BYOC 8-K
Beyond Commerce, Inc. (BYOC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 31, 2019
Beyond Commerce, Inc.
(Exact Name of Registrant as Specified in its Charter)
Nevada
(State or Other Jurisdiction of Incorporation)
000-52490 |
| 98-0512515 |
(Commission |
| (IRS Employer |
3773 Howard Hughes Pkwy, Suite 500, Las Vegas, Nevada, 89169 | ||
(Address of Principal Executive Offices) |
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(702) 675-8022
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
None |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 1.01. Entry into a Material Definitive Agreement
On December 31, 2019, Beyond Commerce, Inc., a Nevada corporation (the “Company”), entered into a securities purchase agreement (the “Securities Purchase Agreement”) with TCA Special Situations Credit Strategies ICAV, an Irish collective asset vehicle (the “Buyer” or “TCA ICAV”), and TCA Beyond Commerce, LLC, a Wyoming limited liability company (“TCA Beyond Commerce”), pursuant to which the Buyer purchased from the Company a senior secured redeemable debenture having an initial principal amount of $900,000 and an interest rate of 16% per annum (the “Initial Debenture”). The Initial Debenture, and any future debentures that may be purchased by Buyer pursuant to the Securities Purchase Agreement (the “Additional Debentures”), is secured through an unconditional and continuing security interest in all of the assets and properties, including after acquired assets, of the Company and each of its subsidiaries, which are acting as guarantors with respect to the Company’s obligations under the Initial Debenture and any Additional Debentures, pursuant to that certain Security Agreement, dated December 31, 2019, entered into by the Company and TCA Beyond Commerce in favor of the Buyer (the “Security Agreement”).In addition, Geordan Pursglove, the Company’s CEO, delivered a personal guaranty with respect to the Company’s obligations under the Securities Purchase Agreement. Additional Debentures may be issued and funded, subject to and upon the approval of the Company and the Buyer, provided that the total value of the Initial Debenture and the Additional Debentures together shall not exceed $5,000,000.
The Securities Purchase Agreement was entered into as part of a larger financing transaction between the Company and the Buyer. As part of this financing transaction, the Company and the Buyer formed TCA Beyond Commerce as a special purpose vehicle to complete the Company’s acquisition of Customer Centered Strategies, L.L.C., a Minnesota limited liability company (“CCS”), while using the funds generated through the Company’s sale of the Initial Debenture. The Company owns 80% of the outstanding common membership interests of TCA Beyond Commerce (the “Common Units”) and the Buyer owns 2,000 Common Units, comprising the remaining 20% of the Common Units issued, as well as 100% of the 250,000 Series A Preferred Units issued and the sole Series B Preferred Unit issued (which is the sole class of equity with voting rights). The Common Units and the Series A Preferred Units are convertible into shares of the Company’s common stock at a 10% discount to the lowest closing bid price during the preceding 20 trading days and such equity will be redeemed pursuant to the Company’s making of installment payments, in accordance with the Operating Agreement of TCA Beyond Commerce. The Company has pledged its interests in TCA Beyond Commerce to TCA ICAV as security for the repayment of the Initial Debenture.
TCA Beyond Commerce entered into a Membership Interest Purchase Agreement (the “Membership Interest Purchase Agreement”), whereby TCA Beyond Commerce acquired 100% of the authorized and issued membership interests of CCS from its sole member (the “CCS Seller”). TCA Beyond Commerce acquired the membership interests for a purchase price $525,000 (the “CCS Purchase Price”), with $175,000 to be paid in cash and the remaining $350,000 to be paid through TCA Beyond Commerce’s issuance of a convertible promissory note with an original principal of $350,000 and a conversion feature that provides the CCS Seller with the right to convert outstanding principal and accrued interest into shares of the Company’s common stock at a price based on the 10-day trailing average price of the Company’s stock (the “CCS Purchase Note”).
In addition to the CCS Purchase Price, the CCS Seller and Service 800, Inc., a Minnesota corporation and subsidiary of the Company (“Service 800”) entered into an employment agreement whereby the CCS Seller will be employed by Service 800 as Vice President of Operations and Technologies for a period of six months
The foregoing descriptions of the Securities Purchase Agreement, Security Agreement, Membership Interest Purchase Agreement, Operating Agreement, Initial Debenture, and the CCS Purchase Note do not purport to be complete and are qualified in their entirety by the full text of their forms, which are filed as exhibits hereto and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
The issuance of the securities whose information is set forth in Item 1.01 and this Item 3.02 of this Current Report on Form 8-K were not registered under the Securities Act of 1933, as amended (the “Securities Act”), but qualified for exemption under Section 4(a)(2) of the Securities Act. The securities were exempt from registration under Section 4(a)(2) of the Securities Act because the issuance of such securities by the Company did not involve a “public offering,” as defined in Section 4(a)(2) of the Securities Act, due to the insubstantial number of persons involved in the transaction, size of the offering, manner of the offering and number of securities offered. All of the securities were issued without registration under the Securities Act of 1933 in reliance upon the exemption provided in Section 4(a)(2).
Item 9.01. Exhibits.
(d) Exhibits
Exhibit No. |
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4.1* |
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4.2* |
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4.3* |
| Form of TCA Beyond Commerce Convertible Promissory Note Dated December 31, 2019 |
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10.1* |
| Form of Securities Purchase Agreement Dated December 31, 2019. |
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10.2* |
| Form of Membership Interest Purchase Agreement dated December 31, 2019 |
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10.3* |
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* Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BEYOND COMMERCE, INC. | |
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Dated: January 7, 2020 | By: | /s/ Geordan G. Pursglove |
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| Geordan G. Pursglove Chief Executive Officer, President and Director |
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
BEYOND COMMERCE, INC.
SENIOR SECURED REDEEMABLE DEBENTURE
Dated as of: December 31, 2019Principal Amount: $900,000.00
Effective Date: December 31, 2019
Maturity Date: December 31, 2021
This SENIOR SECURED REDEEMABLE DEBENTURE (the “Debenture”) is issued, dated and effective as of December 31, 2019 (the “Effective Date”), by BEYOND COMMERCE, INC., a corporation incorporated under the laws of the State of Nevada (the “Company”), to TCA SPECIAL SITUATIONS CREDIT STRATEGIES ICAV, an Irish collective asset vehicle (together with its permitted successors and assigns, the “Holder”) pursuant to exemptions from registration under the Securities Act of 1933, as amended. This Debenture is issued in connection with that certain Securities Purchase Agreement, dated as of the date hereof, by and between the Company, the Holder and certain other parties thereto (the “Purchase Agreement”). All capitalized terms used in this Debenture and not otherwise defined herein shall have the meanings assigned to them in the Purchase Agreement.
ARTICLE I
Section 1.01Principal and Interest. For value received, the Company hereby promises to pay to the order of the Holder, by no later than December 31, 2021 (the “Maturity Date”), in immediately available and lawful money of the United States of America, Nine Hundred Thousand and No/100 United States Dollars ($900,000.00), together with interest on the outstanding principal amount under this Debenture, at the rate of Sixteen Percent (16%) per annum simple interest (the “Interest Rate”) from the Effective Date, until paid, as more specifically provided below.
Section 1.02 Optional Redemption Prior to Maturity. The Company, at its option,
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shall have the right to redeem this Debenture in full and for cash, at any time prior to the Maturity Date, with three (3) business days advance written notice (the “Redemption Notice”) to the Holder. The amount required to redeem this Debenture in full pursuant to this Section 1.02 shall be equal to: (i) the aggregate principal amount then outstanding under this Debenture; plus all accrued and unpaid interest due under this Debenture as of the redemption date; plus (ii) all other costs, fees and charges due and payable hereunder or under any other “Transaction Documents” (as hereinafter defined)(collectively, the “Redemption Amount”). The Company shall deliver the Redemption Amount to the Holder on the third (3rd) business day after the date of the Redemption Notice.
Section 1.03 Mandatory Redemption at Maturity. On the Maturity Date, the Company shall redeem this Debenture for the Redemption Amount, which Redemption Amount shall be due and payable to the Holder by no later than 2:00 P.M. EST, on the Maturity Date.
Section 1.04Payments.
(1)Payments. The Company shall pay to the Holder all interest and principal payable hereunder in accordance with the amortization schedule attached hereto as Exhibit A. In the event such day is not a Business Day, then said payment shall be due on the first Business Day thereafter occurring.
(2)Interest Calculations; Payment Application. Unpaid interest shall be capitalized into the principal balance hereof on a monthly basis. Interest shall be calculated on the basis of a 360-day year, and shall accrue daily on the outstanding principal amount outstanding from time to time (including, for the avoidance of doubt, any increase in the outstanding principal amount due to the capitalization of interest) for the actual number of days elapsed, commencing on the Effective Date until payment in full of the outstanding principal, together with all accrued and unpaid interest and other amounts which may become due hereunder or under any Transaction Documents, has been made. All payments received and actually collected by Holder hereunder shall be applied first to any costs and expenses due or incurred hereunder or under any other Transaction Documents, second to accrued and unpaid interest hereunder, and last to reduce the outstanding principal balance of this Debenture.
(3)Late Fee. If all or any portion of the payments of principal, interest or other charges due hereunder are not received by the Holder within five (5) days of the date such payment is due, then the Company shall pay to the Holder a late charge (in addition to any other remedies that Holder may have) equal to five percent (5%) of each such unpaid payment or sum. Any payments returned to Holder for any reason must be covered by wire transfer of immediately available funds to an account designated by Holder, plus a $100.00 administrative fee charge. Holder shall have no responsibility or liability for payments purportedly made hereunder but not actually received by Holder; and the Company shall not be discharged from the obligation to make such payments due to loss of same in the mails or due to any other excuse or justification ultimately involving facts where such payments were not actually received by Holder.
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Section 1.05. Manner of Payments. All sums payable to the order of Holder hereunder shall be payable by ACH transfer of lawful dollars of the United States of America to the ACH instructions set forth below, or at such place as Holder, from time to time, may designate in writing. ACH Instructions for all sums due and payable hereunder are as follows:
ARTICLE II
Section 2.01Secured Nature of Debenture. This Debenture is being issued in connection with the Purchase Agreement. The indebtedness evidenced by this Debenture is also secured by all of the assets and property of the Credit Parties and various other instruments and documents referred to in the Purchase Agreement as the “Transaction Documents”. All of the agreements, conditions, covenants, provisions, representations, warranties and stipulations contained in any of the Transaction Documents which are to be kept and performed by the Credit Parties are hereby made a part of this Debenture to the same extent and with the same force and effect as if they were fully set forth herein, and the Company covenants and agrees to keep and perform them, or cause them to be kept or performed, strictly in accordance with their terms.
ARTICLE III
Section 3.01Events of Default. The occurrence of any of the following events shall constitute an “Event of Default” hereunder: (i) any Credit Party shall fail to pay any interest, principal or other charges due under this Debenture or any other Transaction Documents within ten (10) days of the date when any such payment shall be due and payable; (ii) any Credit Party makes an assignment for the benefit of creditors; (iii) any order or decree is rendered by a court which appoints or requires the appointment of a receiver, liquidator or trustee for any Credit Party, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (iv) any order or decree is rendered by a court adjudicating any Credit Party insolvent, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (v) any Credit Party files a petition in bankruptcy under the provisions of any bankruptcy law or any insolvency act; (vi) any Credit Party admits, in writing, its inability to pay its debts as they become due; (vii) a proceeding or petition in bankruptcy is filed against any Credit Party and such proceeding or petition is not dismissed within thirty (30) days from the date it is filed; (viii) any Credit Party files a petition or answer seeking reorganization or arrangement under the bankruptcy laws or any law or statute of the United States or any other foreign country or state; (ix) any written warranty, representation, report, certification, certificate or statement of any Credit Party in this Debenture, the Purchase Agreement or any other Transaction Document or any other agreement with Holder shall be false or misleading in any material respect when made or deemed made; and (x) any Credit Party shall fail to perform, comply with or abide by any of the stipulations, agreements, conditions and/or material covenants contained in this Debenture, the Purchase Agreement or any of the other Transaction Documents on the part of any Credit Party to be performed complied with or abided by, and such failure continues or remains uncured for fifteen (15) days following written notice from the Holder to the Company.
Section 3.02Remedies. Upon the occurrence of an Event of Default that is not timely cured within an applicable cure period hereunder, the interest on this Debenture
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shall immediately accrue at an interest rate equal to the lesser of (i) twenty-two percent (22%) per annum or (ii) the maximum interest rate allowable by law, and, in addition to all other rights or remedies the Holder may have, at law or in equity, the Holder may, in its sole discretion, accelerate full repayment of all principal amounts outstanding hereunder, together with accrued interest thereon, together with all attorneys’ fees, paralegals’ fees and costs and expenses incurred by the Holder in collecting or enforcing payment hereof (whether such fees, costs or expenses are incurred in negotiations, all trial and appellate levels, administrative proceedings, bankruptcy proceedings or otherwise), and together with all other sums due by the Company hereunder and under the Transaction Documents, all without any relief whatsoever from any valuation or appraisement laws, and payment thereof may be enforced and recovered in whole or in part at any time by one or more of the remedies provided to the Holder at law, in equity, or under this Debenture or any of the other Transaction Documents. In connection with the Holder’s rights hereunder upon an Event of Default, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it in equity or under applicable law.
ARTICLE IV
Section 4.01 Usury/High-Interest Savings Clause. Notwithstanding any provision in this Debenture or the other Transaction Documents, the total liability for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing this Debenture or any other applicable law. EACH OF THE CREDIT PARTIES UNDERSTANDS AND ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW AND DISCUSS THE OPERATION OF THIS DEBENTURE, ANY FEES, INTEREST, OR OTHER CHARGES OCCASIONED IN THE TRANSACTION DOCUMENTS WITH A COMPETENT ATTORNEY OF THEIR CHOOSING, AND DOES IN FACT UNDERSTAND THEIR OPERATION AND THUS AGREES THAT IT IS NOT THE HOLDER’S INTENT TO CHARGE ANY AMOUNT, FEE, OR INTEREST HIGHER THAN THAT PERMITTED UNDER APPLICABLE LAW, AND THAT IN FACT, THE OBLIGATIONS AND EFFECT OF THE TRANSACTION DOCUMENTS DO NOT CALL FOR THE PAYMENT OF ANY AMOUNT, FEE, INTEREST OR CHARGE GREATER THAN THAT PERMITTED BY APPLICABLE LAW. In the event the total liability of payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period exceeds the limit imposed by the usury laws of the jurisdiction governing this Debenture or any other applicable laws, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice by, between, or to any party hereto, be applied to the reduction of the outstanding principal balance of this Debenture immediately upon receipt of such sums by the Holder, with the same force and effect as though the Borrower had specifically designated such excess sums
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to be so applied to the reduction of such outstanding principal balance and the Holder had agreed to accept such sums as a penalty-free payment of principal; provided, however, that the Holder may, at any time and from time to time, elect, by notice in writing to the Borrower, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest rather than accept such sums as a prepayment of the outstanding principal balance. It is the intention of the parties that the Borrower does not intend or expect to pay nor does the Holder intend or expect to charge or collect any interest under this Debenture greater than the highest legal, non-usurious rate of interest which may be charged under applicable law.
ARTICLE V
Section 5.01No Exemption. To the extent possible pursuant to applicable rules, regulations and laws, the Company hereby waives and releases all benefit that might accrue to the Company by virtue of any present or future laws exempting any property that may serve as security for this Debenture, or any other property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy, or sale under execution, exemption from civil process, or extension of time for payment; and the Company agrees that, to the extent possible pursuant to applicable rules, regulations and laws, any property that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued thereon, may be sold upon any such writ in whole or in part in any order or manner desired by Holder.
Section 5.02 Exercise of Remedies. The remedies of the Holder as provided herein and in any of the other Transaction Documents shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Holder, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.
Section 5.03 WAIVER OF CLAIMS AND DEFENSES. THE CREDIT PARTIES WAIVE EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE CREDIT PARTIES MAY NOW HAVE AS OF THE DATE HEREOF, OR AS THEY MAY IN THE FUTURE COME TO HAVE, TO ANY ACTION BY HOLDER IN ENFORCING THIS DEBENTURE OR ANY OTHER TRANSACTION DOCUMENTS -- OTHER THAN FOR SET OFF TO ESTABLISH THE AMOUNTS DUE AND PAID IN RESPECT OF THE DEBENTURES. THE CREDIT PARTIES UNDERSTAND AND AGREE THAT THEY ARE WAIVING DEFENSES AND CLAIMS WHICH MAY NOT YET HAVE ACCRUED OR OF WHICH THEY MAY NOT YET BE AWARE AS MATERIAL INDUCEMENT FOR HOLDER PURCHASING THIS DEBENTURE, ENTERING THE OTHER TRANSACTION DOCUMENTS AND GRANTING ANY FINANCIAL ACCOMMODATION TO THE CREDIT PARTIES. THIS PROVISION IS INTENDED TO BE CONSTRUED AS BROADLY AS PERMISSIBLE UNDER APPLICABLE LAW. FURTHER, EACH OF THE CREDIT PARTIES UNDERSTANDS AND ACKNOWLEDGES THAT THE AGENTS AND REPRESENTATIVES OF THE HOLDER DO NOT HAVE AUTHORITY TO MAKE ANY STATEMENTS, PROMISES OR REPRESENTATIONS IN CONFLICT WITH OR IN ADDITION TO THE
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INFORMATION CONTAINED IN THIS DEBENTURE OR ANY OTHER TRANSACTION DOCUMENT, AND BY ITS ACCEPTANCE HEREOF HOLDER HEREBY SPECIFICALLY DISCLAIMS ANY RESPONSIBILITY FOR ANY SUCH STATEMENTS, PROMISES OR REPRESENTATIONS. BY EXECUTION OF THIS DEBENTURE, EACH CREDIT PARTY ACKNOWLEDGES THAT HE/SHE/IT HAS NOT RELIED UPON SUCH STATEMENTS, PROMISES OR REPRESENTATIONS, IF ANY, AND WAIVES ANY RIGHTS, DEFENSES, OR CLAIMS ARISING FROM ANY SUCH STATEMENTS, PROMISES OR REPRESENTATIONS.
Section 5.04 No Waiver. Holder shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by Holder, and then only to the extent specifically set forth in the writing. A waiver on one event shall not be construed as continuing or as a bar to or waiver of any right or remedy to a subsequent event.
ARTICLE VI
Section 6.01 Notice. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Debenture shall be made in accordance with the terms of the Purchase Agreement.
Section 6.02 MANDATORY FORUM SELECTION. TO INDUCE HOLDER TO PURCHASE THIS DEBENTURE, EACH OF THE CREDIT PARTIES IRREVOCABLY AGREES THAT ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS DEBENTURE OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS DEBENTURE ANY OTHER TRANSACTION DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT) SHALL, EXCEPT AS HEREINAFTER PROVIDED, BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, HOLDER MAY, AT HOLDER’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. EACH OF THE CREDIT PARTIES HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING IT SITUS IN SUCH COUNTY (OR TO ANY JURISDICTION OR VENUE, IF HOLDER SO ELECTS), AND EACH OF THE CREDIT PARTIES HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
Section 6.03WAIVER OF PERSONAL SERVICE. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY FEDERAL EXPRESS, DIRECTED TO THE BORROWER, AS SET FORTH AND ACCORDING TO THE TERMS IN THE NOTICE PROVISIONS HEREIN. EACH OF THE CREDIT PARTIES
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AGREES THAT NO ACKNOWLEDGMENT OF ACTUAL RECEIPT OF PROCESS IS REQUIRED AND SERVICE WILL BE DEEMED EFFECTIVE PURSUANT TO TERMS OF NOTICE PROVISIONS CONTAINED HEREIN. SERVICE MAY ALSO BE MADE IN ANY MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.
Section 6.04 Governing Law. Except in the case of the Mandatory Forum Selection Clause in Section 6.02 above, which clause shall be governed and interpreted in accordance with Florida law, this Debenture and the Transaction 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 Wyoming, and for all purposes shall be construed in accordance with the laws of the State of Wyoming, without giving effect to the choice of law provisions of such State. The governing law provisions of this Section 6.04 are a material inducement for Holder to purchase this Debenture, and the Borrower hereby agrees, acknowledges and understands that the Holder would not have purchased this Debenture, without the full agreement and consent of the Credit Parties, with full knowledge and understanding, that except in the case of the Mandatory Forum Selection Clause in Section 6.02 above, which clause shall be governed and interpreted in accordance with Florida law, this Debenture, and each of the Transaction Documents, shall be governed by the internal laws of the State of Wyoming, and for all purposes shall be construed in accordance with the laws of the State of Wyoming, without giving effect to the choice of law provisions. In this regard, each of the Credit Parties hereby acknowledges that it has reviewed this Debenture and all Transaction Documents, and specifically, this Section 6.04, with competent counsel selected by the Credit Parties, and in that regard, each of the Credit Parties fully understands the choice of law provisions set forth in this Section. In addition, each of the Credit Parties agree, and acknowledge that it has had an opportunity to negotiate the terms and provisions of this Debenture and the other Transaction Documents with and through its counsel, and that the Credit Parties have sufficient leverage and economic bargaining power, and have used such leverage and economic bargaining power, to fairly and fully negotiate this Debenture and the other Transaction Documents in a manner that is acceptable to the Credit Parties. Moreover, because of the material nature of this choice of law provision in inducing Holder to purchase this Debenture, each of the Credit Parties hereby fully and absolutely waives any and all rights to make any claims, counterclaims, defenses, to raise or make any arguments (including any claims, counterclaims, defenses, or arguments based on grounds of public policy, unconscionability, or implied covenants of fair dealing and good faith), or to otherwise undertake any litigation strategy or maneuver of any nature or kind that would result in, or which otherwise seeks to, invalidate this choice of law provision, or that would otherwise result in or require the application of the laws of any other State other than the State of Wyoming in the interpretation or governance of this Debenture or any other Transaction Documents (except for the Mandatory Forum Selection clause in Section 6.2 hereof). Each of the Credit Parties has carefully considered this Section 6.04 and has carefully reviewed its application and effect with competent counsel, and in that regard, fully understands and agrees that Holder would not have purchased this Debenture without the express agreement and acknowledgement of each of the Credit Parties to this choice of law provision, and the express waivers set forth herein.
Section 6.05 Severability. In the event any one or more of the provisions of this Debenture shall for any reason be held to be invalid, illegal, or unenforceable, in whole or in part, in any respect, or in the event that any one or more of the provisions of this Debenture
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operates or would prospectively operate to invalidate this Debenture, then and in any of those events, only such provision or provisions shall be deemed null and void and shall not affect any other provision of this Debenture. The remaining provisions of this Debenture shall remain operative and in full force and effect and shall in no way be affected, prejudiced, or disturbed thereby.
Section 6.06 Entire Agreement. This Debenture and the other Transaction Documents: (i) are valid, binding and enforceable against the Credit Parties and Holder in accordance with their provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire agreement between the parties; and (iii) are the final expression of the intentions of the Credit Parties and Holder. No promises, either expressed or implied, exist between the Credit Parties and Holder, unless contained herein or in the Transaction Documents. This Debenture and the Transaction Documents supersede all negotiations, representations, warranties, commitments, offers, contracts (of any kind or nature, whether oral or written) prior to or contemporaneous with the execution hereof. EACH CREDIT PARTY ACKNOWLEDGES THAT HE/SHE/IT HAS NOT RELIED UPON ANY STATEMENTS, PROMISES OR REPRESENTATIONS, IF ANY, THAT ARE NOT CONTAINED WITHIN THIS DEBENTURE OR IN ANY OTHER THE TRANSACTION DOCUMENT AND WAIVES ANY RIGHTS, DEFENSES, OR CLAIMS ARISING FROM ANY SUCH STATEMENTS, PROMISES OR REPRESENTATIONS.
Section 6.07 Amendments; Waivers. No promises of future action, amendment, modification, forbearance, termination, discharge or waiver of any provision of this Debenture or of the Transaction Documents, nor any consent to any departure from the terms of this Debenture or any other Transaction Document, by the Credit Parties therefrom, shall in any event be effective unless the same shall be in writing and signed by Holder, and then such waiver or consent shall be effective only for the specific purpose for which given. This Debenture does not permit implied amendments based upon course of dealing or silence or oral representations of any sort.
Section 6.08 Binding Effect. This Debenture shall be binding upon the Credit Parties and the successors and assigns of any Credit Party and shall inure to the benefit of the Holder and the successors and assigns of the Holder.
Section 6.09 Assignment. The Holder may from time to time sell or assign, in whole or in part, or grant participations in, this Debenture and/or the obligations evidenced hereby without the consent of the Credit Parties. The holder of any such sale, assignment or participation, if the applicable agreement between Holder and such holder o provides, shall be: (i) entitled to all of the rights obligations and benefits of Holder (to the extent of such holder’s interest or pa1ticipation); and (ii) deemed to hold and may exercise the rights of setoff or banker’s lien with respect to any and all obligations of such holder to any Credit Parties (to the extent of such holder s interest or participation), in each case as fully as though the Credit Parties was directly indebted to such holder. Holder shall give written notice to a Credit Party of such sale, assignment or participation.
Section 6.10Lost or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed the Credit Parties shall execute and deliver, in exchange and substitution for
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and upon cancellation of a mutilated Debenture or in lieu of or in substitution for a lost, stolen or destroyed Debenture a new Debenture for the principal amount of this Debenture so mutilated, lost stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company.
Section 6.11 WAIVER OF JURY TRIAL. EACH CREDIT PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON THIS DEBENTURE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS DEBENTURE OR ANY OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF OR BETWEEN ANY PARTY HERETO, AND EACH CREDIT PARTY AGREES AND CONSENTS TO THE GRANTING TO HOLDER OF RELIEF FROM ANY STAY ORDER WHICH MIGHT BE ENTERED BY ANY COURT AGAINST HOLDER AND TO ASSIST HOLDER IN OBTAINING SUCH RELIEF. THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER ACCEPTING THIS DEBENTURE FROM THE COMPANY. THE CREDIT PARTIES’ REASONABLE RELIANCE UPON SUCH INDUCEMENT I HEREBY ACKNOWLEDGED.
Section 6.12WAIVER AND RELEASE. IN CONSIDERATION OF THE MUTUAL PROMISES AND COVENANTS MADE HEREIN, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, AND INTENDING TO BE LEGALLY BOUND HEREBY, EACH CREDIT PARTY HEREBY AGREES TO FULLY, FINALLY AND FOREVER RELEASE AND FOREVER DISCHARGE AND COVENANT NOT TO SUE THE HOLDER INDEMNITEES, AND EACH ONE OF THEM, FROM ANY AND ALL DEBTS, FEES, ATTORNEYS’ FEES, LIENS, COSTS, EXPENSES, DAMAGES, SUMS OF MONEY, ACCOUNTS, BONDS, BILLS, COVENANTS, PROMISES, JUDGMENTS, CHARGES, DEMANDS, CLAIMS, CAUSES OF ACTION, PROCEEDINGS, SUITS, LIABILITIES, EXPENSES, OBLIGATIONS OR CONTRACTS OF ANY KIND WHATSOEVER, WHETHER IN LAW OR IN EQUITY, WHETHER ASSERTED OR UNASSERTED, WHETHER KNOWN OR UNKNOWN, FIXED OR CONTINGENT, UNDER STATUTE OR OTHERWISE, FROM THE BEGINNING OF TIME THROUGH THE EFFECTIVE DATE AND FROM THE EFFECTIVE DATE THROUGH THE FUTURE, INCLUDING ANY AND ALL CLAIMS RELATING TO OR ARISING OUT OF ANY FINANCING TRANSACTIONS, CREDIT FACILITIES, NOTES, DEBENTURES, SECURITY AGREEMENTS, AND OTHER AGREEMENTS, INCLUDING EACH OF THE TRANSACTION DOCUMENTS, ENTERED INTO BY THE CREDIT PARTIES WITH HOLDER. WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING RELEASE, EACH OF THE CREDIT PARTIES HEREBY AGREES AND ACKNOWLEDGES THAT THEY ARE RELEASING ANY CLAIMS THEY HAVE NOW WHICH HAVE ACCRUED OR WHICH MAY ACCRUE IN THE FUTURE, SPECIFICALLY INCLUDING BUT NOT LIMITED TO: (A) ANY AND ALL CLAIMS REGARDING OR RELATING TO THE ENFORCEABILITY OF THE TRANSACTION DOCUMENTS AS AGAINST ANY OF THE CREDIT PARTIES; (B) ANY AND ALL CLAIMS REGARDING, RELATING TO, OR OTHERWISE
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CHALLENGING THE GOVERNING LAW PROVISIONS OF THE TRANSACTION DOCUMENTS ; (C) ANY AND ALL CLAIMS REGARDING OR RELATING TO THE AMOUNT OF PRINCIPAL, INTEREST, FEES OR OTHER OBLIGATIONS DUE FROM ANY OF THE CREDIT PARTIES TO THE HOLDER UNDER ANY OF THE TRANSACTION DOCUMENTS ; (D) ANY AND ALL CLAIMS REGARDING OR RELATING TO THE HOLDER'S CONDUCT OR HOLDER'S FAILURE TO PERFORM ANY OF HOLDER'S COVENANTS OR OBLIGATIONS UNDER ANY OF THE TRANSACTION DOCUMENTS; (E) ANY AND ALL CLAIMS REGARDING OR RELATING TO ANY DELIVERY OR FAILURE TO DELIVER ANY NOTICES BY THE HOLDER TO THE CREDIT PARTIES; (F) ANY AND ALL CLAIMS REGARDING OR RELATING TO ANY FAILURE BY THE HOLDER TO FUND ANY ADVANCES OR OTHER AMOUNTS UNDER ANY OF THE TRANSACTION DOCUMENTS; (G) ANY AND ALL CLAIMS REGARDING OR RELATING TO ANY ADVISORY OR INVESTMENT BANKING SERVICES (OR THE LACK THEREOF) PROVIDED BY THE HOLDER TO ANY OF THE CREDIT PARTIES FOR WHICH ANY ADVISORY OR INVESTMENT BANKING FEES MAY BE DUE AND OWING AND INCLUDED WITHIN THE OBLIGATIONS; AND (H) ANY AND ALL CLAIMS BASED ON GROUNDS OF PUBLIC POLICY, UNCONSCIONABILITY, OR IMPLIED COVENANTS OF FAIR DEALING AND GOOD FAITH – OTHER THAN THOSE DEEMED NON-WAIVABLE BY LAW OR APPLICABLE PUBLIC POLICY. THE CREDIT PARTIES FURTHER EXPRESSLY AGREE THAT THE FOREGOING RELEASE AND WAIVER IS INTENDED TO BE AS BROAD AND INCLUSIVE AS PERMITTED BY THE LAWS GOVERNING THE TRANSACTION DOCUMENTS, AND THESE RELEASED CLAIMS INCLUDE CLAIMS THAT THE CREDIT PARTIES DO NOT KNOW OR SUSPECT TO EXIST, WHETHER THROUGH IGNORANCE, OVERSIGHT, ERROR, NEGLIGENCE, OR OTHERWISE, AND WHICH, IF KNOWN, WOULD MATERIALLY AFFECT THEIR DECISION TO EXECUTE THIS DEBENTURE OR ANY OTHER TRANSACTION DOCUMENT. THE CREDIT PARTIES UNDERSTAND THAT THEY COULD HAVE CLAIMS ACCRUE IN THE FUTURE IN CONNECTION HEREWITH, BUT VOLUNTARILY ELECT TO RELEASE THOSE CLAIMS NOW AS AN INDUCEMENT TO THE FINANCIAL ACOMMODATIONS PROVIDED HERE BY THE HOLDER. THE FOREGOING WAIVERS AND RELEASES BY THE CREDIT PARTIES ARE A MATERIAL INDUCEMENT FOR THE HOLDER TO PURCHASE THIS DEBENTURE, AND THE HOLDER'S AGREEMENT TO PURCHASE THIS DEBENTURE IS SEPARATE AND MATERIAL CONSIDERATION TO THE CREDIT PARTIES FOR THE WAIVERS AND RELEASES CONTAINED HEREIN, THE RECEIPT AND SUFFICIENCY OF SUCH CONSIDERATION IS HEREBY ACKNOWLEDGED BY THE CREDIT PARTIES. IN ADDITION, EACH OF THE CREDIT PARTIES AGREES AND ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO NEGOTIATE THIS SPECIFIC WAIVER AND RELEASE PROVISION OF THIS DEBENTURE, WITH AND THROUGH THEIR OWN COMPETENT COUNSEL. THE FOREGOING WAIVERS AND RELEASES SHALL SURVIVE THE TERMINATION OF THIS DEBENTURE OR ANY OF THE OTHER TRANSACTION DOCUMENTS, AND REPAYMENT OF THE OBLIGATIONS.
Section 6.13 NON-US STATUS. THE HOLDER IS A NON-US PERSON AS THAT
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TERM IS DEFINED IN THE UNITED STATES INTERNAL REVENUE CODE. IT IS HEREBY AGREED AND UNDERSTOOD THAT THE OBLIGATIONS HEREUNDER MAY BE SOLD ONLY TO NON-U.S. PERSON. THE INTEREST PAYABLE HEREUNDER IS PAYABLE ONLY OUTSIDE THE UNITED STATES. ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAW. BY ACCEPTING THIS OBLIGATION, THE HOLDER REPRESENTS AND WARRANT THAT IT IS NOT A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SEC 6049(8)(4) OF THE INTERNAL REVENUE CODE AND REGULATIONS THEREUNDER) AND THAT IT IS NOT ACTING FOR OR ON BEHALF OF A UNITED STATE PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SEC. 6049(B)(4) OF THE INTERNAL REVENUE CODE AND THE REGULATIONS THEREUNDER).
[signature page follows]
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IN WITNESS WHEREOF with the intent to be legally bound hereby, the Company has executed this Senior Secured Redeemable Debenture as of the date first written above.
BEYOND COMMERCE, INC.
By: _________________________________
Name: Geordan Pursglove
Title: Chief Executive Officer
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, the Chief Executive Officer of Beyond Commerce, Inc., a Nevada corporation, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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CONSENT AND AGREEMENT
The undersigned is a Credit Party, as that term is defined in that certain securities purchase agreement by and between the Company and the Holder and, as such, the undersigned hereby consents and agrees to the payment of the amounts contemplated in the senior secured redeemable debenture, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by the Company pursuant to or in connection with said senior secured redeemable debenture to the same extent as if the undersigned were a party to said senior secured redeemable debenture.
CREDIT PARTY:
TCA BEYOND COMMERCE, LLC
By: _________________________________
Name: Carlos Sandino
Title: Manager
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Carlos Sandino, a Manager of TCA Beyond Commerce, LLC, a Wyoming limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said limited liability company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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CONSENT AND AGREEMENT
The undersigned is a Guarantor, as that term is defined in that certain securities purchase agreement by and between the Company and the Holder and, as such, the undersigned hereby consents and agrees to the payment of the amounts contemplated in the senior secured redeemable debenture, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by the Company pursuant to or in connection with said senior secured redeemable debenture to the same extent as if the undersigned were a party to said senior secured redeemable debenture.
GUARANTOR:
_________________________________
GEORDAN PURSGLOVE
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said person, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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CONSENT AND AGREEMENT
The undersigned is a Guarantor, as that term is defined in that certain securities purchase agreement by and between the Company and the Holder and, as such, the undersigned hereby consents and agrees to the payment of the amounts contemplated in the senior secured redeemable debenture, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by the Company pursuant to or in connection with said senior secured redeemable debenture to the same extent as if the undersigned were a party to said senior secured redeemable debenture.
GUARANTOR:
PATHUX, LLC
By: _________________________________
Name: Geordan Pursglove
Title: Manager
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, a Manager of PathUX, LLC, a Delaware limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said limited liability company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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CONSENT AND AGREEMENT
The undersigned is a Guarantor, as that term is defined in that certain securities purchase agreement by and between the Company and the Holder and, as such, the undersigned hereby consents and agrees to the payment of the amounts contemplated in the senior secured redeemable debenture, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by the Company pursuant to or in connection with said senior secured redeemable debenture to the same extent as if the undersigned were a party to said senior secured redeemable debenture.
