THIRD COMBINED AMENDMENT TO FINANCING AGREEMENTS
THIS THIRD COMBINED AMENDMENT TO FINANCING AGREEMENTS, dated as of August
11, 1995 ("Amendment") is entered into between GO-VIDEO, INC., a Delaware
corporation ("Go-Video") and CONGRESS FINANCIAL CORPORATION (WESTERN)
("Congress").
FACT ONE: As of October 12, 1992, Go-Video and Congress entered into that
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certain Accounts Financing Agreement [Security Agreement], together with certain
addenda and supplements thereto (collectively, as amended, the "Agreement").
FACT TWO: The Agreement has previously been amended by combined amendments
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dated August 16, 1994 and by letter agreement dated January 27, 1995.
FACT THREE: Go-Video has requested, and Congress has agreed, to further
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amend certain of the terms and conditions contained in the Agreement and to
amend and restate all previous addenda and amendments to the Agreement and the
various supplements and related agreements.
In consideration of the mutual covenants, conditions, and provisions
hereafter set forth, the parties hereto agree as follows:
1. Attached hereto as Exhibits "A" through "C" are the following Combined
Amendments which have amended and restated all prior Addenda and Amendments
relating to each of such Agreements:
(a) Third Combined Amendment to Accounts Financing [Security Agreement];
(b) Third Combined Amendment to Agreement Re: Inventory Loans; and
(c) Third Combined Amendment to Trade Financing Agreement Supplement to
Accounts Financing Agreement [Security Agreement].
2. Paragraph 2.6 of the Inventory and Equipment Security Agreement Supplement
to Accounts Financing Agreement[Security Agreement]between Go-Video and Congress
is hereby amended by adding the following thereto:
"as of the last Business Day of each month during the term of this
Agreement, the aggregate value of: (a) our Inventory (excluding any
parts but including Inventory in transit); plus (b) the aggregate
face amount of all outstanding Credits, shall not exceed Twenty
Million Dollars ($20,000,000) in the case of the month ending
September 30, 1995 and Eighteen Million Dollars ($18,000,000) in
all other months."
3. The effectiveness of this Amendment, and of all documents in connection
herewith, is subject to Go-Video paying to Congress, concurrently herewith, an
amendment fee in the amount of Fifteen Thousand Dollars ($15,000), which fee
shall be fully earned when paid and which shall be charged to Go-Video's loan
account.
4. Go-Video shall pay to Congress all sums, costs, and expenses incurred by
Congress and its attorneys and agents in connection with the negotiation,
preparation and delivery of this Amendment and any related agreements or
documents. Congress' rights herein shall be in addition to any and all rights
contained in Section 9.5 of the Agreement.
5. Except as expressly amended hereby, and in Exhibits "A" through "C" hereto,
the Agreement shall remain unchanged and in full force and effect.
GO-VIDEO, INC., a Delaware corporation
By /s/ Xxxxxxx X. Xxxxx
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Title: Vice President and Chief Financial
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Officer
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CONGRESS FINANCIAL CORPORATION
(WESTERN), a California corporation
By /s/ Xxx Xxxxxx
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Title: Vice President
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EXHIBIT "A"
THIRD COMBINED AMENDMENT TO
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ACCOUNTS FINANCING AGREEMENT
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[SECURITY AGREEMENT]
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This THIRD COMBINED AMENDMENT TO ACCOUNTS FINANCING AGREEMENT [SECURITY
AGREEMENT] (this "Amendment") amends and shall be considered a part of that
certain Accounts Financing Agreement [Security Agreement] (the "Agreement"),
dated as of October 12, 1992, by and between Congress Financial Corporation
(Western), a California corporation ("Congress"), and Go-Video, Inc., a Delaware
corporation ("Borrower"). Congress and Borrower hereby agree as follows:
1. The definition of "Eligible Accounts" contained in the Agreement is
hereby amended by deleting the last sentence thereof and replacing it with the
following:
"In general, an Account shall not be deemed eligible unless: (a) the
Account Debtor on such Account is and at all times continues to be
acceptable to you; (b) such Account complies in all respects with the
representations, covenants and warranties hereinafter set forth; (c)
such Account is not owed by an Account Debtor that has failed to pay
when due fifty percent (50%) or more of its accounts owed to us; (d)
such Account is not owed by an Account Debtor which is not a resident of
the United States; (e) such Account is due and payable (i) within thirty
(30) days of its creation, or, (ii) with respect to certain new Accounts
(to be determined in your discretion (an "Extended Dating Account"))
within sixty (60) days of the date of its creation; and (f) no more than
ninety (90) days have passed since the invoice date of such Account or,
with respect to an Extended Dating Account,no more than one hundred
twenty (120) days have passed since the invoice date of such Account."
