TRADE FINANCE AGREEMENT
THIS AMENDED AND RESTATED TRADE FINANCE AGREEMENT ('Agreement') is made
and entered into as of July 15, 1998 by and between SanDisk Corporation, a
Delaware Corporation ('Borrower') and UNION BANK OF CALIFORNIA, N.A. ('Bank').
This Agreement amends and restates in its entirety that certain Trade Finance
Agreement dated July 1, 1996, as amended from time to time, between Bank and
Borrower.
SECTION 1. THE LOAN
1.1 The Trade Finance Credit Facility. Bank will extend to Borrower a
Trade Finance Credit Facility in an amount not to exceed Ten Million Dollars
($10,000,000); (the 'Trade Finance Credit Facility') to expire on July 15, 1999.
The Trade Finance Credit Facility shall be subject to the following sublimits:
a. The Clean Advance Line in an amount not to exceed Ten Million Dollars
($10,000,000);
b. The Standby L/C Line in an amount not to exceed Ten Million Dollars
($10,000,000);
1.1.1 Clean Advance Line. Bank will also make available an amount that
will not exceed the amount listed above (the 'Clean Advance Line') for
Borrower's working capital purposes. All advances under the Clean Advance Line
must be made on or before July 15, 1999, at which time all unpaid principal and
interest under the Clean Advance Line shall be due and payable. Borrower may
borrow, repay and reborrow all or part of the Clean Advance Line in accordance
with the terms of the Clean Advance Note. The Clean Advance Line shall be
evidenced by a Promissory Note (the 'Clean Advance Note') on the standard form
used by Bank for commercial loans. Bank shall enter each amount borrowed and
repaid in Bank's records and such entry shall be deemed to be the amount of the
Clean Advance Line outstanding. Omission by Bank to make any such entries shall
not discharge Borrower of its obligation to repay amounts borrowed in full with
interest.
1.1.2 The Standby L/C Sublimit. Bank shall issue, for the account of
Borrower, one or more irrevocable, standby letters of credit (individually, a
"Standby L/C' and collectively, the 'Standby L/Cs'). All such Standby L/Cs shall
be drawn on such terms and conditions as are acceptable to Bank and shall be
governed by the terms of (and Borrower agrees to execute) Bank's standard form
of Standby UC application and reimbursement agreement. The aggregate amount
available to be drawn under all outstanding Standby L/Cs and the aggregate
amount of unpaid reimbursement obligations under drawn Standby L/Cs shall not
exceed Ten Million Dollars ($10,000,000). No Standby L/C shall expire after July
15, 1999.
1.1.3 Trade Finance Revolving Lines and Limits. The aggregate amount
available to be drawn under each sublimit listed above shall be reduced, dollar
for dollar, by the aggregate amount of unpaid principal obligations under the
respective sublimit. The aggregate of all unpaid advances and reimbursement
obligations shall reduce, dollar for dollar, the maximum amount available under
the Trade Finance Credit Facility. Borrower may reborrow or obtain new
extensions of credit under each such sublimit until the expiration date of the
Trade Finance Credit Facility, to the extent that Borrower has paid or otherwise
satisfied prior borrowings or extensions of credit, subject to all terms and
conditions in the Loan Documents.
1.2 Terminology.
As used herein the word 'Loan' shall mean, collectively, all the credit
facilities described above.
As used herein the word 'Note' shall mean, collectively, all the promissory
notes described above.
As used herein, the words 'Loan Documents' shall mean all documents executed in
connection with this Agreement.
As used herein, the word 'L/C' shall mean all Commercial L/Cs and Standby L/Cs
described above.
1.3 Purpose of Loan. The proceeds of the Trade Finance Credit Facility
shall be used to finance Borrower's customary trade cycle. Proceeds of the Clean
Advance Line shall be used for general working capital purposes.
1.4 Interest. The unpaid principal balance of the Clean Advance Line
shall bear interest at the rate of zero percent (0%) per annum in excess of the
Reference Rate as more specifically provided in the Clean Advance Note.
