EXHIBIT 10.1
ASSUMPTION AND AMENDMENT AGREEMENT
This Assumption and Amendment Agreement ("Agreement") dated as of September 14,
2000, is made by and between ▇▇▇▇▇ Fargo Credit, Inc. ("Lender"), successor in
interest to ▇▇▇▇▇ Fargo Bank, National Association, and nStor Corporation, Inc.,
a Delaware corporation ("nStor"), successor-by-operation of law to anDATAco of
California, Inc., a California corporation ("anDATAco").
R E C I T A L S
A. anDATAco has heretofore executed and delivered to Lender the following
(collectively, together with all other documents, instruments and agreements
executed and delivered by anDATAco to Lender in connection with the Loan
Agreement referred to below, the "Loan Documents"):
1. A Loan Agreement (Line of Credit L/C Subfeature) with Lender dated as of
April 30, 1998 (as amended, supplemented or otherwise modified, the "Loan
Agreement");
2. A Second Amended and Restated Line of Credit Note in favor of Lender
dated December 14, 1998 (as amended, supplemented or otherwise modified, the
"Note");
3. A Security Agreement in favor of Lender dated as of April 30, 1998 (as
amended, supplemented or otherwise modified, the "Security Agreement"). The
Security Agreement secures the obligations of anDATAco to Lender, as further
described therein; and
4. The UCC-1 Financing Statements (and amendments thereto) filed with the
applicable jurisdictions on the applicable dates with the applicable instrument
numbers set forth on Exhibit A attached hereto.
B. In addition to the Loan Documents, anDATAco also is a party to the
following:
1. A Lien Subordination Agreement dated as of April 30, 1998 with Lender
and ▇▇▇▇ Microproducts, Inc. (as amended, supplemented or otherwise modified,
the "▇▇▇▇ Subordination Agreement"); and
2. A Subordination Agreement dated as of July 13, 1999 with nStor
Technologies, Inc., a Delaware corporation ("Technologies"), and Lender (as
amended, supplemented or otherwise modified, the "Technologies Subordination
Agreement").
C. Pursuant to a series of transactions (collectively, the "Merger")
described in an Agreement of Merger dated as of April 26, 2000 among anDATAco,
Andataco, Inc., a Massachusetts corporation ("Former Guarantor") and nStor (the
"Merger Agreement"), and other related documentation (collectively, together
with the Merger Agreement, the "Merger Documents"), the existence of anDATAco
and the existence of Former Guarantor as separate legal entities has been
terminated and nStor has, by operation of law, succeeded to the liabilities and
assets of anDATAco and Former Guarantor.
D. Lender is agreeable to continuing the Loan Documents in effect with
nStor pursuant to and in accordance with the terms and conditions set forth
below and, in connection therewith, Lender and nStor have agreed to certain
modifications to the "Assumed Documents" (as defined below) as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the terms and conditions herein, and
for other good and valuable consideration, the receipt and adequacy of which are
acknowledged, the parties hereto agree to the following covenants, agreements,
amendments and modifications:
1. Merger and Assumption.
(a) Pursuant to the Merger, nStor has, by effect of law, assumed all
liabilities and assets of anDATAco and Former Guarantor, and nStor hereby
expressly and unconditionally assumes, agrees to pay, discharge, satisfy and
perform any and all obligations owing to Lender pursuant to the Loan Agreement
and the other Assumed Documents, all with the same force and effect as if nStor
were the original signatory to the Loan Agreement and the other Assumed
Documents. For purposes hereof, "Assumed Documents" shall mean, collectively,
the Loan Documents and, insofar and to the extent anDATAco was a party thereto,
the ▇▇▇▇ Subordination Agreement and the Technologies Subordination Agreement.
(b) The execution of this Agreement by nStor shall be deemed its execution
of the Loan Agreement and the other Assumed Documents. This Agreement does not
constitute the creation of a new obligation or the extinguishment of the
obligations evidenced by the Loan Agreement or the other Assumed Documents, nor
does it in any way affect or impair the liens of the Assumed Documents, which
nStor acknowledges to be valid first liens on the property described therein
(except as otherwise set forth in the Assumed Documents). nStor agrees that the
liens of the Assumed Documents shall continue in full force and effect,
unimpaired and unaffected by this Agreement or by the Merger.
2. Acknowledgment of anDATAco Indebtedness.
(a) As of April 26, 2000, the principal balance outstanding under the Note
was $5,550,134.92; and
(b) Interest on the credit facilities evidenced by the Note has been paid
through September 1, 2000.
3. Representations and Warranties. nStor makes the following representations and
warranties to Lender, which representations and warranties shall survive the
execution of this Agreement and shall continue in full force and effect until
the full and final payment, and satisfaction and discharge, of all obligations
of nStor to Lender subject to the Loan Documents:
(a) nStor is a corporation duly organized and existing and in good standing
under the laws of the State of Delaware. Technologies is a corporation duly
organized and existing in good standing under the laws of the State of Delaware.
Each of nStor and Technologies is qualified or licensed to do business, and is
in good standing as a foreign corporation, if applicable, in all jurisdictions
in which such qualification or licensing is required or in which the failure to
so qualify or to be so licensed could have a material adverse effect on nStor or
Technologies, as the case may be.
(b) The performance by each of nStor and Technologies of each of the Loan
Documents to which it is a party does not (a) violate any provision of any law
or regulation, or (b) contravene any provision of the Articles of Incorporation
or By-Laws of such party, or (c) result in a breach of or default under any
contract, obligation, indenture or other instrument to which nStor or
Technologies, as applicable, is a party or by which it may be bound, or (d)
require the consent or approval of any Federal or state governmental authority.
(c) There are no pending, or to the best of nStor's knowledge threatened,
actions, claims, investigations, suits or proceedings before any governmental
authority, arbitrator, court or administrative agency which reasonably could be
expected to have a material adverse effect on the financial condition or
operation of nStor other than those disclosed by nStor to Lender in writing.
(d) nStor (a) has paid all income tax when due and payable each year,and
(b) has no knowledge of any pending assessments or adjustments of its income tax
payable with respect to any year.
(e) There is no agreement, indenture, contract or instrument to which nStor
is a party or by which nStor may be bound that requires the subordination in
right of payment of any of nStor's obligations subject to the Loan Documents to
any other obligation of nStor.
(f) nStor possesses, and will hereafter possess, all permits, memberships,
franchises, contracts and licenses required and rights to all trademarks, trade
names, if any, patents, and fictitious names necessary to enable it to conduct
the business in which it is now engaged in compliance with applicable law,
excluding any such of the foregoing the failure of which to possess would not
reasonably be expected to have a material adverse effect on nStor's financial
condition, business or operations.
(g) nStor is in compliance in all material respects with all applicable
provisions of ERISA; nStor has not violated any provision of any Plan maintained
or contributed to by nStor; no Reportable Event as defined in ERISA has occurred
and is continuing with respect to any Plan initiated by nStor; nStor has met its
minimum funding requirements under ERISA with respect to each Plan; and each
Plan will be able to fulfill its benefit obligations as they come due in
accordance with the Plan documents and under generally accepted accounting
principles.
(h) nStor is not in default on any obligation for borrowed money, any
purchase money obligation or any other material lease, commitment, contract,
instrument or obligation. nStor is in compliance in all material respects with
all requirements of all laws, rules, regulations and orders of any governmental
authority applicable to nStor or its business not otherwise addressed by
provisions of this Section 3. There are no security interests in or liens upon
the Collateral or any other property which is intended to be security for the
Line of Credit or the liability of any Obligor in respect thereof, other than
security interests and liens permitted in the Assumed Documents.
(i) Except as disclosed by nStor to Lender in writing prior to the date
hereof, nStor is in compliance in all material respects with all applicable
Federal or state environmental, hazardous waste, health and safety statutes and
any rules or regulations adopted pursuant thereto, which govern or affect any of
nStor's operations and/or properties, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource
Conservation and Recovery Act of 1976, the Federal Toxic Substances Control Act
and the California Health and Safety Code, as any of the same may be amended,
modified or supplemented from time to time. None of the operations of nStor is
the subject of any Federal or state investigation evaluating whether any
remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment. nStor
has no material contingent liability in connection with any release of any toxic
or hazardous waste or substance into the environment.
(j) The execution, delivery and performance of this Agreement are within
nStor's powers, have been duly authorized by all necessary action, have received
all necessary approvals and do not contravene any law or any contractual
restrictions binding on nStor.
