COMMERCIAL LOAN AGREEMENT
COMMERCIAL LOAN AGREEMENT
This Commercial Loan Agreement dated as of April 3, 1996 ("Agreement") is
between Sumitomo Bank of California ("Bank") and Novellus Systems,
Inc.("Borrower").
1. LINE OF CREDIT, AMOUNT AND TERMS
Bank agrees to make available to Borrower a line of credit on the following
terms, covenants and conditions:
1.1 LINE OF CREDIT AMOUNT.
Unsecured Line of Credit. During the Availability Period, Bank will
provide an Unsecured Line of Credit to Borrower. The maximum amount of this
Line of Credit (the "Commitment") is One Million Dollars ($1,000,000).
Borrower's obligation to repay this Unsecured Line of Credit is evidenced by a
promissory note substantially in the form of Exhibit A attached hereto (the
"Unsecured Line Note"),
(a) MAXIMUM LOAN BALANCE. Borrower agrees not to permit the
outstanding principal balance of the Unsecured Line of Credit plus the
outstanding amounts of any letters of credit, including amounts drawn on letters
of credit and not yet reimbursed, and any amounts outstanding under obligations
to Bank of third parties which are guaranteed by Borrower (such sum is the "Loan
Balance") to exceed the Commitment.
1.2 AVAILABILITY PERIOD.
The period under which Borrower may draw on the Unsecured Line of Credit
("Availability Period") is between the date of this Agreement and June 30, 1998
(the "Maturity Date") unless Borrower is in default, in which event Bank need
not make any advances.
1.3 INTEREST RATE.
(a) Unless Borrower elects an Offshore Rate based Interest Rate as
described below, the interest rate is Bank's Prime Rate in effect from time to
time.
(b) The "Prime Rate" equals the rate of interest set from time to
time by Bank at its head office in San Francisco, California as its Prime Rate.
The Prime Rate is determined by
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Bank as a means of pricing credit extensions to some customers and is neither
tied to any external rate of interest or index nor is it necessarily the lowest
rate of interest charged by Bank at any given time for any particular class of
customers or credit extensions. Any changes in the interest rate resulting from
a change in the Prime Rate shall take effect without notice on the date
specified at the time the Prime Rate is set.
(c) OFFSHORE RATE/RATE PLUS DISCLOSED SPREAD. Borrower may elect to
have all or portions of the principal balance of the Unsecured Line of Credit
bear interest at the Offshore Rate plus One and Three Fourths percent (1.75%).
Designation of an Offshore Rate portion is subject to the following
requirements:
(i) The interest period during which the Offshore Rate will be in
effect will be no shorter than 30 days and no longer than 180 days as
selected by Borrower with consent of Bank. The last day of the interest
period will be determined by Bank using the practices of the offshore
dollar inter-bank market.
(ii) Each Offshore Rate portion will be for an amount not less than
One Million dollars ($1,000,000).
(iii) The "Offshore Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent. All
amounts in the calculation will be determined by Bank as of the first day
of interest period.
Offshore Rate = EURODOLLAR RATE
(1.00 - Reserve Percentage)
Where,
(A) "Eurodollar Rate" means the interest rate (rounded upward to
the nearest 1/16th of one percent) at which Bank's Grand Cayman Branch
would offer U.S. dollar deposits for the applicable interest period to
other major banks in the offshore dollar inter-bank market.
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(B) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in the Federal Reserve Board Regulation D, rounded upward to
the nearest 1/100 of one percent. The percentage will be expressed as
a decimal, and will include, but not be limited to, marginal,
emergency, supplemental, special, and other reserve percentages.
(iv) Borrower may not elect an Offshore Rate with respect to any
portion of the principal balance of the Unsecured Line of Credit which is
scheduled to be repaid before the last day of the applicable interest
period.
(v) No portion of the principal balance of the line of credit
already bearing interest at the offshore Rate may be converted to a
different rate during its interest period.
