REVOLVING LOAN AND SECURITY AGREEMENT
EXECUTION
VERSION
THIS REVOLVING LOAN AND SECURITY
AGREEMENT (this “Agreement”), dated as of
October 28, 2009 (the “Effective Date”) is entered
into by and between (i), a Pennsylvania limited liability company (jointly and
severally, the “Borrower”), and WorldGate
Communications, Inc., a Delaware corporation, WorldGate Service, Inc., a
Delaware corporation, WorldGate Finance, Inc., a Delaware corporation, Ojo
Services LLC, a Pennsylvania limited liability company, and Ojo Video Phones LLC
(ii) WGI Investor LLC, a Delaware limited liability company (“Lender”).
RECITALS
WHEREAS, Lender is a
shareholder of WorldGate Communications, Inc.;
WHEREAS, Borrower has
requested that Lender make advances to Borrower from time to time on a revolving
basis in an aggregate principal amount at any time thereof not to exceed three
million dollars ($3,000,000) (the “Maximum Principal Amount”);
and
WHEREAS, Lender is willing to
make such advances to Borrower on the terms and subject to the conditions set
forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of
the premises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower and Lender, intending to be legally bound, hereby agree as
follows:
1. Loans and
Promissory Note.
(a) Commitment to
Lend. Subject to the terms and conditions set forth in this
Agreement, Lender hereby agrees to make advances to Borrower (each a “Loan Advance” and
collectively, the “Loan
Advances”) from time to time, during the period beginning on the date
hereof and ending on the Maturity Date (the “Draw Period”), in an amount up
to, but not to exceed, the Maximum Principal Amount in the aggregate outstanding
at any time, for the purposes stated herein only. During the Draw
Period, subject to the terms and condition of this Agreement, Borrower may
borrow, repay, and re-borrow amounts up to the Maximum Principal Amount at any
time and from time to time.
(b) Promissory
Note. The Loan Advances made by Lender hereunder shall be
evidenced by the duly executed Revolving Promissory Note of Borrower to Lender,
dated as of the date hereof in an original principal amount equal to the Maximum
Principal Amount and in the form attached hereto as Exhibit
A (as amended, modified, extended, renewed or replaced from time to time,
the “Note”).
(c) Repayments. Borrower
shall pay in full any remaining outstanding principal amount, all accrued but
unpaid interest, and all other Obligations on the Maturity Date.
(d) Payment of
Interest.
(i) Subject
to Section 7(b)(ii), the principal amount outstanding under the Loan
Advances shall accrue interest from the date of issuance until the Maturity Date
at the rate of ten percent (10%) per annum, compounding daily. The
initial payment of accrued interest shall be made on June 1, 2010, and payment
of accrued interest shall be made on the first calendar day of each month
thereafter.
(ii) Interest
will be computed on the basis of a year deemed to consist of 360 days and shall
be paid for the actual number of days elapsed.
2. Creation
of a Security Interest.
(a) Grant of Security
Interest.
(i) Borrower
hereby grants to Lender, to secure the payment and performance in full of all of
the Obligations, a continuing security interest in, and pledges to Lender, all
of Borrower’s right, title and interest in, to and under all the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof. Borrower represents, warrants, and
covenants that the security interest granted herein is and shall at all times be
a first priority perfected security interest in the Collateral other than with
respect to Permitted Liens. If Borrower shall acquire a commercial
tort claim, Borrower shall promptly notify Lender in writing of the general
details thereof and grant to Lender a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance reasonably satisfactory to Lender.
(ii) If this
Agreement is terminated, Lender’s security interest in the Collateral shall
continue until the Obligations are repaid in full in cash. Upon
payment in full in cash of the Obligations and at such time as Lender’s
obligation to make Loan Advances has terminated, Lender shall, at Borrower’s
sole cost and expense, release its security interest in the Collateral and all
rights therein shall revert to Borrower.
(b) Authorization to File
Financing Statements. Borrower hereby authorizes Lender to
file financing statements, without notice to Borrower, with all appropriate
jurisdictions to perfect or protect Lender’s interest or rights
hereunder. Such financing statements may indicate the Collateral as
“all assets of the Debtor” or words of similar effect, or as being of an equal
or lesser scope, or with greater detail, all in Lender’s
discretion. Lender shall promptly provide Borrower with a copy of any
such financing statements following filing.
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3. Conditions of
Loans.
(a) Conditions Precedent to Loan
Advances. Lender’s obligation to make each Loan Advance is
subject to satisfaction of the following conditions:
(i) Receipt
of an executed Notice of Borrowing (as defined below);
(ii) The
representations and warranties in Section 4 shall be true in all material
respects on the date of the Notice of Borrowing and the Loan Date (as defined
below);
(iii) No Event
of Default shall have occurred and be continuing or result from such Loan
Advance;
(iv) There
shall not have occurred, in Lender’s sole discretion, any Material Adverse
Change.
