EXHIBIT 10.14
[IMPERIAL BANK LOGO]
CREDIT AGREEMENT
This Credit Agreement (the "Agreement") is made and entered into on
October 22, 1996, by and between Tekelec, a California corporation,
("Borrower") and Imperial Bank, a California banking corporation, ("Bank").
Borrower wishes to secure certain credit accommodations from Bank and
Bank is willing to provide credit accommodations all as provided in this
Agreement.
In consideration of mutual covenants and conditions hereof, the parties
hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.01 REVOLVING CREDIT COMMITMENT. Subject to the terms and conditions of
this Agreement, between the date of this Agreement and June 30, 1998 (the
"Commitment Termination Date"), provided that no event of default then has
occurred and is continuing, Bank will provide the Revolving Credit Commitment
of Ten Million Dollars ($10,000,000) for (a) the issuance of Letters of Credit
("Letters of Credit") and (b) loans for general working capital purposes
provided, however, that the aggregate of the Letters of Credit and Loans at
any one time shall not exceed the Revolving Credit Commitment. No Letter of
Credit shall expire beyond the Commitment Termination Date.
Borrower's obligation to repay the Revolving Credit Commitment, together with
accrued interest thereon, shall be evidenced by a promissory note issued by
Borrower in favor of Bank on the standard form used by Bank to evidence its
commercial loans.
Prior to the Commitment Termination Date, Borrower may borrow, repay and
reborrow loans under the Revolving Credit Commitment.
1.02 INTEREST RATE(S). All principal amounts owing under the Line will bear
interest, as elected by the Borrower, at either:
(i) Bank's announced prime rate as it may vary from time to
time, calculated on a 360 day(s) basis, or
(ii) Reserve adjusted LIBOR for any interest period of 1, 2,
or 3 months plus 1.90%, with minimum borrowings of $1,000,000, and $500,000
increments, or
(iii) Bank's prevailing domestic Bankers Acceptance ("BA")
rate plus 1.65% on a 30, 60, 90 day basis with minimum borrowings of $500,000,
and $500,000 increments.
1.03 FEES. Borrower shall pay to Bank a Commitment Fee, due and payable at
closing, equal to one-half of one percent (0.50%) per annum, calculated on a
360 day(s) basis.
2. COLLATERAL
2.01 SECURITY PROVIDED BY BORROWER. To secure the payment and performance
of all obligations of Borrower to Bank, Borrower shall have granted a first
priority security interest in all of Borrower's accounts, deposit accounts,
instruments, chattel paper, documents, general intangibles, inventory,
equipment, furniture and fixtures, now owned or hereafter acquired by Borrower,
all proceeds and insurance proceeds of the foregoing, all guarantees and other
security therefor, and all of Borrower's books and records relating thereto
(including computer-stored information and all software relating thereto) and
all contract rights with third parties relating to the maintenance of any such
books, records and information.
3. REPRESENTATIONS OF BORROWER
Borrower represents and warrants that:
3.01 EXISTENCE AND RIGHTS. Borrower is a corporation duly organized and
existing and in good standing under the laws of California, without limit as to
the duration of its existence and is authorized and in good standing to do
business in the State of California; Borrower has corporate powers and adequate
authority, rights and franchises to own its property and to carry on its
business as now conducted, and is duly qualified and in good standing in each
State in which the character of the properties owned by it therein or the
conduct of its business makes such qualification necessary; and Borrower has the
power and adequate authority to make and carry out this Agreement. Borrower has
no investment in any other business entity.
3.02 AGREEMENT AUTHORIZED. The execution, delivery and performance of this
Agreement are duly authorized and do not require the consent or approval of any
governmental body or other regulatory authority; are not in contravention of or
in conflict with any law or regulation or any term or provision of Borrower's
articles of incorporation, by-laws, as the case may be, and this Agreement is
the valid, binding and legally enforceable obligation of Borrower in accordance
with its terms; subject only to bankruptcy, insolvency or similar laws
affecting creditors rights generally.
3.03 NO CONFLICT. The execution, delivery and performance of this Agreement
are not in contravention of or in conflict with any agreement, indenture or
undertaking to which Borrower is a party or by which it or any of its property
may be bound or affected, and do not cause any lien, charge or other
encumbrance to be created or imposed upon any such property by reason thereof.
3.04 LITIGATION. There is no litigation or other proceeding pending or
threatened against or affecting Borrower which if determined adversely to
Borrower or its interest would have a material adverse effect on the financial
condition of Borrower, and Borrower is not in default with respect to any
order, writ, injunction, decree or demand of any court or other governmental or
regulatory authority.
3.05 FINANCIAL CONDITION. The balance sheet of borrower as of June 30, 1996
a copy of which has heretofore been delivered to Bank by Borrower, and all other
statements and data submitted in writing by Borrower to Bank in connection with
any credit extended pursuant to this Agreement are true and correct, and said
balance sheet truly presents the financial condition of Borrower as of the date
thereof, and has been prepared in accordance with generally accepted accounting
principles on a basis consistently maintained. Since such date there have been
no material adverse changes in the financial condition or business of Borrower.