2. Section 1.7 of the Agreement is hereby amended to read as follows:
"1.7 'Maximum Credit' shall mean Fourteen Million Dollars
($14,000,000)."
3. Section 1 of the Agreement is hereby amended by inserting the
following at the end thereof:
"1.12 'Licensing/Manufacturing Agreements' means collectively, the
License and Technical Assistance Agreement between Borrower and Samsung
Electronics Co., Ltd. ("Samsung") and that certain Manufacturing
Agreement between Borrower and Samsung, and any replacements,
extensions, restatements or amendments thereto."
4. Section 2.1 of the Agreement is hereby amended in its entirety to
read as follows:
"You shall, in your discretion, make loans to us from time to time (and
as frequently as daily), at our request, of up to seventy-five percent
(75%) of the Net Amount of Eligible Accounts (or such greater or lesser
percentage thereof as you shall in your sole discretion determine from
time to time).
5. Sections 3.5 and 3.6 of the Agreement are hereby deleted in their
entirety and replaced by the following new Sections 3.5 and 3.6:
"3.5. We shall pay to you an annual facility fee equal to one-half of
one percent (0.50 %) per annum of the Maximum Credit amount then in
effect. This fee shall be payable simultaneously with the execution
hereof and thereafter on each anniversary of such execution during the
term, including all renewal terms, of this Agreement or so long as any
of the Obligations are outstanding.
"3.6. We shall pay to you and we authorize you to accordingly charge an
auditing fee of Five Hundred Dollars ($500) per day per auditor, and we
shall reimburse you for all of your itemized, reasonable, out-of-pocket
expenses which you may incur in engaging or performing verifications and
audits of our books and records."
6. Section 3 of the Agreement is hereby amended by adding the following
as a new Section 3.7:
"3.7. If the average outstanding daily principal balance of all loans by
you to us under this Agreement or any supplement hereto in any calendar
month shall be less than the Maximum Credit, we shall pay to you on or
before the tenth (10th) day of the next succeeding calendar month an
unused line fee equal to one-quarter of one percent (0.25%) per annum
upon the amount by which the Maximum Credit exceeds the average
outstanding daily principal balance of all such loans in respect of such
month."
7. Section 5.2 of the Agreement is hereby amended by adding the
following at the end thereof:
"Prior to an Event of Default, your rights under this Section 5.2 to
access to our Records and Collateral shall be limited to our regular
business hours."
8. Section 6.4 of the Agreement is hereby amended by adding the
following after the first sentence thereof:
"To the extent that, in the ordinary course of our business, we shall
amend our shipping forms, invoices, or related documents in the future,
you have agreed not to unreasonably withhold your consent to such
modified forms."