(b) Procedure for
Borrowing. Subject to the prior or simultaneous satisfaction
of the conditions set forth in Section 3(a), to obtain a Loan Advance, Borrower
shall give written notice to Lender in the form attached as Exhibit B (a “Notice of Borrowing”) not
later than the ten (10th)
Business Day prior to the date of the proposed Loan Advance (the “Loan Date”). Each
Notice of Borrowing shall be in writing and shall specify (a) the Loan Date; (b)
the account of Borrower to be funded and the wire instructions applicable
thereto; (c) the purpose for which such Loan Advance shall be used; and (d) the
amount of such proposed Loan Advance. Each Loan Advance shall be in
an amount of at least $100,000. Following
Lender’s receipt of a Notice of Borrowing and satisfaction of the other
conditions set forth in Section 3(a), Lender shall deliver the applicable Loan
Advance to Borrower on the Loan Date by wire transfer of immediately available
funds to the account specified by Borrower.
4. Representations
and Warranties of Borrower. Each Borrower
hereby represents and warrants to Lender as of the date hereof as
follows:
(a) Binding
Agreement. The Loan Documents constitute or will constitute,
when issued and delivered, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors’ rights
in general, and general principles of equity.
(b) Organization; Power;
Authorization. Each Borrower is a Registered Organization duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation or incorporation, as the case may
be. Each Borrower has all requisite power and authority (corporate
and otherwise) to execute, deliver and perform the Loan Documents and to
consummate the transactions contemplated thereby. The execution,
delivery and performance by Borrower of the Loan Documents and the consummation
of the transactions contemplated thereby have been duly authorized by all
necessary action on the part of Borrower.
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(c) Non-Contravention. Neither
the execution and the delivery of the Loan Documents, nor the consummation of
the transactions contemplated hereby, will (a) violate any injunction, judgment,
order, decree, ruling, charge or any provision of Borrower’s charter documents,
or, to Borrower’s knowledge, any restriction of any government, governmental
agency, or court to which Borrower is subject, or (b) conflict with, result in a
material breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, any
material agreement, contract, lease, license, instrument, or other arrangement
to which Borrower is a party or by which it is bound or to which any of its
assets are subject.
(d) Collateral.
(i) Borrower
has good title to, has rights in, and the power to transfer each item of the
Collateral upon which it purports to xxxxx x Xxxx hereunder, free and clear of
any and all Liens except Permitted Liens. The security interests and Liens
granted to Lender under this Agreement and the other Loan Documents to which
Borrower is a party constitute valid and perfected first priority liens and
security interests in and upon the Collateral to which Borrower now has or
hereafter acquires rights other than with respect to Permitted
Liens. The Accounts are bona fide, existing obligations of the
Account Debtors.
(ii) All
Inventory is in all material respects of good and marketable quality, free from
material defects.
(iii) Borrower
is the owner of its intellectual property, except for non-exclusive licenses
granted to its customers in the ordinary course of business. Each patent is
valid and enforceable and no part of the intellectual property of the Borrower
has been judged invalid or unenforceable, in whole or in part, and to the best
of Borrower’s knowledge, no claim has been made that any part of the
intellectual property violates the rights of any third party.
(iv) Borrower
is not a party to, nor is bound by, any material license or other agreement with
respect to which Borrower is the licensee (A) that prohibits or otherwise
restricts Borrower from granting a security interest in Borrower’s interest in
such license or agreement or any other property, or (B) for which a default
under or termination of could interfere with Lender’s right to sell any
Collateral. Borrower shall provide written notice to Lender within
ten (10) days of entering or becoming bound by any such license or agreement
which is reasonably likely to have a material impact on Borrower’s business or
financial condition (other than over-the-counter software that is commercially
available to the public). Borrower shall take such steps as Lender requests to
obtain the consent of, or waiver by, any Person whose consent or waiver is
necessary for (Y) all such licenses or agreements to be deemed “Collateral” and
for Lender to have a security interest in it that might otherwise be restricted
or prohibited by law or by the terms of any such license or agreement, whether
now existing or entered into in the future, and (Z) Lender to have the ability
in the event of a liquidation of any Collateral to dispose of such Collateral in
accordance with Lender’s rights and remedies under this Agreement and the other
Loan Documents.
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(e) Tax Returns and
Payments. Borrower has filed, or caused to be filed, in a
timely manner all material tax returns, reports and declarations which are
required to be filed by it (without requests for extension except as previously
disclosed in writing to Lender). All information in such tax returns,
reports and declarations is complete and accurate in all material
respects. Borrower has paid or caused to be paid prior to delinquency
all taxes due and payable or claimed due and payable in any assessment received
by it, except taxes the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower and with
respect to which adequate reserves have been set aside on its
books. Adequate provision has been made by Borrower for the payment
of all accrued and unpaid federal, state, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed.
