Exhibit 10.1
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") has been executed, as of this
31st day of October, 2006 ("Closing Date"), by and between RBL Capital Group,
LLC, a New York limited liability company ("RBL"), and Acies Inc., a wholly
owned subsidiary of Acies Corporation ("Borrower").
Recitals
Borrower has applied to RBL for a Term Loan facility; as such term is defined
below, in the maximum principal sum of up to $2,000,000.00.
Whereas Borrower has initially requested to borrow $350,000.00.
Whereas Borrower desires to borrow additional funds in the future at which time,
if eligible, a new additional original Note will be executed and added to and
governed by this Agreement. Any further loans are subject to the terms and
conditions of this Agreement, specifically Section 5.01.
Whereas Borrower agrees to net out any fees and interim interest due to RBL at
time of funding
Subject to and in accordance with the terms and conditions of this Agreement,
RBL is willing to make this loan to Borrower.
Agreement
In consideration of the promises, the mutual covenants and agreements herein,
and each act performed and to be performed hereunder, Borrower and RBL agree as
follows:
ARTICLE I
Definition of Terms
Section 1.01. Accounting Terms/Financial Statements. All accounting terms used
herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with GAAP. Except as otherwise expressly
provided herein, all computations and determinations for purposes of determining
compliance with the financial requirements of this Agreement shall be made in
accordance with GAAP as in effect on the date hereof. Unless otherwise provided
for herein, wherever any computation is to be made with respect to Borrower,
such computation shall be made so as to include all items of income, assets and
liabilities attributable to Borrower and any other entity, which, in conformance
with GAAP, is included in the consolidated financial statements of Borrower.
Section 1.02. Definitions. When used in this Agreement each of the following
terms shall have the definitions set out in this Article I.
Accelerated Term Loan Installment(s). The term "Accelerated Term Loan
Installment(s)" shall have the meaning ascribed thereto in Section 3.01(e) of
this Agreement.
Account(s). The term "Account(s)" shall have the meaning ascribed thereto in
Section 8.01 of this Agreement.
Affiliate. The term "Affiliate" means, (a) with respect to any Person, any
officer, shareholder or director of such Person and any Person or group acting
in concert in respect of the Person in question that, directly or indirectly,
controls or is controlled by or is under common control with such Person and (b)
without limiting the foregoing but specifically with respect to Borrower, any
employee, shareholder, officer or director.
Agreement. The term "Agreement" means this Loan and Security Agreement
(including the above recitals and all exhibits and schedules thereto) as
amended, modified, extended, renewed, supplemented and/or restated from time to
time and at any time.
Anniversary Date. The term "Anniversary Date" means one year from the Closing
Date (i.e., the first Anniversary Date) and the same day of each calendar year
thereafter.
Articles of Incorporation. The term "Articles of Incorporation" means the
initial articles of incorporation of Borrower, together with all exhibits,
amendments and modifications thereto.
Business Day. The term "Business Day" means a day on which RBL's offices in New
York, NY are open for the conduct of substantially all of its business, except
Saturdays, Sundays and days on which banks in New York are closed.
By-Laws. The term "By-Laws" means the by-laws or operating agreement of
Borrower, including all exhibits, amendments and modifications thereto.
Cash Flow Ratio. The term "Cash Flow Ratio" means the ratio, during any
particular calendar month, of Processing Agreement Proceeds to, as applicable,
the Term Loan Installment or Accelerated Term Loan Installment due in that
calendar month.
Chase. The term "Chase" means Chase Paymentech Solutions, LLC successor in
interest to: i)Paymentech, L.P., a Delaware limited liability company with its
principal place of business at 1601 Elm, 12th floor, Dallas Texas 75201and
ii)Chase Merchant Services, LLC with its principal place of business at 265
Broad Hollow Rd, Melville, NY 11747.
Closing Date. The term "Closing Date" shall have the meaning ascribed thereto in
the head of this Agreement.
Collateral. The term "Collateral" shall have the meaning ascribed thereto in
Section 8.01 of this Agreement.
Corporate Resolutions. The term "Corporate Resolutions" means the corporate
resolutions of Borrower authorizing one or more officers of Borrower to execute
and deliver to RBL the Loan Instruments and authorizing Borrower to undertake
and perform the transactions contemplated by the Loan Instruments.
Current Financial Statements. The term "Current Financial Statements" shall have
the meaning ascribed thereto in Section 2.01(q) of this Agreement.
Debt. The term "Debt" means, as of the date any determination thereof is to be
made, with reference to any Person, all indebtedness, liabilities and
obligations which in accordance with GAAP should be classified upon such
Person's balance sheet as liabilities, but in any event including liabilities
secured by any Lien on property owned or acquired by such Person (whether or not
the liability secured thereby shall have been assumed and whether or not such
Person is personally liable for the payment thereof), and obligations under
leases which have been (or which in accordance with GAAP should be) capitalized
for financial reporting purposes.
Default Rate. The term "Default Rate" means: (i) with respect to the Note, a
rate per annum equal to the interest rate which would otherwise be in effect
under such Note plus three percent (3%) per annum; and (ii) with respect to any
other amount, obligation or payment, a rate per annum equal to the Prime
Commercial Rate plus three percent (3%) per annum.
Documents. The term "Documents" shall have the meaning ascribed thereto in
Section 8.01 of this Agreement.
ERISA. The term "ERISA" means the Employment Retirement Income Security Act of
1974, and the regulations used thereunder.
Equipment. The term "Equipment" shall have the meaning ascribed thereto in
Section 8.01 of this Agreement.
Event of Default. The term "Event of Default" shall have the meaning ascribed
thereto in Section 7.02 of this Agreement.
Financial Statements. The term "Financial Statements" includes, but is not
limited to, balance sheets, profit and loss statements, sources and applications
of funds statements and reconciliations of net worth prepared in accordance with
GAAP.
General Intangibles. The term "General Intangibles" shall have the meaning
ascribed thereto in Section 8.01 of this Agreement.
Indemnified Liabilities. The term "Indemnified Liabilities" shall have the
meaning ascribed thereto in Section 9.02 of this Agreement.
Indemnified Party/Parties. The term "Indemnified Party" and "Indemnified
Parties" shall have the meanings ascribed thereto in Section 9.02 of this
Agreement.
Instruments. The term "Instruments" shall have the meaning ascribed thereto in
Section 8.01 of this Agreement.
Inventory. The term "Inventory" shall have the meaning ascribed thereto in
Section 8.01 of this Agreement.
Lien. The term "Lien" means any mortgage, pledge, security interest,
encumbrance, lien, charge or deposit arrangement of any kind (including, without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof, any sale of receivables with recourse against the seller,
any filing or agreement to file a financing statement as debtor under the UCC or
any similar statute other than to reflect ownership by a third party of property
leased to Borrower under a lease which is not in the nature of a conditional
sale or title retention agreement, and any subordination arrangement in favor of
another Person).
Loan Instruments. The term "Loan Instruments" means this Agreement, the Note,
and all other instruments, agreements and documents delivered or to be delivered
to RBL pursuant to or by virtue of this Agreement, as each may be amended,
modified, extended, renewed, supplemented and/or restated from time to time and
at any time.
Loan Term. The term "Loan Term" means that period which begins on the Closing
Date and ends on that date on which the Obligations are paid and satisfied in
full and no Obligations thereafter arise.
Merchant Base. The term "Merchant Base" means the portfolio of merchants that
participate in a merchant bank card processing system that originates with
Borrower, its assignor or other predecessor in interest, under the Processing
Agreement.
Note. The term "Note" means the Term Loan Note.
Obligations. The term "Obligations" means, collectively, all present and future
indebtedness, obligations and liabilities, and all renewals and extensions
thereof, now or hereafter owed to RBL by Borrower evidenced by or arising under,
by virtue of or pursuant to this Agreement, the Note or any other of the Loan
Instruments, and any present and future indebtedness, obligations and
liabilities, and all renewals and extensions thereof, now or hereafter owed to
RBL by Borrower, together with all costs, expenses and reasonable attorneys'
fees incurred by RBL in the enforcement or collection thereof, whether such
indebtedness, obligations and liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several, joint and several, now
exist or hereafter arise, or were prior to acquisition thereof by RBL, owed to
some other Person.
