EXHIBIT 10.23
[LOGO]
BUSINESS LOAN AGREEMENT
THIS SEAFIRST BUSINESS LOAN AGREEMENT ("AGREEMENT") IS MADE BETWEEN SEATTLE-
FIRST NATIONAL BANK ("BANK") AND Data I/O Corporation ("BORROWER")
WITH RESPECT TO THE FOLLOWING:
PART A
I. LINE OF CREDIT # 1 . Subject to the terms of this Agreement, Bank will
make loans to Borrower under a revolving line of credit as follows:
(A) TOTAL AMOUNT AVAILABLE: $8,000,000.00
[ ] Subject to (describe):
N/A__________________________________________________________________
(B) AVAILABILITY PERIOD: Date of Note through
May 31, 1996 . However, if loans are made and/or new
promissory notes executed after the last date, such advances will be
subject to the terms of this Agreement until repaid in full unless a
written statement signed by the Bank and Borrower provides otherwise,
or a replacement loan agreement is executed. The making of such
additional advances alone, however, does not constitute a commitment
by the Bank to make any further advances or extend the availability
period.
(C) INTEREST RATE:
At Borrower's option:
1. Banks publicly announced prime rate plus_-0-_ percent of the principal
per annum, adjusted on the date of any Bank prime rate change.
or
2. A rate of interest to be fixed at Borrower's election equal to the London
Interbank Offered Rate ("LIBOR") plus 1.10 percent for periods ranging from
one, two, three or six month periods, but not extending beyond the maturity
date of the note. The rate shall be adjusted for any statutory reserves,
FDIC or other assessments. Rate will be set two business days prior to the
first day of the interest period selected. A prepayment fee may apply if
principal reductions are made during a fixed rate period. The minimum
amount of a LIBOR loan for interest periods of one, two, three or six
months is $250,000.
At maturity of a fixed rate period, the interest rate will revert to Prime
as described in section 1 above unless otherwise elected by the Borrower.
(D) INTEREST RATE BASIS. All interest will be calculated at the per annum
interest rate based on 360-day year and applied to the actual number
of days elapsed.
(E) REPAYMENT: At the times and in amounts as set forth in note(s)
required under Part B Article 1 of this Agreement.
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(F) LOAN FEE: None
(G) FEE ON UNUTILIZED PORTION OF LINE: On each quarter, and every
quarter thereafter, Borrower shall pay a fee based upon the average
daily unused portion of the line of credit. This fee will be
calculated as follows: 1/4 of 1.00% per annum, payable quarterly in
arrears.
(H) OTHER FEE(S) (IDENTIFY): N/A.
(I) COLLATERAL. This revolving line of credit shall be unsecured.
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1. PROMISSORY NOTE(S). All loans shall be evidenced by promissory notes
in a form and substance satisfactory to Bank.
2. CONDITIONS TO AVAILABILITY OF LOAN/LINE OF CREDIT. Before Bank is
obligated to disburse/make any advance, or at any time thereafter
which Bank deems necessary and appropriate, Bank must receive all of
the following, each of which must be in form and substance
satisfactory to Bank ("loan documents"):
2.1 Original, executed promissory note(s);
2.2 Original executed security agreement(s) and/or deed(s) of trust
covering the collateral described in Part A;
2.3 All collateral described in Part A in which Bank wishes to have a
possessory security interest;
2.4 Financing statement(s) executed by Borrower;
2.5 Such evidence that Bank may deem appropriate that the security
interests and liens in favor of Bank are valid, enforceable, and prior
to the rights and interests of others except those consented to in
writing by Bank;
+2.6 The following guaranty(ies) in favor of the Bank: N/A
+2.7 Subordination agreement(s) in favor of Bank executed by: N/A
2.8 Evidence that the execution, delivery, and performance by Borrower of
this Agreement and the execution, delivery, and performance by
Borrower and any corporate guarantor or corporate subordinating
creditor of any instrument or agreement required under this Agreement,
as appropriate, have been duly authorized;
2.9 Any other document which is deemed by the Bank to be required from
time to time to evidence loans or to effect the provisions of this
Agreement;
2.10 N/A;
2.11 Pay or reimburse Bank for any out-of-pocket expenses expended in
making or administering the loans made hereunder including without
limitation attorney's fees (including allocated costs of in-house
counsel);
