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EXHIBIT 10.29
SECURITY AND LOAN AGREEMENT
(ACCOUNTS RECEIVABLE)
THIS SECURITY AND LOAN AGREEMENT (Accounts Receivable) is entered into as
of March 27, 1997 (this "Loan Agreement") between EXCITE, INC., a California
corporation (herein called "Borrower") and IMPERIAL BANK (herein called "Bank").
1. Facility-A Commitment. Subject to all the terms and conditions of this
Loan Agreement and prior to the termination of its commitment as hereinafter
provided, Bank hereby agrees to make loans (each a "Facility-A Loan") to
Borrower, from time to time and in such amounts as Borrower shall request
pursuant to this Section 1, up to an aggregate principal amount outstanding
under the Facility-A Loan Account (as hereinafter defined) not to exceed the
lesser of: (a) eighty percent (80.0%) of Eligible Accounts (the "Borrowing
Base") and (b) $3,000,000.00 (the "Facility-A Commitment Amount"). If at any
time or for any reason, the outstanding principal amount of the Facility-A Loan
Account (as such may be increased by the exercise of the Facility-B Conversion
Option (as hereinafter defined) is greater than the lesser of: (i) the Borrowing
Base or (ii) the Facility-A Commitment Amount, Borrower shall immediately pay to
Bank, in cash, the amount of such excess. Any commitment of Bank, pursuant to
the terms of this Loan Agreement, to make Facility-A Loans shall expire on the
Facility-A Maturity Date (as hereinafter defined), subject to Bank's right to
renew said commitment in its sole and absolute discretion at Borrower's request.
Any such renewal of said commitment shall not be binding upon Bank unless it is
in writing and signed by an officer of Bank. If Bank decides to terminate this
line of credit prior to the Facility-A Maturity Date, then, provided that no
Event of Default (as hereinafter defined) has occurred and is continuing, Bank
shall give Borrower ninety (90) days prior written notice of such termination.
Provided that no Event of Default has occurred and is continuing, all or any
portion of the Facility-A Loans advanced by Bank which are repaid by Borrower
shall be available for reborrowing in accordance with the terms hereof. Borrower
promises to pay to Bank the entire outstanding unpaid principal balance (and all
accrued unpaid interest thereon) of the Facility-A Loan Account three hundred
sixty-four (364) days from the date hereof ("Facility-A Maturity Date").
A. Facility-A Loans. The amount of each Facility-A Loan made by Bank
to Borrower hereunder shall be debited to the loan ledger account of Borrower
maintained by Bank for the Facility-A Commitment (herein called the "Facility-A
Loan Account") and Bank shall credit the Facility-A Loan Account with all loan
repayments in respect thereof made by Borrower. When Borrower desires to obtain
a Facility-A Loan, Borrower shall notify Bank (which notice shall be signed by
an officer of Borrower and shall be irrevocable) in accordance with Section 4
hereof, to be received no later than 3:00 p.m. Pacific time one (1) business day
before the day on which the Facility-A Loan is to be made. Facility-A Loans may
only be used for general corporate and working capital purposes.
(i) Interest Payments on Facility-A Loans. Borrower further
promises to pay to Bank from the date of the advance of the initial Facility-A
Loan through the Facility-A Maturity Date, on or before the tenth (10th) day of
each month, interest on the average daily unpaid balance of the Facility-A Loan
Account during the immediately preceding month at a rate of interest per annum
which Bank has announced as its prime lending rate (the "Prime Rate"), which
shall vary concurrently with any change in the Prime Rate. Interest shall be
computed at the above rate on the basis of the actual number of days during
which the principal balance of the Facility-A Loan Account is outstanding
divided by 360, which shall for interest computation purposes be considered one
(1) year.
B. Amendment to Facility-A Commitment Upon Conversion of Facility-B
Commitment. Upon the exercise by Borrower of the Facility-B Conversion Option,
beginning on the Facility-B Conversion Date (as hereinafter defined), the
Facility-A Commitment Amount shall be increased by $3,000,000.00 to
$6,000,000.00. Following the date thereof, Bank agrees to make Facility-A Loans
to Borrower, subject to the terms and conditions contained in Sections 1 and 1A
hereof.
(i) Interest Payments on Facility-A Loans Following
Conversion of Facility-B Loans. Borrower further promises to pay to Bank: (a) on
or before October 10, 1997, any unpaid interest accrued on the outstanding
balance of the Facility-B Loan Account through September 30, 1997, at the rate
of interest provided for in
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Section 2A(i) hereof, (b) on or before October 10, 1997, any unpaid interest
accrued on the outstanding balance of the Facility-A Loan Account through
September 30, 1997, at the rate of interest provided for in Section 1A(i)
hereof, and (c) on or before November 10, 1997 and on the tenth (10th) day of
each month thereafter, interest on the average daily unpaid balance of the
Facility-A Loan Account following the Facility B Conversion Date during the
immediately preceding month at the rate of interest provided for and computed in
accordance with in Section 1A(i) hereof.
2. Facility-B Commitment. Subject to all the terms and conditions of this
Loan Agreement and prior to the termination of its commitment as hereinafter
provided, Bank hereby agrees to make loans (each a "Facility-B Loan") to
Borrower, in such amounts as Borrower shall request pursuant to this Section 2,
at any time from the date hereof through September 30, 1997 (the "Facility-B
Maturity Date"), in an aggregate principal amount not to exceed $3,000,000.00
(the "Facility-B Commitment Amount"). If at any time or for any reason, the
outstanding principal amount of the Facility-B Loan Account (as hereinafter
defined) is greater than the Facility-B Commitment Amount, Borrower shall
immediately pay to Bank, in cash, the amount of such excess. Any commitment of
Bank, pursuant to the terms of this Loan Agreement, to make Facility-B Loans
shall expire on the Facility-B Maturity Date, subject to Bank's right to renew
said commitment in its sole and absolute discretion at Borrower's request. Any
such renewal of said commitment shall not be binding upon Bank unless it is in
writing and signed by an officer of Bank. If Bank decides to terminate this line
of credit prior to the Facility-B Maturity Date, then, provided that no Event of
Default (as hereinafter defined) has occurred and is continuing, Bank shall give
Borrower ninety (90) days prior written notice of such termination. Provided
that no Event of Default has occurred and is continuing, all or any portion of
the Facility-B Loans advanced by Bank which are repaid by Borrower shall be
available for reborrowing in accordance with the terms hereof.
