FIRST AMENDMENT TO
LOAN AGREEMENT
BETWEEN
STATE STREET BANK AND TRUST COMPANY
AND
STORAGE COMPUTER CORPORATION
AUGUST 20, 1996
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") is made and entered into as of
August 20, 1996 by and between STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000-0000 (the "Bank") and STORAGE
COMPUTER CORPORATION, a Delaware corporation having its principal place of
business at 00 Xxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxxxxx 00000 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Bank and the Borrower are parties to a Loan Agreement
dated as of August 4, 1995 (the "Original Loan Agreement"), pursuant to which
the Bank has established a line of credit for the Borrower, on the terms and
conditions set forth therein, in the maximum principal amount of Six Million
Dollars ($6,000,000) (the "Original Line of Credit"); and
WHEREAS, the Original Line of Credit is evidenced by the Borrower's
Line of Credit Note dated August 4, 1995 in the maximum principal amount of
$6,000,000 (the "Original Note"); and
WHEREAS, the Borrower has requested that the Bank (i) increase the Line
of Credit from $6,000,000 to $10,000,000, (ii) make letter of credit borrowings
available thereunder, and (iii) to make certain other amendments to the Original
Loan Agreement as hereinafter set forth; and
WHEREAS, the Bank is willing to accommodate the Borrower's requests on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Amendment, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Original Loan Agreement or the Affiliate
Subordination Agreement, as the context so requires.
2. The following respective definitions in Section 1.01 of the
Original Loan Agreement are hereby replaced in their entirety with the
following:
"Line of Credit" shall mean the line of credit made available to
the Borrower under this Agreement in the maximum principal amount of
Ten Million Dollars ($10,000,000).
"Maximum Line Availability" shall mean Ten Million Dollars
($10,000,000).
"Note" shall mean the unsecured Amended and Restated Line of Credit
Note dated the Closing Date (as amended and restated as of August 20,
1996) in the maximum
principal amount of Ten Million Dollars ($10,000,000) issued by the
Borrower to the Bank in the form of Exhibit A annexed hereto, and all
extensions, renewals, modifications, substitutions, restatements,
replacements and amendments thereof.
"Review Date" shall mean May 31, 1997, the date upon which the
Line of Credit shall be due and payable in full, unless the payment
thereof is earlier made, whether upon demand, prepayment or otherwise,
or unless such date is extended in writing by the Bank in its sole
discretion."
4. There is hereby added the following provision as new Section 2.11 to
the Loan Agreement:
"2.11. LETTERS OF CREDIT; REDUCTION OF AVAILABILITY UNDER THE LINE OF
CREDIT.
(a) STANDBY LETTERS OF CREDIT. If requested by the Borrower prior to
the earlier of demand or the Review Date, the Bank will issue one or more
standby letters of credit, for the purpose of providing credit support for a
Taiwanese supplier relationship, pursuant to one or more of the Bank's standard
standby letter of credit agreements, for the account of the Borrower, in amounts
in the aggregate not to exceed the lesser of (i) Two Million Dollars
($2,000,000), or (ii) the unused availability under the Maximum Line
Availability.
(b) REDUCTION OF MAXIMUM LINE AVAILABILITY. The face amount of the
letters of credit in the aggregate shall reduce the Maximum Line Availability on
a dollar for dollar basis.
(c) EXPIRATION DATES. All such letters of credit shall expire within
one year of their issuance.
(d) LOANS. All amounts paid out under such letters of credit shall be
deemed to be Loans, evidenced by the Note.
(e) FEES. In addition to all other fees and charges payable hereunder
and under the Note, the Borrower shall pay to the Bank (i) concurrently with the
issuance of each letter of credit, the Bank's standard issuance and transmittal
fees, and (ii) while any letter of credit is outstanding for the account of the
Borrower, a fee of one and one-half percent (12%) per annum on the face amount
of outstanding letters of credit, calculated on the basis of a year of 360 days
counting the actual number of days elapsed, shall be payable annually in
advance."
5. Section 7.02 of the Loan Agreement is hereby amended as follows:
"7.02. QUICK RATIO. A Quick Ratio greater than or equal to 1.25:1.00."
6. The Original Note and Exhibit A to the Loan Agreement are hereby
amended in their entirety to read as set forth in Attachment I to this
Amendment. In order to evidence such changes in the Original Note, the Borrower
shall issue to the Bank on the date hereof a new note
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(the "Replacement Note") in the form of Attachment I annexed hereto in
replacement and substitution of the Original Note. The Replacement Note shall
not constitute a satisfaction or a novation of the Original Note, but merely a
replacement thereof.