1.5 Trade Finance Fees. All fees in connection with the Trade Finance
Credit Facility will be in accordance with Bank's standard schedule of fees as
published from time to time, except as follows: Standby L/C Issuance Fee shall
be at Four-Tenth's of One Percent (0.40%) per annum.
1.6 Balances. Borrower shall maintain its major depository accounts,
excluding its broker accounts, with Bank until the Note and all sums payable
pursuant to this Agreement have been paid in full.
1.7 Disbursement. Upon execution hereof, Bank shall disburse the
proceeds of the Loan as provided in Bank's standard form Authorization executed
by Borrower.
1.8 Controlling Document. In the event of any inconsistency between the
terms of this Agreement and any Note or any of the other Loan Documents, the
terms of such Note or other Loan Documents will prevail over the terms of this
Agreement.
SECTION 2. CONDITIONS PRECEDENT
Bank shall not be obligated to disburse all or any portion of the
proceeds of the Loan unless at or prior to the time for the making of such
disbursement, the following conditions have been fulfilled to Bank's
satisfaction:
2.1 Compliance. Borrower shall have performed and complied with all
terms and conditions required by this Agreement to be performed or complied with
by it prior to or at the date of the making of such disbursement and shall have
executed and delivered to Bank the Note and other documents deemed necessary by
Bank.
2.2 Borrowing Resolution. Borrower shall have provided Bank with
certified copies of resolutions duly adopted by the Board of Directors of
Borrower, authorizing this Agreement and the Loan Documents. Such resolutions
shall also designate the persons who are authorized to act on Borrower's behalf
in connection with this Agreement and to do the things required of Borrower
pursuant to this Agreement.
2.3 Continuing Compliance. At the time any UC is to be issued, there
shall not exist any event, condition or act which constitutes an event of
default under Section 6 hereof or any event, condition or act which with notice,
lapse of time
or both would constitute such event of default; nor shall there be
any such event, condition, or act immediately after the disbursement were it to
be made.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that:
3.1 Business Activity. The principal business of Borrower is the
manufacturing of flash storage products.
3.2 Affiliates and Subsidiaries. Borrower's affiliates and subsidiaries
(those entities in which Borrower has either a controlling interest or at least
a 25% ownership interest) and their addresses, and the names of Borrower's
principal shareholders, are as provided on a schedule delivered to Bank on or
before the date of this Agreement.
3.3 Authority to Borrow. The execution, delivery and performance of this
Agreement, the Note and all other agreements and instruments required by Bank in
connection with the Loan are not in contravention of any of the terms of any
indenture, agreement or undertaking to which Borrower is a party or by which it
or any of its property is bound or affected.
3.4 Financial Statements. The financial statements of Borrower,
including both a balance sheet at March 31, 1998 together with supporting
schedules, and an income statement for the three (3) months ended March 31,
1998, have heretofore been furnished to Bank, and are true and complete and
fairly represent the financial condition of Borrower during the period covered
thereby. Since March 31, 1998, there has been no material adverse change in the
financial condition or operations of Borrower.
3.5 Title. Except for assets which may have been disposed of in the
ordinary course of business, Borrower has good and marketable title to all of
the property reflected in its financial statements delivered to Bank and to all
property acquired by Borrower since the date of said financial statements, free
and clear of all liens, encumbrances, security interests and adverse claims
except those specifically referred to in said financial statements.
3.6 Litigation. There is no litigation or proceeding pending or
threatened against Borrower or any of its property which is reasonably likely to
affect the financial condition, property or business of Borrower in a materially
adverse manner or result in liability in excess of Borrower's insurance
coverage.
3.7 Default. Borrower is not now in default in the payment of any of its
material obligations, and there exists no event, condition or act which
constitutes an event of default under Section 6 hereof and no condition, event
or act which with notice or lapse of time, or both, would constitute an event of
default.
3.8 Organization. Borrower is duly organized and existing under the laws
of the state of its organization, and has the power and authority to carry on
the business in which it is engaged and/or proposes to engage.
3.9 Power. Borrower has the power and authority to enter into this
Agreement and to execute and deliver the Note and all of the other Loan
Documents.
3.10 Authorization. This Agreement and all things required by this
Agreement have been duly authorized by all requisite action of Borrower.
