LOAN AND SECURITY AGREEMENT
THIS AGREEMENT, dated as of March 8, 2000, is entered into between Micrel
Incorporated, a California corporation (hereinafter called "Borrower"), whose
chief executive office is at the address set forth in Section 1.7
hereinbelow, and Bank of the West, a California banking corporation, whose
address is set forth in Section 1.5.
The parties agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
definitions:
1.1 Accounts. The term "Account(s)" means all presently existing and
hereafter arising accounts, contract rights, instruments, documents, chattel
paper, and all other forms of obligations owing to Borrower arising out of
the sale or lease of goods or the rendition of services by Borrower whether
or not earned by performance, and any and all credit insurance, guaranties
and other security therefor, as well as all merchandise returned to or
reclaimed by Borrower.
1.2 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.
1.3 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.
1.4 Applicable Term Loan "A" Rate. The term "Applicable Term Loan 'A'
Rate" shall be either (i) the Prime Rate, (ii) the Term Offshore Rate, or
(iii) the Term Fixed Rate, as designated by Borrower or otherwise applicable
to such loan or advance under Article 3 of this Agreement.
1.5 Bank. The term "Bank" shall mean and refer to Bank of the West, a
California banking corporation, with a place of business located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ Business Banking Group, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.6 Bank Expenses. The term "Bank Expenses" means: all costs and
expenses incurred by Bank in connection with this Agreement or the
transactions contemplated hereby, including, without limitation, all 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.
1.7 Borrower. The term "Borrower" shall mean and refer to the party
first named above, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
1.8 Borrower's Books. The term "Borrower's Books" means all of
Borrower's books and records including, but not limited to: minute books;
ledgers, records indicating, summarizing or evidencing Borrower's assets,
liabilities, the Collateral, the Obligations, and all information relating
thereto; records indicating, summarizing or evidencing Borrower's business
operations or financial condition; and all computer programs, disc or tape
files, printouts, runs, and other computer prepared information and the
equipment containing such information.
1.9 Borrowing Base. The term "Borrowing Base" means the sum of: (a)
eighty percent (80%) of the net amount of Eligible Accounts after deducting
therefrom all payments, adjustments and credits applicable thereto; and (b)
the amount of the advances agreed to be made pursuant to any rider, amendment
or modification to this Agreement that may now or hereafter be entered into
by Bank and Borrower.
1.10 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.
1.11 Collateral. The term "Collateral" means and includes all of
Borrower's presently existing and hereafter acquired equipment (whether
acquired pursuant to any advance made by Bank or otherwise), wherever
located, including without limitation, equipment used to design, manufacture,
test and package semiconductor devices, machinery, machine tools, motors,
controls, attachments, parts, tools, and accessories incidental thereto; and
all substitutions, replacements, accessories, additions, attachments,
improvements, accessions, Proceeds and products of the foregoing.
1.12 Credit. The term "Credit" means all Obligations in respect of
amounts actually paid or advanced by Bank under this Agreement.
Loan and Security Agreement - Page 1
1.13 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.
1.14 Eligible Accounts. The term "Eligible Accounts" means and includes
those accounts of Borrower which are due and payable within forty-five (45)
days (or less) from the date of invoice and strictly comply with all of
Borrower's warranties and representations to Bank; but Eligible Accounts
shall not include the following: (a) accounts with respect to which the
account debtor is an officer, employee, partner, joint venturer or agent of
Borrower; (b) accounts with respect to which goods are placed on consignment,
guarantied sale or other terms by reason of which the payment by the account
debtor may be conditional; (c) accounts with respect to which the account
debtor is not a resident of the United States of America; (d) accounts with
respect to which the account debtor is the United States of America or any
department, agency or instrumentality thereof; (e) accounts with respect to
which the account debtor is a subsidiary of, related to, affiliated or has
common shareholders, officers or directors with Borrower; (f) accounts with
respect to which Borrower is or may become liable to the account debtor for
goods sold or services rendered by the account debtor to Borrower; (g)
accounts not paid by an account debtor within ninety (90) days from the date
of the invoice; (h) accounts with respect to which account debtors dispute
liability or make any claim, or have any defense, crossclaim, counterclaim or
offset; (i) accounts with respect to which any Insolvency Proceeding is filed
by or against the account debtor, or if an account debtor becomes insolvent,
fails or goes out of business; (j) all accounts owed by an account debtor
when fifty percent (50%) or more of all outstanding accounts owed by the
account debtor to Borrower have not been paid within ninety (90) days after
the date of invoice; and (k) accounts owed by any single account debtor which
exceed twenty percent (20%) of all of the Eligible Accounts.
