LOAN, SECURITY AND PLEDGE AGREEMENT
Exhibit
4.18
This
LOAN, SECURITY AND PLEDGE AGREEMENT dated as of January 15, 2010 (the
"Agreement"), is executed by and among DAL GROUP, LLC, a limited liability
company organized under the laws of the State of Delaware (the "Borrower"),
which has its chief executive office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, the Law Offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇, P.A., a
professional association licensed to practice law in the State of Florida (“DJS”
or “Lender”), Professional Title and Abstract Company of Florida, Inc., a
corporation organized under the laws of the State of Florida (“PTA”), and
Default Servicing, Inc., a corporation organized under the laws of the State of
Florida (“DSI,” and collectively with PTA and DJS, the “Secured
Parties”). The Borrower, the Lender and Secured Parties are referred
to from time to time in this Agreement individually as a “Party” and together as
the “Parties.”
R E C I T
A L S:
A. In
connection with the Master Acquisition Agreement, dated December 10, 2009 among
Chardan 2008 China Acquisition Corp., a corporation organized under the laws of
the British Virgin Islands (“Chardan”), Borrower, Lender, the Secured Parties,
▇▇▇▇▇ ▇. ▇▇▇▇▇ (“▇▇▇▇▇”), FlatWorld DAL LLC, a limited liability company
organized under the laws of the State of Delaware (“FlatWorld”), Fortuna Capital
Partners LP, a limited partnership organized under the laws of the State of
Delaware, ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, DJS Processing, LLC, a limited
liability company organized under the laws of the State of Delaware (“DJS LLC”),
Professional Title and Abstract Company of Florida, LLC, a limited liability
company organized under the laws of the State of Delaware (“PTA LLC”), and
Default Servicing, LLC, a limited liability company organized under the laws of
Delaware (“DSI LLC”) (the “Acquisition Agreement”), Borrower has executed a
promissory note in the principal amount of $52,469,000 (as amended or modified
from time to time, including any and all renewals, extensions, modifications,
replacements or agreement entered into in substitution thereof, the “Term
Note”). A copy of the Term Note is attached to this Agreement as
Exhibit
A.
B. Pursuant
to the terms of the Acquisition Agreement, the Borrower has also agreed to pay
to DJS, PTA and DSI the Post-Closing Cash (as defined in the Acquisition
Agreement). To secure Borrower’s payment of the Obligations (as
defined below), the Borrower has agreed to grant to DJS (as Lender and Secured
Party), PTA and DSI a security interest in and to the Collateral (as defined
below) including a pledge of its membership interest in each of DJS LLC, DSI LLC
and PTA LLC (collectively, the “Operating Companies” and individually an
“Operating Company”).
C. As
additional security for the Obligations, each Operating Company (each a
“Guarantor”) has executed a Guaranty, dated as of the date of this Security
Agreement, (the “Guaranty”) in favor of DJS, PTA and DSI. Each
Operating Company has also agreed to grant DJS, PTA and DSI a security interest
in its assets pursuant to the applicable Operating Company Security Agreement
executed contemporaneously with this Agreement (each an “Operating Company
Security Agreement”).
D. The
Borrower, DJS, PTA and DSI are each parties to that certain Subordination
Agreement in favor of the holder of Senior Debt, dated as of the same date of
this Security Agreement.
NOW
THEREFORE, in consideration of the premises, and the mutual covenants and
agreements set forth herein, the Parties agree as follows:
1
A G R E E
M E N T S:
Section
1 DEFINITIONS.
1.1 Defined
Terms. For the purposes of this Agreement, the following
capitalized words and phrases shall have the meanings set forth
below.
"Affiliate" of any
person or entity shall mean (a) any other person or entity which, directly or
indirectly, controls or is controlled by or is under common control with such
person or entity or (b) any officer or director of such entity. A
person or entity shall be deemed to be "controlled by" any other person or
entity if such person or entity possesses, directly or indirectly, power to
direct or cause the direction of the management and policies of such person or
entity whether by contract, ownership of voting securities, membership interests
or otherwise.
"Bankruptcy Code"
shall mean the United States Bankruptcy Code, as now existing or hereafter
amended.
"Business Day" shall
mean any day other than a Saturday, Sunday or a legal holiday on which Lenders
are authorized or required to be closed for the conduct of commercial banking
business in Plantation, Florida.
"Capital Expenditures"
shall mean all expenditures (including Capitalized Lease Obligations) which, in
accordance with GAAP, would be required to be capitalized and shown on the
consolidated balance sheet of the Borrower and its Subsidiaries, but excluding
expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (a) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (b) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being
replaced.
"Capital Lease" shall
mean a lease of any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible, by a lessee that is, or
should be recorded as a "capital lease" on the financial statements of the
lessee prepared in accordance with GAAP.
"Capital Securities"
shall mean, with respect to any
Person, all shares, participations, membership interests or other ownership
interests of any kind (however designated, whether voting or non-voting) of such
Person’s capital, whether now outstanding or issued or acquired after the
date hereof, including common shares, preferred shares, membership
interests in a limited liability company, limited or general partnership
interests in a partnership or any other equivalent of such ownership
interest.
"Capitalized Lease
Obligations" shall mean all rental obligations as lessee under a Capital
Lease which are or will be required to be capitalized on the books of the lessee
in accordance with GAAP.
“Cause” shall have the
meaning set forth in the ▇▇▇▇▇ Employment Agreement, dated as of the date of
this Agreement, between Borrower, DJS LLC, Chardan and ▇▇▇▇▇.
"Change in Control"
shall mean the occurrence of any of the following events: (a) Chardan shall
cease to own and control, directly or indirectly, at least the percentage of the
outstanding Capital Securities of the Borrower that it owns or controls on the
date of this Agreement, as adjusted for this purpose to reflect the conversion
of the Series B Preferred Units into Common Units when they actually convert;
(b) the granting by Chardan, directly or indirectly, of a security interest in
its ownership interest in the Borrower, which could result in a change in the
identity of the individuals or entities in control of the Borrower; (c) a sale
by the Borrower of its interest in a Guarantor or (d) a sale of all or
substantially all of the assets of Borrower or a Guarantor. For the
purpose hereof, the terms "control" or "controlling" shall mean the possession
of the power to direct, or cause the direction of, the management and policies
of the Borrower by contract or voting of securities or ownership
interests.
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“Chardan Change in
Control” shall mean (a) a merger involving Chardan if, following the
merger, the shareholders of Chardan immediately prior to the merger do not own
more than fifty percent (50%) of the total voting power of the surviving
company; (b) a share exchange in which the shareholders of Chardan exchange
their shares in Chardan for shares of another corporation, provided, that such
share exchange shall result in the exchange of more than fifty percent (50%) of
the total fair market value or total voting power of Chardan shares outstanding
before such share exchange for shares of another corporation, if, following the
share exchange, the shareholders of Chardan immediately prior to the share
exchange do not own more than fifty percent (50%) of the total voting power of
such other corporation following the share exchange; (c) a sale of all or
substantially all of the assets of Chardan, except to an Affiliate and/or except
if, following the sale, the shareholders of Chardan immediately prior to the
sale own more than fifty percent (50%) of the voting power, directly or
indirectly, of the acquiring company; (d) any person or group of
persons (as defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended) (other than ▇▇▇▇▇ ▇. ▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇ ▇. ▇▇▇▇▇ or any
employee benefit plan or employee benefit trust benefiting the employees of any
Obligor) becoming a beneficial owner, directly or indirectly, of securities of
Chardan representing more than fifty percent (50%) of either the total fair
market value of Chardan’s securities, or the combined voting power of Chardan’s
then outstanding voting securities; (e) a merger or share exchange involving the
Borrower and/or any Guarantor, if (i) following the transaction, the Borrower
and/or all of the Guarantors are no longer Affiliates of Chardan and (ii)
following the transaction, the shareholders of Chardan immediately prior to the
merger or share exchange do not own more than fifty percent (50%) of the total
voting power, directly or indirectly, of the surviving or acquiring company; or
(f) the Borrower and/or any Guarantor is no longer an Affiliate of
Chardan.
"Collateral" shall
have the meaning set forth in Section 3.1
hereof.
"Collateral Access
Agreement" shall mean an agreement in form and substance reasonably
satisfactory to the Lender and each Secured Party pursuant to which a mortgagee
or lessor of real property on which any collateral for the Term Note Obligations
or Post-Closing Cash Obligations is stored or otherwise located, or a processor
or other bailee holding property owned by the Borrower or any of its
Subsidiaries, acknowledges the security interests of the Lender and each Secured
Party and waives any liens held by such person on such property, and, in the
case of any such agreement with a mortgagee or lessor, permits the Lender and
the Secured Parties reasonable access to and use of such real property following
the occurrence and during the continuance of an Event of Default to assemble,
complete and sell any collateral stored or otherwise located
thereon.
“Common Units” has the
meaning set forth in the Operating Agreement.
“EBITDA" shall mean
earnings before interest, taxes, depreciation and amortization, as reflected on
the Borrower’s and its Subsidiaries’ financial statements determined in
accordance with GAAP.
"Employee Plan" shall
mean any pension, stock bonus, employee stock ownership plan, retirement, profit
sharing, deferred compensation, stock option, bonus or other incentive plan,
whether qualified or nonqualified, or any disability, medical, dental or other
health plan, life insurance or other death benefit plan, vacation benefit plan,
severance plan or other employee benefit plan or arrangement, including, without
limitation, those pension, profit-sharing and retirement plans of the Borrower
or its Subsidiaries described from time to time in the financial statements of
the Borrower or its Subsidiaries and any pension plan, welfare plan, Defined
Benefit Pension Plans (as defined in ERISA) or any multi-employer plan,
maintained or administered by the Borrower or its Subsidiaries or to which the
Borrower or its Subsidiaries is a party or may have any material liability or by
which the Borrower or any of its Subsidiaries is bound.
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"Environmental Laws"
shall mean all present or future federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes, together with all
administrative or judicial orders, consent agreements, directed duties,
requests, licenses, authorizations and permits of, and agreements with, any
governmental authority, in each case relating to any matter arising out of or
relating to public health and safety, or pollution or protection of the
environment or workplace, including any of the foregoing relating to the
presence, use, production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, emission, release, threatened release,
control or cleanup of any Hazardous Substance.
"ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended from time to
time.
"Event of Default"
shall mean any of the events or conditions which are set forth in Section 8
hereof.
"GAAP" shall mean
United States generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination, provided, however, that interim financial statements or reports
shall be deemed in compliance with GAAP despite the absence of footnotes and
fiscal year-end adjustments as required by GAAP.
"Guarantor" and "Guarantors" shall
mean, respectively, each of and collectively, the following: DJS Processing,
LLC, Default Servicing, LLC and Professional Title and Abstract Company of
Florida, LLC.
"Guaranty" shall have
the meaning given to it in the Recitals.
"Hazardous Substances"
shall mean (a) any petroleum or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, dielectric fluid containing levels of polychlorinated biphenyls,
radon gas and mold; (b) any chemicals, materials, pollutant or substances
defined as or included in the definition of "hazardous substances", "hazardous
waste", "hazardous materials", "extremely hazardous substances", "restricted
hazardous waste", "toxic substances", "toxic pollutants", "contaminants",
"pollutants" or words of similar import, under any applicable Environmental Law;
and (c) any other chemical, material or substance, the exposure to, or
release of which is prohibited, limited or regulated by any governmental
authority or for which any duty or standard of care is imposed pursuant to, any
Environmental Law.