3.11 Qualification. Borrower is duly qualified and in good standing in
any jurisdiction where such qualification is required.
3.12 Compliance With Laws. Borrower is not in violation with respect to
any applicable laws, rules, ordinances or regulations which materially affect
the operations or financial condition of Borrower.
3.13 ERISA. Any defined benefit pension plans as defined in the Employee
Retirement Income Security Act of 1974, as amended ('ERISA'), of Borrower meet,
as of the date hereof, the minimum funding standards of Section 302 of ERISA,
and no Reportable Event or Prohibited Transaction as defined in ERISA has
occurred with respect to any such plan.
3.14 Regulation U. No action has been taken or is currently planned by
Borrower, or any agent acting on its behalf, which would cause this Agreement or
the Note to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities and
Exchange Act of 1934, in each case as in effect now or as the same may hereafter
be in effect. Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock as one of its important
activities and none of the proceeds of the Loan will be used directly or
indirectly for such purpose.
3.15 Continuing Representations. These representations shall be
considered to have been made again at and as of the date each L/C is issued and
of each disbursement of the Loan and shall be true and correct as of such date
or dates.
SECTION 4. AFFIRMATIVE COVENANTS
Until the Note and all sums payable pursuant to this Agreement or any
other of the Loan Documents have been paid in full, unless Bank waives
compliance in writing, Borrower agrees that:
4.1 Use of Proceeds. Borrower will use the proceeds of the Loan only as
provided in subsection 1.3 above.
4.2 Payment of Obligations. Borrower will pay and discharge promptly all
taxes, assessments and other governmental charges and claims levied or imposed
upon it or its property, or any part thereof, provided, however, that Borrower
shall have the right in good faith to contest any such taxes, assessments,
charges or claims and, pending the outcome of such contest, to delay or refuse
payment thereof provided that adequately funded reserves are established by it
to pay and discharge any such taxes, assessments, charges and claims.
4.3 Maintenance of Existence. Borrower will maintain and preserve its
existence and assets and all rights, franchises, licenses and other authority
necessary for the conduct of its business and will maintain and preserve its
property, equipment and facilities in good order, condition and repair. Bank
may, at reasonable times, visit and inspect any of the properties of Borrower.
4.4 Records. Borrower will keep and maintain full and accurate accounts
and records of its operations according to generally accepted accounting
principles and will permit Bank to have access thereto, to make examination and
photocopies thereof, and to make audits during regular business hours. Costs for
such audits shall be paid by Borrower.
4.5 Information Furnished. Borrower will furnish to Bank:
(a) Within forty five (45) days after the close of each fiscal quarter,
except for the final quarter of each fiscal year, its unaudited balance sheet as
of the close of such fiscal quarter, its unaudited income and expense statement
with supportive schedules and statement of retained earnings for that fiscal
quarter, prepared in accordance with generally accepted accounting principles;
(b)Within one hundred twenty (1 20) days after the close of each fiscal
year, a copy of its statement of financial condition including at least its
balance sheet as of the close of such fiscal year, its income and expense
statement and retained earnings statement for such fiscal year, examined and
prepared on an audited basis by independent certified public accountants
selected by Borrower and reasonably satisfactory to Bank, in accordance with
generally accepted accounting principles applied on a basis consistent with that
of the previous year;
(c) Such other financial statements and information as Bank may
reasonably request from time to time;
(d) In connection with each financial statement provided hereunder, a
statement executed by chief financial officer of Borrower, certifying that no
default has occurred and no event exists which with notice or the lapse of time
or both, would result in a default hereunder,
(e)Prompt written notice to Son-k of all events of default under any of
the terms or p of this Agreement or of any other agreement, contract, document
or instrument entered, or to be entered into with Bank, and of any litigation
which, if decided adversely to Borrower, would have a material adverse effect on
Borrower's financial condition, and of any other matter which has resulted in,
or is likely to result in, a material adverse change in its financial condition
or operations, and
(f) Prior written notice to Bank of any changes in Borrower's officers
and other senior management; Borrower's name; and location of Borrower's assets,
principal place of business or chief executive office.
