EXHIBIT 10.1
LOAN AGREEMENT
THIS AGREEMENT, dated as of April 16, 2001, is between Gaiam, Inc. and its 100%
owned subsidiaries (the "Company"), 000 Xxxxxxxxxxx Xxxx., Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000 (address), and Xxxxx Fargo Bank West, N.A. (the
"Bank"), 0000 Xxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxx, Xxxxxxxx.
ARTICLE I
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DEFINITIONS
Section 1.1 The terms defined in this Article shall have the meanings specified
for all purposes of this Agreement. For purposes of this Agreement all
references to the Company shall mean Gaiam, Inc.
(a) "Borrowing Base" shall mean an amount equal to the sum of the following:
(1) 75% of the Company's total accounts receivable which are less than 60
days past due according to their assigned selling terms; plus
(2) 50% of the Company's total finished goods inventory, excluding any
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goods being manufactured, subject to further manufacturing processes
by the Company, and inventory considered obsolete.
(b) "Commitment Expiration Date" shall mean June 30, 2003.
(c) "Consolidated Debt to Worth Ratio" shall mean the ratio of (i) the
aggregate debt of the Company less cash or cash equivalents at the Bank,
determined in accordance with generally accepted accounting principles, less any
debt formally subordinated by a creditor to the indebtedness of the Company to
the Bank, to (ii) the Company's net equity, determined in accordance with
generally accepted accounting principles plus any debt formally subordinated by
a creditor to the indebtedness of the Company to the Bank.
(d) "Current Ratio" shall mean the ratio of current assets of the Company to
its current liabilities, determined in accordance with generally accepted
accounting principles.
(e) "Equity Equivalent Investments" shall mean cash provided to the Company
either by the purchase of common or preferred stock or by the making of Loans to
the Company that are formally subordinated to the indebtedness of the Company to
the Bank.
(f) "ERISA" shall mean the Employment Retirement Income Security Act of 1974,
as amended.
(g) "Event of Default" shall mean any of the events listed in
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Section 5.1 below.
(h) "Loan" or "Loans" mean all advances and draws on Letters of Credit that the
Bank agrees to make or issue hereunder.
ARTICLE II
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THE COMMITMENT
Section 2.1 The Bank agrees, on the terms herein set forth, to make Loans to
the Company under a Revolving Line of Credit in an aggregate amount not
exceeding the lesser of the Borrowing Base or $10,000,000.00. The Loans may be
in the form of cash advances or Letters of Credit as requested by the Company on
or before the Commitment Expiration Date, when said Loans, together with
interest thereon, shall be due and payable. The amount available for Loans at
any time shall be the lesser of $10,000,000.00 or the Borrowing Base, minus the
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aggregate principal amount of all outstanding cash advances and outstanding
Letter of Credit issued hereunder. Calculations of the Borrowing Base shall be
submitted to the Bank quarterly and with each Loan advance, on the basis of the
information and certificates provided pursuant to Sections 4.1(a) and (b) below;
however, compliance with the Borrowing Base limitation is a continuing
obligation. However, the Company may request advances under any given Borrowing
Base Certificate for a period of forty days without providing additional
certificates. If any time the aggregate balance outstanding on the Loans exceeds
the Borrowing Base, the excess shall become immediately due and payable and
shall be paid to the Bank within five business days after written notice to the
Company.
Section 2.2 The Company may request the Bank to issue, or cause to have issued
by a third party bank, Letters of Credit. Maturing drafts drawn in accordance
with the terms of the Letters of Credit shall be payable in full when due,
either through the cash assets of the Company or by a draw against funds then
available under Section 2.1. The Letters of Credit will be priced on a fee
basis, dependent on the costs of complying with the terms of each Letter of
Credit or ensuing draft. Each Letter of Credit shall have an expiration date as
requested by the Company; however, with respect to any Letter of Credit for
which an expiration date later than the Commitment Expiration Date is requested:
(a) such later date shall be consistent with the Company's usual and customary
practice for Letter of Credit transactions during the immediately preceding 12
months, and (b) on or before the Commitment Expiration Date the Company shall
provide collateral reasonably acceptable to the Bank for any draws on such
Letter of Credit after the Commitment Expiration Date.
Section 2.3 The Loan described in Section 2.1 shall be evidenced by a
Promissory Note in the maximum principal amount of $10,000,000.00, payable to
the order of the Bank on or before June 30, 2003.