+2.12 Other (describe): N/A
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Bank, except as Borrower has disclosed to Bank in writing, as of the
date of this Agreement and hereafter so long as credit granted under
this Agreement is available and until full and final payment of all
sums outstanding under this Agreement and promissory notes that:
+3.1 Borrower is duly organized and existing under the laws of the state of
its organization as a:
General
Limited
_X_Corporation ___ Partnership ___ Partnership ____
Sole
____ Proprietorship ___ dba
Borrower is properly licensed and in good standing in each state in
which Borrower is doing business and Borrower has qualified under, and
complied with, where required, the fictitious or trade name statutes
of each state in which Borrower is doing business, and Borrower has
obtained all necessary government approvals for its business
activities; the execution, delivery, and performance of this Agreement
and such notes and other instruments required herein are within
Borrower's powers, have been duly authorized, and, as to Borrower and
any guarantor, are not in conflict with the terms of any charter,
bylaw, or other organization papers of Borrower, and this Agreement,
such notes and the loan documents are valid and enforceable according
to their terms;
3.2 The execution, delivery, and performance of this Agreement, the loan
documents and any other instruments are not in conflict with any law
or any indenture, agreement or undertaking to which Borrower is a
party or by which Borrower is bound or affected;
3.3 Borrower has title to each of the properties and assets as reflected
in its financial statements (except such assets which have been sold
or otherwise disposed of in the ordinary course of business), and no
assets or revenues of the Borrower are subject to any lien except as
required or permitted by this Agreement, disclosed in its financial
statements or otherwise previously disclosed to Bank in writing;
3.4 All financial information, statements as to ownership of Borrower and
all other statements submitted by Borrower to Bank, whether previously
or in the future, are and will be true and correct in all material
respects upon submission and are and will be complete upon submission
insofar as may be necessary to give Bank a true and accurate knowledge
of the subject matter thereof;
3.5 Borrower has filed all tax returns and reports as required by law to
be filed and has paid all taxes and assessments applicable to Borrower
or to its properties which are presently due and payable, except those
being contested in good faith;
3.6 There are no proceedings, litigation or claims (including unpaid
taxes) against Borrower pending or, to the knowledge of the Borrower,
threatened, before any court or government agency, and no other event
has occurred which may have a material adverse effect on Borrower's
financial condition;
3.7 There is no event which is, or with notice or lapse of time, or both,
would be, an Event of Default (as defined in Section 7) under this
Agreement;
3.8 Borrower has exercised due diligence in inspecting Borrower's
properties for hazardous wastes and hazardous substances. Except as
otherwise previously disclosed and acknowledged to Bank in writing:
Borrower has no actual or constructive notice of any actual or
threatened litigation or claims of any kind
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by any person relating to such matters. The terms "hazardous
waste(s)," hazardous substance(s)," "disposal," "release," and
"threatened release" as used in this Agreement shall have the same
meanings as set forth in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq., the Superfund Amendments and Re authorization Act of
1986, as amended, Pub. L. No. 99-499, the Hazardous Materials
Transportation Act, as amended, 49 U.S. C. Section 1801, et seq., the
Resource Conservation and Recovery Act, as amended, 49 U.S.C. Section
6901, et seq., or other applicable state or federal laws, rules or
regulations adopted pursuant to any of the foregoing.
+3.9 N/A
4. AFFIRMATIVE COVENANTS. So long as credit granted under this Agreement
is available and until full and final payment of all sums outstanding
under this Agreement and promissory note(s) Borrower will:
+4.1 Use the proceeds of the loans covered by this Agreement only in
connection with Borrower's business activities and exclusively for the
following purposes: Line of credit - working capital and general
corporate purposes.