(vi) Each prepayment of an Offshore Rate option, whether
voluntary, by reason of acceleration or otherwise, will be accompanied by
the amount of accrued interest on the amount prepaid, and a prepayment fee
equal to the amount (if any) by which
(A) the additional interest which would have been payable on the
amount prepaid had it not been paid until the last day of the interest
period, exceeds
(B) the interest which would have been recoverable by Bank by
placing the amount prepaid on the deposit in the offshore dollar
market for a period starting on the date on which it was prepaid and
ending on the last day of the interest period for such portion.
(vii) Bank will have no obligation to accept an election of an
Offshore Rate portion if any of the following described events has occurred
and is continuing:
(x) Dollar deposits in the principal amount, and for periods
equal to the interest
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period, of an Offshore Rate portion are not available in the
offshore Dollar interbank market; or
(y) the Offshore Rate does not accurately reflect the cost of an
Offshore Rate portion.
1.4 REPAYMENT TERMS/UNSECURED LINE OF CREDIT.
(a) Borrower will pay interest in arrears commencing on December 1,
1995, and then on each first day of each month thereafter until payment in full
of all amounts outstanding under the Unsecured Line of Credit.
(b) Borrower will repay in full, all principal, interest and other
charges outstanding under the Unsecured Line of Credit no later than the
Maturity Date.
(c) Subject to provisions contained elsewhere herein, Borrower may
prepay the Unsecured Line of Credit in full or in part at any time. The
prepayment will be applied first to interest and charges and then to the most
remote installment of principal due under this Agreement.
1.5 LETTER OF CREDIT LINE. This Line of Credit may be used for financing:
(i) commercial letters of credit with a maximum maturity of 360
days but not to extend beyond the Maturity Date. Each commercial letter of
credit will require drafts payable at sight or up to 180 days after sight.
(ii) standby letters of credit with a maximum maturity of 24
months but not to extend beyond the Maturity Date.
(a) The amount of outstanding letters of credit, including amounts
drawn on letters of credit and not yet reimbursed, may not exceed at any one
time the Commitment,
(b) Any sum drawn under a letter of credit may, at the option of
Bank, be added to the principal amount outstanding under this Agreement. The
amount will bear interest and be due as described elsewhere in this Agreement.
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(c) In the event any letters of credit are outstanding on the
Maturity Date, or in the event an Event of Default shall have occurred, Borrower
shall immediately prepay such letters of credit and deposit with Bank, as cash
collateral for the obligations of Borrower under such letters of credit (and
Borrower hereby grants to Bank a security interest in such cash collateral), an
amount equal to the face amount of all outstanding letters of credit, to be
applied to repay draws under letters of credit as and when made.
(d) The issuance of any letter of credit or any amendment to a letter
of credit is subject to Bank's written approval and must be in form and content
satisfactory to Bank and in favor of a beneficiary acceptable to Bank.
(e) Borrower will sign Bank's form Application and Security Agreement
for Commercial Letter of Credit or Application and Agreement for Standby Letter
of Credit.
(f) Borrower agrees that Bank may automatically charge its checking
account for applicable fees, discounts, and other charges relating to any
letters of credit.
(g) Borrower will pay Bank a non-refundable fee equal to 1.0% per
annum of the outstanding undrawn amount of each standby letter of credit,
payable in advance, calculated on the basis of the face amount outstanding on
the day the fee is calculated. Standby letters of credit issued for the purpose
of allowing Borrower to borrow local currencies from Sumitomo Bank Limited will
carry an issuance fee equal to .5% per annum.
(h) Borrower will pay any issuance and/or other fees that Bank
notifies Borrower will be charged for issuing and processing letters of credit
for Borrower.
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2. FEES AND EXPENSES
2.1 FEES.
(a) LOAN FEE. Borrower agrees to pay a Two Thousand Five Hundred
Dollar ($2,500) loan fee on June 30, 1996 and again on June 30, 1997.