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Section 2.4 The Bank agrees, on the terms herein set forth, to make Loans on a
non-revolving basis to the Company under a Term Loan in an aggregate amount not
exceeding $4,900,000.00. The Loans shall be in the form of cash advances as
requested by the Company on or before July 31, 2001.
Section 2.5 The Loan described in Section 2.4 shall be evidenced by a
Promissory Note in the maximum principal amount of $4,900,000.00, payable to the
order of the Bank on or before July 1, 2006. This Term Loan shall require
payments of $272,222.22 principal per quarter beginning January 1, 2002.
Interest shall be payable quarterly beginning July 1, 2001.
(a) Loans drawn again this Term Loan shall be limited to $1,330,000.00,
until the Company either pledges cash or cash equivalent collateral
reasonably acceptable to the Bank to secure the remaining
$3,357,000.00 available under this note, or provides other additional
collateral as described in paragraph (b) below, or provides other
additional and / or substitute collateral reasonably acceptable to
the Bank.
(b) The company presently owns two parcels of real estate, one known as
the Real Goods Solar Living Center located at 00000 X. Xxxxxxx 000,
Xxxxxxx, Xxxxxxxxxx, and the other known as the Gaiam Yoga Center,
located on Feather Mountain Road, Paulden, Arizona. The Company
hereby requests the Bank to order appraisals on these properties, to
be performed by third party appraisers selected by and under the
direction of the Bank. The acceptance of these appraisals and the
valuations described therein must be reasonably acceptable to Bank.
Said appraisals and their subsequent review shall be completed by
June 15, 2001. The Company hereby agrees to pay all reasonable costs
of said appraisals paid to third parties. The Bank does agree that
this real estate will be deemed as additional collateral acceptable
to the Bank, applying a maximum advance rate of 70% of accepted
valuation on the Real Goods Solar Living Center and a maximum advance
rate of 60% on the Gaiam Yoga Center.
Section 2.6 The Loans described in Sections 2.1 and 2.4 shall bear interest at
a rate equal to the lower of Xxxxx Fargo Bank West, N.A. Prime Rate (the "Prime
Rate") minus ?% as in effect from time to time, which rate shall change, without
notice, whenever the Prime Rate changes, to and including maturity or the 30 day
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London Interbank Offered Rate (LIBOR) as quoted on the first business day of
each calendar month plus 275 basis points. Overdue principal and (to the extent
legally enforceable) overdue interest, whether caused by acceleration of
maturity or otherwise, shall bear interest at a rate four percentage points
above the rate in effect at the time such principal or interest becomes due.
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Section 2.7 The Company shall have the right to repay the Loans in part or in
whole at any time without penalty except as noted below; however, prepayment in
full must be accompanied by payment of all accrued interest then due.
(a) The company shall have the option to fix the interest rate on the
Term Loan described in Section 2.4 for a period of one year at the one
year LIBOR rate as described in the Wall Street Journal plus 275 basis
points. Said fixed rate election may only be made effective the first
business day of each calendar month, and shall remain in effect for a
period of one year from the effective date. If the Term Loan is prepaid
above and beyond the agreed upon repayment schedule while a fixed rate
election is in effect, the Company shall pay to the Bank a 1% prepayment
penalty.
Section 2.8 All payments made by the Company on account of principal and of
interest shall be made in immediately available funds to the Bank.
Section 2.9 The Bank's commitment to make the initial and all subsequent Loans
hereunder shall be subject to the following conditions:
(a) Prior to the initial Loan on the Revolving Line of Credit described in
Section 2.1, payment by the Company of a $20,000.00 loan commitment fee.
(b) Prior to the initial Loan on the Term Loan described in Section 2.4,
payment by the Company of a $12,500.00 loan commitment fee.
(c) Prior to the initial Loan, delivery to the Bank of the Note and all
security agreements, financing statements and related documents necessary
to confirm or create liens and security interests in favor of the Bank on
all the Company's accounts, equipment and inventory as security for the
Loan.
(d) As of the dates of the initial and any subsequent Loans, all
representations and warranties of the Company contained herein shall be
true and no Event of Default shall have occurred and be continuing.
ARTICLE III
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REPRESENTATION AND WARRANTIES
The Company represents and warrants to the Bank as follows:
Section 3.1 The Company is duly organized, validly existing, and in good
standing under the laws of the State of Colorado, and is duly qualified to do
business wherever necessary to carry on its present operations.
