LOAN AND SECURITY AGREEMENT
THIS AGREEMENT, dated as of June 29, 2001, is entered into between Micrel
Incorporated, a California corporation (hereinafter called "Borrower"), whose
chief executive office is at the address set forth in Section 1.5 hereinbelow,
and Bank of the West, a California banking corporation, whose address is set
forth in Section 1.3.
The parties agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
definitions:
1.1 Agreement. The term "this Agreement" means this Loan and Security
Agreement, any concurrent or subsequent rider to this Loan and Security
Agreement and any extensions, supplements, amendments or modifications to this
Loan and Security Agreement and/or to any such rider.
1.2 Applicable Revolving Loan Rate. The term "Applicable Revolving Loan
Rate" shall be either (i) the Prime Rate or (ii) the Revolving Offshore Rate,
as designated by Borrower or otherwise applicable to such loan or advance
under Article 2 of this Agreement.
1.3 Bank. The term "Bank" shall mean and refer to Bank of the West, a
California banking corporation, with a place of business located at Xxx Xxxxx
Xxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxx Business Banking Group, Xxx Xxxx,
Xxxxxxxxxx 00000.
1.4 Bank Expenses. The term "Bank Expenses" means: all reasonable
costs and expenses incurred by Bank in connection with this Agreement or the
transactions contemplated hereby, including, without limitation, all
reasonable costs or expenses required to be paid by Borrower under this
Agreement which are paid or advanced by Bank; taxes and insurance premiums of
every nature and kind of Borrower paid by Bank; filing, recording,
publication, search fees, appraiser fees authorized by this Agreement, auditor
fees authorized by this Agreement, title insurance premiums paid or incurred
by Bank in connection with Bank's transactions with Borrower; costs and
expenses incurred by Bank in collecting or realizing upon the Collateral (with
or without suit), to correct any default or enforce any provision of this
Agreement, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale and/or advertising to sell the
Collateral, whether or not a sale is consummated; costs and expenses of suit
incurred by Bank in enforcing or defending this Agreement or any portion
hereof; and reasonable attorneys' fees and expenses incurred by Bank in
advising, structuring, drafting, reviewing, amending, terminating, enforcing,
defending or concerning this Agreement, any portion hereof, any agreement
related hereto, or any of the transactions contemplated hereby, whether or not
suit is brought, and including, but not limited to, any expenses incurred in
relation to opposing or seeking to obtain relief from any stay or restraining
order prohibiting Bank from exercising its rights as a secured creditor,
foreclosing upon or disposing of Collateral, or such related matters.
Loan and Security Agreement - Page 1
1.5 Borrower. The term "Borrower" shall mean and refer to the party
first named above, whose address is 0000 Xxxxxxx Xxxxx, Xxx Xxxx, XX 00000.
1.6 Code. The term "the Code" means the California Uniform Commercial
Code, and any and all terms used in this Agreement which are defined in the
Code and not specifically defined herein shall be construed and defined in
accordance with the meaning and definition ascribed to such terms under the
Code.
1.7 Collateral. The term "Collateral" means and includes all of
Borrower's presently existing and hereafter acquired equipment acquired
pursuant to any advance made by Bank under Article 3 of this Agreement,
wherever located; all accessories incidental thereto; and all substitutions,
replacements, accessories, additions, attachments, improvements, accessions,
and Proceeds of the foregoing.
1.8 Credit. The term "Credit" means all Obligations in respect of
amounts actually paid or advanced by Bank under this Agreement.
1.9 Daily Balance. The term "Daily Balance" shall mean the amount
determined by taking the amount of the Credit owed at the beginning of a given
day, adding any new Credit advanced to or incurred by Borrower on such date,
and subtracting any payments or collections which are deemed to be paid and
are applied by Bank in reduction of the Credit on that date under the
provisions of this Agreement.
1.10 Eurodollar Reserve Percentage. The term "Eurodollar Reserve
Percentage" means for any day during any Interest Period the maximum reserve
percentage (expressed as a decimal, rounded upward to the next 1/100ths of one
percent) in effect on such day (whether or not applicable to any bank) under
the regulations issued from time to time by the Federal Reserve Bank for
determining the maximum reserve requirements (including any emergency,
supplemental, or other marginal reserve requirements) with respect to
Eurocurrency Funding (currently referred to as "Eurocurrency Liabilities").
The Revolving Offshore Rate shall be adjusted automatically as to all
Revolving Offshore Rate loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
1.11 Event of Default. The term "Event of Default" shall have the
meaning set forth in Article 11 of this Agreement.
1.12 Insolvency Proceeding. The term "Insolvency Proceeding" means any
proceeding commenced by or against any person or entity, including Borrower,
under any provision of the federal Bankruptcy Code, as amended, or under any
other bankruptcy or insolvency law, including, but not limited to, assignments
for the benefit of creditors, formal or informal moratoriums, compositions or
extensions with some or all creditors.
1.13 Interest Period. The term "Interest Period" means the period of one
(1) month, two (2) months, three (3) months, or six (6) months, as designated
by Borrower at the time Borrower requests a Revolving Offshore Rate-Based
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Loan; provided, however, that such Interest Period shall in no event extend
beyond the date certain set forth in Section 4.1 of this Agreement (as same
may from time to time be amended) with respect to revolving loans and advances
under Article 2.
1.14 Judicial Officer or Assignee. The term "Judicial Officer or
Assignee" means any trustee, receiver, controller, custodian, assignee for the
benefit of creditors or any other person or entity having powers or duties
like or similar to the powers and duties of a trustee, receiver, controller,
custodian or assignee for the benefit of creditors.
1.15 LIBOR Rate. The term "LIBOR Rate" means the rate of interest per
annum that appears on page 3750 of the Dow Xxxxx Telerate Screen (or any
successor page) for United States dollar deposits in amounts equal to the
amount of the Revolving Offshore Rate-Based loan and with a maturity
comparable to the Interest Period, which amount shall be determined at 11:00
a.m. (London local time) two (2) business days prior to the commencement of
the Interest Period; provided, however, that if such rate is no longer
published by Dow Xxxxx, then the LIBOR Rate shall be determined by reference
to such other index that Bank may reasonably designate in good faith as the
rate at which United States dollar deposits with a maturity comparable to the
Interest Period and in an amount equal to the amount of the Revolving Offshore
Rate-Based loan would be offered to major banks on the London Eurocurrency
market at 11:00 a.m. (London local time) two (2) business days prior to the
commencement of the Interest Period.
1.16 Obligations. The term "Obligations" means any and all obligations,
loans, advances, overdrafts, debts, liabilities (including, without
limitation, any and all amounts charged to Borrower's account pursuant to any
agreement authorizing Bank to charge Borrower's account), lease and other
contractual obligations, guaranties, covenants, promises and duties owing by
Borrower to Bank of any kind and description (whether advanced pursuant to or
evidenced by this Agreement; by any note or other instrument; or by any other
agreement between Bank and Borrower and whether or not for the payment of
money), whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, and including, without limitation, any
debt, liability or obligation owing from Borrower to others which Bank may
have obtained by assignment, participation, operation of law, or otherwise,
and further including, without limitation, all interest not paid when due and
all Bank Expenses.
1.17 Over Advance. The term "Over Advance" shall have the meaning set
forth in Section 2.1 of this Agreement.
1.18 Permitted Acquisitions. The term "Permitted Acquisitions" shall
have the meaning assigned by Section 9.2 of this Agreement.
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1.19 Permitted Investments. The term "Permitted Investments" shall mean:
(a) Those investments in subsidiaries of Borrower that are existing on
the date of this Agreement or are hereafter made and (with respect to
investments in subsidiaries that are made after the date of this Agreement)
either constitute Permitted Acquisitions or are consented to in writing by
Bank;
(b) any investments in (i) marketable direct obligations maturing
within one (1) year from the date of the acquisition thereof and issued or
unconditionally guaranteed by the United States of America, any agency
thereof, or any State in the United States of America; (ii) commercial paper
maturing within one (1) year from the date of creation and issued by issuers
currently having the highest rating obtainable from either Standard & Poors
Corporation or Xxxxx'x Investment Services, Inc.; and/or (iii) certificates of
deposit maturing within one (1) year from the date of investment and issued by
Bank;
(c) any investment permitted by any written investment policy from time
to time approved in writing by Bank;
(d) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale of goods or services by Borrower in the
ordinary course of Borrower's business;
(e) investments consisting of the endorsement of negotiable
instruments for deposit, collection or similar liquidation in the ordinary
course of Borrower's business;
(f) investments (including debt obligations) received in the ordinary
course of Borrower's business and received in connection with the bankruptcy
or reorganization of Borrower's customers or suppliers or in settlement of
delinquent or disputed obligations owing by such customers or suppliers;
(g) investments consisting of (i) employee relocation loans, and other
employee loans and advances in the ordinary course of Borrower's business
(including guaranties of relocation loans made to employees) in an aggregate
outstanding amount not to exceed One Hundred Thousand Dollars ($100,000), (ii)
loans to officers, employees and directors relating to the purchase of
Borrower's equity securities, and (iii) loans to employees and officers
approved by Borrower's Board of Directors that, together with the relocation
loans and guarantees of relocation loans described in clause (i) hereof, do
not exceed two Hundred Fifty Thousand Dollars ($250,000);
(h) investments pursuant to or arising under currency arrangements or
interest rate arrangements entered into in the ordinary course of Borrower's
business;
(i) investments in an aggregate sum not exceeding (at any one time)
the sum of Two Million Dollars ($2,000,000) in joint ventures and strategic
partnerships consisting of the development or licensing of technology and/or
the provision of technical support in connection with such development and
licensing, which joint ventures and strategic partnerships are not prohibited
Loan and Security Agreement - Page 4
elsewhere in this Agreement, but only to the extent and so long as same have
not created, caused or resulted in a default or event of default under this
Agreement.
1.20 Permitted Liens. The term "Permitted Lien" shall mean:
(a) liens, security interests, mortgages and encumbrances in favor of
Bank:
(b) liens in an aggregate amount not exceeding (at any one time) the
sum of Five Million Dollars ($5,000,000) upon or in any equipment not
comprising the Collateral that is now existing or hereinafter acquired or held
by Borrower or any subsidiary of Borrower in connection with any of the
following: (i) to secure the purchase price thereof; (ii) to secure existing
indebtedness on such equipment at the time of its acquisition (provided,
however, that any such lien is confined solely to the equipment so acquired,
any improvements thereon, and any proceeds thereof); (iii) to secure any
capital lease obligations respecting the equipment that is the subject of such
capital lease; and/or (iv) to secure obligations in connection with any
operating lease on such equipment in the ordinary course of Borrower's
business (including proceeds thereof and accessions thereto) incurred solely
for the purpose of financing such equipment lease (including liens arising
from UCC financing statements regarding leases permitted by this Agreement);
(c) liens incurred in connection with any extension, renewal or
refinancing of the indebtedness secured by liens of the type described in
clauses (a) and (b) above; provided, however, that any such liens given in
connection with such extension, renewal or refinancing shall be limited to the
equipment encumbered by the existing lien and that the principal amount of the
indebtedness being extended, renewed or refinanced does not increase;
(d) liens for taxes, assessments, or other governmental charges
incurred in the ordinary course of Borrower's business for which (i) no
interest, late charge, or penalty is or has attached or, if any interest, late
charge, or penalty is or has attached, is being contested by Borrower in good
faith by appropriate proceedings and, if requested by Bank, bonded in an
amount and in a manner satisfactory to Bank, (ii) no notice of sale has been
filed or recorded in connection with the sale or liquidation of the property
that is the subject of the lien for the payment of such taxes, assessments, or
other governmental charges, and/or (iii) the existence, amount or nature of
same does not create, cause or result in a default or event of default under
this Agreement;
(e) liens arising from judgements, decrees, or attachments, but only
to the extent and so long as such judgements, decrees, or attachments have not
created, caused or resulted in a default or event of default under this
Agreement;
(f) liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods, but only to the extent and so long as such liens have
not created, caused or resulted in a default or event of default under this
Agreement; provided, however, that any such liens shall be limited to the
goods so imported;
(g) liens in favor of landlords arising as a matter of law and in the
ordinary course of Borrower's business to secure payment and performance under
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any real property leases and in favor of any sublandlords arising as a matter
of law and in the ordinary course of Borrower's business to secure payment and
performance under any real property subleases, but only to the extent and so
long as such liens do not interfere in any material respect with Borrower's
business and have not created, caused or resulted in a default or event of
default under this Agreement;
(h) liens created by statute or arising under applicable law for non-
delinquent obligations owing in connection with worker's compensation,
unemployment insurance, social security and/or similar statutory employment
obligations, but only to the extent and so long as such liens have not
created, caused or resulted in a default or event of default under this
Agreement;
(i) liens of mechanics, materialmen, carriers, warehousemen, or other
similar statutory and common law liens securing obligations that are incurred
in good faith in the ordinary course of Borrower's business, are not yet due
and payable, and do not create, cause or result in a default or event of
default under this Agreement; and
(j) encumbrances consisting of existing or future zoning restrictions,
existing recorded rights of way, existing recorded easements, existing
recorded private restrictions, or existing or future public restrictions on
the use of real property, none of which materially impairs the use of such
real property by Borrower in the operation of its business and none of which
is violated in any material respect by any existing or proposed structure or
land use.