1.15 Equipment. Intentionally Omitted
1.16 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 and/or the Term Offshore Rate (as the case may
be) shall be adjusted automatically as to all Revolving Offshore Rate and/or
the Term Offshore Rate loans (as the case may be) then outstanding as of the
effective date of any change in the Eurodollar Reserve Percentage.
1.17 Event of Default. The term "Event of Default" shall have the
meaning set forth in Article 11 of this Agreement.
1.18 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.
1.19 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 Loan or an Term Offshore Rate-Based Loan (as the case may be);
provided, however, that such Interest Period shall in no event extend beyond
the date certain set forth in Section 5.1 of this Agreement (as same may from
time to time be amended) with respect to revolving loans and advances under
Article 2 and provided further, however, that such Interest Period shall in
no event extend beyond the maturity date of any term loans set forth in any
note executed and delivered by Borrower to Bank (as same may from time to
time be amended) with respect to term loans and advances under Article 3.
1.20 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.
1.21 LIBOR Rate. The term "LIBOR Rate" means the rate of interest per
annum that appears on page 3750 of the Dow ▇▇▇▇▇ Telerate Screen (or any
successor page) for United States dollar deposits in amounts equal to the
amount of the Revolving Offshore Rate-Based loan or the Term Offshore Rate-
Based loan (as the case may be) 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 ▇▇▇▇▇,
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 or
the Term Offshore Rate-Based loan (as the case may be) 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.
1.22 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.
1.23 Over Advance. The term "Over Advance" shall have the meaning set
forth in Section 2.1 of this Agreement.
1.24 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
Loan and Security Agreement - Page 2
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.
1.25 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.
1.26 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.
1.27 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:
Revolving Offshore Rate = [2.00%] + [LIBOR Rate/(1.00 - Eurodollar Reserve
Percentage)]
1.28 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.
1.29 Term Fixed Rate. The term "Term Fixed Rate" shall mean the rate of
interest determined in accordance with the note attached hereto as Exhibit
"A."
1.30 Term Fixed Rate-Based Loans. The term "Term Fixed Rate-Based
loans" means all advances and extensions of credit which shall bear interest
at the Term Fixed Rate.
1.31 Term Offshore Rate. The term "Term 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 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
Term Offshore Rate shall be as follows:
Term Offshore Rate = [2.125%] + [LIBOR Rate/(1.00 - Eurodollar Reserve
Percentage)]
1.32 Term Offshore Rate-Based Loans. The term "Term Offshore Rate-Based
loans" means all advances and extensions of credit which shall bear interest
at the Term Offshore Rate.
1.33 Term Treasury Rate. The term "Term Treasury Rate" shall mean the
rate of interest determined in accordance with the note attached hereto as
Exhibit "A."
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 March 8, 2000 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 (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
Loan and Security Agreement - Page 3
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 5.1 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 5.1. 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 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. TERM LOAN FACILITY "A"
3.1 Term Loan Facility "A" 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 (the "Term
Loan 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) April 30, 2001 or (ii) the date on which the aggregate of all advances
made pursuant to this Article 3 equals Forty Million Dollars
($40,000,000.00).
