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EXHIBIT 10.34
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of October 19,
1998, by and between At Home Corporation ("Borrower") and Silicon Valley Bank
("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Loan and Security Agreement, dated September 24, 1997, as may be
amended from time to time, (the "Loan Agreement"). The Loan Agreement provided
for, among other things, a Committed Equipment Line in the original principal
amount of Eight Million Dollars ($8,000,000) (the "Equipment Facility"). Defined
terms used but not otherwise defined herein shall have the same meanings as in
the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement
1. The defined terms as set forth in Section 1.1 entitled
"Definitions" are hereby amended or added to read as follows:
"Committed Equipment Line" means a credit extension of Fifteen
Million Dollars ($15,000,000).
"Libor Rate" has the meaning set forth in the Libor Supplement
attached hereto.
"Maturity Date" means October 19, 2002.
"Payment Date" means the nineteenth (19th) calendar day of
each month, commencing on the first such date after the
Closing Date and ending on the Maturity Date.
"Prepayment Fee" means a fee on any portion of the Obligations
with a fixed interest rate (the "Fixed Obligations") that is
paid before the payment due date. The Prepayment Fee is
calculated as follows: first, Bank determines a "Current
Market Rate" based on what the Bank would receive if it loaned
the amount on the prepayment date in a wholesale funding
market matching maturity, principal amount and principal
amount and principal and interest payment dates (such
aggregate payments received being deemed the "Current Market
Rate Amount"). Bank, in its sole discretion, may select any
wholesale funding market as the Current Market Rate. Second,
Bank will take the prepayment amount and calculate the present
value of each principal and interest payment which,. without
prepayment, the Bank would have received during the term of
the Fixed Obligations using the applicable interest rate set
forth in this Agreement. The sum of the present value
calculations is the "▇▇▇▇ to Market Amount". Third, the Bank
will subtract the ▇▇▇▇ to Market Amount from the Current
Market Rate Amount. Any amount greater than zero is the
Prepayment Fee.
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"Treasury Yield Percentage Rate". Treasury Yield Percentage
shall be defined as the most recent weekly average yield on
actively traded U.S. Treasury obligations having a final
maturity approximate to the then remaining average life of the
principal amount to be repaid as determined by reference to
the week ending figures published in the most recent Federal
Reserve Statistical Release which shall become available at
least two business days prior to the date as of which such
yield is to be determined, or if a Statistical Release is not
then published, the arithmetic average (rounded to the nearest
.01%) of the per annum yields to maturity for each business
day during the week ending at least two business days prior to
the date such determination is made, of all issues of actively
traded marketable United States Treasury fixed interest rate
securities with a constant maturity equal to, or not more than
30 days longer or 30 days shorter than the average life of the
payments of principal and interest that are avoided by any
prepayment (excluding all such securities which can be
surrendered at the option of the holder at the face value of
payment of any Federal estate tax, or which provide for tax
benefits to the holder).
2. The first sentence of sub-section (a) of Section 2.1.1
entitled "Equipment Advances" is hereby amended to read as
follows:
Subject to and upon the terms and conditions of this
Agreement, at any time from the date hereof through October
19, 1999 (the "Equipment Availability End Date"), Bank agrees
to make advances (each an "Equipment Advance" and
collectively, the "Equipment Advances") to Borrower in an
aggregate outstanding amount not to exceed (i) the Committed
Equipment Line, minus (ii) the face amount of all outstanding
Letters of Credit (including all drawn but unreimbursed
Letters of Credit), minus (iii) the Foreign Exchange Reserve,
minus (iv) the Cash Management Sublimit.
3. Sub-section (b) of Section 2.1.1 entitled "Equipment Advances"
is hereby amended in its entirety to read as follows:
Interest shall accrue from the date of each outstanding
Equipment Advance and shall be payable in accordance with
Sub-section (a) of Section 2.2 entitled "Interest Rates,
Payments, and Calculations".
