EXHIBIT 10.5

 
AMENDMENT NUMBER TEN
TO LOAN AND SECURITY AGREEMENT

 
This AMENDMENT NUMBER TEN TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is
entered into as of June 22, 2005, among ACCERIS MANAGEMENT AND ACQUISITION,
LLC, a Minnesota limited liability company (“Lender”), and ACCERIS
COMMUNICATIONS CORP., a Delaware corporation formerly known as WorldxChange
Corp. (“ACC”) and ACCERIS COMMUNICATIONS INC., a Florida corporation formerly
known as I-Link, Incorporated (“ACI,” and, together with ACC, each individually
a “Borrower” and together the “Borrowers”), with reference to the following:
 
WHEREAS, ACC has previously entered into, and ACI has previously become a party
to, that certain Loan and Security Agreement, dated as of December 10, 2001,
with Wells Fargo Foothill, Inc., a California corporation formerly known as
Foothill Capital Corporation (the “Original Lender”), as amended by (i) that
certain Amendment Number One to Loan and Security Agreement, dated as of
March 6, 2002, (ii) that certain Amendment Number Two to Loan and Security
Agreement, dated as of June 11, 2002, (iii) that certain Amendment Number Three
to Loan and Security Agreement, dated as of July 31, 2003, (iv) that certain
Amendment Number Four to Loan and Security Agreement, dated as of October 14,
2003, (v) that certain Amendment Number Five to Loan and Security Agreement,
dated as of April 13, 2004, (vi) that certain Amendment Number Six to Loan and
Security Agreement, dated as of July 15, 2004, (vii) that certain Amendment
Number Seven to Loan and Security Agreement, dated as of July 15, 2004, (viii)
that certain Amendment Number Eight to Loan and Security Agreement, dated as of
October 14, 2004, and (ix) that certain Amendment Number Nine to Loan and
Security Agreement, dated as of February 9, 2005 (as so modified and as
otherwise heretofore amended, modified or supplemented from time to time, the
“Agreement”), pursuant to which the Original Lender made certain loans and
financial accommodations available to Borrower;
 
WHEREAS, pursuant to that certain Assignment and Acceptance Agreement dated as
of even date herewith by an between the Original Lender and the Lender and
acknowledged by the Borrowers and by the Guarantors referred to therein (the
“Loan Assignment Agreement”), the Original Lender sold to the Lender and the
Lender purchased from the Original Lender the Agreement, together with the other
Loan Documents, interceditor agreements and other agreements referred to in the
Agreement, and all rights related thereto; and
 
WHEREAS, to induce the Lender to enter into the Loan Assignment Agreement, the
Borrowers have agreed to amend the Agreement as set forth herein, and the Lender
has agreed to amend the Agreement in certain other respects as set forth herein.
 
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
 
1. Definitions. Terms used herein without definitions shall have the meanings
ascribed to them in the Agreement.
 
2. Existing Indebtedness. Each Borrower represents and warrants to the Lender
that each of the Agreement, the other Loan Documents and all other related loan
documents entered into with the Original Lender continue in full force and
effect in accordance with its original terms, and the obligations of each
Borrower thereunder are not subject to any defense, counterclaim or right of
setoff, or, to the extent that any such defense, counterclaim or setoff exists,
each of the same are hereby absolutely and forever waived and released. Each
Borrower acknowledges and agrees (i) that, as of the date hereof, the
outstanding principal amount of Advances plus interest and all outstanding fees
and expenses are $2,689,689.18 and (ii) that such obligations (the aggregate
amount thereof being referred to as the “Existing Indebtedness”), together with
any other existing obligations of either Borrower acquired by the Lender from
the Original Lender under the Loan Assignment Agreement, are now evidenced by
and repayable in accordance with the Agreement. Each Borrower consents to the
transactions contemplated by the Loan Assignment Agreement.
 
 
 

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3. Amendments to the Agreement.
 
