LOAN AND SECURITY AGREEMENT
BETWEEN
KELTIC FINANCIAL PARTNERS II, LP
AND
IGXGLOBAL, CORP.
Effective Date: December ___, 2012
TABLE OF CONTENTS
ARTICLE 1. 케 DEFINITIONS.
1 케
ARTICLE 2. 케 THE LOANS.
1 케
2.1. 케 Revolving Credit; Borrowing Capacity; Revolving Credit Note.
1 케
2.2. 케 Conditions To Loans and Advances.
1 케
2.3. 케 Overadvances.
2 케
2.4. 케 Reserves.
2 케
2.5. 케 Manner of Revolving Credit Borrowing; Notice of Borrowing.
2 케
2.6. 케 Collections.
2 케
2.7. 케 Crediting of Funds.
3 케
2.8. 케 Records of Lender.
4 케
2.9. 케 Payment on Termination Date; Termination of Advances.
4 케
ARTICLE 3. 케 INTEREST AND FEES.
4 케
3.1. 케 Interest.
4 케
3.2. 케 Facility Fee.
5 케
3.3. 케 Collateral Management Fee.
5 케
3.4. 케 Commitment Fee.
5 케
3.5. 케 Field Examination Fees; Appraisals.
5 케
3.6. 케 Late Document Fee.
5 케
3.7. 케 Liquidated Damages.
5 케
3.8. 케 Computation of Interest and Fees.
6 케
3.9. 케 Interest, Fees and Expenses Charged to Revolving Credit.
6 케
ARTICLE 4. 케 COLLATERAL AND SECURITY INTEREST.
6 케
4.1. 케 Grant of Security Interest.
6 케
4.2. 케 Nature of Security Interest.
6 케
4.3. 케 Perfection and Protection of Security Interest.
6 케
4.4. 케 Limited License.
7 케
4.5. 케 Rights of Lender as Secured Party.
8 케
4.6. 케 Communication with Account Debtors.
8 케
4.7. 케 Confirmatory Written Assignments.
8 케
4.8. 케 Lender’s Right to Perform Borrower’s Obligations.
8 케
ARTICLE 5. 케 REPRESENTATIONS.
8 케
5.1. 케 Organization, Qualification and Structure.
8 케
5.2. 케 Legally Enforceable Agreement.
8 케
5.3. 케 Name and Address.
9 케
5.4. 케 Location of Collateral; Equipment List.
9 케
5.5. 케 Title; Liens; Permitted Liens.
9 케
5.6. 케 Existing Indebtedness.
9 케
5.7. 케 Financial Statements.
9 케
5.8. 케 Solvent Financial Condition.
9 케
5.9. 케 General Intangibles, Patents, Trademarks, Copyrights and Licenses.
9 케
5.10. 케 Existing Business Relationships.
10 케
5.11. 케 Investment Company Act: Federal Reserve Board Regulations.
10 케
5.12. 케 Anti-Money Laundering and Terrorism Regulations.
10 케
5.13. 케 Tax Returns.
10 케
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5.14. 케 Litigation.
11 케
5.15. 케 ERISA Matters.
11 케
5.16. 케 O.S.H.A.
11 케
5.17. 케 Environmental Matters.
11 케
5.18. 케 Labor Disputes.
11 케
5.19. 케 Location of Bank and Securities Accounts.
11 케
5.20. 케 Compliance With Laws.
11 케
5.21. 케 Capital Structure.
11 케
5.22. 케 No Other Violations.
11 케
5.23. 케 Full Disclosure.
12 케
5.24. 케 Survival of Representations.
12 케
ARTICLE 6. 케 FINANCIAL INFORMATION TO BE DELIVERED TO LENDER.
12 케
6.1. 케 Borrowing Base Certificates.
12 케
6.2. 케 A/R and A/P Aging; Perpetual Inventory Report.
12 케
6.3. 케 Ineligible Receivables.
12 케
6.4. 케 Annual Financial Statements; Compliance Certificates.
12 케
6.5. 케 Monthly Financial Statements; Compliance Certificates.
13 케
6.6. 케 Physical Inventory Report.
13 케
6.7. 케 Projections.
13 케
6.8. 케 Customer and Vendor Lists.
13 케
6.9. 케 Insurance.
13 케
6.10. 케 Tax Returns.
13 케
6.11. 케 Other Information.
13 케
ARTICLE 7. 케 AFFIRMATIVE COVENANTS.
13 케
7.1. 케 Use of Loan Proceeds.
13 케
7.2. 케 Business and Existence; Trade Names.
14 케
7.3. 케 Taxes.
14 케
7.4. 케 Compliance with Laws.
14 케
7.5. 케 Maintain Properties; Insurance.
14 케
7.6. 케 Business Records.
14 케
7.7. 케 Delivery of Documents and Instruments.
14 케
7.8. 케 Name Change; Organizational Change; Creation of Affiliates.
14 케
7.9. 케 Change of Offices; Records.
14 케
7.10. 케 Change of Fiscal Year.
15 케
7.11. 케 Access to Books and Records.
15 케
7.12. 케 Solvency.
15 케
7.13. 케 Notice to Lender.
15 케
ARTICLE 8. 케 NEGATIVE COVENANTS.
16 케
8.1. 케 Indebtedness.
16 케
8.2. 케 Mergers; Consolidations; Acquisitions.
16 케
8.3. 케 Change of Management; Change of Control.
16 케
8.4. 케 Sale or Disposition.
16 케
8.5. 케 Real Property Defaults.
16 케
8.6. 케 Liens and Encumbrances.
16 케
8.7. 케 Dividends and Distributions; Payment of Indebtedness.
17 케
8.8. 케 Guaranties; Contingent Liabilities.
19 케
8.9. 케 Removal of Collateral.
19 케
8.10. 케 Transfer of Notes or Accounts.
19 케
8.11. 케 Settlements.
19 케
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8.12. 케 Change of Business.
19 케
8.13. 케 Change of Accounting Practices.
19 케
8.14. 케 Inconsistent Agreement.
19 케
8.15. 케 Loan or Advances; Personal Expenses.
19 케
8.16. 케 Investments.
19 케
8.17. 케 Bank Accounts.
19 케
8.18. 케 Transactions with Affiliates.
19 케
8.19. 케 Unfunded Capital Expenditures.
20 케
8.20. 케 EBITDA.
20 케
ARTICLE 9. 케 EVENTS OF DEFAULT; REMEDIES OF LENDER.
20 케
9.1. 케 Events of Default.
20 케
9.2. 케 Continuation of Events of Default.
21 케
9.3. 케 Rights and Remedies with Respect to Loans and Advances.
21 케
9.4. 케 Rights and Remedies with Respect to Collateral.
22 케
ARTICLE 10. 케GENERAL PROVISIONS.
24 케
10.1. 케 Rights and Remedies Cumulative.
24 케
10.2. 케 Reinstatement.
24 케
10.3. 케 Successors and Assigns.
24 케
10.4. 케 Notice.
24 케
10.5. 케 Strict Performance.
25 케
10.6. 케 Waiver.
25 케
10.7. 케 Construction of Agreement.
25 케
10.8. 케 Expenses; Taxes.
25 케
10.9. 케 Reimbursements Charged to Revolving Credit.
26 케
10.10. 케Marketing and Advertising.
26 케
10.11. 케Waiver of Right to Jury Trial.
26 케
10.12. 케Indemnification by Borrower.
26 케
10.13. 케Savings Clause for Indemnification.
27 케
10.14. 케Lender’s Performance.
27 케
10.15. 케Entire Agreement; Amendments; Lender’s Consent.
27 케
10.16. 케Cross Default; Cross Collateralization.
28 케
10.17. 케Execution in Counterparts.
28 케
10.18. 케Severability of Provisions.
28 케
10.19. 케Governing Law; Consent To Jurisdiction.
28 케
10.20. 케Table of Contents; Headings.
29 케
DEFINITIONS SCHEDULE
31 케
REVOLVING CREDIT SUBLIMIT SCHEDULE
40 케
DISCLOSURE SCHEDULE
43 케
EXHIBIT A: NOTICE OF BORROWING
47 케
EXHIBIT B: BORROWING BASE CERTIFICATE
49 케
EXHIBIT C: COMPLIANCE CERTIFICATE
50 케
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This LOAN AND SECURITY AGREEMENT (together with all Schedules and Exhibits
hereto, this “Agreement”) between KELTIC FINANCIAL PARTNERS II, LP, a Delaware limited
partnership (“Lender”) and IGXGLOBAL, CORP., a corporation organized under the laws of the state
of Delaware (“Borrower”), is dated the date of execution by Lender on the signature page of this
Agreement (the “Effective Date”).
RECITALS: Borrower has requested Lender to extend loans to Borrower under a revolving credit
facility to support Borrower’s working capital needs and for other purposes as described in this
Agreement. Lender is willing to extend such loans to Borrower subject to the terms and conditions set
forth in this Agreement.
AGREEMENT:
ARTICLE 1. DEFINITIONS. Unless defined in the Recitals, above, in the body of this Agreement, or
in the Exhibits or other Schedules hereto, capitalized terms have the meanings given to such terms in the
Definitions Schedule. The Definitions Schedule also provides meanings for certain other phrases used
in this Agreement (whether or not capitalized). Each term defined in the singular shall be interpreted in a
collective manner when used in the plural, and each term defined in the plural shall be interpreted in an
individual manner when used in the singular.
ARTICLE 2. THE LOANS.
2.1. Revolving Credit; Borrowing Capacity; Revolving Credit Note. Subject to the terms and
conditions of this Agreement and as long as no Default or Event of Default then exists, on Borrower’s
request prior to the Revolving Credit Termination Date Lender shall lend to Borrower under a revolving
credit facility (the “Revolving Credit”) an aggregate principal sum (the “Borrowing Capacity”) equal to
the lesser of (a) SIX MILLION AND 00/100 DOLLARS ($6,000,000.00) (the “Revolving Credit
Limit”), or (b) the Borrowing Base. The maximum principal amount of any Advance shall not exceed an
amount equal to the Borrowing Capacity less the aggregate amount of all Obligations then outstanding.
Within the limits of the Borrowing Capacity, and subject to terms and conditions of this Agreement,
Borrower may borrow, repay and reborrow the principal amount of the Revolving Credit. Borrower’s
obligation to pay the principal of, and interest on, Advances made to Borrower and the Revolving Credit
shall be evidenced by an Authenticated promissory note in form and content acceptable to Lender (the
“Revolving Credit Note”). Borrower acknowledges and agrees that to the extent any portion of the
Revolving Credit will be made available to Borrower under any sublimit described in the Revolving
Credit Sublimit Schedule (each, a “Sublimit”), such Sublimit shall be subject to the terms and
conditions of this Agreement applicable to the Revolving Credit and to the additional terms and
conditions contained in the Revolving Credit Sublimit Schedule applicable to such Sublimit.
2.2. Conditions To Loans and Advances. Lender’s obligation to make any Loan or Advance under
this Agreement is subject to the following conditions precedent: (a) that the representations set forth in
ARTICLE 5 and in the other Loan Documents shall be true and complete on and as of the date of such
Loan or Advance; (b) that on and as of the date of such Loan or Advance Borrower shall have complied
with all covenants and agreements set forth in ARTICLE 6, ARTICLE 7 and ARTICLE 8 and in the
other Loan Documents; and (c) that as of the date of such Loan or Advance, no Default or Event of
Default shall have occurred and be continuing. Borrower’s acceptance of each Loan or Advance under
this Agreement shall constitute a confirmation by Borrower, as of the date of such Loan or Advance (i) of
the accuracy and completeness of the representations set forth in ARTICLE 5 and in the other Loan
Documents, (ii) of Borrower’s satisfaction of the covenants and agreements set forth in ARTICLE 6,
ARTICLE 7 and ARTICLE 8 and in the other Loan Documents, and (iii) of the absence of any Default
or Event of Default. Borrower shall confirm such matters by delivery to Lender of an Authenticated
“Compliance Certificate” as provided in Section 6.4 and Section 6.5, and if requested by Lender by
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delivery of a Compliance Certificate with any “Notice of Borrowing” (as defined in Section 2.5)
requesting an Advance.
2.3. Overadvances. Lender shall not be required to make any Advance at any time in a principal
amount that would, when aggregated with the amount of the Obligations then outstanding, exceed the
Borrowing Capacity, or any Advance of the Foreign Receivables Sublimit at any time in a principal
amount that would, when aggregated with the amount of the Obligations then outstanding, exceed the
Foreign Receivables Sublimit Borrowing Capacity. If the Obligations of Borrower to Lender incurred
under the Revolving Credit exceed the Borrowing Capacity, or Obligations of Borrower to Lender
incurred under the Foreign Receivables Sublimit exceed the Foreign Receivables Borrowing Capacity, for
any reason (the amount of such excess to be referred to as an “Overadvance”), then (a) such Overadvance
will constitute an Advance for purposes of this Agreement, (b) payment of such Overadvance will be
secured by the Collateral, (c) Borrower shall immediately repay the amount of such Overadvance without
notice or demand by Lender, and (d) Lender may in Lender’s sole discretion refrain from making any
additional Advances until the Overadvance has been repaid to Lender in full.
2.4. Reserves. Lender may at any time establish one or more reserves (“Reserves”) under the
Revolving Credit in Lender’s sole discretion. For example, and without limitation, Lender may establish
Reserves for liabilities of Borrower such as accrued warranties and prepaid maintenance contracts. A
Reserve may limit the Borrowing Capacity, reduce the Borrowing Base (by reduction of an advance rate
set forth in the Borrowing Base or otherwise), or otherwise restrict Borrower’s ability to borrow under the
Revolving Credit. Lender shall endeavor to notify Borrower promptly after the establishment of any
Reserve; provided, however, under no circumstance shall the delivery or receipt of any such notice
constitute a condition to Lender’s establishment of any Reserve. Borrower acknowledges that Lender
shall establish a Reserve in the amount of Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00) that will be released upon the satisfaction of the following in Lender’s reasonable
discretion: (a) Borrower shall deliver unsigned draft audited financial statements for IGX Global, Inc. for
its calendar years ending in 2010 and 2011, together with footnotes to accompany any such annual
financial statements if prepared by the independent certified public accountant in connection with such
draft annual financial statements; and (b) a final unaudited opening day balance sheet of Borrower
prepared by Borrower’s independent certified public accountant reflecting Borrower’s acquisition of
substantially all of the assets and assumption of certain liabilities of IGX Global, Inc. pursuant to the
terms of the Asset and Stock Purchase Agreement dated on or about the Effective Date between
Borrower, IGX Global, Inc. and the other parties thereto (the “Asset Purchase Agreement”), and
reflecting all post-closing adjustments as contemplated by the terms of the Asset Purchase Agreement;
and (c) the Lockbox and Blocked Account (as described in Section 2.6, below) shall have been
established.
2.5. Manner of Revolving Credit Borrowing; Notice of Borrowing. Borrower shall request each
Advance by delivering an Authenticated Notice of Borrowing in the form of Exhibit A (a “Notice of
Borrowing”) to Lender (a) by facsimile, or (b) by electronic transmission including, without limitation, e-
mail. Borrower must verify Lender’s receipt of each Notice of Borrowing by telephone confirmation, or
upon Borrower’s request by Borrower’s receipt of confirming e-mail from Lender. Subject to the terms
and conditions of this Agreement, Lender shall deliver the amount of the Advance requested in the Notice
of Borrowing for credit to any account of Borrower (other than a payroll account) at a bank in the United
States of America as Borrower may specify in writing by wire transfer of immediately available funds (i)
on the same day of Lender’s receipt of the Notice of Borrowing if Lender verifies that the Notice of
Borrowing was received by Lender on or before 11 a.m. Eastern Time on a Banking Day, or (ii) on the
Banking Day immediately following Lender’s receipt of the Notice of Borrowing if Lender verifies that
the Notice of Borrowing was received by Lender after 11 a.m. Eastern Time on a Banking Day, or Lender
verifies that the Notice of Borrowing was received by Lender on any day that is not a Banking Day.
Lender shall charge to the Revolving Credit Lender’s usual and customary fees for the wire transfer of
each Advance.
2.6. Collections.
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(a) Borrower shall open a lockbox (the “Lockbox”) with a financial institution acceptable to Lender
(the “Depository Bank”) pursuant to documents with the Depository Bank that are in form and content
acceptable to Lender. Borrower shall instruct all if its Account Debtors to forward all payments of
Receivables to the Lockbox, and shall instruct IGXGLOBAL UK Limited to wire all collections of
Receivables to the “Blocked Account” (defined below) without setoff or other deduction. Borrower shall
require each of its customers making a payment of a Receivable by check or other instrument to make
such check or instrument payable to the order of (i) Borrower, or (ii) Lender, or (iii) Borrower and Lender
jointly. Collected funds in the Lockbox shall be deposited into an account with the Depository Bank
established by Lender and subject to Lender’s sole dominion and control (including, but not limited to the
sole power of withdrawal) (the “Blocked Account”). The agreement(s) relating to the Blocked Account
between Lender, the Depository Bank and Borrower shall be in form and content satisfactory to Lender.
(b) All Proceeds of Collateral received by Borrower, including cash, checks, drafts, notes,
acceptances or other forms of payment, and whether Proceeds of Receivables, Inventory, insurance claims
or other otherwise, shall be received by Borrower in trust for Lender. Borrower shall deliver all Proceeds
of Collateral in Borrower’s possession to the Blocked Account immediately after receipt, in precisely the
form received (except for the endorsement or assignment of Borrower where necessary).
(c) Borrower shall cause Persons processing or collecting any credit card payments or Proceeds of
Receivables on behalf of Borrower to deliver such payments or Proceeds to the Blocked Account
promptly, but not less frequently than once every week.
(d) Prior to the establishment of the Lockbox and Blocked Account Borrower shall remit to Lender
daily all proceeds of Receivables collected by Borrower, and shall cause IGXGLOBAL UK Limited to
direct all of its customers to remit payment of Foreign Receivables, by wire transfer of immediately
available funds to the following address:
Bank:
Xxxxxx Trust and Savings Bank
Xxxxxxx, XX 00000
ABA No.:
000000000
Account Name: Keltic Financial Partners II, LP
Account No.:
0000000
Reference:
IGXGLOBAL, CORP.
2.7. Crediting of Funds. Each Banking Day Lender shall withdraw available funds from the Blocked
Account, deposit such funds in the Settlement Account, and credit available funds received in the
Settlement Account to the payment of the Obligations. Lender shall credit to the payment of the
Obligations any other form of funds received by Lender in the Settlement Account for which Lender has
received notice that such funds are collected and available to Lender (i) on the same day of Lender’s
receipt of such notice if such notice is received by Lender on or before 2 p.m. Eastern Time on a Banking
Day, and (ii) on the Banking Day immediately following Lender receipt of such notice if such notice is
received by Lender after 2 p.m. Eastern Time on a Banking Day, or if such notice is received by Lender
on a day that is not a Banking Day. In the absence of an Event of Default, all funds credited to the
repayment of the Obligations will be applied in the following order:
(a) to unpaid fees and expenses;
(b) to unpaid interest;
(c) if proceeds of a Foreign Receivable, to the outstanding principal balance of the Foreign
Receivables Sublimit (and if the outstanding principal balance of the Foreign Receivables Sublimit is
Zero and 00/100 Dollars ($0.00) or is in a credit position, to the remainder of the outstanding principal
balance of the Revolving Credit);
(d) if proceeds of a Domestic Receivable, to the outstanding principal balance of the Revolving Credit
other than the Foreign Receivables Sublimit (and if the outstanding principal balance of the Revolving
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Credit other than the Foreign Receivables Sublimit is Zero and 00/100 Dollars ($0.00) or is in a credit
position, to the outstanding principal balance of the Foreign Receivables Sublimit); and
(e) to all other Obligations in such order as Lender shall elect.
Upon the occurrence and during the continuation of an Event of Default Lender shall credit available
funds received in the Settlement Account to the repayment of the Obligations in such order and in such
amounts as Lender determines in Lender’s sole discretion.
