule, none of the Collateral is
maintained or invested with a Person other than Bank or Bank’s Affiliates.”


 


9.             Section 6.7
of the Agreement is hereby amended and restated in its entirety to read as
follows:


 


“Tangible Net
Worth.    Borrower shall
maintain a Tangible Net Worth of Not Less than Eight Million Dollars
($8,000,000) plus an amount equal to fifty percent (50%) of Borrower’s net
income for each fiscal quarter, calculated in accordance with GAAP, plus an
amount equal to seventy-five percent (75%) of the proceeds received after December 31,
2005 from the sale or issuance by Borrower of its equity securities or
Subordinated Debt.”


 


10.           Section 6.8
of the Agreement is hereby amended and restated in its entirety to read as
follows:


 


“Domestic Cash Balance.  The aggregate balance of Borrower’s
unrestricted cash and cash equivalents located in the United States minus
the aggregate balance of all Indebtedness (including without limitation any
issued and drawn Letters of Credit and other Contingent Obligations) owing from
Borrower to Bank, shall be at least Twelve Million Dollars ($12,000,000) at all
times.


 


11.           Section 7.12
of the Agreement is hereby amended and restated in its entirety to read as
follows:


 





















 


“Capital Expenditures. 
Make or become committed to make capital expenditures (excluding any
capital expenditures for Merger and Acquisition Activities) in excess of Five
Million Dollars ($5,000,000) in the aggregate during any calendar year.”


 


12.           All
references in the Loan Documents to Bank’s address at 2321 Rosecrans Ave., Suite 5000,
El Segundo, CA  90245 shall
mean and refer to 75 East Trimble Road, M/C 4770, San Jose, California  95131, Attn: 
Manager, FAX: (408) 556-5091.


 


13.           Section 11
of the Agreement hereby is amended and restated in its entirety to read as
follows:


 


“11.         CHOICE OF LAW AND VENUE; JURY
TRIAL WAIVER.


 


This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of California, without regard to principles of conflicts of
law.  Each of Borrower and Bank hereby
submits to the exclusive jurisdiction of the state and Federal courts located
in the County of Santa Clara, State of California.  THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER
CERTAIN CIRCUMSTANCES.  TO THE EXTENT
PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY
TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY,
AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN
THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY
OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.”


 


14.           Section 12
of the Agreement hereby is amended and restated in its entirety to read as
follows:]


 


“12          REFERENCE PROVISION.


 


In the event the Jury Trial Waiver set forth above is
not enforceable, the parties elect to proceed under this Judicial Reference
Provision.


 


13.1         Mechanics.


 


(a)           With
the exception of the items specified in clause (c), below, any controversy,
dispute or claim (each, a “Claim”) between the parties arising out of or
relating to this Agreement or any other document, instrument or agreement
between the undersigned parties (collectively in this Section, the “Comerica
Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code
of Civil Procedure (“CCP”), or their successor sections, which shall constitute
the exclusive remedy for the resolution of any Claim, including whether the
Claim is subject to the reference proceeding. Except as otherwise provided in
the Comerica Documents, venue for the reference proceeding will be in the state
or federal court in the county or district where the real property


 





















 


involved in the action, if any, is located or in the
state or federal court in the county or district where venue is otherwise
appropriate under applicable law (the “Court”).


 


(b)           The
matters that shall not be subject to a reference are the following: (i) nonjudicial
foreclosure of any security interests in real or personal property, (ii) exercise
of self-help remedies (including, without limitation, set-off), (iii) appointment
of a receiver and (iv) temporary, provisional or ancillary remedies
(including, without limitation, writs of attachment, writs of possession,
temporary restraining orders or preliminary injunctions). This reference
provision does not limit the right of any party to exercise or oppose any of
the rights and remedies described in clauses (i) and (ii) or to seek
or oppose from a court of competent jurisdiction any of the items described in
clauses (iii) and (iv). The exercise of, or opposition to, any of those
items does not waive the right of any party to a reference pursuant to this
reference provision as provided herein.


 


(c)           The
referee shall be a retired judge or justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days
of a written request to do so by any party, then, upon request of any party,
the referee shall be selected by the Presiding Judge of the Court (or his or
her representative). A request for appointment of a referee may be heard on an
ex parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. 
Pursuant to CCP § 170.6, each party shall have one peremptory
challenge to the referee selected by the Presiding Judge of the Court (or his
or her representative).


 


(d)           The
parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (i) set the
matter for a status and trial-setting conference within fifteen (15) days after
the date of selection of the referee, (ii) if practicable, try all issues
of law or fact within one hundred twenty (120) days after the date of the
conference and (iii) report a statement of decision within twenty (20)
days after the matter has been submitted for decision.


 


(e)           The
referee will have power to expand or limit the amount and duration of
discovery.  The referee may set or extend
discovery deadlines or cutoffs for good cause, including a party’s failure to
provide requested discovery for any reason whatsoever. Unless otherwise ordered
based upon good cause shown, no party shall be entitled to “priority” in
conducting discovery, depositions may be taken by either party upon seven (7) days
written notice, and all other discovery shall be responded to within fifteen
(15) days after service. All disputes relating to discovery which cannot be
resolved by the parties shall be submitted to the referee whose decision shall
be final and binding.