GUARANTOR:
CUSTOMER CENTERED STRATEGIES, L.L.C.
By: _________________________________
Name: Geordan Pursglove
Title: Manager
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, a Manager of Customer Centered Strategies, L.L.C., a Minnesota limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said limited liability company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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CONSENT AND AGREEMENT
The undersigned is a Guarantor, as that term is defined in that certain securities purchase agreement by and between the Company and the Holder and, as such, the undersigned hereby consents and agrees to the payment of the amounts contemplated in the senior secured redeemable debenture, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by the Company pursuant to or in connection with said senior secured redeemable debenture to the same extent as if the undersigned were a party to said senior secured redeemable debenture.
GUARANTOR:
SERVICE 800, INC.
By: _________________________________
Name: Geordan Pursglove
Title: Chief Executive Officer
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, the Chief Executive Officer of Service 800, Inc., a Minnesota corporation, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
17
SECURITY AGREEMENT
This SECURITY AGREEMENT (the “Security Agreement”) dated and made effective as of December 31, 2019, is executed by BEYOND COMMERCE, INC., a Nevada corporation and TCA BEYOND COMMERCE, INC., a Wyoming limited liability company (the “Debtors”), with their chief executive offices located at 260-A West Broadway Avenue, Jackson, WY 83001 and TCA SPECIAL SITUATIONS CREDIT STRATEGIES ICAV (the “Secured Party”).
R E C I T A L S:
WHEREAS, pursuant to a Securities Purchase Agreement dated as of December 31, 2019 and effective as of December 31, 2019 by and between the Debtors and the Secured Party (the “Purchase Agreement”) and acknowledged and agreed by certain other credit parties, the Debtors have agreed to issue to the Secured Party and the Secured Party has agreed to purchase from the Debtors certain secured redeemable debentures (the “Debentures”), as more specifically set forth in the Purchase Agreement; and
WHEREAS, in order to induce the Secured Party to purchase the Debentures, the Debtors has agreed to execute and deliver to the Secured Party this Agreement for the benefit of the Secured Party and to grant to Secured Party an unconditional and continuing, first priority security interest in all of the assets and property of the Debtors to secure the prompt payment, performance and discharge in full of all of Debtors obligations under the Debentures, the Purchase Agreement and the other Transaction Documents.
A G R E E M E N T S:
1DEFINITIONS.
1.1Defined Terms. Capitalized terms used but not otherwise defined in this Security Agreement (including the Recitals) shall have the meanings ascribed to them in the Purchase Agreement. For the purposes of this Security Agreement, the following capitalized words and phrases shall have the meanings set forth below.
(a)“Capital Securities” shall mean, with respect to any Person, all shares, interests, participations or other equivalents (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.
(b)“Collateral” shall have the meaning set forth in Section 2.1 hereof.
(c)“Obligor” shall mean Debtors, or any other party liable with respect to the Obligations.
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(d)“Organizational Identification Number” means, with respect to the Debtors, the organizational identification number assigned to the Debtors by the applicable governmental unit or agency of the jurisdiction of organization of the Debtors, if any.
(e)“Taxes” shall mean any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and any and all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing.
(f)“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.
1.2Other Terms Defined in UCC. All other capitalized words and phrases used herein and not otherwise specifically defined herein or in the Purchase Agreement shall have the respective meanings assigned to such terms in the UCC, to the extent the same are used or defined therein.
1.3Other 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 neutral gender includes the masculine and feminine, the single number includes the plural, and vice versa, and in particular the word “Debtors” shall be so construed.
(b)Section and Schedule references are to this Security Agreement unless otherwise specified. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Security Agreement shall refer to this Security Agreement as a whole and not to any particular provision of this Security Agreement
(c)The term “including” (or words of similar import) 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 Security Agreement and the other Transaction 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 Transaction 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 Transaction Documents are inconsistent with the terms of this Security Agreement, the provisions of this Security Agreement shall govern.
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(g)This Security Agreement and the other Transaction 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.
2SECURITY FOR THE OBLIGATIONS.
2.1Security for Obligations. As security for the payment and performance of the Obligations, the Debtors do hereby pledge, assign, transfer, deliver and grant to Secured Party, for its own benefit and as agent for its Affiliates, a continuing and unconditional first priority security interest in and to any and all property of the Debtors, of any kind or description, tangible or intangible, wheresoever located and whether now existing or hereafter arising or acquired, including the following (all of which property for the Debtors, 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 Debtors now or hereafter coming into the possession, control or custody of, or in transit to, Secured Party or any agent or bailee for Secured Party or any parent, affiliate or subsidiary of Secured Party or any participant with Secured Party in the Obligations (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise), including all cash, earnings, dividends, interest, or other rights in connection therewith and the products and proceeds therefrom, including the proceeds of insurance thereon; and
(b)the additional property of the Debtors, 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 Debtors books and records and recorded data relating thereto (regardless of the medium of recording or storage), together with all of the Debtors 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 and all goods whose sale, lease or other disposition by the Debtors have given rise to Accounts and have been returned to, or repossessed or stopped in transit by, the Debtors, or rejected or refused by any of its customers;
(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, and all funds at any time deposited therewith, and all funds and amounts reserved or held back by any of the Debtors payment processing service providers;
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(vi)All As-Extracted Collateral, Commodity Accounts, Commodity Contracts, and Farm Products;
(vii)All Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of Credit Rights, all proceeds of letters of credit, Health-Care-Insurance Receivables, Supporting Obligations, notes secured by real estate, Commercial Tort Claims and General Intangibles, including Payment Intangibles; and
(viii)All real estate property owned by the Debtors and the interest of the Debtors in fixtures related to such real property;
(ix)All Proceeds (whether Cash Proceeds or Non-cash 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.
2.2Possession and Transfer of Collateral. Until an Event of Default which has not been cured or waived by the Secured Party has occurred, the Debtors shall be entitled to possession and 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 Secured Party pursuant to this Section 2). The cancellation or surrender of any promissory note evidencing an Obligation, upon payment or otherwise, shall not affect the right of Secured Party to retain the Collateral for any other of the Obligations, except upon payment in full of the Obligations. The Debtors 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 as permitted pursuant to the Purchase Agreement.
2.3Financing Statements. The Debtors authorize Secured Party to prepare and file such financing statements, amendments and other documents and do such acts as Secured Party deems necessary in order to establish and maintain valid, attached and perfected, first priority security interests in the Collateral in favor of Secured Party, for its own benefit and as agent for its Affiliates, free and clear of all Liens and claims and rights of third parties whatsoever, except Permitted Liens. The Debtors hereby irrevocably authorize Secured Party at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto that: (a) indicate the Collateral: (i) is comprised of all assets of the Debtors (or words of similar effect), regardless of whether any particular asset comprising a part of the Collateral falls within the scope of Article 9 of the UCC of the jurisdiction wherein such financing statement or amendment is filed; or (ii) as being of an equal or lesser scope or within greater detail as the grant of the security interest set forth herein; and (b) contain any other information required by Section 5 of Article 9 of the UCC of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement or amendment, including: (A) whether the Debtors are an organization, the type of organization and any Organizational Identification Number issued to the Debtors; and (B) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of the real property to which
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the Collateral relates. The Debtors agree to furnish any such information to Secured Party promptly upon request. In addition, the Debtors shall make appropriate entries on its books and records disclosing the security interests of Secured Party, for its own benefit and as agent for its Affiliates, in the Collateral. The Debtors hereby agree that a photogenic or other reproduction of this Security Agreement is sufficient for filing as a financing statement and the Debtors authorize Secured Party to file this Security Agreement as a financing statement in any jurisdiction.
2.4Preservation of the Collateral. Secured Party may, but is not required to, take such actions from time to time as Secured Party reasonably deems appropriate to maintain or protect the Collateral. Secured Party shall have exercised reasonable care in the custody and preservation of the Collateral if Secured Party takes such action as the Debtors shall reasonably request in writing which is not inconsistent with Secured Party’s status as a secured party, but the failure of Secured Party to comply with any such request shall not be deemed a failure to exercise reasonable care; provided, however, Secured Party’s responsibility for the safekeeping of the Collateral shall: (i) be deemed reasonable if such Collateral is accorded treatment substantially equal to that which Secured Party accords its own property; and (ii) not extend to matters beyond the control of Secured Party, including acts of God, war, insurrection, riot or governmental actions. In addition, any failure of Secured Party to preserve or protect any rights with respect to the Collateral against prior or third parties, or to do any act with respect to preservation of the Collateral, not so requested by the Debtors, shall not be deemed a failure to exercise reasonable care in the custody or preservation of the Collateral. The Debtors shall have the sole responsibility for taking such action as may be necessary, from time to time, to preserve all rights of the Debtors and Secured Party in the applicable Collateral against prior or third parties. Without limiting the generality of the foregoing, where Collateral consists, in whole or in part, of Capital Securities, the Debtors represent to, and covenants with, Secured Party that the Debtors have made arrangements for keeping informed of changes or potential changes affecting the Capital Securities (including rights to convert or subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights), and the Debtors agree that Secured Party shall have no responsibility or liability for informing the Debtors of any such or other changes or potential changes or for taking any action or omitting to take any action with respect thereto.
2.5Other Actions as to any and all Collateral. The Debtors further agree to take any other action reasonably requested by Secured Party to ensure the attachment, perfection and first priority of, and the ability of Secured Party to enforce, the security interest of Secured Party, for its own benefit and as agent for its Affiliates, in any and all of the Collateral, including: (i) causing Secured Party’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the bank to enforce, the security interest of Secured Party, for its own benefit and as agent for its Affiliates, in such Collateral; (ii) complying with any provision of any statute, regulation or treaty of the United States as to any material portion of the Collateral as soon as possible but not more than forty-five (45) days after such request if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Secured Party to enforce, the security interest of Secured Party, for its own
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benefit and as agent for its Affiliates, in such Collateral; (iii) obtaining governmental and other third party consents and approvals, including, without limitation, any consent of any licensor, lessor or other Person with authority or control over or an interest in any material portion of the Collateral as soon as possible but not more than forty-five (45) days after such request; (iv) obtaining waivers from mortgagees and landlords in form and substance reasonably satisfactory to Secured Party which affect any material portion of the Collateral as soon as possible but not more than forty-five (45) days after such request; and (v) taking all actions required by the UCC in effect from time to time or by other law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction. The Debtors further agree to indemnify and hold Secured Party harmless against claims of any Persons not a party to this Security Agreement concerning disputes arising over the Collateral, except to the extent resulting from the gross negligence or willful misconduct of Secured Party or its Affiliates.
2.6Collateral in the Possession of a Warehouseman or Bailee. If any material portion of the Collateral at any time is in the possession of a warehouseman or bailee, the Debtors shall promptly notify Secured Party thereof, and, as soon as possible, but not more than forty-five (45) days later, shall obtain a collateral access agreement in form and substance reasonably satisfactory to Secured Party from such warehouseman or bailee.
2.7Letter-of-Credit Rights. If a Debtor at any time is a beneficiary under a letter of credit now or hereafter issued in favor of such Debtor, such Debtor shall promptly notify Secured Party thereof and, at the request and option of Secured Party, such Debtor shall, pursuant to an agreement in form and substance reasonably satisfactory to Secured Party, either: (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to Secured Party, for its own benefit and as agent for its Affiliates, of the proceeds of any drawing under the letter of credit; or (ii) arrange for Secured Party, for its own benefit and as agent for its Affiliates, to become the transferee beneficiary of the letter of credit, with Secured Party agreeing, in each case, that the proceeds of any drawing under the letter to credit are to be applied as provided in the Purchase Agreement and the Debentures.
2.8Commercial Tort Claims. If the Debtors shall at any time hold or acquire a Commercial Tort Claim, the Debtors shall promptly notify Secured Party in writing signed by the Debtors of the details thereof and grant to Secured Party, for its own benefit and as agent for its Affiliates, in such written notice or other written instrument, a security interest therein and in the proceeds thereof, all upon the terms of this Security Agreement, in each case in form and substance reasonably satisfactory to Secured Party, and shall execute any amendments hereto deemed reasonably necessary by Secured Party to perfect the security interest of Secured Party, for its own benefit and as agent for its Affiliates, in such Commercial Tort Claim.
2.9Electronic Chattel Paper and Transferable Records. If the Debtors 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
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in effect in any relevant jurisdiction, the Debtors shall promptly notify Secured Party thereof and, at the request of Secured Party, shall take such action as Secured Party may reasonably request to vest in Secured Party 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, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. Secured Party agrees with the Debtors that Secured Party will arrange, pursuant to procedures reasonably satisfactory to Secured Party and so long as such procedures will not result in Secured Party’s loss of control, for the Debtors 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.
2.10Additional Requirements on Collateral. The Debtors shall fully cooperate with Secured Party to obtain and keep in effect one or more control agreements in Deposit Accounts, Electronic Chattel Paper, Investment Property and Letter-of-Credit Rights Collateral. Such control agreements shall only be required if, in the reasonable discretion of the Secured Party, the nature of the Collateral requires any such control agreements in order for the Secured Party to perfect its security interests in any Collateral as granted hereunder, and in such event, the Debtors shall promptly provide any such control agreements upon request from the Secured Party. In addition, the Debtors, at the Debtors expense, shall promptly: (A) execute all notices of security interest for each relevant type of Software and other General Intangibles in forms suitable for filing with any United States or foreign office handling the registration or filing of patents, trademarks, copyrights and other intellectual property and any successor office or agency thereto; and (B) take all commercially reasonable steps in any hearing, suit, action, or other proceeding before any such office or any similar office or agency in any other country or any political subdivision thereof, to diligently prosecute or maintain, as applicable, each application and registration of any Software, General Intangibles or any other intellectual property rights and assets that are part of the Collateral, including filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings.
3REPRESENTATIONS AND WARRANTIES.
The Debtors make the following representations and warranties to Secured Party:
3.1Debtors Organization and Name. Each Debtor is a corporation or limited liability company, duly organized, existing and in good standing under the laws of its State of organization, with full and adequate power to carry on and conduct its business as presently conducted. The Debtors are duly licensed or qualified in all foreign jurisdictions wherein the nature of its activities requires such qualification or licensing. Each Debtor’s Organizational Identification Number, if applicable, is set forth in the Purchase Agreement. The exact legal names of the Debtors are as set forth in the first paragraph of this Security Agreement, and the Debtors currently do not conduct, nor has it during the last five (5) years conducted, business under any other name or trade name.
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3.2Authorization. The Debtors have full right, power and authority to enter into this Security Agreement and to perform all of its duties and obligations under this Security Agreement. The execution and delivery of this Security Agreement and the other Transaction 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 articles of incorporation, bylaws, operating agreement, or other governing documents of the Debtors. All necessary and appropriate action has been taken on the part of the Debtors to authorize the execution and delivery of this Security Agreement.
3.3Validity and Binding Nature. This Security Agreement is the legal, valid and binding obligation of the Debtors, enforceable against the Debtors in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors' rights generally and to general principles of equity.
3.4Consent; Absence of Breach. The execution, delivery and performance of this Security Agreement and any other documents or instruments to be executed and delivered by the Debtors in connection herewith, do not and will not to the knowledge of the Debtors: (a) require any consent, approval, authorization, or filings with, notice to or other act by or in respect of, any governmental authority or any other Person (other than filings or notices pursuant to federal or state securities laws or other than any consent or approval which has been obtained and is in full force and effect); (b) conflict with: (i) any provision of law or any applicable regulation, order, writ, injunction or decree of any court or governmental authority; (ii) the articles of incorporation, bylaws, or other organic or governance document of the Debtors; or (iii) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon the Debtors or any of its properties or assets; or (c) require, or result in, the creation or imposition of any Lien on any asset of the Debtors, other than Liens in favor of Secured Party created pursuant to this Security Agreement and Permitted Liens.
3.5Ownership of Collateral; Liens. The Debtors are the sole owners of all the Collateral, free and clear of all Liens, charges and claims (including infringement claims with respect to patents, trademarks, service marks, copyrights and other intellectual property rights), other than Permitted Liens.
3.6Adverse Circumstances. No condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding (or threatened litigation or proceeding or basis therefor) exists which to the knowledge of the Debtors: (i) would have a Material Adverse Effect upon the Debtors; or (ii) would constitute an Event of Default or an Unmatured Event of Default.
3.7Security Interest. This Security Agreement creates a valid security interest in favor of Secured Party in the Collateral and, when properly perfected by filing in the appropriate jurisdictions, or by possession or control of such Collateral by Secured Party or delivery of such Collateral to Secured Party, shall constitute a valid, perfected, first-priority security interest in such Collateral.
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3.8Place of Business. The principal place of business and books and records of the Debtors are set forth in the preamble to this Security Agreement, and the location of all Collateral, if other than at such principal place of business, is as set forth on Schedule 3.8 attached hereto and made a part hereof, and the Debtors shall promptly notify Secured Party of any change in such locations. The Debtors will not remove or permit the Collateral to be removed from such locations without the prior written consent of Secured Party, except as permitted pursuant to the Purchase Agreement.
3.9Complete Information. This Security Agreement and all financial statements, schedules, certificates, confirmations, agreements, contracts, and other materials and information heretofore or contemporaneously herewith furnished in writing by the Debtors to Secured Party for purposes of, or in connection with, this Security Agreement and the transactions contemplated hereby is, and all written information hereafter furnished by or on behalf of the Debtors to Secured Party pursuant hereto or in connection herewith will be, true and accurate in every material respect on the date as of which such information is dated or certified, and none of such information is or will be incomplete by omitting to state any material fact necessary to make such information not misleading in light of the circumstances under which made (it being recognized by Secured Party that any projections and forecasts provided by the Debtors are based on good faith estimates and assumptions believed by the Debtors to be reasonable as of the date of the applicable projections or assumptions and that actual results during the period or periods covered by any such projections and forecasts may differ from projected or forecasted results).
4REMEDIES.
Upon the occurrence of any default in the payment or performance of any of the covenants, conditions and agreements contained in this Security Agreement or any other Event of Default, Secured Party shall have all rights, powers and remedies set forth in this Security Agreement or the other Transaction Documents or in any other written agreement or instrument relating to any of the Obligations or any security therefor, as a secured party under the UCC or as otherwise provided at law or in equity. Without limiting the generality of the foregoing, Secured Party may, at its option upon the occurrence of an Event of Default, declare its commitments to the Debtors to be terminated and all Obligations to be immediately due and payable, or, if provided in the Transaction Documents, all commitments of Secured Party to the Debtors shall immediately terminate and all Obligations shall be automatically due and payable, all without demand, notice or further action of any kind required on the part of Secured Party. The Debtors hereby waive any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in connection with the enforcement of Secured Party’s rights under the Transaction Documents, and hereby consents to, and waives notice of release, with or without consideration, of any Collateral, notwithstanding anything contained herein or in the Transaction Documents to the contrary. In addition to the foregoing:
4.1Possession and Assembly of Collateral. Secured Party may, without notice, demand or the initiation of legal process of any kind, take possession of any or all of the Collateral (in addition to Collateral of which Secured Party already has possession), wherever it may be found, and for that purpose may pursue the same wherever it may be
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found, and may at any time enter into any of the Debtors 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 Secured Party shall have the right to store and conduct a sale of the same in any of the Debtors premises without cost to Secured Party. At Secured Party’s request, the Debtors will, at the Debtors sole expense, assemble the Collateral and make it available to Secured Party at a place or places to be designated by Secured Party which is reasonably convenient to Secured Party and the Debtors.
4.2Sale of Collateral. Secured Party may sell any or all of the Collateral at public or private sale, upon such terms and conditions as Secured Party may deem proper, and Secured Party may purchase any or all of the Collateral at any such sale. The Debtors acknowledges that 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 Debtors consent 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. Secured Party shall have no obligation to clean-up or otherwise prepare the Collateral for sale. Secured Party may apply the net proceeds, after deducting all costs, expenses, attorneys’ and paralegals’ fees incurred or paid at any time in the collection, protection and sale of the Collateral and the Obligations, to the payment of the Obligations, returning the excess proceeds, if any, to the Debtors. The Debtors shall remain liable for any amount remaining unpaid after such application, with interest at the default rate under the Debentures. Any notification of intended disposition of the Collateral required by law shall be conclusively deemed reasonably and properly given if given by Secured Party at least ten (10) calendar days before the date of such disposition. The Debtors hereby confirm, approve and ratify all acts and deeds of 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 Secured Party or its representatives, by reason of taking, selling or collecting any portion of the Collateral. The Debtors consent 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 Secured Party shall deem appropriate. The Debtors expressly absolve Secured Party from any loss or decline in market value of any Collateral by reason of delay in the enforcement or assertion or non-enforcement of any rights or remedies under this Security Agreement.
4.3Standards for Exercising Remedies. To the extent that applicable law imposes duties on Secured Party to exercise remedies in a commercially reasonable manner, The Debtors acknowledge and agree that it is not commercially unreasonable for Secured Party: (i) to incur reasonable expenses deemed necessary by Secured Party to prepare Collateral for disposition or otherwise to complete raw material or work-in-process into finished goods or other finished products for disposition; (ii) 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; (iii) to fail to exercise collection remedies against any of its customer or other Persons obligated on Collateral or to remove liens or
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encumbrances on or any adverse claims against Collateral; (iv) to exercise collection remedies against any of its customers and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists; (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature; (vi) to contact other Persons, whether or not in the same business as the Debtors, for expressions of interest in acquiring all or any portion of the Collateral; (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature; (viii) 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; (ix) to dispose of assets in wholesale rather than retail markets; (x) to disclaim disposition warranties, including any warranties of title; (xi) to purchase insurance or credit enhancements to insure Secured Party against risks of loss, collection or disposition of Collateral or to provide to Secured Party a guaranteed return from the collection or disposition of Collateral; or (xii) to the extent deemed appropriate by Secured Party, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Secured Party in the collection or disposition of any of the Collateral. The Debtors acknowledge that the purpose of this section is to provide non-exhaustive indications of what actions or omissions by Secured Party would not be commercially unreasonable in Secured Party’s exercise of remedies against the Collateral and that other actions or omissions by 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 Debtors or to impose any duties on Secured Party that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section.
4.4UCC and Offset Rights. Secured Party may exercise, from time to time, any and all rights and remedies available to it 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 Security Agreement or in any other agreements between any Obligor and Secured Party, and may, without demand or notice of any kind, appropriate and apply toward the payment of such of the Obligations, whether matured or unmatured, including costs of collection and attorneys’ and paralegals’ fees and costs, and in such order of application as Secured Party may, from time to time, elect, any indebtedness of 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 Secured Party. The Debtors, on behalf of itself and any Obligor, hereby waives the benefit of any law that would otherwise restrict or limit Secured Party in the exercise of its right, which is hereby acknowledged, to appropriate at any time hereafter any such indebtedness owing from Secured Party to any Obligor.
4.5Additional Remedies. Upon the occurrence of an Event of Default, Secured Party shall have the right and power to:
(a)instruct the Debtors, at their own expense, to notify any parties obligated on any of the Collateral, including any of its customers and of Debtors payment processing
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service providers, to make payment directly to Secured Party of any amounts due or to become due thereunder, or Secured Party may directly notify such obligors of the security interest of Secured Party, and/or of the assignment to Secured Party of the Collateral and direct such obligors to make payment to Secured Party of any amounts due or to become due with respect thereto, and thereafter, collect any such amounts due on the Collateral directly from such Persons 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 Capital Securities which may constitute Collateral into the name of Secured Party or Secured Party’s nominee without disclosing, if Secured Party so desires, that such Capital Securities so transferred are subject to the security interest of Secured Party, and any corporation, association, or any of the managers or trustees of any trust issuing any of such Capital Securities, or any transfer agent, shall not be bound to inquire, in the event that Secured Party or such nominee makes any further transfer of such Capital Securities, or any portion thereof, as to whether Secured Party or such nominee has the right to make such further transfer, and shall not be liable for transferring the same;
(g)vote the Collateral;
(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 Bankruptcy Code; provided, however, that any such action of Secured Party as set forth herein shall not, in any manner whatsoever, impair or affect the liability of the Debtors hereunder, nor prejudice, waive, nor be construed to impair, affect, prejudice or waive Secured Party’s rights and remedies at law, in equity or by statute, nor release, discharge, nor be construed to release or discharge, the Debtors, any guarantor or other Person liable to 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 Security Agreement, the Transaction Documents, or any of the other Obligations, or Secured Party’s rights hereunder, under the Obligations.
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The Debtors hereby ratify and confirm whatever Secured Party may do with respect to the Collateral and agrees that Secured Party shall not be liable for any error of judgment or mistakes of fact or law with respect to actions taken in connection with the Collateral.
4.6Attorney-in-Fact. The Debtors hereby irrevocably make, constitute and appoint Secured Party (and any officer of Secured Party or any Person designated by Secured Party for that purpose) as the Debtors true and lawful proxy and attorney-in-fact (and agent-in-fact) in the Debtors name, place and stead, with full power of substitution, to: (i) take such actions as are permitted in this Security Agreement; (ii) execute such financing statements and other documents and to do such other acts as Secured Party may require to perfect and preserve Secured Party’s security interest in, and to enforce such interests in the Collateral; and (iii) upon the occurrence of an Event of Default, carry out any remedy provided for in this Security Agreement, the Debentures, the Purchase Agreement, or otherwise at law or in equity, including endorsing the Debtors 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 Debtors, changing the address of the Debtors to that of Secured Party, opening all envelopes addressed to the Debtors and applying any payments contained therein to the Obligations, and changing any merchant accounts or instructions to the Debtors payment processing service providers regarding any credit/debit card payments from any of its customers. The Debtors hereby acknowledge that the constitution and appointment of such proxy and attorney-in-fact are coupled with an interest and are irrevocable. The Debtors hereby ratify and confirm all that such attorney-in-fact may do or cause to be done by virtue of any provision of this Security Agreement.
4.7No Marshaling. Secured Party shall not be required to marshal any present or future collateral security (including this Security 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 Debtors hereby agree that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of Secured Party’s rights under this Security 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 Debtors hereby irrevocably waive the benefits of all such laws.
4.8No Waiver. No Event of Default shall be waived by Secured Party except in writing. No failure or delay on the part of Secured Party 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 Secured Party to exercise any remedy available to 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 Debtors
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agree that in the event that the Debtors fail to perform, observe or discharge any of its Obligations or liabilities under this Security Agreement or any other agreements with Secured Party, no remedy of law will provide adequate relief to Secured Party, and further agrees that Secured Party shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.
4.9 Application of Proceeds. Secured Party will, within three (3) Business Days after receipt of cash or solvent credits from collection of items of payment, proceeds of Collateral or any other source, apply the whole or any part thereof against the Obligations secured hereby. Secured Party shall further have the exclusive right to determine how, when and what application of such payments and such credits shall be made on the Obligations, and such determination shall be conclusive upon the Debtors. Any proceeds of any disposition by Secured Party of all or any part of the Collateral may be first applied by Secured Party to the payment of expenses incurred by Secured Party in connection with the Collateral, including reasonable attorneys’ fees and legal expenses and costs as provided for in Section 5.14 hereof.
5MISCELLANEOUS.
5.1Entire Agreement. This Security Agreement and the other Transaction Documents: (i) are valid, binding and enforceable against the Debtors and Secured Party in accordance with their respective provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof; and (iii) are the final expression of the intentions of the Debtors and Secured Party. No promises, either expressed or implied, exist between the Debtors and Secured Party, unless contained herein or therein. This Security Agreement, together with the other Transaction 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 Security Agreement and the other Transaction Documents. This Security Agreement and the other Transaction Documents are the result of negotiations between Secured Party and the Debtors and have been reviewed (or have had the opportunity to be reviewed) by counsel to all such parties, and are the products of all parties. Accordingly, this Security Agreement and the other Transaction Documents shall not be construed more strictly against Secured Party merely because of Secured Party's involvement in their preparation. THE DEBTORS ACKNOWLEDGE THAT IT HAS NOT RELIED UPON ANY STATEMENTS, PROMISES OR REPRESENTATIONS, IF ANY, THAT ARE NOT CONTAINED WITHIN THIS SECURITY AGREEMENT OR IN ANY OTHER THE TRANSACTION DOCUMENT AND WAIVES ANY RIGHTS, DEFENSES, OR CLAIMS ARISING FROM ANY SUCH STATEMENTS, PROMISES OR REPRESENTATIONS.
5.2Amendments; Waivers. No delay on the part of Secured Party in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by Secured Party of any right, power or remedy preclude other or further
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exercise thereof, or the exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision of this Security Agreement or the other Transaction Documents shall in any event be effective unless the same shall be in writing and acknowledged by 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.
5.3WAIVER OF CLAIMS AND DEFENSES. THE DEBTORS WAIVE EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE DEBTORS MAY NOW HAVE AS OF THE DATE HEREOF, OR AS IT MAY IN THE FUTURE COME TO HAVE, TO ANY ACTION BY SECURED PARTY IN ENFORCING THIS SECURITY AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS -- OTHER THAN FOR SET OFF TO ESTABLISH THE AMOUNTS DUE AND PAID IN RESPECT OF THE DEBENTURES. THE DEBTORS UNDERSTAND AND AGREES THAT IT IS WAIVING DEFENSES AND CLAIMS WHICH MAY NOT YET HAVE ACCRUED OR OF WHICH IT MAY NOT YET BE AWARE AS MATERIAL INDUCEMENT FOR SECURED PARTY ENTERING THIS SECURITY AGREEMENT AND GRANTING ANY FINANCIAL ACCOMMODATION TO THE DEBTORS. THIS PROVISION IS INTENDED TO BE CONSTRUED AS BROADLY AS PERMISSIBLE UNDER APPLICABLE LAW. FURTHER, THE DEBTORS UNDERSTAND AND ACKNOWLEDGE THAT THE AGENTS AND REPRESENTATIVES OF THE SECURED PARTY DO NOT HAVE AUTHORITY TO MAKE ANY STATEMENTS, PROMISES OR REPRESENTATIONS IN CONFLICT WITH OR IN ADDITION TO THE INFORMATION CONTAINED IN THIS SECURITY AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND SECURED PARTY HEREBY SPECIFICALLY DISCLAIMS ANY RESPONSIBILITY FOR ANY SUCH STATEMENTS, PROMISES OR REPRESENTATIONS. BY EXECUTION OF THIS AGREEMENT, THE DEBTORS ACKNOWLEDGE THAT IT HAS NOT RELIED UPON SUCH STATEMENTS, PROMISES OR REPRESENTATIONS, IF ANY, AND WAIVES ANY RIGHTS, DEFENSES, OR CLAIMS ARISING FROM ANY SUCH STATEMENTS, PROMISES OR REPRESENTATIONS.
5.4MANDATORY FORUM SELECTION. TO INDUCE SECURED PARTY TO MAKE CERTAIN FINANCIAL ACCOMODATIONS TO THE DEBTORS, THE DEBTORS IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS SECURITY AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS SECURITY AGREEMENT ANY OTHER TRANSACTION DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT) SHALL, EXCEPT AS HEREINAFTER PROVIDED, BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, SECURED PARTY MAY, AT SECURED
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PARTY’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. THE DEBTORS HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING IT SITUS IN SUCH COUNTY (OR TO ANY JURISDICTION OR VENUE, IF SECURED PARTY SO ELECTS), AND THE DEBTORS HEREBY WAIVE ANY OBJECTION BASED ON FORUM NON CONVENIENS.
5.5WAIVER OF PERSONAL SERVICE. THE DEBTORS HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY FEDERAL EXPRESS, DIRECTED TO THE DEBTORS, AS SET FORTH AND ACCORDING TO THE TERMS IN THE NOTICE PROVISIONS HEREIN. THE DEBTORS AGREE THAT NO ACKNOWLEDGMENT OF ACTUAL RECEIPT OF PROCESS IS REQUIRED AND SERVICE WILL BE DEEMED EFFECTIVE PURSUANT TO TERMS OF NOTICE PROVISIONS CONTAINED HEREIN. SERVICE MAY ALSO BE MADE IN ANY MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.
5.6WAIVER OF JURY TRIAL. THE DEBTORS AND SECURED PARTY, 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 SECURITY AGREEMENT, ANY NOTE, ANY OTHER TRANSACTION 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 SECURED PARTY AND THE DEBTORS 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 SECURED PARTY GRANTING ANY FINANCIAL ACCOMMODATION TO THE DEBTORS.
5.7Assignability. Secured Party, without consent from or notice to anyone, may at any time assign Secured Party’s rights in this Security Agreement, the other Transaction Documents, the Obligations, or any part thereof and transfer Secured Party’s rights in any or all of the Collateral, and Secured Party thereafter shall be relieved from all liability with respect to such Collateral. This Security Agreement shall be binding upon Secured Party and the Debtors and its respective legal representatives and successors. All references herein to the Debtors shall be deemed to include any successors, whether
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immediate or remote. In the case of a joint venture or partnership, the term “Debtors” shall be deemed to include all joint venturers or partners thereof, who shall be jointly and severally liable hereunder.
5.8Binding Effect. This Security Agreement shall become effective upon execution by the Debtors and Secured Party, and shall bind the Debtors and Secured Party, and their respective successors and permitted assigns.
5.9Governing Law. Except in the case of the Mandatory Forum Selection Clause in Section 5.4 above, which clause shall be governed and interpreted in accordance with Florida law, this Security Agreement shall be delivered and accepted in and shall be deemed to be a contract made under and governed by the internal laws of the State of Wyoming, and for all purposes shall be construed in accordance with the laws of such State, without giving effect to the choice of law provisions of such State.
5.10Enforceability. Wherever possible, each provision of this Security Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Security 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 Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
5.11Time of Essence. Time is of the essence in making payments of all amounts due Secured Party under the Transaction Documents and in the performance and observance by the Debtors of each covenant, agreement, provision and term of this Security Agreement and the other Transaction Documents.
5.12Counterparts; Facsimile Signatures. This Security 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 Security Agreement. Receipt of an executed signature page to this Security Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof. Electronic records of executed Transaction Documents maintained by Secured Party shall be deemed to be originals thereof.
5.13Notices. Except as otherwise provided herein, the Debtors waive all notices and demands in connection with the enforcement of Secured Party’s rights hereunder. All notices, requests, demands and other communications provided for hereunder shall be made in accordance with the terms of the Purchase Agreement.
5.14Costs, Fees and Expenses. The Debtors shall pay or reimburse Secured Party for all reasonable costs, fees and expenses incurred by Secured Party or for which Secured Party becomes obligated in connection with the enforcement or defense of this Security Agreement, including search fees, costs and expenses and attorneys’ fees, costs and time charges of counsel to Secured Party and all taxes payable in connection with this
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Security Agreement. In furtherance of the foregoing, the Debtors shall pay any and all stamp and other taxes, UCC search fees, filing fees and other costs and expenses in connection with the execution and delivery of this Security Agreement and the other Transaction Documents to be delivered hereunder, and agrees to save and hold Secured Party harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such costs and expenses. That portion of the Obligations consisting of costs, expenses or advances to be reimbursed by the Debtors to Secured Party pursuant to this Security Agreement or the other Transaction Documents which are not paid on or prior to the date hereof shall be payable by the Debtors to Secured Party on demand. If at any time or times hereafter Secured Party: (a) employs counsel for advice or other representation: (i) with respect to this Security Agreement or the other Transaction Documents; (ii) to represent Secured Party in any litigation, contest, dispute, suit or proceeding or to commence, defend, or intervene or to take any other action in or with respect to any litigation, contest, dispute, suit, or proceeding (whether instituted by Secured Party, the Debtors, or any other Person) in any way or respect relating to this Security Agreement; or (iii) to enforce any rights of Secured Party against the Debtors or any other Person under of this Security Agreement; (b) takes any action to protect, collect, sell, liquidate, or otherwise dispose of any of the Collateral; and/or (c) attempts to or enforces any of Secured Party’s rights or remedies under this Security Agreement, the costs and expenses incurred by Secured Party in any manner or way with respect to the foregoing, shall be part of the Obligations, payable by the Debtors to Secured Party on demand.