(b) Borrower may use the proceeds of this Term Loan Facility "A" for
the purchase of items of new and used equipment that is acquired from and
after June 1, 1999 for use in connection with Borrower's business. If such
loan or advance is approved by Bank, each advance made by Bank under this
Term Loan Facility "A" shall be made either to Borrower or to the vendor of
any new and used 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 new and used 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 new and used equipment, and if the amount of
the advance to be made by Bank does not equal the total purchase price of
such new and used 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 Article 3
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
Loan and Security Agreement - Page 4
Borrower with respect to any equipment to be purchased, and (3) such other
documentation as Bank may require (including, without limitation, schedules
attached hereto describing said new and used equipment and financing
statements relative thereto). Amounts once borrowed and repaid under Term
Loan Facility "A" shall not be available for re-borrowing.
3.2 Documentation and Interest. Each advance made under this Term Loan
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
"Term Loan Facility 'A' Note"). All loans and advances made under Term Loan
Facility "A" shall be added to and deemed a part of the Obligations and shall
bear interest, on the Daily Balance owing in connection with such note, at a
per annum rate equal to the Applicable Term Loan "A" Rate.
3.3 Monthly Accounting. Bank shall render monthly statements of all
amounts owing by Borrower to Bank under Term Loan 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 ninety (90)
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 April 30, 2001 and
Borrower's obligations with respect to any Term Loan Facility "A" Notes
outstanding on April 30, 2001 and the terms and conditions of this Agreement
as same relate to the Term Loan Facility "A" and the Term Loan Facility "A"
Notes shall continue in full force and effect (and shall be subject to Bank's
rights and remedies set forth therein). 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 April 30, 2001 and
shall continue on a month-to-month basis after such April 30, 2001 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 Borrower's right
continue to make installment payments under the Term 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 Term 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 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:
Loan and Security Agreement - Page 5
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;
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. Waivers executed by landlords and mortgagees of any real
property on which the Collateral is located;
6.7 Officers' Warranties and Representations. An executed form of
Warranties and Representations of Officers; and
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).
6.9 Secured Lending Audit. If requested by Bank, an audit, inspection
or other report prepared by auditors or consultants acceptable to Bank
confirming (i) the location, quantity, quality, and value of all equipment,
(ii) the accuracy, authenticity, amount, aging, payment history, obligors,
and status of all Accounts, and (iii) such other attributes, locations,
quantities, qualities, and values of the Collateral as Bank deems necessary
or appropriate.
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.
7.5 Borrower's Books. Bank shall have the right, at all times, during
Borrower's normal business hours, or at the regular business hours of any
third party having custody of or control over Borrower's Books, to inspect,
review, examine, and audit (i) Borrower's Books, (ii) the accuracy,
authenticity, amount, aging, payment history, obligors, and status of all
Accounts, and (iii) such other attributes, locations, quantities, qualities,
and values of Borrower or the Collateral as Bank deems necessary or
appropriate. In connection with the foregoing, Bank shall have the right to
make summaries and photocopies thereof. 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 performing such inspection, review, examination, audit and
photocopying.
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 Validity of Accounts. The accounts are and will, at all times
pertinent hereto, be bona fide existing obligations created by the sale or
lease of goods or the rendition of services to account debtors in the
ordinary course of Borrower's business, and are and will be unconditionally
owed to Borrower without rights of return or cancellation. At the time each
account is generated and/or assigned to Bank: (a) all accounts will be due
and payable in accordance with the terms set forth in Section 1.14 of this
Agreement, or on such other terms approved in writing by Bank in advance of
Loan and Security Agreement - Page 6
the creation of accounts, and such terms shall be expressly set forth on the
face of all invoices; (b) all property giving rise to accounts shall have
been delivered to the account debtor or to the agent of the account debtor
for immediate shipment to and unconditional acceptance by the account debtor;
(c) no account will be past due; (d) all accounts shall be unconditionally
owed to Borrower without defense, offset or counterclaim dispute; and (e)
Borrower shall have received no notice of actual or imminent Insolvency
Proceeding of any account debtor.
8.3 Place of Business. Borrower's chief executive office is located at
the address set forth in Section 1.7 hereinabove and all of the locations at
which Borrower conducts business or stores any Collateral are as set forth in
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.
8.4 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.