Permitted Liens. The term "Permitted Liens" means, collectively: (i) mechanics',
materialmen's, carriers', warehousemen's and similar Liens arising by operation
of law and arising in the ordinary course of business and securing obligations
of such Person that are not overdue for a period of more than sixty (60) days or
are being contested in good faith by appropriate proceedings diligently pursued,
provided that in the case of any such contest any proceedings commenced for the
enforcement of such Liens shall have been duly suspended and provision for the
payment of such Liens has been made on the books of such Person to the extent
required by GAAP; (ii) Liens arising in connection with worker's compensation,
unemployment insurance, old age pensions and social security benefits which are
not overdue or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest any
proceedings commenced for the enforcement of such Liens shall have been duly
suspended and provision for the payment of such Liens has been made on the books
of such Person to the extent required by GAAP; (iii) Liens granted to RBL
pursuant to any of the Loan Instruments; (iv) existing and future Liens on
specific equipment, software and furniture used in the ordinary course of
business, (v) interests of the processors under the Primary Processing Agreement
or any other Processing Agreement and (vi) those liens and encumbrances
described on Exhibit B attached hereto and made a part hereof for all purposes.
Person. The term "Person" means any individual, firm, corporation, association,
partnership, joint venture or other entity.
Prepayment Premium. The term "Prepayment Premium" means a fee, based upon a
percentage of the principal balance of the Term Loan Note if Borrower were
current thereunder and its obligations determined where such percentage is equal
to two percent (2%). Notwithstanding the above, in the event Borrower is
eligible and requests additional funding and RBL declines such request, the
Prepayment Premium will be waived for all outstanding loans.
Primary Processing Agreement. The term "Primary Processing Agreement" means (A)
collectively the: i) Marketing Agreement executed by and among Borrower and
Chase Merchant Services, LLC dated as of December 9, 2002 and the ii) Card
Processing Agreements by and among Borrower and Paymentech, L.P. dated October
25, 2004, and (B) any future processing agreement entered into pursuant to
Section 6.02(o) of this Agreement, as any of the foregoing may be amended,
restated or otherwise modified from time to time in accordance with this
Agreement. A copy of the existing Primary Processing Agreement(s) are attached
hereto as Exhibit A.
Prime Commercial Rate. The term "Prime Commercial Rate" means a variable per
annum interest rate equal at all times to the rate of interest established and
quoted by Bank of America, or its successor, as its prime rate, such rate to
change contemporaneously with each change in the established and quoted rate. In
the event that such bank, during the term hereof, shall abolish or abandon the
practice of publishing its prime rate, or should the same or any Replacement
Prime Commercial Rate (as such term is hereinafter defined) become
unascertainable, RBL shall select any alternative rate which in its reasonable
judgment is substantially equivalent to the "Prime Commercial Rate" (or
Replacement Prime Commercial Rate, as the case may be) being replaced, expressed
as a per annum rate, and, effective as of the date notice of such selection is
given by RBL to Borrower, such selected alternative rate of interest (the
"Replacement Prime Commercial Rate") shall constitute the "Prime Commercial
Rate." The Prime Commercial Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to a customer by RBL. RBL may
make commercial loans or other loans at an interest rate per annum at, above or
below the Prime Commercial Rate.
Proceeds. The term "Proceeds" shall have the meaning ascribed thereto in Section
8.01 of this Agreement.
Processing Agreement. The term "Processing Agreement" means any agreement
between Borrower and any Person other than with Chase, in which such Person
agrees to perform the services performed by Chase pursuant to the Primary
Processing Agreement.
Processing Agreement Proceeds. The term "Processing Agreement Proceeds" means
the aggregate payments received during any calendar month by Borrower under the
Primary Processing Agreement and any other Processing Agreement.
RBL's Office. The term "RBL's Office" means the office of RBL located at the
following address: 16w281 West 83rd Burr Ridge, IL 60527 Suite B
Shareholders. The term "Shareholders" means each of the Persons identified on
Exhibit C hereto.
Shareholder Distribution. The term "Shareholder Distribution" means any
dividend, redemption or other acquisition for value of capital stock now or
hereafter outstanding, return of capital or any distribution of assets to any of
the Shareholders, including any repayment of debt owed to the Shareholders by
Borrower.
Solvent. The term "Solvent" means, when used with respect to any Person, that:
(i) the fair salable value of its assets is in excess of the total amount of its
liabilities (including for purposes of this definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with GAAP, and
whether direct or indirect, fixed or contingent, disputed or undisputed);
(ii) it is able to pay its debts or obligations in the ordinary course as they
mature; and (iii) Person has capital sufficient to carry on its business and all
business in which it is about to engage.
Term Loan. The term "Term Loan" means the indebtedness represented by the Term
Note.
Term Loan Installment(s). The term "Term Loan Installment(s)" shall have the
meaning ascribed thereto in Section 3.01(d) of this Agreement.
Term Loan Maturity Date. The term "Term Loan Maturity Date" shall have the
meaning ascribed thereto in Section 3.01(a) of this Agreement.
Term Loan Note. The term "Term Loan Note" shall have the meaning ascribed
thereto in Section 3.01(b) of this Agreement.
Term Loan Rate. The term "Term Loan Rate" shall have the meaning ascribed
thereto in Section 3.01(c) of this Agreement.
Tri-Party Agreement. The term "Tri-Party Agreement" shall mean that Agreement
dated October 26, 2006 by and between Borrower, RBL, and the processor under the
Primary Processing Agreement, as may be amended, restated or otherwise modified
from time to time in accordance with this Agreement (attached as Exhibit C).
UCC. The term "UCC" means the New York Uniform Commercial Code, as amended and
as may hereafter be further amended or revised.
ARTICLE II
Representations and Warranties of Borrower
Section 2.01. Representations and Warranties of Borrower. To induce RBL to enter
into this Agreement and to make the Term Loan, Borrower represents and warrants
to RBL that:
(a) Organization/Standing. Borrower is and will continue to be a duly formed and
validly existing corporation in good standing under the laws of the State of
Nevada. Borrower is duly qualified and in good standing as a foreign
corporation, and is duly authorized to do business, in each jurisdiction in
which the failure to so qualify would have a material adverse effect on the
condition (financial or otherwise), properties, business, prospects or results
of operations of Borrower.
(b) Right and Power. Borrower has full right, power and authority, corporate and
otherwise, to own the Collateral, to execute and deliver the Loan Instruments,
to borrow funds, and to otherwise consummate the transactions contemplated by
this Agreement.
(c) Authorization, Validity and Binding Effect. The execution, delivery and
performance by Borrower of the Loan Instruments, and the borrowing contemplated
thereunder, have been duly authorized by all necessary corporate action taken on
the part of Borrower. This Agreement does, and the other Loan Instruments will
when duly executed and delivered, constitute valid, legal and binding
obligations of Borrower enforceable in accordance with their respective terms.
(d) Litigation. There is no action, litigation or proceeding pending or
threatened against or involving Borrower or the Collateral in any court or
before or by any agency or regulatory body which could result in a judgment or
liability against Borrower or the Collateral that is likely to materially
adversely affect any material asset of Borrower, including without limitation
all or any part of the Collateral, or the income of Borrower or right of
Borrower to carry on its businesses as now conducted or as intended to be
conducted. Borrower is not in material default with respect to any order, writ,
injunction, decree or demand of any court or regulatory body and is not in
violation of any material ordinance, law or regulation of any governmental
authority applicable to Borrower or its businesses or properties.
(e) intentionally left blank
(f) Articles of Organization. The copy of the Articles of Organization delivered
on behalf of Borrower to RBL on the date hereof is a true, complete and correct
copy of the Articles of Organization, as in effect on the Closing Date.
(g) Other Commitments, etc. Neither the execution of, nor the consummation of
the transactions and borrowing contemplated by the Loan Instruments, nor
compliance with the terms and provisions of the Loan Instruments, will conflict
with, result in a breach of, or constitute a default under any of the terms,
conditions or provisions of the Articles of Organization or operating agreement
or any agreement, lease, indenture, mortgage, deed of trust, land contract,
license or other instrument to which Borrower is a party or by which Borrower or
any of its assets are or may be bound or affected or to which Borrower is
subject, or any law, regulation, order, writ, injunction or decree of any court
or agency or regulatory body having jurisdiction.
