{"id":41114,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/loan-agreement-salon-com-and-imperial-bank.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"loan-agreement-salon-com-and-imperial-bank","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/loan-agreement-salon-com-and-imperial-bank.html","title":{"rendered":"Loan Agreement &#8211; Salon.com and Imperial Bank"},"content":{"rendered":"<pre>\n                      AMENDED AND RESTATED LOAN AGREEMENT\n\n     THIS AMENDED AND RESTATED LOAN AGREEMENT is entered into as of September\n23, 1999 (this 'Restated Loan Agreement') between SALON.COM, a Delaware\ncorporation (herein called 'Borrower'), and IMPERIAL BANK (herein called\n'Bank'). This Restated Loan Agreement amends, restates and supercedes in its\nentirety the Security and Loan Agreement and the Other Loan Agreement (as\nhereinafter defined).\n\n                                   RECITALS\n\n     A. Borrower and Bank entered into a certain Security and Loan Agreement\ndated as of April 14, 1997, as the same was amended by that certain First\nAmendment to Loan Agreement dated as of April 13, 1998 (collectively, the\n'Security and Loan Agreement'), pursuant to which Bank agreed to extend and make\n'Working Capital Advances' and 'Equipment Advances' (as said terms are defined\nin the Security and Loan Agreement) to Borrower in the maximum principal amount\nof $500,000.00 upon the terms and conditions contained therein. The commitment\nof Bank to make Working Capital Advances expired and was terminated on April 13,\n1998. The commitment of Bank to make Equipment Advances expired on September 30,\n1997 and Borrower is currently making the scheduled principal and interest\npayments set forth in the Security and Loan Agreement.\n\n     B. Borrower and Bank entered into a certain Loan Agreement dated as of\nApril 13, 1998 (the 'Other Loan Agreement'), pursuant to which Bank agreed to\nmake (1) revolving loans to Borrower in the maximum principal amount of\n$1,000,000.00 (the 'Prior Revolving Loan Commitment') and (2) an equipment term\nloan to Borrower in the maximum principal amount of $300,000.00 (the 'Additional\nEquipment Loan Commitment'). The Prior Revolving Loan Commitment expired and was\nterminated on April 12, 1999. The commitment of Bank to make advances under the\nAdditional Equipment Loan Commitment expired on December 31, 1998 and Borrower\nis currently making the scheduled principal and interest payments set forth in\nthe Other Loan Agreement.\n\n     C. Borrower has requested and Bank has agreed to make additional revolving\nloans to Borrower in the maximum principal amount of $2,000,000.00, subject to\nthe terms and conditions hereinafter set forth and in reliance on the\nrepresentations and warranties set forth herein.\n\n                                   AGREEMENT\n\n     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual\ncovenants hereinafter set forth, and intending to be legally bound, the parties\nhereby agree as follows:\n\n\n     1. Definitions. As used in this Restated Loan Agreement and unless\notherwise defined herein, all initially capitalized terms shall have the\nmeanings set forth on Exhibit A attached hereto and incorporated herein by this\nreference.\n\n     2. Commitments.\n\n          (A) Revolving Commitment. Subject to all the terms and conditions of\nthis Restated Loan Agreement and prior to the termination of its commitment as\nhereinafter provided, Bank hereby agrees to make loans (each a 'Revolving Loan')\nto Borrower, from time to time and in such amounts as Borrower shall request\npursuant to this Section 2.A., up to an aggregate principal amount outstanding\nunder the Revolving Loan Account\n\n                                      29.\n\n \nnot to exceed the lesser of: (a) eighty percent (80.0%) of Eligible Accounts (as\nthe same may be adjusted from time to time as provided for under Section 9.B.\nhereof, the 'Borrowing Base') or (b) $2,000,000.00 (the 'Revolving Loan\nCommitment'). If at any time or for any reason, the outstanding principal amount\nof the Revolving Loan Account is greater than the lesser of: (x) the Borrowing\nBase or (y) the Revolving Loan Commitment, Borrower shall immediately pay to\nBank, in cash, the amount of such excess. Any commitment of Bank, pursuant to\nthe terms of this Restated Loan Agreement, to make Revolving Loans shall expire\non the Revolving Loan Maturity Date, subject to Bank's right to renew said\ncommitment in its sole and absolute discretion at Borrower's request. Any such\nrenewal of the Revolving Loan Commitment shall not be binding upon Bank unless\nit is in writing and signed by an officer of Bank. The outstanding principal\nbalance of the Revolving Loan Account may be prepaid in whole or in part at any\ntime without penalty. Any partial prepayment of principal will be applied to the\nRevolving Loans in inverse order of maturity. Provided that no Event of Default\nhas occurred and is continuing, all or any portion of the Revolving Loans\nadvanced by Bank which are repaid by Borrower shall be available for reborrowing\nin accordance with the terms hereof. Borrower promises to pay to Bank the entire\noutstanding unpaid principal balance (and all accrued unpaid interest thereon)\nof the Revolving Loan Account on or before September 23, 2000 ('Revolving Loan\nMaturity Date').\n\n\n           (1) Non-Formula Availability. Notwithstanding the provisions set\nforth in Section 2.A. hereof, and provided that no Event of Default has occurred\nand is continuing, and subject to the availability of the Revolving Loan\nCommitment and in reliance on the representations and warranties of Borrower set\nforth herein, at any time from the date hereof through July 31, 2000 ('Non-\nFormula Expiration Date'), Bank hereby agrees to make Revolving Loans to\nBorrower in such amounts that exceed the Borrowing Base as Borrower shall\nrequest pursuant to this Section 2.A.(1), up to an aggregate principal amount\nnot to exceed $1,000,000.00 (the 'Non-Formula Sublimit'); provided, however,\nthat the outstanding amounts under the Non-Formula Sublimit shall be deemed to\nconstitute Revolving Loans for the purpose of calculating availability under the\nRevolving Loan Commitment. On the Banking Day immediately following the Non-\nFormula Expiration Date, Borrower shall immediately pay to Bank, in cash, the\nentire outstanding unpaid principal amount advanced to Borrower under the Non-\nFormula Sublimit.\n\n           (2) Revolving Loans. The amount of each Revolving Loan made by Bank\nto Borrower hereunder shall be debited to the loan ledger account of Borrower\nmaintained by Bank for the Revolving Loan Commitment (herein called the\n'Revolving Loan Account') and Bank shall credit the Revolving Loan Account with\nall Loan repayments in respect thereof made by Borrower. When Borrower desires\nto obtain a Revolving Loan, Borrower shall notify Bank (which notice shall be\nsigned by an officer of Borrower and shall be irrevocable) in accordance with\nSection 3 hereof, to be received no later than 3:00 p.m. Pacific time one (1)\nBanking Day before the day on which the Revolving Loan is to be made. Revolving\nLoans may only be used to support the short-term working capital requirements of\nBorrower, the issuance of letters of credit and for the purchase of foreign\nexchange futures con tracts.\n\n               (a) Letter of Credit Usage and Sublimit. Subject to the\navailability of the Revolving Loan Commitment and in reliance on the\nrepresentations and warranties of Borrower set forth herein, at any time and\nfrom time to time from the date hereof through the Banking Day immediately prior\nto the Revolving Loan Maturity Date, Bank shall issue for the account of\nBorrower such standby and commercial letters of credit ('Letters of Credit') as\nBorrower may request, which request shall be made by delivering to Bank a duly\nexecuted letter of credit application on Bank's standard form; provided,\nhowever, that the outstanding and undrawn amounts under all such Letters of\nCredit (i) shall not at any time exceed $1,500,000.00 and (ii) any Letters of\nCredit currently issued or hereafter issued by Bank for the account of Borrower\nshall be deemed to constitute Revolving Loans for the purpose of calculating\navailability under the Revolving Loan Commitment. Unless Borrower shall have\ndeposited with Bank cash collateral in an amount sufficient to cover all undrawn\namounts under each such Letter of Credit, no Letter of Credit shall have an\nexpiration date that is later than the Revolving Loan Maturity Date. All Letters\nof Credit shall be in form and substance acceptable to Bank in its sole\ndiscretion and shall be subject to the terms and conditions of Bank's form\napplication and letter of credit\n\n                                      30.\n\n \nagreement. Borrower will pay any standard issuance and other fees that Bank\nnotifies Borrower will be charged for issuing and processing Letters of Credit\nfor Borrower.\n\n                    (b) Foreign Exchange Usage and Sublimit. Subject to the\navailability of the Revolving Loan Commitment and in reliance on the\nrepresentations and warranties of Borrower set forth herein, at any time and\nfrom time to time from the date hereof through the Banking Day immediately prior\nto the Revolving Loan Maturity Date, Bank shall arrange the purchase by Borrower\nof foreign exchange futures contracts ('Exchange Contracts') as Borrower may\nrequest, which request shall be made by delivering to Bank a duly executed\nexchange contract application on Bank's standard form; provided, however, that\nthe maximum aggregate notional contract amount under all such Exchange Contracts\nshall not at any time exceed $1,000,000.00 and provided, further, that ten\npercent (10.0%) of the maximum aggregate notional contract amount under all such\nExchange Contracts shall be deemed to constitute outstanding Revolving Loans for\nthe purpose of calculating availability under the Revolving Loan Commitment.