8.5 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.
8.6 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.
8.7 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.
8.8 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.
8.9 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.
8.10 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.
8.11 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 8.9 of this Agreement).
8.12 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.
8.13 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.
8.14 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.
8.15 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.
Loan and Security Agreement - Page 7
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") where (1) the sum of the
aggregate consideration paid for any such Acquisitions undertaken during the
term of this Agreement, including (i) the fair market value of any property
given, (ii) any cash paid, and (iii) the amount of any assumption of existing
obligations (but excluding consideration in the form of capital stock of
Borrower) which indebtedness is either unsecured or secured by assets of the
subject of such Acquisition, and less cash received as a result of the
Acquisition, does not exceed $5,000,000, (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.
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
an amount exceeding (in the aggregate) One Million Dollars ($1,000,000) 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 in favor of Bank and except for purchase money liens
on Equipment that it not manufacturing, production or testing and is
otherwise not Equipment with respect to which Bank has made and extended
loans and advances under Article 3.
9.8 Investment in Securities. Make any investment in securities, other
than the securities of the United States of America and other than in
accordance with any written investment policy from time to time approved by
Bank, which policy shall be in writing and shall be delivered to Bank prior
to or concurrently with the execution of this Agreement.
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.
9.11 Guarantees. Guaranty or otherwise become in any way liable with
respect to the obligations of any third party in an aggregate amount at any
one time exceeding One Million Dollars ($1,000,000), 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.
9.12 Indebtedness. Incur any debts outside the ordinary course of
Borrower's business, except for renewals or extensions of existing debts.
9.13 Loans. Make any advance or loan to any person or entity in an
aggregate amount at any one time exceeding Two Million Five Hundred Thousand
Dollars ($2,500,000).
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. Except as permitted below, Borrower shall
keep the Collateral only at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at such
locations in the State of California as may be identified for the location of
collateral in that certain Warranties and Representations of Officers of
Borrower executed and delivered in connection with this Agreement, and at
such other locations within 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. Notwithstanding the foregoing, Borrower
shall have the right to move, relocate, loan, sell or dispose of any items or
pieces of Collateral (and not just those items and pieces of Collateral
financed by Bank with loans and advances under Article 3) to locations other
than Permitted Locations provided (1) such movement, relocation, sale and/or
disposition is in the usual and ordinary course of Borrower's business and
(2) the aggregate book value of all Collateral (and not just those items and
pieces of Collateral financed by Bank with loans and advances under Article
3) located at locations that are not Permitted Locations does not exceed (at
any one time) ten percent (10%) of the aggregate book value of all of
Borrower's Collateral (and not just those items and pieces of Collateral
financed by Bank with loans and advances under Article 3). For the purpose
of this Agreement, "book value" shall mean the original purchase price of
each such item or piece of Collateral, less the accumulated deprecation
thereon as reflected on Borrower's books and in accordance with generally
accepted financial accounting principles (consistently applied). Within
thirty (30) days after the end of each fiscal quarter, Borrower shall provide
Bank with a detailed listing of the location of each item of Collateral (and
not just those items and pieces of Collateral financed by Bank with loans and
advances under Article 3) having an initial purchase price exceeding Five
Thousand Dollars ($5,000) each that is located at an address or location that
is not a Permitted Location.
Loan and Security Agreement - Page 8
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) 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 (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 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, 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
Loan and Security Agreement - Page 9
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 all of Borrower's principal domestic bank accounts with Bank and shall
open no domestic bank account, deposit account or other account into which
money can be deposited in the United States without the written consent of
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
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. Borrower
shall permit Bank and any of Bank's employees, officers or agents, upon
demand, during Borrower's usual business hours, or the usual business hours
of third persons having control thereof, to have access to and examine all of
Borrower's Books relating to the Collateral, the Obligations, Borrower's
financial condition, and the results of Borrower's operations, and, in
connection therewith, permit Bank or any of Bank's agents, employees or
officers to copy and make extracts therefrom, and to inspect the properties
of Borrower.
