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EXHIBIT 10.36
[LOGO] Silicon Valley Bank
Amendment to Loan and Security Agreement
Borrower: Pairgain Technologies, Inc.
Address: 00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Date: May 3, 1995
THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT is entered into between
SILICON VALLEY BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between
them, dated December 22, 1993, as amended by that certain Amendment to Loan
Agreement dated January 26, 1994 (as amended, the "Loan Agreement"), as
follows. (Capitalized terms used but not defined in this Amendment, shall have
the meanings set forth in the Loan Agreement.)
1. AMENDED SCHEDULE. The Schedule to Loan and Security Agreement
is amended effective on the date hereof, to read as set forth on the Amended
Schedule to Loan and Security Agreement attached hereto.
2. FACILITY FEE. Borrower shall pay to Silicon concurrently
herewith a facility fee of $10,000, which shall be in addition to all interest
and all other fees payable to Silicon and shall be non-refundable.
3. REPRESENTATIONS TRUE. Borrower represents and warrants to
Silicon that all representations and warranties set forth in the Loan
Agreement, as amended hereby, are true and correct.
4. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any
prior written amendments to the Loan Agreement signed by Silicon and the
Borrower, and the other written documents and agreements between Silicon and
the Borrower set forth in full all of the representations and agreements of the
parties with respect to the subject matter hereof and supersede all prior
discussions, representations, agreements and understandings between the parties
with respect to the subject hereof. Except as herein expressly amended, all of
the terms and provisions of the Loan Agreement, and all other documents and
agreements between Silicon
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and the Borrower shall continue in full force and effect and the same are
hereby ratified and confirmed.
BORROWER: SILICON:
PAIRGAIN TECHNOLOGIES, INC. SILICON VALLEY BANK
BY /s/ XXXXXXX X. XXXXXXX
------------------------------- BY /s/ XXXXX X. XXXX
PRESIDENT OR VICE PRESIDENT -------------------------------
TITLE Vice President
----------------------------
BY /s/ XXXXXXX X. XxXXXXXX
-------------------------------
SECRETARY OR ASS'T SECRETARY
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[LOGO] SILICON VALLEY BANK
AMENDED SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: PAIRGAIN TECHNOLOGIES, INC.
ADDRESS: 00000 XXXXXXXX XXXXXX
XXXXXX, XXXXXXXXXX 00000
DATE: MAY 3, 1995
THIS SCHEDULE is an integral part of the Loan and Security Agreement
between Silicon Valley Bank ("Silicon") and the above-named borrower (the
"Borrower") of even date.
CREDIT LIMIT
(Section 1.1): Loans in a total amount not to exceed
$10,000,000 outstanding at any one time,
provided that Term Loans, Letters of Credit
and the Exchange Contracts are subject to the
sublimits set forth below.
TERM LOAN FACILITY
SUBLIMIT
An amount up to $2,000,000 (such aggregate
amount as reduced as from time to time upon
the making of advances is referred to as the
"Term Loan Facility", and an advance is
referred to individually as a "Term Loan" and
advances are collectively referred to as
"Term Loans") to be utilized by the Borrower
on or before the Maturity Date for the
purchase of new fixed assets to be located in
the United States (such purchase to be
evidenced by documentation reasonably
acceptable to Silicon); provided, however,
that the amount of a Term Loan advance
hereunder shall not exceed 100% of the
invoice price of the items purchased, with
applicable freight and installation charges
and taxes to be additional items not
financed; provided, further, the minimum
amount of a Term Loan shall be $250,000;
provided, further, that Borrower shall
provide to Silicon such UCC-1 Financing
Statements relating to the assets being
purchased for filing in such jurisdictions as
Silicon determines is necessary or desirable
and an amendment to this Agreement relating
to the definition of Term Loan Collateral
relating thereto, in such form and containing
such language and other provisions as are
satisfactory to Silicon in its discretion;
provided, further, that on the date a Term
Loan is to be made, Borrower has available to
it Loans in an amount equal to or greater
than the amount of the then proposed Term
Loan; and, provided, further, that the Credit
Limit set forth above and the Loans available
under this Agreement at any time shall be
reduced by the aggregate amount of Term Loans
from time to time outstanding.
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The amount available under the Term Loan
Facility shall be permanently reduced by the
original principal amount of each Term Loan
at the time that such Term Loan is made.
Commencing upon the making of any Term Loan
and continuing until all Term Loans are
repaid in full, Borrower shall pay to
Silicon, on a monthly basis, interest
accruing on the aggregate principal amount of
all Term Loans outstanding from time to time
at the Term Loan Rate (as referred to below).
In addition to making monthly interest
payments to Silicon, Borrower shall repay to
Silicon the aggregate principal amount of
each Term Loan outstanding in 48 equal
monthly payments of principal, the first
payment of which shall be due on the date
that is one month immediately after the
making of the Term Loan, with succeeding
payments due on the same day of each month
thereafter for the following 47 months, on
which date such Term Loan, all accrued and
unpaid interest thereon and all other
Obligations relating thereto shall be paid in
full.