"Intellectual
Property" shall mean the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
patents, service marks and trademarks, and all registrations and applications
for registration therefor and all licensees thereof, trade names, domain names,
technology, know-how and processes, and all rights to ▇▇▇ at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
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"Interest Charges"
shall mean, for any period, the sum of: (a) all interest, charges and related
expenses payable with respect to that fiscal period to a lender in connection
with borrowed money or the deferred purchase price of assets that are treated as
interest in accordance with GAAP, plus (b) the portion
of Capitalized Lease Obligations with respect to that fiscal period that should
be treated as interest in accordance with GAAP.
"Liabilities" shall
mean at all times all liabilities of the Borrower and its Subsidiaries that
would be shown as such on a balance sheet of the Borrower or its Subsidiaries
prepared in accordance with GAAP.
"Loan Documents" shall
mean the Term Note, the Operating Company Security Agreements, this Agreement
(but only the provisions that relate to the Term Note Obligations) and each
Guaranty, as each may be amended, restated, supplemented or modified from time
to time.
"Material Adverse
Effect" shall mean (a) a material adverse change in, or a material
adverse effect upon, the assets, business, properties, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries taken
as a whole, (b) a material impairment of the ability of the Borrower or any
Obligor to perform any of the Obligations under any of the Loan Documents or
Post-Closing Cash Documents, or (c) a material adverse effect on (i) any
substantial portion of any collateral for the Term Note Obligations or
Post-Closing Cash Obligations, (ii) the legality, validity, binding effect or
enforceability against the Borrower or any Obligor of any of the Loan Documents,
or the Post-Closing Cash Documents (iii) the perfection or priority of any lien
or security interest granted to DJS, PTA or DSI under any Loan Document, or (iv)
the rights or remedies of DJS, PTA or DSI under any Loan Document.
"Maturity Date" shall
mean the Maturity Date stated in the Term Note, as such date may be extended by
the Lender pursuant to any modification, extension or renewal note executed by
the Borrower and accepted by the Lender in its sole and absolute discretion in
substitution for the Term Note.
“Membership Interest Purchase
Agreement” shall mean that certain Contribution and Membership Interest
Purchase Agreement dated January 15, 2010 by and among Chardan, Borrower,
Lender, ▇▇▇▇▇ ▇. ▇▇▇▇▇, PTA, DSI, FlatWorld DAL LLC, a limited liability company
organized under the laws of the State of Delaware, Fortuna Capital Partners LP,
a limited partnership organized under the laws of the State of Delaware, ▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, DJS LLC, PTA LLC, and DSI LLC.
“Net EBITDA” has the
meaning set forth in the Membership Interest Purchase Agreement.
"Obligations" shall
mean, collectively, the Term Note Obligations and the Post-Closing Cash
Obligations.
"Obligor" shall mean
the Borrower, any Guarantor, accommodation endorser, third party pledgor, or any
other party liable with respect to the Obligations.
“Operating Agreement”
shall mean the Amended and Restated Operating Agreement of DAL Group, LLC, dated
as of the date of this Agreement.
“Operating Company Operating
Agreement” shall mean, collectively, the Limited Liability Company
Agreement of DJS Processing, LLC, dated January 14, 2010, the Limited Liability
Company Agreement of Professional Title and Abstract Company of Florida, LLC,
dated January 14, 2010, and the Limited Liability Company Agreement of Default
Servicing, LLC, dated January 14, 2010, as each may be amended from time to
time.
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“Operating Company Security
Agreement” shall have the meaning given to it in the
Recitals.
"Organizational
Identification Number" shall mean, with respect to Borrower, the
organizational identification number assigned to Debtor by the applicable
governmental unit or agency of the jurisdiction of organization of the
Borrower.
"Permitted Liens"
shall mean (a) liens for taxes, assessments or other governmental charges
not at the time delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and, in each case, for which
it maintains adequate reserves in accordance with GAAP and in respect of which
no lien has been filed; (b) liens arising in the ordinary course of business
(such as (i) liens of carriers, warehousemen, mechanics and materialmen and
other similar liens imposed by law, and (ii) liens in the form of deposits or
pledges incurred in connection with worker's compensation, unemployment
compensation and other types of social security (excluding liens arising under
ERISA) or in connection with surety bonds, bids, performance bonds and similar
obligations) for sums not overdue or being contested in good faith by
appropriate proceedings and not involving any advances or borrowed money or the
deferred purchase price of property or services, which do not in the aggregate
materially detract from the value of the property or assets of the Borrower or
any of its Subsidiaries or materially impair the use thereof in the operation of
the Borrower's business or any of its Subsidiaries’ businesses and, in each
case, for which it maintains adequate reserves in accordance with GAAP and in
respect of which no lien has been filed; (c) attachments, appeal bonds,
judgments and other similar liens to the extent such liens have not yet resulted
in an Event of Default under Section 8.9 hereof; (d) easements, rights of way,
restrictions, minor defects or irregularities in title and other similar liens
not interfering in any material respect with the ordinary conduct of the
business of Borrower or any Guarantor; (e) liens arising in connection with
Capitalized Lease Obligations (and attaching only to the property being leased);
(f) liens granted to the Lender, the Secured Parties and the Secured Party
Representative hereunder and under the Loan Documents; (g) liens listed on
Schedule 6.2, (h) bankers’ liens, rights of set off or similar rights for
financial institutions in any deposit accounts; (i) any interest or title of a
lessor under any operating lease entered into in the ordinary course of business
and covering only the assets so leased, (j) any interest of title of a licensor,
sublicensor, lessor or sublessor, lessee or sublessee, in each case under any
license or lease agreement in the ordinary course of business, and liens arising
from UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) solely evidencing a lessor’s interest under
leases, (k) liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto; and (l) any renewal or extension
of any lien permitted above, so long as such renewal or extension does not
extend the lien to any additional property or secure a greater obligation, other
than after-acquired title in such property and the proceeds
thereof.
“Person” shall mean
any natural person, partnership, limited liability company, corporation, trust,
joint venture, joint stock company, association, unincorporated organization,
government or agency or political subdivision thereof, or other entity, whether
acting in an individual, fiduciary or other capacity.
"Pledged Membership
Interests" shall mean Borrower's entire membership in each of DJS LLC,
PTA LLC and DSI LLC.
“Post-Closing Cash
Documents” shall mean the Membership Interest Purchase Agreement, this
Agreement, each Guaranty and each Operating Company Security Agreement, as each
may be amended, restated, supplemented or modified from time to time, but only
the provisions of each such document that relates to the Post-Closing Cash
Obligations.
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“Post-Closing Cash
Obligations” shall means the obligation to pay the Post-Closing Cash (as
defined in the Acquisition Agreement), and all interest accrued thereon, as
accrued and payable as set forth in the Membership Interest Purchase Agreement,
any fees due any Secured Party hereunder, any reasonable expenses incurred by
any Secured Party hereunder and any and all other liabilities and obligations of
the Borrower to any Secured Party whether under this Agreement or under any
other Post-Closing Cash Document.
“Secured Party
Representative” has the meaning set forth in Section 10.14.
“Senior Debt” means
the term loan granted by the lenders party to that certain Senior Loan, Security
and Pledge Agreement to Borrower on the date of this Security Agreement, in the
principal amount of $15,588,735.79.
“Series B Preferred
Units” has the meaning set forth in the Operating Agreement.
“▇▇▇▇▇ NDA” means that
certain ▇▇▇▇▇ Confidentiality and Noncompetition Agreement, dated as of the date
of this Agreement, among Chardan, Borrower and the Guarantors.
"Subordinated Debt"
shall mean that portion of the Liabilities of the Borrower and each Subsidiary
which is subordinated to the Obligations in a manner reasonably satisfactory to
DJS, PTA and DSI, including right and time of payment of principal and
interest.
"Subsidiary" and
"Subsidiaries"
shall mean each and all such corporations, partnerships, limited partnerships,
limited liability companies, limited liability partnerships, joint ventures or
other entities of which or in which the Borrower owns, directly or indirectly,
such number of outstanding Capital Securities as have more than fifty percent
(50.00%) of the ordinary voting power for the election of directors or other
managers of such corporation, partnership, limited liability company or other
entity.
“Term Note” shall have
the meaning set forth in the Recitals.
“Term Note
Obligations” shall mean the obligations under the Term Note, all interest
accrued thereon (including interest which would be payable post-petition in
connection with any bankruptcy or similar proceeding, whether or not permitted
as a claim thereunder), any fees due the Lender hereunder, any reasonable
expenses incurred by the Lender hereunder and any and all other liabilities and
obligations of the Borrower to the Lender whether under this Agreement or under
any other Loan Document.
"UCC" shall mean the
Uniform Commercial Code in effect in the State of Florida from time to
time.
"Unmatured Event of
Default" shall mean any event which, with the giving of notice, the
passage of time or both, would constitute an Event of Default.
“Voidable Transfer”
shall have the meaning set forth in Section 10.3 hereof.
1.2 Accounting
Terms. Any accounting terms used in this Agreement which are
not specifically defined herein shall have the meanings customarily given them
in accordance with GAAP. Calculations and determinations of financial
and accounting terms used and not otherwise specifically defined hereunder and
the preparation of financial statements to be furnished to DJS, PTA or DSI
pursuant hereto shall be made and prepared, both as to classification of items
and as to amount, in accordance with sound accounting practices and GAAP as used
in the preparation of the financial statements of the Borrower and its
Subsidiaries on the date of this Agreement.
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1.3 Other Terms Defined in
UCC. All other capitalized words and phrases used herein and
not otherwise specifically defined herein shall have the respective meanings
assigned to such terms in the UCC, to the extent the same are used or defined
therein.
1.4 Other Interpretive
Provisions.
(a) The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms. Whenever the context so requires, the
neuter gender includes the masculine and feminine, the single number includes
the plural, and vice versa.
(b) Section
and Schedule references are to this Agreement unless otherwise
specified. The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement
(c) The term
"including" is not limiting, and means "including, without
limitation".
(d) In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding", and the word "through" means "to and
including."
(e) Unless
otherwise expressly provided herein, (i) references to agreements
(including this Agreement and the other Loan Documents and Post-Closing Cash
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, supplements and other modifications
thereto, but only to the extent such amendments, restatements, supplements and
other modifications are not prohibited by the terms of any Loan Document or
Post-Closing Cash Document, and (ii) references to any statute or
regulation shall be construed as including all statutory and regulatory
provisions amending, replacing, supplementing or interpreting such statute or
regulation.
(f) To the
extent any of the provisions of the other Loan Documents or Post-Closing Cash
Documents are inconsistent with the terms of this Agreement, the provisions of
this Agreement shall govern.
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(g) This
Agreement, the other Loan Documents and the Post-Closing Cash Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and each shall be performed in accordance with its
terms.
Section
2 TERM NOTE AND
OBLIGATIONS.
2.1 Term Note. Subject to
the terms and conditions of this Agreement, the other Loan Documents and the
Master Agreement, and in reliance upon the representations and warranties of the
Borrower set forth herein, in the other Loan Documents and in the Master
Agreement, on the date of this Agreement, Borrower has issued to Lender, and
Lender has accepted from Borrower, the Term Note. The principal amount of the
Term Note outstanding from time to time shall bear interest at the rate set
forth in the Term Note and shall be repaid as provided in the Term
Note. Repayment of the Term Note is due in full on the Maturity Date,
unless the Term Note Obligations are otherwise accelerated, terminated or
extended as provided in this Agreement.
