EXHIBIT 10.2
[LOGO OF FINOVA]
Schedule to Loan and Security Agreement
Borrower: Cumetrix Data Systems Corp.
Address: 000 Xxxxxx Xxxxxx
Xxxx xx Xxxxxxxx, Xxxxxxxxxx 00000
Date: 10/22/98
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This Schedule forms an integral part of the Loan and Security Agreement between
the above Borrower and FINOVA Capital Corporation dated the above date, and all
references herein and therein to "this Agreement" shall be deemed to refer to
said Agreement and to this Schedule.
TOTAL FACILITY (Section 2.1):
Twenty-Five Million Dollars ($25,000,000) (the "Total Facility")
LOANS (Section 2.2):
A. Revolving Loans: a revolving line of credit ("Revolving Credit Line")
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consisting of loans against Borrower's Eligible Receivables and
Eligible Inventory ("Revolving Loans") in an aggregate outstanding
principal amount (the "Revolving Loans Borrowing Base") not to exceed
the lesser of:
(a) Five Million Dollars ($5,000,000) (the "Maximum Revolving
Facility Amount"); or
(b) an amount equal to the sum of: (i) eighty-five percent (85%)
of the net amount of Eligible Receivables due from an account
debtor other than FINOVA; and (ii) one hundred percent (100%)
of the net amount of Eligible Receivables due from FINOVA
pursuant to a floor plan financing arrangement with Borrower's
customer.
B. Floorplan Loans: a floorplan line of credit consisting of loans against
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Borrower's Floorplanned Inventory ("Floorplan Loans") in an aggregate
principal amount not to exceed at any time Twenty Million Dollars
($20,000,000) less the amount of any outstanding approvals given by
FINOVA to any manufacturer of Floorplanned Inventory. No individual
Floorplan Loan shall exceed 100% of the manufacturer's invoice price
for Eligible Inventory ("Floorplan Loans Borrowing Base").
In no event may the sum of the Revolving Loans and Floorplan Loans exceed the
Total Facility.
CONDITIONS PRECEDENT (SECTION 4):
The obligation of FINOVA to make the initial advance hereunder is
subject to the fulfillment, to the satisfaction of FINOVA and its counsel, of
the following conditions, in addition to the conditions set forth in Sections
2.1 and 2.2 above:
(i) There shall have been no material adverse change in the business,
operations,profits or prospects of Borrower, or in the condition of the
assets of Borrower, between April 30, 1998 and the date hereof.
(ii) Receipt by FINOVA of the monthly unaudited financial statement
for the month ending June 30, 1998.
(iii) Receipt by FINOVA of the SEC Form 10-Q for the quarter ending
June 30, 1998.
(iv) Receipt by FINOVA of the Year 2000 Compliant Questionnaire.
INTEREST AND FEES (SECTION 2.6):
Revolving Credit Line Interest Rate: Borrower shall pay FINOVA interest
-----------------------------------
on the daily outstanding balance of all Revolving Loans at a per annum rate
equal to the "Base Rate". The Base Rate shall equal the rate of interest
published in the "Money Rates" section of The Wall Street Journal as the "Prime
Rate". -----------------------
In the event that the Borrower's total debt to tangible capital funds
(Section 6.13 of Schedule) exceeds 3.0:1.0 at any quarter-end, the rate
chargeable hereunder will be increased to the Base Rate plus one-half of one
percentage point (0.5%).
Floorplan Credit Line Interest. Interest free, if paid within the free
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period (60 days) extended by FINOVA. Interest on any amount past due under the
Floorplan Credit Line pursuant to Section 2.7 hereof shall accrue from the
due date or any extended due date at a per annum rate of six percentage points
(6.0%) in excess of the Base Rate.
