SENIOR SECURED REVOLVING CREDIT FACILITY AGREEMENT IN THE AMOUNT OF US$5,000,000 BY AND AMONG as Borrower, CHINA DIRECT INVESTMENTS, INC., INTERNATIONAL MAGNESIUM GROUP, INC., YUEJIAN (JAMES) WANG, as Joint and Several Guarantors, AND TCA GLOBAL...
IN THE AMOUNT OF US$5,000,000
BY AND AMONG
as Borrower,
CDI CHINA, INC.,
CHINA DIRECT INVESTMENTS, INC.,
CDII MINERALS, INC.,
INTERNATIONAL MAGNESIUM GROUP, INC.,
YUEJIAN (XXXXX) XXXX,
as Joint and Several Guarantors,
AND
TCA GLOBAL CREDIT MASTER FUND, LP,
as Lender
May 31, 2014
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SENIOR SECURED REVOLVING CREDIT FACILITY AGREEMENT
This SENIOR SECURED REVOLVING CREDIT FACILITY AGREEMENT (as amended, restated, modified or supplemented from time to time, this “Agreement”), dated as of May 31, 2014 and effective as of July 30, 2014 (the “Closing Date”), is executed by and among (i) CD INTERNATIONAL ENTERPRISES, , INC., a corporation incorporated under the laws of the State of Florida (the “Borrower”), (ii) CDI CHINA, INC., a corporation incorporated under the laws of the State of Florida, CHINA DIRECT INVESTMENTS, INC., a corporation incorporated under the laws of the State of Florida, CDII MINERALS, INC., a corporation incorporated under the laws of the State of Florida, INTERNATIONAL MAGNESIUM GROUP, INC., a corporation incorporated under the laws of the State of Florida, and any Person to hereafter become a Subsidiary of the Borrower pursuant to Section 3.4 hereof, as joint and several guarantors (together, jointly and severally, the “Corporate Guarantors” and together with the Borrower, the “Credit Parties”), (iii) XXXXXXX XXXX, an individual residing at 00000 Xxxxxx Xxxxx, Xxxx Xxxxx, XX 00000, as additional personal guarantor (the “Individual Guarantor” and together with the Corporate Guarantors, jointly and severally, the “Guarantors”) and (iv) TCA GLOBAL CREDIT MASTER FUND, LP, a limited partnership organized and existing under the laws of the Cayman Islands, as lender (the “Lender”).
(a) “Account” shall mean, individually, and “Accounts” shall mean, collectively, any and all accounts (as such term is defined in the UCC) of any Credit Party.
(b) “Affiliate” (a) of Lender shall mean: (i) any entity which, directly or indirectly, controls or is controlled by or is under common control with Lender; and (ii) any entity administered or managed by Lender, or an Affiliate or investment advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans; and (b) of any Credit Party shall mean any entity which, directly or indirectly, controls or is controlled by or is under common control with such Credit Party. With respect to an Affiliate of Lender or a Credit Party, an entity shall be deemed to be “controlled by” another entity if such other entity possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such entity, whether by contract, ownership of voting securities, membership interests or otherwise.
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(c) “Agreement” shall mean this Senior Secured Revolving Credit Facility Agreement by and among the Borrower, the Guarantors and the Lender.
(d) “Asset Monitoring Fee” shall have the meaning given to it in Section 2.2(a) hereof.
(e) “Borrower” shall have the meaning given to it in the preamble hereof.
(f) “Borrowing Base Amount” shall mean, if the Reserve Amount has not been fully collected by Lender as of the date the Borrowing Base Amount is calculated, then an amount, expressed in Dollars, equal to eighty percent (80%) of the amount of funds then available in the Lock Box Account as of the date the Borrowing Base Amount is calculated, less the Reserve Amount, less any interest or fees then due and payable to Lender under this Agreement. If the Reserve Amount has been fully collected by Lender in the Lock Box Account as of the date the Borrowing Base Amount is calculated, then an amount, expressed in Dollars, equal to one hundred percent (100%) of the amount of funds then available in the Lock Box Account as of the date the Borrowing Base Amount is calculated, less the Reserve Amount, less any principal, interest or fees then due and payable to Lender under this Agreement.
(g) “Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required to be closed for the conduct of commercial banking business in the State of New York.
(h) “BSA” shall have the meaning given to it in Section 13.23 hereof.
(i) “Capital Expenditures” shall mean expenditures (including Capital Lease obligations which should be capitalized under GAAP) for the acquisition of fixed assets which are required to be capitalized under GAAP.
(j) “Capital Lease” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person as lessee that is, or should be, in accordance with Financial Accounting Standards Board Statement No. 13, as amended from time to time, or, if such Statement is not then in effect, such statement of GAAP as may be applicable, recorded as a “capital lease” on the balance sheets of any Credit Party prepared in accordance with GAAP.
(k) “Change in Control” shall mean any sale, conveyance, assignment or other transfer, directly or indirectly, of any ownership interest of any Credit Party, which results in any change in the identity of the individuals or entities in Control of any Credit Party as of the Closing Date, or the grant of a security interest in any ownership interest of any Person, directly or indirectly Controlling the Credit Parties, which could result in a change in the identity of the individuals or entities in Control of the Credit Parties as of the Closing Date.
(l) “Closing Date” shall have the meaning specified in the preamble hereto.
(m) “Collateral” shall mean “Collateral” as defined in the Security Agreements.
(n) “Common Stock” shall mean the common stock of the Borrower, par value $0.0001 per share.
(o) “Communication” shall have the meaning given to it in Section 13.17 hereof.
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(p) “Contingent Liability” and “Contingent Liabilities” shall mean, respectively, each obligation and liability of any Credit Party and all such obligations and liabilities of such Credit Party incurred pursuant to any agreement, undertaking or arrangement by which such Credit Party, either: (i) guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability of any other Person in any manner (other than by endorsement of instruments in the course of collection), including without limitation, any indebtedness, dividend or other obligation which may be issued or incurred at some future time; (ii) guarantees the payment of dividends or other distributions upon the shares or ownership interest of any other Person; (iii) undertakes or agrees (whether contingently or otherwise): (A) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any other Person or any property or assets constituting security therefor; (B) to advance or provide funds for the payment or discharge of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of any other Person; or (C) to make payment to any other Person other than for value received; (iv) agree to lease property or to purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (v) to induce the issuance of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (vi) undertake or agree otherwise to assure a creditor against loss. The amount of any Contingent Liability shall (subject to any limitation set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation or other liability guaranteed or supported thereby.
(q) “Control” or “Controlling” shall mean the possession of the power to direct, or cause the direction of, the management and policies of a Person by contract, voting of securities, or otherwise.
(r) “Credit Party(ies)” shall have the meaning given to it in the preamble hereof.
(s) “Customer” shall mean any Person who is obligated to any Credit Party for any Receipts.
(t) “Default Rate” shall mean a per annum rate of interest equal to the highest rate permitted by applicable law.
(u) “Depreciation” shall mean the total amounts added to depreciation, amortization, obsolescence, valuation and other proper reserves, as reflected on the Credit Parties’ financial statements and determined in accordance with GAAP.
(v) “Dollars” or “$” means lawful currency of the United States of America.
(w) “EBIDTA” shall mean, for any period, the sum of the following: (i) Net Income (excluding extraordinary and unusual items and income or loss attributable to a minority equity position in any affiliated corporation or Subsidiary) for such period; plus (ii) interest expense; plus (iii) income and franchise taxes payable or accrued; plus (iv) Depreciation for such period; plus (v) all other non-cash charges; plus (vi) management fees; plus (vii) costs, fees and expenses incurred in connection with, or otherwise associated with, the closing of the transaction contemplated by this Agreement; minus (viii) that portion of Net Income arising out of the sale of assets outside of the Ordinary Course of Business (to the extent not previously excluded under clause (i) of this definition), in each case to the extent included in determining Net Income for such period.