All funds credited to the payment of the Obligations are conditional upon final payment to Lender in cash
or solvent credits of the items giving rise to such funds. If any item credited to the payment of the
Obligations is not paid to Lender, the amount of any credit given for such item shall be charged to the
balance of the Obligations whether or not the item is returned. For the purpose of computing interest on
the Obligations, interest shall continue to accrue on the amount of any funds credited to the payment of
the Obligations by Lender for a period of four (4) Banking Days after the date so credited if a payment by
check or other Instrument (including if made using any electronic check deposit or similar electronic
check scanning methods), or for a period of two (2) Banking Days after the date so credited if a payment
by wire, electronic funds transfer or other similar electronic medium from a remitting bank to the Blocked
Account.
2.8. Records of Lender. Lender shall maintain Records relating to the Obligations, Loans and
Advances (including schedules maintained electronically) containing such annotations as Lender deems
appropriate, including but not limited to annotations regarding the dates and amounts of Advances, the
principal balance of any Loan, and the dates and amounts of repayments of any Loans, and shall account
to Borrower monthly. In the absence of manifest error each Record of any annotations delivered to
Borrower shall be conclusive and binding upon Borrower unless Borrower delivers to Lender written
notice of any objection within thirty (30) calendar days of receipt. If Borrower disputes the accuracy of
any Record or annotation, Borrower’s notice shall specify in detail the particulars of its basis for
contending that such Record or annotation is inaccurate. No failure of Lender to render any Record or in
making any annotation shall affect the obligation of Borrower to pay and perform the Obligations
pursuant to the terms of this Agreement and the other Loan Documents.
2.9. Payment on Termination Date; Termination of Advances. On the Termination Date of a Loan
Borrower shall pay to Lender in cash the entire outstanding principal balance of such Loan, plus all
accrued and unpaid interest thereon and all fees, costs, expenses and other amounts payable to Lender
under this Agreement and the other Loan Documents in connection therewith. Lender shall not be
obligated to make or continue to extend any Advance to Borrower under the Revolving Credit after the
Revolving Credit Termination Date.
ARTICLE 3. INTEREST AND FEES.
3.1. Interest. Borrower shall pay interest on the outstanding principal amount of the Revolving Credit
to Lender until all Obligations with respect to the Revolving Credit have been finally and indefeasibly
paid to Lender in cash and performed in full. Interest shall accrue daily on the daily unpaid principal
amount of the Revolving Credit, and Borrower shall pay interest to Lender monthly in arrears
commencing on the first Banking Day of the calendar month immediately following the Effective Date
and on the first Banking Day of each calendar month thereafter. The interest rate on the Revolving Credit
shall equal:
(a) if no Default or Event of Default has occurred and is continuing, the Revolving Credit Rate; and
(b) if a Default or an Event of Default has occurred and is continuing, the Default Rate.
Notwithstanding anything to the contrary in this Agreement or any other Loan Document, in no event
shall any interest paid to Lender on the Revolving Credit exceed an amount that would cause the interest
rate on the Revolving Credit to exceed the maximum rate permitted by applicable law. Any amount of
interest paid to Lender that is finally and irrevocably determined by a court of competent jurisdiction to
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exceed the maximum interest payable on the Revolving Credit under applicable law shall be returned by
Lender to Borrower promptly thereafter.
3.2. Facility Fee. Until all Obligations have been finally and indefeasibly repaid in cash to Lender and
performed in full, Borrower shall pay to Lender annually a fee (the “Facility Fee”) in an amount equal to
one percent (1.00%) of the Revolving Credit Limit. The Facility Fee shall be earned in full on the
Effective Date and on the first (1st) day of each subsequent Contract Year. In the absence of the
occurrence and continuation of an Event of Default the Facility Fee shall be paid in twelve (12) equal
monthly installments, in arrears, on the first day of each calendar month. Upon the occurrence of any
Event of Default and written notice by Lender, Borrower shall immediately pay to Lender the portion of
the Facility Fee remaining unpaid for the then-current Contract Year. The Facility Fee shall be
appropriately adjusted during any Contract Year in which the maximum principal amount of any Loan is
increased.
3.3. Collateral Management Fee. Borrower shall pay to Lender monthly a collateral management fee
(the “Collateral Management Fee”) in an amount equal to Five Thousand and 00/100 Dollars
($5,000.00). The Collateral Management Fee shall be earned in full on the Effective Date and on the first
(1st) day of each calendar month until the date the Obligations have been finally and indefeasibly paid to
Lender in cash and performed in full. The Collateral Management Fee shall be paid in arrears
commencing on the first Banking Day of the calendar month immediately following the Effective Date
and on the first Banking Day of each calendar month thereafter. Upon the occurrence and during the
continuation of a Default or Event of Default, the monthly Collateral Management Fee shall equal Six
Thousand Five Hundred and 00/100 Dollars ($6,500.00).
3.4. Commitment Fee. On or before the Effective Date Borrower shall have paid to Lender a
Commitment Fee of One Hundred Twenty Thousand and 00/100 Dollars ($120,000.00).
3.5. Field Examination Fees; Appraisals. Borrower shall be liable for and promptly reimburse Lender
for all fees, costs and expenses associated with periodic field examinations and appraisals of Collateral
performed by Lender and/or Lender’s agents, all as deemed necessary by Lender in its reasonable
discretion. Following the first (1st) Contract Year in no event shall Borrower be liable for or reimburse
Lender for such fees, costs or expenses to the extent Lender performs more than four (4) field
examinations or appraisals in any calendar year. Notwithstanding anything to the contrary in the
foregoing, Borrower acknowledges and agrees that following a Default or Event of Default Borrower
shall be liable for and shall reimburse Lender for all fees, costs and expenses of all field examinations and
appraisals conducted by Lender and/or its agents, without limit and regardless of the number of field
examinations or appraisals conducted by Lender or its agents in any calendar year.
3.6. Late Document Fee. Borrower shall pay to Lender a fee of One Hundred Fifty and 00/100 Dollars
($150.00) per document per calendar day for each document, instrument or report required to be delivered
to Lender pursuant to ARTICLE 6 of this Agreement that is overdue.
3.7. Liquidated Damages. Subject to the terms and conditions of this Agreement, prior to the third
(3rd) anniversary of the Effective Date and upon sixty (60) calendar days’ advance written notice to
Lender (a “Principal Reduction Notice”) Borrower shall have the right to prepay in full the entire
outstanding principal balance of the Revolving Credit, all accrued and unpaid interest thereon, all fees,
costs, expenses and other amounts payable to Lender in connection with the Revolving Credit, and all
other Obligations payable to Lender under this Agreement and the other Loan Documents. A Principal
Reduction Notice shall be irrevocable when delivered to Lender, and if all Obligations are finally and
indefeasibly paid to Lender in connection with such Principal Reduction Notice the Revolving Credit
shall be terminated and all obligations of Lender to extend credit to Borrower under the Revolving Credit
shall terminate.
If prior to the third (3rd) anniversary of the Effective Date (a) Borrower prepays all Obligations
outstanding in full, or (b) pursuant to the terms of this Agreement or any other Loan Document, either (i)
Lender demands repayment of the outstanding Obligations in whole or in part, or (ii) repayment of the
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outstanding Obligations are otherwise accelerated in whole or in part, then (c) at the time of such
prepayment, repayment, demand or acceleration Borrower shall pay liquidated damages to Lender in an
amount equal to the Revolving Credit Limit multiplied by (i) five percent (5.00%) if such prepayment,
repayment, demand or acceleration occurs prior to the first (1st) anniversary of the Effective Date, (ii)
three percent (3.00%) if such prepayment, repayment, demand or acceleration occurs on or after the first
(1st) anniversary of the Effective Date but prior to the second (2nd) anniversary of the Effective Date, and
(iii) one percent (1.00%) if such prepayment, repayment, demand or acceleration occurs on or after the
second (2nd) anniversary of the Effective Date but prior to the third (3rd) anniversary of the Effective
Date.
Borrower acknowledges and agrees that: it would be difficult or impractical to calculate Lender’s actual
damages from early termination of the Revolving Credit and Lender’s compensation from Loans
hereunder following such early termination; the liquidated damages provided above are intended to be fair
and reasonable approximations of such damages and compensation, and; the liquidated damages are not
intended to be penalties.
3.8. Computation of Interest and Fees. All interest and fees under this Agreement shall be computed
on the basis of a year consisting of three hundred sixty (360) days for the number of days actually
elapsed.
3.9. Interest, Fees and Expenses Charged to Revolving Credit. Borrower acknowledges and agrees
that Lender may (a) charge all interest, fees and expenses described in this Agreement (specifically
including all such amounts described in this ARTICLE 3) to the Revolving Credit, (b) pay such amounts
to Lender from the proceeds of the Revolving Credit, and (c) treat each such payment as an Advance of
the Revolving Credit on the date such proceeds are paid to Lender
ARTICLE 4. COLLATERAL AND SECURITY INTEREST.
4.1. Grant of Security Interest. As security for the final and indefeasible payment to Lender in cash
and performance of the Obligations in full, Borrower hereby pledges to Lender, and grants to Lender a
continuing general lien upon and security interest in and to the Collateral. Borrower acknowledges and
agrees that Collateral securing any purchase money security interest in favor of Lender also secures all
non-purchase money security interests in favor of Lender.
4.2. Nature of Security Interest. The pledge, lien and security interest granted to Lender pursuant to
this Agreement shall continue in full force and effect until the Obligations have been finally and
indefeasibly paid to Lender in cash and performed in full, notwithstanding the termination of any other
Loan Document (in whole or in part), the termination of Lender’s obligations to extend credit to Borrower
under this Agreement or any other Loan Document, the full or partial termination (whether by
prepayment, demand or acceleration) of any Loan, or that the Revolving Credit may from time to time be
temporarily in a credit position. Any balances to the credit of Borrower in the possession of Lender, and
any other Property or assets of Borrower in the possession of Lender, shall be held by Lender as
Collateral, and applied in whole or partial satisfaction of the Obligations when due, subject to the terms of
this Agreement.
4.3. Perfection and Protection of Security Interest.
(a) Borrower will execute and deliver to Lender security agreements, assignments (including, without
limitation, assignments of specific Accounts, Receivables, Certificates of title, Chattel Paper, Documents,
Instruments, Goods, Inventory, Equipment and General Intangibles), and other documents and
instruments as Lender may at any time reasonably request to establish, evidence, attach, perfect, or
protect any security interest, pledge, lien, charge, mortgage or other encumbrance granted to Lender.
Borrower authorizes Lender to file all financing statements, and all continuations or amendments thereof,
to establish, evidence attach, perfect or protect any security interest, pledge, lien, charge, mortgage or
other encumbrance granted to Lender in the Collateral. Borrower agrees that subject to Borrower’s rights
under Section 9-509(d)(2) of the UCC, Borrower is not and shall not be authorized to file any financing
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statement or amendment, termination or corrective statement with respect to any financing statement filed
by Lender, or with respect to any continuation or amendment thereof, without the prior written consent of
Lender.
(b) Borrower will perform any and all actions requested by Lender in Lender’s sole discretion to
establish, attach, perfect or protect any security interest, pledge, lien, charge, mortgage or other
encumbrance of Lender in Inventory, including without limitation, placing and maintaining signs,
appointing custodians, maintaining stock Records and transferring Inventory to warehouses. Upon
Lender’s request, Borrower shall record Lender’s security interest on any Certificate Of Title for any
Collateral that is a motor vehicle. Borrower hereby appoints Lender, and Lender’s designee(s), as
Borrower’s attorney-in-fact (i) to execute and deliver notices of lien, financing statements, assignments,
and any other documents, instruments, notices, and agreements necessary for the establishment,
attachment, perfection or protection of any security interest, pledge, lien, charge, mortgage or other
encumbrance of Lender in any Collateral, (ii) to endorse the name of Borrower on any checks, notes,
drafts or other forms of payment or security consisting of Collateral that may come into the possession of
Lender or any Affiliate of Lender, (iii) following the occurrence and during the continuation of an Event
of Default, to sign Borrower’s name on invoices or bills of lading, drafts against customers, notices of
assignment, verifications and schedules relating to Collateral, (iv) following the occurrence and during
the continuation of an Event of Default (A) to notify the Post Office authorities to change the address of
delivery of mail to an address designated by Lender, and (B) to open and dispose of mail addressed to
Borrower, and (v) generally, to do all things necessary to carry out the purposes and intent of this
Agreement. The powers granted herein, being coupled with an interest, are irrevocable, and Borrower
approves and ratifies all acts of the attorney(s)-in-fact consistent with the foregoing. Neither Lender nor
any attorney(s)-in-fact shall be liable for any act or omission, error in judgment or mistake of law so long
as the same does not constitute gross negligence or willful misconduct.
(c) Borrower shall cooperate with Lender in obtaining waivers or subordinations in favor of Lender as
Lender may require from third parties having any interest in any Collateral and Borrower shall cooperate
with Lender in obtaining “control” of Collateral consisting of Deposit Accounts, electronic Chattel Paper,
Investment Property, or Letter-Of-Credit Rights as provided in Sections 9-104 through 9-107, inclusive,
of the UCC. If any Inventory is in the possession or control of any third party other than a purchaser in
the ordinary course of business or a public warehouseman where the warehouse receipt is in the name of
or held by Borrower, Borrower shall notify such person of each security interest, pledge, lien, charge,
mortgage or other encumbrance of Lender therein and instruct such person or persons to hold such
Inventory for the account and benefit of Lender and subject to Lender’s instructions. Borrower will
deliver to Lender warehouse receipts covering any Inventory located in warehouses showing Lender as
the beneficiary thereof and will also cooperate with Lender in obtaining from warehousemen and bailees
agreements relating to the release of warehouseman’s and bailee’s liens on Inventory as Lender may
request.
(d) Borrower acknowledges and agrees that the security interest granted to Lender pursuant to this
Agreement shall specifically include a security interest in all Commercial Tort Claims arising after the
Effective Date, and in order to permit Lender to perfect its security interest in each such Commercial Tort
Claim Borrower shall promptly deliver to Lender copies of all summonses, complaints, responses,
motions and other pleadings filed by or against Borrower after the date hereof so that Lender may file a
Uniform Commercial Code financing statement relating to each such Commercial Tort Claim.
4.4. Limited License. Regardless of whether Lender’s security interests in and to any of the General
Intangibles has attached or is perfected, until the Obligations have been finally and indefeasibly paid to
Lender in cash and performed in full, Borrower hereby irrevocably grants to Lender a royalty-free, non-
exclusive license to use Borrower’s General Intangibles, including all trademarks, copyrights, patents and
other proprietary and intellectual property rights, labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, and any Property of a similar nature, as it
pertains to the Collateral in connection with the (a) advertisement for, and sale or other disposition of, any
finished goods Inventory by Lender in accordance with the provisions of this Agreement, (b)
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manufacture, assembly, completion, preparation and advertising for sale or other disposition of any
unfinished Inventory by Lender in accordance with the provisions of this Agreement, (c) sale, lease,
license or other disposition of Collateral by Lender in accordance with the provisions of this Agreement,
and Borrower’s rights under all licenses and any franchise, sales, distribution and supply agreements shall
inure to Lender’s benefit for such purposes.
4.5. Rights of Lender as Secured Party. At all times prior to the final and indefeasible payment to
Lender in cash and performance of the Obligations in full, Lender shall have, in addition to all other rights
and remedies of Lender under this Agreement (a) all rights and remedies granted to a Secured Party in the
UCC, and (b) all rights and remedies with respect to Collateral granted to Lender under the other Loan
Documents, and (c) all rights and remedies of Lender with respect to the Collateral available under
applicable law.
4.6. Communication with Account Debtors. Borrower authorizes Lender, at any time and without
notice to or the consent of Borrower, to communicate directly with customers of Borrower and Account
Debtors of Borrower by whatever means Lender shall elect for the purpose of verifying information
supplied by Borrower to Lender with respect to Receivables pursuant to this Agreement. Upon Lender’s
request at any time Borrower shall provide Lender with a list of the addresses, telephone and facsimile
numbers of its Account Debtors.
4.7. Confirmatory Written Assignments. Upon Lender’s request, promptly after the creation of any
Receivable Borrower shall execute and deliver a confirmatory written assignment to Lender of such
Receivable. Borrower’s failure to execute or deliver any such assignment shall not affect or limit any
security interest or lien or other right of Lender in and to such Receivable.
4.8. Lender’s Right to Perform Borrower’s Obligations. In the event that Borrower shall fail to
purchase or maintain insurance, or to pay any tax, assessment, charge or levy of any Governmental Unit,
except as the same may be otherwise permitted hereunder, or in the event that any lien, charge,
encumbrance or security interest on any Collateral not specifically permitted by the terms of this
Agreement shall not be paid in full or discharged, or in the event that Borrower shall fail to perform or
comply with any other covenant, promise or Obligation to Lender hereunder or under any other Loan
Document, upon two (2) Banking Days’ notice to Borrower Lender may, but shall not be required to,
perform, pay, satisfy, discharge or bond the same for the account of Borrower, and all monies so paid by
Lender, including reasonable attorneys’ fees and expenses incurred by Lender in connection therewith,
shall be treated as an Advance.
ARTICLE 5. REPRESENTATIONS.
5.1. Organization, Qualification and Structure.
(a) Borrower is and except as described in the Disclosure Schedule always has been a corporation
duly organized and existing under the laws of the State of Delaware. Borrower’s federal tax identification
number is 00-0000000, and Borrower’s registration or filing number with the Secretary of State of the
State of Delaware is 5260394. Borrower is qualified to do business in every jurisdiction where the nature
of its business requires it to be so qualified.
(b) Except as set forth in the Disclosure Schedule (i) Borrower has no subsidiaries or Affiliates that
are not natural persons, and (ii) during the preceding five (5) years (A) Borrower has not acquired, been
acquired by, or merged, consolidated, combined or amalgamated with or into, any other Person, in whole
or in part (whether by purchase or sale of securities and/or assets, by assumption of liabilities, or by
merger or otherwise), (B) Borrower has not liquidated, sold or disposed of any subsidiary or Affiliate
(whether by sale or assignment of securities and/or assets or otherwise), and (C) Borrower has not
engaged in any joint venture or partnership with any other Person.
5.2. Legally Enforceable Agreement. The execution, delivery and performance of this Agreement,
each of the other Loan Documents and each of the other agreements, instruments and documents to be
delivered by Borrower in connection with this Agreement or any other Loan Document, and the creation
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of all security interests, pledges, liens, charges, mortgages or other encumbrances in favor of Lender
pursuant to this Agreement and any other Loan Document (a) are within Borrower’s organizational
power, (b) have been duly authorized by all necessary or proper actions of or pertaining to the Borrower
(including the consent of directors, officers, and/or shareholders, as applicable), (c) are not in
contravention of (i) any agreement or indenture to which Borrower is a party or by which Borrower is
bound the contravention of which would reasonably be expected to result in a Material Adverse Change,
or (ii) Borrower’s Charter Documents, or (iii) any provision of law the contravention of which would
reasonably be expected to result in a Material Adverse Change, and (d) do not require the consent or
approval of any Governmental Unit or any other Person that has not been obtained that would reasonably
be expected to result in a Material Adverse Change, and each such consent or approval obtained by
Borrower has been furnished to Lender prior to the Effective Date.
5.3. Name and Address. During the preceding five (5) years, Borrower has not been known by and has
not used any other name, whether corporate, fictitious or otherwise, except as set forth on the Disclosure
Schedule. The Disclosure Schedule lists all real property owned or leased by Borrower, and if leased,
the correct name and address of the landlord and the date and term of the applicable lease. Borrower’s
main office is at the main office address identified as such in the Disclosure Schedule and Borrower
maintains no other offices or facilities except as described in the Disclosure Schedule.
5.4. Location of Collateral; Equipment List. The Disclosure Schedule lists:
(a) all places at which Records relating to the Collateral, including, but not limited to, all Documents
and Instruments relating to Receivables and Inventory, are maintained by Borrower or by any other
Person;
(b) except for In Transit Inventory, all places where Borrower maintains, or will maintain, Inventory,
and whether the premises are owned or leased by Borrower or whether the premises are the premises of a
warehouseman, bailee or other third party, and if owned by a third party, the name and address of such
third party;
(c) all of Borrower’s equipment, and describes the places where the same is located and whether the
premises are owned or leased by Borrower or whether the premises are the premises of a warehouseman,
bailee or other third party, and if owned by a third party, the name and address of such third party.