\nUnless Borrower shall have deposited with Bank cash collateral in an amount\nsufficient to cover all undrawn amounts under each such Exchange Contract and\nBank shall have agreed in writing, no Exchange Contract shall have a due date\nthat is later than the Revolving Loan Maturity Date. All Exchange Contracts\nshall be in form and substance acceptable to Bank in its sole discretion and\nshall be subject to the terms and conditions of Bank's form exchange contract\napplication. Borrower will pay any standard issuance and other fees that Bank\nnotifies Borrower will be charged for issuing and processing Exchange Contracts\nfor Borrower. After and during the continuance of an Event of Default, Bank may,\nin its sole and absolute discretion, terminate any or all of the Exchange\nContracts. Borrower agrees to indemnify and hold harmless Bank from and against\nall loss, costs and expense associated with any such termination of any Exchange\nContract.\n\n               (3)  Interest Payments on Revolving Loans. Borrower further\npromises to pay to Bank from the date of the advance of the initial Revolving\nLoan through the Revolving Loan Maturity Date, on or before the tenth (10th) day\nof each month, interest on the average daily unpaid balance of the Revolving\nLoan Account during the immediately preceding month at a rate of interest per\nannum equal to the rate of interest which Bank has announced as its prime\nlending rate (the 'Prime Rate'), which shall vary concurrently with any change\nin the Prime Rate. Interest shall be computed at the above rate on the basis of\nthe actual number of days during which the principal balance of the Revolving\nLoan Account is outstanding divided by 360, which shall for interest computation\npurposes be considered one (1) year.\n\n          (B)  Equipment Commitment. Pursuant to the terms of the Security and\nLoan Agreement, as of the date hereof Bank has made loans ('Equipment Loans') to\nBorrower in the principal amount of $66,075.00 (the 'Equipment Loan Commitment')\nto enable Borrower to purchase equipment. The commitment of Bank to make further\nEquipment Loans to Borrower expired on September 30, 1997. Any renewal of the\nEquipment Loan Commitment shall be in Bank's sole and absolute discretion and\nshall not be binding upon Bank unless it is in writing and signed by an officer\nof Bank. Equipment Loans that are repaid by Borrower may not be reborrowed.\nBorrower promises to pay to Bank the outstanding unpaid principal balance (and\nall accrued unpaid interest thereon) of the Equipment Loan Account on or before\nMarch 31, 2000 (the 'Equipment Loan Maturity Date').\n\n               (1)  Equipment Loans. The amount of the Equipment Loans made by\nBank to Borrower has been debited to the loan ledger account of Borrower\nmaintained by Bank for the Equipment Loan Commitment (herein called the\n'Equipment Loan Account') and Bank shall credit the Equipment Loan Account with\nall Loan repayments in respect thereof made by Borrower.\n\n               (2)  Principal and Interest Payments. Borrower further promises\nto pay to Bank from the date hereof through the Equipment Loan Maturity Date, on\nor before the tenth (10th) day of each month, (a) the outstanding principal\nbalance of the Equipment Loan Account on September 30, 1997 in twenty-nine (29)\nequal monthly installments plus (b) interest on the average daily unpaid balance\nof the Equipment Loan Account\n\n                                      31.\n\n \nduring the immediately preceding month at a rate of interest equal to one-half\nof one percent (0.50%) per annum in excess of the Prime Rate, which shall vary\nconcurrently with any change in the Prime Rate. Interest shall be computed at\nthe above rate on the basis of the actual number of days during which the\nprincipal balance of the Equipment Loan Account is outstanding divided by 360,\nwhich shall for interest computation purposes be considered one (1) year.\n\n          (C)  Additional Equipment Commitment. Pursuant to the terms of the\nOther Loan Agreement, as of the date hereof Bank has made loans ('Additional\nEquipment Loans') to Borrower in the principal amount of $170,680.00 (the\n'Additional Equipment Loan Commitment') to enable Borrower to purchase\nequipment, furniture and software. The commitment of Bank to make further\nAdditional Equipment Loans to Borrower expired on December 31, 1998. Any renewal\nof the Additional Equipment Loan Commitment shall be in Bank's sole and absolute\ndiscretion and shall not be binding upon Bank unless it is in writing and signed\nby an officer of Bank. Additional Equipment Loans that are repaid by Borrower\nmay not be reborrowed. Borrower promises to pay to Bank the outstanding unpaid\nprincipal balance (and all accrued unpaid interest thereon) of the Additional\nEquipment Loan Account on or before December 31, 2000 (the 'Additional Equipment\nLoan Maturity Date').\n\n               (1)  Additional Equipment Loans. The amount of the Additional\nEquipment Loans made by Bank to Borrower has been debited to the loan ledger\naccount of Borrower maintained by Bank for the Additional Equipment Loan\nCommitment (herein called the 'Additional Equipment Loan Account') and Bank\nshall credit the Additional Equipment Loan Account with all Loan repayments in\nrespect thereof made by Borrower.\n\n               (2)  Principal and Interest Payments. Borrower further promises\nto pay to Bank from the date hereof through the Additional Equipment Loan\nMaturity Date, on or before the tenth (10th) day of each month, (a) the\noutstanding principal balance of the Equipment Loan Account on December 31, 1998\nin twenty-four (24) equal monthly installments plus (b) interest on the average\ndaily unpaid balance of the Additional Equipment Loan Account during the\nimmediately preceding month at a rate of interest equal to one-half of one\npercent (0.50%) per annum in excess of the Prime Rate, which shall vary\nconcurrently with any change in the Prime Rate. Interest shall be computed at\nthe above rate on the basis of the actual number of days during which the\nprincipal balance of the Additional Equipment Loan Account is outstanding\ndivided by 360, which shall for interest computation purposes be considered one\n(1) year.\n\n     3. Loan Requests. Requests for Loans hereunder shall be in writing duly\nexecuted by Borrower in a form satisfactory to Bank and shall contain a\ncertification setting forth the matters referred to in Section 2, which shall\ndisclose that Borrower is entitled to the amount and type of Loan being\nrequested. Bank is hereby authorized to charge Borrower's deposit account with\nBank for all sums due Bank under this Restated Loan Agreement.\n\n     4. Delivery of Payments. Payment to Bank of all amounts due hereunder shall\nbe made at its Santa Clara Valley Regional office, or at such other place as may\nbe designated in writing by Bank from time to time. If any payment date fall on\na day that is not a day that Bank is open for the transaction of business\n('Banking Day'), the payment due date shall be extended to the next Banking Day.\n\n     5. Late Charge. If any interest payment, principal payment or principal\nbalance payment required hereunder is not received by Bank on or before ten (10)\ndays from the date in which such payment becomes due, Borrower shall pay to\nBank, a late charge equal to the lesser of (a) five percent (5.0%) of the amount\nof such unpaid payment, in addition to said unpaid payment or (b) the maximum\namount permitted to be charged by applicable law, until remitted to Bank;\nprovided; however, nothing contained in this Section 5, shall be construed as\nany obligation on the part of Bank to accept payment of any past due payment or\nless than the total unpaid principal balance of the applicable Loan Account\nfollowing the Revolving Loan Maturity Date, the Equipment\n\n                                      32.\n\n \nLoan Maturity Date or the Additional Equipment Loan Maturity Date. All payments\nshall be applied first to any late charges due hereunder, next to accrued\ninterest then payable and the remainder, if any, to reduce any unpaid principal\ndue under the applicable Loan Account.\n\n     6. Default Interest. From and after the Revolving Loan Maturity Date, the\nEquipment Loan Maturity Date or the Additional Equipment Loan Maturity Date, as\napplicable, or such earlier date as all sums owing under any Loan Account\nbecomes due and payable by acceleration or otherwise, or upon the occurrence and\nduring the continuance of an Event of Default, at the option of Bank all sums\nowing under the applicable Loan Account shall bear interest until paid in full\nat a rate equal to the lesser of (a) five percent (5.0%) per annum in excess of\nthe then applicable interest rate provided for in Sections 2A.(2), 2.B.(2) and\n2.C.(2) hereof or (b) the maximum amount permitted to be charged by applicable\nlaw, until all obligations hereunder are repaid in full or the Event of Default\nis waived or cured to the satisfaction of Bank, as applicable.