2.2 Interest and Fee
Computation; Collection of Funds. If any payment to be made by
the Borrower pursuant to this Agreement or the Term Note shall become due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in computing any
interest in respect of such payment. All payments made by the
Borrower under any of the Loan Documents or the Post-Closing Cash Documents
shall be made without setoff, counterclaim, or other defense. Late
fees and interest on the Post-Closing Cash Obligations shall accrue and be paid
in accordance with the Membership Interest Purchase Agreement.
2.3 Obligations. The
Term Note Obligations shall constitute one general obligation of the Borrower,
and shall be secured by Lender’s security interest in and lien upon any
Collateral and by all other security interests, liens, claims and encumbrances
heretofore, now or at any time or times hereafter granted by the Borrower and/or
any Subsidiary to Lender. The Post-Closing Cash Obligations shall constitute one
general obligation of the Borrower, and shall be secured by Secured Parties’
security interest in and lien upon any Collateral and by all other security
interests, liens, claims and encumbrances heretofore, now or at any time or
times hereafter granted by the Borrower and/or any Subsidiary to the Secured
Parties.
Section
3 SECURITY FOR THE
OBLIGATIONS.
3.1 Security for
Obligations. As security for the payment and performance
of (x) the Term Note Obligations, the Borrower does hereby pledge,
assign, transfer, deliver and grant to the Lender and (y) the Post-Closing Cash
Obligations, the Borrower does hereby assign, transfer, deliver and grant to the
Secured Parties, a continuing and unconditional security interest in and to any
and all personal property of the Borrower, of any kind or description, tangible
or intangible, wherever located and whether now existing or hereafter arising,
created or acquired, including the following (all of which property, along with
the products and proceeds therefrom, are individually and collectively referred
to as the “Collateral”):
(a) all
property of, or for the account of, the Borrower now or hereafter coming into
the possession, control or custody of, or in transit to, the Lender, a Secured
Party or any agent or bailee for the Lender or a Secured Party or any parent,
affiliate or subsidiary of the Lender or a Secured Party or any participant with
the Lender or a Secured Party (whether for safekeeping, deposit, collection,
custody, pledge, transmission or otherwise), including all earnings, dividends,
interest, or other rights in connection therewith and the products and proceeds
therefrom, including the proceeds of insurance thereon; and
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(b) the
additional property of the Borrower, whether now existing or hereafter arising
or acquired, and wherever now or hereafter located, together with all additions
and accessions thereto, substitutions, betterments and replacements therefor,
products and Proceeds therefrom, and all of the Borrower's books and records and
recorded data relating thereto (regardless of the medium of recording or
storage), together with all of the Borrower's right, title and interest in and
to all computer software required to utilize, create, maintain and process any
such records or data on electronic media, identified and set forth as
follows:
(i) All
Accounts, including but not limited to billed and unbilled accounts receivable,
and all Goods whose sale, lease or other disposition by the Borrower has given
rise to Accounts and have been returned to, or repossessed or stopped in transit
by, the Borrower, or rejected or refused by an account borrower;
(ii) All
Inventory, including raw materials, work-in-process and finished
goods;
(iii) All Goods
(other than Inventory), including embedded software, Equipment, vehicles,
furniture and Fixtures;
(iv) All
Software and computer programs;
(v) All
Securities, investment property, Financial Assets and Deposit
Accounts;
(vi) All
Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of
Credit Rights, all proceeds of letters of credit, Supporting Obligations, notes
secured by real estate, Commercial Tort Claims and General Intangibles,
including Payment Intangibles;
(vii) The Pledged Membership
Interests; and
(viii) All
Proceeds (whether Cash Proceeds or Noncash Proceeds) of the foregoing property,
including all insurance policies and proceeds of insurance payable by reason of
loss or damage to the foregoing property, including unearned premiums, and of
eminent domain or condemnation awards.
3.2 Pledged Membership
Interests. In the event that a reclassification, split, reverse split,
dividend, readjustment, or other change is made in the capital structure of any
of the Operating Companies (a) any additional or substituted shares issued on
behalf of the Pledged Membership Interests shall be subject to the pledge
contained in this Agreement and (b) if such change reduces the number of the
membership interests of any Operating Company, then the number of Pledged
Membership Interests shall be reduced in proportion to such
reduction.
3.3 Possession and Transfer of
Collateral.
(a) Until an
Event of Default has occurred hereunder, the Borrower shall be entitled to (i)
possession or use of the Collateral (other than Instruments or Documents
including Tangible Chattel Paper and Investment Property consisting of
certificated securities and other Collateral required to be delivered to the
Lender or Secured Party Representative pursuant to this Section 3) and (ii)
shall be entitled to receive for its own use cash dividends on the Pledged
Membership Interests paid out of earned surplus, to the extent that such cash
dividends are permitted to be paid under the terms of the Loan Documents or the
Post-Closing Cash Documents. If a dividend is paid that is not permitted to be
paid under the terms of the Loan Documents or Post-Closing Cash Documents,
Borrower shall hold such dividend in trust for DJS, PTA and DSI, and shall
immediately deliver such dividend to the Secured Party Representative to be held
on behalf of Lender and Secured Parties as additional collateral
hereunder.
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(b) The
cancellation or surrender of the Term Note, upon payment or otherwise, shall not
affect the right of the Lender to retain Collateral, with respect to any other
of the Term Note Obligations and the Secured Parties to retain Collateral with
respect to the Post-Closing Cash Obligations until all Obligations are
indefeasibly paid in full. The Borrower shall not sell, assign (by operation of
law or otherwise), license, lease or otherwise dispose of, or grant any option
with respect to any of the Collateral except in the ordinary course of
business.
3.4 Perfection of Security
Interest. Borrower hereby irrevocably authorizes the Lender
and Secured Party Representative on behalf of the Secured Parties to file
financing statement(s) describing the Collateral in all public offices
reasonably deemed necessary by the Lender or any Secured Party, and to take any
and all actions, including, without limitation, filing all financing statements,
continuation financing statements and all other documents that the Lender or a
Secured Party may reasonably determine to be necessary to perfect and maintain
the Lender's or a Secured Party’s security interests in the
Collateral. Borrower shall have possession of the Collateral, except
where expressly otherwise provided in this Agreement or where the Lender or a
Secured Party chooses to perfect its security interest by possession, whether or
not in addition to the filing of a financing statement. Where
Collateral is in the possession of a third party, Borrower will join with the
Lender and the Secured Party Representative in notifying the third party of the
Lender’s and the Secured Parties’ security interest and obtaining an
acknowledgement from the third party that it is holding the Collateral for the
benefit of the Lender and the Secured Parties. Borrower will
cooperate with the Lender and the Secured Party Representative in obtaining
control with respect to Collateral consisting of Deposit Accounts, Investment
Property, Letter-of-Credit Rights and Electronic Chattel
Paper. Borrower will not create any Chattel Paper without placing a
legend on the Chattel Paper reasonably acceptable to the Lender and the Secured
Party Representative indicating that the Lender and each Secured Party has a
security interest in the Chattel Paper. Borrower shall pay the cost
of filing or recording all financing statement(s) and other
documents. Borrower agrees to promptly execute and deliver to the
Lender and the Secured Party Representative all financing statements,
continuation financing statements, assignments, certificates of title,
applications for vehicle titles, affidavits, reports, notices, schedules of
Accounts, designations of Inventory, letters of authority and all other
documents that the Lender or any Secured Party may reasonably request in form
reasonably satisfactory to the Lender and the Secured Party Representative to
perfect and maintain the Lender's and the Secured Parties’ security interests in
the Collateral. The Borrower further agrees to indemnify and hold the
Lender and each Secured Party and the Secured Party Representative harmless
against claims of any person or entity not a party to this Agreement concerning
disputes arising over the Collateral, except to the extent such claim is the
result of the action, failure to act, negligence and/or misconduct of the
Lender, the Secured Party Representative, any other Secured Party and/or any
Affiliate of any of the foregoing..
3.5 Preservation of the
Collateral. The Lender and Secured Party Representative may,
but neither is not required, to take such actions from time to time as the
Lender or the Secured Party Representative deems reasonably appropriate to
maintain or protect the Collateral. The Lender and the Secured Party
Representative shall have exercised reasonable care in the custody and
preservation of the Collateral if the Lender or Secured Party Representative
takes such action as the Borrower shall reasonably request in writing which is
not inconsistent with the Lender's or any Secured Party’s status as a secured
party, but the failure of the Lender or the Secured Party Representative to
comply with any such request shall not be deemed a failure to exercise
reasonable care; provided, however, the Lender's or Secured Party
Representative’s responsibility for the safekeeping of the Collateral shall (a)
be deemed reasonable if such Collateral is accorded treatment substantially
equal to that which the Lender or any Secured Party accords its own property,
and (b) not extend to matters beyond the control of the Lender or Secured Party
Representative, including acts of God, war, insurrection, riot or governmental
actions.
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3.6 Collateral in the Possession
of a Warehouseman or Bailee. If any of the Collateral at any
time is in the possession of a warehouseman or bailee, the Borrower shall
promptly notify the Lender and the Secured Party Representative
thereof, and shall use commercially reasonable efforts to promptly obtain a
Collateral Access Agreement. Neither the Lender nor any Secured Party
shall give any instructions to such warehouseman or bailee pursuant to such
Collateral Access Agreement unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by the Borrower
with respect to the warehouseman or bailee.
3.7 Commercial Tort
Claims. If the Borrower shall at any time hold or acquire a
Commercial Tort Claim, the Borrower shall promptly, upon knowledge thereof,
notify the Lender and the Secured Party Representative in writing signed by the
Borrower of the details thereof and at the request of the Lender or any Secured
Party grant to the Lender and to each Secured Party, for its own benefit and as
agent for its Affiliates, in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, in each case in form and
substance reasonably satisfactory to the Lender and the Secured Party
Representative, and shall execute any amendments hereto deemed reasonably
necessary by the Lender and any Secured Party to perfect the security interest
of the Lender in such Commercial Tort Claim.
3.8 Electronic Chattel Paper and
Transferable Records. If the Borrower at any time holds or
acquires an interest in any electronic chattel paper or any "transferable
record", as that term is defined in Section 201 of the federal Electronic
Signatures in Global and National Commerce Act, or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction, the
Borrower shall promptly notify the Lender and the Secured Party Representative
thereof and, at the request of the Lender or any Secured Party, shall take such
action as the Lender or the Secured Party Representative may reasonably request
to vest in the Lender or the Secured Parties, control under Section 9-105 of the
UCC of such electronic chattel paper or control under Section 201 of the federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, §16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record. The Lender or the Secured
Party Representative, as the case may be, will arrange, pursuant to procedures
reasonably satisfactory to the Lender and each Secured Party, as applicable, and
so long as such procedures will not result in the Lender's or any Secured
Party’s loss of control, for the Borrower to make alterations to the electronic
chattel paper or transferable record permitted under Section 9-105 of the UCC
or, as the case may be, Section 201 of the federal Electronic Signatures in
Global and National Commerce Act or Section 16 of the Uniform Electronic
Transactions Act for a party in control to make without loss of
control.
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Section
4 REPRESENTATIONS AND
WARRANTIES.
To induce
the Lender to accept the Term Note, and to induce the Secured Parties’ to accept
the Post-Closing Cash (as defined in the Acquisition Agreement), the Borrower
makes the following representations and warranties to DJS, PTA and DSI, each of
which shall survive the execution and delivery of this Agreement:
4.1 Borrower Organization and
Name. The Borrower and each Subsidiary, if any, is duly
organized, existing and in good standing, with full and adequate power to carry
on and conduct its business as presently conducted. The Borrower and
each Subsidiary, if any, is duly licensed or qualified in all foreign
jurisdictions wherein the nature of its activities requires such qualification
or licensing. The exact legal name of the Borrower is as set forth in
the first paragraph of this Agreement. The Borrower's Organizational
Identification Number is 4320638.