(k) This Agreement and, pursuant to the assumption described herein, the
Assumed Documents are the legal, valid and binding obligations of nStor and
Technologies, as applicable, enforceable against nStor and Technologies, as
applicable, in accordance with their respective terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws relating to or affecting creditors' rights generally or
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
(l) After giving effect to this Agreement, no event has occurred and is
continuing or would result from this Agreement which constitutes a default or
event of default, however defined, under the Assumed Documents, as amended and
modified hereby.
(m) The Merger has become effective under applicable laws and all the
assets of anDATAco and Former Guarantor existing immediately prior to the Merger
have become vested in nStor, subject to all the liabilities of anDATAco and
Former Guarantor immediately prior to the Merger. All consents and approvals of
any governmental agency and any other entity necessary to effect the Merger have
been obtained and the Merger has been effected in compliance with all applicable
laws.
(n) nStor agrees that it has no defense, offset or counterclaim whatsoever
against Lender with respect to its liability under the Loan Agreement or any
other Assumed Document.
4. Amendments to Loan Agreement.
(a) References to Borrower. All references to "Borrower" in the Loan
Agreement shall be deemed to be references to nStor.
(b) Section 1.3A. The following new Section 1.3A is added to the Loan
Agreement immediately following Section 1.3 of the Loan Agreement:
"1.3A 'Book Net Worth' shall mean, at any time, the aggregate total
stockholders' equity of Borrower (including paid-in-capital and retained
earnings), as determined in accordance with GAAP."
(c) Section 1.6. Section 1.6 of the Loan Agreement is amended by replacing
the parenthetical "(other than Guarantor or W. ▇▇▇▇▇ ▇▇▇▇▇)" therein with the
parenthetical "(other than Guarantor)".
(d) Section 1.13. Section 1.13 of the Loan Agreement is amended by
replacing the words "Andataco, Inc., a Massachusetts corporation" therein with
the words "nStor Technologies, Inc., a Delaware corporation".
(e) Section 1.27. Section 1.27(g) of the Loan Agreement is amended to read
in full as follows:
"(g) any interest or title of a lessor in equipment subject to any capital
lease permitted hereunder; and"
(f) Section 1.31. Section 1.31 of the Loan Agreement is amended to read in
full as follows:
"1.31 Intentionally Omitted."
(g) Section 2.5. Section 2.5 of the Loan Agreement is amended to read in
full as follows:
"2.5 Intentionally Omitted."
(h) Section 3.2. Section 3.2 of the Loan Agreement is amended by replacing
the reference to "2.00%" therein with "2.50%".
(i) Section 4.2. Section 4.2(a) of the Loan Agreement is amended by
replacing the reference to "January 31, 1998" therein with "December 31, 1999".
(j) Section 7.1. The first two sentences of Section 7.1 of the Loan
Agreement are amended to read in full as follows:
"Each of Borrower and Guarantor is a corporation duly organized and
existing and in good standing under the laws of the State of Delaware."
(k) Section 7.5. The first sentence of Section 7.5 of the Loan Agreement is
amended by replacing the reference to "January 31, 1998" therein with a
reference to "December 31, 1999".
(l) Section 8.3. Section 8.3(a) of the Loan Agreement is amended to read in
full as follows:
"(a) on or before 11 a.m. each day, a schedule of Accounts, including
without limitation daily sales, credit and adjustment journals and cash
receipts;"
(m) Section 8.4. Section 8.4(a) of the Loan Agreement is amended by
replacing the reference to "Price Waterhouse LLP" therein with "BDO ▇▇▇▇▇▇▇
LLP".
(n) Section 8.10. Section 8.10 of the Loan Agreement is amended to read in
full as follows:
"8.10 Financial Condition. Maintain Borrower's financial condition as
follows:
(a) Book Net Worth not at any time during any period specified below less
than the amount set forth opposite such period, to be measured as of the end of
each fiscal month of Borrower, provided that Lender agrees to reset the covenant
levels with respect to periods subsequent to December 31, 2000 in Lender's sole
discretion based upon Lender's review of the annual plans and financial
forecasts of Borrower delivered to Lender pursuant to Section 8.4(f):
Period Minimum Book Net Worth
------ ----------------------
September 30, 2000 $12,600,000
October 1, 2000 and thereafter $12,125,000
(b) Unfunded capital expenditures not greater than $500,000 in any fiscal
year. For purposes of this section, "unfunded" capital expenditures shall mean
capital expenditures made by Borrower that are not financed by or through the
incurrence of debt (including, without limitation, financed with the proceeds of
any Revolving Loans hereunder) or otherwise made with the proceeds of other
sources of capital (other than internally generated funds of Borrower).
(c) Net Income (as defined below) for each period specified below of not
less than the amount set forth opposite such period, to be measured as of the
end of each fiscal quarter of Borrower, provided that Lender agrees to reset the
covenant levels with respect to periods subsequent to December 31, 2000 in
Lender's sole discretion based upon Lender's review of the annual plans and
financial forecasts of Borrower delivered to Lender pursuant to Section 8.4(f),
provided further that for purposes of this section 'Net Income' with respect to
any period shall mean the sum of (i) net income of Borrower for such period
determined in accordance with GAAP minus (ii) any extraordinary gain (other than
the gain realized with respect to the sale of certain assets of Borg Adaptive
Technologies, Inc.) reflected in such net income:
Period Minimum Net Income
------- ------------------
Six months ending June 30, 2000 - $ 250,000
Nine months ending September 30, 2000 - $1,225,000
Twelve months ending December 31, 2000 - $1,600,000
(o) Section 8.13. Section 8.13 of the Loan Agreement is amended to read in
full as follows:
"8.13 Intentionally Omitted."
(p) Section 8.15. Section 8.15 of the Loan Agreement is amended to read in
full as follows:
"8.15 Intentionally Omitted."
(q) Section 8.16. Section 8.16 of the Loan Agreement is amended to read in
full as follows:
"8.16 Intentionally Omitted."
(r) Section 9.1. The first sentence of Section 9.1 of the Loan Agreement is
amended to read in full as follows:
"Create, incur, assume or permit to exist any indebtedness or liabilities
resulting from borrowings, loans or advances, whether secured or unsecured,
matured or unmatured, liquidated or unliquidated, joint or several, except (a)
the liabilities of Borrower to Lender and any other liabilities of Borrower
existing as of, and disclosed to Lender prior to, the date hereof in the
Information Certificate or in Schedule 9.1 attached hereto, (b) indebtedness
secured by Permitted Liens, and (c) indebtedness secured by liens permitted
pursuant to Section 9.6(c) not exceeding the cost or fair market value thereof
."
(s) Section 9.4. Section 9.4 of the Loan Agreement is amended to read in
full as follows:
"9.4 Loans, Advances, Investments. Make any loans or advances to or
investments in any person or entity, except (a) advances to employees in the
ordinary course of business not to exceed $100,000 outstanding at any time, (b)
loans or advances to Technologies for the payment by Technologies of operating
and administrative expenses of Technologies in an amount not to exceed $800,000
per fiscal year, and (c), so long as no Event of Default shall have occurred and
be continuing (or would occur upon the giving of notice, the passage of time, or
both, or after giving effect thereto), loans or advances to Technologies in an
amount not to exceed $73,000 per month, the proceeds of which loans or advances
Technologies shall expressly warrant will be used solely (i) to pay cash
dividends on Technologies' Series D preferred stock at a dividend rate not
greater than the dividend rate in effect as of the date hereof for such 'Series'
of preferred stock or (ii) to pay cash dividends on Technologies' Series E and
Series F preferred stock at dividend rates not greater than 8% per annum for the
period from June 8, 1999 through June 7, 2000, 9% per annum for the period from
June 8, 2000 through June 7, 2001, and 10% per annum for the period from and
after June 8, 2001."
(t) Section 9.6. Section 9.6 of the Loan Agreement is amended to read in
full as follows:
"9.6. Pledge of Assets. Mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, any of its assets of any kind, now owned or
hereafter acquired, except (a) Permitted Liens, (b) any of the foregoing in
favor of Lender and except as set forth in the Information Certificate, and (c)
purchase money security interests relating to the acquisition of machinery and
equipment by Borrower provided that, (i) at the time of each such acquisition,
no Event of Default shall be in existence or would result therefrom, and (ii)
the applicable purchase money security interests shall be limited to the
machinery and equipment purchased."
(u) Section 9.9. Section 9.9 of the Loan Agreement is amended to read in
full as follows:
"9.9 Intentionally Omitted."
(v) Section 10.1(m). The last sentence of Section 10.1(m) of the Loan
Agreement is amended to read in full as follows: "Senior Management means ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇."