5.15Termination. This Security Agreement and the Liens and security interests granted hereunder shall not terminate until the termination of the Purchase Agreement and the commitments to make Loans thereunder and the full and complete performance and satisfaction and payment in full of all the Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted). Upon termination of this Security Agreement, Secured Party shall also timely deliver to the Debtors (at the sole expense of the Debtors) such UCC termination statements, certificates for terminating the liens on the Motor Vehicles (if any) and such other documentation, without recourse, warranty or representation whatsoever, as shall be reasonably requested by the Debtors to effect the termination and release of the Liens and security interests in favor of Secured Party affecting the Collateral; provided, however, to the extent any such terminations or releases require Secured Party to expend any sums in terminating or releasing any such Liens, Secured Party may refrain from terminating or releasing such Liens unless and until the Debtors pay to Secured Party the estimated cost, as reasonably and promptly determined by Secured Party, of effectuating such terminations or releases.
5.16Reinstatement. This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against the Debtors for liquidation or reorganization, should the Debtors become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of the Debtors assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
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otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
5.17Increase in Obligations. It is the intent of the parties to secure payment of the Obligations, as the amount of such Obligations may increase from time to time in accordance with the terms and provisions of the Transaction Documents, and all of the Obligations, as so increased from time to time, shall be and are secured hereby. Upon the execution hereof, the Debtors shall pay any and all documentary stamp taxes and/or other charges required to be paid in connection with the execution and enforcement of the Transaction Documents, and if, as and to the extent the Obligations are increased from time to time in accordance with the terms and provisions of the Transaction Documents, then the Debtors shall immediately pay any additional documentary stamp taxes or other charges in connection therewith.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Debtors and Secured Party have executed this Security Agreement as of the date first above written.
Debtors:
BEYOND COMMERCE, INC.
By:__________________________
Name: Geordan Pursglove
Title: Chief Executive Officer
STATE OF ____________)
SS.
COUNTY OF ____________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, the Chief Executive Officer of Beyond Commerce, Inc., a Nevada corporation, who is personally known to me to be the same person whose name is subscribed to the foregoing, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
[Signature Page to Security Agreement (Issuer)]
Debtors:
TCA BEYOND COMMERCE, LLC
By:__________________________
Name: Carlos Sandino
Title: Manager
STATE OF ____________)
SS.
COUNTY OF ____________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Carlos Sandino, a Manager of TCA Beyond Commerce, LLC, a Wyoming limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said limited liability company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
[Signature Page to Security Agreement (Issuer)]
IN WITNESS WHEREOF, Debtor and Secured Party have executed this Security Agreement as of the date first above written.
Agreed and accepted:
Secured Party:
TCA SPECIAL SITUATIONS CREDIT STRATEGIES ICAV
By: ______________________________
Name:
Title:
[Signature Page – Security Agreement (Issuer)]
Schedule 3.8
Collateral Locations/Places of Business
3773 Howard Hughes Pkwy, Suite 500
Las Vegas, NV 89169
EXHIBIT A
CONVERTIBLE PROMISSORY NOTE
$350,000December 31, 2019
FOR VALUE RECEIVED, TCA BEYOND COMMERCE, LLC (“Maker”), whose address is 19950 West Country Club Drive Aventura, FL 33180, promises to pay to the order of SHANNON GRONEMEYER (“Holder”) at 14850 Madison St NE, Ham Lake, Minnesota, 55304, or such other place as the Holder may designate in writing, the principal amount of Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00) plus interest accruing at the rate of Five (5%) percent per annum on the unpaid balance of the principal sum from the date of this Note until the Note is paid in full or converted in accordance with the terms hereof (the “Note”).
1.Definitions. As used in this Promissory Note (“Note”), the following terms shall have the following meanings:
a.Calendar Quarter. Each calendar year is divided into four (4) quarters, commencing on January 1, April 1, July 1 and October 1, with each period between the commencement of such a quarter and the last day of such quarter is a “Calendar Quarter.”
b.Effective Date. The “Effective Date” is the date first written at the top of page 1 of this Note.
c.Governmental Body. A “Governmental Body” is any foreign, federal, state, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof or any court or arbitrator.
d.Cash Maturity Date. The “Cash Maturity Date” is December 31, 2022.
e.Conversion Maturity Date. If all of the Original Conversion Principal has not been converted into shares of the common stock of Beyond Commerce, Inc. (a Nevada entity) (the “Company”), the parent of Maker, as provided herein, then all outstanding Conversion Principal and accrued interest thereon shall be converted on the Cash Maturity Date as provided for in Section 3(b) below, such date being the “Conversion Maturity Date.”
f.Obligations. Maker’s “Obligations” mean and include any and all indebtedness, liabilities and obligations due or to become due, now existing or hereafter arising of Maker in favor of Holder, including without limitation the Principal Balance, all interest accrued thereon and any additional fee or penalty arising hereunder.
g.Original Cash Principal. The “Original Cash Principal” is One Hundred Seventy-Five Thousand and No/100 ($175,000)
h.Original Conversion Principal. The “Original Conversional Principal” is One Hundred Seventy-Five Thousand and No/100 ($175,000), which may be increased at Holder’s option pursuant to Section 3 below.
i.Party; Parties. The Holder and Maker are collectively referred to herein as the “parties,”
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each individually a “party.”
g.Person. A “Person” is any individual, firm, corporation, limited liability company, business enterprise, trust, association, joint venture, partnership or other entity, whether acting in an individual, fiduciary or other capacity.
h.Principal Balance. The “Principal Balance” is the total unpaid principal balance of this Note that is outstanding from time to time, which consists of the remaining balance outstanding of both the Original Cash Principal and the Original Conversion Principal.
2. Cash Payments; Prepayment; Subordination
a. Interest Only Payments. Commencing on the 15th day of the first month of the first (1st) Calendar Quarter following the Effective Date (plus any accrued interest for the time period after the Effective Date and the start of the first Calendar Quarter) and continuing on the 15th day of the first month of each of the next three (3) consecutive Calendar Quarters, Maker shall make interest only payments on the Original Cash Principal in the amount of $2,187.50_.
b.Interest and Principal Payments. Commencing on the 15th day of the first month fifth (5th ) Calendar Quarter following the Effective Date and continuing on the 15th day of the first month of each of the next seven (7) consecutive Calendar Quarters, Maker shall make equal payments of Original Cash Principal and interest accrued thereon in the amount of $__23,032.48________.
c.Maturity. Any remaining amount of the Original Cash Principal and interest accrued thereon is fully due and payable on the Cash Maturity Date.
d.No Prepayment Penalty on Cash Principal. Notwithstanding the foregoing, Maker may prepay, in whole or in part, any of the Original Cash Principal or interest accrued thereon. The Maker acknowledges that Holder’s conversion right hereunder is a material inducement for making this loan and, therefore, Maker shall have no right to prepay any portion of the Conversion Principal.
e.Subordination. Maker’s obligations under this Section 2, including all payments of the Original Cash Principal and interest accrued thereon, is subordinate to the obligations Maker owes to its institutional lenders.
3. Conversion.
a.Conversion Upon Call. On or before the Conversion Maturity Date, at the sole option of Holder, if before the Conversion Maturity Date and by written notification to the Maker (“Notice”), the unpaid Original Conversion Principal and all interest accrued thereon, shall be converted into such number of the Company’s shares of common stock (“Stock”) which are derived by dividing the amount of the Original Conversion Principal and interest accrued thereon or the balance of the Original Conversion Principal that has not been converted thus far by Holder by the Company’s share price on the Notice date based on a ten day trailing average of the Company’s share price (Symbol: BYOC).
b.Conversion Upon Maturity. Unless earlier converted hereunder, then on or within no more than ten days following the Conversion Maturity Date, the unconverted Original Conversion Principal and all interest accrued thereon, shall be converted into such number of the Company’s shares of common stock (“Stock”) which are derived by dividing the amount of the unconverted Original Conversion Principal and interest accrued thereon by the Company’s share price on Conversion
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Maturity Date based on a ten day trailing average of the Company’s share price (Symbol: BYOC).
c.Mechanics of Conversion. Upon receipt of the Notice or on the Conversion Maturity Date, as the case may be, the Company shall issue Stock to Holder and reflect such issuance on the Company’s company books and records. Holder agrees to execute any documents as are customary for purchasers of shares of the Company’s common stock. If Maker’s obligation to pay Cash Principal and interest thereon have been fully satisfied as of the date of conversion under this Section 3, then upon conversion Holder shall deliver to Maker the original Note.
4.Events of Default, Acceleration and Remedies
a.Events of Default. The occurrence of any of the following shall constitute an “Event of Default” under the this Note:
i. The failure to pay any installment of interest when due;
ii. The failure to pay any installment of principal and interest when due;
iii. The failure to pay the remaining balance of principal and any accrued interest when due any maturity date provided herein;
iv. The failure to perform any nonmonetary obligation contained herein after 30 days opportunity to cure;
v. The occurrence of any one of the following:
1.Maker's insolvency; or
2.The general assignment of Maker’s assets for the benefit of any creditor; or
3.The filing of bankruptcy or the appointment of a trustee or receiver to manage Maker’s business or assets and such preceding is not discharged or cancelled within sixty days (60) of such filing or appointment; or
4.The entry of any order or consent decree by any Governmental Body against Maker or any of Maker’s board members, officers, or managers, which materially affects Maker’s ability to perform its obligations under this Note.
b. Acceleration. Upon the occurrence of any Event of Default, the Obligations, including without limitation all Principal Balance and all accrued and unpaid interest thereon at that time outstanding, shall automatically and immediately mature and become due and payable without notice or demand and without presentment, protest or notice, all of which hereby are expressly waived by Maker.
c. Remedies. Upon the occurrence of any Event of Default, Holder, at its sole option, may
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enforce or cause to be enforced any of the rights or remedies accorded to Holder (i) under this Note and (ii) at equity or law, by virtue of statute or otherwise.
5. Notice. Any notice, payment, demand or communication required or permitted to be given by the provisions of this Note shall be made in writing and deemed to have been effectively given and received on the date personally delivered or delivered by FedEx to the respective party to whom it is directed, or three (3) days after the date when deposited by registered or certified mail, with postage and charges prepaid and addressed to such party at the address written in the introductory paragraph of this Note, or at such other address(es) as the parties may communicate to one other in writing.
7.Miscellaneous.
a.Waivers. Maker hereby waives presentment for payment, protest and demand and notice of protest, demand, dishonor, nonpayment, intent to accelerate and acceleration of this Note, and expressly agrees that this Note, or any payment hereunder, may be extended from time to time before, at or after maturity, without in any way affecting the liability of Maker hereunder. The failure or delay by Holder to insist upon strict adherence to any provision of this Note in one or more instances shall not be considered a waiver thereof in any of such instances or any other instances, or deprive it of the right thereafter to insist upon strict adherence to that provision or any other provision of this Note.
b.Modifications. This Note may only be amended by an instrument in writing signed by the party against whom enforcement of the change or amendment is sought.
c.Authority. The Maker has full authority to enter into this Note, has received all necessary consents from its governing authority to so enter, is not violating any term or condition of any agreement or obligation or any rule or law, regulation or court or administrative order, and the undersigned has been vested with actual authority to bind Maker and act on Maker’s behalf.
d.Successors and Assigns. This Note shall be binding upon Maker and upon Maker’s heirs, administrators, successors and assigns, and shall inure to the benefit of Holder and his heirs, administrators, successors and assigns. Maker may not assign this Note to a third party without the prior written consent of Holder.
e.Severability. In the event that any provision hereof shall be deemed to be invalid by reason of the operation of any law, or by reason of the interpretation placed thereon by any court or any Governmental Body, this Note shall be construed as not containing such provision and the invalidity of such provision shall not affect the validity of any other provisions hereof, and any and all other provisions hereof which otherwise are lawful and valid shall remain in full force and effect.
f.Time of the Essence. Time for the performance of the Obligations under this Note is of the essence.
g.Costs of Enforcement. Maker promises to pay attorney's fees and costs incurred by Holder in collection and/or enforcement of the Note or any part hereof, including in any proceeding under the United States Bankruptcy code, and, in the event of court action, all costs, attorneys' fees and such additional sums as the court may adjudge.
h.Governing Law. This Note shall be construed in accordance with and governed by the laws and decisions of the State of Nevada.
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i.Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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| MAKER |
| TCA BEYOND COMMERCE, LLC |
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| _________________________________ |
| By: |
| Its: |
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| HOLDER |
| Shannon Gronemeyer |
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| COMPANY |
| BEYOND COMMERCE, INC. (Solely as to Sections 1, 3, and 4(b)) |
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| ______________________________ |
| By: |
| Its: |
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”) is dated and effective as of December 31, 2019 (the “Effective Date”), by and between BEYOND COMMERCE, INC., a corporation incorporated under the laws of the State of Nevada (referred to herein as “BYOC” and a “Company”) and TCA BEYOND COMMERCE, LLC, a limited liability company organized and existing under the laws of the State of Wyoming (referred to herein as “TCA Beyond”, a “Company” and together with BYOC, the “Companies”), and TCA SPECIAL SITUATIONS CREDIT STRATEGIES ICAV, an Irish collective asset vehicle (the “Buyer”).
WHEREAS, Buyer desires to purchase, for the total purchase price of Seven Hundred Thousand No/100 United States Dollars ($900,000.00) from the Companies, and the Companies desire to sell and issue to Buyer, upon the terms and subject to the conditions contained herein, a senior secured, redeemable debenture in the amount of Seven Hundred Thousand No/100 United States Dollars ($900,000.00) (the “Initial Debenture” and together with any other debentures sold hereunder, the “Debentures” each in the form attached hereto as Exhibit A) (the “First Closing”); additionally, debentures in amounts Buyer and the Companies may mutually agree upon may be purchased in additional closings as set forth in Section 4.2 below (the “Additional Closings”) (each of the First Closing and the Additional Closings, if any, are sometimes hereinafter individually referred to as a “Closing” and collectively as the “Closings”), all subject to the terms and provisions hereinafter set forth;
WHEREAS, the Companies, Geordan Pursglove (“G. Pursglove” and a “Personal Guarantor”); PathUX, LLC, a limited liability company organized and existing under the laws of the State of Delaware (“PathUX”, and a “Guarantor”); Customer Centered Strategies, LLC, a Minnesota limited liability company (“CCS” and a “Guarantor”) and Service 800, Inc., a corporation incorporated under the laws of the State of Minnesota (“Service 800”, a “Guarantor”, together with PathUX, CCS and Service 800, the “Corporate Guarantors” and together with the Companies and any other person or entity to hereafter become a guarantor or party hereunder, collectively, the “Credit Parties”), have each agreed to secure all of the Companies’ Obligations to Buyer under the Debentures, this Agreement and all other Transaction Documents by granting to the Buyer an unconditional and continuing security interest in all of the assets and properties of the Companies and the Guarantors, whether now existing or hereafter acquired, pursuant to those certain Security Agreements, each dated as of the date hereof (in the forms attached hereto as Exhibit B, the “Security Agreements”);
WHEREAS, the Guarantors will receive a substantial benefit from the Buyer’s purchase of the Debentures and, as such, have agreed to guarantee all of the Obligations of the Companies under the Debentures, this Agreement and all other Transaction Documents pursuant to those certain Guaranty Agreements, dated as of the date hereof (in the forms attached hereto as Exhibit C-1 and C-2, the “Guaranty Agreements”); and
WHEREAS, as security for the payment and performance of any and all of the Companies’ Obligations to Buyer under the Debentures, this Agreement and all other Transaction Documents, the Pledgors (as defined herein) have agreed to execute those certain
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Pledge Agreements in favor of Buyer, dated as of the date hereof (in the form attached hereto as Exhibit D, the “Pledge Agreements”), whereby (i) BYOC shall pledge to the Buyer all of BYOC’s right, title and interest in and to, and provide a first priority lien and security interest on, certain issued and outstanding shares of capital stock or membership interests, as applicable, of TCA Beyond, PathUX and Service 800, and (ii) TCA Beyond shall pledge to the Buyer all of TCA Beyond’s right, title and interest in and to, and provide a first priority lien and security interest on, certain issued 100% of the membership interests of CCS.
NOW, THEREFORE, in consideration of the premises and the mutual covenants of the parties hereinafter expressed and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, each intending to be legally bound, agree as follows:
ARTICLE I
RECITALS, EXHIBITS, SCHEDULES
The foregoing recitals are true and correct and, together with the Schedules and Exhibits referred to hereafter, are hereby incorporated into this Agreement by this reference.
ARTICLE II
DEFINITIONS
For purposes of this Agreement, except as otherwise expressly provided or otherwise defined elsewhere in this Agreement, or unless the context otherwise requires, the capitalized terms in this Agreement shall have the meanings assigned to them in this Article as follows:
2.1“Affiliate” means, with respect to a Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person at any time during the period for which the determination of affiliation is being made. For purposes of this definition, the term “control,” “controlling,” “controlled” and words of similar import, when used in this context, means, with respect to any Person, the possession, directly or indirectly, of the power to direct, or cause the direction of, management policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
2.2“Affirmation and Compliance Certificate” means that certain affirmation and compliance certificate executed by an officer of each of the Companies in the form attached hereto as Exhibit E.
2.3“Assets” means all of the properties and assets of the Person in question, as the context may so require, whether real, personal or mixed, tangible or intangible, wherever located, whether now owned or hereafter acquired.
2.4“Business Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which federal banks are authorized or required to be closed for the conduct of commercial banking business.
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2.5“Capital Lease” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person as lessee that is, or should be, in accordance with Financial Accounting Standards Board Statement No. 13, as amended from time to time, or, if such Statement is not then in effect, such statement of GAAP as may be applicable, recorded as a “capital lease” on the balance sheets of any Credit Party prepared in accordance with GAAP.
2.6“CCS Purchase Agreement” shall mean that certain Membership Interest Purchase Agreement, dated as of the date hereof, among CCS, Shannon Gronemeyer, and TCA Beyond.
2.7“Claims” means any Proceedings, Judgments, Obligations, threats, losses, damages, deficiencies, settlements, assessments, charges, costs and expenses of any nature or kind.
2.8“Collateral” shall have the meaning given to it in the Security Agreements.
2.9“Consent” means any consent, approval, order or authorization of, or any declaration, filing or registration with, or any application or report to, or any waiver by, or any other action (whether similar or dissimilar to any of the foregoing) of, by or with, any Person, which is necessary in order to take a specified action or actions, in a specified manner and/or to achieve a specific result.
2.10“Contract” means any written or oral contract, agreement, order or commitment of any nature whatsoever, including, any sales order, purchase order, lease, sublease, license agreement, services agreement, loan agreement, mortgage, security agreement, guarantee, management contract, employment agreement, consulting agreement, partnership agreement, shareholders agreement, buy-sell agreement, option, warrant, debenture, subscription, call or put.
2.11“Credit Party(ies)” shall have the meaning given to it in the recitals hereof.
2.12“DACA” shall mean a deposit account control agreement among BYOC, the Buyer and BYOC’s deposit bank, dated as of the Effective Date, in a form reasonably satisfactory to the Buyer.
2.13"Discover Subordination Agreement" means that certain Subordination Agreement, dated as of the date hereof, among Buyer, BYOC, and Discover Growth Fund, LLC.
2.14
2.15“Debentures” shall have the meaning given to it in the preamble hereof.
2.16“Effective Date” means the date so defined in the introductory paragraph of this Agreement.
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2.17“Encumbrance” means any lien, security interest, pledge, mortgage, easement, leasehold, assessment, tax, covenant, restriction, reservation, conditional sale, prior assignment, or any other encumbrance, claim, burden or charge of any nature whatsoever.
2.18“Environmental Requirements” means all Laws and requirements relating to human health, safety or protection of the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, or Hazardous Materials in the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata), or otherwise relating to the treatment, storage, disposal, transport or handling of any Hazardous Materials.
2.19“Exempt Issuance” shall mean (i) the issuance of shares of common stock of BYOC, restricted stock units or options (and common Stock of BYOC issued upon exercise of such options) pursuant to any employment agreement or consulting agreement or any stock or option plan or employee stock purchase plan adopted by the independent directors of BYOC; (ii) any issuance of securities upon the exercise, exchange or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of common stock of BYOC issued and outstanding on the Effective Date; and (iii) any issuance of common stock of BYOC bearing a restrictive legend issued pursuant to a private placement without the involvement of any placement agent or other registered broker-dealers; provided that the shares issued are for a value not in excess of $1,500,000 in any six month period and the issuance is not undertaken for a price less than a 25% discount to the then current market price of the common stock of BYOC.
2.20“GAAP” means generally accepted accounting principles, methods and practices set forth 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 of such other Person as may be approved by a significant segment of the U.S. accounting profession, in each case as of the date or period at issue, and as applied in the U.S. to a U.S. company.
2.21“Governmental Authority” means any foreign, federal, state or local government, or any political subdivision thereof, or any court, agency or other body, organization, group, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial, regulatory or administrative function of government.
2.22"Gronemeyer Subordination Agreement" means that certain Subordination Agreement, dated as of the date hereof, among Buyer, BYOC, TCA Beyond, and Shannon Gronemeyer.
2.23“Guaranty Agreements” shall have the meaning given to it in the recitals hereof.
2.24“Guarantors” shall have the meaning given to it in the recitals hereof.
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2.25“Hazardous Materials” means: (i) any chemicals, materials, substances or wastes which are now or hereafter become defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants” or words of similar import, under any Law; and (iii) any other chemical, material, substance, or waste, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental Authority.
2.26“Judgment” means any order, writ, injunction, fine, citation, award, decree, or any other judgment of any nature whatsoever of any Governmental Authority.
2.27“Law” means any provision of any law, statute, ordinance, code, constitution, charter, treaty, rule or regulation of any Governmental Authority.
2.28“Leases” means all leases for real or personal property.
2.29“Lien” shall mean, with respect to any Person, any mortgage, pledge, hypothecation, judgment lien or similar legal process, title retention lien, or other lien, security interest or encumbrance of any nature or kind granted by such Person or arising by judicial process or otherwise, including the interest of a vendor under any conditional sale or other title retention agreement and the interest of a lessor under a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by such Person as lessee that is, or should be, a Capital Lease on the balance sheet of such Person prepared in accordance with GAAP.
2.30“Material Adverse Effect” shall mean: (i) a material adverse change in, or a material adverse effect upon, the Assets, business, properties, financial condition or results of operations of the Companies; (ii) a material impairment of the ability of the Companies to perform any of its Obligations under any of the Transaction Documents; (iii) a material adverse effect on: (A) any material portion of the “Collateral” (as such term is defined in the Security Agreements); (B) the legality, validity, binding effect or enforceability against the Credit Parties of any of the Transaction Documents; (C) the perfection or priority of any Encumbrance granted to Buyer under any Transaction Documents; or (D) the rights or remedies of the Buyer under any of the Transaction Documents. For purposes of determining whether any of the foregoing changes, effects, impairments, or other events have occurred, such determination shall be made by Buyer, in its sole, but reasonably exercised, discretion.
2.31“Material Contract” shall mean any Contract to which a Company is a party or by which a Company or any of its Assets are bound and which: (i) must be disclosed to any Governmental Authority or any other laws, rules or regulations of any Governmental Authority; (ii) involves aggregate payments of Twenty-Five Thousand Dollars ($25,000) or more to or from a Company; (iii) involves delivery, purchase, licensing or provision, by or to a Company, of any goods, services, assets or other items having a value (or potential value) over the term of such Contract of Twenty-Five Thousand Dollars ($25,000) or more or is otherwise material to the conduct of either Company’s business as now conducted and as contemplated to be conducted in the future; (iii) involves a Credit Party Lease; (iv) imposes any guaranty, surety or
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indemnification obligations on a Company; or (v) prohibits a Company from engaging in any business or competing anywhere in the world.
2.32“Obligation” means, now existing or in the future, any debt, liability or obligation of any nature whatsoever (including any required performance of any covenants or agreements), whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated, accrued, voluntary or involuntary, direct or indirect, absolute, fixed, contingent, ascertained, unascertained, known, unknown, whether or not jointly owed with others, whether or not from time to time decreased or extinguished and later decreased, created or incurred, or obligations existing or incurred under this Agreement, the Debentures or any other Transaction Documents, or any other agreement between any of the Credit Parties and the Buyer, as such obligations may be amended, supplemented, converted, extended or modified from time to time.
2.33“Ordinary Course of Business” means the ordinary course of business of the Person in question, consistent with past custom and practice (including with respect to quantity, quality and frequency).
2.34“Permit” means any license, permit, approval, waiver, order, authorization, right or privilege of any nature whatsoever, granted, issued, approved or allowed by any Governmental Authority.
2.35“Permitted Liens” shall mean: (i) Liens for Taxes, assessments or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which adequate reserves are maintained in accordance with GAAP and in respect of which no Lien has been filed; (ii) Liens of carriers, warehousemen, mechanics and materialmen arising in the Ordinary Course of Business; (iii) Liens in the form of deposits or pledges incurred in connection with worker’s compensation, unemployment compensation and other types of Social Security (excluding Liens arising under ERISA or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being contested in good faith by appropriate Proceedings and not involving any advances or borrowed money or the deferred purchase price of property or services, which do not in the aggregate materially detract from the value of the property or assets of the Credit Parties taken as a whole or materially impair the use thereof in the operation of the Credit Parties’ business and, in each case, for which adequate reserves are maintained in accordance with GAAP and in respect of which no Lien has been filed; (iv) Liens described in the Financial Statements and acceptable to Buyer in its sole and absolute discretion, and the replacement, extension or renewal of any such Lien upon or in the same property subject thereto arising out of the extension, renewal or replacement of the indebtedness secured thereby (without an increase in the amount thereof and without expansion of such Liens upon any other property); (v) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding Fifty Thousand and No/100 United States Dollars (US$50,000.00) arising in connection with court Proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate Proceedings, and only to the extent such judgments or awards do not otherwise constitute an Event of Default; (vi) zoning and similar restrictions on the use of property and easements, rights of way, restrictions, minor defects or
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irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Credit Parties; (vii) Liens arising in connection with Capital Leases (and attaching only to the property being leased); (viii) Liens that constitute purchase money security interests on any property securing indebtedness incurred for the purpose of financing all or any part of the cost of acquiring such property, provided that any such Lien attaches to such property within sixty (60) days of the acquisition thereof and attaches solely to the property so acquired; (ix) Liens granted to Buyer hereunder and under the Transaction Documents; (x) any interest or title of a lessor, sublessor, licensor or sublicensor under any lease or non-exclusive license permitted by this Agreement; (xi) Liens arising from precautionary UCC financing statements filed under any lease permitted by this Agreement; and (xii) banker’s Liens and rights of set-off of financial institutions arising in connection with items deposited in accounts maintained at such financial institutions and subsequently unpaid and unpaid fees and expenses that are charged to the Credit Parties by such financial institutions in the Ordinary Course of Business of the maintenance and operation of such accounts.
2.36“Person” means any individual, sole proprietorship, joint venture, partnership, company, corporation, association, cooperation, trust, estate, Governmental Authority, or any other entity of any nature whatsoever.
2.37“Pledge Agreements” shall have the meaning given to it in the recitals hereof.
2.38“Pledged Companies” shall mean TCA Beyond, PathUX, Service 800 and CCS.
2.39“Pledgors” shall mean BYOC and TCA Beyond.
2.40“Proceeding” means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative hearing, or any other proceeding of any nature whatsoever.
2.41“Real Property” means any real estate, land, building, structure, improvement, fixture or other real property of any nature whatsoever, including, but not limited to, fee and leasehold interests.
2.42“Securities” means the Debentures.
2.43“Securities Act” means the Securities Act of 1933, as amended.
2.44“Security Agreements” shall have the meaning given to it in the recitals hereof.
2.45“Tax” means (i) any foreign, federal, state or local income, profits, gross receipts, franchise, sales, use, occupancy, general property, real property, personal property, intangible property, transfer, fuel, excise, accumulated earnings, personal holding company, unemployment compensation, social security, withholding taxes, payroll taxes, or any other tax of any nature whatsoever, (ii) any foreign, federal, state or local organization fee, qualification fee, annual report fee, filing fee, occupation fee, assessment, rent, or any other fee or charge of
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any nature whatsoever, or (iii) any deficiency, interest or penalty imposed with respect to any of the foregoing.
2.46“Tax Return” means any tax return, filing, declaration, information statement or other form or document required to be filed in connection with or with respect to any Tax.
2.47“Transaction Documents” means this Agreement any and all documents or instruments executed or to be executed by any Credit Party in connection with this Agreement, including the Debentures, the Security Agreements, the Guaranty Agreements, the Use of Proceeds Confirmation, the Pledge Agreements, the DACA, the Discover Subordination Agreement, the Gronemeyer Subordination Agreement, the CCS Purchase Agreement and the Validity Certificates, together with all modifications, amendments, extensions, future advances, renewals, and substitutions thereof.
2.48“Use of Proceeds Confirmation” means that certain use of proceeds confirmation executed by an officer of each Company in the form attached hereto as Exhibit F.
2.49“Validity Certificate(s)” shall mean that certain validity certificate executed by Geordan Pursglove, officers and/or managers of the Credit Parties, in the form of which is attached hereto as Exhibit G.
ARTICLE III
INTERPRETATION
In this Agreement, unless the express context otherwise requires: (i) the words “herein,” “hereof” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement; (ii) references to the words “Article” or “Section” refer to the respective Articles and Sections of this Agreement, and references to “Exhibit” or “Schedule” refer to the respective Exhibits and Schedules annexed hereto; (iii) references to a “party” mean a party to this Agreement and include references to such party’s permitted successors and permitted assigns; (iv) references to a “third party” mean a Person not a party to this Agreement; (v) references to the words “share” or “shareholder”, if in reference to a Company, shall refer to “units” or “unitholder” respectively and (v) the terms “dollars” and “$” means U.S. dollars; (vi) wherever the word “include,” “includes” or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation”.
This Agreement is a commercial lending and financial services agreement and pre-supposes that each of the Credit Parties is sophisticated commercial entity or actor, together with their principals, officers, and beneficiaries. Each provision of this Agreement is subject to negotiation because each provision represents a monetary value. All provisions should be read and understood, and special attention should be paid to those provisions in bold or all-caps.
ARTICLE IV
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PURCHASE AND SALE OF DEBENTURES
4.1Purchase and Sale of Debentures. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, Buyer agrees to purchase, at each Closing, and the Companies agree to sell and issue to Buyer, at each Closing, Debentures in the amount of the purchase price applicable to each Closing as more specifically set forth below.
4.2Closing Dates. The First Closing of the purchase and sale of the Debentures shall be for Nine Hundred Thousand and No/100 United States Dollars ($900,000), and shall take place on the Effective Date, subject to satisfaction of the conditions to the First Closing set forth in this Agreement (the “First Closing Date”). Additional Closings of the purchase and sale of the Debentures shall be at such times and for such amounts as determined in accordance with Section 4.4 below, subject to satisfaction of the conditions to the Additional Closings set forth in this Agreement (the “Additional Closing Dates”) (collectively, with the First Closing Date, referred to as the “Closing Dates”). The Closings shall occur on the respective Closing Dates in Wyoming, at the offices of Lucosky Brookman LLP, counsel to Buyer, or in such other manner as is mutually agreed to by the Companies and the Buyer.
4.3Form of Payment. Subject to the satisfaction of the terms and conditions of this Agreement, on each Closing Date: (i) the Buyer shall deliver to the Companies, to an account designated by the Companies, the aggregate proceeds for the Debentures to be issued and sold to Buyer at each such Closing, minus the fees to be paid directly from the proceeds of each such Closing as set forth in this Agreement, in the form of wire transfers of immediately available U.S. dollars; and (ii) the Companies shall deliver to Buyer the Securities which Buyer is purchasing hereunder at each Closing, duly executed on behalf of the Companies, together with any other documents required to be delivered pursuant to this Agreement.
4.4Additional Closings. At any time after the First Closing but prior to the maturity date of any of the Debentures issued in the First Closing, the Companies may request that Buyer purchase additional Debentures hereunder in Additional Closings by written notice to Buyer, and, subject to the conditions below, Buyer shall purchase such additional Debentures in such amounts and at such times as Buyer and the Companies may mutually agree, (i) so long as no default or “Event of Default” (as such term is defined in any of the Transaction Documents) shall have occurred or be continuing under this Agreement or any other Transaction Documents, and no event shall have occurred that, with the passage of time, the giving of notice, or both, would constitute a default or an Event of Default hereunder or thereunder; (ii) the aggregate amount of Debentures purchased hereunder shall not exceed Five Million and No/100 United States Dollars ($5,000,000); and (iii) any additional purchase of Debentures beyond the purchase of Debentures at the First Closing shall have been approved by Buyer, which approval may be given or withheld in Buyer’s sole and absolute discretion.
ARTICLE V
BUYER’S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to the Companies, that:
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5.1Investment Purpose. Buyer is acquiring the Securities for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.
5.2Accredited Buyer Status. Buyer is an “accredited investor” as that term is defined in Rule 501 of Regulation D, as promulgated under the Securities Act of 1933.
5.3Reliance on Exemptions. Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Companies are relying in part upon the truth and accuracy of, and Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of Buyer to acquire the Securities.
5.4Information. Buyer and its advisors, if any, have been furnished with all materials they have requested relating to the business, finances and operations of the Companies and information Buyer deemed material to making an informed investment decision regarding its purchase of the Securities. Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Companies and their management. Neither such inquiries, nor any materials provided to Buyer, nor any other due diligence investigations conducted by Buyer or its advisors, if any, or its representatives, shall modify, amend or affect Buyer’s right to fully rely on the Companies representations and warranties contained in Article VI below. Buyer understands that its investment in the Securities involves a high degree of risk. Buyer is in a position regarding the Companies, which, based upon economic bargaining power, enabled and enables Buyer to obtain information from the Companies in order to evaluate the merits and risks of this investment. Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
5.5No Governmental Review. Buyer understands that no United States federal or state Governmental Authority has passed on or made any recommendation or endorsement of the Securities, or the fairness or suitability of the investment in the Securities, nor have such Governmental Authorities passed upon or endorsed the merits of the offering of the Securities.
5.6Authorization, Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of Buyer, meaning it has been authorized, executed and delivered by an agent of the Buyer with proper corporate authority to do so, and is a valid and binding agreement of Buyer, enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
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To induce the Buyer to purchase the Securities, the Credit Parties, as applicable make the following representations and warranties to Buyer, each of which shall be true and correct in all respects as of the date of the execution and delivery of this Agreement and as of the date of each Closing hereunder, and which shall survive the execution and delivery of this Agreement:
6.1Subsidiaries. A list of all of each Company’s Subsidiaries, direct and indirect, is set forth in Schedule 6.1 hereto.
6.2Organization. Each Credit Party, that is not a natural person, is a corporation, limited liability company, or other form of legally recognized entity, as applicable, duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated, and has the full power and authority and all necessary certificates, licenses, approvals and Permits to: (i) enter into and execute this Agreement and the Transaction Documents and to perform all of its Obligations hereunder and thereunder; and (ii) own and operate its Assets and properties and to conduct and carry on its business as and to the extent now conducted. Each Credit Party is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the character of its business or the ownership or use and operation of its Assets or properties requires such qualification. The exact legal name of the Credit Parties is as set forth in the preamble to this Agreement, and the Credit Parties do not currently conduct, nor have the Credit Parties, during the last five (5) years conducted, business under any other name or trade name.
6.3Authority and Approval of Agreement; Binding Effect. The execution and delivery by Credit Parties of this Agreement and the Transaction Documents, and the performance by each Credit Party of all of its Obligations hereunder and thereunder, including the issuance of the Securities, have been duly and validly authorized and approved by each Credit Party and, as applicable, its board of directors, stockholders, members, managers or partners pursuant to all applicable Laws and no other action or Consent on the part of any Credit Party, its board of directors, managers, stockholders members, partners or any other Person is necessary or required by any Credit Parties to execute this Agreement and the Transaction Documents, consummate the transactions contemplated herein and therein, perform all Obligations hereunder and thereunder, or to issue the Securities. This Agreement and each of the Transaction Documents have been duly and validly executed by the applicable Credit Parties party thereto (and the officer executing this Agreement and all such other Transaction Documents is duly authorized to act and execute same on behalf of each Credit Party) and constitute the valid and legally binding agreements of the Credit Parties, enforceable against each Credit Party in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.