(x) “Employee Plan” includes any pension, stock bonus, employee stock ownership plan, retirement, disability, medical, dental or other health plan, life insurance or other death benefit plan, profit sharing, deferred compensation, stock option, bonus or other incentive plan, vacation benefit plan, severance plan or other employee benefit plan or arrangement, including, without limitation, those pension, profit-sharing and retirement plans of the Credit Parties described from time to time in the financial statements of the Credit Parties and any pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA) or any multi-employer plan, maintained or administered by the Credit Parties or to which the Credit Parties are a party or may have any liability or by which is the Credit Parties are bound.
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(y) “Environmental Laws” shall mean all federal, state, district, local and foreign laws, rules, regulations, ordinances, and consent decrees relating to health, safety, hazardous substances, pollution and environmental matters, as now or at any time hereafter in effect, applicable to the Credit Parties’ business or facilities owned or operated by the Credit Parties, including laws relating to emissions, discharges, releases or threatened releases of pollutants, contamination, chemicals, or hazardous, toxic or dangerous substances, materials or wastes in the environment (including, without limitation, ambient air, surface water, land surface or subsurface strata) or otherwise relating to the generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.
(z) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.
(aa) “Event of Default” shall mean any of the events or conditions set forth in Section 11 hereof.
(bb) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(cc) “Funded Indebtedness” shall mean, as to any Person, without duplication: (i) all indebtedness for borrowed money of such Person (including principal, interest and, if not paid when due, fees and charges), whether or not evidenced by bonds, debentures, notes or similar instruments; (ii) all obligations to pay the deferred purchase price of property or services; (iii) all obligations, contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person, and all unpaid drawings in respect of such letters of credit, bankers’ acceptances and similar obligations; and (iv) all indebtedness secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided, however, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the fair market value of the property subject to such Lien at the time of determination). Notwithstanding the foregoing, Funded Indebtedness shall not include trade payables and accrued expenses incurred by such Person in accordance with customary practices and in the Ordinary Course of Business of such Person.
(dd) “GAAP” shall mean United States generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination; provided, however, that interim financial statements or reports shall be deemed in compliance with GAAP despite the absence of footnotes and fiscal year-end adjustments as required by GAAP.
(ee) “Guarantor(s)” shall have the meaning given to it in the preamble hereof.
(ff) “Guaranty Agreements” shall mean the guaranty agreements executed by each Guarantor in favor of the Lender, the form of which is attached hereto as Exhibit A.
(gg) “Hazardous Materials” shall mean any hazardous, toxic or dangerous substance, materials and wastes, including, without limitation, hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including, without limitation, materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances, materials or wastes that are or become regulated under any Environmental Law (including, without limitation, any that are or become classified as hazardous or toxic under any Environmental Law).
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(hh) “Individual Guarantor(s)” shall have the meaning given to it in the preamble hereof.
(ii) “Interest Rate” shall mean a fixed rate of interest equal to ten percent (10.00 %) per annum, calculated on the actual number of days elapsed over a 360-day year.
(jj) “Irrevocable Transfer Agent Instructions” shall mean the Irrevocable Transfer Agent Instructions to be entered into by and among the Lender, the Borrower and the Borrower’s transfer agent, in the form attached hereto as Exhibit B.
(kk) “Lender” shall have the meaning given to it in the preamble hereof.
(ll) “Lender Indemnitee(s)” shall have the meaning given to it in Section 13.19 hereof.
(mm) “Liabilities” shall mean, at all times, (i) the repayment of all sums due under the Revolving Note (and all extensions, renewals, replacements, future advances and amendments thereof) and the other Loan Documents; (ii) the performance and observance of all terms, conditions, covenants, representations and warranties set forth in the Loan Documents; and (iii) all liabilities of the Credit Parties that would be shown as such on the consolidated balance sheets of the Credit Parties prepared in accordance with GAAP.
(nn) “Lien” shall mean, with respect to any Person, any mortgage, pledge, hypothecation, judgment lien or similar legal process, title retention lien, or other lien or security interest granted by such Person or arising by judicial process or otherwise, including, without limitation, the interest of a vendor under any conditional sale or other title retention agreement and the interest of a lessor under a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person as lessee that is, or should be, a Capital Lease on the balance sheet of such Person prepared in accordance with GAAP.
(oo) “Loan” or “Loans” shall mean the aggregate of all Revolving Loans made by Lender to Borrower under and pursuant to this Agreement.
(pp) “Loan Documents” shall mean those documents listed in Section 3.1 hereof.
(qq) “Lock Box” shall have the meaning give to it in Section 2.1(e) hereof.
(rr) “Lock Box Account” shall have the meaning given to it in Section 2.1(e) hereof.
(ss) “Mandatory Principal Repayment Amount” shall have the meaning given to it in Section 2.1(d)(i).
(tt) “Material Adverse Effect” shall mean (a) a material adverse change in, or a material adverse effect upon, the assets, business, prospects, properties, financial condition or results of operations of the Credit Parties taken as a whole, (b) a material impairment of the ability of the Credit Parties to perform its Obligations under any of the Loan Documents, or (c) a material adverse effect on (i) any portion of the Collateral, (ii) the legality, validity, binding effect or enforceability against any Credit Party of any of the Loan Documents, (iii) the perfection or priority (subject to Permitted Liens) of any Lien granted to Lender under any Loan Document or (iv) the rights or remedies of Lender under any Loan Document, or (d) a material adverse effect or impairment on the Lender’s ability to sell the Facility Fee Shares or other shares of Borrower’s Common Stock issuable to Lender under any Loan Documents without limitation or restriction.
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(uu) “Material Contract” shall mean any contract or agreement to which any Credit Party is a party or by which any Credit Party or any of their respective assets are bound and which: (i) involves aggregate payments of Twenty-Five Thousand Dollars ($25,000) or more to or from any Credit Party; (ii) involves delivery, purchase, licensing or provision, by or to any Credit Party, of any goods, services, assets or other items having a value (or potential value) over the term of such contract or agreement of Twenty-five Thousand Dollars ($25,000) or more or is otherwise material to the conduct of any business of any Credit Party’s as now conducted and as contemplated to be conducted in the future; (iii) involves a Borrower Lease; (iv) imposes any guaranty, surety or indemnification obligations on any Credit Party; or (v) prohibits any Credit Party from engaging in any business or competing anywhere in the world.
(vv) “Net Income” shall mean, with respect to any period, the amount shown opposite the caption “Net Income” or a similar caption on the consolidated financial statements of Borrower, prepared in accordance with GAAP.
(ww) “Obligations” shall mean, now existing or in the future: (i) all loans, principal, advances and other financial accommodations (whether primary, contingent or otherwise), (ii) all interest accrued thereon (including interest which would be payable as post-petition in connection with any bankruptcy or similar Proceeding, whether or not permitted as a claim thereunder), (iii) any fees due to Lender under this Agreement or the other Loan Documents, (iv) any expenses incurred by Lender under this Agreement or the other Loan Documents, (v) any and all other liabilities and obligations of each of the Credit Parties and the Individual Guarantor to Lender, and (vi) the performance by the Credit Parties and the Individual Guarantor of all covenants, agreements and obligations of every nature and kind on the part of the Credit Parties and the Individual Guarantor to be performed under this Agreement and any other Loan Documents.
(xx) “OFAC” shall have the meaning given to it in Section 13.23 hereof.
(yy) “Ordinary Course of Business” means the Ordinary Course of Business consistent with past custom and practice (including with respect to quantity, quality and frequency).
