Exhibit 10.1

 

LOAN AND SECURITY AGREEMENT

 

Dated as of November 20, 2018

 

between

 

Siena Lending Group LLC,
as Lender,

 

WE SELL CELLULAR LLC,
UPSTREAM PHONE COMPANY USA, INC.,
PHONEX, INC.,
as Borrowers,

 

and

 

USELL.COM, INC.,
BST DISTRIBUTION, INC.,
UPSTREAM PHONE HOLDINGS, INC.,
HD CAPITAL HOLDINGS, LLC,
as Loan Parties

 

 

 

 

TABLE OF CONTENTS

 

        Page         1. LOANS AND LETTERS OF CREDIT 1   1.1 Amount of Loans /
Letters of Credit 1   1.2 Reserves for Revolving Loans / Letters of Credit 1  
1.3 Protective Advances 2   1.4 Notice of Borrowing; Manner of Revolving Loan
Borrowing 2   1.5 Other Provisions Applicable to Letters of Credit 3   1.6
Conditions of Making the Loans and Issuing Letters of Credit 3   1.7 Repayments
4   1.8 Prepayments / Voluntary Termination / Application of Prepayments 5   1.9
Obligations Unconditional 5   1.10 Reversal of Payments 6       2. INTEREST AND
FEES; LOAN ACCOUNT 6   2.1 Interest 6   2.2 Fees 7   2.3 Computation of Interest
and Fees 7   2.4 Loan Account; Monthly Accountings 7   2.5 Further Obligations;
Maximum Lawful Rate 7       3. SECURITY INTEREST GRANT / POSSESSORY COLLATERAL /
FURTHER ASSURANCES 8   3.1 Grant of Security Interest 8   3.2 Possessory
Collateral 9   3.3 Further Assurances 9   3.4 UCC Financing Statements 10      
4. CERTAIN PROVISIONS REGARDING ACCOUNTS, INVENTORY, COLLECTIONS, APPLICATIONS
OF PAYMENTS, INSPECTION RIGHTS, AND APPRAISALS 11   4.1 Lock Boxes and Blocked
Accounts 11   4.2 Application of Payments 11   4.3 Notification; Verification 12
  4.4 Power of Attorney 13   4.5 Disputes 14   4.6 Inventory 14   4.7 Access to
Collateral, Books and Records 15   4.8 Appraisals 15       5. REPRESENTATIONS,
WARRANTIES AND COVENANTS 15   5.1 Existence and Authority 16   5.2 Names; Trade
Names and Styles 16   5.3 Title to Collateral; Third Party Locations; Permitted
Liens; Inactive Loan Parties 16   5.4 Accounts, Chattel Paper and Inventory 17  
5.5 Electronic Chattel Paper 17   5.6 Capitalization; Investment Property 18  
5.7 Commercial Tort Claims 19

 

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TABLE OF CONTENTS

 

        Page           5.8 Jurisdiction of Organization; Location of Collateral
19   5.9 Financial Statements and Reports; Solvency 20   5.10 Tax Returns and
Payments; Pension Contributions 20   5.11 Compliance with Laws; Intellectual
Property; Licenses 21   5.12 Litigation 23   5.13 Use of Proceeds 23   5.14
Insurance 23   5.15 Financial, Collateral and Other Reporting / Notices 24  
5.16 Litigation Cooperation 26   5.17 Maintenance of Collateral, Etc 26   5.18
Material Contracts 26   5.19 No Default 27   5.20 No Material Adverse Change 27
  5.21 Full Disclosure 27   5.22 Sensitive Payments 27   5.23 Subordinated Debt
27   5.24 Negative Covenants 28   5.25 Financial Covenants 30   5.26 Employee
and Labor Matters 30   5.27 Post-Closing Matters         6. RELEASE, LIMITATION
OF LIABILITY AND INDEMNITY 30   6.1 Release 30   6.2 Limitation of Liability 31
  6.3 Indemnity/Currency Indemnity 31       7. EVENTS OF DEFAULT AND REMEDIES 32
  7.1 Events of Default 32   7.2 Remedies with Respect to Lending
Commitments/Acceleration/Etc 35   7.3 Remedies with Respect to Collateral 36    
  8. LOAN GUARANTY 41   8.1 Guaranty 41   8.2 Guaranty of Payment 41   8.3 No
Discharge or Diminishment of Loan Guaranty 41   8.4 Defenses Waived 42   8.5
Rights of Subrogation 42   8.6 Reinstatement; Stay of Acceleration 42   8.7
Information 43   8.8 Termination 43   8.9 Maximum Liability 43   8.10
Contribution 44   8.11 Liability Cumulative 44       9. PAYMENTS FREE OF TAXES;
OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES 44

 

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TABLE OF CONTENTS

 

        Page       10. GENERAL PROVISIONS 47   10.1 Notices 47   10.2
Severability 49   10.3 Integration 49   10.4 Waivers 49   10.5 Amendment 49  
10.6 Time of Essence 49   10.7 Expenses, Fee and Costs Reimbursement 50   10.8
Benefit of Agreement; Assignability; Servicer 50   10.9 Recordation of
Assignment 52   10.10 Participations 53   10.11 Headings; Construction 53  
10.12 USA PATRIOT Act Notification 53   10.13 Counterparts; Email Signatures 54
  10.14 GOVERNING LAW 54   10.15 WAIVERS AND JURISDICTION 54   10.16 Publication
55   10.17 Confidentiality 55   10.18 Borrowing Agency Provisions 56

  

Disclosure Schedule       Schedule A Description of Certain Terms Schedule B
Definitions Schedule C Fees Schedule D Reporting Schedule E Financial Covenants
Schedule F Warrants, Etc. Schedule G Subordinated Debt     Exhibit A Form of
Notice of Borrowing Exhibit B Closing Checklist Exhibit C Client User Form
Exhibit D Authorized Accounts Form Exhibit E Form of Account Debtor Notification
Exhibit F Form of Compliance Certificate Exhibit G Form of Monthly Financial
Model

 

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LOAN AND SECURITY AGREEMENT

 

This Loan and Security Agreement (as it may be amended, restated or otherwise
modified from time to time, this “Agreement”) is entered into as of November 20,
2018 among (1) Siena Lending Group LLC, together with its successors and assigns
(“Lender”), (2) WE SELL CELLULAR LLC, a Delaware limited liability company
(“WeSell”), UPSTREAM PHONE COMPANY USA, INC., a Delaware corporation
(“Upstream”) and PHONEX, INC., a Delaware corporation (“PhoneX” and together
with WeSell and Upstream and any other Person who from time to time becomes a
Borrower hereunder, collectively, the “Borrowers” and each individually, a
“Borrower”), and (3) the Loan Parties (as defined herein) set forth on the
signature pages to this Agreement. The Schedules and Exhibits to this Agreement
are an integral part of this Agreement and are incorporated herein by reference.
Terms used, but not defined elsewhere, in this Agreement are defined in Schedule
B.

 

1.LOANS AND LETTERS OF CREDIT.

 

1.1          Amount of Loans / Letters of Credit.

 

(a)           Revolving Loans and Letters of Credit. Subject to the terms and
conditions contained in this Agreement, including Sections 1.3 and 1.6, Lender
shall, from time to time prior to the Maturity Date, at Borrowing Agent’s
request, (i) make revolving loans to Borrowers (“Revolving Loans”), and (ii)
make, or cause or permit a Participant (as defined in Section 10.10) to make,
letters of credit (“Letters of Credit”) available to Borrowers; provided, that
after giving effect to each such Revolving Loan and each such Letter of Credit,
(A) the outstanding balance of all Revolving Loans and the Letter of Credit
Balance will not exceed the lesser of (x) the Maximum Revolving Facility Amount,
minus Reserves and (y) the Borrowing Base, and (B) none of the other Loan Limits
for Revolving Loans will be exceeded. All Revolving Loans shall be made in and
repayable in Dollars.

 

1.2          Reserves for Revolving Loans / Letters of Credit. Lender may, with
or without notice to Borrowing Agent, from time to time establish and revise
reserves against the Borrowing Base and/or the Maximum Revolving Facility Amount
in such amounts and of such types as Lender deems appropriate in its Permitted
Discretion (“Reserves”). Such Reserves shall be available for Borrowing Agent to
view in Passport 6.0 simultaneously with the imposition thereof; provided, that
Lender shall endeavor to provide email notice advising Borrowing Agent of such
Reserves prior to or simultaneously with the imposition of such Reserves;
provided, further that Lender shall have no liability for failing to provide
such email notice. Without limiting the foregoing, references to Reserves shall
include the Dilution Reserve. In no event shall the establishment of a Reserve
in respect of a particular actual or contingent liability obligate Lender to
make advances to pay such liability or otherwise obligate Lender with respect
thereto.

 

 

 

 

1.3          Protective Advances. Any contrary provision of this Agreement or
any other Loan Document notwithstanding, Lender is hereby authorized by
Borrowers at any time, regardless of (a) the existence of a Default or an Event
of Default, (b) whether any of the other applicable conditions precedent set
forth in Section 1.6 hereof have not been satisfied or the commitment of Lender
to make Loans hereunder has been terminated for any reason, or (c) any other
contrary provision of this Agreement, to make (in its Permitted Discretion prior
to the occurrence and continuance of an Event of Default) Revolving Loans to, or
for the benefit of, Borrowers that Lender, in its sole discretion, deems
necessary or desirable: (i) to preserve or protect the Collateral, or any
portion thereof, (ii) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (iii) to pay any other amount
chargeable to Borrowers pursuant to the terms of this Agreement (the “Protective
Advances”). Any contrary provision of this Agreement or any other Loan Document
notwithstanding, Lender may direct the proceeds of any Protective Advance to
Borrowers or to such other Person as Lender determines in its sole discretion.
All Protective Advances shall be payable immediately upon demand.

 

1.4          Notice of Borrowing; Manner of Revolving Loan Borrowing. Borrowing
Agent shall request each Revolving Loan by an Authorized Officer submitting such
request via Passport 6.0 (or, if requested by Lender, by delivering, in writing
or via an Approved Electronic Communication, a Notice of Borrowing substantially
in the form of Exhibit A hereto) (each such request a “Notice of Borrowing”).
Subject to the terms and conditions of this Agreement, including Sections 1.1
and 1.6, Lender shall, except as provided in Section 1.3, deliver the amount of
the Revolving Loan requested in the Notice of Borrowing for credit to any
account of Borrowers at a bank in the United States of America as Borrowing
Agent may specify (provided that such account must be one identified on Section
3 of the Disclosure Schedule and approved by Lender as an account to be used for
funding of loan proceeds) by wire transfer of immediately available funds (a) on
the same day if the Notice of Borrowing is received by Lender on or before 11:00
a.m. Eastern Time on a Business Day, or (b) on the immediately following
Business Day if the Notice of Borrowing is received by Lender after 11:00 a.m.
Eastern Time on a Business Day, or is received by Lender on any day that is not
a Business Day. Lender shall charge to the Revolving Loan Lender’s usual and
customary fees for the wire transfer of each Loan.

 

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1.5          Other Provisions Applicable to Letters of Credit. Lender shall, on
the terms and conditions set forth in this Agreement (including the terms and
conditions set forth in Section 1.1 and Section 1.6), make Letters of Credit
available to Borrowers either by issuing them, or by causing other financial
institutions to issue them supported by Lender’s guaranty or indemnification;
provided, that after giving effect to each Letter of Credit, the Letter of
Credit Balance will not exceed the Letter of Credit Limit. Notwithstanding
anything in this Agreement, the parties agree that in connection with Lender’s
option to make Letters of Credit available to Borrowers by causing other
financial institutions to issue Letters of Credit, Lender may cause or permit
any Participant under this Agreement to cause other financial institutions to
issue such Letters of Credit and thereafter (a) all such Letters of Credit shall
be treated for all purposes under this Agreement as if such Letters of Credit
were requested by Borrowing Agent and made available by Lender, (b) such
Participant’s support of such Letters of Credit in the form of a guaranty or
indemnification shall be treated as if such support had been made by Lender, (c)
Borrowers hereby unconditionally and irrevocably, jointly and severally agree to
pay to Lender the amount of each payment or disbursement made by such
Participant or the applicable issuer under any such Letter of Credit honoring
any demand for payment thereunder upon demand in accordance with the
reimbursement provisions of this Section 1.5 and agrees that such reimbursement
obligations of Borrowers constitute Obligations under this Agreement, and (d)
any and all amounts paid by such Participant or the applicable issuer in respect
of any such Letter of Credit will, at the election of Lender, be treated for all
purposes as a Revolving Loan, and be payable, in the same manner as a Revolving
Loan. Borrowers agree to execute all documentation reasonably required by Lender
and/or the issuer of any Letter of Credit in connection with any such Letter of
Credit. Borrowers hereby unconditionally and irrevocably, jointly and severally
agree to reimburse Lender and/or the applicable issuer for each payment or
disbursement made by Lender and/or the applicable issuer under any Letter of
Credit honoring any demand for payment made thereunder, in each case on the date
that such payment or disbursement is made. Borrowers’ reimbursement obligations
hereunder shall be irrevocable and unconditional under all circumstances,
including (w) any lack of validity or enforceability of any Letter of Credit,
this Agreement or any other Loan Document, (x) the existence of any claim,
set-off, defense or other right which any Loan Party may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any Letter
of Credit (or any Person for whom any such transferee may be acting), Lender,
any Participant, the applicable issuer under any Letter or Credit, or any other
Person, whether in connection with any Letter of Credit, this Agreement, any
other Loan Document, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between any Loan Party and
the beneficiary named in any Letter of Credit), (y) any lack of validity,
sufficiency or genuineness of any document which Lender or the applicable issuer
has determined complies on its face with the terms of the applicable Letter of
Credit, even if such document should later prove to have been forged,
fraudulent, invalid or insufficient in any respect or any statement therein
shall have been untrue or inaccurate in any respect, or (z) the surrender or
impairment of any security for the performance or observance of any of the terms
hereof. Any and all amounts paid by Lender and any Participant in respect of a
Letter of Credit will, at the election of Lender, be treated for all purposes as
a Revolving Loan, and bear interest, and be payable, in the same manner as a
Revolving Loan.

 

1.6          Conditions of Making the Loans and Issuing Letters of Credit.
Lender’s obligation to make any Loan or issue or cause any Letter of Credit to
be issued under this Agreement is subject to the following conditions precedent
(as well as any other conditions set forth in this Agreement or any other Loan
Document), all of which must be satisfied in a manner acceptable to Lender (and
as applicable, pursuant to documentation which in each case is in form and
substance acceptable to Lender) as of each day that such Loan is made or such
Letter of Credit is issued, as applicable:

 

(a)           Loans and Letters of Credit Made and/or Issued on the Closing
Date: With respect to Loans made, and/or Letters of Credit issued, on the
Closing Date, (i) each applicable Loan Party shall have duly executed and/or
delivered, or, as applicable, shall have caused such other applicable Persons to
have duly executed and or delivered, to Lender such agreements, instruments,
documents and/or certificates listed on the closing checklist attached hereto as
Exhibit B; (ii) Lender shall have completed its business and legal due diligence
pertaining to the Loan Parties, their respective businesses and assets, with
results thereof satisfactory to Lender in its sole discretion; (iii) Lender’s
obligations and commitments under this Agreement shall have been approved by
Lender’s Credit Committee; (iv) after giving effect to such Loans and Letters of
Credit, as well as to the payment of all trade payables (other than trade
payables to Brightstar but including the payment of $1,200,000 made to
Brightstar whether or not made on the Closing Date) older than sixty (60) days
past due and the consummation of all transactions contemplated hereby to occur
on the Closing Date, closing costs and any book overdraft, Excess Availability
(after giving effect to the Availability Block) shall be no less than
$1,000,000; (vi) Lender shall have received proceeds of an equity raise and/or
Subordinated Debt in respect of the Loan Parties in an amount at least equal to
$4,800,000 on terms and conditions satisfactory to Lender; and (vii) Borrowers
shall have paid to Lender all fees due on the date hereof, and shall have paid
or reimbursed Lender for all of Lender’s costs, charges and expenses incurred
through the Closing Date (and in connection herewith, Borrowers hereby
irrevocably authorize Lender to charge such fees, costs, charges and expenses as
Revolving Loans; and

 

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(b)           All Loans and/or Letters of Credit: With respect to Loans made
and/or Letters of Credit issued, on the Closing Date and/or at any time
thereafter, in addition to the conditions specified in clause (a) above as
applicable, (i) Borrowers shall have provided to Lender such information as
Lender may require in order to determine the Borrowing Base (including the items
set forth in Section 5.15(a)), as of such borrowing or issue date, after giving
effect to such Loans and/or Letters of Credit, as applicable; (ii) each
applicable Loan Party and Other Obligor shall have duly executed and/or
delivered, or, as applicable, shall have caused such other applicable Persons to
have duly executed and or delivered, to Lender such further agreements,
instruments, documents, proxies and certificates as Lender may reasonably
require in connection therewith; (iii) each of the representations and
warranties set forth in this Agreement and in the other Loan Documents shall be
true and correct in all material respects (without duplication of any
materiality qualifier contained therein) as of the date such Loan is made and/or
such Letter of Credit is issued (or to the extent any representations or
warranties are expressly made solely as of an earlier date, such representations
and warranties shall be true and correct in all material respects (without
duplication of any materiality qualifier contained therein) as of such earlier
date), both before and after giving effect thereto; and (iv) no Default or Event
of Default shall be in existence, both before and after giving effect thereto.