Borrower has no knowledge of any liabilities, contingent or otherwise, at such
date not reflected in said balance sheet, and Borrower has not entered into any
special commitments or substantial contracts which are not reflected in said
balance sheet, other than in the ordinary and normal course of its business,
which may have a materially adverse effect upon its financial condition,
operations or business as now conducted.
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3.06 TITLE TO ASSETS. Borrower has good title to its assets, and the same are
not subject to any liens or encumbrances other than those permitted by Section
5.03 hereof.
3.07 TAX STATUS. Borrower has no liability for any delinquent state, local or
federal taxes, and, if Borrower has contracted with any governmental agency,
Borrower has no liability for renegotiation of profits.
3.08 TRADEMARKS, PATENTS. Borrower, as of the date hereof, possesses all
necessary trademarks, trade names, copyrights, patents, patent rights, and
licenses to conduct its business as now operated, without any known conflict
with the valid trademarks, trade names, copyrights, patents and license rights
of others.
3.09 REGULATION U. The proceeds of the Loan shall not be used to purchase or
carry margin stock (as defined within Regulation U of the Board of Governors of
the Federal Reserve system).
4. AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees that so long as it is indebted to Bank, under
borrowings, or other indebtedness, it will, unless Bank shall otherwise consent
in writing:
4.01 RIGHTS AND FACILITIES. Maintain and preserve all rights, franchises and
other authority adequate for the conduct of its business; maintain its
properties, equipment and facilities in good order and repair; conduct its
business in an orderly manner without voluntary interruption and, if a
corporation or partnership, maintain and preserve its existence.
4.02 INSURANCE. Maintain public liability, property damage and workers'
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible insurance carriers to the extent usually
maintained by similar businesses and/or in the exercise of good business
judgment.
4.03 TAXES AND OTHER LIABILITIES. Pay and discharge, before the same become
delinquent and before penalties accrue thereon, all taxes, assessments and
governmental charges upon or against it or any of its properties, and all its
other liabilities at any time existing, except to the extent and so long as:
a. The same are being contested in good faith and by appropriate
proceedings in such manner as not to cause materially adverse affect upon its
financial condition or the loss of any right of redemption from any sale
thereunder; and
b. It shall have set aside on its books reserves (segregated to
the extent required by generally accepted accounting practice) deemed by it
adequate with respect thereto.
4.04 QUICK ASSETS. Maintain a minimum ratio of cash, short term and long
term investments in securities, accounts receivable divided by total current
liabilities of 1.50 to 1.0, all as computed and determined in accordance with
generally accepted accounting principles on a basis consistently maintained by
Borrower.
4.05 CURRENT RATIO. Maintain a ratio of current assets, including long term
investments, to current liabilities of not less than 2.0 to 1.00; all as
computed and determined in accordance to generally accepted accounting
principles on a basis consistently maintained by Borrower.
4.06 NET WORTH. Maintain Tangible Net Worth [meaning the excess of all assets,
excluding any value for good will, trademarks, patents, copyrights, leaseholds,
organization expense, amounts due from officers, shareholders and affiliates,
and other similar intangible items, over its liabilities] of not less than
$40,000,000.
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4.07 DEBT TO NET WORTH. Maintain a ratio of total liabilities to Tangible
Net Worth not greater than 0.75 to 1.00.
4.09 RECORDS AND REPORTS. Maintain a standard and modern system of
accounting in accordance with generally accepted accounting principles on a
basis consistently maintained; permit Bank's representatives to have access to,
and to examine its properties, books and records at all reasonable times and
upon reasonable notice during normal business hours; and furnish Bank:
a. QUARTERLY FINANCIAL STATEMENT. Within forty-five (45) days after
the close of each quarter of each fiscal year of Borrower, commencing with the
quarter next ending, a balance sheet, profit and loss statement and
reconciliation of Borrower's fund balance accounts as of the close of such
period and covering operations for the portion of Borrower's fiscal year ending
on the last day of such period, all in reasonable detail, prepared in accordance
with generally accepted accounting principles on a basis consistently maintained
by Borrower and certified by an appropriate officer of Borrower;
b. ANNUAL FINANCIAL STATEMENT. As soon as available, and in any event
within ninety (90) days after the close of each fiscal year of Borrower, a
report of audit of Company as of the close of and for such fiscal year, all in
reasonable detail, prepared on an AUDITED basis by an independent certified
public accountant selected by Borrower and reasonably acceptable to Bank, in
accordance with generally accepted accounting principles on a basis consistently
maintained by Borrower and certified by an appropriate officer of Borrower;
c. At Bank's written request, within ninety (90) days after the end of
Borrower's fiscal year, a certificate of the chief financial officer of
Borrower, stating that Borrower has performed and observed each and every
covenant contained in this Agreement to be performed by it and that no event has
occurred and no condition then exists which constitutes an event of default
hereunder or would constitute such an event of default upon the lapse of time or
upon the giving of notice and the lapse of time specified herein; or, if any
such event has occurred or any such condition exists, specifying the nature
thereof;
d. Promptly after the receipt thereof by Borrower, copies of any
detailed audit reports submitted to Borrower by independent accountants in
connection with each annual or interim audit of the accounts of Borrower made by
such accountants;
e. Such other information relating to the affairs of Borrower as the
Bank reasonably may request from time to time;
f. Within thirty (30) days after and as of the end of each month,
copies of Borrower's summary accounts payable and accounts receivable agings.
g. In connection with each fiscal year end financial statement
furnished to Bank hereunder, any management letter of Borrower's independent
certified public accountant.
