EXHIBIT 10.19
REVOLVING CREDIT LOAN & SECURITY
AGREEMENT
(ACCOUNTS AND INVENTORY)
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OBLIGOR NOTE # AGREEMENT DATE
August 6, 1997
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CREDIT LIMIT INTEREST RATE OFFICER NO./INITIALS
B+0,50% 48710 XXXXXXX X. XXXX
$2,000,000 9.00%
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THIS AGREEMENT is entered into on AUGUST 6, 1997, between COMERICA BANK
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CALIFORNIA ("Bank") as secured party, whose Headquarter Office is 333 WEST SANTA
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XXXXX STREET, SAN JOSE, CA and GEOCITIES ("Borrower"), a CALIFORNIA CORPORATION
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whose sole place of business (if it has only one), chief executive office (if it
has more than one place of business) or residence (if an individual) is located
at 0000 XXXX XXXXXX, XXXXX XXXXXX, XX. The parties agree as follows:
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1. DEFINITIONS
1.1 "Agreement" as used in this Agreement means and includes this Revolving
Credit Loan & Security Agreement (Accounts and Inventory). any concurrent or
subsequent rider to this Revolving Credit Loan & Security Agreement (Accounts
and Inventory) and any extensions, supplements. amendments or modifications to
this Revolving Credit Loan & Security Agreement (Accounts and Inventory) and to
any such rider.
1.2 "Bank Expenses" as used in this Agreement means and includes: all
costs or expenses required to be paid by Borrower under this Agreement which are
paid or advanced by Bank; taxes and insurance premiums of every nature and kind
of Borrower paid by Bank; filing, recording, publication and search fees,
appraiser fees, auditor fees and costs, and title insurance premiums paid or
incurred by Bank in connection with Bank's transactions with Borrower, costs and
expenses incurred by Bank in collecting the Receivables (with or without suit)
to correct any default or enforce any provision of this Agreement. or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
disposing of, preparing for sale and/or advertising to sell the Collateral,
whether or not a sale is consummated; costs and expenses of suit incurred by
Bank in enforcing or defending this Agreement or any portion hereof, including,
but not limited to, expenses incurred by Bank in attempting to obtain relief
from any stay, restraining order, injunction or similar process which prohibits
Bank from exercising any of its rights or remedies; and attorneys' fees and
expenses incurred by Bank in advising, structuring, drafting, reviewing,
amending, terminating, enforcing, defending or concerning this Agreement, or any
portion hereof or any agreement related hereto, whether or not suit is brought.
Bank Expenses shall include Bank's in-house legal charges at reasonable rates.
1.3 "Base Rate" as used in this Agreement means that variable rate of
interest so announced by Bank at its headquarters office in San Jose, California
as its "Base Rate" from time to time and which serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto.
1.4 "Borrower's Books" as used in this Agreement means and includes all of
the Borrower's books and records including but not limited to: minute books;
ledgers; records indicating, summarizing or evidencing Borrower's assets,
liabilities, Receivables, business operations or financial condition, and all
information relating thereto, computer programs; computer disk or tape files;
computer printouts; computer runs; and other computer prepared information and
equipment of any kind.
1.5 "Borrowing Base" as used in this Agreement means the sum of: (1)
SEVENTY percent (70.00%) of the net amount of Eligible Accounts after deducting
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therefrom all payments, adjustments and credits applicable thereto ("Accounts
Receivable Borrowing Base"); and (2) the amount, if any, of the advances against
inventory agreed to be made pursuant to any inventory Rider ("Inventory
Borrowing Base"), or other rider, amendment or modification to this Agreement,
that may now or hereafter be entered into by Bank and Borrower.
1.6 "Cash Flow" as used in this Agreement means, for any applicable period
of determination, the Net Income (after deduction for income taxes and other
taxes of such person determined by reference to income or profits of such
person) for such period, plus, to the extent deducted in computation of such Net
Income, the amount of depreciation and amortization expense and the amount of
deferred tax liability during such period, all as determined in accordance with
GAAP. The applicable period of determination will be N/A ,
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beginning with the period from to .
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REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS AND INVENTORY)
1.7 "Collateral" as used in this Agreement means and includes each and all
of the following: the Receivables; the intangibles; the negotiable collateral,
the inventory; all money, deposit accounts and all other assets of Borrower in
which Bank receives a security interest or which hereafter come into the
possession. custody or control of Bank: and the proceeds of any of the
foregoing, including, but not limited to, proceeds of insurance covering the
collateral and any and all Receivables, intangibles, negotiable collateral,
inventory, equipment. money, deposit accounts or other tangible and intangible
property of borrower resulting from the sale or other disposition of the
collateral, and the proceeds thereof. Notwithstanding anything to the contrary
contained herein, collateral shall not include any waste or other materials
which have been or may be designated as toxic or hazardous by Bank.
1.8 "Credit" as used in this Agreement means all Obligations, except those
obligations arising pursuant to any other separate contract, instrument, note,
or other separate agreement which, by its terms, provides for a specified
interest rate and term.
1.9 "Current Assets" as used in this Agreement means, as of any applicable
date of determination, all cash, non-affiliated customer receivables, United
States government securities, claims against the United States government, and
inventories.
1.10 "Current Liabilities" as used in this Agreement means, as of any
applicable date of determination, (i) all liabilities of a person that should be
classified as current in accordance with GAAP, including without limitation any
portion of the principal of the indebtedness classified as current, plus (ii) to
the extent not otherwise included, all liabilities of the Borrower to any of its
affiliates whether or not classified as current in accordance with GAAP.
1.11 "Daily Balance" as used in this Agreement means the amount determined
by taking the amount of the Credit owed at the beginning of a given day, adding
any new Credit advanced or incurred on such date, and subtracting any payments
or collections which are deemed to be paid and are applied by Bank in reduction
of the Credit on that date under the provisions of this Agreement.
1.12 "Eligible Accounts" as used in this Agreement means and includes those
accounts of Borrower which are due and payable within thirty (30) days, or less,
from the date of invoice, have been validly assigned to Bank and strictly comply
with all of Borrower's warranties and representations to Bank; but Eligible
Accounts shall not include the following: (a) accounts with respect to which the
account debtor is an officer, employee, partner, joint venturer or agent of
Borrower; (b) accounts with respect to which goods are placed on consignment,
guaranteed sale or other terms by reason of which the payment by the account
debtor may be conditional; (c) accounts with respect to which the account debtor
is not a resident of the United States; (d) accounts with respect to which the
account debtor is the United States or any department, agency or instrumentality
of the United States; (e) accounts with respect to which the account debtor is
any State of the United States or any city, county, town, municipality or
division thereof; (I) accounts with respect to which the account debtor is a
subsidiary of, related to, affiliated or has common shareholders, officers or
directors with Borrower: (g) accounts with respect to which Borrower is or may
become liable to the account debtor for goods sold or services rendered by the
account debtor to Borrower; (h) accounts not paid by an account debtor within
ninety (90) days from the date of the invoice; (i) accounts with respect to
which account debtors dispute liability or make any claim, or have any defense,
crossclaim, counterclaim, or offset; (j) accounts with respect to which any
Insolvency Proceeding is filed by or against the account debtor, or if an
account debtor becomes insolvent, fails or goes out of business; and (k)
accounts owed by any single account debtor which exceed twenty percent (20%) of
all of the Eligible Accounts; and (l) accounts with a particular account debtor
on which over twenty-five percent (25%) of the aggregate amount owing is greater
than ninety (90) days from the date of the invoice.
1.13 "Event of Default" as used in this Agreement means those events
described in Section 7 contained herein below.
1.14 "Fixed Charges" as used in this Agreement means and includes, for any
applicable period of determination, the sum, without duplication of (a) all
interest paid or payable during such period by a person on debt of such person,
plus (b) all payments of principal or other sums paid or payable during such
period by such person with respect to debt of such person having a final
maturity more than one year from the date of creation of such debt, plus (c) all
debt discount and expense amortized or required to be amortized during such
period by such person, plus (d) the maximum amount of all rents and other
payments paid or required to be paid by such person during such period under any
lease or other contract or arrangement providing for use of real or personal
property in respect of which such person is obligated as a lessee, use or
obligor, plus (e) all dividends and other distributions paid or payable by such
person or otherwise accumulating during such period on any capital stock of such
person, plus (f) all loans or other advances made by such person during such
period to any Affiliate of such person. The applicable period of determination
will be N/A , beginning with the period
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from to .
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LOAN & SECURITY AGREEMENT
(ACCOUNTS AND INVENTORY)
1.15 "GAAP" as used in this Agreement means as of any applicable period,
generally accepted accounting principles in effect during such period.
1.16 "Insolvency Proceeding" as used in this Agreement means and includes
any proceeding or case commenced by or against the Borrower, or any guarantor of
Borrower's Obligations, or any of Borrower's account debtors, under any
provisions of the Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law, including but not limited to assignments for the benefit of
creditors, formal or informal moratoriums, composition or extensions with some
or all creditors, any proceeding seeking a reorganization, arrangement or any
other relief under the Bankruptcy code, as amended, or any other bankruptcy or
insolvency law.
1.17 "Intangibles" as used in this Agreement means and includes all of
Borrower's present and future general intangibles and other personal property
(including, without limitation, any and all rights in any legal proceedings,
goodwill, patents. trade names, copyrights, trademarks, blueprints, drawings,
purchase orders, computer programs, computer disks, computer tapes, literature,
reports, catalogs and deposit accounts) other than goods and receivables, as
well as Borrower's Books relating to any of the foregoing.