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;
(c) within thirty (30) days after the end of each fiscal quarter
during which amounts under Article 2 of this Agreement are advanced by Bank
or are outstanding, an aged statement of all Accounts and accounts receivable
owing to Borrower, which statement shall show (at a minimum) the date of each
Account and account receivable, the payor of each Account and account
receivable, and the amount of each Account and account receivable; shall
otherwise be in a form and content acceptable to Bank and shall cover
Borrower's operations during such preceding calendar month; shall be prepared
by Borrower; shall be certified by an officer or other authorized employee of
Borrower to be full, true, complete and accurate; and shall be 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
(d) 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
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:
Loan and Security Agreement - Page 10
(a) a ratio of total debt and liabilities to Tangible Net Worth of
less than one (1.0) to one (1.0);
(b) Tangible Net Worth in an amount not less than One Hundred Ten
Million Dollars ($110,000,000.00);
(c) a ratio of (i) the sum of cash, cash equivalents, short-term
investments, and accounts receivable to (ii) current liabilities of not less
than one and one-half (1.5) to one (1.0);
(d) an after-tax profit from operations for each of Borrower's fiscal
quarters and for each of Borrower's fiscal years; provided, however, that
Borrower may experience one (1) fiscal quarter during any rolling four (4)
fiscal quarter period in which Borrower does not earn an after-tax profit
from operations so long as the loss from operations during such quarter does
not exceed Two Million Five Hundred Thousand Dollars ($2,500,000.00); and
(e) a ratio of net after-tax profit 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).
For purposes of this Section 10.13, the following terms shall have the
following meanings:
The term "after-tax profit from operations" means after tax profit from
operations as determined in accordance with generally accepted accounting
principles consistently applied, decreased by extraordinary gains, capital
gains from the sale of assets outside the ordinary course of business and
investment income earned outside the ordinary course of 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.
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 this Agreement or any other present or future
agreement between Borrower and Bank within three (3) days after Bank's
service of a written notice identifying Borrower's default under this Section
11.2.
11.3 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.
11.4 Seizure of Assets. If all or any of the assets of Borrower are
attached, seized, subjected to a writ or distress warrant, or are levied
upon, or come into the possession of any Judicial Officer or Assignee.
11.5 Voluntary Insolvency. If an Insolvency Proceeding is commenced by
Borrower.
11.6 Involuntary Insolvency. If an Insolvency Proceeding is commenced
against Borrower.
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 Lien, Levy. If a notice of lien, levy or assessment is filed of
record with respect to any or all of the assets of Borrower by the United
States Government, or any department, agency or instrumentality thereof, or
by any state, county, municipal or other governmental agency, or if any taxes
or debts owing at any time hereafter to any one or more of such entities
becomes a lien, whether ▇▇▇▇▇▇ or otherwise, upon any or all of the assets of
Borrower.
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).
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.
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.
Loan and Security Agreement - Page 11
11.14 Additional Defaults. If an event occurs which with the passage of
time would constitute an Event of Default.
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 11.6, 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
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;
(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
Loan and Security Agreement - Page 12
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 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 1.7 of this Agreement or
to Bank at Bank's address set forth in Section 1.5 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
▇▇▇▇▇, 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.
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.
Loan and Security Agreement - Page 13
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 November 12, 1990 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 was due and owing under the Prior
Agreement the Daily Balance of $ ___________________, and accrued and unpaid
interest in the amount of $ _____________________; provided, however, that
the foregoing shall not apply to any Obligations owing by Borrower to Bank in
connection with any promissory notes evidencing any term loans previously
extended by Bank to Borrower.
IN WITNESS WHEREOF, Borrower has executed and delivered this Agreement on
the date first hereinabove written.
"Borrower"
Micrel Incorporated,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President, CEO & Chairman of the Board of Directors
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Vice President, Finance & CFO
Accepted and effective this eighth day of March, 2000, at Bank's place of
business in the City of San ▇▇▇▇, State of California.