 


13.2         Procedures.  Except as
expressly set forth herein, the referee shall determine the manner in which the
reference proceeding is conducted including the time and place of hearings, the
order of presentation of evidence, and all other questions that arise with
respect to the course of the reference proceeding.  All proceedings and hearings conducted before
the referee, except for trial, shall be conducted without a court reporter,
except that when any party so requests, a court reporter will be used at any


 





















 


hearing conducted before the referee, and the referee
will be provided a courtesy copy of the transcript. The party making such a
request shall have the obligation to arrange for and pay the court reporter.
Subject to the referee’s power to award costs to the prevailing party, the
parties will equally share the cost of the referee and the court reporter at
trial.


 


13.3         Application of Law. 
The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the State of California. The rules of
evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or
summary adjudication. The referee shall issue a decision at the close of the
reference proceeding which disposes of all claims of the parties that are the
subject of the reference.  Pursuant to
CCP § 644, such decision shall be entered by the Court as a judgment or an
order in the same manner as if the action had been tried by the Court and any
such decision will be final, binding and conclusive.  The parties reserve the right to appeal from
the final judgment or order or from any appealable decision or order entered by
the referee.  The parties reserve the
right to findings of fact, conclusions of laws, a written statement of
decision, and the right to move for a new trial or a different judgment, which
new trial, if granted, is also to be a reference proceeding under this
provision.


 


13.4         Repeal.  If the
enabling legislation which provides for appointment of a referee is repealed
(and no successor statute is enacted), any dispute between the parties that
would otherwise be determined by reference procedure will be resolved and
determined by arbitration.   The
arbitration will be conducted by a retired judge or justice, in accordance with
the California Arbitration Act §1280 through §1294.2 of the CCP as amended from
time to time. The limitations with respect to discovery set forth above shall
apply to any such arbitration proceeding.


 


13.5         THE
PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS
RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY
A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY,
AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION
WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING
OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER COMERICA
DOCUMENTS.”


 


15.           Exhibit C
to the Agreement is hereby replaced with Exhibit C attached hereto.


 


16.           No
course of dealing on the part of Bank or its officers, nor any failure or delay
in the exercise of any right by Bank, shall operate as a waiver thereof, and
any single or partial exercise of any such right shall not preclude any later
exercise of any such right.  Bank’s
failure at any time to require strict performance by a Borrower of any
provision shall not affect any right


 





















 


of Bank thereafter to demand strict compliance and
performance.  Any suspension or waiver of
a right must be in writing signed by an officer of Bank.


 


17.           Unless
otherwise defined, all initially capitalized terms in this Amendment shall be
as defined in the Agreement.  The
Agreement, as amended hereby, shall be and remain in full force and effect in
accordance with its respective terms and hereby is ratified and confirmed in
all respects.  Except as expressly set
forth herein, the execution, delivery, and performance of this Amendment shall
not operate as a waiver of, or as an amendment of, any right, power, or remedy
of Bank under the Agreement, as in effect prior to the date hereof.


 


18.           Borrower
represents and warrants that the Representations and Warranties contained in
the Agreement are true and correct as of the date of this Amendment, and that
no Event of Default has occurred and is continuing.


 


19.           As
a condition to the effectiveness of this Amendment, Bank shall have received,
in form and substance satisfactory to Bank, the following:


 


(a)           this
Amendment, duly executed by Borrower;


 


(b)           a
Certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Amendment;


 


(c)           all
reasonable Bank Expenses incurred through the date of this Amendment, which may
be debited from any of Borrower’s accounts; and


 


(d)           such
other documents, and completion of such other matters, as Bank may reasonably
deem necessary or appropriate.


 


20.           This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one instrument.


 





















 


IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the first
date above written.


 


	
   

  	
  WJ
  COMMUNICATIONS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ RAINER N. GROWITZ

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   VP Finance and Interim CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ GUY SIMPSON

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   Vice President

  



 


 


[Signature Page to Fourth Amendment to Loan & Security
Agreement]


 





















 


EXHIBIT C

COMPLIANCE CERTIFICATE


 


TO:                         COMERICA
BANK


 


FROM:                   WJ
COMMUNICATIONS, INC.


 


The undersigned authorized officer of WJ COMMUNICATIONS,
INC. hereby certifies that in accordance with the terms and conditions of the
Amended and Restated Loan and Security Agreement between Borrower and Bank (the
“Agreement”), (i) Borrower is in complete compliance for the period ending
                             
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof.  Attached
herewith are the required documents supporting the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.


 


Please indicate
compliance status by circling Yes/No under “Complies” column.


 




	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly 10Q/financial
  statements

  	
   

  	
  Quarterly within 45
  days

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Annual (CPA
  Audited)/10K

  	
   

  	
  FYE within 90 days

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Compliance Cert.

  	
   

  	
  Quarterly within 45
  days

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  IP Report

  	
   

  	
  Quarterly within 30
  days

  	
   

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  






 




	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Unrestricted
  Cash

  	
   

  	
  $12,000,000 plus bank
  debt

  	
   

  	
  $

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Minimum Tangible Net
  Worth

  	
   

  	
  $8,000,000

  	
   

  	
  $

  	
   

  	
  Yes

  	
   

  	
  No

  






 


	
  Comments Regarding Exceptions:
  See Attached.

  	
   

  	
  BANK USE ONLY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  	
   

  
	
   

  	
  SIGNATURE

  	
   

  	
   

  	
   

  	
   

  	
  AUTHORIZED
  SIGNER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
  TITLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Compliance Status

  	
  Yes

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DATE