Exhibit 10.1
SILICON VALLEY BANK
AMENDMENT TO LOAN DOCUMENTS
BORROWER(S): MOBILITY ELECTRONICS, INC.
MOBILITY IDAHO, INC. (FORMERLY PORTSMITH, INC.)
MAGMA, INC.
ADDRESS: 17800 N. PERIMETER DRIVE
SCOTTSDALE, ARIZONA 85255-5449
DATE AS OF JULY 31, 2004 (THE "JULY 2004 AMENDMENT DATE")
THIS AMENDMENT TO LOAN DOCUMENTS (THIS "AMENDMENT") is entered into
between SILICON VALLEY BANK ("Bank"), whose address is 3003 Tasman Drive, Santa
Clara, California 95054, and the borrower(s) named above (individually and
collectively, and jointly and severally, the "Borrower"), whose address is set
forth above.
Bank and Borrower agree to amend the Loan and Security Agreement
between them, dated as of September 27, 2002 (as amended, restated,
supplemented, or otherwise modified from time to time, the "Loan Agreement"), as
set forth herein, effective as of the date hereof. Capitalized terms used but
not defined in this Amendment, shall have the meanings set forth in the Loan
Agreement (as amended by this Amendment). The term "July 2004 Amendment Date" as
defined above hereby is incorporated into the Loan Agreement. This Amendment is
the "July 2004 Amendment" referenced in the Amended and Restated Schedule.
1. AMENDED AND RESTATED SCHEDULE; UPDATED SCHEDULE 2.
(a) The Schedule 1 to the Loan Agreement, dated September 27,
2002, between Borrower and Silicon (as amended, restated, supplemented, or
otherwise modified from time to time prior to the date hereof, the "Existing
Schedule"), hereby is amended and restated in its entirety to read as set forth
in the Amended and Restated Schedule 1 to Loan and Security Agreement of even
date herewith (the "Amended and Restated Schedule"). Accordingly, from and after
the date hereof, all references in the Loan Agreement and the other Loan
Documents to the "Schedule" or words of like import referring to the Existing
Schedule shall mean and refer to the Amended and Restated Schedule (as amended,
restated, supplemented, or otherwise modified from time to time from and after
the date hereof) instead of the Existing Schedule.
(b) The Schedule 2 attached to the Loan Agreement as in effect
immediately prior to the effectiveness of this Amendment (the "Old Schedule 2")
hereby is replaced by the updated Schedule 2 attached hereto (the "Updated
Schedule 2"). Accordingly, from and after the date
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SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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hereof, all references in the Loan Agreement and the other Loan Documents to the
"Schedule 2" or words of like import referring to the Old Schedule 2 shall mean
and refer to the Updated Schedule 2 (as amended, restated, supplemented, or
otherwise modified from time to time from and after the date hereof) instead of
the Old Schedule 2.
2. AMENDMENTS TO LOAN AGREEMENT.
(a) Exhibit E to the Loan Agreement hereby is deleted in its
entirety, and Section 9.8 of the Loan Agreement hereby is amended and restated
in its entirety to read as follows:
"9.8 [INTENTIONALLY OMITTED]"
(b) Section 2.1.2 of the Loan Agreement hereby is amended and
restated in its entirety to read as follows:
"2.1.2 LETTER OF CREDIT SUBLIMIT.
Section 1.3(a) of the Schedule is incorporated herein
by this reference as though fully set forth herein."
(c) Section 2.1.3 of the Loan Agreement hereby is amended and
restated in its entirety to read as follows:
"2.1.3 FX SUBLIMIT; CASH MANAGEMENT SERVICES AND
RESERVES.
(a) FX Sublimit. Section 1.3(b) of the Schedule is
incorporated herein by this reference as though fully set
forth herein."
(b) Cash Management Services and Reserves. Section
1.3(c) of the Schedule is incorporated herein by this
reference as though fully set forth herein."
(d) The portion of Section 5 of the Loan Agreement that
currently reads as follows:
"Borrower represents and warrants that the following
statements are true and correct on the date hereof and
Borrower covenants that the following statements will
continue to be true and correct throughout the term of this
Agreement and so long as any Obligations are outstanding:"
, hereby is amended and restated in its entirety to read as follows:
"Borrower represents and warrants that the following
statements are true and correct on the July 2004 Amendment
Date and Borrower covenants that the following statements
will continue to be true and correct throughout the term of
this Agreement and so long as any Obligations are
outstanding:"
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SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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(e) The portion of Section 5.7 of the Loan Agreement that
currently reads as follows:
"The information in the Representations previously
submitted to Bank continues to be true and correct as of
the date hereof."
, hereby is amended and restated in its entirety to read as follows:
"The information in the Representations previously
submitted to Bank continues to be true and correct as of
the July 2004 Amendment Date."