5. Covenants.
(a) Affirmative
Covenants.
(i) Maintenance of
Properties. Borrower shall maintain all tangible property
included in the Collateral in good order and repair, subject to normal wear and
tear, and make all needed and proper repairs to its properties so that
Borrower’s business may be properly and advantageously conducted at all times in
accordance with prudent business management and in compliance with all
governmental requirements and regulations;
(ii) Use of
Proceeds. Borrower shall use the proceeds of the Loan Advances
solely as working capital and to fund its general business requirements and not
for personal, family, household or agricultural purposes;
(iii) Insurance. Borrower
shall, at all times, maintain with financially sound and reputable insurers
insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or carried
by corporations of established reputation engaged in the same or similar
businesses and similarly situated.
(iv) Further
Assurances. Borrower shall execute any further instruments and
take further action as Lender reasonably requests to perfect or continue
Lender’s security interest in the Collateral or to otherwise effect the purposes
of this Agreement.
(b) Negative
Covenants. Borrower shall not, without Lender’s prior written
consent:
(i) Dispositions. Convey,
sell, lease, transfer or otherwise dispose of (collectively, “Transfer”), or permit any of
its subsidiaries to Transfer, all or any part of its business or property,
except for Transfers (a) of Inventory in the ordinary course of business; (b) of
worn-out or obsolete Equipment; (c) in connection with Permitted Liens; and (d)
of non-exclusive licenses for the use of the property of Borrower or its
subsidiaries in the ordinary course of business;
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(ii) Mergers or
Acquisitions. Merge or consolidate, or permit any of its
subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A subsidiary may merge
or consolidate into another subsidiary or into Borrower; provided that, in the
case of a merger of a subsidiary into Borrower, Borrower shall remain the
surviving entity.
(iii) Indebtedness. Borrow
money or engage in any other financing transaction for borrowed money except
under this Agreement and except for trade payables incurred in the ordinary
course of Borrower’s business;
(iv) Encumbrances. Create,
incur, allow, or suffer any Lien on any Collateral, or assign or convey any
right to receive income or permit any of Borrower’s subsidiaries to do so, or
permit any Collateral not to be subject to the first priority security interest
granted herein, in each case, other than with respect to Permitted
Liens;
(v) Loans. Make
any loan to any Person except receivable, prepaid items or deposits incurred in
the ordinary course of business; or
(vi) Capital
Expenditures. Make nor agree to make any material capital
expenditures.
6. Representations
and Warranties of Lender.
(a) Binding
Agreement. This Agreement constitutes or will constitute, when
issued and delivered, a valid and binding obligation of Lender, enforceable in
accordance with its terms, subject to bankruptcy, insolvency and other similar
laws affecting the enforcement of creditors’ rights in general, and general
principles of equity.
(b) Organization; Power;
Authorization. Lender is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Lender has full limited liability company power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and
performance by Lender of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary limited liability
company action.
(c) Non-Contravention. Neither
the execution and the delivery of the Loan Documents, nor the consummation of
the transactions contemplated hereby, will (a) violate any injunction, judgment,
order, decree, ruling, charge or any provision of Lender’s charter documents,
or, to Lender’s knowledge, any restriction of any government, governmental
agency, or court to which Lender is subject, or (b) conflict with, result in a
material breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel, any
material agreement, contract, lease, license, instrument, or other arrangement
to which Lender is a party or by which it is bound or to which any of its assets
are subject
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7. Events of
Default; Remedies Upon Default.
(a) Events of
Default. The occurrence of any of the following events shall
constitute an event of default (each, an “Event of Default”)
hereunder:
(i) Borrower
fails to pay timely any of the principal and any accrued interest or other
amounts due under the Loan Documents when the same becomes due and
payable;
(ii) Borrower
(A) files any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law for the relief
of, or relating to, debtors, now or hereafter in effect; (B) applies for or
consents to the appointment of a custodian, receiver, trustee, sequestrator,
conservator or similar official for Borrower or for a substantial part of
Borrower’s assets; (C) makes a general assignment for the benefit of
creditors; (D) becomes unable to, or admits in writing its inability to,
pay its debts generally as they come due; or (E) takes any corporate
action in furtherance of any of the foregoing;
(iii) An
involuntary petition is filed against Borrower (unless such petition is
dismissed or discharged within sixty (60) days) under any bankruptcy statute now
or hereafter in effect, or a custodian, receiver, trustee, sequestrator,
conservator, assignee for the benefit of creditors (or other similar official)
is appointed to take possession, custody or control of any property of
Borrower;
(iv) One or
more final and non-appealable judgments for the payment of money in an amount,
individually or in the aggregate, of at least $100,000 (not covered by
independent third-party insurance as to which liability has been accepted by
such insurance carrier) are entered by a court of competent jurisdiction against
Borrower which judgment remains undischarged, unsatisfied, unvacated or unstayed
for a period of ten (10) days after such judgment becomes final and
non-appealable (and Lender shall not be required to make any Loan Advances prior
to the satisfaction, vacation or stay of such judgment, order or
decree);
(v) A default
or breach occurs under any agreement between Borrower and any creditor of
Borrower that signed a subordination, intercreditor, or other similar agreement
with Lender, or any creditor that has signed such an agreement with Lender
breaches any terms of such agreement;
(vi) Any
representation, warranty or other statement made by Borrower in the Loan
Documents, or any other agreement or other document delivered in connection with
any of the Loan Documents, shall prove to have been false or misleading in any
material respect when made;
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(vii) Borrower
violates any covenant set forth in Section 5 hereof; or
(viii) After the
date hereof, Borrower grants any Person, other than Lender, any Lien or other
encumbrance on all or any substantial part of its assets, other than (A) with
respect to Permitted Liens or (B) with respect to any Lien or other encumbrance
that is junior in priority to the Lien created by Section 2 hereof.