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Section 3.2 The making and performance of this Agreement is within the
Company's corporate powers; has been duly authorized by all necessary corporate
action; does not require any stockholder consent; does not require the approval
of any federal or state regulatory authority; does not contravene any law,
regulation or agreement to which the Company is a party or by which it or its
assets may be bound; and will not conflict with any provision of the articles of
incorporation, bylaws or other governing documents of the Company.
Section 3.3 This Agreement is the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms.
Section 3.4 There is no pending, nor to the best of the Company's knowledge
threatened, action or proceedings before any court or administrative agency that
may materially adversely affect the Company's financial condition or operations
as of the date of this Agreement. The Company hereby agrees to notify the Bank
in writing of any subsequent action or proceedings before any court or
administrative agency that, in the judgment of the Company's management based on
the advise of legal counsel, may materially adversely affect the Company's
financial condition or operations. Said notice shall be given to the Bank
within 30 days of such determination.
Section 3.5 The Company has good and marketable title to all of its material
properties or assets (except leased assets), and none of such material
properties or assets included in the Borrowing Base are subject to any mortgage,
pledge, loan security interest, encumbrance or any other security agreement or
arrangement of any type whatsoever except the security interests, liens and
encumbrances permitted by this Agreement and Permitted Liens permitted pursuant
to Section 4.2(f).
Section 3.6 Except for any Tax Disputes permitted pursuant to Section 4.2(f),
to the best of the Company's knowledge and information no material claim for
taxes, whether federal, state or local, are presently being assessed against the
Company with respect to any past due taxes, nor are there any tax disputes being
litigated or determined by governmental proceedings at the present time that
have not been reflected in the financial statements of the Company previously
furnished to the Bank.
Section 3.7 The Company or property of the Company as of the date of this
Agreement is not the subject of any ongoing litigation, judgment, decree,
order, citation, compliant, or notice of violation relating to or arising out of
environmental laws or issues. For purposes of this Agreement, Contamination and
Contaminated shall mean the presence of solid or hazardous wastes, hazardous
substances, pollutants or contaminants, petroleum, toxic or hazardous
constituents, or similar materials, as such terms are defined under any federal,
state, or local statute, whether currently or subsequently enacted, or under
common law. The Company hereby agrees to notify the Bank in
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writing of any subsequent action or proceedings before any court or
administrative agency that, in the judgment of the Company's management based on
the advise of legal counsel, makes the Company the subject of litigation,
judgment, decree, order, citation, compliant, or notice of violation relating to
or arising out of environmental laws or issues, which may materially adversely
affect the Company's financial condition. Said notice shall be given to the Bank
within 30 days of such determination.
ARTICLE IV
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COVENANTS OF THE COMPANY
SECTION 4.1 So long as the Company may borrow hereunder and until payment in
full of the Note and performance of all other obligations of the Company under
this Agreement, the Company shall:
(a) (i) Furnish to the Bank within 45 days after the end of each quarter during
each fiscal year a consolidated balance sheet and income statement; (ii) furnish
to the Bank within 150 days after the end of each fiscal year of the Company an
audited consolidated balance sheet and income statement; (iii) furnish to the
Bank within 150 days after the end of each fiscal year of the Company
projections for the ensuing year; and(iv) permit or cause to permit the Bank at
any reasonable time during normal business hours to have access to the books and
records of the Company and to inspect or otherwise check the properties of the
Company, but only upon at least three (3) business days notice by the Bank.
(b) Furnish to the Bank within 30 days after the end of each calendar quarter
and at the time of each request for an advance on the Loan (unless otherwise
stated in Section 2.1) a completed and signed Borrowing Base Certificate, a
blank copy of which is attached as Exhibit A, accompanied by copies of the same
month's end accounts receivable aging and summary inventory lists. The inventory
lists so provided shall include separate listings for inventory deemed
discontinued or obsolete by the Company.
(c) Maintain a Current Ratio of at least 1.0 to 1 at the end of each calendar
quarter. While the Company and the Bank acknowledge that this calculation need
only be performed at the end of each calendar quarter, the Company agrees in
principle to maintain such financial covenant on an ongoing basis, and shall use
reasonable efforts to insure compliance with same.
(d) Maintain a Consolidated Debt to Worth Ratio not to exceed 1.6 to 1 at the
end of each calendar quarter. While the Company and the Bank acknowledge that
this calculation need only be performed at the end of each calendar quarter, the
Company agrees in principle to maintain such financial covenant on an ongoing
basis, and shall use reasonable efforts to insure compliance with same.