(f) Section 6.2(a)(ii) of the Loan Agreement, which currently
reads as follows:
"(ii) Monthly perpetual inventory reports for the Inventory
valued on a first-in, first-out basis at the lower of cost
or market (in accordance with GAAP) and such other
inventory reports as are requested by Bank in its good
faith business judgment, all within 20 days after the end
of each month. Notwithstanding the foregoing, Bank
understands that Borrower presently reports its inventory
on a standard cost basis and Borrower may continue to do so
until it converts its accounting system to enable it to
report its inventory on a first-in, first-out basis at the
lower of cost or market (in accordance with GAAP), which
Borrower shall do beginning with reports for the month of
April, 2003. Borrower's reports on a standard cost basis
shall be accompanied by variance data in form acceptable to
Bank showing variance to actual costs and other data as
Bank shall specify. In the event the Asset Based Terms are
in effect before Borrower reports its Inventory on a
first-in, first-out basis, the variance between standard
cost and actual cost shall be subject to a reserve
established by the Bank in its good faith business
judgment."
, hereby is amended and restated in its entirety to read as follows:
"(ii) From and after Bank's receipt of the "Designated
Inventory Appraisal" (as such term is defined in Section
1.1 of the Schedule), monthly perpetual inventory reports
for the Inventory, including any adjustments or reserves
made by Borrower in order to value Inventory at a first-in,
first-out basis at the lower of cost or market (in
accordance with GAAP), and such other inventory reports as
are requested by Bank in its good faith business judgment,
all within 20 days after the end of each month."
(g) Section 6.2(a)(iii) of the Loan Agreement, which currently
reads as follows:
"(iii) Within 20 days after the last day of each month,
Borrower will deliver to Bank a Borrowing Base Certificate
signed by a Responsible Officer in the form of Exhibit C,
provided that if the Asset Based Terms are in effect such
Borrowing Base Certificate shall be delivered to Bank
weekly as specified by Bank."
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SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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, hereby is amended and restated in its entirety to read as follows:
"(iii) Within 30 days after the last day of each month,
Borrower will deliver to Bank: (y) a Borrowing Base
Certificate signed by a Responsible Officer in the form of
Exhibit C; and (z) transaction reports, schedules of
Accounts, and schedules of collections, all on Bank's
standard forms; provided, however, that Borrower's failure
to execute and deliver the same shall not affect or limit
Bank's security interest and other rights in all of
Borrower's Accounts. If requested by Bank, Borrower shall
furnish Bank with copies (or, at Bank's request, originals)
of all contracts, orders, invoices, and other similar
documents, and all shipping instructions, delivery
receipts, bills of lading, and other evidence of delivery,
for any goods the sale or disposition of which gave rise to
such Accounts, and Borrower warrants the genuineness of all
of the fore-going. Borrower shall also furnish to Bank an
aged accounts receivable trial balance in such form and at
such intervals as Bank shall request. In addition, Borrower
shall deliver to Bank the originals of all instruments,
chattel paper, security agreements, guarantees and other
documents and property evidencing or securing any Accounts,
immediately upon receipt thereof and in the same form as
received, with all necessary endorsements, all of which
shall be with recourse. Borrower shall also provide Bank
with copies of all credit memos from time to time on
request by Bank."
(h) The portion of Section 6.2(a) of the Loan Agreement that
currently reads as follows:
"Provided that if there are no Advances or Letters of
Credit outstanding throughout a month, then the following
reports under the following clauses above need not be
provided with respect to such month: 6.2(a)(i), (ii),
(iii), (iv), and (v), provided that if, in a following
month, the Borrower requests an Advance, Borrower shall
provide said reports at the time the request for the
Advance is made."
, hereby is deleted in its entirety.
(i) The portion of Section 6.9 of the Loan Agreement that
currently reads as follows:
"The sums received in such lockbox account shall be applied
to the outstanding monetary Obligations in such order as
Bank shall determine, and any excess will be deposited by
Bank in Borrower's operating account at Bank."
, hereby is amended and restated in its entirety to read as follows:
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SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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"So long as no Event of Default has occurred and is
continuing, the sums received in such lockbox account will
be deposited by Bank in Borrower's operating account at
Bank. Upon the occurrence and during the continuation of an
Event of Default, Bank may, in its good faith business
judgment, elect to apply any or all sums received in such
lockbox account to the outstanding monetary Obligations in
such order as Bank shall determine or hold such sums as
additional cash security for the Obligations, and any such
sums not so applied to (or held as additional cash security
for) the outstanding monetary Obligations will be deposited
by Bank in Borrower's operating account at Bank."
(j) The definition of "Credit Extension" set forth in Section
13.1 of the Loan Agreement hereby is amended and restated in its entirety to
read as follows:
" "CREDIT EXTENSION" is each Advance, Letter of Credit, FX
Contract, Cash Management Service, or any other extension
of credit by Bank for Borrower's benefit."
(k) The definition of "Representations" set forth in Section
13.1 of the Loan Agreement hereby is amended and restated in its entirety to
read as follows:
" "REPRESENTATIONS " are, collectively, the written
Representations and Warranties of Borrower dated July 28,
2004 and the Litigation Update of Borrower dated August 5,
2004."