(w) Section 11.1(c). The table appearing in Section 11.1(c) of the Loan
Agreement is amended to read in full as follows:
"Amount Period
------- ------
(i) 2% of Maximum Amount Date hereof to and including the first
anniversary date hereof
(ii) 1% of Maximum Amount First anniversary date hereof to and
including the second anniversary date hereof
(iii).5%(one half of one percent) Second anniversary date hereof to and
of Maximum Amount including the fourth anniversary date hereof"
(x) Section 11.3. The notice address for Borrower and its counsel in
Section 11.3 of the Loan Agreement is amended to read in full as follows:
"BORROWER: nStor Corporation, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copies to: nStor Corporation, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Akerman, Senterfitt & ▇▇▇▇▇▇, P.A.
Las Olas Centre II
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇"
(y) Exhibit A. Exhibit A to the Loan Agreement is replaced by Exhibit A
attached hereto as Annex 1.
(z) Exhibit B. Exhibit B to the Loan Agreement is replaced by Exhibit B
attached hereto as Annex 2.
(aa) Amendment No. 1 to Loan Agreement. Paragraph 1.1 of Amendment No. 1 to
Loan Agreement dated as of July 29, 1998 between Lender and anDATAco is amended
to read in full as follows:
"1.1 Intentionally Omitted."
5. Amendments to Assumed Documents other than Loan Agreement. The Assumed
Documents other than the Loan Agreement (collectively, the "Remaining Assumed
Documents") are amended as follows:
(a) References to Borrower. All references to "Borrower" in the Remaining
Assumed Documents (other than the Note) shall be deemed to be references to
nStor. The Note shall be amended and restated in its entirety by the Third
Amended and Restated Line of Credit Note delivered to Lender as provided in
Section 6(a)(ii) of this Agreement.
(b) Notices to nStor. Notwithstanding anything contained in the Remaining
Assumed Documents to the contrary, all notices to nStor with respect to the
Remaining Assumed Documents shall be sent to the replacement addresses set forth
in Section 4(j) of this Agreement.
6. Documentation.
(a) nStor agrees to deliver or cause to be delivered to Lender on or before
September19, 2000, each of the following documents, in each case in form and
substance satisfactory to Lender:
(i) An executed original of this Agreement executed by nStor and
Technologies.
(ii) An executed original of the Third Amended and Restated Line of Credit
Note executed by nStor in the form attached hereto as Annex 2.
(iii) An executed original of a continuing guaranty executed by
Technologies in favor of Lender with respect to the obligations of nStor to
Lender (the "Guaranty").
(iv) Copies of the Merger Agreement (as filed) and all of the other Merger
Documents, in each case certified as true, correct and complete by a responsible
official of nStor.
(v) Such UCC-2 Financing Statement Amendments and UCC-1 Financing
Statements as required by Lender, in each case executed by nStor and in proper
form for filing and/or recording in all applicable jurisdictions.
(b)
nStor agrees to deliver or cause to be delivered to Lender on or before October
31, 2000, each of the following documents, in each case in form and substance
satisfactory to Lender:
(i) An executed original of a patent collateral assignment agreement
executed by nStor (the "Patent Agreement").
(ii) An executed original of a trademark collateral assignment agreement
executed by nStor (the "Trademark Agreement", and together with the Patent
Agreement, the "IP Collateral Documents").
(iii) (A) An executed original of a warehouse bailment letter from the
owner of each of the following warehouses where inventory of nStor and/or
anDATAco is located: (i) Gemini Storage, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and (ii) North American Logistics, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇; and (B) a replacement or reaffirmation of the waiver/consent previously
executed by the owner of the premises located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(iv) Such documentation as Lender reasonably may require to establish the
due organization, valid existence and good standing of nStor and Technologies,
their respective qualification to engage in business in each jurisdiction in
which each such party is engaged in business or required to be so qualified,
nStor's authority to execute, deliver and perform this Agreement and, by doing
so, each of the Assumed Documents, Technologies' authority to execute, deliver
and perform the Guaranty, and the identity, authority and capacity of each
responsible official of each such party, authorized to act on such party's
behalf, including without limitation, certified copies of each such party's
certificate of incorporation and amendments thereto, bylaws and amendments
thereto, certificates of good standing and/or qualification to engage in
business, tax status certificates, certificates of organizational resolutions,
incumbency certificates, and the like.
(v) A replacement Letter of Credit Agreement executed by nStor in favor of
Lender, or its agent.
(vi) A notice/reaffirmation regarding the continued effectiveness of the
▇▇▇▇ Subordination Agreement executed by nStor, and, if requested by Lender,
▇▇▇▇ Microproducts, Inc.
(vii) A reaffirmation regarding the continued effectiveness of the
Technologies Subordination Agreement executed by nStor and Technologies.
(viii) UCC termination statement(s) executed by Seagate Technology, Inc.
("Seagate") regarding any and all UCC financing statements executed by anDATAco
in favor of Seagate.
(ix) An original executed opinion of counsel issued by Akerman, Senterfitt
& ▇▇▇▇▇▇, P.A., counsel for nStor and Technologies, regarding the formation,
existence and authorization of nStor and Technologies, the enforceability of
this Agreement, the IP Collateral Documents, the Guaranty, and the Assumed
Documents as assumed by nStor, and such other matters as Lender shall require.
(x) Such other documents and agreements which are required by Lender
pursuant to this Agreement or which Lender reasonably requests.
7. Accommodation Fee. Concurrently with the execution of this Agreement by
nStor, nStor agrees to pay to Lender a non-refundable supplemental accommodation
fee in the amount of $5,000. Lender acknowledges receipt of a prior
non-refundable accommodation fee of $15,000 on or about May 1, 2000.
8. Security Interest; Knowledge of Assumed Documents. nStor hereby grants
to Lender a security interest in the "Collateral" as defined in the Security
Agreement. nStor warrants that it has full personal knowledge of all terms of
the Assumed Documents. nStor understands and acknowledges that except as
expressly provided herein or in the Assumed Documents, Lender has not waived any
right of Lender or obligation of nStor under the Assumed Documents and Lender
has not agreed to any modification or extension of any provision of any Assumed
Document.
9. Indemnity. nStor indemnifies Lender against, and holds Lender harmless
from, any and all losses, damages (whether general, punitive or otherwise),
liabilities, claims, causes of actions (whether legal, equitable or
administrative), judgments, court costs or other legal or other expenses
(including reasonable attorneys' fees) which Lender may suffer or incur as a
direct or indirect consequence of the Merger and nStor's assumption of the
Assumed Documents and the obligations evidenced thereby. Immediately upon
Lender's demand, nStor shall pay Lender any amounts due and owing under this
indemnity with interest from the date such amounts become due until paid at the
default rate of interest specified in the Note. nStor's duty to indemnify Lender
shall survive the cancellation or termination of the Loan Agreement.
10. Reinstatement. In addition to the foregoing indemnity, should the
consummation of the Merger be challenged or otherwise rescinded (whether
voluntarily or involuntarily, by court order or otherwise), the Assumed
Documents (and the liability of anDATAco thereunder) shall be reinstated and
revived in accordance with their original terms as if this Agreement did not
exist. In such event, the rights and duties of all parties shall be determined
as if this Agreement had not been executed.
11. Confirmation of Liens. Nothing contained herein shall affect or be
construed to affect any lien, security interest, charge or encumbrance created
by any Assumed Document or the priority of that lien, security interest, charge
or encumbrance over other liens, security interests, charges or encumbrances.
12. Integration; Interpretation. The Assumed Documents, including this
Agreement, contain or expressly incorporate by reference the entire agreement of
the parties with respect to the matters contemplated herein and supersede all
prior negotiations. The Assumed Documents shall not be modified except by
written instrument executed by all applicable parties. Any reference herein to
the Assumed Documents includes any amendments, renewals or extensions thereof
approved by Lender. Except as expressly modified hereby, all terms and
conditions of the Assumed Documents shall continue in full force and effect
without waiver or modification, and Lender reserves all of its rights,
privileges and remedies in connection therewith.
13. Successors and Assigns. This Agreement is binding upon and shall enure
to the benefit of the successors and assigns of the parties, subject to all
prohibitions of transfers contained in any Assumed Document.
14. Costs and Expenses. nStor shall reimburse Lender immediately upon
demand the full amount of costs and expenses, including reasonable attorneys'
fees (to include outside counsel fees and all allocated costs of Lender's
in-house counsel) incurred by Lender in connection with this Agreement and all
documents, instruments and agreements in connection herewith.