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(e) Maintain a minimum Shareholder Equity position of $12,000,000.00, as
defined under Generally Accepted Accounting Principles at the end of each
calendar quarter. While the Company and the Bank acknowledge that this
calculation need only be performed at the end of each calendar quarter, the
Company agrees in principle to maintain such financial covenant on an ongoing
basis, and shall use reasonable efforts to insure compliance with same.
(f) Use the Bank as its principal depository for all demand and savings
business accounts.
(g) Allow the Bank the opportunity to bid on all short-term investments held in
the form of cash and / or cash equivalents including certificates of deposit and
repurchase agreements provided that this obligation to allow the Bank to bid
shall only extend to short-term investments in excess of $1,000,000.00 and
provided further that such obligation shall not extend to other investments in
connection with acquisitions owed to the seller or affiliates of the seller.
(h) Maintain insurance with responsible companies on such of its properties, in
such amounts and against such amount and against such risks as is reasonable and
customarily maintained by similar businesses operating in the same vicinity,
and, prior to May 31, 2001, file with the Bank evidence of such coverage which
names the Bank as Loss Payee.
(i) Comply in all material respects with all laws, ordinances, rules and
regulations of all governmental authorities, now or hereafter in effect,
applicable to the ownership, production, disposition, or use of the assets
included in the Borrowing Base if the failure to comply would have a material
adverse affect on the Company. The Company may contest in good faith any such
law, ordinance or regulation and withhold compliance during any proceeding,
including appropriate appeals.
(j) Promptly provide notice to the Bank of (i) the occurrence of an Event of
Default; (ii) the occurrence of a "Reportable Event" (as defined in ERISA); or
(iii) the institution of steps by the Company to withdraw from or terminate any
employee benefit plan as to which the Company may have any liability material to
the Company's business and operations.
(k) Permit the Bank to perform inspections of the Company's accounts
receivable, inventory, and other pertinent financial records, to be conducted
during regular business hours and by the Bank giving at least three business
days' prior notice. Said inspections are to be limited to a maximum of three
annually.
(l) Promptly furnish to the Bank copies of all documents filed by it with the
Securities and Exchange Commission, the National Association of Securities
Dealers, Inc., any securities exchange or any state securities commission,
limited to all registration statements, annual reports on Form 10K,
quarterly reports on Form
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10Q, reports on Form 8K, proxy statements and annual reports to shareholders,
and all amendments there to.
Section 4.2 So long as the Company may borrow hereunder and until payment in
full of the Note and performance of all other obligations of the Company
hereunder, the Company shall not:
(a) Pay a cash dividend on capital stock now or hereafter outstanding, or
redeem, retire, purchase or otherwise acquire directly or indirectly any shares
of the debtor's stock now or hereafter outstanding provided that the Company may
redeem shares of the Company's stock owned by employees or former employees of
the Company up to a maximum of $1,000,000 per year and provided further that
nothing in this Section 4.2(a) shall prevent the cashless exercise of stock
options granted by the Company, or the purchase of its common stock up to the
amount of 50% of operating income earned during the prior twelve months plus any
equity issued subsequent to the December 31, 2000. Any such purchase of common
stock shall be in compliance with the terms stated in Section 4.1.
(b) Without the written consent of the Bank, enter into any mergers,
acquisitions or consolidations unless the Company is the surviving entity.
(c) Without providing prior notice to the Bank, sell, lease or otherwise
dispose of all or any substantial part of its assets or operation other than in
the ordinary course of the Company's business; The sale of website codes and
rights is expressly accepted and noted.
(d) Without providing prior notice to the Bank, make any loans or advances to
another person or entity, enter into any direct borrowings other than purchase
money security agreements for equipment acquisitions or assume, guarantee or
otherwise become contingently liable on any borrowings or indebtedness of
another person or entity
(i) Advances not to exceed 1% of the total assets of the Company in the
aggregate are expressly permitted.
(ii) Advances and borrowings between the Company and its subsidiaries are
expressly permitted.
(e) Without the prior written consent of the Bank, permit any Pension and/or
Profit Sharing Plan maintained by it to:
(i) Engage in any "prohibited transaction" as such term is defined in
section 4975 of the Internal Revenue Code of 12954, as amended;
(ii) Incur any "accumulated funding deficiency" as such term is defined in
section 302 of ERISA; or
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(iii) Terminate in a manner that could result in the imposition of a
lien on the property of the Company pursuant to section 4068 to ERISA.