(h) Payment of Taxes. Borrower has filed all tax returns which were required to
be filed by it prior to and as of the date of this Agreement and has paid all
taxes and assessments which to Borrower's knowledge are payable by it, to the
extent that the same have become due and payable and before they became
delinquent. Borrower does not know of any proposed material tax assessment
against it or any of its properties for which adequate provision has not been
made on its books.
(i) Governmental Consents. There are no governmental authorizations, permits,
certificates, licenses, filings, registrations, approvals or consents which must
be obtained, received or made, and which have not been obtained, received or
made as of the date of this Agreement, for Borrower lawfully to (i) make,
execute and deliver the Loan Instruments or (ii) perform all of its obligations
under the Loan Instruments.
(j) Compliance. Borrower is in substantial compliance with and in conformity to
all laws, ordinances, rules, regulations, and all other legal requirements the
violation of which would have a material, adverse effect on its businesses,
financial condition or properties.
(k) Use of Proceeds. The proceeds of the Term Loan will be used as working
capital for the operations and growth of the business of Borrower and to payoff
any outstanding loans from officers.
(l) Fictitious Names. Borrower has not, during the preceding six (6) years, been
known as or used any other corporate or fictitious names and Borrower shall not
change its corporate name without the prior written consent of RBL.
(m) ERISA Compliance. If and to the extent applicable to Borrower, Borrower is
in compliance with ERISA and, without limitation of the foregoing, no fact
including, but not limited to, any "reportable event" (as such term is defined
in ERISA) exists or shall exist during the term of this Agreement in connection
with any "Employee Pension Benefit Plan," as such term is defined in ERISA, or
any such plan currently in effect which might constitute grounds for the
termination of any such plan by the "Pension Benefit Guaranty Corporation," as
such term is defined in ERISA, or for the appointment by the appropriate United
States District Court of a trustee to administer such plan, and Borrower has not
received any notice to the effect that it is not in full compliance with any of
the requirements of ERISA. No such plan maintained by Borrower, nor any trust
created thereunder, has incurred any "accumulated funding deficiency," as such
term is defined in Section 302 of ERISA, nor does the present value of all
benefits vested under all such plans exceed, as of the last annual valuation
date, the value of the assets of such plans allocable to such vested benefits.
(n) Labor Agreements. There are no labor agreements between Borrower and the
representative of any of the employees of Borrower, other than employment
agreements.
(o) Solvency. Borrower is Solvent and will continue to be Solvent following the
consummation of the transactions contemplated by this Agreement.
(p) Location of Borrower. The chief executive office and principal place of
business of Borrower is 14 Wall Street, New York, NY, 10005.
(q) Financial Statements. The Financial Statements of Borrower previously
delivered to RBL in connection with Borrower's application for the Term Loan
(the "Current Financial Statements") correctly and fairly present the financial
condition and results of operations of Borrower as of the dates and for the
periods shown and covered thereby. Borrower knows of no material liabilities,
direct, indirect, contingent or otherwise, not shown on the Current Financial
Statements, and there has been no material, adverse change in its assets or
condition (financial or otherwise) since that date of the Current Financial
Statements.
(r) Title to Assets and Properties. Borrower has good and marketable title to
all of the properties and assets reflected on the Current Financial Statements
pertaining to Borrower and all properties and assets acquired by Borrower
thereafter and prior to the date hereof, except for such assets as have been
disposed of since the date of such Current Financial Statements in the ordinary
course of business or are no longer used or useful in the conduct of its
business.
(s) No Casualty. Since the date of the Current Financial Statements pertaining
to Borrower, no damage, injury or adverse impairment of or to the Collateral by
virtue of casualty or other cause has occurred.
(t) Primary Processing Agreement. The copy of the Primary Processing Agreement
delivered by Borrower to RBL, and attached hereto as Exhibit A, is a true,
accurate and complete copy of such agreement in the form existent on the Closing
Date. There are no other Processing Agreements in effect as of the Closing Date.
Section 2.02. Full Disclosure--Survival of Representations and Warranties.
Borrower further warrants to RBL that to the best of its knowledge and belief:
(a) none of the written statements, representations or warranties furnished by
Borrower to RBL in connection with this Agreement or any of the other Loan
Instruments contain or will contain any untrue statement or omits or will omit a
material fact necessary to make the statements contained therein or herein, in
light of the circumstances when made, misleading and (b) there is no fact which
Borrower has not disclosed to RBL in writing which materially, adversely affects
or which will materially, adversely affect the Collateral or the condition
(financial or otherwise) of Borrower. All representations and warranties made by
Borrower under or in connection with any of the Loan Instruments shall survive
the making of the Term Loan provided for herein and issuance and delivery of the
Note to RBL, notwithstanding any investigation made by RBL or on RBL's behalf.
ARTICLE III
Borrowing Terms
Section 3.01. The Term Loan
(a) Term Loan--In General. RBL has heretofore agreed, subject to the terms and
subject to the conditions hereinafter set forth, to lend to Borrower the
aggregate of Two Million Dollars and Borrower intends to initially borrow from
RBL hereunder the principal sum of Three Hundred and Fifty Thousand Dollars
($350,000.00) ("Initial Loan") for the term ending on that date (the "Term Loan
Maturity Date") which is the earlier of: (a) April 30th, 2008, (b) that date on
which RBL accelerates payment of the Term Loan or (c) Borrower exercises its
prepayment options in their entirety. All loans shall be payable in 18 monthly
equal fully amortizing loan payments.
(b) Term Loan Note. Borrower's obligation to pay the principal of, and interest
on, the Term Loan shall be evidenced by a promissory note payable to the order
of RBL in the principal amount of $350,000.00 executed and delivered by Borrower
to RBL on the Closing Date pursuant to and in accordance with Section 5.01(c) of
this Agreement, in form and substance the same as Exhibit D attached hereto and
made a part hereof for all purposes, and being referred to herein, together with
all extensions, renewals and replacements thereof, as any of the foregoing may
be amended and/or restated from time to time and at any time, as the "Term Loan
Note".
(c) Interest on the Term Loan. The Term Loan, as evidenced by the Term Loan
Note, shall bear interest (the "Term Loan Rate"): (i) from and after the date of
the Term Loan Note until the Term Loan Maturity Date, at a fixed rate per annum
equal to seventeen and fifteen one hundredths percent (17.15%) per annum and
(ii) after the Term Loan Maturity Date until paid in full, at a rate per annum
equal to the Default Rate. Such interest calculations are on a per annum basis,
compounded monthly. For any additional Loans contemplated herein, the Term Loan
Rate will be calculated using an 890 basis point spread to the U.S. Prime Rate
that exists three (3) business days prior to the specific subsequent funding.
(d) Initial Payments Required. Commencing on or before November 30th, 2006 and
on no later than the 30th day of each calendar month thereafter until and
including the Term Loan Maturity Date, Borrower shall, subject to the provisions
of Section 3.01(e), make, as evidenced by the Term Loan Note, eighteen (18)
equal monthly payments of principal and interest (referred to herein
collectively as "Term Loan Installments" and individually as a "Term Loan
Installment"), which in the case of the Initial Loan shall be each in the amount
of $22,190.50. For subsequent Term Loan Notes, the Term Loan Installments will
be made and governed by this Agreement and the specific Term Loan Note.
(e) Accelerated Payment Schedule. In the event that the Cash Flow Ratio as at
the end of any two consecutive calendar months is less than 4.0:1.0, then
Borrower shall begin, as of the next date that a Term Loan Installment would
fall due, making payments of principal and interest, instead of in the amount of
a Term Loan Installment, in the sum of One Hundred Fifty Percent (150%) of the
Term Loan Installment (referred to herein collectively as "Accelerated Term Loan
Installments" and individually as a "Accelerated Term Loan Installment") (which
in the case of the Initial Loan would in the amount of $44,000). Accelerated
Term Loan Installments shall be applied first to accrued interest, then to other
Obligations, and, finally, to the remaining principal balance of the Term Note.
RBL's receipt of Accelerated Term Loan Installments shall not constitute a
prepayment, but shall constitute a payment under the Term Loan Note. In the
event that Borrower begins making Accelerated Term Loan Installments but the
Cash Flow Ratio as at the end of any calendar month is equal to or greater than
4.0:1.0 for two (2) consecutive months, then Borrower shall resume, as of the
next date that an Accelerated Term Loan Installment would fall due following
such three (3) months, making payments of principal and interest in an amount
equal to the Term Loan Installments.