15. Attorneys' Fees; Enforcement. In addition to the foregoing, if any
attorney is engaged by Lender to enforce, construe or defend any provision of
this Agreement or as a consequence of any default under this Agreement, with or
without the filing of any legal action or proceeding, nStor shall be liable to
pay to Lender immediately upon demand, the amount of all reasonable attorneys'
fees and costs incurred by Lender in connection therewith, together with
interest thereon from the date of such demand at the default rate of interest
specified in the Note.
16. Miscellaneous. This Agreement is one of the Assumed Documents and shall
be governed by and interpreted in accordance with the laws of the State of
California. Time is of the essence of each term of the Assumed Documents,
including this Agreement. If any provision of this Agreement or any of the other
Assumed Documents shall be determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable, that portion shall be deemed severed
therefrom and the remaining part shall remain in full force as though the
invalid, illegal, or unenforceable portion had not been a part thereof. This
Agreement may be executed in counterparts, which counterparts, when so executed
and delivered shall together constitute but one original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
"nStor"
nStor Corporation, Inc.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
"Lender"
▇▇▇▇▇ Fargo Credit, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
ACKNOWLEDGED AND AGREED:
nStor Technologies, Inc.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
EXHIBIT 10.2
THIRD AMENDED AND RESTATED LINE OF CREDIT NOTE
$10,000,000.00 September 14, 2000
FOR VALUE RECEIVED, the undersigned, nSTOR CORPORATION, INC., a Delaware
corporation (successor-by-operation of law to anDATAco of California, Inc., a
California corporation)("Borrower"), promises to pay to the order of ▇▇▇▇▇ FARGO
CREDIT, INC. (successor in interest to ▇▇▇▇▇ Fargo Bank, National
Association)("Bank") at its office at ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, or at such other place as the holder hereof may designate,
in lawful money of the United States of America and in immediately available
funds, the principal sum of Ten Million Dollars ($10,000,000.00), or so much
thereof as may be advanced and be outstanding, with interest thereon as set
forth herein. This Note amends and restates in its entirety that certain Second
Amended and Restated Line of Credit Note dated December 14, 1998 executed and
delivered by anDATAco of California, Inc., a California corporation, to the
order of ▇▇▇▇▇ Fargo Bank, National Association, in the original principal
amount of up to $10,000,000.00 (the "Prior Note"). Amounts outstanding and
committed under the Prior Note shall, upon the effectiveness of this Note be
deemed to be outstanding and committed hereunder and evidenced hereby, subject,
however, to all terms and conditions hereunder and under the Loan Agreement
described below.
A. DEFINITIONS:
As used herein, the following terms shall have the meanings set forth after
each:
1. "Applicable LIBOR Margin" means (a) so long as neither the Initial Rate
Reduction Date or the Supplemental Rate Reduction Date shall have occurred,
4.375%, (b) from and after the occurrence (if any) of the Initial Rate Reduction
Date, but prior to the occurrence (if any) of the Supplemental Rate Reduction
Date, 3.875%, and (c) from and after the occurrence (if any) of the Supplemental
Rate Reduction Date, 3.375%.
2. "Applicable Prime Rate Margin" means (a) so long as neither the Initial
Rate Reduction Date or the Supplemental Rate Reduction Date shall have occurred,
1.500%, (b) from and after the occurrence (if any) of the Initial Rate Reduction
Date, but prior to the occurrence (if any) of the Supplemental Rate Reduction
Date, 1.000%, and (c) from and after the occurrence (if any) of the Supplemental
Rate Reduction Date, 0.500%.
3. "Business Day" means any day except a Saturday, Sunday or any other day
designated as a holiday under Federal or California statute or regulation.
4. "Fixed Rate Term" means a period commencing on a Business Day and
continuing for one (1), two (2), three (3) or six (6) months, as designated by
Borrower, during which all or a portion of the outstanding principal balance of
this Note bears interest determined in relation to Bank's LIBOR; provided
however, that (i) no Fixed Rate Term may be selected for a principal amount less
than One Million Dollars ($1,000,000); (ii) no Fixed Rate Term shall extend
beyond the scheduled maturity date hereof; (iii) no Fixed Rate Term may be
selected during the continuance of an Event of Default (as such term is defined
in the Loan Agreement described below); and (iv) no more than eight (8) Fixed
Rate Terms may be in existence at any time. If any Fixed Rate Term would end on
a day which is not a Business Day, then such Fixed Rate Term shall be extended
to the next succeeding Business Day.
5. "Initial Rate Reduction Date" means the first day of the calendar month
immediately following Borrower's delivery of financial statements to Bank
reflecting that, as of the date of such financial statements, (a) Borrower's Net
Income for each of the three consecutive fiscal months ending as of the date of
such financial statements was not less than $1.00 and (b) Borrower's cumulative
Net Income for such three-month period exceeded $150,000.00.
6. "LIBOR" means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/8 of 1%) and determined pursuant to the following formula:
LIBOR = Base LIBOR
-------------------------------
100% - LIBOR Reserve Percentage
(a) "Base LIBOR" means the rate per annum for United States dollar deposits
quoted by Bank as the Inter-Bank Market Offered Rate, with the understanding
that such rate is quoted by Bank for the purpose of calculating effective rates
of interest for loans making reference thereto, on the first day of a Fixed Rate
Term for delivery of funds on said date for a period of time approximately equal
to the number of days in such Fixed Rate Term and in an amount approximately
equal to the principal amount to which such Fixed Rate Term applies. Borrower
understands and agrees that Bank may base its quotation of the Inter-Bank Market
Offered Rate upon such offers or other market indicators of the Inter-Bank
Market as Bank in its discretion deems appropriate including, but not limited
to, the rate offered for U.S. dollar deposits on the London Inter-Bank Market.
(b) "LIBOR Reserve Percentage" means the reserve percentage prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
"Eurocurrency Liabilities" (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.
7. "Net Income" shall have the meaning specified in Section 8.10(c) of the
Loan Agreement referenced below.
8. "Prime Rate" means at any time the rate of interest most recently
announced within ▇▇▇▇▇ Fargo Bank, National Association (WFB") at its principal
office in San Francisco as its Prime Rate, with the understanding that the Prime
Rate is one of WFB's base rates and serves as the basis upon which effective
rates of interest are calculated for those loans making reference thereto, and
is evidenced by the recording thereof after its announcement in such internal
publication or publications as WFB may designate.
9. "Supplemental Rate Reduction Date" means the first day of the calendar
month immediately following Borrower's delivery of financial statements to Bank
reflecting that, as of the date of such financial statements, (a) Borrower's Net
Income for each of the six consecutive fiscal months ending on the date of such
financial statements was not less than $1.00 and (b) Borrower's cumulative Net
Income for such six-month period exceeded $325,000.
B. INTEREST:
1. Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) either
(i) at a fluctuating rate per annum equal to the Prime Rate in effect from time
to time plus the Applicable Prime Rate Margin, or (ii) at a fixed rate per annum
determined by Bank in good faith to be LIBOR in effect on the first day of the
applicable Fixed Rate Term plus the Applicable LIBOR Margin. When interest is
determined in relation to the Prime Rate, each change in the rate of interest
hereunder shall become effective on the date each Prime Rate change is announced
within WFB. With respect to each LIBOR selection hereunder, Bank is hereby
authorized to note the date, principal amount, interest rate and Fixed Rate Term
applicable thereto and any payments made thereon on Bank's books and records
(either manually or by electronic entry) and/or on any schedule attached to this
Note, which notations shall be prima facie evidence of the accuracy of the
information noted.
2. Selection of Interest Rate Options. At any time any portion of this Note
bears interest determined in relation to Bank's LIBOR, it may be continued by
Borrower at the end of the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or in
relation to Bank's LIBOR for a new Fixed Rate Term designated by Borrower. At
any time any portion of this Note bears interest determined in relation to the
Prime Rate, Borrower may convert all or a portion thereof so that it bears
interest determined in relation to Bank's LIBOR for a Fixed Rate Term designated
by Borrower. At the time each advance is requested hereunder or Borrower wishes
to select the LIBOR option for all or a portion of the outstanding principal
balance hereof, and at the end of each Fixed Rate Term, Borrower shall give Bank
notice specifying (a) the interest rate option selected by Borrower, (b) the
principal amount subject thereto, and (c) if the LIBOR option is selected, the
length of the applicable Fixed Rate Term. Any such notice may be given by
telephone so long as, with respect to each LIBOR selection, (i) Bank receives
written confirmation from Borrower not later than three (3) Business Days after
such telephone notice is given, and (ii) such notice is given to Bank prior to
10:00 a.m., California time, on the first day of the Fixed Rate Term. For each
LIBOR option requested hereunder, Bank will quote the applicable fixed rate to
Borrower at approximately 10:00 a.m., California time, on the first day of the
Fixed Rate Term. If Borrower does not immediately accept the rate quoted by
Bank, any subsequent acceptance by Borrower shall be subject to a
redetermination by Bank of the applicable fixed rate; provided however, that if
Borrower fails to accept any such rate by 11:00 a.m., California time, on the
Business Day such quotation is given, then the quoted rate shall expire and Bank
shall have no obligation to permit a LIBOR option to be selected on such day. If
no specific designation of interest is made at the time any advance is requested
hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to have
made a Prime Rate interest selection for such advance or the principal amount to
which such Fixed Rate Term applied.