(b) Remedies Upon
Default.
(i) Upon the
occurrence of an Event of Default hereunder:
(A) all
unpaid principal, accrued interest and other amounts owing hereunder shall, at
the option of Lender, be immediately due and payable by Borrower;
(B) Lender
may terminate its commitment to make additional Loan Advances; and
(C) Lender
may proceed to protect and enforce its right by suit in the specific performance
of any covenant or agreement contained in the Loan Documents or in aid of the
exercise of any power granted in the Loan Documents or may proceed to enforce
the payment of the Loan Documents or to enforce any other legal or equitable
rights as Lender may have, including exercising any right or remedies available
to Lender under the Loan Documents and under the Code (including disposal of the
Collateral pursuant to the terms thereof).
(ii) Any and
all amounts (including principal, unpaid interest and all reasonable costs and
expenses of collection, including reasonable attorneys’ fees) outstanding
hereunder after an Event of Default shall bear interest from the date due until
paid at the rate of fifteen percent (15%) per annum.
(c) Power of
Attorney. Borrower hereby irrevocably appoints Lender as its
lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower’s name on any
checks or other forms of payment or security; (b) sign Borrower’s name on any
invoice or xxxx of lading for any Account or drafts against Account Debtors; (c)
settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Lender determines reasonable; (d) make,
settle, and adjust all claims under Borrower’s insurance policies; (e) pay,
contest or settle any Lien, charge, encumbrance, security interest, and adverse
claim in or to the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; and (f) transfer the Collateral
into the name of Lender or a third party as the Code permits.
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(d) Application of Payments and
Proceeds. If an Event of Default has occurred and is
continuing, Borrower shall have no right to specify the order or the accounts to
which Lender shall allocate or apply any payments required to be made by
Borrower to Lender or otherwise received by Lender under this Agreement when any
such allocation or application is not specified elsewhere in this
Agreement. If an Event of Default has occurred and is continuing,
Lender may apply any funds in its possession, whether from Borrower account
balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the
Obligations in such order as Lender shall determine in its sole
discretion. If Lender, in its good faith business judgment, directly
or indirectly enters into a deferred payment or other credit transaction with
any purchaser at any sale of Collateral, Lender shall have the option,
exercisable at any time, of either reducing the Obligations by the principal
amount of the purchase price or deferring the reduction of the Obligations until
the actual receipt by Lender of cash therefor.
(e) Lender’s Liability for the
Collateral. So long as Lender complies with reasonable
practices regarding the safekeeping of the Collateral in the possession or under
the control of Lender, Lender shall not be liable or responsible for: (i) any
loss or damage to the Collateral; (ii) any diminution in the value of the
Collateral; or (iii) any act or default of any carrier, warehouseman, bailee, or
other Person. So long as Lender complies with reasonable practices
regarding the safekeeping of the Collateral in the possession or under the
control of Lender, Borrower bears all risk of loss, damage or destruction of the
Collateral.
8. Other
Provisions.
(a) Demand Waiver;
Representations and Expenses. Borrower waives presentment,
notice of dishonor, protest and notice of protest of this Agreement and the Note
and all other notices or demands in connection with the delivery, acceptance,
performance, default or endorsement of the Loan Documents, and shall pay
reasonable out-of-pocket costs and expenses of collection when incurred by
Lender, including, without limitation, reasonable attorneys’ fees and
expenses
(b) Waivers by Lender; Remedies
Cumulative. Lender’s failure, at any time or times, to require
strict performance by Borrower of any provision of this Agreement or any other
Loan Document shall not waive, affect, or diminish any right of Lender
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by Lender and then is only
effective for the specific instance and purpose for which it is given. Lender’s
rights and remedies under this Agreement and the other Loan Documents are
cumulative. Lender has all rights and remedies provided under the
Code, by law, or in equity. Lender’s exercise of one right or remedy
is not an election, and Lender’s waiver of any Event of Default is not a
continuing waiver. Any delay in exercising any remedy by Lender is not a waiver,
election, or acquiescence.