\n\n     7. Representations and Warranties. Borrower represents and warrants to\nBank: (a) That Borrower is a corporation, duly organized and existing in the\nState of its incorporation and the execution, delivery and performance of each\nof the Loan Documents are within Borrower's corporate powers, have been duly\nauthorized and are not in conflict with law or the terms of any charter, by-law\nor other incorporation papers, or of any indenture, agreement or undertaking to\nwhich Borrower is a party or by which Borrower is bound or affected; (b)\nBorrower is, and at the time the Collateral becomes subject to Bank's security\ninterest will be, the true and lawful owner of and has, and at the time the\nCollateral becomes subject to Bank's security interest will have, good and clear\ntitle to the Collateral, subject only to Bank's rights therein and to Permitted\nLiens; (c) Each Account is, and at the time the Account comes into existence\nwill be, a true and correct statement of a bona fide indebtedness incurred by\nthe debtor named therein in the amount of the Account for either merchandise\nsold or delivered (or being held subject to Borrower's delivery instructions)\nto, or services rendered, performed and accepted by, the account debtor; (d)\nThat there are and will be no defenses, counterclaims, or setoffs which may be\nasserted against the Accounts from time to time represented by Borrower to be\nEligible Accounts, except as permitted in the definition thereof; (e) Any and\nall financial information, including information relating to the Collateral,\nsubmitted by Borrower to Bank, whether previously or in the future, is and will\nbe true and correct in all material respect; (f) There is no litigation or other\nproceeding pending or to Borrower's knowledge threatened against or affecting\nBorrower, and Borrower is not in default with respect to any order, writ,\ninjunction, decree or demand of any court or other governmental or regulatory\nauthority except for proceeding of defaults which will not have a materially\nadverse effect upon its financial conditions or business as now conducted; (g)\n(i) The consolidated balance sheets of Borrower for the month ending July 31,\n1999, and the related consolidated profit and loss statements for the fiscal\nyear then ended, copies of which have heretofore been delivered to Bank by\nBorrower, and all other statements and data submitted in writing by Borrower to\nBank in connection with Borrower's request for credit are true and correct, and\nsaid balance sheet and profit and loss statement accurately present the\nfinancial condition of Borrower as of the date thereof and the results of the\noperations of Borrower for the period covered thereby, and have been prepared in\naccordance with GAAP, (ii) since such date, there have been no material adverse\nchanges in the financial condition of Borrower, and (iii) Borrower has no\nknowledge of any liabilities, contingent or otherwise, which are not reflected\nin said balance sheet, and Borrower has not entered into any special commitments\nor substantial contracts which are not reflected in said balance sheet, other\nthan in the ordinary and normal course of its business, which may have a\nMaterial Adverse Effect upon its financial condition, operations or business as\nnow conducted; (h) Borrower has no liability for any delinquent local, state or\nfederal taxes, and, if Borrower has contracted with any government agency, it\nhas no liability for renegotiation of profits; and (i) Borrower, as of the date\nhereof, possesses all necessary Trademarks, trade names, Copyrights, Patents,\npatent rights, and licenses to conduct its business as now operated, without any\nknown conflict with valid Trademarks, trade names, Copyrights, Patents, patent\nrights and license rights of others; and (j) Borrower and its Subsidiaries have\nreviewed the areas within their operations and business which could be adversely\naffected by, and have developed or are developing a program to address on a\ntimely basis, the Year 2000 Problem and have made related appropriate inquiry of\nmaterial suppliers and vendors, and based on such review and program, the\n\n                                      33.\n\n \nYear 2000 Problem will not have a Material Adverse Effect upon its financial\ncondition, operations or business as now conducted.\n\n     8. Negative Covenants. Borrower agrees that so long as any Loans,\nobligations or liabilities remain outstanding or unpaid to Bank or the\ncommitment of Bank hereunder is in effect, neither Borrower, nor any of its\nsubsidiaries ('Subsidiaries') will, without the prior written consent of Bank\nwhich consent shall not be unreasonably withheld, declined or conditioned in the\ncase of 8.F below:\n\n          (A)  Make any substantial change in the character of its business as\nnow conducted;\n\n          (B)  (1) Create, incur, assume or permit to exist any Indebtedness\nother than Loans from Bank, obligations now existing as shown in the financial\nstatements referenced in Section 7.(g)(i) (excluding those being refinanced by\nBank, Subordinated Debt and Permitted Indebtedness); or (2) sell or transfer,\neither with or without recourse, any accounts or notes receivable or any monies\ndue or to become due;\n\n          (C)  Create, incur, assume or permit to exist any mortgage, pledge,\nencumbrance, lien or charge of any kind (including the charge upon property at\nany time purchased or acquired under conditional sale or other title retention\nagreement) upon any asset now owned or hereafter acquired by it, other than\nPermitted Liens and liens in favor of Bank;\n\n          (D)  Sell, dispose of or grant a security interest in any of the\nCollateral other than to Bank (other than the disposing of such Collateral in\nthe ordinary and normal course of its business as now conducted or other assets\nwhich are obsolete or otherwise considered surplus), or execute any financing\nstatements covering the Collateral in favor of any secured party or Person other\nthan Bank, except for Permitted Liens;\n\n          (E)  (1) Make any loans or advances in excess of $500,000.00 in the\naggregate to any Person or other entity other than in the ordinary and normal\ncourse of its business as now conducted (provided that such loans or advances\nare not made to any Person or entity which is controlled by or under common\ncontrol with Borrower); or (2) make any investment in the securities of any\nPerson or other entity other than the United States Government; or (3) guarantee\nor otherwise become liable upon the obligation of any Person or other entity,\nexcept by endorsement of negotiable instruments for deposit or collection in the\nordinary and normal course of its business as now conducted;\n\n          (F)  (1) Purchase or otherwise acquire all or substantially all of the\nassets or business of any Person or other entity; or (2) liquidate, dissolve,\nmerge (other than a merger to change Borrower's State of Incorporation) or\nconsolidate, or commence any proceedings therefore; or (3) except in the\nordinary and normal course of its business as now conducted, sell (including,\nwithout limitation, the selling of any property or other asset accompanied by\nthe leasing back of the same) any assets including any fixed assets, any\nproperty, or other assets necessary for the continuance of its business as now\nconducted. Notwithstanding the foregoing, upon the consent of Bank, which\nconsent shall not be unreasonably withheld, Borrower may proceed with any\nacquisition, merger or consolidation (as described above) (a) so long as no\nEvent of Default has occurred and is continuing or would exist after giving\neffect to such transaction, (b) Borrower is the surviving corporation, if\napplicable and (c) prior to consummating such transaction, Borrower executes and\ndelivers to Bank all such additional agreements, documents and instruments as\nBank may require in order to affirm, effectuate or further assure its\ncontinuing, first priority lien in the Collateral after giving effect to such\ntransaction;\n\n          (G)  (1) Declare or pay any dividend or make any other distribution on\nany of its capital stock now outstanding or hereafter issued; or (2) purchase,\nredeem or retire any of such stock, other than in dividends or distributions\npayable in Borrower's or any such Subsidiary's capital stock, except for the\nrepurchase of Borrower's capital stock from officers, directors, employees or\nconsultants of Borrower upon termination of their employment with or rendering\nof service to Borrower; and\n\n                                      34.\n\n \n          (H)  Sell, transfer, assign, mortgage, pledge, license, lease, grant a\nsecurity interest in, or otherwise encumber any of the Intellectual Property,\nother than licenses or leases of the Intellectual Property granted in the\nordinary and normal course of its business.\n\n     9. Affirmative Covenants. Borrower affirmatively covenants that so long as\nany Loans, obligations or liabilities remain outstanding or unpaid to Bank or\nthe commitment of Bank hereunder is in effect, it will:\n\n          (A)  Furnish Bank from time to time such financial statements and\ninformation as Bank may reasonably request and inform Bank immediately upon the\noccurrence of a material adverse change therein;\n\n          (B)  Permit representatives of Bank to conduct an audit of Borrower's\nbooks and records relating to the Collateral and make extracts therefrom, with\nresults satisfactory to Bank, provided that Bank shall use its best efforts to\nnot interfere with the conduct of Borrower's business, and to the extent\npossible to arrange for verification of the Accounts directly with the account\ndebtors obligated thereon or otherwise, all under reasonable procedures\nacceptable to Bank and at Borrower's sole expense; provided further that prior\nto an Event of Default, Borrower shall only be responsible for the expense of\none (1) such audit in any fiscal year if the amount outstanding and unpaid under\nthe Revolving Loan Account is greater than One Million Dollars ($1,000,000.00),\nthe cost of such audit of which shall not exceed $2,000.00;\n\n          (C)  Promptly notify Bank of any attachment or other legal process\nlevied against any of the Collateral and any information received by Borrower\nrelative to the Collateral, including the Accounts, the account debtors or other\nPersons obligated in connection therewith, which may in any way affect the value\nof the Collateral or the rights and remedies of Bank in respect thereto;\n\n          (D)  Reimburse Bank upon demand for any and all legal costs, including\nreasonable attorneys' fees, and other expenses incurred in collecting any sums\npayable by Borrower under any Loan Account or any other obligation secured\nhereby, enforcing any