+4.2 Maintain current assets in an amount at least equal to 1.20 times
current liabilities, and not less than $ N/A. Current assets and
current liabilities shall be determined in accordance with generally
accepted accounting principles and practices, consistently applied;
+4.3 Maintain a tangible net worth of at least $19,000,000 and not permit
Borrower's total indebtedness which is not subordinated in a manner
satisfactory to Bank to exceed 1.30 times Borrower's tangible net
worth. "Tangible net worth" means the excess of total assets over
total liabilities, excluding, however, from the determination of total
assets (a) all assets which should be classified as intangible assets
such as goodwill, patents, trademarks, copyrights, franchises, and
deferred charges (including unamortized debt discount and research and
development costs), (b) treasury stock, (c) cash held in a sinking or
other similar fund established for the purpose of redemption or other
retirement of capital stock, (d) to the extent not already deducted
from total assets, reserves for depreciation, depletion, obsolescence
or amortization of properties and other reserves or appropriations of
retained earnings which have been or should be established in
connection with the business conducted by the relevant corporation,
and (e) any revaluation or other write-up in book value of assets
subsequent to the fiscal year of such corporation last ended at the
date of this Agreement;
+4.4 Upon request Borrower agrees to insure and to furnish Bank with
evidence of insurance covering the life of Borrower (if an individual)
or the lives of designated partners or officers of Borrower (if a
partnership or corporation) in the amounts stated below. Borrower
shall take such actions as are reasonably requested by Bank, such as
assigning the insurance policies to Bank or naming Bank as beneficiary
and obtaining the insurer's acknowledgment thereof, to provide that in
the event of the death of any of the named insureds the policy
proceeds will be applied to payment of Borrower's obligations owing to
Bank;
Name:______N/A________Amount:$____________
Name:_________________Amount:$ ___________
+4.5 Promptly give written notice to Bank of: (a) all litigation and claims
made or threatened affecting Borrower where the amount is $500,000 or
more; (b) any substantial dispute which may exist between Borrower and
any governmental regulatory body or law enforcement authority; (c) any
Event of Default under this Agreement or any other agreement with Bank
or any other creditor or any event which become an Event of Default;
and (d) any other matter which has resulted or might result in a
material adverse change in Borrower's financial condition or
operations;
+4.6 Borrower shall as soon as available, but in any event within 90 days
following the end of each Borrower's fiscal years and within 60 days
following the end of each QUARTER provide to Bank, in a form
satisfactory to Bank, such financial statements, Form 10-K Reports,
Form 10-Q Reports and other information respecting the financial
condition and operations of Borrower as Bank may reasonably request.
The fiscal year financial statement shall be audited by an independent
certified public accounting firm.;
4.7 Borrower will maintain in effect insurance with responsible insurance
companies in such amounts and against such risks as is customarily
maintained by persons engaged in businesses similar to that of
Borrower and all policies covering property given as security for the
loans shall have loss payable clauses in favor of Bank. Borrower
agrees to deliver to Bank such evidence of insurance as Bank may
reasonably require and, within thirty (30) days after notice from
Bank, to obtain such additional insurance with an insurer satisfactory
to the Bank;
4.8 Borrower will pay all indebtedness taxes and other obligations for
which the Borrower is liable or to which its income or property is
subject before they shall become delinquent, except any which is being
contested by the Borrower in good faith;
4.9 Borrower will continue to conduct its business as presently
constituted, and will maintain and preserve all rights, privileges and
franchises now enjoyed, conduct Borrower's business in an orderly,
efficient
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and customary manner, keep all Borrowers properties in good working
order and condition, and from time to time make all needed repairs,
renewals or replacements so that the efficiency of Borrower's
properties shall be fully maintained and preserved;
4.10 Borrower will maintain adequate books, accounts and records and
prepare all financial statements required hereunder in accordance with
generally accepted accounting principles and practices consistently
applied, and in compliance with the regulations of any governmental
regulatory body having jurisdiction over Borrower or Borrower's
business;
4.11 Borrower will permit representatives of Bank to examine and make
copies of the books and records of Borrower and to examine the
collateral of the Borrower at reasonable times;
4.12 Borrower will perform, on request of Bank, such acts as may be
necessary or advisable to perfect any lien or security interest
provided for herein or otherwise carry out the intent of this
Agreement;
4.13 Borrower will comply with all applicable federal, state and municipal
laws, ordinances, rules and regulations relating to its properties,
charters, businesses and operations, including compliance with all
minimum funding and other requirements related to any of Borrower's
employee benefit plans;
4.14 Borrower will permit representatives of Bank to enter onto Borrower's
properties to inspect and test Borrower's properties as Bank, in its
sole discretion, may deem appropriate to determine Borrower's
compliance with section 5.8 of this Agreement; provided however, that
any such inspections and tests shall be for Bank's sole benefit and
shall not be construed to create any responsibility or liability on
the part of Bank to Borrower or to any third party.
5. NEGATIVE COVENANTS. So long as credit granted under this Agreement is
available and until full and final payment of all sums outstanding
under this Agreement and promissory note(s):
+5.1 Borrower will not, during any fiscal year, expend or incur in the
aggregate more than $ N/A for fixed assets, nor more than $ N/A
for any single fixed asset whether or not payable that fiscal year or
later under any purchase agreement or lease;
5.2 N/A
+5.3 The total of salaries, withdrawals, or other forms of compensation,
whether paid in cash or otherwise, by Borrower shall not exceed the
following amounts for the persons indicated, nor will amounts in
excess of such limits be paid to any other person:
Name: ____________N/A_____________________
Monthly/Yearly Amount:$_____________________
Name: ____________________________________
Monthly/Yearly Amount:$ _____________________
5.4 N/A
+5.5 N/A
5.6 Borrower will not liquidate or dissolve or enter into any
consolidation, merger, pool, joint venture, syndicate or other
combination, or sell, lease, or dispose of Borrower's business assets
as a whole or such as in the opinion of Bank constitute a substantial
portion of Borrower's business or assets;
5.7 Borrower will not engage in any business activities or operations
substantially different from or unrelated to present business
activities or operations; and
5.8 Borrower's activity shall be conducted in compliance with all
applicable federal, state and local laws, regulations and ordinances,
including without limitation those described in section 3.8.