6.4Capitalization. The authorized capital stock or other capitalization, as applicable, of each Credit Party that is not a natural person, is set forth in Schedule 6.4 attached hereto. All of such outstanding shares or other securities of each such Credit Party are validly issued, fully paid and non-assessable and have been issued in compliance with all foreign,
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federal and state securities laws and none of such outstanding shares or other securities were issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. As of the Effective Date, no shares of capital stock or other securities of any Credit Party are subject to preemptive rights or any other similar rights or any Claims or Encumbrances suffered or permitted by such Credit Party. Except for the Securities to be issued pursuant to this Agreement and as set forth in BYOC’s filings with the SEC, as of the Effective Date: (i) there are no outstanding debt securities, notes, credit agreements, credit facilities or other Contracts or instruments evidencing indebtedness of the Credit Party, or by which a Credit Party is or may become bound; (ii) there are no outstanding registration statements with respect to any Credit Party or any of its securities; (iii) there are no agreements or arrangements under which a Credit Party is obligated to register the sale of any of their securities under the Securities Act (except pursuant to this Agreement); (iv) there are no financing statements securing obligations filed in connection with the Credit Parties or any of their Assets; (v) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by this Agreement or any related agreement or the consummation of the transactions described herein or therein; and (vi) there are no outstanding securities or instruments of a Credit Party which contain any redemption or similar provisions, and there are no Contracts by which a Credit Party is or may become bound to redeem a security of said Credit Party. The Credit Parties have furnished to the Buyer true, complete and correct copies of: each Credit Party’s respective articles of incorporation (including any certificates of designation, as applicable), bylaws, operating agreement, partnership agreement, certificate of organization or similar organizational and governing documents (the “Organizational Documents”). Except for the Organizational Documents or as disclosed in BYOC’s filings with the SEC or contained in the Transaction Documents, there are no other shareholder agreements, voting agreements or other Contracts of any nature or kind that restrict, limit or in any manner impose Obligations on the governance of any Credit Party.
6.5No Conflicts; Consents and Approvals. The execution, delivery and performance of this Agreement and the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, including the issuance of any of the Securities, will not: (i) constitute a violation of or conflict with the Organizational Documents of the Credit Parties, that is not a natural person; (ii) to the knowledge of the Credit Parties, constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, or gives to any other Person any rights of termination, amendment, acceleration or cancellation of, any provision of any Contract to which any Credit Party is a party or by which any of its Assets or properties may be bound; (iii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, any Judgment; (iv) constitute a violation of, or conflict with, any Law (including United States federal and state securities Laws); or (v) to the knowledge of the Credit Parties, result in the loss or adverse modification of, or the imposition of any fine, penalty or other Encumbrance with respect to, any Permit granted or issued to, or otherwise held by or for the use of, any Credit Party or any of its Assets. The Credit Parties are not in violation of any Credit Parties’ Organizational Documents and the Credit Parties are not in default or breach (and no event has occurred which with notice or lapse of time or both could put any Credit Party in default or breach) under, and the Credit Parties have not taken any action or failed to take any action that would give to any other Person any rights of termination, amendment,
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acceleration or cancellation of, any Contract to which any Credit Party is a party or by which any property or Assets of the Credit Parties are bound or affected. The businesses of the Credit Parties are not being conducted, and shall not be conducted so long as Buyer owns any of the Securities, in violation of any Law. Except as specifically contemplated by this Agreement, no Credit Party is required to obtain any Consent of, from, or with any Governmental Authority, or any other Person, in order for it to execute, deliver or perform any of its Obligations under this Agreement or the Transaction Documents in accordance with the terms hereof or thereof, or to issue and sell the Securities in accordance with the terms hereof. All Consents which any Credit Party is required to obtain pursuant to the immediately preceding sentence have been obtained or effected on or prior to the date hereof. The Credit Parties are not aware of any facts or circumstances which might give rise to any of the foregoing.
6.6Issuance of Securities. The Securities are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and non-assessable, and, other than restrictions on transferability, free from all Encumbrances with respect to the issue thereof, and will be issued in compliance with all applicable United States federal and state securities Laws.
6.7Financial Statements. Each Company has delivered to the Buyer an audited consolidated Balance Sheet and Statement of Income for fiscal year ending 2018, and an unaudited consolidated Balance Sheet and Statement of Income as of September 30, 2019 (collectively, the “Financial Statements”). The Financial Statements have been prepared in accordance with GAAP, consistently applied, during the periods involved (except: (i) as may be otherwise indicated in such Financial Statements or the notes thereto; or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements), and fairly and accurately present in all material respects the consolidated financial position of each Company and its Subsidiaries as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). To the best knowledge of the Companies, no other information provided by or on behalf of each Company and its Subsidiaries to the Buyer, either as a disclosure schedule to this Agreement, or otherwise in connection with Buyer’s due diligence investigation of the Companies and its Subsidiaries, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading.
6.8Absence of Certain Changes. Since the date of the most recent of the Financial Statements, none of the following have occurred:
(a)There has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect; or
(b)Any transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by the Credit Parties other than in the Credit Parties’ Ordinary Course of Business.
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6.9Absence of Litigation or Adverse Matters. No condition, circumstance, event, agreement, document, instrument, restriction, litigation or Proceeding (or threatened litigation or Proceeding or basis therefor) exists which: (i) could adversely affect the validity or priority of the Encumbrances granted to the Buyer under the Transaction Documents; (ii) could adversely affect the ability of any Credit Party to perform its Obligations under the Transaction Documents; (iii) would constitute a default under any of the Transaction Documents; (iv) would constitute such a default with the giving of notice or lapse of time or both; or (v) would constitute or give rise to a Material Adverse Effect. In addition: (vi) there is no Proceeding before or by any Governmental Authority or any other Person, pending, or to the best of each Credit Party’s knowledge, threatened or contemplated by, against or affecting any Credit Party, its business or Assets; (vii) there is no outstanding Judgment against or affecting any Credit Party, its business or Assets; (viii) no Credit Party is in breach or violation of any Material Contract; and (ix) no Credit Party has received any material complaint from any customer, supplier, vendor or employee.
6.10Liabilities and Indebtedness of the Credit Parties. The Credit Parties do not have any Obligations of any nature whatsoever, except: (i) as disclosed in the Financial Statements or which have been disclosed in writing to the Buyer; or (ii) Obligations incurred in the Ordinary Course of Business since the date of the most recent Financial Statements which do not or would not, individually or in the aggregate, exceed Ten Thousand Dollars ($10,000) or otherwise have a Material Adverse Effect; or (iii) Obligations owed to the Buyer.
6.11Title to Assets. Each Credit Party has good and marketable title to, or a valid leasehold interest in, all of its Assets which are material to the business and operations of such Credit Party as presently conducted free and clear of all Encumbrances or restrictions on the transfer or use of same. Except as would not have a Material Adverse Effect, each Credit Party’s Assets are in good operating condition and repair, ordinary wear and tear excepted, and are free of any latent or patent defects which might impair their usefulness, and are suitable for the purposes for which they are currently used and for the purposes for which they are proposed to be used.
6.12Real Estate.
(a)Real Property Ownership. Except for the Credit Party Leases and as set forth on Schedule 6.12, the Credit Parties that are not natural persons do not own any Real Property.
(b)Real Property Leases. Except for ordinary office Leases disclosed to the Buyer in writing prior to the date hereof (the “Credit Party Leases”), the Credit Parties that are not natural persons do not lease any other Real Property. With respect to each of the Credit Party Leases: (i) the Credit Parties have been in peaceful possession of the property leased thereunder and neither the Credit Parties nor the landlord is in default thereunder; (ii) no waiver, indulgence or postponement of any of the Obligations thereunder has been granted by the Credit Parties or landlord thereunder; and (iii) there exists no event, occurrence, condition or act known to the officers or directors of Credit Parties which, upon notice or lapse of time or both, would be or could become a default thereunder or which could result in the termination of
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the Credit Party Leases, or any of them, or have a Material Adverse Effect on the business of any Credit Party, its Assets or its operations or financial results. The Credit Parties have not violated nor breached any provision of any such Credit Party Leases, and all Obligations required to be performed by the Credit Parties under any of such Credit Party Leases have been fully, timely and properly performed. The Credit Parties have delivered to the Buyer true, correct and complete copies of all Credit Party Leases, including all modifications and amendments thereto, whether in writing or otherwise. The Credit Parties have not received any written or oral notice to the effect that any of the Credit Party Leases will not be renewed at the termination of the term of such Credit Party Leases, or that any of such Credit Party Leases will be renewed only at higher rents.
6.13Material Contracts. An accurate, current and complete copy of each of the Material Contracts has been furnished to Buyer, and each of the Material Contracts constitutes the entire agreement of the respective parties thereto relating to the subject matter thereof. There are no outstanding offers, bids, proposals or quotations made by any Credit Party which, if accepted, would create a Material Contract with any Credit Party. Each of the Material Contracts is in full force and effect and is a valid and binding Obligation of the parties thereto in accordance with the terms and conditions thereof. To the knowledge of each Credit Party and its officers, all Obligations required to be performed under the terms of each of the Material Contracts by any party thereto have been fully performed by all parties thereto, and no party to any Material Contracts is in default with respect to any term or condition thereof, nor has any event occurred which, through the passage of time or the giving of notice, or both, would constitute a default thereunder or would cause the acceleration or modification of any Obligation of any party thereto or the creation of any Encumbrance upon any of the Assets of the Credit Parties. Further, no Credit Party has received notice, nor does any Credit Party have any knowledge, of any pending or contemplated termination of any of the Material Contracts and, no such termination is proposed or has been threatened, whether in writing or orally.
6.14Compliance with Laws. To the knowledge of each Credit Party and its officers, each Credit Party is and at all times has been in full compliance with all applicable Laws. No Credit Party has received any notice that it is in violation of, has violated, or is under investigation with respect to, or has been threatened to be charged with, any violation of any applicable Law.
6.15Intellectual Property. The Credit Parties own or possess adequate and legally enforceable rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and all other intellectual property rights necessary to conduct its business as now conducted (collectively, the “IP Rights”). All IP Rights, and any federal, state, local or foreign patent and trademark office, or functional equivalent thereof where any such IP Rights may be filed or registered, is set forth in Schedule 6.15. All of the IP Rights are owned by the Credit Parties, except for IP Rights licensed by the Credit Parties, which licensed IP Rights are specifically outlined and described in Schedule 6.15. If any IP Rights are licensed by any Credit Party, the underlying license agreement or other agreement pursuant to which such IP Rights are licensed (collectively, the “License Agreements”), permits Buyer to encumber such License Agreements without any further consent or approval of any
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other Person, including the underlying owner of such IP Rights, such that if there was an Event of Default and Buyer foreclosed on all Collateral, Buyer would have the right to use such IP Rights under the License Agreements, subject only to Buyer’s obligation to comply with the terms of such License Agreements. The Credit Parties do not have any knowledge of any infringement by any Credit Party of any IP Rights of others, and, to the knowledge of the Credit Parties, there is no claim, demand or Proceeding, or other demand of any nature being made or brought against, or to any Credit Party’s knowledge, being threatened against, any Credit Party regarding IP Rights or other intellectual property infringement; and is the Credit Parties are not aware of any facts or circumstances which might give rise to any of the foregoing. Notwithstanding anything contained in this Section to the contrary, the representations made in this Section are deemed to be made to the best knowledge of the Credit Parties.
6.16Labor and Employment Matters. The Credit Parties are not involved in any labor dispute or, to the knowledge of each Credit Party, is any such dispute threatened. To the knowledge of each Credit Party and its officers, none of the employees of any Credit Party is a member of a union and each Credit Party believes that its relations with its employees are good. To the knowledge of each Credit Party and its officers, the Credit Parties have complied in all material respects with all Laws relating to employment matters, civil rights and equal employment opportunities.
6.17Employee Benefit Plans. Except as disclosed to the Buyer in writing prior to the date hereof or as disclosed in the Company’s filings with the SEC, the Credit Parties do not have and have not ever maintained, and have no Obligations with respect to any employee benefit plans or arrangements, including employee pension benefit plans, as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), multiemployer plans, as defined in Section 3(37) of ERISA, employee welfare benefit plans, as defined in Section 3(1) of ERISA, deferred compensation plans, stock option plans, bonus plans, stock purchase plans, hospitalization, disability and other insurance plans, severance or termination pay plans and policies, whether or not described in Section 3(3) of ERISA, in which employees, their spouses or dependents of the Credit Parties participate (collectively, the “Employee Benefit Plans”). To each Credit Party’s knowledge, all Employee Benefit Plans meet the minimum funding standards of Section 302 of ERISA, where applicable, and each such Employee Benefit Plan that is intended to be qualified within the meaning of Section 401 of the Internal Revenue Code of 1986 is qualified. No withdrawal liability has been incurred under any such Employee Benefit Plans and no “Reportable Event” or “Prohibited Transaction” (as such terms are defined in ERISA), has occurred with respect to any such Employee Benefit Plans, unless approved by the appropriate Governmental Authority. To each Credit Party’s knowledge, the Credit Parties have promptly paid and discharged all Obligations arising under ERISA of a character which if unpaid or unperformed might result in the imposition of an Encumbrance against any of its Assets or otherwise have a Material Adverse Effect.
6.18Tax Matters. Each Credit Party has made and timely filed all Tax Returns required by any jurisdiction to which it is subject, and each such Tax Return has been prepared in compliance with all applicable Laws, and all such Tax Returns are true and accurate in all respects. Except and only to the extent that each Credit Party has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported Taxes, each
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Credit Party has timely paid all Taxes shown or determined to be due on such Tax Returns, except those being contested in good faith, and each Credit Party has set aside on its books provision reasonably adequate for the payment of all Taxes for periods subsequent to the periods to which such Tax Returns apply. There are no unpaid Taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of each Credit Party know of no basis for any such claim. The Credit Parties have withheld and paid all Taxes to the appropriate Governmental Authority required to have been withheld and paid in connection with amounts paid or owing to any Person. There is no Proceeding or Claim for refund now in progress, pending or threatened against or with respect to any Credit Party regarding Taxes.
6.19Insurance. The Companies and the Corporate Guarantors are each covered by valid, outstanding and enforceable policies of insurance which were issued to each by reputable insurers of recognized financial responsibility, covering its properties, Assets and businesses against losses and risks normally insured against by other corporations or entities in the same or similar lines of businesses as the Credit Parties are engaged and in coverage amounts which are prudent and typically and reasonably carried by such other corporations or entities (the “Insurance Policies”). Such Insurance Policies are in full force and effect, and all premiums due thereon have been paid. None of the Insurance Policies will lapse or terminate as a result of the transactions contemplated by this Agreement. The Credit Parties have complied with the provisions of such Insurance Policies. The Credit Parties have not been refused any insurance coverage sought or applied for and the Credit Parties do not have any reason to believe that it will not be able to renew its existing Insurance Policies as and when such Insurance Policies expire or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Credit Parties.
6.20Permits. The Credit Parties possess all Permits necessary to conduct their businesses, and no Credit Party has received any notice of, or is otherwise involved in any Proceedings relating to, the revocation or modification of any such Permits. All such Permits are valid and in full force and effect and the Credit Parties are in full compliance with the respective requirements of all such Permits.
6.21Bank Accounts; Business Location. Schedule 6.21 sets forth, with respect to each account of the Credit Parties that are not natural persons with any bank, broker or other depository institution: (i) the name and account number of such account; (ii) the name and address of the institution where such account is held; (iii) the name of any Person(s) holding a power of attorney with respect to such account, if any; and (iv) the names of all authorized signatories and other Persons authorized to withdraw funds from each such account. The Credit Parties have no office or place of business other than as identified on Schedule 6.21 and each of the Credit Party’s principal places of business and chief executive offices are indicated on Schedule 6.21. All books and records of the Credit Parties and other material Assets of the Credit Parties are held or located at the principal offices of the Credit Parties indicated on Schedule 6.21.
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6.22Environmental Laws. Except as are used in such amounts as are customary in the Ordinary Course of Business of the Credit Parties and in compliance with all applicable Environmental Laws, each Credit Party represents and warrants to Buyer that: (i) no Credit Party has generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or off any of the premises of the Credit Parties (whether or not owned by the Credit Parties) in any manner which at any time violates any Environmental Law or any Permit, certificate, approval or similar authorization thereunder; (ii) the operations of the Credit Parties comply in all material respects with all Environmental Laws and all Permits certificates, approvals and similar authorizations thereunder; (iii) there has been no investigation, Proceeding, complaint, order, directive, Claim, citation or notice by any Governmental Authority or any other Person, nor is any pending or, to the each Credit Party’s knowledge, threatened; and (iv) the Credit Parties do not have any liability, contingent or otherwise, in connection with a release, spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Material.
6.23Illegal Payments. Neither the Credit Parties, nor any director, officer, agent, employee or other Person acting on behalf of the Credit Parties has, in the course of his actions for, or on behalf of, the Credit Parties: (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
6.24Related Party Transactions. Except as disclosed in the Company’s filings with the SEC and except for arm’s length transactions pursuant to which the Credit Parties make payments in the Ordinary Course of Business upon terms no less favorable than the Credit Parties could obtain from third parties, none of the officers, directors or employees of the Credit Parties, nor any stockholders who own, legally or beneficially, five percent (5%) or more of the ownership interests of the Credit Parties (each a “Material Shareholder”), is presently a party to any transaction with the Credit Parties (other than for services as employees, officers and directors), including any Contract providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from, any officer, director or such employee or Material Shareholder or, to the best knowledge of the Credit Parties, any other Person in which any officer, director, or any such employee or Material Shareholder has a substantial or material interest in or of which any officer, director or employee of the Credit Parties or Material Shareholder is an officer, director, trustee or partner. There are no Claims or disputes of any nature or kind between the Credit Parties and any officer, director or employee of the Credit Parties or any Material Shareholder, or between any of them, relating to each Credit Party and its business.
6.25Internal Accounting Controls. Except as disclosed in the Company’s filings with the SEC, each Credit Party, that is not a natural person, maintains a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed
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in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to Assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for Assets is compared with the existing Assets at reasonable intervals and appropriate action is taken with respect to any differences.
6.26Acknowledgment Regarding Buyer’s Purchase of the Securities. Each Credit Party acknowledges and agrees that Buyer is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. Each Credit Party further acknowledges that (i) Buyer is not acting as a financial advisor or fiduciary of the Credit Parties (or in any similar capacity) with respect to this Agreement notwithstanding any other advisory or investment banking relationship with Buyer or any party related thereto, (ii) the transactions contemplated hereby and any advice given by Buyer or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to Buyer’s purchase of the Securities and (iii) no Credit Party has relied on, nor are relying on, any fiduciary relationship with the Buyer in executing this Agreement or any other Transaction Document. The Credit Parties further represent to Buyer that each Credit Party’s decision to enter into this Agreement has been based solely on the independent evaluation such Credit Party and their respective representatives.
6.27Seniority. Indebtedness or other equity or security of the Credit Parties is senior to the Debentures in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, except only purchase money security interests (which are senior only as to underlying Assets covered thereby).
6.28Brokerage Fees. There is no Person acting on behalf of the Credit Parties who is entitled to or has any claim for any brokerage or finder’s fee or commission in connection with the execution of this Agreement or the consummation of the transactions contemplated hereby.
6.29No General Solicitation. Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or issuance of the Securities.
6.30No Integrated Offering. Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the Securities under the Securities Act or cause this offering of such securities to be integrated with prior offerings by the Credit Parties for purposes of the Securities Act.
6.31Private Placement. No registration under the Securities Act or the laws, rules or regulation of any other governmental authority is required for the issuance of the Securities.
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6.32Full Disclosure. All the representations and warranties made by the Credit Parties herein or in the Schedules hereto, and all of the financial statements, schedules, certificates, confirmations, agreements, contracts, and other materials submitted to the Buyer in connection with or in furtherance of this Agreement or pertaining to the transaction contemplated herein, whether made or given by the Credit Parties, its agents or representatives, are materially complete and accurate, and, to the knowledge of the Credit Parties, do not omit any information required to make the statements and information provided, in light of the transaction contemplated herein and in light of the circumstances under which they were made, not misleading, accurate and meaningful.
6.33NO-RELIANCE. ANY CURRENT OR PRIOR UNDERSTANDINGS, STATEMENTS, REPRESENTATIONS, AND AGREEMENTS, ORAL OR WRITTEN, INCLUDING, BUT NOT LIMITED TO, RENDERINGS OR REPRESENTATIONS CONTAINED IN E-MAILS AND ORAL STATEMENTS OF THE AGENTS OR EMPLOYEES OF THE BUYER, IF NOT SPECIFICALLY EXPRESSED IN THIS AGREEMENT OR IN ANY OTHER TRANSACTION DOCUMENTS, ARE VOID AND HAVE NO EFFECT. EACH CREDIT PARTY ACKNOWLEDGES AND AGREES THAT HE/SHE/IT HAS NOT RELIED ON ANY SUCH ITEMS.
ARTICLE VII
COVENANTS
7.1Negative Covenants.
(a)Indebtedness.So long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly or indirectly, create, assume, incur or have outstanding any indebtedness for borrowed money of any nature or kind (including purchase money indebtedness), or become liable, whether as endorser, guarantor, surety or otherwise, for any Obligation of any other Person, except for: (i) the Debentures; (ii) Obligations disclosed in the financial statements provided to the Buyer as of the Effective Date; (iii) Obligations for accounts payable other than for money borrowed, incurred in the Ordinary Course of Business of the Credit Parties; provided that, any management or similar fees payable by the Credit Parties shall be fully subordinated in right of payment to the prior payment in full of the Debentures; and (iv) Obligations which are subordinated pursuant to a signed subordination agreement with the Buyer, in a form acceptable to the Buyer in its sole discretion.
(b)Encumbrances.So long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly or indirectly, create, assume, incur or suffer or permit to exist any Encumbrance upon any Asset of the Credit Parties, whether owned at the date hereof or hereafter acquired, except for Permitted Liens.
(c)Investments.So long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties who are not natural persons shall not, either directly or indirectly, make or have outstanding any new investments (whether through purchase of stocks, obligations or otherwise) in, or loans or advances to, any other Person, or acquire all or any
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substantial part of the assets, business, stock or other evidence of beneficial ownership of any other Person, except for the following: (i) investments in direct obligations of the United States or any state in the United States; (ii) trade credit extended by any Credit Party in its Ordinary Course of Business; (iii) investments existing on the Effective Date and set forth in the financial statements provided to the Buyer; and (iv) capital expenditures first approved by the Buyer in writing, which approval shall not be unreasonably withheld.
(d)Issuances. Other than Exempt Issuances, so long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly or indirectly, issue any equity, debt or convertible or derivative instruments or securities whatsoever, except upon obtaining Buyer’s prior written consent, which consent may be withheld in Buyer’s sole discretion.
(e)Transfer; Merger. So long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly or indirectly, permit or enter into any transaction involving a “Change in Control” (as hereinafter defined), or any other merger, consolidation, sale, transfer, license, Lease, Encumbrance or other disposition of all or substantially all of its properties or business or all or substantially all of its Assets, except for the sale, lease or licensing of property or Assets of the Credit Parties in the Ordinary Course of Business of the Credit Parties. For purposes of this Agreement, the term “Change of Control” shall mean any sale, conveyance, assignment or other transfer, directly or indirectly, of any ownership interest of the Credit Parties which results in any change in the identity of the individuals or entities previously having the power to direct, or cause the direction of, the management and policies of the Credit Parties, or the grant of a security interest in any ownership interest of any Person directly or indirectly controlling the Credit Parties, which could result in a change in the identity of the individuals or entities previously having the power to direct, or cause the direction of, the management and policies of the Credit Parties.
(f)Distributions; Restricted Payments; Change in Management. So long as Buyer owns, legally or beneficially, any of the Debentures, the Credit Parties shall not, either directly or indirectly: (i) purchase or redeem any shares of its capital stock; (ii) declare or pay any dividends or distributions, whether in cash or otherwise, or set aside any funds for any such purpose; (iii) make any distribution to its shareholders, make any distribution of its property or Assets or make any loans, advances or extensions of credit to, or investments in, any Person, including, without limitation, any Affiliates of the Credit Parties, or the Credit Parties’ officers, directors, employees or Material Shareholder; (iv) pay any outstanding indebtedness of the Credit Parties, except for indebtedness and other Obligations permitted hereunder; (v) increase the annual salary paid to any officers or directors of the Credit Parties as of the Effective Date, unless any such increase is part of a written employment contract with any such officers entered into prior to the Effective Date, a copy of which has been delivered to and approved by the Buyer; or (vi) add, replace, remove, or otherwise change any officers or other senior management positions of the Credit Parties from the officers and other senior management positions existing as of the Effective Date, unless first approved by Buyer in writing, which approval may be granted or withheld or conditioned by Buyer in its sole and absolute discretion. The Credit Parties shall not pay any brokerage or finder’s fee or commission in
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connection with the execution of this Agreement or the consummation of the transactions contemplated hereby.
(g)Use of Proceeds. Except as set forth in the Use of Proceeds Confirmation, the Credit Parties shall not use any portion of the proceeds of the Debentures, either directly or indirectly, for any of the following purposes: (i) to make any payment towards any indebtedness or other Obligations of the Credit Parties other than indebtedness in assumed in the Ordinary Course of Business; (ii) to pay any Taxes of any nature or kind that may be due by the Credit Parties; or (iii) to pay any Obligations of any nature or kind due or owing to any officers, directors, employees, or Material Shareholders of the Credit Parties, other than salaries payable in the Ordinary Course of Business of the Credit Parties. Each Credit Party covenants and agrees to only use any portion of the proceeds of the purchase and sale of the Debentures for the purposes set forth in the Use of Proceeds Confirmation to be executed by the Companies on the Effective Date, unless the Companies obtain the prior written consent of the Buyer to use such proceeds for any other purpose, which consent may be granted or withheld or conditioned by Buyer in its sole and absolute discretion.
(h)Business Activities; Change of Legal Status and Organizational Documents. The Credit Parties shall not: (i) engage in any line of business other than the businesses engaged in as of the Effective Date and business reasonably related thereto; (ii) change its name, organizational identification number (if applicable), its type of organization, its jurisdiction of organization or other legal structure; or (iii) permit its Certificate of Incorporation, Bylaws or other organizational documents to be amended or modified in any way which could reasonably be expected to have a Material Adverse Effect. Notwithstanding anything contained in this Section to the contrary, the Company is permitted to increase its authorized number of common shares and effect a reverse split of the Company’s common stock
(i)Transactions with Affiliates. Unless approved by the Buyer in writing, which approval shall not be unreasonably withheld, the Credit Parties shall not enter into any transaction with any of its Affiliates, officers, directors, employees, Material Shareholders or other insiders, except in the Ordinary Course of Business of the Credit Parties and upon fair and reasonable terms that are no less favorable to the Credit Parties than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate of the Credit Parties.
(j)Bank Accounts. The Credit Parties who are not natural persons shall not maintain any bank, deposit, credit card payment processing accounts, or other accounts with any financial institution, or any other Person, other than the Credit Parties’ accounts listed in the attached Schedule 6.21. Specifically, the Credit Parties may not change, modify, close or otherwise affect any of the accounts listed in Schedule 6.21 without Buyer’s prior written approval, which approval may be withheld or conditioned in Buyer’s sole and absolute discretion.
7.2Affirmative Covenants.
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(a)Corporate Existence. The Credit Parties, that is not a natural person, shall at all times preserve and maintain its: (i) existence and good standing in the jurisdiction of its organization; and (ii) its qualification to do business and good standing in each jurisdiction where the nature of its business makes such qualification necessary, and shall at all times continue as a going concern in the business which the Credit Parties are presently conducting.
(b)Tax Liabilities. The Credit Parties shall at all times pay and discharge all Taxes upon, and all Claims (including claims for labor, materials and supplies) against any Credit Party or any of its properties or Assets, before the same shall become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are being maintained.
(c)Notice of Proceedings. The Credit Parties shall, promptly, but not more than ten (10) days after knowledge thereof shall have come to the attention of any officer of the Credit Parties, give written notice to the Buyer of all threatened or pending Proceedings before any Governmental Authority or otherwise affecting the Credit Parties or any of its Assets.
(d)Material Adverse Effect. The Credit Parties shall, promptly, but not more than five (5) days after knowledge thereof shall have come to the attention of any officer of the Credit Parties, give written notice to the Buyer of any event, circumstance, fact or other matter that could in any way have or be reasonably expected to have a Material Adverse Effect.
(e)Notice of Default. The Credit Parties shall, promptly, but not more than five (5) days after the commencement thereof, give notice to the Buyer in writing of the occurrence of any “Event of Default” (as such term is defined in any of the Transaction Documents) or of any event which, with the lapse of time, the giving of notice or both, would constitute an Event of Default hereunder or under any other Transaction Documents.
(f)Maintain Property. Each Credit Party shall at all times maintain, preserve and keep all of its Assets in good repair, working order and condition, normal wear and tear excepted, and shall from time to time, as such Credit Party deems appropriate in its reasonable judgment, 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. The Credit Parties shall permit Buyer to examine and inspect such Assets at all reasonable times upon reasonable notice during business hours. During the continuance of any Event of Default hereunder or under any Transaction Documents, the Buyer shall, at the Companies’ expense, have the right to make additional inspections without providing advance notice.
(g)Maintain Insurance. The Credit Parties shall at all times insure and keep insured with an insurance company acceptable to Buyer, all insurable property owned by the Credit Parties which is of a character usually insured by a company similarly situated and operating like properties, against loss or damage from environmental, fire and such other hazards or risks as are customarily insured against by a company similarly situated and operating like properties; and shall similarly insure employers’, public and professional liability
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risks. Prior to the Effective Date, the Credit Parties shall deliver to the Buyer a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Section. All such policies of insurance must be satisfactory to Buyer in relation to the amount and term of the Debentures and type and value of the Assets of the Credit Parties, shall identify Buyer as sole/lender’s loss payee and as an additional insured. In the event the Credit Parties fail to provide Buyer 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 Buyer, without waiving or releasing any obligation or default by the Credit Parties hereunder, may at any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance and pay such premium and take any other action with respect thereto, which Buyer deems advisable. This insurance coverage: (i) may, but need not, protect the Credit Parties’ interest in such property; and (ii) may not pay any claim made by, or against, the Credit Parties in connection with such property. The Credit Parties may later request that the Buyer cancel any such insurance purchased by Buyer, but only after providing Buyer with evidence that the insurance coverage required by this Section is in force. The costs of such insurance obtained by Buyer, through and including the effective date such insurance coverage is canceled or expires, shall be payable on demand by the Credit Parties to Buyer, together with interest at the highest non-usurious rate permitted by law on such amounts until repaid and any other charges by Buyer in connection with the placement of such insurance. The costs of such insurance, which may be greater than the cost of insurance which the Credit Parties may be able to obtain on its own, together with interest thereon at the highest non-usurious rate permitted by Law and any other charges incurred by Buyer in connection with the placement of such insurance may be added to the total Obligations due and owing by the Credit Parties hereunder and under the Debentures to the extent not paid by the Credit Parties.
(h)ERISA Liabilities; Employee Plans. The Credit Parties shall: (i) 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 Credit Parties; (ii) 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; (iii) comply with all material requirements of ERISA which relate to such Employee Plans; (iv) notify Buyer immediately upon receipt by the Credit Parties 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; (v) promptly advise Buyer 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 (vi) 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.
(i)Continued Due Diligence/Field Audits. Each Credit Party acknowledges that during the term of this Agreement, Buyer and its agents and representatives undertake
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ongoing and continuing due diligence reviews of the Credit Parties and its business and operations. Such ongoing due diligence reviews may include, and the Credit Parties do hereby agree to allow Buyer, to conduct site visits and field examinations of the office locations of the Credit Parties, and the Assets and records of each of them, the results of which must be satisfactory to Buyer in Buyer’s sole and absolute discretion. In this regard, in order to cover Buyer’s expenses of the ongoing due diligence reviews and any site visits or field examinations which Buyer may undertake from time to time while this Agreement is in effect, the Companies shall pay to Buyer, within five (5) Business Days after receipt of an invoice or demand therefor from Buyer, a fee of up to $10,000.00 (based on four (4) expected field audits and ongoing due diligence of $2,500 per visit or audit) plus additional related expenses. Failure to pay such fee shall be deemed an Event of Default under this Agreement and all other Transaction Documents. The foregoing notwithstanding, from and after the occurrence of an Event of Default or any event which with notice, lapse of time or both, would become an Event of Default, Buyer may conduct site visits, field examinations and other ongoing reviews of the Credit Parties’ records, Assets and operations at any time, in its sole discretion, without any limitations in terms of number of site visits or examinations and without being limited to the fee hereby contemplated, all at the sole expense of the Companies.
(j)Personal Information. Notwithstanding any provision of any other Transaction Document, each Guarantor hereby agrees provide such personal information within fourteen (14) days of the applicable request as the Buyer may from time to time reasonably request for the purpose of evaluating the health, stability and collectability of the amounts owing hereunder including, but not limited to, bank account records, tax returns and financial statements.
(k)Continued Provision of Financial Information. In the event that the Buyer seeks to enforce any of its rights under this Agreement or any other Transaction Document whether as a result of Event of Default or otherwise, subject to Buyer’s agreement to maintain appropriate safe guards relating to the disclosure of non-public information, each of the Credit Parties, not excluding each Guarantor, hereby waives any and all objections to continuing to provide any of the information required to be delivered by Section 7.3 hereof and any other financial information required to be delivered under this Agreement or any other Transaction Document.
(l)Financial Covenants.
(i)Loan to Value Ratio. At all times, the ratio of the Obligations to the value of the Collateral of the Companies, such value to be based on the financial information and documentation delivered by the Companies to the Buyer from time to time and to be determined by the Buyer in its sole but reasonable discretion, shall be no more than 0.55 to 1.00.
(ii)Capital Expenditures. Without Buyer's prior written consent, the Companies shall not in any calendar year make or incur obligations for any Capital Expenditures, in excess of Three Hundred Thousand No/100 United States Dollars ($300,000.00). For purposes of this Agreement, "Capital
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Expenditures" shall mean expenditures (including capital lease obligations which should be capitalized under GAAP) for the acquisition of fixed assets which are required to be capitalized under GAAP.
(iii)Tangible Net Worth. The Companies will maintain, on a consolidated basis, a "Tangible Net Worth" equal to at least One Million and No/100 United States Dollars ($1,000,000.00), measured on a quarterly basis. For purposes of this Agreement, "Tangible Net Worth" means the value of total assets (including leaseholds and leasehold improvements and reserves against assets but excluding goodwill, patents, trademarks, trade names, organization expense, unamortized debt discount and expense, capitalized or deferred research and development costs, deferred marketing expenses, and other like intangibles, and monies due from affiliates, officers, directors, employees, shareholders, members or managers) less total liabilities, including but not limited to accrued and deferred income taxes.
(iv)Minimum Equivalents. The Companies shall maintain cash and cash equivalents equal to at least One Hundred Thousand and No/100 United States Dollars ($100,000.00). For purposes of this Agreement, "Cash Equivalents" shall mean all bank deposits, highly liquid securities, certificates of deposit with maturities of three months or less, and accounts receivable which is less than thirty (30) days in arrears commencing on the date of invoice issuance and which such account has been pre-approved in writing by the Buyer.