(zz) “Organizational Identification Number” means, the organizational identification number assigned to any Credit Party, respectively, by the applicable governmental unit or agency of the jurisdiction of organization of such Credit Party, if any.
(aaa) “OTC Markets” means the OTC Markets Group, Inc.
(bbb) “Payment Date” shall have the meaning given to it in Section 2.1(c) hereof.
(ccc) “Payment Processing Companies” shall have the meaning given to it in Section 2.1(e).
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(ddd) “Permitted Liens” shall mean: (i) Liens for Taxes, assessments or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which adequate reserves are maintained in accordance with GAAP and in respect of which no Lien has been filed; (ii) Liens of carriers, warehousemen, mechanics and materialmen arising in the Ordinary Course of Business and other similar Liens imposed by law; (iii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being contested in good faith by appropriate proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services, which do not in the aggregate materially detract from the value of the property or assets of the Credit Parties taken as a whole or materially impair the use thereof in the operation of the Credit Parties’ business and, in each case, for which adequate reserves are maintained in accordance with GAAP and in respect of which no Lien has been filed; (iv) Liens described in the financial statements referred to in Section 7.10 hereof and the replacement, extension or renewal of any such Lien upon or in the same property subject thereto arising out of the extension, renewal or replacement of the indebtedness secured thereby (without increase in the amount thereof); (v) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding Fifty Thousand and 00/100 Dollars ($50,000) arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings and to the extent such judgments or awards do not constitute an Event of Default; (vi) zoning and similar restrictions on the use of property and easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Credit Parties; (vii) Liens arising in connection with Capital Leases (and attaching only to the property being leased); (viii) Liens that constitute purchase money security interests on any property securing indebtedness incurred for the purpose of financing all or any part of the cost of acquiring such property, provided that any such Lien attaches to such property within sixty (60) days of the acquisition thereof and attaches solely to the property so acquired; (ix) Liens granted to Lender hereunder and under the Loan Documents; (x) any interest or title of a lessor, sublessor, licensor or sublicensor under any lease or non-exclusive license permitted by this Agreement; (xi) Liens arising from precautionary uniform commercial code financing statements filed under any lease permitted by this Agreement; (xii) banker’s Liens and rights of set-off of financial institutions arising in connection with items deposited in accounts maintained at such financial institutions and subsequently unpaid and unpaid fees and expenses that are charged to the Credit Parties by such financial institutions in the Ordinary Course of Business of the maintenance and operation of such accounts; (xiii) any Lien existing on any property prior to the acquisition thereof by the any Credit Party.
(eee) “Permit” means any license, permit, approval, waiver, order, authorization, right or privilege of any nature whatsoever, granted, issued, approved or allowed by any governmental authority.
(fff) “Person” shall mean any individual, partnership, limited liability company, limited liability partnership, corporation, trust, joint venture, joint stock company, association, unincorporated organization, government or agency or political subdivision thereof, or other entity.
(hhh) “Prepayment Penalty” shall have the meaning given to it in Section 2.1(d) hereof.
(iii) “Principal Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC Bulletin Board, the OTC Markets, the so-called OTC Pink Sheets, the NYSE Euronext or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock.
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(jjj) “Real Property” means any real estate, land, building, structure, improvement, fixture or other real property of any nature whatsoever, including, but not limited to, fee and leasehold interests and specifically including the real property listed on Schedule 7.16.
(kkk) “Receipts” shall mean all revenues, receipts, receivables, Accounts, collections or any other funds at any time received or receivable by the Credit Parties in connection with its business, operations or from any other source.
(lll) “Receipts Collection Fee” shall mean a surcharge charged by Lender to the Borrower on a monthly basis, and shall be in an amount calculated by Lender such that, when added together with any monthly interest paid by Borrower hereunder, the aggregate amount of the monthly interest and the monthly Receipts Collection Fee shall not exceed One and a Half Percent (1.50%) of the then outstanding principal balance of all Loans hereunder, per month.
(mmm) “Regulatory Change” shall mean the introduction of, or any change in any applicable law, treaty, rule, regulation or guideline or in the interpretation or administration thereof by any governmental authority or any central bank or other fiscal, monetary or other authority having jurisdiction over Lender or its lending office.
(nnn) “Reserve Amount” shall mean an amount, expressed in Dollars, equal to twenty percent (20%) of the then applicable Revolving Loan Commitment.
(ooo) “Revolving Loan” and “Revolving Loans” shall mean, respectively, each direct advance, and the aggregate of all such direct advances, made by Lender to Borrower under and pursuant to Section 2.1 of this Agreement.
(ppp) “Revolving Loan Availability” shall mean at any time the lesser of (a) the Revolving Loan Commitment or (b) the Borrowing Base Amount.
(qqq) “Revolving Loan Commitment” shall mean, on the Closing Date, Six Hundred Fifty Thousand Dollars and No/100 United States Dollars (US$650,000), and in the event Borrower requests and Lender agrees to increase the Revolving Loan Commitment pursuant to Section 2.1(b), thereafter, such aggregate additional amount up to Five Million and No/100 United States Dollars (US$5,000,000).
(rrr) “Revolving Loan Maturity Date” shall mean the earlier of (a) six (6) months following the Closing Date, unless the date shall be extended pursuant to Section 2.3 hereof or by Lender pursuant to any modification, extension or renewal note executed by Borrower, consented and agreed to by each Guarantor, and accepted by Lender in its sole and absolute discretion in substitution for the Revolving Note, (b) upon sixty (60) days written notice from Lender (the “Early Termination Notice”), (c) upon prepayment of all of the outstanding Revolving Note by Borrower (subject to Section 2.1(d)(ii)), or (d) the occurrence of an Event of Default and acceleration of all of the outstanding Revolving Note pursuant to this Agreement.
(sss) “Revolving Note” shall mean that certain revolving convertible promissory note, or any replacement, substitution or amended and restated form thereof, in the principal amount of the Revolving Loan Commitment made by Borrower, and consented and agreed to by each Guarantor, in favor of Lender, the form of which is attached hereto as Exhibit D.
(ttt) “Rule 144” shall mean Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto).
(uuu) “Sale Reconciliation” shall have the meaning given to it in Section 2.2(f)(ii) hereof.
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(vvv) “SEC” shall mean the United States Securities and Exchange Commission.
(www) “Securities Act” shall mean the Securities Act of 1933, as amended.
(xxx) “Security Agreement(s)” shall mean the Security Agreements executed by each of the Credit Parties in favor of Lender, the form of which is attached hereto as Exhibit E-1 with respect to the Borrower and the form of which is attached hereto as Exhibit E-2 with respect to each Guarantor.
(yyy) “Share Value” shall have the meaning given to it in Section 2.2(f)(ii) hereof.
(zzz) “Subsidiary” and “Subsidiaries” shall mean, respectively, each and all such corporations, partnerships, limited partnerships, limited liability companies, limited liability partnerships or other entities of which or in which a Person owns, directly or indirectly, fifty percent (50%) or more of: (i) the combined voting power of all classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such entity if a corporation; (ii) the management authority and capital interest or profits interest of such entity, if a partnership, limited partnership, limited liability company, limited liability partnership, joint venture or similar entity; or (iii) the beneficial interest of such entity, if a trust, association or other unincorporated organization.
(aaaa) “UCC” shall mean the Uniform Commercial Code in effect in Florida from time to time.
(bbbb) “Validity Guaranties” shall mean the validity guaranties executed by such officers and directors of Borrower as Lender shall require, in Lender’s sole discretion, the form of which is attached hereto as Exhibit F.