(l) The portion of Section 5.2 of the Loan Agreement that
currently reads as follows:
"The Collateral is not in the possession of any third party
bailee (such as at a warehouse), except for Collateral
consisting of Inventory located at the following warehouse
in Memphis, Tennessee: 4638 E. Shelby Drive, Memphis,
Tennessee 38118 (the "Tennessee Warehouse"). Borrower shall
cause the Tennessee Warehouse to execute and deliver to
Bank an agreement pursuant to which the Tennessee Warehouse
waives any liens on the Collateral stored with it and
acknowledges that it is holding such Collateral for the
benefit of Bank in form acceptable to the Bank. In the
event that Borrower, after the date hereof, intends to
store or otherwise deliver the Collateral to such a bailee,
then Borrower will receive the prior written consent of
Bank and such bailee must acknowledge in writing that the
bailee waives any liens on the Collateral and acknowledges
that the bailee is holding such Collateral for the benefit
of Bank in form acceptable to the Bank."
, hereby is amended and restated in its entirety to read as follows:
"The Collateral is not in the possession of any third party
bailee (such as at a warehouse), except for Collateral
consisting of Inventory located at the locations expressly
identified in Section 3(f) of the Representations,
including
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SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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the following warehouse in Memphis, Tennessee: 4638 E.
Shelby Drive, Memphis, Tennessee 38118 (the "Tennessee
Warehouse"). Borrower previously has caused the
warehouseman or bailee in respect of the Tennessee
Warehouse to execute and deliver to Bank a bailee agreement
(in form and substance satisfactory to the Bank). Borrower
hereby covenants that Borrower promptly shall deliver
written notice to the Bank of any goods or other Collateral
of Borrower being in the possession of any other
warehouseman or other bailee. With respect to any goods or
other Collateral of Borrower in the possession of any
warehouseman or other bailee located within the United
States, Borrower shall, promptly upon the Bank's request
therefor, use commercially reasonable efforts to deliver to
the Bank a bailee agreement (in form and substance
satisfactory to the Bank) duly executed by such
warehouseman or other bailee. In the event that the Bank
requests such a bailee agreement and Borrower uses such
efforts but does not succeed in delivering such a bailee
agreement, the Bank may (in its good faith business
judgment) maintain a reserve with respect to such warehouse
or other bailee location."
(m) Section 5.3 of the Loan Agreement, which currently reads
as follows:
"Except as shown in the Schedule, there are no actions or
proceedings pending or, to the knowledge of Borrower's
Responsible Officers and legal counsel, threatened by or
against Borrower or any Subsidiary, which could reasonably
be expected to result in damages or costs to Borrower or
any Subsidiary of $100,000 or more, or in which an adverse
decision could reasonably be expected to cause a Material
Adverse Change."
, hereby is amended and restated in its entirety to read as follows:
"Except as shown in the Litigation Update referenced within
the definition of "Representations" or in Schedule 2, there
are no actions or proceedings pending or, to the knowledge
of Borrower's Responsible Officers and legal counsel,
threatened by or against Borrower or any Subsidiary, which
could reasonably be expected to result in damages or costs
to Borrower or any Subsidiary of $100,000 or more, or in
which an adverse decision could reasonably be expected to
cause a Material Adverse Change."
(n) The portion of Section 6.2(b) of the Loan Agreement that
currently reads as follows:
"Such audits will be conducted no more often than every 6
months, provided that if the Asset Based Terms are in
effect, such audits may be conducted by Bank quarterly, and
if an Event of Default or an event which, with notice or
passage of time or both would constitute an Event of
Default, has occurred and is continuing, there shall not be
a limit on the number of such audits."
, hereby is amended and restated in its entirety to read as follows:
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"Such audits will be conducted no more often than (a)
subject to the following proviso and clause (b) below, once
in any consecutive-6-month-period (which period commences
on or after the July 2004 Amendment Date), so long as no
Event of Default and no event which, with notice or passage
of time or both would constitute an Event of Default
("Default") has occurred and is continuing, or (b) subject
to the following proviso, once in any
consecutive-12-month-period (which period commences on or
after the July 2004 Amendment Date), so long as no Advances
were outstanding at any time during such 12-month period
and no Default or Event of Default has occurred and is
continuing; provided, however, that any such audits
conducted upon the occurrence and during the continuation
of any Default or Event of Default shall not count toward
any of the foregoing limitations on the number of such
audits."
3. LIMITED AND CONDITIONAL CONSENT TO SALE OF MOBILITY TEXAS, INC. Bank
hereby agrees to not unreasonably withhold its consent to the sale of all or
substantially all of the assets or capital stock of Mobility Texas, Inc.
(formerly known as Cutting Edge Software, Inc.); provided, however, that, as
conditions to the effectiveness of any such consent:
(a) no Event of Default shall have occurred and be continuing, both
immediately before and immediately after the consummation of such sale;
(b) such sale shall be in accordance (in all material respects) with
the terms and conditions of a commercially-reasonable, definitive purchase/sale
agreement relative thereto;
(c) all consideration received by Borrower (in the case of a stock
sale) or Mobility Texas, Inc. (in the case of an asset sale) for such sale shall
be promptly delivered to Bank in the same form as received (with any and all
necessary endorsements): (i) in the case of monetary payments, to be applied to
(or held by Bank as cash security for) the outstanding monetary Obligations in
such order as Bank shall determine, and any excess will be deposited by Bank in
Borrower's operating account at Bank; and (ii) in all other cases, as additional
Collateral.