4.2 Authorization. The
Borrower has full right, power and authority to enter into this Agreement, to
make the borrowings and execute and deliver the Loan Documents and Post-Closing
Cash Documents as provided herein and to perform all of its duties and
obligations under this Agreement and the other Loan Documents and Post-Closing
Cash Documents. The execution and delivery of this Agreement, the
other Loan Documents and Post-Closing Cash Documents will not, nor will the
observance or performance of any of the matters and things herein or therein set
forth, violate or contravene any provision of law or of the Borrower’s
organizational documents, nor require any consent, approval, authorization, or
filings with, notice to or other act by or in respect of, any governmental
authority or any other party (other than any consent or approval which has been
obtained and is in full force and effect). All necessary and
appropriate action has been taken on the part of the Borrower to authorize the
execution and delivery of this Agreement and the other Loan Documents and
Post-Closing Cash Documents.
4.3 Validity and Binding
Nature. This Agreement and the other Loan Documents and
Post-Closing Cash Documents are the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their terms,
subject to bankruptcy, insolvency and similar laws affecting the enforceability
of creditors' rights generally and to general principles of equity.
4.4 Security
Interest. This Agreement creates a valid security interest in
favor of each of DJS, PTA and DSI in the Collateral and, when properly perfected
by filing in the appropriate jurisdictions, or by possession or Control of such
Collateral by the Lender or a Secured Party or delivery of such Collateral to
the Lender or a Secured Party, shall constitute a valid, perfected security
interest in such Collateral. None of the Collateral is subject to any security
interest other than as contemplated by this Agreement or in favor of the holders
of the Senior Debt.
4.5 Pledged Membership
Interests. Borrower is the sole and lawful owner of the Pledged
Membership Interests and has the right and authority to subject the same to the
security interest of the Lender and the Secured Parties under this
Agreement. None of the Pledged Membership Interests is subject to any
Lien (other than pursuant to this Agreement and subject to a lien in favor of
the holder of the Senior Debt). This Agreement creates in favor of
each of DJS, PTA and DSI a valid security interest in the Pledged Membership
Interests. All of the Pledged Membership Interests have been duly and
validly issued and are fully paid and nonassessable.
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4.6 Lending
Relationship. The relationship hereby created between the
Borrower, the Lender and each Secured Party is and has been conducted on an open
and arm's length basis in which no fiduciary relationship exists and that the
Borrower has not relied and is not relying on any such fiduciary relationship in
executing this Agreement and in consummating this Agreement. The
Lender represents that it will receive a promissory note payable to its order as
evidence of the Term Note Obligations.
4.7 Business
Loan. The obligations evidenced by the term note, including
interest rate, fees and charges as contemplated hereby, (a) are an exempted
transaction under the Truth In Lending Act, 15 U.S.C. 1601 et seq., as amended from
time to time, and (b) do not, and when disbursed shall not, violate the
provisions of the Florida usury laws, any consumer credit laws or the usury laws
of any state which may have jurisdiction over this transaction, the Borrower or
any property securing the Obligations.
4.8 Place of
Business. The principal place of business and books and
records of the Borrower is set forth in the preamble to this Agreement, and the
location of all Collateral, if other than at such principal place of business,
is as set forth in schedules furnished to DJS, PTA or DSI. The
Borrower shall promptly notify the Lender and the Secured Party Representative
of any change in such location(s). The Borrower will not remove or
permit the Collateral to be removed from such location(s) without the prior
written consent of the Lender and Secured Party Representative, except for
Inventory sold in the usual and ordinary course of the Borrower's
business.
Section
5 AFFIRMATIVE
COVENANTS.
5.1 Borrower Existence. The
Borrower shall, and shall cause each Subsidiary to, at all times preserve and
maintain its (a) existence and good standing in the jurisdiction of its
organization, and (b) qualification to do business and good standing in each
jurisdiction where the nature of its business makes such qualification necessary
(other than such jurisdictions in which the failure to be qualified or in good
standing could not reasonably be expected to have a Material Adverse Effect),
and shall at all times continue as a going concern in the same business or
substantially similar business to the business which the Borrower or the
Subsidiary, as applicable, is presently conducting.
5.2 Compliance With
Laws. The Borrower shall comply, and cause each Subsidiary to
comply, in all respects, including the conduct of its business and operations
and the use of its properties and assets, with all applicable laws, rules,
regulations, decrees, orders, judgments, licenses and permits, except where
failure to comply could not reasonably be expected to have a Material Adverse
Effect.
5.3 Payment of Taxes and
Liabilities. The Borrower shall pay, and cause each Subsidiary
to pay, and discharge, before penalties accrue thereon, all property taxes and
other taxes, and all governmental charges or levies against it, as well as
claims of any kind which, if unpaid, could become a lien on any of its property;
provided that the foregoing shall not require the Borrower or any Subsidiary to
pay any such tax or charge so long as it shall contest the validity thereof in
good faith by appropriate proceedings and shall set aside on its books adequate
reserves with respect thereto in accordance with GAAP.
5.4 Maintain
Property. The Borrower shall, and shall cause each Subsidiary
to, at all times maintain, preserve and keep its properties and equipment,
including any Collateral, in good repair, working order and condition, normal
wear and tear and casualty and condemnation events excepted, and shall from time
to time make all needful and proper repairs, renewals, replacements, and
additions thereto so that at all times the efficiency thereof shall be fully
preserved and maintained in all material respects. The Borrower
shall, and shall each of Subsidiary to, permit the Lender and any Secured Party
to examine and inspect such plant, properties and equipment at all reasonable
times.
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5.5 Maintain
Insurance. The Borrower shall, and shall cause each Subsidiary
to, at all times maintain, with insurance companies reasonably acceptable to the
Lender and each Secured Party, such insurance coverage as may be required by any
law or governmental regulation or court decree or order applicable to it and
such other insurance, to such extent and against such hazards and liabilities,
including employers', public and professional liability risks, as is customarily
maintained by companies similarly situated, and shall have insured amounts no
less than, and deductibles no higher than, are reasonably acceptable to the
Lender and the Secured Parties. The Borrower shall, and shall cause
each Subsidiary to, furnish to the Lender and Secured Party Representative a
certificate setting forth in reasonable detail the nature and extent of all
insurance maintained by the Borrower and the Subsidiary, as applicable, which
shall be reasonably acceptable in all respects to the Lender and each Secured
Party. The Borrower shall, and shall cause each Subsidiary to, cause each issuer
of an insurance policy to provide the Lender and each Secured Party with an
endorsement (a) showing the Lender and each Secured Party as lender's loss payee
with respect to each policy of property or casualty insurance; and (b) providing
that thirty (30) days notice will be given to the Lender and Secured Party
Representative prior to any cancellation of, material reduction or change in
coverage provided by or other material modification to such policy. In the event
the Borrower or a Subsidiary either fails to provide the Lender and Secured
Party Representative with evidence of the insurance coverage required by this
Section or at any time hereafter shall fail to obtain or maintain any of the
policies of insurance required above, or to pay any premium in whole or in part
relating thereto, then the Lender or any Secured Party, without waiving or
releasing any obligation or default by the Borrower hereunder, may at any time
(but shall be under no obligation to so act), obtain and maintain such policies
of insurance and pay such premiums and take any other action with respect
thereto, which the Lender and each Secured Party deems
advisable. This insurance coverage (i) may, but need not, protect the
Borrower’s or a Subsidiary’s interests in such property, and (ii) may not pay
any claim made by, or against, the Borrower or a Subsidiary in connection with
such property. The Borrower or a Subsidiary, as the case
may be, may later cancel any such insurance purchased by the Lender or any
Secured Party, but only after providing the Lender and Secured Party
Representative with evidence that the Borrower and each Subsidiary has obtained
the insurance coverage required by this Section. If the Lender or any
Secured Party purchases such insurance, the Borrower will be responsible for the
reasonable costs of that insurance, including interest and any other charges
that may be imposed with the placement of the insurance, until the effective
date of the cancellation or expiration of the insurance. The
reasonable costs of the insurance may be added to the principal amount of the
Term Note or the Post-Closing Cash (as defined in the Acquisition Agreement), as
the case may be. The costs of the insurance may be more than the cost
of the insurance the Borrower or any Subsidiary may be able to obtain on its
own.
5.6 Pledged Membership
Interests. At any time and from time to time after the occurrence of an
Event of Default (as hereinafter defined) or a default under any of the
Obligations which is continuing uncured and unwaived, the Borrower shall, upon
request of any of DJS, PTA or DSI, execute and deliver to the requesting party
any proxies, stock powers or assignments with respect to the Pledged Membership
Interests or endorse any instruments or chattel paper with respect to Pledged
Membership Interests as so requested in order to enforce its rights under
Section 9.4(g).
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5.7 ERISA Liabilities; Employee
Plans. The Borrower shall, and shall cause each Subsidiary to:
(a) keep in full force and effect any and all Employee Plans which are presently
in existence or may, from time to time, come into existence under ERISA, and not
withdraw from any such Employee Plans, unless such withdrawal can be effected or
such Employee Plans can be terminated without liability to the Borrower or the
Subsidiaries; (b) make contributions to all of such Employee Plans in a timely
manner and in a sufficient amount to comply with the standards of ERISA;
including the minimum funding standards of ERISA; (c) comply with all material
requirements of ERISA which relate to such Employee Plans; (d) notify the Lender
and the Secured Party Representative immediately upon receipt by the Borrower or
any Subsidiary of any notice concerning the imposition of any withdrawal
liability or of the institution of any proceeding or other action which may
result in the termination of any such Employee Plans or the appointment of a
trustee to administer such Employee Plans; (e) promptly advise the Lender and
the Secured Party Representative of the occurrence of any "Reportable Event" or
"Prohibited Transaction" (as such terms are defined in ERISA), with respect to
any such Employee Plans; and (f) amend any Employee Plan that is intended to be
qualified within the meaning of Section 401 of the Internal Revenue Code of 1986
to the extent necessary to keep the Employee Plan qualified, and to cause the
Employee Plan to be administered and operated in a manner that does not cause
the Employee Plan to lose its qualified status.
5.8 Intellectual
Property. The Borrower shall and shall cause each Subsidiary
to maintain, preserve and renew, and shall cause the Subsidiaries to maintain,
preserve and renew, all Intellectual Property necessary for the conduct of its
business as and where the same is currently located as heretofore or as
hereafter conducted by it.
5.9 Notice of
Proceedings. The Borrower, promptly upon becoming aware, shall
give written notice to the Lender and the Secured Party Representative of any
litigation, arbitration or governmental investigation or proceeding not
previously disclosed by the Borrower to the Lender or any Secured Party which
has been instituted or, to the knowledge of the Borrower, is threatened against
the Borrower or any of its Subsidiaries or any Guarantor or to which any of its
respective properties is subject which might reasonably be expected to have a
Material Adverse Effect.
5.10 Notice of Event of Default
or Material Adverse Effect. The Borrower shall, prompty after
the commencement thereof, give notice to the Lender and the Secured Party
Representative in writing of the occurrence of any Event of Default or any
Unmatured Event of Default, or the occurrence of any condition or event having a
Material Adverse Effect on the Borrower, any Subsidiary or any Guarantor, not
previously disclosed by the Borrower to the Lender.