A. Facility-B Loans. The amount of each Facility-B Loan made by Bank
to Borrower hereunder shall be debited to the loan ledger account of Borrower
maintained by Bank for the Facility-B Commitment (herein called the "Facility-B
Loan Account") and Bank shall credit the Facility-B Loan Account with all loan
repayments in respect thereof made by Borrower. When Borrower desires to obtain
a Facility-B Loan, Borrower shall notify Bank (which notice shall be signed by
an officer of Borrower and shall be irrevocable) in accordance with Section 4
hereof, to be received no later than 3:00 p.m. Pacific time one (1) business day
before the day on which the Facility-B Loan is to be made. Facility-B Loans may
only be used for general corporate and working capital purposes. Borrower
promises to pay to Bank the entire outstanding principal balance (and all
accrued unpaid interest thereon) of the Facility-B Loan Account on the
Facility-B Maturity Date; provided, however, if Borrower delivers at least two
(2) business days' prior written notice to Bank that it does not intend to repay
the outstanding principal balance of the Facility-B Loan Account on the
Facility-B Maturity Date, then on the day immediately following the Facility-B
Maturity Date ("Facility-B Conversion Date"), the outstanding principal balance
of the Facility-B Loan Account shall be added to the outstanding principal
balance of the Facility-A Loan Account (the "Facility-B Conversion Option"), and
thereafter shall be subject to all of the terms and conditions of the Facility-A
Commitment.
(i) Interest Payments on Facility-B Loans. Borrower further
promises to pay to Bank from the date of the advance of the initial Facility-B
Loan through the Facility-B Maturity Date, on or before the tenth (10th) day of
each month, interest on the average daily unpaid balance of the Facility-B Loan
Account during the immediately preceding month at a rate of interest equal to
one-quarter of one percent (0.25 %) per annum in excess of the Prime Rate, which
shall vary concurrently with any change in the Prime Rate. Interest shall be
computed at the above rate on the basis of the actual number of days during
which the principal balance of the Facility-B Loan Account is outstanding
divided by 360, which shall for interest computation purposes be considered one
(1) year.
3. Facility-C Commitment. Upon receipt by Borrower of new or additional
equity investments by any new or existing shareholders of Borrower totalling at
least Fifteen Million Dollars ($15,000,000.00) and delivery of evidence to Bank
of such equity investment, in form satisfactory to Bank, and subject to all the
terms and conditions of this Loan Agreement and prior to the termination of its
commitment as hereinafter provided, Bank hereby agrees to make loans (each a
"Facility-C Loan") to Borrower in such amounts as Borrower shall request
pursuant to this Section 3 at any time from the date hereof through March 31,
1998 (the "Facility-C Availability End Date"), in an aggregate principal amount
not to exceed to exceed $1,500,000.00 (the "Facility-C Commitment Amount"). If
at any time or for any reason, the outstanding principal amount of the
Facility-C Loan Account (as hereinafter defined) is greater than the Facility-C
Commitment Amount, Borrower shall immediately pay to Bank, in cash, the amount
of such excess. Any commitment of Bank, pursuant to the terms of this
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Loan Agreement, to make Facility-C Loans shall expire on the Facility-C
Availability End Date (as hereinafter defined), subject to Bank's right to renew
said commitment in its sole and absolute discretion at Borrower's request. Any
such renewal of said commitment shall not be binding upon Bank unless it is in
writing and signed by an officer of Bank. If Bank decides to terminate this line
of credit prior to the Facility-C Maturity Date, then, provided that no Event of
Default (as hereinafter defined) has occurred and is continuing, Bank shall give
Borrower ninety (90) days prior written notice of such termination. Facility-C
Loans which are repaid by Borrower may not be reborrowed. Borrower promises to
pay to Bank the outstanding unpaid principal balance (and all accrued unpaid
interest thereon) of the Facility-C Loan Account on March 31, 2000 ("Facility-C
Maturity Date").
A. Facility-C Loans. The amount of each Facility-C Loan made by Bank
to Borrower hereunder shall be debited to the loan ledger account of Borrower
maintained by Bank for the Facility-C Commitment (herein called the "Facility-C
Loan Account") and Bank shall credit the Facility-C Loan Account with all loan
repayments in respect thereof made by Borrower. When Borrower desires to obtain
a Facility-C Loan, Borrower shall notify Bank (which notice shall be signed by
an officer of Borrower and shall be irrevocable) in accordance with Section 4
hereof, to be received no later than 3:00 p.m. Pacific time one (1) business day
before the day on which the Facility-C Loan is to be made. The notice shall be
signed by an officer of Borrower and include a copy of the invoice for the
equipment to be financed. Facility-C Loans may only be used to purchase
equipment and will be limited to one hundred percent (100%) of the invoice
amount for such equipment, approved from time to time by Bank, less any taxes,
shipping and freight charges or discounts, warranty charges, installation
expenses and other soft costs.