(v)Debt Service Coverage Ratio. The Companies will have at the end of each quarter, effective with the quarter ending March 31, 2020, a "Debt Service Coverage Ratio" (as defined below) for that year of not less than 1.15 to 1.00. For purposes of this Agreement, "Debt Service Coverage Ratio" shall mean the following (all as calculated for the most current year-end in accordance with GAAP consistently applied): (i) net income (after taxes), plus depreciation and amortization; divided by (ii) all current portion of long term debt for the prior period (all scheduled long term debt payments).
7.3Reporting Requirements. The Credit Parties agree as follows:
(a)Financial Statements. The Credit Parties shall at all times maintain a system of accounting capable of producing its individual and consolidated (if applicable) financial statements in compliance with GAAP (provided that monthly financial statements shall not be required to have footnote disclosure, are subject to normal year-end adjustments and need not be consolidated), and shall furnish to the Buyer or its authorized representatives such information regarding the business affairs, operations and financial condition of the Credit Parties as Buyer may from time to time request or require, including:
(i)as soon as available, and in any event, within ninety (90) days after the close of each fiscal year, a copy of the annual audited financial statements of the Companies, including balance sheet, statement of income and retained earnings, statement of
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cash flows for the fiscal year then ended, in reasonable detail, prepared and reviewed by an independent certified public accountant reasonably acceptable to Buyer, containing an unqualified opinion of such accountant; and
(ii)as soon as available, and in any event, within sixty (60) days after the close of each fiscal quarter, a copy of the quarterly financial statements of the Companies, including balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended, in reasonable detail, prepared and certified as accurate in all material respects by the CEO or CFO of each Company.
No change with respect to the accounting principles shall be made by the Credit Parties without giving prior notification to Buyer. The Credit Parties represent and warrant to Buyer that the financial statements delivered to Buyer at or prior to the execution and delivery of this Agreement and to be delivered at all times thereafter accurately reflect and will accurately reflect the financial condition of the Credit Parties in all material respects. Buyer shall have the right at all times (and on reasonable notice so long as there then does not exist any Event of Default) during business hours to inspect the books and records of the Credit Parties and make extracts therefrom.
(b)Additional Reporting Requirements. Each Credit Party shall provide the following reports and statements to Buyer as follows:
(i)Income Projections; Variance. On the Effective Date, the Companies shall provide to Buyer an income statement projection showing, in reasonable detail, the Companies’ income statement projections for the twelve (12) calendar months following the Effective Date (the “Income Projections”). In addition, on the fifteen (15th) day of every calendar month after the Effective Date, the Companies shall provide to Buyer a report comparing the Income Projections to actual results. Any variance in the Income Projections to actual results that is more than ten percent (10%) (either above or below) will require the Companies to submit to Buyer written explanations as to the nature and circumstances for the variance.
(ii)Use of Proceeds; Variance. On the fifteen (15th) day of every calendar month after the Effective Date, the Companies shall provide to Buyer a report comparing the use of the proceeds from the sale of Debentures set forth in the Use of Proceeds Confirmation, with the actual use of such proceeds. Any variance in the actual use of such proceeds from the amounts set forth in the approved Use of Proceeds Confirmation will require the Companies to submit to Buyer written explanations as to the nature and circumstances for the variance.
(iii)Bank Statements. Each Credit Party who is not a natural person shall submit to Buyer true and correct copies of all bank statements received by the Credit Parties within five (5) days after the Credit Parties’ receipt thereof from its bank.
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(iv)Interim Reports. Promptly upon receipt thereof, the Companies shall provide to Buyer copies of interim and supplemental reports, if any, submitted to the Companies by independent accountants in connection with any interim audit or review of the books of the Credit Parties.
(v)Aged Accounts/Payables Schedules. Each Credit Party shall, on the fifteen (15th) day of each and every calendar month, deliver to Buyer an aged schedule of the accounts receivable of the Credit Parties, listing the name and amount due from each Person and showing the aggregate amounts due from: (i) 0-30 days; (ii) 31-60 days; (iii) 61-90 days; (iv) 91-120 days; and (v) more than 120 days, and certified as accurate by the CEO or CFO of each Company. Each Credit Party shall, on the first (1st) day of each and every calendar month, deliver to Buyer an aged schedule of the accounts payable of the Credit Parties, listing the name and amount due to each creditor and showing the aggregate amounts due from: (v) 0-30 days; (w) 31-60 days; (x) 61-90 days; (y) 91-120 days; and (z) more than 120 days, and certified as accurate by the CEO or CFO of each Company.
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(c)Representation, Warranty and Covenant Compliance. The Credit Parties shall, within thirty (30) days after the end of each calendar month, deliver to Buyer an Affirmation and Compliance Certificate (A) affirming each of the Representations and Warranties of Credit Parties, (B) affirming each of the affirmative and negative covenants herein, and (C) attesting to compliance with such covenants by the Credit Parties. This Affirmation and Compliance Certificate shall be certified as accurate by the President or Chief Executive Officer of the Borrower and in a form consistent with that attached as Exhibit E. The Credit Parties agree and understand that regular and timely receipt of this document is a material term to this Agreement and a relevant factor in considering any request to purchase additional Debentures.
(d)View Only Access. The Credit Parties shall provide the Buyer view only access to any and all accounts listed on the attached Schedule 6.21 and any and all other accounts of the Companies as requested by Buyer in its sole and absolute discretion. In the event the Credit Parties, with the Buyer’s prior written consent, open any new bank, deposit, credit card payment processing accounts, or other accounts with any financial institution, and/or the Buyer discovers an account of the Credit Parties that is in existence prior to the Effective Date but is not listed on Schedule 6.21, the Credit Parties shall provide the Buyer view only access to such account(s) within one (1) Business Day following the opening or discovery of such account(s).
7.4Fees and Expenses; Additional Consideration.
(a)Commitment Fee. The Companies agree to pay to Buyer a commitment fee equal to two percent (2.0%) of the amount of the Debentures purchased by Buyer at the First Closing, which fee shall be due and payable on the Effective Date and withheld from the gross purchase price paid by Buyer for the Debentures. In the event of any Additional Closings, the Companies shall pay to Buyer a transaction advisory fee equal to one percent (1%) of the amount of the Debentures purchased by Buyer at any such Additional Closings,
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which fee shall be due and payable upon such Additional Closing and withheld from the gross purchase price paid by Buyer for the Debentures at such Additional Closing.
(b)Due Diligence Fees. The Companies agree to pay to the Buyer a due diligence fee equal to Fifteen Thousand and No/100 United States Dollars ($15,000.00), which shall be due and payable in full on the Effective Date.
(c)Document Review and Legal Fees. The Companies agree to pay to the Buyer or its counsel document review and legal fees on an hourly basis (with a minimum amount equal to thirty and No/100 United States Dollars ($30,000.00), which shall be due and payable in full on the Effective Date, or any remaining portion thereof shall be due and payable on the Effective Date if a portion of such fee was paid upon the execution of any term sheet related to this Agreement. The Companies also agree to be responsible for the prompt payment of all legal fees and expenses of the Companies and their own counsel and other professionals incurred by the Companies in connection with the negotiation and execution of this Agreement and the Transaction Documents.
(d)Other Fees. The Companies also agree to pay to the Buyer (or any designee of the Buyer), upon demand, or to otherwise be responsible for the payment of, any and all other costs, fees and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Buyer and of any experts and agents, which the Buyer may incur or which may otherwise be due and payable in connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, subordination, waiver or other modification or termination of this Agreement or any other Transaction Documents; (ii) any documentary stamp taxes, intangibles taxes, recording fees, filing fees, or other similar taxes, fees or charges imposed by or due to any Governmental Authority in connection with this Agreement or any other Transaction Documents; (iii) the exercise or enforcement of any of the rights of the Buyer under this Agreement or the Transaction Documents; or (iv) the failure by the Credit Parties to perform or observe any of the provisions of this Agreement or any of the Transaction Documents. Included in the foregoing shall be the amount of all expenses paid or incurred by Buyer in consulting with counsel concerning any of its rights under this Agreement or any other Transaction Document or under applicable law. To the extent any such costs, fees, charges, taxes or expenses are incurred prior to the funding of proceeds from the Closing, same shall be paid directly from the proceeds of the Closing. All such costs and expenses, if not so immediately paid when due or upon demand thereof, shall bear interest from the date of outlay until paid, at the highest rate set forth in the Debentures, or if none is so stated, the highest rate allowed by law. All of such costs and expenses shall be additional Obligations of the Credit Parties to Buyer secured under the Transaction Documents. The provisions of this Subsection shall survive the termination of this Agreement.
7.5Additional Consideration. As additional consideration for agreeing to enter into this Agreement and purchasing the Initial Debenture the Buyer shall be granted one (1) Series B Preferred Unit as defined in the Amended and Restated Limited Liability Company Agreement of TCA Beyond.
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7.6Subsidiaries. Any Subsidiary which is formed or acquired or otherwise becomes a Subsidiary of any Credit Party, as applicable, following the date hereof, within ten (10) Business Days of such event, shall become an additional party hereto and guarantor of the Companies’ Obligations hereunder, and the Companies shall take any and all actions necessary or advisable to cause said Subsidiary to execute a counterpart to this Agreement and any and all other documents which the Buyer shall require. “Subsidiary” shall mean, respectively, each and all such corporations, partnerships, limited partnerships, limited liability company, limited liability partnerships or other entities of which or in which a Person owns, directly or indirectly, fifty percent (50%) or more of: (i) the combined voting power of all classes of stock/units having general voting power under ordinary circumstances to elect a majority of the board of directors of such entity if a corporation; (ii) the management authority and capital interest or profits interest of such entity, if a partnership, limited partnership, limited liability company, limited liability partnership, joint venture or similar entity; or (iii) the beneficial interest of such entity, if a trust, association or other unincorporated organization.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE COMPANIES’ OBLIGATIONS TO SELL
The obligations of the Companies hereunder to issue and sell the Securities to the Buyer at the Closings is subject to the satisfaction, at or before the respective Closing Dates, of each of the following conditions, provided that these conditions are for the Companies’ sole benefit and may be waived by the Companies at any time in their sole discretion:
8.1Buyer shall have executed the Transaction Documents and delivered them to the Companies.
8.2The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Dates as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Dates.
8.3The Companies shall have received such certificates, confirmations, resolutions, acknowledgements or other documentation necessary or advisable from all applicable Governmental Authorities, including, but not limited to, those Governmental Authorities located in each Company’s State of incorporation or formation, as the Companies may require in order to evidence such Governmental Authorities’ approval of this Agreement, the Transaction Documents and the purchase of the Debentures contemplated hereby.
ARTICLE IX
CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATIONS TO PURCHASE
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The obligation of the Buyer hereunder to purchase the Debentures at the Closings is subject to the satisfaction, at or before each applicable Closing Date, of each of the following conditions (in addition to any other conditions precedent elsewhere in this Agreement), provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:
9.1First Closing. The obligation of the Buyer hereunder to purchase the Debentures at the First Closing is subject to the satisfaction, at or before the First Closing Date, of each of the following conditions (in addition to any other conditions precedent elsewhere in this Agreement), provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:
(a)Each Credit Party and/or the Chief Executive Officer/Chief Financial Officer (as applicable) of a Credit Party shall have executed and delivered the Transaction Documents applicable to the First Closing and delivered the same to the Buyer, each signature of a Credit Party thereon being notarized.
(b)The representations and warranties of the Credit Parties shall be true and correct in all material respects (except to the extent that any of such representations and warranties are already qualified as to materiality in Article VI above, in which case, such representations and warranties shall be true and correct in all respects without further qualification) as of the date when made and as of the First Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Credit Parties shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Credit Parties at or prior to the First Closing Date.
(c)The Buyer shall have received an opinion of counsel from counsel to the Credit Parties in a form satisfactory to the Buyer and its counsel.
(d)The Credit Parties shall have executed and delivered to Buyer a closing certificate, certified as true, complete and correct by an officer of the Credit Parties, in substance and form required by Buyer, which closing certificate shall include and attach as exhibits: (i) a true copy of a certificate of good standing evidencing the formation and good standing of the Credit Parties from the secretary of state (or comparable office) from the jurisdiction in which each Credit Party is formed; (ii) the Credit Parties’ Organizational Documents; (iii) copies of the resolutions of the board of directors of the Credit Parties as adopted by the Credit Parties’ board of directors or managers, in a form acceptable to Buyer.; and (iv) copies of the resolutions adopted by the shareholders or members of the Credit Parties, as applicable, approving and authorizing the execution, delivery and performance of the Transaction Documents to which it is party and the transactions contemplated thereby, in a form acceptable to Buyer.
(e) No event shall have occurred which could reasonably be expected to have a Material Adverse Effect.
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(f) The Buyer shall have received copies of UCC search reports, issued by the Secretary of State of the state of incorporation or residency, as applicable, of the Credit Parties, dated such a date as is reasonably acceptable to Buyer, listing all effective financing statements which name the Credit Parties, under their present name and any previous names, as debtors, together with copies of such financing statements.
(g) The Credit Parties shall have executed such other agreements, certificates, confirmations or resolutions as the Buyer may require, to consummate the transactions contemplated by this Agreement and the Transaction Documents, including a closing statement and joint disbursement instructions as may be required by Buyer.
9.2Additional Closing. Provided the Buyer is to purchase additional Debentures in accordance with Section 4.4 at an Additional Closing, the obligation of the Buyer hereunder to accept and purchase the Debentures at any Additional Closing is subject to the satisfaction, at or before the Additional Closing Date, of each of the following conditions:
(a)The Credit Parties shall have executed the Transaction Documents applicable to the Additional Closing and delivered the same to the Buyer, each signature of a Credit Party thereon being notarized.
(b)The representations and warranties of the Credit Parties shall be true and correct in all material respects (except to the extent that any of such representations and warranties are already qualified as to materiality in Article VI above, in which case, such representations and warranties shall be true and correct in all respects without further qualification) as of the date when made and as of the Additional Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Credit Parties shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Credit Parties at or prior to the Additional Closing Date.
(c)No event shall have occurred which could reasonably be expected to have a Material Adverse Effect.
(d)The Buyer shall have received an opinion of counsel from counsel to BYOC in a form satisfactory to the Buyer and its counsel.
(e)No default or Event of Default shall have occurred and be continuing under this Agreement or any other Transaction Documents, and no event shall have occurred that, with the passage of time, the giving of notice, or both, would constitute a default or an Event of Default under this Agreement or any other Transaction Documents.
(f)The Credit Parties shall have executed such other agreements, certificates, confirmations or resolutions as the Buyer may require to consummate the transactions contemplated by this Agreement and the Transaction Documents, including a closing statement and joint disbursement instructions as may be required by Buyer.
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ARTICLE X
INDEMNIFICATION
10.1Credit Parties’ Obligation to Indemnify. In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Securities hereunder, and in addition to each Credit Party’s other obligations under this Agreement, each Credit Party hereby agrees to defend and indemnify Buyer and its Affiliates and subsidiaries and their respective directors, officers, employees, agents and representatives, and the successors and assigns of each of them (collectively, the “Buyer Indemnified Parties”) and each Credit Party does hereby agree to hold the Buyer Indemnified Parties forever harmless, from and against any and all Claims made, brought or asserted against the Buyer Indemnified Parties, or any one of them, and each Credit Party hereby agrees to pay or reimburse the Buyer Indemnified Parties for any and all Claims payable by any of the Buyer Indemnified Parties to any Person, including reasonable attorneys’ and paralegals’ fees and expenses, court costs, settlement amounts, costs of investigation and interest thereon from the time such amounts are due at the highest non-usurious rate of interest permitted by applicable Law, through all negotiations, mediations, arbitrations, trial and appellate levels, as a result of, or arising out of, or relating to: (i) any misrepresentation or breach of any representation or warranty made by any Credit Party in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; (ii) any breach of any covenant, agreement or Obligation of any Credit Party contained in this Agreement, the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby; or (iii) any Claims brought or made against the Buyer Indemnified Parties, or any one of them, by a third party and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement, the Transaction Documents or any other instrument, document or agreement executed pursuant hereto or thereto, any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Debentures, or the status of the Buyer or holder of any of the Securities, as a buyer and holder of such Securities in any Credit Party. To the extent that the foregoing undertaking by any Credit Party may be unenforceable for any reason, each Credit Party shall make the maximum contribution to the payment and satisfaction of each of the Claims covered hereby, which is permissible under applicable Law.
ARTICLE XI
MISCELLANEOUS
11.1Notices. All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:
If to the Company:Beyond Commerce, Inc.
3773 Howard Hughes Pkwy
Suite 500
Las Vegas, Nevada 89169
Attention: Geordan Pursglove
E-Mail:
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If to the Buyer:TCA Special Situations Credit Strategies ICAV
P.O. Box 322
Jackson, WY 83001
Attn: Alyce Schreiber
E-Mail: [email protected]
With a copy to:Lucosky Brookman LLP
(which shall not constitute notice)101 Wood Avenue South, 5th Floor
Woodbridge, NJ 08830
Attn: Seth A. Brookman, Esq.
E-Mail: [email protected]
and shall be deemed valid and operative, unless the address is changed by the party by like notice given to the other parties. It is the independent duty of each of the Credit Parties to promptly notify Buyer of any change in their actual address and to provide a current e-mail address at which they can be contacted. Notice shall be in writing and shall be deemed delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following business day. Notwithstanding the foregoing, notice, consents, waivers or other communications referred to in this Agreement may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation from the receiving party) that the notice has been received by the other party.
11.2Obligations Absolute. None of the following shall affect the Obligations of the Companies and each Guarantor to Buyer under this Agreement, Buyer’s rights with respect to the Collateral or any other Transaction Documents:
(a)acceptance or retention by Buyer of other property or any interest in property as security for the Obligations;
(b)release by Buyer of all or any part of the Collateral or of any party liable with respect to the Obligations (other than the Companies and each Guarantor);
(c)release, extension, renewal, modification or substitution by Buyer of the debentures or any other Transaction Documents; or
(d)failure of Buyer to resort to any other security or to pursue the Companies or any other obligor liable for any of the Obligations of the Companies and each Guarantor hereunder before resorting to remedies against the Collateral.
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11.3Entire Agreement. This Agreement and the other Transaction Documents: (i) are valid, binding and enforceable against each Credit Party and Buyer in accordance with its provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire agreement between the parties; and (iii) are the final expression of the intentions of each Credit Party and Buyer. No promises, either expressed or implied, exist between any Credit Party and Buyer, unless contained herein or in the Transaction Documents. This Agreement and the Transaction Documents supersede all negotiations, representations, warranties, commitments, offers, contracts (of any kind or nature, whether oral or written) prior to or contemporaneous with the execution hereof. EACH CREDIT PARTY ACKNOWLEDGES THAT HE/SHE/IT HAS NOT RELIED UPON ANY STATEMENTS, PROMISES OR REPRESENTATIONS, IF ANY, THAT ARE NOT CONTAINED WITHIN THIS AGREEMENT OR IN ANY OTHER THE TRANSACTION DOCUMENT AND WAIVES ANY RIGHTS, DEFENSES, OR CLAIMS ARISING FROM ANY SUCH STATEMENTS, PROMISES OR REPRESENTATIONS.
11.4Amendments; Waivers. No promises of future action, amendment, modification, forbearance, termination, discharge or waiver of any provision of this Agreement or of the Transaction Documents, nor any consent to any departure from the terms of this Agreement or any other Transaction Document, by the Credit Parties therefrom, shall in any event be effective unless the same shall be in writing and signed by Buyer, and then such waiver or consent shall be effective only for the specific purpose for which given. This Agreement does not permit implied amendments based upon course of dealing or silence or oral representations of any sort.
11.5WAIVER OF CLAIMS AND DEFENSES. THE CREDIT PARTIES WAIVE EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE CREDIT PARTIES MAY NOW HAVE AS OF THE DATE HEREOF, OR AS THEY MAY IN THE FUTURE COME TO HAVE, TO ANY ACTION BY BUYER IN ENFORCING THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS -- OTHER THAN FOR SET OFF TO ESTABLISH THE AMOUNTS DUE AND PAID IN RESPECT OF THE DEBENTURES. THE CREDIT PARTIES UNDERSTAND AND AGREE THAT THEY ARE WAIVING DEFENSES AND CLAIMS WHICH MAY NOT YET HAVE ACCRUED OR OF WHICH THEY MAY NOT YET BE AWARE AS MATERIAL INDUCEMENT FOR BUYER ENTERING THIS AGREEMENT AND GRANTING ANY FINANCIAL ACCOMMODATION TO THE CREDIT PARTIES. THIS PROVISION IS INTENDED TO BE CONSTRUED AS BROADLY AS PERMISSIBLE UNDER APPLICABLE LAW. FURTHER, EACH OF THE CREDIT PARTIES UNDERSTANDS AND ACKNOWLEDGES THAT THE AGENTS AND REPRESENTATIVES OF THE BUYER DO NOT HAVE AUTHORITY TO MAKE ANY STATEMENTS, PROMISES OR REPRESENTATIONS IN CONFLICT WITH OR IN ADDITION TO THE INFORMATION CONTAINED IN THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND BUYER HEREBY SPECIFICALLY DISCLAIMS ANY RESPONSIBILITY FOR ANY SUCH STATEMENTS, PROMISES OR REPRESENTATIONS. BY EXECUTION OF THIS AGREEMENT, EACH CREDIT PARTY ACKNOWLEDGES THAT HE/SHE/IT HAS NOT RELIED UPON SUCH
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STATEMENTS, PROMISES OR REPRESENTATIONS, IF ANY, AND WAIVES ANY RIGHTS, DEFENSES, OR CLAIMS ARISING FROM ANY SUCH STATEMENTS, PROMISES OR REPRESENTATIONS.
11.6WAIVER OF JURY TRIAL. BUYER, THE CREDIT PARTIES, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY TRANSACTION DOCUMENT OR ANY OF THE OBLIGATIONS HEREUNDER, THE COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH BUYER AND THE COMPANY AND/OR THE GUARANTORS ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BUYER PURCHASING THE DEBENTURES.
11.7MANDATORY FORUM SELECTION. TO INDUCE BUYER TO PURCHASE DEBENTURES, EACH OF THE CREDIT PARTIES IRREVOCABLY AGREES THAT ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER TRANSACTION, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT) SHALL, EXCEPT AS HEREINAFTER PROVIDED, BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, BUYER MAY, AT BUYER’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. EACH OF THE CREDIT PARTIES HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING IT SITUS IN SUCH COUNTY (OR TO ANY JURISDICTION OR VENUE, IF BUYER SO ELECTS), AND EACH OF THE CREDIT PARTIES HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
11.8WAIVER OF PERSONAL SERVICE. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY FEDERAL EXPRESS, DIRECTED TO THE ISSUER, AS SET FORTH AND ACCORDING TO THE TERMS IN THE NOTICE PROVISIONS HEREIN. EACH OF THE CREDIT PARTIES AGREES THAT NO ACKNOWLEDGMENT OF ACTUAL RECEIPT OF PROCESS IS REQUIRED AND SERVICE WILL BE DEEMED EFFECTIVE PURSUANT TO TERMS OF NOTICE PROVISIONS CONTAINED HEREIN. SERVICE MAY ALSO BE MADE IN ANY
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MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.
11.9Assignability. Buyer may at any time assign Buyer’s rights in this Agreement, the Debentures, any Transaction Document, or any part thereof and transfer Buyer’s rights in any or all of the Collateral, and Buyer thereafter shall be relieved from all liability with respect to such Collateral. In addition, Buyer may at any time sell one or more participations in the Debentures. No Credit Party may sell or assign this Agreement, any Transaction Document or any other agreement with Buyer, or any portion thereof, either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder or thereunder, without the prior written consent of Buyer, which consent may be withheld or conditioned in Buyer’s sole and absolute discretion. This Agreement shall be binding upon Buyer, the Credit Parties and their respective legal representatives, successors and permitted assigns. All references herein to any Credit Party shall be deemed to include any successors, whether immediate or remote. In the case of a joint venture or partnership, the term “Company”, “Companies”, “Credit Party” or “Guarantor” shall be deemed to include all joint venturers or partners thereof, who shall be jointly and severally liable hereunder.
11.10Publicity. Buyer shall have the right to approve, before issuance, any press release or any other public statement with respect to the transactions contemplated hereby made by the Companies; provided, however, that the Companies shall be entitled, without the prior approval of Buyer, to issue any press release or other public disclosure with respect to such transactions required under applicable securities or other laws or regulations. Notwithstanding the foregoing, the Companies shall use their best efforts to consult Buyer in connection with any such press release or other public disclosure prior to its release and Buyer shall be provided with a copy thereof upon release thereof. Buyer shall have the right to make any press release with respect to the transactions contemplated hereby without the Companies’ approval. In addition, with respect to any press release to be made by Buyer, BYOC hereby authorize and grants blanket permission to Buyer to include BYOC’s stock symbols, if any, in any press releases. The Companies shall, promptly upon request, execute any additional documents of authority or permission as may be requested by Buyer in connection with any such press releases.
11.11Binding Effect. This Agreement shall become effective upon execution by the Companies, the Guarantors and Buyer.
11.12Governing Law. Except in the case of the Mandatory Forum Selection Clause in Section 11.6 above, which clause shall be governed and interpreted in accordance with Florida law, this Agreement and all other Transaction 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 Wyoming, and for all purposes shall be construed in accordance with the laws of such State, without giving effect to the choice of law provisions of such State.
11.13Enforceability. 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
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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.
11.14Survival of the Credit Parties’ Representations. All covenants, agreements, representations and warranties made by the Credit Parties herein shall, notwithstanding any investigation by Buyer, be deemed material and relied upon by Buyer and shall survive the making and execution of this Agreement and the Transaction Documents and the sale and purchase of the Debentures, and shall be deemed to be continuing representations and warranties until such time as the Credit Parties have fulfilled all of its Obligations to Buyer hereunder and under all other Transaction Documents, and Buyer has been indefeasibly paid in full.
11.15Time of Essence. Time is of the essence in making payments of all amounts due Buyer under this Agreement and the other Transaction Documents and in the performance and observance by the Credit Parties of each covenant, agreement, provision and term of this Agreement and the other Transaction Documents. The parties agree that in the event that any date on which performance is to occur falls on a day other than a Business Day, then the time for such performance shall be extended until the next Business Day thereafter occurring.
11.16WAIVER AND RELEASE. IN CONSIDERATION OF THE MUTUAL PROMISES AND COVENANTS MADE HEREIN, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, AND INTENDING TO BE LEGALLY BOUND HEREBY, EACH CREDIT PARTY HEREBY AGREES TO FULLY, FINALLY AND FOREVER RELEASE AND FOREVER DISCHARGE AND COVENANT NOT TO SUE THE BUYER INDEMNITEES, AND EACH ONE OF THEM, FROM ANY AND ALL DEBTS, FEES, ATTORNEYS’ FEES, LIENS, COSTS, EXPENSES, DAMAGES, SUMS OF MONEY, ACCOUNTS, BONDS, BILLS, COVENANTS, PROMISES, JUDGMENTS, CHARGES, DEMANDS, CLAIMS, CAUSES OF ACTION, PROCEEDINGS, SUITS, LIABILITIES, EXPENSES, OBLIGATIONS OR CONTRACTS OF ANY KIND WHATSOEVER, WHETHER IN LAW OR IN EQUITY, WHETHER ASSERTED OR UNASSERTED, WHETHER KNOWN OR UNKNOWN, FIXED OR CONTINGENT, UNDER STATUTE OR OTHERWISE, FROM THE BEGINNING OF TIME THROUGH THE EFFECTIVE DATE AND FROM THE EFFECTIVE DATE THROUGH THE FUTURE, INCLUDING ANY AND ALL CLAIMS RELATING TO OR ARISING OUT OF ANY FINANCING TRANSACTIONS, CREDIT FACILITIES, NOTES, DEBENTURES, SECURITY AGREEMENTS, AND OTHER AGREEMENTS, INCLUDING EACH OF THE TRANSACTION DOCUMENTS, ENTERED INTO BY THE CREDIT PARTIES WITH BUYER. WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING RELEASE, EACH OF THE CREDIT PARTIES HEREBY AGREES AND ACKNOWLEDGES THAT THEY ARE RELEASING ANY CLAIMS THEY HAVE NOW WHICH HAVE ACCRUED OR WHICH MAY ACCRUE IN THE FUTURE, SPECIFICALLY INCLUDING BUT NOT LIMITED TO: (A) ANY AND ALL CLAIMS REGARDING OR RELATING TO THE ENFORCEABILITY OF THE TRANSACTION DOCUMENTS AS AGAINST ANY OF
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THE CREDIT PARTIES; (B) ANY AND ALL CLAIMS REGARDING, RELATING TO, OR OTHERWISE CHALLENGING THE GOVERNING LAW PROVISIONS OF THE TRANSACTION DOCUMENTS ; (C) ANY AND ALL CLAIMS REGARDING OR RELATING TO THE AMOUNT OF PRINCIPAL, INTEREST, FEES OR OTHER OBLIGATIONS DUE FROM ANY OF THE CREDIT PARTIES TO THE BUYER UNDER ANY OF THE TRANSACTION DOCUMENTS ; (D) ANY AND ALL CLAIMS REGARDING OR RELATING TO THE BUYER’S CONDUCT OR BUYER’S FAILURE TO PERFORM ANY OF BUYER’S COVENANTS OR OBLIGATIONS UNDER ANY OF THE TRANSACTION DOCUMENTS; (E) ANY AND ALL CLAIMS REGARDING OR RELATING TO ANY DELIVERY OR FAILURE TO DELIVER ANY NOTICES BY THE BUYER TO THE CREDIT PARTIES; (F) ANY AND ALL CLAIMS REGARDING OR RELATING TO ANY FAILURE BY THE BUYER TO FUND ANY ADVANCES OR OTHER AMOUNTS UNDER ANY OF THE TRANSACTION DOCUMENTS; (G) ANY AND ALL CLAIMS REGARDING OR RELATING TO ANY ADVISORY OR INVESTMENT BANKING SERVICES (OR THE LACK THEREOF) PROVIDED BY THE BUYER TO ANY OF THE CREDIT PARTIES FOR WHICH ANY ADVISORY OR INVESTMENT BANKING FEES MAY BE DUE AND OWING AND INCLUDED WITHIN THE OBLIGATIONS; AND (H) ANY AND ALL CLAIMS BASED ON GROUNDS OF PUBLIC POLICY, UNCONSCIONABILITY, OR IMPLIED COVENANTS OF FAIR DEALING AND GOOD FAITH – OTHER THAN THOSE DEEMED NON-WAIVABLE BY LAW OR APPLICABLE PUBLIC POLICY. THE CREDIT PARTIES FURTHER EXPRESSLY AGREE THAT THE FOREGOING RELEASE AND WAIVER IS INTENDED TO BE AS BROAD AND INCLUSIVE AS PERMITTED BY THE LAWS GOVERNING THE TRANSACTION DOCUMENTS, AND THESE RELEASED CLAIMS INCLUDE CLAIMS THAT THE CREDIT PARTIES DO NOT KNOW OR SUSPECT TO EXIST, WHETHER THROUGH IGNORANCE, OVERSIGHT, ERROR, NEGLIGENCE, OR OTHERWISE, AND WHICH, IF KNOWN, WOULD MATERIALLY AFFECT THEIR DECISION TO ENTER INTO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. THE CREDIT PARTIES UNDERSTAND THAT THEY COULD HAVE CLAIMS ACCRUE IN THE FUTURE IN CONNECTION HEREWITH, BUT VOLUNTARILY ELECT TO RELEASE THOSE CLAIMS NOW AS AN INDUCEMENT TO THE FINANCIAL ACOMMODATIONS PROVIDED HERE BY THE BUYER. THE FOREGOING WAIVERS AND RELEASES BY THE CREDIT PARTIES ARE A MATERIAL INDUCEMENT FOR THE BUYER TO ENTER INTO THIS AGREEMENT, AND THE BUYER’S AGREEMENT TO ENTER INTO THIS AGREEMENT IS SEPARATE AND MATERIAL CONSIDERATION TO THE CREDIT PARTIES FOR THE WAIVERS AND RELEASES CONTAINED HEREIN, THE RECEIPT AND SUFFICIENCY OF SUCH CONSIDERATION IS HEREBY ACKNOWLEDGED BY THE CREDIT PARTIES. IN ADDITION, EACH OF THE CREDIT PARTIES AGREES AND ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO NEGOTIATE THIS SPECIFIC WAIVER AND RELEASE PROVISION OF THIS AGREEMENT, WITH AND THROUGH THEIR OWN COMPETENT COUNSEL. THE FOREGOING WAIVERS AND RELEASES SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, AND REPAYMENT OF THE OBLIGATIONS.
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11.15Interpretation. If any provision in this Agreement requires judicial or similar interpretation, the judicial or other such body interpreting or construing such provision shall not apply the assumption that the terms hereof shall be more strictly construed against one party because of the rule that an instrument must be construed more strictly against the party which itself or through its agents prepared the same. The parties hereby agree that all parties and their agents have participated in the preparation hereof equally.
11.16Compliance with Federal Law. Each Credit Party shall: (i) ensure that no Person who owns a controlling interest in or otherwise controls a Company is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, included in any Executive Orders or any other similar lists from any Governmental Authority, foreign or national; (ii) not use or permit the use of the proceeds of the Debentures to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, or any other similar national or foreign governmental regulations; and (iii) comply with all applicable Lender Secrecy Act laws and regulations, as amended. As required by federal law and Buyer’s policies and practices, Buyer may need to obtain, verify and record certain customer identification information and documentation in connection with opening or maintaining accounts or establishing or continuing to provide services.
11.17Termination. Upon payment in full of all outstanding Debentures purchased hereunder, together with all other Obligations, including any charges, fees and costs due and payable under this Agreement or under any of the Transaction Documents, the Companies shall have the right to terminate this Agreement upon written notice to the Buyer; provided, however, that if the Companies prepay any portion of the Debentures, the Companies shall pay to Buyer as liquidated damages and compensation for the costs of being prepared to make funds available hereunder an amount equal to the following (the “Prepayment Penalty”):
(a)in the period beginning on the Effective Date and ending on the date that is ninety (90) days following the Effective Date, five percent (5.0%) of the aggregate initial principal balance of the Debentures then being prepaid;
(b)in the period beginning on the date that is ninety-one (91) days following the Effective Date and ending on the date that is one-hundred eight (180) days following the Effective Date, three percent (3.0%) of the of the aggregate initial principal balance of the Debentures then being prepaid; and
(c)in the period beginning on the date that is one hundred eight-one (181) days following the Effective Date and ending on the date that is three-hundred sixty (360) days following the Effective Date, two percent (2.0%) of the aggregate initial principal balance of the Debentures then being prepaid.
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11.18Gender and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the party or parties or their personal representatives, successors and assigns may require.
11.19Execution. This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and the same Agreement, and same shall become effective when counterparts have been signed by each party and each party has delivered its signed counterpart to the other party. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf’ format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf’ signature page was an original thereof.
11.20Headings. The article and section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of the Agreement.
11.21Further Assurances. The Companies and the Guarantors will execute and deliver such further instruments and do such further acts and things as may be reasonably required by Buyer to carry out the intent and purposes of this Agreement.
11.22No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year set forth above.
COMPANY:
BEYOND COMMERCE, INC.
By: _________________________________
Name: Geordan Pursglove
Title: Chief Executive Officer
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, the Chief Executive Officer of Beyond Commerce, Inc., a Nevada limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year set forth above.
COMPANY:
TCA BEYOND COMMERCE, LLC
By: _________________________________
Name: Carlos Sandino
Title: Manager
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Carlos Sandino, a Manager of TCA Beyond Commerce, LLC, a Wyoming limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said limited liability company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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BUYER:
TCA SPECIAL SITUATIONS CREDIT STRATEGIES ICAV
By:
Name:
Title:
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CONSENT AND AGREEMENT
The undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.
GUARANTOR:
_________________________________
GEORDAN PURSGLOVE
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said person, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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CONSENT AND AGREEMENT
The undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.
GUARANTOR:
PATHUX LLC
By: _________________________________
Name: Geordan Pursglove
Title: Manager
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, a Manager of PathUX, LLC, a Delaware limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said limited liability company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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CONSENT AND AGREEMENT
The undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.