4. Sub-section (a) of Section 2.2 entitled "Interest Rates,
Payments and Calculations" is hereby amended in its entirety
to read as follows:
Interest shall accrue from the date of each outstanding
Equipment Advance at Borrowers election of either (i) a
variable per annum rate equal to the Prime Rate ("Option 1")
or (ii) a fixed rate of the Libor Rate plus 250 basis points
("Option 2"). In the event Borrower elects Option 1, interest
shall be payable monthly for each month through the month in
which the Equipment Availability End Date falls. In the event
Borrower elects Option 2 interest will be paid in accordance
with the terms of the Libor Supplement, provided however, no
Interest Period (as defined therein) may extend beyond the
Equipment Availability End Date. Any Equipment Advances that
are outstanding on the Equipment Availability End Date will be
amortized and payable quarterly and will accrue interest at
Borrower's election as follows: (i) a fixed rate equal to the
Libor Rate plus 250 basis points (ii) a variable rate equal to
the Prime Rate or (iii) a fixed rate equal to the Bank's 36
month Treasury Rate plus 275 basis points and will be payable
in twelve (12) equal quarterly installments of principal plus
all accrued interest beginning on the Payment Date of each
month following the Equipment Availability End Date and ending
on the Maturity Date, at which time all Equipment Advances
under this Section 2.1 and all other amounts due under this
Agreement shall be immediately due and payable.
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Equipment Advances once borrowed and repaid may not be
reborrowed and shall reduce the amount available to be
borrowed under the Committed Equipment Line.
5. The following Sub-section is hereby incorporated as (e) under
Section 2.2 entitled "Interest Rates, Payments, and
Calculations to read as follows:
Any Equipment Advances subject to a fixed rate and prepaid
earlier than due shall be subject to a Prepayment Fee.
6. Item "(a)" under Section 2.1.2 entitled "Letters of Credit" is
hereby amended in part to (i) increase the limit of the
aggregate face amount of outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit and any
Letter of Credit Reserve) to an amount not to exceed Fifteen
Million Dollars ($15,000,000) and (ii) provide that Bank may
issue Letters of Credit at any time prior to the Equipment
Availability End Date.
7. Item "(a)" under Section 2.1.3 entitled "Foreign Exchange
Contract; Foreign Exchange Settlements" is hereby amended to
increase the limit of the aggregate amount of Exchange
Contracts to an amount not to exceed Fifteen Million Dollars
($15,000,000), the Contract Limit.
8. Item "(c)" under Section 2.1.3 entitled "Foreign Exchange
Contract; Foreign Exchange Settlement" is hereby amended in
part to increase the Settlement Limit to an amount not to
exceed Fifteen Million Dollars ($15,000,000).
9. Section 2.1.4 entitled "Cash Management Sublimit" is hereby
amended in part to increase the aggregate amount of the Cash
Management Sublimit not to an amount not to exceed Fifteen
Million Dollars ($15,000,000).
10. Section 2.1.5 entitled "Executive Guarantee Reserve" is hereby
deleted in its entirety.
11. The following Sub-section is hereby incorporated as (c) under
Section 2.4 entitled "Fees" to read as follows:
"Non-usage Fee". Borrower shall pay to Bank a non-usage fee
equal to .20% of the unused Committed Equipment Line,
quarterly, in arrears (the "Non-usage Fee"). For purpose of
calculation, unused commitment shall represent $15,000,000
minus Equipment Advances and outstandings under Letters of
Credit, Cash Management and Foreign Exchange sublimits.
12. Section 6.8 entitled "Tangible Net Worth" is hereby amended in
its entirety to read as follows:
Borrower shall maintain, as of the last day of each calendar
month, a Tangible Net Worth of not less than One Hundred Forty
Million, increasing quarterly by 75% of net income and/or new
equity (with no allowance for losses).
13. The first sentence of Section 6.9 entitled "Remaining Months
Liquidity" is hereby amended in its entirety to read as
follows:
Subject to Section 6.10, Borrower shall maintain, as of the
last day of each month, at least eleven (11) months Remaining
Months Liquidity.
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14. The last sentence of Section 6.10 entitled "Liquidity, Debt
Service Coverage" is hereby amended in its entirety to read as
follows:
For purposes of this Section, "Liquidity Ratio" means as of
any date for which it is tested, the ratio of (a) unrestricted
cash and cash equivalents to (b) the aggregate amount of
outstanding Equipment Advances and the aggregate face amount
of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letter of Credit
Reserve).