1.18 "Inventory" as used in this Agreement means and includes all present
and future inventory in which Borrower has any interest, including, but not
limited to, goods held by Borrower for sale or lease or to be furnished under a
contract of service and all of Borrower's present and future raw materials, work
in process, finished goods, advertising materials, and packing and shipping
materials, wherever located and any documents of title representing any of the
above, and any equipment, fixtures or other property used in the storing,
moving, preserving, identifying, accounting for and shipping or preparing for
the shipping of inventory, and any and all other items hereafter acquired by
Borrower by way of substitution, replacement, return, repossession or otherwise,
and all additions and accessions thereto, and the resulting product or mass, and
any documents of title respecting any of the above.
1.19 "Net Income" as used in this Agreement means the Net Income (or loss)
of a person for any period determined in accordance with GAAP but excluding in
any event:
(a) any gains or losses on the sale or other disposition, not in the
ordinary course of business, of investments or fixed or capital
assets, and any taxes on the excluded gains and any tax deductions or
credits on account on any excluded losses; and
(b) in the case of the Borrower, net earnings of any Person in which
Borrower has an ownership interest, unless such net earnings shall
have actually been received by Borrower in the form of cash
distributions.
1.20 "Judicial Officer or Assignee" as used in this Agreement means and
includes any trustee, receiver, controller, custodian, assignee for the benefit
of creditors or any other person or entity having powers or duties like or
similar to the powers and duties of trustee, receiver, controller, custodian or
assignee for the benefit of creditors.
1.21 "Obligations" as used in this Agreement means and includes any and all
loans, advances, overdrafts, debts, liabilities (including, without limitation,
any and all amounts charged to Borrower's account pursuant to any agreement
authorizing Bank to charge Borrower's account), obligations, lease payments,
guaranties, covenants and duties owing by Borrower to Bank of any kind and
description whether advanced pursuant to or evidenced by this Agreement; by any
note or other instrument; or by any other agreement between Bank and Borrower
and whether or not for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including, without limitation, any debt, liability or obligation owing from
Borrower to others which Bank may have obtained by assignment, participation,
purchase or otherwise, and further including, without limitation, all interest
not paid when due and all Bank Expenses which Borrower is required to pay or
reimburse by this Agreement, by law, or otherwise.
1.22 "Person" or "person" as used in this Agreement means and includes any
individual, corporation, partnership. joint venture, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency, or other entity.
1.23 "Receivables" as used in this Agreement means and includes all
presently existing and hereafter arising accounts, instruments, documents,
chattel paper, general intangibles, all other forms of obligations owing to
Borrower, all of Borrower's rights in, to and under all purchase orders
heretofore or hereafter received, all moneys due to Borrower under all contracts
or agreements (whether or not yet earned or due), all merchandise returned to or
reclaimed by Borrower and the Borrower's books (except minute books) relating to
any of the foregoing.
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REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS AND INVENTORY)
1.24 "Subordinated Debt" as used in this Agreement means indebtedness of
the Borrower to third parties which has been subordinated to the Obligations
pursuant to a subordination agreement in form and content satisfactory to the
Bank
1.25 "Subordination Agreement" as used in this Agreement means a
subordination agreement in form satisfactory to Bank making all present and
future indebtedness of the Borrower to N/A subordinate to the
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Obligations.
1.26 "Tangible Effective Net Worth" as used in this Agreement means net
worth as determined in accordance with GAAP consistently applied, increased by
Subordinated Debt, if any, and decreased by the following: patents, licenses,
goodwill, subscription lists, organization expenses. trade receivables converted
to notes, money due from affiliates (including officers, directors, subsidiaries
and commonly held companies).
1.27 "Tangible Net Worth" as used in this Agreement means, as of any
applicable date of determination, the excess of
(a) the net book value of all assets of a person (other than patents,
patent rights, trademarks, trade names, franchises, copyrights,
licenses, goodwill, and similar intangible assets) after all
appropriate deductions in accordance with GMP (including, without
limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization), over
(b) all Debt of such person.
1.28 "Total Liabilities" as used in this Agreement means the total of all
items of indebtedness, obligation or liability which, in accordance with GAAP
consistently applied, would be included in determining the total liabilities of
the Borrower as of the date Total Liabilities is to be determined. including
without limitation (a) all obligations secured by any mortgage, pledge. security
interest or other lien on property owned or acquired, whether or not the
obligations secured thereby shall have been assumed; (b) all obligations which
are capitalized lease obligations; and (c) all guaranties, endorsements or other
contingent or surety obligations with respect to the indebtedness of others,
whether or not reflected on the balance sheets of the Borrower, including any
obligation to furnish funds, directly or indirectly through the purchase of
goods, supplies, services, or by way of stock purchase, capital contribution,
advance or loan or any obligation to enter into a contract for any of the
foregoing.
1.29 "Working Capital" as used in this Agreement means, as of any
applicable date of determination, Current Assets less Current Liabilities.
1.30 Any and all terms used in this Agreement shall be construed and
defined in accordance with the meaning and definition of such terms under and
pursuant to the California Uniform Commercial Code (hereinafter referred to as
the "Code") as amended .
2. LOAN AND TERMS OF PAYMENT
For value received, Borrower promises to pay to the order of Bank such amount,
as provided for below, together with interest, as provided for below.
2.1 Upon the request of Borrower, made at any time and from time to time
during the term hereof, and so long as no Event of Default has occurred, Bank
shall lend to Borrower an amount equal to the Borrowing Base; provided, however,
that in no event shall Bank be obligated to make advances to Borrower under this
Section 2.1 whenever the Daily Balance exceeds, at any time, either the
Borrowing Base or the sum of TWO MILLION AND NO/100 ($2,000,000.00), such amount
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being referred to herein as an "Overadvance."
OVERFORMULA IN THE AMOUNT OF $750,000.00 IS TO BE ALLOWED ABOVE THE BORROWING
BASE BUT WITHIN THE LINE AMOUNT.
2.2 Except as herein below provided, the Credit shall bear interest, on the
Daily Balance owing, at a rate of 500/1000 ( N/A %) percentage points per annum
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above the Base Rate (the "Rate"). The Credit shall bear interest, from and after
the occurrence of an Event of Default and without constituting a waiver of any
such Event of Default, on the Daily Balance owing, at a rate three (3)
percentage points per annum above the Rate. All interest chargeable under this
Agreement that is based upon a per annum calculation shall be computed on the
basis of a three hundred sixty (360) day year for actual days elapsed.
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REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
The Base Rate as of the date of this Agreement is EIGHT AND 500/1000
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( 8.500 %) per annum. In the event that the Base Rate announced is, from
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time to time hereafter changed, adjustment in the Rate shall be made and based
on the Base Rate in effect on the date of such change. The Rate, as adjusted,
shall apply to the Credit until the Base Rate is adjusted again. The minimum
interest payable by the Borrower under this Agreement shall no event be less
than N/A per month. All interest payable by Borrower under the Credit
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shall be due and payable on the first day of each calendar month during the term
of this Agreement and Bank may, at its option, elect to treat such interest and
any and all Bank Expenses as advances under the Credit, which amounts shall
thereupon constitute Obligations and shall thereafter accrue interest at the
rate applicable to the Credit under the terms of the Agreement.
2.3 Without affecting Borrower's obligation to repay immediately any
Overadvance in accordance with Section 2.1 hereof, all Overadvances shall bear
additional interest on the amount thereof at a rate equal to N/A ( N/A %)
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percentage points per month in excess of the interest rate set forth in Section
2.2, from the date incurred and for each month thereafter, until repaid in full.
3. TERM.
3.1 This Agreement shall remain in full force and effect until
DECEMBER 1, 1998, or until terminated by notice by Borrower. Notice of such
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termination by Borrower shall be effectuated by mailing of a registered or
certified letter not less than thirty (30) days prior to the effective date of
such termination, addressed to the Bank at the address set forth herein and the
termination shall be effective as of the date so fixed in such notice.
Notwithstanding the foregoing, should Borrower be in default of one or more of
the provisions of this Agreement, Bank may terminate this Agreement at any time
without notice. Notwithstanding the foregoing, should either Bank or Borrower
become insolvent or unable to meet its debts as they mature, or fail, suspend,
or go out of business, the other party shall have the right to terminate this
Agreement at any time without notice. On the date of termination all Obligations
shall become immediately due and payable without notice or demand: no notice of
termination by Borrower shall be effective until Borrower shall have paid all
Obligations to Bank in full. Notwithstanding termination, until all Obligations
have been fully satisfied, Bank shall retain its security interest in all
existing Collateral and Collateral arising thereafter, and Borrower shall
continue to perform all of its Obligations.
3.2 After termination and when Bank has received payment in full of
Borrower's Obligations to Bank, Bank shall reassign to Borrower all Collateral
held by Bank, and shall execute a termination of all security agreements and
security interests given by Borrower to Bank, upon the execution and delivery of
mutual general releases.