2.2 EXPENSES.
(a) Borrower agrees to immediately repay Bank for expenses that
include, without limitation, filing, recording and search fees, appraisal
fees, title report fees, and documentation fees.
(b) Borrower agrees to reimburse Bank for any expenses it incurs
in the negotiation and preparation of this Agreement and any agreement or
instrument required by this Agreement. Expenses include, but are not
limited to, reasonable attorneys', fees, including any allocated costs of
Bank's in-house counsel.
3. DISBURSEMENTS, PAYMENTS AND COSTS
3.1 REQUEST FOR CREDIT. Each request for an extension of credit will be
made in writing in a manner acceptable to Bank, or by another means acceptable
to Bank.
3.2 DISBURSEMENTS AND PAYMENTS. Each disbursement by Bank and each
payment by Borrower will be:
(a) made at Bank's branch (or other location) selected by Bank
from time to time.
(b) made for the account of Bank's branch selected by Bank from
time to time.
(c) made in immediately available funds, or such other type of
funds selected by Bank.
(d) evidenced by records kept by Bank. In addition, Bank may,
at its discretion, require Borrower to sign one or more promissory notes.
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3.3 TELEPHONE AUTHORIZATION.
(a) Bank may honor telephone instructions for advances or
repayments or for the designation of optional interest rates given by any
officer of Borrower or a person or persons so authorized by any officer of
Borrower.
(b) Advances will be deposited in, and repayments will be
withdrawn from, Borrower's account number 000-000000-00, or such other
accounts with Bank as designated in writing by Borrower.
(c) Borrower indemnifies and holds harmless Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone instructions it reasonably
believes are made by an officer of Borrower or a person authorized by an
officer of Borrower. This indemnity and agreement to hold harmless will
survive this Agreement's termination.
3.4 DIRECT DEBIT
(a) Borrower agrees that interest, principal payments and any
fees will be deducted automatically on the due date from Borrower's checking
account number 000-000000-00.
(b) Bank will debit Borrower's account on the dates the payments
become due. If a due date does not fall on a banking day, Bank will debit the
account on the first Banking Day following the due date.
(c) Borrower will maintain sufficient funds in the account on
the dates Bank enters debits authorized by this Agreement. If there are
insufficient funds in the account on the date Bank enters any debit authorized
by this Agreement Borrower shall immediately pay such shortfall to Bank.
3.5 BANKING DAYS. Unless otherwise provided in this Agreement, a
"Banking Day" is a day other than a Saturday or a Sunday, on which Bank is open
for business in California. For amounts bearing interest at an Offshore Rate
(if any), a Banking Day is a day other than a Saturday or a Sunday on which Bank
is open for business in California and dealing in offshore dollars.
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All payments and disbursements which would be due on a day which is not a
Banking Day will be due on the next Banking Day. All payments received on a day
which is not a Banking Day will be applied to the applicable Line of Credit on
the next Banking Day.
3.6 TAXES. Borrower will not deduct any taxes from any payments made to
Bank. If any government authority imposes any taxes or charges on any payments
to Borrower, Borrower will pay the taxes or charges. Upon request by Bank,
Borrower will confirm that it has paid the taxes by giving Bank official tax
receipts (or notarized copies) within 30 days after the due date.
3.7 ADDITIONAL COSTS. Borrower will pay Bank, on demand, for Bank's costs
or losses arising from any statute or regulation, or any request or requirement
of a regulatory agency which is applicable to Bank. The costs and losses will be
allocated to the loans in a manner determined by Bank, using any reasonable
method. The costs include the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to Bank's assets and
commitments for credit.
3.8 INTEREST CALCULATION. Except as otherwise stated in this Agreement,
all interest and fees, if any, will be computed on the basis of a 360-day year
and the actual number of days elapsed. This results in more interest or a
higher fee than if a 365-day year is used.