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(c) Binding Agreement; Governing
Law. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement shall be governed by and construed in
accordance with the internal and substantive laws of the State of Delaware and
without regard to any conflicts of laws concepts which would apply the
substantive law of some other jurisdiction.
(d) Further
Assurances. The parties hereto agree to execute and deliver
all such other papers and documents and to take such other further actions that
may be reasonably necessary or appropriate to carry out the terms of this
Agreement.
(e) Entire Agreement;
Amendment. The Loan Documents contain the entire agreement
among the parties with respect to the subject matter hereof and there are no
agreements, understandings, representations, or warranties regarding the subject
matter hereof that are not set forth herein. This Agreement may not
be amended or revised except by a writing signed by Borrower and
Lender.
(f) Notices. Any
notices required or permitted to be sent to Borrower or Lender shall be
delivered to the address of Borrower or Lender, as applicable, as set forth
below. All notices required or permitted hereunder, to be effective,
shall be in writing and shall be deemed effectively given: (i) when sent by
confirmed facsimile if sent during normal business hours of the recipient, and
if not, then on the next Business Day, (ii) three (3) days after having been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (iii) one (1) Business Day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt.
If to
Borrower, to:
WorldGate
Communications, Inc.
0000
Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attention:
Chief Financial Officer
Facsimile:
000-000-0000
with a
copy (which shall not constitute notice) to:
WorldGate
Communications, Inc.
0000
Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attention:
General Counsel
Facsimile:
000-000-0000
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If to
Lender, to:
WGI
Investor LLC
000-X
Xxxxxxxxxxx Xxxx, #000
Xxxxxxx,
XX 00000
Attention: Xxxxxx
Xxxxxxxxxxx, Manager
Facsimile: 704.260.3304
with a
copy (which shall not constitute notice) to:
WGI
Investor LLC
000-X
Xxxxxxxxxxx Xxxx, #000
Xxxxxxx,
XX 00000
Attention: General
Counsel
Facsimile: 704.260.3304
(g) Counterparts. This
Agreement may be executed in one or more counterparts, all of which when taken
together shall constitute but one instrument, and in the event any signature is
delivered by facsimile or “.pdf” transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
“.pdf” were an original thereof.
(h) Severability. The
provisions of this Agreement are severable, and the invalidity of any provision
shall not affect the validity or enforceability of any other provision
hereof.
(i) Captions. The
captions herein have been inserted solely for convenience of reference and in no
way define, limit, or describe the scope or substance of any provision of this
Agreement.
(j) Interpretation. All
pronouns used herein shall include the masculine, feminine, and neuter gender as
the context requires. All defined terms shall include both the plural
and singular case as the context requires.
(k) Restriction on
Assignment. Notwithstanding anything herein to the contrary,
Borrower shall not assign this Agreement without obtaining the prior written
approval of Lender. Lender may assign or transfer any of its rights
or obligations under the Loan Documents without the consent of Borrower, and the
provisions of the Loan Documents shall be binding upon and inure to the benefit
of such assignee or transferee. Any attempted assignment in violation
of this Section 8(k) shall be void and the other party hereto shall not
recognize any such purported assignment.
(l) Borrower
Matters. Any Borrower may, acting singly, request a Loan
Advance hereunder. Each Borrower hereby appoints each other Borrower as such
Borrower’s agent for all purposes hereunder, including with respect to
requesting Loan Advances hereunder. Each Borrower hereunder shall be jointly and
severally obligated to repay all Loan Advances made hereunder, regardless of
which Borrower actually receives said Loan Advances, as if each Borrower
hereunder directly received all Loan Advances. Each Borrower waives any
suretyship defenses available to it under the Code or any other applicable
law. Each Borrower waives any right to require Lender to: (i) proceed
against any Borrower or any other Person; (ii) proceed against or exhaust any
security; or (iii) pursue any other remedy. Lender may exercise or not exercise
any right or remedy it has against any Borrower or any security it holds
(including the right to foreclose by judicial or non-judicial sale) without
affecting any Borrower’s liability hereunder. Notwithstanding any other
provision of this Agreement or any other Loan Document, each Borrower
irrevocably waives all rights that it may have at law or in equity (including,
without limitation, any law subrogating Borrower to the rights of Lender under
this Agreement) to seek contribution, indemnification or any other form of
reimbursement from any other Borrower, or any other Person now or hereafter
primarily or secondarily liable for any of the Obligations, for any payment made
by Borrower with respect to the Obligations in connection with this Agreement,
any other Loan Document or otherwise and all rights that it might have to
benefit from, or to participate in, any security for the Obligations as a result
of any payment made by Borrower with respect to the Obligations in connection
with this Agreement or otherwise. Any agreement providing for indemnification,
reimbursement or any other arrangement prohibited under this Section 8(l) shall
be null and void. If any payment is made to a Borrower in contravention of this
Section 8(l), such Borrower shall hold such payment in trust for Lender and such
payment shall be promptly delivered to Lender for application to the
Obligations, whether matured or unmatured.