"Bank"
Bank of the West,
a California banking corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
Loan and Security Agreement - Page 14
Exhibit "A"
TERM LOAN 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 March 8, 2000 (the "Loan Agreement"), Borrower promises to pay
Bank, or order, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ Business
Banking Group, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on the dates and in the manner
hereinafter set forth, the principal amount set forth above, plus any
interest thereon at the Applicable Term Loan "A" Rate (as hereinafter
defined), and all Bank Expenses. Interest shall be computed 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 TERM 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 one (1) of the blanks set forth
below or as hereinafter designated by Borrower in accordance with the terms
of this Note (the "Applicable Term Loan 'A' Rate"); provided, however, that
if Borrower fails to elect either of the three options set forth below, the
Applicable Term Loan "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 Term Loan "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.
____________ (b) Term Fixed Rate-Based Loan.
Initial Here
Subject to Borrower's right to convert the Applicable Term Loan "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 rate designated below as
selected by Borrower at the time of its execution and delivery of this Note
(the "Term Fixed Rate"); provided, however, that if the option set forth in
this Section 2(1)(b) to have the obligations under this Note bear interest at
the Term Fixed Rate is selected and Borrower fails to further elect to have
such loan and advance accrue in accordance with the Annual Adjusting
procedure prescribed by Section 2(1)(b)(A) or the Four Year Fixed Rate
procedure prescribed by Section 2(1)(b)(B), then such loan and advance shall
Term Loan Facility "A" Note - Page 1
be deemed to accrued interest in accordance with the Annual Adjusting
procedure prescribed by Section 2(1)(b)(A):
(A) Annual Adjusting
(i) Initial Rate: The rate of interest on the amounts from
time to time unpaid under this Note until and including the first day of the
thirteenth (13th) calendar month immediately succeeding the Funding Date (the
"Initial Rate") shall be at two and three-quarters percentage points (2.75%)
per annum in excess of the Adjustable Rate Index (as hereinafter defined)
and rounding the sum so determined to the next highest one-eighth of one
percentage point (0.125%). The "Adjustable Rate Index" shall be the yield
calculated on the basis of the actual weekly auction rate on fifty-two (52)
week Treasury Bills sold by the U.S. Treasury during the week preceding the
week in which funds are advanced by Bank to Borrower under this Note (the
"Funding Date") or the Term Loan Adjustment Date occurs (as the case may be).
Bank shall determine the Adjustable Rate Index and compute the Applicable
Term Loan "A" Adjustable Rate Index from information supplied in the Wall
Street Journal or another reliable publication or reporting service selected
by Bank. The parties agree that the Initial Rate is and shall be ______% per
annum.
(ii) Adjusted Rate: The Applicable Term Loan "A" Rate shall be
adjusted as of the first (1st) day of the thirteenth (13th) full calendar
month following the Funding Date and every twelve (12) months thereafter
(each a "Term Loan Adjustment Date") to reflect the value of the Adjustable
Rate Index on the Term Loan Adjustment Date. From and after each Term Loan
Adjustment Date until the next Term Loan Adjustment Date (each a "Term Loan
Adjustment Period"), the Applicable Term Loan "A" Rate shall be an amount
computed by adding two and three-quarters percentage points (2.75%) to the
value of the Adjustable Rate Index in effect on the Term Loan Adjustment Date
and rounding the sum so determined to the next highest one-eighth of one
percentage point (0.125%). The Applicable Term Loan "A" Rate for each Term
Loan Adjustment Period shall become effective automatically on the Term Loan
Adjustment Date for such Term Loan Adjustment Period. Any failure by Bank to
give Borrower notice of an adjustment of the Applicable Term Loan "A" Rate
and the amount of monthly installments, or any disagreement by Borrower as to
the correctness of any calculation by the holder hereof, shall not relieve
Borrower of the obligation to make monthly payments hereunder. In the event
of any failure by Bank to give Borrower notice of an adjustment of the
Applicable Term Loan "A" Rate, Borrower shall continue to make monthly
payments in the same amount as were payable prior to the Term Loan Adjustment
Date. If the amount of payments made is less than the amount applicable
under this Note, then Borrower shall pay Bank the amount of the deficiency on
demand; if the amount of such payments is more than the amount applicable
under this Note, then Borrower shall receive a credit for any excess payments
against the next payment coming due following the date of any notice of an
adjustment.
