[US Bank Logo]
September 30, 1999
Mr. Stephen F. Loughlin, Chief Financial Officer
RadiSys Corporation
5445 NE Dawson Creek Drive
Hillsboro, OR 97124
Dear Stephen:
I am pleased to advise you that U.S. Bank, National Association ("Bank") has
approved the renewal of, and an increase in, the revolving line of credit 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: $20,000,000 (Twenty Million Dollars)
Guarantors: None.
Expiry Date: September 30, 2000 or upon non-compliance with any
term or condition stated herein, or any material
misrepresentation of fact by the Borrower.
Pricing:
Fees: Upfront Fee of 5 basis points ($ 1 0,000) on the
committed amount, due upon acceptance.
Quarterly fee of 1/8 of I percent (annualized)
based upon the unused portion of the line, due
quarterly in arrears.
RadiSys Corporation Page 2
September 30, 1999
Commitment Letter
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 I O-Q
report or the audited annual financials.
Total Liabilities/
Tangible Net Worth Prime BA or LIBOR
------------------ ----- -----------
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.
E) Irrevocability: Acceptance of a pricing
commitment from the Bank will constitute an
irrevocable agreement to borrow under the
revolving line of credit.
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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
September 30, 1999
Commitment Letter
F) Interest computed on the basis of a 360 day
year and the actual 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 ten-ns
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 ten-ns 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.
Quick Ratio Collateral
----------- ----------
Greater than 1.50:1.00 Unsecured with negative pledge
agreement.
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.
Less than or equal to 1.15:1.00 Line is secured and margined at
80% of eligible A/R**.
* 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: I.O. When Quick Ratio
is less than or equal to 1. 15: 1. 00 the advances
will be limited to
RadiSys Corporation Page 4
September 30, 1999
Commitment Letter
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.
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 $75,000,000.
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. RadiSys
Corporation Page 5 September 30, 1999
Commitment Letter
RadiSys Corporation Page 5
September 30, 1999
Commitment Letter
3. If the Quick Ratio (as defined above) falls
below 1. 1 5 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.
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 15, 1999.
We are pleased to provide you this borrowing accommodation and look forward to
serving your banking needs in the future.
Respectfully,
ROSS A. BEATON
Ross A. Beaton
Vice President
BY OREGON STATUE (ORS 41.580), THE FOLLOWING DISCLOSURE IS REQUIRED: UNDER
OREGON LAW MOST AGREEMENTS PROMISES AND COMMITMENTS MADE BY LENDERS AFTER
OCTOBER 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE LENDER
TO BE ENFORCEABLE
RadiSys Corporation Page 6
September 30, 1999
Commitment Letter
THE UNDERSIGNED HEREBY ACKNOWLEDGES AND ACCEPTS THIS OFFER TO EXTEND CREDIT
SUBJECT TO THE TERMS AND CONDITIONS STATED ABOVE.
RadiSys Corporation
BY: STEPHEN F. LOUGHLIN CFO September 30, 1999
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