(a)  Section 1.1 of the Agreement hereby is amended by adding the following
defined terms in their proper alphabetical order or amending and restating the
following definitions in their entirety, as the case may be:
 
“Asset Sale Agreement” means that certain Asset Purchase Agreement by and among
each Person comprising Borrower, Counsel, Acceris Management and Acquisition
LLC, and North Central Equity LLC.
 
“Borrower” means, collectively and jointly and severally, Acceris Communications
Inc., a Florida corporation (formerly known as I-Link, Incorporated), also
referred to herein as “Parent,” and Acceris Communications Corp. (formerly known
as WorldxChange Corp.), a Delaware corporation.
 
“Existing Indebtedness” means, as of June 22, 2005, outstanding Advances under
this Agreement in the amount of principal, interest and related fees and
expenses is $2,689,689.18, and any other existing obligations of Borrower
evidenced by and repayable in accordance with this Agreement.
 
“Loan Documents” means this Agreement, the ACTI Guarantor Security Agreement,
the Cash Management Agreements, the Control Agreements, the Counsel/ACTI
Guaranty, the Counsel Stock Pledge Agreement, the Counsel 2004 Intercreditor
Agreement, the Disbursement Letter, the Due Diligence Letter, the Fee Letter,
the Guaranty, the Intercreditor Agreement, the Laurus Intercreditor Agreement,
the Officer’s Certificate, the Parent Stock Pledge Agreement, the Stock Pledge
Agreement, the Subsidiary Stock Pledge Agreement, collateral access agreements
for Pittsburgh, San Diego, and other Borrower locations, any note or notes
executed by a Borrower in connection with this Agreement and payable to Lender,
and any other agreement, instrument or document entered into, now or in the
future, by a Borrower or Guarantor in connection with this Agreement or
otherwise relating to, executed in connection with, or arising out of the
transactions contemplated by this Agreement.
 
“Obligations” means all loans, Advances, debts, principal, interest (including
any interest that, but for the provisions of the Bankruptcy Code, would have
accrued), premiums, liabilities (including all amounts charged to Borrower’s
Loan Account pursuant hereto), obligations, fees (including the fees provided
for in the Fee Letter), charges, costs, Lender Expenses (including any fees or
expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and
description owing by Borrower to Lender pursuant to or evidenced by the Loan
Documents and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all Lender
Expenses that Borrower is required to pay or reimburse by the Loan Documents, by
law, or otherwise. Any reference in this Agreement or in the Loan Documents to
the Obligations shall include all amendments, changes, extensions,
modifications, renewals replacements, substitutions, and supplements, thereto
and thereof, as applicable, both prior and subsequent to any Insolvency
Proceeding.
 
“Maximum Revolver Amount” means $5,000,000, including without limitation the
Existing Indebtedness.
 
 
 

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“Tenth Amendment” means that certain Amendment Number Ten to Loan and Security
Agreement dated as of June 22, 2005, between each Person comprising Borrower and
Lender.
 