1.21 Prime Rate. The term "Prime Rate" means the variable rate of
interest, per annum, most recently announced by Bank at its headquarters
office in San Francisco, California as its "prime rate", with the
understanding that Bank's "prime rate" is only one of Bank's base rates and
serves as a basis upon which effective rates of interest are calculated for
loans making reference thereto and may not be the lowest of Bank's base rates.
1.22 Prime Rate-Based Loans. The term "Prime Rate-Based loans" means all
advances and extensions of credit which shall bear interest at the Prime Rate.
1.23 Proceeds. The term "Proceeds" means whatever is received upon the
sale, lease, exchange, collection or other disposition of Collateral or
proceeds, including, without limitation, proceeds of insurance covering
Collateral, tax refunds, and any and all Accounts, general intangibles,
Negotiable Collateral, equipment, money, deposit accounts, goods, or other
tangible and intangible property of Borrower resulting from the sale or other
disposition of the Collateral, and the proceeds thereof.
1.24 Revolving Offshore Rate. The term "Revolving Offshore Rate" shall,
for any Interest Period, be the rate of interest per annum (rounded upward to
the next 1/32nd of one percent) resulting from the sum of (i) two percent
(2.00%) per annum and (ii) a quotient, the numerator of which is the LIBOR
Rate and the denominator of which is the difference between (a) one (1.0) and
(b) the Eurodollar Reserve Percentage. Expressed as a formula, the Revolving
Offshore Rate shall be as follows:
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Revolving Offshore Rate = [2.00%] + [LIBOR Rate/(1.00 - Eurodollar Reserve
Percentage)]
1.25 Revolving Offshore Rate-Based Loans. The term "Revolving Offshore
Rate-Based loans" means all advances and extensions of credit which shall bear
interest at the Revolving Offshore Rate.
All accounting terms and computations shall be based upon generally
accepted accounting principles consistently applied.
2. REVOLVING LOANS AND TERMS OF PAYMENT
2.1 Revolving Loans. Upon request of Borrower, made at any time and from
time to time during the term hereof, and so long as no Event of Default has
occurred, Bank shall lend to Borrower an amount equal to the Borrowing Base;
provided, however, that in no event shall Bank be obligated to make advances
to Borrower under this Section 2.1 whenever the Daily Balance of loans and
advances under this Article 2 exceeds, at any one time, either the Borrowing
Base or the sum of Five Million Dollars ($5,000,000.00).
All loans made pursuant to this Section 2.1 shall be added to and deemed
part of the Credit when made. If, at any time and for any reason, the Daily
Balance of loans and advances under this Article 2 exceeds the amount of the
loans and advances for which Borrower is eligible based upon the above
limitations, or if the advances made pursuant to any rider to this Agreement
exceed the percentage or dollar limitations contained in such rider (an "Over
Advance"), then Borrower shall immediately pay to Bank, in cash, the amount of
such Over Advance.
2.2 Revolving Loans Procedure for Borrowing and Interest Rate. Except as
hereinbelow provided, all advances under this Article 2 made and advanced by
Bank from and after June 29, 2001 or outstanding on the date hereof shall bear
interest on the amount of such advance from time to time outstanding at a per
annum rate equal to the "Applicable Revolving Loan Rate" (as hereinafter
defined).
(a) Method of Borrowing. Each revolving loan or advance under this
Article 2 shall be made upon Borrower's request, which request shall (a) be on
such form and in such manner as Bank may from time to time specify; (b)
specify if the loan or advance is to be a Prime Rate-Based loan or a Revolving
Offshore Rate-Based loan; (c) specify the amount of each such loan or advance
[which, in connection with any Revolving Offshore Rate-Based loans, shall be
in multiples of One Hundred Thousand Dollars ($100,000.00)]; (d) be received
by Bank not later than 10:00 a.m. Pacific local time either (i) three (3)
business days prior to the requested borrowing date, with respect to Revolving
Offshore Rate-Based loans or (ii) on the borrowing date, with respect to Prime
Rate-Based loans; and (e) with respect to any Revolving Offshore Rate-Based
loans, specify an Interest Period for such Revolving Offshore Rate-Based loan.
If a request fails to specify if the loan or advance is a Prime Rate-Based
loan or a Revolving Offshore Rate-Based loan, such loan and advance shall be a
Prime Rate-Based loan. If any request for a Revolving Offshore Rate-Based
loan fails to specify an Interest Period, such Interest Period shall be one
Loan and Security Agreement - Page 7
(1) month. If an Interest Period would end on a date that is not a business
day, such Interest Period shall extend to the next following business day.
(b) Conversions. Borrower may, from time to time, elect to convert
one or more Prime Rate-Based loans to Revolving Offshore Rate-Based loans upon
Borrower's request, which request shall (a) be on such form and in such manner
as Bank may from time to time specify; (b) specify the amount of each such
loan or advance to be converted in multiples of One Hundred Thousand Dollars
($100,000.00); (c) be received by Bank not later than 10:00 a.m. Pacific local
time three (3) business days prior to the requested conversion date; and (d)
specify an Interest Period. If any request to convert a Prime Rate-Based loan
to a Revolving Offshore Rate-Based loan fails to specify an Interest Period,
such Interest Period shall be one (1) month. If an Interest Period would end
on a date that is not a business day, such Interest Period shall extend to the
next following business day.
By not later than 10:00 a.m. Pacific local time three (3) business days
prior to the end of any Interest Period, Borrower shall elect to either
convert any Revolving Offshore Rate-Based loans expiring at the end of such
Interest Period into Prime Rate-Based loans or to renew such Revolving
Offshore Rate-Based loans, which request shall (a) be on such form and in such
manner as Bank may from time to time specify; (b) specify what portion (if
any) of the loan or advance is to be converted to a Prime-Based loan and what
portion (if any) is to remain as a Revolving Offshore Rate-Based loan [which,
in connection with Revolving Offshore Rate-Based loans shall be in multiples
of One Hundred Thousand Dollars ($100,000.00)]; and (c) specify an Interest
Period for any loans or advances to be continued as Revolving Offshore Rate-
Based loans; provided, however, that such Interest Period shall in no event
extend beyond the date certain set forth in Section 4.1 of this Agreement (as
same may from time to time be amended). If Borrower fails to timely elect to
renew such Revolving Offshore Rate-Based loans, such failure shall be deemed
an election to convert such Revolving Offshore Rate-Based loans into Prime
Rate-Based loans at the expiration of the Interest Period. If any request to
renew a Revolving Offshore Rate-Based loan fails to specify an Interest
Period, such Interest Period shall be one (1) month. If an Interest Period
elected by Borrower with respect to any renewed Revolving Offshore Rate-Based
loans would end on a date that is not a business day, such Interest Period
shall extend to the next following business day.
(c) Changes in the Prime Rate. In the event that the Prime Rate
announced is, from time to time hereafter, changed, adjustment in the rate of
interest payable by Borrower with respect to Prime Rate-Based loans then
outstanding shall be made on the effective date of the change in the Prime
Rate. The rate of interest, as adjusted, shall apply to all outstanding Prime
Rate-Based loans until the Prime Rate is again adjusted.
2.3 Computation and Payment of Interest and Principal. All interest
chargeable under this Agreement on a per annum basis shall be computed on a
basis of a 360-day year for actual days elapsed. Interest payable by Borrower
under this Article 2 shall be due and payable on the fifth (5th) day of each
calendar month (in arrears) during the term of this Agreement with respect to
the availability of this facility under Section 4.1. If Borrower fails to
make any installment of principal, interest or Bank Expenses in the time and
manner prescribed by this Agreement, Bank may, at Bank's option, elect to
Loan and Security Agreement - Page 8
treat any due but unpaid principal, interest and/or Bank Expenses as a Prime
Rate-Base loan and all such advances shall bear interest on the Daily Balance
of loans and advances under this Article 2 thereof, at a per annum rate
applicable to Prime Rate-Based loans under the terms of Article 2 of this
Agreement. Notwithstanding anything to the contrary contained in this
Agreement, and regardless of the existence or non-existence of any Event of
Default under this Agreement, Bank shall have the right (but not the
obligation) to withdraw and charge any deposit or other accounts maintained by
Borrower with Bank for the amount of any payment due Bank hereunder (and
Borrower hereby consents to such withdrawal, charge and application by Bank).
The receipt of any check or other item of payment by Bank shall not be
considered payment until such check or other item of payment is honored when
presented for payment, in which event, said check or other item of payment
shall be deemed to have been paid to Bank in accordance with Bank's rules and
regulations relating to credits to deposit accounts or, in Bank's discretion,
two (2) calendar days after the date Bank actually receives possession of such
check or other item of payment. Amounts once borrowed and repaid under this
Article 2 shall be available for re-borrowing. On the date of termination
under Article 4, all Obligations owed by Borrower to Bank under this Article 2
shall become immediately due and payable without notice or demand and shall be
repaid to Bank in cash or by a wire transfer of immediately available funds.
2.4 Default Interest Rate. Notwithstanding anything to the contrary
contained in Article 2 of this Agreement, the Credit shall bear interest, from
and after any Event of Default and without constituting a waiver of any such
Event of Default, on the Daily Balance of loans and advances under this
Article 2, at a per annum rate two (2) percentage points above the Applicable
Revolving Loan Rate.
2.5 Account Stated. Bank shall render monthly statements of the Credit
owing by Borrower to Bank, including statements of all principal, interest and
Bank Expenses owing, and such statement shall be conclusively presumed to be
correct and accurate and constitute an account stated between Borrower and
Bank unless, within ninety (90) days after receipt thereof by Borrower,
Borrower shall deliver to Bank, by registered or certified mail, at Bank's
place of business indicated above, written objection thereto specifying the
error or errors, if any, contained in any such statement.
3. EQUIPMENT PURCHASE FACILITY "A"
3.1 Equipment Purchase Facility Advances.
(a) Upon the request of Borrower made at any time, and from time to
time, during Draw Period "A" (as hereinafter defined), subject to and upon
the terms and conditions of this Agreement, and so long as no Event of
Default has occurred, Bank agrees to make term loans to Borrower for the
purpose of purchasing new equipment for use in connection with Borrower's
business (the "Equipment Purchase Facility 'A'"). For the purpose of this
Agreement, "Draw Period 'A'" shall mean the period between the date of this
Agreement and the earlier of: (i) June 30, 2002 or (ii) the date on which
the aggregate of all advances made pursuant to this Section 3.1 equals Ten
Million Dollars ($10,000,000.00).