4. CREATION OF SECURITY INTEREST
4.1 Borrower hereby grants to Bank a continuing security interest in all
presently existing and hereafter arising Collateral in order to secure prompt
repayment of any and all Obligations owed by Borrower to Bank and in order to
secure prompt performance by Borrower of each and all of its covenants and
Obligations under this Agreement and otherwise created. Bank's security
interest in the Collateral shall attach to all Collateral without further act on
the part of Bank or Borrower. in the event that any Collateral. including
proceeds, is evidenced by or consists of a letter of credit, advice of credit,
instrument, money, negotiable documents, chattel paper or similar property
(collectively. "Negotiable Collateral"). Borrower shall, Immediately upon
receipt thereof, endorse and assign such Negotiable Collateral over to Bank and
deliver actual physical possession of the Negotiable Collateral to Bank
4.2 Bank's security interest in Receivables shall attach to all Receivables
without further act on the part of Bank or Borrower. Upon request from Bank,
Borrower shall provide Bank with schedules describing all Receivables created or
acquired by Borrower (including without limitation agings listing the names and
addresses of, and amounts owing by date by account debtors), and shall execute
and deliver written assignments of all Receivables to Bank all in a form
acceptable to Bank, provided, however, Borrower's failure to execute and deliver
such schedules and/or assignments shall not affect or limit Bank's security
interest and other rights in and to the Receivables. Together with each
schedule, Borrower shall furnish Bank with copies of Borrower's customers'
invoices or the equivalent, and original shipping or delivery receipts for all
merchandise sold, and Borrower warrants the genuineness thereof. Bank or Bank's
designee may notify customers or account debtors of collection costs and
expenses to Borrower's account but, unless and until Bank does so or gives
Borrower other written instructions, Borrower shall collect all Receivables for
Bank, receive in trust all payments thereon as Bank's trustee, and, if so
requested to do so from Bank, Borrower shall Immediately deliver said payments
to Bank in their original form as received from the account debtor and all
letters of credit, advices of credit, instruments, documents, chattel paper or
any similar property evidencing or constituting Collateral. Notwithstanding
anything to the contrary contained herein, if sales of inventory are made for
cash, Borrower shall immediately deliver to Bank, in identical form, all such
cash, checks, or other forms of payment which Borrower receives. The receipt of
any check or other item of payment by Bank shall not be considered a payment on
account until such check or other item of payment is honored when
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REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
presented for payment, in which event, said check or other item of payment shall
be deemed to have been paid to Bank TWO ( 2 ) calendar days after the
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date Bank actually receives such check or other item of payment.
4.3 Bank's security interest in inventory shall attach to all inventory
without further act on the part of Bank or Borrower. Upon Bank's request
Borrower will from time to time at Borrower's expense pledge, assemble and
deliver such inventory to Bank or to a third party as Bank's bailee; or hold the
same in trust for Bank's account or store the same in a warehouse in Bank's
name; or deliver to Bank documents of title representing said inventory; or
evidence of Bank's security interest in some other manner acceptable to Bank.
Until a default by Borrower under this Agreement or any other Agreement between
Borrower and Bank, Borrower may, subject to the provisions hereof and consistent
herewith, sell the inventory, but only in the ordinary course of Borrower's
business. A sale of inventory in Borrower's ordinary course of business does not
include an exchange or a transfer in partial or total satisfaction of a debt
owing by Borrower.
4.4 Borrower shall execute and deliver to Bank concurrently with Borrower's
execution of this Agreement, and at any time or times hereafter at the request
of Bank, all financing statements, continuation financing statements, security
agreements, mortgages, assignments, certificates of title, affidavits, reports,
notices, schedules of accounts, letters of authority and all other documents
that Bank may request, in form satisfactory to Bank, to perfect and maintain
perfected Bank's security interest in the Collateral and in order to fully
consummate all of the transactions contemplated under this agreement. Borrower
hereby irrevocably makes, constitutes and appoints Bank (and any of Bank's
officers, employees or agents designated by Bank) as Borrower's true and lawful
attorney-in-fact with power to sign the name of Borrower on any financing
statements, continuation financing statements, security agreement, mortgage,
assignment, certificate of title, affidavit, letter of authority, notice of
other similar documents which must be executed and/or filed in order to perfect
or continue perfected Bank's security interest in the Collateral.
Borrower shall make appropriate entries in Borrower's Books disclosing
Bank's security interest in the Receivables. Bank (through any of its officers,
employees or agents) shall have the right at any time or times hereafter during
Borrower's usual business hours, or during the usual business hours of any third
party having control over the records of Borrower, to inspect and verify
Borrower's Books in order to verify the amount or condition of, or any other
matter, relating to, said Collateral and Borrower's financial condition.
4.5 Borrower appoints Bank or any other person whom Bank may designate as
Borrower's attorney-in-fact, with power to endorse Borrower's name on any
checks, notes, acceptances, money order, drafts or other forms of payment or
security that may come into Bank's possession; to sign Borrower's name on any
invoice or xxxx of lading relating to any Receivables, on drafts against account
debtors, on schedules and assignments of Receivables, on verifications of
Receivables and on notices to account debtors; to establish a lock box
arrangement and/or to notify the post office authorities to change the address
for delivery of Borrower's mail addressed to Borrower to an address designated
by Bank, to receive and open all mail addressed to Borrower, and to retain all
mail relating to the Collateral and forward all other mail to Borrower; to send,
whether in writing or by telephone, requests for verification of Receivables;
and to do all things necessary to carry out this Agreement. Borrower ratifies
and approves all acts of the attorney-in-fact. Neither Bank nor its attorney-in-
fact will be liable for any acts or omissions or for any error of judgement or
mistake of fact or law. This power being coupled with an interest, is
irrevocable so long as any Receivables in which Bank has a security interest
remain unpaid and until the Obligations have been fully satisfied.
4.6 In order to protect or perfect any security interest which Bank is
granted hereunder, Bank may, in its sole discretion, discharge any lien or
encumbrance or bond the same, pay any insurance, maintain guards, warehousemen
or any personnel to protect the Collateral, pay any service bureau, or, obtain
any records, and all costs for the same shall be added to the Obligations and
shall be payable on demand.
4.7 Borrower agrees that Bank may provide information relating to this
Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and
service providers.
5. CONDITIONS PRECEDENT
5.1 Conditions precedent to the making of the loans and the extension of
the financial accommodations hereunder, Borrower shall execute, or cause to be
executed, and deliver to Bank, in form and substance satisfactory to Bank and is
counsel, the following:
(a) This Agreement and other documents required by Bank;
(b) Financing statements (Form UCC-1 ) in form satisfactory to Bank for
filing and recording with the appropriate governmental authorities;
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(ACCOUNTS & INVENTORY)
(c) If Borrower is a corporation, then certified extracts from the minutes
of the meeting of its board of directors, authorizing the borrowings and the
granting of the security interest provided for herein and authorizing
specific officers to execute and deliver the agreements provided for herein;
(d) If Borrower is a corporation, then a certificate of good standing
showing that Borrower is in good standing under the laws of the state of its
incorporation and certificates indicating that Borrower is qualified to
transact business and is in good standing in any other state in which it
conducts business;
(e) If Borrower is a partnership, then a copy of Borrower's partnership
agreement certified by each general partner of Borrower;
(f) UCC searches, tax lien and litigation searches, fictitious business
statement filings, insurance certificates, notices or other similar
documents which Bank may require and in such form as Bank may require, in
order to reflect, perfect or protect Bank's first priority security interest
in the Collateral and in order to fully consummate all of the transactions
contemplated under this Agreement;
(g) Evidence that Borrower has obtained insurance and acceptable
endorsements;
(h) Waivers executed by landlords and mortgagees of any real property on
which any Collateral Is located; and
(i) Warranties and representations of officers.
6. WARRANTIES REPRESENTATIONS AND COVENANTS.
6.1 If so requested by Bank, Borrower shall, at such intervals designated
by Bank, during the term hereof execute and deliver a Report of Accounts
Receivable or similar report, in form customarily used by Bank Borrower's
Borrowing Base at all times pertinent hereto shall not be less than the advances
made hereunder. Bank shall have the right to recompute Borrower's Borrowing Base
in conformity with this Agreement.
6.2 If any warranty is breached as to any account, or any account is not
paid in full by an account debtor within NINETY ( 90 ) days from the date of
-------------
invoice, or an account debtor disputes liability or makes any claim with respect
thereto, or a petition in bankruptcy or other application for relief under the
Bankruptcy Code or any other insolvency law is filed by or against an account
debtor, or an account debtor makes an assignment for the benefit of creditors,
becomes insolvent, fails or goes out of business, then Bank may deem ineligible
any and all accounts owing by that account debtor, and reduce Borrower's
Borrowing Base by the amount thereof. Bank shall retain its security interest in
all Receivables and accounts, whether eligible or ineligible, until all
Obligations have been fully paid and satisfied. Returns and allowances, if any,
as between Borrower and its customers, will be on the same basis and in
accordance with the usual customary practices of the Borrower, as they exist at
this time. Any merchandise which is returned by an account debtor or otherwise
recovered shall be set aside, marked with Bank's name, and Bank shall retain a
security interest therein. Borrower shall promptly notify Bank of all disputes
and claims and settle or adjust them on terms approved by Bank After default by
Borrower hereunder, no discount, credit or allowance shall be granted to any
account debtor by Borrower and no return of merchandise shall be accepted by
Borrower without Bank's consent. Bank may, after default by Borrower, settle or
adjust disputes and claims directly with account debtors for amounts and upon
terms which Bank considers advisable, and in such cases Bank will credit
Borrower's account with only the net amounts received by Bank in payment of the
accounts, after deducting all Bank Expenses in connection therewith.
6.3 Borrower warrants, represents, covenants and agrees that:
(a) Borrower has good and marketable title to the Collateral. Bank has
and shall continue to have a first priority perfected security interest
in and to the Collateral. The Collateral shall at all times remain free
and clear of all liens, encumbrances and security interests (except
those in favor of Bank).
(b) All accounts are and will, at all times pertinent hereto, be bona
fide existing obligations created by the sale and delivery of
merchandise or the rendition of services to account debtors in the
ordinary course of business, free of liens, claims, encumbrances and
security interests (except as held by Bank and except as may be
consented to, in writing, by Bank) and are unconditionally owed to
Borrower without defenses, disputes, offsets, counterclaims, rights of
return or cancellation, and Borrower shall have received no notice of
actual or imminent bankruptcy or insolvency of any account debtor at
the time an account due from such account debtor is assigned to Bank
7
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
(c) At the time each account is assigned to Bank, all property giving
rise to such account shall have been delivered to the account debtor or
to the agent for the account debtor for immediate shipment to, and
unconditional acceptance by, the account debtor. Borrower shall deliver
to Bank, as Bank may from time to time require, delivery receipts,
customer's purchase orders, shipping instruction, bills of lading and
any other evidence of shipping arrangements. Absent such a request by
Bank, copies of all such documentation shall be held by Borrower as
custodian for Bank.