term or provision of this Restated Loan Agreement or\notherwise or in the checking, handling and collection of the Collateral and the\npreparation and enforcement of any agreement relating thereto;\n\n          (E)  Notify Bank of each location and of each office of Borrower at\nwhich records of Borrower relating to the Accounts are kept;\n\n          (F)  Provide, maintain and deliver to Bank policies insuring the\nCollateral against loss or damage by such risks and in such amounts, forms and\ncompanies as Bank may require (to the extent customarily maintained by\nbusinesses similar to Borrower) and with loss payable to Bank, and, in the event\nBank takes possession of the Collateral, the insurance policy or policies and\nany unearned or returned premium thereon shall at the option of Bank become the\nsole property of Bank, such policies and the proceeds of any other insurance\ncovering or in any way relating to the Collateral, whether now in existence or\nhereafter obtained, being hereby assigned to Bank;\n\n          (G)  In the event the unpaid balance of any Loan Account shall exceed\nthe maximum amount of outstanding Loans to which Borrower is entitled under\nSection 2 hereof, as applicable, Borrower shall immediately pay to Bank for\ncredit to such Loan Account the amount of such excess;\n\n          (H)  Maintain and preserve all rights, franchises and other authority\nadequate and necessary for the conduct of its business and maintain and preserve\nits existence in the state of its incorporation and any other states in which\nBorrower conducts its business, except with respect to such other states, where\nthe failure to do so would not have a Material Adverse Effect;\n\n                                      35.\n\n \n          (I)  Maintain public liability, property damage and workers\ncompensation insurance and insurance on all its insurable property against fire\nand other hazards with responsible insurance carriers to the extent usually\nmaintained by similar businesses. Borrower shall provide evidence of property\ninsurance in amounts and types acceptable to Bank, and certificates naming Bank\nas a loss payee;\n\n          (J)  Pay and discharge, before the same becomes delinquent and\npenalties accrue thereon, all taxes, assessments and governmental charges upon\nor against it or any of its properties, and any of its other liabilities at any\ntime existing, except to the extent and so long as: (1) the same are being\ncontested in good faith and by appropriate proceedings in such manner as not to\ncause any Material Adverse Effect or the loss of any right of redemption from\nany sale thereunder; and (2) it shall have set aside on its books reserves\n(segregated to the extent required by GAAP);\n\n          (K)  Maintain a standard and modern system of accounting in accordance\nwith GAAP on a basis consistently maintained; permit Bank's representatives to\nhave access to, and to examine its properties, books and records during normal\nbusiness hours; provided that Bank shall use its best efforts to not interfere\nwith the conduct of Borrower's business;\n\n          (L)  Maintain its properties, equipment and facilities in good order\nand repair, ordinary wear and tear excepted;\n\n          (M)  Maintain its primary operating and depository accounts with Bank;\n\n          (N)  Prior to allowing any of Borrower's raw materials, work in\nprocess, finished goods inventory and property, plant and equipment to be\ntransported to or be held at any contract manufacturer, warehouse or other\nlocation (other than with bona fide distributors and retail accounts), Borrower\nshall provide notice to Bank and Borrower shall have complied with such filing\nand notice requirements as shall, in Bank's opinion, assure Borrower's and\nBank's priority in such property over creditors of such contract manufacturer,\nwarehouseman or operator of such other location, including, without limitation,\nmaking filings under California Commercial Code ss.2326, providing notice under\nCalifornia Commercial Code ss.9114 and making filings and publications as\nrequired under California Civil Code ss.3440.1 and ss.3440.5 All such filings,\nnotices and publications shall be in form and substance satisfactory to Bank;\nand\n\n          (O)  Borrower shall perform all acts reasonably necessary to ensure\nthat (1) Borrower, its Subsidiaries and any business in which Borrower holds a\nsubstantial interest and (2) all customers, suppliers and vendors that are\nmaterial to Borrower's business, become Year 2000 Compliant in a timely manner.\nSuch acts shall include, without limitation, performing a comprehensive review\nand assessment of all of Borrower's systems and adopting a detailed plan, with\nan itemized budget, for the remediation, monitoring and testing of such systems.\nIf requested by Bank, Borrower shall within ten (10) business days deliver a\nstatement to Bank summarizing the Year 2000 exposure, program or progress of\nBorrower and its Subsidiaries or other evidence of Borrower's compliance with\nthe terms of this Section 9.O. certified by an officer of Borrower.\n\n     10. Financial Covenants and Information. All financial covenants and\nfinancial information referenced herein shall be interpreted and prepared in\naccordance with GAAP as used in the United States of America applied on a basis\nconsistent with previous years. Compliance with the financial covenants shall be\ncalculated and monitored on a monthly basis, except as shall be expressly stated\nto the contrary. Borrower affirmatively covenants that so long as any Loans,\nobligations or liabilities remain outstanding or unpaid to Bank or any\ncommitment is outstanding hereunder, it will, on a consolidated basis:\n\n          (A) As of the last day of each month, maintain a minimum Tangible Net\nWorth of not less than $10,000,000.00. As used herein, 'Tangible Net Worth'\nshall mean the sum of all assets, excluding any value\n\n                                      36.\n\n \nfor goodwill, Trademarks, Patents, Copyrights, organization expense and other\nsimilar intangible items, less all liabilities, plus Subordinated Debt;\n\n          (B)  At all times maintain a minimum Quick Ratio of not less than\n2.00:1.00 and beginning with the month ending September 30, 2000 of not less\nthan 1.50:1.00. As used herein 'Quick Ratio' means the sum of all unrestricted\ncash plus Accounts divided by the sum of all current liabilities less deferred\nrevenues;\n\n          (C)  Within five (5)days of filing with the Securities Exchange\nCommission (the 'SEC'), but in no event later than fifty (50) days after the end\nof each of the first three fiscal quarters of each fiscal year, a copy of its\nquarterly 10-Q report for each such quarter, as filed with the SEC and a\nCompliance Certificate in the form of Exhibit B attached hereto and incorporated\nherein by this reference, certified by an officer of Borrower;\n\n          (D)  Within five (5)days of filing with the SEC, but in no event later\nthan ninety-five (95) days after the end of each fiscal year, beginning with the\nfiscal year ending March 31, 2000, deliver to Bank (1) unqualified copies of its\nconsolidated financial statements together with changes in financial position\naudited by an independent certified public accountant selected by Borrower but\nacceptable to Bank, (2) a copy of its annual 10-K report, as filed with the SEC\nand (3) and a Compliance Certificate, certified by an officer of Borrower;\n\n          (E)  So long as any amounts remain outstanding and unpaid under the\nRevolving Loan Account, as soon as it is available, but not later than twenty\n(20) days after and as of the end of each month, deliver to Bank, in such form\nand detail as Bank may require, statements showing aging of the Accounts and\nBorrower's accounts payable from invoice date, together with a Borrowing Base\nCertificate in the form of Exhibit C attached hereto and incorporated herein by\nthis reference, certified by an officer of Borrower. Notwithstanding the\nforegoing, if Borrower has not provided to Bank the statements described\nimmediately above for the most recent month then ended, as a condition to any\nrequest for a Revolving Loan, Borrower shall have delivered to Bank said\nstatements as well as a Borrowing Base Certificate covering the most recent\nmonth then ended at least twenty (20) days prior to the date of Borrower's\nrequest for an advance for said Revolving Loan;\n\n          (F)  Upon the reasonable request of Bank, deliver to Bank current\nbudgets, sales projections, operating plans and other financial exhibits and\ninformation in form and substance satisfactory to Bank; and\n\n          (G)  Upon any officer becoming aware, deliver immediately to Bank\nwritten notice of any pending or threatened litigation claiming, or reasonably\nlikely to result in, damages against Borrower in an amount in excess of\n$50,000.00.\n\n     11. Loan Fee. Borrower has paid, and Bank hereby acknowledges receipt of in\nrespect of the Revolving Loan Commitment, a loan fee in the amount of Five\nThousand Dollars ($5,000.00).\n\n     12. Event of Default. The occurrence of any one or more of the following\nshall constitute an 'Event of Default' under this Restated Loan Agreement: (a)\nDefault be made in the payment of any obligation by Borrower under any Loan\nDocument; (b) Except for any failure to pay as described in clause (a) above,\nbreach be made in any warranty, statement, promise, term or condition, contained\nherein or in any other Loan Document and the same shall not have been cured to\nthe satisfaction of Bank within fifteen (15) days after Borrower shall have\nbecome aware thereof, whether by written notice from Bank, or otherwise (except\nthat no cure period shall exist for breaches in respect of Borrower's\nobligations under Section 8, Subsections 9.A., 9.B., 9.C., 9.F., 9.G., 9.H.,\n9.I. and 9.O., Subsections 10.A., 10.B., 10.C., 10.D. and 10.E. of this Restated\nLoan Agreement, and Sections 1 and 2 of the General Security Agreement); (c) Any\nstatement, warranty or representation made by Borrower at any time proves false\nin any material respect; (d) Borrower defaults in the repayment of any principal\nof or the payment of any interest on any indebtedness exceeding in the aggregate\nprincipal amount $50,000 or breaches or violates any term or provision of any\npromissory note, loan agreement, mortgage, indenture or other evidence of\n\n                                      37.