(b)  Section 1.1 of the Agreement hereby is amended by deleting the definitions
of “Acceris Accounts,”“Acceris Availability,”“Acceris Base Rate Margin,”“Acceris
Borrowing Base,”“Acceris Dilution,”“Acceris Dilution Reserve,”“Acceris Direct
Billed Accounts,”“Acceris Direct Billed Borrowing Base,”“Acceris Direct Billed
Dilution,”“Acceris Direct Billed Dilution Reserve,”“Acceris Loan Account,”
Acceris Revolver Advances,”“Acceris Revolver Usage,”“ACT
Transactions,”“Aggregate Availability,”“Applicable Prepayment
Premium,”“Availability,”“Bank Product Agreements,”“Bank Product
Obligations,”“Bank Products,”“Bank Product Reserves,”“Base Rate,”“Base Rate
Loan,”“Base Rate Margin,”“Billing and Collection Charges Reserve,”“Billing
Reserve,”“Borrowing Base,”“Borrowing Base Certificate,”“Dilution,”“Dilution
Reserve,”“Direct Billed Accounts,”“Eligible Accounts,”“Eligible RSL Direct
Billed Accounts,”“Eligible Acceris Accounts,”“Eligible Acceris Direct Billed
Accounts,”“Excess Availability,”“Excess RSL Availability,”“Former RSL
Customers,”“Funding Date,”“Funding Losses,”“Hedge Agreement,”“ILEC,”“L/C,”“L/C
Disbursement,”“L/C Undertaking,”“LED Confirmation Statement,”“LEC
Reserves,”“Letter of Credit,”“Letter of Credit Usage,”“Net Issuance
Proceeds,”“Overadvance,”“Required Availability,”“Revolver Block
Amount,”“Revolver Usage,”“RSL Availability,”“RSL Borrowing Base,”“RSL
Clearinghouse Accounts,”“RSL Dilution,”“RSL Dilution Reserve,”“RSL Direct Billed
Accounts,”“RSL Note,”“RSL Loan Account,”“RSL Revolver Advances,”“RSL Revolver
Usage,”“Telecommunication Taxes,”“Telecommunication Tax Reserve,”“Underlying
Issuer,”“Underlying Letter of Credit,” and “Wells Fargo.”
 
(c)  Sections 2.1, 2.2, 2.3, 2.4, 2.5 and 2.6 of the Agreement are hereby
amended and restated in their entirety as set forth on Schedule 2A hereto.
 
(d) Section 2.8 of the Agreement is hereby amended to replace the reference to
“Base Rate Loans” therein to “Advances.”
 
(e) Sections 2.9, 2.10, 2.11, 2.12, 2.13 and 2.14 of the Agreement are hereby
amended and restated in their entirety as set forth on Schedule 2B hereto.
 
(f) Section 2.16 of the Agreement is hereby deleted in its entirety.
 
(g) The introductory clause in Section 3.3 is hereby amended and restated as
follows:
 
Lender’s discretionary consideration of any request for an Advance (or to extend
any other credit hereunder) shall be subject to the following conditions
precedent:
 
(h) Sections 3.4, 3.5 and 3.6 of the Agreement are hereby amended and restated
in their entirety as set forth on Schedule 3 hereto.
 
(i) Section 6.2 of the Agreement is hereby amended to (i) delete, in subsection
(a), the phrase “and a calculation of the Borrowing Base as of such date,” (ii)
by amending and restating subsection (d) in its entirety to read “intentionally
omitted,” and (iii) delete, in subsection (e), the phrase “together with a
reconciliation to the detailed calculation of the Borrowing Base previously
provided to Lender.”
 
 
 

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(j) The second sentence of Section 6.18 is hereby deleted in its entirety.
 
(k) Section 7.1 of the Agreement is hereby amended by amending and restating
each of subsections (e) and (f) thereof in their entirety to read “intentionally
omitted.”
 
(l) Section 7.3(c) of the Agreement is hereby amended and restated in its
entirety as follows:
 
(c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in
one transaction or series of transactions, all or any substantial part of its
assets (other than pursuant to a Permitted Disposition or pursuant to the Asset
Sale Agreement).
 
(m) Section 7.20 of the Agreement is hereby deleted in its entirety.
 
(n) Section 8.13 of the Agreement is hereby amended and restated in its entirety
as follows:
 
If the obligation of Guarantor under the Guaranty, or of the guarantors under
the Counsel/ACTI Guaranty, or of any other guarantor under any guaranty of any
of the Obligations is limited, terminated or revoked by operation of law or by
the applicable guarantor thereunder; or
 
(o) Section 8.15 of the Agreement is hereby amended to replace the period at its
end with “; or”, and the Agreement is hereby further amended to add thereafter
the following new Section 8.16:
 
8.16 If the Asset Sale Agreement is terminated or the transactions contemplated
thereby are not consummated in accordance with the provisions thereof.
 