6. WAIVER, RELEASE AND INDEMNIFICATION. Borrower hereby:
(a) releases and waives any claims against Bank for indemnity or
contribution in the event Borrower becomes liable for cleanup or other
costs under any of the applicable federal, state or local laws,
regulations or ordinances, including without limitation those
described in section 3.8, and (b) agrees to indemnify and hold Bank
harmless from and against any and all claims, losses, liabilities,
damages, penalties and expenses which Bank may directly or indirectly
sustain or suffer resulting from a breach of (i) any of Borrower's
representations and warranties with respect to hazardous wastes and
hazardous substances contained in section 3.8, or (ii) section 5.8.
The provisions of this section 6 shall survive the full and final
payment of all sums outstanding under this Agreement and promissory
notes and shall not be affected by Bank's acquisition of any interest
in any of the Borrower's properties, whether by foreclosure or
otherwise.
7. EVENTS OF DEFAULT. The occurrence of any of the following events
("Events of Default") shall terminate any and all obligations on the
part of Bank to make or continue the loan and/or line of credit and,
at the option of Bank, shall make all sums of interest and principal
outstanding under the loan and/or line of credit immediately due and
payable, without notice of default, presentment or demand for payment,
protest or notice of non payment or dishonor, or other notices or
demands of any kind or character, all of which are waived by Borrower,
and Bank may proceed with collection of such obligations and
enforcement and realization upon all security which it may hold and to
the enforcement of all rights hereunder or at law:
7.1 The Borrower shall fail to pay when due any amount payable by it
hereunder on any loans or notes executed in connection herewith;
7.2 Borrower shall fail to comply with the provisions of any other
covenant, obligation or term of this Agreement for a period of thirty
(30) days after the earlier of written notice thereof shall have been
Page 96
given to the Borrower by Bank or Borrower or any Guarantor has
knowledge of an Event of Default or an event that can become an Event
of Default;
7.3 Borrower shall fail to pay when due any other obligation for borrowed
money, or to perform any term or covenant on its part to be performed
under any agreement relating to such obligation or any such other debt
shall be declared to be due and payable and such failure shall
continue after the applicable grace period;
7.4 Any representation or warranty made by Borrower in this Agreement or
in any other statement to Bank shall prove to have been false or
misleading in any material respect when made;
7.5 Borrower makes an assignment for the benefit of creditors, files a
petition in bankruptcy, is adjudicated insolvent or bankrupt,
petitions to any court for a receiver or trustee for Borrower or any
substantial part of its property, commences any proceeding relating to
the arrangement, readjustment, reorganization or liquidation under any
bankruptcy or similar laws, or if there is commenced against Borrower
any such proceedings which remain undismissed for a period of thirty
(30) days or, if Borrower by any act indicates its consent or
acquiescence in any such proceeding or the appointment of any such
trustee or receiver;
+7.6 Any judgment attaches against Borrower or any of its properties for an
amount in excess of $500,000 which remains unpaid, unstayed on appeal,
unbonded, or undismissed for a period of thirty (30) days;
7.7 Loss of any required government approvals, and/or any governmental
regulatory authority takes or institutes action which, in the opinion
of Bank, will adversely affect Borrower's condition, operations or
ability to repay the loan and/or line of credit;
7.8 Failure of Bank to have a legal, valid and binding first lien on, or a
valid and enforceable prior perfected security interest in, any
property covered by any deed of trust or security agreement required
under this Agreement;
7.9 Borrower dies, becomes incompetent, or ceases to exist as a going
concern;
7.10 Occurrence of an extraordinary situation which gives Bank reasonable
grounds to believe that Borrower may not, or will be unable to,
perform its obligations under this or any other agreement between Bank
and Borrower; or
7.11 Any of the preceding events occur with respect to any guarantor of
credit under this Agreement, or such guarantor dies or becomes
incompetent, unless the obligations arising under the guaranty and
related agreements have been unconditionally assumed by the
guarantor's estate in a manner satisfactory to Bank.