\n\n \nsuch indebtedness pursuant to which amounts outstanding in the aggregate exceed\n$50,000 if the effect of such breach is to permit the acceleration of such\nindebtedness, whether or not waived by the note holder or obligee, and such\nfailure shall not have been cured to Bank's satisfaction within fifteen (15)\ncalendar days after Borrower shall become aware thereof, whether by written\nnotice from Bank or otherwise, or there has in fact been an acceleration of such\nindebtedness; (e) Borrower becomes insolvent or makes an assignment for the\nbenefit of creditors; (f) Any proceeding be commenced by Borrower under any\nbankruptcy, reorganization, arrangement, readjustment of debt or moratorium law\nor statute or, any such a proceeding is commenced against Borrower and is not\ndismissed or stayed within sixty (60) days (provided that no Loans will be made\nprior to the dismissal of such proceeding); (g) Any money judgment, writ of\nattachment, garnishment, execution or other legal process be entered against\nBorrower or issued against any material property of Borrower which is not fully\ncovered by insurance (subject to reasonable deductibles) and remains unvacated,\nunbonded, unstayed or unpaid or undischarged for more than fifteen (15) days\n(whether or not consecutive) or in any event later than five (5) days prior to\nthe date of any proposed sale thereunder, or if any assessment for taxes against\nBorrower other than against any of its real property, is made by the Federal or\nState government or any department thereof;\n\n     13. Remedies. Upon the occurrence and during the continuance of an Event of\nDefault, Bank may, at its option and without demand first made and without\nnotice to Borrower, do any one or more of the following: (i) Terminate its\nobligation to make Loans to Borrower as provided in Section 2 hereof; (ii)\nDeclare all sums secured hereby immediately due and payable; (iii) Immediately\ntake possession of the Collateral wherever it may be found, using all legally\npermissible means to do so, or require Borrower to assemble the Collateral and\nmake it available to Bank at a place designated by Bank which is reasonably\nconvenient to Borrower and Bank, and Borrower waives all claims for damages due\nto or arising from or connected with any such taking; (iv) Proceed in the\nforeclosure of Bank's security interest and sale of the Collateral in any manner\npermitted by law, or provided for herein; (v) Sell, lease or otherwise dispose\nof the Collateral at public or private sale, with or without having the\nCollateral at the place of sale, and upon terms and in such manner as Bank may\ndetermine, and Bank may purchase same at any such sale; (vi) Retain the\nCollateral in full satisfaction of the obligations secured thereby to the extent\npermitted under the UCC; or (vii) Exercise any remedies of a secured party under\nthe UCC. Prior to any such disposition, Bank may, at its option, cause any of\nthe Collateral to be repaired or reconditioned in such manner and to such extent\nas Bank may deem advisable, and any sums expended therefor by Bank shall be\nrepaid by Borrower and secured hereby. Bank shall have the right to enforce one\nor more remedies hereunder successively or concurrently, and any such action\nshall not estop or prevent Bank from pursuing any further remedy that it may\nhave hereunder or by law. If a sufficient sum is not realized from any such\ndisposition of the Collateral to pay all obligations secured by this Restated\nLoan Agreement, Borrower hereby promises and agrees to pay Bank any deficiency.\n\n     14. Records Retention. Borrower authorizes Bank to destroy all invoices,\ndelivery receipts, reports and other types of documents and records submitted to\nBank in connection with the transactions contemplated herein at any time\nsubsequent to four (4) months from the time such items are delivered to Bank.\n\n     15. Attorneys' Fees. Borrower agrees to reimburse Bank for its reasonable\nattorneys' fees and expenses incurred in connection with the negotiation,\npreparation, execution and delivery of the Loan Documents.\n\n     16. Governing Law; Judicial Reference.\n\n          (A)  overning Law. This Agreement shall be deemed to have been made in\nthe State of California and the validity, construction, interpretation, and\nenforcement hereof, and the rights of the parties hereto, shall be determined\nunder, governed by, and construed in accordance with the internal laws of the\nState of California, without regard to principles of conflicts of law.\n\n          (B)  Judicial Reference.\n\n                                      38.\n\n \n          (1) Other than (a) nonjudicial foreclosure and all matters in\nconnection therewith regarding security interests in real or personal property;\nor (b) the appointment of a receiver, or the exercise of other provisional\nremedies (any and all of which may be initiated pursuant to applicable law),\neach controversy, dispute or claim between the parties arising out of or\nrelating to this Restated Loan Agreement or the other Loan Documents, which\ncontroversy, dispute or claim is not settled in writing within thirty (30) days\nafter the 'Claim Date' (defined as the date on which a party subject to this\nRestated Loan Agreement gives written notice to all other parties that a\ncontroversy, dispute or claim exists), will be settled by a reference proceeding\nin California in accordance with the provisions of Section 638 et seq. of the\nCalifornia Code of Civil Procedure, or their successor sections ('CCP'), which\nshall constitute the exclusive remedy for the settlement of any controversy,\ndispute or claim concerning this Restated Loan Agreement, including whether such\ncontroversy, dispute or claim is subject to the reference proceeding and except\nas set forth above, the parties waive their rights to initiate any legal\nproceedings against each other in any court or jurisdiction other than the\nSuperior Court in the County where the real property, if any, is located or\nSanta Clara County, if none (the 'Court'). The referee shall be a retired Judge\nof the Court selected by mutual agreement of the parties, and if they cannot so\nagree within forty-five (45) days after the Claim Date, the referee shall be\npromptly selected by the Presiding Judge of the Court (or his\/her\nrepresentative). The referee shall be appointed to sit as a temporary judge,\nwith all of the powers for a temporary judge, as authorized by law, and upon\nselection should take and subscribe to the oath of office as provided for in\nRule 244 of the California Rules of Court (or any subsequently enacted Rule).\nEach party shall have one peremptory challenge pursuant to CCP ss. 170.6. The\nreferee shall (x) be requested to set the matter for hearing within sixty (60)\ndays after the date of selection of the referee and (y) try any and all issues\nof law or fact and report a statement of decision upon them, if possible, within\nninety (90) days of the Claim Date. Any decision rendered by the referee will be\nfinal, binding and conclusive and judgement shall be entered pursuant to CCP ss.\n644 in any court in the State of California having jurisdiction. Any party may\napply for a reference proceeding at any time after thirty (30) days following\nnotice to any other party of the nature of the controversy, dispute or claim, by\nfiling a petition for a hearing and\/or trial. All discovery permitted by this\nRestated Loan Agreement shall be completed no later than fifteen (15) days\nbefore the first hearing date established by the referee. The referee may extend\nsuch period in the event of a party's refusal to provide requested discovery for\nany reason whatsoever, including, without limitation, legal objections raised to\nsuch discovery or unavailability of a witness due to absence or illness. No\nparty shall be entitled to 'priority' in conducting discovery. Depositions may\nbe taken by either party upon seven (7) days written notice, and request for\nproduction or inspection of documents shall be responded to within ten (10) days\nafter service. All disputes relating to discovery which cannot be resolved by\nthe parties shall be submitted to the referee whose decision shall be final and\nbinding upon the parties. Pending appointment of the referee as provided herein,\nthe Superior Court is empowered to issue temporary and\/or provisional remedies,\nas appropriate.\n\n          (2) Except as expressly set forth in this Restated Loan Agreement, the\nreferee shall determine the manner in which the reference proceeding is\nconducted including the time and place of all hearings, the order of\npresentation of evidence, and all other questions that arise with respect to the\ncourse of the reference proceeding. All proceedings and hearings conducted\nbefore the referee, except for trial, shall be conducted without a court\nreporter except that when any party so requests, a court reporter will be used\nat any hearing conducted before the referee. The party making such a request\nshall have the obligation to arrange for and pay for the court reporter. The\ncosts of the court reporter at the trial shall be borne equally by the parties.