9. Section 6 of the Agreement is hereby amended by adding the following
as new sections:
"6.11. During 1994, we shall maintain on our books a reserve for
seasonal returns of at least One Hundred Fifty Thousand Dollars
($150,000), which reserve will be increased at the rate of Seventy Five
Thousand Dollars ($75,000) per week commencing December 1, 1994 until it
reaches Four Hundred Fifty Thousand Dollars ($450,000). Commencing April
1, 1995, the seasonal reserve shall be reduced at the rate of Seventy
Five Thousand Dollars ($75,000) per week until it reaches Two Hundred
Twenty Five Thousand Dollars ($225,000). The seasonal reserve will be
increased at the rate of Seventy Five Thousand Dollars ($75,000) per
week commencing December 1, 1995 until it reaches Four Hundred Fifty
Thousand Dollars ($450,000). Commencing April 1, 1996, the seasonal
reserve shall be reduced at the rate of Seventy Five Thousand Dollars
($75,000) per week until it reaches Two Hundred Twenty Five Thousand
Dollars ($225,000). The seasonal reserve shall be increased at a rate of
Seventy Five Thousand Dollars ($75,000) per week commencing December 1,
1996 until it reaches for Four Hundred Fifty Thousand Dollars
($450,000). Commencing April 1, 1997, the seasonal reserve shall be
reduced at the rate of Seventy-Five Thousand Dollars ($75,000) per week
until it reaches Two Hundred Twenty-Five Thousand Dollars ($225,000)."
"6.12. We agree to furnish you monthly (or more frequently if requested
by you) a report on video cassette recorder units ("Units") sold."
10. Section 7.1 of the Agreement is hereby amended by adding the
following to the end of Clause (f) thereof:
"provided, however that no such release shall be required to the extent
that such liability is finally determined, by a court of competent
jurisdiction, to have arisen from the gross negligence or willful
misconduct of you or your officers, employees, or designees."
11. Clause (a) of Section 8.1 of the Agreement is hereby amended by
adding the following at the end thereof:
"including, without limitation, any breach or termination of (whether at
maturity or by failure to renew, or otherwise), or default under any of
the Licensing/Manufacturing Agreements."
12. Sections 9.1 and 9.2 of the Agreement are hereby deleted in their
entirety and replaced by the following:
"9.1. This Agreement shall become effective upon acceptance by you and
shall continue in full force and effect for a term ending October 12,
1997 (the "Renewal Date") and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Either party may
terminate this Agreement on the Renewal Date or on the anniversary of
the Renewal Date in any year by giving the other party at least sixty
(60) days prior written notice by registered or certified mail, return
receipt requested, and, in addition, you shall have the right to
terminate this Agreement immediately at any time upon the occurrence of
an Event of Default. No termination of this Agreement, however, shall
relieve or discharge us of our duties, obligations and covenants
hereunder until all Obligations have been paid in full, and your
continuing security interest in the Collateral shall remain in effect
until such Obligations have been fully discharged.
9.2. If you terminate this Agreement upon the occurrence of an Event of
Default or at our request, in view of the impracticability and extreme
difficulty of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of your lost profits as a result
thereof, we hereby agree that we shall pay to you, upon the effective
date of such termination, an early termination fee in an amount equal to
one percent (1%) of the Maximum Credit. Such termination fee shall be
presumed to be the amount of damages sustained by said early termination
and we agree that it is reasonable under the circumstances currently
existing. The early termination fee provided for in this paragraph 9.2
shall be deemed included in the Obligations. Notwithstanding the
foregoing, there shall not be any early termination fee payable if all
of the following occur:
(i) we request early termination of this Agreement after the
second anniversary hereof;
(ii) no Event of Default has occurred and is continuing;
(iii) we have obtained replacement financing on terms (fees,
interest rates, advance rates, line limits, security, and
other material credit terms) which are more favorable
than the terms being offered by you at such time; and
(iv) we have offered you the opportunity to continue to
finance us on such more favorable terms and you have
declined to do so."
13. Notwithstanding anything to the contrary contained in the Agreement
or in any other agreement between Congress and Borrower, at any such time as
Borrower has no outstanding loan balances and no outstanding obligations with
respect to any letters of credit, and there is a positive cash balance in any
lockbox or other restricted deposit account over which Congress has control,
Congress will, upon request by Borrower, promptly deliver such cash balances to
Borrower pursuant to Borrower's direction.
14. Congress shall have a continuing right, in its sole discretion, to
withhold a reserve against Eligible Accounts equal to: (a) thirty-five percent
(35%) of the face amount of all documentary letters of credit issued for the
purchase of Eligible Inventory and which are outstanding at any one time during
the week commencing August 11, 1995, which rate shall be increased by two
percentage points (2%) on October 2, 1995 and on each Monday thereafter until
and including November 13, 1995, and by one percentage (1.0%) point on November
20, 1995 on which date such rate shall be and remain fifty percent (50%); or
(b) one hundred percent (100%) of the face amount of all other letters of
credit, including standby letters of credit, in each case increased by all duty
and freight on the subject Inventory.