(f) Without the prior written consent of the Bank, create, incur or permit to
exist any material lien, security interest or other encumbrance upon any of its
properties or assets included in the Borrowing Base which ranks senior to or
pari passu with the security interest of the Bank, except the following liens
are expressly permitted(each a "Permitted Lien"):
1) Liens for taxes not yet due or which are being contested in good
faith (a "Tax Dispute");
2) pledges and deposits made in the ordinary course of business
and/or in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations, as
applicable;
3) zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the
ordinary course of business which, in the aggregate, are not
substantial in amount and do not materially detract from the value
of the property subject thereto or interfere with the ordinary
conduct of the business of the Company or any of its subsidiaries;
4) Liens which arise in the ordinary course of business for sums not
due or sums which the Company is contesting in good faith and by
appropriate proceedings and with respect to which the Company has
made adequate reserves in accordance with GAAP, but which do not
involve any deposits or advances or borrowed money or the deferred
purchase price of property or services;
5) purchase money security interests incurred in connection with the
Company's normal business activities;
6) statutory Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like
persons for labor, materials, supplies or rentals incurred in the
ordinary course of the Company's business; provided that the
underlying obligations relating to such Liens are paid in the
ordinary course of business or are being contested in good faith
and by appropriate proceedings and with respect to which the
Company has made adequate reserves in accordance with GAAP;
7) attachment, judgment and other similar non-tax Liens with respect
to which no Event of Default would exist pursuant to Article V;
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8) those created under the documents creating and perfecting the
Bank's security interests in the collateral hereunder;
9) those liens created to secure Debt owed by the Company's Real
Goods Trading Corp. subsidiary to the California Statewide
Certified Development Corporation dated June 17, 1996, as amended,
in the original principal amount of $604,000 and any guarantees of
such Debt by the Company;
10) Capital Leases (defined in accordance with GAAP) in an aggregate
annual amount less than $1,500,000.00, provided that notice of all
Capital Lease transactions of $500,000.00 or greater shall be
provided to Bank prior to or concurrently with the such Debt
transaction; and
11) liens that may exist on the assets or securities of acquired
business that may be acquired by the Company in the future.
ARTICLE V
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EVENTS OF DEFAULT
Section 5.1 The occurrence of any of the following events shall be an "Event
of Default", unless cured within ten business days of written notice to the
Company by the Bank:
(a) Any payment of principal or interest owed to the Bank shall not be made
when due and not be cured within ten business days thereafter; or
(b) Any representation or warranty made by the Company in connection with the
execution and delivery of this Agreement, or in any certificate furnished
pursuant hereto, shall prove to be at any time incorrect in any material
respect; or
(c) The Company shall fail to materially perform or observe any other term,
covenant or agreement contained in this Agreement and such failure shall
continue for a period of ten business days after written notice to the Company
from the Bank; which failure to perform or observe any covenant having occurred
subsequent to review of the occasion with the Bank; or
(d) Any obligation of the Company to the Bank for the payment of borrowed money
is not made at maturity, whether by acceleration or otherwise, or is declared to
be due and payable prior to the stated maturity thereof by reason of default or
other violation of the terms thereof.
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(e) The Company shall fail to exercise reasonable efforts to protect and
preserve the collateral, liens, and security interests securing the Loans
in all material respects.
Section 5.2 Upon the occurrence of an Event of Default, the obligation of the
Bank to make advances under this Agreement or any other loan commitment to the
Company and to issue Letters of Credit shall terminate and the Bank may declare
the principal balance, together with accrued interest thereon, to be immediately
due and payable, and the same shall forthwith become immediately due and payable
without presentment, protest, notice or demand of any kind, all of which are
hereby expressly waived by the Company. Upon any such Event of Default, the
Bank may proceed with each and every remedy provided for it in this Agreement,
the Note, or security agreements and other instruments executed in connection
with the Loans, anything in said instruments to the contrary notwithstanding,
and may pursue any other remedy available to the Bank, whether in law or equity,
to enforce collection of all sums due and owing to the Bank, all of such right
and remedies being cumulative and not exclusive of all rights and remedies which
the Bank has or may have against the Company.