\n\n          (3) The referee shall be required to determine all issues in\naccordance with existing case law and the statutory laws of the State of\nCalifornia. The rules of evidence applicable to proceedings at law in the State\nof California will be applicable to the reference proceeding. The referee shall\nbe empowered to enter equitable as well as legal relief, to provide all\ntemporary and\/or provisional remedies and to enter equitable orders that will be\nbinding upon the parties. The referee shall issue a single judgment at the close\nof the reference proceeding that shall dispose of all of the claims of the\nparties that are the subject of the reference. The parties hereto expressly\nreserve the right to contest or appeal from the final judgment or any appealable\norder or appealable judgment entered by the referee. The parties hereto\nexpressly reserve the right to findings of fact,\n\n                                      39.\n\n \nconclusions of laws, a written statement of decision, and the right to move for\na new trial or a different judgment, which new trial, if granted, is also to be\na reference proceeding under this provision.\n\n          (4) In the event that the enabling legislation which provides for\nappointment of a referee is repealed (and no successor statute is enacted), any\ndispute between the parties that would otherwise be determined by the reference\nprocedure herein described will be resolved and determined by arbitration. The\narbitration will be conducted by a retired judge of the Court, in accordance\nwith the California Arbitration Act, ss. 1280 through ss. 1294.2 of the CCP as\namended from time to time. The limitations with respect to discovery as set\nforth hereinabove shall apply to any such arbitration proceeding.\n\n     17. Miscellaneous Provisions.\n\n          (A)  Nothing herein shall in any way limit the effect of the\nconditions set forth in any other security or other agreement executed by\nBorrower, but each and every condition hereof shall be in addition thereto.\n\n          (B)  No failure or delay on the part of Bank, in the exercise of any\npower, right or privilege hereunder shall operate as a waiver thereof, nor shall\nany single or partial exercise thereof.\n\n          (C)  All rights and remedies existing under this Restated Loan\nAgreement or any other Loan Document are cumulative to, and not exclusive of,\nany rights or remedies otherwise available.\n\n          (D)  All headings and captions in this Restated Loan Agreement and any\nrelated documents are for convenience only and shall not have any substantive\neffect.\n\n          (E)  This Restated Loan Agreement may be executed in any number of\ncounterparts, each of which when so delivered shall be deemed an original, but\nall such counterparts shall constitute but one and the same instrument. Each\nsuch agreement shall become effective upon the execution of a counterpart hereof\nor thereof by each of the parties hereto and telephonic notification that such\nexecuted counterparts has been received by Borrower and Bank.\n\n          (F)  This Restated Loan Agreement is not intended to be, and shall not\nbe construed to create, a novation or accord and satisfaction, and, except as\notherwise provided herein, the Security and Loan Agreement and the Other Loan\nAgreement are amended and restated in full by the terms of this Restated Loan\nAgreement and all obligations outstanding under the Security and Loan Agreement\nand the Other Loan Agreement are governed by the terms of this Restated Loan\nAgreement.\n\n \n \nBANK:                                                                     BORROWER:\n                                                                         \nIMPERIAL BANK                                                             SALON.COM,\n                                                                          a Delaware corporation\n\nBy: September 23, 1999        By:  \/s\/ Benjermin Colombo                  By: September 23, 1999   By: \/s\/ Todd Hagen\n--------------------------------------------------------                      ---------------------------------------               \n         Benjermin Colombo                                                      Todd Hagen                                          \n         Assistant Vice President                                               Chief Financial Officer\n \n                                                                         \n\nLIST OF EXHIBITS AND SCHEDULES\n------------------------------\n\nEXHIBIT A:  Definitions\n\n                                      40.\n\n \n  SCHEDULE 1 TO EXHIBIT A:  List of Specific Permitted Indebtedness\n  SCHEDULE 2 TO EXHIBIT A:  List of Specific Permitted Liens\n\nEXHIBIT B:  Compliance Certificate\n\nEXHIBIT C:  Borrowing Base Certificate\n\n                                      41.\n\n \n                                    Exhibit A\n\n                                   Definitions\n\n         'Accounts' means any right to payment for goods sold or leased, or to\nbe sold or to be leased, or for services rendered or to be rendered no matter\nhow evidenced, including accounts receivable, contract rights, chattel paper,\ninstruments, purchase orders, notes, drafts, acceptances, general intangibles\nand other forms of obligations and receivables.\n\n         'Capital Lease' means, as to any Person, any lease of any Property by\nsuch Person as lessee that is, or should be in accordance with Financing\nAccounting Standards Board Statement No. 13, classified and accounted for as a\n'capital lease' on the balance sheet of such Person prepared in accordance with\nGAAP.\n\n         'Capital Lease Obligation' means, with respect to any Capital Lease,\nthe amount of the obligation of the lessee thereunder that, in accordance with\nGAAP, would appear on a balance sheet of such lessee in respect of such Capital\nLease or otherwise be disclosed in a note to such balance sheet.\n\n         'Collateral' means any and all personal property of Borrower which is\nassigned or hereafter is assigned to Bank as security or in which Bank now has\nor hereafter acquires a security interest hereunder (including, without\nlimitation, the Accounts), or pursuant to the terms of the General Security\nAgreement, the IP Security Agreement or otherwise.\n\n         'Contingent Obligation' means, as applied to any Person, any direct or\nindirect liability, contingent or otherwise, of that Person with respect to any\nindebtedness, lease, dividend, letter of credit or other obligation of another,\nincluding, without limitation, any such obligation directly or indirectly\nguaranteed, endorsed (otherwise than for collection or deposit in the ordinary\ncourse of business), co-made or discounted or sold with recourse by that Person,\nor in respect of which that Person is otherwise directly or indirectly liable,\nincluding, without limitation, any such obligation for which that Person is in\neffect liable through any agreement (contingent or otherwise) to purchase,\nrepurchase or otherwise acquire such obligation or any security therefor, or to\nprovide funds for the payment or discharge of such obligation (whether in the\nform of loans, advances, capital stock purchases, capital contributions or\notherwise), or to maintain the solvency of the obligor of such obligation, or to\nmake payment for any products, materials or supplies or for any transportation,\nservices or lease regardless of the non-delivery or non-furnishing thereof, in\nany such case if the purpose or intent of such agreement is to provide assurance\nthat such obligation will be paid or discharged, or that any agreements relating\nthereto will be complied with, or that the holders of such obligation will be\nprotected (in whole or in part) against loss in respect thereof. The amount of\nany Contingent Obligation of any Person shall be deemed to be an amount equal to\nthe maximum amount of such Person's liability with respect to the stated or\ndeterminable amount of the primary obligation for which such Contingent\nObligation is incurred or, if not stated or determinable, the maximum reasonably\nanticipated liability in respect thereof (assuming such Person is required to\nperform thereunder).\n\n         'Eligible Accounts' means such of Borrower's Accounts as Bank in its\nsole reasonable discretion shall determine are eligible from time to time;\nprovided, however, that in no event shall Eligible Accounts include the\nfollowing:\n\n               (a)   all Accounts under which payment is not received within\n                   ninety (90) days from the applicable invoice date;\n\n               (b)   all Accounts against which the account debtor or any other\n                   Person obligated to make payment thereon asserts any defense,\n                   offset, counterclaim or other right to avoid or reduce the\n                   liability represented by the Accounts;\n\n                                   Exhibit A\n                                  Page 1 of 6\n\n \n               (c)   any Accounts if the account debtor or any other Person\n                   liable in connection therewith is insolvent, subject to\n                   bankruptcy or receivership proceedings or has made an\n                   assignment for the benefit of creditors or whose credit\n                   standing is unacceptable to Bank and Bank has so notified\n                   Borrower;\n\n               (d)   Accounts with respect to which the account debtor is an\n                   officer, director, shareholder, employee or Subsidiary of\n                   Borrower;\n\n               (e)   Accounts due from an account debtor if more than twenty-\n                   five percent (25%) of the aggregate amount of Accounts of\n                   such account debtor have at that time remained unpaid for\n                   more than ninety (90) days from the applicable invoice date;\n\n               (f)   Accounts with respect to account debtors whose principal\n                   place of business is located outside of the United States of\n                   America unless either (a) such Accounts are insured or\n                   covered by a letter of credit in a manner and form acceptable\n                   to the Bank or (b) Bank shall have otherwise permitted in\n                   writing in its sole and absolute direction;\n\n               (g)   salesperson's accounts for promotional purposes;\n\n               (h)   the amount by which the aggregate of all Accounts of an\n                   account debtor exceeds twenty-five percent (25.0%) of the\n                   total accounts receivable balance;\n\n               (i)   Accounts where the account debtor is a seller to borrower,\n                   to the extent that a potential offset exists;\n\n               (j)   any Account which has been offset by Borrower against\n                   another Account, the balance of which is subtracted and\n                   reflected on its balance sheet; and\n\n               (k)   Accounts where the account debtor is a federal governmental\n                   entity, federal agency or instrumentality thereof.