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay to Bank a fee in the amount of Five
Thousand and 00/100 Dollars ($5,000.00) (the "Loan Fee"), plus all out-of-pocket
expenses.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below)
understands and agrees that in modifying the existing Indebtedness, Bank is
relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement shall be
conditioned upon the payment of the Loan Fee.
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This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
AT HOME CORPORATION SILICON VALLEY BANK
By:_______________________________ By:_________________________________
Name:_____________________________ Name:_______________________________
Title:____________________________ Title:______________________________
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LIBOR SUPPLEMENT TO AGREEMENT
This LIBOR Supplement to Agreement (the "Supplement") is a supplement
to the Loan and Security Agreement (the "Loan Agreement") dated as of September
27, 1997, as incorporated pursuant to that Certain Loan Modification Agreement
dated as of October 19, 1998, between Silicon Valley Bank ("Bank") and At Home
Corporation ("Borrower"), and forms a part of and is incorporated into the Loan
Agreement. Defined terms used but not otherwise defined shall have the same
meanings as in the Loan Agreement.
1. Definitions.
"Business Day" means a day of the year (a) that is not a Saturday,
Sunday or other day on which banks in the State of California or the City of
London are authorized or required to close and (b) on which dealings are carried
on in the interbank market in which Bank customarily participates.
"Interest Period" means for each LIBOR Rate Loan, a period of
approximately one, two or three months as the Borrower may elect, provided that
the last day of an Interest Period for a LIBOR Rate Loan shall be determined in
accordance with the practices of the LIBOR interbank market as from time to time
in effect, provided, further, in all cases such period shall expire not later
than the applicable Maturity Date (or with respect to Equipment Advances prior
to the Equipment Availability End Date, no later than such date).
"Interest Rate" shall mean as to: (a) Prime Rate Loans, a rate equal to
the Prime Rate; and (b) LIBOR Rate Loans, a rate of 250 basis points excess of
the LIBOR Rate (based on the LIBOR Rate applicable for the Interest Period
selected by the Borrower).
"LIBOR Base Rate" means, for any Interest Period for a LIBOR Rate Loan,
the rate of interest per annum determined by Bank to be the per annum rate of
interest as which deposits in United States Dollars are offered to Bank in the
London interbank market in which Bank customarily participates at 11:00 A.M.
(local time in such interbank market) TWO (2) BUSINESS DAYS before the first day
of such Interest Period for a period approximately equal to such Interest Period
and in an amount approximately equal to the amount of such Loan.
"LIBOR Rate" shall mean, for any Interest Period for a LIBOR Rate Loan,
a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%)
equal to (i) the LIBOR Base Rate for such Interest Period divided by (ii) 1
minus the Reserve Requirement for such Interest Period.
"LIBOR Rate Loans" means any Loans made or a portion thereof on which
interest is payable based on the LIBOR Rate in accordance with the terms hereof.
"Prime Rate" means the variable rate of interest per annum, most
recently announced by Bank as its "prime rate," whether or not such announced
rate is the lowest rate available from Bank. The interest rate applicable to the
Prime Rate Loans shall change on each date there is a change in the Prime Rate.
"Prime Rate Loans" means any Loans made or a portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms hereof.
"Regulatory Change" means, with respect to Bank, any change on or after
the date of this Loan Agreement in United States federal, state or foreign laws
or regulations, including Regulation D, or the adoption or making on or after
such date of any interpretations, directives or requests applying to a class of
lenders including Bank of or under any United States federal or state, or any
foreign, laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
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"Reserve Requirement" means, for any Interest Period, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D against "Eurocurrency liabilities" (as such term is used in
Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
against (i) any category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined as provided in the definition of "LIBOR
Base Rate" or (ii) any category of extensions of credit or other assets which
include Loans.
2. Requests for Loans; Confirmation of Initial Loans. Each LIBOR Rate
Loan shall be made upon the irrevocable written request of Borrower RECEIVED BY
BANK NOT LATER THAN 11:00 A.M. (SANTA CLARA, CALIFORNIA TIME) ON THE BUSINESS
DAY THREE (3) BUSINESS DAYS PRIOR TO THE DATE SUCH LOAN IS TO BE MADE. Each such
notice shall specify the date such Loan is to be made, which day shall be a
Business Day; the amount of such Loan, the Interest Period for such Loan, and
comply with such other requirements as Bank determines are reasonable or
desirable in connection therewith.