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(i) no Event of Default shall have occurred or be continuing, or result from the applicable increase of the Revolving Loan Commitment;
(ii) Borrower shall have executed and delivered a new or revised Revolving Note;
(iii) after giving effect to such increase, the amount of the aggregate outstanding principal balance of all Revolving Loans shall not be in excess of the Revolving Loan Availability;
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(iv) Lender shall have reviewed and accepted, in its sole and absolute discretion, the amount and type of current and historical Receipts of the Credit Parties, or other Collateral required for the increase; and
(v) Lender shall have received any and all additional documents or agreements included in Section 3 hereof as it shall require in its sole discretion.
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(i) To the extent any Customers make or pay any Receipts to the Credit Parties by a wire transfer, the Credit Parties shall direct all of such Customers to make all such wire transfer payments directly to the Lock Box Account. To the extent any Customers make or pay any Receipts to the Credit Parties by any other form other than wire transfer (such as through a check), then each Credit Party shall direct all of its Customers to make all such payments and Receipts directly to a post office box designated by, and under the exclusive control of, Lender (such post office box is referred to herein as the “Lock Box”). The parties recognize that in many instances, Customers of the Borrower and its Subsidiaries make payments to the Borrower and its Subsidiaries through the use of a credit or debit card. In that regard, the Borrower and its Subsidiaries shall, prior to the Closing Date, modify its agreements with all credit/debit card payment processing companies with whom it has agreements or other payment processing relationships (the “Payment Processing Companies”), so as to authorize, direct and cause: (A) all credit/debit card payments from any Customers; and (B) any reserves or holdbacks withheld by any of the Payment Processing Companies, if, as an when distributed or paid to the Borrower and its Subsidiaries, to be deposited directly into the Lock Box Account, rather than any other bank accounts of the Credit Parties. It shall be a condition precedent to the making of any Revolving Loans hereunder that each of the Payment Processing Companies issue and deliver to Lender an estoppel certificate, disbursement direction or other similar document confirming and agreeing: (I) to the foregoing payment directions; (II) that such payment instructions and directions shall not be changed, amended or terminated, except upon written notice from Lender; and (III) that copies of all statements, notices and other communications sent by any Payment Processing Companies to the Credit Parties, also be delivered to Lender. The Credit Parties hereby agree to undertake any and all required actions, execute any required documents, instruments or agreements, or to otherwise do any other thing required or requested by Lender in order to effectuate the foregoing. Lender shall maintain an account at a financial institution acceptable to Lender in its sole and absolute discretion (the “Lock Box Account”), which Lock Box Account is (as of the Closing Date) and shall be maintained in Lender’s name, and into which all Receipts, whether through wires, credit and debit card payments from any Customers (whether directly or through any Payment Processing Companies), and all other monies, checks, notes, drafts or other payments of any kind received by the Credit Parties shall be deposited, in the identical form in which such payments were received, whether by cash, check, direct deposit, or otherwise. If the Credit Parties, any Affiliate, any shareholder, officer, director, employee or agent of the Credit Parties or any Affiliate, or any other Person acting for or in concert with the Credit Parties, shall receive any monies, checks, notes, drafts or other payments or Receipts, the Credit Parties and each such Person shall receive all such items in trust for, and as the sole and exclusive property of, Lender, and, immediately upon receipt thereof, shall remit the same (or cause the same to be remitted) in kind to the Lock Box Account. The Credit Parties and Lender agree that all payments made to such Lock Box Account, whether in respect of Receipts, as proceeds of other collateral, or otherwise (except for proceeds of Collateral which are required to be delivered to the holder of a Permitted Lien which is prior in right of payment), will be swept from the Lock Box Account to Lender on each Payment Date to be applied according to the following priorities: (1) to unpaid fees and expenses due hereunder including, without limitation, any recurring fees due pursuant to Section 2.2 hereof; (2) to any custodian/back-up servicer (if applicable); (3) to accrued but unpaid interest owed under Sections 2.1(c) and 2.4 hereof; (4) to any accrued but unpaid Receipts Collection Fee; (5) if at any time the Lender is not holding, in the Lock Box Account, an amount equal to at least the Reserve Amount, then fifteen percent (15%) of all Receipts received into the Lock Box Account shall be withheld and applied by Lender to amounts required to establish the Reserve Amount, until the Reserve Amount is reached during the duration of this Agreement, as additional security for the Obligations; (6) to amounts payable pursuant to Section 2.1(d), including, but not limited to, the Mandatory Principal Repayment Amount; (7) to amounts payable pursuant to Sections 2.2(e) and (8) upon the occurrence of an Event of Default, to Lender (including any Reserve Amount then in the Lock Box Account), to reduce the outstanding Revolving Loan balance to zero (each of the foregoing payments, the “Lock Box Payments”). The amount remaining following the payment of the Lock Box Payments on each Payment Date shall be referred to herein as the “Net Amount”. The Credit Parties and the Lender agree that one hundred percent (100%) of the Net Amount will be transferred to Borrower from the Lock Box Account via wire transfer or electronic funds transfer to an account designated by the Borrower on the immediately subsequent Payment Date. Borrower agrees to pay all reasonable fees, costs and expenses in connection with opening and maintaining of the Lock Box, the Lock Box Account, or of creating, administering or switching any payment accounts with any of the Payment Processing Companies. All of such reasonable fees, costs and expenses,
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if not paid by Borrower within five (5) business days of Lender’s written request, may be paid by Lender and in such event all amounts paid by Lender shall constitute Obligations hereunder, shall be payable to Lender by Borrower upon demand, and, until paid, shall bear interest at the lowest rate then applicable to Loans hereunder. It is intended that all Receipts, and all other checks, drafts, instruments and other items of payment or proceeds of Collateral at any time received, due or owing to the Borrower and its Subsidiaries shall be deposited into the Lock Box Account, and if not deposited into the Lock Box Account, shall be remitted or endorsed by the applicable Credit Party to Lender to be deposited into the Lock Box Account, and, if that remittance or endorsement of any such item shall not be made for any reason, Lender is hereby irrevocably authorized to remit or endorse the same on the applicable Credit Party’s behalf. For purpose of this Section, each Credit Party irrevocably hereby makes, constitutes and appoints Lender (and all Persons designated by Lender for that purpose) as each Credit Party’s true and lawful attorney and agent-in-fact: (A) to endorse the applicable Credit Party’s name upon said items of payment and/or proceeds of Collateral and upon any chattel paper, document, instrument, invoice or similar document or agreement relating to any Receipts of the Credit Parties; (B) to take control in any manner of any item of payment or proceeds thereof; (C) to have access to the applicable Credit Party’s operating accounts, through the Credit Party’s online banking system, or otherwise, to make remittances of any Receipts deposited therein into the Lock Box Account as required hereby; and (D) to have access to any lock box or postal box into which any of the Credit Party’s mail is deposited, and open and process all mail addressed to the Credit Parties and deposited therein. Notwithstanding anything contained herein to the contrary and in addition to the amounts provided above, the Lender may from time to time, in its sole and absolute discretion, retain in the Lock Box Account any and all amounts deposited into the Lock Box Account by any Customer that the Lender deems necessary or appropriate (i) in order to have the Borrower comply with Section 10.3 of this Agreement; (ii) to prevent any insecurity by the Lender with respect to the total value of the Collateral (including, but not limited to, the amount held in the Lock Box Account at any time) when compared to the outstanding amount of all Obligations owed to the Lender; and (iii) to ensure that the Collateral (including, but not limited to the amount held in the Lock Box Account) is and remains of a value to adequately serve as appropriate security for the Obligations of the Credit Parties hereunder.