\n\n         'Event of Default' has the meaning set forth in Section 12.\n\n         'GAAP' means generally accepted accounting principles set forth in the\nopinions and pronouncements of the Accounting Principles Board of the American\nInstitute of Certified Public Accountants and statements and pronouncements of\nthe Financial Accounting Standards Board or in such other statements by such\nother Person as may be approved by the significant segment of the accounting\nprofession, which are applicable to the circumstances as of the date of\ndetermination.\n\n         'General Security Agreement' means that certain General Security\nAgreement dated as of April 14, 1997, made by Borrower in favor of Bank.\n\n         'IP Security Agreement' means that certain Collateral Assignment,\nPatent Mortgage and Security Agreement dated as of April 13, 1998, made by\nBorrower in favor of Bank.\n\n         'Indebtedness' means, as to any Person, without duplication, (a) all\nindebtedness of such Person for borrowed money, including, without limitation,\nall of such indebtedness outstanding under this Restated Loan Agreement and any\nof the other Loan Documents, (b) all Capital Lease Obligations of such Person,\n(c) to the extent of the outstanding indebtedness thereunder, any obligation of\nsuch Person representing an extension of credit to such Person, whether or not\nfor borrowed money, (d) any obligation of such Person for the deferred purchase\nprice of Property or services (other than (i) trade or other accounts payable in\nthe ordinary course of\n\n                                   Exhibit A\n                                  Page 2 of 6\n\n \nbusiness in accordance with customary industry terms and (ii) deferred franchise\nfees), (e) all Contingent Obligations, (f) any obligation of such Person of the\nnature described in clauses (a), (b), (c), (d) or (e) above, that is secured by\na Lien on assets of such Person and which is non-recourse to the credit of such\nPerson, but only to the extent of the fair market value of the assets so subject\nto the Lien, (g) obligations of such Person arising under acceptance facilities\nor under facilities for the discount of accounts receivable of such Person, (h)\nany obligation of such Person to reimburse the issuer of any letter of credit\nissued for the account of such Person upon which a draw has been made, and (i)\nany lease having the effect of indebtedness, whether or not the same shall be\ntreated as such on the balance sheet of Borrower under GAAP.\n\n         'Intellectual Property' means\n\n               (1)   Any and all copyright rights, copyright applications,\n                   copyright registrations and like protection in each work or\n                   authorship and derivative work thereof, whether published or\n                   unpublished and whether or not the same also constitutes a\n                   trade secret, now or hereafter existing, created, acquired or\n                   held (collectively, the 'Copyrights');\n\n               (l)   Any and all trade secrets, and any and all intellectual\n                   property rights in computer software and computer software\n                   products now or hereafter existing, created, acquired or\n                   held;\n\n               (m)   Any and all design rights which may be available to\n                   Borrower now or hereafter existing, created, acquired or\n                   held;\n\n               (n)   Any patents, patent applications and like protections,\n                   including, without limitation, improvements, divisions,\n                   continuations, renewals, reissues, extensions and\n                   continuations-in-part of the same, including, without\n                   limitation, the patents and patent applications\n                   (collectively, the 'Patents');\n\n               (o)   Any trademark and servicemark rights, whether registered\n                   or not, applications to register and registrations of the\n                   same and like protections, and the entire goodwill of the\n                   business of Borrower connected with and symbolized by such\n                   trademarks (collectively, the 'Trademarks');\n\n               (p)   Any and all claims for damages by way of past, present and\n                   future infringements of any of the rights included above,\n                   with the right, but not the obligation, to sue for and\n                   collect such damages for said use or infringement of the\n                   intellectual property rights identified above;\n\n               (q)   Any licenses or other rights to use any of the Copyrights,\n                   Patents or Trademarks and all license fees and royalties\n                   arising from such use to the extent permitted by such license\n                   or rights;\n\n               (r)   Any amendments, extensions, renewals and extensions of any\n                   of the Copyrights, Patents or Trademarks; and\n\n               (s)   Any proceeds and products of the foregoing, including,\n                   without limitation, all payments under insurance or any\n                   indemnity or warranty payable in respect of any of the\n                   foregoing.\n\n         'Lien' means any mortgage, pledge, security interest, lien or other\ncharge or encumbrance, including the lien or retained security title of a\nconditional vendor, upon or with respect to any property or assets.\n\n         'Loan Account or Loan Accounts' means individually and collectively,\nthe Revolving Loan Account, the Equipment Loan Account and the Additional\nEquipment Loan Account.\n\n                                   Exhibit A\n                                  Page 3 of 6\n\n \n         'Loan Documents' means this Restated Loan Agreement, the General\nSecurity Agreement, the IP Security Agreement, the Warrants to Purchase Stock\nand that certain Agreement to Provide Insurance (Real or Personal Property)\ndated of even date herewith, each as executed by Borrower in favor of Bank,\ntogether with all other documents entered into or delivered pursuant to any of\nthe foregoing, in each case as originally executed or as the same may from time\nto time be modified, amended, supplemented or restated.\n\n         'Loan or Loans' means individually and collectively, the Revolving\nLoans, the Equipment Loans and the Additional Equipment Loans advanced pursuant\nto Section 2.\n\n         'Material Adverse Effect' means any set of circumstances or events\nwhich (a) has or could reasonably be expected to have any material adverse\neffect upon the validity or enforceability of any material provision of any Loan\nDocument, (b) is or could reasonably be expected to be material and adverse to\nthe condition (financial or otherwise) or business operations of Borrower, (c)\nmaterially impairs or could reasonably be expected to materially impair the\nability of Borrower, to perform its material Obligations, (d) materially impairs\nor could reasonably be expected to materially impair the value or priority of\nBank's security interest in any Collateral or (e) materially impairs or could\nreasonably be expected to materially impair the ability of Bank to enforce any\nof its legal remedies pursuant to the Loan Documents.\n\n         'Permitted Indebtedness' means the following:\n\n               (2)  Indebtedness of Borrower or Indebtedness and Contingent\n         Obligations of its Subsidiaries in favor of Bank arising under this\n         Restated Loan Agreement and the other Loan Documents;\n\n               (t)    the existing Indebtedness and Contingent Obligations\n                    disclosed on Schedule 1 attached hereto and incorporated\n                    herein by this reference; provided that the principal amount\n                    thereof is not increased and the terms thereof are not\n                    modified to impose more burdensome terms upon Borrower or\n                    any of its Subsidiaries;\n\n               (u)    the Subordinated Debt;\n\n               (v)    extensions, renewals or refinancings of Indebtedness\n                    permitted under this Restated Loan Agreement, other than\n                    clause (3) immediately above;\n\n               (w)    accrued dividends on the preferred stock of Borrower;\n\n               (x)    interest rate and currency hedging agreements;\n\n               (y)    guaranties of any Subsidiary's suppliers in connection\n                    with the purchase of supplies in the ordinary course of\n                    business;\n\n               (z)    guaranties of lease obligations incurred in the ordinary\n                    course of business and to the extent otherwise permitted\n                    hereunder;\n\n               (aa)   Contingent Obligations constituting Permitted Liens; and\n\n               (bb)   the indebtedness referred to in clause (3) of the\n                    definition of Permitted Liens.