 

1.7          Repayments.

 

(a)           Revolving Loans/Letters of Credit. If at any time for any reason
whatsoever (including without limitation as a result of currency fluctuations)
(i) the sum of the outstanding balance of all Revolving Loans and the Letter of
Credit Balance exceeds the lesser of (x) the Maximum Revolving Facility Amount
and (y) the Borrowing Base, or (ii) any of the Loan Limits for Revolving Loans
or Letters of Credit are exceeded, then in each case, Borrowers will
immediately, jointly and severally pay to Lender such amounts (or, with respect
to the Letter of Credit Balance, provide cash collateral to Lender in the manner
set forth in clause (c) below) as shall cause Borrowers to eliminate such excess
(such excess, an “Overadvance”).

 

(b)           Maturity Date Payments / Cash Collateral. All remaining
outstanding monetary Obligations (including, all accrued and unpaid fees
described on Schedule C) shall be payable in full on the Maturity Date. Without
limiting the generality of the foregoing, if, on the Maturity Date, there are
any outstanding Letters of Credit, then on such date Borrowers shall provide to
Lender cash collateral in an amount equal to 105% of the Letter of Credit
Balance to secure all of the Obligations (including estimated attorneys’ fees
and other expenses) relating to said Letters of Credit, pursuant to a cash
pledge agreement in form and substance reasonably satisfactory to Lender.

 

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(c)           Currency Due. If, notwithstanding the terms of this Agreement or
any other Loan Document, Lender receives any payment from or on behalf of
Borrowers or any other Person in a currency other than the Currency Due, Lender
may convert the payment (including the monetary proceeds of realization upon any
Collateral and any funds then held in a cash collateral account) into the
Currency Due at exchange rate selected by Lender in the manner contemplated by
Section 6.3(b) and Borrowers shall jointly and severally reimburse Lender on
demand for all reasonable costs they incur with respect thereto. To the extent
permitted by law, the obligation shall be satisfied only to the extent of the
amount actually received by Lender upon such conversion.

 

1.8          Prepayments / Voluntary Termination / Application of Prepayments.

 

(a)           Voluntary Termination of Loan Facilities. Borrowers may, on at
least thirty (30) days prior and irrevocable written notice received by Lender,
permanently terminate the Loan facilities by repaying all of the outstanding
Obligations, including all principal, interest and fees with respect to the
Revolving Loans, and an Early Payment/Termination Premium in the amount
specified in Schedule C. If, on the date of a voluntary termination pursuant to
this Section 1.8(a), there are any outstanding Letters of Credit, then on such
date, and as a condition precedent to such termination, Borrowers shall provide
to Lender cash collateral in an amount equal to 105% of the Letter of Credit
Balance to secure all of the Obligations (including estimated attorneys’ fees
and other expenses) relating to said Letters of Credit, pursuant to a cash
pledge agreement in form and substance reasonably satisfactory to Lender. From
and after such date of termination, Lender shall have no obligation whatsoever
to extend any additional Loans or Letters of Credit and all of its lending
commitments hereunder shall be terminated.

 

1.9          Obligations Unconditional.

 

(a)           The payment and performance of all Obligations shall constitute
the absolute and unconditional obligations of each Loan Party, and shall be
independent of any defense or rights of set-off, recoupment or counterclaim
which any Loan Party or any other Person might otherwise have against Lender or
any other Person. All payments required (other than by Lender) by this Agreement
and/or the other Loan Documents shall be made in Dollars (unless payment in a
different currency is expressly provided otherwise in the applicable Loan
Document) and paid free of any deductions or withholdings for any taxes or other
amounts and without abatement, diminution or set-off. If any Loan Party is
required by applicable law to make such a deduction or withholding from a
payment under this Agreement or under any other Loan Document, such Loan Party
shall pay to Lender such additional amount as is necessary to ensure that, after
the making of such deduction or withholding, Lender receives (free from any
liability in respect of any such deduction or withholding) a net sum equal to
the sum which it would have received and so retained had no such deduction or
withholding been made or required to be made. Each Loan Party shall (i) pay the
full amount of any deduction or withholding, which it is required to make by
law, to the relevant authority within the payment period set by applicable law,
and (ii) promptly after any such payment, deliver to Lender an original (or
certified copy) official receipt issued by the relevant authority in respect of
the amount withheld or deducted or, if the relevant authority does not issue
such official receipts, such other evidence of payment of the amount withheld or
deducted as is reasonably acceptable to Lender.

 

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(b)           If, at any time and from time to time after the Closing Date (or
at any time before or after the Closing Date with respect to (x) the Dodd-Frank
Wall Street Reform and Consumer Protection Act and all requests, rules,
regulations, guidelines or directives thereunder or issued in connection
therewith, or (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States
regulatory authorities, in each case for purposes of this clause (y) pursuant to
Basel III, regardless of the date enacted, adopted or issued), (i) any change in
any existing law, regulation, treaty or directive or in the interpretation or
application thereof, (ii) any new law, regulation, treaty or directive enacted
or application thereof, or (iii) compliance by Lender with any request or
directive (whether or not having the force of law) from any Governmental
Authority, central bank or comparable agency (A) subjects Lender to any tax,
levy, impost, deduction, assessment, charge or withholding of any kind
whatsoever with respect to any Loan Document, or changes the basis of taxation
of payments to Lender of any amount payable thereunder (except for net income
taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally
by federal, state, local or other taxing authorities with respect to interest or
fees payable hereunder or under any other Loan Document or changes in the rate
of tax on the overall net income of Lender or its members), or (B) imposes on
Lender any other condition or increased cost in connection with the transactions
contemplated thereby or participations therein, and the result of any of the
foregoing is to increase the cost to Lender of making or continuing any Loan or
Letter of Credit or to reduce any amount receivable hereunder or under any other
Loan Documents, then, in any such case, Borrowers shall promptly and jointly and
severally pay to Lender, when notified to do so by Lender, any additional
amounts necessary to compensate Lender, on an after-tax basis, for such
additional cost or reduced amount as determined by Lender. Each such notice of
additional amounts payable pursuant to this Section 1.9(b) submitted by Lender
to Borrowing Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.

 

(c)           This Section 1.9 shall remain operative even after the Termination
Date and shall survive the payment in full of all of the Obligations.

 

1.10        Reversal of Payments. To the extent that any payment or payments
made to or received by Lender pursuant to this Agreement or any other Loan
Document are subsequently invalidated, declared to be fraudulent or
preferential, set aside, or required to be repaid to any trustee, receiver or
other Person under any state, federal or other bankruptcy or other such
applicable law, then, to the extent thereof, such amounts (and all Liens, rights
and remedies therefore) shall be revived as Obligations (secured by all such
Liens) and continue in full force and effect under this Agreement and under the
other Loan Documents as if such payment or payments had not been received by
Lender. This Section 1.10 shall remain operative even after the Termination Date
and shall survive the payment in full of all of the Obligations.

 

2.INTEREST AND FEES; LOAN ACCOUNT.

 

2.1          Interest. All Loans and other monetary Obligations shall bear
interest at the interest rate(s) set forth in Section 2 of Schedule A, and
accrued interest shall be payable (a) on the first day of each month in arrears,
(b) upon a prepayment of such Loan in accordance with Section 1.8, and (c) on
the Maturity Date; provided, that after the occurrence and during the
continuation of an Event of Default, all Loans and other monetary Obligations
shall bear interest at a rate per annum equal to five (5) percentage points in
excess of the rate otherwise applicable thereto (the “Default Rate”), and all
such interest shall be payable on demand. Changes in the interest rate shall be
effective as of the date of any change in the Base Rate.

 

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2.2          Fees. Borrowers shall jointly and severally pay Lender the fees set
forth on Schedule C hereto on the dates set forth therein, which fees are in
addition to all fees and other sums payable by Borrowers or any other Person to
Lender under this Agreement or under any other Loan Document, and, in each case
are not refundable once paid.

 

2.3          Computation of Interest and Fees. All interest and fees shall be
calculated daily on the outstanding monetary Obligations based on the actual
number of days elapsed in a year of 360 days.

 

2.4          Loan Account; Monthly Accountings. Lender shall maintain a loan
account for Borrowers reflecting all outstanding Loans and the Letters of Credit
Balance, along with interest accrued thereon and such other items reflected
therein (the “Loan Account”), and shall provide Borrowing Agent with a monthly
accounting reflecting the activity in the Loan Account, viewable by Borrowing
Agent on Passport 6.0. Each accounting shall be deemed correct, accurate and
binding on Borrowers and an account stated (except for reverses and
reapplications of payments made and corrections of errors discovered by Lender),
unless Borrowing Agent notifies Lender in writing to the contrary within thirty
(30) days after such account is posted on Passport 6.0to Borrower Agent,
describing the nature of any alleged errors or omissions. However, Lender’s
failure to maintain the Loan Account or to provide any such accounting shall not
affect the legality or binding nature of any of the Obligations, provided that
Lender’s failure to maintain the Loan Account or to post an accounting for a
particular period during the term of this Agreement shall toll Borrower Agent’s
right to object to the accounting for the applicable period until thirty (30)
days after such accounting is provided or posted for the applicable period.
Interest, fees and other monetary Obligations due and owing under this Agreement
(including fees and other amounts paid by Lender to issuers of Letters of
Credit) may, in Lender’s discretion, be charged to the Loan Account, and will
thereafter be deemed to be Revolving Loans and will bear interest at the same
rate as other Revolving Loans.

 

2.5          Further Obligations; Maximum Lawful Rate. With respect to all
monetary Obligations for which the interest rate is not otherwise specified
herein (whether such Obligations arise hereunder or under any other Loan
Document, or otherwise), such Obligations shall bear interest at the rate(s) in
effect from time to time with respect to the applicable loan and shall be
payable upon demand by Lender. In no event shall the interest charged with
respect to any Loan or any other Obligation exceed the maximum amount permitted
under applicable law. Notwithstanding anything to the contrary herein or
elsewhere, if at any time the rate of interest payable or other amounts
hereunder or under any other Loan Document (the “Stated Rate”) would exceed the
highest rate of interest or other amount permitted under any applicable law to
be charged (the “Maximum Lawful Rate”), then for so long as the Maximum Lawful
Rate would be so exceeded, the rate of interest and other amounts payable shall
be equal to the Maximum Lawful Rate; provided, that if at any time thereafter
the Stated Rate is less than the Maximum Lawful Rate, Borrowers shall, to the
extent permitted by applicable law, continue to pay interest and such other
amounts at the Maximum Lawful Rate until such time as the total interest and
other such amounts received is equal to the total interest and other such
amounts which would have been received had the Stated Rate been (but for the
operation of this provision) the interest rate payable or such other amounts
payable. Thereafter, the interest rate and such other amounts payable shall be
the Stated Rate unless and until the Stated Rate again would exceed the Maximum
Lawful Rate, in which event this provision shall again apply. In no event shall
the total interest or other such amounts received by Lender exceed the amount
which it could lawfully have received had the interest and other such amounts
been calculated for the full term hereof at the Maximum Lawful Rate. If,
notwithstanding the prior sentence, Lender has received interest or other such
amounts hereunder in excess of the Maximum Lawful Rate, such excess amount shall
be applied to the reduction of the principal balance of the Loans or to other
Obligations (other than interest) payable hereunder, and if no such principal or
other Obligations are then outstanding, such excess or part thereof remaining
shall be paid to Borrowers. In computing interest payable with reference to the
Maximum Lawful Rate applicable to any Lender, such interest shall be calculated
at a daily rate equal to the Maximum Lawful Rate divided by the number of days
in the year in which such calculation is made.

 

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3.SECURITY INTEREST GRANT / POSSESSORY COLLATERAL / FURTHER ASSURANCES.

 

3.1          Grant of Security Interest. To secure the full payment and
performance of all of the Obligations, each Loan Party hereby assigns to Lender
and grants to Lender a continuing security interest in all property of such Loan
Party, whether tangible or intangible, real or personal, now or hereafter owned,
existing, acquired or arising and wherever now or hereafter located, and whether
or not eligible for lending purposes, including: (a) all Accounts and all Goods
whose sale, lease or other disposition by such Loan Party has given rise to
Accounts and have been returned to, or repossessed or stopped in transit by,
such Loan Party; (b) all Chattel Paper (including Electronic Chattel Paper),
Instruments, Documents, and General Intangibles (including all patents, patent
applications, trademarks, trademark applications, trade names, trade secrets,
goodwill, copyrights, copyright applications, registrations, licenses, software,
franchises, customer lists, tax refund claims, claims against carriers and
shippers, guarantee claims, contracts rights, payment intangibles, security
interests, security deposits and rights to indemnification); (c) all Inventory
(whether or not Eligible Inventory); (d) all Goods (other than Inventory),
including Equipment, Farm Products, Health-Care-Insurance Receivables, vehicles,
and Fixtures; (e) all Investment Property, including, without limitation, all
rights, privileges, authority, and powers of such Loan Party as an owner or as a
holder of Pledged Equity, including, without limitation, all economic rights,
all control rights, authority and powers, and all status rights of such Loan
Party as a member, equity holder or shareholder, as applicable, of each Issuer;
(f) all Deposit Accounts, bank accounts, deposits and cash; (g) all
Letter-of-Credit Rights; (h) all Commercial Tort Claims listed in Section 2 of
the Disclosure Schedule; (i) all Supporting Obligations; (j) any other property
of such Loan Party now or hereafter in the possession, custody or control of
Lender or any agent or any parent, Affiliate or Subsidiary of Lender or any
Participant with Lender in the Loans, for any purpose (whether for safekeeping,
deposit, collection, custody, pledge, transmission or otherwise), and (k) all
additions and accessions to, substitutions for, and replacements, products and
Proceeds of the foregoing property, including proceeds of all insurance policies
insuring the foregoing property, and all of such Loan Party’s books and records
relating to any of the foregoing and to such Loan Party’s business.

 

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3.2          Possessory Collateral. Promptly, but in any event no later than
five (5) Business Days after any Loan Party’s receipt of any portion of the
Collateral evidenced by an agreement, Instrument or Document, including any
Tangible Chattel Paper and any Investment Property consisting of certificated
securities, such Loan Party shall deliver the original thereof to Lender
together with an appropriate endorsement or other specific evidence of
assignment thereof to Lender (in form and substance acceptable to Lender). If an
endorsement or assignment of any such items shall not be made for any reason,
Lender is hereby irrevocably authorized, as attorney and agent-in-fact (coupled
with an interest) for each Loan Party, to endorse or assign the same on such
Loan Party’s behalf.

 

3.3          Further Assurances.

 

(a)           Each Loan Party will, at the time that any Loan Party forms any
direct or indirect Subsidiary, acquires any direct or indirect Subsidiary after
the Closing Date, within ten days of such event (or such later date as permitted
by Lender in its sole discretion) (i) cause such new Subsidiary to become a Loan
Party and to grant Lender a first priority Lien (subject to Permitted Liens) in
and to the assets of such newly formed or acquired Subsidiary), (ii) provide, or
cause the applicable Loan Party to provide, to Lender a pledge agreement and
appropriate certificates and powers or financing statements, pledging all of the
direct or beneficial ownership interest in such new Subsidiary in form and
substance reasonably satisfactory to Lender (which pledge, if reasonably
requested by Lender, shall be governed by the laws of the jurisdiction of such
Subsidiary), and (iii) provide to Lender all other documentation, including one
or more opinions of counsel reasonably satisfactory to Lender, which, in its
opinion, is appropriate with respect to the execution and delivery of the
applicable documentation referred to above (including policies of title
insurance, flood certification documentation or other documentation with respect
to all Real Property owned in fee and subject to a mortgage). Any document,
agreement, or instrument executed or issued pursuant to this Section 3.3 shall
constitute a Loan Document.