Loan and Security Agreement - Page 9
(b) Each advance under Equipment Purchase Facility "A" shall be in
amount approved by Bank for items of equipment approved by Bank and not
made specifically for Borrower on a custom basis. The aggregate of all
advances made by Bank under Equipment Purchase Facility "A" shall not
exceed Ten Million Dollars ($10,000,000.00).
(c) If Borrower uses the proceeds of this Equipment Purchase
Facility "A" for the purchase of any equipment, and if such loan or advance
is approved by Bank, each advance made by Bank under this Equipment
Purchase Facility "A" shall be made either to Borrower or to the vendor of
any equipment financed with the proceeds of such advance (at Bank's
option). In no event shall said proceeds be used by Borrower for any
purpose other than purchase of the equipment approved by Bank. In the
event that Bank opts to disburse the proceeds of any such advance directly
to the vendor(s) of any equipment, and if the amount of the advance to be
made by Bank does not equal the total purchase price of such equipment
together with all installation charges, sales tax, freight, and software
charges, Borrower shall deliver to Bank an amount equal to the difference
between the cost (including all installation charges, sales tax, freight,
and software charges) and the amount of such advance, which difference
shall be remitted to said vendor(s) with the advance by Bank. Bank shall
not be obligated to make any advance under this Section 3.1 with respect to
the purchase of any items of equipment unless and until Bank has received
and approved the following: (1) a copy of Borrower's purchase order, (2) an
original delivery and acceptance certificate executed by Borrower with
respect to any equipment to be purchased, (3) a UCC-1 Financing Statement
or such other documents as the Bank may request to create, perfect or
continue its security interest in the equipment acquired with the advance
under this Equipment Purchase Facility, and (4) such other documentation as
Bank may require (including, without limitation, schedules attached hereto
describing said equipment and financing statements relative thereto).
Amounts once borrowed and repaid under Equipment Purchase Facility "A"
shall not be available for re-borrowing.
3.2 Documentation and Interest. Each advance made under this Equipment
Purchase Facility "A" shall be evidenced by and subject to the terms of a
separate promissory note to be executed by Borrower in substantially the form
of Exhibit "A" attached to this Agreement, with appropriate insertions (the
"Equipment Purchase Facility 'A' Note"). All loans and advances made under
Equipment Purchase Facility "A" shall be added to and deemed a part of the
Obligations. Except as hereinbelow provided, each advance under Equipment
Purchase Facility "A" shall bear interest, on the Daily Balance owing, at a
per annum rate equal to the rate designated by Borrower in the Equipment
Purchase Facility "A" Note with respect to the advance evidenced thereby (the
"Applicable Equipment Purchase Facility 'A' Rate").
Loan and Security Agreement - Page 10
3.3 Payments.
(a) Commencing on the fifth day of the month after any advance is
made under this Equipment Purchase Facility "A", and continuing on the fifth
day of each of the next forty-seven (47) months thereafter, Borrower shall
make monthly payments of principal, interest and Bank Expenses in connection
with the advance evidenced by the Equipment Purchase Facility "A" Note in the
time and manner specified therein.
(b) The receipt of any check or other item of payment by Bank shall
not be considered a payment until such check or other item of payment is
honored when presented for payment, in which event, said check or other item
of payment shall be deemed to have been paid to Bank in accordance with Bank's
rules and regulations relating to credits to deposit accounts or, in Bank's
discretion, two (2) calendar days after the date Bank actually receives
possession of such check or other item of payment.
3.4 Monthly Accounting. Bank shall render monthly statements of all
amounts owing by Borrower to Bank under Equipment Purchase Facility "A" (or,
at Bank's discretion, under each Equipment Purchase Facility "A" Note executed
and delivered by Borrower under Equipment Purchase Facility "A"), including
statements of all principal, interest, and Bank Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account between Borrower and Bank unless, within thirty (30)
days after receipt thereof by Borrower, Borrower delivers to Bank, by
registered or certified mail, at Bank's place of business, a written objection
specifying the error or errors, if any, contained in any such statement.
4. TERM
4.1 Term and Termination. This Agreement shall commence on the date
hereof. Borrower's right to receive term loan advances under Article 3 of
this Agreement shall remain in full force and effect until June 30, 2002.
Borrower's obligations with respect to any Equipment Purchase Loan Facility
"A" Notes outstanding on June 30, 2002 and the terms and conditions of this
Agreement as same relate to the Equipment Purchase Loan Facility "A" and the
Equipment Purchase Loan Facility "A" Notes shall continue in full force and
effect, and shall be subject to Bank's rights and remedies set forth therein,
and shall be due and payable in accordance with the covenants, terms and
conditions contained in such Equipment Purchase Loan Facility "A" Notes. With
respect to Borrower's right to requests revolving loan advances under Article
2 of this Agreement only, this Agreement shall remain in full force and effect
until June 30, 2002 and shall continue on a month-to-month basis after such
June 30, 2002 date until Borrower's right to requests revolving loan advances
under Article 2 of this Agreement is terminated by either party by thirty (30)
days' written notice. Notice of such termination of Borrower's right to
requests revolving loan advances under Article 2 of this Agreement shall be
effectuated by the mailing of a registered or certified letter of notice.
Notwithstanding the foregoing, upon the occurrence of an Event of Default,
Bank may terminate all of its obligations under this Agreement without notice
(including, without limitation, those relating to Borrower's right to receive
term loan advances under Article 3 of this Agreement, those relating to
Loan and Security Agreement - Page 11
Borrower's right continue to make installment payments under the Equipment
Purchase Loan Facility "A" Notes, and those relating to Borrower's right to
request revolving loan advances under Article 2 of this Agreement).
On the date of termination, all Obligations owed by Borrower to Bank
shall become immediately due and payable without notice or demand and shall be
repaid to Bank in cash or by a wire transfer of immediately available funds.
Notwithstanding termination, until all Obligations owing by Borrower with
respect to term loan advances under Article 3 of this Agreement have been
fully repaid and performed, Bank shall retain its security interest in all
existing Collateral and Collateral arising thereafter, and Borrower shall
continue to perform all Obligations with respect to term loan advances under
Article 3 of this Agreement.
4.2 Termination of Security Interest. After termination and when Bank
has received payment and performance in full of all Obligations owing under
Article 3 of this Agreement, and upon the execution by Borrower and delivery
to Bank of a general release in favor of Bank, Bank shall execute a
termination of all security agreements and security interests given by
Borrower to Bank.
5. CREATION OF SECURITY INTEREST
5.1 Grant of Security Interest. Borrower hereby grants to Bank a
continuing security interest in the Collateral in order to secure prompt
repayment and performance of all Obligations owing under Article 3 and all
Bank Expenses related to the Obligations under Article 3 of this Agreement.
Bank's security interest in the Collateral shall attach to the Collateral
without further act on the part of Bank or Borrower. In the event that any
Collateral sold, conveyed or otherwise transferred by Borrower, the proceeds
of such sale, conveyance or transfer shall be applied to pay off and satisfy
the Equipment Purchase Loan Facility "A" Note secured by such Collateral.
5.2 Security Documents; Attorney-In-Fact. Borrower shall execute and
deliver, or cause to be executed and delivered, to Bank, concurrent with
Borrower's execution of this Agreement, (if requested by Bank) concurrently
with any advances under Article 3 of this Agreement), and at any other time or
times hereafter at the request of Bank, all financing statements, continuation
financing statements, fixture filings, landlord waivers, security agreements,
chattel mortgages, assignments, deeds of trust, assignments of leases,
endorsements of certificates of title, affidavits, reports, notices, and
letters of authority and all other documents that Bank may reasonably request,
in form satisfactory to Bank, to perfect and maintain perfected Bank's
security interests in the Collateral and in order to fully consummate all of
the transactions contemplated under this Agreement. Borrower hereby
irrevocably makes, constitutes and appoints Bank (and any of Bank's officers,
employees or agents designated by Bank to act on Bank's behalf) as Borrower's
true and lawful attorney with power to sign the name of Borrower on any of the
above-described documents or on any other similar documents which need to be
executed, recorded, and/or filed in order to perfect or continue perfected
Bank's security interest in the Collateral and to do all things necessary to
carry out this Agreement. Borrower ratifies and approves all acts of the
attorney, and neither Bank nor its attorney will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law made in good
Loan and Security Agreement - Page 12
faith. The appointment of Bank as Borrower's attorney, and each and every one
of Bank's rights and powers, being coupled with an interest, are irrevocable
so long as any Obligations remain unpaid or unperformed.
To protect or perfect any security interest granted to Bank hereunder,
Bank may, in its sole discretion, discharge any lien or encumbrance or bond
the same, pay any insurance, fees or charges, maintain guards, warehousemen or
any personnel to protect the Collateral, pay any service bureau or obtain any
records, and all costs for the same shall be Bank Expenses.
6. CONDITIONS PRECEDENT
As conditions precedent to the making of the loans and the extension of
the financial accommodations hereunder, Borrower shall execute and deliver or
cause to be executed and delivered, to Bank, in form and substance
satisfactory to Bank and its counsel, each of the following:
6.1 Agreement. This Agreement, together with supplemental security
agreements, chattel mortgages, riders and other documents required by Bank;
6.2 Financing Statement. Financing statements (Form UCC-1) in form
acceptable for filing and recording with the appropriate governmental
authorities with respect to any loans and advances under Article 3;
6.3 Resolutions. If Borrower is a corporation, certified extracts from
the minutes of the meetings of Borrower's board of directors, authorizing the
borrowings and the granting of the security interests provided for herein and
authorizing specific officers to execute and deliver the agreements provided
for herein;
6.4 Certificates. If Borrower is a corporation, a certificate of good
standing showing that Borrower is in good standing under the laws of the state
of its incorporation, and certificates indicating that Borrower has qualified
to transact business and is in good standing in any other state in which
Borrower conducts business;
6.5 Search Results. UCC, tax lien, litigation, judgment and other
searches, title reports, fictitious business name statement filings, insurance
certificates, notices or other similar documents which Bank may require and in
such form as Bank may require, in order to reflect Bank's first priority
security interest in the Collateral and in order to fully consummate all of
the transactions contemplated under this Agreement;
6.6 Waivers. If requested by Bank, waivers executed by landlords and
mortgagees of any real property on which the Collateral is located;
6.7 Officers' Warranties and Representations. If requested by Bank, an
executed form of Warranties and Representations of Officers; and
Loan and Security Agreement - Page 13
6.8 Insurance. Evidence satisfactory to Bank that Borrower has obtained
insurance policies or binders, in such amounts as may be acceptable to Bank,
respecting the tangible assets of Borrower which are to serve as Collateral
and naming Bank as a loss payee on a 438-BFU endorsement and/or additional
insured (at Bank's discretion).
7. MANAGEMENT AND STATUS OF COLLATERAL AND INSPECTIONS AND AUDITS
7.1 Collateral Records. Borrower shall maintain a comprehensive and up-
to-date list of all Collateral, showing the date of purchase, any identifying
descriptions and numbers, and records of maintenance. Borrower shall deliver
a copy of such list to Bank upon execution of this Agreement, and at such time
or times thereafter as Bank may request.
7.2 Condition of Collateral. Borrower shall keep and maintain the
Collateral in good operating condition and repair and make all necessary
replacements thereto so that the value and operating efficiency thereof shall
at all times be maintained and preserved. Borrower shall not permit any items
of Collateral to become a fixture to real estate or an accession to other
property, and the Collateral is now and shall at all times remain and be
personal property.
7.3 Certificate of Title. Upon Bank's request, Borrower shall
immediately deliver to Bank, properly endorsed, any and all evidences of
ownership, certificates of title or applications for titles to any or all
items of Collateral.
7.4 Inspection of Collateral. Bank shall have the right, now and at all
times hereafter, during Borrower's usual business hours, or at the regular
business hours of any third party in possession of Collateral, to inspect and
examine the Collateral and to check and test the same as to quality, quantity,
value and condition, and at any time when an event of default under this
Agreement or under any Obligations has occurred and is outstanding Borrower
agrees to reimburse Bank for its reasonable costs and expenses in so doing.