5.11 Environmental
Matters. The Borrower will, and will cause the Subsidiaries
to, comply in all material respects with all Environmental Laws and will obtain
all licenses, permits, certificates, approvals and similar authorizations
thereunder. The Borrower shall immediately notify the Lender and the Secured
Party Representative upon becoming aware of any such investigation, proceeding,
complaint, order, directive, claim, citation or notice, and shall take prompt
and appropriate actions to respond thereto, with respect to any non-compliance
with, or violation of, the requirements of any Environmental Law by the Borrower
or the release, spill or discharge, threatened or actual, of any Hazardous
Material or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Material or any
other environmental, health or safety matter, which affects the Borrower or its
business, operations or assets or any properties at which the Borrower has
transported, stored or disposed of any Hazardous Substances. The
Borrower agrees to allow the Lender, any Secured Party or any of their agents
access to the properties of the Borrower and any Subsidiaries during normal
business hours to confirm compliance with all Environmental Laws, and the
Borrower shall, following reasonable determination by the Lender and each
Secured Party that there is non-compliance, or any condition which requires any
action by or on behalf of the Borrower in order to avoid any non-compliance,
with any Environmental Law, at the Borrower's sole expense, cause an independent
environmental engineer reasonably acceptable to the Lender to conduct such tests
of the relevant site as are appropriate, and prepare and deliver a report
setting forth the result of such tests, a proposed plan for remediation and an
estimate of the costs thereof.
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5.12 Further
Assurances. The Borrower shall take, and cause any Subsidiary
to take, such actions as are necessary or as the Lender or any Secured Party may
reasonably request from time to time to ensure that the Obligations under the
Loan Documents or the Post-Closing Cash Documents, as the case may be, are
secured by substantially all of the assets of the Borrower and its Subsidiaries,
in each case, as the Lender or any Secured Party may determine, including (a)
the execution and delivery of security agreements, pledge agreements, mortgages,
deeds of trust, financing statements and other documents, and the filing or
recording of any of the foregoing, and (b) the delivery of certificated
securities and other collateral with respect to which perfection is obtained by
possession to the Secured Party Representative on behalf of the Lender and
Secured Parties.
5.13 Books and Records.
The Lender and each Secured Party shall have the right at all times during
business hours to inspect the books and records of the Borrower, the
Subsidiaries and any Guarantor and make extracts therefrom. The
Borrower shall permit the Lender and each Secured Party to inspect the tangible
assets and/or other business operation of the Borrower and each
Subsidiary.
5.14 Reporting
Requirements. The Borrower shall at all times maintain and
cause each Subsidiary to maintain a standard and modern system of accounting, on
the accrual basis of accounting and in all respects in accordance with GAAP, and
shall furnish to the Lender and each Secured Party or any of their authorized
representatives such information regarding the business affairs, operations and
financial condition of the Borrower or any Subsidiary as the Lender or any
Secured Party shall reasonably require, including:
(a) CPA Financial
Statements. Promptly when available, and in any event, within 90 days
after the close of each fiscal year, a copy of the audited financial statements
of the Borrower and any Subsidiaries for such fiscal period, including
consolidated balance sheet, statement of income and retained earnings, statement
of cash flows for the fiscal period then ended and such other information
(including nonfinancial information) as the Lender or any Secured Party may
reasonably request, in reasonable detail, prepared and certified without adverse
reference to going concern value and without qualification by an independent
certified public account of recognized standing, selected by the Borrower and
reasonably acceptable to the Lender and each Secured Party.
(b) Management Financial
Statements. Promptly when available, and in any event, within the earlier
of (i) 45 days after the close of each fiscal quarter or (ii) such date that
Chardan is required to file such financial statements with the Securities and
Exchange Commission, a copy of the financial statements of the Borrower and any
Subsidiaries for such fiscal quarter, including consolidated balance
sheet, statement of income and retained earnings, statement of cash flows for
the quarter then ended and such other information (including nonfinancial
information) as the Lender or any Secured Party may reasonably request, in
reasonable detail, prepared and certified as accurate by the Borrower's
treasurer or chief financial officer or the relevant Subsidiary’s treasurer or
chief financial officer, as applicable.
(c) Monthly Financial
Statements. Promptly when available, and in any event, within 30 days
after the end of the relevant month, a copy of the financial statements of the
Borrower and any Subsidiaries for such fiscal period, including consolidated
balance sheet, statement of income and retained earnings, statement of cash
flows for the fiscal period then ended and such other information (including
nonfinancial information) as the Lender or any Secured Party may request, in
reasonable detail, prepared and certified as accurate by the Borrower's
treasurer or chief financial officer or the relevant Subsidiary’s treasure or
chief financial officer, as applicable.
(d) Borrower Tax Returns.
Within ten (10) days after the filing due date (as such date may be extended in
accordance with properly granted extensions) each year, a signed copy of the
complete income tax returns filed with the Internal Revenue Service by the
Borrower and any Subsidiaries.
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(e) Guarantor Financial
Reporting. Such information regarding the business affairs,
operations and financial condition of the Guarantors as the Lender or any
Secured Party may reasonably require, including:
(i) CPA Financial
Statements. Promptly when available, and in any event, within 90 days
after the close of each fiscal year, a copy of the audited financial statements
of the Guarantors for such fiscal period, including balance sheet, statement of
income and retained earnings, statement of cash flows for the fiscal period then
ended and such other information (including nonfinancial information) as the
Lender or any Secured Party may reasonably request, in reasonable detail,
prepared and certified without adverse reference to going concern value and
without qualification by an independent certified public account of recognized
standing, selected by the Borrower and reasonably acceptable to the Lender and
each Secured Party.
(ii) Management Financial
Statements. Promptly when available, and in any event, within the earlier
of 45 days after the close of each fiscal quarter or date that Borrower files
its financial statements with the United States Securities and Exchange
Commission a copy of the financial statements of the Guarantors for such fiscal
period, including consolidated balance sheet, statement of income and retained
earnings, statement of cash flows for the fiscal period then ended and such
other information (including nonfinancial information) as the Lender or any
Secured Party may reasonably request, in reasonable detail, prepared and
certified as accurate by each Guarantors' treasurer or chief financial
officer.
(iii) Guarantor Tax
Returns. Within ten (10) days after the filing due date (as such date may
be extended in accordance with properly granted extensions) each year, a signed
copy of the complete income tax returns filed with the Internal Revenue Service
by the Guarantors.
(f) Supplemental Financial
Statements. Immediately upon receipt thereof, copies of
interim and supplemental reports if any, submitted to the Borrower by
independent accountants in connection with any interim audit or review of the
books of the Borrower or any Subsidiary.
(g) Covenant Compliance
Certificates. Contemporaneously with the furnishing of the
financial statements pursuant to this Section, a duly completed compliance
certificate, dated the date of such financial statements and certified as true
and correct by an appropriate officer of the Borrower and each Subsidiary,
stating that neither the Borrower nor any Subsidiary has become aware of any
Event of Default or Unmatured Event of Default that has occurred and is
continuing or, if there is any such Event of Default or Unmatured Event of
Default describing it and the steps, if any, being taken to cure
it.
5.15 Collateral
Records. The Borrower shall, and shall cause each Subsidiary
to, keep full and accurate books and records relating to the
Collateral. The Borrower shall make appropriate entries on its books
and records disclosing the security interests of the Lender and each Secured
Party, for its own benefit and as agent for its Affiliates, in the
Collateral.
5.16 Other
Reports. Within such period of time as the Lender or any
Secured Party may specify, the Borrower shall, and shall cause each Subsidiary
to, deliver to the Lender or the requesting Secured Party such other schedules
and reports as the Lender or any Secured Party may reasonably
request.
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Section
6 NEGATIVE
COVENANTS.
6.1 Liabilities. The
Borrower and its Subsidiaries shall not, either directly or indirectly, create,
assume, incur or have outstanding any Liabilities (including purchase money
indebtedness), or become liable, whether as endorser, guarantor, surety or
otherwise, for any debt or obligation of another, except:
(a) the
Senior Debt;
(b) the
Obligations under this Agreement and the other Loan Documents and the
Post-Closing Cash Documents;
(c) obligations
of the Borrower or any Subsidiary for taxes, assessments, municipal or other
governmental charges;
(d) obligations
of the Borrower or any Subsidiary for accounts payable, other than for money
borrowed, incurred in the ordinary course of business;
(e) indebtedness
owed by or to the Borrower to or from any Guarantor;
(f) Subordinated
Debt;
(g) Capitalized
Lease Obligations;
(h) indebtedness
for Capital Expenditures incurred after the date of this Agreement;
(i) indebtedness
constituting the financing of insurance premiums arising in the ordinary course
of business; and
(j) those
Liabilities set forth on Schedule
6.1
6.2 Encumbrances. The
Borrower shall not, and shall cause each of its Subsidiaries not to, either
directly or indirectly, create, assume, incur or suffer or permit to exist any
lien, security interest or charge of any kind or character upon any asset of the
Borrower or any Subsidiary, whether owned at the date hereof or hereafter
acquired, except for Permitted Liens and liens in favor of Bank of America, N.A.
to secure Borrower’s obligations under the Senior Debt.
6.3 Transfer; Merger;
Sales. Neither Borrower nor any of its Subsidiaries shall,
whether in one transaction or a series of related transactions, (a) be a party
to any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or Capital Securities of any class of, or any
partnership or joint venture interest in, any other entity, except for (i) any
such merger, consolidation, sale, transfer, conveyance, lease or assignment of
or by any Subsidiary into the Borrower or into any other domestic Subsidiary;
(ii) any such purchase or other acquisition by the Borrower or any domestic
Subsidiary of the assets or equity interests of any Subsidiary, (b) sell,
transfer, convey or lease all or any substantial part of its assets or Capital
Securities (including the sale of Capital Securities of any Subsidiary), except
for sales of Inventory in the ordinary course of business, or (c) sell or
assign, with or without recourse, any receivables, except as may be required
under the Senior Debt.
6.4 Issuance of Capital
Securities. The Borrower and its Subsidiaries shall not issue
any Capital Securities other than any issuance of Common Units pursuant to any
employee or director option program, benefit plan or compensation
program.
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6.5 Distributions. The
Borrower shall not and cause each Subsidiary not to, (a) make any distribution,
other than tax distributions under Section 5.4 of the Operating Agreement and
distributions to Chardan to pay expenses as set forth in Section 5.8
of the Operating Agreement, whether in cash or otherwise, to any of its
equityholders, (b) purchase or redeem any of its equity interests or any
warrants, options or other rights in respect thereof, (c) pay any management
fees or similar fees to any of its equityholders or any Affiliate thereof,
except for the fees to be paid by Borrower to each of FlatWorld and Chardan
Capital LLC pursuant to the management consulting agreements between Borrower
and FlatWorld and Borrower and Chardan Capital LLC executed on the date of this
Agreement, or (d) set aside funds for any of the
foregoing. Notwithstanding the foregoing, any Subsidiary may pay
distributions or make other distributions to the Borrower.
6.6 Transactions with
Affiliates. The Borrower shall not, and shall cause each of
its Subsidiaries not to, directly or indirectly, enter into or permit to exist
any transaction with any of its Affiliates or with any director, officer or
employee of the Borrower or any Subsidiary other than transactions in the
ordinary course of, and pursuant to the reasonable requirements of, the business
of the Borrower and each Subsidiary and upon fair and reasonable terms which are
fully disclosed to the Lender and are no less favorable to the Borrower than
would be obtained in a comparable arm’s length transaction with a party that is
not an Affiliate of the Borrower.
6.7 Cancellation of
Debt. The Borrower shall not, and shall not permit any
Subsidiary to, cancel any claim or debt owing to it, except for
reasonable consideration or in the ordinary course of business.