6.4 At the time each eligible account is assigned to Bank, all such
eligible accounts will be due and payable on terms set forth in Section 1.12, or
on such other terms approved in writing by Bank in advance of the creation of
such accounts and which are expressly set forth on the face of all invoices,
copies of which shall be held by Borrower as custodian for Bank, and no such
eligible account will then be past due.
6.5 Borrower shall keep the inventory only at the following locations:
and the owner or mortgagees of the respective locations
------------------------
are: .
--------------------------------
(a) Borrower, immediately , upon demand by Bank therefor shall now and
from time to time hereafter at such intervals as are requested by Bank,
deliver to Bank, designations of inventory specifying Borrower's coat
of inventory, the wholesale market value thereof and such other matters
and information relating to the inventory as Bank may request;
(b) Borrower's inventory, valued at the lower of Borrower's cost or
the wholesale market value thereof, at all times pertinent hereto shall
not be less than N/A Dollars ($ N/A ) of which no less than
------------- -------------
N/A Dollars ($ N/A ) shall be in raw materials and
---------------- --------------
finished goods;
(c) All of the inventory is and shall remain free from all purchase
money or other security interests, liens or encumbrances, except as
held by Bank;
(d) Borrower does now keep and hereafter at all times shall keep
correct and accurate records itemizing and describing the kind, type,
quality and quantity of the inventory, its cost therefor and selling
price thereof, and the daily withdrawals therefrom and additions
thereto, all of which records shall be available upon demand to any of
Bank's officers, agents and employees for inspection and copying;
(e) All inventory, now and hereafter at all times, shall be new
inventory of good and merchantable quality free from defects;
(f) Inventory is not now and shall not at any time or times hereafter
be located or stored with a bailee, warehouseman or other third party
without Bank's prior written consent, and, in such event, Borrower will
concurrently therewith cause any such bailee, warehouseman or other
third party to issue and deliver to Bank, in a form acceptable to Bank,
warehouse receipts in Bank's name evidencing the storage of inventory
or other evidence of Bank's prior rights in the inventory. in any
event, Borrower shall instruct any third party to hold all such
inventory for Bank's account subject to Bank's security interests and
its instructions; and
(g) Bank shall have the right upon demand now and/or at all times
hereafter, during Borrower's usual business hours, to inspect and
examine the inventory and to check and test the same as to quality,
quantity, value and condition and Borrower agrees to reimburse Bank for
Bank's reasonable costs and expenses in so doing.
6.6 Borrower represents, warrants and covenants with Bank that Borrower
will not, without Bank's prior written consent:
(a) Grant a security interest in or permit a lien, claim or
encumbrance upon any of the Collateral to any person, association,
firm, corporation. entity or governmental agency or instrumentality;
(b) Permit any levy, attachment or restraint to be made affecting any
of Borrower's assets;
(c) Permit any Judicial Officer or Assignee to be appointed or to take
possession of any or all of Borrower's assets;
8
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
(d) Other than sales of inventory in the ordinary course of Borrower's
business, to sell, lease, or otherwise dispose of, move, or transfer,
whether by sale or otherwise, any of Borrower's assets;
(e) Change its name, business structure, corporate identity or
structure; add any new fictitious names, liquidate, merge or
consolidate with or into any other business organization;
(f) Move or relocate any Collateral;
(g) Acquire any other business organization;
(h) Enter into any transaction not in the usual course of Borrower 5
business;
(i) Make any investment in securities of any person, association,
firm, entity, or corporation other than the securities of the United
States of America;
(j) Make any change in Borrower's financial structure or in any of its
business objectives, purposes or operations which would adversely
effect the ability of Borrower to repay Borrower's Obligations;
(k) incur any debts outside the ordinary course of Borrower's business
except renewals or extensions of existing debts and interest thereon:
(l) Make any advance or loan except in the ordinary course of
Borrower's business as currently conducted;
(m) Make loans, advances or extensions of credit to any Person, except
for sales on open account and otherwise in the ordinary course of
business;
(n) Guarantee or otherwise, directly or indirectly, in any way be or
become responsible for obligations of any other Person, whether by
agreement to purchase the indebtedness of any other Person, agreement
for the furnishing of funds to any other Person through the furnishing
of goods, supplies or services, by way of stock purchase, capital
contribution, advance or loan, for the purpose of paying or discharging
(or causing the payment or discharge of) the indebtedness of any other
Person, or otherwise, except for the endorsement of negotiable
instruments by the Borrower in the ordinary course of business for
deposit or collection.
(o) (a) Sell, lease, transfer or otherwise dispose of properties and
assets having an aggregate book value of more than N/A Dollars ($ N/A )
----- --------
(whether in one transaction or in a series of transactions) except as
to the sale of inventory in the ordinary course of business; (b) change
its name, consolidate with or merge into any other corporation, permit
another corporation to merge into it, acquire all or substantially all
the properties or assets of any other Person, enter into any
reorganization or recapitalization or reclassify its capital stock, or
(c) enter into any sale-leaseback transaction;
(p) Subordinate any indebtedness due to it from a person to
indebtedness of other creditors of such person;
(q) Purchase or hold beneficially any stock or other securities of, or
make any investment or acquire any interest whatsoever in, any other
Person, except for the common stock of the Subsidiaries owned by the
Borrower on the date of this Agreement and except for certificates of
deposit with maturities of one year or less of United States commercial
banks with capital, surplus and undivided profits in excess of
$100,000,000 and direct obligations of the United States Government
maturing within one year from the date of acquisition thereof; or
(r) Allow any fact, condition or event to occur or exist with respect
to any employee pension or profit sharing plans established or
maintained by it which might constitute grounds for termination of any
such plan or for the court appointment of a trustee to administer any
such plan.
6.7 Borrower Is not a merchant whose sales for resale of goods for
personal, family or household purposes exceeded seventy-five percent (75%) in
dollar volume of its total sales of all goods during the 12 months preceding the
filing by Bank of a financing statement describing the Collateral. At no time
hereafter shall Borrower's sales for resale of goods for personal, family or
household purposes exceed seventy-five percent (75 %) in dollar volume of its
total sales.
9
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
6.8 Borrower's sole place of business or chief executive office or
residence is located at the address indicated above and Borrower covenants and
agrees that it will not, during the term of this Agreement, without prior
written notification to Bank, relocate said sole place of business or chief
executive office or residence.
6.9 if Borrower is a corporation, Borrower represents, warrants and
covenants as follows:
(a) Borrower will not make any distribution or declare or pay any
dividend (in stock or in cash) to any shareholder or on any of its
capital stock, of any class, whether now or hereafter outstanding, or
purchase, acquire, repurchase, redeem or retire any such capital stock;
(b) Borrower is and shall at all times hereafter be a corporation duly
organized and existing in good standing under the laws of the state of
its incorporation and qualified and licensed to do business in
California or any other state in which it conducts its business;
(c) Borrower has the right and power and is duly authorized to enter
into this Agreement; and
(d) The execution by Borrower of this Agreement shall not constitute a
breach of any provision contained in Borrower's articles of
incorporation or by-laws.
6.10 The execution of and performance by Borrower of all of the terms and
provisions contained in this Agreement shall not result in a breach of or
constitute an event of default under any agreement to which Borrower is now or
hereafter becomes a party.
6.11 Borrower shall promptly notify Bank in writing of its acquisition by
purchase, lease or otherwise of any after acquired property of the type included
in the Collateral, with the exception of purchases of inventory in the ordinary
course of business.
6.12 All assessments and taxes, whether real, personal or otherwise, due or
payable by, or imposed, levied or assessed against, Borrower or any of its
property have been paid, and shall hereafter be paid in full, before
delinquency. Borrower shall make due and timely payment or deposit of all
federal, state and local taxes, assessments or contributions required of it by
law, and will execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof. Borrower will make timely payment
or deposit of all X.X.XX payments and withholding taxes required of it by
applicable laws, and will upon request furnish Bank with proof satisfactory to
it that Borrower has made such payments or deposit. If Borrower fails to pay any
such assessment, tax, contribution, or make such deposit, or furnish the
required proof, Bank may, in its sole and absolute discretion and without notice
to Borrower, (i) make payment of the same or any part thereof; or (ii) set up
such reserves in Borrower's account as Bank deems necessary to satisfy the
liability therefor, or both. Bank may conclusively rely on the usual statements
of the amount owing or other official statements Issued by the appropriate
governmental agency. Each amount so paid or deposited by Bank shall constitute a
Bank Expense and an additional advance to Borrower.
6.13 There are no actions or proceedings pending by or against Borrower or
any guarantor of Borrower before any court or administrative agency and Borrower
has no knowledge of any pending, threatened or imminent litigation, governmental
investigations or claims, complaints. actions or prosecutions involving Borrower
or any guarantor of Borrower, except as heretofore specifically disclosed in
writing to Bank. If any of the foregoing arise during the term of the Agreement,
Borrower shall immediately notify Bank in writing.
6.14 a. Borrower, at its expense, shall keep and maintain its assets
insured against loss or damage by fire, theft explosion, sprinklers
and all other hazards and risks ordinarily insured against by other
owners who use such properties in similar businesses for the full
insurable value thereof. Borrower shall also keep and maintain
business interruption insurance and public liability and property
damage insurance relating to Borrower's ownership and use of the
Collateral and its other assets. All such policies of insurance shall
be in such form, with such companies, and in such amounts as may be
satisfactory to Bank. Borrower shall deliver to Bank certified copies
of such policies of insurance and evidence of the payments of all
premiums therefor. All such policies of insurance (except those of
public liability and property damage) shall contain an endorsement in
a form satisfactory to Bank showing Bank as a loss payee thereof, with
a waiver of warranties (Form 438-BFU), and all proceeds payable
thereunder shall be payable to Bank and, upon receipt by Bank, shall
be applied on account of the Obligations owing to Bank. To secure the
payment of the Obligations, Borrower grants Bank a security interest
in and to all such policies of insurance (except those of public
liability and property damage) and the proceeds thereof, and Borrower
shall direct all insurers under such policies of insurance to pay all
proceeds thereof directly to Bank
10
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
b. Borrower hereby irrevocably appoints Bank (and any of Bank's
officers, employees or agents designated by Bank) as Borrower's
attorney for the purpose of making, selling and adjusting claims under
such policies of insurance, endorsing the name of Borrower on any
check, draft, instrument or other item of payment for the proceeds of
such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance. Borrower will
not cancel any of such policies without Bank's prior written consent.