8. WARRANTIES AND REPRESENTATIONS
In order to induce Bank to enter into this Agreement and to make the
loans and/or issue the letters of credit contemplated hereby, Borrower
warrants, represents and agrees that, until all Obligations are fully paid and
performed:
8.1 Title to Properties. Borrower has and at all times will have good,
marketable and indefeasible title to the Collateral; the Collateral is and at
all times shall remain free and clear of all liens, claims, encumbrances, and
purchase money or other security interests (except as held by Bank or as may
be consented to, in writing, by Bank), and the Collateral is and shall, at all
times, remain of good and of merchantable quality, free from defects.
8.2 Place of Business. Borrower's chief executive office is located at
the address set forth in Section 1.5 hereinabove and all of the locations at
which Borrower conducts business or stores any Collateral are as set forth in
Loan and Security Agreement - Page 14
the Warranties and Representations of Officers delivered by Borrower to Bank
of even date herewith. Borrower covenants and agrees that it will not, during
the term of this Agreement, relocate said chief executive office location
without prior written notification to Bank.
8.3 Legal Status. Borrower is and shall at all times hereafter be duly
organized and existing and in good standing under the laws of the state of its
incorporation, and qualified or licensed to do business, and in good standing
as a foreign corporation, if applicable, in all jurisdictions in which such
qualification or licensing is required.
8.4 Authorization and Validity. This Agreement and each other document,
contract and instrument required by or at any time delivered to Bank in
connection with this Agreement have been duly authorized, and upon their
execution and delivery in accordance with the provisions hereof will
constitute legal, valid and binding agreements and obligations of Borrower or
the party which executes the same, enforceable in accordance with their
respective terms.
8.5 No Violation. The execution, delivery and performance by Borrower of
this Agreement shall not: (a) violate any law or regulation, (b) constitute a
breach of any provision contained in the Articles of Incorporation, Bylaws or
other organization papers of Borrower, or (c) constitute an event of default
under any agreement to which Borrower is now or hereafter becomes a party or
by which Borrower may be bound.
8.6 Payment of Taxes. All assessments and taxes, whether real, personal
or otherwise, due or payable by, or imposed, levied or assessed against
Borrower, or any of Borrower's property, have been paid in full before
delinquency.
8.7 No Litigation. Except as disclosed by Borrower to Bank in writing
prior to or concurrently with the execution and delivery of this Agreement,
there are not presently any actions or proceedings pending by or against
Borrower before any court or administrative agency alleging seeking an award
of damages in an aggregate at any one time in excess of One Million dollars
($1,000,000) or which, in the reasonable opinion of Bank or its counsel
involving claims representing a foreseeable liability in an aggregate at any
one time in excess of One Million dollars ($1,000,000), and Borrower has no
knowledge of any pending, threatened or imminent litigation, governmental
investigations or claims, complaints, actions or prosecutions involving
Borrower outside of the limits set forth in this sentence, except for ongoing
collection matters. If any of the foregoing do arise during the term of this
Agreement, Borrower shall notify Bank in writing within thirty (30) days.
8.8 Financial Statements and Condition. All financial statements and
information relating to Borrower which have been or may hereafter be delivered
by Borrower to Bank are true and correct and have been prepared in accordance
with generally accepted accounting principles consistently applied, and there
has been no material adverse change in the financial condition of Borrower
since the submission of such financial information to Bank.
Loan and Security Agreement - Page 15
8.9 Permits, Franchises. Borrower possesses, and will hereafter possess,
all permits, memberships, franchises, contracts and licenses required and all
trademark rights, trade names, trade name rights, patents, patent rights and
fictitious name rights necessary to enable Borrower to conduct the business in
which Borrower is now engaged without conflict with the rights of others.
8.10 ERISA Warranty. Borrower has not withdrawn from (and no
termination, partial termination or other event has occurred with respect to)
any deferred compensation plan maintained for the benefit of Borrower's
employees, and has not withdrawn from any multi- employer plan described in
Section 4001(a)(3) of ERISA (as defined in Section 8.8 of this Agreement).
8.11 Environmental Matters. Borrower is now and at all times hereafter
shall remain in compliance with all federal, state and municipal laws,
regulations and ordinances relating to the handling, treatment and disposal of
toxic substances, wastes and hazardous material and shall maintain all
necessary authorizations and permits. None of the operations of Borrower is
now nor shall hereafter be the subject of any federal, state or municipal
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
8.12 Solvency. Borrower is now and shall be at all times hereafter
solvent and able to pay Borrower's debts (including trade debts) as they
mature.
8.13 Lien Priority. The liens and security interests of Bank in the
Collateral are and shall remain first priority, except as expressly agreed to,
in writing, by Bank.
8.14 Warranties and Representations Cumulative. Each warranty,
representation and agreement contained in this Agreement shall be
automatically deemed repeated with each loan and/or advance and shall be true,
accurate and correct at each such time and shall be conclusively presumed to
have been relied on by Bank regardless of any investigation made or
information possessed by Bank. The warranties, representations and agreements
set forth herein shall be cumulative and in addition to any and all other
warranties, representations and agreements which Borrower shall give, or cause
to be given, to Bank, either now or hereafter.
9. NEGATIVE COVENANTS
Borrower will not, without Bank's prior written consent, during the term
hereof and so long as any Obligation remains unpaid or unperformed:
9.1 Change in Identity. Change Borrower's name, business structure, or
identity, or add any new fictitious name, or relocate Borrower's chief
executive office.
9.2 Acquisitions and Mergers. Acquire, merge or consolidate with or into
any other business organization or enter into any partnership, joint venture
or other combination (each an "Acquisition") which is not a "Permitted
Acquisition." For the purposes of this Agreement, a "Permitted Acquisition"
shall be (A) an Acquisition involving (in whole or in part) the payment of
Loan and Security Agreement - Page 16
cash and/or the assumption by Borrower or liabilities) where (1) the sum of
the aggregate cash consideration paid and the aggregate liabilities assumed
for any single Acquisition does not exceed $5,000,000.00, (2) such Acquisition
is undertaken in accordance with all applicable requirements of law; and (3)
such Acquisition will not cause Borrower, on a projected basis, to violate any
of the financial covenants set forth in this Agreement; (B) an Acquisition
where a one or more existing subsidiaries of Borrower merges into another
subsidiary of Borrower; (C) and Acquisition between Borrower and one or more
existing subsidiaries of Borrower where Borrower is the surviving entity; and
(D) an Acquisition involving solely the issuance of capital stock of Borrower
or any affiliate of Borrower where (1) such Acquisition is undertaken in
accordance with all applicable requirements of law and (2) such Acquisition
will not cause Borrower, on a projected basis, to violate any of the financial
covenants set forth in this Agreement.
9.3 Ordinary Course of Business. Enter into any transaction not in the
usual course of Borrower's business of design, manufacture and sale of semi-
conductor products and services.
9.4 Change in Financial Structure. Make any material change in
Borrower's financial structure or in any of Borrower's business objectives,
purposes, or operations.
9.5 Suspension of Business. Suspend or go out of business.
9.6 Dividends and Distributions. Do either or both of the following in
any of Borrower's fiscal years: (i) make any distribution or declare or pay
any cash dividends on any of its capital stock or (ii) purchase, acquire,
redeem or retire any of its capital stock, of any class, whether now or
hereafter outstanding.
9.7 Liens and Encumbrances. Grant a security interest in or permit a
lien, claim or encumbrance upon all or any portion of Borrower's assets or the
Collateral, except Permitted Liens.
9.8 Investment in Securities. Make any investment in securities, other
than Permitted Investments.
9.9 ERISA/Covenant. Withdraw from participation in, permit the
termination or partial termination of, or permit the occurrence of any other
event with respect to any deferred compensation plan maintained for the
benefit of Borrower's employees under circumstance that could result in
liability to the Pension Benefit Guaranty Corporation, or any of its
successors or assigns, or to any entity which provides funds for such deferred
compensation plan, or withdraw from any multi-employer plan described in
Section 4001(a)(3) of the Employee Retirement Income Security Act ("ERISA") of
1974, as amended, which may cover Borrower's employees.
9.10 Relocation and Sale of Assets. Other than in the ordinary course of
Borrower's business, sell, lease, or otherwise dispose of, move, relocate, or
transfer, whether by sale or otherwise, any of Borrower's assets or the
Collateral.
Loan and Security Agreement - Page 17
9.11 Guarantees. Guaranty or otherwise become in any way liable with
respect to the obligations of any third party, except by endorsement of
instruments or items of payment for deposit to the general account of Borrower
or which are transmitted or turned over to Bank.
10. AFFIRMATIVE COVENANTS
Borrower hereby covenants and agrees that during the term hereof and until
all Obligations are fully paid and performed:
10.1 Location of Collateral. Borrower shall keep the Collateral only at
0000 Xxxxxxx Xxxxx, Xxx Xxxx, XX 00000, at such locations in the State of
California with respect to which Borrower has provided Bank in writing the
name and mailing address of the landlord and (if requested by Bank) for which
Borrower has obtained and delivered to Bank a landlord's waiver or similar
documentation from the landlord at each such location in a form and content
acceptable to Bank (the "Permitted Locations"). If requested by Bank,
Borrower shall provide Bank with the name and mailing address of the landlord
for each location described above or where any of the Collateral may (from
time to time) be kept and/or the mortgagee, beneficiary, or lender of any
mortgage, deed of trust or other lien encumbering each such location.
10.2 Value of Collateral. Bank shall not in any way or manner be liable
or responsible for: (a) the safekeeping of the Collateral; (b) any loss or
damage to the Collateral or occurring or arising in any manner or fashion from
any cause; (c) any diminution in the value of the Collateral; or (d) any act
or default by any carrier, warehouseman, bailee, forwarding agency or any
other person or entity whomsoever. All risk of loss, damage, destruction or
loss of value of the Collateral shall be borne by Borrower, whether or not
Borrower shall be in possession or control of the Collateral.
10.3 Notice of Litigation and/or Environmental Investigations. Promptly
after the commencement thereof, Borrower shall notify Bank in writing of: (a)
any litigation pending or threatened against Borrower before any court or
administrative agency alleging seeking an award of damages in an aggregate at
any one time in excess of One Million dollars ($1,000,000.00) or which, in the
reasonable opinion of Bank or its counsel involving claims representing a
foreseeable liability in an aggregate at any one time in excess of One Million
dollars ($1,000,000.00), and (b) any federal, state or municipal investigation
evaluating whether any remedial action is needed by Borrower to respond to a
release of any toxic or hazardous waste or substance into the environment.
10.4 Taxes. Borrower shall make due and timely payment or deposit of all
federal, state and local taxes, assessments or contributions required of
Borrower by law, and will execute and deliver to Bank, on demand, appropriate
certificates attesting to the payment or deposit thereof. Borrower will make
timely payment or deposit of all F.I.C.A. payments and withholding taxes
required of Borrower by applicable laws, and will, upon request, furnish Bank
with proof satisfactory to Bank that Borrower has made such payments or
deposits. If Borrower fails to pay any such assessment, tax, contribution, or
make such deposit, or furnish the required proof, Bank may, in Bank's sole and
absolute discretion and without notice to Borrower: (a) make payment of the
Loan and Security Agreement - Page 18
same or any part thereof, or (b) set up such reserves against the Credit, or
otherwise reduce the loans and advances for which Borrower is eligible under
this Agreement, as Bank deems necessary to satisfy the liability therefor, or
both. Bank may conclusively rely on the usual statements of the amount owing
or other official statements issued by the appropriate governmental agency.
Each amount paid or deposited by Bank shall constitute Bank Expenses and an
advance to Borrower. Nothing herein contained shall preclude Borrower from
contesting, diligently, in good faith, and by appropriate proceedings, the
imposition of any assessments and taxes and to withhold payment of such
contested amounts pending the resolution of such proceedings.
10.5 Compliance. Borrower shall maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of Borrower's business; conduct Borrower's business in an orderly and
regular manner; and comply with the provisions of all documents pursuant to
which Borrower is organized and/or which govern Borrower's continued existence
and with the requirements of all laws, rules, regulations and orders of any
governmental authority applicable to Borrower or Borrower's business.