6.8 Inconsistent
Agreements. The Borrower shall not and shall not permit
anySubsidiary to enter into any agreement containing any provision which would
(a) be violated or breached by any borrowing by the Borrower hereunder or by the
performance by the Borrower or any Subsidiary of any of its Obligations
hereunder or under any other Loan Document, or (b) prohibit the Borrower or any
Subsidiary from granting to the Lender a lien on any of its assets.
6.9 Business Activities; Change
of Legal Status and Organizational Documents. The Borrower
shall not, and shall not permit any Subsidiary to, (a) engage in any line of
business materially different from the businesses engaged in on the date hereof
and businesses reasonably related thereto, (b) change its name, its type of
organization, its jurisdiction of organization or other legal structure, or (b)
permit its charter, Operating Agreement or other organizational documents, or
its Subsidiaries charter, operating agreements (including the Operating Company
Operating Agreements), bylaws or other organizational documents, to be amended
or modified in any way which could reasonably be expected to cause a Material
Adverse Effect.
6.10 Tax Obligations. The
Borrower shall, and shall cause each Subsidiary to, pay within the time that
they are required to be paid without interest or penalty, all taxes,
assessments, and similar charges which at any time are or may become a lien,
charge, or encumbrance upon any Collateral, except to the extent contested in
good faith and bonded in a manner that is satisfactory to the Lender and Secured
Party Representative. If the Borrower or any Subsidiary fails to pay
any of these taxes, assessments, or other charges as provided above, then the
Lender or the Secured Parties have the option (but not the obligation) to do so
and the Borrower agrees to repay all amounts so expended by the Lender or the
Secured Parties immediately upon demand, together with interest at the highest
lawful default rate which would be charged by Lender or the Secured Parties on
any Obligations.
20
Section
7 FINANCIAL
COVENANT.
7.1 Minimum Payment
Requirement. Each calendar month, the Borrower is required to
pay to DJS, DSI and PTA, in the aggregate, a minimum payment of $1,083,000 in
the aggregate on account of the Term Note Obligations and/or the
Post-Closing Cash Obligations, as the case may be.
Section
8 EVENTS OF
DEFAULT.
The
Borrower, without notice or demand of any kind, shall be in default with respect
to its Obligations upon the occurrence of any of the following events, except to
the extent caused by the action or failure to act of the Lender, the Secured
Party Representative, any Secured Party or any Affiliate of any of the foregoing
for the purpose of causing an Event of Default, (each an "Event of
Default").
8.1 Nonpayment of
Obligations. Any Term Note Obligation or Post-Closing Cash
Obligation due and owing, whether by its terms or as otherwise provided herein,
is not paid when due.
8.2 Misrepresentation. Any
written warranty, representation, certificate or statement of any Obligor in
this Agreement, the other Loan Documents or the Post-Closing Cash Documents or
any other agreement with the Lender or any Secured Party shall be false in any
material respect when made or at any time thereafter (except to the extent such
representation, warranty, certificate or statement expressly relates only to an
earlier date), or if any financial data or any other information now or
hereafter furnished to the Lender or any Secured Party by or on behalf of any
Obligor shall prove to be false, inaccurate or misleading in any material
respect as of the date to which such information relates.
8.3 Nonperformance. Any
failure to perform or default in the performance of any covenant, condition or
agreement contained in (a) this Agreement, (b) the Loan Documents or any other
agreement with the Lender, with respect to the Term Note Obligations or (c) the
Post-Closing Cash Documents or any other agreement with the Secured Parties with
respect to the Post-Closing Cash Obligations (other than a default covered by
Section 8.1) and the continuance of such default or breach for a period of
thirty (30) calendar days after Borrower has notice thereof.
8.4 Default under Loan Documents
or Post-Closing Cash Documents. A default under any of the
other Loan Documents or Post-Closing Cash Documents, all of which covenants,
conditions and agreements contained therein are hereby incorporated in this
Agreement by express reference, shall be and constitute an Event of Default
under this Agreement and any other of the Obligations.
8.5 Default under Other
Debt. Any default by any Obligor in the payment of any
indebtedness for any other obligation in excess of $2,000,000 beyond any period
of grace provided with respect thereto or in the performance of any other term,
condition or covenant contained in any agreement (including any capital or
operating lease or any agreement in connection with the deferred purchase price
of property) under which any such obligation is created, the effect of which
default is to cause or permit the holder of such obligation (or the other party
to such other agreement) to cause such obligation to become due prior to its
stated maturity or terminate such other agreement.
8.6 Bankruptcy, Insolvency,
etc. Any Obligor becomes insolvent or generally fails to pay,
or admits in writing its inability or refusal to pay, its debts as they become
due; or any Obligor applies for, consents to, or acquiesces in the appointment
of a trustee, receiver or other custodian for such Obligor or any property
thereof, or makes a general assignment for the benefit of creditors; or, in the
absence of such application, consent or acquiescence, a trustee, receiver or
other custodian is appointed for any Obligor or for a substantial part of the
property of any thereof and is not discharged within sixty (60) days; or any
bankruptcy, reorganization, debt arrangement, or other case or proceeding under
any bankruptcy or insolvency law, or any dissolution or liquidation proceeding,
is commenced in respect of any Obligor, and if such case or proceeding is not
commenced by such Obligor, it is consented to or acquiesced in by such Obligor,
or remains undismissed for sixty (60) days; or any Obligor takes any action to
authorize, or in furtherance of, any of the foregoing.
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8.7 Judgments. The
entry of any final judgment, decree, levy, attachment, garnishment or other
process, or the filing of any lien against any Obligor, which is not fully
covered by insurance, and such judgment or other process shall not have been,
within thirty (30) days from the entry thereof, (a) bonded over to the
reasonable satisfaction of the Lender and Secured Parties and appealed, (b)
vacated, or (c) discharged.
8.8 Change in
Control. The occurrence of any Change in Control or a Chardan
Change in Control.
8.9 Material Adverse
Effect. The occurrence of any event which has a Material
Adverse Effect on the Borrower.
8.10 Guaranty. There
is a discontinuance by any Guarantor of the Guaranty or any Guarantor shall
contest the validity of such Guaranty.
8.11 Subordinated
Debt. The subordination provisions of any Subordinated Debt
shall for any reason be revoked or invalid or otherwise cease to be in full
force and effect or the Borrower shall contest in any manner, or any other
obligor thereunder shall contest in any judicial proceeding, the validity or
enforceability of the subordination agreement relating to the Subordinated Debt
or deny that it has any further liability or obligation thereunder, or the
Obligations shall for any reason not have the priority contemplated by the
subordination provisions of the Subordinated Debt.
8.12 Involuntary
Removal. ▇▇▇▇▇ ▇. ▇▇▇▇▇ is involuntarily removed as President
of Chardan or DAL, without Cause.
Section
9 REMEDIES.
9.1 Rights and
Remedies. Upon the occurrence and during the continuance of an
Event of Default, (a) the Lender shall have all rights, powers and remedies set
forth in the Loan Documents, in any other written agreement or
instrument relating to any of the Term Note Obligations or any security
therefor, as a secured party under the UCC or as otherwise provided at law or in
equity and (b) the Secured Parties shall have all rights powers and remedies set
forth in the Post-Closing Cash Documents, in any other written agreement or
instrument relating to the Post Closing Cash Obligations or any security
therefore, as a secured party under the UCC or as otherwise provided at law or
equity. Without limiting the generality of the foregoing, each of the
Lender or the Secured Party Representative (on behalf of the Secured Parties)
may, at such party’s option upon the occurrence and during the continuance of an
Event of Default, declare, their respective Obligations to be immediately due
and payable, provided, however, that upon the occurrence and during the
continuance of an Event of Default under Section
8.6, all Obligations
shall be automatically due and payable, all without demand, notice or further
action of any kind required on the part of the Lender or any Secured Party. The
Borrower hereby waives any and all presentment, demand, notice of dishonor,
protest, and all other notices and demands in connection with the enforcement of
Lender's rights under the Loan Documents and Secured Party’s rights under the
Post-Closing Cash Documents, and hereby consents to, and waives notice of
release, with or without consideration, of any Borrower or any Guarantor or of
any Collateral, notwithstanding anything contained herein or in the Loan
Documents or the Post-Closing Cash Documents to the contrary. In
addition to the foregoing, upon the occurrence and during the continuance of an
Event of Default:
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(a) Possession and Assembly of
Collateral. The Lender or the Secured Party Representative
may, without notice, demand or legal process of any kind, take possession of any
or all of the Collateral (in addition to Collateral of which any Lender or
Secured Party may already have in its possession), wherever it may be found, and
for that purpose may pursue the same wherever it may be found, and may at any
time enter into any of the Borrower's premises where any of the Collateral may
be or is supposed to be, and search for, take possession of, remove, keep and
store any of the Collateral until the same shall be sold or otherwise disposed
of and the Lender and Secured Party Representative shall have the right to store
and conduct a sale of the same in any of the Borrower's premises without cost to
the Lender, the Secured Party Representative, or any Secured Party as
applicable. At the Lender's or Secured Party Representative’s
request, the Borrower will, at the Borrower's sole expense, assemble the
Collateral and make it available to the Lender or the Secured Party
Representative, as the case may be, at a place or places to be designated by the
Lender which is reasonably convenient to the Lender or any Secured Party, as the
case may be, and the Borrower.
(b) Sale of
Collateral. The Lender or the Secured Party Representative (on
behalf of the Secured Parties) may sell any or all of the Collateral at public
or private sale, upon such terms and conditions as the Lender and each Secured
Party may deem reasonably proper, and the Lender or any Secured Party may
purchase any or all of the Collateral at any such sale. The Borrower
acknowledges that the Lender or any Secured Party may be unable to effect a
public sale of all or any portion of the Collateral because of certain legal
and/or practical restrictions and provisions which may be applicable to the
Collateral and, therefore, may be compelled to resort to one or more private
sales to a restricted group of offerees and purchasers. The Borrower
consents to any such private sale so made even though at places and upon terms
less favorable than if the Collateral were sold at public
sale. Neither the Lender nor any Secured Party shall have any
obligation to clean-up or otherwise prepare the Collateral for
sale. The Lender may apply the net proceeds, after deducting all
reasonable costs, expenses, attorneys' and paralegals' fees incurred or paid at
any time in the collection, protection and sale of the Collateral and the Term
Note Obligations, to the payment of the Term Note Obligations, in such order of
application as the Lender may, from time to time, elect, returning the excess
proceeds, if any, to the Borrower. The Borrower shall remain liable
for any amount remaining unpaid after such application, with interest at the
rate provided in the Loan Documents. The Secured Party Representative may apply
the net proceeds, after deducting all reasonable costs, expenses, attorneys' and
paralegals' fees incurred or paid at any time in the collection, protection and
sale of the Collateral and the Post-Closing Cash Obligations, to the payment of
the Post-Closing Cash Obligations, in such order of application as the Lender
may, from time to time, elect, returning the excess proceeds, if any, to the
Borrower. The Borrower shall remain liable for any amount remaining
unpaid after such application, with interest at the rate provided in the
Post-Closing Cash Documents. Any notification of intended disposition
of the Collateral required by law shall be conclusively deemed reasonably and
properly given if given by the Lender or any Secured Party or Secured Party
Representative at least ten (10) calendar days before the date of such
disposition. The Borrower hereby confirms, approves and ratifies all
acts and deeds of the Lender, the Secured Party Representative or any Secured
Party relating to the foregoing, and each part thereof, and expressly waives any
and all claims of any nature, kind or description which it has or may hereafter
have against the Lender, any Secured Party or the Secured Party Representative
or its representatives, by reason of taking, selling or collecting any portion
of the Collateral. The Borrower consents to releases of the
Collateral at any time (including prior to default) and to sales of the
Collateral in groups, parcels or portions, or as an entirety, as the Lender or
any Secured Party or Secured Party Representative shall deem reasonably
appropriate. The Borrower expressly absolves the Lender, Secured
Party Representative any each Secured Party from any loss or decline in market
value of any Collateral by reason of delay in the enforcement or assertion or
nonenforcement of any rights or remedies under this Agreement.