Each such insurer shall agree by endorsement upon the policy or
policies of insurance issued by it to Borrower as required above, or
by independent instruments furnished to Bank, that it will give Bank
at least ten (10) days written notice before any such policy or
policies of insurance shall be altered or cancelled, and that no act
or default of Borrower, or any other person, shall affect the right of
Bank to recover under such policy or policies of insurance required
above or to pay any premium in whole or in part relating thereto.
Bank, without waiving or releasing any Obligations or any Event of
Default, may, but shall have no obligation to do so. obtain and
maintain such policies of insurance and pay such premiums and take any
other action with respect to such policies which Bank deems advisable.
All sums so disbursed by Bank, as well as reasonable attorneys' fees,
court costs, expenses and other charges relating thereto, shall
constitute Bank Expenses and are payable on demand.
6.15 All financial statements and information relating to Borrower which
have been or may hereafter be delivered by Borrower to Bank are true and correct
and have been prepared in accordance with GAAP consistently applied and there
has been no material adverse change in the financial condition of Borrower since
the submission of such financial information to Bank.
6.16 a. Borrower at all times hereafter shall maintain a standard and
modern system of accounting in accordance with GAAP consistently
applied with ledger and account cards and/or computer tapes and
computer disks, computer printouts and computer records pertaining to
the Collateral which contain information as may from time to time be
requested by Bank, not modify or change its method of accounting or
enter into, modify or terminate any agreement presently existing, or
at any time hereafter entered into with any third party accounting
firm and/or service bureau for the preparation and/or storage of
Borrower's accounting records without the written consent of Bank
first obtained and without said accounting firm and/or service bureau
agreeing to provide information regarding the Receivables and
inventory and Borrower's financial condition to Bank; permit Bank and
any of its employees. officers or agents, upon demand, during
Borrower's usual business hours, or the usual business hour of third
persons having control thereof, to have access to and examine all of
the Borrower's Books relating to the Collateral, Borrower's
Obligations to bank, Borrower's financial condition and the results of
Borrower's operations and in connection therewith, permit Bank or any
of its agents, employees or officers to copy and make extracts
therefrom.
b. Borrower shall deliver to Bank within thirty (30) days after the
end of each MONTH , a COMPANY PREPARED balance sheet and profit and
------- ------------------
loss statement covering Borrower's operation and deliver to Bank
within ninety (90) days after the end of which of Borrower's fiscal
years a(n) AUDITED statement of the financial condition of the
---------
Borrower for each such fiscal year, including but not limited to, a
balance sheet and profit and loss statement and any other report
requested by Bank relating to the Collateral and the financial
condition of Borrower, and a certificate signed by an authorized
employee of Borrower to the effect that all reports, statements,
computer disk or tape files, computer printouts, computer runs, or
other computer prepared information of any kind or nature relating to
the foregoing or documents delivered or caused to be delivered to Bank
under this subparagraph are complete, correct and thoroughly present
the financial condition of borrower and that there exists on the date
of delivery to Bank no condition or event which constitutes a breach
or Event of Default under this Agreement.
* INCLUDING A COVENANT COMPLIANCE CERTIFICATE
c. in addition to the financial statements requested above, the
Borrower agrees to provide Bank with the following schedules:
x Accounts Receivable Agings on a MONTHLY basis: within 15
----------------- -------
days of month-end
x Accounts Payable Agings on a MONTHLY basis: within 15
----------------- -------
days of month-end
Job Progress Reports on a basis:
---------------- --------------------
and
x BORROWINGS BASE REPORT on a MONTHLY basis: within 15
--------------------------------------- -------
days of month-end
11
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
OR AS REQUIRED BY DRAW, IF THE SUM OF THE OUTSTANDING LETTERS OF CREDIT AND
BORROWINGS EXCEED SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000.00).
6.17 Borrower shall maintain the following financial ratios and covenants
on a consolidated and non-consolidated basis:
(a) Working Capital in an amount not less than n/a
--------
(b) Tangible Effective Net Worth in an amount not less than
$1,500,000.00 FROM THE DATE OF THIS AGREEMENT AND THEREAFTER,
-------------------------------------------------------------
NOTWITHSTANDING THE FOREGOING, THE MINIMUM EFFECTIVE TANGIBLE NET
-----------------------------------------------------------------
WORTH WILL INCREASE BY FIFTY PERCENT (50%) OF NEW EQUITY OR
-----------------------------------------------------------
SUBORDINATED DEBT RAISED AFTER LOAN CLOSING.
-------------------------------------------
(c) a ratio of Current Assets to Current Liabilities of not less than
N/A
-------
(d) a quick ratio of cash plus securities plus Receivables to Current
Liabilities of not less than 1.25:1.00 FROM THE DATE OF THIS AGREEMENT
-----------------------------------------
AND THEREAFTER. THE DEFINITION OF CURRENT LIABILITIES USED TO
-------------------------------------------------------------
DETERMINE THE QUICK RATIO SHALL ALSO INCLUDE ALL ISSUED AND
-----------------------------------------------------------
OUTSTANDING LETTERS OF CREDIT AS WELL AS THE FIRST FIVE HUNDRED
---------------------------------------------------------------
THOUSAND DOLLARS ($500,000.00) OUTSTANDING UNDER THE BRIDGE LOAN
----------------------------------------------------------------
FACILITY AS DESCRIBED IN THAT CERTAIN COMMITMENT LETTER DATED JULY 29,
---------------------------------------------------------------------
1997, BY AND BETWEEN THE BANK AND THE BORROWER, BUT WILL NOT INCLUDE
--------------------------------------------------------------------
DEFERRED REVENUE.
----------------
(e) a ratio of Total Liabilities (less debt subordinated to Bank)
to Tangible Effective Net Worth of less than n/a .
-------------
(f) a ratio of Cash Flow to Fixed Charges of not less than n/a .
-------
(g) Net Income after taxes of N/A .
-------
(h) Borrower shall not without Bank's prior written consent acquire
or expend for or commit itself to acquire or expend for fixed assets
by lease, purchase or otherwise in an aggregate amount that exceeds
N/A Dollars ($ N/A ) in any fiscal year; and
--------- ---------
(i) SEMI-ANNUAL A/R AUDITS .
------------------------------------------------------
All financial covenants shall be computed in accordance with GAAP
consistently applied except as otherwise specifically set forth in this
Agreement. All monies due from affiliates (including officers, directors and
shareholders) shall be excluded from Borrower's assets for all purposes
hereunder.
6.18 Borrower shall promptly supply Bank (and cause any guarantor to supply
Bank) with such other information (including tax returns) concerning its
financial affairs (or that of any guarantor) as Bank may request from time to
time hereafter, and shall promptly notify Bank of any material adverse change in
Borrower's financial condition and of any condition or event which constitutes a
breach of or an event which constitutes an Event of Default under this
Agreement.
6.19 Borrower is now and shall be at all times hereafter solvent and able
to pay its debts (including trade debts) as they mature.
6.20 Borrower shall immediately and without demand reimburse Bank for all
sums expended by Bank in connection with any action brought by Bank to correct
any default or enforce any provision of this Agreement, including all Bank
Expenses; Borrower authorizes and approves all advances and payments by Bank for
items described in this Agreement as Bank Expenses.
12
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
6.21 Each warranty, representation and agreement contained in this
Agreement shall be automatically deemed repeated with each advance and shall be
conclusively presumed to have been relied on by Bank regardless of any
investigation made or information possessed by Bank. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements which
Borrower shall give, or cause to be given, to Bank, either now or hereafter.
6.22 Borrower shall keep all of its principal bank accounts with Bank and
shall notify the Bank Immediately in writing of the existence of any other bank
account, deposit account, or any other account into which money can be
deposited.
6.23 Borrower shall furnish to the Bank: (a) as soon as possible, but in no
event later than thirty (30) days after Borrower knows or has reason to know
that any reportable event with respect to any deferred compensation plan has
occurred, a statement of the chief financial officer of Borrower setting forth
the details concerning such reportable event and the action which Borrower
proposes to take with respect thereto, together with a copy of the notice of
such reportable event given to the Pension Benefit Guaranty Corporation, if a
copy of such notice is available to Borrower; (b) promptly after the filing
thereof with the United States Secretary of Labor or the Pension Benefit
Guaranty Corporation, copies of each annual report with respect to each deferred
compensation plan; (c) promptly after receipt thereof a copy of any notice
Borrower may receive from the Pension Benefit Guaranty Corporation or the
lnternal Revenue Service with respect to any deferred compensation plan;
provided, however, this subparagraph shall not apply to notice of general
application issued by the Pension Benefit Guaranty Corporation or the Internal
Revenue Service; and (d) when the same is made available to participants in the
deferred compensation plan, all notices and other forms of information from time
to time disseminated to the participants by the administrator of the deferred
compensation plan.
6.24 Borrower is now and shall at all times hereafter remain in compliance
with all federal, state and municipal laws, regulations and ordinances relating
to the handling, treatment and disposal of toxic substances, wastes and
hazardous material and shall maintain all necessary authorizations and permits.