3.9 INTEREST ON LATE PAYMENTS. At Bank's sole option in each instance,
any amount not paid when due under this Agreement (including interest) shall
bear interest from the due date at Bank's Prime Rate plus Two percent (2.0%).
This may result in compounding of interest.
3.10 DEFAULT RATE. If any amount under this Agreement is not paid in full
when due at maturity or when due because of the exercise of an option by Bank,
Borrower agrees to pay interest on the outstanding principal and interest at the
rate of interest otherwise provided under this Agreement plus Two percent
(2.0%).
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3.11 OVERDRAFTS. At Bank's sole option in each instance, Bank may make
advances under this Agreement to prevent or cover an overdraft on any account of
Borrower with Bank. Each such advance will accrue interest from the date of the
advance or the date on which the account is overdrawn, whichever occurs first,
at the interest rate described in this Agreement.
4. CONDITIONS
4.1 INITIAL ADVANCE. Bank must have received the following items, in form
and content acceptable to Bank, before it is required to extend any credit to
Borrower under this Agreement:
(a) AUTHORIZATIONS. Evidence that the execution, delivery and
performance by Borrower of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.
(b) NOTES. The fully executed Unsecured Note.
(c) GOOD STANDING. Certificates of good standing for Borrower from
its state of incorporation and from any other state in which Borrower is
required to qualify to conduct its business.
4.2 CONDITIONS TO EACH ADVANCE. Before each extension of credit,
including the first:
(a) The Representations and Warranties hereunder must be true
and correct.
5. REPRESENTATIONS AND WARRANTIES
When Borrower signs this Agreement, and until Bank is repaid in full,
Borrower makes the following representations and warranties. Each request for
an extension of credit constitutes a renewed representation.
5.1 ORGANIZATION OF BORROWER. Borrower is a corporation duly formed and
existing under the laws of the state where organized.
5.2 AUTHORIZATION. This Agreement, and any instrument or agreement
required hereunder, are within Borrower's powers,
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have been duly authorized, and do not conflict with any of its organizational
papers.
5.3 ENFORCEABLE AGREEMENT. This Agreement and any related loan documents,
are legal, valid and binding agreements of Borrower, enforceable against
Borrower in accordance with their terms, and any instrument or agreement
required hereunder or thereunder, when executed and delivered, will be similarly
legal, valid, binding and enforceable.
5.4 GOOD STANDING. In each state in which Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.
5.5 NO CONFLICTS. This Agreement does not conflict with any law,
agreement, or obligation by which Borrower is bound.
5.6 FINANCIAL INFORMATION. All financial and other information that has
been or will be supplied to Bank, including Borrower's financial statement dated
as of December 31, 1995, is:
(a) sufficiently complete to give Bank accurate knowledge of
Borrower's financial condition.
(b) in form and content required by Bank.
(c) in compliance with all government regulations that apply.
Since the dates of the financial statements specified above, there has
been no material adverse change in the assets or the financial condition of
Borrower. The Bank acknowledges that the Borrower will enter into a Purchase
and Master Lease Agreement, dated as of April , 1996, by and among Novellus
Systems, Inc., the Lessors referred to therein and Sumitomo Bank Leasing and
Finance, Inc., as Agent for the Lessors, as the same may be amended from time to
time (the "Lease") and that from time to time the Borrower may grant a security
interest with respect to its assets in connection with the Borrower's
obligations under the Lease as provided for in Section 6.7(c) of this Agreement;
and the Bank further acknowledges and agrees that entering into the Lease and
the granting from time to time of such security interest shall not be deemed to
constitute a material adverse change in the assets or financial condition of
Borrower.
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5.7 LAWSUITS. There is no lawsuit, tax claim or other dispute pending or
threatened against Borrower except as has been disclosed in writing to Bank
prior to the date hereof.
5.8 PERMITS, FRANCHISES. Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged without conflict with the rights
of others.
5.9 OTHER OBLIGATIONS. Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
5.10 INCOME TAX RETURNS. Borrower has filed all required tax returns and
has no knowledge of any pending assessments or adjustments of its income tax for
any year.