 

(b)           Each Loan Party will, and will cause each of the other Loan
Parties to, at any time upon the reasonable request of Lender, execute or
deliver to Lender any and all financing statements, fixture filings, security
agreements, pledges, assignments, mortgages, deeds of trust, opinions of
counsel, and all other documents (the “Additional Documents”) that Lender may
reasonably request in form and substance reasonably satisfactory to Lender, to
create, perfect, and continue to be perfected or to better perfect Lender’s
Liens in all of the assets of each of the Loan Parties (whether now owned or
hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Lender in any Real Property acquired by any
other Loan Party with a fair market value in excess of $100,000, and in order to
fully consummate all of the transactions contemplated hereby and under the other
Loan Documents. To the maximum extent permitted by applicable law, if any
Borrower or any other Loan Party refuses or fails to execute or deliver any
reasonably requested Additional Documents within a reasonable period of time
following the request to do so, each Borrower and each other Loan Party hereby
authorizes Lender to execute any such Additional Documents in the applicable
Loan Party’s name and authorizes Lender to file such executed Additional
Documents in any appropriate filing office.

 

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(c)           Each Loan Party shall, at its own cost and expense, promptly and
duly take, execute, acknowledge and deliver (and/or use commercially reasonable
efforts to cause such other applicable Person to take, execute, acknowledge and
deliver) all such further acts, documents, agreements and instruments as Lender
shall deem reasonably necessary in order to (i) carry out the intent and
purposes of the Loan Documents and the transactions contemplated thereby, (ii)
establish, create, preserve, protect and perfect a first priority lien (subject
only to Permitted Liens) in favor of Lender in all Collateral (wherever located)
from time to time owned by the Loan Parties, (iii) cause each Loan Party to
guarantee all of the Obligations, all pursuant to documentation that is in form
and substance satisfactory to Lender in its Permitted Discretion and (iv)
facilitate the collection of the Collateral. Without limiting the foregoing,
each Loan Party shall, at its own cost and expense, promptly and duly take,
execute, acknowledge and deliver (and/or use commercially reasonable efforts to
cause such other applicable Person to take, execute, acknowledge and deliver) to
Lender all promissory notes, security agreements, agreements with landlords,
mortgagees and processors and other bailees, subordination and intercreditor
agreements and other agreements, instruments and documents, in each case in form
and substance reasonably acceptable to Lender, as Lender may request from time
to time to perfect, protect, and maintain Lender’s security interests in the
Collateral, including the required priority thereof, and to fully carry out the
transactions contemplated by the Loan Documents.

 

3.4          UCC Financing Statements. Each Loan Party authorizes Lender to
file, transmit, or communicate, as applicable, from time to time, Uniform
Commercial Code financing statements, along with amendments and modifications
thereto, in all filing offices selected by Lender, listing such Loan Party as
the debtor and Lender as the secured party, and describing the collateral
covered thereby in such manner as Lender may elect, including using descriptions
such as “all personal property of debtor” or “all assets of debtor” or words of
similar effect. Each Loan Party also hereby ratifies its authorization for
Lender to have filed in any filing office any financing statements filed prior
to the date hereof.

 

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4.CERTAIN PROVISIONS REGARDING ACCOUNTS, INVENTORY, COLLECTIONS, APPLICATIONS OF
PAYMENTS, INSPECTION RIGHTS, AND APPRAISALS.

 

4.1          Lock Boxes and Blocked Accounts. Each Loan Party hereby represents
and warrants that all Deposit Accounts and all other depositary and other
accounts maintained by each Loan Party as of the Closing Date are described in
Section 3 of the Disclosure Schedule, which description includes for each such
account the name of the Loan Party maintaining such account, the name, of the
financial institution at which such account is maintained, the account number,
and the purpose of such account. After the Closing Date, no Loan Party shall
open any new Deposit Accounts or any other depositary or other accounts without
the prior written consent of Lender and without updating Section 3 of the
Disclosure Schedule to reflect such Deposit Accounts or other accounts, as
applicable. No Deposit Accounts or other accounts of any Loan Party shall at any
time constitute a Restricted Account other than accounts expressly indicated on
Section 3 of the Disclosure Schedule as being a Restricted Account (and each
Loan Party hereby represents and warrants that each such account shall at all
times meet the requirements set forth in the definition of Restricted Account to
qualify as a Restricted Account). Each Loan Party will, at its expense,
establish (and revise from time to time as Lender may require) procedures
acceptable to Lender, in Lender’s Permitted Discretion, for the collection of
checks, wire transfers and all other proceeds of all of such Loan Party’s
Accounts, including proceeds from any credit card processor, PayPal, Amazaon,
proceeds of Indebtedness and issuance of Equity and other Collateral
(“Collections”), which shall include (a) directing all Account Debtors to send
all Account proceeds directly to a post office box designated by Lender either
in the name of such Loan Party (but as to which Lender has exclusive access) or,
at Lender’s option, in the name of Lender (a “Lock Box”), and/or (b) depositing
all Collections received by such Loan Party into one or more bank accounts
maintained in the name of such Loan Party (but as to which Lender has exclusive
access) or, at Lender’s option, in the name of Lender (each, a “Blocked
Account”), under an arrangement acceptable to Lender with a depository bank
acceptable to Lender, pursuant to which all funds deposited into each Blocked
Account are to be transferred to Lender in such manner, and with such frequency,
as Lender shall specify, and/or (d) a combination of the foregoing. Each Loan
Party agrees to execute, and to cause its depository banks and other account
holders to execute, such Lock Box and Blocked Account control agreements and
other documentation as Lender shall require from time to time in connection with
the foregoing, all in form and substance acceptable to Lender, and in any event
such arrangements and documents must be in place on the date hereof with respect
to accounts in existence on the date hereof, or prior to any such account being
opened with respect to any such account opened after the date hereof, in each
case excluding Restricted Accounts. Each Loan Party shall provide Lender with
online read-only access to such Loan Party’s Deposit Accounts, provide Lender
with its ID, user names and passwords for its PayPal accounts and maintain such
access in effect for Lender throughout the term of this Agreement and until all
Obligations have been paid in full, all in a manner acceptable to Lender in its
Permitted Discretion. Prior to the Closing Date, Borrowing Agent shall deliver
to Lender a complete and executed Authorized Accounts form regarding Borrowers’
operating account(s) into which the proceeds of Loans are to be paid in the form
of Exhibit D annexed hereto. Notwithstanding anything to the contrary in this
Section 4.1, (a) PhoneX shall maintain two separate Deposit Accounts in which it
deposits Collections with one such Deposit Account containing amounts owed to
PhoneX and the other containing amounts due to Brightstar or other third parties
who use the services of PhoneX; (b) PhoneX shall cause the amounts in the
Deposit Account containing amounts due to PhoneX to be remitted on each Business
Day to Lender’s Bank; (c) following the occurrence of an Event of Default,
Lender may cause all of the amounts in the Deposit Accounts of PhoneX to be
remitted to Lender’s Bank; and (d) each Loan Party shall direct that all amounts
due from PayPal, Amazon, any credit card processor or any other third party be
remitted to a Blocked Account.

 

4.2          Application of Payments. All amounts paid to or received by Lender
in respect of the monetary Obligations, from whatever source (whether from any
Borrower or any other Loan Party pursuant to such other Loan Party’s guaranty of
the Obligations, any realization upon any Collateral, or otherwise) shall,
unless otherwise directed by Borrowing Agent with respect to any particular
payment (unless an Event of Default shall then be continuing, in which event
Lender may disregard Borrowing Agent’s direction), be applied by Lender to the
Obligations in such order as Lender may elect, and absent such election shall be
applied as follows:

 

(a)           FIRST, to reimburse Lender for all out-of-pocket costs and
expenses, and all indemnified losses, incurred by Lender which are reimbursable
to Lender in accordance with this Agreement and/or any of the other Loan
Documents,

 

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(b)           SECOND, to any accrued but unpaid interest on any Protective
Advances,

 

(c)           THIRD, to the outstanding principal of any Protective Advances,

 

(d)           FOURTH, to any accrued but unpaid fees owing to Lender under this
Agreement and/or any other Loan Documents,

 

(e)           FIFTH, to any unpaid accrued interest on the Obligations,

 

(f)            SIXTH, to the outstanding principal of the Obligations, and, to
the extent required by this Agreement, to cash collateralize the Letter of
Credit Balance, and

 

(g)           SEVENTH, to the payment of any other outstanding Obligations; and
after payment in full in cash of all of the outstanding monetary Obligations,
any further amounts paid to or received by Lender in respect of the Obligations
(so long as no monetary Obligations are outstanding) shall be paid over to
Borrowers or such other Person(s) as may be legally entitled thereto. For
purposes of determining the Borrowing Base, such amounts will be credited to the
Loan Account and the Collateral balances to which they relate upon Lender’s
receipt of an advice from Lender’s Bank (set forth in Section 4 of Schedule A)
that such items have been credited to Lender’s account at Lender’s Bank (or upon
Lender’s deposit thereof at Lender’s Bank in the case of payments received by
Lender in kind), in each case subject to final payment and collection. However,
for purposes of computing interest on the Obligations, such items shall be
deemed applied by Lender three Business Days after Lender’s receipt of advice of
deposit thereof at Lender’s Bank.

 

4.3          Notification; Verification. Lender or its designee may, from time
to time, whether or not a Default or Event of Default has occurred: (a) verify
directly with the Account Debtors of the Loan Parties (or by any reasonable
manner and through any reasonable medium Lender considers advisable in the
exercise of its Permitted Discretion) the validity, amount and other matters
relating to the Accounts and Chattel Paper of the Loan Parties, by means of
mail, telephone or otherwise, either in the name of the applicable Loan Party or
Lender or such other name as Lender may choose and (b) notify Account Debtors of
the Loan Parties that Lender has a security interest in the Accounts of the Loan
Parties. Lender or its designee may, from time to time after the occurrence and
during the continuance of an Event of Default: (x) require any Loan Party to
cause all invoices and statements which it sends to Account Debtors or other
third parties to be marked, in a manner satisfactory to Lender, to reflect
Lender’s security interest therein and payment instructions acceptable to Lender
(y) direct such Account Debtors to make payment thereof directly to Lender; such
notification to be sent on the letterhead of such Loan Party and substantially
in the form of Exhibit E annexed hereto; and (z) demand, collect or enforce
payment of any Accounts and Chattel Paper (but without any duty to do so). Each
Loan Party hereby authorizes Account Debtors to make payments directly to Lender
and to rely on notice from Lender without further inquiry. Lender may on behalf
of each Loan Party endorse all items of payment received by Lender that are
payable to such Loan Party for the purposes described above.

 

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4.4          Power of Attorney.

 

Each Loan Party hereby grants to Lender an irrevocable power of attorney,
coupled with an interest, authorizing and permitting Lender (acting through any
of its officers, employees, attorneys or agents), at Lender’s option (and solely
with respect to any actions taken by Lender under Section 4.4(a) below, in the
exercise of its Permitted Discretion), but without obligation, with or without
prior notice to such Loan Party, and at such Loan Party’s expense, to do any or
all of the following, in such Loan Party’s name or otherwise:

 

(a)           (i) execute on behalf of such Loan Party any documents that Lender
may deem advisable in order to perfect, protect and maintain Lender’s security
interests, and priority thereof, in the Collateral (including such financing
statements and continuation financing statements, and amendments or other
modifications thereto, as Lender shall deem necessary or appropriate); (ii)
endorse such Loan Party’s name on all checks and other forms of remittances
received by Lender; (iii) pay any sums required on account of such Loan Party’s
taxes or to secure the release of any Liens therefor; (iv) pay any amounts
necessary to obtain, or maintain in effect, any of the insurance described in
Section 5.14; (v) receive and otherwise take control in any manner of any cash
or non-cash items of payment or Proceeds of Collateral; (vi) receive, open and
process all mail addressed to such Loan Party at any post office box/lockbox
maintained by Lender for such Loan Party or at any other business premises of
Lender with Collections to be promptly transferred to the Blocked Account and
any mail unrelated to Collections to be promptly remitted to such Loan Party
along with copies of all other mail addressed to such Loan Party and received by
Lender; and (vii) endorse or assign to Lender on such Loan Party’s behalf any
portion of Collateral evidenced by an agreement, Instrument or Document if an
endorsement or assignment of any such items is not made by Borrowers pursuant to
Section 3.2; and

 

(b)           After the occurrence and during the continuance of an Event of
Default and subject to the terms and conditions of Section 7 of this Agreement:
(i) execute on behalf of such Loan Party any document exercising, transferring
or assigning any option to purchase, sell or otherwise dispose of or lease (as
lessor or lessee) any real or personal property which is part of the Collateral
or in which Lender has an interest; (ii) execute on behalf of such Loan Party
any invoices relating to any Accounts, any draft against any Account Debtor, any
proof of claim in bankruptcy, any notice of Lien or claim, and any assignment or
satisfaction of mechanic’s, materialman’s or other Lien; (iii) except as
otherwise provided in Section 4.3(i) hereof, execute on behalf of such Loan
Party any notice to any Account Debtor; (iv) pay, contest or settle any Lien,
charge, encumbrance, security interest and adverse claim in or to any of the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (v) grant extensions of time to pay, compromise
claims relating to, and settle Accounts, Chattel Paper and General Intangibles
for less than face value and execute all releases and other documents in
connection therewith; (vi) settle and adjust, and give releases of, any
insurance claim that relates to any of the Collateral and obtain payment
therefor; (vii) instruct any third party having custody or control of any
Collateral or books or records belonging to, or relating to, such Loan Party to
give Lender the same rights of access and other rights with respect thereto as
Lender has under this Agreement or any other Loan Document; (viii) change the
address for delivery of such Loan Party’s mail; (ix) vote any right or interest
with respect to any Investment Property; and (x) instruct any Account Debtor to
make all payments due to such Loan Party directly to Lender.

 

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Any and all sums paid, and any and all costs, expenses, liabilities, obligations
and reasonable attorneys’ fees incurred, by Lender with respect to the foregoing
shall be added to and become part of the Obligations, shall be payable on
demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations at such time. Each Loan Party agrees that
Lender’s rights under the foregoing power of attorney and/or any of Lender’s
other rights under this Agreement or the other Loan Documents shall not be
construed to indicate that Lender is in control of the business, management or
properties of such Loan Party.

 

4.5          Disputes. Each Loan Party shall promptly notify Lender of all
disputes or claims relating to its Accounts and Chattel Paper. Each Loan Party
agrees that it will not, without Lender’s prior written consent, compromise or
settle any of its Accounts or Chattel Paper for less than the full amount
thereof, grant any extension of time for payment of any of its Accounts or
Chattel Paper, release (in whole or in part) any Account Debtor or other person
liable for the payment of any of its Accounts or Chattel Paper or grant any
credits, discounts, allowances, deductions, return authorizations or the like
with respect to any of its Accounts or Chattel Paper; except (unless otherwise
directed by Lender during the existence of a Default or an Event of Default)
such Loan Party may take any of such actions in the ordinary course of its
business consistent with past practices, provided, that Borrowers promptly
report the same to Lender.

 

4.6          Inventory.

 

(a)           Returns. No Loan Party will accept returns of any Inventory from
any Account Debtor except in the ordinary course of its business. In the event
the value of returned Inventory in any one calendar month exceeds $400,000
(collectively for all Loan Parties), Borrowers will immediately notify Lender
(which notice shall specify the value of all such returned Inventory, the
reasons for such returns, and the locations and the condition of such returned
Inventory).

 

(b)           Third Party Locations. Loan Parties shall give Lender 30 days
prior written notice of such Loan Party’s intent to store Inventory at any
location other than a location set forth on Section 1(d) of the Disclosure
Schedule. For the avoidance of doubt, no such Inventory stored at any location
other than a location previously set forth on Section 1(d) of the Disclosure
Schedule shall be considered by Lender for compliance with the criteria set
forth in clause (d) of the defined term Eligible Inventory unless Lender shall
have received (x) thirty (30) days prior written notice of such Inventory being
moved or located at such other location, (y) a fully-executed landlord’s,
warehouseman or bailee’s waiver, as applicable (or in lieu thereof a rent
reserve equal to three (3) months’ rent for such location has been applied by
Borrowers in the calculation of the Borrowing Base) and (z) an updated Borrowing
Base Certificate in form and substance satisfactory to Lender.

 

(c)           Sale on Return, etc. No Loan Party shall sell any Inventory on a
sale-or-return or right of return except a Loan Party may sell such Loan Party’s
Inventory with a thirty (30) day right of return. No Loan Party shall sell
Inventory owned by a third party except for PhoneX or accept returns of such
Inventory.