(i) Interest Payments Prior to Facility-C Availability End
Date. Borrower further promises to pay to Bank from the date of the advance of
the initial Facility-C Loan through the Facility-C Availability End Date, on or
before the tenth (10th) day of each month, through and including a payment on
April 10, 1998, interest on the average daily unpaid balance of the Facility-C
Loan Account during the immediately preceding month at a rate of interest equal
to one-quarter of one percent (0.25 %) per annum in excess of the Prime Rate,
which shall vary concurrently with any change in the Prime Rate. Interest shall
be computed at the above rate on the basis of the actual number of days during
which the principal balance of the Facility-C Loan Account is outstanding
divided by 360, which shall for interest computation purposes be considered one
(1) year.
(ii) Principal Repayment and Interest Payments Following
Facility-C Availability End Date. Borrower further promises to pay to Bank, on
or before May 10, 1998 and on or before the tenth (10th) day of each month
thereafter through the Facility-C Maturity Date, (a) the outstanding principal
balance of the Facility-C Loan Account on the Facility-C Availability End Date
in equal monthly installments plus (b) interest on the average daily unpaid
balance of the Facility-C Loan Account accruing from and after April 1, 1998,
during the immediately preceding month at the rate of interest and computed in
accordance with Section 3A(i) hereof.
4. Loan Requests. Requests for Loans hereunder shall be in writing duly
executed by Borrower in a form satisfactory to Bank and shall contain a
certification setting forth the matters referred to in Sections 1, 2 or 3
hereof, which shall disclose that Borrower is entitled to the amount and type of
Loan being requested. Bank is hereby authorized to charge Borrower's deposit
account(s) with Bank for all sums due Bank under this Loan Agreement.
5. Definitions. As used in this Loan Agreement and unless otherwise
defined herein, all initially capitalized terms shall have the meanings set
forth on Exhibit A attached hereto and incorporated herein by this reference.
6. Assignment of Accounts. Borrower hereby assigns to Bank all of
Borrower's present and future Accounts, including all proceeds due thereunder,
all guaranties and security therefor, and hereby grants to Bank a continuing
security interest in all moneys collected as contemplated under Section 7 hereof
as security for any and all obligations of Borrower to Bank, whether now owing
or hereafter incurred and whether direct, indirect, absolute or contingent. So
long as Borrower is indebted to Bank or Bank is committed to extend credit to
Borrower and there shall exist and be continuing an Event of Default, Borrower
will execute and deliver to Bank such assignments, including Bank's standard
forms of Specific or General Assignment covering individual Accounts, notices,
financing statements, and other documents and papers as Bank may require in
order to affirm, effectuate or further assure the assignment to Bank of the
Collateral or to give any third party, including the account debtors obligated
on the Accounts, notice of Bank's interest in the Collateral. Notwithstanding
the
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foregoing, so long as no Event of Default has occurred and is continuing,
Borrower shall be entitled to use the proceeds of such Accounts in the ordinary
course of its business.
7. Collection of Accounts. Until Bank exercises its rights to collect the
Accounts pursuant to Section 16 hereof, Borrower will collect with diligence all
Borrower's Accounts. Any collection of Accounts by Borrower, whether in the form
of cash, checks, notes, or other instruments for the payment of money (properly
endorsed or assigned where required to enable Bank to collect same), shall be in
trust for Bank. If an Event of Default has occurred, Borrower shall keep all
such collections separate and apart from all other funds and property so as to
be capable of identification as the property of Bank and deliver said
collections daily to Bank in the identical form received. The proceeds of such
collections when received by Bank may be applied by Bank directly to the payment
of the Loan Account or to any other obligation secured hereby. Any credit given
by Bank upon receipt of said proceeds shall be conditional credit subject to
collection. Returned items at Bank's option may be charged to Borrower's deposit
account with Bank. All collections of the Accounts shall be set forth on an
itemized schedule, showing the name of the account debtor, the amount of each
payment and such other information as Bank may request.
8. Returns and Adjustments. Until Bank exercises its rights to collect
the Accounts pursuant to Section 16 hereof, Borrower may continue its present
policies with respect to returned merchandise and adjustments. However, Borrower
shall immediately notify Bank of all cases involving repossessions, and material
loss or damage of or to merchandise represented by the Accounts.
9. Representations and Warranties. Borrower represents and warrants to
Bank: (a) That Borrower is a corporation, duly organized and existing in the
State of its incorporation and the execution, delivery and performance of each
of the Loan Documents are within Borrower's corporate powers, have been duly
authorized and are not in conflict with law or the terms of any charter, by-law
or other incorporation papers, or of any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower is bound or affected; (b)
Borrower is, and at the time the Collateral becomes subject to Bank's security
interest will be, the true and lawful owner of and has, and at the time the
Collateral becomes subject to Bank's security interest will have, good and clear
title to the Collateral, subject only to Bank's rights therein and to Permitted
Liens; (c) Each Account is, and at the time the Account comes into existence
will be, a true and correct statement of a bona fide indebtedness incurred by
the debtor named therein in the amount of the Account for either merchandise
sold or delivered (or being held subject to Borrower's delivery instructions)
to, or services rendered, performed and accepted by, the account debtor; (d)
That there are and will be no defenses, counterclaims, or setoffs which may be
asserted against the Accounts from time to time represented by Borrower to be
Eligible Accounts, except as permitted in the definition thereof; (e) Any and
all financial information, including information relating to the Collateral,
submitted by Borrower to Bank, whether previously or in the future, is and will
be true and correct; (f) Except for that certain Complaint for Damages filed on
November 18, 1996 in the Superior Court of the State of California for the
County of Xxxxx Xxxxx, Xxxx Xx. XX000000, a copy of which has been previously
delivered to Bank, which litigation if adversely determined to Borrower would
not have an Material Adverse Effect, there is no litigation or other proceeding
pending or threatened against or affecting Borrower, and Borrower is not in
default with respect to any order, writ, injunction, decree or demand of any
court or other governmental or regulatory authority; (g) (i) The consolidated
and consolidating balance sheets of Borrower dated as of December 31, 1996, and
the related consolidated and consolidating profit and loss statements for the
fiscal year then ended, a copy of which has heretofore been delivered to Bank by
Borrower, and all other statements and data submitted in writing by Borrower to
Bank in connection with Borrower's request for credit are true and correct, and
said balance sheet and profit and loss statement accurately present the
financial condition of Borrower as of the date thereof and the results of the
operations of Borrower for the period covered thereby, and have been prepared in
accordance with GAAP, (ii) since such date, there have been no material adverse
changes in the financial condition of Borrower, and (iii) Borrower has no
knowledge of any material liabilities, contingent or otherwise, at such date not
reflected in said balance sheet, and Borrower has not entered into any special
commitments or substantial contracts which are not reflected in said balance
sheet, other than in the ordinary and normal course of its business, which may
have a Materially Adverse Effect upon its financial condition, operations or
business as now conducted; (h) Borrower has no liability for any delinquent
local, state or federal taxes, and, if Borrower has contracted with any
government agency, it has no liability for renegotiation of profits; and (i)
Borrower, as of the date hereof, possesses all necessary trademarks, trade
names, copyrights, patents, patent rights, and licenses to conduct its business
as now operated, without any known conflict with valid trademarks, trade names,
copyrights, patents, patent rights and license rights of others.