10.6 Insurance.
(a) Acquisition and Maintenance. Borrower, at Borrower's expense,
shall keep and maintain the Collateral insured against loss or damage by fire,
theft, explosion, sprinklers and all other hazards and risks ordinarily
insured against by other owners who use such properties in similar businesses
for the full insurable value thereof. Borrower shall also keep and maintain
business interruption insurance and public liability and property damage
insurance relating to Borrower's ownership and use of the Collateral. All
such policies of insurance shall be in such form, with such companies, and in
such amounts and with such deductibles as may be satisfactory to Bank.
Borrower shall deliver to Bank certified copies of such policies of insurance
or certificates from the issuer of such insurance certifying to Bank in
writing that such insurance has been obtained and is in full force and effect
and evidence of the payments of all premiums therefor.
(b) Loss Payee Endorsement and Additional Insured. All such policies
of insurance covering the Collateral shall contain an endorsement in a form
satisfactory to Bank showing Bank as a loss payee thereof and shall contain a
waiver of warranties (Form 438-BFU). All proceeds payable under any policies
of insurance insuring the Collateral and involving losses as a result of
damage, destruction or casualty in aggregate amounts not exceeding One Million
Dollars ($1,000,000.00) during any twelve (12) consecutive month period shall
be payable to Borrower. All proceeds payable under any policies of insurance
insuring the Collateral that (i) involve losses as a result of damage,
destruction or casualty which, when added to all losses as a result of damage,
destruction or casualty during the immediately preceding twelve (12) month
period equals or exceeds One Million Dollars ($1,000,000.00) and/or (ii)
involve losses as a result of damage, destruction or casualty which, in any
one event of damage, destruction or casually equals or exceeds One Million
Dollars ($1,000,000.00) shall be payable to Bank. Upon receipt by Bank, and
at Bank's sole option, any proceeds payable and paid to Bank under this
Section 10.6 shall be either applied on account of the Obligations or released
to Borrower to purchase new, replacement Collateral in accordance with terms,
Loan and Security Agreement - Page 19
conditions and provisions acceptable to Bank, in Bank's discretion. To
further secure the payment and full performance of the Obligations, Borrower
grants Bank a security interest in and to all such policies of insurance
required to be maintained by Borrower under Section 10.6(a) and the proceeds
thereof, and Borrower shall direct all insurers under such policies of
insurance to pay all proceeds thereof directly to Bank. All public liability
insurance and all property damage insurance covering the Collateral shall name
Bank as an additional insured thereunder.
(c) Settlement of Claims. Prior to the occurrence of an Event of
Default, Borrower shall have the right to make, settle and adjust any and all
claims under such policies of insurance; provided, however, that Borrower
shall not legally conclude the settlement or adjustment of any claim which in
amount exceeds five percent (5%) of Borrower's total assets without Bank's
prior written consent. Following the occurrence of an Event of Default, Bank
(and any of its employees, officers or designated agents) is and shall be
irrevocably appointed as Borrower's lawful attorney-in-fact with full power to
make, settle and adjust all claims under such policies of insurance, to
endorse the name of Borrower on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance, and to make all
determinations and decisions with respect to such policies of insurance.
(d) Notice and Cancellation. Borrower will not cancel any of such
policies without Bank's prior written consent. Each such insurer shall agree
by endorsement upon the policy or policies of insurance issued by it to
Borrower as required above, or by independent instruments furnished to Bank,
that it will give Bank at least ten (10) days written notice before any such
policy or policies of insurance shall be altered or canceled, and that no act
or default of Borrower, or any other person, shall affect the right of Bank to
recover under such policy or policies of insurance required above or to pay
any premium in whole or in part relating thereto. Bank, without waiving or
releasing any Obligations or Event of Default, may, but shall have no
obligation to do so, obtain and maintain such policies of insurance and pay
such premiums and take any other action with respect to such policies which
Bank deems advisable. All sums so disbursed by Bank, as well as reasonable
attorneys' fees, court costs, expenses and other charges relating thereto,
shall constitute Bank Expenses, when disbursed, and shall be payable on
demand.
10.7 Bank Accounts. Except for permitted investments, Borrower shall
keep the majority of all of Borrower's principal domestic bank accounts with
Bank.
10.8 ERISA/Covenant. Borrower shall furnish to Bank: (a) as soon as
possible, but in no event later than thirty (30) days after Borrower knows or
has reason to know that any reportable event with respect to any deferred
compensation plan has occurred, a statement of the chief financial officer of
Borrower setting forth the details concerning such reportable event and the
action which Borrower proposes to take with respect thereto, together with a
copy of the notice of such reportable event given to the Pension Benefit
Guaranty Corporation, if a copy of such notice is available to Borrower; (b)
promptly after the filing thereof with the United States Secretary of Labor or
the Pension Benefit Guaranty Corporation, copies of each annual report with
respect to each deferred compensation plan; (c) promptly after receipt
thereof, a copy of any notice Borrower may receive from the Pension Benefit
Loan and Security Agreement - Page 20
Guaranty Corporation or the Internal Revenue Service with respect to any
deferred compensation plan; provided, however, this subsection shall not apply
to notice of general application issued by the Pension Benefit Guaranty
Corporation or the Internal Revenue Service; and (d) when the same is made
available to participants in the deferred compensation plan, all notices and
other forms of information from time to time disseminated to the participants
by the administrator of the deferred compensation plan.
10.9 Reimbursements. Borrower shall immediately and without demand
reimburse Bank for all sums expended by Bank which constitute Bank Expenses
and Borrower hereby authorizes and approves all advances and payments by Bank
for items constituting Bank Expenses.
10.10 Accounting Methods. Borrower shall maintain a standard and modern
system of accounting in accordance with generally accepted accounting
principles consistently applied with ledger and account cards and/or computer
tapes, discs, printouts, and records pertaining to the Collateral which
contain information as may from time to time be requested by Bank.
10.11 Financial Statements. Borrower agrees to deliver to Bank the
following reports, statements, certificates, or other materials, which
materials will be in a form acceptable to Bank and will be delivered within
the time periods specified in this Section 10.11:
(a) within fifty (50) days after the end of each of Borrower's fiscal
quarters, (i) a balance sheet and profit and loss statement, prepared by
Borrower, certified by an officer or other authorized employee of Borrower to
be full, true, complete and accurate and further certified by such officer or
other authorized employee that there exists on the date of delivery to Bank no
condition or event which constitutes a breach of or Event of Default under
this Agreement, and covering Borrower's operations during such period and (ii)
a full true and correct copy of Borrower's Form 10-Q filed by Borrower with
the Securities and Exchange Commission;
(b) within ninety-five (95) days after the end of each of Borrower's
fiscal years, (i) a statement of the financial condition of Borrower for each
such fiscal year, including (but not limited to) a long-form balance sheet and
profit and loss statement, audited by certified public accountants acceptable
to Bank, certified by an officer or other authorized employee of Borrower to
be full, true, complete and accurate and further certified by such officer or
other authorized employee that there exists on the date of delivery to Bank no
condition or event which constitutes a breach of or Event of Default under
this Agreement, and covering Borrower's operations during such period and (ii)
a full true and correct copy of Borrower's Form 10-K filed by Borrower with
the Securities and Exchange Commission; and
(c) any other report requested by Bank relating to the Collateral and
the financial condition of Borrower (including, without limitation, an aged
statement of accounts payable and an aged statement of accounts receivable),
together with a certificate signed by an officer or other authorized employee
of Borrower to the effect that all reports, statements, computer disc or tape
files, printouts, runs, or other computer prepared information of any kind or
Loan and Security Agreement - Page 21
nature relating to the foregoing, or documents delivered or caused to be
delivered to Bank under this Section 10.11 are full, true, complete, correct,
and thoroughly present the financial condition of Borrower and that there
exists on the date of delivery to Bank no condition or event which constitutes
a breach of or Event of Default under this Agreement.
If Borrower is required hereunder to deliver fiscal year-end statements of
Borrower's financial condition which are prepared on an audited basis by
independent certified public accountants, then, contemporaneously therewith,
Borrower shall also deliver to Bank an unqualified opinion thereon by said
accountants. Borrower shall comply with any request and shall treat any
written request as a continuing obligation until expressly modified or
terminated in writing.
10.12 Notifications. Borrower shall promptly supply Bank with such other
information, including tax returns, concerning Borrower's affairs as Bank may
request from time to time hereafter. Borrower shall promptly notify Bank of
any material adverse change in Borrower's financial condition and of any
condition or event which constitutes a breach of or Event of Default under
this Agreement.
10.13 Financial Covenants. At all times during the term of this
Agreement, Borrower shall:
(a) maintain a ratio of total debt and liabilities to Tangible Net
Worth of less than one (1.0) to one (1.0);
(b) maintain Tangible Net Worth in an amount not less than Two Hundred
Seventy Four Million Dollars ($274,000,000.00);
(c) not incur a net after-tax loss determined in accordance with
generally accepted accounting principles consistently applied (including,
without limitation, any gains or losses from operations, any extraordinary
gains or losses, any capital gains or losses from the sale of assets outside
the ordinary course of Borrower's business, and any investment income or
losses outside the ordinary course of Borrower's business) during any of
Borrower's fiscal years in excess of Twenty Million Dollars ($20,000,000.00);
(d) not incur an after-tax loss from operations during any of
Borrower's fiscal years in excess of Ten Million Dollars ($10,000,000.00); and
(e) maintain a ratio of net after-tax profit from operations plus
depreciation and amortization, on a rolling four (4) fiscal quarter basis, to
current maturities of long term liabilities and capitalized leases during such
rolling four (4) fiscal quarter period of not less than one and one-half (1.5)
to one (1.0).
Loan and Security Agreement - Page 22
For purposes of this Section 10.13, the following terms shall have the
following meanings:
The term "after-tax profit or loss from operations" means after tax profit
or loss from operations as determined in accordance with generally accepted
accounting principles consistently applied, excluding extraordinary gains or
losses, acquisition expenses associated with any Acquisitions, capital gains
or losses from the sale of assets outside the ordinary course of Borrower's
business and investment income or losses earned outside the ordinary course of
Borrower's business.
The term "Tangible Net Worth" means net worth as determined in accordance
with generally accepted accounting principles consistently applied, increased
by debt subordinated to Bank and decreased by the following: patents,
licenses, goodwill, capitalized research and development costs, subscription
lists, organization expenses, monies due from affiliates (including officers,
directors, shareholders, parents, partners, joint venturers, subsidiaries and
commonly held companies), and such other assets as would be classified as
"intangible" under generally accepted accounting principles.
10.14 Maintenance of Liquid Assets. At all time during the term of this
Agreement, so long as Credit is available hereunder, and until full and final
payment of all Obligations under this Agreement and any instrument or
agreement required under this Agreement, Borrower shall maintain a sum of
cash, cash equivalents (as defined in accordance with generally accepted
accounting principles), and those Permitted Investments described in Section
1.19(b) (but having maturities of one year or less) that are not encumbered,
hypothecated and or pledged in a sum not less than Ninety Million Dollars
($90,000,000.00).
11. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an Event of Default under this Agreement:
11.1 Failure to Make Payment. If Borrower fails to pay within five (5)
days after Bank's service of a written notice that same is past due and
payable, or when declared due and payable, all or any portion of the
Obligations.
11.2 Breach. If Borrower fails or neglects to perform, keep or observe
any term, provision, condition, covenant, agreement, warranty or
representation contained in Sections 8, 9 or 10 of this Agreement (and/or any
and all subsections thereof).
11.3 Breach. If Borrower fails or neglects to perform, keep or observe
any term, provision, condition, covenant, agreement, warranty or
representation contained in this Agreement (other than provided by Sections
11.1 and 11.2 hereof) within thirty (30) days after Bank's service of a
written notice identifying Borrower's default under this Section 11.3.