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9.2 Waiver. Borrower
acknowledges and agrees that any action taken by Lender, any Secured Party, the
Secured Party Representative or any of their Affiliates related to or taken in
furtherance of the exercise of Lender’s or a Secured Party’s remedies under this
Agreement upon and during the continuance of an Event of Default, including but
not limited to foreclosing upon or taking possession of any of the Collateral,
including but not limited to the operation of any of the Collateral during the
period prior to the foreclosure sale, if any, shall not be a violation of any
provision of the ▇▇▇▇▇ NDA. If any Lender, Secured Party, Secured
Party Representative acting on behalf of the Secured Parties or any of Affiliate
of the Lender or any Secured Party becomes the owner of any of the Collateral as
a result of or after the exercise of Lender’s or Secured Party’s remedies in
accordance with Section 9 of this Agreement, the Borrower waives (i) any and all
rights under Section 1, Section 4, Section 5 and Section 6 of the ▇▇▇▇▇ NDA with
respect to such Collateral and the use of such Collateral and agrees to that
Section 4 and Section 5 shall no longer be applicable to ▇▇▇▇▇ ▇. ▇▇▇▇▇, DSI,
PTA or DJS and (ii) any and all rights under Article 8 of the Membership
Interest Purchase Agreement and agrees that such Article shall no longer be
applicable to ▇▇▇▇▇ ▇. ▇▇▇▇▇, DSI, PTA or DJS except that Section 7 (the
Definition section) of the ▇▇▇▇▇ NDA shall not be waived.
9.3 Standards for Exercising
Remedies. Upon the occurrence and during the continuance of an
Event of Default, to the extent that applicable law imposes duties on the
Lender, Secured Party Representative or any Secured Party to exercise remedies
in a commercially reasonable manner, the Borrower acknowledges and agrees that
it is not commercially unreasonable for the Lender, Secured Party Representative
or any Secured Party (a) to fail to incur expenses reasonably deemed significant
by the Lender, Secured Party Representative or any Secured Party to prepare
Collateral for disposition, (b) to fail to obtain third party consents for
access to Collateral to be disposed of, or to obtain or, if not required by
other law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of, (c) to
fail to exercise collection remedies against account debtors or other party
obligated on Collateral or to remove liens or encumbrances on or any adverse
claims against Collateral, (d) to exercise collection remedies against account
debtors and other parties obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
parties, whether or not in the same business as the Borrower, for expressions of
interest in acquiring all or any portion of the Collateral, (g) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (h) to dispose of
Collateral by utilizing internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets
in wholesale rather than retail markets, (j) to disclaim disposition warranties,
including any warranties of title, (k) to purchase insurance or credit
enhancements to insure the Lender, Secured Party Representative or any Secured
Party against risks of loss, collection or disposition of Collateral or to
provide to the Lender a guaranteed return from the collection or disposition of
Collateral, or (l) to the extent deemed reasonably appropriate by the Lender,
Secured Party Representative or any Secured Party to obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
the Lender, Secured Party Representative or any Secured Party in the collection
or disposition of any of the Collateral. The Borrower acknowledges
that the purpose of this section is to provide non-exhaustive indications of
what actions or omissions by the Lender, any Secured Party or the Secured Party
Representative would not be commercially unreasonable in the exercise of
remedies against the Collateral by any of the Lender, any Secured Party or the
Secured Party Representative and that other actions or omissions by the Lender,
Secured Party Representative or any Secured Party shall not be deemed
commercially unreasonable solely on account of not being indicated in this
section. Without limitation upon the foregoing, nothing contained in
this section shall be construed to grant any rights to the Borrower or to impose
any duties on the Lender, Secured Party Representative or any Secured Party that
would not have been granted or imposed by this Agreement or by applicable law in
the absence of this section.
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9.4 UCC and Offset
Rights. Upon the occurrence and during the continuance of an
Event of Default, the Lender and the Secured Party Representative (on behalf of
each Secured Party) may exercise, from time to time, any and all rights and
remedies available to each of them under the UCC or under any other applicable
law in addition to, and not in lieu of, any rights and remedies expressly
granted in this Agreement or in any other agreements between any Obligor and
Lender or any Obligor and Secured Parties, and may, without demand or notice of
any kind, appropriate and apply toward the payment of the relevant Obligations,
whether matured or unmatured, including reasonable costs of collection and
attorneys' and paralegals' fees, and in such order of application as the Lender
or any Secured Party may, from time to time, elect, any indebtedness of the
Lender to any Obligor or any indebtedness of any Secured Party to any Obligor,
however created or arising, including balances, credits, deposits, accounts or
moneys of such Obligor in the possession, control or custody of, or in transit
to the Lender or any Secured Party, as applicable. The Borrower, on
behalf of itself and each Obligor, hereby waives the benefit of any law that
would otherwise restrict or limit the Lender, the Secured Party Representative
or any Secured Party in the exercise of its right, which is hereby acknowledged,
to be appropriate any time hereafter any such indebtedness owing from the Lender
to any Obligor or from any Secured Party to any Obligor.
9.5 Additional
Remedies. Upon the occurrence and during the continuance of an
Event of Default, the Lender and the Secured Party Representative on behalf of
the Secured Parties shall have the right and power to:
(a) instruct
the Borrower, at its own expense, to notify any parties obligated on any of the
Collateral, including any Account Borrowers, to make payment directly to the
Lender or the Secured Party Representative, as applicable, of any amounts due or
to become due thereunder, or the Lender or Secured Party Representative, as
applicable, may directly notify such obligors of the security interest of the
Lender or the Secured Parties, and/or of the assignment to the Lender or the
Secured Party Representative of the Collateral and direct such obligors to make
payment to the Lender or the Secured Party Representative, as applicable, of any
amounts due or to become due with respect thereto, and thereafter, collect any
such amounts due on the Collateral directly from such party obligated
thereon;
(b) enforce
collection of any of the Collateral, including any Accounts, by suit or
otherwise, or make any compromise or settlement with respect to any of the
Collateral, or surrender, release or exchange all or any part thereof, or
compromise, extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder;
(c) take
possession or control of any proceeds and products of any of the Collateral,
including the proceeds of insurance thereon;
(d) extend,
renew or modify for one or more periods (whether or not longer than the original
period) the Obligations or any obligation of any nature of any other obligor
with respect to the Obligations;
(e) grant
releases, compromises or indulgences with respect to the Obligations, any
extension or renewal of any of the Obligations, any security therefor, or to any
other obligor with respect to the Obligations;
(f) transfer
the whole or any part of securities which may constitute Collateral into the
name of the Lender, the Lender's nominee, or any Secured Party or the Secured
Party Representative without disclosing, if the Lender or any Secured Party so
desires, that such securities so transferred are subject to the security
interest of the Lender or the Secured Party, and any corporation, association,
or any of the managers or trustees of any trust issuing any of such securities,
or any transfer agent, shall not be bound to inquire, in the event that the
Lender, such nominee or any Secured Party makes any further transfer of such
securities, or any portion thereof, as to whether the Lender, such nominee or
the Secured Party has the right to make such further transfer, and shall not be
liable for transferring the same;
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(g) receive
distributions related to the Pledged Membership Interests to apply against the
Obligations and exercise any voting rights as to the Pledged Membership
Interests and all other corporate rights and all conversion, exchange,
subscription or other rights, privileges or options pertaining thereto as if it
were the absolute owner thereof, including, without limitation, registration
rights and any right to exchange any or all of the Pledged Membership Interests
upon the merger, consolidation, reorganization, recapitalization, or other
readjustment of the issuer thereof, or upon the exercise of any such issuer of
any right, privilege, or option pertaining to any of the Pledged Membership
Interests, but neither the Lender nor the Secured Parties shall have any duty to
exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing;
(h) make an
election with respect to the Collateral under Section 1111 of the Bankruptcy
Code or take action under Section 364 or any other section of the Bankruptcy
Code; provided, however, that any such action of the Lender or the Secured Party
Representative as set forth herein shall not, in any manner whatsoever, impair
or affect the liability of the Borrower hereunder, nor prejudice, waive, nor be
construed to impair, affect, prejudice or waive the Lender's or any Secured
Party’s rights and remedies at law, in equity or by statute, nor release,
discharge, nor be construed to release or discharge, the Borrower, any guarantor
or other party liable to the Lender or any Secured Party for the Obligations;
and
(i) at any
time, and from time to time, accept additions to, releases, reductions,
exchanges or substitution of the Collateral, without in any way altering,
impairing, diminishing or affecting the provisions of this Agreement, the Loan
Documents, or any of the other Obligations, or the Lender's or any Secured
Party’s rights hereunder, under the Obligations.
The
Borrower hereby ratifies and confirms that whatever the Lender or any Secured
Party or the Secured Party Representative may do with respect to the Collateral
and agrees that neither the Lender, any Secured Party nor the Secured Party
Representative shall be liable for any error of judgment or mistakes of fact or
law with respect to actions taken in connection with the Collateral except to
the extent resulting from the action, failure to act, negligence and/or
misconduct of the Lender, any other Secured Party, the Secured Party
Representative and/or any Affiliate of any of the foregoing.
9.6 Attorney-in-Fact. The
Borrower hereby irrevocably makes, constitutes and appoints each of the Lender
and the Secured Party Representative (and any officer of the Lender or any party
designated by the Lender for that purpose) as the Borrower's true and lawful
proxy and attorney-in-fact (and agent-in-fact) in the Borrower's name, place and
stead, with full power of substitution, to (a) take such actions as are
permitted in this Agreement, (b) execute such financing statements and other
documents and to do such other acts as the Lender or any Secured Party may
reasonably require to perfect and preserve the Lender's or any Secured Party’s
security interest in, and to enforce such interests in the Collateral, and (c)
upon the occurrence and during the continuance of an Event of Default, carry out
any remedy provided for in this Agreement, including endorsing the Borrower's
name to checks, drafts, instruments and other items of payment, and proceeds of
the Collateral, executing change of address forms with the postmaster of the
United States Post Office serving the address of the Borrower, changing the
address of the Borrower to that of the Lender or the Secured Party
Representative, opening all envelopes addressed to the Borrower and applying any
payments contained therein to the Obligations. The Borrower hereby
acknowledges that the constitution and appointment of such proxy and
attorney-in-fact are coupled with an interest and are
irrevocable. The Borrower hereby ratifies and confirms all that such
attorney-in-fact may do or cause to be done by virtue of any provision of this
Agreement.
26
9.7 No
Marshaling. Neither the Lender nor any Secured Party shall be
required to marshal any present or future collateral security (including this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order. To the extent that it
lawfully may, the Borrower hereby agrees that it will not invoke any law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of the Lender's or any Secured Party’s rights under this
Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, the Borrower hereby irrevocably waives the
benefits of all such laws.