 

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(d)           Fair Labor Standards Act. Each Loan Party represents and warrants,
and covenants that at all times, that all of the Inventory of each Loan Party
has been, at all times will be, produced only in accordance with the Fair Labor
Standards Act of 1938 and all rules, regulations and orders promulgated
thereunder.

 

4.7          Access to Collateral, Books and Records. At reasonable times and
upon reasonable notice to the applicable Loan Party taking into account the
circumstances involved, Lender and/or its representatives or agents shall have
the right to inspect the Collateral, and the right to examine and copy each Loan
Party’s books and records. Each Loan Party agrees to give Lender access to any
or all of such Loan Party’s, and each of its Subsidiaries’, premises to enable
Lender to conduct such inspections and examinations. Such inspections and
examinations shall be at Borrowers’ expense and the charge therefor shall be
$1,200 per person per day (or such higher amount as shall represent Lender’s
then current standard charge), plus of out-of-pocket expenses (“Collateral
Inspection Fee”). Upon the occurrence and during the continuance of an Event of
Default, Lender may, at Borrowers’ expense, use each Loan Party’s personnel,
computer and other equipment, programs, printed output and computer readable
media, supplies and premises for the collection, sale or other disposition of
Collateral to the extent Lender, in its sole discretion, deems appropriate. Each
Loan Party hereby irrevocably authorizes all accountants and other financial
professional third parties to disclose and deliver to Lender, at Borrowers’
expense, all financial information, books and records, work papers, management
reports and other information in their possession regarding the Loan Parties.
Notwithstanding the foregoing or anything contained herein to the contrary,
Borrowers shall not be required to pay a Collateral Inspection Fee in connection
with Lender and/or its representatives inspection of the Collateral or
examination and copying of a Loan Party’s books and records more than four (4)
times in any Contract Year, except no such limitation shall apply once an Event
of Default shall have occurred.

 

4.8          Appraisals. Each Loan Party will permit Lender and each of its
representatives or agents to conduct appraisals and valuations of the Collateral
at such times and intervals as Lender may designate. Such appraisals and
valuations shall be at Borrowers’ expense.

 

5.REPRESENTATIONS, WARRANTIES AND COVENANTS.

 

To induce Lender to enter into this Agreement, each Loan Party represents,
warrants and covenants as follows (it being understood and agreed that (a) each
such representation and warranty (i) will be made as of the date hereof and be
deemed remade as of each date on which any Loan is made or Letter of Credit is
issued (except to the extent any such representation or warranty expressly
relates only to any earlier and/or specified date, in which case such
representation or warranty will be made as of such earlier and/or specified
date), and (ii) shall not be affected by any knowledge of, or any investigation
by, Lender, except as otherwise expressly set forth herein, and (b) each such
covenant shall continuously apply with respect to all times commencing on the
date hereof and continuing until the Termination Date):

 

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5.1          Existence and Authority. Each Loan Party is duly organized,
incorporated, validly existing and in good standing under the laws of its
jurisdiction of organization (which jurisdiction is identified in Section 1(a)
of the Disclosure Schedule) and is qualified to do business in each jurisdiction
in which the operation of its business requires that it be qualified (which each
such jurisdiction is identified in Section 1(a) of the Disclosure Schedule),
except where the failure to be so qualified could not reasonably be expected to
result in a Material Adverse Effect. Each Loan Party will, and will cause each
of its Subsidiaries to, at all times preserve and keep in full force and effect
such Person’s valid existence and good standing in its jurisdiction of
organization and, except as could not reasonably be expected to result in a
Material Adverse Effect, good standing with respect to all other jurisdictions
in which it is qualified to do business and any rights, franchises, permits,
licenses, accreditations, authorizations, or other approvals material to their
businesses. Each Loan Party has all requisite power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents to which it is a
party and to carry out the transactions contemplated thereby. The execution,
delivery and performance by each Loan Party of this Agreement and all of the
other Loan Documents to which such Loan Party is a party have been duly and
validly authorized, do not violate such Loan Party’s Organic Documents, or any
law or any agreement or instrument or any court order which is binding upon any
Loan Party or its property, do not constitute grounds for acceleration of any
Indebtedness or obligation under any agreement or instrument which is binding
upon any Loan Party or its property, and do not require the consent of any
Person. No Loan Party is required to obtain any government approval, consent, or
authorization from, or to file any declaration or statement with, any
Governmental Authority in connection with or as a condition to the execution,
delivery or performance of any of the Loan Documents. This Agreement and each of
the other Loan Documents have been duly executed and delivered by, and are
enforceable against each of the Loan Parties who have signed them, in accordance
with their respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors’ rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Section 1(f)
of the Disclosure Schedule sets forth the ownership of each Borrower and their
respective Subsidiaries.

 

5.2          Names; Trade Names and Styles. The name of each Loan Party set
forth on Section 1(b) of the Disclosure Schedule is its correct and complete
legal name as of the date hereof, and no Loan Party has used any other name at
any time in the past five years, or at any time will use any other name, in any
tax filing made in any jurisdiction. Listed in Section 1(b) of the Disclosure
Schedule are all prior names used by each Loan Party at any time in the past
five years and all of the present and prior trade names used by any Loan Party
at any time in the past five years. Borrowers shall give Lender at least thirty
(30) days’ prior written notice (and will deliver an updated Section 1(b) of the
Disclosure Schedule to reflect the same) before it or any other Loan Party
changes its legal name or does business under any other name.

 

5.3          Title to Collateral; Third Party Locations; Permitted Liens;
Inactive Loan Parties. Each Loan Party has, and at all times will continue to
have, good and marketable title to all of the Collateral. The Collateral now is,
and at all times will remain, free and clear of any and all Liens, except for
Permitted Liens. Lender now has, and will at all times continue to have, a
first-priority perfected and enforceable security interest in all of the
Collateral, and each Loan Party will at all times defend Lender and the
Collateral against all claims of others. None of the Collateral which is
Equipment is, or will at any time, be affixed to any real property that is not
subject to a Mortgage in favor of Lender in such a manner, or with such intent,
as to become a fixture. Except for leases or subleases as to which Borrowers
have delivered to Lender a landlord’s waiver in form and substance satisfactory
to Lender, no Loan Party is or will be a lessee or sublessee under any real
property lease or sublease. Except for warehouses as to which Borrowers have
delivered to Lender a warehouseman’s waiver in form and substance satisfactory
to Lender, no Loan Party is or will at any time be a bailor of any Goods at any
warehouse or otherwise. Prior to causing or permitting any Collateral to at any
time be located upon premises in which any third party (including any landlord,
warehouseman, or otherwise) has an interest, Borrowers shall notify Lender and
the applicable Loan Party shall cause each such third party to execute and
deliver to Lender, in form and substance acceptable to Lender, such waivers,
collateral access agreements, and subordinations as Lender shall specify, so as
to, among other things, ensure that Lender’s rights in the Collateral are, and
will at all times continue to be, superior to the rights of any such third party
and that Lender has access to such Collateral. Each applicable Loan Party will
keep at all times in full force and effect, and will comply at all times with
all the terms of, any lease of real property where any of the Collateral now or
in the future may be located. No Loan Party that has been designated as an
Inactive Loan Party has ceased to satisfy all the requirements for an Inactive
Loan Party. If at any time any Loan Party that has previously been designated as
an Inactive Loan Party shall cease to satisfy any of the requirements for an
Inactive Loan Party, Borrowers shall promptly give written notice of such
occurrence to Lender.

 

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5.4          Accounts, Chattel Paper and Inventory.

 

(a)           As of each date reported by Borrowers, all Accounts which
Borrowers have then reported to Lender as then being Eligible Accounts, if any,
comply in all respects with the criteria for eligibility set forth in the
definition of Eligible Accounts. All such Accounts and Chattel Paper are genuine
and in all respects what they purport to be, arise out of a completed, bona fide
and unconditional and non-contingent sale and delivery of goods or rendition of
services by Borrowers in the ordinary course of its business and in accordance
with the terms and conditions of all purchase orders, contracts or other
documents relating thereto, to the knowledge of the Borrowers each Account
Debtor thereunder had the capacity to contract at the time any contract or other
document giving rise to such Accounts and Chattel Paper were executed, and the
transactions giving rise to such Accounts and Chattel Paper comply with all
applicable laws and governmental rules and regulations.

 

(b)           As of each date reported by Borrowers, all Inventory which
Borrowers have then reported to Lender as then being Eligible Inventory complies
in all respects with the criteria for eligibility set forth in the definition of
Eligible Inventory, and all Inventory which Borrowers have then reported to
Lender as then being Eligible In-Transit Inventory comply in all respects with
the criteria for eligibility set forth in the definition of Eligible Inventory.

 

5.5          Electronic Chattel Paper. To the extent that any Loan Party obtains
or maintains any Electronic Chattel Paper, such Loan Party shall at all times
create, store and assign the record or records comprising the Electronic Chattel
Paper in such a manner that (a) a single authoritative copy of the record or
records exists which is unique, identifiable and except as otherwise provided
below, unalterable, (b) the authoritative copy identifies Lender as the assignee
of the record or records, (c) the authoritative copy is communicated to and
maintained by Lender or its designated custodian, (d) copies or revisions that
add or change an identified assignee of the authoritative copy can only be made
with the participation of Lender, (e) each copy of the authoritative copy and
any copy of a copy is readily identifiable as a copy that is not the
authoritative copy and (f) any revision of the authoritative copy is readily
identifiable as an authorized or unauthorized revision.

 

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5.6          Capitalization; Investment Property.

 

(a)           No Loan Party, directly or indirectly, owns, or shall at any time
own, any Equity Interests of any other Person except as set forth in Sections
1(f) and 1(g) of the Disclosure Schedule, which such Sections of the Disclosure
Schedule list all Investment Property owned by each Loan Party, except in each
case for Permitted Investments.

 

(b)           None of the Pledged Equity has been issued or otherwise
transferred in violation of the Securities Act, or other applicable laws of any
jurisdiction to which such issuance or transfer may be subject. The Pledged
Equity pledged by each Loan Party hereunder constitutes all of the issued and
outstanding Equity Interests of each Issuer owned by such Loan Party.

 

(c)           All of the Pledged Equity has been duly and validly issued and is
fully paid and non-assessable, and the holders thereof are not entitled to any
preemptive, first refusal, or other similar rights. Except as set forth on
Schedule F, there are no outstanding options, warrants or similar agreements,
documents, or instruments with respect to any of the Pledged Equity.

 

(d)           Intentionally Omitted.

 

(e)           Each Loan Party will take any and all actions required or
reasonably requested by Lender, from time to time, to (i) cause Lender to obtain
exclusive control of any Investment Property in a manner acceptable to Lender
and (ii) obtain from any Issuers and such other Persons as Lender shall specify,
for the benefit of Lender, written confirmation of Lender’s exclusive control
over such Investment Property and take such other actions as Lender may
reasonably request to perfect Lender’s security interest in any Investment
Property. For purposes of this Section 5.6, Lender shall have exclusive control
of Investment Property if (A) pursuant to Section 3.2, such Investment Property
consists of certificated securities and the applicable Loan Party delivers such
certificated securities to Lender (with all appropriate endorsements); (B) such
Investment Property consists of uncertificated securities and either (x) the
applicable Loan Party delivers such uncertificated securities to Lender or (y)
the Issuer thereof agrees, pursuant to documentation in form and substance
satisfactory to Lender, that it will comply with instructions originated by
Lender without further consent by the applicable Loan Party, and (C) such
Investment Property consists of security entitlements and either (x) Lender
becomes the entitlement holder thereof or (y) the appropriate securities
intermediary agrees, pursuant to documentation in form and substance
satisfactory to Lender, that it will comply with entitlement orders originated
by Lender without further consent by the applicable Loan Party. Each Loan Party
that is a limited liability company or a partnership hereby represents and
warrants that it has not, and at no time will, elect pursuant to the provisions
of Section 8-103 of the UCC to provide that its Equity Interests are securities
governed by Article 8 of the UCC.

 

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(f)            No Loan Party owns, or has any present intention of acquiring,
any “margin security” or any “margin stock” within the meaning of Regulations T,
U or X of the Board of Governors of the Federal Reserve System (herein called
“margin security” and “margin stock”). None of the proceeds of the Loans will be
used, directly or indirectly, for the purpose of purchasing or carrying, or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry, any margin security or margin stock or for any
other purpose which might constitute the transactions contemplated hereby a
“purpose credit” within the meaning of said Regulations T, U or X, or cause this
Agreement to violate any other regulation of the Board of Governors of the
Federal Reserve System or the Exchange Act, or any rules or regulations
promulgated under such statutes.

 

(g)           No Loan Party shall vote to enable, or take any other action to
cause or to permit, any Issuer to issue any Equity Interests of any nature, or
to issue any other securities or interests convertible into or granting the
right to purchase or exchange for any Equity Interests of any nature of any
Issuer.

 

(h)           No Loan Party shall take, or fail to take, any action that would
in any manner impair the value or the enforceability of Lender’s Lien on any of
the Investment Property, or any of Lender’s rights or remedies under this
Agreement or any other Loan Document with respect to any of the Investment
Property.

 

(i)            In the case of any Loan Party which is an Issuer, such Issuer
agrees that the terms of Section 7.3(g)(iii) of this Agreement shall apply to
such Loan Party with respect to all actions that may be required of it pursuant
to such Section 7.3(g)(iii) regarding the Investment Property issued by it.

 

5.7          Commercial Tort Claims. No Loan Party has any Commercial Tort
Claims pending other than those listed in Section 2 of the Disclosure Schedule,
and each Loan Party shall promptly (but in any case no later than five (5)
Business Days thereafter) notify Lender in writing upon incurring or otherwise
obtaining a Commercial Tort Claim after the date hereof against any third party.
Such notice shall constitute such Loan Party’s authorization to amend such
Section 2 to add such Commercial Tort Claim and shall automatically be deemed to
amend such Section 2 to include such Commercial Tort Claim.

 

5.8          Jurisdiction of Organization; Location of Collateral. Sections 1(c)
and 1(d) of the Disclosure Schedule set forth (a) each place of business of each
Loan Party (including its chief executive office), (b) all locations where all
Inventory, Equipment, and other Collateral owned by each Loan Party is kept, and
(c) whether each such Collateral location and/or place of business (including
each Loan Party’s chief executive office) is owned by a Loan Party or leased
(and if leased, specifies the complete name and notice address of each lessor).
No Collateral is located outside the United States or in the possession of any
lessor, bailee, warehouseman or consignee, except as expressly indicated in
Sections 1(c) and 1(d) of the Disclosure Schedule. Each Loan Party will give
Lender at least thirty (30) days’ prior written notice before changing its
jurisdiction of organization, opening any additional place of business, changing
its chief executive office or the location of its books and records, and will
execute and deliver all financing statements, landlord waivers, collateral
access agreements, mortgages, and all other agreements, instruments and
documents which Lender shall require in connection therewith prior to making
such change, all in form and substance satisfactory to Lender. Without the prior
written consent of Lender, no Loan Party will at any time (x) change its
jurisdiction of organization or (y) allow any Collateral to be located outside
of the continental United States of America.

 

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5.9          Financial Statements and Reports; Solvency.

 

(a)           All financial statements delivered to Lender by or on behalf of
any Loan Party have been, and at all times will be, prepared in conformity with
GAAP and completely and fairly reflect, in all material respects, the financial
condition of each Loan Party and its Subsidiaries covered thereby, at the times
and for the periods therein stated.

 

(b)           As of the date hereof (after giving effect to the Loans and
Letters of Credit to be made or issued on the date hereof, and the consummation
of the transactions contemplated hereby), and as of each other day that any Loan
or Letter of Credit is made or issued (after giving effect thereof), (i) the
fair saleable value of all of the assets and properties of each Loan Party,
individually, exceeds the aggregate liabilities and Indebtedness of each such
Loan Party (including contingent liabilities), (ii) each Loan Party,
individually, is solvent and able to pay its debts as they come due, (iii) each
Loan Party, individually, has sufficient capital to carry on its business as now
conducted and as proposed to be conducted, (iv) no Loan Party (other than
Inactive Loan Parties) is contemplating either the liquidation of all or any
substantial portion of its assets or property, or the filing of any petition
under any state, federal, or other bankruptcy or insolvency law, and (v) no Loan
Party has knowledge of any Person contemplating the filing of any such petition
against any Loan Party.