5. NEGATIVE COVENANTS OF BORROWER
Borrower agrees that so long as it is indebted to Bank, it will not,
without Bank's written consent, which consent will not be unreasonably withheld:
5.01 TYPE OF BUSINESS; MANAGEMENT. Make any substantial change in the
character of its business; or make any substantial change in its executive
management.
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5.02 OUTSIDE INDEBTEDNESS. Create, incur, assume or permit to exist any
indebtedness for borrowed moneys other than loans from the Bank except
obligations now existing as shown in the financial statement dated June 30,
1996, in excess of $1,000,000;
5.03 LIENS AND ENCUMBRANCES. Create, incur, or assume any mortgage, pledge,
encumbrance, lien or charge of any kind upon any asset now owned, other than
liens for taxes not delinquent and liens in Bank's favor except for those
already existing as of June 30, 1996, in excess of $1,000,000.
5.04 LOANS, INVESTMENTS, SECONDARY LIABILITIES. Make, in excess of
$1,000,000, any loans or advances to any person or other entity, other than in
the ordinary and normal course of its business as now conducted or any
investment in the securities of any person or other entity other than shown on
Exhibit "A" attached hereto and made a part hereof by this reference; or
guarantee or otherwise become liable, in excess of $1,000,000 upon the
obligation of any person or other entity, except by endorsement of negotiable
instruments for deposit or collection in the ordinary and normal course of its
business, excluding advances to and/or accounts receivable from its affiliates.
5.05 ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION. Purchase or
otherwise acquire the assets or business of any person or other entity, in
excess of $1,000,000; or liquidate, dissolve, merge or consolidate, or commence
any proceedings therefor; or sell any assets except in the ordinary and normal
course of its business as now conducted; or sell, lease, assign, or transfer
any substantial part of its business or fixed assets, or any property or other
assets necessary for the continuance of its business as now conducted,
including without limitation the selling of any property or other asset
accompanied by the leasing back of the same.
6. EVENTS OF DEFAULT
The occurrence of any of the following events of default shall, at
Bank's option, terminate Bank's commitment to lend and make all sums of
principal and interest then remaining unpaid on all Borrower's indebtedness to
Bank immediately due and payable, all without demand, presentment or notice,
all of which are hereby expressly waived;
6.01 FAILURE TO PAY NOTE. Failure to pay any installment of principal or
interest on any indebtedness of Borrower to Bank, ten (10) days after its due
date, and notice of non-payment from Bank.
6.02 BREACH OF COVENANT. Failure of Borrower to perform any other term or
condition of this Agreement binding upon Borrower.
6.03 BREACH OF WARRANTY. Any of borrower's representations or warranties
made herein or any statement or certificate at any time given in writing
pursuant hereto or in connection herewith shall be false or misleading in any
respect.
6.04 INSOLVENCY; RECEIVER OR TRUSTEE. Borrower shall become insolvent; or
admit its inability to pay its debts as they mature; or make an assignment for
the benefit of creditors; or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or
business.
6.05 JUDGMENTS, ATTACHMENTS. Any money judgment in excess of $1,000,000,
writ or warrant of attachment, or similar process shall be entered or filed
against Borrower or any of its assets and shall remain unvacated, unbonded or
unstayed for a period later than five days prior to the date of any proposed
sale thereunder.
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6.06 BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against Borrower and, if
instituted against it, shall be consented to.
7. MISCELLANEOUS PROVISIONS
7.01 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of
Bank or any holder of Notes issued hereunder, in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this Agreement or any note issued in
connection with a loan that Bank may make hereunder, are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
7.02 NOTICE OF DEFAULT. Borrower shall promptly notify Bank in writing of the
occurrence of any event of default hereunder or any event which upon notice
and/or the lapse of time would be an event of default.
7.03 OPERATING ACCOUNTS. Borrower shall maintain all significant business
deposit accounts at Bank.
7.04 ATTORNEY'S FEES. Borrower will pay promptly to Bank without demand after
notice, with interest thereon from the date of expenditure at the rate
applicable to the Loan, reasonable attorneys' fees and all costs and expenses
paid or incurred by Bank in collecting or compromising the Loan after the
occurrence of an event of default, whether or not suit is filed. If it is
brought to enforce any provision of this Agreement, the prevailing party shall
be entitled to recover its reasonable attorneys' fees and court costs in
addition to any other remedy or recovery awarded by the court.
7.05 ADDITIONAL REMEDIES. The rights, powers and remedies given to Bank
hereunder shall be cumulative and not alternative and shall be in addition to
all rights, powers and remedies given to Bank by law against Borrower or any
other person, including but not limited to Bank's rights of setoff or banker's
lien.
7.06 INUREMENT. The benefits of this Agreement shall inure to the successors
and assigns of Bank and the permitted successors and assigns of Borrower.