5.5. Title; Liens; Permitted Liens. Except for Permitted Liens and liens described in the Disclosure
Schedule Borrower has good title to the Collateral and is the sole owner thereof. Except as set forth on
the Disclosure Schedule none of the Collateral is subject to any prohibition against encumbering,
granting a security interest in or to, pledging, hypothecating or assigning the same or requires notice or
consent to any Person in connection therewith.
5.6. Existing Indebtedness. Borrower has no existing Indebtedness except the Indebtedness described
in the Disclosure Schedule.
5.7. Financial Statements. The financial statements of Borrower described on the Disclosure
Schedule, copies of which have been delivered to Lender, fairly present Borrower’s financial condition
and results of operations as of the dates and for the periods covered, contain no Material misstatements,
and there has been no Material Adverse Change since such dates. Borrower has no contingent liabilities,
liabilities for taxes (except for taxes billed but not yet due), unusual forward or long-term commitments,
or unrealized or unanticipated losses or expenses from any unfavorable commitments (collectively,
“contingent liabilities”) that have not been disclosed in such financial statements or the notes thereto,
except for contingent liabilities incurred in the ordinary course of Borrower’s business since the date of
the financial statements described on the Disclosure Schedule.
5.8. Solvent Financial Condition. Borrower is Solvent.
5.9. General Intangibles, Patents, Trademarks, Copyrights and Licenses. Borrower owns or is
licensed to use all rights, title and interests in and to all General Intangibles, including but not limited to
patents, trademarks, service marks, trade names, copyrights, licenses and intellectual property, necessary
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for the conduct of Borrower’s business on the Effective Date and planned future conduct of its business
without any conflict with the rights of others. All General Intangibles owned or used by Borrower in
Borrower’s operations or the conduct of its business are listed on the Disclosure Schedule and indicate
the owner of such General Intangible and a description of the rights of Borrower to use such General
Intangible if not owned by Borrower.
5.10. Existing Business Relationships. Except as described in the Disclosure Schedule there exists no
actual or threatened termination, cancellation or limitation of, or any adverse modification or change in,
the business relationship of Borrower with any supplier, customer or group of customers that individually
or in the aggregate could result in a Material Adverse Change.
5.11. Investment Company Act: Federal Reserve Board Regulations. Borrower is not an “investment
company”, or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment
company”, as such terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C. §§
80(a)(1), et seq.). The making of the Loans under this Agreement by Lender, the application of the
proceeds and repayment thereof by Borrower and the performance of the transactions contemplated by
this Agreement will not violate any provision of such Act, or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder. Borrower does not own any margin security as that
term is defined in Regulation U of the Board of Governors of the Federal Reserve System and the
proceeds of the Loans made pursuant to this Agreement will be used only for the purposes contemplated
under this Agreement. None of the proceeds of the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry margin security or for any other purpose
which might constitute any of the Loans under this Agreement a “purpose credit” within the meaning of
said Regulation U or Regulations T or X of the Federal Reserve Board. Borrower will not take, or permit
any agent acting on its behalf to take, any action which might cause this Agreement or any document or
instrument delivered pursuant hereto to violate any regulation of the Federal Reserve Board.
5.12. Anti-Money Laundering and Terrorism Regulations. Borrower: (a) acknowledges that its
transactions are subject to applicable Anti-Terrorism Laws; (b) will comply in all material respects with
all applicable Anti-Terrorism Laws, including, if appropriate, the USA Patriot Act; (c) acknowledges that
Lender’s performance hereunder is also subject to Lender’s compliance with all applicable Anti-
Terrorism Laws, including the USA Patriot Act; (d) acknowledges that its Affiliates are not Blocked
Persons; (e) acknowledges that Lender will not conduct business with any Blocked Person; (f) will not (i)
conduct any business or engage in any transaction or dealing with any Blocked Person, including, without
limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of
any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any Property or
interests in Property blocked pursuant to Executive Order No. 13224 or other Anti-Terrorism Law, or
(iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of
evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224
or other Anti-Terrorism Law; (g) shall provide to Lender all such information about Borrower’s
ownership, officers, directors, business structure and, to the extent not prohibited by applicable law or
agreement, customers, as Lender may reasonably require; and (h) will take such other action as Lender
may reasonably request in connection with Lender’s obligations described in clause (d) above.
5.13. Tax Returns. Borrower has filed all Federal, state and local tax returns required to be filed, or has
received an extension for such filing from the appropriate taxing authority, and has paid all taxes shown
thereon to be due including interest and penalties or has provided adequate reserves therefor. No
assessments have been made against Borrower by any taxing authority nor has any penalty or deficiency
been made by any such authority. No Federal, state or local income tax return of Borrower is presently
being examined by the Internal Revenue Service or any applicable state or local taxing authority, and the
results of any prior examination by the Internal Revenue Service or any state or local taxing authority is
not being contested by Borrower, or to Borrower’s knowledge by such Significant Holder.
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5.14. Litigation. Except as disclosed in the Disclosure Schedule no action or proceeding at law, in
equity or otherwise is pending, or to the knowledge of Borrower is threatened, by or before any
Governmental Unit, or before any arbitrator or panel of arbitrators (a) against Borrower, or (b) by
Borrower as plaintiff, as counter-claimant or otherwise pursuant to which Borrower has asserted claims
for damages, and Borrower has not accepted liability for any matter described on the Disclosure
Schedule.
5.15. ERISA Matters. The Disclosure Schedule lists all “Employee Benefit Plans” (as such term is
defined in ERISA) offered by Borrower to any of its employees, officers and directors, and indicates
whether any such plan is defined benefit pension plan. If any Employee Benefit Plan is a defined benefit
plan: (a) the present value of all accrued vested benefits under such defined benefit plan (calculated on the
basis of the actuarial valuation for the plan) did not exceed, as of the date of the most recent actuarial
valuation for such defined benefit plan, the fair market value of the assets of such plan allocable to such
benefits, (b) Borrower is not aware of any information since the date of as of the date of the most recent
actuarial valuation that would affect the information contained therein, (c) such defined benefit plan has
not incurred an “accumulating funding deficiency” (as that term is defined in Section 302 of ERISA or
Section 412 of the Code) whether or not waived, or Borrower has made all “minimum required
contributions” (as such term is defined in Section 303 of ERISA or Section 430 of the Code) to such
defined benefit plan, (d) no liability to the Pension Benefit Guaranty Corporation (other than required
premiums which have become due and payable, all of which have been paid) has been incurred with
respect to such defined benefit plan, and (e) there has not been any Reportable Event which presents a
risk of termination of the defined benefit plan by the Pension Benefit Guaranty Corporation. Borrower
has not engaged in any transaction that would subject Borrower to tax, penalty or liability for prohibited
transactions imposed by ERISA or the Code.
5.16. O.S.H.A. Borrower has complied in all Material respects with, and its facilities, business,
leaseholds, equipment and other property are in Material compliance with, the provisions of the federal
Occupational Safety and Health Act and all rules and regulations promulgated thereunder, and all Federal,
state and local governmental rules, ordinances and regulations similar thereto. There are no outstanding
citations, notices or orders of non-compliance issued to Borrower or relating to its facilities, business,
leaseholds, equipment or other property under the federal Occupational Safety and Health Act, any rule or
regulation promulgated thereunder, or any similar state or local Governmental Rules.
5.17. Environmental Matters. Except as disclosed in the Disclosure Schedule, Borrower is in Material
compliance with all Environmental Laws.
5.18. Labor Disputes. There is no pending, or to Borrower’s knowledge threatened, labor dispute which
could result in a Material Adverse Change.
5.19. Location of Bank and Securities Accounts. The Disclosure Schedule lists all deposit, checking
and other bank accounts, and all securities and other investment accounts, maintained with any financial
institution or securities intermediary and all other similar accounts maintained by Borrower (collectively,
“Bank Accounts”), together with a description thereof.
5.20. Compliance With Laws. Borrower is in Material compliance with all Governmental Rules
applicable to its ownership or use of its Property and the operation and conduct of its business.
5.21. Capital Structure. The Disclosure Schedule describes (i) Borrower’s holders of Equity Interests
of record and the number and type of Equity Interests held by each such Person, and (ii) all holders of
subscriptions, warrants, options, convertible securities, and other rights (fixed, contingent or otherwise) to
purchase or otherwise acquire Equity Interests, and the number and type of Equity Interests that may be
acquired by each such Person.
5.22. No Other Violations. Borrower is not in violation of any term or provision of its Charter
Documents, and no event or condition or series of events or conditions has or have occurred or is or are
continuing which constitutes or results in (or would constitute or result in, with the giving of notice, lapse
of time or other condition) (a) a breach of, or a default under, Borrower’s Charter Documents or any
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agreement, undertaking or instrument to which Borrower is a party or by which it or any of the Collateral
may be affected, or (b) the imposition of any security interest, pledge, lien, charge, mortgage or other
encumbrance on any Collateral.
5.23. Full Disclosure. No information contained in any Loan Document, the financial statements or any
written statement furnished by or on behalf of Borrower under any Loan Document, or to induce Lender
to execute the Loan Documents, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not misleading in light of the
circumstances under which they were made.
5.24. Survival of Representations. All representations of Borrower contained in this Agreement and in
the other Loan Documents shall be true, accurate and complete at the time of Borrower’s execution of this
Agreement, shall be true, accurate and complete on the Effective Date, and shall be true, accurate and
complete on the date of each Advance and Loan made to Borrower. Lender’s right to bring an action for
breach of any such representation or to exercise any right or remedy under this Agreement or any other
Loan Document based upon the breach of any such representation shall survive the execution, delivery
and acceptance of this Agreement and each other Loan Document, and the closing of the transactions
described in this Agreement until the Obligations are finally and indefeasibly paid to Lender in cash and
performed in full.
ARTICLE 6. FINANCIAL INFORMATION TO BE DELIVERED TO LENDER. Borrower
covenants and agrees that at all times prior to the final and indefeasible payment to Lender in cash and
performance of the Obligations in full, Borrower shall deliver to Lender, or shall cause to be delivered to
Lender:
6.1. Borrowing Base Certificates. A satisfactorily completed and Authenticated certificate in the form
of Exhibit B (a “Borrowing Base Certificate”) together with accompanying sales journals, cash receipts
journals and detailed sales credit reports (a) contemporaneously with each request for an Advance, (b)
weekly (on or before Tuesday of the following week prepared as of the preceding week end) if no
Advance was requested in a calendar week, and (c) monthly (within five (5) calendar days after the end of
each calendar month, prepared as of the end of such month). In addition, Borrower shall provide to
Lender with each Borrowing Base Certificate a report showing in reasonable detail all sales to Account
Debtors (i) on consignment or on approval, under all xxxx and hold, guaranteed sale, sale or return, billing
in advance of shipment, and other “pre-billing” arrangements, and (ii) under all payment plans, scheduled
installment plans, extended payment terms or on any other repurchase or return basis. On Lender’s
request, Borrower shall also furnish to Lender copies of invoices to customers and related shipping and
delivery receipts or warehouse receipts for all Inventory covered by each such invoice.
6.2. A/R and A/P Aging; Perpetual Inventory Report. (a) Weekly (on or before Tuesday of the
following week prepared as of the preceding week end) a summary report of Borrower’s agings of
accounts receivable and accounts payable (each, based on the respective invoice dates), and (b) monthly
(within five (5) calendar days after the end of each month, prepared as of the end of such month) a
detailed report of Borrower’s agings of accounts receivable and accounts payable (each, based on the
respective invoice dates) and a perpetual inventory report.
6.3. Ineligible Receivables. Weekly (on or before Tuesday of the following week prepared as of the
preceding week end) and monthly (within five (5) calendar days after the end of each calendar month,
prepared as of the end of such month) a report showing Borrower’s Receivables that are not Eligible
Receivables.
6.4. Annual Financial Statements; Compliance Certificates. Within one hundred five (105) calendar
days after the close of each Fiscal Year, a copy of audited annual financial statements of Borrower
prepared by an independent certified public accountant in accordance with GAAP consisting of a balance
sheet, statements of operations and retained earnings, statements of cash flow, acceptable to Lender in its
reasonable discretion, together with a satisfactorily completed and Authenticated Compliance Certificate
in the form of Exhibit C (a “Compliance Certificate”) prepared as of and for the end of such Fiscal Year.
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If Borrower’s independent certified public accountant has prepared footnotes to accompany any such
financial statements, Borrower shall deliver such footnotes to Lender contemporaneously with Borrower’s
delivery of the associated financial statements to Lender. The financial statements delivered to Lender
pursuant to this Section 6.4 shall fairly present Borrower’s financial condition and results of operations as
of the dates and for the periods covered, and shall not contain any Material misstatements.
6.5. Monthly Financial Statements; Compliance Certificates. Within twenty (20) calendar days after
the end of each calendar month financial statements consisting of balance sheets, statements of operations
and retained earnings, and within fifty (50) calendar days after the end of each Fiscal Quarter statements
of cash flow, in each case prepared by management of Borrower as of and for the end of such calendar
month or Fiscal Quarter, as applicable, in accordance with GAAP (except for the absence of footnotes),
together with a satisfactorily completed and Authenticated Compliance Certificate prepared as of and for
the end of such calendar month or Fiscal Quarter, as applicable The financial statements delivered to
Lender pursuant to this Section 6.5 shall fairly present Borrower’s financial condition and results of
operations as of the dates and for the periods covered, and shall not contain any Material misstatements.
6.6. Physical Inventory Report. Annually within fifteen (15) calendar days of the end of each Fiscal
Year, prepared as of such Fiscal Year end, a report of Borrower’s physical inventory audit conducted as
of such date.
6.7. Projections. No later than thirty (30) calendar days prior to the end of each Fiscal Year, monthly
financial projections for the next Fiscal Year and annual projections for each succeeding Fiscal Year
ending on or prior to the Revolving Credit Termination Date, in form satisfactory to Lender.
6.8. Customer and Vendor Lists. On each June 30 and December 31 a list of all of Borrower’s
customers and vendors, including the addresses, telephone and facsimile numbers of each customers and
vendors as of such date.
6.9. Insurance. Annually, no later than thirty (30) calendar days prior to the renewal date of each of
Borrower’s insurance policies, evidence of insurance with respect to such insurance in form and content
satisfactory to Lender and otherwise in compliance with Section 7.5 of this Agreement, together with the
original insurance policy.
6.10. Tax Returns. Annually, within ten (10) calendar days of filing, copies of Borrower’s federal and
state tax returns.
6.11. Other Information. Such other information relating to the financial condition of Borrower, or any
Property or Collateral of Borrower in, on or respect to which Lender may have a security interest, pledge,
lien, charge, mortgage or other encumbrance, as Lender may from time to time reasonably request. On or
before the Effective Date, Borrower shall deliver to Lender a letter in form and content acceptable to
Lender addressed to Borrower’s independent certified accountants instructing such accountants to comply
with the provisions of this Section 6.11, which letter shall be acknowledged by such accountants (an
“Accountant’s Access Letter”). Borrower hereby authorizes Lender to communicate directly with
Borrower’s independent certified public accountants executing an “Accountant Access Letter” in
connection with the transactions contemplated hereby and authorizes such accountants to disclose to
Lender any and all financial statements and other information addressed in the instruction and
acknowledgment letter (described below), and such other information that Lender may reasonably
request, and Lender shall treat and hold all such information in a confidential manner.
ARTICLE 7. AFFIRMATIVE COVENANTS. Borrower covenants and agrees that at all times prior
to the final and indefeasible payment to Lender in cash and performance of the Obligations in full,
Borrower shall:
7.1. Use of Loan Proceeds. Use all proceeds of Advances for Borrower’s working capital purposes, to
acquire substantially all of the assets of IGX Global, Inc. and assume certain liabilities of IGX Global,
Inc. as described in the Asset Purchase Documents, to acquire all of the issued and outstanding shares of
stock of IGXGLOBAL UK Limited, and to pay for transaction-related costs incident thereto.
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7.2. Business and Existence; Trade Names. Preserve and maintain Borrower’s separate existence and
rights, privileges and franchises, and except for trade names described in the Disclosure Schedule
transact business in Borrower’s own name and invoice all of Borrower’s Receivables in Borrower’s own
name.
7.3. Taxes. Pay and discharge all taxes, assessments, charges, levies and encumbrances imposed upon
Borrower, Borrower’s income or Borrower’s profits or upon any Property of Borrower by any
Governmental Unit prior to the date on which penalties attach thereto, except where the same is being
contested by Borrower in good faith by appropriate proceedings being diligently conducted and Reserves
for such amounts have been established by Lender and have been maintained by Borrower.
7.4. Compliance with Laws. Comply in all Material respects with all Governmental Rules applicable
to Borrower including, without limitation, all laws and regulations regarding the collection, payment and
deposit of employees’ income, unemployment and Social Security taxes, all Environmental Laws and all
applicable provisions of ERISA and the Code, and any other applicable laws, rules or regulations relating
to the compensation of employees and funding of employee pension plans.
7.5. Maintain Properties; Insurance. (a) Maintain its Properties in good condition and repair at all
times, (b) preserve its Properties from loss, damage, or destruction of any nature whatsoever, and (c) keep
all of its Properties insured with insurance companies licensed to do business in the State where such
Property is located against loss or damage by fire or other risk under extended coverage endorsement and
against theft, burglary, and pilferage together with such other hazards, and in such amounts, as Lender
may from time to time reasonably request. Borrower shall deliver to Lender each policy of insurance
covering any Property and certificates of insurance containing endorsements in form satisfactory to
Lender naming Lender as lender loss payee, additional insured and such other beneficiary designations as
required by Lender, and providing that the insurance shall not be canceled, amended or terminated except
upon thirty (30) calendar days’ prior written notice to Lender. Lender shall retain all Proceeds of
insurance received by Lender for application to the payment of all or any portion of the Obligations as
Lender may determine in Lender’s sole discretion.
7.6. Business Records. Keep adequate records and books of account with respect to Borrower’s
business activities in which proper entries are made in accordance with sound bookkeeping practices
reflecting all financial transactions of Borrower. Borrower shall maintain full, accurate and complete
Records respecting Receivables, Inventory (including a perpetual inventory reporting system), and all
other Collateral at all times. Borrower shall maintain all of its Bank Accounts as set forth on the
Disclosure Schedule. Borrower shall cause all of its invoices to be printed and to bear consecutive
numbers, and to issue its invoices in such consecutive numerical order.
7.7. Delivery of Documents and Instruments. Appropriately endorse and immediately deliver to
Lender all notes, trade acceptances, Instruments and Documents included in or evidencing the Proceeds of
any Receivables, and all Documents of title and Chattel Paper, whether or not negotiable, covering any
Inventory. Borrower acknowledges that Borrower waives protest regardless of the form of the
endorsement on any note, trade acceptance, Instrument, Document, Document of title or Chattel Paper
delivered to Lender.
7.8. Name Change; Organizational Change; Creation of Affiliates. Provide Lender with not fewer
than thirty (30) calendar days’ notice in an Authenticated Record prior to any proposed (a) change in
Borrower’s state of organization or organizational structure, (b) change of Borrower’s name, (c) use of
any trade name or fictitious name, “d/b/a” or other similar designation, (d) creation of any Affiliate under
the control of Borrower, or (e) transaction or series of transactions pursuant to which Borrower would
become an Affiliate under the control of any other Person.
7.9. Change of Offices; Records. Provide Lender with not fewer than thirty (30) calendar days’ notice
in an Authenticated Record prior to any change of Borrower’s chief executive office or any office where
Borrower maintains its Records (including computer printouts and programs) with respect to Receivables
or any other Collateral.
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7.10. Change of Fiscal Year. Provide Lender with not fewer than ninety (90) calendar days’ notice in
an Authenticated Record prior to any change of Borrower’s Fiscal Year.