6.25 Borrower shall maintain insurance on the life of
----------------------
in an amount not to be less than NO/100 Dollars ($ n/a ) under one or
------------- ----------
more policies issued by insurance companies satisfactory to Bank, which policies
shall be assigned to Bank as security for the Obligations and on which Bank
shall be named as sole beneficiary.
6.26 Borrower shall limit direct and indirect compensation paid to the
following employees: , , to an aggregate
--------------------- -----------------
of N/A Dollars ($ N/A ) per
-------------- ----------- --------------------------
7. EVENTS OF DEFAULT
Any one or more of the following events shall constitute a default by
Borrower under this Agreement:
(a) If Borrower fails or neglects to perform, keep or observe any
term, provision, condition, covenant, agreement, warranty or
representation contained in this Agreement, or any other present or
future agreement between Borrower and Bank;
(b) If any representation, statement, report or certificate made or
delivered by Borrower, or any of its officers, employees or agents to
Bank is not true and correct;
(c) If Borrower fails to pay when due and payable or declared due and
payable, all or any portion of the Borrower's Obligations (whether of
principal, interest, taxes, reimbursement of Bank Expenses, or
otherwise);
(d) If there is a material impairment of the prospect of repayment of
all or any portion of Borrower's Obligations or a material impairment
of the value or priority of Bank's security interest in the Collateral;
(e) If all or any of Borrower's assets are attached, seized, subject
to a writ or distress warrant, or are levied upon, or come into the
possession of any Judicial Officer or Assignee and the same are not
released, discharged or bonded against within ten (10) days thereafter;
(f) If any insolvency Proceeding is filed or commenced by or against
Borrower without being dismissed within ten (10) days thereafter;
13
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
(g) If any proceeding is filed or commenced by or against Borrower for
its dissolution or liquidation;
(h) If Borrower is enjoined, restrained or in any way prevented by
court order from continuing to conduct all or any material part of its
business affairs;
(i) If a notice of lien, levy or assessment is filed of record with
respect to any or all of Borrower's assets by the United States
Government, or any department, agency or instrumentality thereof, or by
any state, county, municipal or other government agency, or if any
taxes or debts owing at any time hereafter to any one or more of such
entities becomes a lien, whether xxxxxx or otherwise, upon any or all
of the Borrower's assets and the same is not paid on the payment date
thereof;
(j) If a judgment or other claim becomes a lien or encumbrance upon
any or all of Borrower's assets and the same is not satisfied,
dismissed or bonded against within ten (10) days thereafter;
(k) If Borrower's records are prepared and kept by an outside computer
service bureau at the time this Agreement is entered into or during the
term of this Agreement such an agreement with an outside service bureau
is entered into, and at any time thereafter, without first obtaining
the written consent of Bank, Borrower terminates, modifies, amends or
changes its contractual relationship with said computer service bureau
or said computer service bureau falls to provide Bank with any
requested information or financial data pertaining to Bank's
Collateral, Borrower's financial condition or the results of Borrower's
operations;
(l) If Borrower permits a default in any material agreement to which
Borrower is a party with third parties so as to result in an
acceleration of the maturity of Borrower's indebtedness to others,
whether under any indenture, agreement or otherwise;
(m) If Borrower makes any payment on account of indebtedness which has
been subordinated to Borrower's Obligations to Bank;
(n) If any misrepresentation exists now or thereafter in any warranty
or representation made to Bank by any officer or director of Borrower,
or if any such warranty or representation is withdrawn by any officer
or director;
(o) If any party subordinating its claims to that of Bank's or any
guarantor of Borrower's Obligations dies or terminates its
subordination or guaranty, becomes insolvent or an Insolvency
Proceeding is commenced by or against any such subordinating party or
guarantor;
(p) If Borrower is an individual and Borrower dies;
(q) If there is a change of ownership or control of FIFTY ONE
---------
percent (51.0%) or more of the issued and outstanding stock of
------
Borrower; or
(r) If any reportable event, which the Bank determines constitutes
grounds for the termination of any deferred compensation plan by the
Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer any
such plan, shall have occurred and be continuing thirty (30) days after
written notice of such determination shall have been given to Borrower
by Bank, or any such Plan shall be terminated within the meaning of
Title IV of the Employment Retirement income Security Act ("ERISA"), or
a trustee shall be appointed by the appropriate United States District
Court to administer any such plan, or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any plan and in
case of any event described in this Section 7.0, the aggregate amount
of the Borrower's liability to the Pension Benefit Guaranty Corporation
under Sections 4062, 4063 or 4064 of ERISA shall exceed five percent
(5%) of Borrower's Tangible Effective Net Worth.
Notwithstanding anything contained in Section 7 to the contrary, Bank shall
refrain from exercising its rights and remedies and Event of Default shall
thereafter not be deemed to have occurred by reason of the occurrence of any of
the events set forth in Sections 7.e, 7,f or 7.j of this Agreement if, within
ten (10) days from the date thereof, the same is released, discharged,
dismissed, bonded against or satisfied; provided, however, if the event Is the
institution of insolvency Proceedings against Borrower, Bank shall not be
obligated to make advances to Borrower during such cure period.
14
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
8. BANK'S RIGHTS AND REMEDIES
8.1 Upon the occurrence of an Event of Default by Borrower under this
Agreement, Bank may, at its election, without notice of its election and without
demand, do any one or more of the following , all of which are authorized by
Borrower:
(a) Declare Borrower's Obligations, whether evidenced by this
Agreement, installment notes, demand notes or otherwise, immediately
due and payable to the Bank;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, or any other agreement between Borrower
and Bank;
(c) Terminate this Agreement as to any future liability or obligation
of Bank, but without affecting Bank's rights and security interests in
the Collateral, and the Obligations of Borrower to Bank;
(d) Without notice to or demand upon Borrower or any guarantor, make
such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral, Borrower
agrees to assemble the Collateral if Bank so requires and to make the
Collateral available to Bank as Bank may designate. Borrower authorizes
Bank to enter the premises where the Collateral Is located, take and
maintain possession of the Collateral and the premises (at no charge to
Bank), or any part thereof, and to pay, purchase, contest or compromise
any encumbrance, charge or lien which in the opinion of Bank appears to
be prior or superior to its security interest and to pay all expenses
incurred in connection therewith ;
(e) Without limiting Bank's rights under any security interest, Bank
Is hereby granted a license or other right to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature as it pertains to the Collateral, in
completing production of, advertising for sale and selling any
Collateral and Borrower's rights under all licenses and all franchise
agreement shall inure to Bank's benefit, and Bank shall have the right
and power to enter into sublicense agreements with respect to all such
rights with third parties on terms acceptable to Bank;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sales and sail (1n the manner provided for
herein) the inventory ;
(g) Sell or dispose the Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or
on terms, in such manner and at such places (including Borrower's
premises) as is commercially reasonable in the opinion of Bank it is
not necessary that the Collateral be present at any such sale;
(h) Bank shall give notice of the disposition of the Collateral as
follows:
(i) Bank shall give the Borrower and each holder of a security
interest in the Collateral who has filed with Bank a written request
for notice, a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some disposition other than a
public sale is to be made of the Collateral, the time on or after which
the private ale or other disposition is to be made;
(ii) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower's address appearing in this Agreement, at least
five (5) calendar days before the date fixed for the sale, or at least
five (5) calendar days before the date on or after which the private
sale or other disposition is to be made, unless the Collateral is
perishable or threatens to decline speedily in value. Notice to persons
other than Borrower claiming an interest in the Collateral shall be
sent to such addresses as they have furnished to Bank;
(iii) If the sale is to be a public sale, Bank shall also give
notice of the time and place by publishing a notice one time at least
five (5) calendar days before the date of the sale in a newspaper of
general circulation in the county in which the sale is to be held; and
(iv) Bank may credit bid and purchase at any public sale.
15
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
(i) Borrower shall pay all Bank Expenses incurred in connection with
Bank's enforcement and exercise of any of its rights and remedies as
herein provided, whether or not suit is commenced by Bank;
(j) Any deficiency which exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will be
returned, without interest and subject to the rights of third parties,
to Borrower by Bank, or, in Bank's discretion, to any party who Bank
believes, in good faith, is entitled to the excess; and
(k) Without constituting a retention of Collateral in satisfaction of
an obligation within the meaning of 9505 of the Uniform Commercial Code
or an action under California Code of Civil Procedure 726, apply any
and all amounts maintained by Borrower as deposit accounts (as that
term is defined under 9105 of the Uniform Commercial Code) or other
accounts that Borrower maintains with Bank against the Obligations.
8.2 Bank's rights and remedies under this Agreement and all other
agreements shall be cumulative. Bank shall have all other rights and remedies
not inconsistent herewith as provided by law or in equity. No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of any
default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election or acquiescence by Bank.
9. TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY.
If Borrower fails to pay promptly when due to another person or entity, monies
which Borrower is required to pay by reason of any provision in this Agreement,
Bank may, but need not, pay the same and charge Borrower's account therefor, and
Borrower shall promptly reimburse Bank. All such sums shall become additional
indebtedness owing to Bank, shall bear interest at the rate hereinabove
provided, and shall be secured by all Collateral. Any payments made by Bank
shall not constitute (i) an agreement by it to make similar payments in the
future; or (ii) a waiver by Bank of any default under this Agreement. Bank need
not inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance or lien and the receipt of the usual official notice of
the payment thereof shall be conclusive evidence that the same was validly due
and owing. Such payments shall constitute Bank Expenses and additional advances
to Borrower.
10. WAIVERS.
10.1 Borrower agrees that checks and other instruments received by Bank in
payment or on account of Borrower's Obligations constitute only conditional
payment until such items are actually paid to Bank and Borrower waives the right
to direct the application of any and all payments at any time or times hereafter
received by Bank on account of Borrower's Obligations and Borrower agrees that
Bank shall have the continuing exclusive right to apply and reapply such
payments in any manner as Bank may deem advisable, notwithstanding any entry by
Bank upon its books.