 

5.10       Tax Returns and Payments; Pension Contributions. Each Loan Party has
timely filed all tax returns and reports required by applicable law, has timely
paid all applicable Taxes, assessments, deposits and contributions owing by such
Loan Party and will timely pay all such items in the future as they became due
and payable. Each Loan Party may, however, defer payment of any contested taxes;
provided, that such Loan Party (a) in good faith contests its obligation to pay
such Taxes by appropriate proceedings promptly and diligently instituted and
conducted; (b) notifies Lender in writing of the commencement of, and any
material development in, the proceedings; (c) posts bonds or takes any other
commercially reasonable steps required to keep the contested taxes from becoming
a Lien upon any of the Collateral and (d) maintains adequate reserves therefor
in conformity with GAAP. No Loan Party is aware of any claims or adjustments
proposed for any prior tax years that could result in additional taxes becoming
due and payable by any Loan Party. Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other applicable
laws. Each Plan that is intended to be a qualified plan under Section 401(a) of
the Code has received a favorable determination letter or opinion letter from
the Internal Revenue Service to the effect that the form of such Plan is
qualified under Section 401(a) of the Code and the trust related thereto has
been determined by the Internal Revenue Service to be exempt from federal income
tax under Section 501(a) of the Code, or an application for such a letter is
currently being processed by the Internal Revenue Service. To the best knowledge
of each Loan Party, nothing has occurred that would prevent or cause the loss of
such tax-qualified status. There are no pending or, to the best knowledge of any
Loan Party or any ERISA Affiliate, threatened claims, actions or lawsuits, or
action by any Governmental Authority, with respect to any Plan that could
reasonably be expected to result in liabilities individually or in the aggregate
in excess of $50,000 on any Loan Party. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan that
has resulted or could reasonably be expected to result in liabilities
individually or in the aggregate on any Loan Party in excess of $50,000. No
ERISA Event has occurred, and no Loan Party or any ERISA Affiliate is aware of
any fact, event or circumstance that could reasonably be expected to constitute
or result in an ERISA Event with respect to any Pension Plan, in each case that
could reasonably be expected to result in liabilities individually or in the
aggregate in excess of $50,000. Each Loan Party and each ERISA Affiliate has met
all applicable requirements under the Pension Funding Rules in respect of each
Pension Plan, and no waiver of the minimum funding standards under the Pension
Funding Rules has been applied for or obtained, in each case except as could not
reasonably be expected to result in liabilities individually or in the aggregate
to any Loan Party or any ERISA Affiliate in excess of $50,000. As of the most
recent valuation date for any Pension Plan, the funding target attainment
percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and no
Loan Party or any ERISA Affiliate knows of any facts or circumstances that could
reasonably be expected to cause the funding target attainment percentage for any
such plan to drop below 60% as of the most recent valuation date; no Loan Party
nor any ERISA Affiliate has incurred any liability to the PBGC other than for
the payment of premiums, and there are no premium payments which have become due
that are unpaid, except as could not reasonably be expected to result in
liabilities individually or in the aggregate to any Loan Party or ERISA
Affiliate in excess of $50,000. No Loan Party nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or Section
4212(c) of ERISA except as could not reasonably be expected to result in
liabilities individually or in the aggregate to the Loan Parties in excess of
$50,000. No Pension Plan has been terminated by the plan administrator thereof
nor by the PBGC, and no event or circumstance has occurred or exists that could
reasonably be expected to cause the PBGC to institute proceedings under Title IV
of ERISA to terminate any Pension Plan except as could not reasonably be
expected to result in liabilities individually or in the aggregate to the Loan
Parties in excess of $50,000.

 

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5.11       Compliance with Laws; Intellectual Property; Licenses.

 

(a)           Each Loan Party has complied, and will continue at all times to
comply, in all material respects with all provisions of all applicable laws and
regulations, including those relating to the ownership, use or operations of
real or personal property, the conduct and licensing of each Loan Party’s
business, the payment and withholding of Taxes, ERISA and other employee
matters, and safety and environmental matters.

 

(b)           No Loan Party has received written notice of default or violation,
nor is any Loan Party in default or violation, with respect to any judgment,
order, writ, injunction, decree, demand or assessment issued by any court or any
federal, state, local, municipal or other Governmental Authority relating to any
aspect of any Loan Party’s business, affairs, properties or assets. No Loan
Party has received written notice of or been charged with, or is, to the
knowledge of any Loan Party, under investigation with respect to, any violation
in any material respect of any provision of any applicable law. No Loan Party or
any real property owned, leased or used in the operation of the business of any
Loan Party is subject to any federal, state or local investigation to determine
whether any remedial action is needed to address any hazardous materials or an
environmental release (as that term is defined under environmental and health
and safety laws) at, on, or under any real property currently leased, owned or
used by a Loan Party nor is a Loan Party liable for any environmental release
identified or under investigation at, on or under any real property previously
owned, leased or used by a Loan Party. No Loan Party has any contingent
liability with respect to any environmental release, environmental pollution or
hazardous material on any real property now or previously owned, leased or
operated by it.

 

21 

 

 

(c)           No Loan Party owns any Intellectual Property, except as set forth
in Section 4 of the Disclosure Schedule. Except as set forth in Section 4 of the
Disclosure Schedule, none of the Intellectual Property owned by any Loan Party
is the subject of any licensing or franchise agreement pursuant to which such
Loan Party is the licensor or franchisor. Each Loan Party shall promptly (but in
any event within thirty (30) days thereafter) notify Lender in writing of any
additional Intellectual Property rights acquired or arising after the Closing
Date and shall submit to Lender a supplement to Section 4 of the Disclosure
Schedule to reflect such additional rights (provided, that such Loan Party’s
failure to do so shall not impair Lender’s security interest therein). Each Loan
Party shall execute a separate security agreement granting Lender a security
interest in such Intellectual Property (whether owned on the Closing Date or
thereafter), in form and substance acceptable to Lender and suitable for
registering such security interest in such Intellectual Property with the United
States Patent and Trademark Office and/or United States Copyright Office, as
applicable (provided, that such Loan Party’s failure to do so shall not impair
Lender’s security interest therein). Each Loan Party owns or has, and will at
all times continue to own or have, the valid right to use all material patents,
trademarks, copyrights, software, computer programs, equipment designs, network
designs, equipment configurations, technology and other Intellectual Property
used, marketed and sold in such Loan Party’s business, and each Loan Party is in
compliance, and will continue at all times to comply, in all material respects
with all licenses, user agreements and other such agreements regarding the use
of Intellectual Property. No Loan Party has any knowledge that, or has received
any notice claiming that, any of such Intellectual Property infringes upon or
violates the rights of any other Person.

 

(d)           Each Loan Party has and will continue at all times to have, all
federal, state, local and other licenses and permits required to be maintained
in connection with such Loan Party’s business operations, and its ownership, use
and operation of any real property, and all such licenses and permits, necessary
for the operation of the business are valid and will remain and in full force
and effect. Each Loan Party has, and will continue at all times to have,
complied with the requirements of such licenses and permits in all material
respects, and has received no written notice of any pending or threatened
proceedings for the suspension, termination, revocation or limitation thereof.
No Loan Party is aware of any facts or conditions that could reasonably be
expected to cause or permit any of such licenses or permits to be voided,
revoked or withdrawn.

 

(e)           In addition to and without limiting the generality of clause (a)
above, (i) comply in all material respects with applicable provisions of ERISA
and the IRC with respect to all Plans, (ii) without the prior written consent of
Lender, not take any action or fail to take action the result of which could
result in a Loan Party or ERISA Affiliate incurring a material liability to the
PBGC or to a Multiemployer Plan (other than to pay contributions or premiums
payable in the ordinary course), (iii) allow any facts or circumstances to exist
with respect to one or more Plans that, in the aggregate, reasonably could be
expected to result in a Material Adverse Effect, (iv) not participate in any
prohibited transaction that could result in other than a de minimis civil
penalty excise tax, fiduciary liability or correction obligation under ERISA or
the IRC, (v) operate each Plan in such a manner that will not incur any material
tax liability under the IRC (including Section 4980B of the IRC), and (vi)
furnish to Lender upon Lender’s written request such additional information
about any Plan for which any Loan Party or ERISA Affiliate could reasonably
expect to incur any material liability. With respect to each Pension Plan (other
than a Multiemployer Plan) except as could not reasonably be expected to result
in liability to the Loan Parties, the Loan Parties and the ERISA Affiliates
shall (y) satisfy in full and in a timely manner, without incurring any late
payment or underpayment charge or penalty and without giving rise to any Lien,
all of the contribution and funding requirements of the IRC and of ERISA, and
(z) pay, or cause to be paid, to the PBGC in a timely manner, without incurring
any late payment or underpayment charge or penalty, all premiums required
pursuant to ERISA.

 

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5.12       Litigation. Section 1(e) of the Disclosure Schedule discloses all
claims, proceedings, litigation or investigations pending or (to the best of
each Loan Party’s knowledge) threatened against any Loan Party as of the Closing
Date. There is no claim, suit, litigation, proceeding or investigation pending
or (to the best of each Loan Party’s knowledge) threatened by or against or
affecting any Loan Party in any court or before any Governmental Authority (or
any basis therefor known to any Loan Party) which may result, either separately
or in the aggregate, in liability in excess of $50,000 for the Loan Parties, in
any Material Adverse Effect, or in any material impairment in the ability of any
Loan Party to carry on its business in substantially the same manner as it is
now being conducted.

 

5.13       Use of Proceeds. All proceeds of all Loans and Letters of Credit
shall be used by Borrowers solely (a) with respect to Loans made on the Closing
Date, to repay in full Indebtedness to TCUS Financial LLC, (b) to pay other
outstanding Indebtedness (including at least $1,200,000 due to Brightstar), (c)
to pay the fees, costs, and expenses incurred in connection with this Agreement,
the other Loan Documents, and the transactions contemplated hereby and thereby,
(d) for Borrowers’ working capital purposes and (e) for such other purposes as
specifically permitted pursuant to the terms of this Agreement. All proceeds of
all Loans and Letters of Credit will be used solely for lawful business
purposes.

 

5.14       Insurance.

 

(a)           Each Loan Party will at all times carry property, liability and
other insurance, with insurers acceptable to Lender, in such form and amounts,
and with such deductibles and other provisions, as Lender shall reasonably
require, and Borrowers will provide Lender with evidence satisfactory to Lender
that such insurance is, at all times, in full force and effect. A true and
complete listing of such insurance as of the Closing Date, including issuers,
coverages and deductibles, is set forth in Section 5 of the Disclosure Schedule.
Each property insurance policy shall name Lender as loss payee and shall contain
a lender’s loss payable endorsement in form reasonably acceptable to Lender,
each liability insurance policy shall name Lender as an additional insured, and
each business interruption insurance policy shall be collaterally assigned to
Lender, all in form and substance reasonably satisfactory to Lender. All
policies of insurance shall provide that they may not be cancelled or changed
without at least thirty (30) days’ prior written notice to Lender, and shall
otherwise be in form and substance reasonably satisfactory to Lender. Borrowers
shall advise Lender promptly of any policy cancellation, non-renewal, reduction,
or material amendment with respect to any insurance policies maintained by any
Loan Party or any receipt by any Loan Party of any notice from any insurance
carrier regarding any intended or threatened cancellation, non-renewal,
reduction or material amendment of any of such policies, and Borrowers shall
promptly deliver to Lender copies of all notices and related documentation
received by any Loan Party in connection with the same.

 

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(b)           Borrowers shall deliver to Lender no later than fifteen (15) days
prior to the expiration of any then current insurance policies, insurance
certificates evidencing renewal of all such insurance policies required by this
Section 5.14. Borrowers shall deliver to Lender, upon Lender’s request,
certificates evidencing such insurance coverage in such form as Lender shall
reasonably specify. If any Loan Party fails to provide Lender with a certificate
of insurance or other evidence of the continuing insurance coverage required by
this Agreement within the time period set forth in the first sentence of this
Section 5.14(b), Lender may purchase insurance required by this Agreement at
Borrowers’ expense. This insurance may, but need not, protect any Loan Party’s
interests.

 

5.15       Financial, Collateral and Other Reporting / Notices. Each Loan Party
has kept and will at all times keep adequate records and books of account with
respect to its business activities and the Collateral in which proper entries
are made in accordance with GAAP reflecting all its financial transactions. Each
Loan Party will cause to be prepared and furnished to Lender, in each case in a
form and in such detail as is acceptable to Lender the following items (the
items to be provided under this Section 5.15 shall be delivered to Lender by
posting on Passport 6.0 (or, if requested by Lender, by another form of Approved
Electronic Communication or in writing)).

 

(a)           Annual Financial Statements. Not later than ninety (90) days after
the close of each Fiscal Year, unqualified audited financial statements of uSell
and its Subsidiaries on a consolidated basis, including balance sheet, income
statement, and statement of cash flow for such Fiscal Year, audited and
certified (without qualification) by a firm of independent certified public
accountants of recognized standing selected by Borrowers but reasonably
acceptable to Lender, together with a copy of any management letter issued in
connection therewith. Notwithstanding the foregoing, Lender acknowledges and
agrees that Borrowers’ current independent certified accountants, Marcum, LLP,
are acceptable to Lender. Concurrently with the delivery of such financial
statements, Borrowing Agent shall deliver to Lender a Compliance Certificate,
indicating whether (i) Borrowers are in compliance with each of the covenants
specified in Section 5.25, if any, and setting forth a detailed calculation of
such covenants, and (ii) any Default or Event of Default is then in existence;

 

(b)           Interim Financial Statements. Not later than thirty (30) days
after the end of each month hereafter, including the last month of each Fiscal
Year, (i) the Monthly Financial Model and (ii) unaudited interim financial
statements of each Loan Party as of the end of such month and of the portion of
such Fiscal Year then elapsed, including balance sheet, income statement,
statement of cash flow, and results of their respective operations during such
month and the then-elapsed portion of the Fiscal Year, together with comparative
figures for the same periods in the immediately preceding Fiscal Year and the
corresponding figures from the budget for the Fiscal Year covered by such
financial statements, in each case on a consolidated and consolidating basis,
certified by an Authorized Officer of Borrowing Agent as prepared in accordance
with GAAP and fairly presenting the consolidated financial position and results
of operations (including management discussion and analysis of such results) of
each Loan Party for such month and period subject only to changes from ordinary
course year-end audit adjustments and except that such statements need not
contain footnotes. Concurrently with the delivery of such financial statements,
Borrowing Agent shall deliver to Lender a Compliance Certificate, indicating
whether (i) Borrowers are in compliance in all with each of the covenants
specified in Section 5.25, if any, and setting forth a detailed calculation of
such covenants, and (ii) any Default or Event of Default is then in existence;

 

24 

 

 

(c)           Borrowing Base / Collateral Reports / Insurance Certificates /
Disclosure Schedules / Other Items. The items described on Schedule D hereto by
the respective dates set forth therein.

 

(d)           Projections, Etc. Not later than thirty (30) days prior to the end
of each Fiscal Year, monthly business projections for the following Fiscal Year
for the Loan Parties on a consolidated and consolidating basis, which
projections shall include for each such period Borrowing Base projections,
profit and loss projections, balance sheet projections, income statement
projections and cash flow projections, together with appropriate supporting
details and a statement of underlying assumptions used in preparing such
projections;

 

(e)           Shareholder Reports, Etc. To the extent the following are not
publicly available on the website of the Securities and Exchange Commission,
promptly after the sending or filing thereof, as the case may be, copies of any
proxy statements, financial statements or reports which each Loan Party has made
available to its shareholders and copies of any regular, periodic and special
reports or registration statements which any Loan Party files with the
Securities and Exchange Commission or any Governmental Authority which may be
substituted therefor, or any national securities exchange;

 

(f)            ERISA Reports. Copies of any annual report to be filed pursuant
to the requirements of ERISA in connection with each plan subject thereto
promptly upon request by Lender and in addition, each Loan Party shall promptly
notify Lender upon having knowledge of any ERISA Event; and

 

(g)           Tax Returns. Upon request from Lender, each federal and state
income tax return filed by any Loan Party or Other Obligor promptly, together
with such supporting documentation as is supplied to the applicable tax
authority with such return and proof of payment of any amounts owing with
respect to such return.