(p) Section 12  of the Agreement is hereby amended to amend and restate the
notice address for Lender as follows:
 
If to Lender:  Acceris Management and Acquisition, LLC, 60 South Sixth Street
Suite 2535, Minneapolis, MN 55402
 
(q) Section 16.10 of the Agreement is hereby deleted in its entirety.
 
(r) Exhibit C-1 of the Agreement is hereby amended to (i) address the form of
Compliance Certificate to Lender, and (ii) restate in its entirety the first
sentence of the Compliance Certificate to read, “Reference is made to that
certain Loan and Security Agreement, dated as of December 10, 2001, among
Acceris Communications Inc. (“ACI”), Acceris Communications Corp. (formerly
known as WorldxChange Corp., “ACC,” and, with ACI, “Borrower”) and Acceris
Management and Acquisition, LLC (“Lender”), as assignee of Wells Fargo Foothill,
Inc. (formerly known as Foothill Capital Corporation), as amended.”   
 
 
 

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4. Representations and Warranties. Each of the Borrowers hereby represents and
warrants to Lender that (a) the execution, delivery, and performance of this
Amendment and of the Agreement, as amended by this Amendment, are within its
corporate powers, have been duly authorized by all necessary corporate action,
and are not in contravention of any law, rule, or regulation, or any order,
judgment, decree, writ, injunction, or award of any arbitrator, court, or
governmental authority, or of the terms of its charter or bylaws, or of any
contract or undertaking to which it is a party or by which any of its properties
may be bound or affected, (b) this Amendment and the Agreement, as amended by
this Amendment, constitute the legal, valid, and binding obligation of such
Borrower, enforceable against such Borrower in accordance with its terms,
(c) this Amendment has been duly executed and delivered by such Borrower, and
(d) no Default or Event of Default has occurred and is continuing. Any
misrepresentation or breach of warranty under this Amendment shall be deemed an
Event of Default.
 
5. Choice of Law. The validity of this Amendment, its construction,
interpretation and enforcement, and the rights of the parties hereunder, shall
be determined under, governed by, and construed in accordance with the laws of
the State of California.
 
6. Counterparts; Facsimile Execution. This Amendment may be executed in any
number of counterparts and by different parties and separate counterparts, each
of which when so executed and delivered, shall be deemed an original, and all of
which, when taken together, shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Amendment by
facsimile transmission shall be effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by facsimile transmission also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.
 
7. Release. As to each and every claim released under this Amendment, each
Borrower hereby represents that it has received the advice of legal counsel with
regard to the releases contained herein, and having been so advised, each of
them specifically waives the benefit of the provisions of Section 1542 of the
Civil Code of California which provides as follows:
 
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM, MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”
 
As to each and every claim released hereunder, each Borrower also waives the
benefit of each other similar provision of applicable federal or state law, if
any, pertaining to general releases after having been advised by its legal
counsel with respect thereto. Each Borrower hereby agrees, represents, and
warrants that it has not voluntarily, by operation of law or otherwise,
assigned, conveyed, transferred or encumbered, either directly or indirectly, in
whole or in part, any right to or interest in any claim released under this
Agreement.
 
8. Effect on Loan Documents.
 
(a) The Agreement, as amended hereby, and the other Loan Documents shall be and
remain in full force and effect in accordance with its respective terms and
hereby is ratified and confirmed in all respects. The execution, delivery, and
performance of this Amendment shall not, except as expressly set forth herein,
operate as a waiver of or, except as expressly set forth herein, as an amendment
of, any right, power, or remedy of Lender as in effect prior to the date hereof.
The waivers, consents, and modifications herein are limited to the specifics
hereof, shall not apply with respect to any facts or occurrences other than
those on which the same are based, shall not excuse future non-compliance with
the Agreement, and shall not operate as a consent to any further or other
matter, under the Loan Documents.
 
