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EXHIBIT 10.10
SILICON VALLEY BANK
SCHEDULE TO LOAN AGREEMENT
BORROWER: QLOGIC CORPORATION
ADDRESS: 3545 HARBOR BOULEVARD, P.O. BOX 5001
COSTA MESA, CALIFORNIA 92628
DATED AS OF: JULY 6, 1998
CREDIT LIMIT
(Section 1.1): An amount not to exceed $7,500,000; Provided, however, that the
minimum amount of a Loan shall be $100,000;
LETTER OF CREDIT SUBLIMIT Silicon, in its reasonable discretion, will from time to time
during the term of this Agreement issue letters of credit for the
account of the Borrower ("Letters of Credit"), in an aggregate
amount at any one time outstanding not to exceed $3,000,000, upon
the request of the Borrower, provided that, on the date the Letters
of Credit are to be issued, Borrower has available to it Loans in
an amount equal to or greater than the face amount of the Letters
of Credit to be issued. Prior to the issuance of any Letters of
Credit, Borrower shall execute and deliver to Silicon Applications
for Letters of Credit and such other documentation as Silicon shall
specify (the "Letter of Credit Documentation"). Fees for the
Letters of Credit shall be as provided in the Letter of Credit
Documentation. The Credit Limit set forth above and the Loans
available under this Agreement at any time shall be reduced by the
face amount of Letters of Credit from time to time outstanding.
INTEREST RATE (Section 1.2): A rate equal to the "Prime Rate" in effect from time to time.
Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. "Prime Rate" means the rate
announced from time to time by Silicon as its "prime rate;" it is a
base rate upon which other rates charged by Silicon are based, and
it is not necessarily the best rate available at Silicon. The
interest rate applicable to the Obligations shall change on each
date there is a change in the Prime Rate.
LOAN FEE (Section 1.3): See Amendment to Loan Agreement of even date herewith.
MATURITY DATE (Section 5.1): JULY 5, 1999.
PRIOR NAMES OF BORROWER
(Section 3.2): EMULEX MICRO DEVICES (EMD) A DIVISION OF EMULEX CORPORATION
TRADE NAMES OF BORROWER
(Section 3.2): NONE
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SILICON VALLEY BANK SCHEDULE TO LOAN AGREEMENT
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OTHER LOCATIONS AND ADDRESSES
(Section 3.3): 150 INDUSTRIAL AVE. EAST, SUITE 39, LOWELL, MA 01852
MATERIAL ADVERSE LITIGATION
(Section 3.10): NONE
NEGATIVE COVENANTS-EXCEPTIONS
(Section 4.6): Without Silicon's prior written consent, Borrower may do the
following, provided that, after giving effect thereto, no Event of
Default has occurred and no event has occurred which, with notice
or passage of time or both, would constitute an Event of Default,
and provided that the following are done in compliance with all
applicable laws, rules and regulations: (i) repurchase shares of
Borrower's stock pursuant to any employee stock purchase or benefit
plan, provided that the total amount paid by Borrower for such
stock does not exceed $1,000,000 in any fiscal year and (ii) make
employee loans in an aggregate amount outstanding at any time not
to exceed $50,000.
FINANCIAL COVENANTS
(Section 4.1): Borrower shall comply with all of the following covenants.Compliance
shall be determined as of the end of each quarter, except as
otherwise specifically provided below:
QUICK ASSET RATIO: Borrower shall maintain a ratio of "Quick Assets" to current
liabilities of not less than 1.50 to 1.
TANGIBLE NET WORTH: Borrower shall maintain a tangible net worth of not less than
$75,000,000.
DEBT TO TANGIBLE
NET WORTH RATIO: Borrower shall maintain a ratio of total liabilities to tangible
net worth of not more than 1.00 to 1.
PROFITABILITY: Borrower shall not incur a loss (after taxes) for any fiscal quarter
during the term hereof, other than for a loss (after taxes) in a single
fiscal quarter; notwithstanding the foregoing permitted loss, Borrower
shall not incur a loss (after taxes) for any fiscal year.
DEFINITIONS: "Current assets," and "current liabilities" shall have the meanings
ascribed to them in accordance with generally accepted accounting
principles.
"Tangible net worth" means the excess of total assets over total
liabilities, determined in accordance with generally accepted accounting
principles, excluding however all assets which would be classified as
intangible assets under generally accepted accounting principles,
including without limitation goodwill, licenses, patents, trademarks,
trade names, copyrights, capitalized software and organizational costs,
licenses and franchises.
"Quick Assets" means cash on hand or on deposit in banks, readily
marketable securities issued by the United States, readily marketable
commercial paper rated "A-1" by Standard & Poor's Corporation (or a
similar rating by a similar rating organization), certificates of
deposit and banker's acceptances, and accounts receivable (net of
allowance for doubtful accounts).