3. Additional LIBOR Provisions.
(a) If Bank at any time shall determine that for any reason adequate and
reasonable means do not exist for ascertaining Bank's LIBOR, then Bank shall
promptly give notice thereof to Borrower. If such notice is given and until such
notice has been withdrawn by Bank, then (i) no new LIBOR option may be selected
by Borrower, and (ii) any portion of the outstanding principal balance hereof
which bears interest determined in relation to Bank's LIBOR, subsequent to the
end of the Fixed Rate Term applicable thereto, shall bear interest determined in
relation to the Prime Rate.
(b) If any law, treaty, rule, regulation or determination of a court or
governmental authority or any change therein or in the interpretation or
application thereof (each, a "Change in Law") shall make it unlawful for Bank
(i) to make LIBOR options available hereunder, or (ii) to maintain interest
rates based on Bank's LIBOR, then in the former event, any obligation of Bank to
make available such unlawful LIBOR options shall immediately be canceled, and in
the latter event, any such unlawful LIBOR-based interest rates then outstanding
shall be converted, at Bank's option, so that interest on the portion of the
outstanding principal balance subject thereto is determined in relation to the
Prime Rate; provided however, that if any such Change in Law shall permit any
LIBOR-based interest rates to remain in effect until the expiration of the Fixed
Rate Term applicable thereto, then such permitted LIBOR-based interest rates
shall continue in effect until the expiration of such Fixed Rate Term. Upon the
occurrence of any of the foregoing events, Borrower shall pay to Bank
immediately upon demand such amounts as may be necessary to compensate Bank for
any fines, fees, charges, penalties or other costs incurred or payable by Bank
as a result thereof and which are attributable to any LIBOR options made
available to Borrower hereunder, and any reasonable allocation made by Bank
among its operations shall be conclusive and binding upon Borrower.
(c) If any Change in Law or compliance by Bank with any request or
directive (whether or not having the force of law) from any central bank or
other governmental authority shall:
(i) subject Bank to any tax, duty or other charge with respect to any LIBOR
options, or change the basis of taxation of payments to Bank of principal,
interest, fees or any other amount payable hereunder (except for changes in the
rate of tax on the overall net income of Bank); or
(ii) impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances or loans by, or any other
acquisition of funds by any office of Bank; or
(iii) impose on Bank any other condition;
and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any LIBOR options hereunder and/or to reduce any
amount receivable by Bank in connection therewith, then in any such case,
Borrower shall pay to Bank immediately upon demand such amounts as may be
necessary to compensate Bank for any additional costs incurred by Bank and/or
reductions in amounts received by Bank which are attributable to such LIBOR
options. In determining which costs incurred by Bank and/or reductions in
amounts received by Bank are attributable to any LIBOR options made available to
Borrower hereunder, any reasonable allocation made by Bank among its operations
shall be conclusive and binding upon Borrower.
4. Payment of Interest. Interest accrued on this Note shall be payable on
the first (1st) day of each month, commencing October 1, 2000 and on the last
day of each Fixed Rate Term.
5. Default Interest. During the continuance of an Event of Default, the
outstanding principal balance of this Note shall bear interest until paid in
full at an increased rate per annum (computed on the basis of a 360-day year,
actual days elapsed) equal to two percent (2%) above the rate of interest from
time to time applicable to this Note.
C. BORROWING AND REPAYMENT:
1. Borrowing and Repayment. Borrower may from time to time during the term
of this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with or governing this Note; provided
however, that the total outstanding borrowings under this Note shall not at any
time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for
Borrower, which balance may be endorsed hereon from time to time by the holder.
The outstanding principal balance of this Note shall be due and payable in full
on April 30, 2002.
2. Advances. Advances hereunder, to the total amount of the principal sum
stated above, may be made by the holder at the oral or written request of (a)
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, any one acting alone, who are
authorized to request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by the holder at
the office designated above, or (b) any person, with respect to advances
deposited to the credit of any account of Borrower with the holder, which
advances, when so deposited, shall be conclusively presumed to have been made to
or for the benefit of Borrower regardless of the fact that persons other than
those authorized to request advances may have authority to draw against such
account. The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by Borrower.
3. Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
Bank's LIBOR, with such payments applied to the oldest Fixed Rate Term first.
4. Prepayment.
(a) Prime Rate. Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to the Prime Rate at any time, in
any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this Note which
bears interest determined in relation to Bank's LIBOR at any time and in the
minimum amount of One Million Dollars ($1,000,000); provided however, that if
the outstanding principal balance of such portion of this Note is less than said
amount, the minimum prepayment amount shall be the entire outstanding principal
balance thereof. In consideration of Bank providing this prepayment option to
Borrower, or if any such portion of this Note shall become due and payable at
any time prior to the last day of the Fixed Rate Term applicable thereto by
acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a
fee which is the sum of the discounted monthly differences for each month from
the month of prepayment through the month in which such Fixed Rate Term matures,
calculated as follows for each such month:
(i) Determine the amount of interest which would have accrued each month on
the amount prepaid at the interest rate applicable to such amount had it
remained outstanding until the last day of the Fixed Rate Term applicable
thereto.
(ii) Subtract from the amount determined in (i) above the amount of
interest which would have accrued for the same month on the amount prepaid for
the remaining term of such Fixed Rate Term at Bank's LIBOR in effect on the date
of prepayment for new loans made for such term and in a principal amount equal
to the amount prepaid.
(iii) If the result obtained in (ii) for any month is greater than zero,
discount that difference by Bank's LIBOR used in (ii) above.
Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum two percent (2%) above the Prime
Rate in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed).
D. EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of
that certain Loan Agreement between anDATAco of California, Inc., a California
corporation (predecessor in interest to Borrower), and ▇▇▇▇▇ Fargo Bank,
National Association (predecessor in interest to Bank), dated as of April 30,
1998, as amended from time to time (the "Loan Agreement"). Any default in the
payment or performance of any obligation under this Note, or any defined event
of default under the Loan Agreement, shall constitute an "Event of Default"
under this Note.
E. MISCELLANEOUS:
1. Remedies. Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, protest or notice of dishonor, all of which are expressly
waived by Borrower, and the obligation, if any, of the holder to extend any
further credit hereunder shall immediately cease and terminate. Borrower shall
pay to the holder immediately upon demand the full amount of all payments,
advances, charges, costs and expenses, including reasonable attorneys' fees (to
include outside counsel fees and all allocated costs of the holder's in-house
counsel), incurred by the holder in connection with the enforcement of the
holder's rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, and including any of the foregoing incurred in connection with any
bankruptcy proceeding relating to Borrower.
2. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of California.
3. Effectiveness. Notwithstanding the date of execution of this Note, the
terms and conditions hereof (including the interest rate(s) specified herein)
shall be deemed to have been effective as of April 1, 2000.
nStor Corporation, Inc.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title:Vice President
EXHIBIT 10.3
CONTINUING GUARANTY
TO: ▇▇▇▇▇ FARGO CREDIT, INC.
1. GUARANTY; DEFINITIONS. In consideration of any credit or other financial
accommodation heretofore, now or hereafter extended or made to nSTOR
CORPORATION, INC., a Delaware corporation ("Borrower"), successor-by-operation
of law to anDATAco of California, Inc., a California corporation, by ▇▇▇▇▇ Fargo
Credit, Inc. ("Bank"), and for other valuable consideration, the undersigned
nStor Technologies, Inc., a Delaware corporation ("Guarantor"), unconditionally
guarantees and promises to pay to Bank, or order, on demand in lawful money of
the United States of America and in immediately available funds, any and all
Indebtedness of Borrower to Bank. The term "Indebtedness" is used herein in its
most comprehensive sense and includes any and all advances, debts, obligations
and liabilities of Borrower, heretofore, now or hereafter made, incurred or
created, whether voluntary or involuntary and however arising, whether due or
not due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and whether Borrower may be liable individually or jointly with
others, or whether recovery upon such Indebtedness may be or hereafter becomes
unenforceable.
2. MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION; OBLIGATION UNDER
OTHER GUARANTIES. The liability of Guarantor shall not exceed at any one time
the sum of TEN MILLION DOLLARS ($10,000,000) for principal, plus all interest
thereon and costs and expenses pertaining to the enforcement of this Guaranty
and/or the collection of the Indebtedness of Borrower to Bank. Notwithstanding
the foregoing, Bank may permit the Indebtedness of Borrower to exceed
Guarantor's liability. This is a continuing guaranty and all rights, powers and
remedies hereunder shall apply to all past, present and future Indebtedness of
Borrower to Bank, including that arising under successive transactions which
shall either continue the Indebtedness, increase or decrease it, or from time to
time create new Indebtedness after all or any prior Indebtedness has been
satisfied, and notwithstanding the dissolution, liquidation or bankruptcy of
Borrower or Guarantor or any other event or proceeding affecting Borrower or
Guarantor. This Guaranty shall not apply to any new Indebtedness created after
actual receipt by Bank of written notice of its revocation as to such new
Indebtedness; provided however, that loans or advances made by Bank to Borrower
after revocation under commitments existing prior to receipt by Bank of such
revocation, and extensions, renewals or modifications, of any kind, of
Indebtedness incurred by Borrower or committed by Bank prior to receipt by Bank
of such revocation, shall not be considered new Indebtedness. Any such notice
must be sent to Bank by registered U.S. mail, postage prepaid, addressed to its
office at Commercial Finance Division, ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other address as Bank shall from time to
time designate. Any payment by Guarantor shall not reduce Guarantor's maximum
obligation hereunder unless written notice to that effect is actually received
by Bank at or prior to the time of such payment. The obligations of Guarantor
hereunder shall be in addition to any obligations of Guarantor under any other
guaranties of any liabilities or obligations of Borrower or any other person
heretofore or hereafter given to Bank unless said other guaranties are expressly
modified or revoked in writing; and this Guaranty shall not, unless expressly
herein provided, affect or invalidate any such other guaranties.
3. SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF
LIABILITY. The obligations hereunder are independent of the obligations of
Borrower, and a separate action or actions may be brought and prosecuted against
Guarantor whether action is brought against Borrower or any other person, or
whether Borrower or any other person is joined in any such action or actions.
Guarantor acknowledges that this Guaranty is absolute and unconditional, there
are no conditions precedent to the effectiveness of this Guaranty, and this
Guaranty is in full force and effect and is binding on Guarantor as of the date
written below, regardless of whether Bank obtains collateral or any guaranties
from others or takes any other action contemplated by Guarantor. Guarantor
waives the benefit of any statute of limitations affecting Guarantor's liability
hereunder or the enforcement thereof, and Guarantor agrees that any payment of
any Indebtedness or other act which shall toll any statute of limitations
applicable thereto shall similarly operate to toll such statute of limitations
applicable to Guarantor's liability hereunder. The liability of Guarantor
hereunder shall be reinstated and revived and the rights of Bank shall continue
if and to the extent for any reason any amount at any time paid on account of
any Indebtedness guaranteed hereby is rescinded or must otherwise be restored by
Bank, whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, all as though such amount had not been paid. The determination as to
whether any amount so paid must be rescinded or restored shall be made by Bank
in its sole discretion; provided however, that if Bank chooses to contest any
such matter at the request of Guarantor, Guarantor agrees to indemnify and hold
Bank harmless from and against all costs and expenses, including reasonable
attorneys' fees, expended or incurred by Bank in connection therewith, including
without limitation, in any litigation with respect thereto.
4. AUTHORIZATIONS TO BANK. Guarantor authorizes Bank either before or after
revocation hereof, without notice to or demand on Guarantor, and without
affecting Guarantor's liability hereunder, from time to time to: (a) alter,
compromise, renew, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of the Indebtedness or any portion thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security for the payment of this Guaranty or the Indebtedness or any
portion thereof, and exchange, enforce, waive, subordinate or release any such
security; (c) apply such security and direct the order or manner of sale
thereof, including without limitation, a non-judicial sale permitted by the
terms of the controlling security agreement or deed of trust, as Bank in its
discretion may determine; (d) release or substitute any one or more of the
endorsers or any other guarantors of the Indebtedness, or any portion thereof,
or any other party thereto; and (e) apply payments received by Bank from
Borrower to any Indebtedness of Borrower to Bank, in such order as Bank shall
determine in its sole discretion, whether or not such Indebtedness is covered by
this Guaranty, and Guarantor hereby waives any provision of law regarding
application of payments which specifies otherwise. Bank may without notice
assign this Guaranty in whole or in part. Upon Bank's request, Guarantor agrees
to provide to Bank copies of Guarantor's financial statements.
5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to Bank
that: (a) this Guaranty is executed at Borrower's request; (b) Guarantor shall
not, without Bank's prior written consent, sell, lease, assign, encumber,
hypothecate, transfer or otherwise dispose of all or a substantial or material
part of Guarantor's assets other than in the ordinary course of Guarantor's
business; (c) Bank has made no representation to Guarantor as to the
creditworthiness of Borrower; and (d) Guarantor has established adequate means
of obtaining from Borrower on a continuing basis financial and other information
pertaining to Borrower's financial condition. Guarantor agrees to keep
adequately informed from such means of any facts, events or circumstances which
might in any way affect Guarantor's risks hereunder, and Guarantor further
agrees that Bank shall have no obligation to disclose to Guarantor any
information or material about Borrower which is acquired by Bank in any manner.
6. GUARANTOR'S WAIVERS.
(a) Guarantor waives any right to require Bank to: (i) proceed against Borrower
or any other person; (ii) marshal assets or proceed against or exhaust any
security held from Borrower or any other person; (iii) give notice of the terms,
time and place of any public or private sale of personal property security held
from Borrower or any other person, or otherwise comply with the provisions of
Section 9504 of the California Uniform Commercial Code; (iv) take any action or
pursue any other remedy in Bank's power; or (v) make any presentment or demand
for performance, or give any notice of nonperformance, protest, notice of
protest or notice of dishonor hereunder or in connection with any obligations or
evidences of indebtedness held by Bank as security for or which constitute in
whole or in part the Indebtedness guaranteed hereunder, or in connection with
the creation of new or additional Indebtedness.
(b) Guarantor waives any defense to its obligations hereunder based upon or
arising by reason of: (i) any disability or other defense of Borrower or any
other person; (ii) the cessation or limitation from any cause whatsoever, other
than payment in full, of the Indebtedness of Borrower or any other person; (iii)
any lack of authority of any officer, director, partner, agent or any other
person acting or purporting to act on behalf of Borrower, or any defect in the
formation of Borrower; (iv) the application by Borrower of the proceeds of any
Indebtedness for purposes other than the purposes represented by Borrower to, or
intended or understood by, Bank or Guarantor; (v) any act or omission by Bank
which directly or indirectly results in or aids the discharge of Borrower or any
portion of the Indebtedness by operation of law or otherwise, or which in any
way impairs or suspends any rights or remedies of Bank against Borrower; (vi)
any impairment of the value of any interest in any security for the Indebtedness
or any portion thereof, including without limitation, the failure to obtain or
maintain perfection or recordation of any interest in any such security, the
release of any such security without substitution, and/or the failure to
preserve the value of, or to comply with applicable law in disposing of, any
such security; or (vii) any modification of the Indebtedness, in any form
whatsoever, including any modification made after revocation hereof to any
Indebtedness incurred prior to such revocation, and including without limitation
the renewal, extension, acceleration or other change in time for payment of, or
other change in the terms of, the Indebtedness or any portion thereof, including
increase or decrease of the rate of interest thereon. Until all Indebtedness
shall have been paid in full, Guarantor shall have no right of subrogation, and
Guarantor waives any right to enforce any remedy which Bank now has or may
hereafter have against Borrower or any other person, and waives any benefit of,
or any right to participate in, any security now or hereafter held by Bank.
Guarantor further waives all rights and defenses Guarantor may have arising out
of (A) any election of remedies by Bank, even though that election of remedies,
such as a non-judicial foreclosure with respect to any security for any portion
of the Indebtedness, destroys Guarantor's rights of subrogation or Guarantor's
rights to proceed against Borrower for reimbursement, or (B) any loss of rights
Guarantor may suffer by reason of any rights, powers or remedies of Borrower in
connection with any anti-deficiency laws or any other laws limiting, qualifying
or discharging Borrower's Indebtedness, whether by operation of Sections 726,
580a or 580d of the California Code of Civil Procedure as from time to time
amended, or otherwise, including any rights Guarantor may have to a Section 580a
fair market value hearing to determine the size of a deficiency following any
trustee's foreclosure sale or other disposition of any real property security
for any portion of the Indebtedness.