7.11. Access to Books and Records. Provide Lender with access to Borrower’s books and Records and
permit Lender to copy and inspect such books and Records all as Lender to enable Lender to monitor the
Loans and the Collateral. Lender may examine and inspect the Inventory, Equipment or other Collateral
and may examine, inspect and copy all books and Records with respect thereto at any time during
Borrower’s normal business hours (a) in the absence of a Default or Event of Default, upon reasonable
notice to Borrower, and (b) following the occurrence and during the continuation of a Default or Event of
Default, without notice.
7.12. Solvency. Continue to be Solvent.
7.13. Notice to Lender. Provide Lender with prompt telephonic notice (followed by notice in an
Authenticated Record) after becoming aware of any of the following:
(a) the happening of any event, occurrence or condition, or series of events, occurrences or
conditions, that would cause any representation contained in ARTICLE 5 to be untrue, inaccurate or
misleading;
(b) the existence of a Default or an Event of Default;
(c) the happening of any event, occurrence or condition, or series of events, occurrences or
conditions, that has resulted in, or that may reasonably be expected to result in, a Material Adverse
Change;
(d) any dispute that may arise between Borrower and any Governmental Unit, including any action
relating to any tax liability of Borrower, in connection with which Borrower would be liable (as damages,
penalties, fines, costs or expenses, or any combination of the foregoing) for a Material amount if
adversely determined;
(e) any labor controversy resulting in or threatening to result in a strike or work stoppage against
Borrower in connection with which Borrower would suffer Material damages;
(f) any proposal by any Governmental Unit to acquire any Material Property of Borrower;
(g) the location of any Collateral other than at Borrower’s place(s) of business as described in the
Disclosure Schedule;
(h) any cancellation, non-renewal, acceleration, draw upon, termination or other event (as applicable)
with respect to any letter of credit, bond, note or other financial accommodation in a Material face amount
or Material principal amount issued or made to, or in favor of, any other Person, for which Borrower has
agreed to or is obligated to repay, or to reimburse or indemnify the issuer thereof, the creditor with respect
thereto or any other Person, in whole or in part (a “Third Party Obligation”), whether such obligation of
Borrower arises by reason of the extension of credit, the opening, guaranteeing or confirming of a letter of
credit, any loan, guaranty, indemnification, or any other manner, whether direct or indirect (including if
acquired by purchase, assignment or otherwise), absolute or contingent;
(i) the commencement of any litigation, suit, action or proceeding, at law or in equity (i) against
Borrower as defendant, co-defendant, third party defendant or otherwise, involving money or Property of
a Material amount, or (b) by Borrower as plaintiff, as counter-claimant or otherwise pursuant to which
Borrower has asserted claims for damages of a Material amount;
(j) if any Proceeds of Receivables shall include, or any of the Receivables shall be evidenced by,
notes, trade acceptances or Instruments or Documents, or if any Inventory is covered by any Certificate
Of Title or Chattel Paper, whether or not negotiable; and
(k) any damage to or destruction of any Collateral in a Material amount, or the happening of any
event, occurrence or condition, or series of events, occurrences or conditions, that has caused, or that may
cause, a Material loss or depreciation in the value of any Collateral or a Material loss or decline in the
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value of insured Property or the existence of an event justifying a Material claim under any insurance;
provided however, the provisions of this paragraph (k) shall not apply to (a) obsolete, worn out or
surplus Property, (b) Equipment replaced in the ordinary course of Borrower’s business as conducted on
the Effective Date, and (c) Inventory disposed of in the ordinary course of Borrower’s business as
conducted on the Effective Date.
ARTICLE 8. NEGATIVE COVENANTS. Borrower covenants and agrees that at all times prior to
the final and indefeasible payment to Lender in cash and performance of the Obligations in full, Borrower
shall not:
8.1. Indebtedness. Create, incur, assume or suffer to exist, voluntarily or involuntarily, any
Indebtedness, except (i) Obligations to Lender, (ii) trade debt incurred in the ordinary course of
Borrower’s business as conducted on the Effective Date; (iii) purchase money financing and equipment
leases with a principal amount not to exceed either individually or in the aggregate Eighty Thousand and
00/100 Dollars ($80,000.00) in any Fiscal Year; (iv) existing Indebtedness described on the Disclosure
Schedule, and (v) extensions, renewals and replacements of any Indebtedness described in clauses (ii)
through (iv), inclusive, of this Section 8.1 that do not increase the outstanding principal amount thereof.
8.2. Mergers; Consolidations; Acquisitions. Enter into any transaction or series of transactions that
directly or indirectly would constitute a merger, consolidation, reorganization or recapitalization with any
other Person; take any action in contemplation of dissolution or liquidation; conduct any part of its
business through any Affiliate or other Person; or acquire substantially all of the equity interests or assets
of any Person, whether by merger, consolidation, purchase of equity interests or otherwise.
8.3. Change of Management; Change of Control. (a) Allow a change in the ownership structure of
Borrower, whether by the issuance, sale, transfer, exchange, assignment or other direct or indirect
hypothecation of Equity Interests, or by the issuance of subscriptions, warrants, options, convertible
securities, or other rights (fixed, contingent or otherwise) to purchase or otherwise acquire Equity
Interests, or (b) permit any person other than Xxxx Xxxxxxx to be elected Chairman of Borrower or to
assume or otherwise be granted with the powers and duties of the Chairman of Borrower as existing on
the date of this Agreement without the prior consent of Lender in an Authenticated Record, (c) or permit
any person other than Xxxxxx Xxxxx to be elected President and CEO of Borrower or to assume or
otherwise be granted with the powers and duties of the President and CEO of Borrower as existing on the
date of this Agreement without the prior consent of Lender in an Authenticated Record; provided,
however, in the event the Xxxxxx Xxxxx resigns his employment with Borrower, his employment with
Borrower is otherwise terminated, or Borrower replaces Xxxxxx Xxxxx as President and/or CEO of
Borrower, Borrower shall employ or engage a Person in replacement of Xxxxxx Xxxxx (or as President
and/or CEO of Borrower) that is reasonably satisfactory to Lender.
8.4. Sale or Disposition. Sell or dispose of all or any Collateral or other Property, or grant any Person
an option to acquire any Collateral or other Property, except for (a) obsolete, worn out or surplus Property
disposed of in the ordinary course of Borrower’s business as conducted on the Effective Date, (b)
Equipment replaced in the ordinary course of Borrower’s business as conducted on the Effective Date,
and (c) Inventory sold in the ordinary course of Borrower’s business as conducted on the Effective Date.
8.5. Real Property Defaults. Permit any landlord, mortgagee, trustee under deed of trust,
warehouseman, bailee or lienholder to declare a default under any lease, mortgage, deed of trust,
warehousing or bailee agreement or lien on real estate owned or leased by Borrower or in which
Borrower maintains any Collateral, which default remains uncured after the lesser of (a) any stated cure
period, or (b) a period of thirty (30) days from its occurrence, unless such default is being contested by
Borrower in good faith by appropriate proceedings being diligently conducted and Reserves for such
amounts have been established by Lender and have been maintained by Borrower.
8.6. Liens and Encumbrances. Grant or permit the imposition of any security interest, pledge, lien,
charge, mortgage or other encumbrance on any Collateral (collectively, “liens”), except (a) liens in favor
of Lender, (b) liens described in the Disclosure Schedule, and (c) Permitted Liens.
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8.7. Dividends and Distributions; Payment of Indebtedness. Except as specifically permitted below
(i) pay any cash dividends or profits to any current or former holder of its Equity Interests, (ii) make any
distribution or return of capital in cash or other Property to any current or former holder of its Equity
Interests, (iii) make any payment or distribution in cash or other Property to any current or former holder
of its Equity Interests in connection with any direct or indirect redemption or purchase of Equity Interests
entered into on or prior to the date hereof, (iv) directly or indirectly purchase or redeem any of its Equity
Interests, or retire any of its Equity Interests, or take any action which would have an effect equivalent to
any of the foregoing., or (v) pay any principal, interest, or other amount in connection with any
Indebtedness (other than the Obligations) not permitted pursuant to Section 8.1.
(a) Permitted Payments. Subject to the terms and conditions hereof, Borrower shall be permitted to
make:
(i) cash distributions to iGambit Inc. (“iGambit”) to fund (A) Borrower Stock Obligations,
but not any extraordinary dividend, distribution, payment or other amount with respect to the
Borrower Stock Obligations and whether mandatory, voluntary or otherwise under the terms of
the Borrower Charter Documents, as the Borrower Charter Documents are in effect on the date
of this Agreement, and as the Borrower Charter Documents may be amended, restated, extended
or otherwise modified in accordance with the terms hereof (each, a “Permitted Stock Dividend”)
and (B) cash Distributions by Borrower to iGambit of management fees and other amounts as
compensation for services performed by iGambit, and for reimbursable costs and expenses
incurred by iGambit in the ordinary course of performing services for Borrower (each, a
“Permitted Management Payment”, and together with Permitted Stock Dividends, “Permitted
iGambit Distributions”); and
(ii) cash Distributions by Borrower to Xxxxxx Xxxxx in amounts equal to the regularly
scheduled payments of principal interest due and payable under the terms of a Promissory Note
Effective Date and issued by Borrower to Xxxxxx Xxxxx in the original principal amount of One
Million and 00/100 Dollars ($1,000,000.00) pursuant to the terms of the Asset Purchase
Documents (the “Subordinated Note”), but not any Distribution, payment or other amount in
prepayment of any obligations or liabilities of, under or with respect to the Subordinated Note,
whether mandatory, voluntary or otherwise, or due to the acceleration of maturity thereof for any
reason under the terms of the Subordinated Note or Asset Purchase Documents, as the
Subordinated Note and the Asset Purchase Documents are in effect on the date of this
Agreement, and disregarding any amendment, modification, restatement or replacement of the
Seller Note or the Asset Purchase Documents after the date of this Agreement (each, a
“Subordinated Note Permitted Payment”); and
(iii) cash Distributions by Borrower to Seller of payments of the contingent earn-out
Described in the Asset Purchase Agreement in an aggregate amount equal to Three Million
Seven Hundred Fifty Thousand and 00/100 Dollars ($3,750,000.00) based on Borrower’s
achievement of certain revenue and financial targets for the “IT Solutions Business” as described
in the Asset Purchase Agreement (the “Earnout Distributions”), when and if due and payable
under the terms of the Asset Purchase Documents, but not any Distribution, payment or other
amount in prepayment of any obligations or liabilities of, under or with respect to the Earnout
Distributions, whether mandatory, voluntary or otherwise, or due to the acceleration of maturity
thereof for any reason under the terms of the Asset Purchase Documents, as the Asset Purchase
Documents are in effect on the date of this Agreement, and disregarding any amendment,
modification, restatement or replacement of the Asset Purchase Documents after the date of this
Agreement (each, a “Permitted Earnout Distribution”).
(b) Termination of Permitted Payments. Notwithstanding anything in paragraph (a) immediately
above to the contrary, or anything in the Asset Purchase Documents, the Subordinated Note, the Borrower
Charter Documents or the Management Agreement to the contrary:
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(i) As a condition to making any Permitted iGambit Distribution Borrower shall have
provided Lender with at least three (3) Business Days’ prior written notice of the amount and
date of such proposed Permitted iGambit Distribution, and Borrower shall not make any
Permitted iGambit Distribution:
(A) if any payment of principal or interest then due with respect to the Obligations
shall not have been paid to Lender in full; or
(B) if the aggregate amount of Permitted iGambit Distribution, including the
proposed Permitted iGambit Distribution, would exceed Five Hundred Thousand and
00/100 Dollars ($500,000.00) in any calendar year; or
(C) if after giving effect to such Permitted iGambit Distribution the remainder of the
Borrowing Capacity less the aggregate amount of all Obligations then outstanding would
not exceed Five Hundred Thousand and 00/100 Dollars ($500,000.00) (as determined on
a pro forma basis); or
(D) if after giving effect to such Permitted iGambit Distribution a Default or Event of
Default would occur (as determined on a pro forma basis); or
(E) during any period in which a Default or Event of Default has occurred and is
continuing.
(ii) Borrower shall not make any Subordinated Note Permitted Payment:
(A) if any payment of principal or interest then due with respect to the Obligations
shall not have been paid to Lender in full; or
(B) if after giving effect to such Subordinated Note Permitted Payment the remainder
of the Borrowing Capacity less the aggregate amount of all Obligations then outstanding
would not exceed Five Hundred Thousand and 00/100 Dollars ($500,000.00) (as
determined on a pro forma basis); or
(C) if after giving effect to such Subordinated Note Permitted Payment a Default or
Event of Default would occur (as determined on a pro forma basis); or
(D) during any period in which a Default or Event of Default (as such terms are
defined in the Senior Creditor Loan Documents) has occurred and is continuing.
(iii) As conditions to making any Permitted Earnout Distribution Borrower shall have
provided Lender with at least three (3) Business Days’ prior written notice of the amount and
date of such proposed Permitted Earnout Distribution, the “IT Solutions Business” of Borrower
(as such term is defined in the Asset Purchase Documents) shall have achieved the “EBITDA
Threshold” and “Revenue Threshold” described in the Asset Purchase Agreement applicable to
such proposed payment, and Borrower shall not make any Permitted Earnout Distribution:
(A) if any payment of principal or interest then due with respect to the Obligations
shall not have been paid to Lender in full; or
(B) if after giving effect to such Permitted Earnout Distribution the remainder of the
Borrowing Capacity less the aggregate amount of all Obligations then outstanding would
not exceed Five Hundred Thousand and 00/100 Dollars ($500,000.00) (as determined on
a pro forma basis); or
(C) if after giving effect to such Permitted Earnout Distribution a Default or Event of
Default would occur (as determined on a pro forma basis); or
(D) during any period in which a Default or Event of Default has occurred and is
continuing.
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8.8. Guaranties; Contingent Liabilities. Assume, guarantee, endorse, contingently agree to purchase,
assume or otherwise become liable for the Indebtedness of any Person, except by the endorsement of
negotiable instruments for deposit or collection or similar transactions in the ordinary course of
Borrower’s business as conducted on the Effective Date.
8.9. Removal of Collateral. Remove, or cause or permit to be removed, any of Collateral from the
premises where such Collateral is currently located and described in the Disclosure Schedule, except (a)
for sales of Inventory in the ordinary course of Borrower’s business as conducted on the Effective Date,
(b) dispositions of worn-out, obsolete or surplus Equipment in the ordinary course of Borrower’s business
as conducted on the Effective Date, and (c) off-site repairs of Equipment in the ordinary course of
Borrower’s business as conducted on the Effective Date.
8.10. Transfer of Notes or Accounts. (a) Sell, assign, transfer, or otherwise dispose of any Account, or
any Chattel Paper, Letter-Of-Credit Rights, promissory note or other Instrument payable to Borrower or
evidencing any Account, or (b) accept or negotiate any discount on any Account, promissory note or other
Instrument payable to Borrower except in the ordinary course of Borrower’s business as conducted on the
Effective Date.
8.11. Settlements. Compromise, settle or adjust any Material claim relating to any Collateral except in
the ordinary course of Borrower’s business as conducted on the Effective Date.
8.12. Change of Business. Cause or permit a change in the nature of its business as conducted on the
Effective Date.
8.13. Change of Accounting Practices. Change its accounting principles or practices as in effect on the
Effective Date in any respect, except for changes in accounting principles as may be required by changes
in GAAP. Borrower shall provide Lender with prompt written notice of any change in its accounting
principles or practices, whether required by changes in GAAP or otherwise.
8.14. Inconsistent Agreement. Enter into any agreement that would be violated by the payment or
performance of the Obligations or Borrower’s other liabilities and obligations under this Agreement or
any other Loan Document.
8.15. Loan or Advances; Personal Expenses. Make any loans or advances to any Person, or make any
payments or pay any liabilities, costs or expenses, of or on behalf of any other Person (collectively, “third
party expenses”), whether such third party expenses have arisen or have been incurred on or prior to the
date of this Agreement, or arise or are incurred after the date hereof, except for advances for or
reimbursements of business-related expenses incurred by employees of Borrower in the ordinary course,
including but not limited to business expenses for food, lodging, travel and credit card charges.
8.16. Investments. Make any investment in any Person or Affiliate after the Effective Date, whether in
the form of equity interests (including, but not limited to, subscriptions, warrants, options or other rights
convertible into equity interests), Indebtedness (including Indebtedness that is convertible into equity
interests), any combination of equity interests and Indebtedness, or otherwise.
8.17. Bank Accounts. Open or maintain any deposit, checking, operating or other bank account, or
similar money handling account, with any bank or other financial institution except for those accounts
identified in the Disclosure Schedule, or close or permit to be closed any of the accounts listed in the
Disclosure Schedule, in each case without Lender’s prior written consent, and then only after Borrower
has implemented agreements with such bank or financial institution and Lender in form and substance
acceptable to Lender.
8.18. Transactions with Affiliates. Make, enter into or otherwise undertake any transaction with any
Affiliate, if such transaction (a) has not been approved or otherwise consented to pursuant to the
applicable terms of Borrower’s Charter Documents, (b) has not been approved by at least a majority of
the disinterested directors of Borrower entitled to approve or vote on such transaction after being
informed of the material terms of such transaction, and (c) is not at least as favorable to Borrower as a
similar transaction entered into at arms’ length with an unrelated third party.
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8.19. Unfunded Capital Expenditures. Permit Unfunded Capital Expenditures to exceed, individually
or in the aggregate, an amount equal to Three Hundred Twenty Thousand and 00/100 Dollars
($320,000.00) in any Fiscal Year.
8.20. EBITDA. Permit EBITDA as of and for:
(a) The three (3) consecutive calendar month period ending on March 31, 2013, to be less than Five
Hundred Thousand and 00/100 Dollars ($500,000.00);
(b) The six (6) consecutive calendar month period ending on June 30, 2013, to be less than Six
Hundred Seventy Five Thousand and 00/100 Dollars ($675,000.00);
(c) The nine (9) consecutive calendar month period ending on September 30, 2013, to be less than
One Million One Hundred Thousand and 00/100 Dollars ($1,100,000.00);
(d) The Fiscal Year ending on December 31, 2013, to be less than One Million Four Hundred
Thousand and 00/100 Dollars ($1,400,000.00); and
(e) The twelve (12) consecutive calendar month period ending on March 31, 2014, to be less than
One Million Eight Hundred Thousand and 00/100 Dollars ($1,800,000.00); and
(f) The twelve (12) consecutive calendar month period ending on June 30, 2014, to be less than Two
Million and 00/100 Dollars ($2,000,000.00); and
(g) The twelve (12) consecutive calendar month period ending on September 30, 2014, and for each
twelve (12) consecutive calendar month period ending on the last day of each Fiscal Quarter thereafter, to
be less than Two Million Four Hundred Thousand and 00/100 Dollars ($2,400,000.00).
ARTICLE 9. EVENTS OF DEFAULT; REMEDIES OF LENDER.