(f) Prepayment of the Term Loan. Borrower may prepay the principal of the Term
Loan with the payment of the Prepayment Premium.
(g) Notice to Chase. RBL agrees to notify the processor under the Primary
Processing Agreement promptly upon payment in full of (i) any Term Loan Note and
simultaneously to instruct Chase to no longer remit any Processing Agreement
Proceeds to RBL with respect to that Term Loan Note and (ii) all outstanding
Obligations and simultaneously to instruct Chase to terminate the Tri-Party
Letter in its entirety..
Section 3.02. Payments/Late Payments
(a) All Term Loan Installments (or Accelerated Term Loan Installments for so
long as such installments are due pursuant to Section 3.01(e)) to be made by
Borrower on account of the Loan shall be made to RBL's Office not later than
11:00 A.M. (EST) on the date when due in each case in lawful money of the United
States of America and in immediately available funds. Pursuant to the Tri-Party
Agreement, Borrower has authorized and directed Chase to pay all amounts
otherwise due to Borrower from Chase pursuant to the Primary Processing
Agreement. RBL, after deducting any amount due under this Loan Agreement, will
electronically remit the excess within a twenty-four (24) hour period.
(b) In the event that for any reason Chase does not pay all of the Term Loan
Installment (or Accelerated Term Loan Installments for so long as such
installments are due pursuant to Section 3.01(e)) on the date each such payment
is due; RBL shall promptly notify Borrower, and Borrower authorizes RBL to
automatically withdraw all such payments that remain unpaid hereunder and under
the Term Loan Note by initiating debit entries to Borrower account at {NEED TO
FILL IN}evidenced by the check copy provided, or such other financial
institution as may be used by Borrower from time to time. Borrower hereby
authorizes its financial institution referenced above to accept and to charge
any debit entries initiated by RBL to Borrower's account and agrees to execute
any further documentation required by such financial institution to accomplish
such authorization.
(c) In the event any Term Loan Installment or Accelerated Term Loan Installment
due under the Note is not received by RBL in full within ten (10) days after the
due date thereof, and the same subsequently is received and accepted by RBL,
Borrower shall pay RBL on demand a late charge in the amount of Five Percent
(5%) of the amount of the delinquent Term Loan Installment or Accelerated Term
Loan Installment.
(d) Monies received by RBL shall be applied toward accrued interest and then
principal. Except as otherwise expressly set forth in this Agreement, Borrower
shall not have the right to prepay or to reborrow any amounts repaid under the
Term Loan. Any monies received other than on the date that a Term Loan
Installment or Accelerated Term Loan Installment first becomes due shall, if
received prior thereto and except as provided in Section 3.01(f), be applied on
the date that the next Term Loan Installment or Accelerated Term Loan
Installment falls due.
Section 3.03. Collection Costs. All amounts payable by Borrower under or
pursuant to any of the Loan Instruments shall be payable without relief from
valuation and appraisement laws.
Section 3.04. Closing. Closing of the Loan shall be held on the Closing Date, at
RBL's Office or such other place as it may direct. On or prior to the Closing
Date and the date of funding ("Future Funding Dates") of each future funding of
a loan under this Agreement, Borrower shall have fulfilled the conditions
specified in Section 5.01 of this Agreement and shall at the closing deliver to
RBL those Loan Instruments required to be delivered by Borrower to RBL pursuant
to subsection 5.01(c) of this Agreement.
ARTICLE IV
Security for Obligations
Section 4.01. Security for Obligations. Payment of the Obligations at all times
during the Loan Term, shall be secured by a first and prior security interest in
the Collateral, subject only to Permitted Liens.
ARTICLE V
Borrowing Conditions
Section 5.01. Conditions Precedent to Loan. The obligations of RBL hereunder to
make the Term Loan shall be subject to full satisfaction of the following
conditions precedent:
(a) General. All documents and legal matters relating to the Loan hereunder and
all proceedings to be taken on or prior to the Closing Date in connection with
the performance of this Agreement shall be satisfactory in form and substance to
RBL, and RBL shall have received copies of all such documents and other evidence
as it may reasonably require or request in order to establish and confirm that
all necessary proceedings in connection with the Loan contemplated by this
Agreement have been taken.
(b) No Changes. On the Closing Date or Future Funding Dates, there shall not
have been any material adverse change in the assets or condition (financial or
otherwise) of Borrower, as such assets or conditions are reflected in the
Financial Statements that have been provided to RBL in connection with
Borrower's application for the Loan or for additional Loans.
(c) Conditions Precedent. On or prior to the Closing Date, or, except as
otherwise indicated, any Future Funding Date, RBL shall have received or
Borrower must be in compliance with:
(i) Note. A Term Note, duly authorized, executed and delivered by Borrower, and
in compliance with the provisions of Article III of this Agreement;
(ii) Certain Agreements. On the Closing Date, a true, accurate and complete copy
of the Primary Processing Agreement;
(iii) Incumbency Certificate/Corporate Resolutions. On the Closing Date, the
Corporate Resolutions and a certificate of the president of Borrower
certifying the names of the officers of Borrower authorized to sign the
Loan Instruments, together with a sample of the true signature of each such
officer;
(iv) Passage of time. Between any additional Notes, there must be a passage of
time of a minimum of sixty (60) days.
(v) Constituent Documents. On the Closing Date, a Certificate of Good Standing
for Borrower dated no more than ten (10) days prior to the Closing Date.
(vi) UCC-1. On the Closing Date, a signed UCC-1 financing statement in a form
acceptable to RBL.
(vii) Material Adverse Change. No material adverse change in either the
financial condition of the Borrower or in the economic condition of the
payment processing industry.
(viii) Subsequent fundings. Subsequent fundings are capped at a maximum of i)
eight (8) times the previous three month average of residuals received
under the Primary Processing Agreement less ii) any Loans previously
funded.
(ix) Merchant Growth. From the previous Loan to the anticipated additional
funding, a net positive merchant count growth must exist.
ARTICLE VI
Affirmative and
Negative Covenants of Borrower
Section 6.01. Affirmative Covenants of Borrower. Until payment in full of all of
the Obligations and the performance by Borrower of all of its other obligations
under the Loan Instruments, Borrower covenants and agrees that, unless RBL shall
otherwise consent in writing as provided in Section 9.05 hereof, it will:
(a) Intentionally left blank
(b) Workmen's Compensation. Maintain workmen's compensation insurance in such
amounts as may be required by applicable law.
(c) Books, Existence, etc. Keep proper, accurate and complete books of account
and do or cause to be done all things necessary to: (i) preserve its existence
under the laws of the State of Nevada, or, after 10 days notice to RBL, such
other jurisdiction as Borrower shall become incorporated; (ii) remain or become
qualified and/or authorized to engage in business in good standing in the State
of Nevada and all other jurisdictions in which the character of its properties
or the transaction of its business make such qualifications and/or authorization
necessary, the absence of which would have a negative material effect on
Borrower; and (iii) preserve and maintain in full force and effect all other
qualifications, certificates or licenses required for the conduct of the
businesses of Borrower the absence of which would have a negative material
effect on Borrower.
(d) Payment of Taxes. Pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or on income or profits or upon property
belonging to it prior to the date on which penalties attach thereto and all
lawful claims and debts which, if unpaid, might become a lien or charge upon the
property of Borrower, provided that Borrower shall not be required to pay any
such tax, assessment, charge, levy or claim for which Borrower has obtained a
bond or insurance, or for which it has established a reserve and the payment of
which is being contested in good faith and by appropriate proceedings which are
being reasonably and diligently pursued.
(e) Financial and Other Reports. Maintain a standard system of accounting in
accordance with GAAP and furnish or cause to be furnished to RBL:
(i) As soon as available and in any event within one hundred twenty (120) days
after the end of each fiscal year of Borrower ending after the Closing Date,
annual Financial Statements for Borrower, each based upon Borrower's
internal statements and with oversight by Borrower's existing accounting
firm. RBL will be given written notice of any change in accounting firms:
(ii) Within forty-five (45) days after filing, true and correct copies of all
state and federal tax returns filed by Borrower;
(iii) Such other reports and additional financial and other information relating
to the business, affairs and financial condition of Borrower and with
respect to the Collateral as RBL reasonably may request in writing from
time to time, including but not limited to (x) interim financial
information, based upon the Borrower's internal figures, on a quarterly
basis or such other frequency as RBL may reasonably require after
reasonable notice and (y) on a monthly basis, and by the 25th day
following any particular month, Borrower shall deliver to RBL a readable
electronic data file with respect to the Primary Processing Agreement,
which information shall provide only summary information on such matters
as, without limitation, active merchant count, number of new merchant
additions, merchant closures and/or cancellations, processing volume,
gross revenue generated, net revenue generated, and aggregate Processing
Agreement Proceeds distributed to Borrower for the given month.