\n\n                                   Exhibit A\n                                  Page 4 of 6\n\n \n         'Permitted Liens' means the following:\n\n          (3)  liens and security interests existing as of this date and\ndisclosed in Schedule 2 attached hereto and incorporated herein by this\nreference;\n\n          (4)  liens for taxes, fees, assessments or other governmental charges\nor levies, either not delinquent or being contested in good faith by appropriate\nproceedings;\n\n          (5)  liens and security interests (a) upon or in any equipment\nacquired or held by Borrower to secure the purchase price of such equipment or\nindebtedness incurred solely for the purpose of financing the acquisition of\nsuch equipment and in an amount not greater than the purchase price thereof or\n(b) existing on such equipment at the time of its acquisition, provided that the\nlien and security interest is confined solely to the property so acquired and\nimprovements thereon, and the proceeds of such equipment;\n\n          (6)  liens consisting of leases or subleases and licenses and\nsublicenses granted to others in the ordinary course of Borrower's business not\ninterfering in any material respect with the business of Borrower and any\ninterest or title of a lessor or licensor under any lease or license, as\napplicable;\n\n          (7)  liens securing claims or demands of materialmen, mechanics,\ncarriers, warehousemen, landlords and other like persons or entities imposed\nwithout action of such parties, provided that the payment thereof is not yet\nrequired;\n\n          (8)  liens incurred or deposits made in the ordinary course of\nBorrower's business in connection with worker's compensation, unemployment\ninsurance, social security and other like laws;\n\n          (9)  liens arising from judgments, decrees or attachments in\ncircumstances not constituting an Event of Default;\n\n          (10) easements, reservations, rights-of-way, restrictions, minor\ndefects or irregularities in title and other similar charges or encumbrances\naffecting real property not interfering in any material respect with the\nordinary conduct of Borrower's business;\n\n          (11) liens in favor of customs and revenue authorities arising as a\nmatter of law to secure payment of customs duties in connection with the\nimportation of goods;\n\n          (12) liens that are not prior to Bank's security interest which\nconstitute rights of set-off of a customary nature;\n\n          (13) any interest or title of a lessor in equipment subject to any\nCapitalized Lease otherwise permitted hereunder; and\n\n          (14) any liens arising from the filing of any financing statements\nrelating to true leases otherwise permitted hereunder.\n\n          'Person' means any individual, sole proprietorship, partnership, joint\nventure, trust, unincorporated organization, association, corporation, limited\nliability company, institution, public benefit corporation, firm, joint stock\ncompany, estate, entity or governmental agency.\n\n                                   Exhibit A\n                                  Page 5 of 6\n\n \n         'Property' means any interest in any kind of property or asset, whether\nreal, personal or mixed, whether tangible or intangible.\n\n         'Subordinated Debt' means indebtedness of Borrower, the repayment of\nprincipal of which is fully subordinated in time and right of payment to the\nLoans, and has been approved in Bank's sole and absolute discretion and in\nwriting.\n\n         'UCC' means the Uniform Commercial Code as the same may, from time to\ntime, be in effect in the State of California; provided, however, in the event\nthat, by reason of mandatory provisions of law, any or all of the attachment,\nperfection or priority of Bank's security interest in any Collateral is governed\nby the Uniform Commercial Code as in effect in a jurisdiction other than the\nState of California, the term 'UCC' shall mean the Uniform Commercial Code as in\neffect in such other jurisdiction for purposes of the provisions hereof relating\nto such attachment, perfection or priority and for purposes of definitions\nrelated to such provisions.\n\n         'Warrants to Purchase Stock' means collectively, that certain Warrant\nto Purchase Stock issued on April 14, 1997 by Borrower to Bank in connection\nwith the Security and Loan Agreement and that certain Warrant to Purchase Stock\nissued on April 13, 1998 by Borrower to Bank in connection with the Other Loan\nAgreement.\n\n         'Year 2000 Compliant' means, in regard to Borrower or any Person, that\nall software, hardware, firmware, equipment, goods or systems utilized by or\nmaterial to the business operations or financial condition of Borrower or such\nPerson, will properly perform date sensitive functions before, during and after\nthe year 2000.\n\n         'Year 2000 Problem' means the risk that any computer applications used\nby Borrower and its Subsidiaries may be unable to recognize and properly perform\ndate-sensitive functions involving certain dates prior to and any date on or\nafter December 31, 1999.\n\n                                   Exhibit A\n                                  Page 6 of 6\n\n \n                            Schedule 1 To Exhibit A\n\n                        SPECIFIC PERMITTED INDEBTEDNESS\n\n\n                  (List, attach schedule or indicate 'None')\n\n\n\n\n\n\n\n                            Schedule 1 To Exhibit A\n\n \n                            Schedule 2 To Exhibit A\n\n                           SPECIFIC PERMITTED LIENS\n\n\n\n                  (List, attach schedule or indicate 'None')\n\n\n\n\n\n\n\n\n\n\n                            Schedule 2 To Exhibit A\n\n \n                                   Exhibit B\n\n                             COMPLIANCE CERTIFICATE\n\n\nThe consolidated financial statements dated as of __________________________ of\nSALON.COM, a Delaware corporation ('Borrower') attached hereto and submitted to\nIMPERIAL BANK ('Bank') pursuant to that certain Amended and Restated Loan\nAgreement dated as of September ___, 1999, entered into between Borrower and\nBank (the 'Restated Loan Agreement'), are in compliance with all financial\ncovenants (unless otherwise noted below) as specified in Section 10 therein, as\nfollows:\n\n \n \n-----------------------------------------------------------------------------------------------------------------------\nCovenant:                                                                               Actual:\n-----------------------------------------------------------------------------------------------------------------------\n                                                                                   \nA.    Tangible Net Worth of not less than:                       \n      -----------------------------------\n\n      $10,000,000.00                                             \n\n-----------------------------------------------------------------------------------------------------------------------\nB.    Quick Ratio of not less than:                                    \n      ----------------------------                                                              \n\n      2.00: 1.00                                                 \n                                                                    \n      1.50: 1.00        for the month ending September 30, 2000  \n-----------------------------------------------------------------------------------------------------------------------\n \n\nExceptions: (if none, so state):\n\n________________________________________________________________________________\n\n________________________________________________________________________________\n\n________________________________________________________________________________\n\nThe undersigned authorized officer of Borrower hereby certifies that Borrower is\nin complete compliance with the terms and conditions of the Restated Loan\nAgreement for the period ending _____________________, ____, and as of the date\nof this Compliance Certificate the representations and warranties stated therein\nare true, accurate and complete as of the date hereof (except as to those\nrepresentations and warranties which specifically reference a particular date\nand except as noted above).\n\nThe undersigned further certifies that s\/he knows of no pending conditions which\nmay cause an Event of Default (as defined in the Restated Loan Agreement) to\nexist in the next thirty (30) days. The required support documents for this\ncertification are attached and prepared in accordance with GAAP consistently\napplied.\n\n\nDate:                                  SALON.COM,\n                                       a Delaware corporation\n\n\n                                       By: _____________________________________\n                                       Name: ___________________________________\n                                       Title: __________________________________\n\n\n                                   Exhibit B\n                                  Page 1 of 1\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7840,8749],"corporate_contracts_industries":[9415,9468],"corporate_contracts_types":[9560,9567],"class_list":["post-41114","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-imperial-bank","corporate_contracts_companies-salon-media-group-inc","corporate_contracts_industries-financial__banks","corporate_contracts_industries-media__other","corporate_contracts_types-finance","corporate_contracts_types-finance__loan"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41114","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41114"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41114"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41114"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41114"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}