9.1. Events of Default. The happening of any of the following events, occurrences or conditions, or
series of events, occurrences or conditions, shall be an “Event of Default” (collectively, “Events of
Default”) under this Agreement:
(a) Borrower shall fail to pay the amount of any Obligation (whether principal, interest, costs,
charges, expenses, or otherwise) in full when due pursuant to the terms of this Agreement or any other
Loan Document; or
(b) any representation contained in ARTICLE 5 of this Agreement, or any representation or
certification contained in any certificate, document or instrument delivered to Lender pursuant to
ARTICLE 6 of this Agreement, shall have been inaccurate when made by Borrower or shall have been
otherwise breached; or
(c) Borrower shall fail to comply with any provision, term, covenant or condition contained in
ARTICLE 6, ARTICLE 7 or ARTICLE 8 of this Agreement; or
(d) other than with respect to the provisions, terms, covenants and conditions contained in ARTICLE
6, ARTICLE 7 and ARTICLE 8 of this Agreement, if Borrower shall fail to comply with any provision,
term, covenant, or condition contained in this Agreement, and such failure continues for a period in
excess of ten (10) Banking Days after the date that Borrower failed to comply with such provision, term,
covenant or condition, respectively; or
(e) the occurrence of any “default” or “event of default” under any other Loan Document (as such
terms are defined in the respective Loan Document), after taking into consideration any applicable period
of grace, notice and/ or cure as provided for in such Loan Document, if any; or
(f) Borrower shall (i) cease to be Solvent, (ii) make an assignment for the benefit of its creditors, (iii)
call a meeting of its creditors to obtain any general financial accommodation, (iv) suspend business, or (v)
commence any case under any provision of the Bankruptcy Code including provisions for
reorganizations; or
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(g) (i) if any case under any provision of the Bankruptcy Code, including provisions for
reorganizations, shall be commenced against Borrower and such case remains undismissed, undischarged
or unbonded for a period of sixty (60) calendar days from the date of commencement, or (ii) if a receiver,
trustee or equivalent officer shall be appointed for all or any of the Collateral or of Borrower’s Property
which results in the entry of an order for relief or such adjudication or appointment; or
(h) if Borrower’s independent public accountants that have executed an Accountant’s Access Letter
shall refuse to deliver to Lender (i) any financial statement required by this Agreement within thirty (30)
calendar days of the due date thereof, or (ii) any information requested by Lender pursuant to the
provisions of Section 6.11 and the terms of such Accountant’s Access Letter within five (5) Banking
Days of such request; or
(i) if any federal or state tax lien is filed or recorded against Borrower and is not bonded or
discharged within twenty (20) calendar days of the date of filing or recording; or
(j) if a Material judgment shall be entered against Borrower in any action or proceeding and shall not
be stayed, vacated, bonded, paid or discharged within twenty (20) calendar days of entry, except a
judgment where the claim is fully covered by insurance and the insurer has accepted full liability therefor
in writing and such writing has been delivered to Lender; or
(k) if, other than with respect to the Obligations (i) any Material Indebtedness of Borrower shall be
declared to be or shall become due and payable prior to its stated maturity; or (ii) any obligation of
Borrower with respect to any Material Indebtedness shall not be paid or performed as and when the same
becomes due; or (iii) any payment by Borrower with respect to any Material Indebtedness shall be
declared to be or shall become due and payable prior to its stated maturity; or (iii) there shall occur any
event or condition which constitutes an event of default under any mortgage, indenture, Instrument,
agreement or evidence of Indebtedness relating to any Material Indebtedness of Borrower the effect of
which is to permit the holder or the holders of such mortgage, indenture, Instrument, agreement or
evidence of Indebtedness, or a trustee, agent or other representative on behalf of such holder or holders, to
cause the Indebtedness evidenced thereby to become due prior to its stated maturity; or
(l) if Borrower becomes obligated to pay any Material amount under any Third Party Obligation, or
any Third Party Obligation is not renewed or replaced on terms substantially similar to or more favorable
to Borrower than the original Third Party Obligation; or
(m) the occurrence of any Reportable Event that could in Lender’s reasonable discretion result in the
termination of any Employee Benefit Plan, or if a trustee shall be appointed by a United States District
Court or other court or administrative tribunal to administer any Employee Benefit Plan, or if the Pension
Benefit Guaranty Corporation shall institute proceedings to terminate any Plan or to appoint a trustee to
administer any Employee Benefit Plan; or
(n) the occurrence of any Material Adverse Change.
9.2. Continuation of Events of Default. For purposes of this Agreement, an Event of Default shall be
deemed to be continuing from the date of occurrence of such Event of Default until the earlier of (a) the
date, if any, Lender waives such Event of Default in writing, or (b) the date that Borrower cures such
Event of Default to Lender’s satisfaction in Lender’s sole discretion.
9.3. Rights and Remedies with Respect to Loans and Advances.
(a) Termination of Lending Obligations. Upon the occurrence of an Event of Default Lender may, in
Lender’s sole discretion (i) terminate any or all Loans and correspondingly terminate its obligations to
otherwise lend to or extend credit to Borrower under this Agreement, under any Note and/or any other
Loan Document, without prior notice to Borrower, and/or (ii) increase the amount of interest payable on
any Loan to the applicable Default Rate, and/or (iii) increase all fees payable to Lender under this
Agreement that may be increased upon the occurrence of an Event of Default, and/or (iv) demand
payment in full of all or any portion of the Obligations or any Note (whether or not payable on demand
prior to such Event of Default), and/or (v) take all other and further actions and avail itself of any and all
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rights and remedies available to Lender under this Agreement, any other Loan Document, under law or in
equity.
(b) Obligations Immediately Due. Notwithstanding the provisions of Section 9.3(a) immediately
above, upon the occurrence of any Event of Default described in Section 9.1(f) or Section 9.1(g), without
notice, demand or other action by Lender (i) all of Borrower’s Obligations to Lender shall immediately
become due and payable whether or not payable on demand prior to such Event of Default, and (ii) all
interest payable on the Obligations shall increase to the applicable Default Rate, and (iii) all fees payable
to Borrower under this Agreement that may be increased upon the occurrence of an Event of Default shall
increase to their applicable amount after an Event of Default, and (iv) Lender may take all other and
further actions and avail itself of any and all rights and remedies available to Lender under this
Agreement, any other Loan Document, under law or in equity.
9.4. Rights and Remedies with Respect to Collateral. Without limiting any rights or remedies Lender
may have pursuant to this Agreement, under applicable law or otherwise, and in addition to all rights and
remedies granted to Lender as a Secured Party in the UCC, upon the occurrence and during the
continuation of an Event of Default:
(a) Notification of Account Debtors. (i) Lender may notify Account Debtors of Lender’s security
interest in and to Accounts and Receivables and direct Account Debtors to make payment directly to
Lender without notice to, consent of, or any other action by Borrower, or (ii) Borrower, at the request of
Lender, shall notify Account Debtors of Lender’s security interest in Borrower’s Accounts and
Receivables and direct Account Debtors to make payment directly to Lender. Borrower hereby
authorizes Account Debtors to make payments directly to Lender and to rely on notice from Lender
without further inquiry. Lender may on Borrower’s behalf endorse all items of payment received by
Lender that are payable to Borrower for the purposes described above.
(b) Collections; Modifications of Terms. Lender may but shall be under no obligation to (i) notify all
appropriate parties that the Collateral, or any part thereof, has been assigned to Lender; (ii) demand, xxx
for, collect and give receipts for and take all necessary or desirable steps to collect any Collateral or
Proceeds in its or Borrower’s name, and apply any such collections against the Obligations in such
amounts and in such order as Lender determines in Lender’s sole discretion; (iii) take control of any
Collateral and any cash and non-cash Proceeds of any Collateral; (iv) enforce, compromise, extend, renew
settle or discharge any rights or benefits of Borrower with respect to or in and to any Collateral, or deal
with the Collateral as Lender may deem advisable; and (v) make any compromises, exchanges,
substitutions or surrenders of Collateral Lender deems necessary or proper in its reasonable discretion,
including without limitation, extending the time of payment, permitting payment in installments, or
otherwise modifying the terms or rights relating to any of the Collateral, all of which may be effected
without notice to, consent of, or any other action of Borrower and without otherwise discharging or
affecting the Obligations, the Collateral or the security interests granted to Lender under this Agreement
or any other Loan Document.
(c) Insurance. Lender may file proofs of loss and claim with respect to any of the Collateral with the
appropriate insurer, and may endorse in its own and Borrower’s name any checks or drafts constituting
Proceeds of insurance. Any Proceeds of insurance received by Lender may be applied by Lender against
payment of all or any portion of the Obligations as Lender may elect in its reasonable discretion.
(d) Possession and Assembly of Collateral. Lender may take possession of the Collateral and/or
without removal render Borrower’s Equipment unusable. Upon Lender’s request, Borrower shall
assemble the Collateral and make it available to Lender at a place or places to be designated by Lender
that is reasonably convenient to Lender and Borrower.
(e) Set-off. Lender may and without any notice to, consent of or any other action by Borrower (such
notice, consent or other action being expressly waived), set-off or apply (i) any and all deposits (general
or special, time or demand, provisional or final) at any time held by or for the account of Lender, and/or
(ii) any Indebtedness at any time owing by Lender or any Affiliate of Lender or any participant in the
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Loans to or for the credit or the account of Borrower, to the repayment of the Obligations irrespective of
whether any demand for payment of the Obligations has been made.
(f) Disposition of Collateral.
(i) Sale, Lease, etc. of Collateral. Lender may, without demand, advertising or notice, all of
which Debtor hereby waives (except as the same may be required by the UCC or other
applicable law), at any time or times in one or more public or private sales or other dispositions,
for cash, on credit or otherwise, at such prices and upon such terms as are commercially
reasonable (within the meaning of the UCC) (A) sell, lease, license or otherwise dispose of any
and all Collateral, and/or (B) deliver and grant options to a third party to purchase, lease, license
or otherwise dispose of any and all Collateral. Lender may sell, lease, license or otherwise
dispose of any Collateral in its then-present condition or following any preparation or processing
deemed necessary by Lender in its reasonable discretion. Lender may be the purchaser at any
such public or private sale or other disposition of Collateral, and in such case Lender may make
payment of all or any portion of the purchase price therefor by the application of all or any
portion of the Obligations due to Lender to the purchase price payable in connection with such
sale or disposition. Lender may, if it deems it reasonable, postpone or adjourn any sale or other
disposition of any Collateral from time to time by an announcement at the time and place of the
sale or disposition to be so postponed or adjourned without being required to give a new notice
of sale or disposition; provided, however, that Lender shall provide Debtor with written notice of
the time and place of such postponed or adjourned sale or disposition. Borrower hereby
acknowledges and agrees that Lender’s compliance with any requirements of applicable law in
connection with a sale, lease, license or other disposition of Collateral will not be considered to
adversely affect the commercial reasonableness of any sale, lease, license or other disposition of
such Collateral.
(ii) Application of Disposition Proceeds. Borrower shall be obligated for, and the Proceeds
of any sale, lease, license or other disposition of Collateral pursuant to this paragraph (f) shall
be applied (A) first to the costs of retaking, holding, preparing for disposition, processing, and
disposing of Collateral, including the fees and disbursements of attorneys, auctioneers,
appraisers, consultants and accountants employed by Lender in connection with the foregoing,
and then (B) to the payment of the Obligations in whatever order Lender may elect. Borrower
shall remain liable for all amounts of the Obligations remaining unpaid as a result of any
deficiency of the Proceeds of the sale, lease, license or other disposition of Collateral after such
Proceeds are applied as provided in the foregoing sentence. Lender shall pay any Proceeds of
the sale, lease, license or other disposition of Collateral remaining after application as provided
in clause (A) and (B), above, in accordance with the applicable provisions of the UCC.
(iii) Warranties; Sales on Credit. Lender may sell, lease, license or otherwise dispose of the
Collateral without giving any warranties and may specifically disclaim any and all warranties,
including but not limited to warranties of title, possession, merchantability and fitness. Debtor
hereby acknowledges and agrees that Lender’s disclaimer of any and all warranties in
connection with a sale, lease, license or other disposition of Collateral will not be considered to
adversely affect the commercial reasonableness of any such disposition of the Collateral. If
Lender sells, leases, licenses or otherwise disposes of any of the Collateral on credit, Borrower
will be credited only with payments actually made by the recipient of such Collateral and
received by Lender and applied to the Obligations. If any Person fails to pay for Collateral
acquired pursuant to this paragraph (f) on credit, Lender may re-offer the Collateral for sale,
lease, license or other disposition.
(g) Election of Remedies for Non-Collateral Property. Notwithstanding Lender’s security interest in
and to the Collateral, to the extent that the Obligations are now or are hereafter secured by any Property
other than the Collateral, or by the guaranty, endorsement, assets or Property of any other Person, Lender
shall have the right in Lender’s sole discretion to determine which rights, security, security interests,
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liens, charges, encumbrances and/or remedies Lender may at any time pursue, foreclose upon, relinquish,
subordinate, modify or take any other action with respect to, without in any way impairing, modifying or
affecting any of Lender’s other rights, security, security interests, liens, charges, encumbrances and/or
remedies with respect to such Property, or any of Lender’s rights or remedies under this Agreement or
any other Loan Document.
(h) Lender’s Obligations. Borrower agrees that Lender shall not have any obligation to preserve
rights to any Collateral against prior parties or to marshal any Collateral of any kind for the benefit of any
other creditor of Borrower or any other Person. Lender shall not be responsible to Borrower for loss or
damage resulting from Lender’s failure to enforce its security interests or collect any Collateral or
Proceeds or any monies due or to become due under the Obligations or any other liability or obligation of
Borrower to Lender.
(i) Waiver of Rights by Borrower. Except as may be otherwise specifically provided in this
Agreement, Borrower waives, to the extent permitted by law, all bonds, security or sureties required by
any Governmental Rule or otherwise as an incident to Lender’s taking of possession of, or sale, lease,
license or other disposition of, any Collateral. Borrower authorizes Lender, upon the occurrence of an
Event of Default to enter upon any premises owned by or leased to Borrower where the Collateral is kept,
without obligation to pay rent or for use and occupancy, through self help, without judicial process and
without having first given notice to Borrower or obtained an order of any court, and peacefully retake
possession thereof by securing at or removing same from such premises.
ARTICLE 10. GENERAL PROVISIONS.
10.1. Rights and Remedies Cumulative. Lender’s rights and remedies under this Agreement
(specifically including all rights and remedies of Lender under ARTICLE 9) shall be cumulative and not
alternative or exclusive, irrespective of any other rights or remedies that may be available to Lender under
any other Loan Document, by operation of law or otherwise, and may be exercised by Lender at such time
or times and in such order as Lender in Lender’s sole discretion may determine, and are for the sole
benefit of Lender. Lender’s failure to exercise or delay in exercising any right or remedy shall not (a)
preclude Lender from exercising such right or remedy thereafter, (b) preclude Lender from exercising any
other right or remedy of Lender, or (c) result in liability to Lender or Lender’s Affiliates or their
respective members, managers, shareholders, directors, officers, partners, employees, consultants or
agents.
10.2. Reinstatement. The agreements, covenants, liabilities and obligations of Borrower set forth in this
Agreement (including, but not limited to, the final and indefeasible payment to Lender in cash and
performance of the Obligations in full) shall continue to be effective, or be reinstated, as the case may be,
if at any time any payment in respect of the Obligations is rescinded or must otherwise be restored or
returned by Lender by reason of any bankruptcy, reorganization, arrangement, composition or similar
proceeding or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, Borrower or any other Person, or any Property of Borrower or any other Person, or
otherwise, all as though such payment had not been made.
10.3. Successors and Assigns. This Agreement is entered into for the benefit of the parties hereto and
their successors and assigns and shall be binding upon the parties, their successors and assigns. Lender
shall have the right, without the necessity of any consent, authorization or other action by Borrower, to
sell, assign, securitize or grant participations in all or a portion of Lender’s interest in the Loans to other
financial institutions of Lender’s choice and on such terms as are acceptable to Lender in Lender’s sole
discretion. Borrower shall not assign, exchange or otherwise hypothecate any rights, liabilities or
obligations under this Agreement, in whole or in part, without the prior written consent of Lender, which
consent may be granted or withheld in Lender’s sole discretion, and any attempted assignment, exchange
or hypothecation without Lender’s written consent shall be void and be of no effect.
10.4. Notice. Wherever this Agreement provides for notice to any party (except as expressly provided to
the contrary), it shall be given by messenger, facsimile, certified U.S. mail with return receipt requested,
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or nationally recognized overnight courier with receipt requested, effective when either received or
receipt rejected by the party to whom addressed, and shall be addressed as provided in the Disclosure
Schedule, or to such other address as the party affected may hereafter designate.
10.5. Strict Performance. The failure by Lender at any time to require Borrower’s strict compliance
with or performance of any provision of this Agreement shall not waive, affect, impair or diminish any
right of Lender thereafter to demand Borrower’s strict compliance with and performance of such
provision. Any suspension or waiver by Lender of any Default or Event of Default shall not suspend,
waive or affect any other Default or Event of Default, whether the same is prior or subsequent to such
suspension or waiver and whether of the same or a different type.
10.6. Waiver. Borrower waives presentment, protest, notice of dishonor and notice of protest with
respect to any Document or Instrument on or for which it may be liable to Lender as maker, endorser,
guarantor or otherwise (including but not limited to this Agreement and each Note).
10.7. Construction of Agreement. The parties hereto agree that the terms, provisions and language of
this Agreement were the result of negotiations between the parties, and, as a result, there shall be no
presumption that any ambiguities in this Agreement shall be resolved against either party. Any
controversy over the construction of this Agreement shall be decided without regard to events of
authorship or negotiation.
10.8. Expenses; Taxes.
(a) Borrower shall reimburse Lender for all expenses incurred by Lender in connection with the
transactions contemplated by this Agreement or the other Loan Documents, including, without limitation,
fees in connection with any bank account, the Lockbox, the Blocked Account, wire charges, automatic
clearing house fees and other similar costs and expenses incurred by Lender in carrying out the
transactions contemplated by this Agreement.
(b) If, at any time or times prior or subsequent to the Effective Date, and regardless of whether any of
the transactions contemplated by this Agreement are concluded, Lender reasonably employs counsel for
advice or other representation, reasonably incurs legal fees or expenses, consulting fees or expenses, fees,
costs or expenses of external professionals engaged by Lender, or reasonably incurs other out-of-pocket
costs or expenses in connection with: (i) the exercise of any right or remedy of Lender described in this
Agreement or any other Loan Document; (ii) the negotiation and preparation of this Agreement or any
other Loan Document, or any amendment, modification or restatement of this Agreement or any other
Loan Document; (iii) the administration of this Agreement or any other Loan Document and the
transactions contemplated hereby and thereby; (iv) periodic field exams or audits and appraisals
performed by Lender; (v) any litigation, contest, dispute, suit, proceeding or action (whether instituted by
Lender, Borrower or any other Person) in any way relating to the Collateral, this Agreement or any other
Loan Document or Borrower’s business or affairs; (vi) the establishment, attachment, perfection or
protection of any security interest or lien on the Collateral; (vii) any attempt to enforce any right or
remedy of Lender against Borrower or any other Person who may be obligated to Lender by virtue of this
Agreement or any other Loan Document including, without limitation, Account Debtors; or (viii) any
attempt to inspect, verify, protect, preserve, restore, collect, sell, lease, license, liquidate or otherwise
dispose of or realize upon the Collateral; then, in any such event, all reasonable attorneys’ fees arising
from such services and all expenses, costs and charges of such counsel, all fees, costs, expenses and
charges of consultants and professionals engaged by Lender, and all other costs and out-of-pocket
expenses of Lender relating to any of the events or actions described above shall be payable by Borrower
to Lender, and shall be additional Obligations under this Agreement secured by the Collateral. Borrower
acknowledges and agrees that upon the occurrence and during the continuation of any Event of Default
Borrower shall pay directly or reimburse Lender for all fees, costs, expenses and charges incurred by
Lender in Lender’s sole discretion in connection with the foregoing matters.
(c) Additionally, if any tax, levy or charge (including any intangibles tax, stamp tax or recording tax)
shall be imposed upon or payable by Lender in connection with the execution or delivery of this
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Agreement, or the execution, delivery, issuance or recording of any other Loan Document, or the creation
of any of the Obligations under this Agreement (i) Borrower will pay (or will promptly reimburse Lender
for the payment of) all such taxes, levies and charges including, but not limited to, any interest and
penalties thereon, (ii) following receipt of notice from Lender regarding the claim for payment of, or
imposition of, any such tax, levy or charge, with the consent of Lender, which consent may not be
unreasonably withheld, conditioned or delayed, Borrower shall have the right, at its own cost and
expense, to contest the imposition of such tax, levy or charge, and with the consent of the Lender, which
consent may not be unreasonably withheld, conditioned or delayed, to compromise or settle such claim
for such tax, levy or charge and pay the same following such compromise or settlement, and (iii) in any
circumstance described in clause (i) or (ii) above, Borrower will indemnify, defend and hold Lender
harmless from and against any liability in connection therewith.
(d) Borrower’s obligations under this Section 10.8 shall survive termination of the Loans and the
termination of this Agreement.