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10. Negative Covenants. Borrower agrees that so long as any loans,
obligations or liabilities remain outstanding or unpaid to Bank or the
commitment of Bank hereunder is in effect, neither Borrower, nor any of its
subsidiaries will, without the prior written consent of Bank:
A. Make any substantial change in the character of its business as
now conducted.
B. Create, incur, assume or permit to exist any Indebtedness other
than loans from Bank except obligations now existing as shown in the financial
statements dated December 31, 1996, excluding those being refinanced by Bank,
Subordinated Debt and Permitted Indebtedness; or sell or transfer, either with
or without recourse, any accounts or notes receivable or any monies due or to
become due.
C. Create, incur, assume or permit to exist any mortgage, pledge,
encumbrance, lien or charge of any kind (including the charge upon property at
any time purchased or acquired under conditional sale or other title retention
agreement) upon any asset now owned or hereafter acquired by it, other than
Permitted Liens and liens in favor of Bank.
D. Sell, dispose of or grant a security interest in any of the
Collateral other than to Bank (other than the disposing of such Collateral in
the ordinary and normal course of its business as now conducted or other assets
which are obsolete or otherwise considered surplus), or execute any financing
statements covering the Collateral in favor of any secured party or Person other
than Bank.
E. Make any loans or advances to any Person or other entity other
than in the ordinary and normal course of its business as now conducted
(provided that such loans or advances are not made to any Person or entity which
is controlled by or under common control with Borrower) or make any investment
in the securities of any Person or other entity other than the United States
Government.
F. Purchase or otherwise acquire all or substantially all of the
assets or business of any Person or other entity; or liquidate, dissolve, merge
or consolidate, or commence any proceedings therefore; or, except in the
ordinary and normal course of its business as now conducted, sell (including,
without limitation, the selling of any property or other asset accompanied by
the leasing back of the same) any assets including any fixed assets, any
property, or other assets necessary for the continuance of its business as now
conducted.
G. Declare or pay any dividend or make any other distribution on any
of its capital stock now outstanding or hereafter issued or purchase, redeem or
retire any of such stock other than in dividends or distributions payable in
Borrower's or any such subsidiary's capital stock.
11. Affirmative Covenants. Borrower affirmatively covenants that so long
as any loans, obligations or liabilities remain outstanding or unpaid to Bank or
the commitment of Bank hereunder is in effect, it will:
A. Furnish Bank from time to time such financial statements and
information as Bank may reasonably request and inform Bank immediately upon the
occurrence of a material adverse change therein;
B. Within thirty (30) days from the date hereof and annually
thereafter, permit representatives of Bank to inspect Borrower's books and
records relating to the Collateral and make extracts therefrom, with results
satisfactory to Bank, provided that Bank shall use its best efforts to not
interfere with the conduct of Borrower's business, and to arrange for
verification of the Accounts, under reasonable procedures, acceptable to Bank,
directly with the account debtors or otherwise, all at Borrower's sole expense;
C. Promptly notify Bank of any attachment or other legal process
levied against any of the Collateral and any information received by Borrower
relative to the Collateral, including the Accounts, the account debtors or other
Persons obligated in connection therewith, which may in any way affect the value
of the Collateral or the rights and remedies of Bank in respect thereto;
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D. Reimburse Bank upon demand for any and all legal costs, including
reasonable attorneys' fees, and other reasonable expense incurred in collecting
any sums payable by Borrower under the Loan Account or any other obligation
secured hereby, enforcing any term or provision of this Loan Agreement or
collection of the Collateral and the preparation and enforcement of any
agreement relating thereto;
E. Notify Bank of each location and of each office of Borrower at
which records of Borrower relating to the Accounts are kept;
F. Provide, maintain and deliver to Bank policies insuring the
Collateral against loss or damage by such risks and in such amounts, forms and
companies as Bank may require (to the extent customarily maintained by
businesses similar to Borrower) and with loss payable solely to Bank, and, in
the event Bank takes possession of the Collateral, the insurance policy or
policies and any unearned or returned premium thereon shall at the option of
Bank become the sole property of Bank, such policies and the proceeds of any
other insurance covering or in any way relating to the Collateral, whether now
in existence or hereafter obtained, being hereby assigned to Bank;
G. In the event the unpaid balance of the Facility-A Loan Account,
the Facility-B Loan Account and/or the Facility-C Loan Account shall exceed the
maximum amount of outstanding loans to which Borrower is entitled under Sections
1, 2 and 3 hereof, as applicable, Borrower shall immediately pay to Bank for
credit to such Loan Account the amount of such excess;
H. Maintain and preserve all rights, franchises and other authority
adequate and necessary for the conduct of its business and maintain and preserve
its existence in the State of its incorporation and any other state(s) in which
Borrower conducts its business, except with respect to such other state(s), as