4.6 Quick Ratio. Borrower shall maintain at all times a ratio of cash,
accounts receivable and marketable securities to current liabilities of not less
than 2.25:1.0, as such terms are defined by generally accepted accounting
principals. Bank Line and Deferred Revenues shall be included in current
liabilities.
4.7 Tangible Net Worth. Borrower will at all times maintain Tangible Net
Worth of not less than One Hundred Seventy Million Dollars ($170,000,000) plus
50% of Net Profit after Taxes. "Tangible Net Worth" shall mean net worth
increased by indebtedness of Borrower subordinated to Bank and decreased by
patents, licenses, trademarks, trade names, goodwill and other similar
intangible assets, organizational expenses, and monies due from affiliates
(including officers, shareholders and directors).
4.8 Debt To Tangible Net Worth. Borrower will at all times maintain a
ratio of total liabilities to tangible net worth of not grater than 0.5:1.0.
"Tangible Net Worth" shall mean net worth increased by indebtedness of Borrower
subordinated to Bank and decreased by patents, licenses, trademarks, trade
names, goodwill and other similar intangible assets, organizational expenses,
and monies due from affiliates (including officers, shareholders and directors).
4.9 Profitability. Borrower will maintain a net profit, after provision
for income taxes, of any positive amount, for any two consecutive fiscal
quarters, as reported at the end of each such fiscal quarter. Net profit after
tax for any fiscal quarter will not reflect a loss greater than five percent
(5%) of Tangible Net Worth as of the last day of the immediately preceding
fiscal quarter.
4.10 Insurance. Borrower will keep all of its insurable property, real,
personal or mixed, insured by good and responsible companies against fire and
such other risks as are customarily insured against by companies conducting
similar business with respect to like properties. Borrower will maintain
adequate worker's compensation insurance and adequate insurance against
liability for damages to persons and property.
4.11 Additional Requirements. Borrower will promptly, upon demand by
Bank, take such further action and execute all such additional documents and
instruments in connection with this Agreement as Bank in its reasonable
discretion deems necessary, and promptly supply Bank with such other information
concerning its affairs as Bank may request from time to time.
4.12 Litigation and Attorneys' Fees. Borrower will pay promptly to Bank
upon demand, reasonable attorneys' fees (including but not limited to the
reasonable estimate of the allocated costs and expenses of in-house legal
counsel and legal staff) and all costs and other expenses paid or incurred by
Bank in collecting, modifying or compromising the Loan or in enforcing or
exercising its rights or remedies created by, connected with or provided for in
this Agreement or any of the Loan Documents, whether or not an arbitration,
judicial action or other proceeding is commenced. If such proceeding is
commenced, only the prevailing party shall be entitled to attorneys' fees and
court costs.
4.13 Bank Expenses. Borrower will pay or reimburse Bank for all costs,
expenses and fees incurred by Bank in preparing and documenting this Agreement
and the loan, and all amendments and modifications thereof, including but not
limited to all filing and recording fees, costs of appraisals, insurance and
attorneys' fees, including the reasonable estimate of the allocated costs and
expenses of in-house legal counsel and legal staff.
4.14 Reports Under Pension Plans. Borrower will furnish to Bank, as soon
as possible and in any event within 15 days after Borrower knows or has reason
to know that any event or condition with respect to any defined benefit pension
plans of Borrower described in Section 3 above has occurred, a statement of an
authorized officer of Borrower describing such event or condition and the
action, if any, which Borrower proposes to take with respect thereto.
SECTION 5. NEGATIVE COVENANTS
Until the Note and all other sums payable pursuant to this Agreement or any
other of the Loan Documents have been paid in full, unless Bank waives
compliance in writing, Borrower agrees that:
5.1 Encumbrances and Liens. Borrower will not create, assume or suffer
to exist any mortgage, pledge, security interest, encumbrance, or lien (other
than for taxes not delinquent and for taxes and other items being contested in
good faith) on property of any kind, whether real, personal or mixed, now owned
or hereafter acquired, or upon the income or profits thereof, except to Bank and
except for minor encumbrances and easements on real property which do not affect
its market value, and except for existing liens on Borrower's personal property
and future purchase money security interests encumbering only the personal
property purchased.