7.07 APPLICABLE LAW. This Agreement and all other agreements and instruments
required by Bank in connection therewith shall be governed by and construed
according to the laws of the State of California, to the jurisdiction of whose
courts the parties hereby agree to submit.
7.08 OFFSET. In addition to and not in limitation of all rights of offset
that Bank or other holder of the Loan may have under applicable law, Bank or
other holder of the Notes shall, upon the occurrence of any Event of Default or
any event which with the passage of time and/or notice would constitute such an
Event of Default, have the right to appropriate and apply to the payment of the
Loan any and all balances, credits, deposits, accounts or monies of Borrower
then or thereafter with Bank or other holder, within ten (10) days after the
Event of Default, and notice of the occurrence of any Event of Default by Bank
to Borrower.
7.09 SEVERABILITY. Should any one or more provisions of the Agreement be
determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective.
7.10 TIME OF THE ESSENCE. Time is hereby declared to be of the essence of
this Agreement and of every part hereof.
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7.11 INTEGRATION CLAUSES. Except for documents and instruments specifically
referenced herein, the Agreement constitutes the entire agreement between Bank
and Borrower regarding the Loan and all prior communications verbal or written
between Borrower and Bank shall be of no further effect or evidentiary value. In
the event of a conflict or inconsistency among any other documents and
instruments and this Agreement, the provisions of this Agreement shall prevail.
7.12 ACCOUNTING. All accounting terms shall have the meanings applied under
generally accepted accounting principles unless otherwise specified.
7.13 This Agreement may be modified only by a writing signed by both parties
hereto.
This Agreement is executed on behalf of the parties by duly authorized officers
as of the date first above written.
IMPERIAL BANK ("BANK")
By: /s/ NUNILO XXXXX
-------------------------
Nunilo Xxxxx
Vice President
TEKELEC ("BORROWER")
By: /s/ XXXXXX XXXXX
-------------------------
Xxxxxx Xxxxx
Chief Financial Officer
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Exhibit "A"
ELIGIBLE INVESTMENTS
I. Taxable Investments
1. U.S. Treasuries and agencies of the U.S. Government
2. Negotiable certificates of deposits, time deposits, and banker's
acceptances of the top 50 banks in the world.
3. Commercial paper, rated no less than A-1*/P-1 or Aa/AA*.
4. Medium term notes within allowable maturity range, rated no less
than Aa3/AA-*.
5. Investments in Money Market Preferred Stocks rated no less than
Aa/AA*.
II. Tax-Exempt Investments
1. Short term municipal securities (one year or less) will be MIG-1 or
SP-1*.
2. Investments in Municipal Floating Rate Securities will be rated at
least Mig-1.
3. Variable rate demand notes and tax-exempt commercial paper rated Aaa
or MIG-1.
4. Tax-exempt municipal preferred rated As/AA*.
5. Tax-exempt notes/bonds regardless of maturity date shall:
A. Have credit rating of Aa3/AA-*, if no insurance, letter of
credit, or credit enhancement is present.
B. Have underlying credit rating of A/A* if credit enhancements are
present.
C. Have minimum credit enhancement quality such as insurance by the
Municipal Bonds Investors Assurance Corps. (MBIA) or by the
Financial Guarantees Insurance Corp. (FGIC) or by AMRAC
Indemnity Corp. (AMBAC), or letters of credit by a top 50
worldwide bank.
III. Investments by Borrower's Japanese subsidiary
1. In addition to investments permitted under I and II Borrower's
Japanese subsidiary may make investments in Japanese instruments
having, at a minimum, the same financial quality characteristics as
outlined in I and II.
* Asterisk indicates the "Standard & Poor's" ratings. All other ratings are
"Moody's" ratings.
[IMPERIAL BANK LOGO]
NOTE
$10,000,000.00 Los Angeles, California, October 22, 1996
On June 30, 1998, and as hereinafter provided, for value received, the
undersigned promises to pay to IMPERIAL BANK ("Bank"), a California banking
corporation, or order, at its Los Angeles Regional office, the principal sum of
$10,000,000.00 maximum or such sums up to the maximum if so stated, as the Bank
may now or hereafter advance to or for the benefit of the undersigned in
accordance with the terms hereof, together with interest from date of
disbursement or N/A, whichever is later, on the unpaid principal balance [ ] at
the rate of ___% per year [X] at the rate of 0.000%* per year in excess of the
rate of interest which Bank has announced as its prime lending rate (the "Prime
Rate"), which shall vary concurrently with any change in such Prime Rate, or
$250.00, whichever is greater. Interest shall be computed at the above rate on
the basis of the actual number of days during which the principal balance is
outstanding, divided by 360, which shall, for interest computation purposes, be
considered one year.
Interest shall be payable [X] monthly [ ] quarterly [ ] included with principal
[ ] in addition to principal [ ] __________, beginning November 30, 1996, and if
not so paid shall become a part of the principal. All payments shall be applied
first to interest, and the remainder, if any, on principal. [ ] (If checked),
Principal shall be payable in installments of $_______________, or more, each
installment on the ____ day of each ______________, beginning
_______________________. Advances not to exceed any unpaid balance owing at any
one time equal to the maximum amount specified above, may be made at the option
of Bank.