It is understood and agreed that such consent to such sale (the "Permitted
Mobility Texas Sale") does not constitute a waiver of any provision or term of
the Loan Documents restricting the sale or other disposition of assets of any
Borrower or any Guarantor in respect of any matter other than the Permitted
Mobility Texas Sale, nor a waiver of any other provision or term of the Loan
Agreement or any other Loan Document, nor an agreement to waive, in the future,
any provision or term of the Loan Documents restricting the sale or other
disposition of assets of any Borrower or any Guarantor in respect of any matter
other than the Permitted Mobility Texas Sale, nor a waiver of any other
provision or term of the Loan Agreement or any other Loan Document.
Concurrently with the effectiveness of such consent and the consummation of such
sale, Bank will (at Borrower's expense): (y) (1) release its security interests
(without recourse, representation, or warranty) in such assets or capital stock
that are sold pursuant to such sale, (2) authorize and authenticate in writing
the filing of UCC-2/3 Partial Releases relative to the applicable financing
statements of record in favor of the Bank, in form and substance reasonably
satisfactory to Bank and otherwise in suitable form for filing in the
appropriate governmental
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SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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offices, in order to reflect such release of security interests, and (3) execute
and deliver any other documents (in form and substance reasonably satisfactory
to Bank) reasonably requested by Borrower to effect or reflect such release of
security interests; and (z) if and to the extent that Borrower no longer owns
any capital stock of Mobility Texas, Inc. (formerly known as Cutting Edge
Software, Inc.), release Mobility Texas, Inc. (formerly known as Cutting Edge
Software, Inc.) from its guaranty of the Obligations in favor of Bank (except
that Borrower shall assume any and all obligations of Mobility Texas, Inc.
(formerly known as Cutting Edge Software, Inc.) under the Loan Documents to
reimburse Bank for costs and expenses and to indemnify Bank).
4. FEES. In consideration for Bank entering into this Amendment and the
Amended and Restated Schedule, Borrower shall pay Bank the $50,000 facility fee
described in Section 3 of the Amended and Restated Schedule, concurrently with
the execution and delivery of this Amendment and the Amended and Restated
Schedule, which fee shall be non-refundable and in addition to all interest and
other fees payable to Bank under the Loan Documents. Bank is authorized to
charge said fees to Borrower's loan account.
5. REPRESENTATIONS TRUE. Borrower represents and warrants to Bank that
all representations and warranties set forth in the Loan Agreement, as amended
hereby, are true and correct.
6. GENERAL PROVISIONS. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Bank and Borrower, and the
other Loan Documents set forth in full all of the representations and agreements
of the parties with respect to the subject matter hereof and supersede all prior
discussions, representations, agreements and understandings between the parties
with respect to the subject hereof. Except as expressly amended herein (or as
amended and restated in the Loan Documents as expressly contemplated herein),
all of the terms and provisions of the Loan Agreement and all other Loan
Documents shall continue in full force and effect and the same are hereby
ratified and confirmed.
[remainder of page intentionally left blank; signature page follows]
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SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same document.
Delivery of an executed counterpart of this Amendment by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Amendment. The foregoing shall apply to each other Loan Document mutatis
mutandis.
Borrower: Bank:
MOBILITY ELECTRONICS, INC. SILICON VALLEY BANK
By By
------------------------------- ------------------------------
President or Vice President Title
---------------------------
Borrower: Borrower:
MOBILITY IDAHO, INC. (formerly MAGMA, INC.
Portsmith, Inc.)
By
------------------------------
By President or Vice President
-------------------------------
President or Vice President
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SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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CONSENT
The undersigned acknowledges that the undersigned's consent to the
foregoing Amendment and to the Amended and Restated Schedule is not required,
but the undersigned nevertheless does hereby consent to the foregoing Amendment
and the Amended and Restated Schedule and to the documents and agreements
referred to therein and to all future modifications and amendments thereto, and
any termination thereof, and to any and all other present and future documents
and agreements between or among the foregoing parties. Nothing herein shall in
any way limit any of the terms or provisions of the guaranty, security
agreement, or any other Loan Document of the undersigned, all of which are
hereby ratified and affirmed.
Mobility Texas, Inc. (formerly Cutting Edge iGo Direct Corporation, a Delaware
Software, Inc.) corporation formerly known as IGOC
Acquisition, Inc. and successor-by-merger
to iGo Corporation
By
-----------------------------------
President or Vice President By
-----------------------------------
President or Vice President
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SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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Schedule 2 to Loan and Security Agreement
Deposit Accounts at Silicon Valley Bank:
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Liens existing on the July 2004 Amendment Date and disclosed to and accepted by
Bank in writing:
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Investments existing on the July 2004 Amendment Date and disclosed to and
accepted by Bank in writing:
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Subordinated Debt:
Indebtedness on the July 2004 Amendment Date and disclosed to and consented to
by Bank in writing:
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Updated Schedule 2
SILICON VALLEY BANK AMENDMENT TO LOAN DOCUMENTS
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Except as shown below, there are no actions or proceedings pending or, to the
knowledge of Borrower's Responsible Officers and legal counsel, threatened by or
against Borrower or any Subsidiary, which could result in damages or costs to
Borrower or any Subsidiary of $100,000 or more, or in which an adverse decision
could reasonably be expected to cause a Material Adverse Change (attach
additional comments, if needed):
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Updated Schedule 2 (continued)
AMENDED AND RESTATED SCHEDULE 1 TO
LOAN AND SECURITY AGREEMENT
BORROWER(S): MOBILITY ELECTRONICS, INC.