In all applications, the interest rate chargeable hereunder shall be
increased or decreased, as the case may be, without notice or demand of any
kind, upon the announcement of any change in the Base Rate. Each change in the
Base Rate shall be effective immediately. In all applications unless specified
otherwise, interest charges and all other fees and charges herein shall be
computed on the basis of a year of 360 days and actual days elapsed and
shall be payable to FINOVA in arrears on the first day of each month.
Facility Fee. NONE
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Transaction Fee. NONE
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Application Fee. None
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Examination Fees. None, as long as no Event of Default shall have
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occurred. After an Event of Default has occurred, Borrower agrees to pay FINOVA
an examination fee in the amount of Five Hundred Dollars ($500) per person per
day plus out-of-pocket expenses in connection with each audit or examination of
Borrower performed by FINOVA.
INSURANCE (Section 3.4): Borrower agrees to maintain insurance in an amount
sufficient to fully cover the cost of all Inventory at all time which amount
shall initially be Five Million Dollars ($5,000,000). In the event that the
amount of Inventory exceeds such amount, FINOVA may require at any time that
Borrower provide to FINOVA evidence of insurance covering all inventory.
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REPORTING REQUIREMENTS (SECTION 9.1):
1. Borrower shall provide FINOVA with collateral and loan reports when
Revolving Loan advances are requested, and at least as of month-end. In the
event that the lockbox is implemented, a Collateral and Loan Report shall be
submitted when revolving loan advances are requested, and at least on a
weekly basis, and as of month-end.
2. Borrower shall provide FINOVA with monthly agings aged by invoice date and
reconciliations of Receivables within ten (10) days after the end of each
month.
3. Borrower shall provide FINOVA with monthly accounts payable agings aged by
invoice date, outstanding or held check registers and inventory certificates
within ten (10) days after the end of each month.
4. Borrower shall provide FINOVA with monthly perpetual inventory reports for
the Inventory (segregating Floorplanned Inventory from Eligible Inventory
and from Ineligible Inventory) valued on a first-in, first-out basis at the
lower of cost or market (in accordance with generally accepted accounting
principles) or such other inventory reports as are reasonably requested by
FINOVA, all weekly reports by Tuesday of each week with respect to reports
for the immediately preceding week. Monthly reports shall be aged and
provided to FINOVA within ten days after the end of each month. Without
limiting the generality of the foregoing, each separate inventory report as
to Floorplanned Inventory shall also set forth the applicable Valid Price
Protection and RMA Credit amounts. Inventory reports will be sorted by
location and further sub-totaled by product line.
5. Borrower shall provide FINOVA with monthly unaudited financial statements
within forty-five (45) days after the end of each month.
6. Borrower shall provide FINOVA with quarterly unaudited financial statements
within forty-five (45) days after the end of each quarter. In addition,
Borrower shall provide FINOVA with its SEC Form 10-Q within forty-five (45)
days after the end of each quarter.
7. Borrower shall provide FINOVA with audited consolidated and consolidating
fiscal financial statements within ninety (90) days after the end of each
fiscal year, as more specifically described in Section 9.1 hereof, and with
an opinion issued by a Certified Public Accountant which is acceptable to
FINOVA. In addition, Borrower shall provide FINOVA with its SEC-Form 10-K
within ninety (90) days after the end of each fiscal year.
8. Borrower shall provide FINOVA with annual operating budgets (including
income statements, balance sheets and cash flow statements, by month) for
the upcoming fiscal year of Borrower within ninety (90) days after the end
of each fiscal year of Borrower.
Credit Memoranda (Section 3.5): $50,000
Business Days for Clearance (Section 2.11): 2 days
Inventory Returns (Section 3.6): $25,000
Events of Default-liens (Section 7.1(h)): $20.000
Events of Default-Judgments (7.1): $100,000
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BORROWER INFORMATION:
Borrower's State of Incorporation (Section 5.1): California
Fictitious Names/Prior Corporate Names (Section 5.2): Data Net International, Inc.
Cumetrix Computer Systems, Inc.