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SILICON VALLEY BANK SCHEDULE TO LOAN AGREEMENT
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DEFERRED REVENUES: For purposes of the above quick asset ratio deferred revenues shall
not be counted as current liabilities. For purposes of the above
debt to tangible net worth ratio, deferred revenues shall not be
counted in determining total liabilities but shall be counted in
determining tangible net worth for purposes of such ratio. For all
other purposes deferred revenues shall be counted as liabilities in
accordance with generally accepted accounting principles.
SUBORDINATED DEBT: "Liabilities" for purposes of the foregoing covenants do not
include indebtedness which is subordinated to the indebtedness to
Silicon under a subordination agreement in form specified by
Silicon or by language in the instrument evidencing the
indebtedness which is acceptable to Silicon.
OTHER COVENANTS
(Section 4.1): Borrower shall at all times comply with all of the following
additional covenants:
1. BANKING RELATIONSHIP. Borrower shall at all times maintain its
primary banking relationship with Silicon, provided that the
foregoing shall not restrict the Borrower's establishment of
investment accounts at other institutions.
2. INDEBTEDNESS. Without limiting any of the foregoing terms or
provisions of this Agreement, Borrower shall not in the future
incur indebtedness for borrowed money, except for (i) indebtedness
to Silicon, (ii) indebtedness incurred in the future for the
purchase price of or lease of equipment in an aggregate amount not
exceeding $3,500,000 on an annual basis, and (iii) the creation of
trade payable obligations in the ordinary course of business.
3. SEC FILINGS AND COMMUNICATIONS. Without limitation of the
provisions of Section 3.7 hereof, Borrower agrees to provide to
Silicon all filings made with the Securities and Exchange
Commission (the "SEC"), and copies of all notices or other
communication from the SEC, within 5 days of such filing or receipt
of such notice or other communication.
4. NEGATIVE PLEDGE. Except as otherwise permitted hereunder
(including without limitation the incurrence of Permitted Liens as
set forth in Section 3.4 of this Agreement), Borrower shall not
hereafter grant a security interest in any of its present or future
Collateral, other than for liens on capital equipment relating to
obligations incurred pursuant to paragraph 3 above.
QLOGIC CORPORATION
By /s/ THOMAS R. ANDERSON
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President or Vice President
By /s/ MICHAEL MANNING
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Michael Manning
Secretary or Ass't Secretary
SILICON VALLEY BANK
By: /s/ MARLA W. JOHNSON
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Marla W. Johnson
Title: Vice President
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SILICON VALLEY BANK
CERTIFIED RESOLUTION
BORROWER: QLOGIC CORPORATION, A CORPORATION ORGANIZED UNDER
THE LAWS OF THE STATE OF DELAWARE
ADDRESS: 3545 HARBOR BOULEVARD, P.O. BOX 5001
COSTA MESA, CALIFORNIA 92628
DATED AS OF: JULY 6, 1998
I, the undersigned, Secretary or Assistant Secretary of the above-named
borrower, a corporation organized under the laws of the state set forth above,
do hereby certify that the following is a full, true and correct copy of
resolutions duly and regularly adopted by the Board of Directors of said
corporation as required by law, and by the by-laws of said corporation, and that
said resolutions are still in full force and effect and have not been in any way
modified, repealed, rescinded, amended or revoked.
RESOLVED, that this corporation borrow from Silicon Valley Bank ("Silicon"),
from time to time, such sum or sums of money as, in the judgment of the
officer or officers hereinafter authorized hereby, this corporation may
require.
RESOLVED FURTHER, that any officer of this corporation be, and he or she is
hereby authorized, directed and empowered, in the name of this corporation,
to execute and deliver to Silicon, and Silicon is requested to accept, the
loan agreements, security agreements, notes, financing statements, and other
documents and instruments providing for such loans and evidencing and/or
securing such loans, with interest thereon, and said authorized officers are
authorized from time to time to execute renewals, extensions and/or
amendments of said loan agreements, security agreements, and other documents
and instruments.
RESOLVED FURTHER, that said authorized officers be and they are hereby
authorized, directed and empowered, as security for any and all indebtedness
of this corporation to Silicon, whether arising pursuant to this resolution
or otherwise, to grant, transfer, pledge, mortgage, assign, or otherwise
hypothecate to Silicon, or deed in trust for its benefit, any property of
any and every kind, belonging to this corporation, including, but not
limited to, any and all real property, accounts, inventory, equipment,
general intangibles, instruments, documents, chattel paper, notes, money,
deposit accounts, furniture, fixtures, goods, and other property of every
kind, and to execute and deliver to Silicon any and all grants, transfers,
trust receipts, loan or credit agreements, pledge agreements, mortgages,
deeds of trust, financing statements, security agreements and other
hypothecation agreements, which said instruments and the note or notes and
other instruments referred to in the preceding paragraph may contain such
provisions, covenants, recitals and agreements as Silicon may require and
said authorized officers may approve, and the execution thereof by said
authorized officers shall be conclusive evidence of such approval.