(ii) Lender may, at any time and from time to time after the occurrence and during the continuance of an Event of Default, whether before or after notification to any Customer and whether before or after the maturity of any of the Obligations: (A) enforce collection of any of the Accounts of any Credit Party or other amounts owed to any Credit Party by suit or otherwise; (B) exercise all of the rights and remedies of any Credit Party with respect to proceedings brought to collect any Accounts or other amounts owed to the Credit Parties; (C) surrender, release or exchange all or any part of any Accounts or other amounts owed to any Credit Party, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder; (D) sell or assign any Account of any Credit Party or other amount owed to the Credit Parties upon such terms, for such amount and at such time or times as Lender deems advisable; (E) prepare, file and sign any Credit Party’s name on any proof of claim in bankruptcy or other similar document against any Customer or other Person obligated to any Credit Party; and (F) do all other acts and things which are necessary, in Lender’s sole discretion, to fulfill any Credit Party’s obligations under this Agreement and the other Loan Documents and to allow Lender to collect the Accounts or other amounts owed to any Credit Party. In addition to any other provision hereof, Lender may at any time after the occurrence and during the continuance of an Event of Default, at Borrower’s expense, notify any parties obligated on any of the Accounts to make payment directly to Lender of any amounts due or to become due thereunder.
(iii) On a monthly basis, Lender shall deliver to Borrower an invoice and an account statement showing all Loans, charges and payments, which shall be deemed final, binding and conclusive upon Borrower, unless Borrower notify Lender in writing, specifying any error therein, within thirty (30) days of the date such account statement is sent to Borrower and any such notice shall only constitute an objection to the items specifically identified.
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drafts or other payments or Receipts of any kind received or receivable by, or due to, the Credit Parties, shall be collected directly by the Credit Parties and deposited into Borrower’s operating accounts, and within twenty-four (24) hours after such Receipts or other funds are cleared into such operating accounts of Borrower, all such Receipts and other funds shall be immediately remitted by Borrower into the Lock Box Account, as directed by the Lender. In addition, promptly upon request by Lender, but in no event less than once per month, Borrower shall provide to Lender copies of bank statements for all of the Credit Parties’ operating accounts, and other documents reasonably requested by Lender, which shall show and confirm that all Receipts, whether through wires, electronic fund transfers, credit and debit card payments from any Customers, and all other monies, checks, notes, drafts or other payments or Receipts of any kind received or receivable by, or due to, the Credit Parties, have in fact been received by Borrower and remitted to the Lock Box Account within the timeframes and as otherwise required hereby. Failure by Credit Parties to comply with this Section hall be an immediate Event of Default under this Agreement and all other Loan Documents. On the Regular Lock Box Date, the Borrower shall insure that all Receipts, whether through wires, electronic fund transfers, credit and debit card payments from any Customers, and all other monies, checks, notes, drafts or other payments or Receipts of any kind received or receivable by, or due to, the Credit Parties, are delivered directly to the new Lock Box Account, as directed by the Lender, and not to Borrower’s accounts.
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(ii) any documentary stamp taxes, intangibles taxes, recording fees, filing fees, or other similar taxes, fees or charges imposed by or due to any governmental authority in connection with this Agreement or any other Loan Documents; (iii) the exercise or enforcement of any of the rights of the Lender under this Agreement or the Loan Documents; or (iv) the failure by any Credit Party to perform or observe any of the provisions of this Agreement or any of the Loan Documents. Included in the foregoing shall be the amount of all expenses paid or incurred by Lender in consulting with counsel concerning any of its rights under this Agreement or any other Loan Document or under applicable law. All such costs and expenses, if not so immediately paid when due or upon demand thereof, shall bear interest from the date of outlay until paid, at the Default Rate. All of such costs and expenses shall be additional Obligations of the Credit Parties to Lender secured under the Loan Documents. The provisions of this Subsection shall survive the termination of this Agreement.
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Adjustments. It is the intention of the Borrower and Lender that the Lender shall generate net proceeds from the sale of the Facility Fee Shares equal to the Share Value. The Lender shall have the right to sell the Facility Fee Shares in the Principal Trading Market or otherwise, at any time in accordance with applicable securities laws. At any time the Lender may elect, the Lender may deliver to the Borrower a reconciliation statement showing the net proceeds actually received by the Lender from the sale of the Facility Fee Shares (the “Sale Reconciliation”). If, as of the date of the delivery by Lender of the Sale Reconciliation, the Lender has not realized net proceeds from the sale of such Facility Fee Shares equal to at least the Share Value, as shown on the Sale Reconciliation, then the Borrower shall immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Lender in an amount sufficient such that, when sold and the net proceeds thereof are added to the net proceeds from the sale of any of the previously issued and sold Facility Fee Shares, the Lender shall have received total net funds equal to the Share Value. If additional shares of Common Stock are issued pursuant to the immediately preceding sentence, and after the sale of such additional issued shares of Common Stock, the Lender still has not received net proceeds equal to at least the Share Value, then the Borrower shall again be required to immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Lender as contemplated above, and such additional issuances shall continue until the Lender has received net proceeds from the sale of such Common Stock equal to the Share Value. In the event the Lender receives net proceeds from the sale of Facility Fee Shares equal to the Share Value, and the Lender still has Facility Fee Shares remaining to be sold, the Lender shall return all such remaining Facility Fee Shares to the Borrower. In the event additional Common Stock is required to be issued as outlined above, the Borrower shall instruct its Transfer Agent to issue certificates representing such additional shares of Common Stock to the Lender immediately subsequent to the Lender’s notification to the Borrower that additional shares of Common Stock are issuable hereunder, and the Borrower shall in any event cause its Transfer Agent to deliver such certificates to Lender within three (3) Business Days following the date Lender notifies the Borrower that additional shares of Common Stock are to be issued hereunder. In the event such certificates representing such additional shares of Common Stock issuable hereunder shall not be delivered to the Lender within said three (3) Business Day period, same shall be an immediate default under this Agreement and the Loan Documents. Notwithstanding anything contained in this Section 2.2(f) to the contrary, the Borrower shall have the right to redeem any Facility Fee Shares then in the Lender’s possession for an amount payable by the Borrower to Lender in cash equal to the Share Value, less any net cash proceeds received by the Lender from any previous sales of Facility Fee Shares. Upon Lender’s receipt of such cash payment in accordance with the immediately preceding sentence, the Lender shall return any then remaining Facility Fee Shares in its possession back to the Borrower and otherwise undertake any required actions reasonably requested by Borrower to have such then remaining Facility Fee Shares returned to Borrower.
Mandatory Redemption. Notwithstanding anything contained in this Agreement to the contrary, in the event the Lender has not realized net proceeds from the sale of Facility Fee Shares equal to at least the Share Value by the twelve (12) month anniversary of the Closing Date, then at any time thereafter, the Lender shall have the right, upon written notice to the Borrower, to require that the Borrower redeem all Facility Fee Shares then in Lender’s possession for cash equal to the Share Value, less any cash proceeds received by the Lender from any previous sales of Facility Fee Shares, if any. In the event such redemption notice is given by the Lender, the Borrower shall redeem the then remaining Facility Fee Shares in Lender’s possession for an amount of Dollars equal to the Share Value, less any cash proceeds received by the Lender from any previous sales of Facility Fee Shares, if any, payable by wire transfer to an account designated by Lender within five (5) Business Days from the date the Lender delivers such redemption notice to the Borrower.
Piggyback Registration Rights. In the event that the Borrower files a registration statement with respect to its Common Stock with the SEC (other than a registration statement on Form S-4 or S-8 or any successor form thereto) after the Closing Date but before the Lender sells the Facility Fee Shares, the Facility Fee Shares shall be registered pursuant to such registration statement.
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(i) Evidence satisfactory to the Lender that the Credit Parties have irrevocably instructed the Payment Processing Companies to redirect all payments to the Lock Box Account.