GUARANTOR:
CUSTOMER CENTERED STRATEGIES, L.L.C.
By: _________________________________
Name: Geordan Pursglove
Title: Manager
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, a Manager of Customer Centered Strategies, L.L.C., a Minnesota limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said limited liability company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
______________________________________
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CONSENT AND AGREEMENT
The undersigned, referred to in the foregoing securities purchase agreement as a guarantor, hereby consents and agrees to said securities purchase agreement and to the payment of the amounts contemplated therein, documents contemplated thereby and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to or in connection with said securities purchase agreement to the same extent as if the undersigned were a party to said securities purchase agreement.
GUARANTOR:
SERVICE 800, INC.
By: _________________________________
Name: Geordan Pursglove
Title: Chief Executive Officer
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, the Chief Executive Officer of Service 800, Inc., a Minnesota corporation, who is personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth.
| GIVEN under my hand and notarial seal this _____ day of ________________, 20____. | |
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| ______________________________________ |
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| Notary Public |
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Membership Interest Purchase Agreement (“Agreement”) is made effective as of December 31, 2019 (“Effective Date”) and is entered into by and among CUSTOMER CENTERED STRATEGIES, LLC, a Minnesota limited liability company (“Target”), the Target’s sole Member SHANNON GRONEMEYER, (“Seller”) and TCA BEYOND COMMERCE, LLC, a Wyoming limited liability company ("Buyer"). Target, Buyer and Seller are collectively referred to herein as the “Parties”, each individually a “Party.”
RECITALS
WHEREAS, Seller owns 100% of the authorized and issued membership interests of the Target (the “Membership Interests”); and
WHEREAS, Seller wishes to sell, and Buyer wishes to purchase, all of the Membership Interests in the Target, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, the sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
I. DEFINITIONS
1.1The definitions included in this Article 1, and elsewhere in this Agreement, shall apply to the relevant terms when used anywhere in this Agreement. These definitions shall also apply to any exhibits, attachments, schedules, amendments, addendums or supplements to this Agreement, whether agreed to now or in the future, unless an alternative definition is expressly included in the relevant document, and such document has been signed by both Buyer and Seller.
1.3 “Claims” means all claims, demands, proceedings, causes of action, court orders, arbitration awards, obligations, contracts, agreements (express or implied), promises, debts, liabilities, damages, losses, costs or expenses of any nature whatsoever, whether known or unknown, fixed or contingent, arising on or prior to the date of this Agreement or arising after the date hereof.
1.4“Code” means the Internal Revenue Code (“IRC”) of 1986, as amended.
1.5“Closing Date” shall be December 31, 2019 or such earlier date as may be agreed upon by the parties in writing.
1.6“Due Diligence Period” shall be the period commencing on the Effective Date and ending on the earlier of Closing Date or thirty (30) days following the Effective Date.
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1.7“ERISA” means the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.
1.8“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of law), or any arbitrator, court or tribunal of competent jurisdiction.
1.9“Knowledge” in reference to a natural person, means such person’s actual awareness of the facts or matters in question, after a commercially reasonable inquiry into such facts or matters. “Knowledge” in reference to business entity, means the actual awareness of such business entity’s owners, directors, officers, and employees with supervisory capacity over the facts or matters in question, after a commercially reasonable inquiry into such facts or matters by the employee with direct responsibility over the subject matter of the fact or matter in question.
1.10 “Lien” means any mortgages, liens (statutory or otherwise), security interests, claims, pledges, licenses, equities, options, conditional sales contracts, assessments, levies, easements, covenants, conditions, reservations, encroachments, hypothecations, equities, restrictions, rights-of-way, exceptions, limitations, charges, possibilities of reversion, rights of refusal or encumbrances of any nature whatsoever, including voting trusts or agreements, proxies and marital or community property interests.
1.11"Losses" means losses, damages, liabilities, deficiencies, Claims, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys' fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that "Losses" shall not include punitive damages, except in the case of fraud or willful misconduct.
1.12“Membership Interests” shall mean and include all of Seller’s ownership and financial rights, rights to assign financial rights, governance rights, and rights to assign governance rights in the Target.
1.13 “Non-Competition Zone” means the United States of America and such international countries where Buyer and or its Affiliates are doing business or have customers.
1.14 "Person" means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.
1.15 “Representative” means directors, officers, employees, consultants, financial advisors, attorneys, accountants or other agents of a natural person or business entity.
1.16 “Tax” means any tax (including any income tax, capital gains tax, value-added tax, sales tax, property tax, gift tax, or estate tax), levy, assessment, tariff, duty (including any customs duty), deficiency, or other fee, and any related charge or amount (including any fine, penalty, interest, or addition to tax), imposed, assessed, or collected by or under the authority of any
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Governmental Authority or payable pursuant to any tax-sharing agreement or any other contract relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency, or fee.
1.17 “Tax Return” means any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.
II. PURCHASE TERMS
2.1Purchase and Sale of Membership Interests. Subject to the terms and conditions of this Agreement, Seller agrees to sell and transfer the Membership Interests to Buyer, and Buyer will purchase and accept the Membership Interests from Seller free and clear of any and all Liens.
2.2Purchase Price. The purchase price (the "Purchase Price") for the Membership Interests is Five Hundred Twenty-Five Thousand and No/100 Dollars ($525,000.00).
2.3Payment of Purchase Price. Buyer shall pay the Purchase Price on the Closing Date as follows:
2.3.1$175,000 by delivery of a certified check or wire transfer of immediately available funds; and
2.3.2$350,000 by delivery of a convertible promissory note in favor of Seller in the form attached as Exhibit A (“Note”).
2.4Governance, Financial and Management Rights of Buyer. As of closing, Buyer is acquiring all rights incidental to ownership of the Membership Interests, including without limitation voting, financial and management, and management appointment rights in and to Target. Seller will resign as the manager or managing member as applicable.
III. CLOSING
3.1Closing. The closing of the purchase and sale of Membership Interests (“Closing”) will occur on the Closing Date via remote close or at such place as the Parties may agree, in writing.
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3.2Deliveries. At the Closing,
3.2.1Seller will execute, acknowledge, and deliver to Buyer:
3.2.1.1assignment of the Membership Interests in the Target;
3.2.1.2documents demonstrating that Seller has terminated any Qualified Plans (if any);
3.2.1.3all certificates, instruments, governance documents and/or historical business records of the Target which are in Seller’s possession; and
3.2.1.4the Employment Agreement pursuant to Section 3.3.2.
3.2.2Buyer will execute, acknowledge and deliver to Seller (or cause Buyer’s Affiliates to execute, acknowledge and deliver as applicable):
3.2.2.1payment in the manner as required by Section 2.3.1 of this Agreement;
3.2.2.2the Note pursuant to Section 2.3.2; and
3.2.2.3the Employment Agreement pursuant to Section 3.3.2.
3.3Post-Closing Services and Employment.
3.3.1Target. Following the Closing Date, Target agrees to enter into a service agreement with Service 800, Inc. on terms and conditions mutually satisfactory to Target and Service 800, Inc. (“Managed Services Agreement”).
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3.3.2Seller Employment Services to Buyer. To assist in the transition of Buyer’s ownership of the Target, at Closing Buyer will execute (or cause one of Buyer’s Affiliates to execute) and deliver an employment agreement in form attached as Exhibit B (“Employment Agreement”).
3.42019 Tax Return. Seller and Buyer agree that following Closing, any Taxes owed by the Target (or Seller because of his ownership of the Membership Interests of the Target) for 2019 shall be pro-rated between Seller and Buyer as of the Closing Date. Seller shall be obligated to complete Tax Return(s) that are due or become due prior to Closing. Buyer shall be obligated to complete Tax Return(s) that are due or become due after Closing. Seller shall be obligated to pay Taxes for the time prior to the Closing Date. Buyer is obligated to pay Taxes for the time following the Closing Date. Within fifteen (15) business days following the completion of a 2019 Tax Return for the, Target, Seller shall be given the opportunity to review and comment on such 2019 Tax Return.
IV. REPRESENTATIONS AND WARRANTIES
4.1Representations and Warranties of the Seller. Seller represent and warrant to Buyer as follows:
4.1.1Ownership of Membership Interests. Seller is the sole owner of 100% of the Membership Interests in the Target. Seller has good and full right, power and authority to enter into this Agreement, carry out the transactions contemplated by this Agreement and sell the Membership Interests to Buyer. There are no outstanding contracts with any person concerning or relating to the issuance, sale or transfer of any of the Membership Interests. Seller has (or will as of Closing have) good and marketable fee title to the Membership Interests and will transfer the Membership Interests to Buyer free and clear of all Liens.
4.1.2Organization of Target. Target is a limited liability company, duly organized, validly existing, and in good standing under the laws of the State of Minnesota, with full power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under applicable contracts. Seller has delivered (or will as of Closing deliver) true and correct copies of all the Target’s organizational documents in Seller’s possession.
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4.1.3Authority. The execution and delivery of this Agreement and the other documents and instruments to be executed and delivered by Seller pursuant hereto and the consummation of the transactions contemplated hereby and thereby have been duly authorized by the Seller. This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with the terms of this Agreement, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally, and by general principals of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).
4.1.4No Violation or Additional Authority Required. To Seller’s Knowledge, neither the execution and delivery of this Agreement nor the consummation or performance of any transaction contemplated herein will, directly or indirectly (with or without notice or lapse of time): (a) contravene, conflict with, or result in a violation of any provision of the Target’s governance or organizational documents; (b) contravene, conflict with, or result in a violation of, or give any Governmental Authority or other person the right to challenge any of the transaction contemplated herein or to exercise any remedy or obtain any relief under, any contract, order or action to which the Target or Seller, or any of the assets owned or used by the Target, may be subject, (c) contravene, conflict with, or result in a violation or breach of any provision of, or give any person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any contract of Sellers or the Target, or (d) result in the imposition or creation of any Lien upon or with respect to any of the assets owned or used by Target.
4.1.5Consent to Agreement. Seller has 100% of the authority necessary to authorize, consent to and execute this Agreement and the transactions contemplated hereby, and to perform any obligations created by this Agreement.
4.1.6Pending Claims. To Seller’s Knowledge, there is no pending or threatened litigation, claim, proceeding or investigation relating to the transaction contemplated by this Agreement, nor is Seller or Target subject to any judgment, order or decree which would prevent, impede, or make illegal the consummation of the transaction contemplated hereunder.
4.1.7No Preclusion or Restriction. To Seller’s Knowledge, there is no document or agreement in existence which would preclude this transaction from being completed nor are there are any existing warrants, options, membership purchase agreements, redemption agreements, restrictions of any nature, calls or rights to subscribe of any
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character relating to the Membership Interests which would prevent the Membership Interests from being sold or otherwise transferred to Buyer.
4.1.8Title to Properties; Liens. Target owns all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) that it purports to own, including all of the properties and assets reflected on the balance sheet of the Target. To Seller’s Knowledge, all liabilities of the Target have been fully disclosed to Buyer. All material properties and assets of the Target are free and clear of Liens excepted as otherwise provided herein.
4.1.9Accounts Receivable. All accounts receivable of the Target that are reflected on the balance sheet or on the accounting records of the Target as of the Closing Date (collectively, the “Accounts Receivable”) represent or will represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business. Unless paid prior to the Closing Date, the Accounts Receivable are or will be as of the Closing Date current and, to Seller’s Knowledge, collectible as of the Closing Date.
4.1.10No Undisclosed Liabilities. Except specifically stated in this Agreement, to Seller’s Knowledge, the Target has no liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for liabilities or obligations reflected or reserved against in the balance sheet, and current liabilities incurred in the ordinary course of business since the respective dates thereof.
4.1.11Taxes. Target has filed or caused to be filed (on a timely basis) all Tax Returns that are or were required to be filed by the Target. Seller has delivered or made available to Buyer copies of Tax Returns for the three years immediately preceding the Closing. Seller has caused the Target to pay, or make provision for the payment of, all Taxes that have or may have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment received by Sellers or Target.
4.1.12No Material Adverse Change. From the Effective Date until the Closing Date, the Target’s business has been and will be conducted in the usual and ordinary course, the character of the business will not be changed, and Seller will use his best efforts to preserve for Buyer the existing business relationships with employees, contractors, and customers. From the Effective Date until Closing Date, there has not been any material adverse change in the business, operations, properties, prospects, assets, or condition of the Target and, to Seller’s Knowledge, no event has occurred or will occur prior to or on
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the Closing Date nor does any circumstance exist nor will any circumstance exist prior to or on the Closing Date that may result in such a material adverse change.
4.1.13Statements. True and correct copies of the Target’s unaudited financial statements, consisting of a balance sheet as of December 31st in each of the years 2017 and 2018, as well as 2019 year-to-date statements of income and cash flow all produced from Target’s accounting software program (collectively, the "Financial Statements"), and unaudited financial statements consisting of the balance sheet of the Target as of June 30, 2019 (the "Interim Financial Statements") have been delivered to Buyer. To the best of Seller’s knowledge the Financial Statements have been prepared in accordance commercially reasonable accounting practices on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Financial Statements). The Financial Statements are based on the books and records of Target, and, to Seller’s Knowledge, accurate present the financial condition of the Target as of the respective dates they were prepared. None of the Financial Statements or Interim Financial statements have been audited.
4.1.14Solvency. Seller is not insolvent and will not be rendered insolvent by reason of the transfer contemplated by the Agreement and is able to meet all obligations as they become due.
4.1.15Representations Complete and True at Closing. To Seller’s Knowledge, all representations and disclosures made with respect to the parties’ contemplated transaction are complete, and none contain any untrue statement of material fact, or omit to state a material fact, which is necessary to avoid being misleading. To Seller’s Knowledge, these representations will be true and correct as of the Closing Date.
4.1.16Employment Matters.
4.1.16.1 As used in this section, the following terms have the meanings set forth below:
(i)“Company Other Benefit Obligation” means an Other Benefit Obligation owed, adopted, or followed by the Target or an ERISA Affiliate of the Target.
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(ii)“Company Plan” means all Plans of which the Target or an ERISA Affiliate of the Target is or was a Plan Sponsor, or to which the Target or an ERISA Affiliate of the Target otherwise contributes or has contributed, or in which the Target or an ERISA Affiliate of the Target otherwise participates or has participated. All references to Plans are to Target Plans unless the context requires otherwise.
(iii)“ERISA Affiliate” means, with respect to the Target, any other person that, together with the Target, would be treated as a single employer under IRC § 414.
(iv)“Other Benefit Obligations” means all obligations, arrangements, or customary practices, whether or not legally enforceable, to provide benefits, other than salary, as compensation for services rendered, to present or former directors, employees, or agents, other than obligations, arrangements, and practices that are Plans. Other Benefit Obligations include consulting agreements under which the compensation paid does not depend upon the amount of service rendered, sabbatical policies, severance payment policies, and fringe benefits within the meaning of IRC § 132.
(v)“Pension Plan” has the meaning given in ERISA § 3(2)(A). “Plan” has the meaning given in ERISA § 3(3).
(vi)“Plan Sponsor” has the meaning given in ERISA § 3(16)(B).
(vii)“Qualified Plan” means any Plan that meets or purports to meet the requirements of IRC § 401(a).
4.1.16.2There are no Company Plans or Company Other Benefit Obligations or similar programs defined benefit Pension Plans.
4.1.16.3To the best of Seller’s Knowledge, Target has complied with all applicable employment laws, rules and regulations applicable to Target’s business, including without limitation, wage and hour laws and health and safety regulations. To Seller’s Knowledge, Target has not received any notice from any Governmental Authority alleging Targets’ violation of applicable employment laws, rules and regulations.
4.1.17Target has (or as of Closing will have) enough cash or accounts receivable to satisfy financial obligations of the Target which, to Seller’s Knowledge and to Target’s Knowledge, are ( or will become ) due within the first sixty (60) days following the closing date..
4.1.17.1Target represents and warrants to Buyer that Target’s agreements with independent contractors provide that Target is not obligated to pay its independent
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contractors until Target’s has received payment from Target’s customers for the services for which the independent contractor was employed. Target has (or will have as of Closing) provided Buyer with true and correct copies of all independent contractor agreements in place as of the Effective Date and the Closing Date.
4.1.18To the best of Seller’s Knowledge, Target owns, exclusively or jointly with other Persons, all right, title and interest in and to Target’s Intellectual Property, free and clear of Liens. For purposes of this Section “Intellectual Property” means (i) trademarks, service marks, trade names, and logos regularly used in the operation of Target’s business, whether or not such marks are registered with the USPTO, (ii) original works of authorship, copyrights (whether or not registered), and patented and patentable designs, inventions, models and plans.
4.2Representations and Warranties of the Buyer. Buyer represents, warrants and covenants to the Seller that the statements contained in this Section 4.2 are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date:
4.2.1Authority. Buyer is a public company duly organized, validly existing, and in good standing under the Laws of the state of Nevada. Buyer has full corporate power and authority to enter into this Agreement and related documents to which Buyer is a party, to carry out its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and related documents to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder, and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. The individual(s) executing this Agreement and related documents on behalf of the Buyer have actual authority to execute such documents on behalf of the Buyer. This Agreement has been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms.
4.2.2No Violation. The execution, delivery and performance by Buyer of this Agreement and related documents to which Buyer is a party do not and will not: a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of organization, operating agreement or other organizational documents of Buyer; b) conflict with or result in a violation or breach of any provision of any law or administrative rule or regulation applicable to Buyer nor violate any term, condition or decree of any Governmental Authority applicable to Buyer; nor c) require the consent, notice or other action by any other Person.
4.2.3Due Diligence Investigation. Buyer has had access to or the opportunity to access all materials necessary to make an informed decision regarding the proposed transaction, including but not limited to books and records pertaining to the Target and the value of the Membership Interests. Buyer is familiar with the business of the Target and is satisfied with the results of its due diligence review.
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4.2.4Professional Advice. Buyer has obtained, to the extent it deems necessary, its own professional advice with respect to this Agreement, the risks inherent in the purchase of the Membership Interests, and the suitability of such purchase in light of Buyer’s financial condition.
4.2.5Broker. Buyer has not dealt with any broker, finder, or other person in connection with the offering, sale, or negotiation of the sale of Membership Interests in any manner that might give rise to any claim for commission against Seller.
4.2.6Solvency. Buyer is not insolvent and will not be rendered insolvent by reason of the payment (or other) obligations of Buyer under this Agreement and Buyer is able to meet all of its financial obligations as they become due.
4.2.7Registration Status of Securities. Buyer understands that the Membership Interests, have not been registered under the applicable state or federal securities laws. Buyer understands that the Membership Interests may not be sold, transferred or otherwise disposed of except pursuant to an effective registration statement or appropriate exemption from registration under applicable state law and, as a result, the Buyer may be required to hold the Membership Interests for an indefinite period of time. Buyer understands that Target has neither (a) agreed to register the Membership Interests for distribution in accordance with applicable law nor (b) to comply with any exemption under applicable law for the resale of the Membership Interests.
4.2.8Full Disclosure. All of Buyer’s representations and disclosures made with respect to the parties’ contemplated transaction are complete, and none contain any untrue statement or material fact, or omit to state a material fact, which is necessary to avoid being misleading and these representations will be true and correct as of the Closing Date.
V. CONDITIONS PRECEDENT TO CLOSING
5.1Conditions to the Parties’ Obligations. The obligations of the Parties under this Agreement are subject to the satisfaction of the following conditions precedent to the Closing Date;
5.1.1The Parties shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date.
5.1.2Buyer’s review, inspection and approval to Buyer’s satisfaction of the Target’s business and assets, such contingency being waived by Buyer if not completed by the Closing.
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5.1.3Seller’s review, inspection and approval, to Seller’s satisfaction of Buyer’s business and assets, such contingency being waived by Seller if not completed within by the Closing.
5.1.4The Parties shall have made all deliveries required to be made on or prior to the Closing.
5.1.5The Parties shall cooperate in the creation and execution of any other mutually agreeable ancillary documentation for the transaction which the Parties deem to be necessary or desirable.
VI. TERMINATION
6.1Termination Events. This Agreement may, by written notice delivered prior to the Closing, be terminated:
6.1.1by either Buyer or Seller, if a material breach of any provision of this Agreement has been committed by the other party and such breach has not been cured or waived; or
6.1.2by either Buyer or Seller, if any of the conditions of Sections 5.1.1, 5.1.4, or 5.1.5 are unsatisfied as of Closing; or
6.1.3by Buyer if the condition of Section 5.1.2 is unsatisfied, subject only to waiver by Buyer in accordance with Section 5.1.2; or
6.1.4by Seller if the condition of Section 5.1.3 is unsatisfied, subject only to waiver by Seller in accordance with Section 5.1.3; or
6.1.5by mutual written consent of all Parties.
6.2 Effect of Termination. Each party’s right of termination under Section 6.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 6.1, all further obligations of the parties under this Agreement will terminate, except that all confidentiality obligations assumed by the parties hereunder or pursuant to other agreements incorporated herein, will survive; provided, however, that if this Agreement is terminated by a party because of a breach of the Agreement by the other party or because one or more of the conditions to the terminating party’s obligations under this Agreement is not satisfied as a result of the other party’s failure to comply with its obligations under this Agreement, the terminating party’s right to pursue all legal remedies will survive such termination unimpaired.
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VII. POST-CLOSING COVENANTS
7.1Further Assurances. On the Closing Date, and from time to time thereafter, at the reasonable request of Buyer, Seller shall execute and deliver to Buyer all such assignments, endorsements and other documents, and take such other action as Buyer may reasonably request, in order to more effectively transfer and assign to Buyer the Membership Interests.
7.2Cooperation. Seller and Buyer shall, at no cost to the other party, provide such cooperation and information as either of them may reasonably request as follows: (i) for purposes of preparing and filing any Tax Return, (ii) in connection with any audit or other proceeding with respect of Taxes of the Target, or (iii) with respect to any Third-Party Claims as may be required pursuant to Article VIII. Each of Seller and Buyer shall retain all Tax Returns, schedules and work papers, records and other documents in its possession relating to tax matters of the Target until the expiration of the statute of limitations of the taxable periods to which such Tax Returns and other documents relate, without regard to extensions except to the extent notified by the other party in writing of such extensions for the respective Tax periods. Prior to transferring, destroying or discarding any Tax Returns, schedules and work papers, records and other documents in its possession relating to Tax matters of the Target for any taxable period beginning before the Closing Date, Seller or Buyer (as the case may be) shall provide the other party with reasonable written notice and offer the other party the opportunity to take custody of such materials.
7.3 Non-Competition and Non-Solicitation. Seller specifically acknowledges that he has access to confidential and proprietary information about the Target, the Buyer or any of its Affiliates as well as their business and assets, including without limitation, information regarding the operational, sales, promotional and marketing methods and techniques of the their business (“Business”). Seller covenants that for a period of three (3) years (“Non-Competition Period”) after the Closing or after Seller is no longer employed by Service 800, whichever occurs last, he shall not, either directly or indirectly, for himself or through, on behalf of, or in conjunction with any person, persons, partnerships, corporation or entity for the Non-Competition Period:
7.3.1Own, maintain, operate, engage in, or have any interest in, any other business engaged in the operation of a business which is materially engaged in the Business and which business is, or is intended to be, located or operated anywhere within the Non-Competition Zone, nor act as an officer, director, employee, partner, independent contractor, consultant, principal, agent, or proprietor for any such business, nor lend any assistance (financial, managerial or otherwise) to any such business; or
7.3.2Divert or attempt to divert any business or customer of the Target, the Buyer or any of its Affiliates to any competitor, by direct or direct inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Company, its business or assets; or
7.3.3Employ or seek to employ any person who is at that time an employee of Target, the Buyer or any of its Affiliates, or otherwise directly or indirectly induce such person or
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entity to terminate his, her or its relationship with the Target, the Buyer or any of its Affiliates.
7.3.4Nothing herein shall be construed to prohibit Seller from owning 5% or less of any class of securities of a publicly traded company which is materially engaged in the Business Description.
7.4Reasonableness of Restriction. Seller acknowledges and agrees that the geographical and time limitations contained in Section 7.3 are reasonable and properly required for the adequate protection of Buyer and the Target. Seller agrees that if any portion of these restrictions contained in this Article 7 are held to be unreasonable, arbitrary or against public policy, then such restriction(s) shall be considered divisible, both as to the time and geographical area, and a lesser time period or geographic area, which is determined by a court of competent jurisdiction to be reasonable, non-arbitrary and not against public policy may be enforced. Seller agrees that the remedy at law for any breach of the covenants contained in this Article 7 will be inadequate and will be difficult to ascertain and, therefore, in the event of the breach or threatened breach of any such covenants, Buyer, in addition to any other remedy, shall have the right to enjoin Seller from any threatened or actual breach of such covenants.
The covenants of this Article 7 shall survive the execution and delivery of this Agreement and any of the agreements made in connection herewith.
VIII. INDEMNIFICATION
8.1 Indemnification By Seller. Seller shall indemnify and defend Buyer and its respective Affiliates (including the Target) and their respective Representatives (collectively, the "Buyer Indemnitees") against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:
8.1.1any material breach of the representations or warranties of Seller contained in this Agreement or in any certificate or instrument delivered by or on behalf of Seller pursuant to this Agreement as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date; or
8.1.2any material breach or non-fulfilment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement; or
8.1.3any Claim for brokerage or finder’s fees or commissions or similar payments based upon an agreement or understanding alleged to have been made by Seller or Target in contemplation of this Agreement.
8.2 Indemnification by Buyer. Buyer shall indemnify and defend each of Seller and each of his respective Affiliates and their respective Representatives (collectively, the "Seller Indemnitees") against, and shall hold each of them harmless from and against, and shall pay and
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reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:
8.2.1 any material breach of the representations or warranties of Buyer contained in this Agreement or in any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date; or
8.2.2any material breach or non-fulfilment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement; or
8.2.3any Claim for brokerage or finder’s fees or commissions or similar payments based upon an agreement or understanding alleged to have been made by Buyer in contemplation of this Agreement.
8.3 Indemnification Procedures.
8.3.1The party making a claim under Article 8 is referred to as the "Indemnified Party” and the party against whom such claims are asserted under this Article 8 is referred to as the "Indemnifying Party".
8.3.2Third Party Claims. If any Indemnified Party receives notice of a Claim made or threatened by any person who is not a party (or Affiliate or Representative of a party) (a "Third-Party Claim") against such Indemnified Party for which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party written notice thereof within a commercially reasonable time period. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights by reason of such failure. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third-Party Claim at the Indemnifying Party's expense and with Indemnifying Party's own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that if the Indemnifying Party is Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third-Party Claim that (x) is asserted directly by or on behalf of a Person that is a supplier or customer of the Target, or (y) seeks an injunction or other equitable relief against the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third-Party Claim with counsel selected by it subject to the Indemnifying Party's right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. Seller and Buyer shall cooperate with each other in all reasonable respects in connection
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with the defense of any Third-Party Claim, including making available records relating to such Third-Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third-Party Claim.
8.3.3.1Settlement of Third-Party Claims. The Indemnifying Party shall not enter into settlement of any Third-Party Claim without the prior written consent of the Indemnified Party, which shall not be unreasonably withheld, delayed or conditioned. In no event shall Indemnifying Party accept a settlement of any Third-Party Claim which does not unconditionally release the Indemnified Party. If the Indemnified Party has assumed the defense of a Third-Party Claim, it shall not agree to any settlement without the written consent of the Indemnifying Party, which consent shall not be unreasonably withheld, delayed, or conditioned.
8.3.4 Other Claims. Any claim or action by an Indemnified Party on account of a Loss which does not result from a Third-Party Claim (a "Direct Claim") shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof. Such notice shall describe the Direct Claim in reasonable detail and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party.
8.4 Limitations. The indemnification provided for in this Article 8 shall be subject to the following limitations:
8.4.1Seller and Target shall not be liable to the Buyer Indemnitees for indemnification under Article 8 until the aggregate amount of all Losses in connection with the indemnification exceeds 1% of the Purchase Price (the “Basket”). Once the liability exceeds the Basket, Seller shall be required to pay or be liable for all such Losses from the first dollar, provided however, the aggregate amount of all combined Losses, including attorney’s fees and expenses, shall not exceed 10% of the cash payments made by Buyer to Seller under Section 2.3 (“Seller Cap”).
8.4.2Buyer shall not be liable to the Seller Indemnitees for indemnification under Article 8 until the aggregate amount of all Losses with respect to the indemnification exceeds the Basket. Once the liability exceeds the Basket, Buyer shall be required to pay or be liable for all such Losses from the first dollar, provided however, the aggregate amount of all combined Losses, including attorney’s fees and expenses, shall not exceed 10% of the Purchase Price (“Buyer Cap”).
8.4.3EXCEPT IN THE CASE OF FRAUD OR INTENTIONAL MISCONDUCT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF PROFITS, ARISING FROM OR RELATED TO A BREACH OF THIS AGREEMENT OR THE OPERATION OF THE TARGET FOLLOWING CLOSING, EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE
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POSSIBILITY OF SUCH DAMAGES.
8.4.4If the Closing occurs, Seller will have no liability (for indemnification or otherwise) with respect to any representation or warranty, or covenant or obligation to be performed and complied with prior to the Closing Date, unless on or before the one-year anniversary of the Closing Date, Buyer notifies Seller of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by Buyer. If the Closing occurs, Buyer will have no liability (for indemnification or otherwise) with respect to any representation or warranty, or covenant or obligation to be performed and complied with prior to the Closing Date, unless on or before one-year anniversary of the Closing Date Seller notifies Buyer of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by Seller.
8.5 Exclusive Remedies. The parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud, criminal misconduct or willful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article 8. Nothing in this Section 8.5 shall limit any party’s right to seek and obtain any equitable relief to which such party may be entitled under Sections 6.3, 6.4, or 9.2.
IX. MISCELLANEOUS
9.1Public Announcements. Unless otherwise required by applicable law, no party to this Agreement shall make any public announcements concerning or relating to this Agreement or the transactions contemplated herein nor otherwise communicate with any news media without the prior written consent of the other party. In the event the parties agree on a public announcement, the parties shall cooperate as to the timing and contents of any such announcement.
9.2Confidentiality. Between the Effective Date and the Closing Date, Buyer and Seller will maintain in confidence, and will cause the directors, officers, employees, agents, and advisors of Buyer and the Target to maintain in confidence, and not use to the detriment of another party or any Affiliate any confidential and proprietary information received from the other party (including, without limitation, historical business information, customer information, and confidential specifications, procedures and concepts for establishing, promoting and operating the party’s respective businesses) whether provided in writing or orally when originally furnished by another party in connection with this Agreement or the party’s Non-Disclosure Agreement dated August 23, 2019 (“NDA”), unless (a) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (b) the use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the Agreement, or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings. If the transaction contemplated by this Agreement is not consummated, each party will return or destroy as much of such written information as the other party may reasonably request. Whether or not the Closing takes place, Seller waives, and will upon Buyer’s request cause the Target to waive, any cause of action, right, or claim arising out of the access of Buyer or its representatives to any trade secrets or
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other confidential information of the Target except for the intentional competitive misuse by Buyer of such trade secrets or confidential information. If the Contemplated Transactions are consummated, the restrictions upon Seller stated in this Section 9.2 shall survive the Closing for the Non-Competition Period.
9.3Notices. Any notice, demand, acknowledgment or other communication which one of the parties wishes or is required to give, make or send hereunder to the other party hereto shall be in writing. The written notice shall be deemed to be sufficiently given, made or sent, if delivered by hand to a representative of such party, or mailed by certified mail, return receipt requested, or by overnight delivery service, addressed as follows:
9.4Amendment or Modification. No amendment, modification, termination or waiver of any provision of this Agreement will be effective unless the same is in writing and signed by both Parties.
9.5Assignment. Except as otherwise specifically provided herein, neither of the Parties shall assign or transfer this Agreement without first obtaining the written consent of all non-assigning and/or non-transferring Parties. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.
9.6Severability. If one or more provisions of this Agreement are deemed to be invalid, unenforceable, or illegal for any reason, the provision deemed invalid, unenforceable or illegal
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shall be stricken from the Agreement and the remainder of the Agreement shall remain in full force an effect.
9.7Entire Agreement. This Agreement and any document delivered pursuant to this Agreement constitute the entire agreement between the Parties with respect to the transaction contemplated hereby and supersedes all prior agreement and understandings, if any, with respect to the subject matter hereof.
9.8No Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
9.9Knowing and Voluntary. The Parties agree that they have read and understand the terms of this Agreement and that they voluntarily entered into this Agreement having discussed all the terms and conditions with their respective legal counsel.
9.10Choice of Law; Jurisdiction and Venue. This Agreement shall be governed and controlled by the laws of the state of Nevada, without reference to its choice of law principal.
9.11Expenses and Attorneys’ Fees. Each of the Parties hereto must pay their own expenses incurred in connection with the negotiation, execution and consummation of this Agreement, including, without limitation, the fees and expenses of their respective attorneys, accountants, and advisors. Notwithstanding the foregoing, in the event any Party brings suit to construe or enforce the terms hereof, or raises this Agreement as a defense in a suit brought by another Party, the prevailing Party, as determined by the trier, court or arbitrator with jurisdiction over the matter, shall be entitled to recover its attorneys’ fees and expenses incurred in bringing, defending and/or maintaining any such action.
9.12Rules of Construction. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; (c) “or” is not exclusive; and (d) provisions apply to successive events and transactions. The language used in this Agreement will
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be deemed to be the language chosen by all Parties to express their mutual intent and no rule of strict construction against any party will apply to any term or condition of this Agreement.
9.13Headings and Captions. The headings and captions in this Agreement are for convenience of reference only and do not define or limit any of the terms or provisions of this Agreement.
9.14Counterparts. This agreement may be executed in one or more counterparts all of which when taken together constitute one and the same instrument. A signed counterpart is as binding as an original. The Parties hereto may transmit signatures via facsimile, telecopy or electronic transmission and such signature will be binding and have the same effect as a manual signature upon this document.
9.15Survival of Representations, Warranties, and Covenants. The representations, warranties, covenants, and indemnities contained in this Agreement and in any document delivered pursuant to this Agreement will survive the execution and delivery of this Agreement and the Closing.
9.16Additional Tax Matters. The allocation of the Target’s 2019 financial performance to Seller shall be done by the closing of the books method, with Seller allocated only its percentage share of the financial performance through the Closing Date.
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MEMBERSHIP INTEREST PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed effective as of the date written above.
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EXHIBIT A
PROMISSORY NOTE
[Insert Note]
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EXHIBIT B
EMPLOYMENT AGREEMENT
[Insert Employment Agreement]
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
TCA BEYOND COMMERCE, LLC
A WYOMING LIMITED LIABILITY COMPANY
THE UNITS REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES ACTS OR LAWS OF ANY STATE IN RELIANCE UPON EXEMPTIONS UNDER THOSE ACTS AND LAWS. THE SALE OR OTHER DISPOSITION OF SUCH UNITS IS RESTRICTED AS STATED IN THIS AGREEMENT, AND IN ANY EVENT IS PROHIBITED UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL THAT SUCH SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES ACTS AND LAWS. BY ACQUIRING UNITS REPRESENTED BY THIS AGREEMENT, EACH MEMBER REPRESENTS THAT IT WILL NOT SELL OR OTHERWISE DISPOSE OF ITS UNITS WITHOUT COMPLIANCE WITH THE PROVISIONS OF THIS AGREEMENT AND REGISTRATION OR OTHER COMPLIANCE WITH THE AFORESAID ACTS AND LAWS AND THE RULES AND REGULATIONS ISSUED THEREUNDER.
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
TCA BEYOND COMMERCE, LLC
A WYOMING LIMITED LIABILITY COMPANY
This Amended and Restated Limited Liability Company Agreement (collectively with all schedules and exhibits hereto, as amended and/or restated from time to time, this “Agreement”), dated as of December 31, 2019, is made and entered into by and among the Persons whose names and addresses are listed on the Schedule of Members attached hereto as Schedule A. Unless otherwise indicated, capitalized words and phrases in this Agreement shall have the meanings set forth in the Glossary of Terms attached hereto as Exhibit A.