10.9. Reimbursements Charged to Revolving Credit. With respect to any amount paid by Lender and
required to be reimbursed by Borrower pursuant to the provisions of Section 10.8, Borrower agrees that
Lender may charge any such amount to the Revolving Credit on the date such payment is made.
10.10. Marketing and Advertising. Borrower hereby authorizes and gives permission for Lender and
Lender’s Affiliates to use the legal or fictional company name, logo, trademark and/or personal quotes in
connection with promotional materials that Lender may disseminate to the public relating to Lender’s
relationship with Borrower. Promotional materials may include, but are not limited to, brochures, video
tapes, emails, internet websites, advertising in newspapers and/or other periodicals, lucites, pictures and
photographs. Lender shall provide Borrower with a copy of promotional materials prepared by Lender or
Lender’s Affiliates prior to making such promotional materials available to the public.
10.11. Waiver of Right to Jury Trial. Borrower and Lender recognize that in matters related to the
Loans and/or this Agreement, and as it may be subsequently modified and/or amended, either party may
be entitled to a trial in which matters of fact are determined by a jury (as opposed to a trial in which such
matters are determined by a judge, magistrate, referee or other elected or appointed decider of facts). By
executing this Agreement, Lender and Borrower will give up their respective right to a trial by jury.
Borrower and Lender each hereby expressly acknowledges that this waiver is entered into to avoid delays,
minimize trial expenses, and streamline the legal proceedings in order to accomplish a quick resolution of
claims arising under or in connection with Agreement, the Loan(s), the Note(s) and the transactions
contemplated by this Agreement.
(a) WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
BORROWER AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT THAT BORROWER OR LENDER MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY LITIGATION, ACTION, SUIT OR PROCEEDING,
DIRECTLY OR INDIRECTLY, AT ANY TIME ARISING OUT OF, UNDER, OR IN CONNECTION
WITH THIS AGREEMENT, ANY LOAN, ANY NOTE, ANY LOAN DOCUMENT OR ANY
TRANSACTION CONTEMPLATED BY THIS AGREEMENT, BEFORE OR AFTER MATURITY.
(b) CERTIFICATIONS.
BORROWER HEREBY CERTIFIES THAT NEITHER ANY
REPRESENTATIVE NOR AGENT OF LENDER NOR LENDER’S COUNSEL HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, OR IMPLIED THAT LENDER WOULD NOT, IN THE EVENT OF
ANY LITIGATION, ACTION SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING
WAIVER. BORROWER ACKNOWLEDGES THAT LENDER HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION
HEREIN.
10.12. Indemnification by Borrower. Borrower hereby covenants and agrees to indemnify, defend
(with counsel selected by Lender) and hold harmless Lender, Lender’s Affiliates and their respective
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members, managers, directors, shareholders, officers, partners, employees, attorneys, consultants and
agents (collectively, the “Indemnitees”) from and against any and all claims, damages, liabilities, costs
and expenses (including, without limitation, actual attorney’s fees and expenses and other costs of
investigation or defense, including those incurred upon any appeal), which may be incurred by or asserted
against any Indemnitee (whether for breach of contract, in tort or under any other theory of liability) in
connection with or as a result of credit having been extended, suspended or terminated under this
Agreement or the other Loan Documents or with respect to the execution, delivery, enforcement,
performance or administration of, or in any other way arising out of relating to, this Agreement or the
other Loan Documents or any other documents or transactions contemplated by or referred to in this
Agreement, or any action or failure to act with respect to any of the foregoing, including any and all
product liabilities, environmental liabilities, taxes and legal costs and expenses arising out of or incurred
in connection with disputes between or among any parties to and of the Loan Documents, the correctness,
validity or genuineness of any Instrument or Document that may be released or endorsed to Borrower by
Lender (which shall automatically be deemed to be without recourse to Lender in any event), the
existence, character, quantity, quality, condition, value or delivery of any Goods purporting to be
represented by any such Instruments or Documents, or any broker’s commission, finder’s fee or similar
charge or fee payable by Borrower in connection with the Loans and the transactions contemplated by this
Agreement (collectively, the “Indemnified Liabilities”), except to the extent that any such Indemnified
Liability is finally determined by a court of competent jurisdiction to have resulted primarily from such
Indemnitee’s gross negligence or willful misconduct. BORROWER, FOR ITSELF AND FOR ALL
SUCCESSORS, ASSIGNS, THIRD PARTY BENEFICIARIES AND ALL OTHER PERSONS THAT
MAY ASSERT CLAIMS DERIVATIVELY THROUGH SUCH PARTY, HEREBY WAIVES ANY
AND ALL CLAIMS FOR INDEMNIFIED LIABILITIES AGAINST ALL INDEMNITEES EXCEPT
TO THE EXTENT THAT ANY SUCH INDEMNIFIED LIABILITY IS FINALLY DETERMINED BY
A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH
INDEMNITEE’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. NO INDEMNITEE SHALL
BE RESPONSIBLE OR LIABLE TO BORROWER, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF
ATTORNEY OR FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
THAT MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED
OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
THE PROVISIONS OF THIS SECTION 10.12 SHALL SURVIVE TERMINATION OF THE LOANS
AND THE TERMINATION OF THIS AGREEMENT. Notwithstanding the foregoing, in no event shall
Borrower be liable to any Indemnitee for any indirect, punitive, exemplary or consequential damages.
10.13. Savings Clause for Indemnification. To the extent that Borrower’s undertaking to indemnify,
pay and hold harmless set forth in Section 10.12 above may be unenforceable because it violates any law
or public policy, Borrower shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all matters referred to under Section 10.12.
10.14. Lender’s Performance. Lender shall not be responsible for any failure of any Advance to be
credited to any account of Borrower (i) if such failure is caused by conditions beyond Lender’s control
including, but not limited to Acts of God, restrictions of Governmental Units (including the denial or
cancellation of any necessary license, registration or permit), wars, insurrections, or interruptions of
telephone service or internet access caused by a service provider or resulting from the failure of a service
provider’s equipment, software or personnel, and (ii) if such failure is not caused by or due to an event,
occurrence or condition described in clause (i) immediately above, unless such failure is caused by or due
to Lender’s gross negligence or willful misconduct.
10.15. Entire Agreement; Amendments; Lender’s Consent. This Agreement (including the
Schedules and Exhibits) constitutes the entire agreement between Lender and Borrower with respect to
the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings,
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inducements or conditions between Lender and Borrower, whether express or implied, oral or written,
with respect to the subject matter hereof. No amendment or waiver of any provision of this Agreement,
nor consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall
be Authenticated by Lender in a Record, and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
10.16. Cross Default; Cross Collateralization. Borrower hereby acknowledges and agrees that (a)
each other Loan Document and agreement between Borrower and Lender is hereby amended, to the
extent necessary, to provide that a Default or an Event of Default under this Agreement is a default or
event of default, respectively, under each such Loan Document or agreement, and a default or event of
default under any Loan Document or agreement between Borrower and Lender is a Default or an Event of
Default, respectively, under this Agreement, and (b) the Collateral secures the final and indefeasible
payment to Lender in cash and performance of the Obligations in full, whether now or hereafter
outstanding under all other Loan Documents and agreements between Borrower and Lender, and that the
Collateral and any other Property of any other Person pledged to Lender in connection with the
transactions contemplated by this Agreement under any other Loan Document or agreement with Lender
secures the final and indefeasible payment to Lender in cash and performance of the Obligations in full.
10.17. Execution in Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.
10.18. Severability of Provisions. Any provision of this Agreement or any of the other Loan
Documents that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or the other Loan Documents or affecting the validity or enforceability of
such provision in any other jurisdiction.
10.19. Governing Law; Consent To Jurisdiction.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY
LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF EACH NOTE DELIVERED PURSUANT HERETO WERE AND ARE DISBURSED
FROM THE STATE OF NEW YORK. THE PARTIES AGREE THAT THE STATE OF NEW YORK
HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND IN ALL RESPECTS,
INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY IN SUCH STATE
WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS. TO THE FULLEST
EXTENT PERMITTED BY LAW, LENDER AND BORROWER HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER
JURISDICTION GOVERNS THIS AGREEMENT OR ANY NOTE ISSUED BY BORROWER TO
LENDER IN CONNECTION HEREWITH, AND THIS AGREEMENT AND EACH SUCH NOTE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY
IN SUCH STATE WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN THE
SOLE OPTION OF LENDER IN ANY FEDERAL OR STATE COURT LOCATED IN
WESTCHESTER COUNTY, NEW YORK PURSUANT TO SECTION 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW; HOWEVER, LENDER MAY, AT ITS OPTION, COMMENCE
ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION TO OBTAIN POSSESSION OF OR FORECLOSE UPON ANY COLLATERAL, TO
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OBTAIN EQUITABLE RELIEF OR TO ENFORCE ANY JUDGMENT OR ORDER OBTAINED BY
LENDER AGAINST BORROWER OR WITH RESPECT TO ANY COLLATERAL, TO ENFORCE
ANY RIGHT OR REMEDY UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
TO OBTAIN ANY OTHER RELIEF DEEMED APPROPRIATE BY LENDER, AND LENDER AND
BORROWER EACH WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND LENDER
AND BORROWER EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER REPRESENTS AND
ACKNOWLEDGES THAT IT HAS REVIEWED THIS CONSENT TO JURISDICTION PROVISION
WITH ITS LEGAL COUNSEL, AND HAS MADE THIS WAIVER KNOWINGLY AND
VOLUNTARILY, WITHOUT COERCION OR DURESS.
10.20. Table of Contents; Headings. The table of contents and headings preceding the text of this
Agreement are inserted solely for convenience of reference and shall not constitute a part of this
Agreement or affect its meaning, construction or effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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LENDER:
KELTIC FINANCIAL PARTNERS II, LP
By Keltic Financial Services, LLC, its general partner
By:
Name:
Its:
Effective Date:
BORROWER:
IGXGLOBAL, CORP.
By:
Name:
Its:
Date:
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DEFINITIONS SCHEDULE
“Advance” means each principal amount of the Revolving Credit delivered to Borrower in
connection with a Notice of Borrowing (including each principal amount delivered to Borrower under a
Sublimit of the Revolving Credit), and each other amount charged to the principal of the Revolving Credit
pursuant to this Agreement.
“Affiliate” of a Person means a “Person related to” such Person as defined in Sections 9-102(62)
and 9-102(63) of the UCC, and for purposes of this Agreement also includes any employee of such
Person, and any entity controlled by or under common control with any such employee. For purposes of
this definition the term “control” as used in Section 9-102(63) of the UCC means the possession, directly
or indirectly, of the power to direct or cause the direction of the management and/or policies of a Person,
whether through the ownership of voting stock or other equity interests, by agreement or otherwise.
“Anti-Terrorism Laws” shall mean any and all laws, regulations, rules, orders, etc. in effect from
time to time relating to anti-money laundering and terrorism, including, without limitation, Executive
Order No. 13224 (effective September 24, 2001) and the USA Patriot Act (Pub. L. No. 107-56 (Oct. 12,
2001)).
“Asset Purchase Documents” means the Asset Agreement and all other agreements, documents
and instruments executed and/or delivered in connection with the transactions contemplated by such
Asset Purchase Agreement, pursuant to which Buyer is acquiring substantially all of the assets of, and
assuming certain liabilities of, IGX Global, Inc. and acquiring the stock of IGX Global UK Limited.
“Banking Day” means a day on which commercial banks are not authorized or required to close
in New York State.
“Blocked Person” shall mean any person: (a) listed in the annex to Executive Order No. 13224,
(b) owned or controlled by, or acting for or on behalf of, any person listed in the annex to Executive
Order No. 13224, (c) with which Lender is prohibited from dealing or otherwise engaging in any
transaction by any Anti-Terrorism Law, (d) that commits, threatens or conspires to commit or supports
“terrorism” as defined in Executive Order No. 13224, (e) a person that is named a “specially designated
national” or “blocked person” on the most current list published by the U.S. Department of Treasury
Office of Foreign Assets Control or any successor agency (“OFAC”) or other similar list, (f) a person that
is named a “denied person” on the most current list published by the U.S. Commerce Department, or (g)
(i) an agency of the government of a Sanctioned Country, (ii) an organization controlled by a Sanctioned
Country, or (iii) a person resident in a Sanctioned Country to the extent subject to a sanctions program
administered by OFAC.
“Borrower Stock Obligations” means all present and future indebtedness, obligations (whether
fixed or contingent), liabilities (including but not limited to fees, costs and expenses) and claims payable
by Borrower to iGambit Inc. in connection with Borrower’s Equity Interests, pursuant to Borrower’s
Charter Documents, by operation of law or equitable principles, including but not limited to all dividends
payable by Borrower to iGambit Inc., whether regularly declared, declared by special vote, election or
meeting, or whether occasioned by the occurrence of any event or series of events.
“Borrowing Base” means, at any time, an amount equal to:
(a) an amount not to exceed eighty five percent (85.00%) of the aggregate amount of Domestic
Eligible Receivables at such time;
(b) less, aggregate amount of all Obligations outstanding under the Foreign Receivables
Sublimit at such time;
(c) less, the aggregate amount of all Reserves in effect at such time.
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“Capital Expenditures” means for any period, as determined in accordance with GAAP, the
dollar amount of gross expenditures (including obligations under capital leases) made or incurred for
fixed assets, real property, plant and equipment, and all renewals, improvements and replacements thereto
(but not repairs thereof) during such period.
“Charter Documents” means (a) with respect to a corporation, such corporation’s certificate or
articles of incorporation (as applicable) and bylaws in effect on the Effective Date, and as the same may
be amended, restated or otherwise modified after the date hereof, (b) with respect to a partnership, such
partnership’s articles or certificate of formation or certificate of partnership (as applicable) or other
certificate required to be filed with any Governmental Authority in order to form such partnership, and
partnership agreement in effect on the Effective Date, and as the same may be amended, restated or
otherwise modified after the date hereof, and (c) with respect to a limited liability company or limited
liability partnership, such limited liability company’s or limited liability partnership’s articles or
certificate of formation (as applicable) and limited liability company agreement, limited liability
partnership agreement or operating agreement (as applicable) in effect on the Effective Date, and as the
same may be amended, restated or otherwise modified after the date hereof.
“Code” means the Internal Revenue Code of the United States, as the same may be amended.
“Collateral” means all of the properties and assets of Borrower, whether real, personal or mixed,
wherever located, tangible or intangible, and all interests in all of the properties and assets of Borrower of
any kind, whether such properties, assets or interests are owned on the Effective Date or thereafter
acquired, whether owned or held by Borrower or by any other Person in any manner for Borrower's
account, all accessions to, substitutions for and all replacements, products and cash and non-cash
proceeds of all of the foregoing, and specifically including all cash, Money (as defined in Section 1-
201(24) of the UCC), Accessions, Accounts (including without limitation all Receivables and unearned
premiums with respect to insurance policies insuring any of the Collateral and claims against any Person
for loss of, damage to, or destruction of any or all of the Collateral), Certificates of title, Chattel Paper,
Commercial Tort Claims (specifically including all Commercial Tort Claims arising from or in
connection with the matters described in the attached Disclosure Schedule), Deposit Accounts,
Documents (including but not limited all to books and records, and all recorded data of any kind or
nature, regardless of the medium of recording, including, without limitation, writings, plans,
specifications, schematics customer lists, credit files, computer programs, printouts and other computer
materials and records of Borrower pertaining to any of the items or subject matter described in this
paragraph), Equipment, General Intangibles, Goods, Health-Care-Insurance Receivables, Instruments,
Inventory, Investment Property, Letter-Of-Credit Rights, Proceeds, Records, Software and Supporting
Obligations, all rights to payment for money or funds advanced or sold, and all monies or other Property
of any kind now or at any time or times hereafter in the possession or under the control of Lender or any
Affiliate of Lender or any representative, agent or correspondent of Lender pertaining to any of the items
or subject matter described in this paragraph; provided, however, if on or prior to the Effective Date
Borrower has not obtained the written consent of a Governmental Authority necessary to permit the
assignment of any Document, Instrument, Chattel Paper, contract or agreement by and between Borrower
and any Governmental Authority (a “Government Contract”) in connection with the granting by
Borrower to Lender of the security interests described herein, the Collateral and Lender’s security
interests described herein shall specifically exclude each such Government Contract, and all of
Borrower’s rights, title and interests therein, however, in such case the Collateral and Lender’s security
interests granted herein shall specifically include and shall be limited to all Accounts and Receivables in
connection with such Government Contract and all of Borrower’s rights, title and interests in and to such
Accounts and Receivables, and all such Accounts and Receivables shall be considered as Collateral for
purposes hereof.
“Contract Year” means initially the period of twelve (12) consecutive calendar months
commencing on the Effective Date, and thereafter each period of twelve (12) consecutive calendar
months commencing on the annual anniversary of the Effective Date.
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“Default” means each event, occurrence or condition, or series of events, occurrences or
conditions (individually and collectively, an “Occurrence”), that would constitute an Event of Default as
defined in Section 9.1, disregarding (a) all requirements of notice to be delivered to Borrower under this
Agreement in connection with such Occurrence as a condition to the existence of such prospective Event
of Default, and (b) all periods of time, grace or cure under this Agreement that must pass prior to the
existent of such prospective Event of Default.
“Default Rate” means an annualized rate of interest that is equal to three percent (3.00%) more
than the Revolving Credit Rate.
“Eastern Time” means North American Eastern Standard Time, including Eastern standard time
when observing standard time, and Eastern daylight time when observing daylight saving time.
“EBITDA” means, for any period, Borrower’s total income before interest expense, taxes,
depreciation and amortization for such period, all calculated in accordance with GAAP, consistently
applied and determined as of and at the end of such period. For purposes of this Agreement, EBITDA for
any period shall be determined disregarding any extraordinary items of income and expense during such
period.