5.11 NO EVENT OF DEFAULT. No event has occurred which is, or with notice
or lapse of time or both would be, an Event of Default under this Agreement,
5.12 ERISA PLANS.
(a) Borrower has fulfilled its obligations, if any, under the
minimum funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and has not incurred any liability with
respect to any Plan under Title IV of ERISA.
(b) No reportable event has occurred under Section 4043(b) of
ERISA for which the PBGC requires 30 day notice.
(c) No action by Borrower to terminate or withdraw from any Plan
has been taken and no notice of intent to terminate a Plan has been filed
under Section 4041 of ERISA.
(d) No proceeding has been commenced with respect to a Plan
under Section 4042 of ERISA, and no event has occurred or condition exists
which might
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constitute grounds for the commencement of such a proceeding.
(e) The following terms have the meanings indicated for purposes
of this Agreement:
(i) "Code" means the Internal
Revenue Code of 1986, as amended from time to time.
(ii) "ERISA" means the
Employee Retirement Income Art of 1974, as amended from time to time.
(iii) "PBGC" means the Pension
Benefit Guaranty Corporation established pursuant to Subtitle A of
Title IV of ERISA.
(iv) "Plan" means any employee
pension benefit plan maintained or contributed to by Borrower and
insured by the Pension Benefit Guaranty Corporation under Title IV of
ERISA.
6. COVENANTS
Borrower agrees, so long as credit is available under this Agreement
and until Bank is repaid in full:
6.1 USE OF PROCEEDS. To use the proceeds of the Unsecured Line of Credit
only for corporate purposes, including the guaranty of employee loans at the
Bank.
6.2 FINANCIAL INFORMATION. To provide the following financial information
and statements and such additional information as requested by Bank from time to
time:
(a) Within 90 days of Borrower's fiscal year end, Borrower's
annual financial statements. These financial statements must be audited by
a Certified Public Accountant ("CPA") acceptable to Bank. The statements
shall be prepared on a consolidated basis.
(b) Within 45 days of the period's end, Borrower's quarterly
financial statements. These financial statements may be Borrower prepared.
The statements shall be prepared on a consolidated basis.
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(c) Copies of Borrower's Form 10-K Annual Report, Form 10-Q
Quarterly Report and Form 8-K Current Report within 15 days after the date
of filing with the Securities and Exchange Commission.
6.3 QUICK RATIO. To maintain on a consolidated basis as of the last day
of each fiscal quarter, a ratio of quick assets to current liabilities of at
least 1.5:1.0.
"Quick assets" means cash, short-term cash investments, net trade
receivables and marketable securities not classified as long-term investments,
6.4 TANGIBLE NET WORTH. To maintain on a consolidated basis, as of the
last day of each fiscal quarter, Tangible Net Worth equal to at least
$220,000,000.
"Tangible Net Worth" means the gross book value of Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, deferred research and
development costs, deferred marketing expenses, and other like intangibles and
monies due from affiliates, officers, directors or shareholders of Borrower)
plus debt subordinated to Bank in a manner acceptable to Bank less total
liabilities, including, without limitation, accrued and deferred income taxes,
and any reserves against assets.
6.5 TOTAL LIABILITIES TO TANGIBLE NET WORTH. To maintain on a
consolidated basis, as of the last of each fiscal quarter, a ratio of Total
Liabilities not subordinated to Tangible Net Worth not exceeding .5:1.0.
"Total Liabilities not subordinated" means the sum of current
liabilities plus long term liabilities, excluding debt subordinated to
Borrower's obligations to Bank in a manner acceptable to Bank.
6.6 OTHER DEBTS. Not to have outstanding or incur any direct or
contingent debts or lease obligations (other than those to Bank), or become
liable for the debts of others without Bank's written consent. This does not
prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade
credit.
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(b) Endorsing negotiable instruments received in the usual
course of business.