RECITALS:
WHEREAS, on December 23, 2019, TCA Beyond Commerce, LLC (collectively with its successors and assigns, the “Company”) was organized as a Wyoming limited liability company and its sole initial member entered into a limited liability company agreement (the “Prior LLC Agreement”), governing the organization and management of the Company;
WHEREAS, in connection with the Financing (as defined below), the Company is converting all of its outstanding membership interests under and pursuant to the Prior LLC Agreement (the “Existing Interests”) into Common Units (as defined herein) and issuing Series A Preferred Units to TCA Credit and Series B Preferred Units to TCA ICAV, as provided on Schedule A hereto and as further set forth in this Agreement;
WHEREAS, on December 31, 2019, the Company entered into a Securities Purchase Agreement, dated as of December 31, 2019 (as amended and/or restated from time to time, the “Purchase Agreement”), by and among the Company, Beyond Commerce, Inc., the parent company of the Company and a Nevada corporation (“BYOC”), and TCA Special Situations Credit Strategies ICAV (“TCA ICAV”), among others, pursuant to which TCA ICAV advanced principal amounts to BYOC and the Company, as co-borrowers (the transactions contemplated by the Purchase Agreement are referred to herein as the “Financing”);
WHEREAS, BYOC currently owes $450,000.00 to TCA Global Credit Master Fund, LP (including affiliates thereof, “TCA Credit”), pursuant to that certain Financial Consulting Services letter agreement, dated July 30, 2019, by and between BYOC and TCA Credit (as amended, the “Financial Consulting Services Agreement”);
WHEREAS, concurrently with the execution of this Agreement, BYOC, the Company and TCA Credit are executing an Exchange Agreement, pursuant to which, in exchange for $250,000.00 of the $450,000.00 in financial consulting services fees currently owed by BYOC to TCA Credit, BYOC has caused the Company to issue, and the Company acknowledged the benefit of the Financing to the Company and agreed to issue, certain Common Units and Series A Preferred Units to TCA Credit, as provided on Schedule A hereto;
WHEREAS, in consideration of the Financing, the Company has agreed to issue a Series B Preferred Unit to TCA ICAV, as provided on Schedule A hereto;
WHEREAS, the Company and its existing member wish to amend and restate the Prior LLC Agreement in its entirety and the parties hereto wish to enter into an amended and restated limited liability company agreement of the Company for the purposes of, among other things, creating multiple classes of Units, admitting BYOC as a Member, admitting TCA Credit as a Member, admitted TCA ICAV as a Member, setting forth the provisions regarding the governance and management of the Company, issuing Series A Preferred Units to TCA Credit and issuing Series B Preferred Units to TCA ICAV, as reflected in the Schedule of Members.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the parties hereto hereby restate the Prior LLC Agreement in its entirety as follows:
ARTICLE I
FORMATION
1.1 Formation; General Terms; Effective Date. The Company was formed on December 23, 2019, as a Wyoming limited liability company by the filing of Articles of Organization with the Wyoming Secretary of State. The Persons listed on the Schedule of Members are the Members of the Company. This Agreement shall be effective immediately on the date hereof (the “Effective Date”). The rights and obligations of the Members and the terms and conditions of the Company shall be governed by the Act and this Agreement. To the extent the Act and this Agreement are inconsistent with respect to any subject matter covered in this Agreement, this Agreement shall govern to the extent permitted by law. The Board shall cause to be executed and filed on behalf of the Company all other instruments or documents, and shall do or cause to be done all such filing, recording, or other acts as may be necessary or appropriate from time to time to comply with the requirements of law for the continuation and operation of a limited liability company in Wyoming and in the other states and jurisdictions in which the Company shall transact business.
1.2 Name. The name of the Company shall be “TCA Beyond Commerce, LLC”. The name of the Company shall be the exclusive property of the Company, and no Member shall have any rights, commercial or otherwise, in the Company’s name or any derivation thereof. The Company’s name may be changed only by an amendment to the Articles of Organization of the Company.
1.3 Purposes. The purposes of the Company shall be (i) to own and operate a solar energy business (the “Business”), (ii) to own, hold, maintain, encumber, lease, sell, transfer or otherwise dispose of all property or assets or interests in property or assets as may be necessary, appropriate or convenient to accomplish the activities described in clause (i) above, (iii) subject to Section 5.3(i), to incur indebtedness or obligations in furtherance of the activities described in clause (i) above, and (iv) subject to the provisions herein contained, to engage in any activity for
which limited liability companies may be organized in the State of Wyoming, all on the terms and conditions and subject to the limitations set forth in this Agreement.
1.4 Principal Place of Business. The principal place of business of the Company shall be at such place as the Board may designate from time to time, which need not be in the State of Wyoming. The Company may have such other offices (within or without the State of Wyoming) as the Board may designate from time to time.
1.5 Registered Agent; Registered Office. The Company’s registered agent is Vcorp Services, LLC and the Company’s registered office in the State of Wyoming is 1908 Thomes Avenue, Cheyenne, Wyoming 82001. The Company’s registered agent and office may be changed from time to time only by the Board.
1.6 Commencement and Term. The Company commenced at the time and on the date appearing in the Articles of Organization of the Company and shall continue until it is dissolved, its affairs are wound up and final liquidating distributions are made pursuant to this Agreement and in compliance with the Act.
ARTICLE II
UNITS; CAPITAL CONTRIBUTIONS
2.1 Classes of Units; Voting; Exchange; Redemption.
(a) Classes of Units. All interests of the Members in distributions and other amounts specified in this Agreement, as well as the rights of the Members to vote on, consent to, or approve any matter related to the Company, shall be denominated in units of membership interests in the Company (each a “Unit” and collectively, the “Units”); and the relative rights, privileges, preferences and obligations of the Members with respect to Units shall be determined under this Agreement and the Act to the extent provided herein and therein. The number and the class of Units held by each Member shall be set forth opposite each Member’s name on the Schedule of Members. The classes of Units as of the Effective Date are as follows: Common Units (the “Common Units”); Series A Convertible Redeemable Preferred Units (the “Series A Preferred Units”) and Series B Preferred Units (the “Series B Preferred Units”). The Common Units shall have no voting rights and be redeemable by the Company in accordance with the provisions of Section 2.1(e). The Series A Preferred Units shall have no voting rights, be convertible into common stock of BYOC (as defined below) in accordance with the provisions of Section 2.1(d) and shall be redeemable by the Company for cash in accordance with the provisions of Section 2.1(e). The Series B Preferred Units shall have sole voting rights and be redeemable by the Company in accordance with the provisions of Section 2.1(g). The Company shall be authorized to issue not more than 10,000 Common Units, not more than 250,000 Series A Preferred Units and not more than 1 Series B Preferred Unit. Each Series A Preferred Unit shall have a stated value equal to $1.00, each Series B Preferred Unit shall have a stated value equal to $0.01, and each Common Unit shall have a stated value equal to $0.01 (the “Stated Value”).
(b) Issuance of Units. The Company shall issue Common Units to Beyond Commerce, Inc., a Nevada corporation (“BYOC”), on the Effective Date. The Company shall issue Common
Units and Series A Preferred Units to TCA Credit on the Effective Date, in consideration of the value delivered to the Company provided in the recitals hereto. The Company shall issue Series B Preferred Units to TCA ICAV on the Effective Date, in consideration of the value delivered to the Company provided in the recitals hereto. The Common Units, the Series A Preferred Units and the Series B Preferred Units shall be issued in the amounts and to the individuals and entities provided on Schedule A hereto. The issuances and exchanges provided herein shall be effective on the Effective Date. Any other issuances shall be subject to approval of the Requisite Series B Preferred Holders pursuant to Section 5.3.
(c) Voting. The Members shall have no right to vote on any matter, except as specifically set forth in this Agreement or as may be required under the Act. Any such vote shall be at a meeting of the Members entitled to vote or in writing. Each Series B Preferred Unit shall be entitled to cast one (1) vote on any matter requiring approval of such Units (as calculated as of the time of the vote) and on any matter requiring the approval of the Members.
(d) Conversion of Series A Preferred Units for Common Stock of BYOC.
(i) Optional Exchange. BYOC hereby agrees that any Holder of Series A Preferred Units shall have the right, at such Holder’s option, at any time and from time to time to convert all or any portion of the Series A Preferred Units held by such Holder into common stock of BYOC (the “Conversion Shares”) by providing the Company with written notice of such conversion. A conversion of Series A Preferred Units pursuant to this Section 2.1(d)(i) shall be effective as of the Company’s receipt of a written conversion notice (“Notice of Conversion”), provided that the conversion notice may specify that the conversion be conditioned upon, and be effective as of, a later date or the occurrence of a later event. The date on which the conversion shall be effective shall be referred to as the “Conversion Date”.
(ii) Number of Conversion Shares. In connection with any exchange pursuant to Section 2.1(d)(i), subject to the limitations provided herein, each Series A Preferred Unit shall have a value equal to the Stated Value and shall be exchangeable into Conversion Shares. The Holder of Series A Preferred Units shall have the right from time to time, and at any time following the date hereof, to convert all or any part of the Series A Preferred Units into fully paid and non-assessable Conversion Shares, or any shares of capital stock or other securities of BYOC into which such Conversion Shares shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder of Series A Preferred Units be entitled to convert any portion of the Series A Preferred Units in excess of that portion of the Series A Preferred Units upon conversion of which the sum of (1) the number of Conversion Shares beneficially owned by the Holder of the Series A Preferred Units and its affiliates (other than shares of common stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Series A Preferred Units or the unexercised or unconverted portion of any other security of the Holder of the Series A Preferred Units subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of Conversion Shares issuable upon the conversion of the portion of the Series A Preferred Units with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder of the Series A Preferred Units and its affiliates of more than 4.99% of the outstanding shares of common stock of BYOC (the “Beneficial Ownership Limitation”). For purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance
with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder. A Holder of Series A Preferred Units Holder may decrease the Beneficial Ownership Limitation at any time and such Holder, upon not less than 61 days’ prior notice to the Company and BYOC, may increase the Beneficial Ownership Limitation provisions of this Section 2.1(d)(ii), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the common stock of BYOC outstanding immediately after giving effect to the issuance of shares of common stock of BYOC upon conversion of the Series A Preferred Units held by such Holder and the provisions of this Section 2.1(d)(ii) shall continue to apply. Any such increase will not be effective until the 61st day after such notice is delivered to the Company and BYOC. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2.1(d)(ii) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.
(iii) Conversion Price. Subject to the adjustments described herein, the Conversion Price shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by BYOC relating to BYOC’s securities or the securities of any subsidiary of BYOC, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 90% multiplied by the Market Price (as defined herein) (representing a discount rate of 10%). “Market Price” means the lowest closing bid price for BYOC’s common stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the lowest closing bid price on the Over-the-Counter Bulletin Board (the “OTCBB”), OTCQB or applicable trading market as reported by a reliable reporting service (“Reporting Service”) or, if the OTCBB is not the principal trading market for such security, the trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. To the extent the Conversion Price of BYOC’s common stock closes below the par value per share, BYOC will take all steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. BYOC agrees to honor all conversions submitted pending this adjustment. Furthermore, the Conversion Price may be adjusted downward if, within three (3) business days of the transmittal of the Notice of Conversion to BYOC, the common stock of BYOC has a closing bid which is 5% or lower than that set forth in the Notice of Conversion. If the shares of BYOC’s common stock have not been delivered within three (3) business days to the Holder of the Series A Preferred Units, the Notice of Conversion may be rescinded. If in the case that BYOC’s commons stock is not deliverable by DWAC (including if the BYOC’s transfer agent has a policy prohibiting or limiting delivery of shares of the BYOC’s common stock specified in a Notice of Conversion), an additional 10% discount will apply for all future conversions. If in the case that BYOC’s common stock is “chilled” for deposit into the DTC system and only eligible for clearing deposit, an additional 7.5% discount shall apply for all future conversions while the “chill” is in effect. If in the case of both of the above, an additional cumulative 17.5% discount shall apply. Additionally, if BYOC ceases to be a reporting company pursuant to the 1934 Act or if the Series A Preferred Units
cannot be converted into free trading shares after one hundred eighty-one (181) days following the Conversion Date, an additional 15% discount will be attributed to the Conversion Price. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Holder of the Series A Preferred Units in order to determine the Conversion Price. “Trading Day” shall mean any day on which the common stock of BYOC is tradable for any period on the OTCBB, OTCQB or on the principal securities exchange or other securities market on which the common stock is then being traded. BYOC shall be responsible for the fees of its transfer agent, legal opinions, and all DTC and clearing fees. If at any time the Conversion Price as determined hereunder for any conversion would be less than the par value of the common stock, then at the sole discretion of the Holder of the Series A Preferred Units, the Conversion Price hereunder may equal such par value for such conversion and the Conversion Amount for such conversion may be increased to include such additional amount to be added to the Conversion Amount to the extent necessary to cause the number of conversion shares issuable upon such conversion to equal the same number of conversion shares as would have been issued had the Conversion Price not been adjusted to the par value price. In the event of a dispute as to the number of shares of common stock issuable to the Holder of the Series A Preferred Units in connection with a conversion, BYOC shall issue to the Holder of the Series A Preferred Units the number of shares of common stock determined by the Holder of the Series A Preferred Units in its reasonable discretion.
(iv) Effect of Conversion. Notwithstanding anything in this Agreement to the contrary, each Series A Preferred Unit that has been converted into Conversion Shares pursuant to this Section 2.1(d) shall cease to have the rights, preferences and privileges provided under this Agreement for the Series A Preferred Units.
(v)Redemption of Common Units of Investor in Connection with each Conversion. In connection with any conversion of Series A Preferred Units pursuant to this Section 2.1(d) the Company shall redeem from the Investor concurrently with such conversion Common Units in an amount equal to the Series A Preferred Units then being converted.
(vi)Make-Whole Provision. Upon conversion by a Holder of Series A Preferred Units into Conversion Shares issued pursuant to a Conversion Notice, provided that such Holder realizes a net amount from such conversion and subsequent sale (such net realized amount, the “Realized Amount”) equal to less than the Stated Value of the Series A Preferred Units converted pursuant to the relevant Conversion Notice (“Converted Stated Value”), BYOC shall issue to such Holder additional shares of BYOC’s common stock in an amount equal to: (i) the Converted Stated Value; minus (ii) the Realized Amount, as evidenced by a reconciliation statement from such Holder (a “Sale Reconciliation”) showing the Realized Amount from the sale of the Conversion Shares; divided by (iii) the average volume weighted average price of BYOC’s Common Stock during the five (5) Business Days immediately prior to the date upon which the Holder delivers notice (the “Make-Whole Notice”) to BYOC that such additional shares are requested by such Holder (the “Make-Whole Stock Price”) (such number of additional shares to be issued, the “Make-Whole Shares”). Upon receiving the Make-Whole Notice and Sale Reconciliation evidencing the number of Make-Whole Shares requested, BYOC shall instruct its transfer agent to issue certificates representing the Make-Whole Shares, which
Make-Whole Shares shall be issued and delivered in the same manner and within the same time frames s set forth herein. The Make-Whole Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of BYOC’s common stock. Following the sale of the Make-Whole Shares by such Holder: (i) in the event that such Holder receives net proceeds from such sale which, when added to the Realized Amount from the prior relevant Conversion Notice, is less than the Conversion Amount specified in the relevant Conversion Notice, the Holder shall deliver an additional Make-Whole Notice BYOC following the procedures provided previously in this paragraph, and such procedures and the delivery of Make-Whole Notices and issuance of Make-Whole Shares shall continue until the Converted Stated Value has been fully satisfied; and (ii) in the event that the Holder received net proceeds from the sale of Make Whole Shares in excess of the Converted Stated Value, such excess amount shall be applied to satisfy any and all amounts owed hereunder in excess of Converted Stated Value.
(e) Redemption of Series A Preferred Units and Common Units of TCA Credit. On the Redemption Date, the Company shall, redeem 100% of the Series A Preferred Units outstanding as of such date and 100% of the Common Units held by TCA Credit as of such date (such amount, the “Redeemed Units”), for cash, in an amount equal to the Redemption Price. “Redemption Date” shall be the date that is twenty-four (24) months from the date hereof. “Redemption Price” shall mean, with respect to the Redeemed Units, the Stated Value of such Redeemed Units. Upon payment of the Redemption Price, all rights of the Holder in the units so redeemed and paid, shall cease, and such units shall no longer be deemed issued and outstanding.
(f) Redemption of Series B Preferred Units of TCA ICAV. Upon (i) satisfaction in full of all Obligations (as defined in the Purchase Agreement) owing by BYOC and the Company to TCA ICAV in connection with the Financing, as determined by TCA ICAV in its sole discretion, (ii) the full cash redemption and/or conversion of all Series A Preferred Units and Common Units held by TCA Credit, as determined by TCA Credit in its sole discretion, and (iii) satisfaction in full of all obligations owing by BYOC to TCA Credit pursuant to the Financial Consulting Services Agreement, as determined by TCA Credit in its sole discretion, the Series B Preferred Units may be redeemed by the Company for an amount equal to $0.01.
(g) Treatment of Repurchased Units. Any Unit which reverts to the Company pursuant to conversion or redemption shall no longer be deemed to be an “outstanding” Unit.
(h) Record of Units Outstanding; Unit Certificates. The Secretary will maintain a current and updated Schedule of Members, the Units held by such Members, and such Members’ capital contributions. Units will not be represented by certificates unless so requested by any Unit Holder.
(i) Effect of Subsequent Common Unit Issuances; Anti-Dilution. Upon a Subsequent Common Unit Issuance, the Company shall, immediately and concurrently with such Subsequent Common Unit Issuance, issue to each Series A Preferred Holder additional Common Units in an amount which shall maintain such Series A Preferred Holder’s percent ownership of the Company’s issued and outstanding Common Units immediately prior to such Subsequent Common Unit Issuance (e.g., if a Series A Preferred Holder owns 10% of the issued and outstanding Common Units prior to a Subsequent Common Unit Issuance, the Company shall issue that number of Common Units to such Series A Preferred Holder to ensure that such Series
A Preferred Holder owns 10% of the issued and outstanding Common Units following such Subsequent Common Unit Issuance). Notwithstanding the Company’s failure to actually issue the Common Units pursuant to the preceding sentence, such Common Units shall automatically be deemed issued to each Series A Preferred Holder at the time of a Subsequent Common Unit Issuance.
2.2 Additional Capital Contributions; Participation Rights. The Board, subject to the written approval of the Holders of the Series B Preferred Units, may from time to time authorize and cause the Company to issue additional Units, securities or rights convertible into Units, options or warrants to purchase Units, or any combination of the foregoing, consisting either of the classes of Units authorized hereby or as otherwise may be authorized in accordance with the terms hereof (collectively, “New Securities”), and with such rights, privileges, preferences and restrictions and other terms and conditions, and in exchange for such cash or other lawful consideration, as the Board may determine; provided, however, no Member shall have any obligation to contribute additional capital to the Company except to the extent expressly set forth in the second paragraph of Section 3.3. Any such New Securities will be issued pursuant to subscription agreements and such other documents deemed appropriate by the Board.
2.3 Liability of Members. No Member shall be liable for any debts or losses of capital or profits of the Company or be required to guarantee the liabilities of the Company. Except as otherwise expressly set forth herein, no Member shall be required to contribute or lend funds to the Company.
2.4 Capital Contributions. The initial Capital Contribution (if any) and additional Capital Contribution(s) (if any) of each Member to the capital of the Company shall be set forth opposite such Member’s name under the heading “Cash Contribution” on the Schedule of Members and in the Company’s books and records.
2.5 Capital Accounts.
(a) A separate capital account (each a “Capital Account”) shall be maintained for each Member in accordance with the rules of Treasury Regulations Section 1.704-1 (b)(2)(iv), and this Section 2.5 shall be interpreted and applied in a manner consistent therewith. Whenever the Company would be permitted to adjust the Capital Accounts of the Members pursuant to Treasury Regulations Section 1.704-1 (b)(2)(iv)(f) to reflect revaluations of Company property, the Company, at the direction of the Board, may so adjust the Capital Accounts of the Members. In the event that the Capital Accounts of the Members are adjusted pursuant to Treasury Regulations Section 1.704-1 (b)(2)(iv)(f) to reflect revaluations of Company property, (i) the Capital Accounts of the Members shall be adjusted in accordance with Treasury Regulations Section 1.704-1 (b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain or loss, as computed for book purposes, with respect to such property, (ii) the Members’ distributive shares of depreciation, depletion, amortization and gain or loss, as computed for tax purposes, with respect to such property shall be determined so as to take account of the variation between the adjusted tax basis and book value of such property in the same manner as Section 704(c) allocations are made under Section 4.3, and (iii) the amount of upward and/or downward adjustments to the book value of the Company property shall be treated as income, gain, deduction and/or loss for purposes of applying the allocation provisions of Article IV. In the event that Section 704(c) of the Code applies to Company property, the Capital Accounts of the
Members shall be adjusted in accordance with Treasury Regulations Section 1.704-1 (b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain and loss, as computed for book purposes, with respect to such property.
(b) As of the Effective Date, each Member’s Capital Account is reflected opposite such Member’s name under the heading “Capital Account” on the Schedule of Members. Such Capital Account of each Member as of the Effective Date reflects all transactions contemplated in this Agreement, including the Financing. In the event of a default by any Member to make any Capital Contribution required by this Agreement, the Company shall have all the rights and remedies provided by law, including the right to recover the amounts of the defaulted contributions and any and all other damages.
(c) Except as otherwise expressly provided in this Agreement, or, unless consented to in writing by all of the Members, (i) no Member shall be entitled to withdraw or receive any part of its Capital Account or receive any distribution with respect to its Units, (ii) no Member shall be entitled to receive any interest on its Capital Account or Capital Contributions, (iii) each Member shall look solely to the assets of the Company for the return of its Capital Contributions and distributions with respect to its Units, (iv) no Member shall have any right or power to demand or receive any property or cash from the Company, (v) no Member shall have priority over any other Member as to the return of its Capital Contributions and (vi) no Member shall be required to restore any negative balance in its Capital Account.
2.6 Exchange of Existing Interests; Waiver of Anti-Dilution and Pre-Emptive Rights.
Concurrently with the execution of this Agreement, the Company is converting all of its outstanding membership interests under and pursuant to the Prior LLC Agreement (regardless of class or type of membership interest and including the Existing Interests of BYOC) into Common Units. In furtherance thereof, BYOC shall receive Common Units (in the amounts set forth on Schedule A), which such Common Units shall be issued by the Company to BYOC on the Effective Date pursuant to Section 2.1(b)(iii).
ARTICLE III
DISTRIBUTIONS
3.1 Distributions of Available Cash Flows
(a) Subject to Section 2.1(e), Section 3.2 and Section 3.4, the Company may distribute Available Cash On Hand, from time to time upon the majority vote of the Board and consent of the Holders of the Series B Preferred Units, to the Holders of Series A Preferred Units and Common Units pro rata based upon the number of Units held thereby (with respect to the Series A Preferred Units, on an as-converted to Common Units basis).
(b) The Company shall engage an accounting firm selected by the Board from time to time to review and audit the Company’s compliance with this Section 3.1 no less frequently than once per calendar year, and the Company agrees that it will provide such accounting firm with reasonable access to the books, records and properties of the Company and its Subsidiaries in order to conduct such review and audit. In the event that such accounting firm determines Available Cash On Hand for any period was not distributed in accordance with this Section 3.1,
the Company shall adjust future distributions as necessary to bring the Company into compliance with this Section 3.1 as soon as practicable thereafter.
3.2 Distributions Upon Liquidation or a Deemed Liquidation Event.
(a) Upon a Liquidation or a Deemed Liquidation Event, upon written request of the Series B Preferred Holders, after payment of, or other adequate provision for, the debts and obligations of the Company, including the expenses of its liquidation and dissolution or other transaction expenses, the Company shall distribute the net proceeds or assets available for distribution, whether in cash or in other property (“Net Liquidation Proceeds”), to the Holders of Series A Preferred Units and Common Units as follows:
(i) First, to the Holders of Series A Preferred Units on a pari passu basis, until the Holders of such Series A Preferred Units receive, in respect of each Series A Preferred Unit held by them, the Stated Value; and
(ii) Next, to the Holders of Common Units, pro rata in proportion to the number of Common Units held by such Holders.
(b) A “Deemed Liquidation Event” shall mean (a) any merger, consolidation, recapitalization or sale of the Company, transfer of Units or other transaction or series of transactions in which the Members and their Permitted Transferees immediately prior to such transaction do not own and control a majority of the voting power represented by the outstanding equity of the surviving entity after the closing of such transaction, (b) a sale, exclusive license or other transfer or disposition of all or substantially all of the Company’s and/or its Subsidiaries’ assets (determined on a consolidated basis) to any Person. For avoidance of doubt, in the event of a Deemed Liquidation Event pursuant to this Section 3.2(b), if any portion of the consideration payable directly to the Members in respect of their Units and/or if any portion of the consideration that is payable to the Members is placed into escrow and/or is payable to the Members subject to contingencies, the principal transaction agreement shall provide that (a) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of Common Units and Series A Preferred Units in accordance with Section 3.2(a) as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event and (b) any additional consideration which becomes payable to the Members of the Company upon release from escrow or satisfaction of contingencies shall be allocated among the holders of Common Units and Series A Preferred Units in accordance with Section 3.2(a) after taking into account the previous payment of the Initial Consideration as part of the same transaction.
3.3 Withholding. If any federal, foreign, state or local jurisdiction requires the Company to withhold taxes or other amounts with respect to any Member’s allocable share of taxable income or any items thereof, or with respect to distributions, the Company shall withhold from distributions or other amounts then due to such Member an amount necessary to satisfy the withholding responsibility and shall pay any amounts withheld to the appropriate taxing authorities. In such a case, for purposes of this Agreement the Member for whom the Company has paid the withholding tax shall be deemed to have received the withheld distribution or other amount due and to have paid the withholding tax directly and such Member’s share of cash distributions or other amounts due shall be reduced by a corresponding amount.
If it is anticipated that, at the due date of the Company’s withholding obligation, a Member’s share of cash distributions or other amounts due is less than the amount of the withholding obligation, the Member with respect to which the withholding obligation applies shall pay to the Company the amount of such shortfall within thirty (30) days after written notice by the Company. If a Member fails to make the required payment when due hereunder, and the Company nevertheless pays the withholding, in addition to the Company’s remedies for breach of this Agreement, the amount paid shall be deemed a recourse loan from the Company to such Member bearing interest at the Default Rate, and the Company shall apply all distributions or payments that would otherwise be made to such Member toward payment of the loan and interest, which payments or distributions shall be applied first to interest and then to principal until the loan is repaid in full.
3.4 Tax Distributions Notwithstanding the other provisions of this Article III, if at any time the cumulative Tax Liability of any Member exceeds the cumulative distributions to such Member pursuant to this Section 3.4 (such excess, the Member’s “Unpaid Tax Liability”), such Member shall have the right to receive a distribution of the Unpaid Tax Liability on a timely basis to make all required estimated payments of income taxes, but in no event later than April 10, June 10, September 10 and December 10 of each calendar year, provided that each Member shall be entitled to an additional payment on or before March 10 of each calendar year to the extent the total amounts distributed under this Section 3.4 with respect to the immediately preceding taxable year are less than each Member’s Unpaid Tax Liability as of the end of such year). Distributions pursuant to this Section 3.4 (each, a “Tax Distribution”) shall not reduce any Member’s right to distributions under any other provision of this Agreement. In the event that one or more Members are entitled to distributions pursuant to this Section 3.4 and the Company does not have available funds sufficient to make all such distributions in full, then such funds which are available for such distributions shall be distributed in proportion to the Members’ Unpaid Tax Liabilities. For purposes of this Agreement, the “Tax Liability” of any Member for each taxable year or portion thereof shall equal (A) the sum of (i) such Member’s distributive share of the taxable income or loss of the Company for such taxable year or portion thereof determined without regard to any taxable income or loss of the Company as a result of Section 704(c) of the Code allocated to a Member, if any, and (ii) the amount of any guaranteed payments realized by such Member in respect of its interest in the Company, multiplied by (B) the maximum combined federal and state marginal income tax rates generally applicable to individuals under the Code and the laws of the State of Wyoming, for each category of income (ordinary income, long-term capital gains, etc.), after taking into account the federal deduction for state income taxes, as determined by the Board.
3.5 Designation of Distributions. With respect to each distribution made by the Company pursuant to this Article III, the Company shall designate in a written notice delivered to the Members at the time of such distribution whether such distribution is made pursuant to Section 3.1, Section 3.2 or Section 3.4; provided, however, that the Company may, by written notice to the Members prior to the end of any fiscal year, re-designate as distributions made pursuant to Section 3.4 any amounts previously designated during such fiscal year as distributions made pursuant to Section 3.1 and, to the extent of such re-designation, the Company shall not be required to make a distribution pursuant to Section 3.4.
ARTICLE IV
ALLOCATIONS
4.1 Allocations. Subject to Section 4.2, net income or net loss (but not items thereof) (a) for any taxable year within which a Liquidation or disposition of substantially all of the assets of the Company occurs shall be allocated among the Holders of Common Units in such amounts and ratios as may be necessary to cause the Adjusted Capital Account balances of the Holders of Common Units to be as nearly equal to their Target Balances as possible and (b) for any other taxable year shall be allocated among the Members pro rata in accordance with the number of Common Units held by each Member.
4.2 Qualified Income Offset, etc. To the extent the allocation provisions of Section 4.1 would not comply with the Treasury Regulations under Section 704(b) of the Code, there is hereby included in this Agreement such special allocation provisions governing the allocation of income, gain, loss, deduction and credit (prior to making the remaining allocations in conformity with Section 4.1) as may be necessary to provide herein a so-called “qualified income offset,” and ensure that this Agreement complies with all provisions, including “minimum gain” provisions, relating to the allocation of so-called “nonrecourse deductions” and “partner nonrecourse deductions” and the charge back thereof as are required to comply with the Treasury Regulations under Section 704 of the Code. In particular, so-called “nonrecourse deductions” and “excess nonrecourse liabilities,” as defined in the Treasury Regulations under Sections 704 and 752 of the Code, shall be allocated to the Members in proportion to the ratios in which they would share distributions under Section 3.1(a) if all distributions were made pursuant to such section.
4.3 Section 704(c) Allocations. In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder, depreciation, amortization, gain, loss and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial book value, such allocation to be made by the Manager in accordance with any permissible method under the Treasury Regulations as may be approved by the Board.
4.4 Allocations for Tax Purposes. Subject to Sections 2.5(a) and 4.3, items of income, gain, deduction and loss for federal income tax purposes shall be allocated in the same manner as the corresponding items are allocated for book purposes pursuant to this Article IV.
4.5 Tax Elections. Except as otherwise specifically provided in this Agreement, any elections or other decisions relating to tax matters, including allocations of income, gain, loss, deduction or credit hereunder shall be made by the Board, in any manner that reasonably reflects the purpose and intention of this Agreement.
4.6 No Guaranteed Payments. Except to the extent required by applicable law for any tax year with respect to which allocations are made pursuant to Section 4.1(a), the Company and the Members shall not treat any of the rights of the Series A Preferred Holders under this Agreement as giving rise to any guaranteed payments within the meaning of Section 707(c) of the Code.
ARTICLE V
MANAGEMENT AND GOVERNANCE
5.1 Management by Board; Specific Acts Authorized; Delegation of Authority by the Board.
(a) General Authority of the Board; Size. The business, property and affairs of the Company shall be managed by a board of managers (the “Board”). The Board shall consist of not more than three (3) individuals designated pursuant to Section 5.1(b) (each a “Manager” and collectively, the “Managers”) and shall not be increased in size without the consent of the Requisite Series B Preferred Holders. The Requisite Series B Preferred Holders shall be entitled to elect two (2) Managers in their sole discretion and BYOC shall be entitled to appoint one (1). Subject to Section 5.3 and except as otherwise required by the Act, the Board shall have authority, power and discretion to manage and control the business, property and affairs of the Company and its Subsidiaries, to make all decisions regarding those matters and to supervise, direct and control the actions of the Officers and to perform any and all other actions customary or incident to the management of the Company’s business, property and affairs.
(b) Composition.
(i) The Requisite Series B Preferred Holders shall be entitled to designate, appoint and remove all Managers by delivering written notice thereof to the Company. The Requisite Series B Preferred Holders shall have the right to change any such designees at any time and to fill the vacancy left by the resignation or removal of any such designees by delivering written notice to the Company.
(c) Voting. Each Manager shall have one (1) vote on all matters before the Board.
(d) Meetings of the Board. Meetings of the Board may be called by any Manager. Notice of any meeting shall be given pursuant to Section 10.1 below to all Managers not less than forty- eight (48) hours prior to the meeting. A majority of the total number of Managers authorized pursuant to Section 5.1(a) shall be required to constitute a quorum for the transaction of business by the Board. Except as otherwise provided in this Agreement, a simple majority of the Managers present at any duly constituted meeting of the Board at which a quorum is present shall be required for the Board to take any action. A notice need not specify the purpose of any meeting. Notice of a meeting need not be given to any Manager who signs a waiver of notice, a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or who attends the meeting without protesting the lack of notice prior to the commencement of the meeting. All such waivers, consents and approvals shall be filed with the Company’s records or made a part of the minutes of the meeting. Managers may participate in any meeting of the Managers by means of conference telephones or other means of electronic communication so long as all Managers participating can hear or communicate with one another. A Manager so participating is deemed to be present at the meeting. Meetings of the Board shall be held no less frequently than once per calendar quarter, unless otherwise approved by a majority of the Board. The Company shall reimburse all Managers for all reasonable out-of-pocket travel expenses incurred in connection with attending meetings of the Board or any Committee or any other services on behalf of the Company or any Subsidiary.
(e) Board Action by Written Consent. Any action that is permitted or required to be taken by the Board may be taken or ratified by written consent setting forth the specific action to be taken, which written consent is signed by a majority of the Managers.
(f) Committees. The Board may appoint one or more committees (each, a “Committee”), each such Committee consisting of two (2) or more Managers. Except as otherwise expressly provided herein, any such appointed Committee shall have and may exercise such of the powers and authority of the Board delegated to it. Each Committee shall elect a person to serve as secretary, shall keep regular minutes of its proceedings, shall report the same to the Board when requested, shall fix its own rules and procedures that are not inconsistent with the provisions of Sections 5.1(c), (d) and (e) as such provisions apply to the Board, and shall meet at such times and at such place or places as may be provided by such rules or procedures, or by resolution of such Committee or the Board.
(g) Limitation of Liability; Fiduciary Duties.
(i) No Manager shall be obligated personally for any debt, obligation or liability of the Company or of any Member, whether arising in contract, tort or otherwise, by reason of being or acting as Manager of the Company. No Manager shall be personally liable to the Company or its Members for any action undertaken or omitted in good faith reliance upon the provisions of this Agreement unless the acts or omissions of the Manager were not in good faith or involved criminal activity, intentional misconduct, fraud or a knowing and intentional violation or breach of this Agreement; provided, however, that each Manager shall owe, and shall act in a manner consistent with, fiduciary duties to the Company and its Members of the nature, and to the same extent, as those owed by directors of a Wyoming corporation.