Loan and Security Agreement - Page 23
11.4 Material Impairment. If there is a material impairment of the
prospect of repayment of all or any portion of the Obligations, or a material
impairment of the value of the Collateral or the priority of Bank's security
interests therein.
11.5 Insolvency If Borrower or any guarantor or subsidiary of Borrower
commences any voluntary Insolvency Proceeding, becomes insolvent or generally
unable to pay or admits in writing its inability to pay its debts as they
mature and come due, applies for or acquiesces in the appointment of a
trustee, receiver, liquidator, conservator or other custodian of Borrower, any
guarantor, or any subsidiary of Borrower or a substantial part of their
respective assets, makes an assignment for the benefit of creditors, becomes
the subject of any involuntary Insolvency Proceeding and same is not
discharged within thirty (30) days, becomes the subject of the appointment of
a trustee, receiver, liquidator, conservator or other custodian of Borrower,
any guarantor or any subsidiary of Borrower or a substantial part of their
respective assets and same is not discharged within thirty (30) days.
11.6 Private Liens and Levies. If all or any material portion of the
assets of Borrower, any guarantor of the Obligations, or any subsidiary of
Borrower are seized, subjected to any writ, attachment, or distress warrant or
is levied upon or comes or put into possession of any trustee, receiver, or
person acting in a similar capacity and such seizure, writ, attachment,
warrant or transfer of possession is not discharged within ten (10) days.
11.7 Injunction. If Borrower is enjoined, restrained or in any way
prevented by court order from continuing to conduct all or any material part
of Borrower's business affairs.
11.8 Governmental and Tax Liens or Levies. If (1) a notice of lien, levy
or assessment is filed of record with respect to all or any material part of
the assets of Borrower, any guarantor of the Obligations, or any subsidiary of
Borrower by the United States Government, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency and same is not discharge and paid within ten (10) days,
or (2) any taxes or debts owing at any time hereafter to any one or more of
such entities becomes a lien as a result of any delinquency in the payment
thereof and such lien is not being contested by Borrower in good faith by
appropriate proceedings and/or, if requested by Bank, Borrower has not
procured and posted such bonds (in amounts, forms an content) satisfactory to
Bank, or (3) any notice of sale has been filed or recorded in connection with
the sale or liquidation of the property that is the subject of the lien for
the payment of such taxes, assessments, or other governmental charges owing by
one or more of such entities.
11.9 Judgment Lien. If one or more judgments and/or one or more other
claims becomes liens or encumbrances upon any or all of the assets of Borrower
in an aggregate amount at any one time in excess of One Million Dollars
($1,000,000.00).
11.10 Third Party Agreements. If there is a default in any material
agreement to which Borrower is a party with third parties resulting in a right
by such third parties to accelerate the maturity of Borrower's indebtedness.
Loan and Security Agreement - Page 24
11.11 Misrepresentations. If any misrepresentation exists in any
warranty or representation made to Bank by Borrower or any officer, director
or partner of Borrower, or if any warranty or representation is withdrawn by
Borrower or any officer, director or partner of Borrower.
11.12 Dissolution. If Borrower dissolves or liquidates, or if the
directors and/or shareholders of Borrower take action to effect such a
dissolution or liquidation.
11.13 Change of Ownership. If there is a change of control of Borrower
or any change in the direct, indirect, or beneficial ownership by any single
or affiliated group of owners in an amount of twenty percent (20%) or more of
the issued and outstanding stock of Borrower.
11.14 Additional Defaults. If an event occurs which with the passage of
time would constitute an Event of Default or if Borrower fails or neglects to
perform, keep or observe any term, provision, condition, covenant, agreement,
warranty or representation contained in any other present or future agreement
between Borrower and Bank and such failure or neglect constitutes a default or
event of default under such agreement.
Notwithstanding anything contained in this Article 11 to the contrary, upon
the occurrence of an Event of Default, Bank, at Bank's discretion, may cease
advancing monies or extending loans or other credit accommodations under this
Agreement or any other agreement between Bank and Borrower; provided, however,
that Bank shall refrain from further exercising its rights and remedies and an
Event of Default shall thereafter be deemed not to have occurred by reason of
the occurrence of any of the events set forth in Sections 11.8 and 11.9 of
this Agreement if, within ten (10) days from the date of such occurrence, the
subject event or action is released, discharged, dismissed, bonded against or
satisfied.
12. BANK'S RIGHTS AND REMEDIES
12.1 Rights and Powers. If an Event of Default shall have occurred and
not been cured or waived in accordance with the terms hereof, Bank shall have
the following rights and powers and may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all Obligations immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, or any other agreement between Borrower and
Bank;
(c) Terminate this Agreement as to any future liability or obligation
of Bank, but without effecting Bank's rights and security interest in the
Collateral and without effecting the Obligations;
(d) Without notice to or demand upon Borrower or any guarantor, make
such payments and do such acts as Bank considers necessary or reasonable to
Loan and Security Agreement - Page 25
protect its security interest in the Collateral. Borrower agrees to assemble
the Collateral if Bank so requires, and to make the Collateral available to
Bank as Bank may designate. Borrower authorizes Bank to enter the premises
where the Collateral is located, take and maintain possession of the
Collateral and the premises, or any part thereof, for so long as is required
by Bank, and at no cost to Bank, and to pay, purchase, contest or compromise
any encumbrance, charge or lien which in the opinion of Bank appears to be
prior or superior to Bank's security interest and to pay all expenses incurred
in connection therewith;
(e) Without constituting a retention of Collateral in satisfaction of
an Obligation within the meaning of Section 9505 of the Code or an action
under California Code of Civil Procedure Section 726, Bank may apply any and
all amounts maintained by Borrower with Bank as deposit accounts (as that term
is defined under Section 9105 of the Code) or other accounts against the
Obligations;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale and sell or dispose of (in the manner provided
for herein) the Collateral;
(g) Sell or dispose of the Collateral at either public or private
sales, or both, by way of one or more contracts or transactions, for cash or
on terms, in such manner and at such places (including Borrower's premises) as
is commercially reasonable in the opinion of Bank. It is not necessary that
the Collateral be present at any such sale;
(h) Bank shall give the Borrower and each holder of a security
interest in the Collateral who has filed with Bank a written request for
notice, a notice in writing of the time and place of public sale, or, if the
sale is a private sale or some other disposition other than a public sale is
to be made of the Collateral, the time on or after which the private sale or
other disposition is to be made. The notice shall be personally delivered or
mailed, postage prepaid, to Borrower as provided in Section 13.3 of this
Agreement, at least five (5) calendar days before the date fixed for the sale,
or at least five (5) calendar days before the date on or after which the
private sale or other disposition is to be made, unless the Collateral is
perishable or threatens to decline speedily in value. Notice to parties other
than Borrower claiming an interest in the Collateral shall be sent to such
addresses as they have furnished to Bank. If the sale is to be a public sale,
Bank shall also give notice of the time and place by publishing a notice one
time at least five (5) calendar days before the date of the sale in a
newspaper of general circulation in the county in which the sale is to be
held;
(i) Bank may credit bid and purchase at any public sale;
(j) Borrower shall pay all Bank Expenses incurred in connection with
Bank's enforcement and exercise of any of Bank's rights and remedies as herein
provided, whether or not suit is commenced by Bank;
(k) Any deficiency which exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will be
returned, without interest and subject to the rights of third parties, to
Borrower by Bank, or, in Bank's discretion, to any party who Bank believes, in
good faith, is entitled to such excess;
Loan and Security Agreement - Page 26
(l) Bank is hereby granted a license or other right to use, without
charge, Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any property
of a similar nature, as it pertains to the Collateral or any disposition
thereof, and Borrower's rights under all general intangibles, licenses and
franchise agreements shall inure to Bank's benefit, and Bank shall have the
right and power to enter into sub-license agreements with respect to all such
rights with third parties on terms acceptable to Bank.
12.2 Remedies Cumulative. Bank's rights and remedies under this
Agreement and all other agreements shall be cumulative. Bank shall have all
other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Bank of one right or remedy shall
be deemed an election, and no waiver by Bank of any default on Borrower's part
shall be deemed a continuing waiver. No delay by Bank shall constitute a
waiver, election or acquiescence by Bank.
13. MISCELLANEOUS
13.1 Taxes and Other Expenses Regarding the Collateral. If Borrower
fails to pay promptly when due to any person or entity, monies which Borrower
is required to pay by reason of any provision in this Agreement, Bank may, but
need not, pay the same and any such payment shall immediately constitute an
advance under and pursuant to the Credit, and Borrower shall promptly
reimburse Bank therefor. All such sums shall be Bank Expenses hereunder. Any
payments made by Bank shall not constitute: (a) an agreement by Bank to make
similar payments in the future, or (b) a waiver by Bank of any default under
this Agreement. Bank need not inquire as to, or contest the validity of, any
such expense, tax, security interest, encumbrance or lien and the receipt of
the usual official notice for the payment thereof shall be conclusive evidence
that the same was validly due and owing.
13.2 Waivers.
(a) Application of Payments. Borrower waives the right to direct the
application of any and all payments or collections at any time or times
hereafter received by Bank on account of any Obligations, and Borrower agrees
that Bank shall have the continuing exclusive right to apply and reapply such
payments or collections to the Obligations in any manner as Bank may deem
advisable,
(b) Notices of Demand, Etc. Borrower waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
documents, instruments, chattel paper, and guaranties at any time held by Bank
on which Borrower may in any way be liable.
(c) Confidentiality of Accounting. Borrower waives the right to
assert a confidential relationship, if any, Borrower may have with any
accounting firm and/or service bureau in connection with any information
requested by Bank pursuant to or in accordance with this Agreement, and agrees
Loan and Security Agreement - Page 27
that Bank may contact directly any such accounting firm and/or service bureau
in order to obtain such information.
13.3 Notices. Unless otherwise provided in this Agreement, all notices
or demands by any party relating to this Agreement shall be in writing and
sent by regular United States mail, postage prepaid, properly addressed to
Borrower at Borrower's address set forth in Section 1.5 of this Agreement or
to Bank at Bank's address set forth in Section 1.3 hereinabove, or to such
other addresses as Borrower or Bank may from time to time specify to the other
in writing.
13.4 Destruction of Borrower's Documents. Any documents, schedules,
invoices or other papers delivered to Bank may be destroyed or otherwise
disposed of by Bank six (6) months after they are delivered to or received by
Bank unless Borrower does request, in writing, the return of the said
documents, schedules, invoices or other papers and makes arrangements, at
Borrower's expense, for their return.
13.5 Choice of Law. The validity of this Agreement, its construction,
interpretation and enforcement, and the rights of the parties hereunder and
concerning the Collateral, shall be determined under, governed by and
construed in accordance with the laws of the State of California. The parties
agree that all actions or proceedings arising in connection with this
Agreement shall be tried and litigated only in the state courts located in the
County of San Francisco, State of California, or the County of Santa Xxxxx,
State of California, or the federal courts located in the Northern District of
California. Borrower waives any right Borrower may have to assert the
doctrine of forum non conveniens or to object to such venue and hereby
consents to any court-ordered relief.
13.6 One Loan Transaction. The Obligations shall be secured by all other
security interests, liens or encumbrances heretofore, now, or at any time
hereafter granted by Borrower to Bank. If more than one person or entity is
signing this Agreement on behalf of Borrower, the Obligations of each party
signing this Agreement on behalf of Borrower shall be joint and several.
13.7 Agreement Binding; Assignment. This Agreement shall be binding and
deemed effective when executed by Borrower and accepted and executed by Bank.
This Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties; provided, however, that
Borrower may not assign this Agreement or any rights hereunder without Bank's
prior written consent and any prohibited assignment shall be absolutely void.
No consent to an assignment by Bank shall release Borrower from its
obligations to Bank. Bank may assign this Agreement and its rights and duties
hereunder. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits hereunder. Bank will provide Borrower with prior written notice
to Borrower; provided, however, that Borrower shall not have any right, power
or privilege to approve or consent to such assignment, sale, transfer,
negotiation and/or participation and the Bank's failure to give such notice
shall not constitute a breach or default under this Agreement. In connection
therewith, Bank may disclose all documents and information which Bank now has
or hereafter may have relating to Borrower or Borrower's business.