10.2 Borrower waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, documents, instruments chattel paper, and guarantees
at any time held by Bank on which Borrower may in any way be liable.
10.3 Bank shall not in any way or manner be liable or responsible for (a)
the safekeeping of the inventory; (b) any 1055 or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof; or (d) any act default of any carrier, warehouseman, ballee, forwarding
agency or other person whomsoever. All risk of loss, damage or destruction of
inventory shall be borne by Borrower,
10.4 Borrower waives the right and the right to assert a confidential
relationship, if any, It may have with any accountant, accounting firm and/or
service bureau or consultant in connection with any information requested by
Bank pursuant to or in accordance with this Agreement, and agrees that a Bank
may contact directly any such accountants. accounting firm and/or service bureau
or consultant in order to obtain such information.
10.5 BORROWER AND BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING RELATING TO This AGREEMENT OR ANY TRANSACTION HEREUNDER, OR
CONTEMPLATED HEREUNDER, OR ANY OTHER CLAIM (INCLUDING TORT OR BREACH OF DUTY
CLAIMS) OR DISPUTE HOWSOEVER ARISING BETWEEN BANK AND BORROWER.
10.6 In the event that Bank elects to waive any rights or remedies
hereunder, or compliance with any of the terms hereof, or delays or fails to
pursue or enforce any terms, such waiver, delay or failure to pursue or enforce
shall only be
16
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
effective with respect to that single act and shall not be construed to affect
any subsequent transactions or Bank's right to later pursue such rights and
remedies.
11. ONE CONTINUING LOAN TRANSACTION.
All loans and advances heretofore, now or at any time or times hereafter made by
Bank to Borrower under this Agreement or any other agreement between Bank and
Borrower, shall constitute one loan secured by Bank's security interests in the
Collateral and by all other security interests, liens, encumbrances heretofore,
now or from time to time hereafter granted by Borrower to Bank.
Notwithstanding the above, (i) to the extent that any portion of the Obligations
are a consumer loan, that portion shall not be secured by any deed of trust or
mortgage on or other security interest in the Borrower's principal dwelling
which Is not a purchase money security interest as to that portion, unless
expressly provided to the contrary in another place, or (ii) if the Borrower (or
any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure the loan
and any other Obligation of the Borrower (or any of them), unless expressly
provided to the contrary in another place.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by either
party on the other relating to this Agreement shall be in writing and sent by
regular United States mail, postage prepaid, properly addressed to Borrower or
to Bank at the addresses stated in this Agreement, or to such other addresses as
Borrower or Bank may from time to time specify to the other in writing. Requests
to Borrower by Bank hereunder may be made orally.
13. AUTHORIZATION TO DISBURSE.
Bank is hereby authorized to make loans and advances hereunder upon telephonic
or other instructions received from anyone purporting to be an officer,
employee, or representative of Borrower, or at the discretion of Bank if said
loans and advances are necessary to meet any Obligations of Borrower to Bank.
Bank shall have no duty to make inquiry or verily the authority of any such
party, and Borrower shall hold Bank harmless from any damage, claims or
liability by reason of Bank's honor of, or failure to honor, any such
instructions.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
Any documents, schedules, invoices or other papers delivered to Bank, may be
destroyed or otherwise disposed of by Bank six (6) months after they are
delivered to or received by Bank, unless Borrower requests, in writing, the
return of the said documents, schedules, invoices or other papers and makes
arrangements, at Borrower's expense, for their return.
15. CHOICE OF LAW.
The validity of this Agreement, its construction, interpretation and
enforcement, and the rights of the parties hereunder and concerning the
Collateral, shall be determined according to the laws of the State of
California. The parties agree that all actions or proceedings arising in
connection with this Agreement shall be tried and litigated only in the state
and federal courts in the Northern District of California or County of Santa
Xxxxx.
16. GENERAL PROVISIONS.
16.1 This Agreement shall be binding and deemed effective when executed by
the Borrower and accepted and executed by Bank at its Headquarter Office.
16.2 Agreement shall bind and inure to the benefit of the respective
successors and assigns of each of the parties, provided, however, that Borrower
may not assign this Agreement or any rights hereunder without Bank's prior
written consent and any prohibited assignment shall be absolutely void. No
consent to an assignment by Bank shall release Borrower or any guarantor from
their Obligations to Bank, Bank may assign this Agreement and its rights and
duties hereunder. Bank reserves the right to sell, assign, transfer, negotiate
or grant participations in all or any part of, or any interest in Bank's rights
and benefits hereunder. in connection therewith, Bank may disclose all documents
and information which Bank now or hereafter may have relating to Borrower or
Borrower's business.
16.3 Paragraph headings and paragraph numbers have been set forth herein
for convenience only; unless the contrary is compelled by the context,
everything contained in each paragraph applies equally to this entire Agreement.
17
REVOLVING
LOAN & SECURITY AGREEMENT
(ACCOUNTS & INVENTORY)
16.4 Neither this Agreement nor any uncertainty or ambiguity herein shall
be construed or resolved against Bank or Borrower, whether under any rule of
construction or otherwise; on the contrary, this Agreement has been reviewed by
all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto. When permitted by the context, the singular includes the
plural and vice versa.
16.5 Each provision of this Agreement shall be several from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
16.6 This Agreement cannot be changed or terminated orally. Except as to
currently existing Obligations owing by Borrower to Bank, all prior agreements,
understandings, representations. warranties, and negotiations. If any, with
respect to the subject matter hereof, are merged into this Agreement.
16.7 The parties intend and agree that their respective rights, duties,
powers liabilities, obligations and discretions shall be performed, carried out,
discharged and exercised reasonably and in good faith.
IN WITNESS WHEREOF, the parties hereto have caused this Revolving Credit
Loan & Security Agreement (Accounts and inventory) to be executed as of the date
first hereinabove written.
ATTEST: BORROWER: GEOCITIES
By: /s/ Xxxxx Xxxxxxx
------------------------------- ---------------------------------
Title: Signature of Xxxxx Xxxxxxx
Accepted and effective as of Title:
August 6, 1997 at Bank's Headquarter ------------------------------
Office
By:
---------------------------------
Signature of
(Bank) Title:
------------------------------
By: /s/ Xxxxxx X. Xxxxx for By:
---------------------------- ---------------------------------
Signature of Xxxxxxx X. Xxxx Signature of
Title: Vice President Title:
------------------------- ------------------------------
By:
---------------------------------
Signature of
Title:
------------------------------
18
EQUIPMENT
RIDER
Borrower(s):
GEOCITIES
Borrower has entered into a certain Revolving Credit and Security
Agreement (Accounts and inventory) or a certain Loan and Security Agreement
(Accounts and inventory) (either hereinafter referred to as "Agreement", dated
August 6, 1997 with Bank (Secured Party). This EQUIPMENT RIDER (hereinafter
referred to as this Rider) dated August 6, 1997 is hereby made a part of and
incorporated into that Agreement.
1. Borrower grants to Bank a security interest in the following (hereinafter
referred to as "Equipment"):
(a) All of Borrower's present machinery, equipment, fixtures, vehicles,
office equipment, furniture, furnishings, tools, dies, jigs and
attachments, wherever located, (including but not limited to, the items
listed and described on the Schedule of Equipment attached hereto and
marked Exhibit "A" and by this reference made a part hereof as though
fully set forth hereat);
(b) all of Borrower's additional equipment, wherever located, of like or
unlike nature, to be acquired hereafter, and all replacements,
substitutes, accessions, additions and improvements to any of the
foregoing; and
(c) all of Borrowers general intangibles, including without limitation,
computer programs, computer disks, computer tapes, literature, reports,
catalogs,. drawings, blueprints and other proprietary items.
2. Bank's security interest in the Equipment as set forth above shall secure
each, any and all of Borrower's Obligations to Bank, as the term "Obligations"
is defined in the Agreement; and, the payment of Borrower's indebtedness in the
principal amount of THREE MILLION FIFTY THOUSAND AND NO/100 DOLLARS
($3,050,000.00) and interest evidenced by REVOLVING LOAN & SECURITY AGREEMENT
AND VARIOUS NOTES.
3. Bank may, in its sole discretion, from time to time hereafter, make loans to
Borrower. Loans made by Bank to Borrower pursuant to this Rider shall be
included as part of the Obligations of Borrower to Bank and at Bank's option,
may be evidenced by promissory note(s), in form satisfactory to Bank. Such
loans shall bear interest at the rate and be payable in the manner specified in
said promissory note(s) in the event Bank exercises the aforementioned option,
and in the event Bank does not, such loans shall bear interest at the rate and
be payable in the manner specified in the Agreement.
4. Borrower represents and warrants to Bank that:
(a) it has good and indefeasible title to the Equipment;
(b) the Equipment is and will be free and clear of all liens, security
interests, encumbrances and claims, except as held by Bank;
(c) the Equipment shall be kept only at the following locations:
-----------------------------------------------------------------------
.
--------------------------------------------------------------------
(d) the owners or mortgages of the respective locations are:
--------------
.
---------------------------------------------------------------------
(e) Bank shall have the right upon demand now and /or at all times
hereafter, during Borrower's usual business hours to inspect and
examine the Equipment and Borrower agrees to reimburse Bank for its
reasonable costs and expenses in so doing.
5. Borrower shall keep and maintain the Equipment in good operating conditions
and repair, make all necessary replacements thereto so that the value and
operating efficiency thereof shall at all times be maintained and preserved.
Borrower shall not permit any items of Equipment to become a fixture to real
estate or accession to other property, and the Equipment is now and shall at all
times remain and be personal property.