LETTER OF CREDIT
SUBLIMIT Silicon, in its reasonable discretion, will
from time to time during the term of this
Agreement issue letters of credit for the
account of the Borrower ("Letters of
Credit"), in an aggregate amount at any one
time outstanding not to exceed $10,000,000,
upon the request of the Borrower, provided
that, on the date the Letters of Credit are
to be issued, Borrower has available to it
Loans in an amount equal to or greater than
the face amount of the Letters of Credit to
be issued. Prior to the issuance of any
Letters of Credit, Borrower shall execute and
deliver to Silicon Applications for Letters
of Credit and such other documentation as
Silicon shall specify (the "Letter of Credit
Documentation"). Fees for the Letters of
Credit shall be as provided in the Letter of
Credit Documentation. Letters of Credit may
have a maturity date up to twelve months
beyond the Maturity Date in effect from time
to time, provided that if, on the Maturity
Date, or on any earlier effective date of
termination, there are any outstanding
letters of credit issued by Silicon or issued
by another institution based upon an
application, guarantee, indemnity or similar
agreement on the part of Silicon, then on
such date Borrower shall provide to Silicon
cash collateral in an amount equal to the
face amount of all such letters of credit
plus all interest, fees and costs due or to
become due in connection therewith, to secure
all of the Obligations relating to said
letters of credit, pursuant to Silicon's then
standard form cash pledge agreement.
The Credit Limit set forth above and the
Loans available under this Agreement at any
time shall be reduced by the face amount of
Letters of Credit from time to time
outstanding.
FOREIGN EXCHANGE
CONTRACT SUBLIMIT Up to $2,000,000 of the Credit Limit may be
utilized for spot and future foreign exchange
contracts (the "Exchange Contracts"). The
Credit Limit available at any time shall be
reduced by the following amounts (the
"Foreign Exchange Reserve") on each day (the
"Determination Date"): (i) on all
outstanding Exchange Contracts on which
delivery is to be effected or settlement
allowed more than two business days from the
Determination Date, 20% of the gross amount
of the Exchange Contracts; plus (ii) on all
outstanding Exchange Contracts on which
delivery is to be effected or settlement
allowed
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within two business days after the
Determination Date, 100% of the gross amount
of the Exchange Contracts. In lieu of the
Foreign Exchange Reserve for 100% of the
gross amount of any Exchange Contract, the
Borrower may request that Silicon debit the
Borrower's bank account with Silicon for such
amount, provided Borrower has immediately
available funds in such amount in its bank
account.
Borrower may provide, by written notification
to Silicon, instructions to terminate any of
the Exchange Contracts, except that Borrower
may not terminate an Exchange Contract within
two business days of the date delivery is to
be effected or settlement allowed. Further,
Silicon may, in its discretion, terminate the
Exchange Contracts at any time (a) that an
Event of Default occurs or (b) that there is
not sufficient availability under the Credit
Limit and Borrower does not have available
funds in its bank account to satisfy the
Foreign Exchange Reserve. If either Silicon
or Borrower terminates the Exchange
Contracts, and without limitation of the FX
Indemnity Provisions (as referred to below),
Borrower agrees to reimburse Silicon for any
and all fees, costs and expenses relating
thereto or arising in connection therewith.
Borrower shall not permit the total gross
amount of all Exchange Contracts on which
delivery is to be effected and settlement
allowed in any two business day period to be
more than $1,000,000, nor shall Borrower
permit the total gross amount of all Exchange
Contracts to which Borrower is a party,
outstanding at any one time, to exceed
$2,000,000.
The Borrower shall execute all standard form
applications and agreements of Silicon in
connection with the Exchange Contracts, and
without limiting any of the terms of such
applications and agreements, the Borrower
will pay all standard fees and charges of
Silicon in connection with the Exchange
Contracts.
Without limiting any of the other terms of
this Loan Agreement or any such standard form
applications and agreements of Silicon,
Borrower agrees to indemnify Silicon and hold
it harmless, from and against any and all
claims, debts, liabilities, demands,
obligations, actions, costs and expenses
(including, without limitation, attorneys'
fees of counsel of Silicon's choice), of
every nature and description, which it may
sustain or incur, based upon, arising out of,
or in any way relating to any of the Exchange
Contracts or any transactions relating
thereto or contemplated thereby (collectively
referred to as the "FX Indemnity
Provisions").
The Exchange Contracts shall have maturity
dates no later than the Maturity Date with
respect to all Obligations other than for the
Term Loans.
For all purposes hereof, Loans shall include,
without limitation, Term Loans, Letters of
Credit and Exchange Contracts, provided that
with respect to Exchange Contracts and the
Credit Limit, the Credit Limit shall be
reduced in accordance with the Exchange
Reserve provisions set forth above.
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INTEREST RATE (Section 1.2): A rate equal to the "Prime Rate" in effect
from time to time, provided that with respect
to Term Loans the interest rate shall be a
rate equal to the "Prime Rate" in effect from
time to time plus 1.00% per annum (the "Term
Loan Rate"). Interest shall be calculated on
the basis of a 360-day year for the actual
number of days elapsed. "Prime Rate" means
the rate announced from time to time by
Silicon as its "prime rate;" it is a base
rate upon which other rates charged by
Silicon are based, and it is not necessarily
the best rate available at Silicon. The
interest rate applicable to the Obligations
shall change on each date there is a change
in the Prime Rate.