“Eligible Domestic Receivable” means each Receivable of Borrower: for which the Records and
accounts are located at Borrower’s facilities located in the United States where such Records are
maintained as described in the Disclosure Schedule; arising out of a sale in the ordinary course of
Borrower’s business as conducted on the Effective Date; with respect to which the sale giving rise to such
Receivable is to an Account Debtor domiciled in the United States or Canada; relating to a sale made by
Borrower to a Person that is not an Affiliate of Borrower; that is not in dispute; with respect to which
each representation with respect to Eligible Receivables set forth in this Agreement is accurate; and that is
acceptable to Lender in Lender’s permitted discretion. Lender may treat any Domestic Receivable as
ineligible if:
(a) more than ninety (90) consecutive calendar days has passed from the original invoice date for
such Receivable; or
(b) any representation contained in this Agreement with respect to such Receivable or with
respect to whether such Receivable is an Eligible Receivable was inaccurate when made; or
(c) the Account Debtor has disputed liability or made any claim with respect to such Receivable
or with respect to any other material Receivable due from the Account Debtor; or
(d) the Account Debtor (i) has filed a case for bankruptcy or reorganization under the
Bankruptcy Code, or (ii) has filed against it any case under the Bankruptcy Code, or (iii) has made
an assignment for the benefit of creditors, or (iv) has failed, suspended business operations, become
insolvent, or (v) has a receiver or a trustee appointed for all or a significant portion of its assets or
affairs; or
(e) the Account Debtor is a supplier to or creditor of Borrower; or
(f) the Account Debtor has or asserts any right of offset with respect to any Receivable or asserts
any claim or counterclaim against Borrower with respect to any Receivable; or
(g) Borrower is not the sole owner of the Receivable; Borrower has sold, assigned or otherwise
transferred all or any portion thereof; or any portion of the Receivable is subject to any claim, lien or
security interest (other than a Permitted Lien); or
(h) the sale giving rise to such Receivable is to an Account Debtor domiciled in the Province of
Quebec, Canada, unless (i) such Receivable is secured by a letter of credit issued to Borrower in
amount, form and content acceptable to Lender in Lender’s sole discretion, or (ii) such Receivable is
secured by a credit risk insurance policy in form and content acceptable to Lender in Lender’s sole
discretion; or
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(i) twenty five percent (25.00%) or more of the Receivables of any Account Debtor and/or its
Affiliates is ineligible, then all the Receivables of such Account Debtor and its Affiliates shall be
treated as ineligible; or
(j) any portion of the Eligible Receivables of the Account Debtor and/or its Affiliates exceeds
twenty percent (20.00%) of the total amount of all Eligible Receivables, then the amount of such
excess shall be treated as ineligible; provided, however, with respect to (A) New York University
Hospital and its Affiliates, if the aggregate amount of Eligible Receivables from New York
University Hospital and its Affiliates exceeds forty percent (40.00%) of the total amount of all
Eligible Receivables, then the amount of such excess, respectively, shall be treated as ineligible; and
(B) each Account Debtor that Lender determines in its Permitted Discretion is of similar credit
quality as New York University Hospital (each, an “A Credit Account Debtor”) and its Affiliates, if
the aggregate amount of Eligible Receivables from such A Credit Account Debtor and its Affiliates
exceeds forty percent (40.00%) of the total amount of all Eligible Receivables, then the amount of
such excess, respectively, shall be treated as ineligible; or
(k) such Receivable relates to a sale of goods or services to the United States of America, or to a
Governmental Unit of the United States of America, unless Borrower assigns its right to payment of
such Receivable to Lender in compliance with the Assignment of Claims Act of 1940, as amended;
or
(l) such Receivable relates to a sale of goods or services to any state of the United States of
America, or to any Governmental Unit of any state of the United States of America, unless Borrower
assigns its right to payment of such Receivable to Lender in compliance with all applicable laws,
rules, regulations or administrative or judicial determinations relating to the assignment (in whole or
in part) of any agreement or contract pursuant to which such sale was made; or
(m) such Receivable relates to a sale of goods or services to the federal government of Canada,
any Province of Canada, or to any Governmental Unit of the federal government of Canada or any
Province of Canada, unless Borrower assigns its right to payment of such Receivable to Lender in
compliance with all applicable laws, rules, regulations or administrative or judicial determinations
relating to the assignment (in whole or in part) of any agreement or contract pursuant to which such
sale was made; or
(n) the goods or services covered by such Receivable were shipped to the customer or performed
for the customer, as applicable, prior to or after the date of the invoice giving rise to such
Receivable; or such Receivable consists of a sale to an Account Debtor on consignment, on any xxxx
and hold basis, on any guaranteed sale, sale or return, sale on approval or other repurchase or return
basis, on any billing in advance of shipment or other “pre-billing” basis or under any payment plan,
scheduled installment plan, or on any payment terms greater than sixty (60) days from invoice date
or other similar extended payment terms basis; or
(o) the Account Debtor is located in a state of the United States or in a Province of Canada in
which Borrower is deemed to be doing business under the laws of such state or Province,
respectively, and such state or Province denies creditors access to its courts in the absence of
Borrower’s qualification to transact business in such state or Province, respectively, or of
Borrower’s filing of any reports with such state or Province, unless Borrower has qualified as a
foreign business entity authorized to do business in such state or Province and has filed all required
reports; or
(p) such Receivable is evidenced by chattel paper or an instrument of any kind which has not
been assigned or endorsed and delivered to Lender, or such Receivable has been reduced to
judgment; or
(q) such Receivable arises from a sale of goods or services to an individual who is purchasing
such goods primarily for personal, family or household purposes; or
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(r) Lender believes in Lender’s permitted discretion that collection of such Receivable is
insecure or that such Receivable may not be paid by reason of the Account Debtor’s financial
inability to pay.
“Eligible Receivable” means an Eligible Domestic Receivable or Eligible Foreign Receivable.
“Environmental Law” means each federal, state and local environmental, land use, zoning,
health, chemical use, safety and sanitation law, statute, ordinance or code relating to the protection of any
water or water vapor, any land surface or subsurface, air, fish, wildlife, biota or any other natural
resources and/or governing the use, storage, treatment, generation, transportation, processing, handling,
production or disposal of “hazardous substances” and the rules, regulations, policies, guidelines,
interpretations, decisions, orders and directives of any Governmental Unit with respect thereto.
“Equity Interests” of a Person means such Person’s issued and outstanding equity securities, or
membership, partnership or profits interests, as applicable, or debt or securities (or combinations thereof)
convertible into such Person’s equity securities, or membership, partnership or profits interests, as
applicable.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Fiscal Quarter” means the three (3) consecutive calendar month period commencing on the first
day of the Fiscal Year, and each three (3) consecutive calendar month period in such Fiscal Year
commencing on the day immediately following end of the preceding Fiscal Quarter.
“Fiscal Year” means a year of 365 or 366 days, as the case may be, ending on the last day of
December in any calendar year.
“Foreign Receivable” means each Receivable of Borrower’s wholly-owned subsidiary IGX
Global UK Limited.
“GAAP” means generally accepted accounting principles consistently applied and maintained
throughout the period indicated and consistent with the prior financial practice of Borrower, except for
changes mandated by the Financial Accounting Standards Board or any similar accounting authority of
comparable standing.
“Governmental Rules” means all Federal, state and local governmental rules, ordinances and
regulations applicable to Borrower’s ownership or use of properties or the operation or conduct of its
business.
“Governmental Unit” means, with respect to the government of the United States, a State of the
United States or a foreign county (a “government”) (a) a subdivision, agency, department, county, parish,
municipality or other unit of such government, or (b) an entity exercising executive, legislative, judicial,
taxing, law enforcement, regulatory or administrative powers or functions of or pertaining to such
government.
“Indebtedness” of a Person means all obligations for borrowed money of any kind or nature,
including funded debt and unfunded liabilities, contingent obligations under guaranties or letters of credit
or similar financial instruments or accommodations, and all obligations for the acquisition or use of any
fixed asset or improvements, including capitalized leases, which are payable over a period longer than
one (1) year, regardless of the term thereof or the Person or Persons to whom the same is payable.
“In Transit Inventory” means Inventory that is being shipped or otherwise transported to or by
Borrower from or to, as applicable, a point of origin within the continental United States, or is being
shipped or otherwise transported to or by Borrower from or to, as applicable, a point of origin outside of
the continental United States.
“Lender’s permitted discretion” means, that in connection with a determination to be made by
Lender under this Agreement, or in connection with an election by Lender to take or refrain from taking
an action under this Agreement, Lender may make such determination, or elect to take or not take such
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action, as applicable, in good faith and in the exercise of reasonable business judgment from the
perspective of a secured asset based lender.
“Lender’s sole discretion” means, that in connection with a determination to be made by Lender
under this Agreement, or in connection with an election by Lender to take or refrain from taking an action
under this Agreement, Lender may make such determination, or elect to take or not take such action, as
applicable, after consideration by Lender of only its own interests, without regard to the effect of such
determination or election on Borrower, including but not limited to Borrower’s interests, Borrower’s
business or Borrower’s operations.
“LIBOR Rate” means the annual rate of interest for deposits in U.S. Dollars for a term of three
(3) months as quoted on LIBOR01 Page as of 11:00 a.m. London Time on the second (2nd) Banking Day
prior to the date of an Advance until the first day of the first full month following the date of such
Advance, and for each calendar month thereafter on the second (2nd) Banking Day prior to the first day
of each calendar month, adjusted for reserve requirements and such other requirements as may be
imposed by federal, state or local government and regulatory agencies.
“LIBOR01 Page” means the Reuters Screen LIBOR01 Page (or such other page as may replace
the LIBOR01 on that service or such other service as may be nominated by the British Bankers’
Association as the information vendor for the purpose of displaying British Bankers’ Association Interest
Settlement Rates for U.S. Dollar deposits).
“Loans” means the Revolving Credit (including all Advances thereof) and all other Indebtedness
of Borrower to Lender under the terms of this Agreement.
“Loan Document” means this Agreement and each other agreement, document and instrument
delivered by Borrower or any other Person to Lender or by Lender to any other Person in connection with
the Obligations, the Loans, the Notes, or any other Indebtedness payable to Lender in connection with the
transactions contemplated by this Agreement, as the same may be amended, modified, supplemented,
extended or restated from time to time.
“Material” and “Materially” mean a level of significance that (a) if capable of reduction to a
monetary amount, would be reasonably expected to exceed Twenty Five Thousand and 00/100 Dollars
($25,000.00) individually, or Fifty Thousand and 00/100 Dollars ($50,000.00) when aggregated with all
other similar matters, and (b) if not capable of reduction to a monetary amount, would have affected any
decision of a reasonable business person in Lender’s position as an asset-based lender regarding whether
(i) to enter into this Agreement, or (ii) to consummate the transactions contemplated by this Agreement,
or (iii) to continue to make Advances to, or to continue to extend the Loans, in whole or in part, to
Borrower.
“Material Adverse Change” means any: (a) Material adverse change in the business, assets,
operations, profits or financial condition of Borrower; or (b) Material adverse change in the ability of
Borrower to pay or perform the Obligations in accordance with their terms; or (c) Material adverse
change in the value, collectability or salability of the Collateral; or (d) the occurrence of any event,
development, circumstance or condition, or series of events, developments, circumstances or conditions,
that would reasonably be expected to have a material adverse effect on the validity or enforceability of
this Agreement or any of the Loan Documents, or on the perfection or priority of Lender’s security
interests in any Collateral; or (e) the occurrence of any event, development, circumstance or condition, or
series of events, developments, circumstances or conditions, that could have a material adverse effect on
Lender’s practical realization of the benefits, rights and remedies inuring to Lender under this Agreement
or under any other Loan Document; or (f) the occurrence of any event, development, circumstance or
condition, or series of events, developments, circumstances or conditions, that could materially impair
Lender’s security, materially increase Lender’s risks, or materially impair Borrower’s ability to perform
under this Agreement or under any of the other Loan Documents. The determination of whether a
Material Adverse Change has occurred shall be made by Lender in Lender’s permitted discretion and
based on the foregoing with respect to Borrower, and not based on changes in general economic
conditions or the economic conditions of the market in which Borrower operates.
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“Note” means a promissory note Authenticated by Borrower and delivered to Lender pursuant to
the terms of this Agreement.
“Obligation” means a liability, obligation, covenant or duty owed or owing by Borrower to
Lender, of any kind or nature, present or future, whether or not evidenced by any note, guaranty,
Supporting Obligation or other agreement, document or instrument, whether arising under this
Agreement, any other Loan Document or under any other agreement, document, instrument delivered to
Lender by Borrower, or by operation of law, whether or not for the payment of money, whether arising in
connection with an extension of credit to Borrower or Borrower’s opening, guaranteeing or confirming of
a letter of credit, loan, guaranty, indemnification or other financial accommodation, whether direct or
indirect (including those acquired by purchase or assignment), absolute or contingent, due or to become
due, now or hereafter arising and howsoever acquired including, without limitation, each Loan, Advance,
and other Indebtedness payable by Borrower to Lender, all interest payable to Lender with respect to each
Loan, Advance and other Indebtedness of Borrower to Lender, and each charge, cost, expense, fee, and
other sum chargeable to Borrower under this Agreement, any other Loan Document or any other
agreement, document or instrument delivered by Borrower to Lender. The Obligations shall specifically
include, but not be limited to (i) Borrower’s obligations to finally and indefeasibly pay to Lender in cash
the full principal amounts of all Loans, Notes and other Indebtedness of Borrower to Lender when due,
whether upon termination, maturity, demand or acceleration under the terms of the Loan Documents, all
interest due and payable thereon, and all fees, costs and expenses payable in connection therewith, and (ii)
Borrower’s obligations to perform in full all agreements, covenants and duties of Borrower under the
Loan Documents in the manner and at such times as provided by the terms of each such Loan Document.
“Permitted Liens” means:
(a) liens securing the Obligations;
(b) liens for taxes, assessments and other governmental charges or levies (excluding any Lien
imposed pursuant to the provisions of ERISA or Environmental Laws) (i) not yet due and payable or
(ii) which are being properly contested and for which Borrower has established adequate reserves;
(c) claims of materialmen, mechanics, carriers, warehousemen, processors or landlords arising
out of operation of law so long as the obligations secured thereby (i) are not past due or (ii) are being
properly contested and for which Borrower has established adequate reserves;
(d) liens consisting of deposits or pledges made in the ordinary course of business in connection
with workers’ compensation, unemployment insurance, social security and similar laws;
(e) liens on equipment (including capital leases) to secure purchase money Indebtedness
permitted under Section 8.1, so long as such security interests do not apply to any property of
Borrower other than the equipment so acquired, and the Indebtedness secured thereby does not
exceed the cost of such equipment; and
(f) security interests, pledges, liens, charges, mortgages or other encumbrances in, to or on any
Collateral in favor of any creditor of Borrower other than Lender so long and to the extent that such
security interest, pledge, lien, charge, mortgage or other encumbrance is junior and subordinate to
the security interests, pledges, liens, charges, mortgages and other encumbrances in, to or on
Collateral in favor of Lender pursuant to a subordination agreement executed by Lender.
“Person” means an individual, partnership, limited liability company, limited liability
partnership, corporation, joint venture, joint stock company, land trust, business trust, unincorporated
organization, or Governmental Unit.
“Prime Rate” means, at any time, the prime rate published in the “Money Rates” column of The
Wall Street Journal at such time, and in the event that The Wall Street Journal is not available at such
time, the prime rate published in another publication as determined by Lender in its discretion.
02 IGXGLOBAL CORP LSA Final.docx
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“Property” means, with respect to a Person, all of such Person’s tangible and intangible property,
assets and interests in property and assets, whether personal, real or mixed, owned on the Effective Date
or thereafter acquired.
“Receivable” means, with respect to a Person, each (i) Account, (ii) Health-Care-Insurance
Receivable, (iii) credit card receivable, (iv) right to payment under any contract, Document, Instrument
promissory note, Chattel Paper, or electronic chattel paper, (v) tax refund or right to receive any tax
refund, (vi) bond or certificate owned or held by such Person or held for the benefit of such Person, (vi)
right to payment for the sale, lease or license of any Inventory, Equipment or General Intangible, (vii)
policy of insurance issued to or for the benefit of such Person and each right to payment and Proceeds of
such insurance, (viii) right to payment in connection with each Investment Property, Deposit Account,
book account, credit or reserve, and (ix) form of obligation whatsoever owing to such Person, together
with all Instruments, Documents and Certificates of title representing any of the foregoing, and all rights
in any merchandise or Goods which any of the same may represent, all files and Records with respect to
any collateral or security given by such Person to Lender in the foregoing, together with all rights, title,
security, Supporting Obligations and guarantees with respect to the foregoing, including any right of
stoppage in transit, whether now owned or hereafter created or acquired by such Person or in which such
Person now has or hereafter acquires any interest.
“Reportable Event” has the same definition as provided in Title IV of ERISA.
“Revolving Credit Rate” means a fluctuating rate that, when annualized, is equal to the greatest
of (A) the Prime Rate plus three and one half percent (3.50%), (B) the LIBOR Rate plus six and one
quarter percent (6.25%), and (C) six and three quarters percent (6.75%).
“Revolving Credit Termination Date” means the earliest to occur of (a) the third (3rd)
anniversary of the Effective Date, (b) the date Lender terminates the Revolving Credit pursuant to Section
9.3(a), and (c) the date on which repayment of the Revolving Credit, or any portion thereof, becomes
immediately due and payable pursuant to Section 9.3(b), or (d) the date on which the Obligations are
finally and indefeasibly repaid in cash to Lender and performed in full.
“Settlement Account” means Lender’s account at Xxxxxx Trust and Savings Bank, Xxxxxxx, XX
00000, Account Name: Keltic Financial Partners II, LP; Account No. 0000000, ABA No. 000000000, or
such other account as Lender may advise Borrower.
“Significant Holder” means a Person that directly or indirectly holds ten percent (10%) or more
of Borrower’s Equity Interests.
“Solvent” when used with respect to a Person means that such Person is able to pay all of its
Indebtedness as such Indebtedness matures.
“Termination Date” means with respect to the Revolving Credit the Revolving Credit
Termination Date, and with respect to any Sublimit of the Revolving Credit, the termination date of such
Sublimit as described in the Revolving Credit Sublimits Schedule.
“to Borrower’s knowledge”, “to the knowledge of Borrower” and all variations and derivations
of such terms mean (i) the actual individual and/or collective knowledge of any of Borrower’s directors
and executive officers (individually and collectively, the “Knowledge Parties”), after reasonable and
prudent inquiry by each of the Knowledge Parties, and (ii) the individual and/or collective knowledge of
any fact, condition, event, occurrence or circumstance that would have come to the attention of any of the
Knowledge Parties in the course of discharging his or her duties as a director or executive officer of
Borrower (as applicable) in a reasonable and prudent manner consistent with sound business practices.
“UCC” means the New York Uniform Commercial Code as in effect on the date of this
Agreement, and as may be amended or modified after the date of this Agreement; provided, however, in
the event that, by reason of mandatory provisions of law, the perfection, the effect of perfection or
nonperfection or priority of Lender’s security interest in any Collateral is governed by the Uniform
Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, then the
02 IGXGLOBAL CORP LSA Final.docx
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term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for the purposes of the provisions hereof relating perfection, the effect of perfection or
nonperfection or priority of Lender’s security interest in such Collateral.
“Unfunded Capital Expenditures” means, for any period, the aggregate amount of Capital
Expenditures made by Borrower during such period, less the aggregate principal amount of all
Indebtedness assumed or incurred by Borrower during such period for the purpose of financing such
Capital Expenditures (other than the principal amount of Loans made for the purpose of financing such
Capital Expenditures).
UCC Definitions. When used in this Agreement, the following terms have the same definitions
as provided in Article 9 of the UCC, but for convenience in this Agreement the first letter of all such
terms shall be capitalized : “Accession”, “Account”, “Account Debtor”, “Authenticate” (and all
derivations thereof), “Certificate Of Title”, “Chattel Paper”, “Commercial Tort Claim”, “Deposit
Account”, “Document”, “Equipment”, “General Intangible”, “Goods”, “Health-Care-Insurance
Receivable”, “Instrument”, “Inventory”, “Investment Property”, “Letter-Of-Credit Right”, “Obligor”,
“Proceeds” (as specifically defined in Section 9-102(64) of the UCC), “Record”, “Secondary Obligor”,
“Secured Party”, “Software” and “Supporting Obligation”.
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02 IGXGLOBAL CORP LSA Final.docx
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REVOLVING CREDIT SUBLIMIT SCHEDULE
Foreign Receivables Sublimit. Subject to the terms and conditions of this Agreement and so long as no
Default or Event of Default then exists, on Borrower’s request until the third (3rd) anniversary of the
Effective Date or the date the Revolving Credit is earlier terminated pursuant to the terms of this
Agreement (the earliest of such dates to be referred to as the “Foreign Receivables Sublimit Termination
Date”) Lender shall provide to Borrower a portion of the Revolving Credit (the “Foreign Receivables
Sublimit”) in an aggregate principal sum (the “Foreign Receivables Sublimit Borrowing Capacity”)
equal to the lesser of (i) FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00) (the
“Foreign Receivables Sublimit Cap”), or (ii) fifty percent (50.00%) of the aggregate amount of Eligible
Foreign Receivables at such time. The maximum principal amount of any Advance of the Foreign
Receivables Sublimit shall not exceed an amount equal to the Foreign Receivables Sublimit Borrowing
Capacity less the aggregate amount of all Obligations under the Foreign Receivables Sublimit then
outstanding. Notwithstanding anything to the contrary contained herein in no event shall any Advance of
the Foreign Receivables Sublimit be made if it would cause (A) the outstanding principal amount of the
Foreign Receivables Sublimit to exceed the Foreign Receivables Sublimit Cap, or (B) the outstanding
principal amount of the Revolving Credit, including Advances made under the Foreign Receivables
Sublimit, to exceed the Revolving Credit Limit. Within the limits of the Foreign Receivables Sublimit
Borrowing Capacity, and subject to the terms and conditions of this Agreement, Borrower may borrow,
repay and reborrow the principal amount of the Foreign Receivables Sublimit.
(a) Eligible Foreign Receivables.