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9. Definitions. As
used in this Agreement:
(a) “Account” means all present and
future rights of Borrower to payment for goods sold or leased or for services
rendered, which are not evidenced by instruments or chattel paper, and whether
or not earned by performance.
(b) “Account Debtor” is any
“account debtor” as defined in the Code with such additions to such term as may
hereafter be made.
(c) “Business Day” means any day
except Saturday, Sunday and any day which shall be a federal legal holiday or a
day on which banking institutions in the State of Delaware are authorized or
required by law or governmental action to close.
(d) “Code” means the Uniform
Commercial Code, as the same may, from time to time, be enacted and in effect in
the State of Delaware; provided, that, to the extent that the Code is used to
define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Code, the definition of
such term contained in Article or Division 9 shall govern; provided further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection, or priority of, or remedies with respect to,
Lender’s security interest in any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the State of Delaware,
the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes on the provisions thereof
relating to such attachment, perfection, priority, or remedies and for purposes
of definitions relating to such provisions.
12
(e) “Collateral” is any and all
properties, rights and assets of Borrower described on Exhibit
C.
(f) “Equipment” is all “equipment”
as defined in the Code with such additions to such term as may hereafter be
made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the
foregoing.
(g) “Inventory” means all
“inventory” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products, including without limitation such
inventory as is temporarily out of Borrower’s custody or possession or in
transit and including any returned goods and any documents of title representing
any of the above.
(h) “Lien” means any claim,
mortgage, deed of trust, levy, charge, pledge, security interest or other
encumbrance of any kind, whether voluntarily incurred or arising by operation of
law or otherwise against any property.
(i) “Loan Documents” means this
Agreement and the Note, each as amended, restated, or otherwise
modified.
(j) “Material Adverse Change” means
(i) any impairment in the perfection or priority of Lender’s security interest
in the Collateral, other than with respect to any Permitted Lien, or in the
value of such Collateral; (ii) a material adverse change in the business,
operations or condition (financial or otherwise) of Borrower; or (iii) a
material impairment in the prospect of repayment of any portion of the
Obligations.
(k) “Maturity Date” means October
28, 2014.
(l) “Obligations” means Borrower’s
obligation to pay when due any debts, principal, interest, and other amounts
Borrower owes Lender now or later under the Loan Documents.
(m) “Permitted Liens” means (i)
Liens for taxes, fees, assessments or other government charges or levies, either
not delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its books, provided that no notice of any such Lien has
been filed or recorded under the Internal Revenue Code of 1986, as amended, and
the treasury regulations adopted thereunder; (ii) purchase money Liens (A) on
Equipment acquired or held by Borrower incurred for financing the acquisition of
Equipment securing no more than One Hundred Thousand Dollars ($100,000) in the
aggregate amount outstanding, or (B) existing on Equipment when acquired, if the
Lien is confined to the property and improvements and the proceeds of the
Equipment; (iii) statutory Liens securing claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other Persons imposed without
action of such parties; provided that, the aggregate amount of such Liens does
not at any time exceed One Hundred Thousand Dollars ($100,000.00); and (iv)
Liens incurred in the extension, renewal or refinancing of the indebtedness
secured by Liens described in (i) through (ii), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness may not increase.
13
(n) “Person” means an individual,
corporation association, partnership, limited liability company, joint venture,
trust, government, agency department or any other entity.
(o) “Records” means all of
Borrower’s present and future books of account of every kind or nature, purchase
and sale agreements, invoices, ledger cards, bills of lading and other shipping
evidence, statements, correspondence, memoranda, credit files and other data
relating to the Collateral or any account debtor, together with the tapes,
disks, diskettes and other data and software storage media and devices, file
cabinets or containers in or on which the foregoing are stored (including any
rights of Borrower with respect to the foregoing maintained with or by any other
person).
(p) “Registered Organization” means
any “registered organization” as defined in the Code with such additions to such
term as may hereafter be made.
[SIGNATURE
PAGE FOLLOWS]
14
IN WITNESS WHEREOF, the parties hereto
have executed this Revolving Loan and Security Agreement as of the date first
above written.
|
BORROWER:
WORLDGATE
COMMUNICATIONS, INC.
By: /s/ Xxxxxxxxxxx X.
Xxxxxx
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and Secretary
WORLDGATE
SERVICE, INC.