Any partial prepayment shall be applied to the installments, if any, in
inverse order of maturity. Should default be made in the payment of principal
or interest when due, or in the performance or observance, when due, of any
item, covenant or condition of any deed of trust, security agreement or other
agreement (including amendments or extensions thereof) securing or pertaining to
this note, at the option of the holder hereof and without notice or demand, the
entire balance of principal and accrued interest then remaining unpaid shall (a)
become immediately due and payable, and (b) thereafter bear interest, until paid
in full, at the increased rate of 5% per year in excess of the rate provided for
above, as it may vary from time to time.
Defaults shall include, but not be limited to, the failure of the
maker(s) to pay principal or interest when due; the filing as to each person
obligated hereon, whether as maker, co-maker, endorser or guarantor
(individually or collectively referred to as the "Obligor") of a voluntary or
involuntary petition under the provisions of the Federal Bankruptcy Act; the
issuance of any attachment or execution against any asset of any Obligor; the
death of any Obligor; or any deterioration of the financial condition of any
Obligor which results in the holder hereof considering itself, in good faith,
insecure.
[ ] If any installment payment or principal balance payment due
hereunder is delinquent ten or more days, Obligor agrees to pay a late charge in
the amount of 5% of the payment so due and unpaid, in addition to the payment;
but nothing in this paragraph is to be construed as any obligation on the part
of the holder of this note to accept payment of any installment of any payment
past due or less than the total unpaid principal balance after maturity.
If this note is not paid when due, each Obligor promises to pay all
costs and expenses of collection and reasonable attorneys fees incurred by the
holder hereof on account of such collection, plus interest at the rate
applicable to principal, whether or not suit is filed hereon. Each Obligor
shall be jointly and severally liable hereon and consents to renewals,
replacements and extensions of time for payment hereof, before, at, or after
maturity; consents to the acceptance, release or substitution of security for
this note; and waives demand and protest and the right to assert any statute of
limitations. Any married person who signs this note agrees that recourse may be
had against separate property for any obligations hereunder. The indebtedness
evidenced hereby shall be payable in lawful money of the United States. In any
action brought under or arising out of this note, each Obligor, including
successor(s) or assign(s) hereby consents to the application of California law,
to the jurisdiction of any competent court within the State of California, and
to service of process by any means authorized by California law.
No single or partial exercise of any power hereunder, or under any deed
of trust, security agreement or other agreement in connection herewith shall
preclude other or further exercises thereof or the exercise of any other such
power. The holder hereof shall at all times have the right to proceed against
any portion of the security for this note in such order and in such manner as
such holder may consider appropriate, without waiving any rights with respect
to any of the security. Any delay or omission on the part of the holder hereof
in exercising any right hereunder, or under any deed of trust, security
agreement or other agreement, shall not operate as a waiver of such right, or of
any other right, under this note or any deed of trust, security agreement or
other agreement in connection herewith.
[Initial * Subject to the conditions and limitations contained
Here] in the Credit Agreement dated 10/22/96.
TEKELEC
By: /s/ XXXXXX X. XXXXX
-------------------------------------- ----------------------------------
Vice President Finance & CFO
By: /s/ XXXXXXX X. XXXXXX
-------------------------------------- ----------------------------------
Corporate Controller
LIBOR ADDENDUM
[IMPERIAL BANK LOGO] TO NOTE
This Libor Addendum ("Addendum") is dated as of October 22, 1996, and
is by and between TEKELEC ("Borrower") and Imperial Bank ("Bank"). This
Addendum amends and supplements the Note to which it is attached (the "Note")
and forms a part of and is incorporated into the Note.
In the event of any inconsistency between the terms herein and the
terms of the Note, the terms herein shall in all cases govern and control. All
capitalized terms herein, unless otherwise defined herein, shall have the
meanings set forth in the Note.
1. ADVANCES.
1.1 Prime Loans. Advances permitted pursuant to the terms of the
Note or this Addendum which bear interest in relation to Bank's Prime Rate
shall be referred to herein as "Prime Loans" and each such advance shall be a
"Prime Loan." Each Prime Loan shall bear interest at an annual rate equal to
the sum of 0.000% plus the Bank's Prime Rate. "Prime Rate" shall mean the rate
of interest publicly announced by Bank from time to time in Inglewood,
California, as its prime rate for lending. The Prime Rate is not intended to
be the lowest rate of interest charged by Bank in connection with extensions of
credit to borrowers.
1.2 Libor Loans. Advances permitted pursuant to the terms of the
Note or this Addendum which bear interest in relation to the Libor Rate shall
be referred to herein as "Libor Loans" and each such advance shall be a "Libor
Loan." Each Libor Loan shall bear interest at the Libor Rate, as defined
below. A Libor Loan shall be in the minimum amount of One Million Dollars
($1,000,000) or such greater amount which is an integral multiple of Five
hundred thousand Dollars ($500,000.00). No Libor Loan shall be made after the
last Business Day that is at least three (3) months prior to the Maturity Date
described in the Note.
2. INTEREST ON LIBOR LOANS.
2.1 Rate of Interest. Each Libor Loan shall bear interest on the
unpaid principal amount thereof from the Loan Date through the date paid
(whether by acceleration or otherwise) at a rate equal to the sum of 1.900% per
annum plus the Libor Rate for the Interest Period.