Loan and Security Agreement - Page 28
13.8 Headings, Gender and Joint and Several Liability. Article and
section headings and article and section numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each article and section applies equally to this
entire Agreement. As used in this Agreement and when required by the context,
each number (singular or plural) shall include all numbers, and each gender
shall include all genders. If more than one person or entity is signing this
Agreement on behalf of Borrower, the Obligations of each party signing this
Agreement on behalf of Borrower shall be joint and several.
13.9 Construction. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Bank or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of all parties hereto.
13.10 Severability. Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose of determining
the legal enforceability of any specific provision.
13.11 Integration. This Agreement cannot be changed or terminated
orally. No modification or amendment to this Agreement shall be effective
unless in writing, executed by Bank. Except as to currently existing
obligations of Borrower to Bank, all prior agreements, understandings,
representations, warranties, and negotiations between the parties, if any, are
merged into this Agreement.
13.12 WAIVER OF JURY TRIAL. BANK AND BORROWER HEREBY WAIVE, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY
COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR
THE OBLIGATIONS, OR ANY INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING (INCLUDING TORT AND CLAIMS FOR BREACH OF
DUTY), BETWEEN BANK AND BORROWER.
13.13 Prior Loan and Security Agreement. The total Credit and the total
of Borrower's Obligations in respect to all letters of credit outstanding
under that certain Amended and Restated Loan and Security Agreement by and
between Bank and Borrower dated as of March 8, 2000 and any concurrent or
subsequent rider thereto and any extensions, supplements, amendments or
modifications thereto and/or to any such rider (collectively the "Prior
Agreement"), from and after the date of this Agreement, shall be deemed to
have been incurred pursuant to this Agreement which amends and restates the
Prior Agreement in its entirety. Borrower agrees and acknowledges that, as of
the date of this Agreement, there were not any sums due and owing under the
Prior Agreement (but not any notes executed and in furtherance of the Prior
Agreement).
Loan and Security Agreement - Page 29
IN WITNESS WHEREOF, Borrower has executed and delivered this Agreement on
the date first hereinabove written.
"Borrower"
Micrel Incorporated,
a California corporation
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
Xxxxxxx X. Xxxx
President and Chief Executive Officer
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
------------------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Vice President of Finance and Chief
Financial Officer
Accepted and effective this fourteenth day of August, 2001, at Bank's place of
business in the City of San Xxxx, State of California.
"Bank"
Bank of the West,
a California banking corporation
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Its: Senior Vice President
Loan and Security Agreement - Page 30
Exhibit "A"
EQUIPMENT PURCHASE FACILITY "A" NOTE
$________________________________ __________________,________________
San Jose, California
1. BORROWING AND INTEREST RATE. In consideration of the loan and
advance of credit in the amount set forth above made by Bank of the West (the
"Bank") to or for the benefit of Micrel Incorporated (the "Borrower") pursuant
to that certain Loan and Security Agreement between Borrower and Bank dated
June 29, 2001 (collectively, the "Loan Agreement"), Borrower promises to pay
Bank, or order, at Xxx Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxx Business
Banking Group, Xxx Xxxx, Xxxxxxxxxx 00000 on the dates and in the manner
hereinafter set forth, the principal amount set forth above, plus any interest
thereon at the Applicable Equipment Purchase Facility "A" Rate (as hereinafter
defined), and all Bank Expenses. Interest shall be computed from the date
funds are advanced under this Note (the "Funding Date") and thereafter on the
outstanding amount from time to time owing by Borrower to Bank under this Note
on the basis of three hundred sixty (360) days per year and actual days
elapsed.
2. APPLICABLE EQUIPMENT PURCHASE LOAN "A" RATE.
(1) Initial Rate Selected by Borrower. Interest on the amounts
from time to time owing by Borrower to Bank under this Note shall accrue at
the rate designated by Borrower by initialing the appropriate blanks set forth
below or as hereinafter designated by Borrower in accordance with the terms of
this Note (the "Applicable Equipment Purchase Facility 'A' Rate"); provided,
however, that if Borrower fails to elect any of the three options set forth
below, the Applicable Equipment Purchase Facility "A" Rate shall be the rate
set forth in Subparagraph 2(1)(a) below:
____________ (a) Prime Rate-Based Loan.
Initial Here
Subject to Borrower's right to convert the Applicable
Equipment Purchase Facility "A" Rate as elsewhere provided in this Note
and except as hereinbelow provided, all amounts from time to time
outstanding and unpaid under this Note shall bear interest, on the Daily
Balance owing, at the Prime Rate (as defined in the Loan Agreement).
The Prime Rate as of the date of this Note is ___________________________
percent ( %) per annum. In the event that the Prime Rate announced is,
from time to time hereafter, changed, adjustment in the rate of interest
payable by Borrower shall be made on the effective date of the change in
the Prime Rate. The rate of interest, as adjusted, shall apply to all
amounts from time to time outstanding and unpaid under this Note until
the Prime Rate is adjusted again. All interest chargeable under this
Agreement on a per annum basis shall be computed on a basis of a 360-day
year for actual days elapsed.
Equipment Purchase Line A Note - Page 1
____________ (b) Four Year Swap Rate-Based Loan.
Initial Here
All amounts from time to time outstanding and unpaid
under this Note shall bear interest, on the Daily Balance owing, at the
"four (4) year swap rate" most recently announced by Bank at its
headquarters office in San Francisco, California and in effect two (2)
Business Days prior to the date of the execution and delivery of this
Note plus two and one-quarter percentage points (2.25%), with the
understanding that Bank's "four (4) year swap rate" is only one of
Bank's base rates and serves as a basis upon which effective rates of
interest are calculated for loans making reference thereto and may not
be the lowest of Bank's base rates.
____________ (c) LIBOR Rate-Based Loan.
Initial Here
Subject to Borrower's right to convert the Applicable
Equipment Purchase Facility "A" Rate as elsewhere provided in this Note
and except as hereinbelow provided, all amounts from time to time
outstanding and unpaid under this Note shall bear interest, on the Daily
Balance owing, at the Equipment Purchase Offshore Rate (as defined
below).
The term "Equipment Purchase Offshore Rate" shall, for any
Interest Period (as defined below), be the rate of interest per annum
(rounded upward to the next 1/32nd of one percent) resulting from the
sum of (i) two and one-eighth percent (2.125%) per annum and (ii) a
quotient, the numerator of which is the LIBOR Rate and the denominator
of which is the difference between (a) one (1.0) and (b) the Eurodollar
Reserve Percentage. Expressed as a formula, the Equipment Purchase
Offshore Rate shall be as follows:
Equipment Purchase Offshore Rate = [2.125%] + [LIBOR Rate/(1.00 - Eurodollar
Reserve Percentage)]
The term "LIBOR Rate" means the rate of interest per annum
that appears on page 3750 of the Dow Xxxxx Telerate Screen (or any
successor page) for United States dollar deposits in amounts equal to
the amount of the LIBOR Rate-Based loan and with a maturity equal to the
Interest Period (as hereinafter defined) as designated by Borrower
below, which LIBOR Rate shall be determined at 11:00 a.m. (London local
time) two (2) Business Days prior to the commencement of the date of
this Note and two (2) days prior to the expiration of any Interest
Period; provided, however, that if such rate is no longer published by
Dow Xxxxx, then the LIBOR Rate shall be determined by reference to such
other index that Bank may reasonably designate in good faith as the rate
at which United States dollar deposits with a maturity comparable to the
Interest Period and in an amount equal to the amount of the LIBOR Rate-
Based loan would be offered to major banks on the London Eurocurrency
market at 11:00 a.m. (London local time) two (2) Business Days prior to
the commencement of the Interest Period.
Equipment Purchase Line A Note - Page 2
The term "Interest Period" means the period of one (1)
month, two (2) months, three (3) months, six (6) months, or one (1)
year, as designated by Borrower at the time Borrower requests an LIBOR
Rate-Based Loan; provided, however, that such Interest Period shall in
no event extend beyond the Maturity Date of this Note.
The term "Eurodollar Reserve Percentage" means for any day
during any Interest Period the maximum reserve percentage (expressed as
a decimal, rounded upward to the next 1/100ths of one percent) in effect
on such day (whether or not applicable to any bank) under the
regulations issued from time to time by the Federal Reserve Bank for
determining the maximum reserve requirements (including any emergency,
supplemental, or other marginal reserve requirements) with respect to
Eurocurrency Funding (currently referred to as ""Eurocurrency
Liabilities"). The Equipment Purchase Offshore Rate shall be adjusted
automatically as to all amounts then outstanding as of the effective
date of any change in the Eurodollar Reserve Percentage.
For purposes of this Note, Borrower selects the following
Interest Period; provided, however, that if Borrower fails to select an
Interest Period for LIBOR Rate-Based Loans, then the Interest Period
shall be deemed to be one (1) month:
Interest Period Initials (Select one)
One (1) month ________
Two (2) months ________
Three (3) months ________
Six (6) months ________
One (1) year ________
In the event that the Equipment Purchase Offshore Rate
announced is, from time to time hereafter, changed, adjustment in the
rate of interest payable by Borrower shall be made on the effective date
of the change in the Equipment Purchase Offshore Rate. The rate of
interest, as adjusted, shall apply to all amounts from time to time
outstanding and unpaid under this Note until the Equipment Purchase
Offshore Rate is adjusted again. All interest chargeable under this
Agreement on a per annum basis shall be computed on a basis of a 360-day
year for actual days elapsed.
(2) Conversion Option. Borrower may, from time to time,
elect to convert the Applicable Equipment Purchase Facility "A" rate from
either a Prime Rate-Based loan under Section 2(1)(a) above or a Equipment
Purchase Offshore Rate-Based loan under Section 2(1)(c), above to a "swap
rate" to be determined by Bank for swap contracts having a period or term
(determined by Bank in its reasonable judgment) most closely equivalent to the
Equipment Purchase Line A Note - Page 3
term remaining term of this Note until its Maturity Date as of the effective
date of the conversion plus two and one-quarter percentage points (2.25%),
with the understanding that Bank's "swap rate" determined by Bank is only one
of Bank's base rates and serves as a basis upon which effective rates of
interest are calculated for loans making reference thereto and may not be the
lowest of Bank's base rates. Borrower shall exercise this conversion option,
if at all, on written notice delivered to Bank, which written notice shall (a)
be on such form and in such manner as Bank may from time to time specify; (b)
specify the principal amount and the date of the note to be so converted; and
(c) be received by Bank not later than 10:00 a.m. Pacific local time three (3)
Business Days prior to the requested conversion date. Once the term loan
evidenced by this note is converted in accordance with the provisions of this
Section 2(2), Borrower shall not have any further right to elect additional or
other conversions. Borrower's conversion rights under this Section 2(2) shall
be exclusive, and Borrower shall not have any right to convert the Applicable
Equipment Purchase Facility "A" Rate, except as provided in this Section 2(2).
(3) Prepayment. Borrower may upon at least ten (10) "Business
Days" notice to Bank, prepay this Note in whole or in part with accrued
interest at the Applicable Rate to the date of such prepayment on the amount
prepaid, subject to the terms and provisions of this Section. If and only if
the Applicable Equipment Purchase Facility "A" Rate is the Four Year Swap Rate
or other swap rate based interest rate resulting from exercise of the
conversion feature under Section 2.2, denominated, then (concurrently with any
prepayment of all or any part of the Obligations owing under this Note)
Borrower shall also pay to Lender an amount equal to the interest which would
be earned at the "Prepayment Rate" (as defined below) on the principal balance
prepaid to Lender (computed on the basis of a 360-day year for actual days
elapsed) for the period starting on the date of prepayment and ending at the
Maturity Date.
For purposes of this Note, the term "Business Day" shall mean any day
which is not a Saturday, Sunday, or other day on which commercial banks are by
law authorized or required to close.