(f) Access to Premises and Records. At all reasonable times and as often as RBL
may request in writing ten (10) Business Days in advance, permit authorized
representatives of RBL to: (i) have access to the Collateral and to the
financial records of Borrower and other records relating to the operations and
procedures of Borrower; and (ii) discuss the affairs, finances and accounts of
Borrower with, and be advised as to the same by, the officers of Borrower, all
as shall be relevant to the performance or observance of the terms, covenants
and conditions of this Agreement or the other Loan Instruments or the financial
condition of Borrower, provided that Borrower cannot be required to violate
Association Rules, Privacy Act guidelines or any other Legislative Act as it
related to non-public, personal information. Notwithstanding the above, RBL
shall only be entitled to access the premises once in a calendar year unless and
until such time as the occurrence and during the continuation of an Event of
Default.
(g) Litigation. Notify RBL in writing, promptly upon learning thereof, of any
litigation commenced against Borrower that may have a material adverse effect on
the business, assets, operations, prospects or financial or other condition of
Borrower, Borrower's ability to pay the Obligations in accordance with the terms
of this Agreement, or the Collateral.
(h) Notices. Immediately inform RBL by written notice of the occurrence of any
event or condition of any nature that may reasonably constitute or may lead to
or may result in an Event of Default.
(i) Payment of Debt. Pay, when due, but in any event within five business days
of the acceleration thereof, any individual Debt of Borrower in excess of
$100,000.00 payable to any Person, excepting only any Debt the payment of which
is subordinated to the payment of the Obligations and any Debt that is being
contested in good faith.
(j) Compliance With ERISA. At all times comply with all of the requirements of
ERISA, to the extent the same may be applicable to Borrower. Promptly upon
becoming aware of the occurrence or a "reportable event" or "prohibited
transaction" (as those terms are defined by ERISA), with respect to any plan or
trust under which Borrower is the employer or to which it is a party, Borrower
will give RBL notice thereof and the penalties applicable thereto, the action
which Borrower is taking or proposes to take with respect thereto and, when
known, the action taken by any enforcement authority having or asserting
jurisdiction.
(k) Comply With Laws. Perform and promptly comply, and cause all property of
Borrower to be maintained, used and operated in accordance, in each case in all
material respects, with all of the following, the violation of which is likely
to have a material adverse effect on the financial condition of the Borrower:
(i) present and future laws, ordinances, rules, regulations, orders and
requirements (including, without limitation, zoning ordinances, building codes
and environmental laws, and the regulations adopted pursuant thereto and any
other similar applicable federal, state or local laws, rules, regulations or
ordinances) of every duly constituted governmental or quasi-governmental
authority or agency applicable to Borrower, or any of its properties; (ii)
similarly applicable orders, rules and regulations of any regulatory, licensing,
accrediting, insurance underwriting or rating organization or other body
exercising similar functions, to the extent usually complied with by companies
engaged in similar businesses and owning similar properties in the same general
areas in which Borrower operates; and (iii) similarly applicable duties or
obligations of any kind imposed under any certificate of occupancy or otherwise
by law, covenant, conditions, agreement or easement, public or private.
(l) Maintenance of Property. Except as to equipment or inventory no longer used
or useful to the business of Borrower, keep and maintain its material equipment
in good operating condition and repair (ordinary wear and tear excepted) and
shall make all necessary replacements thereof and renewals thereto so that the
value thereof and the operating efficiency of Borrower shall at all times be
maintained and preserved. Borrower shall not permit its equipment to be operated
or maintained in violation of any applicable law, statute, rule or regulation
and, with respect to all items of leased equipment, Borrower shall keep,
maintain, repair, replace and operate such leased equipment in accordance with
the terms of the applicable lease, in either case, to the extent necessary, in
the aggregate, to avoid any materially adverse impact to Borrower.
(m) Pay Loan, Obligations, Etc. To pay the Note (including all interest and
other charges and premiums which hereafter accrue thereon or are payable with
respect thereto) and all other Obligations in accordance with the terms of this
Agreement and the other Loan Instruments, subject to applicable grace periods.
(n) Minimum Cash Flow Ratio. Maintain a Cash Flow Ratio of not less than 3.0:1.0
as at the end of each calendar month during the Loan Term.
(o) Compliance with Certain Agreements. Comply with all of the terms and
conditions of the Primary Processing Agreement, such that the counterparty
thereto does not terminate that agreement.
(p) Officer Certification. Submit, upon request and in any event within thirty
(30) days of the close of each calendar quarter beginning with the quarter
ending December 31, 2006, a certificate, executed by the chief financial officer
of Borrower, certifying that Borrower, to the best of the chief financial
officer's actual knowledge, is in compliance with all of the terms and
conditions of (i) this Agreement and (ii) is in material compliance with all
terms and conditions of the Primary Processing Agreement, except, in either
case, as indicated in that certificate.
Section 6.02. Negative Covenants of Borrower. Until repayment in full of all of
the Obligations and the performance by Borrower of all of its other obligations
under the Loan Instruments, Borrower covenants and agrees that, unless the prior
written consent of RBL is obtained as provided in Section 9.05 hereof, it will
not:
(a) Disposition of Assets. Sell, lease, assign, transfer or otherwise dispose of
any of Borrower's rights, title or interests in and to the Collateral, excepting
only sales or other dispositions of obsolete or unused equipment or equipment
being replaced in the ordinary course of Borrower's business.
(b) No Liens. Create or permit any Lien upon any part of the Collateral other
than Permitted Liens.
(c) No Guarantees or Contingent Obligations. Except pursuant to this Agreement,
guarantee, assume or otherwise become directly or contingently liable for, the
Debt of any Person, in excess of $200,000.00 annually
(d) Limitations on Extensions of Credit. Except as otherwise set forth herein,
make any loan or advance or extend any credit to any Person in excess of
$200,000.00 annually.
(e) No Changes in Business. Make or permit to be made any material change in the
character of its business as conducted on the Closing Date, other than to grow
the business by means of the amount of the Term Loan or otherwise.
(f) No Amendments/Modifications To Constituent Documents. Permit any Person to
amend, modify, restate or otherwise change in any way the Articles of
Incorporation or By-Laws without first receiving the written consent of RBL if,
in the reasonable opinion of RBL following notice from Borrower, receipt of
Borrower's written evaluation of the proposed change, and a reasonable
opportunity to consider such matter, the effect of such amendment, modification,
restatement or other change is or may be material and adverse to the (i)
financial condition or prospects of Borrower, (ii) any of the rights of RBL or
(iii) any of the Collateral.
(g) No Additional Debt. Except as otherwise set forth herein (including but not
limited to Exhibit B) create, incur, assume or suffer to exist any Debt for
money borrowed or for the deferred payment of the price of property acquired in
excess of $200,000.00 annually, excepting only (i) the Obligations, and (ii)
trade Debt incurred by Borrower in the ordinary course of its business as it is
now conducted.
(h) No Prepayments of Debt. At any time while an Event of Default shall exist,
prepay any Debt to any Person other than RBL.
(i) Acquisition of Capital Stock. Redeem or acquire any of its own capital stock
except through the use of the net proceeds from the simultaneous or prior sale
of capital stock for the same or greater purchase or redemption price.
(j) Shareholder Distributions. Declare or pay any Shareholder Distributions
without the prior written consent of RBL, which consent shall be exercised in
RBL's sole discretion. Notwithstanding the foregoing, in the event the Minimum
Cash Flow Ratio exceeds 10.0:1.0, Borrower may declare Shareholder
Distributions.
(k) Transactions With Affiliates. Not directly or indirectly enter into or
permit to exist any transactions (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate on terms that are less favorable to Borrower than those which
might be obtained at the time from persons or entities that are not affiliated
with Borrower.
(l) Amend Certain Agreements. Permit any Person to, amend, modify, restate,
cancel or otherwise change in any material way which would adversely affect the
amount of Processing Agreement Proceeds expected to be received by Borrower the
Primary Processing Agreement without first receiving the written consent of RBL,
which consent will not be unreasonably withheld or delayed.