the failure to do so would not have a Material Adverse Effect;
I. Maintain public liability, property damage and workers
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible insurance carriers to the extent usually
maintained by similar businesses. Borrower shall provide evidence of property
insurance in amounts and types acceptable to Bank, and certificates naming Bank
as loss payee;
J. Pay and discharge, before the same becomes delinquent and before
penalties accrue thereon, all taxes, assessments and governmental charges upon
or against it or any of its properties, and any of its other liabilities at any
time existing, except to the extent and so long as: (i) the same are being
contested in good faith and by appropriate proceedings in such manner as not to
cause any Materially Adverse Effect or the loss of any right of redemption from
any sale thereunder; and (ii) it shall have set aside on its books reserves
(segregated to the extent required by (GAAP);
K. Maintain a standard and modern system of accounting in accordance
with GAAP on a basis consistently maintained; permit Bank's representatives to
have access to, and to examine its properties, books and records at all
reasonable times; provided that Bank shall use its best efforts to not interfere
with the conduct of Borrower's business;
L. Maintain its properties, equipment and facilities in good order
and repair; and
M. Prior to allowing any of Borrower's raw materials, work in
process, finished goods inventory and property, plant and equipment to be
transported to or be held at any contract manufacturer, warehouse or other
location (other than with bona fide distributors and retail accounts), Borrower
shall provide notice to Bank and Borrower shall have complied with such filing
and notice requirements as shall, in Bank's opinion, assure Borrower's and
Bank's priority in such property over creditors of such contract manufacturer,
warehouseman or operator of such other location, including, without limitation,
making filings under California Commercial Code Section 2326, providing notice
under California Commercial Code Section 9114 and making filings and
publications as required under California Civil Code Section 3440.1 and Section
3440.5 All such filings, notices and publications shall be in form and substance
satisfactory to Bank.
12. Financial Covenants and Information. All financial covenants and
financial information referenced herein shall be interpreted and prepared in
accordance with GAAP as used in the United States of America applied on a basis
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consistent with previous years. Compliance with financial covenants shall be
calculated and monitored on a monthly basis, except as shall be expressly stated
to the contrary. Borrower affirmatively covenants that so long as any loans,
obligations or liabilities remain outstanding or unpaid to Bank, it will, on a
consolidated basis:
A. Maintain a minimum tangible net worth (meaning the excess of all
assets, excluding any value for goodwill, trademarks, patents, copyrights,
organization expense and other similar intangible items, over its liabilities,
plus Subordinated Debt) of not less than $5,000,000.00 and beginning with the
quarter ending September 30, 1997 and thereafter, of not less than
$15,000,000.00.
B. Maintain a minimum quick ratio (meaning all cash plus Accounts
divided by current liabilities less deferred revenues) (1) of 0.50 to one
(0.50:1.0) for the quarter ending 3/31/97, (2) of 0.75 to one (0.75:1.0) for the
quarter ending June 30, 1997 and (3) beginning with the quarter ending 9/30/97
and thereafter, of 1.25 to one (1.25:1.0).
C. As soon as it is available, but not later than forty-five (45)
days after and as of the end of each quarter, deliver to Bank a quarterly 10-Q
report, as filed with the Securities Exchange Commission, and a Compliance
Certificate in the form of Exhibit B attached hereto and incorporated herein by
this reference, certified by an officer of Borrower.
D. As soon as it is available, but not later than ninety (90) days
after the end of Borrower's fiscal year, deliver to Bank an annual 10-K report,
as filed with the Securities Exchange Commission.
E. When requesting Facility-A Loans, as soon as it is available, but
not later than twenty (20) days after and as of the end of each month, deliver
to Bank, in such form and detail as Bank may require, statements showing aging
and reconciliation of the Accounts and collections thereon and Borrower's
accounts payable and a Borrowing Base Certificate in the form of Exhibit C
attached hereto and incorporated herein by this reference, certified by an
officer of Borrower.
F. Upon the reasonable request of Bank, deliver to Bank current
budgets, sales projections, operating plans and other financial exhibits and
information in form and substance satisfactory to Bank.
G. Upon any officer becoming aware, deliver immediately to Bank
written notice of any pending or threatened litigation claiming, or reasonably
likely to result in, damages against Borrower in an amount in excess of
$50,000.00.
13. Loan Fee. In addition to any other amounts due, or to become due,
concurrent with the execution hereof, in connection with: (a) the Facility-A
Commitment, Borrower agrees, in lieu of a loan fee (i) to permit Bank to use the
logo of Borrower in a minimum of two (2) of its advertisements and (ii) to
provide Bank with a full size poster of the logo of Borrower, suitable for
framing; (b) the Facility-B Commitment, Borrower agrees to deliver to Bank a
loan fee in the amount of Five Thousand Dollars ($5,000.00) and (c) the
Facility-C Commitment, Borrower agrees to deliver to Bank a loan fee in the
amount of Five Thousand Dollars ($5,000) upon first advance.
14. Banking Relationship. Borrower will maintain its primary banking
accounts with Bank.