(b) Upon and after the effectiveness of this Amendment, each reference in the
Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like
import referring to the Agreement, and each reference in the other Loan
Documents to “the Agreement”, “thereunder”, “therein”, “thereof” or words of
like import referring to the Agreement, shall mean and be a reference to the
Agreement as modified and amended hereby.
 
(c) To the extent that any terms and conditions in any of the Loan Documents
shall contradict or be in conflict with any terms or conditions of the
Agreement, after giving effect to this Amendment, such terms and conditions are
hereby deemed modified or amended accordingly to reflect the terms and
conditions of the Agreement as modified or amended hereby.
 
[Signature page follows]
 

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the date first written above.
 
ACCERIS COMMUNICATIONS CORP.,
a Delaware corporation
 
 
By:______________________________
Name:
Title:
 
ACCERIS COMMUNICATIONS INC.,
a Florida corporation
 
By:______________________________
Name:
Title:
 
ACCERIS MANAGEMENT AND ACQUISITION, LLC, a Minnesota limited liability company
 
By:______________________________
Name:
Title:
 

 
 

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REAFFIRMATION AND CONSENT

All capitalized terms used herein but not otherwise defined herein shall have
the meanings ascribed to them in that certain Loan and Security Agreement, dated
as of December 10, 2001 (as amended, restated, supplemented or otherwise
modified, the “Loan Agreement”), by and among Acceris Communications Corp., a
Delaware corporation formerly known as WorldxChange Corp. (“ACC”) and Acceris
Communications Inc., a Florida corporation formerly known as I-Link,
Incorporated (“ACI,” and, together with ACC, the “Borrowers”), and Acceris
Management and Acquisition, LLC, a Minnesota limited liability company (the
“Lender”), as assignee of Wells Fargo Foothill, Inc., a California corporation,
or in Amendment Number Ten to Loan and Security Agreement, dated as of June 22,
2005, by and between the Borrowers and Lender (the “Amendment”). Each of the
undersigned hereby (a) represents and warrants to Lender that the execution,
delivery, and performance of this Reaffirmation and Consent are within its
powers, have been duly authorized by all necessary action, and are not in
contravention of any law, rule, or regulation, or any order, judgment, decree,
writ, injunction, or award of any arbitrator, court, or governmental authority,
or of the terms of its charter or bylaws, or of any contract or undertaking to
which it is a party or by which any of its properties may be bound or affected;
(b) consents to the transactions contemplated by the Amendment; (c) acknowledges
and reaffirms its obligations owing to Lender under any Loan Documents to which
it is a party; and (d) agrees that each of the Loan Documents to which it is a
party is and shall remain in full force and effect. Although the undersigned has
been informed of the matters set forth herein and has acknowledged and agreed to
same, it understands that Lender has no obligations to inform it of such matters
in the future or to seek its acknowledgment or agreement to future amendments,
and nothing herein shall create such a duty. Delivery of an executed counterpart
of this Reaffirmation and Consent by facsimile transmission shall be equally as
effective as delivery of an original executed counterpart of this Reaffirmation
and Consent. Any party delivering an executed counterpart of this Reaffirmation
and Consent by facsimile transmission also shall deliver an original executed
counterpart of this Reaffirmation and Consent but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Reaffirmation and Consent. This Reaffirmation and Consent
shall be governed by the laws of the State of California.

 
 
 

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IN WITNESS WHEREOF, the undersigned has caused this Reaffirmation and Consent to
be executed as of the date of the Amendment.
 
CPT-1 HOLDINGS, INC.,
a Delaware corporation, as a Guarantor
 
 
By:_______________________________
Title:______________________________
 
ACCERIS COMMUNICATIONS TECHNOLOGIES, INC.,
a Delaware corporation, as a Guarantor
 
 
By:_______________________________
Title:______________________________
 
MIBRIDGE, INC.,
a Utah corporation, as a Guarantor
 
By:_______________________________
Title:______________________________
 
COUNSEL CORPORATION,
an Ontario corporation, as a Guarantor
 
 
By:_______________________________
Title:______________________________
 
COUNSEL COMMUNICATIONS LLC,
a Delaware limited liability company, as a Guarantor
 
By:_______________________________
Title:______________________________
 
COUNSEL CORPORATION (US),
a Delaware corporation, as a Guarantor
 
By:_______________________________
Title:______________________________
 

 
 