8. SUCCESSORS; WAIVERS. Notwithstanding the Events of Default above, this
Agreement shall be binding upon and inure to the benefit of Borrower
and Bank, their respective successors and assigns, except that
Borrower may not assign its rights hereunder. No consent or waiver
under this Agreement shall be effective unless in writing and signed
by the Bank and shall not waive or affect any other default, whether
prior or subsequent thereto, and whether of the same or different
type. No delay or omission on the part of the Bank in exercising any
right shall operate as a waiver of such right or any other right.
9. ARBITRATION.
9.1 At the request of either Bank or Borrower any controversy or claim
between the Bank and Borrower, arising from or relating to this
Agreement or any Loan Document executed in connection with this
Agreement or arising from any alleged tort shall be settled by
arbitration in King County Washington. The United States Arbitration
Act will apply to the arbitration proceedings which will be
administered by the American Arbitration Association under its
commercial rules of arbitration except that unless the amount of the
claim(s) being arbitrated exceeds $5,000,000 there shall be only one
arbitrator. Any controversy over whether an issue is arbitrable shall
be determined by the arbitrator(s). Judgment upon the arbitration
award may be entered in any court having jurisdiction. The
institution and maintenance of any action for judicial relief or
pursuit of a provisional or ancillary remedy shall not constitute a
waiver of the right of either party, including plaintiff, to submit
the controversy or claim to arbitration if such action for judicial
relief is contested.
For purposes of the application of the statute of limitations the
filing of an arbitration as provided herein is the equivalent of
filing a lawsuit and the arbitrator(s) will have the authority to
decide whether any claim or controversy is barred by the statute of
limitations, and if so, to dismiss the arbitration on that basis. The
parties consent to the joinder in the arbitration proceedings of any
guarantor, hypothecator or other party having an interest related to
the claim or controversy being arbitrated.
9.2 Notwithstanding the provisions of Section 9.1, no controversy or claim
shall be submitted to arbitration without the consent of all parties
if at the time of the proposed submission, such controversy or claim
arises from or relates to an obligation secured by real property;
9.3 No provision of this Section 9 shall limit the right of the Borrower
or the Bank to exercise self-help remedies such as setoff, foreclosure
or sale of any collateral, or obtaining any ancillary provisional or
interim remedies from a court of competent jurisdiction before, after
or during the pendency of any arbitration proceeding. The exercise of
any such remedy does not waive the right of either party to request
arbitration. At Bank's option foreclosure under any deed of trust may
be accomplished by exercise of the power of sale under the deed of
trust or judicial foreclosure as a mortgage.
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10. COLLECTION ACTIVITIES, LAWSUITS AND GOVERNING LAW. Borrower agrees to
pay Bank all costs and expenses (including reasonable attorney's fees
and the allocated cost for in-house legal services incurred by Bank),
to enforce this Agreement, any notes or any Loan Documents pursuant to
this Agreement, whether or not suit is instituted. If suit is
instituted by Bank to enforce this Agreement or any of these
documents, Borrower consents to the personal jurisdiction of the
Courts of the State of Washington and Federal Courts located in the
State of Washington. Borrower further consents to the venue of this
suit, being laid in King County, Washington. This Agreement and any
notes and security agreements entered into pursuant to this Agreement
shall be construed in accordance with the laws of the State of
Washington.
+11. ADDITIONAL PROVISIONS. Borrower agrees to the additional provisions
set forth immediately following this Section 11 or on any Exhibit
attached to and incorporated into this Agreement. This Agreement
supersedes all oral negotiations or agreements between Bank and
Borrower with respect to the subject matter hereof and constitutes the
entire understanding and Agreement of the matters set forth in this
Agreement.
11.1 If any provision of this Agreement is held to be invalid or
unenforceable, then (a) such provision shall be deemed modified if
possible, or if not possible, such provision shall be deemed stricken,
and (b) all other provisions shall remain in full force and effect.
11.2 If the imposition of or any change in any law, rule, or regulation
guideline or the interpretation or application of any thereof by any
court of administrative or governmental authority (including any
request or policy whether or not having the force of law) shall impose
or modify any taxes (except U.S. federal, state or local income or
franchise taxes imposed on Bank), reserve requirements, capital
adequacy requirements or other obligations which would: (a) increase
the cost to Bank for extending or maintaining any loans and/or line of
credit to which this Agreement relates, (b) reduce the amounts payable
to Bank under this Agreement, such notes and other instruments, or
(c) reduce the rate of return on Bank's capital as a consequence of
Bank's obligations with respect to any loan and/or line of credit to
which this Agreement relates, then Borrower agrees to pay Bank such
additional amounts as will compensate Bank therefor, within five (5)
days after Bank's written demand for such payment, which demand shall
be accompanied by an explanation of such imposition or charge and a
calculation in reasonable detail of the additional amounts payable by
Borrower, which explanation and calculations shall be conclusive,
absent manifest error.