 

(h)           Notification of Certain Changes. Borrowers will promptly (and in
no case later than the earlier of (y) three (3) Business Days after the
occurrence of any of the following and (z) such other date that such information
is required to be delivered pursuant to this Agreement or any other Loan
Document) notify Lender in writing of: (i) the occurrence of any Default or
Event of Default, (ii) the occurrence of any event that has had, or may
reasonably be expected to have, a Material Adverse Effect, (iii) any change in
any Loan Party’s Senior Officers or directors, (iv) any material investigation,
action, suit, proceeding or claim (or any material development with respect to
any existing investigation, action, suit, proceeding or claim) relating to any
Loan Party, any officer or director of a Loan Party, the Collateral or which may
result in an adverse impact upon any Loan Party’s business, assets or financial
condition, (v) any violation or asserted violation of any applicable law
(including OSHA or any Environmental Laws), if an adverse resolution could have
a Material Adverse Effect or otherwise result in material liability to any Loan
Party, (vi) any event or the existence of any circumstance that has resulted in,
or could reasonably be expected to result in, any material adverse change in the
business or financial affairs of any Loan Party, any Default, or any Event of
Default, or which would make any representation or warranty previously made by
any Loan Party to Lender untrue in any material respect or constitute a material
breach if such representation or warranty was then being made, (vii) any actual
or alleged breaches of any Material Contract or termination or threat to
terminate any Material Contract or any material amendment to or modification of
a Material Contract, or the execution of any new Material Contract by any Loan
Party, (viii) any change in any Loan Party’s certified accountant. In the event
of each such notice under this Section 5.15(h), Borrowers shall give notice to
Lender of the action or actions that each Loan Party has taken, is taking, or
proposes to take with respect to the event or events giving rise to such notice
obligation.

 

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(i)           Other Information. Promptly upon request, such other data and
information (financial and otherwise) as Lender, from time to time, may
reasonably request, bearing upon or related to the Collateral or each Loan
Party’s and each Other Obligor’s business or financial condition or results of
operations.

 

5.16       Litigation Cooperation. Should any third-party suit, regulatory
action, or any other judicial, administrative, or similar proceeding be
instituted by or against Lender with respect to any Collateral or in any manner
relating to any Loan Party, this Agreement, any other Loan Document or the
transactions contemplated hereby, each Loan Party shall, without expense to
Lender, make available each Loan Party, such Loan Party’s officers, employees
and agents, and any Loan Party’s books and records, without charge, to the
extent that Lender may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.

 

5.17       Maintenance of Collateral, Etc. Each Loan Party will maintain all of
the Collateral in good working condition, ordinary wear, tear, damage and
casualty incurred in the ordinary course of business excepted, and no Loan Party
will use the Collateral for any unlawful purpose.

 

5.18       Material Contracts. Except as expressly disclosed in Section 1(h) of
the Disclosure Schedule, no Loan Party is (a) a party to any contract which has
had or could reasonably be expected to have a Material Adverse Effect or (b) in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (x) any contract to which it is a party or
by which any of its assets or properties is bound, which default, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect or result in liabilities in excess of $100,000 or (y) any Material
Contract. Except for the contracts and other agreements listed in Section 1(h)
of the Disclosure Schedule, no Loan Party is party, as of the Closing Date, to
any (a) employment agreements covering the management of any Loan Party, (b)
collective bargaining agreements or other labor agreements covering any
employees of any Loan Party, (c) agreements for managerial, consulting or
similar services to which any Loan Party is a party or by which it is bound, (d)
agreements regarding any Loan Party, its assets or operations or any investment
therein to which any of its equity holders is a party, (e) patent licenses,
trademark licenses, copyright licenses or other lease or license agreements to
which any Loan Party is a party, either as lessor or lessee, or as licensor or
licensee, (f) distribution, marketing or supply agreements to which any Loan
Party is a party, (g) customer agreements to which any Loan Party is a party (in
each case with respect to any contract of the type described in the preceding
clauses (a), (c), (d), (e), (f) and (g) requiring payments of more than $100,000
in the aggregate in any Fiscal Year), (h) partnership agreements to which any
Loan Party is a partner, limited liability company agreements to which any Loan
Party is a member or manager, or joint venture agreements to which any Loan
Party is a party, (i) real estate leases, or (j) any other contract to which any
Loan Party is a party where the (x) the breach, nonperformance or cancellation
of which, could reasonably be expected to have a Material Adverse Effect; (each
such contract and agreement, described in the immediately preceding clauses (a)
to (j), a “Material Contract”).

 

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5.19       No Default. No Default or Event of Default has occurred and is
continuing.

 

5.20       No Material Adverse Change. Since August 31, 2018 there has been no
material adverse change in the financial condition, business, prospects,
operations, or properties of any Loan Party or any Other Obligor.

 

5.21       Full Disclosure. No written report, notice, certificate, information
or other statement delivered or made (including, in electronic form) by or on
behalf of any Loan Party, any Other Obligor or any of their respective
Affiliates to Lender in connection with this Agreement or any other Loan
Document contains or will at any time contain any untrue statement of a material
fact, or omits or will at any time omit to state any material fact necessary to
make any statements contained herein or therein not misleading. Except for
matters of a general economic or political nature which do not affect any Loan
Party or any Other Obligor uniquely, to the knowledge of the Borrowers there is
no fact presently known to any Loan Party which has not been disclosed to
Lender, which has had or could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.

 

5.22       Sensitive Payments. No Loan Party (a) has made or will at any time
make any contributions, payments or gifts to or for the private use of any
governmental official, employee or agent where either the payment or the purpose
of such contribution, payment or gift is illegal under the applicable laws of
the United States or the jurisdiction in which made or any other applicable
jurisdiction, (b) has established or maintained or will at any time establish or
maintain any unrecorded fund or asset for any purpose or made any false or
artificial entries on its books, (c) has made or will at any time make any
payments to any Person with the intention that any part of such payment was to
be used for any purpose other than that described in the documents supporting
the payment, or (d) has engaged in or will at any time engage in any “trading
with the enemy” or other transactions violating any rules or regulations of the
Office of Foreign Assets Control or any similar applicable laws, rules or
regulations.

 

5.23       Subordinated Debt.

 

(a)           Borrowers have furnished Lender a true, correct and complete copy
of each of the Subordinated Debt Documents. No statement or representation made
in any of the Subordinated Debt Documents by Borrowers or any other Loan Party
or, to Borrowers’ knowledge, any other Person, contains any untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they are made, not misleading in any material
respect as of the time that such statement or representation is made. Each of
the representations and warranties of the Loan Parties set forth in each of the
Subordinated Debt Documents are true and correct in all material respects.

 

27 

 

 

(b)           The provisions of the Subordinated Debt Subordination Agreement
are enforceable against each holder of the Subordinated Debt. Each Borrower and
each other Loan Party acknowledges that Lender is entering into this Agreement
and extending credit and making the Loans in reliance upon the Subordinated Debt
Subordination Agreement and this Section 5.23. All Obligations constitute senior
Indebtedness entitled to the benefits of the subordination provisions contained
in the Subordinated Debt Documents.

 

5.24       Negative Covenants. No Loan Party shall, and no Loan Party shall
permit any other Loan Party that is a Subsidiary to, without Lender’s prior
written consent:

 

(a)           merge or consolidate with another Person, enter into a plan of
division under Delaware law (or any comparable event under a different
jurisdiction’s” laws), form any new Subsidiary or acquire any interest in any
Person;

 

(b)           acquire any assets except in the ordinary course of business and
as otherwise expressly permitted by this Agreement;

 

(c)           enter into any transaction outside the ordinary course of business
that is not expressly permitted by this Agreement;

 

(d)           sell, transfer, return, or dispose of any Collateral or other
assets with an aggregate value in excess of $25,000 in any calendar month,
except that each Loan Party may sell Inventory in the ordinary course of its
business;

 

(e)           make any loans to, or investments in, any Affiliate or other
Person in the form of money or other assets; provided, that (i) Borrowers may
make loans and investments in their respective wholly-owned domestic
Subsidiaries that are Loan Parties, (ii) Parent may make investments in Loan
Parties, and (iii) wholly-owned domestic Subsidiaries that are Loan Parties may
make loans and investments amongst themselves;

 

(f)            incur any Indebtedness other than the Obligations and Permitted
Indebtedness;

 

(g)           create, incur, assume or suffer to exist any Lien or other
encumbrance of any nature whatsoever, other than in favor of Lender to secure
the Obligations, on any of the Collateral whether now or hereafter owned, other
than Permitted Liens;

 

(h)           guaranty or otherwise become liable with respect to the
obligations of any Person other than (i) the Obligations and (ii) guarantees in
respect of Permitted Indebtedness;

 

28 

 

 

(i)            pay or declare any dividends or other distributions on any Loan
Party’s Equity Interests (except for dividends payable solely in capital stock
or other Equity Interests of such Loan Party) and dividends and distributions to
Borrower;

 

(j)            redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of Loan Party’s Equity Interests;

 

(k)           make any change in any Loan Party’s capital structure from that in
place on the Closing Date;

 

(l)           dissolve or elect to dissolve (except of the dissolution or
election to dissolve, in each case, any Inactive Loan Party, so long Lender
receives ten (10) Business Days’ prior written notice thereof and all of the
assets of such Inactive Loan Party are contributed to a Borrower or Parent);

 

(m)          engage, directly or indirectly, in a business other than the
business which is being conducted on the date hereof or any business reasonably
related, incidental or ancillary thereto, wind up its business operations or
cease substantially all, or any material portion, of its normal business
operations, or suffer any material disruption, interruption or discontinuance of
a material portion of its normal business operations;

 

(n)           pay any principal or other amount on any Indebtedness that is
contractually subordinated to Lender in violation of the applicable
subordination or intercreditor agreement or optionally prepay, redeem, defease,
purchase, or otherwise acquire any Indebtedness of any Loan Party or its
Subsidiaries, other than the Obligations in accordance with this Agreement;

 

(o)           enter into any transaction with an Affiliate other than on
arms-length terms disclosed to Lender in writing;

 

(p)           change its jurisdiction of organization or enter into any
transaction which has the effect of changing its jurisdiction of organization
except as provided for in Section 5.8;

 

(q)           agree, consent, permit or otherwise undertake to amend or
otherwise modify any of the terms or provisions of any Loan Party’s Organic
Documents, except for such amendments or other modifications required by
applicable law or that are not adverse to Lender, and then, only to the extent
such amendments or other modifications are fully disclosed in writing to Lender
no less than five (5) Business Days prior to being effectuated;

 

(r)            enter into or assume any agreement prohibiting the creation or
assumption of any Lien on the Collateral to secure the Obligations upon its
properties or assets, whether now owned or hereafter acquired;

 

(s)           create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction (other than any Loan Documents) of any kind on
the ability of any such Person to pay or make any dividends or distributions to
Borrowers, to pay any of the Obligations, to make loans or advances or to
transfer any of its property or assets to Borrowers, except customary terms and
conditions in respect of any Permitted Indebtedness or Permitted Liens; or

 

29 

 

 

(t)           agree, consent, permit or otherwise undertake to amend or
otherwise modify any of the terms or provisions of any Subordinated Debt
Document in violation of the Subordinated Debt Subordination Agreement.

 

5.25       Financial Covenants. Each Loan Party shall at all times comply with
the Financial Covenants described on Schedule E.

 

5.26       Employee and Labor Matters. There is (a) no unfair labor practice
complaint pending or, to the knowledge of any Borrower, threatened against any
Loan Party or its Subsidiaries before any Governmental Authority and no
grievance or arbitration proceeding pending or threatened against any Loan Party
or its Subsidiaries which arises out of or under any collective bargaining
agreement and that could reasonably be expected to result in a material
liability, (b) no strike, labor dispute, slowdown, stoppage or similar action or
grievance pending or threatened in writing against any Loan Party or its
Subsidiaries that could reasonably be expected to result in a material
liability, or (c) to the knowledge of any Borrower, after due inquiry, no union
representation question existing with respect to the employees of any Loan Party
or its Subsidiaries and no union organizing activity taking place with respect
to any of the employees of any Loan Party or its Subsidiaries. None of any Loan
Party or its Subsidiaries has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state law, which
remains unpaid or unsatisfied. The hours worked and payments made to employees
of each Loan Party and its Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other applicable legal requirements. All material
payments due from any Loan Party or its Subsidiaries on account of wages and
employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of Borrowers, except where the failure to do
so could not, individually or in the aggregate, reasonably be expected to result
in a material liability.

 

6.RELEASE, LIMITATION OF LIABILITY AND INDEMNITY.

 

6.1         Release. Each Borrower and each other Loan Party on behalf of itself
and its successors, assigns, heirs, and other legal representatives, hereby
absolutely, unconditionally and irrevocably releases, remises and forever
discharges Lender and any and all Participants, their successors and assigns,
their Affiliates, their respective directors, officers, employees, attorneys and
agents and any other Person affiliated with or representing Lender (the
“Released Parties”) of and from any and all liability, including all actual or
potential claims, demands or causes of action of any kind, nature or description
whatsoever, whether arising in law or equity or under contract or tort or under
any state or federal law or otherwise which each Borrower or any Loan Party or
any of their successors, assigns, or other legal representatives has had, now
has or has made claim to have against any of the Released Parties for or by
reason of any act, omission, matter, cause or thing whatsoever, including any
liability arising from acts or omissions pertaining to the transactions
contemplated by this Agreement and the other Loan Documents, whether based on
errors of judgment or mistake of law or fact, from the beginning of time to and
including the Closing Date, whether such claims, demands and causes of action
are matured or known or unknown, except any liability arising solely as the
result of the gross negligence or willful misconduct of such Released Parties,
as finally determined by a court of competent jurisdiction. Notwithstanding any
provision in this Agreement to the contrary, this Section 6.1 shall remain
operative even after the Termination Date and shall survive the payment in full
of all of the Loans. Such release is made on the date hereof and remade upon
each request for a Loan or Letter of Credit by Borrowers.

 

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6.2         Limitation of Liability. In no circumstance will any of the Released
Parties be liable for lost profits or other special, punitive, or consequential
damages. Notwithstanding any provision in this Agreement to the contrary, this
Section 6.2 shall remain operative even after the Termination Date and shall
survive the payment in full of all of the Loans.

 

6.3         Indemnity/Currency Indemnity.

 

(a)           Each Loan Party hereby agrees to indemnify the Released Parties
and hold them harmless from and against any and all claims, debts, liabilities,
losses, demands, obligations, actions, causes of action, fines, penalties, costs
and expenses (including attorneys’ fees and consultants’ fees), of every nature,
character and description (including, without limitation, natural resources
damages, property damage and claims for personal injury), which the Released
Parties may sustain or incur based upon or arising out of any of the
transactions contemplated by this Agreement or any other Loan Documents or any
of the Obligations, including any transactions or occurrences relating to the
issuance of any Letter of Credit, any Collateral relating thereto, any drafts
thereunder and any errors or omissions relating thereto (including, without
limitation, any loss or claim due to any action or inaction taken by the issuer
of any Letter of Credit or Lender) (and for this purpose any charges to Lender
by any issuer of Letters of Credit shall be conclusive as to their
appropriateness and may be charged to the Loan Account), or any other matter,
including any breach of any covenant or representation or warranty relating to
any environmental and health and safety laws or an environmental release, cause
or thing whatsoever occurred, done, omitted or suffered to be done by Lender
relating to any Loan Party or the Obligations (except any such amounts sustained
or incurred solely as the result of the gross negligence or willful misconduct
of such Released Parties, as finally determined by a court of competent
jurisdiction). Notwithstanding any provision in this Agreement to the contrary,
this Section 6.3 shall remain operative even after the Termination Date and
shall survive the payment in full of all of the Obligations.

 

(b)           If, for the purposes of obtaining or enforcing judgment in any
court in any jurisdiction with respect to this Agreement or any Loan Document,
it becomes necessary to convert into the currency of such jurisdiction (the
“Judgment Currency”) any amount due under this Agreement or under any Loan
Document in any currency other than the Judgment Currency (the “Currency Due”)
(or for the purposes of Section 1.7(c)), then, to the extent permitted by law,
conversion shall be made at the exchange rate reasonably selected by Lender on
the Business Day before the day on which judgment is given (or for the purposes
of Section 1.7(c), on the Business Day on which the payment was received by the
Lender). In the event that there is a change in such exchange rate between the
Business Day before the day on which the judgment is given and the date of
receipt by the Lender of the amount due, each Loan Party shall to the extent
permitted by law, on the date of receipt by Lender, pay such additional amounts,
if any, or be entitled to receive reimbursement of such amount, if any as may be
necessary to ensure that the amount received by Lender on such date is the
amount in the Judgment Currency which (when converted at such exchange rate on
the date of receipt by Lender in accordance with normal banking procedures in
the relevant jurisdiction) is the amount then due under this Agreement or such
Loan Document in the Currency Due. If the amount of the Currency Due (including
any Currency Due for purposes of Section 1.7(c)) which the Lender is so able to
purchase is less than the amount of the Currency Due (including any Currency Due
for purposes of Section 1.7(c)) originally due to it, each Loan Party shall to
the extent permitted by law jointly and severally indemnify and save Lender
harmless from and against loss or damage arising as a result of such deficiency.