 
 
 

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Schedule 2A

2.1 Advances.
 
(a) With respect to advances by Lender to Borrower under this Agreement
(“Advances”), Borrower acknowledges and agrees that Lender shall not be
obligated to make any further Advances, and that Lender may in its sole
discretion refuse to make any further Advances hereunder for any reason
whatsoever or for no reason. The aggregate amount of the Existing Indebtedness
and all Advances which Lender may determine in its sole discretion to make under
this Agreement will not, in any event, exceed the Maximum Revolver Amount.
 
(b) Lender may make further Advances on any basis deemed appropriate by Lender
from time to time. Lender may change from time to time, at its sole discretion
and without notice to Borrower, the standards, criteria or formulae used by
Lender in determining whether to make any Advance.
 
(c) Amounts borrowed pursuant to this Section may be repaid at any time during
the term of this Agreement.

(d) The Obligations shall be fully binding and enforceable without any note or
other evidence of indebtedness. Nevertheless, if Lender so requests, Borrower
will duly execute and deliver to Lender a promissory note in negotiable form
payable on demand to the order of Lender in a principal amount equal to, at
Lender’s discretion, either the Maximum Revolver Amount or the principal balance
of Obligations then outstanding to Lender under this Agreement, together with
interest as set forth in Section 2.6.

2.2 Intentionally omitted.

2.3 Borrowing Procedures and Settlements.
 
(a) Procedure for Borrowing. Borrower will request Advances from Lender in such
manner as Lender may from time to time prescribe. Borrower acknowledges and
agrees that Lender may make Advances in any amount and in any manner requested
orally or in writing by an Authorized Person. In requesting any Advances under
this Agreement, Borrower shall be deemed to represent and warrant to Lender
that, as of the date of the proposed Advance, the representations and warranties
contained in this Agreement and the other Loan Documents will be true and
correct in all material respects on and as of such date, as though made on and
as of such date (except to the extent that such representations and warranties
relate solely to an earlier date).

(b) Making of Advances. Lender may disburse the proceeds of any Advance by
deposit with any bank to or for the account of either Person comprising Borrower
or to or for the account of any third party designed by any Authorized Person,
or by an instrument payable to either Person comprising Borrower or to any such
third party delivered to any Authorized Person or to any such third party, or in
any other manner deemed appropriate by Lender.

2.4 Payments.

(a)  Payments by Borrower. Borrower hereby promises to pay the Obligations
(including principal, interest, fees, costs and expenses) in Dollars in full to
Lender as and when due and payable under the terms of this Agreement and the
other Loan Documents. All payments by Borrower shall be made at the offices of
Lender in Minneapolis, Minnesota, unless Lender designates a different place of
payment by written notice to either Person comprising Borrower.

(b) Application of Payments. All payments shall be remitted to Lender and all
such payments, and all proceeds of Accounts or other Collateral received by
Lender, may be applied to pay any or all Advances or other indebtedness of
Borrower under this Agreement in any manner or order of application as Lender
may elect. In the event of a direct conflict between this provision and other
provisions contained in any other Loan Document, this provision shall control
and govern.

 
 

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2.5 Intentionally omitted.

2.6 Interest Rate, Payments, and Calculations.

(a) Interest Rate. All Obligations that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof at
a per annum rate equal to ten percent (10%).