(a) "Loan Date" shall mean the date on which (i) a Libor
Loan is made, a Libor Loan is continued, or a Prime Loan is converted to a
Libor Loan.
(b) "Interest Period" shall mean a period of one, two or
three months, commencing on the applicable Loan Date, as selected by Borrower
pursuant to Section 2.2; provided, however, that Borrower may not select an
Interest Period that would otherwise extend beyond the Maturity Date of the
Loan. Borrower may also select a twelve (12) month Interest Period if and when
Bank notifies Borrower that such Interest Period is available, as determined by
Bank in its sole discretion.
(c) "Libor Rate" shall mean, for the applicable Interest
Period for a Libor 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) 1.00 minus the Reserve Requirement Rate (expressed as a
decimal fraction) for such Interest Period.
(d) "Libor Base Rate" shall mean with respect to any
Interest Period, the rate equal to the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of:
(i) the offered rates per annum for deposits in U.S.
Dollars for a period equal to such Interest Period which appears at
11:00 a.m., London time, on the Reuters Screen LIBOR Page on the
Business Day that is two (2) Business Days before the first day of such
Interest Period, in each case if at least four (4) such offered rates
appear on such page, or
(ii) if clause (i) is inapplicable, (x) the offered
rate per annum for deposits in U.S. Dollars for a period equal to such
Interest Period which appears as of 11:00 a.m., London time on the
Telerate Monitor on Telerate Screen 3750 on the Business Day which is
two (2) Business Days before the first day of such Interest Period; or
(y) if clause (x) above is inapplicable, the arithmetic mean (rounded
upwards, if necessary, to the nearest 1/16 of 1%) of the interest rates
per annum offered by at least three (3) prime banks selected by Bank at
approximately 11:00 a.m. London time, on the Business Day which is two
(2) Business Days before such date for deposits in U.S. Dollars to prime
banks in the London interbank market, in each case for a period equal to
such Interest Period in an amount equal to the amount to which the Libor
Rate applies.
Page 1 of 4
(e) "Business Day" means any day on which Bank is open for
business in the State of California.
(f) "Reuters Screen LIBOR Page" means the display designated
as page LIBOR on the Reuters Monitor Money Rates Service or such other page as
may replace the LIBOR page on that service for the purpose of displaying London
interbank offered rates of major banks.
(g) "Reserve Requirement Rate" means, for any Interest
Period, the aggregate of the rates, effective as of the Business Day which is
two (2) Business Days before the first day of the Interest Period, at which:
(i) 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; and
(ii) any additional reserves as required to be
maintained by Bank by reason of any Regulatory Change against (x) 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 (y) any category or extensions of credit or other
assets which include Libor Loans.
(h) "Regulatory Change" means, with respect to Bank, any
change on or after the date of the Note and this Addendum in any Governmental
Regulation, including the introduction of any new Governmental Regulation or
the rescission of any existing Governmental Regulation.
(i) "Governmental Regulation" means any (i) United States
Federal, state or foreign law or regulation (including without limitation
Regulation D); and (ii) the adoption or making of any interpretation,
application, directive or request applying to a class of lenders, including
Bank, of or under any United States Federal, state, or any foreign law or
regulation (whether or not having the force of law) by any court or by any
governmental, central banking, monetary or taxing authority charged with the
interpretation or administration of such law or regulation.
2.2 Determination of Interest Rates. Subject to the terms and
conditions of the Note and this Addendum, Borrower, at its option may request an
advance in the form of a Libor Loan, a continuation of a Libor Loan, or a
conversion of a Prime Loan into a Libor Loan, only upon delivery to Bank of an
irrevocable written notice received by Bank at least three (3) Business Days
prior to the requested Loan Date, specifying (i) the principal amount of such
Libor Loan, (ii) the requested Loan Date, and (iii) the selected Interest
Period. Upon receiving such notice, Bank shall determine (which determination
shall be in accordance with Section 2.1 and shall, absent manifest error, be
final, conclusive and binding upon all parties hereto) the Libor Rate applicable
to such Libor Loan two (2) Business Days prior to the Loan Date, and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to Borrower. If Borrower shall fail to notify Bank of its selected Interest
Period for a Libor Loan (including the continuation of an existing Libor Loan or
the conversion or a Prime Loan into a Libor Loan), the Borrower shall be deemed
to have selected an Interest Period of three (3) months.
2.3 Computation of Interest and Fees. All computations of interest
and fees payable pursuant to the Note shall be calculated on the basis of a
three hundred sixty (360) day year for the actual number of days elapsed (less
the date of repayment).
2.4 Recordation by Bank. Bank is hereby authorized to record the
Loan Date, the applicable Interest Period, the principal amount, and the
interest rate or each Libor Loan made (or continued or converted) by Bank, and
the date and amount of each payment or prepayment of principal thereof, in
Bank's records. Any such recordation shall constitute prima facie evidence of
the accuracy of the information recorded; provided that the failure to make any
such recordation shall not in any way affect the Borrower's obligations
hereunder.