15. Default and Remedies. The occurrence of any one or more of the
following shall constitute an "Event of Default": (a) Default be made in the
payment of any obligation by Borrower under any Loan Document; (b) Subject to
clause (a) above, breach be made in any warranty, statement, promise, term or
condition, contained herein or in any other Loan Document and the same shall not
have been cured to the satisfaction of Bank within fifteen (15) days after
Borrower shall have become aware thereof, whether by written notice from Bank,
or otherwise, (except that no cure period shall exist for breaches in respect of
Borrower's obligations under Xxxxxxx 00, Xxxxxxxxxxx 00X, X, X, X, X, X and I,
Subsections 12A, B, C, D and E of this Loan Agreement, and Sections 1 and 2 of
the General Security Agreement, if applicable; (c) Any statement, warranty or
representation made by Borrower at any time proves false; (d) Borrower defaults
in the repayment of any principal of or the payment of any interest on any
indebtedness exceeding in the aggregate principal amount $50,000.00 or breaches
or violates any term or provision of any promissory note, loan agreement,
mortgage, indenture or
7.
8
other evidence of such indebtedness pursuant to which amounts outstanding in the
aggregate exceed $50,000.00 if the effect of such breach is to permit the
acceleration of such indebtedness, whether or not waived by the note holder or
obligee, and such failure shall not have been cured to Bank's satisfaction
within fifteen (15) calendar days after Borrower shall become aware thereof,
whether by written notice from Bank or otherwise, or there has in fact been an
acceleration of such indebtedness; (e) Borrower becomes insolvent or makes an
assignment for the benefit of creditors; (f) Any proceeding be commenced by
Borrower under any bankruptcy, reorganization, arrangement, readjustment of debt
or moratorium law or statute or, any such a proceeding is commenced against
Borrower and is not dismissed or stayed within ten (10) days (provided that no
Loans will be made prior to the dismissal of such proceeding); (g) Any money
judgment, writ of attachment, garnishment, execution or other legal process be
entered against Borrower or issued against any material property of Borrower
which is not fully covered by insurance (subject to reasonable deductibles) and
remains unvacated, unbonded, unstayed or unpaid or undischarged for more than
fifteen (15) days (whether or not consecutive) or in any event later than five
(5) days prior to the date of any proposed sale thereunder, or if any assessment
for taxes against Borrower other than real property, is made by the Federal or
State government or any department thereof; or (h) Any change in Borrower's
financial condition, prospects or operations which has a Material Adverse
Effect. Upon the occurrence and during the continuance of an Event of Default,
Bank may, at its option and without demand first made and without notice to
Borrower, do any one or more of the following: (i) Terminate its obligation to
make loans to Borrower as provided in Sections 1, 2 and 3 hereof; (ii) Declare
all sums secured hereby immediately due and payable; (iii) Immediately take
possession of the Collateral wherever it may be found, using all necessary force
so to do, or require Borrower to assemble the Collateral and make it available
to Bank at a place designated by Bank which is reasonably convenient to Borrower
and Bank, and Borrower waives all claims for damages due to or arising from or
connected with any such taking; (iv) Proceed in the foreclosure of Bank's
security interest and sale of the Collateral in any manner permitted by law, or
provided for herein; (v) Sell, lease or otherwise dispose of the Collateral at
public or private sale, with or without having the Collateral at the place of
sale, and upon terms and in such manner as Bank may determine, and Bank may
purchase same at any such sale; (vi) Retain the Collateral in full satisfaction
of the obligations secured thereby; or (vii) Exercise any remedies of a secured
party under the Uniform Commercial Code. Prior to any such disposition, Bank
may, at its option, cause any of the Collateral to be repaired or reconditioned
in such manner and to such extent as Bank may deem advisable, and any sums
expanded therefor by Bank shall be repaid by Borrower and secured hereby. Bank
shall have the right to enforce one or more remedies hereunder successively or
concurrently, and any such action shall not estop or prevent Bank from pursuing,
any further remedy which it may have hereunder or by law. If a sufficient sum is
not realized from any such disposition of the Collateral to pay all obligations
secured by this Loan Agreement, Borrower hereby promises and agrees to pay Bank
any deficiency.
16. Collection of Accounts by Bank. After and during the continuance
of an Event of Default Bank may, without prior notice to Borrower, collect the
Accounts and may give notice of assignment to any and all account debtors, and
Borrower does hereby make, constitute and appoint Bank its irrevocable, true and
lawful attorney with power (a) to receive, open and dispose of all mail
addressed to Borrower, (b) to endorse the name of Borrower upon any checks or
other evidences of payment that may come into the possession of Bank upon the
Accounts, (c) to endorse the name of Borrower upon any document or instrument
relating to the Collateral, in its name or otherwise, (d) to demand, xxx for,
collect and give acquittances for any and all moneys due or to become due upon
the Accounts, (e) to compromise, prosecute or defend any action, claim or
proceeding with respect thereto and (f) to do any and all things necessary and
proper to carry out the purpose herein contemplated.
17. Records Retention. Borrower authorizes Bank to destroy all
invoices, delivery receipts, reports and other types of documents and records
submitted to Bank in connection with the transactions contemplated herein at any
time subsequent to four (4) months from the time such items are delivered to
Bank.
18. Confidentiality. Bank shall not disclose to an Person any
information with respect to Borrower or any of its subsidiaries which is
furnished pursuant to this Loan Agreement, except that Bank may disclose any
such information (a) to its own directors, officers, employees, auditors,
counsel and other professional advisors and to its affiliates if Bank in its
sole discretion determines that any such party should have access to such
information; (b) to another bank or lender; (c) if such information is generally
available to the public; (d) if required or appropriate in any report, statement
or testimony submitted to any governmental authority having, or claiming to have
jurisdiction over Bank; (e) if required or appropriate in response to any
summons or subpoena or in connection with any litigation, to the extent
permitted or deemed advisable by counsel; (f) to comply with any requirement or
law applicable to Bank; (g) to the extent necessary in connection with the
8.