Borrower Location(s) (Section 5.16): 000 Xxxxxx Xxxxxx, Xxxx xx Xxxxxxxx
XX 00000
Permitted Encumbrances (Section 1.1): Sunston Equipment Inc.
FINANCIAL COVENANTS (Section 6.13):
Borrower shall comply with all of the following covenants. Compliance shall
be determined as of the end of each quarter, except as otherwise specifically
provided below:
Working Borrower shall maintain Working Capital of not less than:
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Capital $5,000,000 at the Closing Date and at all times thereafter.
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Tangible
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Capital Funds. Borrower shall maintain Tangible Capital Funds of not less than;
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$6,500,000 at the Closing Date and at all times thereafter.
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Debt to Tangible
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Capital Funds. Borrower shall maintain a ratio of Indebtedness to Tangible Capital Funds of not greater
------------- than:
4.0x to 1.0x At the Closing Date and at all times thereafter
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All capitalized terms used in the financial covenants section of the Agreement
not otherwise defined herein shall have the meaning ascribed to such term under
the generally accepted accounting principles, as of the Closing Date, and shall
be calculated on a basis consistent therewith.
NEGATIVE COVENANTS (Section 6):
Capital Expenditures: $500,000 beginning with 1999 fiscal year.
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Indebtedness: $500,000
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Year 2000 Compliance: Borrower must implement its new accounting system (Navision) by 12/31/98. This system
-------------------- must be Year 2000 compliant.
TERM (Section 9.2):
The initial term of this Agreement shall be Two (2) year(s) from the date
hereof (the "Initial Term"), unless earlier terminated as provided in Section 9
or 7.2 above or elsewhere in this Agreement.
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TERMINATION FEE (Section 9.2): (a) 2% of the $5,000,000 Revolving Credit
Facility if terminated in the first year,
And
(b) 1% of the $5,000,000 Revolving Credit
Facility if terminated during the second
year.
DEFINITIONS (Section 1.1):
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"Eligible Inventory" means Inventory which FINOVA, in its sole judgment, deems
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Eligible Inventory, based on such considerations as FINOVA may from time to time
deem appropriate. Without limiting the generality of the foregoing, no Inventory
shall be Eligible Inventory unless, in FINOVA's sole judgment, such Inventory
(i) consists of finished goods, in good, new and salable condition which are not
obsolete or unmerchantable, and unless otherwise provided for in the Schedule
are not comprised of raw materials, parts, work in process, packaging, materials
or supplies; (ii) meets all standards imposed by any governmental agency or
authority; (iii) conforms in all respects to the warranties and representations
set forth herein; (iv) is at all times subject to FINOVA's duly perfected, first
priority security interest; (v) meets all criteria under FINOVA's agreement with
the manufacturer of such Inventory; (vi) is not Floorplanned Inventory and (vii)
is situated at a location in compliance with Section 5.16 hereof.