7. To induce the Bank to enter into this Amendment, the Borrower hereby
represents and warrants that on the date hereof, there exists neither an "Event
of Default" under the Original Loan Agreement, the Original Note or the
Affiliate Subordination Agreement (or under any other agreement or document
executed in connection with the foregoing), nor any event which would constitute
such an Event of Default but for the passage of time, or for the giving of
notice, or both. The Borrower hereby restates and reaffirms as of the date
hereof all of the representations and warranties set forth in Article III of the
Loan Agreement, as amended by this Amendment, except that for the purposes of
such restated representations and warranties, all references hereto to the
"Agreement" shall be deemed to refer to the Original Loan Agreement as amended
hereby, and the use of "hereunder", "herein", and words of similar import shall
be deemed to refer to the Original Loan Agreement, as amended hereby, and all
references to the Original Note shall be deemed to refer to the Replacement
Note. All covenants and agreements of the Borrower contained in Articles V, VI
and VII of the Loan Agreement and all Events of Default and remedies contained
in Article VIII of the Loan Agreement, except as may be amended hereby, are
hereby incorporated in this Amendment by reference as though specifically set
forth herein.
8. The Borrower hereby confirms and agrees that each and every
reference to the "Agreement" or the "Loan Agreement" in the Loan Agreement and
the Exhibits thereto and in any other loan document executed in connection
therewith shall hereinafter be deemed to refer to the Original Loan Agreement as
amended hereby.
9. The Borrower hereby confirms and agrees that each and every
reference to the "Note" or the "Line of Credit Note" in the Loan Agreement and
the Exhibits thereto and in any other loan document executed in connection
therewith shall hereinafter be deemed to refer to the Replacement Note in its
new principal amount.
10. In addition to the conditions set forth in Article IV of the Loan
Agreement, the Bank's obligation to enter into this Amendment is subject to the
following conditions:
(i) the Borrower shall have delivered to the Bank the following:
(1) the Replacement Note, an Agreement of Consent, Amendment
and Confirmation of Security Documents between the Bank and
the Borrower, and such other agreements, documents,
certificates, resolutions, schedules and/or exhibits as may be
necessary or desirable to further the purposes of this
Amendment;
(2) any and all amendments to Certificate of Incorporation, if
any, since the execution of the Original Loan Agreement, to
the extent not previously delivered to the Bank, certified by
the Secretary of the State of the Borrower's incorporation;
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(3) a certificate of the Secretary of the Borrower certifying
as to: (a) the incumbency and signature of its officers; (b)
adoption of resolutions of its Board of Directors authorizing
the execution, delivery and performance of this Amendment, the
Replacement Note and of all other instruments, agreements,
documents or certificates contemplated by the Amendment; and
(c) the accuracy and completeness of its charter documents and
by-laws as previously delivered to the Bank or as amended; and
(4) such other supporting agreements, certificates and
documents as the Bank may reasonably request.
(ii) the Bank shall have received an opinion of counsel to the Borrower
to the effect that (a) the execution, delivery and performance by the Borrower
of this Amendment, the Replacement Note and any other agreement executed in
connection herewith, have been duly authorized by all requisite corporate action
of the Borrower and constitutes the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their terms, and (b) such other matters
as the Bank may reasonably request.
11. The execution, delivery and performance of this Amendment and the
Replacement Note by the Borrower have been duly authorized by all requisite
corporate action, are legal, valid and binding on the Borrower, and will not
violate any provision of law, any order, judgment or decree of any court or
other agency of government, or the organizational documents of the Borrower or
any instrument to which the Borrower is a party or by which the Borrower is
bound.
12. The Borrower will pay all out-of-pocket expenses, cost and charges
incurred by the Bank (including reasonable fees and disbursements of counsel) in
connection with the preparation and implementation of this Amendment and the
transactions contemplated hereby and the documents and instruments to be
delivered pursuant hereto.
13. Except as specifically amended hereby, the Original Loan Agreement
and Replacement Note and all instruments and documents executed in connection
therewith, shall remain in full force and effect, and are hereby ratified and
affirmed in all respects.
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IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Amendment to be duly executed as a sealed instrument by their duly authorized
representatives, all as of the day and year first above written.
STATE STREET BANK AND TRUST COMPANY
By: /s/ L. Xxx Xxxxxxx
------------------------------
L. Xxx Xxxxxxx
Vice President
ATTEST: STORAGE COMPUTER CORPORATION
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxxxxx Xxxxxxxxxx
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Secretary Xxxxxxxx Xxxxxxxxxx
Chief Executive Officer
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