RESOLVED FURTHER, that Silicon may conclusively rely upon a certified copy
of these resolutions and a certificate of the Secretary or Ass't Secretary
of this corporation as to the officers of this corporation and their offices
and signatures, and continue to conclusively rely on such certified copy of
these resolutions and said certificate for all past, present and future
transactions until written notice of any change hereto or thereto is given
to Silicon by this corporation by certified mail, return receipt requested.
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SILICON VALLEY BANK CERTIFIED RESOLUTION
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The undersigned further hereby certifies that the following persons are the
duly elected and acting officers of the corporation named above as borrower and
that the following are their actual signatures:
NAMES OFFICE(S) ACTUAL SIGNATURES
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H.K. DESAI President & C.E.O. X /s/ H.K. DESAI
THOMAS R. ANDERSON Vice President & C.F.O. X /s/ THOMAS R. ANDERSON
MICHAEL MANNING Secretary & Treasurer X /s/ MICHAEL MANNING
__________________________ _________________________ X_________________________
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or Assistant
Secretary on the date set forth above.
/s/ MICHAEL MANNING
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Michael Manning
Secretary or Assistant Secretary
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SILICON VALLEY BANK
AMENDMENT TO LOAN AGREEMENT
BORROWER: QLOGIC CORPORATION
ADDRESS: 3545 HARBOR BOULEVARD, P.O. BOX 5001
COSTA MESA, CALIFORNIA 92628
DATED AS OF: JULY 6, 1998
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The parties agree to amend the Loan and Security Agreement between
them, dated March 31, 1994, as amended by that Amendment to Loan and Security
Agreement dated July 10, 1995 and as amended by that Amendment to Loan and
Security Agreement dated July 5, 1996 (as so amended and as otherwise amended
from time to time, the "Loan Agreement"), as follows, effective as of the date
hereof. (Capitalized terms used but not defined in this Amendment, shall have
the meanings set forth in the Loan Agreement.)
1. AMENDED SCHEDULE. The Schedule to the Loan Agreement is amended
effective on the date hereof, to read as set forth on the Amended Schedule to
Loan Agreement attached hereto.
2. DELETED REFERENCES. Section 2.2A of the Loan Agreement is deemed
deleted, and all references in the Loan Agreement to the Section 2.2A Condition
shall be deemed of no force and effect.
3. SECURITY INTEREST REFERENCES IN LOAN AGREEMENT; ETC. All references
to the security interest or lien of Silicon in the Collateral and related
provisions are hereby deleted. Further, it is understood that Silicon shall not
be required to be named as loss payee on the Borrower's insurance policies, nor
are insurance payments relating to the Collateral required to be forwarded to
Silicon for payment of the Obligations. Further, references in the Loan
Agreement to remedies of Silicon on and after an Event of Default that depend
upon the existence of a security interest in the Collateral in favor of Silicon
at or prior to the occurrence of an Event of Default are considered deleted,
provided, however, nothing herein affects or diminishes the rights of Silicon
otherwise available as set forth in the Loan Agreement or as available under
law.
4. FACILITY FEE. Borrower shall pay to Silicon concurrently herewith a
facility fee of $37,500, which shall be in addition to all interest and all
other fees payable to Silicon and shall be non-refundable.
5. REPRESENTATIONS TRUE. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
6. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written
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SILICON VALLEY BANK AMENDMENT TO LOAN AGREEMENT
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documents and agreements between Silicon and the Borrower set forth in full all
of the representations and agreements of the parties with respect to the subject
matter hereof and supersede all prior discussions, representations, agreements
and understandings between the parties with respect to the subject hereof.
Except as herein expressly amended, all of the terms and provisions of the Loan
Agreement, and all other documents and agreements between Silicon and the
Borrower shall continue in full force and effect and the same are hereby
ratified and confirmed.
BORROWER: SILICON:
QLOGIC CORPORATION SILICON VALLEY BANK
By: /s/ THOMAS R. ANDERSON By: /s/ MARLA W. JOHNSON
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Thomas R. Anderson Marla W. Johnson
President or Vice President Vice President
By: /s/ MICHAEL MANNING
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Michael Manning
Secretary or Ass't Secretary
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