(b) Payment. Interest and all other fees payable hereunder shall be due and
payable, in arrears, on the first day of each month at any time that Obligations
hereunder are outstanding, and all Obligations shall be due and payable on the
Maturity Date. Each Person comprising Borrower hereby authorizes Lender, from
time to time without prior notice to Borrower, to charge such interest and fees,
all Lender Expenses (as and when incurred), the fees and costs provided for in
Section 2.11 (as and when accrued or incurred), and all other payments as and
when due and payable under any Loan Document to Borrower’s Loan Account, which
amounts thereafter shall constitute Advances hereunder and shall accrue interest
at the rate then applicable to Advances hereunder. Any interest not paid when
due shall be compounded by being charged to Borrower’s Loan Account and shall
thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances.

(c) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year for the actual number of days
elapsed.

(d) Intent Limit Charges to Maximum Lawful Rate. In no event shall the interest
rate or rates payable under this Agreement, plus any other amounts paid in
connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and Lender, in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto, as of the
date of this Agreement, Borrower is and shall be liable only for the payment of
such maximum as allowed by law, and payment received from Borrower in excess of
such legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.

 
 
 

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Schedule 2B

2.9 Designated Account. Lender is authorized to make the Advances under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(b). Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrower and made by Lender hereunder. Unless
otherwise agreed by Lender and Borrower, any Advance requested by Borrower and
made by Lender hereunder shall be made to the Designated Account.
 
2.10 Maintenance of Loan Account; Statements of Obligations. Lender shall
maintain an account on its books in the name of Borrower (the “Loan Account”) on
which Borrower will be charged with all Advances made by Lender to Borrower or
for Borrower’s account and with all other payment Obligations hereunder or under
the other Loan Documents, including, accrued interest, fees and expenses, and
Lender Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Lender from Borrower or for Borrower’s
account, including all amounts received in the Lender’s Account from any Cash
Management Bank. Lender shall render statements regarding the Loan Account to
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Expenses owing, and such statements
shall be conclusively presumed to be correct and accurate and constitute an
account stated between Borrower and Lender unless, within 30 days after receipt
thereof by Borrower, Borrower shall deliver to Lender written objection thereto
describing the error or errors contained in any such statements.
 
2.11 Fees. Borrower shall pay to Lender the following fees and charges, which
fees and charges shall be non-refundable when paid (irrespective of whether this
Agreement is terminated thereafter):
 
(a)Fee Letter Fees. As and when due and payable under the terms of the Fee
Letter, Borrower shall pay to Lender the fees set forth in the Fee Letter, and
 
(b) Audit and Valuation Charges. Audit and valuation fees and charges as follows
(i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of Borrower performed by personnel employed by Lender, (ii) if
implemented, a one time charge of $5,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems, and
(iii) after the occurrence and during the continuance of an Event of Default,
the actual charges paid or incurred by Lender if it elects to employ the
services of one or more third Persons to perform financial audits of Borrower or
to assess Borrower’s business valuation.
 
2.12 Intentionally omitted.
 
2.13 Intentionally omitted.
 
2.14 Intentionally omitted.
 

 

 
 
 

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Schedule 3
 

 
3.4 Term. This Agreement shall become effective upon the execution and delivery
hereof by Borrower and Lender and shall continue in full force and effect for a
term ending on _______, 200_ (the “Maturity Date”). The foregoing
notwithstanding, Lender shall have the right to terminate this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.

3.5 Effect of Termination. On the date of termination of this Agreement, all
Obligations immediately shall become due and payable without notice or demand.
No termination of this Agreement, however, shall relieve or discharge Borrower
of its duties, Obligations, or covenants hereunder and the Lender’s Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged. When this Agreement has been terminated and all of the
Obligations have been fully and finally discharged irrevocably, Lender will, at
Borrower’s sole expense, execute and deliver any UCC termination statements,
lien releases, mortgage releases, re-assignments of trademarks, discharges of
security interests, and other similar discharge or release documents (and, if
applicable, in recordable form) as are reasonably necessary to release, as of
record, the Lender’s Liens and all notices of security interests and liens
previously filed by Lender with respect to the Obligations.

3.6 Early Termination by Borrower. Borrower has the option, at any time, to
terminate this Agreement by paying to Lender, in cash, the Obligations in full.
 
 
 
 

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