(c) obtaining surety bonds in the usual course of business.
(d) Unsecured debts and lines of credit in existence on the date
of this Agreement disclosed in writing to Bank prior to the date of this
Agreement in Borrower's financial statement dated March 31,1995.
(e) Additional unsecured lines of credit with other banks and
financial institutions not exceeding, in the aggregate, $20,000,000.
(f) Debts or obligations in an aggregate principal amount of up
to $33,000,000 incurred in connection with the Lease, relating to certain
real property and improvements thereon located at 0000-0000 Xxxxx Xxxxx
Xxxxxx in San Jose, California.
6.7 OTHER LIENS. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property Borrower now or later owns, except:
(a) Liens or security interests in favor of Bank.
(b) Liens for taxes not yet due.
(c) Security interests on property valued at not more than $37
million (not including the value of the real property and improvements
covered by the Lease) granted from time to time in connection with the
obligations of Borrower pursuant to the Lease.
6.8 NOTICES TO BANK. To promptly notify Bank in writing of:
(a) any lawsuit over One Million dollars ($1,000,000) against
Borrower;
(b) any substantial dispute between Borrower and any government
authority;
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(c) any failure to comply with this Agreement;
(d) any material adverse change in Borrower's financial
condition or operations;
(e) any change in Borrower's name, address, or legal structure;
and
(f) the occurrence of any Event of Default.
6.9 BOOKS AND RECORDS. To maintain adequate books and records.
6.10 COMPLIANCE WITH LAWS. To comply with the laws, regulations, and
orders of any government body with authority over Borrower's business (including
any fictitious name statute and all statutes regarding the processing,
manufacture, storage, transportation, sale or use of hazardous or toxic
materials).
6.11 PRESERVATION OF RIGHTS. To maintain and preserve all rights,
privileges, and franchises Borrower now has necessary to carry on Borrower's
business.
6.12 COOPERATION. To take any action requested by Bank to carry out the
intent of this Agreement.
6.13 Insurance.
(a) General Business Insurance. To maintain insurance as is
usual for the business it is in.
6.14 ADDITIONAL NEGATIVE COVENANTS. Not to, without Bank's prior written
consent:
(a) engage in any business activities substantially different
from Borrower's present business.
(b) liquidate or dissolve Borrower's business.
(c) enter into any consolidation, merger, pool, joint venture,
syndicate, or other combination.
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(d) lease, or dispose of all or a substantial part of Borrower's
business or Borrower's assets except in the ordinary course of Borrower's
business.
6.15 ERISA PLANS. To give prompt written notice to Bank of:
(a) The occurrence of any reportable event under Section 4043(b)
of ERISA for which the PBGC requires 30 day notice.
(b) Any action by Borrower to terminate or withdraw from a Plan
or the filing of any notice of intent to terminate under Section 4041 of
ERISA.
(c) Any notice of noncompliance made with respect to a Plan
under Section 4041(b) of ERISA.
(d) The commencement of any proceeding with respect to a Plan
under Section 4042 of ERISA.
7. DEFAULT
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(a) FAILURE TO PAY. Borrower fails to make a payment under this
Agreement when due.
(b) NON-COMPLIANCE. Borrower fails to meet the conditions of, or
fails to perform any obligation under:
(i) this Agreement, or
(ii) any other agreement made in connection with this Agreement.
(c) OTHER DEFAULTS. Any default occurs under any agreement in
connection with any credit Borrower has obtained from any other creditor if the
default consists of failing to make a payment when due or gives the other
creditor the right to accelerate the obligation.
(d) FALSE INFORMATION. Any representation or warranty under this
Agreement or any agreement, instrument or
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certificate executed pursuant to this Agreement or in connection with any
transaction contemplated hereby shall prove to have been false or misleading in
any material respect when made or when deemed to have been made.