7. BANK'S RIGHTS WITH RESPECT TO GUARANTOR'S PROPERTY IN BANK'S POSSESSION. In
addition to all liens upon and rights of setoff against the monies, securities
or other property of Guarantor given to Bank by law, Bank shall have a lien upon
and a right of setoff against all monies, securities and other property of
Guarantor now or hereafter in the possession of or on deposit with Bank, whether
held in a general or special account or deposit or for safekeeping or otherwise,
and every such lien and right of setoff may be exercised without demand upon or
notice to Guarantor. No lien or right of setoff shall be deemed to have been
waived by any act or conduct on the part of Bank, or by any neglect to exercise
such right of setoff or to enforce such lien, or by any delay in so doing, and
every right of setoff and lien shall continue in full force and effect until
such right of setoff or lien is specifically waived or released by Bank in
writing.
8. SUBORDINATION. Any Indebtedness of Borrower now or hereafter held by
Guarantor is hereby subordinated to the Indebtedness of Borrower to Bank. Such
Indebtedness of Borrower to Guarantor is assigned to Bank as security for this
Guaranty and the Indebtedness and, if Bank requests, shall be collected and
received by Guarantor as trustee for Bank and paid over to Bank on account of
the Indebtedness of Borrower to Bank but without reducing or affecting in any
manner the liability of Guarantor under the other provisions of this Guaranty.
Any notes or other instruments now or hereafter evidencing such Indebtedness of
Borrower to Guarantor shall be marked with a legend that the same are subject to
this Guaranty and, if Bank so requests, shall be delivered to Bank. Guarantor
will, and Bank is hereby authorized in the name of Guarantor from time to time
to, execute and file financing statements and continuation statements and
execute such other documents and take such other action as Bank deems necessary
or appropriate to perfect, preserve and enforce its rights hereunder.
9. REMEDIES; NO WAIVER. All rights, powers and remedies of Bank hereunder are
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power or remedy hereunder shall affect or operate as a waiver of such right,
power or remedy; nor shall any single or partial exercise of any such right,
power or remedy preclude, waive or otherwise affect any other or further
exercise thereof or the exercise of any other right, power or remedy. Any
waiver, permit, consent or approval of any kind by Bank of any breach of this
Guaranty, or any such waiver of any provisions or conditions hereof, must be in
writing and shall be effective only to the extent set forth in writing.
10. COSTS, EXPENSES AND ATTORNEYS' FEES. Guarantor shall pay to Bank immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel), expended or incurred by
Bank in connection with the enforcement of any of Bank's rights, powers or
remedies and/or the collection of any amounts which become due to Bank under
this Guaranty, and the prosecution or defense of any action in any way related
to this Guaranty, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to Guarantor or any other person or entity. All of the
foregoing shall be paid by Guarantor with interest from the date of demand until
paid in full at a rate per annum equal to the greater of ten percent (10%) or
the Prime Rate in effect from time to time. The "Prime Rate" is a base rate that
▇▇▇▇▇ Fargo Bank, National Association, from time to time establishes and which
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto.
11. SUCCESSORS; ASSIGNMENT. This Guaranty shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Guarantor may not
assign or transfer any of its interests or rights hereunder without Bank's prior
written consent. Guarantor acknowledges that Bank has the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, any Indebtedness of Borrower to Bank and any obligations with
respect thereto, including this Guaranty. In connection therewith, Bank may
disclose all documents and information which Bank now has or hereafter acquires
relating to Guarantor and/or this Guaranty, whether furnished by Borrower,
Guarantor or otherwise. Guarantor further agrees that Bank may disclose such
documents and information to Borrower.
12. AMENDMENT. This Guaranty may be amended or modified only in writing signed
by Bank and Guarantor.
13. UNDERSTANDING WITH RESPECT TO WAIVERS; SEVERABILITY OF PROVISIONS. Guarantor
warrants and agrees that each of the waivers set forth herein is made with
Guarantor's full knowledge of its significance and consequences, and that under
the circumstances, the waivers are reasonable and not contrary to public policy
or law. If any waiver or other provision of this Guaranty shall be held to be
prohibited by or invalid under applicable public policy or law, such waiver or
other provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such waiver or other provision
or any remaining provisions of this Guaranty.
14. GOVERNING LAW. This Guaranty shall be governed by and construed in
accordance with the laws of the State of California.
15. ARBITRATION.
(a) Arbitration. Upon the demand of any party, any Dispute shall be resolved by
binding arbitration (except as set forth in (e) below) in accordance with the
terms of this Guaranty. A "Dispute" shall mean any action, dispute, claim or
controversy of any kind, whether in contract or tort, statutory or common law,
legal or equitable, now existing or hereafter arising under or in connection
with, or in any way pertaining to, this Guaranty and each other document,
contract and instrument required hereby or now or hereafter delivered to Bank in
connection herewith (collectively, the "Documents"), or any past, present or
future extensions of credit and other activities, transactions or obligations of
any kind related directly or indirectly to any of the Documents, including
without limitation, any of the foregoing arising in connection with the exercise
of any self-help, ancillary or other remedies pursuant to any of the Documents.
Any party may by summary proceedings bring an action in court to compel
arbitration of a Dispute. Any party who fails or refuses to submit to
arbitration following a lawful demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by the
American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Documents.
The arbitration shall be conducted at a location in California selected by the
AAA or other administrator. If there is any inconsistency between the terms
hereof and any such rules, the terms and procedures set forth herein shall
control. All statutes of limitation applicable to any Dispute shall apply to any
arbitration proceeding. All discovery activities shall be expressly limited to
matters directly relevant to the Dispute being arbitrated. Judgment upon any
award rendered in an arbitration may be entered in any court having
jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections afforded to it under
12 U.S.C. ss.91 or any similar applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No provision
hereof shall limit the right of any party to exercise self-help remedies such as
setoff, foreclosure against or sale of any real or personal property collateral
or security, or to obtain provisional or ancillary remedies, including without
limitation injunctive relief, sequestration, attachment, garnishment or the
appointment of a receiver, from a court of competent jurisdiction before, after
or during the pendency of any arbitration or other proceeding. The exercise of
any such remedy shall not waive the right of any party to compel arbitration or
reference hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators must be active
members of the California State Bar or retired judges of the state or federal
judiciary of California, with expertise in the substantive law applicable to the
subject matter of the Dispute. Arbitrators are empowered to resolve Disputes by
summary rulings in response to motions filed prior to the final arbitration
hearing. Arbitrators (i) shall resolve all Disputes in accordance with the
substantive law of the state of California, (ii) may grant any remedy or relief
that a court of the state of California could order or grant within the scope
hereof and such ancillary relief as is necessary to make effective any award,
and (iii) shall have the power to award recovery of all costs and fees, to
impose sanctions and to take such other actions as they deem necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
California Rules of Civil Procedure or other applicable law. Any Dispute in
which the amount in controversy is $5,000,000 or less shall be decided by a
single arbitrator who shall not render an award of greater than $5,000,000
(including damages, costs, fees and expenses). By submission to a single
arbitrator, each party expressly waives any right or claim to recover more than
$5,000,000. Any Dispute in which the amount in controversy exceeds $5,000,000
shall be decided by majority vote of a panel of three arbitrators; provided
however, that all three arbitrators must actively participate in all hearings
and deliberations.
(e) Judicial Review. Notwithstanding anything herein to the contrary, in any
arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
California, and (iii) the parties shall have in addition to the grounds referred
to in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
California. Judgment confirming an award in such a proceeding may be entered
only if a court determines the award is supported by substantial evidence and
not based on legal error under the substantive law of the state of California.
(f) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the Dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Documents or the subject matter of the Dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Documents or any relationship between the parties.
IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of
September 14, 2000.
nStor Technologies, Inc.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
Its: Vice President
EXHIBIT 10.4
PROMISSORY NOTE
July 31, ▇▇▇▇
▇.▇. ▇▇,▇▇▇,▇▇▇.▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, the undersigned nSTOR TECHNOLOGIES, INC., a Delaware
corporation with its principal place of business at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (hereinafter called "Maker"), hereby promises to pay to
the order of H. ▇▇▇▇▇ ▇▇▇▇, an individual resident of the State of Florida, with
a business address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter called "Payee"), at the address of Payee's principal place of
business stated above, or at such other place as the Payee may designate in
writing, the sum of TWO MILLION AND FIVE HUNDRED THOUSAND AND 00/100ths U.S.