By: /s/ Xxxxxxxxxxx X.
Xxxxxx
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and Secretary
WORLDGATE
FINANCE, INC.
By: /s/ Xxxxxxxxxxx X.
Xxxxxx
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and Secretary
OJO
SERVICE LLC
By:
WorldGate Communications, Inc., its sole member
By: /s/ Xxxxxxxxxxx X.
Xxxxxx
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and Secretary
OJO
VIDEO PHONES LLC
By:
WorldGate Communications, Inc., its sole member
By: /s/ Xxxxxxxxxxx X.
Xxxxxx
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and Secretary
|
LENDER:
WGI
INVESTOR LLC
By:
/s/ Xxxxxx
Xxxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxxx
Title:
Manager
|
Exhibit
A
Form
of Promissory Note
REVOLVING PROMISSORY
NOTE
|
Up
to $3,000,000
|
October
28, 2009
|
FOR VALUE
RECEIVED, WORLDGATE
COMMUNICATIONS, INC., a Delaware corporation, WORLDGATE SERVICE, INC., a
Delaware corporation, WORLDGATE
FINANCE, INC., a Delaware corporation, OJO SERVICE LLC, a
Pennsylvania limited liability company, and OJO VIDEO PHONES LLC, a
Pennsylvania limited liability company (jointly and severally, the “Borrower”), hereby absolutely,
irrevocably, unconditionally and jointly and severally promises to pay to the
order of WGI INVESTOR
LLC, a Delaware limited liability company (“Lender”), in United States
dollars and in immediately available funds, the principal sum of THREE MILLION DOLLARS
($3,000,000), or such lesser amount as may be advanced by Lender to the
Borrower from time to time in accordance with that certain Revolving Loan and
Security Agreement dated as of October 28, 2009, between the Borrower and Lender
(as it may be amended, modified, extended or restated from time to time, the
“Loan Agreement”),
together with interest thereon, as provided in the Loan
Agreement. Notwithstanding the foregoing, the aggregate principal
amount outstanding under this Revolving Promissory Note (this “Note”) shall not exceed three
million dollars ($3,000,000). This Note is subject to all of the
terms and conditions set forth in, and such terms and conditions are hereby
incorporated herein by reference to, the Loan Agreement. All
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Loan Agreement. In the event of any conflict between the
provisions of this Note and the Loan Agreement, the provisions of the Loan
Agreement shall prevail.
The
obligations of the Borrower evidenced by this Note are secured as set forth in
the Loan Agreement.
Except as
otherwise provided in the Loan Documents, all outstanding principal and interest
with respect to Loan Advances shall be due and payable in full in cash on the
Maturity Date. The daily unpaid principal balance outstanding under
this Note shall bear interest at the rate(s) set forth in the Loan
Agreement. The Loan Advances may be prepaid in whole or in part at
any time without premium or penalty and amounts repaid may be re-borrowed in
accordance with the provisions of the Loan Agreement.
Upon the
occurrence of an Event of Default, Lender shall have, and shall be entitled to
exercise, all of the rights and remedies set forth in the Loan
Documents.
All
payments in respect of amounts outstanding under this Note shall be paid in
immediately available funds to the account(s) specified by Lender from time to
time. Any payment due in respect of this Note which falls due on a
day other than a Business Day shall be made on the next Business
Day.
The
Borrower hereby waives presentment and demand for payment, notice of dishonor,
protest and notice of protest of this Note. No release of any
security for the payment of this Note or extension of time for payment of this
Note, and no alteration, amendment or waiver of any provision of this Note made
by agreement between Lender and any other Person shall release, discharge,
modify, change or affect the liability of the Borrower under this
Note.
Each right, power and remedy of Lender
under this Note, the Loan Agreement, any other Loan Document, or under
applicable laws shall be cumulative and concurrent, and the exercise of any one
or more of them shall not preclude the simultaneous or later exercise by Lender
of any or all such other rights, powers or remedies. No failure or
delay by Lender to insist upon the strict performance of any one or more
provisions of this Note, the Loan Agreement, any other Loan Document, or to
exercise any right, power or remedy consequent upon an Event of Default shall
constitute a waiver thereof, or preclude Lender from exercising any such right,
power or remedy. No modification, change, waiver or amendment of this
Note shall be deemed to be made unless in writing signed by the Borrower and
Lender. This Note shall inure to the benefit of and be binding upon the Borrower
and Lender and their respective successors and assigns; provided that except as
set forth in the Loan Agreement, the Borrower shall have no right to assign any
of its rights or delegate any of its obligations under this Note and provided
further there shall be no restrictions of any nature on Lender’s right to assign
this Note or its rights hereunder. The invalidity, illegality or
unenforceability of any provision of this Note shall not affect or impair the
validity, legality or enforceability of any other provision. This
Note shall be deemed to be made in, and shall be governed by the laws of, the
State of Delaware (without regard to its conflicts of laws
principles).