MOBILITY IDAHO, INC. (FORMERLY PORTSMITH, INC.)
MAGMA, INC.
DATED AS OF JULY 31, 2004 (THE "JULY 2004 AMENDMENT DATE")
This Amended and Restated Schedule 1 (this "Schedule") forms an integral part of
the Loan and Security Agreement, dated September 27, 2002 (as amended, restated,
supplemented, or otherwise modified from time to time (including without
limitation pursuant to the July 2004 Amendment referred to below), the "Loan
Agreement" or "this Agreement"), between Silicon Valley Bank ("Bank" or
"Silicon") and the borrower(s) named above (individually and collectively, and
jointly and severally, "Borrower"), and, effective as of the date hereof, this
Schedule amends and restates in its entirety the prior Schedule 1 to Loan and
Security Agreement, dated September 27, 2002 (as amended, restated,
supplemented, or otherwise modified from time to time prior to the date hereof),
between Bank and Borrower. This Schedule is the "Amended and Restated Schedule"
referred to in Section 1 of the Amendment to Loan Documents, dated as of even
date herewith, between Borrower and Bank (the "July 2004 Amendment") relative to
the Loan Agreement. (Capitalized terms used herein, which are not defined, shall
have the meanings set forth in the Loan Agreement.) The term "July 2004
Amendment Date" as defined above hereby is incorporated into the Loan Agreement.
1. CREDIT LIMIT
(Section 2.1.1):
1.1 Subject to Sections 1.2 and 1.3 below, the Credit Limit shall be an
amount not to exceed the lesser of (i) $10,000,000 at any one time
outstanding (the "Committed Revolving Line") or (ii) the Borrowing
Base (as defined below). As used herein, the term "Borrowing Base"
means, as of any date of determination, the result of (a), (b), and
(c) below:
(a) 80% (the "Accounts Advance Rate" and also an "Advance Rate")
of the amount of Borrower's Eligible Accounts,
plus
(b) the lesser of (1) or (2) below (the "Inventory Component"):
(1) 25% (the "Inventory Advance Rate" and also an "Advance
Rate") of the value of Borrower's Eligible Inventory (as
defined in Section 13.1 of the Loan Agreement),
calculated at the lower of cost or
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SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
market value and determined on a first-in, first-out
basis, or
(2) $2,000,000 (the "Inventory Sublimit"),
minus
(c) Reserves for accrued interest and such other reserves as Bank
deems proper from time to time in its good faith business
judgment.
Anything in the Loan Agreement to the contrary notwithstanding, in
no event shall the aggregate outstanding amount of Advances and
other Credit Extensions based on the Inventory Component exceed 20%
(the "Inventory Percentage Limit" and also an "Advance Rate") of the
aggregate amount of all Advances and other Credit Extensions
outstanding hereunder.
Anything in the Loan Agreement to the contrary notwithstanding, the
Inventory Sublimit shall equal Zero Dollars ($-0-), unless and until
Bank has received, on or after the July 2004 Amendment Date, the
results of an appraisal of the Inventory completed by or on behalf
of Bank, which results shall be satisfactory to Bank in its good
faith business judgment (the "Designated Inventory Appraisal").
Silicon may, from time to time, modify the Advance Rates, in its
good faith business judgment, upon notice to the Borrower, based on
changes in collection experience with respect to Accounts, its
evaluation of the Inventory or other issues or factors relating to
the Accounts, Inventory or other Collateral.
1.2 Advances will be made separately to each Borrower, based on the
Eligible Accounts and Eligible Inventory of each Borrower. Accounts
and Inventory of Mobility Idaho, Inc. (formerly Portsmith, Inc.) and
Magma, Inc. will not be "Eligible" unless and until they are
approved by Bank in writing in its sole discretion.
1.3 Credit Extensions Sublines under the Committed Revolving Line:
(a) Letter of Credit Sublimit (Section 2.1.2): $2,500,000; provided,
however, that the sum of the aggregate face amount of outstanding
Letters of Credit, plus the FX Reserve, plus the aggregate amount of
Obligations in respect of Cash Management Services, shall not at any
time exceed $2,500,000.
At the request of Borrower, Bank may, in its good faith business
judgment, issue or arrange for the issuance of letters of credit for
the account of Borrower, in each case in form and substance
satisfactory
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SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
to Bank in its sole discretion (collectively, "Letters of Credit").