(m) Officer's Compensation. During the term of this Agreement the aggregate of
all of the Borrower's cash compensation to executive officers including, but not
limited to, salary and bonuses (except as provided for in such executive
officer's employment agreements as filed with the Securities and Exchange
Commission), shall not be increased more than fifteen percent (15%) from the
prior year, without the written consent of RBL. Notwithstanding the foregoing,
in the event the Minimum Cash Flow Ratio exceeds 10.0:1.0, Borrower may increase
such officers' cash compensation without such limitation.
(n) Other Processing Agreements. Enter into a new Primary Processing Agreement,
except as provided in Section 6.02(o).
(o) Transfer of Merchant Base. Borrower will not transfer any portion of the
processing services for the Merchant Base from the Primary Processing Agreement
without first either paying off the Term Loan Note or arranging for an agreement
between Borrower, RBL, and the new processor under similar terms and conditions
as those set forth in Section 3.02(a).
(p) Sale of Merchant Base. Borrower will not sell or transfer more than
twenty-five percent (25%) of the Merchant Base to another Person without paying
off the Term Loan Note. In the event Borrower decides to sell less than the
twenty-five percent (25%) of the Merchant Base the resulting cash flow ratio
must exceed 10:1.
(q) Chase Advances. Borrower may not receive any advances from Chase or any
other Processor without prior written consent from RBL which consent will not be
unreasonably withheld.
ARTICLE VII
Events of Default--Acceleration
Section 7.01. Acceleration of Obligations. Upon the happening of any Event of
Default, or at any time thereafter during the continuance of such Event of
Default, RBL shall be entitled, by written or telegraphic notice to Borrower, to
declare the Note and all other payments required to be made under the Note or
under any of the Loan Instruments to be immediately due and payable, without
presentation, demand, protest, notice of protest, or other notice of dishonor of
any kind, all of which are hereby expressly waived. Upon the occurrence of an
Event of Default and RBL's election to accelerate the maturity of the Note, RBL
shall be entitled to enforce any and all of its rights under the Loan
Instruments.
Section 7.02. Events of Default. Each of the following events shall constitute
an "Event of Default" for purposes of this Agreement and each such Event of
Default shall be deemed to exist and continue so long as, but only so long as,
it shall not have been remedied:
(a) Borrower shall fail to pay, within ten (10) days of when due, any amount
payable under the Term Loan Note or any of the other Obligations.
(b) Borrower shall default in the due observance or performance of any other
covenant, condition or agreement on the part of Borrower to be observed or
performed pursuant to the terms of this Agreement or any of the other Loan
Instruments, and such default shall continue unremedied for a period of thirty
(30) days after written notice from RBL (provided, however, that no notice from
RBL to Borrower shall be required where Borrower is clearly aware of the basis
of the default, e.g., under Sections 7.02(d) through (h)).
(c) Any representation, warranty, statement, affidavit or certificate given or
furnished at any time by Borrower or any officer or shareholder of Borrower to
RBL shall prove to be incorrect or misleading in any material respect as of the
date as of which the representation, warranty, statement, affidavit or
certificate was given, stated or certified, and such incorrect matter has a
material adverse effect upon RBL.
(d) Borrower shall make an assignment for the benefit of creditors, shall become
insolvent, or shall admit in writing inability to pay its debts as they become
due.
(e) A decree or order for relief by a court having jurisdiction in the premises
in respect of Borrower shall be entered in an involuntary case under the United
States Bankruptcy Code, as now or hereafter constituted, or any other applicable
Federal or state bankruptcy, insolvency or other similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Borrower or for all or substantially all the property of Borrower
or ordering the winding up or liquidation of the affairs of Borrower and the
continuance of any such decree or order unstayed and in effect for a period of
sixty (60) consecutive days.
(f) A voluntary case shall be commenced by Borrower under the United States
Bankruptcy Code, as now constituted or hereafter amended, or any other
applicable Federal or state bankruptcy, insolvency or other similar law, or
Borrower shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of Borrower or for all or substantially all the property of Borrower.
(g) Borrower is wound up or liquidated or any action is taken which may result
in the winding up or liquidation of Borrower.
(h) The termination of any of the Primary Processing Agreements except as
permitted under Section 6.01(o)
(i) The breach or the occurrence of any event which with notice and/or the
expiration of any cure period shall constitute a material breach of any of
Primary Processing Agreement or which materially and adversely affects the
amount of Processing Agreement Proceeds received by Borrower.
ARTICLE VIII
Security Agreement
Section 8.01. Grant. Borrower hereby GRANTS, PLEDGES, CONVEYS and ASSIGNS to RBL
continuing security interests in the following property, wherever located,
whether Borrower's interest therein be as owner, co-owner, lessee, consignee,
secured party or otherwise: all personal property, tangible and intangible, of
Borrower, now owned and existing or hereafter acquired or arising, including,
without limitation: (a) Accounts; (b) Inventory; (c) General Intangibles; (d)
Documents; (e) Instruments; (f) Equipment; (g) all cash, and all demand, time,
savings, passbook or like account maintained by Borrower with a bank, savings
and loan association, credit union or like organization, and any other monies;
(h) all books and records (including, without limitation, customer lists, credit
files, computer programs, printouts and other computer materials and records) of
Borrower pertaining to any of the property described in clauses (a) through (g);
(i) all additions, accessions, accessories, and replacements of any of the
property described in clauses (a) through (h); and (j) all Proceeds of all or
any of the types or items of property described in clauses (a) through (i). (All
of the foregoing-described property is referred to herein collectively as the
"Collateral.") As used herein, the term: (i) "Accounts" means all rights to
payment for goods sold or leased or for services rendered which is not evidenced
by an instrument or chattel paper (including the right to receive payments under
the Primary Processing Agreement and/or Processing Agreements, whether or not it
has been earned by performance, now owned or hereafter acquired by Borrower, and
shall also mean and include all accounts receivable, contract rights, book
debts, notes, drafts and other obligations or indebtedness owing to Borrower
arising from the sale, lease or exchange of goods or other property by it and/or
the performance of services by it and all of Borrower's rights in, to and under
all purchase orders for goods, services or other property, and all of Borrower's
rights to any goods, services or other property represented by any of the
foregoing (including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit), in each
case whether now in existence or hereafter arising or acquired including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts and all collateral security and guarantees of any kind given by
any person with respect to any of the foregoing, and the term "Account" means
any of the Accounts; (ii) "Documents" means all "documents" (as defined in the
UCC) or other receipts covering, evidencing or representing goods, now owned or
hereafter acquired by Borrower; (iii) "Equipment" means all goods and property
of Borrower as constitutes "equipment" (as defined in the UCC) now owned or
hereafter acquired by Borrower, including without limitation all motor vehicles,
trucks and trailers; (iv) "General Intangibles" means all "general intangibles"
(as defined in the UCC) now owned or hereafter acquired by Borrower, including,
without limitation, (A) all obligations or indebtedness owing to Borrower (other
than Accounts) from whatever source arising, (B) all patent licenses, patents,
trademark licenses, trademarks, rights in intellectual property, goodwill, trade
names, service marks, trade secrets, copyrights, permits and licenses, (C) all
rights or claims in respect of refunds for taxes paid, and (D) all rights in
respect of any pension plan or similar arrangement maintained for employees of
Borrower;(v) "Instruments" means all "instruments", "chattel paper" or "letters
of credit" (each as defined in the UCC), now owned or hereafter acquired by
Borrower; (vi) "Inventory" means all "inventory" (as defined in the UCC), now
owned or hereafter acquired by Borrower, wherever located, and shall also mean
and include, without limitation, all raw materials and other materials and
supplies, work-in-process and finished goods and any products made or processed
therefrom and all substances, if any, commingled therewith or added thereto; and
(vii) "Proceeds" means all "proceeds" (as defined in the UCC) of Accounts,
Documents, Equipment, General Intangibles, Instruments or Inventory, including
insurance proceeds and proceeds of all warranty and tort claims, and all
Accounts, Documents, Equipment, General Intangibles, Instruments and Inventory
arising from or received by Borrower in connection with the sale or disposition
thereof.
The security interests hereby granted are to secure the prompt and full payment
and complete performance of all Obligations to RBL hereunder.