 

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7.EVENTS OF DEFAULT AND REMEDIES.

 

7.1          Events of Default. The occurrence of any of the following events
shall constitute an “Event of Default”:

 

(a)           if any warranty, representation, statement, report or certificate
made or delivered to Lender by or on behalf of any Loan Party or any Other
Obligor is untrue or misleading in any material respect;

 

(b)           if any Loan Party or any Other Obligor fails to pay to Lender, (i)
when due, any principal or interest payment required under this Agreement or any
other Loan Document, or (ii) within three (3) Business Days when due, any other
monetary Obligation;

 

(c)           (i)           if any Loan Party or any Other Obligor defaults in
the due observance or performance of any covenant, condition or agreement
contained in Section 3.2, 4.1, 4.6, 4.7, 4.8, 5.2 (limited to the last sentence
of Section 5.2), 5.3, 5.13, 5.14, 5.15, 5.17, 5.23, 5.24 or 5.25 of this
Agreement or in any provisions of the Post-Closing Agreement;

 

(ii)           if any Loan Party or any Other Obligor defaults in the due
observance or performance of any covenant, condition or agreement contained in
any provision of this Agreement or any other Loan Document and not addressed in
clauses Sections 7.1(a), (b) or (c)(i), and the continuance of such default
unremedied for a period of fifteen (15) Business Days; provided, that such
fifteen (15) Business Day grace period shall not be available for any default
that is not reasonably capable of being cured within such period or for any
intentional default;

 

(d)           if one or more judgments aggregating in excess of $100,000 is
obtained against any Loan Party or any Other Obligor which remains unstayed for
more than thirty (30) days or is enforced;

 

(e)           any default with respect to any Indebtedness (other than the
Obligations) of any Loan Party or any Other Obligor if (i) such default shall
consist of the failure to pay such Indebtedness when due, whether by
acceleration or otherwise, subject to any notice and cure period associated with
such Indebtedness, or (ii) the effect of such default is to permit the holder,
subject to all notice and cure periods associated with such Indebtedness, to
accelerate the maturity of any such Indebtedness or to cause such Indebtedness
to become due prior to the stated maturity thereof (without regard to the
existence of any subordination or intercreditor agreements),;

 

32 

 

 

(f)            the dissolution (other than dissolution of any Inactive Loan
Party in compliance with Section 5.24(l)), death, termination of existence,
insolvency or business failure or suspension or cessation of business as usual
of any Loan Party or any Other Obligor (or of any general partner of any Loan
Party or any Other Obligor if it is a partnership);

 

(g)           if any Loan Party or any Other Obligor shall: (i) apply for or
consent to the appointment of a receiver, trustee, custodian or liquidator of it
or any of its properties, (ii) admit in writing its inability to pay its debts
as they mature, (iii) make a general assignment for the benefit of creditors,
(iv) be adjudicated a bankrupt or insolvent or be the subject of an order for
relief under the Bankruptcy Code or under any bankruptcy or insolvency law of a
foreign jurisdiction, (v) file a voluntary petition in bankruptcy, or a petition
or an answer seeking reorganization or an arrangement with creditors, (vi) take
advantage of any bankruptcy, reorganization, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such law,
or (vii) take or permit to be taken any action in furtherance of or for the
purpose of effecting any of the foregoing;

 

(h)           the commencement of an involuntary case or other proceeding
against any Loan Party or any Other Obligor seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar applicable law or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property and the same is not dismissed within sixty (60)
days, or if an order for relief is entered against any Loan Party or any Other
Obligor under any bankruptcy insolvency or other similar applicable law as now
or hereafter in effect;

 

(i)            the actual or attempted revocation or termination of, or
limitation or denial of liability under, any guaranty of any of the Obligations,
or any security document securing any of the Obligations, by any Loan Party or
Other Obligor;

 

(j)            if any Loan Party or Other Obligor makes any payment on account
of any Indebtedness or obligation which has been contractually subordinated to
the Obligations other than payments which are not prohibited by the applicable
subordination provisions pertaining thereto, or if any Person who has
subordinated such Indebtedness or obligations attempts to limit or terminate any
applicable subordination provisions pertaining thereto;

 

(k)           if there is any actual indictment or conviction of any Borrower,
any Guarantor or any of their respective Senior Officers under any criminal
statute in each case related to a felony committed in the direct conduct of any
Borrower’s, or such Guarantor’s business, as applicable;

 

(l)            (i) any Person not affiliated (defined as any Person who owns
less than 3% of the voting Equity Interests of Parent on the Closing Date) with
Parent acquires, directly or indirectly, through one or a series of related
transactions, control over more than fifty percent (50%) of the outstanding
voting Equity Interests of Parent on a fully diluted basis, (ii) except in
connection with the dissolution of an Inactive Loan Party as permitted pursuant
to this Agreement, Parent shall cease to directly own and control 100% of each
class of the outstanding Equity Interests of PhoneX, BCT, Upstream Holding and
HD Capital, (iii) a change in the majority of the board of directors (or similar
governing body) of Parent from those directors in place on the Closing Date,
(iv) except in connection with the dissolution of an Inactive Loan Party,
Upstream Holdings shall cease to, directly or indirectly, own and control 100%
of each class of the outstanding Equity Interests of Upstream, (v) except in
connection with the dissolution of an Inactive Loan Party, BST shall cease to,
directly or indirectly, own and control 100% of each class of the outstanding
Equity Interests of WeSell, or (vi) following the dissolution of an Inactive
Loan Party, Parent shall cease to, directly or indirectly, own and control 100%
of each class of the outstanding Equity Interests of the each Subsidiary that
was owned by the dissolved Inactive Loan Party;

 

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(m)          if (i) Nikhil Raman ceases to be employed as, and actively perform
the duties of, the chief executive officer and chief financial officer of each
Loan Party, (ii) Scott Tepfer ceases to be employed as, and actively perform the
duties of, the head of sales of each Loan Party, (iii) Dan Coyne ceases to be
employed as, and actively perform the duties of, the head of purchasing of each
Loan Party or (iv) Yasemin Kaya ceases to be employed as, and actively perform
the duties of, the controller of each Loan Party, in each case unless a
successor is appointed within sixty (60) days after the termination of such
Person’s employment, and such successor is reasonably satisfactory to Lender;

 

(n)           if any Lien purported to be created by any Loan Document shall
cease to be a valid perfected first priority Lien (subject only to any priority
accorded by law to Permitted Liens) on any material portion of the Collateral,
or any Loan Party or any Other Obligor shall assert in writing that any Lien
purported to be created by any Loan Document is not a valid perfected first
priority lien (subject only to any priority accorded by law to Permitted Liens)
on the assets or properties purported to be covered thereby;

 

(o)           if any of the Loan Documents shall cease to be in full force and
effect (other than as a result of the discharge thereof in accordance with the
terms thereof or by written agreement of all parties thereto);

 

(p)           if Lender determines in good faith that the Collateral is
insufficient to fully secure the Obligations or that the prospect of payment or
performance of the Obligations is impaired;

 

(q)           if (A) the outstanding balance of all Revolving Loans and the
Letter of Credit Balance exceeds, at any time, the lesser of (x) the Maximum
Revolving Facility Amount and (y) the Borrowing Base or (B) any of the Loan
Limits for Revolving Loans are, at any time, exceeded;

 

(r)            (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of any Loan Party or any ERISA Affiliate under Title IV of ERISA to
the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
excess of $50,000, (ii) the existence of any Lien under Section 430(k) or
Section 6321 of the Code or Section 303(k) or Section 4068 of ERISA on any
assets of a Loan Party or any ERISA Affiliate, or (iii) a Loan Party or any
ERISA Affiliate fails to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $50,000;

 

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(s)           If (i) any Loan Party is enjoined, restrained or in any way
prevented by any Governmental Authority from conducting any material part of its
business, (ii) any Loan Party suffers the loss, revocation or termination of any
material license, permit, lease or agreement necessary to its business, or (iii)
there is a cessation of any material part of any Loan Party’s business for a
material period of time;

 

(t)           (i) an “Event of Default” (as defined in the Subordinated Debt
Documents) has occurred, which “Event of Default” shall not have been cured or
waived within any applicable grace period; (ii) termination or breach of the
Subordinated Debt Subordination Agreement by Borrowers, (iii) the attempt by any
Borrower to terminate or challenge in writing the validity of its obligations
under the Subordinated Debt Subordination Agreement or (iv) the Subordinated
Debt Subordination Agreement ceases to be enforceable;

 

(u)           at least ninety (90) days prior to its termination date, the
Warehouse Lease is not extended or a new lease is not entered into, pursuant to
terms reasonably acceptable to Lender, for the same location as the Warehouse
Lease or another location for which Lender has received a fully executed
landlord agreement, for a term which extends beyond the Scheduled Maturity Date;

 

(v)           at least ninety (90) days prior to its maturity date, the maturity
date of any Subordinated Debt is not extended to a maturity date which extends
at least thirty (30) days beyond the Scheduled Maturity Date;

 

(w)           if Brightstar is not paid the amount owed under the Brightstar
Agreement no later than the due date thereof and the trade payable to Brightstar
is not zero on the ninety first (91st) day following the Closing Date;

 

(x)           if Excess Availability is less than $0 after subtracting from
Excess Availability all amounts due to Brightstar which remain outstanding
beyond the due date thereof;or

 

(y)           if any Borrower fails to maintain or loses its R2 license or
status unless consented to by Lender.

 

7.2          Remedies with Respect to Lending Commitments/Acceleration/Etc. Upon
the occurrence and during the continuance of an Event of Default Lender may, in
Lender’s sole discretion (a) terminate all or any portion of its commitment to
lend to or extend credit to Borrowers under this Agreement and/or any other Loan
Document, without prior notice to any Loan Party, and/or (b) demand payment in
full of all or any portion of the Obligations (whether or not payable on demand
prior to such Event of Default), together the Early Payment/Termination Premium
in the amount specified in Schedule C, and demand that the Letters of Credit be
cash collateralized in the manner described in Section 1.7(c) and/or (c) take
any and all other and further actions and avail itself of any and all rights and
remedies available to Lender under this Agreement, any other Loan Document,
under law and/or in equity. Notwithstanding the foregoing sentence, upon the
occurrence of any Event of Default described in Section 7.1(g) or Section
7.1(h), without notice, demand or other action by Lender all of the Obligations
(including without limitation the Early Payment/Termination Premium in the
amount specified in Schedule C) shall immediately become due and payable whether
or not payable on demand prior to such Event of Default.

 

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7.3          Remedies with Respect to Collateral. Without limiting any rights or
remedies Lender may have pursuant to this Agreement, the other Loan Documents,
under applicable law or otherwise, upon the occurrence and during the
continuance of an Event of Default:

 

(a)           Any and All Remedies. Lender may take any and all actions and
avail itself of any and all rights and remedies available to Lender under this
Agreement, any other Loan Document, under law or in equity, and the rights and
remedies herein and therein provided shall be cumulative and not exclusive of
any rights or remedies provided by applicable law or otherwise.

 

(b)           Collections; Modifications of Terms. Lender may but shall be under
no obligation to (i) notify all appropriate parties that the Collateral, or any
part thereof, has been assigned to Lender; (ii) demand, sue for, collect and
give receipts for and take all necessary or desirable steps to collect any
Collateral or Proceeds in its or any Loan Party’s name, and apply any such
collections against the Obligations as Lender may elect; (i) take control of any
Collateral and any cash and non-cash Proceeds of any Collateral; (iii) enforce,
compromise, extend, renew settle or discharge any rights or benefits of each
Loan Party with respect to or in and to any Collateral, or deal with the
Collateral as Lender may deem advisable; and (iv) make any compromises,
exchanges, substitutions or surrenders of Collateral Lender deems necessary or
proper in its reasonable discretion, including extending the time of payment,
permitting payment in installments, or otherwise modifying the terms or rights
relating to any of the Collateral, all of which may be effected without notice
to, consent of, or any other action of any Loan Party and without otherwise
discharging or affecting the Obligations, the Collateral or the security
interests granted to Lender under this Agreement or any other Loan Document.

 

(c)           Insurance. Lender may file proofs of loss and claim with respect
to any of the Collateral with the appropriate insurer, and may endorse in its
own and each Loan Party’s name any checks or drafts constituting Proceeds of
insurance. Any Proceeds of insurance received by Lender may be applied by Lender
against payment of all or any portion of the Obligations as Lender may elect in
its reasonable discretion.

 

(d)           Possession and Assembly of Collateral. Lender may take possession
of the Collateral and/or without removal render each Loan Party’s Equipment
unusable. Upon Lender’s request, each Loan Party shall assemble the Collateral
and make it available to Lender at a place or places to be designated by Lender.

 

(e)           Set-off. Lender may and without any notice to, consent of or any
other action by any Loan Party (such notice, consent or other action being
expressly waived), set-off or apply (i) any and all deposits (general or
special, time or demand, provisional or final) at any time held by or for the
account of Lender or any Affiliate of Lender, and/or (ii) any Indebtedness at
any time owing by Lender or any Affiliate of Lender or any Participant in the
Loans to or for the credit or the account of any Loan Party, to the repayment of
the Obligations irrespective of whether any demand for payment of the
Obligations has been made.

 

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(f)            Disposition of Collateral.

 

(i)            Sale, Lease, etc. of Collateral. Lender may, without demand,
advertising or notice, all of which each Loan Party hereby waives (except as the
same may be required by the UCC or other applicable law and is not waivable
under the UCC or such other applicable law), at any time or times in one or more
public or private sales or other dispositions, for cash, on credit or otherwise,
at such prices and upon such terms as determined by Lender (provided such price
and terms are commercially reasonable within the meaning of the UCC to the
extent such sale or other disposition is subject to the UCC requirements that
such sale or other disposition must be commercially reasonable) (A) sell, lease,
license or otherwise dispose of any and all Collateral, and/or (B) deliver and
grant options to a third party to purchase, lease, license or otherwise dispose
of any and all Collateral. Lender may sell, lease, license or otherwise dispose
of any Collateral in its then-present condition or following any preparation or
processing deemed necessary by Lender in its reasonable discretion. Lender may
be the purchaser at any such public or private sale or other disposition of
Collateral, and in such case Lender may make payment of all or any portion of
the purchase price therefor by the application of all or any portion of the
Obligations due to Lender to the purchase price payable in connection with such
sale or disposition. Lender may, if it deems it reasonable, postpone or adjourn
any sale or other disposition of any Collateral from time to time by an
announcement at the time and place of the sale or disposition to be so postponed
or adjourned without being required to give a new notice of sale or disposition;
provided, however, that Lender shall provide the applicable Loan Party with
written notice of the time and place of such postponed or adjourned sale or
disposition. Each Loan Party hereby acknowledges and agrees that Lender’s
compliance with any requirements of applicable law in connection with a sale,
lease, license or other disposition of Collateral will not be considered to
adversely affect the commercial reasonableness of any sale, lease, license or
other disposition of such Collateral.

 

(ii)           Deficiency. Each Loan Party shall remain liable for all amounts
of the Obligations remaining unpaid as a result of any deficiency of the
Proceeds of the sale, lease, license or other disposition of Collateral after
such Proceeds are applied to the Obligations as provided in this Agreement.

 

(iii)          Warranties; Sales on Credit. Lender may sell, lease, license or
otherwise dispose of the Collateral without giving any warranties and may
specifically disclaim any and all warranties, including but not limited to
warranties of title, possession, merchantability and fitness. Each Loan Party
hereby acknowledges and agrees that Lender’s disclaimer of any and all
warranties in connection with a sale, lease, license or other disposition of
Collateral will not be considered to adversely affect the commercial
reasonableness of any such disposition of the Collateral. If Lender sells,
leases, licenses or otherwise disposes of any of the Collateral on credit,
Borrowers will be credited only with payments actually made in cash by the
recipient of such Collateral and received by Lender and applied to the
Obligations. If any Person fails to pay for Collateral acquired pursuant to this
Section 7.3(f) on credit, Lender may re-offer the Collateral for sale, lease,
license or other disposition.

 

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(g)          Investment Property; Voting and Other Rights; Irrevocable Proxy.