"Eligible Receivables" means Receivables arising in the ordinary course of
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Borrower's business from the sale of goods or rendition of services which
FINOVA, in its sole judgment, shall deem eligible based on such considerations
as FINOVA may from time to time deem appropriate. Without limiting the
foregoing, a Receivable shall not be deemed to be an Eligible Receivable if (i)
the account debtor has failed to pay the Receivable within a period of ninety
(90) days after invoice date or, with respect to any Receivable where the
account debtor is the United States or any department, agency or instrumentality
thereof, ninety (90) days after invoice date, to the extent of any amount
remaining unpaid after such period, or, if the Receivable is payable C.O.D., the
Receivable has not been paid within ninety (90) days after the date the goods
were shipped; (ii) the account debtor has failed to pay more than the Cross-age
percentage specified below of all outstanding Receivables owed to it by Borrower
within ninety (90) days after invoice date; (iii) the account debtor is an
Affiliate of Borrower; (iv) the goods relating thereto are placed on
consignment, guaranteed sale or other terms pursuant to which payment by the
account debtor may be conditional; (v) the account debtor is not located in the
United States or Canada, unless the Receivable is supported by a letter of
credit or other form of guaranty or security, in each case in form and substance
satisfactory to FINOVA; (iv) the account debtor is the United States or any
department, agency or instrumentality thereof, which has not acknowledged the
assignment of the contract Receivable to FINOVA in accordance with the Federal
Assignment of Claims Acts (open account Receivables due from the United States
or any department, agency or instrumentality thereof may be excluded from this
provision in FINOVA's sole discretion); (vii) Borrower is or may become liable
to the account debtor for goods sold or services rendered by the account debtor
to Borrower; (viii) the account debtor's total obligations to Borrower exceed
the Concentration limit specified below of all Eligible Receivables, (ix) the
account debtor disputes liability or makes any claim with respect thereto (up to
the amount of such liability or claim), or is subject to any insolvency or
bankruptcy proceeding, or becomes insolvent, fails or goes out of a material
portion of its business; (x) the amount thereof consists of late charges or
finance charges; (xi) the amount thereof consists of a credit balance more than
ninety (90) days past due; or (xii) the face amount thereof exceeds the Proof of
Shipment threshold amount specified below, unless accompanied by evidence of
shipment of the goods relating thereto satisfactory to FINOVA in its sole
discretion.
(ii) Cross-age percentage 25%
(viii) Concentration limit 25%
(xii) Proof of Shipment threshold $50,000
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"Prepared Financials" means the balance sheets of Borrower as of the date
------------------- hereof, and as of each subsequent date on which
audited balance sheets are delivered to FINOVA from
time to time hereunder, and the related statements of
operations, changes in stockholder's equity and
changes in cash flow for the periods ended on such
dates in each case prepared in accordance with
Generally Accepted Accounting Principles consistently
applied.
"Guarantors" None.
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"Subordinated Creditor" means any individual who may subordinate its
--------------------- indebtedness of FINOVA from time to time. There are no
subordinated creditors as of the date hereunder.
DISBURSEMENT (Section 9.11):
Unless and until Borrower otherwise directs FINOVA in writing, all loans
(other than Floorplan Loans disbursed directly to manufacturers or vendors of
Floorplanned Inventory as contemplated in Section 2.4 of this Agreement) shall
be wired to Borrower's operating bank account:
Account Number: 1463401601
Bank: Bank of America
City, State: City of Industry, CA
ABA#: 000000000
NOTICE (Section 9.12):
Any notices sent to FINOVA should be sent simultaneously to the address
listed in the preamble to the Agreement and to the following:
FINOVA Capital Corporation
0000 Xxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attn: Associate General Counsel
FINOVA Capital Corporation
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
Attn: Portfolio Manager
ADDITIONAL PROVISIONS:
1. Field exams to be conducted on a quarterly basis.
2. A lockbox will be required if average outstandings under the Revolving
Credit Facility exceed One Million Five Hundred Thousand Dollars
($1,500,000) for 90 days.
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3. Borrower must submit evidence of casualty insurance in the amount of Five
Million Dollars ($5,000,000), with the FINOVA listed as Lender Loss Payee on
the policy. In the event that Borrower's inventory levels exceed $5,000,000,
Borrower must provide FINOVA with evidence of casualty insurance to cover
all inventory.
4. Borrower must provide FINOVA with company-prepared monthly projections by
August 31, 1998 for the Fiscal year ending March 31, 1999.
5. Borrower must complete FINOVA's Year 2000 Questionnaire.
BORROWER: FINOVA:
CUMETRIX DATA SYSTEMS CORP. FINOVA CAPITAL CORPORATION
Tax I.D. No. 00-0000000
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By: /s/ Xxxxx Xxx By: /s/ [ILLEGIBLE]
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Xxxxx Xxx, President Vice President
By: /s/ Xxx Xxxx
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Xxx Xxxx, Secretary
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