15. In the event of a conflict between the terms and provisions of this
Amendment and the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall govern.
16. Except as expressly amended or modified pursuant to this Amendment,
the Agreement shall remain otherwise unchanged and in full force and effect.
IN WITNESS WHEREOF, Borrower and Congress have executed this Amendment
as of the 11th day of August, 1995.
CONGRESS FINANCIAL CORPORATION
(WESTERN), a California corporation
By /s/ Xxx Xxxxxx
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Title Vice President
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GO-VIDEO, INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxx
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Title Vice President and Chief Financial Officer
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EXHIBIT "B"
THIRD COMBINED AMENDMENT TO AGREEMENT
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Re: INVENTORY LOANS
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This THIRD COMBINED AMENDMENT TO AGREEMENT Re: INVENTORY LOANS (this
"Addendum") amends and shall be considered a part of that certain Agreement Re:
Inventory Loans (the "Agreement"), dated as of October 12, 1992, executed by
Go-Video, Inc., a Delaware corporation ("Borrower") in favor of Congress
Financial Corporation (Western), a California corporation ("Congress"). Congress
and Borrower hereby agree as follows:
1. Section 1(a) of the Agreement is hereby amended by inserting the
following at the end thereof:
"that Eligible Inventory shall also include Inventory in transit to
us so long as such Eligible Inventory is consigned to you or your
designee, we have delivered to you all of the original documents of
title (including, but not limited to, bills of lading) for such
Inventory required to perfect your security interest therein, and
the same is covered by insurance satisfactory to you in all
respects."
2. Section 2 of the Agreement is hereby amended in its entirety to
read as follows:
"2. In addition to loans which may be made by you to us, pursuant to
Section 2 of the Accounts Agreement, you shall, in your sole
discretion, make loans to us from time to time, at our request, of
up to (a) sixty five percent (65%) (or such lesser percentages
thereof as you shall, in your sole discretion, determine from time
to time) of the Value of the Eligible Inventory (excluding our
"Security Products Division" Inventory) until and including October
29, 1995; (b) sixty percent (60%) (or such lesser percentages
thereof as you shall, in your sole discretion, determine from time
to time) of the Value of the Eligible Inventory (excluding our
"Security Products Division" Inventory) from October 30, 1995 to and
including November 14, 1995; (c) fifty five percent (55%) (or such
lesser percentages thereof as you shall, in your sole discretion,
determine from time to time) of the Value of the Eligible Inventory
(excluding our "Security Products Division" Inventory) from November
15, 1995 to and including November 29, 1995; and (d) at all times,
with respect to our "Security Products Division" Eligible Inventory,
or from and after November 30, 1995, with respect to all other
Eligible Inventory, the lesser of (i) fifty percent (50%) (or such
greater or lesser percentages thereof as you shall, in your sole
discretion, determine from time to time) of the Value of such
Eligible Inventory and; (ii) eighty percent (80%) of the "Orderly
Liquidation Value" of such Eligible Inventory as established by
third party appraisals conducted pursuant to the terms of Paragraph
2.6 of the Inventory and Equipment Supplement to the Accounts
Agreement."
3. Section 3 of the Agreement is hereby amended and restated to read
as follows:
"3. Except in your sole discretion, the outstanding aggregate
principal amount of loans by you to us hereunder shall not exceed,
at any time, the lower of (a) the aggregate amount of the above
percentages of the Value of Eligible Inventory or (b) Five Million
Dollars ($5,000,000) during the period of August 11, 1995 to and
including January 15, 1996, and Four Million Dollars ($4,000,000) at
all other times."
4. In the event of a conflict between the terms and provisions of
this Amendment and the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall govern.
5. Except as expressly amended or modified pursuant to this
Amendment, the Agreement shall remain otherwise unchanged and in full force and
effect.