5.2 Borrowings. Borrower will not sell, discount or otherwise transfer
any account receivable or any note, draft or other evidence of indebtedness,
except to Bank or except to a financial institution at face value for deposit or
collection purposes only and without any fee other than fees normally charged by
the financial institution for deposit or collection services. Borrower will not
borrow any money, become contingently liable to borrow money, nor enter any
agreement to directly or indirectly obtain borrowed money, except pursuant to
agreements made with Bank.
5.3 Sale of Assets, Liquidation or Merger. Borrower will neither
liquidate nor dissolve nor enter into any consolidation, merger, partnership or
other combination, nor convey, nor sell, nor lease all or the greater part of
its assets or business, nor purchase or lease all or the greater part of the
assets or business of another.
5.4 Loans, Advances and Guaranties. Borrower will not, except in the
ordinary course of business as currently conducted, make any loans or advances,
become a guarantor or surety, pledge its credit or properties in any manner or
extend credit.
5.5 Investments. Borrower will not purchase the debt or equity of
another person or entity except for savings accounts and certificates of deposit
of Bank, direct U.S. Government obligations and commercial paper issued by
corporations with the top ratings of Xxxxx'x or Standard & Poor's, and those
eligible instruments outlined in Borrower's investment policy provided to Bank,
provided all such permitted investments shall mature with in 30 months of
purchase. An additional cash investment in USI, a semiconductor manufacturing
venture headed by UMC is permitted, provided the investment does not exceed
Twenty Million Dollars ($20,000,000) in fiscal year 1998.
5.6 Payment of Dividends. Borrower will not declare or pay any
dividends, other than a dividend payable in its own common stock, or authorize
or make any other distribution with respect to any of its stock now or hereafter
outstanding.
5.7 Retirement of Stock. Borrower will not acquire or retire any share
of its capital stock for value.
5.8 Parent and Subsidiary Property. Borrower will not transfer any
property to its parent or any affiliate of its parent, except for value received
in the normal course of business as business would be conducted with an
unrelated or unaffiliated entity. In no event shall management fees or fees for
services be paid by Borrower to any such direct or indirect affiliate without
Bank's prior written approval.
5.9 Capital Expenditures. Borrower will not make capital expenditures in
excess of Fifteen Million Dollars ($15,000,000) in any fiscal year; and shall
only make such expenditures as are necessary for Borrower in the conduct of its
ordinary course of business. Each said expenditure shall be needed by Borrower
in the ordinary course of its business.
Expenditures as used in this subsection shall include the current expense
portion of all leases whether or not capitalized and shall also include the
current portion of any debt used to finance capital expenditures.
SECTION 6. EVENTS OF DEFAULT
The occurrence of any of the following events ('Events of Default')
shall terminate any obligation on the part of Bank to make or continue the Loan
and automatically, unless otherwise provided under the Note, shall make all sums
of interest and principal and any other amounts owing under the Loan immediately
due and payable, without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, or any other notices or demands:
6.1 Borrower shall default in the due and punctual payment of the
principal of or the interest on the Note or any of the other Loan Documents; or
6.2 Any default shall occur under the Note; or
6.3 Borrower shall default in the due performance or observance of any
covenant or condition of the Loan Documents;
6.4 Any guaranty or subordination agreement required hereunder is
breached or becomes ineffective, or any Guarantor or subordinating creditor
dies, disavows or attempts to revoke or terminate such guaranty or subordination
agreement; or
6.5 There is a change in ownership or control of ten percent (1 0%) or
more of the issued and outstanding stock of Borrower.
SECTION 7. MISCELLANEOUS PROVISIONS
7.1 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
lion.
7.2 Non waiver. Any forbearance or failure or delay by Bank in
exercising any right, power or remedy hereunder shall not be deemed a waiver
thereof and any single or partial exercise of any right, power or remedy shall
not precede the further exercise thereof. No waiver shall be effective unless it
is in writing and signed by an officer of Bank.