The Borrower agrees that the aggregate face amount of all
outstanding Letters of Credit shall never exceed the lesser of the
Letter of Credit Sublimit set forth above or the amount of Advances
and other Credit Extensions which are from time to time available
hereunder, and that the amount of outstanding Letters of Credit
shall be reserved against Advances and other Credit Extensions which
would otherwise be available hereunder. If at any time or for any
reason the aggregate face amount of all outstanding Letters of
Credit shall exceed the foregoing limit, Borrower shall immediately
pay an amount equal to said excess to Bank, without notice or
demand. Borrower shall pay all bank charges (including charges of
Bank) for the issuance of Letters of Credit, together with such
additional fees as Bank's letter of credit department shall charge
in connection with the issuance of the Letters of Credit. Any
payment by Bank under or in connection with a Letter of Credit shall
constitute an Advance hereunder on the date such payment is made.
Each Letter of Credit will have an expiry date of no later than 180
days after the Revolving Maturity Date (except that a Letter of
Credit issued to HIPRO Electronics may have an expiry date beyond
said 180-day period). Regardless of the expiry date of any Letter of
Credit, Borrower's reimbursement obligations with respect to all
Letters of Credit (including without limitation those with expiry
dates after the Revolving Maturity Date and the Letter of Credit
issued to HIPRO Electronics) shall be secured by cash on terms
acceptable to Bank on or before the Revolving Maturity Date if the
term of this Agreement is not extended by Bank. Borrower hereby
agrees to indemnify, save, and hold Bank harmless from any loss,
cost, expense, or liability, including payments made by Bank,
expenses, and reasonable attorneys' fees incurred by Bank arising
out of or in connection with any Letters of Credit. Borrower agrees
to be bound by the regulations and interpretations of the issuer of
any Letters of Credit guarantied by Bank and opened for Borrower's
account or by Bank's interpretations of any Letter of C redit issued
by Bank for Borrower's account, and Borrower understands and agrees
that Bank shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower's
instructions or those contained in the Letters of Credit or any
modifications, amendments, or supplements thereto. Borrower
understands that Letters of Credit may require Bank to indemnify the
issuing bank for certain costs or liabilities arising out of claims
by Borrower against such issuing bank. Borrower hereby agrees to
indemnify and hold Bank harmless with respect to any loss, cost,
expense, or liability incurred by Bank under any Letter of Credit as
a result of Bank's indemnification of any such issuing bank. The
provisions of this Agreement, as it pertains to Letters of Credit,
and any other Loan Documents relating to Letters of Credit are
cumulative.
-3-
SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
(b) FX Sublimit: $2,500,000; provided, however, that the sum of the
aggregate face amount of outstanding Letters of Credit, plus the FX
Reserve, plus the aggregate amount of Obligations in respect of Cash
Management Services, shall not at any time exceed $2,500,000.
Borrower may enter into foreign exchange forward contracts with
Bank, on its standard forms, under which Borrower commits to
purchase from or sell to Bank a set amount of foreign currency more
than one Business Day after the contract date (the "FX Forward
Contracts"); provided that (1) at the time the FX Forward Contract
is entered into, Borrower has Unfunded Availability (as defined
below) under this Agreement in an amount at least equal to 10% of
the amount of the FX Forward Contract; (2) the total FX Forward
Contracts at any one time outstanding may not exceed 10 times the
amount of the FX Sublimit set forth above. Bank shall have the right
to withhold, from the Advances and other Credit Extensions otherwise
available to Borrower under this Agreement, a reserve (which shall
be in addition to all other reserves) in an amount equal to 10% of
the total FX Forward Contracts from time to time outstanding (the
"FX Reserve"), and in the event at any time there are insufficient
Advances and other Credit Extensions available to Borrower for such
reserve, Borrower shall deposit and maintain with Bank cash
collateral in an amount at all times equal to such deficiency, which
shall be held as Collateral for all purposes of this Agreement. Bank
may, in its discretion, terminate the FX Forward Contracts at any
time that an Event of Default occurs and is continuing. The FX
Forward Contracts shall terminate upon the earlier of (a) the
Revolving Maturity Date, or (b) any earlier effective date of
termination of this Agreement (or such later date requested by
Borrower as Bank may agree in writing in its sole discretion if and
to the extent Borrower's Obligations in respect of the FX Forward
Contracts are secured by cash in amounts and on terms and conditions
acceptable to Bank in its good faith business judgment). Borrower
shall execute all standard form applications and agreements of Bank
in connection with the FX Forward Contracts, and without limiting
any of the terms of such applications and agreements, Borrower shall
pay all standard fees and charges of Bank in connection with the FX
Forward Contracts. All amounts that Bank pays or expends in respect
of any FX Forward Contracts shall constitute Obligations hereunder.
As used herein, the term "Unfunded Availability" means, as of any
date of determination, the amount, as determined by Bank in its good
faith business judgment, equal to the aggregate Advances and other
Credit Extensions available to the Borrower under the Loan Agreement
(after deduction of all outstanding Advances and other Credit
Extensions and all applicable reserves).