The continuing security interests granted hereby shall extend to all present and
future Obligations, whether or not such Obligations are reduced or extinguished
and thereafter increased or reincurred, whether or not such Obligations are
specifically contemplated as of the Closing Date. The absence of any reference
in this Agreement to any documents, instruments or agreements evidencing or
relating to any of the Obligations shall not limit or be construed to limit the
scope or applicability of the security interest granted hereby. Upon payment in
full of all obligations under this Agreement by Borrower to RBL, RBL will
immediately release any and all liens, security interests, and encumbrances it
has on the Collateral and terminate the Tri-Party Agreement.
Section 8.02. Representations Regarding the Collateral. Borrower hereby
represents, warrants and covenants as follows: (a) except for the security
interests granted hereby and Permitted Liens, Borrower shall be the sole and
exclusive owner of the Collateral, and the Collateral is and shall remain free
from any and all liens, security interests, encumbrances, claims and interests,
and no security agreement, financing statement, equivalent security or lien
instrument or continuation statement covering any of the Collateral is on file
or of record in any public office; (b) Borrower shall not create, permit or
suffer to exist, and shall take such action as is necessary to remove, any claim
to or interest in or lien or encumbrance upon the Collateral except the security
interest granted hereby and Permitted Liens, and shall defend the right, title
and interest of RBL in and to the Collateral against all claims and demands of
all persons and entities at any time claiming the same or any interest therein;
(c) Borrower shall deliver to RBL at least thirty (30) days prior to the
occurrence of any of the following events, written notice of such impending
events: (i) a change in the principal place of business or chief executive
office; (ii) the opening or closing of any place of business; (iii) a change in
name, identity or corporate structure, or (iii) Borrower's desire to move the
Collateral from the location set forth in Section 2.01(p).
Section 8.03. Books and Records. Borrower shall at all times keep accurate and
complete records of the Collateral and complete and accurate stock records, and
at all reasonable times and from time to time, shall allow RBL, by or through
any of its officers, agents, attorneys or accountants, to examine, inspect and
make extracts from such books and records and to arrange for verification of the
Collateral directly with Account debtors or by other methods and to examine and
inspect the Collateral wherever located. In addition, upon request of RBL,
Borrower shall provide RBL with copies of agreements with, purchase orders from,
and invoices to, the Account debtors, and copies of all shipping documents,
delivery receipts, and such other documentation and information relating to the
Collateral as RBL may reasonably require.
Section 8.04. Collateral Administration. Borrower hereby warrants, represents
and covenants to RBL that Borrower shall promptly perform, on request of RBL,
such acts as RBL- may determine to be reasonably necessary or advisable to
create, perfect, maintain, preserve, protect and continue the perfection of any
lien and security interest provided for in this Agreement or otherwise to carry
out the intent of this Agreement.
Section 8.05. Extensions and Compromises. With respect to any Collateral,
Borrower assents to all extensions or postponements of the time of payment
thereof or any other indulgence in connection therewith, to each substitution,
exchange or release of Collateral, to the addition or release of any party
primarily or secondarily liable, to the acceptance of partial payments thereon
and to the settlement, compromise or adjustment thereof, all in such manner and
at such time or times as RBL may deem advisable. RBL shall have no duty as to
the collection or protection of Collateral or any income therefrom, nor as to
the preservation of rights against prior parties, nor as to the preservation of
any right pertaining thereto, beyond the safe custody of Collateral in the
possession of RBL.
Section 8.06. Financing Statements. At the request of RBL, Borrower shall join
with RBL in executing, delivering and filing one or more financing statements in
a form satisfactory to RBL and shall pay the cost of filing the same in all
public offices wherever filing is deemed by RBL to be necessary or desirable. A
carbon, photographic or other reproduction of this Agreement or of a financing
statement shall be sufficient as a financing statement. In addition, Borrower
authorizes RBL, at the expense of Borrower, to sign and file, without Borrower's
signature, such financing and continuation statements, amendments and
supplements thereto, and other documents which RBL may from time to time deem
necessary to perfect, preserve and protect its security interests in the
Collateral or to enable RBL to exercise and enforce any of its rights, powers
and remedies hereunder with respect to any of the Collateral.
Section 8.07. Attorney-in-Fact. Borrower hereby irrevocably constitutes and
appoints RBL and any officer or agent thereof, with full power of substitution,
as Borrower's true and lawful attorney-in-fact with full irrevocable power and
authority in its place and stead and in its name or in RBL's own name, from time
to time in RBL's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments that may be necessary or desirable to accomplish the
purposes of this Agreement and, without limiting the generality of the
foregoing, hereby grants to RBL the power and right, on behalf of Borrower,
without notice to or assent: (a) to execute, file and record all such financing
statements, certificates of title and other certificates of registration and
operation and similar documents and instruments as RBL may deem necessary or
desirable to protect, perfect and validate RBL's security interest in the
Collateral; and (b) upon the occurrence and the continuation of an Event of
Default and after affording Borrower forty-five (45) days to provide a RBL an
approved remedy (i) to receive, collect, take, endorse, sign, and deliver in
Borrower's or RBL's name, any and all checks, notes, drafts, or other documents
or instruments relating to the Collateral (ii) to notify postal authorities to
change the address for delivery of Borrower's mail to an address designated by
RBL, (iii) to open such mail delivered to the designated address, (iv) to sign
and endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with accounts and other documents relating to the
Collateral; (v) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of any
Collateral; (vi) to defend any suit, action or proceeding brought with respect
to any Collateral; (vii) to negotiate, settle, compromise or adjust any account,
suit, action or proceeding described above and, in connection therewith, to give
such discharges or releases as RBL may deem appropriate; and (viii) generally,
to sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though RBL were the
absolute owner thereof for all purposes, and to do, at RBL's option, at any time
or from time to time, all acts and things which RBL deems necessary to protect,
preserve or realize upon the Collateral and RBL's security interest therein, in
order to effect the intent of this Agreement.
Borrower hereby ratifies all that said attorneys shall lawfully do or cause to
be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable. This power of attorney shall be automatically
revoked upon the occurrence of a payoff of the Term Loan Note. The powers
conferred upon RBL hereunder are solely to protect its interests in the
Collateral and shall not impose any duty upon RBL to exercise any such powers.
RBL shall be accountable only for amounts that RBL actually receives as a result
of the exercise of such powers and neither RBL nor any of its officers,
directors, employees or agents shall be responsible to Borrower for any act or
failure to act, except for RBL's own gross negligence or willful misconduct.
Section 8.08. No Consequential Damages. Except to the extent that any claim
arises out of the willful misconduct or gross negligence of RBL, as determined
in a final, non-appealable judgment by a court of competent jurisdiction, no
claim may be made by Borrower or by any of its officers, directors, or agents
against RBL or its affiliates, directors, officers, employees, attorneys or
agents for any special, indirect, punitive, or consequential damages in respect
of any breach or wrongful conduct (whether the claim therefore is based on
contract, tort or duty imposed by law) in connection with, arising out of or in
any way related to the transactions contemplated and relationship established by
this Agreement, or any act, omission or event occurring in connection therewith,
and Borrower hereby waives, releases and agrees not to sue upon any such claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.
Section 8.09. Remedies on Default. Upon the occurrence of an Event of Default,
RBL shall have the rights and remedies of a secured party under this Agreement,
under any other instrument or agreement securing, evidencing or relating to the
Obligations and under the law of the State of New York or any other applicable
state law. Without limiting the generality of the foregoing, RBL shall have the
right to setoff against any monies otherwise payable by RBL to Borrower and take
possession of the Collateral and all books and records relating to the
Collateral and for that purpose RBL may enter upon any premises on which the
Collateral or books and records relating to the Collateral or any part thereof
may be situated and remove the same therefrom. Except for the notices specified
below of time and place of public sale or disposition or time after which a
private sale or disposition is to occur and as required by law, Borrower
expressly agrees that RBL, without demand of performance or other demand,
advertisement or notice of any kind to or upon Borrower or any other person or
entity (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, assign,
give option or options to purchase or sell or otherwise dispose of and deliver
the Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any of RBL's offices or elsewhere
at such prices as RBL may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. RBL shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption. Borrower further agrees, (a)
at RBL's request, to assemble the Collateral and to make it available to RBL at
such places as RBL may reasonably select and (b) to allow RBL to use or occupy
Borrower's premises, without charge, for the purpose of effecting RBL's remedies
in respect of the Collateral. RBL shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any or all of the
Collateral or in any way relating to the rights of RBL and RBL shall account for
and deliver to Borrower the surplus, if any. To the extent permitted by
applicable law, Borrower waives all claims, damages and demands against RBL
arising out of the repossession, retention, sale or disposition of the
Collateral and agrees that RBL need not give more than ten (10) days' notice
pursuant to the terms of this Agreement of the time and place of any public sale
or of the time after which a private sale may take place and that such notice is
reasonable notification of such matters. Borrower shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which RBL is entitled and shall also be
liable for the costs of collecting any of the Obligations or otherwise enforcing
the terms thereof or of this Agreement, including, without limitation,
reasonable attorneys' fees.