9
exercise of any right or remedy under any Loan Document; (h) to any participant
or assignee of Bank or any prospective participant or assignee, provided that
such participant or assignee or prospective participant or assignee agrees in
writing to be bound by this Section 18 prior to disclosure; or (i) otherwise
with the prior consent of Borrower; provided, however, that any disclosure made
in violation of this Loan Agreement shall not affect the obligations of Borrower
or any of its subsidiaries under this Loan Agreement or the other Loan
Documents.
19. Miscellaneous Provisions.
A. Nothing herein shall in any way limit the effect of the
conditions set forth in any other security or other agreement executed by
Borrower, but each and every condition hereof shall be in addition thereto.
B. No failure or delay on the part of Bank, in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof.
C. All rights and remedies existing under this Loan Agreement or
any other Loan Document are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
D. All headings and captions in this Loan Agreement and any related
documents are for convenience only and shall not have any substantive effect.
E. This Loan Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard to
principles of conflicts of law.
F. This Loan Agreement may be executed in any number of
counterparts, each of which when so delivered shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. Each
such agreement shall become effective upon the execution of a counterpart
hereof or thereof by each of the parties hereto and telephonic notification that
such executed counterparts has been received by Borrower and Bank.
BANK: BORROWER:
IMPERIAL BANK EXCITE,INC.
a California corporation
By: /s/ XXXX XXXXX By: /s/ XXXXXXX X. XXXXXXX
--------------------------- -------------------------------------------
Name: Xxxx Xxxxx Name: Xxxxxxx X. Xxxxxxx
------------------------- -----------------------------------------
Title: Assistant Vice President Title: Vice President Financial Administration
------------------------- ----------------------------------------
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A: Definitions
SCHEDULE 1 TO EXHIBIT A: List of Specific Permitted Liens
SCHEDULE 2 TO EXHIBIT A: List of Specific Permitted Indebtedness
EXHIBIT B: Compliance Certificate
EXHIBIT C: Borrowing Base Certificate
9.
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EXHIBIT A
DEFINITIONS
"Accounts" means any right to payment for goods sold or leased, or to be
sold or to be leased, or for services rendered or to be rendered no matter how
evidenced, including accounts receivable, contract rights, chattel paper,
instruments, purchase orders, notes, drafts, acceptances, general intangibles
and other forms of obligations and receivables.
"Capital Lease" means, as to any Person, any lease of any Property by such
Person as lessee that is, or should be in accordance with Financing Accounting
Standards Board Statement No. 13, classified and accounted for as a "capital
lease" on the balance sheet of such Person prepared in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such lessee in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.
"Collateral" means any and all personal property of Borrower which is
assigned or hereafter is assigned to Bank as security or in which Bank now has
or hereafter acquires a security interest hereunder (including, without
limitation, the Accounts), or pursuant to the terms of the General Security
Agreement, the Intellectual Property Security Agreement or otherwise.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation for which that Person is in
effect liable through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, capital stock purchases, capital contributions or
otherwise), or to maintain the solvency of the obligor of such obligation, or to
make payment for any products, materials or supplies or for any transportation,
services or lease regardless of the non-delivery or non-furnishing thereof, in
any such case if the purpose or intent of such agreement is to provide assurance
that such obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof. The amount of
any Contingent Obligation of any Person shall be deemed to be an amount equal to
the maximum amount of such Person's liability with respect to the stated or
determinable amount of the primary obligation for which such Contingent
Obligation is incurred or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder).
"Eligible Accounts" means such of Borrower's Accounts as Bank in its sole
reasonable discretion shall determine are eligible from time to time; provided,
however, that in no event shall Eligible Accounts include the following:
(1) all Accounts under which payment is not received within the
earlier of (a) 90 days from the applicable invoice date and (b) 60 days
from the applicable payment due date;
(2) all Accounts against which the account debtor or any other Person
obligated to make payment thereon asserts any defense, offset, counterclaim
or other right to avoid or reduce the liability represented by the Account;
(3) any Accounts if the account debtor or any other Person liable in
connection therewith is insolvent, subject to bankruptcy or receivership
proceedings or has made an assignment for the benefit of creditors or whose
credit standing is unacceptable to Bank and Bank has so notified Borrower;
11
(4) accounts with respect to which the account debtor is an officer,
director, shareholder, employee, subsidiary or affiliate of Borrower;
(5) accounts due from a customer if more than twenty-five percent
(25%) of the aggregate amount of accounts of such customer have at that
time remained unpaid for more than the earlier of (a) ninety (90) days from
the applicable invoice date and (b) sixty (60) days from the applicable
payment due date;
(6) accounts with respect to international transactions unless either
(a) such Accounts are insured or covered by a letter of credit in a manner
and form acceptable to the Bank or (b) Bank shall have otherwise permitted
in writing in its sole and absolute direction;
(7) salesperson's accounts for promotional purposes;
(8) the amount by which any one account exceeds twenty-five percent
(25.0%) of the total accounts receivable balance;
(9) accounts where the account debtor is a seller to borrower, to the
extent that a potential offset exists; and
(10) accounts where the account debtor is a federal governmental
entity, federal agency or instrumentality thereof.
"Event of Default" has the meaning set forth in Section 15.
"Facility-A Maturity Date" has the meaning set forth in Section 1.
"Facility-B, Maturity Date" has the meaning set forth in Section 2.
"Facility-C Maturity Date" has the meaning set forth in Section 3.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other Person as may be approved by the significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"General Security Agreement" means that certain General Security Agreement
(Tangible and Intangible Personal Property) dated of even date herewith, made by
Borrower in favor of Bank.