-4-
SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
(c) Cash Management Services and Reserves: Borrower may use up to
$2,500,000 of Advances available hereunder for Bank's Cash
Management Services (as defined below), including, merchant
services, business credit card, ACH and other services identified in
the cash management services agreement related to such service (the
"Cash Management Services"); provided, however, that the sum of the
aggregate face amount of outstanding Letters of Credit, plus the FX
Reserve, plus the aggregate amount of Obligations in respect of Cash
Management Services, shall not at any time exceed $2,500,000. Bank
will reserve against Advances and other Credit Extensions otherwise
available to Borrower under this Agreement such sums as Bank shall
determine in its good faith business judgment in connection with the
Cash Management Services, and Bank may charge to Borrower's Loan
account any amounts that may become due or owing to Bank in
connection with the Cash Management Services. Borrower agrees to
execute and deliver to Bank all standard form applications and
agreements of Bank in connection with the Cash Management Services,
and, without limiting any of the terms of such applications and
agreements, Borrower will pay all standard fees and charges of Bank
in connection with the Cash Management Services. The Cash Management
Services shall terminate upon the earlier of (a) the Revolving
Maturity Date, or (b) any earlier effective date of termination of
this Agreement (or such later date requested by Borrower as Bank may
agree in writing in its sole discretion if and to the extent
Borrower's Obligations in respect of the Cash Management Services
are secured by cash in amounts and on terms and conditions
acceptable to Bank in its sole discretion). Upon the occurrence and
during the continuation of an Event of Default, Bank shall have the
right to require the Obligations in respect of the Cash Management
Services to be secured by cash in amounts and on terms and
conditions acceptable to Bank in its good faith business judgment.
2. INTEREST.
INTEREST RATE
(Section 2.3(a)): A rate equal to the "Prime Rate" in effect from
time to time.
3. FEES (Section 2.4(a)):
Facility Fee: $50,000, payable concurrently with the execution
and delivery of this Schedule and the July 2004
Amendment.
-5-
SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
Unused Line Fee: In the event, in any month (or portion thereof),
the average daily principal balance of the
Advances outstanding during such month (or portion
thereof) is less than the Committed Revolving
Line, then Borrower shall pay Bank an unused line
fee (the "Unused Line Fee") in an amount equal to
0.25% per annum on the difference of the Committed
Revolving Line minus the average daily principal
balance of the Advances outstanding during such
month (or portion thereof), computed on the basis
of a 360-day year, and the Unused Line Fee shall
be computed and paid monthly, in arrears, on the
first day of the following month.
Collateral Handling Fee: During each month or portion thereof, Borrower
shall pay Bank a collateral handling fee in an
amount equal to $1,100 per month.
Termination Fee:
(Sections 2.1.1(d)
and 9.1(b)): None.
4. REVOLVING MATURITY DATE
(Section 13.1): July 31, 2006.
5. FINANCIAL COVENANTS
(Section 6.7): Parent (on a consolidated basis) shall comply with
each of the following financial covenants.
Compliance shall be determined as of the end of
each month, except as specifically otherwise
provided below:
(a) Quick Ratio: Parent (on a consolidated basis) shall maintain a
ratio, of
(i) the total of unrestricted cash and
unrestricted cash equivalents, net
billed Accounts (net of allowance for
doubtful Accounts), and investments
with maturities of less than 12
months,
TO
(ii) Current Liabilities,
of not less than 1.50 TO 1.00.
(b) EBITDA: Parent (on a consolidated basis) shall maintain
EBITDA of not less than Zero Dollars ($-0-) for
each fiscal quarter, commencing with the fiscal
quarter ending September 30, 2004.
-6-
SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
"Current Liabilities" and "liabilities" shall have
the meaning ascribed thereto by GAAP.
"EBITDA" shall mean Parent's earnings before
interest, taxes, depreciation and other non-cash
amortization expenses and other non-cash expenses
of parent, all determined in accordance with GAAP,
on a consolidated basis.
6. BORROWER INFORMATION:
Borrower represents and warrants that the information set forth in the
Representations and Warranties of the Borrower dated July 28, 2004, and the
Litigation Update of Borrower dated August 5, 2004, in each case as previously
submitted to Silicon (collectively, the "Representations") is true and correct
as of the date hereof.
7. ADDITIONAL PROVISIONS
7.1 Intellectual Property. Borrower (and, by its execution and delivery
of the Consent attached to the July 2004 Amendment, Guarantor) each
represents and warrants that all Intellectual Property of the
Borrower and Guarantor, as the case may be, is listed on Exhibit 7.1
hereto and is owned by the Borrower or Guarantor (as the case may
be) shown on said Exhibit. Without limiting the generality of
Section 6.8 of the Loan Agreement (or Section 4.8 of the applicable
Security Agreement between Bank and such Guarantor), neither
Borrower nor Guarantor owns, as of the July 2004 Amendment Date, any
maskworks, computer software, and other copyrights that are
registered (or are the subject of any application for registration)
with the United States Copyright Office, except as expressly and
specifically identified on Exhibit 7.1 with respect to such Borrower
or Guarantor.
7.2 [intentionally omitted]
7.3 [intentionally omitted]
7.4 [intentionally omitted]
7.5 Pledge of Shares of Stock of Mobility Idaho, Inc. (formerly
Portsmith, Inc.). Borrower hereby represents and warrants that, as
discussed in Section 1 of the Litigation Update referenced within
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SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
the definition of "Representations" (set forth in Section 13.1 of
the Loan Agreement), the outstanding shares of stock of Mobility
Idaho, Inc. (formerly Portsmith, Inc.) have been released from the
Borrower's pledge thereof. Accordingly, such shares constitute
Collateral subject to the Bank's first-priority continuing security
interests.