3. CONVERSION TO PRIME LOANS.
3.1 Election by Borrower. Subject to all the terms and conditions
of this Addendum, Borrower may elect from time to time to convert a Libor Loan
to a Prime Loan by giving Bank at least three (3) Business Days' prior
irrevocable notice of such election, and any such conversion of a Libor Loan
shall be made on the last day of the Interest Period with respect thereto.
3.2 Failure of Notice by Borrower. If Borrower otherwise fails to
give notice specifying its requests with respect to any Libor Loans that are
scheduled to become due, such failure shall be deemed, in the absence of any
notice from Borrower to the contrary, to be notice of a requested advance in
the form of a Prime Loan in a principal amount equal to the amount of said
Libor Loan.
4. PREPAYMENTS.
4.1 Voluntary Prepayment by Borrower. Subject to the terms and
conditions of the Note and this Addendum, Borrower may, upon at least three (3)
Business Days' irrevocable notice to Bank as provided herein, at any time and
from time to time on any Business Day prepay any Prime Loan or Libor Loan in
whole or in part, without penalty or premium, other than customary actual
"Breakage Fees" and "Prepayment Costs" as defined below, resulting from
prepayment of any Libor Loan prior to the expiration of the Interest Period
relating thereto. The notice of prepayment shall specify the date and amount
of the prepayment, and the Loan to which the
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prepayment applies. Each partial prepayment of a Libor Loan shall be in an
amount not less than Fifty Thousand Dollars ($50,000) or such greater amount
which is an integral multiple of Fifty Thousand Dollars ($50,000); provided,
that unless a Libor Loan is prepaid in full, no prepayment shall be made if,
after giving effect to such prepayment, the aggregate principal amount of Libor
Loans having the same Interest Period shall be less than One Million Dollars
($1,000,000). Notice of prepayment having been delivered as aforesaid, the
principal amount of the prepayment specified in such notice shall become due and
payable on the prepayment date set forth in such notice. All payments of
principal under this Section 4 shall be accompanied by accrued but unpaid
interest on the amount being prepaid through the date of such prepayment.
4.2 Breakage Fees. If for any reason (including voluntary or
mandatory prepayment, voluntary or mandatory conversion of a Libor Loan into a
Prime Loan, or acceleration), Bank receives all or part of the principal amount
of a Libor 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 Breakage Fees, defined as 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 (without
regard to whether Bank actually so invests said funds) 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 and final, absent manifest error.
4.3 Prepayment Costs. Borrower shall pay to Bank, upon the demand
of Bank, such other amount or amounts as shall be sufficient (in the sole good
faith opinion of Bank) to compensate it for any loss, costs or expense incurred
by it as a result of any prepayment by Borrower (including voluntary or
mandatory prepayment, voluntary or mandatory conversion of a Libor Loan into a
Prime Loan, or prepayment due to acceleration) of all or part of the principal
amount of a Libor Loan prior to the last day of the Interest Period for such
Loan (including without limitation any failure by Borrower to borrow a Libor
Loan on the Loan Date for such borrowing specified in the relevant notice of
borrowing hereunder). Such costs shall include, without limitation, any
interest or fees payable by Bank to lenders of funds obtained by it in order to
make or maintain its loans based on the London interbank eurodollar market.
Bank's determination as to such costs shall be conclusive and final, absent
manifest error.
5. REMEDIES UPON EVENTS OF DEFAULT.
5.1 Conversion to Prime Loans. If any Event of Default has occurred
and is continuing under the Note or this Addendum, then in addition to all other
remedies available to Bank under the Note, at the option of Bank and without
demand or notice, all Libor Loans then outstanding shall be automatically
converted to Prime Loans on the last day of each respective Interest Period for
each Libor Loan.
5.2 Indemnity. Borrower agrees to pay and indemnify Bank for, and
to hold Bank harmless from, any and all cost, loss or expense (including without
limitation any such cost, loss or expense arising from interest or fees payable
by Bank to lenders of funds obtained by it in order to maintain its Libor Loans
hereunder, or in its reemployment of funds obtained in connection with the
making or maintaining of Libor Loans) which Bank may sustain or incur as a
consequence of any default by Borrower in connection with or related to: (a)
payment of the principal amount of or interest on Libor Loans, (b) making a
borrowing or conversion of a Libor Loan after Borrower has given a notice
thereof in accordance with this Addendum, or (c) making a prepayment of a Libor
Loan after Borrower has given a notice thereof in accordance with this Addendum,
or any prepayment (whether optional or mandatory) of any Libor Loan prior to the
end of the applicable Interest Period for such Loan.
6. ADDITIONAL PROVISIONS REGARDING LIBOR LOANS.
6.1 Libor Rate Taxes. All payments of principal, interest, fees,
costs, expenses and all other amounts payable to Borrower pursuant to the Note
and this Addendum shall be made free and clear of and without reduction by
reason of all present and future income, stamp and other taxes or other charges
whatsoever imposed, assessed, levied or collected by any national government or
any political subdivision or taxing authority thereof or any organization of
which it is a member (excluding (i) any taxes imposed on or measured by the
overall net income or gross receipts of Bank by any such entity, and (ii) any
taxes which would have been imposed even if no provisions for Libor Loans had
appeared in this Addendum) (collectively, "Libor Taxes").