For purposes of this Agreement “Eligible Foreign
Receivable” means each Receivable of Borrower’s wholly-owned subsidiary IGXGLOBAL UK
Limited (“IGX UK”): for which the Records and accounts are located at IGX UK’s facilities located
outside of the United States or Canada where such Records are maintained as described in the
Disclosure Schedule; arising out of a sale in the ordinary course of IGX UK’s business as conducted
on the Effective Date; with respect to which the sale giving rise to such Receivable is to a customer
of IGX UK domiciled outside of the United States or Canada; relating to a sale made by IGX UK to
a Person that is not an Affiliate of IGX UK; that is not in dispute; with respect to which each
representation with respect to Eligible Receivables set forth in this Agreement is accurate; and that is
acceptable to Lender in Lender’s permitted discretion. Lender may treat any Foreign Receivable as
ineligible if:
(i) more than ninety (90) consecutive calendar days has passed from the original invoice
date for such Receivable; or
(ii) any representation contained in this Agreement with respect to such Receivable or with
respect to whether such Receivable is an Eligible Foreign Receivable was inaccurate when
made; or
(iii) the customer from which such Receivable is due has disputed liability or made any
claim with respect to such Receivable or with respect to any other material Receivable due from
the customer from which such Receivable is due; or
(iv) the customer from which such Receivable is due (i) has filed a case for bankruptcy,
reorganization, protection from claims or creditors or any similar action under any statute, law or
regulation similar to the Bankruptcy Code, or (ii) has filed against it any case under any statute,
law or regulation similar to the Bankruptcy Code, or (iii) has made an assignment for the benefit
of creditors, or (iv) has failed, suspended business operations, become insolvent, or (v) has a
receiver or a trustee appointed for all or a significant portion of its assets or affairs; or
(v) the customer from which such Receivable is due is a supplier to or creditor of IGX UK;
or
02 IGXGLOBAL CORP LSA Final.docx
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(vi) the customer from which such Receivable is due has or asserts any right of offset with
respect to any Receivable or asserts any claim or counterclaim against IGX UK with respect to
any Receivable; or
(vii) IGX UK is not the sole owner of the Receivable; IGX UK has sold, assigned or
otherwise transferred all or any portion thereof; or any portion of the Receivable is subject to
any claim, lien security interest or other encumbrance (other than a Permitted Lien); or
(viii) twenty five percent (25.00%) or more of the Receivables of any customer and/or its
Affiliates is ineligible, then all the Receivables of such customer and its Affiliates shall be
treated as ineligible; or
(ix) any portion of the Eligible Receivables of the customer from which such Receivable is
due and/or its Affiliates exceeds twenty percent (20.00%) of the total amount of all Eligible
Receivables, then the amount of such excess shall be treated as ineligible; or
(x) such Receivable relates to a sale of goods or services to any federal, provincial,
municipal or local Governmental Unit, unless IGX UK assigns its right to payment of such
Receivable to Lender in compliance with all applicable laws, rules, regulations or administrative
or judicial determinations relating to the assignment (in whole or in part) of any agreement or
contract pursuant to which such sale was made; or
(xi) the goods or services covered by such Receivable were shipped to the customer or
performed for the customer, as applicable, prior to or after the date of the invoice giving rise to
such Receivable; or such Receivable consists of a sale to a customer on consignment, on any xxxx
and hold basis, on any guaranteed sale, sale or return, sale on approval or other repurchase or
return basis, on any billing in advance of shipment or other “pre-billing” basis, under any
payment plan, scheduled installment plan, or on any payment terms greater than sixty (60) days
from invoice date or other similar extended payment terms basis; or
(xii) the customer is located in any jurisdiction in which IGX UK is deemed to be doing
business under the laws of such jurisdiction, and such jurisdiction denies creditors access to its
courts in the absence of IGX UK’s qualification to transact business in such jurisdiction, or of
IGX UK’s filing of any reports with such jurisdiction, unless IGX UK has qualified as a foreign
business entity authorized to do business in such jurisdiction and has filed all required reports; or
(xiii) such Receivable is evidenced by chattel paper or an instrument of any kind which has
not been assigned or endorsed and delivered to Lender, or such Receivable has been reduced to
judgment; or
(xiv) such Receivable arises from a sale of goods or services to an individual who is
purchasing such goods primarily for personal, family or household purposes; or
(xv) Lender believes in Lender’s permitted discretion that collection of such Receivable is
insecure or that such Receivable may not be paid by reason of the customer’s financial inability
to pay.
(b) Advances of the Foreign Receivables Sublimit. Each Advance of the principal amount of the
Foreign Receivables Sublimit shall by made by Borrower in a Notice of Borrowing and shall be
requested by Borrower in a minimum aggregate principal amount of Twenty Five Thousand and
00/100 Dollars ($25,000.00) or in a larger multiple of Five Thousand Dollars ($5,000.00).
(c) Repayment of Foreign Receivables Sublimit on Foreign Receivables Sublimit Termination
Date. On the Foreign Receivables Sublimit Termination Date (i) Borrower shall pay to Lender the
entire outstanding principal balance of the Foreign Receivables Sublimit, plus all accrued and unpaid
interest thereon and all fees, costs, expenses and other amounts payable to Lender under this
Agreement and the other Loan Documents in connection therewith, and (ii) Lender shall not be
02 IGXGLOBAL CORP LSA Final.docx
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obligated to make or continue to extend any Advance to Borrower under the Foreign Receivables
Sublimit.
(d) Currency for Foreign Receivables Sublimit. All requests for Advances of the Foreign
Receivables Sublimit, all disbursements of the Foreign Receivables Sublimit, all payments of the
Foreign Receivables Sublimit and all calculations of the Foreign Receivable Sublimit Cap and
Foreign Receivables Sublimit Borrowing Capacity will be made in United States Dollars using then
current exchange rates published in the “Exchange Rates” column of The Wall Street Journal at such
time, and in the event that The Wall Street Journal is not available at such time, the prime rate
published in another publication as determined by Lender in its discretion
(e) Schedule; Borrower Acknowledgment. Borrower acknowledges that the above provisions
relating to the Foreign Receivables Sublimit, although set apart in this Schedule, are not intended to
and do not set forth all terms, provisions and conditions between Lender and Borrower relating to
the Foreign Receivables Sublimit, that the Foreign Receivables Sublimit constitutes a portion of the
Revolving Credit, and that the Foreign Receivables Sublimit is subject to all terms, provisions and
conditions set forth elsewhere in this Agreement, whether in the body of this Agreement, any Exhibit
or any other Schedule, including, but not limited to, all terms, provisions and conditions relating to
the Revolving Credit.
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02 IGXGLOBAL CORP LSA Final.docx
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DISCLOSURE SCHEDULE
5.1 Organization, Qualification and Structure.
5.1(a) Borrower Jurisdiction.
Incorporated under the laws of the State of Delaware. Doing business in Connecticut and New York.
5.1(b) Affiliates.
IGXGLOBAL UK Limited, a UK wholly owned subsidiary.
Parent company iGambit Inc. owns 100% of the outstanding shares of Borrower.
5.3 Name and Address.
ADDRESS
OWNED/LEASED
LANDLORD
USE
00 Xxxxxx Xxxx
Leased
00 Xxxxxx Xxxx
Headquarters and main
Xxxxx Xxxx, XX 00000
Limited Partnership
operating facility
Trade names used by Seller and to be used by Borrower:
IGX
IGX Global
igxglobal
igxGLOBAL
igxglobal UK Limited
igxGLOBAL UK Limited
igx EMEA
igxGLOBAL EMEA
igxglobal EMEA
Imaginex
5.4 Location of Collateral; Equipment List.
5.4(a) Location of Collateral Records.
00 Xxxxxx Xxxx
Xxxxx Xxxx, XX 00000
5.4(b) Location of Inventory.
00 Xxxxxx Xxxx
Xxxxx Xxxx, XX 00000
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02 IGXGLOBAL CORP LSA Final.docx
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5.4(c) Equipment List.
Vendor
Model
S/N
Qty
Cost
Total3List3Cost
HP
S2500
MX09B1R17T
1
2,125.00
2,125.00
HP
S1400
MXOBB1Q3BD
1
21,850.42
21,850.42
HP
3CRTPZP0196C
8UQP0610000295
1
18.99
18.99
HP
3CRTPZP0196C
MX0BB0DQXP
1
18.99
18.99
HP
3CRTPZP0196C
MX0BB0DQXD
1
18.99
18.99
HP
XXXXXXXXXXX
XXXXX0XXXX
0
1,433.00
1,433.00
HP>
TPOXFPLRFOS
TWOBBOLQZ7
1
1,433.00
1,433.00
HP
TPOXFPLRFOS
TWOBBOLQZF
1
1,433.00
1,433.00
HP
TPOXFPLRFOS
TWOBBOLQZ5
1
1,433.00
1,433.00
MISC
C13/15>POWER>CORDS
8
45.00
360.00
BLUECOAT*
PACKETSHAPER>3500
135E10015354
1
13,000.00
13,000.00
BLUECOAT
SG400E1
090E02613
1
140.00
140.00
JUNIPER
SA2500
0239092010000071
1
2,500.00
2,500.00
XXXXXXX
XX0000
0239052010000121
1
2,500.00
2,500.00
JUNIPER
EX4200E24T
BM0209119952
1
5,200.00
5,200.00
JUNIPER
EX4200E24T
BM0000000000
1
5,200.00
5,200.00
JUNIPER
EX4200E24T
BM0209119951
1
5,200.00
5,200.00
JUNIPER
SRX240H
AG0810AA0240
1
3,699.00
3,699.00
BLUECOAT
SG600E35
0000000000
1
19,000.00
19,000.00
JUNIPER*
QFX3500
P1243
1
1,330.00
1,330.00
HP>
SLIDE>KIT
JC017A
1
182.00
182.00
JUNIPER
250W>POWER>SUPPLY
522606
1
1,050.00
1,050.00
JUNIPER
MAG4610
32938052703
1
7,000.00
7,000.00
BLUECOAT
SG210E10EPR
5107066039
1
4,550.00
4,550.00
JUNIPER
SRX220H
AR0311AA0098
1
2,115.00
2,115.00
JUNIPER
SRX220H
AR0311AA0092
1
2,115.00
2,115.00
JUNIPER
CONNECTOR>ADAPTER
JXECONNEDB9
8
10.00
80.00
BOXES>OF>MISC>RACK>
MISC
RAILS/CABLES
3
50.00
150.00
DELL
PowerEdge>R415
part>#0F27M
2
2,489.00
4,978.00
HP
TP330BS96
8AZA041QA25C01
1
1,433.00
1,433.00
BLUECOAT
PS1400LTEL00ZM
01410007329
1
239.00
239.00
XXXXXXX*
XX0000
0249032008000029
1
500.00
500.00
JUNIPER
WX500
S0500005203
1
3,672.00
3,672.00
BLUECOAT
AV400
0000000000
1
250.00
250.00
BLUECOAT
SG400E1
2805050024
1
139.95
139.95
JUNIPER
CBLEJXEPWREUS
6
59.52
357.12
JUNIPER
JXE2T1ERJ48S
2
350.00
700.00
JUNIPER
JXUE1SFPES
2
425.00
850.00
JUNIPER
JXESFPE1GEES
2
205.00
410.00
JUNIPER
SRX220ERMK
2
150.00
300.00
JUNIPER
EXEUME2XEXFP
2
950.00
1,900.00
JUNIPER
SRXEMPE1SFP
2
1,000.00
2,000.00
JUNIPER
SRXEMPE1ADSLA
1
600.00
600.00
JUNIPER
SRXEMPE1T1
2
700.00
1,400.00
APC
UPS>RACK>KIT
1
35.00
35.00
JUNIPER
QFX>OPTIC
1
425.00
425.00
JUNIPER
GBICELXE1
4
58.00
232.00
JUNIPER
5GT>WIRELESS
2
547.20
1,094.40
JUNIPER
SRXEMPE1SFP
2
1,000.00
2,000.00
BLUECOAT
PACKETSHAPER>1400
014E1000E7337
1
250.00
250.00
HP
TP2400
8UDS60GA0602
1
21,850.42
21,850.42
HP
ZPHA00763004
1
855.00
855.00
BLUECOAT
SA810EA
3706080319
1
25,200.00
25,200.00
INFOBLOX
IB1550
1008200609000062
1
16,495.00
16,495.00
INFOBLOX
IB1550
1006200801000134
1
16,495.00
16,495.00
JUNIPER
SRX1KENPCESPCE1E10E40
AACP7826
1
20,000.00
20,000.00
JUNIPER
NSEIDPE50
0145022007000011
1
350.00
350.00
CYBEROAM
UTM>250I
1
500.00
500.00
02 IGXGLOBAL CORP LSA Final.docx
44 of 50
JUNIPER
IC4000
0160092007000016
1
10,000. 00
10,000. 00
JUNIPER
J4350
JN1093425ADA
1
1,288. 00
1,288. 00
JUNIPER*
NS25
0185102007000805
1
300. 00
300. 00
JUNIPER*
JXEE1GE
1
850. 00
850. 00
JUNIPER
5GT>WIRELESS
5
547. 20
2,736. 00
BLUECOAT
SG200
2
399. 99
799. 98
SMC*
EZ>SWITCH>1024DT
2
25.00
50.00
PACKETSHAPER>LEME1000ME
BLUECOAT
HHET
00810006277
1
250. 00
250. 00
RADWARE
ROUTER
1
300. 00
300. 00
JUNIPER
NS500
0010072001000094
1
500. 00
500. 00
SWITCHVOX*
AA300
DP0508370044
1
2,000. 00
2,000. 00
CISCO*
1800>WITH>MODEMS
1
200. 00
200. 00
JUNIPER*
WXC500
0500002235
1
200. 00
200. 00
JUNIPER
SSGE520MESH
JN10ACA02ADA
1
6,500. 00
6,500. 00
HP>
OFFICEJET>PRINTER>5610
1
449. 99
449. 99
MISC
TRIESCREEN>MONTIOR
1
1,500. 00
1,500. 00
JUNIPER
XXXXXXXX0XXXXXX
XXX0X0X
1
750. 00
750. 00
JUNIPER
QFXESFPE8GFCESW
PKA5S LY
1
750. 00
750. 00
JUNIPER
QFXESFPEDACE3M
8
210. 00
1,680. 00
DLINK
DSSE16
B238258001644
1
58.99
58.99
CISCO
2503 251133713
1
30.00
30.00
JUNIPER
NS204
0029042002000055
1
10,000. 00
10,000. 00
JUNIPER*
J2300
JN000527AA
1
269. 99
269. 99
BLUECOAT
PROXY>AV>400
3004050037
1
250. 00
250. 00
BLUECOAT
PROXY>AV>400
2805050024
1
250. 00
250. 00
BLUECOAT
PROXY>AV>400
3005026496
1
250. 00
250. 00
XXXXXXX*
XX0000
0105012004000016
1
500. 00
500. 00
BLUECOAT
PROXY>AV>2000
1
400. 00
400. 00
HP
600E
8UF 970G9CE 5A9
1
2,497. 00
2,497. 00
HP
OFFICE>CONNECT>HUB
YT3W7G0
1
1,500. 00
1,500. 00
HP
PEM>740>028288
VEO5 483
1
3,350. 00
3,350. 00
NAC>POLICY>ENFORCER>
HP
3CRTPPSB00E92
8VQA7X0000038
1
22,497. 50
22,497. 50
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02 IGXGLOBAL CORP LSA Final.docx
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5.5 Title; Liens; Permitted Liens.
None.
5.6 Existing Indebtedness.
Naugatuck Savings Bank Loan No. 00000000: Principal and interest as of 1/10/2013 $2,021,803.73; to
be paid in full on the Effective Date
Naugatuck Savings Bank Loan No. 1448: Principal and interest as of 1/10/2013 $176,046.35; to be paid
in full on the Effective Date.
$1,000,000 Note payable to Xxxxxx Xxxxx.
Earnout Distributions to IGX Global, Inc. as described in the Asset Purchase Agreement.
5.7 Financial Statements.
Accountants Compilations for 2010, 2011 and 9 months of 2012 attached separately.
PCAOB Audit in progress to be completed in accordance with SEC requirements.
5.9 General Intangibles, Patents, Trademarks, Copyrights and Licenses.
Domain Names:
xxx.xxxxxxxxx.xxx
xxxx://xxxx.xxxxxxxxx.xxx/
5.10 Existing Business Relationships.
iGambit Inc., Borrower’s parent corporation, provides certain management services to Borrower.
5.14 Litigation.
None.
5.15 ERISA Matters.
None.
5.17 Environmental Matters.
None
5.19 Location of Bank and Securities Accounts.
To be provided promptly after Borrower has set up an account at HSBC.
02 IGXGLOBAL CORP LSA Final.docx
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5.21 Capital Structure.
100 common shares represented by certificate no. 2001 dated December 22, 2012 (100% of issued and
outstanding shares) of Borrower are owned by iGambit Inc.
10.4 Notice.
If to Lender:
Keltic Financial Partners II, LP
Attn: Xxxx X Xxxxxx, President and CEO
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000 (ext. 208)
Fax: (000) 000-0000
Keltic Financial Partners II, LP
Attn: Xxxx Xxxxxxxx, Executive Vice President and Chief Credit
Officer
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000 (ext. 221)
Fax: (000) 000-0000
With a copy to:
Xxxxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx X. Xxxxxxx P.C.
0000 Xxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Borrower:
IGXGLOBAL, CORP.
00 Xxxxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx Xxxxxx
Executive Vice President and General Counsel
iGambit Inc.
0000 X. Xxxxxxx Xxxxxxxx
Xxxxx X
Xxxxxxxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
and to:
Xxxx Xxxxxxxxx, Esq.
Xxxxxxx & Xxxxxxx
000 Xxxx Xxx Xxxx Xxxxxxxxx
Las Olas Centre II, Suite 1150
Xxxx Xxxxxxxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
EXHIBIT A: NOTICE OF BORROWING
02 IGXGLOBAL CORP LSA Final.docx
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Keltic Financial Partners II, LP
000 Xxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Re: Request for Advance
The undersigned requests the following Advance(s) of the Revolving Credit pursuant to Section 2.1 of the
Loan and Security Agreement dated as of December ___, 2012 between Keltic Financial Partners II, LP
and the undersigned, as the same may be amended, supplemented or otherwise modified (“Loan
Agreement”). Capitalized terms used herein and not otherwise defined herein shall have the meanings
given to them in the Loan Agreement.
Revolving Credit:
$________________________
Foreign Receivables Sublimit:
$________________________
Please wire the requested Advance(s) to our operating account number ____________________________
at ______________________________________________ in accordance with the following wire
instructions:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________.
Please call the undersigned to confirm receipt of this fax at (____) _______.
IGXGOBAL, CORP.
By: _______________________________________
Name: ____________________________________
Title: _____________________________________
케
02 IGXGLOBAL CORP LSA Final.docx
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EXHIBIT B: BORROWING BASE CERTIFICATE
See attached.
케
02 IGXGLOBAL CORP LSA Final.docx
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EXHIBIT C: COMPLIANCE CERTIFICATE
IGXGLOBAL, CORP. (“Borrower”) hereby certifies to KELTIC FINANCIAL PARTNERS
II, LP in accordance with the provisions of the Loan and Security Agreement dated as of December ___,
2012 between Keltic Financial Partners II, LP and the undersigned, as the same may be amended,
supplemented or otherwise modified (the “Loan Agreement”) that:
A.
General. As of date of this Certificate:
• Borrower has complied in all respects with all the terms, covenants and conditions of the Loan
Agreement;
• the representations contained in the Agreement are true, accurate and complete in all respects
with the same effect as though such representations and warranties had been made on the date
hereof; and
• there exists no Default or Event of Default as defined in the Loan Agreement.
B.
Financial Covenants. As of and for such periods as designated below, the computations, ratios
and calculations as set forth below are true, accurate and correct:
Unfunded Capital Expenditures as of __________________:
EBITDA as of and for the period ending _________________:
IGXGLOBAL, CORP.
By: _______________________________________
Name: ____________________________________
Title: _____________________________________
케
02 IGXGLOBAL CORP LSA Final.docx
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