7.6 Removal of Negative Trends Reserve. Without limiting the Bank's
rights and discretion relative to any other reserves, Borrower and
Bank hereby acknowledge and agree that the "Negative Trends Reserve"
(as defined in Section 3(b) of that certain Amendment to Loan
Documents, dated as of August 25, 2003, between Borrower and Bank)
as previously in effect is removed from and after the July 2004
Amendment Date.
7.7 Notification. Bank or its designee may, at any time, notify Account
Debtors that it has a security interest in the Accounts and that
payment on the Accounts is to be made directly to the Bank.
7.8 Loan Requests. Requests for Advances shall be in writing and shall
be accompanied by a current Transaction Report on Bank's standard
form.
7.9 Reserves. Bank shall have the right to establish and maintain, from
time to time, such reserves as Bank deems proper in its good faith
business judgment against the unfunded amount of Advances and other
Credit Extensions otherwise available under Section 1 of this
Schedule, including the following: (a) reserves to reflect events,
conditions, contingencies or risks which, as determined by Bank in
good faith, do or may affect adversely (i) the Collateral or any
other property which is security for the Obligations or its value
(including without limitation any increase in delinquencies of
Accounts), (ii) the assets, business or prospects of Borrower, or
(iii) the security interests and other rights of Bank in the
Collateral (including the enforceability, perfection and priority
thereof); and (b) reserves to reflect Bank's good faith belief that
any collateral report or financial information furnished by or on
behalf of Borrower to Bank is or may have been incomplete,
inaccurate or misleading in any material respect.
[remainder of page intentionally left blank; signature page follows]
-8-
SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Schedule to be
executed and delivered as of the date first above written.
Borrower: Bank:
MOBILITY ELECTRONICS, INC. SILICON VALLEY BANK
By By
---------------------------------- -----------------------------------
President or Vice President Title
--------------------------------
Borrower: Borrower:
Mobility Idaho, Inc.
(formerly Portsmith, Inc.) MAGMA, INC.
By By
---------------------------------- -----------------------------------
President or Vice President President or Vice President
Signature Page
SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
EXHIBIT 7.1
1. Intellectual Property of Mobility Electronics, Inc.:
a. maskworks, computer software, and other copyrights that are registered
(or are the subject of any application for registration) with the United States
Copyright Office: NONE
b. patents that are issued (or are the subject of any application for
issuance) by the United States Patent & Trademark Office: see Section 4.a of the
Representations and Warranties of the Borrower dated July 28, 2004 (which by
this reference is incorporated herein)
c. trademarks that are registered (or are the subject of any application
for registration) with the United States Patent & Trademark Office: see Section
4.a of the Representations and Warranties of the Borrower dated July 28, 2004
(which by this reference is incorporated herein)
2. Intellectual Property of Mobility Idaho, Inc. (formerly Portsmith, Inc.):
a. maskworks, computer software, and other copyrights that are registered
(or are the subject of any application for registration) with the United States
Copyright Office: NONE
b. patents that are issued (or are the subject of any application for
issuance) by the United States Patent & Trademark Office: NONE
c. trademarks that are registered (or are the subject of any application
for registration) with the United States Patent & Trademark Office: NONE
3. Intellectual Property of Magma, Inc.:
a. maskworks, computer software, and other copyrights that are registered
(or are the subject of any application for registration) with the United States
Copyright Office: NONE
b. patents that are issued (or are the subject of any application for
issuance) by the United States Patent & Trademark Office: NONE
c. trademarks that are registered (or are the subject of any application
for registration) with the United States Patent & Trademark Office: NONE
Exhibit 7.1
SILICON VALLEY BANK A&R SCHEDULE 1 TO LOAN AND SECURITY AGREEMENT
4. Intellectual Property of Mobility Texas, Inc. (formerly Cutting Edge
Software, Inc.):
a. maskworks, computer software, and other copyrights that are registered
(or are the subject of any application for registration) with the United States
Copyright Office: NONE
b. patents that are issued (or are the subject of any application for
issuance) by the United States Patent & Trademark Office: NONE
c. trademarks that are registered (or are the subject of any application
for registration) with the United States Patent & Trademark Office: see Section
4.a of the Representations and Warranties of the Borrower dated July 28, 2004
(which by this reference is incorporated herein)
5. Intellectual Property of iGo Direct Corporation, a Delaware corporation
formerly known as IGOC Acquisition, Inc. and successor-by-merger to iGo
Corporation:
a. maskworks, computer software, and other copyrights that are registered
(or are the subject of any application for registration) with the United States
Copyright Office: NONE
b. patents that are issued (or are the subject of any application for
issuance) by the United States Patent & Trademark Office: see Section 4.a of the
Representations and Warranties of the Borrower dated July 28, 2004 (which by
this reference is incorporated herein)
c. trademarks that are registered (or are the subject of any application
for registration) with the United States Patent & Trademark Office: see Section
4.a of the Representations and Warranties of the Borrower dated July 28, 2004
(which by this reference is incorporated herein)
Exhibit 7.1