If any Libor Taxes are required to be withheld from any amounts
payable to Bank, Borrower shall pay such additional amounts as may be necessary
so as to yield to Bank a net amount equal to the total amount of the payments
provided for in this Addendum or under the Note which Bank would have received
if such amounts had not been subject to Libor Taxes.
If any Libor Taxes are payable directly by Borrower, they shall
be paid by Borrower prior to the date on which penalties attach for failure to
timely pay such Libor Taxes. Within forty five (45) days after the date on
which payment of any such Libor Taxes is due pursuant to applicable law,
Borrower will furnish Bank the original receipt for the full payment of such
Libor Taxes or, if such is not available, evidence of such payment satisfactory
in form and substance to Bank. Borrower shall indemnify and hold Bank harmless
against, and will reimburse to Bank, upon demand, any incremental taxes,
interest or penalties that may become payable by Bank as a result of any failure
by Borrower to pay any Libor Taxes when due.
Page 3 of 4
6.2 Inability to Determine Fair Interest Rate. If at any time
Bank, in its sole and absolute discretion, determines that: (i) the amount of
the Libor Loans for periods equal to the corresponding Interest Periods are not
available to Bank in the offshore currency interbank markets, (ii) the Libor
Rate does not accurately reflect the cost to Bank of lending the Libor Loan, or
(iii) by reason of any changes arising after the date of the Note affecting the
London interbank eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in Sections
2.1 and 2.2 above, then Bank shall promptly give notice thereof to Borrower.
Upon the giving of such notice, Bank's obligation to make Libor Loans shall
terminate, unless Bank and the Borrower agree in writing to a different
interest rate applicable to Libor Loans, or until such time as Bank notifies
Borrower that the circumstances giving rise to Bank's notice no longer exist.
While such circumstances continue to exist, (x) any requested Libor Loan shall
be treated as a request for a Prime Loan, (y) any Prime Loan that was to have
been converted to a Libor Loan shall be continued as a Prime Loan, and (z) any
outstanding Libor Loan shall be converted retroactively, on the first day of
the then current Interest Period with respect thereto, to a Prime Loan.
6.3 Illegality or Impracticability. If (i) due to any Governmental
Regulation it shall become unlawful for Bank to continue to fund or maintain
any Libor Loans, or to perform its obligations hereunder, or (ii) due to any
contingency occurring after the date of the Note which has a material adverse
effect on the London interbank eurodollar market, it has become impracticable
for Bank to continue to fund or maintain any Libor Loans, or to perform its
obligations hereunder, then Bank shall promptly give notice thereof to
Borrower. Upon the giving of such notice, Bank's obligation to make Libor
Loans shall terminate, and in such event, (x) any requested Libor Loan shall be
treated as a request for a Prime Loan, (y) any Prime Loan that was to have been
converted to a Libor Loan shall be continued as a Prime Loan, and (z) any
outstanding Libor Loan shall be converted retroactively, on the first day of
the then current Interest Period with respect thereto, to a Prime Loan.
6.4 Governmental Regulations; Increased Costs. Borrower shall pay
to Bank, within 15 days after demand by Bank, from time to time such amounts as
Bank may determine to be necessary to compensate it for any increased costs
incurred by Bank that Bank determines are attributable to its making or
maintaining of any Libor Loans to Borrower (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"), in
each case resulting from any Regulatory Change which:
(a) imposes a new tax or changes the basis of taxation of
any amounts payable to Bank under the Note or this Addendum in respect of any
Libor 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
(b) imposes or modifies any reserve, special deposit or
similar requirements relating to any extensions of credit or other assets of,
or any deposits or other liabilities with or for the account of Bank (including
any Libor Loans or any deposits referred to in the definition of Libor Base
Rate); or
(c) imposes any other condition affecting the Note (or any
of such extensions of credit or liabilities); or
(d) imposes or modifies a Governmental Regulation regarding
capital adequacy which has or would have the effect of reducing the rate of
return on capital of Bank or any person or entity controlling Bank ("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.
Bank will notify Borrower of any event occurring after the date of the
Note which will entitle Bank to Additional Costs pursuant to this Section 6.4 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 Additional Costs under
this Section 6.4. Determinations and allocations by Bank for purposes of this
Section 6.4 of the effect of any Regulatory Change on its costs of maintaining
its obligations to make Libor Loans or of making or maintaining Libor Loans or
on amounts receivable by it in respect of Libor Loans, and of the additional
amounts required to compensate Bank in respect of any Additional Costs, shall
be conclusive and final, absent manifest error.
This Addendum is executed as of the date first written above.
BORROWER BANK
TEKELEC IMPERIAL BANK,
-------------------------------------- a California banking corporation
a Corporation
------------------------------------ By /s/ NUNILO XXXXX
-----------------------------------
By /s/ XXXXXX X. XXXXX Nunilo Xxxxx
------------------------------------ Its Vice President
-------------------------------
Its V.P. Finance and CFO
-----------------------------------
By /s/ XXXXXXX X. XXXXXX
-----------------------------------
Its Corporate Controller
-----------------------------------
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