[Ex 10.11(a)]
October 17, 1997
Mr. Brian V. Turner, Chief Financial Officer
RadiSys Corporation
15025 SW Koll Parkway
Beaverton, Oregon 97006-6056
Dear Brian:
I am pleased to advise you that U.S. Bank, National Association ("Bank") has
approved the renewal of the revolving line of credit and Corporate Visa facility
for RadiSys Corporation, subject to the following terms and conditions:
Borrower: RadiSys Corporation ("RadiSys").
Operating Line of Credit
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Purpose: Working Capital and general corporate purposes.
Borrowing Limit: $10,000,000
Guarantors: None.
Expiry Date: September 30, 1998 or upon non-compliance with any
term or condition stated herein, or any material
misrepresentation of fact by the Borrower.
Pricing:
Fees: Upfront Fee of 5 basis points ($5,000) on the
committed amount due upon acceptance.
Quarterly fee of 1/8 of 1 percent (annualized) based
upon the unused portion of the line, due quarterly
in arrears.
RadiSys Corporation Page 2
October 17, 1997
Interest Rate: Pricing based upon U.S. Bank, National Association's
Prime Rate,1 Bankers' Acceptances ("BA"), or London
Interbank Offering Rates ("LIBOR"), at the
Borrower's option. The Prime Rate will be
fully floating and computed on a 360 day
year.
The spread over the base rates will be
determined quarterly by the Borrower's
Total Liabilities / Tangible Net Worth*
Ratio as expressed in the chart below. The
rate will be adjusted within 5 business
days of receipt of either the quarterly
10-Q report or the audited annual
financials.
Total Liabilities/Tangible Net Prime BA or LIBOR
------------------------------ ----- -----------
Worth
-----
Greater then 0.65:1.00 + 0% +2.00%
0.41:1.00 to 0.65:1.00 + 0% +1.75%
0.26:1.00 to 0.40:1.00 + 0% +1.50%
Less than or equal to 0.25:1.00 + 0% +1.25%
B/A financing available to Borrower in minimum amount
of $1,000,000 to maximum of 90 days.
LIBOR Terms:
A) Minimum amount of $500,000 and $100,000
increments thereafter.
B) Maturity and availability: One, two
or three month periods.
C) Prepayment of LIBOR borrowings not permitted.
D) Notification: Two day notification prior to 12:
00 noon on the day of notification.
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1 If the interest rate charged to the Borrower is tied to the Prime Rate of
U.S. Bank, Borrower is advised that U.S. Bank's Prime Rate is the rate of
interest which the Bank from time to time identifies and publicly announces
as its Prime Rate and is not necessarily, for example, the lowest rate of
interest which the Bank collects from any borrower or group of borrowers.
RadiSys Corporation Page 3
October 17, 1997
E) Irrevocability: Acceptance of a pricing commitment
from the Bank will constitute an irrevocable agreement
to borrow under the revolving line of credit.
F) Interest computed on the basis of a 360 day year and
the number of days elapsed.
* Tangible Net Worth is defined as Total Shareholder's
Equity less Intangibles (e.g. Goodwill, Patents,
Software development costs, etc.). All other
capitalized terms are defined in accordance with GAAP.
All reasonable out of pocket expenses for
documentation and collateral examination
fees to be paid by Borrower.
Repayment Terms: Optional advance note. Interest payable monthly, in
arrears. Principal due at maturity.
Repayment of each advance received by the
Borrower under the line of credit is
subject to the terms and conditions of the
promissory note evidencing that advance as
well as all conditions of this letter. In
the event of any conflict between the two,
the terms and conditions of the promissory
note shall control.
Collateral: The revolving line of credit provides for a flexible
collateral position according to the following matrix.
The assets of the Borrower which are referenced below
include accounts and inventory.
RadiSys Corporation Page 4
October 17, 1997
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Quick Ratio Collateral
----------- ----------
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Greater than 1.50:1.00 Unsecured with
negative pledge agreement.
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Less than or equal to 1.50:1.00 Unsecured with negative pledge, if not
borrowing, but converts to secured if
ratio falls below 1.50 benchmark for
two consecutive quarters. If Borrowing
and equal to, or less than 1.50, then
the line of credit is secured.
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Less than or equal to 1.15:1.00 Line is secured and margined at 80%
of eligible A/R**.
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* Quick Ratio is defined as ((Cash plus Trade Accounts
Receivable, Net)/(Current Liabilities))
Advances: Advances limited to the Borrowing Limit when Quick
Ratio is greater than 1.15:1.0. When Quick Ratio is
less than or equal to 1.15:1.00 the advances will be
limited to 80% of eligible A/R to 90 days after date
of invoice. Ineligible accounts will be datings, COD
or cash sales, inter-company, employee, progress
billings, consignments, retainage, potential offset
and accounts where more than 25% of the balance is
beyond 90 days after date of invoice. Foreign accounts
receivable will be considered eligible at the
discretion of the Bank.
Disbursements under the line of credit shall terminate
on the earlier occurrence of the date indicated above
as the Expiry Date or the date on which this Bank, in
its sole discretion, determines that there has been a
material adverse change in the financial condition or
management of the Borrower, or determines that there
has been any noncompliance with any term or
condition stated herein. Noncompliance with the
conditions and terms of this letter of will be
considered as an event of default, entitling the Bank
to all the default provisions as provided for in
documents evidencing this line of credit.
RadiSys Corporation Page 5
October 17, 1997
Corporate Visa Facility:
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Borrowing Limit: $120,000
Terms and Conditions: Terms as outlined in Corporate Visa agreement and
application.
Foreign Exchange Currency Transactions:
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General Parameters: Availability to facilitate
issuance of forward and spot currency contracts.
Maximum forward settlement 13 months, with the
majority not to exceed March 31, 1999. Further
details are available upon request.
General Conditions:
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Covenants: The following covenants will be measured quarterly:
1. Minimum Current Ratio: The ratio of Current
Assets to Current Liabilities not to be less than
2.00 to 1.00.
2. Maximum Leverage Ratio: The ratio of Total
Liabilities to Tangible Net Worth not to be more
than 0.75 to 1.00.
3. Minimum Tangible Net Worth: Tangible Net Worth
shall not be less than $48,000,000.
Failure to comply with any the above listed covenants
constitutes an event of default under the terms of the
Bank's documents.
Financial Reporting:
1. Audited annual financial statements.
2. Quarterly interim financial statements and all
material documents filed with the SEC.
3. If the Quick Ratio (as defined above) falls below
1.15 to 1.00: A borrowers certificate with each
advance, and a borrowers certificate to accompany
the monthly A/R and A/P agings. Additionally, if
a Bank Collateral Survey is performed then further
refinement of the advance structure may be
necessary.
RadiSys Corporation Page 6
October 17, 1997
Documentation: Execution of notes, loan agreements, borrowing
resolutions, incumbency certificates and other
documents as required by the Bank on forms prepared
by the Bank.
If the above terms and conditions to extend credit to RadiSys Corporation are
acceptable to you, please sign and return the acknowledgment copy of this letter
on or before October 31, 1997.
We are pleased to provide you this borrowing accommodation and look forward to
serving your banking needs in the future.
Sincerely,
ROSS A. BEATON
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Ross A. Beaton
Vice President