____________ (B) Four Year Fixed Rate.
Initial Here
The rate of interest on the amounts from time to time unpaid under
this Note until and including the Maturity Date shall be at two and three-
quarters percentage points (2.75%) per annum in excess of the Fixed Rate
Index (as hereinafter defined) and rounding the sum so determined to the
next highest one-eighth of one percentage point (0.125%). The "Fixed Rate
Index" shall be the yield calculated on the basis of the actual weekly
auction rate on four (4) year Treasury Bills sold by the U.S. Treasury during
the week preceding the week in which the amounts are advanced by Bank under
this Note. Bank shall compute the Applicable Term Loan "A" Rate from
information supplied in the Wall Street Journal or another reliable
Term Loan Facility "A" Note - Page 2
publication or reporting service selected by Bank. The parties agree that
the Applicable Term Loan Rate under this Subparagraph 2(b)(B) is and shall be
______% per annum.
____________ (c) Term Offshore Rate-Based Loan.
Initial Here
Subject to Borrower's right to convert the Applicable Term Loan "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 Term Offshore Rate (as
defined in the Loan Agreement). In the event that the Term 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 Term 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 Term 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 Term Loan "A" rate from either a Prime Rate-Based loan
under Section 2(1)(a) above, a Term Fixed Rate-Based loan utilizing annual
adjustments under Section 2(1)(b) above, or a Term Offshore Rate-Based loan
under Section 2(1)(c), above to a rate of interest in an amount equal to
three percentage points (3.00%) per annum in excess of the Fixed Rate Index
(as hereinafter defined) and rounding the sum so determined to the next
highest one-eighth of one percentage point (0.125%). 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; (c) specify an effective date for such conversion;
and (d) be received by Bank not later than 10:00 a.m. Pacific local time
three (3) business days prior to the requested conversion date. The "Fixed
Rate Index" shall be the yield calculated on the basis of the actual weekly
auction rate on four (4) year Treasury Bills sold by the U.S. Treasury during
the week preceding the week in which Borrower's written election is received
by Bank. Bank shall compute the Applicable Term Loan "A" Rate from
information supplied in the Wall Street Journal or another reliable
publication or reporting service selected by Bank. 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 Term Loan "A" Rate from either a Prime Rate-Based loan under
Section 2(1)(a) above, a Term Fixed Rate-Based loan utilizing annual
adjustments under Section 2(1)(b) above, or a Term Offshore Rate-Based loan
under Section 2(1)(c), 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 Term Loan "A" Rate is the Four Year Fixed Rate determined in
accordance with the provisions of Section 2(1)(b)(B) of this Note, 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.
Term Loan Facility "A" Note - Page 3
For the purpose of this Note, the term "Prepayment Rate" shall mean the
value calculated by subtracting (i) the rate on the current coupon United
States Treasury Note which, as of the date of prepayment, has a remaining
term most closely approximating the time period between the date of such
prepayment and the Maturity Date of this Note from (ii) the actual weekly
auction rate on Treasury Bills sold by the U.S. Treasury and having a term of
four (4) years which sale occurs most nearly preceding the Funding Date.
(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 Term Loan "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
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 Term Loan Facility "A" at the
Applicable Term Loan "A" Rate, and (iii) all Bank Expenses incurred by Bank
in connection with Term Loan Facility "A." 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.
Term Loan Facility "A" Note - Page 4
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 Term Loan Facility
"A" Rate (the "Term Loan Default Rate"). The Term Loan 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.
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
Term Loan Facility "A" Note - Page 5
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.
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.
Term Loan Facility "A" Note - Page 6
(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.
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: _______________________________
Its:________________________________
By: _________________________________
Its:_________________________________
Term Loan Facility "A" Note - Page 7