7.3 Inurement. The benefits of this Agreement shall inure to the
successors and assigns of Bank and the permitted successors and assignees of
Borrower, and any assignment of Borrower without Bank's consent shall be null
and void.
7.4 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.
7.5 Severability. Should any one or more provisions of this Agreement be
determined to be illegal or unenforceable, all other provisions nevertheless
shall be effective.
7.6 Integration Clause. Except for documents and instruments
specifically referenced herein, this 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.
7.7 Construction. The section and subsection headings herein are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
7.8 Amendments. This Agreement may be amended only in writing signed by
all parties hereto.
7.9 Counterparts. Borrower and Bank may execute one or more counterparts
to this Agreement, each of which shall be deemed an original.
SECTION 8. SERVICE OF NOTICES
8.1 Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following methods and
addressed to the respective party at its address given with the signatures at
the end of this Agreement and shall be considered to have been validly given:
(a) upon delivery, if delivered personally; (b) upon receipt, if mailed, first
class postage prepaid, with the United States Postal Service; (c) on the next
business day, if sent by overnight courier service of recognized standing; and
(d) upon telephoned confirmation of receipt, if telecopied.
8.2 The addresses to which notices or demands are to be given may be
changed from time to time by notice delivered as provided above.
THIS AGREEMENT is executed on behalf of the parties by duly authorized officers
as of the date first above written.
UNION BANK OF CALIFORNIA, N.A. SANDISK CORPORATION, A
DELAWARE DELAWARE CORPORATION
------------------------------------ -----------------------------------
Xxxx Xxxxx Xxx Xxxxxx
Vice President President & CEO
------------------------------------ -----------------------------------
JamesGoudy Xxxxx Xxxxxxxx
Vice President SVP & CFO
UNION
BANK OF
CALIFORNIA
PROMISSORY NOTE
(BASE RATE)
Borrower Name: SANDISK CORPORATION
Borrower Address: 000 XXXXXXX XXXXX, XXXXXXXXX, XX. 00000
Office: 64561
Loan Number: 8159632704 0080000000
Maturity Date: JULY 15, 1999
Amount: $10,000,000.00
$10,000,000.00 Date JULY 15, 1998
FOR VALUE RECEIVED, on JULY 15, 1999, the undersigned ("Debtor") promises to pay
to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank'), as indicated below, the
principal sum of TEN MILLION AND NO/1 00 Dollars ($1 0,000,000,00), or so much
thereof as is disbursed, together with interest on the balance of such principal
from time to time outstanding, at the per annum rate or rates and at the times
set forth below.
1. INTEREST PAYMENTS. Debtor shall pay interest on the 1 5TH day of each QUARTER
(commencing OCTOBER 15, 1998). Should interest not be paid when due, it shall
become part of the principal and bear interest as herein provided. All
computations of interest under this note shall be made on the basis of a year of
360 days, for actual days elapsed.
a. BASE INTEREST RATE. At Debtor's option, amounts outstanding hereunder
in minimum amounts of at least $1 00,000.00 shall bear interest at a
rate, based on an index selected by Debtor, which is 1.00% per annum in
excess of Bank's LIBOR-Rate for the Interest Period selected by Debtor,
acceptable to Bank.
No Base Interest Rate may be changed, altered or otherwise modified
until the expiration of the Interest Period selected by Debtor. The
exercise of interest rate options by Debtor shall be as recorded in
Bank's records, which records shall be prima facie evidence of the
amount borrowed under either interest option and the interest rate;
provided, however, that failure of Bank to make any such notation in its
records shall not discharge Debtor from its obligations to repay in full
with interest all amounts borrowed. In no event shall any Interest
Period extend beyond the maturity date of this note.
To exercise this option, Debtor may, from time to time with respect to
principal outstanding on which a Base Interest Rate is not accruing, and
on the expiration of any Interest Period with respect to principal
outstanding on which a Base Interest Rate has been accruing, select an
index offered by Bank for a Base Interest Rate Loan and an Interest
Period by telephoning an authorized lending officer of Bank located at
the banking office identified below prior to 1 0:00 a.m., Pacific time,
on any Business Day and advising that officer of the selected index, the
Interest Period and the Origination Date selected (which Origination
Date, for a Base Interest Rate Loan based on the LIBOR-Rate, shall
follow the date of such selection by no more than two (2) Business
Days).