ARTICLE IX
Miscellaneous
Section 9.01. Expenses. Borrower and RBL agree to pay all of their own costs and
expenses in connection with the enforcement of this Agreement, the Term Loan
Note or any other Loan Instruments or other agreement furnished pursuant hereto
or thereto or in connection herewith or therewith. In addition, Borrower shall
pay any and all stamp, transfer and other similar taxes payable or determined to
be payable in connection with the execution and delivery of this Agreement, or
any of the other Loan Instruments or the issuance of the Note or the making of
the Loan, and Borrower agrees to save and hold RBL harmless from and against any
and all liabilities with respect to or resulting from any delay in paying, or
omission to pay, such taxes. Any portion of the foregoing fees, costs and
expenses which remains unpaid following RBL's statement and request for payment
thereof shall bear interest from the date of such statement and request to the
date of payment at the Default Rate.
Section 9.02. Indemnity by Borrower--No Obligation to Others. Borrower shall
indemnify, pay and hold harmless RBL and any holder of the Note (referred to
herein collectively as the "Indemnified Parties" and individually an
"Indemnified Party") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on or
incurred by the Indemnified Parties with respect to any legal proceedings
commenced against such Indemnified Parties by any Person (other than Borrower or
another Indemnified Party) in any way relating to or arising out of this
Agreement or any other of the Loan Instruments (collectively, the "Indemnified
Liabilities"). Notwithstanding the foregoing, Borrower shall have no obligation
hereunder to indemnify the Indemnified Parties with respect to Indemnified
Liabilities to the extent payment thereof is judicially determined to be
contrary to any applicable law of the United States or of any State thereof, or
with respect to Indemnified Liabilities arising from the gross negligence or
willful misconduct of such Indemnified Party. Any Indemnified Party desiring to
invoke the benefits of this Section shall notify Borrower of its intention to do
so within a reasonable time after receipt of service of process representing any
action, suit or proceeding which is considered by said Indemnified Party to be
subject to this Section. This undertaking by Borrower shall survive the payment
of the Obligations and the termination of this Agreement.
Section 9.03. Notices. Any and all notices or other communications required or
permitted under this Agreement or any other of the Loan Instruments shall be in
writing and shall be sufficiently given if delivered in person to or sent via
nationally recognized overnight delivery addressed as follows:
To RBL: RBL Capital Group, LLC
16w281 West 83rd
Burr Ridge, IL 60527
Attention: William Healy
To Borrower: Acies, Inc.
14 Wall Street
New York, NY 10005
Attention: Jeffrey Tischler
or to such other address or person as shall be designated from time to time by
notice from Borrower or RBL.
Section 9.04. Governing Law. The laws of the State of New York shall govern this
Agreement, the Note and the other Loan Instruments and any extensions or
renewals thereof, in all aspects, including execution, interpretation,
performance and enforcement, without regard to principles of conflicts of law.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THE
LOAN INSTRUMENTS, WHETHER BASED UPON CONTRACT OR TORT, SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK
OR, AT THE SOLE OPTION OF RBL, IN ANY OTHER COURT IN WHICH RBL SHALL INITIATE
LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER
THE MATTER IN CONTROVERSY. BORROWER HEREBY CONSENTS TO PERSONAL JURISDICTION IN
THE AFOREMENTIONED COURTS AND WAIVES THE RIGHT TO A TRIAL BY JURY AND ANY RIGHT
IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE
TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 9.04.
Section 9.05. Modification of Agreement. Unless otherwise specifically provided
in this Agreement, a modification, amendment or waiver of any provision of this
Agreement, or any other of the Loan Instruments, or a consent to any departure
by Borrower therefrom, shall be effective only when the same shall be in writing
and signed by a duly authorized officer of RBL and Borrower, and then such
waiver of consent shall be effective only in the specific instance and for the
purpose for which given. No amendment, modification or waiver shall extend the
maturity of the Note or either of them, extend the time for, or reduce the
amount of, any scheduled payment or any interest due and payable pursuant to the
terms hereof, or reduce the rate of interest payable with respect to the Loan
without the express and specific written consent of RBL. Without limiting
anything in this Section or otherwise, this Agreement replaces in its entirely
any and all commitment and proposal letter(s).
Section 9.06. No Reliance/Disclaimer. Any reports, appraisals, inspections or
studies commissioned by or undertaken by RBL in connection with the Loan are for
internal lending purposes only and are not to be relied upon by Borrower,
directly or indirectly, in any way. RBL has made no express warranties to
Borrower in connection with the Loan, and hereby disclaims all warranties,
express or implied.
Section 9.07. No Waiver--Remedies Cumulative. Neither failure or delay on the
part of RBL in exercising any right, power or privilege hereunder or under the
Note, or any extensions or renewals thereof, or under any other of the Loan
Instruments shall operate as a waiver of such right, nor shall any single or
partial exercise of any such right, power or privilege preclude any further
exercise thereof or the exercise of any other right, power or privilege. No
notice to or demand on Borrower in any case shall entitle Borrower to any other
or further notices or demands in similar or other circumstances, or constitute a
waiver of any of RBL's rights or powers to take other or further action in any
circumstances without notice or demand. No remedy conferred in this Agreement or
in any of the other Loan Instruments upon RBL is intended to be exclusive of any
other remedy and each shall be cumulative and shall be in addition to every
other remedy now or hereafter existing at law or in equity or by statute or
otherwise.
Section 9.08. Binding on Successors and Assigns. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto, their respective successors, assigns and legal representatives. Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party.
Section 9.09. Further Assurances. Borrower shall, at its expense, upon request
of RBL, duly execute and deliver, or cause to be executed and delivered, such
further instruments and perform or cause to be performed such further acts as
may be necessary or proper in the reasonable opinion of RBL to carry out the
provisions and purposes of this Agreement.
Section 9.10. Counterparts--Copies of Documents. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original, but all
of which when taken together shall constitute but one agreement.
Section 9.11. Nonassignability. The rights and/or obligations of Borrower under
this Agreement may not be assigned without the prior written consent of RBL.
Section 9.12. Severability. In case any one or more of the provisions contained
in this Agreement or in any other of the Loan Instruments, shall be invalid,
illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.
Section 9.13. Reproduction of Documents. This Agreement and all documents
relating hereto, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, (b) documents received by RBL at
the closing or otherwise, and (c) financial statements, certificates and other
information previously or hereafter furnished to RBL, may be reproduced by RBL
by any photographic, photostatic, microfilm, micro-card, miniature photographic
or other similar process and RBL may destroy any original document so
reproduced. Borrower agrees and stipulates that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by RBL in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 9.14. Confidentiality. RBL covenants and agrees to keep secret, retain
in strictest confidence and prevent the unauthorized duplication, use and
disclosure, except as may be necessary in connection with any enforcement
activities hereunder, all information provided by Borrower hereunder.
Section 9.15. Section Headings and Construction. The section and paragraph
headings used herein are for convenience only and shall not be read or construed
as limiting the substance or generality of such sections or paragraphs of this
Agreement. Each covenant contained in this Agreement shall be construed (absent
an express contrary provision therein) as being independent of each other
covenant contained herein and compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any or
all other covenants.
Section 9.16. Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Instruments shall
survive all closings under the Loan Instruments and, except as otherwise
indicated, shall not be affected by any investigation made by any party.
IN WITNESS WHEREOF, Borrower and RBL have caused this Agreement to be duly
executed by their duly authorized officer, all as of the day and year first
above written.
Acies, Inc.
By:
Printed:
Its:
("Borrower")
RBL Capital Group, LLC
By:
Printed:
Its:
("RBL")
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