Each written request for a LIBOR Rate Loan shall be in the form of a
LIBOR Rate Loan Borrowing Certificate as set forth on Exhibit A, which shall be
duly executed by the Borrower.
EACH PRIME RATE LOAN SHALL BE MADE UPON THE IRREVOCABLE WRITTEN REQUEST
OF BORROWER RECEIVED BY BANK NOT LATER THAN 11:00 A.M. (SANTA CLARA, CALIFORNIA
TIME) ON THE BUSINESS DAY ONE (1) BUSINESS DAY PRIOR TO THE DATE SUCH LOAN IS TO
BE MADE. Each such notice shall specify the date such Loan is to be made, which
day shall be a Business Day and the amount of such Loan, and comply with such
other requirements as Bank determines are reasonable or desirable in connection
therewith.
3. Conversion/Continuation of Loans.
(a) Borrower may from time to time submit in writing a request that
Prime Rate Loans be converted to LIBOR Rate Loans or that any existing LIBOR
Rate Loans continue for an additional Interest Period. Such request shall
specify the amount of the Prime Rate Loans which will constitute LIBOR Rate
Loans (subject to the limits set forth below) and the Interest Period to be
applicable to such LIBOR Rate Loans. Each written request for a conversion to a
LIBOR Rate Loan or a continuation of a LIBOR Rate Loan shall be substantially in
the form of a LIBOR Rate Conversion/Continuation Certificate as set forth on
Exhibit B, which shall be duly executed by the Borrower. Subject to the terms
and conditions contained herein, THREE (3) BUSINESS DAYS AFTER BANK'S RECEIPT OF
SUCH A REQUEST FROM BORROWER, such Prime Rate Loans shall be converted to LIBOR
Rate Loans or such LIBOR Rate Loans shall continue, as the case may be provided
that:
(i) no Event of Default or event which with notice or passage of time
or both would constitute an Event of Default exists;
(ii) no party hereto shall have sent any notice of termination of this
Supplement or of the Loan Agreement.
(iii) Borrower shall have complied with such customary procedures as
Bank has established from time to time for Borrower's requests for LIBOR Rate
Loans;
(iv) the amount of a LIBOR Rate Loan shall be $500,000 or such greater
amount which is an integral multiple of $50,000; and
(v) Bank shall have determined that the Interest Period or LIBOR Rate
is available to Bank which can be readily determined as of the date of the
request for such LIBOR Rate Loan.
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Any request by Borrower to convert Prime Rate Loans to LIBOR Rate Loans
or continue any existing LIBOR Rate Loans shall be irrevocable. Notwithstanding
anything to the contrary contained herein, Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable LIBOR Rate market to fund any LIBOR Rate Loans, but the provisions
hereof shall be deemed to apply as if Bank had purchased such deposits to fund
the LIBOR Rate Loans.
(b) Any LIBOR Rate Loans shall automatically convert to Prime Rate
Loans upon the last day of the applicable Interest Period, UNLESS BANK HAS
RECEIVED AND APPROVED A COMPLETE AND PROPER REQUEST TO CONTINUE SUCH LIBOR RATE
LOAN AT LEAST THREE (3) BUSINESS DAYS PRIOR TO SUCH LAST DAY in accordance with
the terms hereof. Any LIBOR Rate Loans shall, at Bank's option, convert to Prime
Rate Loans in the event that (i) an Event of Default, or event which with the
notice or passage of time or both would constitute an Event of Default, shall
exist, (ii) this Supplement or the Loan Agreement shall terminate, or (iii) the
aggregate principal amount of the Prime Rate Loans which have previously been
converted to LIBOR Rate Loans, or the aggregate principal amount of existing
LIBOR Rate Loans continued, as the case may be, at the beginning of an Interest
Period shall at any time during such Interest Period exceeds the COMMITTED
EQUIPMENT LINE. Borrower agrees to pay to Bank, upon demand by Bank (or Bank
may, at its option, charge Borrower's loan account) any amounts required to
compensate Bank for any loss (including loss of anticipated profits), cost or
expense incurred by such person, as a result of the conversion of LIBOR Rate
Loans to Prime Rate Loans pursuant to any of the foregoing.
(c) On all Loans, Interest shall be payable by Borrower to Bank monthly
in arrears not later than the nineteenth (19th) day of each calendar month at
the applicable Interest Rate.