Bank will mail a written confirmation of the terms of the selection to
Debtor promptly after the selection is made. Failure to send such
confirmation shall not affect Bank's rights to collect interest at the
rate selected. If, on the date of the selection, the index selected is
unavailable for any reason, the selection shall be void. Bank reserves
the right to fund the principal from any source of funds notwithstanding
any Base Interest Rate selected by Debtor.
b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is
not bearing interest at a Base Interest Rate shall bear interest at a
rate per annum equal to the Reference Rate, which rate shall vary as and
when the Reference Rate changes.
At any time prior to the maturity of this note, subject to the
provisions of paragraph 4, below, of this note, Debtor may borrow, repay
and reborrow hereon so long as the total outstanding at any one time
does not exceed the principal amount of this note. Debtor shall pay all
amounts due under this note in lawful money of the United States at
Bank's SANTA XXXXX VALLEY CBO Office, or such other office as may be
designated by Bank, from time to time.
-1-
2. LATE PAYMENTS. If any payment required by the terms of this note shall remain
unpaid ten days after same is due, at the option of Bank, Debtor shall pay a fee
of $100 to Bank.
3. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this note at a per annum rate equal to five percent
(5%) in excess of the interest rate specified in paragraph l..b, above,
calculated from the date of default until all amounts payable under this note
are paid in full.
4. PREPAYMENT.
a. Amounts outstanding under this note bearing interest at a rate based
on the Reference Rate may be prepaid in whole or in part at any time,
without penalty or premium. Debtor may prepay amounts outstanding under
this note bearing interest at a Base Interest Rate in whom or in part
provided Debtor has given Bank not less than five (5) Business Days
prior written notice of Debtor's intention to make such prepayment and
pays to Bank the liquidated damages due as a result. Liquidated Damages
shall also be paid, if Bank, for any other reason, including
acceleration or foreclosure, receives all or any portion of principal
bearing interest at a Base Interest Rate prior to its scheduled payment
date. Liquidated Damages shall be an amount equal to the present value
of the product of: (i) the difference (but not less than zero) between
(a) the Base Interest Rate applicable to the principal amount which is
being prepaid, and lb) the return which Bank could obtain if it used
the amount of such prepayment of principal to purchase at bid price
regularly quoted securities issued by the United States having a
maturity date most closely coinciding with the relevant Base Rate
Maturity Date and such securities were hold by Bank until the relevant
Base Rate Maturity Date ("Yield Rate"); (ii) a fraction, the numerator
of which is the number of days in the period between the date of
prepayment and the relevant Base Rate Maturity Date and the denominator
of which is 360; and (iii) the amount of the principal so prepaid
(except in the event that principal payments are required and have been
made as scheduled under the terms of the Base Interest Rate Loan being
prepaid, then an amount equal to the lesser of (A) the amount prepaid
or (B) 50% of the sum of (1) the amount prepaid and (2) the amount of
principal scheduled under the terms of the Base Interest Rate Loan
being prepaid to be outstanding at the relevant Base Rate Maturity
Date). Present value under this note is determined by discounting the
above product to present value using the Yield Rate as the annual
discount factor.
b. In no event shall Bank be obligated to make any payment or refund to
Debtor, nor shall Debtor be entitled to any setoff or other claim
against Bank, should the return which Bank could obtain under this
prepayment formula exceed the interest that Bank would have received if
no prepayment had occurred. All prepayments shall include payment of
accrued interest on the principal amount so prepaid and shall be applied
to payment of interest before application to principal. A determination
by Bank as to the prepayment fee amount, if any, shag be conclusive.
c. Bank shall provide Debtor a statement of the amount payable on
account of prepayment. Debtor acknowledges that (1) Bank establishes a
Base Interest Rate upon the understanding that it apply to the Base
Interest Rate Loan for the entire Interest Period, and (ii) any
prepayment may result in Bank incurring additional costs, expenses or
liabilities; and Debtor agrees to pay these liquidated damages as a
reasonable estimate of the costs, expenses and liabilities of Bank
associated with such prepayment.