9.8 No
Waiver. No Event of Default shall be waived by the Lender or
any Secured Party Representative on behalf of the Secured Parties except in
writing. No failure or delay on the part of the Lender or any Secured
Party or the Secured Party Representative in exercising any right, power or
remedy hereunder shall operate as a waiver of the exercise of the same or any
other right at any other time; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder. There
shall be no obligation on the part of the Lender or any Secured Party to
exercise any remedy available to the Lender or any Secured Party in any
order. The remedies provided for herein are cumulative and not
exclusive of any remedies provided at law or in equity. The Borrower
agrees that in the event that the Borrower fails to perform, observe or
discharge any of its Obligations or liabilities under this Agreement or any
other agreements with the Lender or any Secured Party, no remedy of law will
provide adequate relief to the Lender or any Secured Party, and further agrees
that the Lender and each Secured Party shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
9.9 Assignment of Pledged
Membership Interests. Upon the occurrence and during the
continuance of an Event of Default and the exercise of its remedies with respect
to the Pledged Membership Interest, the Borrower agrees (a) the requirement set
forth in Section 8.1 of each Operating Company Operating Agreement that the
assignee may only become a member of the Operating Company in accordance with
the terms of a written agreement between the member and the assignee and upon
the assignee agreeing to be bound by the terms of the relevant Operating Company
Operating Agreement is waived, (b) any notice requirements under Section 8.1 of
each of the Operating Company Operating Agreements, as such section may be
amended from time to time, are waived and (c) that the exercise of the Lender or
a Secured Party its remedies with respect to some or all of the Pledged
Membership Interest shall constitute, at the election of the Lender or a Secured
Party, as the case may be, an assignment of Pledged Membership Interests in the
relevant Operating Company to the Lender or a Secured Party, as applicable, that
will substitute the Lender or a Secured Parties, as the case may be, as a member
of the relevant Operating Company, and will, upon the election of the Lender or
a Secured Party, as the case may be, entitle the Lender or a Secured Party to
voting rights and the right to participate in the management of the relevant
Operating Company if the Lender or a Secured Party shall so elect.
Section
10 MISCELLANEOUS.
10.1 Entire
Agreement. This Agreement and the other Loan Documents and
Post-Closing Cash Documents (i) constitute the entire agreement between the
Parties with respect to the subject matter hereof and thereof; and (ii) are the
final expression of the intentions of the Borrower, Lender and Secured
Parties. No promises, either expressed or implied, exist between the
Borrower, Lender and Secured Parties, unless contained herein or
therein. This Agreement, together with the other Loan Documents and
the Post-Closing Cash Documents supersedes all negotiations, representations,
warranties, commitments, term sheets, discussions, negotiations, offers or
contracts (of any kind or nature, whether oral or written) prior to or
contemporaneous with the execution hereof with respect to any matter, directly
or indirectly related to the terms of this Agreement and the other Loan
Documents and Post-Closing Cash Documents.
27
10.2 Amendments. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Agreement or the other Loan Documents or Post-Closing Cash Documents
shall in any event be effective unless the same shall be in writing and
acknowledged by the Borrower, the Lender and each Secured Party, and then any
such amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
10.3 Revival and Reinstatement of
Obligations. If the incurrence or payment of the Obligations
by any Obligor or the transfer to the Lender or any Secured Party of any
property should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender or any Secured
Party is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender or any
Secured Party is required or elects to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of the Lender or any Secured
Party, the Obligations shall automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been
made.
10.4 Forum Selection and Consent
to Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT,
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF
FLORIDA OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
FLORIDA; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE THE LENDER OR ANY SECURED PARTY FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION. THE BORROWER HEREBY EXPRESSLY
AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
FLORIDA AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
FLORIDA FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF FLORIDA. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
28
10.5 Waiver of Jury
Trial. THE LENDER, EACH SECURED PARTY AND THE BORROWER, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, POST-CLOSING CASH DOCUMENT, ANY OF
THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN
CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF
DEALING IN WHICH THE LENDER, ANY SECURED PARTY AND THE BORROWER ARE ADVERSE
PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDER AND EACH SECURED PARTY GRANTING ANY FINANCIAL
ACCOMMODATION TO THE BORROWER.
10.6 Assignability. The
Lender or any Secured Party may at any time assign the Lender's or
Secured Party’s rights in this Agreement, the other Loan Documents, the
Obligations, or any part thereof and transfer the Lender's or any Secured
Party’s rights in any or all collateral for the Obligations, and the Lender
thereafter shall be relieved from all liability with respect to such
collateral. The Borrower may not sell or assign this Agreement, or
any other agreement with the Lender or any Secured Party or any portion thereof,
either voluntarily or by operation of law, without the prior written consent of
the Lender and each Secured Party, as applicable. This Agreement
shall be binding upon the Lender, the Secured Party and the Borrower and their
respective legal representatives and successors. All references
herein to the Borrower shall be deemed to include any successors, whether
immediate or remote.
10.7 Governing
Law. This Agreement and the other Loan Documents shall be
delivered and accepted in and shall be deemed to be contracts made under and
governed by the internal laws of the State of Florida applicable to contracts
made and to be performed entirely within such state, without regard to conflict
of laws principles.
10.8 Enforceability. Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by, unenforceable or invalid under any
jurisdiction, such provision shall as to such jurisdiction, be severable and be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other
jurisdiction.
10.9 Survival of Borrower
Representations. All covenants, agreements, representations
and warranties made by the Borrower herein shall, notwithstanding any
investigation by the Lender or any Secured Party, be deemed material and relied
upon by the Lender and each Secured Party and shall survive the making and
execution of this Agreement and the other Loan Documents and Post-Closing Cash
Documents and shall be deemed to be continuing representations and warranties
(except to the extent such representations or warranties expressly relate to an
earlier date) until such time as the Borrower has fulfilled all of its
Obligations to the Lender and each Secured Party, and the Lender and each
Secured Party has been indefeasibly paid in full in cash. The Lender
and each Secured Party, in extending financial accommodations to the Borrower,
is expressly acting and relying on the aforesaid representations and
warranties.
10.10 Time of
Essence. Time is of the essence in making payments of all
amounts due the Lender and each Secured Party under this Agreement and in the
performance and observance by the Borrower of each covenant, agreement,
provision and term of this Agreement.
10.11 Counterparts; Facsimile
Signatures. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
Agreement. Receipt of an executed signature page to this Agreement by
facsimile or other electronic transmission shall constitute effective delivery
thereof. Electronic records of executed Loan Documents and Post-Closing Cash
Documents maintained by the Lender or any Secured Party shall be deemed to be
originals thereof.
29
10.12 Notices. Any
notice, demand, approval, consent or communication required, permitted, or
desired to be given hereunder, will be in writing and will be served on the
Parties at the following respective addresses:
|
If
to Lender:
|
Law
Offices of ▇▇▇▇▇ ▇. ▇▇▇▇▇, P.A.
90▇
▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇TTN: ▇▇▇▇▇
▇. ▇▇▇▇▇
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
|
|
If
to Borrower:
|
DAL
Group, LLC
90▇
▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇TTN: Chief
Financial Officer
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
|
|
If
to Secured Parties:
|
▇▇▇▇▇
▇. ▇▇▇▇▇
90▇
▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇acsimile: (▇▇▇)
▇▇▇-▇▇▇▇
|
or such
other address, or the attention of such other person or officer, as any Party
may by written notice designate. Any notice, demand, or communication
required, permitted, or desired to be given hereunder will be sent either by
hand delivery, by prepaid certified or registered mail, return receipt
requested, postage prepaid in the United States Mail, by a nationally recognized
overnight courier, or via facsimile or other electronic transmission (including
transmission in portable document format by electronic mail). If any
notice, demand or communication is sent by facsimile or electronic mail
transmission, an original must be simultaneously sent by one of the
foregoing mail or courier methods. All such notices, demands or
communications shall be deemed to have been received (a) if by personal
delivery, facsimile machine or other electronic transmission (including
transmission in portable document format by electronic mail), on the date after
such delivery, (b) if by certified or registered mail, on the third business day
after the mailing thereof or (c) if by next-day or overnight courier or
delivery, on the date of such delivery.
10.13 Costs, Fees and
Expenses. The Borrower shall pay or reimburse the Lender and
each Secured Party for all reasonable costs, fees and expenses incurred by the
Lender or any Secured Party or for which the Lender or any Secured Party becomes
obligated in connection with the negotiation, preparation, consummation,
collection of the Obligations or enforcement of this Agreement, the other Loan
Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendment,
supplement or waiver to any Loan Document), or during any workout, restructuring
or negotiations in respect thereof, including, without limitation, reasonable
consultants' fees and attorneys' fees and time charges of counsel to the Lender
and each Secured Party, which shall also include reasonable attorneys' fees and
time charges of attorneys who may be employees of the Lender or any Secured
Party or any Affiliate of the Lender or any Secured Party, plus reasonable costs
and expenses of such attorneys or of the Lender or any Secured Party, if the
transaction contemplated hereby shall be consummated.
30
10.14 Secured Party
Representative. Each Secured Party, with respect to the Post-Closing Cash
Obligations, hereby constitutes and appoints ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇, or his
designee, as its representative (the “Secured Party
Representative”) and their true and lawful attorney in fact, with full
power and authority in each of their names and on behalf of each of them to act
on behalf of each of them in the absolute discretion of the Secured Party
Representative, but only with respect to the following provisions of this
Agreement, with the power to (a) give and receive notices pursuant this
Agreement, (b) waive any provision of this Agreement, (c) collect or accept
funds or Collateral on behalf of the Secured Parties, and (d) to do all things
and to perform all acts, including executing and delivering all agreements,
certificates, receipts, instructions and other instruments contemplated by or
deemed advisable to effectuate the intent of this Agreement. This appointment
and grant of power and authority is by unanimous approval of the Secured Parties
and the Secured Parties may change the Secured Party Representative by a written
notice signed by all Secured Parties delivered to the Borrower. Each Secured
Party hereby consents to the taking of any and all actions and the making of any
decisions required or permitted to be taken or made by the Secured Party
Representative pursuant to this Security Agreement. Each Secured Party agrees
that the Secured Party Representative shall have no obligation or liability to
any person for any action or omission taken or omitted by the Secured Party
Representative in good faith hereunder, and each Secured Party shall, on a
proportionate basis in accordance with the proportion of debt owed to it by the
Borrower, indemnify and hold the Secured Party Representative harmless from and
against any and all loss, damage, expense or liability (including reasonable
counsel fees and expenses) which the Secured Party Representative may sustain as
a result of any such action or omission by the Secured Party Representative
hereunder. The Borrower shall be entitled to rely upon any document or other
paper delivered by the Secured Party Representative as (i) genuine and correct,
and (ii) having been duly signed or sent by the Secured Party Representative,
and the Borrower shall not be liable to any Secured Party for any action taken
or omitted to be taken by the Borrower in such reliance.
[Signatures
appear on the following page]
31
IN
WITNESS WHEREOF, the Borrower, Lender and Secured Parties have executed this
Agreement as of the date first above written.
Borrower:
DAL
GROUP, LLC, a limited liability company organized under the laws of the State of
Delaware
By:
__________________________
Name: __________________________
Title:
__________________________
Agreed
and accepted:
Lender:
LAW
OFFICES OF ▇▇▇▇▇ ▇. ▇▇▇▇▇, P.A.
By:
__________________________
Name: __________________________
Title:
__________________________
Secured
Parties:
LAW
OFFICES OF ▇▇▇▇▇ ▇. ▇▇▇▇▇, P.A.
By:
__________________________
Name: __________________________
Title:
__________________________
DEFAULT
SERVICING, INC.
By:
__________________________
Name: __________________________
Title:
__________________________
PROFESSIONAL
TITLE & ABSTRACT COMPANY OF FLORIDA, INC.
By:
__________________________
Name: __________________________
Title:
__________________________
32