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, this Revolving Promissory Note has been duly executed by the
undersigned as of the day and year first above written.
|
BORROWER:
WORLDGATE
COMMUNICATIONS, INC.
By: ________________________
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and Secretary
WORLDGATE
SERVICE, INC.
By: ________________________
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and Secretary
WORLDGATE
FINANCE, INC.
By: ________________________
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and Secretary
OJO
SERVICE LLC
By:
WorldGate Communications, Inc., its sole member
By: ________________________
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and Secretary
OJO
VIDEO PHONES LLC
By:
WorldGate Communications, Inc., its sole member
By: ________________________
Name: Xxxxxxxxxxx
X. Xxxxxx
Title: SVP,
Legal and Regulatory, General Counsel and
Secretary
|
Exhibit
B
Form
of Notice of Borrowing/Loan Advance Request
NOTICE OF BORROWING/LOAN
ADVANCE REQUEST
Date: [________],
20__
WGI
Investor LLC
000-X
Xxxxxxxxxxx Xxxx, #000
Xxxxxxx,
XX 00000
Attention: Xxxxxx
Xxxxxxxxxxx, Manager
Advance
Request: Revolving
Loan and Security Agreement
Dear
Xxxxxx:
Reference
is made to that certain Revolving Loan and Security Agreement (as from time to
time amended, varied, supplemented or otherwise modified, the “Loan Agreement”), dated as of
October 28, 2009, by and between (i) WorldGate Communications, Inc., a Delaware
corporation, WorldGate Service, Inc., a Delaware corporation, WorldGate Finance,
Inc., a Delaware corporation, Ojo Service LLC, a Pennsylvania limited liability
company, and Ojo Video Phones LLC, a Pennsylvania limited liability company
(jointly and severally, the “Borrower”), and (ii) WGI
Investor LLC, a Delaware limited liability company (“Lender”).
This is a
Notice of Borrowing. All capitalized terms used herein and not
otherwise defined shall have the meanings given to them in the Loan
Agreement.
|
1.
|
LOAN
ADVANCE REQUEST
|
In
accordance with the Loan Agreement, the undersigned hereby requests that Lender
make a Loan Advance as follows:
|
a.
|
Loan
Date: [________], 20__
|
|
b.
|
Amount
of Loan Advance: US [$___________],1 to be disbursed as
follows:
|
[INSERT
APPLICABLE BORROWER]
Account
Information
[INSERT
APPLICABLE INFORMATION]
|
c.
|
Purpose
for which Loan Advance will be
used: ______________________.
|
2. CERTIFICATION.
The
Borrower hereby certifies that (a) the representations and warranties in Section
4 of the Loan Agreement are true in all material respects as of the date hereof,
(b) no Event of Default (i) has occurred that is continuing as of the date
hereof and (ii) will result from the Loan Advance requested hereunder and (c) no
Material Adverse Change has occurred.
Sincerely,
WorldGate
Service, Inc.
Exhibit
C
Description
of Collateral
The
Collateral consists of all of Borrower’s right, title and interest in and to the
following personal property:
|
1.
|
All
Accounts and other indebtedness owed to
Borrower;
|
|
2.
|
All
present and future contract rights, general intangibles (including, but
not limited to, tax and duty refunds, intellectual property, registered
and unregistered patents, trademarks, service marks, copyrights, trade
names, applications for the foregoing, technology, software, know-how,
designs, trade secrets, goodwill, processes, drawings, blueprints,
customer lists, mailing lists, licenses, whether as licensor or licensee,
choses in action and other claims and existing and future leasehold
interests in equipment, real estate and fixtures), chattel paper,
documents, instruments, securities, investment property, letters of
credit, proceeds of letters of credit, bankers’ acceptances and
guaranties;
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|
3.
|
All
present and future monies, securities, credit balances, deposits, deposit
accounts and other property of Borrower now or hereafter held or received
by or in transit to Lender, any Lender or any of their respective
affiliates or at any other depository or other institution from or for the
account of Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all present and future Liens,
security interests, rights, remedies, title and interest in, to and in
respect of Accounts and other Collateral, including, without limitation,
(a) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to
the Collateral, (b) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or
secured party, (c) goods described in invoices, documents, contracts or
instruments with respect to, or otherwise representing or evidencing,
Accounts or other Collateral, including, without limitation, returned,
repossessed and reclaimed goods, and (d) deposits by and property of
Account Debtors or other Persons securing the obligations of Account
Debtors;
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|
4.
|
All
Inventory;
|
|
5.
|
All
Equipment;
|
|
6.
|
All
Records; and
|
|
7.
|
All
products and proceeds of the foregoing, in any form, including, without
limitation, insurance proceeds and any claims against third parties for
loss or damage to or destruction of any or all of the
foregoing.
|