(e) BANKRUPTCY. Borrower files a bankruptcy petition, a bankruptcy
petition is filed against Borrower or Borrower makes a general assignment for
the benefit of creditors. The default will be deemed cured if any bankruptcy
petition filed AGAINST borrower is dismissed within a period of sixty (60) days
after the filing; provided, however, that Bank will not be obligated to extend
any additional credit to Borrower during any bankruptcy period.
(f) RECEIVERS. A receiver or similar official is appointed for
Borrower's business, or the business is terminated.
(g) LAWSUITS. Any lawsuit or lawsuits are filed on behalf of one or
more trade creditors against Borrower in an aggregate amount of Ten Million
dollars ($10,000,000) and such lawsuit or lawsuits are not dismissed or fully
bonded within ten (10) calendar days after service of process upon Borrower.
(h) JUDGMENTS. Any judgments or arbitration awards are entered
against Borrower and, absent procurement of a stay of execution, such judgment
or award remains unbonded or unsatisfied for ten (10) calendar days after the
date of entry; or Borrower enters into any settlement agreement with respect to
any litigation or arbitration, in an aggregate amount of Ten Million dollars
($10,000,000) or more in excess of any insurance coverage.
(i) GOVERNMENT ACTION. Any government authority takes action that
Bank believes adversely affects Borrower's financial condition or ability to
repay.
(j) MATERIAL ADVERSE CHANGE. A material adverse change occurs in
Borrower's financial condition, properties or prospects, or ability to repay the
obligations hereunder. The entering into the Lease and the granting from time
to time of a security interest in assets of Borrower in connection with the
Lease as provided for in Sections 6.6 and 6.7 of this Agreement does not, and
will not, represent a material adverse change per this Section 7.1(j).
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(k) ERISA PLANS. The occurrence of a reportable event with respect
to a Plan which is, in the reasonable judgment of Bank, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, or could reasonably
be expected, in the judgment of Bank, to subject Borrower to any tax, penalty or
liability (or any combination of the foregoing) which, in the aggregate, would
have an adverse effect on the financial condition of Borrower with respect to a
Plan.
7.2 REMEDIES. Upon and after the occurrence of an Event of Default, Bank
shall have all of the following rights and remedies:
(a) All obligations and indebtedness hereunder may, at the
option of Bank and without demand, notice, or legal process of any kind, be
declared, and immediately shall become, due and payable;
(b) The Loans shall bear interest at the Default Rate;
7.3 COSTS AND EXPENSES. Upon the occurrence of any Event of Default, Bank
shall be entitled to recover all costs, expenses, and attorneys' fees (including
any allocated costs of in-house counsel) in connection with the administering or
enforcing of this Agreement, whether or not an action is filed.
8. MISCELLANEOUS
8.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to Bank and all financial covenants will be made under
generally accepted accounting principles consistently applied.
8.2 CALIFORNIA LAW. This Agreement is governed by California law.
8.3 SUCCESSORS AND ASSIGNS. This Agreement is binding on Borrower's and
Bank's successors and assignees. Borrower agrees that it may not assign this
Agreement without Bank's prior written consent. Bank may sell participations in
or assign these loans, or any portion thereof, and may exchange financial
information about Borrower with actual or potential participants or assignees.
If a participation is sold or any portion of the loans is assigned, the
purchaser will have the right of set-off against Borrower.
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8.4 SEVERABILITY; WAIVERS. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. No failure on the part
of Bank to exercise, and no delay in exercising, any right, power, or remedy
under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. Any consent or waiver
under this Agreement must be in writing. If Bank waives a default, it may
enforce a later default.
8.5 COSTS AND EXPENSES. In addition to the recovery of costs and expenses
upon an occurrence of an Event of Default, if Bank incurs expenses in connection
with the preparation, administering or enforcing of this Agreement, Borrower
shall pay Bank all such costs and reasonable attorneys' fees, including any
allocated costs of in-house counsel.