(ii) Within ten (10) Business Days of the Closing Date, evidence that all Credit Parties have modified their respective agreements with all Payment Processing Companies with whom they have agreements or other payment processing relationships so as to authorize, direct and cause: (A) all credit/debit card payments from any Customers; and (B) any reserves or holdbacks withheld by any of the Payment Processing Companies, if, as an when distributed or paid to the Credit Parties, to be deposited directly into the Lock Box Account.
(iii) Within ten (10) Business Days of the Closing Date, an estoppel certificate, disbursement direction or other similar document confirming and agreeing: (I) payment directions to the Lock Box Account; (II) that such payment instructions and directions shall not be changed, amended or terminated, except upon written notice from Lender; and (III) that copies of all statements, notices and other communications sent by any Payment Processing Companies to the Credit Parties, also be delivered to Lender.
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The Revolving Loans shall be evidenced by the Revolving Note (together with any and all renewal, extension, modification or replacement notes executed by Borrower and delivered to Lender and given in substitution therefor) duly executed by Borrower, and consented and agreed to by the Guarantors, and payable to the order of Lender. At the time of the initial disbursement of a Revolving Loan and at each time an additional Revolving Loan shall be requested hereunder or a repayment made in whole or in part thereon, an appropriate notation thereof shall be made on the books and records of Lender. All amounts recorded shall be, absent demonstrable error, conclusive and binding evidence of: (i) the principal amount of the Revolving Loans advanced hereunder; (ii) any unpaid interest owing on the Revolving Loans; and (iii) all amounts repaid on the Revolving Loans. The failure to record any such amount or any error in recording such amounts shall not, however, limit or otherwise affect the obligations of Borrower under the Revolving Note to repay the principal amount of the Revolving Loans, together with all interest accruing thereon.
To secure the payment and performance by Borrower of the Obligations hereunder, the Credit Parties and the Individual Guarantor shall grant, under and pursuant to the Security Agreements executed by the Credit Parties and the Individual Guarantor dated as of the Closing Date, to Lender, its successors and assigns, a continuing, first-priority security interest in, and assignment, transference, mortgage, conveyance, pledge, hypothecation and set over to Lender, its successors and assigns, all of the Credit Parties’ and the Individual Guarantor right, title and interest in and to the Collateral, whether now owned or hereafter acquired, and all proceeds (including, without limitation, all insurance proceeds) and products of any of the Collateral.
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At any time upon Lender’s request, the Credit Parties and the Individual Guarantor shall execute and deliver to Lender any other documents, instruments or certificates requested by Lender for the purpose of properly documenting and perfecting the security interests of Lender in and to the Collateral granted hereunder, including any additional security agreements, mortgages, control agreements, and financing statements. The Security Agreements executed by the Credit Parties and the Individual Guarantor shall terminate following the full payment and performance of all of the Obligations hereunder and under any Loan Document and upon Lender’s express written acknowledgement of such full payment and performance being received by the Credit Parties and the Individual Guarantor.
To secure the payment and performance by Borrower of the Obligations hereunder, the Borrower shall grant, under and pursuant to the Pledge Agreement executed by the Borrower dated as of the Closing Date, to Lender, its successors and assigns, a continuing, first-priority security interest in, and assignment, transference, mortgage, conveyanyce, pledge, hypothecation and set over to Lender, its successors and assigns, all of the Borrower’s right, title and interest in and to all of the shares of common stock of the Guarantor. At any time upon Lender’s request, the Borrower shall execute and deliver to Lender any other documents, instruments or certificates requested by Lender for the purpose of properly documenting and perfecting the security interests of Lender in and to the shares of common stock of the Guarantor granted hereunder, including any additional pledge agreements and financing statements. The Pledge Agreement executed by the Borrower shall terminate following the full payment and performance of all of the Obligations hereunder and under any Loan Document and upon Lender’s express written acknowledgement of such full payment and performance being received by the Borrower.
To induce Lender to make the Loans, the Credit Parties make the following representations and warranties to Lender, each of which shall be true and correct in all material respects as of the Closing Date and as of the date of each Loan made hereunder, except to the extent such representation expressly relates to an earlier date, and which shall survive the execution and delivery of this Agreement:
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This Agreement and the Loan Documents are valid and binding agreements and contracts of each Credit Party, enforceable against each Credit Party in accordance with their respective terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws enacted for the relief of debtors generally and other similar laws affecting the enforcement of creditors’ rights generally or by equitable principles which may affect the availability of specific performance and other equitable remedies. No Credit Party knows of any reason why any Credit Party cannot perform any of its obligations under this Agreement, the Loan Documents or any related agreements.
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(a) There has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect; or
(b) Any transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by any Credit Party other than in the Ordinary Course of Business.
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(a) the Obligations;
(b) endorsement for collection or deposit of any commercial paper secured in the Ordinary Course of Business;
(c) obligations for taxes, assessments, municipal or other governmental charges; provided, the same are being contested in good faith by appropriate proceedings and are insured against or bonded over to the satisfaction of Lender;
(d) obligations for accounts payable, other than for money borrowed, incurred in the Ordinary Course of Business; provided that, any management or similar fees payable by the Credit Parties shall be fully subordinated in right of payment to the prior payment in full of the Loans made hereunder;
(e) obligations existing on the Closing Date which are disclosed on the Borrower’s financial statements;
(f) unsecured intercompany Funded Indebtedness incurred in the Ordinary Course of Business;
(g) Funded Indebtedness existing on the Closing Date and set forth in the financial statements, including any extensions or refinancings of the foregoing, which do not increase the principal amount of such Funded Indebtedness as of the date of such extension or refinancing; provided such Funded Indebtedness is subordinated to the Obligations owed to Lender pursuant to a subordination agreement, in form and content acceptable to Lender in its sole discretion, which shall include an indefinite standstill on remedies and payment blockage rights during any default;
(h) Funded Indebtedness consisting of Capital Lease obligations or secured by Permitted Liens of the type described in clause (g) of the definition thereof not to exceed $250,000 in the aggregate at any time;
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(i) Contingent Liabilities arising with respect to customary indemnification obligations in favor of purchasers in connection with dispositions permitted hereunder;
(j) Contingent Liabilities incurred in the Ordinary Course of Business with respect to surety and appeal bonds, performance bonds and other similar obligations; and
(k) Contingent Liabilities arising under indemnity agreements to title insurers to cause such title insurers to issue to Lender title insurance policies.
(a) the stock or other ownership interests in a Subsidiary existing as of the Closing Date;
(b) investments in direct obligations of the United States or any state in the United States;
(c) trade credit extended by the Credit Parties in the Ordinary Course of Business;
(d) investments in securities of Customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such Customers;
(e) investments existing on the Closing Date and set forth in the financial statements;
(f) Contingent Liabilities permitted pursuant to Section 8.1; or
(g) Capital Expenditures permitted under Section 8.5.
(a) sell or lease Inventory and Equipment in the Ordinary Course of Business;
(b) upon not less than three (3) Business Days’ prior written notice to Lender, any Subsidiary of Borrower may merge with (so long as Borrower remains the surviving entity), or dissolve or liquidate into, or transfer its property to Borrower;
(c) dispose of used, worn-out or surplus equipment in the Ordinary Course of Business;
(d) discount or write-off overdue Accounts for collection in the Ordinary Course of Business;
(e) sell or otherwise dispose (including cancellation of Funded Indebtedness) of any Investment permitted under Section 8.3 in the Ordinary Course of Business; and
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(f) grant Permitted Liens.
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(a) The Credit Parties shall at all times pay and discharge all property, income and other taxes, assessments and governmental charges upon, and all claims (including claims for labor, materials and supplies) against the Credit Parties or any of their properties, Equipment or Inventory, before the same shall become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are being maintained.
(b) The Credit Parties shall be solely responsible for the payment of any and all documentary stamps and other taxes in connection with the execution of the Loan Documents.