For the purpose of this Note, the term "Prepayment Rate" shall mean the
value calculated by subtracting (i) the current rate that obtained by Bank on
a "swap rate" contract having a period of time having a term most closely
approximating the time period between the date of such prepayment and the
Maturity Date from (ii) the Applicable Equipment Purchase Facility "A" Rate.
(4) Maturity Rate. From and after the Maturity Date, amounts
outstanding and unpaid this Note shall bear interest at five (5) percentage
points more than the Applicable Equipment Purchase Facility "A" Rate that
would have been applicable hereunder had the Maturity Date not occurred.
Anything herein to the contrary notwithstanding, interest at the Maturity Rate
shall be due and payable on demand but shall accrue from the Maturity Date
until this Note is paid in full.
3. REPAYMENT OF PRINCIPAL, INTEREST AND EXPENSES. Borrower agrees
to make all payments of principal and interest in lawful money of the United
Equipment Purchase Line A Note - Page 4
States of America free from any offset, deduction, or counterclaim, and
expressly waives all rights to compensation or cross demands it might
otherwise have.
(a) Commencing on the fifth day of be the calendar month after
the Funding Date, and continuing on the fifth day of each of the next forty-
seven (47) months thereafter, Borrower shall make (i) equal and consecutive
monthly principal payments with each payment being in an amount sufficient to
repay the aggregate principal amount advanced under this Note over forty-eight
(48) months on a straight-line basis, (ii) monthly interest payments on the
outstanding amount of the advances under the Equipment Purchase Facility "A"
at the Applicable Equipment Purchase Facility "A" Rate, and (iii) all Bank
Expenses incurred by Bank in connection with Equipment Purchase Facility "B."
Subject to Borrower's obligations to make installment payments of principal,
interest and Bank Expenses in the time and manner specified in this note, all
unpaid principal, interest, Bank Expenses and other amounts owing under this
Note shall be due and payable on the fourth anniversary of the Funding Date
(as defined in this Note).
(b) The receipt of any check or other item of payment by Bank
shall not be considered a payment until such check or other item of payment is
honored when presented for payment, in which event, said check or other item
of payment shall be deemed to have been paid to Bank in accordance with Bank's
rules and regulations relating to credits to deposit accounts or, in Bank's
discretion, two (2) calendar days after the date Bank actually receives
possession of such check or other item of payment.
4. LATE FEES. If any payment due hereunder is not received by Bank
within fifteen (15) days after the due date thereof, Borrower shall pay to
Bank without claim, notice or demand a late payment charge equal to six
percent (6%) of the amount of the installment of principal and interest due
and delinquent to defray the administrative costs and expenses suffered by
Bank by reason of such delinquency. Borrower acknowledges and agrees that the
actual amount of damages that would be incurred by Bank as a result of such
delinquency are extremely difficult or impracticable to ascertain and that the
late charge set forth herein represents a reasonable attempt to fix such
damages. Collection of such late charge shall not excuse the performance of
the terms of this Note nor prejudice Bank's right to enforce any right or
remedy which it may have for the collection of principal and interest or
otherwise under the terms of this Note, under the Loan Agreement, or
applicable law.
5. AUTHORITY FOR ADVANCES. All Advances shall be conclusively
presumed to have been made to, for the benefit of, and at the request of
Borrower when deposited or credited to the account of Borrower with Bank or
made in accordance with the terms of the Loan Agreement or the oral or written
instructions of Borrower, or any one signing below for or on behalf of
Borrower.
Equipment Purchase Line A Note - Page 5
6. EVENTS OF DEFAULT AND REMEDIES.
(a) Events of Default. Any one of the following occurrences
shall constitute an "event of default" under this Note:
(1) The failure by Borrower to make any payment of
principal or interest upon this Note as and when the same becomes
due and payable in accordance with the terms hereof and the
continuation of such failure for five (5) days after written
notice thereof is given Borrower by Bank;
(2) The occurrence of any default under this Note other
than as described in the preceding clause (1) and the continuation
of such default for ten (10) days after written notice thereof is
given Borrower by Bank; or
(3) The occurrence of any event of default as defined
under the Loan Agreement, or any other document securing the
obligations under this Note. For purposes of Subparagraph 6(a)(3)
with respect to any event or occurrence which constitutes an event
of default hereunder solely by reason of its constituting a
default under a document or instrument other than this Note, to
the extent (if any) that such other document or instrument
provides a grace or cure period with respect to such default, the
same grace or cure period, and only such period, shall apply with
respect thereof under this Note.
(b) Remedies. Upon the occurrence of any event of default
hereunder: (i) the entire unpaid principal amount, any and all unpaid interest
then accrued on, and any other amounts owing under or evidenced by this Note,
shall (at the option of the Bank and without notice or demand of any kind to
Borrower or any other person) be and become immediately due and payable and
(ii) Bank hereof shall have and may exercise any and all rights and remedies
available at law or in equity and also any and all rights and remedies
provided in the Loan Agreement.
Upon the occurrence of an event of default hereunder (which has not been
cured as herein provided or waived by Bank in writing), at the option of Bank,
and in addition to any other remedies available to Bank, interest may be
charged on the Advances outstanding on the date of such event of default at
the rate of five (5) percentage points greater than the Equipment Purchase
Facility "A" Rate (the "Equipment Purchase Facility Default Rate"). The
Equipment Purchase Facility Default Rate shall commence on the day following
any event of default and shall continue until such event of default has been
cured to the satisfaction of Bank.
7. WAIVERS, MAKER(S) AND ENDORSER(S). Borrower, for itself and for
its successors, transferees and assigns, hereby waives all valuation and
appraisement privileges, presentment and demand for payment, protest, notice
of protest and nonpayment, dishonor and notice of dishonor, bringing of suit,
lack of diligence or delays in collection or enforcement of this Note and
notice of the intention to accelerate, the release of any party liable, the
release of any security for debt, the taking of any additional security and
any other indulgence or forbearance.
Equipment Purchase Line A Note - Page 6
8. WAIVER OF STATUTE OF LIMITATIONS. The right to plead any and all
statutes of limitations as a defense to any demand on this Note is expressly
waived by each and all said parties.
9. FEES, COSTS AND LENDER EXPENSES.
(a) Attorneys' Fees and Costs. If Bank refers this Note to an
attorney for collection or seeks legal advice following a default under this
Note, the Loan Agreement, or other security agreements securing this Note, or
if an action is instituted on this Note, the Loan Agreement, or if any other
judicial or non-judicial action is instituted by the holder hereof or by any
other person, and an attorney is employed by the holder hereof to appear in
any such action or proceeding or to reclaim, sequester, protect, preserve or
enforce the holder's interest in the Collateral (as defined in the Loan
Agreement) or any other security for this Note, including, but not limited to
proceedings to foreclose the loan evidenced hereby, proceedings under the
federal bankruptcy laws, or in eminent domain, or under the probate code, or
in connection with any state or federal tax lien, or to enforce an assignments
of rents, or for the appointment of a receiver, or involving mechanics' liens
or stop notices, or in connection with disputes regarding the proper
disbursement of loan funds, Borrower promises to pay reasonable attorneys'
fees and for services performed by the holder's attorney, and all costs and
expenses incurred incident to such employment.
(b) Bank Expenses. Borrower shall immediately and without
demand reimburse Bank for all sums expended by Bank which constitute Bank
Expenses and Borrower hereby authorizes and approves all advances and payments
by Bank for items constituting Bank Expenses. The term "Bank Expenses" means:
all costs and expenses incurred by Bank in connection with this Note, the
Loan Agreement, or the transactions contemplated hereby, including, without
limitation, all costs or expenses required to be paid by Borrower under this
Note, the Loan Agreement, or the transactions contemplated hereby which are
paid or advanced by Bank; taxes and insurance premiums of every nature and
kind of Borrower paid by Bank; filing, recording, publication, search fees,
appraiser fees, auditor fees, title insurance premiums paid or incurred by
Bank in connection with Bank's transactions with Borrower; costs and expenses
incurred by Bank (with or without suit) in collecting or realizing upon any
collateral including, without limitation the Collateral (as defined in the
Loan Agreement), to correct any default or enforce any provision of this Note,
the Loan Agreement, or the transactions contemplated hereby, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale and/or advertising to sell the Collateral, whether or not a
sale is consummated; costs and expenses of suit incurred by Bank in enforcing
or defending this Note, the Loan Agreement, or the transactions contemplated
hereby or any portion hereof; and reasonable attorneys' fees and expenses
incurred by Bank in advising, structuring, drafting, reviewing, amending,
terminating, enforcing, defending or concerning this Note, the Loan Agreement,
or the transactions contemplated hereby, any portion hereof, any Agreement
related hereto, or any of the transactions contemplated hereby, whether or not
suit is brought, and including, but not limited to, any expenses incurred in
relation to opposing or seeking to obtain relief from any stay or restraining
order prohibiting Bank from exercising its rights as a secured creditor,
foreclosing upon or disposing of Collateral, or such related matters.
Equipment Purchase Line A Note - Page 7
10. DEFINITIONS. The term "Bank," as used herein, shall mean and
include Bank and any successor or assign of Bank, and any holder of this Note
shall, upon becoming such holder, be included in the term "Bank" wherever the
same appears in this Note.
11. OBLIGATION S UNDER LOAN AGREEMENT. The obligations arising under
this Note constitute Obligations under and pursuant to the terms of the Loan
Agreement and are secured under and pursuant to the terms of such Loan
Agreement.
12. MISCELLANEOUS.
(a) Governing Law and Time of Performance. This Note shall be
governed by and construed under the laws of the State of California. Time is
of the essence of this Note and each provision hereof.
(b) Successors and Assigns. This Note shall be binding upon
Borrower and its successors and assigns, and shall inure to the benefit of
Bank and its successors and assigns.
(c) Headings; Gender. The headings of the Paragraphs and
Subparagraphs of this Note are inserted for convenience only and shall not be
deemed to constitute a part hereof. All words and phrases shall be taken to
include the singular or plural number, and the masculine, feminine or neuter
gender, as may fit the case.
(d). Severability. If any provision of this Note or any
payments pursuant to the terms hereof shall be invalid or unenforceable to any
extent, the remainder of this Note and any other payments hereunder shall not
be affected thereby and shall be enforceable to the greatest extent permitted
by law.
(e) Modification. No waiver of any breach, default or event of
default under this Note or under the Loan Agreement, or any obligations
secured thereby, shall be implied from any failure of Bank to take, or any
delay by Bank in taking, any action with respect to any concurrent or
subsequent breach of or event of default, default or failure of condition or
from any previous wavier of any similar or unrelated breach of or event of
default, default, or failure of condition. A waiver of any term of this Note,
the Loan Agreement, or any of the obligations secured thereby must be made in
writing, shall be limited to the express written terms of such waiver, and
shall not be construed as a waiver or release of any subsequent event of
default, default or failure of condition.
(f) Joint Obligations. If this Note is executed by more than
one person or entity as Borrower, the obligations of each such person or
entity shall be joint and several, and all said parties are and shall be
jointly and severally, directly and primarily, liable for the amount of all
sums owing and to be owed hereon, and agree that this Note and any or all
payments coming due hereunder may be extended or renewed from time to time
without in any way affecting or diminishing their liability hereunder. No
such person shall be a mere accommodation maker, since each such person shall
be primarily and directly liable hereunder.
Equipment Purchase Line A Note - Page 8
IN WITNESS WHEREOF Borrower has executed and delivered this Note as of
the date and year first above written.
Micrel Incorporated, a California
corporation
By:
Xxxxxxx X. Xxxx
President and Chief Executive
Officer
By:
Xxxxxxx X. Xxxxxxx, Xx.
Vice President of Finance and Chief
Financial Officer
Section 2.3 "Revolving Loans Interest Rate" should keep
TWO of the underlined blanks in the paragraph.
"Prior Loan and Security Agreement" -- this section
should also retain the original underlined spaces.
Equipment Purchase Line A Note - Page 9