11.3 N/A
11.4 This Business Loan Agreement also covers all future standby letters of
credit and foreign exchange facilities as may be requested by Borrower
and made by Bank.
12. NOTICES. Any notices shall be given in writing to the opposite
party's signature below or as that party may otherwise specify in
writing.
13. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
Page 98
This Business Loan Agreement (Parts A and B) executed by the parties on May
______, 1995 Borrower acknowledges having read all of the provisions of this
Agreement and Borrower agrees to its terms.
SEATTLE-FIRST NATIONAL BANK
Western Commercial Banking Division, Team #2
By: //S//XXXXXX X. XXXXX
-----------------------------------------
Xxxxxx X. Xxxxx, Vice President
DATA I/O CORPORATION
By: //S//XXXXXX X. XXXXXX
-----------------------------------------
Title: Vice President/Chief Financial Officer
--------------------------------------
Page 99
LOAN MODIFICATION
AGREEMENT
[LOGO]
This Agreement amends the MASTER NOTE FOR MULTIPLE ADVANCES-BUSINESS
PURPOSE dated FEBRUARY 28, 1994 ("Note") executed by DATA I/O CORPORATION
("Borrower") in favor of SEATTLE-FIRST NATIONAL BANK ("Bank"), regarding a
loan in the maximum principal amount of $8,000,000 (the "Loan"). For mutual
consideration, Borrower and Bank agree to amend the above loan documents as
follows:
1. INTEREST RATE. The interest rate under the Note shall
hereafter be either LIBOR rate plus 1.10% (see attached Exhibit B) per annum
or at a floating rate of the Prime Rate plus 0% per annum, with Prime Rate
defined as the floating commercial loan reference rate publicly announced by
Bank from time to time as its "prim rate." If Borrower prepays all or any
portion of principal of the Loan, there shall be due at the time of any
prepayment a prepayment fee, determined in accordance with Exhibit A
attached. Any prepayments of principal shall be applied to the final
scheduled installments of principal, and shall not relieve Borrower of the
obligation to make each monthly installment.
2. MATURITY DATE. The maturity date of the Note is changed to MAY
31, 1996. Bank's commitment to make advances to Borrower under its line of
credit is also extended to MAY 31, 1996.
3. OTHER TERMS. Except as specifically amended by this agreement
or any prior amendment, all other terms, conditions, and definitions of the
Note and all other security agreements, guaranties, deeds of trust,
mortgages, and other instruments or agreements entered into with regard to
the Loan shall remain in full force and effect.
DATED May 12, 1995
Bank: Borrower:
SEATTLE-FIRST NATIONAL BANK DATA I/O CORPORATION
By //S//XXXXXX X. XXXXX BY: //S//XXXXXX X. XXXXXX
--------------------------- ----------------------------------
Title Vice President Title: Vice President/Chief Financial Officer
------------------------- ---------------------------------------
Page 100
EXHIBIT A
PROMISSORY NOTE
INTEREST RATE. The "Borrower" agrees to pay interest monthly on the unpaid
principal amount of the Master Note (Line of Credit) from the date thereof until
fully paid at a rate equivalent to one or a combination of the two options
listed below:
(1) BANK'S PRIME RATE: Bank's publicly announced prime rate plus the sum
of .00% (the "Margin") of the principal per annum, adjusted on the
effective date of any prime rate change.
(2) ADJUSTED LIBOR: "Adjusted LIBOR Rate" means for any day that per
annum rate equal to the sum of 1.10% (the "Margin"), (b) the
Assessment rate, if any, and (c) the LIBOR rate for the Interest
Period in which said day occurs divided by the Reserve Adjustment.
The Adjusted LIBOR Rate shall change with any change in the LIBOR Rate
on the first day of each Interest Period and on the effective date of
any change in the Assessment Rate or Reserve Adjustment.
Adjusted LIBOR Rate is available for increments of borrowing in excess
of $250,000.00 for specific periods of time (30, 60, 90, 180 days).
LIBOR (REUTERS) - "LIBOR Rate" means for any Interest Period that per
annum rate equal to the arithmetic mean (rounded to the nearest
hundred-thousandth of a percentage point) of the offered rates for
U.S. Dollar deposits for a period equal to the Interest Period
appearing on the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page on such service as may
replace said page or, if none, on such other available service which
displays two or more London interbank offered rates of major banks for
U.S. Dollar deposits as of 11:00 a.m., London time, on the day which
is two London banking days prior to the first day of the Interest
Period. If there is no period equal to the Interest Period on the
display, the LIBOR Rate shall be determined by straight-line
interpolation to the nearest month (or week or day if expressed in
weeks or days) corresponding to the Interest Period between the two
nearest neighboring periods on the display.