4. Additional Requirements/Provisions Regarding LIBOR Rate Loans; Etc.
(a) IF FOR ANY REASON (INCLUDING VOLUNTARY OR MANDATORY PREPAYMENT OR
ACCELERATION), BANK RECEIVES ALL OR PART OF THE PRINCIPAL AMOUNT OF A LIBOR RATE
LOAN PRIOR TO THE LAST DAY OF THE INTEREST PERIOD FOR SUCH LOAN, BORROWER SHALL
IMMEDIATELY NOTIFY BORROWER'S ACCOUNT OFFICER AT BANK AND, ON DEMAND BY BANK,
PAY BANK THE AMOUNT (if any) by which (i) the additional interest which would
have been payable on the amount so received had it not been received until the
last day of such Interest Period exceeds (ii) the interest which would have been
recoverable by Bank by placing the amount so received on deposit in the
certificate of deposit markets or the offshore currency interbank markets or
United States Treasury investment products, as the case may be, for a period
starting on the date on which it was so received and ending on the last day of
such Interest Period at the interest rate determined by Bank in its reasonable
discretion. Bank's determination as to such amount shall be conclusive absent
manifest error.
(b) Borrower shall pay to Bank, upon demand by Bank, from time to time
such amounts as Bank may determine to be necessary to compensate it for any
costs incurred by Bank that Bank determines are attributable to its making or
maintaining of any amount receivable by Bank hereunder in respect of any Loans
relating thereto (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), in each case resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to
Bank under this Supplement in respect of any Loans (other than changes which
affect taxes measured by or imposed on the overall net income of Bank by the
jurisdiction in which such Bank has its principal office); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of Bank (including any Loans or any
deposits referred to in the definition of "LIBOR Base Rate"); or
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(iii) imposes any other condition affecting this Supplement
(or any of such extensions of credit or liabilities).
Bank will notify Borrower of any event occurring after the date of the Loan
Agreement which will entitle Bank to compensation pursuant to this section as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. Bank will furnish Borrower with a statement setting
forth the basis and amount of each request by Bank for compensation under this
Section 4. Determinations and allocations by Bank for purposes of this Section 4
of the effect of any Regulatory Change on its costs of maintaining its
obligations to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans, and of the additional amounts required to
compensate Bank in respect of any Additional Costs, shall be conclusive absent
manifest error.
(c) Borrower shall pay to Bank, upon the request of Bank, such amount
or amounts as shall be sufficient (in the sole good faith opinion of such Bank)
to compensate it for any loss, costs or expense incurred by it as a result of
any failure by Borrower to borrow a Loan on the date for such borrowing
specified in the relevant notice of borrowing hereunder.
(d) If Bank shall determine that the adoption or implementation of any
applicable law, rule, regulation or treaty regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any respect or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the rate of
return on capital of Bank or any person or entity controlling Bank (a "Parent")
as a consequence of its obligations hereunder to a level below that which Bank
(or its Parent) could have achieved but for such adoption, change or compliance
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by Bank to be material, then from time to time, within 15 days
after demand by Bank, Borrower shall pay to Bank such additional amount or
amounts as will compensate Bank for such reduction. A statement of Bank claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error.
(e) If at any time Bank, in its sole and absolute discretion,
determines that: (i) the amount of the LIBOR Rate Loans for periods equal to the
corresponding Interest Periods are not available to Bank in the offshore
currency interbank markets, or (ii) the LIBOR Rate does not accurately reflect
the cost to Bank of lending the LIBOR Rate Loan, then Bank shall promptly give
notice thereof to Borrower, and upon the giving of such notice Bank's obligation
to make the LIBOR Rate Loans shall terminate, unless Bank and the Borrower agree
in writing to a different interest rate Loans shall terminate, unless Bank and
the Borrower agree in writing to a different interest rate applicable to LIBOR
Rate Loans. If it shall become unlawful for Bank to continue to fund or maintain
any Loans, or to perform its obligations hereunder, upon demand by Bank,
Borrower shall prepay the Loans in full with accrued interest thereon and all
other amounts payable by Borrower hereunder (including, without limitation, any
amount payable in connection with such prepayment pursuant to Section 4(a)).
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