8.6 ENTIRE AGREEMENT. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements
between Bank and Borrower concerning this credit; and
(b) replace any prior oral or written agreements between Bank
and Borrower concerning this credit; and
(c) are intended by Bank and Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other
agreements required by this Agreement, this Agreement will prevail.
8.7 NOTICES. Except as otherwise provided herein, all notices required
under this Agreement shall be personally delivered or sent by first class mail,
postage prepaid, to the addresses on the signature page of this Agreement, or to
such other addresses as Bank and Borrower may specify from time to time in
writing.
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8.8 HEADINGS. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.
8.9 COUNTERPARTS. This Agreement may be executed in as many counterparts
as necessary or convenient, and by the different parties on separate
counterparts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
8.10 FURTHER ASSURANCES. Borrower shall, at its expense and without
expense to Bank, do, execute and deliver such further acts and documents as Bank
from time to time reasonably requires for the assuring to Bank the rights
created or intended to be created by this Agreement and for carrying out the
intention or facilitating the performance of the terms of this Agreement or any
document executed in connection with this Agreement.
8.11 HAZARDOUS WASTE INDEMNIFICATION. Borrower will indemnify and hold
harmless Bank from any loss or liability directly or indirectly arising out of
the use, generation, manufacture, production, storage, release, threatened
release, discharge, disposal or presence of a hazardous substance. This
indemnity will apply whether the hazardous substance is on, under or about
Borrower's property or operations or property leased to Borrower. The indemnity
includes but is not limited to attorneys' fees (including the reasonable
estimate of the allocated cost of in-house counsel and staff). The indemnity
extends to Bank, its parent, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys and assigns. For these purposes, the
term "hazardous substances" means any substance which is or becomes designated
as "hazardous" or "toxic" under any federal, state or local law. This indemnity
will survive repayment of Borrower's obligations to Bank.
Upon demand by Bank, Borrower will defend any investigation, action or
proceeding alleging the presence of any hazardous substance in any such
location, which affects any of Borrower's property or operations or property
leased to Borrower or which is brought or commenced against Bank, whether alone
or together with Borrower or any other person, all at Borrower's own cost and by
counsel to be approved by Bank in the exercise of its reasonable judgment. In
the alternative, Bank may elect to conduct its own defense at the expense of
Borrower.
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8.12 WAIVER OF JURY TRIAL. The parties to this Agreement acknowledge that
jury trials often entail additional expenses and delays not occasioned by
nonjury trials. The parties to this Agreement further agree and stipulate that
a fair trial may be had before a state or federal judge by means of a bench
trial without a jury. In view of the foregoing, and as a specifically
negotiated provision of this Agreement, each party to this Agreement hereby
expressly waives any right to trial by jury of any claim, demand, action or
cause of action (1) arising under this Agreement or any other instrument,
document or agreement executed or delivered in connection herewith, or (2) in
any way connected with or related or incidental to the dealings of the parties
hereto or any of them with respect to this Agreement or any other instrument,
document or agreement executed or delivered in connection herewith, or the
transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether sounding in contract or tort or otherwise; and
each party hereby agrees and consents that any such claim, demand, action or
cause of action shall be decided by court trial without a jury, and that any
party to this Agreement may file an original counterpart or a copy of this
section with any court as written evidence of the consent of the parties hereto
to the waiver of their right to trial by jury.
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This Agreement is executed as of the date stated at the top of the first page.
NOVELLUS SYSTEMS, INC.
By /s/ illegible
----------------------------
Its Chief Financial Officer
----------------------------
By /s/ Xxxx X. Xxxx
----------------------------
Its Treasurer
----------------------------
Address where notices to Borrower are to be sent:
Novellus Systems, Inc.
00 Xxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxx
SUMITOMO BANK OF CALIFORNIA
By /s/ Xxxxxxx X. Xxxxx Xx.
---------------------------
Its Vice President & Manager
---------------------------
Address where notices to Bank are to be sent:
Sumitomo Bank of California
00 Xxxx Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: X. X. Xxxxx, Xx.
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