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(a) If the Revolving Loan Maturity Date is extended beyond the original term, as soon as available, and in any event, within ninety (90) days after the close of each fiscal year, a copy of the annual audited financial statements of Borrower, including balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended, in reasonable detail, prepared and reviewed by an independent certified public accountant reasonably acceptable to Lender, containing an unqualified opinion of such accountant;
(b) as soon as available, and in any event, within sixty (60) days after the close of each fiscal quarter, a copy of the quarterly financial statements of Borrower, including balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended, in reasonable detail, prepared and certified as accurate in all material respects by the President or Chief Financial Officer of Borrower;
(c) as soon as available, and in any event, within thirty (30) days following the end of each calendar month, a copy of the financial statements of Borrower regarding such month, including balance sheet, statement of income and retained earnings, statement of cash flows for the month then ended, in reasonable detail, prepared and certified as accurate in all material respects by the President or Chief Financial Officer of Borrower;
(d) within three (3) days of receipt by any Credit Party, a copy of any and all bank statements of such Credit Party for the month then ended;
(e) as soon as available, and in any event, within thirty (30) days following the end of each calendar month, a copy of a variance report which shall compare the intended use of the loan proceeds submitted at Closing pursuant to Section 3.3(e) with the actual use of the loan proceeds set forth on the report delivered to the Lender as of the Closing Date, including explanations for variances over or under ten percent (10%), in reasonable detail, prepared and certified as accurate in all material respects by the President or Chief Financial Officer of Borrower.
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No change with respect to such accounting principles shall be made by Borrower without giving prior notification to Lender. The Borrower represents and warrants to Lender that the financial statements delivered to Lender at or prior to the execution and delivery of this Agreement and to be delivered at all times thereafter accurately reflect and will accurately reflect the financial condition of the Credit Parties in all material respects. Lender shall have the right at all times (and on reasonable notice so long as there then does not exist any Event of Default) during business hours to inspect the books and records of Borrower and make extracts therefrom. Borrower shall at all times comply with all reporting requirements of the SEC to the extent applicable.
The Borrower agrees to advise Lender immediately, in writing, of the occurrence of any Material Adverse Effect, or the occurrence of any event, circumstance or other happening that could be reasonably expected to lead to or become a Material Adverse Effect.
In addition to any remedies which may be available hereunder, upon each occurrence of Borrower’s failure to timely comply with the reporting requirements contained in this Section, to the extent that the Facility Fee Shares have not yet been redeemed or sold by the Lender (including any additional Facility Fee Shares to be delivered hereunder) for an amount equal to the Share Value, Borrower agrees to redeem in cash a portion of the Facility Fee Shares equal to eight and thirty-three one hundredths of one percent (8.33%) of the Share Value remaining unpaid to Lender.
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(a) Make, keep and ensure that adequate current public information with respect to Borrower, as required in accordance with Rule 144, is publicly available;
(b) furnish to the Lender, promptly upon reasonable request: (A) a written statement by Borrower that it has complied with the reporting requirements of Rule 144; and (b) such other information as may be reasonably requested by Lender to permit the Lender to sell any of the Facility Fee Shares or other shares of Common Stock acquired hereunder or under the Revolving Note pursuant to Rule 144 without limitation or restriction; and
(c) promptly at the request of Lender, give Borrower’s transfer agent (the “Transfer Agent”) instructions to the effect that, upon the Transfer Agent’s receipt from Lender of a certificate (a “Rule 144 Certificate”) certifying that Lender’s holding period (as determined in accordance with the provisions of Rule 144) for any portion of the Facility Fee Shares or shares of Common Stock issuable upon conversion of the Revolving Note which Lender proposes to sell (or any portion of such shares which Lender is not presently selling, but for which Lender desires to remove any restrictive legends applicable thereto) (the “Securities Being Sold”) is not less than the required holding period pursuant to Rule 144, and receipt by the Transfer Agent of the “Rule 144 Opinion” (as hereinafter defined) from Borrower or its counsel (or from Lender and its counsel as permitted below), the Transfer Agent is to effect the transfer (or issuance of a new certificate without restrictive legends, if applicable) of the Securities Being Sold and issue to Lender or transferee(s) thereof one or more stock certificates representing the transferred (or re-issued) Securities Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the Transfer Agent’s books and records. In this regard, upon Lender’s request, Borrower shall have an affirmative obligation to cause its counsel to promptly issue to the Transfer Agent a legal opinion providing that, based on the Rule 144 Certificate, the Securities Being Sold may be sold pursuant to the provisions of Rule 144, even in the absence of an effective registration statement, or re-issued without any restrictive legends pursuant to the provisions of Rule 144, even in the absence of an effective registration statement (the “Rule 144 Opinion”). If the Transfer Agent requires any additional documentation in connection with any proposed transfer (or re-issuance) by Lender of any Securities Being Sold, Borrower shall promptly deliver or cause to be delivered to the Transfer Agent or to any other Person, all such additional documentation as may be necessary to effectuate the transfer (or re-issuance) of the Securities Being Sold and the issuance of an unlegended certificate to any such Lender or any transferee thereof, all at Borrower’s expense. Any and all fees, charges or expenses, including, without limitation, attorneys’ fees and costs, incurred by Lender in connection with issuance of any such shares, or the removal of any restrictive legends thereon, or the transfer of any such shares to any assignee of Lender, shall be paid by Borrower, and if not paid by Borrower, the Lender may, but shall not be required to, pay any such fees, charges or expenses, and the amount thereof, together with interest thereon at the highest non-usurious rate permitted by law, from the date of outlay, until paid in full, shall be due and payable by Borrower to Lender immediately upon demand therefor, and all such amounts advanced by the Lender shall be additional Obligations due under this Agreement and the Revolving Note and secured under the Loan Documents.
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Borrower, without notice or demand of any kind, shall be in default under this Agreement upon the occurrence of any of the following events (each an “Event of Default”):
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Upon the occurrence and during the continuance of an Event of Default, Lender shall have all rights, powers and remedies set forth in the Loan Documents, in any written agreement or instrument (other than this Agreement or the Loan Documents) relating to any of the Obligations or any security therefor, or as otherwise provided at law or in equity. Without limiting the generality of the foregoing, Lender may, at its option, upon the occurrence and during the continuance of an Event of Default, declare its commitments to Borrower to be terminated and all Obligations to be immediately due and payable; provided, however, that upon the occurrence of an Event of Default under either Section 11.6, “Assignment for Creditors”, or Section 11.7, “Bankruptcy”, all commitments of Lender to Borrower shall immediately terminate and all Obligations shall be automatically due and payable, all without demand, notice or further action of any kind required on the part of Lender. The Credit Parties hereby waive any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in connection with the enforcement of Lender’s rights under the Loan Documents, and hereby consent to, and waive notice of release, with or without consideration, of the Credit Parties or of any Collateral, notwithstanding anything contained herein or in the Loan Documents to the contrary.
No Event of Default shall be waived by Lender, except and unless such waiver is in writing and signed by Lender. No failure or delay on the part of Lender in exercising any right, power or remedy hereunder shall operate as a waiver of the exercise of the same or any other right at any other time; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. There shall be no obligation on the part of Lender to exercise any remedy available to Lender in any order. The remedies provided for herein are cumulative and not exclusive of any remedies provided at law or in equity. Each Credit Party agrees that in the event that a Credit Party fails to perform, observe or discharge any of its Obligations or liabilities under this Agreement, the Revolving Note, and other Loan Documents, or any other agreements with Lender, no remedy of law will provide adequate relief to Lender, and further agrees that Lender shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.