ASSESSMENT RATE - "Assessment Rate" means as of any day the annual
percentum rate established by the Federal Deposit Insurance
Corporation (or any successor) for the assessment due from members of
the Bank Insurance Fund (or any successor) in effect for the
assessment period during which said day occurs based on (a) deposits
maintained at said members' offices in the United States, in
determination of an Adjusted CD Rate, or (b) deposits maintained at
such members' offices located outside of the United States, in
determination of an Adjusted LIBOR Rate.
RESERVE ADJUSTMENT - "Reserve Adjustment" means as of any day the
remainder of one minus that percentage (expressed as a decimal) which
is the highest of any such percentages established by the Board of
Governors of the Federal Reserve System (or any successor) for
required reserves (including any emergency, marginal or supplemental
reserve requirement) regardless of the aggregate amount of deposits
with said member bank and without benefit of any possible credit,
proration, exemptions or offsets for (a) (in determination of an
Adjusted CD Rate) any type, duration or amount of new time deposit
established that day at offices of member banks located in the United
States, or (b) (in determination of an Adjusted LIBOR Rate) for time
deposits established at offices of member banks located outside of the
United States or for eurocurrency liabilities, if any.
It is understood that either or both options may be used during a monthly
billing period and that the billing by Bank will reflect the total of both
options.
If borrowings under Option 2 are prepaid, such prepayment shall be subject to a
prepayment penalty consisting of the differential, if any, by which the then
current rate is less than such rate at the borrowing date, applied to the amount
of the borrowing for the period from the prepayment date through the date of
maturity of such borrowings.
ADDITIONAL PROVISION. Notwithstanding any other provision in this Note, Lender
will have no obligation to make any additional loans or to advance funds under
this Note if Lender makes demand under that certain Note Purchase Agreement
between Lender and Data I/O Corporation of even date herewith and pursuant to
which Lender may make such demand at Lender's sole discretion at any time and
without notice to Borrower.
DATA I/O CORPORATION
By: //S//XXXXXX X. XXXXXX
-----------------------------------------
Title: Vice President/Chief Financial Officer
--------------------------------------
Page 101
EXHIBIT B -- PREPAYMENT FEES
If the principal balance owing to Bank is prepaid in whole or in part, whether
by voluntary prepayment, operation of law, acceleration or otherwise, a
prepayment fee, in addition to any interest earned, will be immediately payable
to Bank.
The amount of the prepayment fee depends on the following:
(1) The amount by which interest reference rates as defined below have changed
between the time the loan is prepaid and either a) the time the loan was
made for fixed rate loans, or b) the time the interest rate last changed
(repriced) for variable rate loans.
(2) A prepayment fee factor (see "Prepayment Fee Factor Schedule" on reverse).
(3) The amount of principal prepaid.
If the proceeds from a CD or time deposit pledged to secure the loan are used to
prepay the loan resulting in payment of an early withdrawal penalty for the CD,
a prepayment fee will not also be charged under the loan.
DEFINITION OF REFERENCE RATE FOR VARIABLE RATE LOANS
The Reference Rate used to represent interest rate levels for variable rate
loans shall be the index rate used to determine the rate on this loan having
maturities equivalent to the remaining period to interest rate change date
(repricing) of this loan rounded upward to nearest month. The "Initial
Reference Rate" shall be the Reference Rate at the time of last repricing and a
new Initial Reference Rate shall be assigned at each subsequent repricing. The
"Final Reference Rate" shall be the Reference Rate at the time of prepayment.
DEFINITION OF REFERENCE RATE FOR FIXED RATE LOANS
The "Reference Rate" used to represent interest rate levels on fixed rate loans
shall be the bond equivalent yield of the average U.S. Treasury rate having
maturities equivalent to the remaining period to maturity of this loan rounded
upward to the nearest month. The "Initial Reference Rate" shall be the
Reference Rate at the time the loan was made. The "Final Reference Rate" shall
be the Reference Rate at time of prepayment.
The Reference Rate shall be interpolated from the Federal Reserve Statistical
Release (Publication H.15) as displayed on Page 119 of the Dow Xxxxx Telerate
Service (or such other page or service as may replace that page or service for
the purpose of displaying rates comparable to said U.S. Treasure rates) on the
day the loan was made (Initial Reference Rate) or the day of prepayment (Final
Reference Rate).