(ii) Notwithstanding the provisions of Section 5.1(g)(i) above, in the event that any of the Series A Preferred Holders or Series B Preferred Holders, as a Member, the Managers or their respective Affiliates acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both the Company, its Subsidiaries or any of their Affiliates, on the one hand, and any other Person (including any Member or its Affiliates), on the other hand, none of the Series A Preferred Holders and none of the Series B Preferred Holders, the Managers or their respective Affiliates shall have any duty (contractual or otherwise) to communicate or present such corporate opportunity to the Company, its Subsidiaries or any of their Affiliates and, notwithstanding any other provision of this Agreement to the contrary, no such Person shall be liable to any Member or the Company or its Subsidiaries or any of their Affiliates for breach of any duty (contractual or otherwise) by reason of the fact that any of the Series A Preferred Holders or any of the Series B Preferred Holders, the Managers or their respective Affiliates directly or indirectly pursues or acquires such opportunity for itself, directs such opportunity to another Person, or does not present such opportunity to any Member, the Company or its Subsidiaries or any of their Affiliates. Furthermore, the Members and the Company and its Subsidiaries and Affiliates hereby acknowledge and agree that the Managers, as appointees of the Series B Preferred Holders, may, from time to time, vote in the best interests of the Series A Preferred Holders and the Series B Preferred Holders and no Managers shall be liable to any Member or the Company or its Subsidiaries or any of their Affiliates for breach of any duty (contractual or otherwise) by reason of the fact
that any Manager voted in the best interest of the Series A Preferred Holders and the Series B Preferred Holders and not the Company.
5.2 Officers.
(a) Enumeration. Except as otherwise provided herein, the Board may appoint one or more officers of the Company (each an “Officer” and, collectively, the “Officers”), which shall consist of a Chief Executive Officer, President, Chief Financial Officer and Treasurer, and Secretary, and which may consist of such other Officers, including a Chairman of the Board, Chief Operating Officer, one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board may determine.
(b) Election. The Chief Executive Officer, President, Chief Financial Officer and Treasurer, and Secretary shall be appointed annually by the Board at their first meeting. Other Officers may be appointed by the Board at such meeting or at any other meeting.
(c) Qualification. An Officer need not be a Member or Manager. Any number of offices may be held by the same Person.
(d) Tenure. Except as otherwise provided by the Act or by this Agreement and unless otherwise specified in the vote appointing him, each of the Officers shall hold office until his successor is elected or until his earlier resignation or removal. Any Officer may resign by delivering his written resignation to the Company or to the Chief Executive Officer or Secretary, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.
(e) Removal. Subject to Section 5.3(d), any Officer elected or appointed by the Board or by the Chief Executive Officer may be removed at any time by the affirmative vote of a majority of the Board, or a Committee duly authorized to do so, except that any Officer appointed by the Chief Executive Officer may also be removed at any time by the Chief Executive Officer.
(f) Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board.
(g) Chief Executive Officer. The Chief Executive Officer shall, subject to the direction of the Board, have general supervision and control of the Company’s business. Unless otherwise provided by the Board, he shall preside, when present, at all meetings of the Members. Any action taken by the Chief Executive Officer, and the signature of the Chief Executive Officer on any agreement, contract, instrument or other document on behalf of the Company shall, with respect to any third-party, be sufficient to bind the Company and shall conclusively evidence the authority of the Chief Executive Officer and the Company with respect thereto.
(h) President. The President shall report to the Chief Executive Officer and shall have such powers and shall perform such duties as the Board or the Chief Executive Officer may from time to time designate.
(i) Chief Financial Officer and Treasurer. The Chief Financial Officer and Treasurer shall, subject to the direction of the Board, have general charge of the financial affairs of the Company and shall cause to be kept accurate books of account. The Treasurer shall have custody of all
funds, securities and valuable documents of the Company, except as the Board may otherwise provide.
(j) Secretary; Assistant Secretaries. The Secretary shall record all the proceedings of the meetings of the Board (including Committees thereof) in books kept for that purpose. In his absence from any such meeting an Assistant Secretary, or if there be none or he is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. The Secretary shall have such other duties and powers as may be designated from time to time by the Board, the President or the Chief Executive Officer.
(k) Other Powers and Duties. Subject to this Agreement, each Officer of the Company shall have, in addition to the duties and powers specifically set forth in this Agreement, such duties and powers as are customarily incident to his office, and such duties and powers as may be designated from time to time by the Board.
5.3 Certain Approval Rights. Notwithstanding anything which may be contained herein to the contrary, without the prior written consent of the Requisite Series B Preferred Holders, the Company shall not, and neither the Members, the Board, nor the Company shall permit the Company or any Subsidiary to (and they themselves to the extent they are referenced below in this section shall not), directly or indirectly, by amendment, merger, recapitalization, sale, consolidation or otherwise:
(a)Amendment of Organizational Documents. Amend or modify this Agreement or the Articles of Organization of the Company (i) to change the rights, preferences or privileges of the Series A Preferred Units or the Series B Preferred Units, (ii) to change the authorized number of Managers or (iii) in a manner that materially and adversely affects the Holders of Series A Preferred Units or the Series B Preferred Units.
(b)Authorization and Issuance of Units. Increase or decrease the number of authorized Common Units or Series A Preferred Units or Series B Preferred Units or authorize or issue any new class or series of Units.
(c)Issuances. Issue any equity, debt or convertible or derivative instruments or securities.
(d)Officer Removal and Appointment. Remove or Appoint any Officers of the Company.
(e)Officer Compensation. Increase the level of compensation paid to any current Officer or member of the Company’s senior management or payable to any individual who becomes an Officer or member of the Company’s senior management after the Effective Date (collectively “Senior Managers”) above an annual base salary of $50,000, subject to compensation plans in effect prior to the Effective Date.
(f)Purchase or Redemption of Units; Distributions. Purchase or redeem, or declare or make any distribution or dividend on, any Units (other than the Series A Preferred Units and the Series B Preferred Units).
(g)Affiliate Transactions. Enter into or permit to exist any transaction or series of transactions (including the purchase, sale, lease or exchange of any property or the rendering of any service) of any kind whatsoever with, or for the benefit of any
Manager, Member, Officer of the Company or any of its Subsidiaries or any Affiliate of any such Person.
(h)Liquidation. Liquidate, dissolve, effect a recapitalization or reorganization in any form of transaction, commence a voluntary case under the U.S. bankruptcy code or any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, consent to the entry of an order for relief in an involuntary case, or the conversion of an involuntary case to a voluntary case, under any such law, consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property, or make a general assignment for the benefit of creditors.
(i)Indebtedness. Create, incur, assume, guarantee, repay, make payment on, refinance, replace, endorse or suffer to exist (or extend, supplement, amend or otherwise modify any of the terms of), in any transaction or series of related transactions, any indebtedness for borrowed money of any nature or kind, whether as endorser, guarantor, surety or otherwise or permit the Company to default on any debt obligation.
(j)Public Offering. Effectuate any Public Offering which would subject a Series A Preferred Holder or the Series B Preferred Holder to a materially adverse change or consequence as a result of the Public Offering.
(k)Sale Transactions. Effect any transaction or series of related transactions pursuant to which any Person or group of Persons acting in concert (other than any Person who is a Member or a Permitted Transferee as of the Effective Date), together with such Person’s or group of Persons’ Affiliates acquire(s) more than fifty percent (50%) of the Units of the Company or (ii) the sale, exclusive license or other transfer or disposition of any material portion of the Company’s and/or its Subsidiaries’ assets determined on a consolidated basis.
(l)Acquisition Transactions. Acquire, through any transaction or series of related transactions, voting securities or assets of any Person (including, without limitation the creation or acquisition of a new Subsidiary of the Company not existing as of the Effective Date).
(m)Transfer; Merger. Either directly or indirectly, permit or enter into any transaction involving a Change of Control, or any other merger, consolidation, sale, transfer, license, lease, encumbrance or other disposition of all or substantially all of the Company’s properties or business or all or substantially all of its assets, except for the sale, lease or licensing of property or assets of the Company in the ordinary course of business of the Credit Parties.
(n)Change in Principal Business; Budget. Make any material change to the Company’s Business, enter into any new material lines of business, discontinue the Business or change the annual budget.
(o)Litigation. Initiate, settle or compromise any suit, action, arbitration or other proceeding (whether administrative, civil or criminal, in law or in equity, or before a
governmental authority or private arbitrator or mediator) involving (i) a claim by or against or potential award or loss to the Company or any of its Subsidiaries in excess of $250,000 or (ii) a claim against the Company or any of its Subsidiaries which would be reasonably likely to result in a material restriction or limitation on a material portion of the Company’s Business.
(p)Actions relating to Series A Preferred Holders and Series B Preferred Holders. Take any action that would alter or change in any manner the terms, powers, preferences or special rights of the Series A Preferred Units or the Series B Preferred Units, or grant waivers thereof, or which would otherwise adversely affect the rights of the Series A Preferred Holders or the Series B Preferred Holders.
(q)Admission of New Members. Either directly or indirectly, permit the admission of any new Members (whether pursuant to Section 6 or otherwise).
(r)Actions relating to the foregoing. Enter into any agreement or otherwise obligate the Company, any Member or any Subsidiary to do any of the foregoing.
5.4 Indemnification of Managers and Officers; D&O Insurance. The Managers and Officers of the Company shall not be liable, responsible or accountable for damages or otherwise to the Company, or to the Members, and, the to the maximum extent permitted by law, each Manager and Officer will be indemnified and held harmless by the Company, including advancement of attorneys’ fees and other expenses, from and against all claims, liabilities, and expenses by reason of the fact that such Manager or Officer is or was a Manager or Officer of the Company. The Company shall at all times maintain directors’ and officers’ indemnity insurance at commercially reasonable levels of coverage and at all times in sufficient amounts required pursuant to the Financing, Purchase Agreement and other documents executed in connection therewith.
ARTICLE VI
TRANSFER OF INTERESTS
6.1 In General. Except as otherwise set forth in this Article VI, a Member may not effect a Transfer of all or any portion of its Units, unless such Transfer complies with the applicable provisions of this Article VI. Any Transfer that does not comply with this Article VI shall be void. The provisions of this Article VI shall terminate and be of no further force or effect immediately before consummation of an Public Offering or a Deemed Liquidation Event.
6.2 Admission as a Member. No Transfer of Units shall be effective and no Person taking or acquiring, by whatever means, all or any portion of any Units shall be admitted as a Member unless (in addition to the requirements of Section 6.1) such proposed Transfer complies with each of the following provisions:
(a) Prior Notice. In the case of a Voluntary Transfer, the Member proposing to effect a Voluntary Transfer delivers a notice to the Company and the Series A Preferred Holdings and the Series B Preferred Holders at least ten (10) days prior to any proposed Voluntary Transfer of Units;
(b) Securities Law Compliance. In the case of either a Voluntary Transfer or an Involuntary Transfer, either (i) the Units are registered under the Securities Act and the rules and regulations thereunder, and any applicable state securities laws; or (ii) the Company and its counsel determine that the Transfer qualifies for an exemption from the registration requirements of the Securities Act, any applicable state securities laws and any securities laws of any applicable jurisdiction;
(c) Taxation; Termination. In the case of either a Voluntary Transfer or an Involuntary Transfer, the Transfer will not (i) result in the taxation of the Company as an association taxable as a corporation or otherwise subject the Company to entity-level taxation for federal income tax purposes or (ii) affect the Company’s existence or qualification as a limited liability company under the Act;
(d) LLC Agreement; Other Agreements. Such proposed transferee agrees to become a Member by executing and delivering a joinder to this Agreement and the other agreements entered into in connection with the Financing
(e) Assignment. Such Member and its proposed transferee execute, acknowledge, and deliver to the Company a written assignment of the Units in such form as may be required by the Requisite Series B Preferred Holders; and
(f) Transfers. With respect to any transfer (whether a Voluntary Transfer or an Involuntary Transfer) of Common Units, Series A Preferred Units or Series B Preferred Units, the Requisite Series B Preferred Holders shall have approved the admission of the transferee as a Member of the Company.
The Board shall amend the Schedule of Members from time to time to reflect the admission of Members pursuant to this Section 6.2.
6.3 Distributions and Allocations With Respect to Transferred Units. If any Units are transferred (by Voluntary Transfer or Involuntary Transfer) during any Fiscal Year in compliance with the provisions of this Article VI, then (i) allocations of net income and net loss with respect to the Units for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during such Fiscal Year in accordance with Code Section 706(d) using any conventions permitted by the Code and selected by the transferor and transferee in connection with the Transfer and approved by the Board; (ii) all distributions on or before the date of such Transfer shall be made to the transferor, and all distributions thereafter shall be made to the transferee; and (iii) the transferee shall succeed to and assume the Capital Account and other similar items of the transferor to the extent related to the transferred Units. Solely for purposes of making such allocations and distributions, the Company shall recognize such Transfer not later than the end of the calendar month during which the Company receives notice of such Transfer and all of the conditions in Section 6.2 are satisfied. If the Company does not receive a notice stating the date the Units were transferred and such other information as the Company may reasonably require within thirty (30) days after the end of the Fiscal Year during which the Transfer occurs, then all of such items shall be allocated, and all distributions shall be made to the Person, who, according to the books and records of the Company on the last day of the Fiscal Year during which the Transfer occurs, was the owner of the Units. Neither the Company nor any Member shall incur any liability for making allocations
and distributions in accordance with the provisions of this Section 6.3, whether or not such Person had knowledge of any Transfer of ownership of any Units.
ARTICLE VII
CESSATION OF MEMBERSHIP
7.1 When Membership Ceases. A Person who is a Member shall cease to be a Member upon the Voluntary Transfer or Involuntary Transfer of all of such Member’s Units as permitted under this Agreement. A Member is not entitled to withdraw voluntarily from the Company while such Member owns Units.
7.2 Deceased, Incompetent or Dissolved Members. The personal representative, executor, administrator, guardian, conservator or other legal representative of a deceased individual Member or of an individual Member who has been adjudicated incompetent may exercise the rights of the Member for the purpose of administration of such deceased Member’s estate or such incompetent Member’s property. The beneficiaries of a deceased Member’s estate shall become Members of the deceased Member only upon compliance with the conditions of this Agreement. If a Member who is a Person other than an individual is dissolved, the legal representative or successor of such Person may exercise the rights of the Member pending liquidation. The distributees of such Person may become Members only upon compliance with the conditions of this Agreement.
7.3 Consequences of Cessation of Membership. In the event a Person ceases to be a Member as provided in Section 7.1 above, the Person (or the Person’s successor in interest) shall continue to be liable for all obligations of the former Member to the Company and, with respect to any Units owned by such Person, shall be an assignee with only the rights and subject to the restrictions, conditions and limitations described above.
ARTICLE VIII
DISSOLUTION, WINDING UP AND LIQUIDATING DISTRIBUTIONS
8.1 Dissolution Triggers. The Company shall dissolve upon the first occurrence of the following events:
(a) The determination by the Board that the Company should be dissolved; or
(b) The entry of a decree of judicial dissolution or the administrative dissolution of the Company as provided in the Act.
8.2 Winding Up; Termination. Upon a dissolution of the Company, the Board, or, if there are no members of the Board, a court appointed liquidating trustee, shall take full account of the Company’s assets and liabilities and wind up the affairs of the Company. The Persons charged with winding up the Company shall settle and close the Company’s business, and dispose of and convey the Company’s non-cash assets as promptly as reasonably possible following dissolution as is consistent with obtaining the fair market value for the Company’s assets.
8.3 Liquidating Distributions. Any distribution in connection with the dissolution and winding up of the Company pursuant to this Article VIII shall be made in accordance with Section 3.2.
ARTICLE IX
BOOKS AND RECORDS
9.1 Books and Records. The Company shall keep adequate books and records at its principal place of business, which shall set forth an accurate account of all transactions of the Company as well as the other information required by the Act.
9.2 Taxable Year; Accounting Methods. The Company’s taxable year shall be the calendar year, and, with respect to the last year of the Company, the period beginning on January 1 and ending with the date of the final liquidating distributions, in each case, unless otherwise required by the Code. The Company shall report its income for income tax purposes using such method of accounting selected by the Board and permitted by law.
9.3 Tax Information. Tax information necessary to enable each Member to prepare its state, federal, local and foreign income tax returns shall be delivered to each Member within sixty (60) days after the end of each Fiscal Year, or as soon as practicable thereafter. Tax information necessary for the Members to make their quarterly estimated tax payments shall be given to the Members as soon as practicable after reasonably requested by the Members.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Any notice, payment, demand or communication required or permitted to be given by any provision of this Agreement shall be in writing and shall be delivered personally to the Person or to an officer of the Person to whom the same is directed, or sent by registered or certified United States mail return receipt requested, or by nationally recognized overnight delivery service, addressed as follows: if to the Company or the Board, to the Company’s principal office address located at 12411 Poway Road, Poway, CA 92064, or to such other address as may be specified from time to time by notice to the Members; if to a Member, to the Member’s address as set forth on the Schedule of Members, or to such other address as may be specified from time to time by notice to the Members; if to a Manager, to the address of such Manager as set forth in the records of the Company (with a copy to the Member entitled to designate such Manager), or to such other address as such Manager may specify from time to time by notice to the Members. Any such notice shall be deemed to be delivered, given and received for all purposes (i) as of the date and time of actual receipt, in the case of notices delivered personally, (ii) one business day after deposit with a nationally recognized overnight delivery service, or (iii) five days after deposit in registered or certified United States mail return receipt requested, as applicable.
10.2 Binding Effect. Except as otherwise provided in this Agreement, every covenant, term and provision of this Agreement shall be binding upon and inure to the benefit of the Members
and their respective heirs, legatees, legal representatives and permitted successors, transferees and assigns.
10.3 Construction. No provision of this Agreement is to be interpreted as a penalty upon, or a forfeiture by, any party to this Agreement. The parties acknowledge that each party to this Agreement, together with such party’s legal counsel, has shared equally in the drafting and construction of this Agreement and, accordingly, no court construing this Agreement shall construe it more strictly against one party hereto than the other.
10.4 Entire Agreement; No Oral Agreements; Amendments to the Agreement. This Agreement, constitutes the entire agreement among the Members with respect to the affairs of the Company and the conduct of its business, and supersedes all prior agreements and understandings, whether oral or written. The Company shall have no oral operating agreements. Any provision of this Agreement may be amended or waived by the written consent of the Series B Preferred Units. Any amendment adopted consistent with the provisions of this Section 10.4 shall be binding on all Members without the necessity of their execution of the amendment or any other instrument.
10.5 Headings; Interpretation; Treatment of Affiliates and Permitted Transferees.
(a) The table of contents and section and other headings contained in this Agreement are for reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof. All references to days or months shall be deemed references to calendar days or months. All references to “$” shall be deemed references to United States dollars. Unless the context otherwise requires, any reference to a “Section”, “Schedule” or “Exhibit” shall be deemed to refer to a section of this Agreement or Schedule or Exhibit to this Agreement, as applicable. The words “hereof,” “herein” and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.” Any agreement, instrument or statute defined or referred to herein, or in any agreement or instrument that is referred to herein, means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.
(b) All Units held or acquired by Affiliates or Permitted Transferees of a Member shall be deemed to be held by such Member for purposes of determining availability of any rights under this Agreement.
10.6 Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, then (a) such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement and (b) the parties agree to negotiate in good faith to draft a new legal and enforceable provision that to the maximum extent possible under applicable law comports with the original intent of the parties and maintains the economic and other terms to which the parties originally agreed.
10.7 Additional Documents. Each Member, upon the request of the Board, agrees to perform all further acts and execute, acknowledge, and deliver any documents that may be reasonably necessary, appropriate, or desirable to carry out the provisions of this Agreement.
10.8 Variation of Pronouns. All pronouns and any variations thereof shall be deemed to refer to masculine, feminine or neuter, singular or plural, as the identity of the Person or Persons may require.
10.9Governing Law; Consent to Exclusive Jurisdiction; Dispute Resolution. Other than with respect to Section 10.11, the laws of the State of Wyoming shall govern the validity of this Agreement, the construction and interpretation of its terms, and organization and internal affairs of the Company and the limited liability of the Members.
10.10WAIVER OF JURY TRIAL. THE PARTIES HERETO, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE PARTIES ARE ADVERSE PARTIES.
10.11MANDATORY FORUM SELECTION. TO INDUCE THE SERIES B PREFERRED HOLDERS TO MAKE THE FINANCING (AS HEREIN DEFINED), THE PARTIES IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT) SHALL, EXCEPT AS HEREINAFTER PROVIDED, BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, THE SERIES B PREFERRED HOLDERS MAY, AT SERIES B PREFERRED HOLDER’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. THE COMPANY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS IN SAID COUNTY (OR TO ANY OTHER JURISDICTION OR VENUE, IF THE SERIES B PREFERRED HOLDERS SO ELECTS), AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE COMPANY, AS SET FORTH HEREIN OR IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.
10.12Waiver of Action for Partition. Each of the Members irrevocably waives any right that it may have to maintain any action for partition with respect to any of the assets of the Company.
10.13Counterpart Execution; Facsimile Execution. This Agreement may be executed in any number of counterparts with the same effect as if all of the Members had signed the same document. Such executions may be transmitted to the Company and/or the other Members by facsimile and such facsimile execution shall have the full force and effect of an original signature. All fully executed counterparts, whether original executions or facsimile executions or a combination, shall be construed together and shall constitute one and the same agreement.
10.14Tax Matters Member.
(a) BYOC shall be the “tax matters partner” of the Company within the meaning of Code Section 6231(a)(7) (the “Tax Matters Member”), and shall serve as the Tax Matters Member of the Company until its successor is duly designated by the Board (which the Board shall do promptly upon request by the Tax Matters Member or if the Tax Matters Member is no longer a Member). The Tax Matters Member shall cause all other Members to be a “Notice Partner” within the meaning of Section 6231(a)(8) of the Code. The Tax Matters Member shall notify the other Members in writing of all material matters that come to its attention in its capacity as Tax Matters Member. The Tax Matters Member will give the other Members not less than fifteen (15) days’ prior written notice, delivered in accordance with Section 10.1, as to any action to be taken or of any decision not to take action with respect to any such material matter. The Tax Matters Member shall act in any similar capacity under applicable state, local or foreign law, subject to similar restrictions and obligations. The Company shall reimburse the Tax Matters Member for its reasonable expenses in connection with the performance of its duties hereunder.
(b) If necessary to cause the Company and the Members to be subject to Code Sections 6221 et seq. (sometimes referred to as the “TEFRA audit provisions”), the Company shall make the election pursuant to Code Section 6231(a)(l)(B)(ii).
10.15Time of the Essence. Time is of the essence with respect to each and every term and provision of this Agreement.
10.16Exculpation Among Members. Each Member acknowledges that it is not relying upon any other Person in making its investment or decision to invest in the Company. Each Member agrees that no Member nor the respective Affiliates, controlling persons, officers, directors, partners, agents or employees of any Member shall be liable to any other Member for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with their purchase or acquisition of any Units.
10.17Payment of Preferred Holders’ Costs. The Company agrees to pay and hold each Series A Preferred Holder and Series B Preferred Holder harmless against liability for payment of reasonable legal fees and disbursements of counsel and other professionals in connection with any modification, waiver, consent or amendment to this Agreement, the Purchase Agreement or any agreement, document or instrument executed and delivered in connection therewith.
10.18Confidentiality. Each Holder covenants and agrees that: (a) it will not disclose or make use of any Trade Secrets or Confidential Information of the Company; and (b) it shall not,
directly or indirectly, transmit or disclose any Trade Secret or Confidential Information of the Company to any Person and shall not make use of any such Trade Secret or Confidential Information, directly or indirectly, for itself or others, without the prior written consent of the Company, except for a disclosure that is required by any law, order or legal process, in which case such Holder shall provide the Company prior written notice of such requirement as promptly as practicable so that the Company may contest such disclosure. To the extent that such information is a “trade secret” as that term is defined under a state or federal law, this subparagraph is not intended to, and does not, limit the Company’s rights or remedies thereunder and the time period for prohibition on disclosure or use of such information is until such information becomes generally known to the public through the act of one who has the right to disclose such information without violating a legal right of the Company. Notwithstanding anything contained in this Section 10.16 to the contrary, each Holder shall be permitted to use all Trade Secrets and Confidential Information of the Company for purposes of evaluating and monitoring its investment in the Company and shall be permitted to disclose such Trade Secrets and Confidential Information as follows: (i) to its attorneys, accountants, consultants and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, provided that such Holder informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; (ii) to any prospective purchaser of any Units from such Holder, if such prospective purchaser agrees to be bound by obligations of confidentiality and non-use comparable this Section 10.16 with respect to such Trade Secrets and Confidential Information where the Company is a third party beneficiary of such obligations; (iii) in the case of any such Holder that is an investment fund, to any partner (limited or general), member, stockholder or wholly owned subsidiary of, or any prospective investor in, such holder in the ordinary course of business, provided that such holder informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information.
10.19Exhibits. The Exhibits to this Agreement, each of which are incorporated by reference, are:
Exhibit A: Glossary of Terms
[Signatures Appear On Following Page]
IN WITNESS WHEREOF, the Members have executed this Amended and Restated Limited Liability Company Agreement on the following execution pages, to be effective as of the Effective Date.
THE COMPANY:
TCA BEYOND COMMERCE, LLC
By:
Name: Carlos Sandino
Title:Manager
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Carlos Sandino, a Manager of TCA Beyond Commerce, LLC, a Wyoming limited liability company, who is personally known to me to be the same person whose name is subscribed to the foregoing, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said limited liability company, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
_________________________________________
MEMBER:
BEYOND COMMERCE, INC.
By:
Name:Geordan Pursglove
Title:Chief Executive Officer
STATE OF ________________)
) SS.
COUNTY OF ______________)
The undersigned, a Notary Public in and for the said County, in the State aforesaid, DOES HEREBY CERTIFY that Geordan Pursglove, the Chief Executive Officer of Beyond Commerce, Inc., a Nevada corporation, who is personally known to me to be the same person whose name is subscribed to the foregoing, appeared before me this day in person and acknowledged that he/she signed and delivered the said instrument as his/her own free and voluntary act and as the free and voluntary act of said corporation, for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this _____ day of ________________, 20____.
______________________________________
Notary Public
My Commission Expires:
_________________________________________
MEMBER:
TCA GLOBAL CREDIT MASTER FUND, LP
By:TCA Global Credit Master Fund GP, Ltd.
Its:General Partner
By:
Name:Robert Press
Title:Director
SCHEDULE A
Schedule of Members*
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Member |
| Common Units |
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| Series A Preferred |
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| Series B Preferred Units | Cash Contribution |
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| Capital Account |
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Beyond Commerce, Inc. 3773 Howard Hughes Pkwy Suite 500
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| 8,000 |
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| 0 |
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| 0 | -- |
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| $ |
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TCA Global Credit Master Fund, LP 1315 S. Hwy 89 Suite 101 Jackson, Wyoming 83001
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| 2,000 |
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| 250,000 |
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0 |
| -- |
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| $ |
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TCA Special Situations Credit Strategies ICAV 1315 S. Hwy 89 Suite 101 Jackson, Wyoming 83001
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| 0 |
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| 0 |
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1 |
| -- |
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| $ |
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* | After giving effect to the Financing |
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EXHIBIT A
Glossary of Terms
Capitalized words and phrases used in this Agreement are defined below.
“Act” shall mean the Wyoming Limited Liability Company Act, as amended from time to time, or any successor statute thereto.
“Adjusted Capital Account” shall mean such Member’s Capital Account increased by any amount that such Member is deemed obligated to restore under Treasury Regulations Section 1.704-2.
“Affiliate” shall mean, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any Person directly or indirectly owning or controlling 10% or more of any class of outstanding equity interests of such Person or of any Person which such Person directly or indirectly owns or controls 10% or more of any class of equity interests, (iii) any officer, director, general partner or trustee of such Person, or any Person of which such Person is an officer, director, general partner or trustee, or (iv) any Person who is an officer, director, general partner, trustee or holder of 10% or more of the equity interests of any Person described in clauses (i) through (iii) of this sentence; provided, that in the case of a Person who is an individual, such terms shall also include members of such specified Person’s immediate family (as defined in Instruction 2 of Item 404(a) of Regulation S-K under the Securities Act); provided further, that for purposes of Article VI and the definition of “Permitted Transferee,” the phrase “10% or more” used in this sentence above shall replaced by “a majority.” “Control”, when used with respect to any Person, shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have the meanings correlative to the foregoing.
“Agreement” shall have the meaning set forth in the introductory paragraph hereto.
“Available Cash On Hand” shall mean as of any given date, the Company’s and its Subsidiaries’ cash and cash equivalents as determined in accordance with GAAP, unless otherwise approved by the Board.
“Board” shall have the meaning set forth in Section 5.1(a).
“Business” shall have the meaning set forth in Section 1.3.
“Capital Account” shall have the meaning set forth in Section 2.5(a).
“Capital Contribution” shall mean with respect to any Member, the amount of money and the fair market value of any property contributed to the Company with respect to the Units of such Member.
“Change of Control” shall mean any sale, conveyance, assignment or other transfer, directly or indirectly, of any ownership interest of the Company which results in any change in the identity of the individuals or entities previously having the power to direct, or cause the direction of, the management and policies of the Company or its Subsidiaries, or the grant of a security interest in any ownership interest of any Person directly or indirectly controlling the Company or
its Subsidiaries, which could result in a change in the identity of the individuals or entities previously having the power to direct, or cause the direction of, the management and policies of the Company or its Subsidiaries.
“Class” shall mean any class of Units, which consists of the Common Units, Series A Preferred Units and Series B Preferred Units.
“Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor federal revenue law.
“Committee” shall have the meaning set forth in Section 5.1(f).
“Common Units” shall have the meaning set forth in Section 2.l(a).
“Common Unit Holders” shall mean holders of Common Units.
“Company” shall have the meaning set forth in the Recitals.
“Confidential Information” shall mean all information regarding the Company, the Company’s activities, the Company’s Business, clients or customers that is not generally known to persons not employed by the Company and that is not generally disclosed by the Company’s practice or authority to persons not employed by the Company, but that does not rise to the level of a Trade Secret, and shall include, but is not limited to, sales and marketing techniques and plans, production techniques, purchase information, prices, billing information, financial plans and data concerning the Company, clients or customers (including, but not limited to client or customer lists), and management planning information. Notwithstanding the foregoing, Confidential Information shall not include information that (i) has become generally available to the public by the act of one who has the right to disclose such information without violating any legal right or contractual right of the Company or (ii) otherwise becomes available to a third-party and such third-party has no knowledge that such disclosure violated any Company right of confidentiality.
“Deemed Liquidation Event” shall have the meaning set forth in Section 3.2(b).
“Default Rate” shall mean a per annum rate of interest equal to the greater of (i) Prime Rate plus 100 basis points or (ii) 18%, but in no event greater than the amount of interest that may be charged and collected under applicable law.
“Dividend Payment Date” shall have the meaning set forth in Section 2.1(d).
“Effective Date” shall have the meaning set forth in Section 1.1.
“Existing Interests” shall have the meaning set forth in the Recitals.
“Financing” shall have the meaning set forth in the Recitals.
“Fiscal Year” shall be the Company’s taxable year, as described in Section 9.2.
“GAAP” shall mean United States generally accepted accounting principles.
“Holders” shall mean the holders of Units.
“Initial Consideration” shall have the meaning set forth in Subsection 3.2(b).
“Involuntary Transfer” shall mean the involuntary transfer of all or any portion of Units by way of intestacy, will, bankruptcy, receivership, levy, execution, charging order or other similar seizure by legal process.
“Issuance Date” shall have the meaning set forth in Section 2.1(e)(i).
“Liquidation” shall mean any liquidation, dissolution or winding up, voluntary or involuntary, of the Company.
“Manager” shall have the meaning set forth in Section 5.1(a).
“Members” shall refer collectively to the Persons listed on the Schedule of Members as Members and to any other Persons who are admitted to the Company as Members or who become Members under the terms of this Agreement until such Persons have ceased to be Members under the terms of this Agreement. “Member” shall mean any one of the Members.
“Net Liquidation Proceeds” shall have the meaning set forth in Section 3.2(a).
“New Securities” shall have the meaning set forth in Section 2.2.
“Officers” shall have the meaning set forth in Section 5.2(a).
“Permitted Transferee” shall mean: (i) the estate, personal representative or executor, or any parent, spouse, child or sibling of such Member; (ii) any trust for the exclusive benefit of any of the Persons set forth in clause (i); (iii), a corporation, limited partnership, limited liability company or other entity all of the equity interests of which are owned by the Member or any of the Persons set forth in clause (i) or clause (ii); or (iv) any transferee deemed appropriate to the Series B Preferred Holders..
“Person” shall mean any natural person, partnership, trust, estate, association, limited liability company, corporation, custodian, nominee, governmental instrumentality or agency, body politic or any other entity in its own or any representative capacity.
“Public Offering” shall mean the sale of shares of capital stock of BYOC.
“Prime Rate” as of a particular date shall mean the prime rate of interest as published on that date in the Wall Street Journal, and generally defined therein as “the base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks.” If the Wall Street Journal is not published on a date for which the Prime Rate must be determined, the Prime Rate shall be the prime rate published in the Wall Street Journal on the nearest-preceding date on which the Wall Street Journal was published.
“Prior LLC Agreement” shall have the meaning set forth in the Recitals.
“Purchase Agreement” shall have the meaning set forth in the Recitals.
“Redemption Date” shall have the meaning set forth in Section 2.1(e)(i).
“Redemption Price” shall have the meaning set forth in Section 2.1(e)(i).
“Requisite Series B Preferred Holders” shall mean TCA Special Situations Credit Strategies ICAV or its designee.
“Schedule of Members” shall mean the Schedule of Members attached hereto as Schedule A.
“Securities Act” shall mean the Securities Act of 1933, as amended.
“Series A Preferred Holders” shall mean holders of Series A Preferred Units.
“Series A Preferred Units” shall have the meaning set forth in Section 2.1(a).
“Series B Preferred Holders” shall mean holders of Series B Preferred Units.
“Series B Preferred Units” shall have the meaning set forth in Section 2.1(a).
“Stated Value” shall have the meaning set forth in Section 2.1(a).
“Subsequent Common Unit Issuance” shall mean an issuance of authorized but unissued Common Units following the Effective Date as approved by the Requisite Series B Preferred holders pursuant to Section 5.3.
“Subsidiaries” shall mean any Person a majority of the equity interests of which are owned, directly or indirectly, by the Company.
“Target Balance” shall mean with respect to each Member, as of the close of any period for which allocations are made under Article IV, the amount such Member would receive in a hypothetical liquidation of the Company as of the close of such period, assuming for purposes of such hypothetical liquidation that (i) all of the assets of the Company are sold at prices equal to their then book values (as maintained by the Company for purposes of, and pursuant to, Section 2.6(a) and the capital account maintenance provisions of Treasury Regulations Section 1.704-1 (b)(2)(iv)), and (ii) all of the cash of the Company is distributed pursuant to Sections 3.1 and 3.2, as applicable (but in the case of such distributions pursuant to Section 3.2, after the payment of all Company liabilities, limited in the case of nonrecourse liabilities to the collateral securing or otherwise available to satisfy such liabilities).
“Tax Distribution” shall have the meaning set forth in Section 3.4.
“Tax Liability” shall have the meaning set forth in Section 3.4.
“Tax Matters Member” shall have the meaning set forth in Section 10.12.
“TCA Credit” shall mean TCA Global Credit Master Fund, LP, including its affiliates.
“Trade Secret” means all secret, proprietary or confidential information regarding the Company or the Company’s activities, including any and all information not generally known to, or ascertainable by, persons not employed by the Company, the disclosure or knowledge of which would permit those persons to derive actual or potential material economic value therefrom or to cause material economic or financial harm to the Company and shall include, but not be limited to, customer lists, pricing information, customer and supplier contacts, technical information regarding Company processes, services and process and service development, information concerning Company methods, current development and expansion or contraction plans of the Company, information concerning the legal affairs of the Company and information
concerning the financial affairs of the Company. Notwithstanding the foregoing, Trade Secrets shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating a legal right or privilege of the Company. This definition shall not limit any definition of “trade secrets” or any equivalent term under state or federal law
“Transfer” shall mean a Voluntary Transfer or an Involuntary Transfer.
“Treasury Regulations” shall mean the final and temporary Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Units” shall have the meaning set forth in Section 2.1(a).
“Unpaid Tax Liability” shall have the meaning set forth in Section 3.4.
“Voluntary Transfer” shall mean any direct or indirect voluntary sale, assignment, transfer, conveyance, pledge, hypothecation or other disposition, with or without consideration, or otherwise of all or any portion of any Units.