Dollars (U.S. $2,500,000.00) (the "Principal Amount"), plus interest on the
outstanding balance of the Principal Amount at the rate of ten percent (10%) per
annum, payable monthly, on the fifth day of every month, commencing on September
5, 2000, from the date hereof until the date when said sum is paid in full in
accordance with the terms hereof. The entire Principal Amount plus all accrued
interest thereon shall be due and payable in full on April 30, 2001.
It is expressly agreed that this Promissory Note evidences a TWO MILLION AND
FIVE HUNDRED THOUSAND AND 00/100ths U.S. Dollars (U.S. $2,500,000.00) revolving
line of credit. The Principal Amount which may be outstanding at any time under
such line of credit shall not exceed TWO MILLION AND FIVE HUNDRED THOUSAND AND
00/100ths U.S. Dollars (U.S. $2,500,000.00). However, this limitation shall not
be deemed to prohibit Payee from advancing any sum, which may, in Payee's sole
and exclusive discretion, be necessary or desirable in order to protect and
preserve the effect and enforceability of this Promissory Note. Within the
limits and subject to the terms and conditions hereof, the Maker may borrow,
repay and re-borrow under the revolving line of credit evidenced by this
Promissory Note and all shall be subject to the terms and conditions of this
Promissory Note.
Upon the failure by Maker to pay interest full on or before the date when due
hereunder, the entire unpaid amount of this Note shall thereupon be immediately
due and payable, and the Payee shall have all rights and remedies provided under
this Note.
Maker shall have the right, in Maker's discretion at any time, without payment
of premium or penalty, to repay in whole or in part the unpaid balance of this
Note.
This Note shall be governed by and construed under the laws of the State of
Florida. The exclusive venue for any litigation in connection with or arising
out of this Note shall be Palm Beach County, Florida, and the Maker hereby
consents and submits to the jurisdiction of the state and federal courts sitting
in Palm Beach County, Florida.
MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE.
nSTOR TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
EXHIBIT 10.5
THIS PROMISSORY NOTE REPLACES THAT CERTAIN PROMISSORY NOTE DATED JULY 31,
2000 IN THE AMOUNT OF U.S. $2,500,000.00
PROMISSORY NOTE
October 11, 2000
U.S. $2,550,000.00 San Diego, California
FOR VALUE RECEIVED, the undersigned nSTOR TECHNOLOGIES, INC., a Delaware
corporation with its principal place of business at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (hereinafter called "Maker"), hereby promises to pay to
the order of H. ▇▇▇▇▇ ▇▇▇▇, an individual resident of the State of Florida, with
a business address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter called "Payee"), at the address of Payee's principal place of
business stated above, or at such other place as the Payee may designate in
writing, the sum of TWO MILLION AND FIVE HUNDRED FIFTY THOUSAND AND 00/100ths
U.S. Dollars (U.S. $2,550,000.00) (the "Principal Amount"), plus interest on the
outstanding balance of the Principal Amount at the rate of ten percent (10%) per
annum, payable monthly, on the fifth day of every month, from the date hereof
until the date when said sum is paid in full in accordance with the terms
hereof. The entire Principal Amount plus all accrued interest thereon shall be
due and payable in full on April 30, 2001.
It is expressly agreed that this Promissory Note evidences a TWO MILLION AND
FIVE HUNDRED FIFTY THOUSAND AND 00/100ths U.S. Dollars (U.S. $2,550,000.00)
revolving line of credit. The Principal Amount which may be outstanding at any
time under such line of credit shall not exceed TWO MILLION AND FIVE HUNDRED
FIFTY THOUSAND AND 00/100ths U.S. Dollars (U.S. $2,550,000.00). However, this
limitation shall not be deemed to prohibit Payee from advancing any sum, which
may, in Payee's sole and exclusive discretion, be necessary or desirable in
order to protect and preserve the effect and enforceability of this Promissory
Note. Within the limits and subject to the terms and conditions hereof, the
Maker may borrow, repay and re-borrow under the revolving line of credit
evidenced by this Promissory Note and all shall be subject to the terms and
conditions of this Promissory Note.
Upon the failure by Maker to pay interest in full on or before the date when due
hereunder, the entire unpaid amount of this Note shall thereupon be immediately
due and payable, and the Payee shall have all rights and remedies provided under
this Note.
Maker shall have the right, in Maker's discretion at any time, without payment
of premium or penalty, to repay in whole or in part the unpaid balance of this
Note.
This Note shall be governed by and construed under the laws of the State of
Florida. The exclusive venue for any litigation in connection with or arising
out of this Note shall be Palm Beach County, Florida, and the Maker hereby
consents and submits to the jurisdiction of the state and federal courts sitting
in Palm Beach County, Florida.
MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE.
nSTOR TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
EXHIBIT 10.6
PROMISSORY NOTE
October 11, 2000
U.S. $750,000.00 San Diego, California
FOR VALUE RECEIVED, the undersigned nSTOR TECHNOLOGIES, INC., a Delaware
corporation with its principal place of business at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (hereinafter called "Maker"), hereby promises to pay to
the order of MLL Corp., a Florida corporation whose principal place of business
is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called
"Payee"), at the address of Payee, stated above, or at such other place as the
Payee may designate in writing, the sum of SEVEN HUNDRED FIFTY THOUSAND AND
00/100ths U.S. Dollars (U.S. $750,000.00) (the "Principal Amount"), plus
interest on the outstanding balance of the Principal Amount at the rate of ten
percent (10%) per annum, payable monthly, on the fifth day of every month, from
the date hereof until the date when said sum is paid in full in accordance with
the terms hereof. The entire Principal Amount plus all accrued interest thereon
shall be due and payable in full on April 30, 2001.
It is expressly agreed that this Promissory Note evidences a SEVEN HUNDRED FIFTY
THOUSAND AND 00/100ths U.S. Dollars (U.S. $750,000.00) revolving line of credit.
The Principal Amount which may be outstanding at any time under such line of
credit shall not exceed SEVEN HUNDRED FIFTY THOUSAND AND 00/100ths U.S. Dollars
(U.S. $750,000.00). However, this limitation shall not be deemed to prohibit
Payee from advancing any sum, which may, in Payee's sole and exclusive
discretion, be necessary or desirable in order to protect and preserve the
effect and enforceability of this Promissory Note. Within the limits and subject
to the terms and conditions hereof, the Maker may borrow, repay and re-borrow
under the revolving line of credit evidenced by this Promissory Note and all
shall be subject to the terms and conditions of this Promissory Note.
Upon the failure by Maker to pay interest in full on or before the date when due
hereunder, the entire unpaid amount of this Note shall thereupon be immediately
due and payable, and the Payee shall have all rights and remedies provided under
this Note.
Maker shall have the right, in Maker's discretion at any time, without payment
of premium or penalty, to repay in whole or in part the unpaid balance of this
Note.
This Note shall be governed by and construed under the laws of the State of
Florida. The exclusive venue for any litigation in connection with or arising
out of this Note shall be Palm Beach County, Florida, and the Maker hereby
consents and submits to the jurisdiction of the state and federal courts sitting
in Palm Beach County, Florida.
MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE.
nSTOR TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
EXHIBIT 10.7
October 18, 2000
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
nStor Technologies, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇▇,
On October 11, 2000, the Board of Directors formally approved the following
revisions to your Employment Arrangement:
1) Term:
-----
The expiration date has been extended to January 16, 2003.
2) Bonus and Incentive Compensation:
---------------------------------
You will be entitled to a $100,000 bonus, to be paid during the first
ten (10) days of January 2002, in the event that one of the following
conditions occur:
a) During 2001, the Company has experienced three consecutive quarters
of revenue growth of a minimum of 5% per quarter, or
b) The closing market price of the Company's stock is at least $5 on
December 31, 2001.
3) Stock Options:
--------------
Effective October 11, 2000, you have been granted options to purchase an
additional 250,000 shares of nStor common stock at an exercise price of
$2 per share. The options will vest 100% on January 16, 2003.
4) Change of Control:
------------------
In the event of a sale of substantially all the property, or more than
51% of the then outstanding common shares, of the Company to another
company not controlled by the Company's shareholders, 100% of all
options, which have been granted to you by the Company, will
automatically vest.
Very truly yours, Approved By:
/s/ H. ▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------- ------------------------
H. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