6. Borrower, at its expense, shall keep and maintain: the Equipment insured
against loss or damage by fire, theft, explosion, sprinklers and all other
hazards and risks ordinarily insured against by other owners who use such
properties and interest in properties in similar businesses for the full
insurable value thereof; and business interruption insurance and public
liability and property damage insurance relating to Borrowers ownership and use
of its assets. All such policies of insurance shall be in such form, with such
companies and in such amounts as may be satisfactory to Bank. Borrower shall
deliver to Bank be in such form, with such companies and in such amounts as may
be satisfactory to Bank. Borrower shall deliver to Bank certified copies of
such policies of insurance and evidence of the payment of all premiums thereof.
All such policies of insurance (except those of public liability and property
damage) shall contain an endorsement in a form satisfactory to Bank showing loss
payable to Bank and all proceeds payable thereunder shall be payable to Bank and
upon receipt by Bank shall be applied on the account of Borrower's Obligations.
To secure the payment of Borrower's Obligations, Borrower grants Bank a security
interest in and to all
19
such policies of insurance (except those of public liability and property
damage) and the proceeds thereof and directs all insurers under such policies of
insurance to pay all proceeds thereof directly to Bank. Borrower hereby
irrevocably appoints Bank (and any of Bank's officers, employees or agents
designed by Bank) as Borrower's attorney-in-fact for the purpose of making,
settling and adjusting claims under such policies of insurance and for making
all determinations and decisions with respect to such policies of insurance.
Each such insurer shall agree by endorsement upon the policy or policies of
insurance issued by it to Borrower as required above, or by independent
instruments furnished to Bank that it will give Bank at least ten (10) days
written notice before any such policy or policies of insurance shall be altered
or canceled, and that no act or default of Borrower, or any other person, shall
affect the right of Bank to recover under such policy or policies of insurance
required above or to pay any premium in whole or in part relating thereto. Bank,
without waiving or releasing any obligations to do so, obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect to such policies which Bank deems advisable. All sums so disbursed by
Bank, including reasonable attorney"s fees, court costs, expenses and other
charges relating thereto, shall be part of Borrower's Obligations and payable on
demand.
7. Until default by Borrower under the Agreement or this Rider, Borrower may,
subject to the provisions of the Agreement and this Rider and consistent
therewith, remain in possession thereof and use the Equipment referred to herein
in the ordinary course of business at the locations or locations hereinabove
designated.
8. All of the terms, conditions, warranties, covenants, agreements and
representations of the Agreement are incorporated herein and reaffirmed.
9. Upon a default by Borrower under the Agreement or this Rider, Borrower upon
request of Bank to do so, agrees to assemble and make the Equipment or any part
thereof available to Bank at a place designated by Bank.
10. Borrower shall upon demand by Bank immediately deliver to Bank and properly
endorse, any and all evidences of ownership, certificates of title or
applications for title to any of the aforesaid items of Equipment.
11. Bank shall not in any way or manner by liable or responsible for (a) the
safekeeping of the Equipment; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof or (d) any act or default by any person whomsoever. All risk of Loss,
damage or destruction of the Equipment shall be borne by Borrower.
Borrower(s): GEOCITIES
By: /s/ Xxxxx X. Xxxxxxx By:
---------------------------------- -------------------------------
By: By:
---------------------------------- -------------------------------
Accepted this 6th day of August 1997 at Bank's place of business in Xxx Xxxx, XX
00000.
By: /s/ Xxxxxx X. Xxxxx for
-------------------------------
XXXXXXX X. XXXX, VICE PRESIDENT
20
Comerica Bank-California 00 Xxxx Xxxxxxx Xxxx
Xxx Xxxx. Xxxxxxxxxx 00000
(000) 0000000
MODIFICATION TO REVOLVING CREDIT LOAN & SECURITY AGREEMENT
This First Modification to Revolving Credit Loan & Security Agreement (this
"Modification") is entered into by and between GEOCITIES ("Borrower") and
---------
Comerica Bank-California ("Bank") as of this 12TH day of MAY, 1998, at San Xxxx,
---- --- ----
California.
RECITALS
--------
A. Bank and Borrower have previously entered into or are concurrently
herewith entering into a Revolving Credit Loan & Security Agreement (Accounts &
Inventory) (the "Agreement") dated August 6, 1997.
--------------
B. Borrower has requested, and Bank has agreed, to modify the Agreement as
set forth below.
AGREEMENT
---------
For good and valuable consideration, the parties agree as set forth below:
Incorporation by Reference. The Agreement as modified hereby and the
--------------------------
Recitals are incorporated herein by this reference.
Section 1.5 "Borrowing Base" as used in this Agreement
means the sum of: (1) Seventy percent
(70.00%) of the net amount of Eligible
Accounts after deducting therefrom all
payments, adjustments and credits applicable
thereto ("Accounts Receivable Borrowing
Base"); and (2) the amount, if any, of the
advances against inventory agreed to be made
pursuant to any Inventory Rider ("Inventory
Borrowing Base"), or other rider, amendment or
modification to this Agreement. NO FORMULA
SHALL APPLY TO BORROWINGS UP TO THE SUM OF
$2,000,000.
Section 1.31 Letter of Credit Sub-Feature - The amount of
$1,750,000.00 for the issuance of Letters of
Credit is to be allowed within the Borrowing
Base and within the line amount.
Section 2.1 Upon the request of the Borrower, made at any
time and from time to time during the term
hereof, and so long as no Event of Default has
occurred, Bank shall lend to Borrower an
amount equal to the Borrowing Base including
Letter of Credit Sub-feature; provided,
however, that in no event shall Bank be
obligated to make advances to Borrower under
this Section 2.1 whenever the Daily Balance
exceeds, at any time, either the Borrowing
Base including Letter of Credit Sub-Feature or
the sum of SEVEN MILLION AND NO/100 DOLLARS
($7,000,000.00), such amount being referred to
herein as "Overadvance".
Overformula in the amount of $2,000,000.00 is
to be allowed within the Borrowing Base and
within the line amount.
Section 2.2 Except as hereinbelow provided, the Credit
shall bear interest, on the Daily Balance
owing, at a rate of Zero (0.00%) percentage
points per annum above the Base Rate (the
"Rate"). The Credit shall bear interest, from
and after the occurrence of an Event of
Default and without constituting a waiver of
any such Event of Default, on the Daily
Balance owing, at a rate three (3) percentage
points per annum above the Rate. All interest
chargeable under this Agreement that is based
upon a per annum calculation shall be computed
on the basis of a three hundred sixty (360)
day year for actual days elapsed.
The Base Rate as of the date of this agreement
is Eight and One-Half (8.50%) per annum. In
the event that the Base Rate announced is,
from time to time hereafter changed,
adjustment in the Rate shall be made and based
on the Base Rate in effect on the date of such
change. The Rate, as adjusted, shall apply to
the Credit until the Base Rate is adjusted
again. The minimum interest payable by the
Borrower under this Agreement shall in no
2
event be less than N/A per month. All
interest payable by Borrower under the Credit
shall be due and payable on the first day of
each calendar month during the term of this
Agreement and Bank, may, at its option, elect
to treat such interest and any and all Bank
Expenses as advances under the Credit, which
amounts shall thereupon constitute Obligations
and shall thereafter accrue interest at the
rate applicable to the Credit under the terms
of this Agreement.
Section 3.1 This Agreement shall remain in full force and
effect until DECEMBER 31, 1999, or until
terminated by notice by Borrower. Notice of
such termination by Borrower shall be
effectuated by mailing of a registered or
certified letter not less than thirty (30)
days prior to the effective date of such
termination, addressed to the Bank at the
address set forth herein and the termination
shall be effective as of the date so fixed in
such notice. Notwithstanding the foregoing,
should Borrower be in default of one or more
of the provisions of this Agreement, Bank may
terminate this Agreement at any time without
notice. Notwithstanding the foregoing, should
either Bank or Borrower become insolvent or
unable to meet its debts as they mature, or
fail, suspend, or go out of business, the
other party shall have the right to terminate
this Agreement at any time without notice. On
the date of termination all Obligations shall
become immediately due and payable without
notice or demand; no notice of termination by
Borrower shall be effective until Borrower
shall have paid all Obligations to Bank in
full. Notwithstanding termination, until all
Obligations have been fully satisfied, Bank
shall retain its security interest in all
existing Collateral and Collateral arising
thereafter, and Borrower shall continue to
perform all of its Obligations.
Section 6.16 c In addition to the financial statements
requested above, the Borrower agrees to
provide Bank with the following schedules:
3
Accounts Receivable Agings on a quarterly
basis within 15 days of each quarter end or
when borrowing on a monthly basis within 15
days of each month end;
Accounts Payable Agings on a quarterly basis
within 15 days of each quarterly end or when
borrowing on a monthly basis within 15 days of
each month end;
Borrowing Base Certificates on a monthly basis
within 15 days of each month end if Letter(s)
of Credit and borrowings exceed $2,00,000.00;
Semi-Annual A/R audits.
Section 6.17 b Tangible Effective Net Worth in an amount not
less than $17,600,000.00, monthly, to be
increased by fifty (50%) percent of new equity
raised.
Section 6.17 d a quick ratio of cash plus securities plus
Receivables to Current Liabilities of not less
than revenue 2.20:1.00. Quick ratio will
include all issued and outstanding letter of
credit, but will not include deferred revenue.
Section 6.17 g Net Income after taxes of greater than $0.00
on a quarterly basis, to begin testing on the
2nd Quarter of fiscal year 1999.
Legal Effect. Except as specifically set forth in this Modification, all
------------
of the terms and conditions of the Agreement remain in full force and effect.
Integration. This is an integrated Modification and supersedes all prior
-----------
negotiations and agreements regarding the subject matter hereof. All amendments
hereto must be in writing
and signed by the parties.
4
IN WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.
COMERICA BANK-CALIFORNIA BORROWER:
GEOCITIES
By: /s/ Xxxxxx X. Xxxxx
-------------------
Xxx Xxxxx
Title: Vice President By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: COO & CFO
--------------------------------
5