ARTICLE VI
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MISCELLANEOUS
Section 6.1 No failure on the part of the Bank in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power preclude any other or further exercise
thereof or the exercise of any other right or power hereunder. No modification
or waiver of any provision of this Agreement nor consent to any departure by the
Company therefrom shall in any event be effective unless the same shall be in
writing and then such a waiver or consent shall be effective only in the
specific instance and for the purposes for which it was given. No notice or
demand on the Company in any case shall entitle it to any other or further
notice or demand in similar or other circumstances.
Section 6.2 No modification of this Agreement shall be effective unless the
same be in writing and mutually agreeable between the two parties.
Section 6.3 The Company agrees to pay all costs incurred by both parties in
connection with the enforcement of any provision of this Agreement, the
collection of the Note or the foreclosure or realization upon any security
therefor, except as otherwise ordered by a court or arbitrator.
Section 6.4 This Loan Agreement supercedes a document of the same name dated
May 11, 2000, as amended.
Section 6.5 The Company agrees to defend, indemnify, and hold harmless the Bank
for, from, and against and to reimburse the
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Bank with respect to any and all claims, actions, costs and expenses whatsoever
(including, without limitation, attorneys fees and expenses and costs reasonably
incurred), known or unknown, asserted against or incurred by the Bank at any
time by reason of or arising out of or relating to any actual or alleged
violation of any existing or future environmental law or actual or threatened
Contamination relating to the property or activities of the Company, whether or
not such contamination was in violation of any environmental statute. This
indemnity shall last indefinitely and is specifically intended to survive this
Agreement.
Section 6.6 All notices or other communications required or permitted under
this Agreement shall be in writing and shall be deemed given when personally
delivered or mailed to the respective parties' addresses as set forth above. On
any matters dealing with Events of Default, the Bank shall deliver written
notice either in person or via registered mail at the address shown above to all
of the following: the Company's Chairman, its President, and its Chief Financial
Officer of record as of the date of said notice. While notice shall be made to
the people in all three positions, notice so given shall serve as notice to the
Company when received by any one person in one or more of these positions.
Section 6.7 This Agreement and the rights and obligations of the parties
hereunder shall be construed and interpreted in accordance with the laws of the
State of Colorado.
Xxxxx Fargo Bank West, N.A. Gaiam, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx Xxxxxx
-------------------------- ---------------------
Xxxxxx X. Xxxxxxxx Xxxxx Xxxxxx
Vice President Chairman & C.E.O.
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EXHIBIT "A"
BORROWING BASE CERTIFICATE
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Xxxxx Fargo Bank West, N. A.
(hereinafter referred to as the Bank)
0000 Xxxxx Xxxxxx, X.X. xxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
COMPANY NAME: Gaiam, Inc.
COLLATERAL:
1. Accounts Receivable as of _______________
Total uncollected balances due on open book
Accounts Receivable _______________
Less:
Assigned accounts which are more than sixty
days past due according to the assigned
selling terms or to which there exists a
dispute with the debtor _______________
Less: Receivables from affiliated companies _______________
Less: Receivables from officers and employees _______________
Less: Unassigned Receivables from Federal Govt. _______________
Total eligible amount of Accounts Receivable _______________
75% of eligible Accounts Receivable _______________
2. Eligible inventory, as described in
Section 1.1 (a) _______________
50% of eligible amount of Merchandise
Inventory allowed _______________
3. Total eligible collateral Assigned to the Bank
(Accounts Receivable + Inventory) _______________
BORROWINGS:
4. Amount outstanding previous to this date _______________
5. Today's Borrowings _______________
6. Total Borrowings outstanding as of today
_______________
7. Total Borrowing Availability under the
Security Agreement _______________
Amount Available for Borrowing after Today _______________
(subtract (6) from the lessor of (7) or (3)
We further certify that there have been no sales, returns, allowances or
rebates, or other adjustments or credits in connection with the above mentioned
assigned accounts and that the above mentioned assigned accounts represent valid
indebtedness which the respective debtors are under legal valid obligation to
pay when due, and that none of such accounts is subject to any right of
deduction, set-off or counter-claim, and that we have not accepted any note,
trade acceptance or other form of settlement of any of the above Accounts
Receivable, except as above noted and that the above merchandise inventory is
unencumbered except to the Bank and that said inventory has been kept in good
condition and repair.
We further certify that there is no default in the conditions set forth in the
Security Agreement and Loan Agreement dated April 16, 2001.
COMPANY: Gaiam, Inc.
OFFICER OF COMPANY:
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