"Indebtedness" means, as to any Person, without duplication, (a) all
indebtedness of such Person for borrowed money, including, without limitation,
all of such indebtedness outstanding under this Loan Agreement and any of the
other Loan Documents, (b) all Capital Lease Obligations of such Person, (c) to
the extent of the outstanding indebtedness thereunder, any obligation of such
Person representing an extension of credit to such Person, whether or not for
borrowed money, (d) any obligation of such Person for the deferred purchase
price of Property or services (other than (i) trade or other accounts payable in
the ordinary course of business in accordance with customary industry terms and
(ii) deferred franchise fees), (e) all Contingent Obligations, (f) any
obligation of such Person of the nature described in clauses (a), (b), (c), (d)
or (e) above, that is secured by a Lien on assets of such Person and which is
non-recourse to the credit of such Person, but only to the extent of the fair
market value of the assets so subject to the Lien, (g) obligations of such
Person arising under acceptance facilities or under facilities for the discount
of accounts receivable of such Person, (h) any obligation of such Person to
reimburse the issuer of any letter of credit issued for the account of such
Person upon which a draw has been made, and (h) any lease having the effect of
indebtedness, whether or not the same shall be treated as such on the balance
sheet of Borrower under GAAP.
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"IP Security Agreement" means that certain Collateral Assignment, Patent
Mortgage and Security Agreement dated of even date herewith, made by Borrower in
favor of Bank.
"Lien" means any mortgage, pledge, security interest, lien or other charge
or encumbrance, including the lien or retained security title of a conditional
vendor, upon or with respect to any property or assets.
"Loan Account" means collectively, the Facility-A Loan Account, the
Facility-B Loan Account and the Facility-C Loan Account.
"Loan Documents" means this Loan Agreement, the General Security Agreement,
IP Security Agreement, that certain Agreement to Provide Insurance (Real or
Personal Property) dated of even date herewith, each as executed by Borrower in
favor of Bank, together with all other documents entered into or delivered
pursuant to any of the foregoing.
"Loans" means collectively, the Facility-A Loans, the Facility-B Loans and
the Facility-C Loans advanced pursuant to Sections 1, 2 and 3 hereof.
"Material Adverse Effect" means any set of circumstances or events which
(a) has or could reasonably be expected to have any material adverse effect upon
the validity or enforceability of any material provision of any Loan Document,
(b) is or could reasonably be expected to be material and adverse to the
condition (financial or otherwise) or business operations of Borrower, (c)
materially impairs or could reasonably be expected to materially impair the
ability of Borrower, to perform its material Obligations, (d) materially impairs
or could reasonably be expected to materially impair the value or priority of
Bank's security interest in any Collateral or (e) materially impairs or could
reasonably be expected to materially impair the ability of Bank to enforce any
of its legal remedies pursuant to the Loan Documents.
"Permitted Indebtedness" means the following:
(1) Indebtedness of Borrower or Indebtedness and Contingent
Obligations of any affiliates or subsidiaries of Borrower ("Borrower's
Subsidiaries") in favor of Bank arising under this Loan Agreement and the
other Loan Documents;
(2) The existing Indebtedness and Contingent Obligations disclosed on
Schedule 1 attached hereto and incorporated herein by this reference;
provided that the principal amount thereof is not increased and the terms
thereof are not modified to impose more burdensome terms upon Borrower or
any of Borrower's Subsidiaries;
(3) The Subordinated Debt;
(4) Extensions, renewals or refinancings of Indebtedness permitted
under this Loan Agreement, other than clause (3) immediately above;
(5) accrued dividends on the preferred stock of Borrower;
(6) Indebtedness and Contingent Obligations as permitted under this
Loan Agreement;
(7) Interest rate and currency hedging agreements;
(8) Guaranties of suppliers to Borrower's Subsidiaries in connection
with the purchase of supplies in the ordinary course of business;
(9) Guaranties of lease obligations incurred in the ordinary course
of business and to the extent otherwise permitted hereunder;
(10) Contingent Obligations constituting Permitted Liens; and
13
(11) the indebtedness referred to in clause (3)(a) of the definition
of Permitted Liens.
"Permitted Liens" means the following:
(1) liens and security interests existing as of this date and
disclosed in Schedule 2 attached hereto and incorporated herein by this
reference;
(2) liens for taxes, fees, assessments or other governmental charges
or levies, either not delinquent or being contested in good faith by
appropriate proceedings;
(3) liens and security interests (a) upon or in any equipment
acquired or held by Borrower to secure the purchase price of such equipment
or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment and in an amount not greater than the
purchase price thereof or (b) existing on such equipment at the time of its
acquisition, provided that the lien and security interest is confined
solely to the property so acquired and improvements thereon, and the
proceeds of such equipment;
(4) liens consisting of leases or subleases and licenses and
sublicenses granted to others in the ordinary course of Borrower's business
not interfering in any material respect with the business of Borrower and
any interest or title of a lessor or licensor under any lease or license,
as applicable;
(5) liens securing claim or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons or entities
imposed without action of such parties, provided that the payment thereof
is not yet required;
(6) liens incurred or deposits made in the ordinary course of
Borrower's business in connection with worker's compensation, unemployment
insurance, social security and other like laws;
(7) liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
(8) easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or
encumbrances affecting real property not interfering in any material
respect with the ordinary conduct of Borrower's business;
(9) liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(10) liens that are not prior to Bank's security interest which
constitute rights of set-off of a customary nature;
(11) any interest or title of a lessor in equipment subject to any
Capitalized Lease otherwise permitted hereunder; and
(12) any liens arising from the filing of any financing statements
relating to true leases otherwise permitted hereunder.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, firm, joint stock
company, estate, entity or governmental agency.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
14
"Subordinated Debt" means indebtedness of Borrower, the payment of which is
fully subordinated in time and right of payment to the Loans, and has been
approved in Bank's sole and absolute discretion and in writing.