COMPLETE FOR FIXED RATE LOANS ONLY: An Initial Reference Rate of _____% has
been assigned to this loan to represent interest rate levels at origination.
CALCULATION OF PREPAYMENT FEE
If the Initial Reference Rate is less than or equal to the Final Reference Rate,
there is no prepayment fee.
If the Initial Reference Rate is greater than the Final Reference Rate, the
prepayment fee shall be equal to the difference between the Initial and Final
Reference Rates (expressed as a decimal), multiplied by the appropriate factor
from the Prepayment Fee Factor Schedule, multiplied by the principal amount of
the loan being prepaid.
Data I/ Corporation
By: //S//XXXXXX X. XXXXXX
-------------------------
Page 102
EXAMPLE OF PREPAYMENT FEE CALCULATION
VARIABLE RATE LOAN: A non-amortizing 6-month LIBOR based loan with principal of
$250,000 is fully prepaid with 3 months remaining until next interest rate
change date (repricing). An Initial Reference Rate of 7.0% was assigned to the
loan at last repricing. The Final Reference Rate (as determined by the 3-month
LIBOR index) is 6.5%. Rates therefore have dropped 0.5% since last repricing
and a prepayment fee applies. A prepayment fee factor of 0.31 is determined
from Table 3 below and the prepayment fee is computed as follows:
Prepayment Fee = (0.07 - 0.065) x (0.31) x ($250,000) = $387.50
FIXED RATE LOAN: An amortizing loan with remaining principal of $250,000 is
fully prepaid with 24 months remaining until maturity. An Initial Reference
Rate of 9.0% was assigned to the loan when the loan was made. The Final
Reference Rate (as determined by the current 24-month U.S. Treasure rate on Page
119 of Telerate) is 7.5%. Rates therefore have dropped 1.5% since the loan was
made and a prepayment fee applies. A prepayment fee factor of 1.3 is determined
from Table 1 below and the prepayment fee is computed as follows:
Prepayment Fee = (0.09 - 0.075) x (1.3) x (250,000) = $4,875
PREPAYMENT FEE FACTOR SCHEDULE
TABLE I: FULLY AMORTIZING LOANS
Proportion or Remaining Principal
Amount Being Prepaid Months Remaining To Maturity/Repricing(1)
---------------------------------------------------------------------------------
0 3 6 9 12 24 36 48 60 84 120 240 360
---------------------------------------------------------------------------------
90-100% 0 .21 .36 .52 .67 1.3 1.9 2.5 3.1 4.3 5.9 10.3 13.1
60-89% 0 .24 .44 .63 .83 1.6 2.4 3.1 3.9 5.4 7.5 13.2 17.0
30-59% 0 .28 .53 .78 1.02 2.0 3.0 4.0 5.0 7.0 9.9 18.5 24.4
0-29% 0 .31 .63 .92 1.22 2.4 3.7 5.0 6.3 9.0 13.4 28.3 41.8
TABLE II: PARTIALLY AMORTIZING (BALLOON) LOANS
Proportion or Remaining Principal
Amount Being Prepaid Months Remaining To Maturity/Repricing(1)
---------------------------------------------------------------------------------
0 3 6 9 12 24 36 48 60 84 120 240 360
---------------------------------------------------------------------------------
90-100% 0 .26 .49 .71 .94 1.8 2.7 3.4 4.2 5.6 7.4 11.6 14.0
60-89% 0 .30 .59 .86 1.15 2.2 3.3 4.3 5.3 7.1 9.4 15.0 18.1
30-59% 0 .31 .63 .95 1.27 2.6 3.9 5.3 6.6 9.1 12.6 21.2 26.2
0-29% 0 .31 .63 .95 1.27 2.6 4.0 5.4 7.0 10.2 15.7 33.4 46.0
TABLE III: NON-AMORTIZING (INTEREST ONLY) LOANS
Proportion or Remaining Principal
Amount Being Prepaid Months Remaining To Maturity/Repricing(1)
---------------------------------------------------------------------------------
0 3 6 9 12 24 36 48 60 84 120 240 360
---------------------------------------------------------------------------------
0-100% 0 .31 .61 .91 1.21 2.3 3.4 4.4 5.3 6.9 8.9 13.0 14.8
(1) For the remaining period to maturity/repricing between any two
maturities/repricings shown in the above schedules, interpolate between the
corresponding factors to the closest month.
The Bank is not required to actually reinvest the prepaid principal in any U.S.
Government Treasury Obligations, or otherwise prove its actual loss, as a
condition to receiving a prepayment fee as calculated above.
Data I/O Corporation
By: //S//XXXXXX X. XXXXXX
------------------------------------
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