Upon each occurrence of a default or an Event of Default pursuant to Section 11.13, in addition to any other rights or remedies the Lender may have under the Loan Documents or applicable law, the Lender shall have the right, but not the obligation, to cause the Borrower to pay liquidated damages in cash in an amount equal to ten percent (10%) of the outstanding amount due as of the time of each said default or Event of Default. The liquidated damages provided in this Section shall be applied (i) upon the occurrence of each single default or Event of Default pursuant to Section 11.13 and, (ii) in the event that any single default or Event of Default continues for a period of longer than thirty (30) days, the liquidated damages provided in this Section shall be immediately applied upon the expiration of each subsequent thirty (30) day period and shall continue to be applied upon the expiration of each subsequent thirty (30) day period until such default or Event of Default is cured by the Borrower to the satisfaction of the Lender in its sole discretion.
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In connection with the liquidated damages described herein, the Lender need not provide, and the Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and the Lender may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Nothing herein shall limit Lender’s right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to causing Borrower to comply with the terms and conditions contained in Section 11.13.
(a) acceptance or retention by Lender of other property or any interest in property as security for the Obligations;
(b) release by Lender of all or any part of the Collateral or of any party liable with respect to the Obligations (other than Borrower);
(c) release, extension, renewal, modification or substitution by Lender of the Revolving Note, or any note evidencing any of the Obligations; or
(d) failure of Lender to resort to any other security or to pursue the Credit Parties or the Individual Guarantor or any other obligor liable for any of the Obligations before resorting to remedies against the Collateral.
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If to the Credit Parties: 000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx Xxxxx, XX 00000
Attention: Yuejian (Xxxxx) Xxxx
Facsimile: 000-000-0000
If to Lender: TCA Global Credit Master Fund, LP
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
|
Xxx Xxxxx, XX 00000
|
Attention: Xxxxxx Press
|
Facsimile: (000) 000-0000
|
With a copy to: Lucosky Xxxxxxxx LLP
(which shall not constitute notice) 000 Xxxx Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
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the preparation, execution and delivery of this Agreement and the Loan Documents, including, but not limited to, the making or issuance and management of the Loans, the use or intended use of the proceeds of the Loans, the enforcement of Lender’s rights and remedies under this Agreement, the Loan Documents, the Revolving Note, any other instruments and documents delivered hereunder, or under any other agreement between any Credit Party and the Individual Guarantor and Lender; provided, however, that the Credit Parties and the Individual Guarantor shall not have any obligations hereunder to any Lender Indemnitee with respect to matters caused by or resulting from the willful misconduct or gross negligence of such Lender Indemnitee. To the extent that the undertaking to indemnify set forth in the preceding sentence may be unenforceable because it violates any law or public policy, the Credit Parties and the Individual Guarantor shall satisfy such undertaking to the maximum extent permitted by applicable law. Any liability, obligation, loss, damage, penalty, cost or expense covered by this indemnity shall be paid to each Lender Indemnitee on demand, and, failing prompt payment, shall, together with interest thereon at the Default Rate from the date incurred by each Lender Indemnitee until paid by Borrower, be added to the Obligations of the Credit Parties and the Individual Guarantor and, in the case of the Credit Parties, be secured by the Collateral. The provisions of this Section shall survive the satisfaction and payment of the other Obligations and the termination of this Agreement.
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[ signature page follows ]
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BORROWER:
By: /s/ Yuejian (Xxxxx) Wang
Name: Yuejian (Xxxxx) Xxxx
Title: Chief Executive Officer
LENDER:
TCA GLOBAL CREDIT MASTER FUND, LP
By: TCA Global Credit Fund GP, Ltd.
Its: General Partner
By: /s/ Xxxxxx Press
Name: Xxxxxx Press
Title: Director
[ signature page 1 of 2 ]
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CONSENT AND AGREEMENT
The undersigned, referred to in the foregoing senior secured revolving credit facility agreement as a guarantor, hereby consents and agrees to said senior secured revolving credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said senior secured revolving credit facility agreement to the same extent as if the undersigned were a party to said senior secured revolving credit facility agreement.
GUARANTOR:
CDI CHINA, INC.
By: /s/ Yuejian (Xxxxx) Wang
Name: Yuejian (Xxxxx) Xxxx
Title: President
CHINA DIRECT INVESTMENTS, INC.
By: /s/ Yuejian (Xxxxx) Wang
Name: Yuejian (Xxxxx) Xxxx
Title: President
INTERNATIONAL MAGNESIUM GROUP, INC.
By: /s/ Yuejian (Xxxxx) Wang
Name: Yuejian (Xxxxx) Xxxx
Title: President
CDII MINERALS, INC.
By: /s/ Yuejian (Xxxxx) Wang
Name: Yuejian (Xxxxx) Xxxx
Title: President
[ signature page 2 of 3 ]
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/s/ Yuejian (Xxxxx) Xxxx
XXXXXXX (XXXXX) XXXX
[ signature page 3 of 3 ]
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INDEX OF EXHIBITS
Exhibit A Form of Guaranty
Exhibit B Form of Irrevocable Transfer Agent Instructions
Exhibit C Form of Pledge Agreement
Exhibit D Form of Revolving Note
Exhibit E-1 Form of Security Agreement (Borrower)
Exhibit E-2 Form of Security Agreement (Subsidiary/Guarantor)
Exhibit F Form of Validity Guaranty
INDEX OF SCHEDULES
Schedule 7.1 Subsidiaries
Schedule 7.4 Outstanding Securities
Schedule 7.16 Real Property
Schedule 7.26 Bank Accounts and Deposit Accounts
Schedule 7.27 Places of Business
Schedule 7.29 Related Party Transactions
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Exhibit A
Form of Guaranty
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Exhibit B
Form of Irrevocable Transfer Agent Instructions
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Exhibit C
Form of Pledge Agreement
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Exhibit D
Form of Revolving Note
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Exhibit E-1
Form of Security Agreement (Borrower)
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Exhibit E-2
Form of Security Agreement (Subsidiary/Guarantor)
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Exhibit F
Form of Validity Agreement
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Schedule 7.1
CDI China, Inc.
China Direct Investments, Inc.
CDII Minerals, Inc.
International Magnesium Group, Inc.
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Schedule 7.4
Outstanding Securities
|
1.
|
10,000,000 registered S-8 shares and options for employees and consultants
|
|
2.
|
100,000,000 shares or an equal amount of convertible preferred stock for the planned acquisition of a Miami, Florida based company. The convertible preferred stock will have no voting rights
|
|
3.
|
9,000,000options for Yuejian (Xxxxx) Wang at $0.05 per share
|
|
4.
|
16,000,000 shares reserved for Yuejian (Xxxxx) Xxxx past compensation and current outstanding loan
|
|
5.
|
30,000,000 shares reserved to pay off current outstanding notes
|
|
6.
|
2,129,000 warrants at $2.20 per share held by past investors
|
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Schedule 7.16
Real Property
None.
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Schedule 7.26
Bank Accounts and Deposit Accounts
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Schedule 7.27
Places of Business
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx Xxxxx, XX 00000
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Schedule 7.29
Related Party Transactions
Due to Customer
|
Interest
|
Beg. Balance
|
Debit
|
Credit
|
Unaudited Ending Balance
|
Xxxxx Xxxx
|
12%
|
$290,025.00
|
$30,000.00
|
$73,599.17
|
$333,624.17
|
Xxxxx Xxxx
|
12%
|
$30,000.00
|
$30,000.00
|
||
Xxxxxxx Xxxxxxxx
|
0%
|
$17,950.00
|
$7,000.00
|
$24,950.00
|
|
Kong Tung
|
24%
|
$624,000.00
|
$624,000.00
|
||
$307,975.00
|
$30,000.00
|
$734,599.17
|
$1,012,574.17
|
4844-3093-8651, v. 4
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