5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but not
be limited to, any of the following: (a) the failure of Debtor to make any
payment required under this note when due; (b) any breach, misrepresentation or
other default by Debtor, any guarantor, co-maker. endorser, or any person or
entity other than Debtor providing security for this note (hereinafter
individually and collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement between Bank and any Obligor; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to any Obligor
of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
relief; (e) the assignment by any Obligor for the benefit of such Obligor's
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this note; (j) the
failure of any Obligor to comply with any order, judgment, injunction, decree.
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice of
levy, notice to withhold, or other legal process for taxes other than property
taxes; (1) the default by any Obligor personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself, in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare all obligations under this note
immediately due and payable; however, upon the occurrence of an event of default
under d, e, f, or g, all principal and interest shall automatically become
immediately due and payable.
6. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note are not
paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the collection or enforcement of
this note. Debtor and any endorsers of this note. for the maximum period of time
and the full extent permitted by law, (a) waive diligence, presentment, demand,
notice of nonpayment, protest, notice of protest, and notice of every kind; (b)
waive the right to assert the defense of any statute of limitations to any debt
or obligation hereunder; and (c) consent to renewals and extensions of time for
the payment of any amounts due under this note. The receipt of any check or
other item of payment by Bank, at its option, shall not be considered a payment
on account until such check or other item of payment is honored when presented
for payment at the drawee bank. Bank may delay the credit of such payment based
upon Bank's schedule of funds availability, and interest under this note shall
accrue until the funds are deemed collected. In any action brought under or
arising out of this note, Debtor and any Obligor, including their successors and
assigns, hereby consent to the jurisdiction of any competent court within the
State of
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California, as provided in any alternative dispute resolution agreement
executed between Debtor and Bank, and consent to service of process by any means
authorized by said state's law. The term "Bank' includes, without limitation,
any holder of this note. This note shall be construed in accordance with and
governed by the laws of the State of California.
7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: 'Base Interest Rate' means a rate of interest
based on the LIBOR-Rate. "Base Interest Rate Loan" means amounts outstanding
under this note that bear interest at a Base Interest Rate. 'Base Rate Maturity
Date" means the last day of the Interest Period with respect to principal
outstanding under a Base Interest Rate Loan. 'Business Day' means a day on which
Bank is open for business for the funding of corporate loans, and, with respect
to the rate of interest based on the LIBOR Rate, on which dealings in U.S.
dollar deposits outside of the United States may be carried on by Bank.
"Interest Period' means with respect to funds bearing interest at a rate based
on the LIBOR Rate, any calendar period of [one, two or three weeks or one, two,
three, four, five, six, nine or twelve months]. In determining an Interest
Period, a month means a period that starts on one Business Day in a month and
ends on and includes the day preceding the numerically corresponding day in the
next month. For any month in which there is no such numerically corresponding
day, then as to that month, such day shall be deemed to be the last calendar day
of such month. Any Interest Period which would otherwise and on a non-Business
Day shall end on the next succeeding Business Day unless that is the first day
of a month, in which event such Interest Period shall end on the next preceding
Business Day. "LIBOR Rate" means a per annum rate of interest (rounded upward,
if necessary, to the nearest I /1 00 of 1%) at which dollar deposits, in
immediately available funds and in lawful money of the United States would be
offered to Bank, outside of the United States, for a term coinciding with the
Interest Period selected by Debtor and for an amount equal to the amount of
principal covered by Debtor's interest rate selection, plus Bank's costs,
including the costs, if any, of reserve requirements. 'Origination Date' means
the first day of the interest Period. "Reference Rate" means the rate announced
by Bank from time to time at its corporate headquarters as its Reference Rate.
The Reference Rate is an index rate determined by Bank from time to time as a
means of pricing certain extensions of credit and is neither directly tied to
any external rate of interest or index nor necessarily the lowest rate of
interest charged by Bank at any given time.
SANDISK CORPORATION
By
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Xxx Xxxxxx, President & CEO
By
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Xxxxx X. Xxxxxxxx, SVP & CFO
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