LOAN ORIGINATION FEE
(Section 1.3): SEE AMENDMENT TO LOAN AND SECURITY AGREEMENT
OF EVEN DATE.
MATURITY DATE
(Section 5.1): MAY 1, 1996, provided that Terms Loans shall
have a maturity as set forth in the Section
1.1 hereof.
PRIOR NAMES OF BORROWER
(Section 3.2): NONE
TRADE NAMES OF BORROWER
(Section 3.2): NONE
OTHER LOCATIONS AND ADDRESSES
(Section 3.3): 0000 XXXXXXX XXXXXX, XXXXX XXX, XX 00000
MATERIAL ADVERSE LITIGATION
(Section 3.10): NONE
NEGATIVE COVENANTS-EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent,
Borrower may do the following, provided that,
after giving effect thereto, no Event of
Default has occurred and no event has
occurred which, with notice or passage of
time or both, would constitute an Event of
Default, and provided that the following are
done in compliance with all applicable laws,
rules and regulations: (i) repurchase shares
of Borrower's stock pursuant to any employee
stock purchase or benefit plan, provided that
the total amount paid by Borrower for such
stock does not exceed $50,000 in any fiscal
year.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the
following covenants. Compliance shall be
determined as of the end of each quarter,
except as otherwise specifically provided
below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick
Assets" to current liabilities of not less
than 1.50 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth
of not less than $70,000,000.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total
liabilities to tangible net worth of not more
than .75 to 1.
PROFITABILITY Borrower shall not incur a loss (after taxes)
for any fiscal quarter.
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DEFINITIONS: "Current assets," and "current liabilities"
shall have the meanings ascribed to them in
accordance with generally accepted accounting
principles.
"Tangible net worth" means the excess of
total assets over total liabilities,
determined in accordance with generally
accepted accounting principles, excluding
however all assets which would be classified
as intangible assets under generally accepted
accounting principles, including without
limitation goodwill, licenses, patents,
trademarks, trade names, copyrights,
capitalized software and organizational
costs, licences and franchises.
"Quick Assets" means cash on hand or on
deposit in banks, readily marketable
securities issued by the United States,
readily marketable commercial paper rated
"A-1" by Standard & Poor's Corporation (or a
similar rating by a similar rating
organization), certificates of deposit and
banker's acceptances, and accounts receivable
(net of allowance for doubtful accounts).
DEFERRED REVENUES: For purposes of the above quick asset ratio,
deferred revenues shall not be counted as
current liabilities. For purposes of the
above debt to tangible net worth ratio,
deferred revenues shall not be counted in
determining total liabilities but shall be
counted in determining tangible net worth for
purposes of such ratio. For all other
purposes deferred revenues shall be counted
as liabilities in accordance with generally
accepted accounting principles.
SUBORDINATED DEBT: "Liabilities" for purposes of the foregoing
covenants do not include indebtedness which
is subordinated to the indebtedness to
Silicon under a subordination agreement in
form specified by Silicon or by language in
the instrument evidencing the indebtedness
which is acceptable to Silicon.
OTHER COVENANTS
(Section 4.1): Borrower shall at all times comply with all
of the following additional covenants:
1. BANKING RELATIONSHIP. Borrower shall at
all times maintain its primary banking
relationship with Silicon. Borrower agrees
and acknowledges that it will arrange for the
refinancing of all outstanding Term Loans at
such time that Borrower no longer maintains
its primary banking relationship with
Silicon.
2. INDEBTEDNESS. Without limiting any
of the foregoing terms or provisions of this
Agreement, Borrower shall not in the future
incur indebtedness for borrowed money, except
for (i) indebtedness to Silicon, and (ii)
indebtedness incurred in the future for the
purchase price of or lease of equipment in an
aggregate amount not exceeding $1,000,000 at
any time outstanding.
3. NEGATIVE PLEDGE. Except as otherwise
permitted hereunder, Borrower shall not
hereafter grant a security interest in, or
permit to exist any lien or encumbrance of
any nature with respect to, any present or
future Collateral, other than for Permitted
Liens and other than for those pre-existing
liens on Borrower's fixed assets that have
been incurred in the usual course of the
Borrower's business that are acceptable to
Silicon.
4. ANNUAL CLEAN-UP PERIOD. Borrower
agrees that there shall be one thirty day
period during each calendar year in which
there shall be no Loans outstanding
hereunder, other than for Obligations, if
any,
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relating to the Term Loans, Letters of
Credit and Foreign Exchange Contracts.
BORROWER:
PAIRGAIN TECHNOLOGIES, INC.
BY /s/ XXXXXXX X. XXXXXXX
------------------------------
PRESIDENT OR VICE PRESIDENT
BY /s/ XXXXXXX X. XxXXXXXX
------------------------------
SECRETARY OR ASS'T SECRETARY
SILICON:
SILICON VALLEY BANK
BY /s/ XXXXX X. XXXX
------------------------------
TITLE Vice President
---------------------------
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