IN WITNESS WHEREOF, Borrower and Congress have executed this
Amendment as of the 11th day of August, 1995.
GO-VIDEO, INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxx
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Title Vice President and Chief Financial Officer
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CONGRESS FINANCIAL CORPORATION
(WESTERN),
a California corporation
By /s/ Xxx Xxxxxx
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Title Vice President
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EXHIBIT "C"
THIRD COMBINED AMENDMENT TO
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TRADE FINANCING AGREEMENT SUPPLEMENT
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TO ACCOUNTS FINANCING AGREEMENT
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[SECURITY AGREEMENT]
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This THIRD COMBINED AMENDMENT TO TRADE FINANCING AGREEMENT SUPPLEMENT TO
ACCOUNTS FINANCING AGREEMENT [SECURITY AGREEMENT] (this "Amendment") amends and
shall be considered a part of that certain Trade Financing Agreement Supplement
to Accounts Financing Agreement [Security Agreement] (the "Agreement"), dated as
of October 12, 1992, by and between Congress Financial Corporation (Western), a
California corporation ("Congress") and Go-Video, Inc., a Delaware corporation
("Borrower"). Congress and Borrower hereby agree as follows:
1. Section 1.1 of the Agreement is hereby amended by adding the
following clause (d) to the end of the first sentence thereof:
"(d) issue or guarantee drafts and acceptances relating to the foregoing
or otherwise."
2. Section 1.3 of the Agreement is hereby amended in its entirety to
read as follows:
"Our loan availability under the Agreement and any other Supplements
thereto will be reduced by: (a) an amount equal to one hundred percent
(100%) of the outstanding Credits consisting of standby letters of
credit; and (b) an amount equal to thirty-five (35%) percent of the
outstanding Credits consisting of documentary letters of credit
outstanding, which rate shall be increased by two percentage points (2%)
on October 2, 1995 and on each Monday thereafter until and including
November 13, 1995, and by one percentage point (1.0%) on November 20,
1995 on which date such rate shall be and remain fifty percent (50%); or
such lesser amount as you may elect in your discretion."
3. Section 1.5 of the Agreement is hereby amended in its entirety to
read as follows:
"1.5 Except in your sole discretion, the amount of all Credits and all
other commitments and obligations made or incurred by you for our
account in connection herewith shall not exceed, in the aggregate at any
time outstanding $10,000,000 during the period from August 11, 1995 to
and including November 30, 1995, and $9,000,000 at all other times."
4. Section 1.8 of the Agreement is hereby amended in its entirety to
read as follows:
"1.8 In addition to all other fees, charges and expenses payable under
the Agreement, this Supplement, and to any bank or other issuer or
correspondent in connection with any Credit, we agree to pay to you the
following commission for your services hereunder, which shall be due and
payable monthly in arrears, a commission equal to two and one-half
percent 2 1/2%) per annum of the face amount of any Credit calculated on
the basis of a 360 day year and actual days elapsed. We also agree to
pay to you, your and any bank's, other issuer's or correspondent's
customary charges for amendments, extensions and administration,
relating to any Credit, which charges shall be due and payable on the
first day of the month following the date of incurrence and, at your
option may be charged to any of our account(s) maintained by you.
We also agree to pay to you a servicing fee in the amount of Five
Hundred Dollars ($500) per month in connection with this Supplement,
which fee shall be due and payable in arrears on the first day of each
month during the term of the Agreement."
5. In the event of a conflict between the terms and provisions of this
Amendment and the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall govern.
6. Except as expressly amended or modified pursuant to this Amendment,
the Agreement shall remain otherwise unchanged and in full force and effect.
IN WITNESS WHEREOF, Borrower and Congress have executed this Amendment
in Los Angeles, California, as of the 11th day of August, 1995.
CONGRESS FINANCIAL CORPORATION
(WESTERN),
a California corporation
By /s/ Xxx Xxxxxx
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Title Vice President
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GO-VIDEO, INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxxx
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Title Vice President and Chief Financial Officer
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