 

(i)         All rights of each Loan Party to exercise any of the voting and
other consensual rights which it would otherwise be entitled to exercise in
accordance with the terms hereof with respect to any Investment Property, and to
receive any dividends, payments, and other distributions which it would
otherwise be authorized to receive and retain in accordance with the terms
hereof with respect to any Investment Property, shall immediately, at the
election of Lender (without requiring any notice) cease, and all such rights
shall thereupon become vested solely in Lender, and Lender (personally or
through an agent) shall thereupon be solely authorized and empowered, without
notice, to (A) transfer and register in its name, or in the name of its nominee,
the whole or any part of the Investment Property, it being acknowledged by each
Loan Party that any such transfer and registration may be effected by Lender
through its irrevocable appointment as attorney-in-fact pursuant to Section
7.3(g)(ii) and Section 4.4 of this Agreement, (B) exchange certificates and/or
instruments representing or evidencing Investment Property for certificates
and/or instruments of smaller or larger denominations, (C) exercise the voting
and all other rights as a holder with respect to all or any portion of the
Investment Property (including, without limitation, all economic rights, all
control rights, authority and powers, and all status rights of each Loan Party
as a member or as a shareholder (as applicable) of the Issuer), (D) collect and
receive all dividends and other payments and distributions made thereon, (E)
notify the parties obligated on any Investment Property to make payment to
Lender of any amounts due or to become due thereunder, (F) endorse instruments
in the name of each Loan Party to allow collection of any Investment Property,
(G) enforce collection of any of the Investment Property by suit or otherwise,
and surrender, release, or exchange all or any part thereof, or compromise or
renew for any period (whether or not longer than the original period) any
liabilities of any nature of any Person with respect thereto, (H) consummate any
sales of Investment Property or exercise any other rights as set forth in
Section 7.3(f) hereof, (I) otherwise act with respect to the Investment Property
as though Lender was the outright owner thereof, and (J) exercise any other
rights or remedies Lender may have under the UCC, other applicable law, or
otherwise.

 

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(ii)        EACH LOAN PARTY HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS LENDER
AS ITS PROXY AND ATTORNEY-IN-FACT FOR SUCH LOAN PARTY WITH RESPECT TO ALL OF
EACH SUCH LOAN PARTY’S INVESTMENT PROPERTY WITH THE RIGHT, DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, WITHOUT NOTICE, TO TAKE ANY OF THE FOLLOWING
ACTIONS: (A) TRANSFER AND REGISTER IN LENDER’S NAME, OR IN THE NAME OF ITS
NOMINEE, THE WHOLE OR ANY PART OF THE INVESTMENT PROPERTY, (B) VOTE THE PLEDGED
EQUITY, WITH FULL POWER OF SUBSTITUTION TO DO SO, (C) RECEIVE AND COLLECT ANY
DIVIDEND OR ANY OTHER PAYMENT OR DISTRIBUTION IN RESPECT OF, OR IN EXCHANGE FOR,
THE INVESTMENT PROPERTY OR ANY PORTION THEREOF, TO GIVE FULL DISCHARGE FOR THE
SAME AND TO INDORSE ANY INSTRUMENT MADE PAYABLE TO ANY LOAN PARTY FOR THE SAME,
(D) EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES, AND REMEDIES (INCLUDING ALL
ECONOMIC RIGHTS, ALL CONTROL RIGHTS, AUTHORITY AND POWERS, AND ALL STATUS RIGHTS
OF EACH LOAN PARTY AS A MEMBER OR AS A SHAREHOLDER (AS APPLICABLE) OF THE
ISSUER) TO WHICH A HOLDER OF THE PLEDGED COLLATERAL WOULD BE ENTITLED
(INCLUDING, WITH RESPECT TO THE PLEDGED EQUITY, GIVING OR WITHHOLDING WRITTEN
CONSENTS OF MEMBERS OR SHAREHOLDERS, CALLING SPECIAL MEETINGS OF MEMBERS OR
SHAREHOLDERS, AND VOTING AT SUCH MEETINGS), AND (E) TAKE ANY ACTION AND TO
EXECUTE ANY INSTRUMENT WHICH LENDER MAY DEEM NECESSARY OR ADVISABLE TO
ACCOMPLISH THE PURPOSES OF THIS AGREEMENT. THE APPOINTMENT OF LENDER AS PROXY
AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE VALID AND
IRREVOCABLE UNTIL (X) ALL OF THE OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN FULL
IN CASH IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, (Y) LENDER HAS NO FURTHER OBLIGATIONS UNDER THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, AND (Z) THE COMMITMENTS UNDER THIS AGREEMENT HAVE EXPIRED
OR HAVE BEEN TERMINATED (IT BEING UNDERSTOOD AND AGREED THAT SUCH OBLIGATIONS
WILL BE AUTOMATICALLY REINSTATED IF AT ANY TIME PAYMENT, IN WHOLE OR IN PART, OF
ANY OF THE OBLIGATIONS IS RESCINDED OR MUST OTHERWISE BE RESTORED OR RETURNED BY
LENDER FOR ANY REASON WHATSOEVER, INCLUDING, WITHOUT LIMITATION, AS A
PREFERENCE, FRAUDULENT CONVEYANCE, OR OTHERWISE UNDER ANY BANKRUPTCY,
INSOLVENCY, OR SIMILAR LAW, ALL AS THOUGH SUCH PAYMENT HAD NOT BEEN MADE; IT
BEING FURTHER UNDERSTOOD THAT IN THE EVENT PAYMENT OF ALL OR ANY PART OF THE
OBLIGATIONS IS RESCINDED OR MUST BE RESTORED OR RETURNED, ALL REASONABLE
OUT-OF-POCKET COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL REASONABLE
ATTORNEYS’ FEES AND DISBURSEMENTS) INCURRED BY LENDER IN DEFENDING AND ENFORCING
SUCH REINSTATEMENT SHALL HEREBY BE DEEMED TO BE INCLUDED AS A PART OF THE
OBLIGATIONS). SUCH APPOINTMENT OF LENDER AS PROXY AND AS ATTORNEY-IN-FACT SHALL
BE VALID AND IRREVOCABLE AS PROVIDED HEREIN NOTWITHSTANDING ANY LIMITATIONS TO
THE CONTRARY SET FORTH IN ANY ORGANIC DOCUMENTS OF ANY LOAN PARTY, ANY ISSUER,
OR OTHERWISE.

 

(iii)       In order to further effect the foregoing transfer of rights in favor
of Lender, during the continuance of an Event of Default, each Loan Party hereby
authorizes and instructs each Issuer of Investment Property pledged by such Loan
Party to comply with any instruction received by such Issuer from Lender without
any other or further instruction from such Loan Party, and each Loan Party
acknowledges and agrees that each Issuer shall be fully protected in so
complying, and to pay any dividends, distributions, or other payments with
respect to any of the Investment Property directly to Lender.

 

(iv)       Upon exercise of the proxy set forth herein, all prior proxies given
by any Loan Party with respect to any of the Pledged Equity or other Investment
Property, as applicable (other than to Lender), are hereby revoked, and no
subsequent proxies (other than to Lender) will be given with respect to any of
the Pledged Equity or any of the other Investment Property, as applicable,
unless Lender otherwise subsequently agrees in writing. Lender, as proxy, will
be empowered and may exercise the irrevocable proxy to vote the Pledged Equity
and/or the other Investment Property at any and all times during the existence
of an Event of Default, including, without limitation, at any meeting of
shareholders or members, as the case may be, however called, and at any
adjournment thereof, or in any action by written consent, and may waive any
notice otherwise required in connection therewith. To the fullest extent
permitted by applicable law, Lender shall have no agency, fiduciary, or other
implied duties to any Loan Party, any Issuer, any Loan Party, or any other
Person when acting in its capacity as such proxy or attorney-in-fact. Each Loan
Party hereby waives and releases any claims that it may otherwise have against
Lender with respect to any breach, or alleged breach, of any such agency,
fiduciary or other duty.

 

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(v)        Any transfer to Lender or its nominee, or registration in the name of
Lender or its nominee, of the whole or any part of the Investment Property shall
be made solely for purposes of effectuating voting or other consensual rights
with respect to the Investment Property in accordance with the terms of this
Agreement and is not intended to effectuate any transfer of ownership of any of
the Investment Property. Notwithstanding the delivery by Lender of any
instruction to any Issuer or any exercise by Lender of an irrevocable proxy or
otherwise, Lender shall not be deemed the owner of, or assume any obligations or
any liabilities whatsoever of the owner or holder of, any Investment Property
unless and until Lender expressly accepts such obligations in a duly authorized
and executed writing and agrees in writing to become bound by the applicable
Organic Documents or otherwise becomes the owner thereof under applicable law
(including through a sale as described in Section 7.3(f) hereof). The execution
and delivery of this Agreement shall not subject Lender to, or transfer or pass
to Lender, or in any way affect or modify, the liability of any Loan Party under
the Organic Documents of any Issuer or any related agreements, documents, or
instruments or otherwise. In no event shall the execution and delivery of this
Agreement by Lender, or the exercise by Lender of any rights hereunder or
assigned hereby, constitute an assumption of any liability or obligation
whatsoever of any Loan Party to, under, or in connection with any of the Organic
Documents of any Issuer or any related agreements, documents, or instruments or
otherwise.

 

(h)          Election of Remedies. Lender shall have the right in Lender’s sole
discretion to determine which rights, security, Liens and/or remedies Lender may
at any time pursue, foreclose upon, relinquish, subordinate, modify or take any
other action with respect to, without in any way impairing, modifying or
affecting any of Lender’s other rights, security, Liens or remedies with respect
to such Property, or any of Lender’s rights or remedies under this Agreement or
any other Loan Document.

 

(i)           Lender’s Obligations. Each Loan Party agrees that Lender shall not
have any obligation to preserve rights to any Collateral against prior parties
or to marshal any Collateral of any kind for the benefit of any other creditor
of any Loan Party or any other Person. Lender shall not be responsible to any
Loan Party or any other Person for loss or damage resulting from Lender’s
failure to enforce its Liens or collect any Collateral or Proceeds or any monies
due or to become due under the Obligations or any other liability or obligation
of any Loan Party to Lender.

 

(j)           Waiver of Rights by Loan Parties. Except as otherwise expressly
provided for in this Agreement or by non-waivable applicable law, each Loan
Party waives: (i) presentment, demand and protest and notice of presentment,
dishonor, notice of intent to accelerate, notice of acceleration, protest,
default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Lender on which
any Loan Party may in any way be liable, and hereby ratifies and confirms
whatever Lender may do in this regard, (ii) all rights to notice and a hearing
prior to Lender’s taking possession or control of, or to Lender’s replevy,
attachment or levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Lender to exercise any of its remedies
and (iii) the benefit of all valuation, appraisal, marshalling and exemption
laws.

 

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8.LOAN GUARANTY.

 

8.1         Guaranty. Each Loan Party hereby agrees that it is jointly and
severally liable for, and absolutely and unconditionally guarantees to Lender,
the prompt payment when due, whether at stated maturity, upon acceleration or
otherwise, and at all times thereafter, all of the Obligations and all costs and
expenses, including all court costs and reasonable attorneys’ and paralegals’
fees (including allocated costs of in-house counsel and paralegals) and expenses
paid or incurred by Lender in endeavoring to collect all or any part of the
Obligations from, or in prosecuting any action against, any Borrower, any Loan
Party or any Other Obligor of all or any part of the Obligations (and such costs
and expenses paid or incurred shall be deemed to be included in the
Obligations). Each Loan Party further agrees that the Obligations may be
extended or renewed in whole or in part without notice to or further assent from
it, and that it remains bound upon its guarantee notwithstanding any such
extension or renewal. All terms of this Loan Guaranty apply to and may be
enforced by or on behalf of any branch or Affiliate of Lender that extended any
portion of the Obligations.

 

8.2         Guaranty of Payment. This Loan Guaranty is a guaranty of payment and
not of collection. Each Loan Party waives any right to require Lender to sue or
otherwise take action against any Borrower, any other Loan Party, any Other
Obligor, or any other Person obligated for all or any part of the Obligations,
or otherwise to enforce its payment against any Collateral securing all or any
part of the Obligations.

 

8.3         No Discharge or Diminishment of Loan Guaranty.

 

(a)       Except as otherwise expressly provided for herein, the obligations of
each Loan Party hereunder are unconditional and absolute and not subject to any
reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of all of the Obligations), including: (i)
any claim of waiver, release, extension, renewal, settlement, surrender,
alteration, or compromise of any of the Obligations, by operation of law or
otherwise; (ii) any change in the corporate existence, structure or ownership of
any Borrower or any other Loan Party; (iii) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting any Borrower or any other
Loan Party, or their assets or any resulting release or discharge of any
obligation of any Borrower or any other Loan Party; or (iv) the existence of any
claim, setoff or other rights which any Loan Party may have at any time against
any Borrower, any other Loan Party, Lender, or any other Person, whether in
connection herewith or in any unrelated transactions.

 

(b)       The obligations of each Loan Party hereunder are not subject to any
defense or setoff, counterclaim, recoupment, or termination whatsoever by reason
of the invalidity, illegality, or unenforceability of any of the Obligations or
otherwise, or any provision of applicable law or regulation purporting to
prohibit payment by any Borrower or any other Loan Party, of the Obligations or
any part thereof.

 

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(c)       Further, the obligations of any Loan Party hereunder are not
discharged or impaired or otherwise affected by: (i) the failure of Lender to
assert any claim or demand or to enforce any remedy with respect to all or any
part of the Obligations; (ii) any waiver or modification of or supplement to any
provision of any agreement relating to the Obligations; (iii) any release,
non-perfection, or invalidity of any indirect or direct security for all or any
part of the Obligations or all or any part of any obligations of any Loan Party;
(iv) any action or failure to act by Lender with respect to any Collateral; or
(v) any default, failure or delay, willful or otherwise, in the payment or
performance of any of the Obligations, or any other circumstance, act, omission
or delay that might in any manner or to any extent vary the risk of such Loan
Party or that would otherwise operate as a discharge of any Loan Party as a
matter of law or equity (other than the indefeasible payment in full in cash of
all of the Obligations).

 

8.4         Defenses Waived. To the fullest extent permitted by applicable law,
each Loan Party hereby waives any defense based on or arising out of any defense
of any Loan Party or the unenforceability of all or any part of the Obligations
from any cause, or the cessation from any cause of the liability of any Loan
Party, other than the indefeasible payment in full in cash of all of the
Obligations. Without limiting the generality of the foregoing, each Loan Party
irrevocably waives acceptance hereof, presentment, demand, protest and, to the
fullest extent permitted by law, any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against any
Borrower, any other Obligor, or any other Person. Each Loan Party confirms that
it is not a surety under any state law and shall not raise any such law as a
defense to its obligations hereunder. Lender may, at its election, foreclose on
any Collateral held by it by one or more judicial or nonjudicial sales, accept
an assignment of any such Collateral in lieu of foreclosure or otherwise act or
fail to act with respect to any Collateral, compromise or adjust any part of the
Obligations, make any other accommodation with any Borrower or any other Loan
Party or exercise any other right or remedy available to it against any Borrower
or any other Loan Party, without affecting or impairing in any way the liability
of any Loan Party under this Loan Guaranty except to the extent the Obligations
have been fully and indefeasibly paid in cash. To the fullest extent permitted
by applicable law, each Loan Party waives any defense arising out of any such
election even though that election may operate, pursuant to applicable law, to
impair or extinguish any right of reimbursement or subrogation or other right or
remedy of any Loan Party against any Borrower or any other Loan Party or any
security.

 

8.5         Rights of Subrogation. No Loan Party will assert any right, claim or
cause of action, including, without limitation, a claim of subrogation,
contribution or indemnification that it has against any Borrower or any other
Loan Party, or any Collateral, until the Termination Date.

 

8.6         Reinstatement; Stay of Acceleration. If at any time any payment of
any portion of the Obligations is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, or reorganization of any Borrower or
any other Person, or otherwise, each Loan Party’s obligations under this Loan
Guaranty with respect to that payment shall be reinstated at such time as though
the payment had not been made and whether or not Lender is in possession of this
Loan Guaranty. If acceleration of the time for payment of any of the Obligations
is stayed upon the insolvency, bankruptcy or reorganization of any Borrower, all
such amounts otherwise subject to acceleration under the terms of any agreement
relating to the Obligations shall nonetheless be payable by the Loan Parties
forthwith on demand by Lender. This Section 8.6 shall remain operative even
after the Termination Date and shall survive the payment in full of all of the
Obligations.

 

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8.7         Information. Each Loan Party assumes all responsibility for being
and keeping itself informed of Borrowers’ financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Obligations
and the nature, scope and extent of the risks that each Loan Party assumes and
incurs under this Loan Guaranty, and agrees that Lender shall not have any duty
to advise any Loan Party of information known to it regarding those
circumstances or risks.

 

8.8         Termination. To the maximum extent permitted by law, each Loan Party
hereby waives any right to revoke this Loan Guaranty as to future Obligations.
If such a revocation is effective notwithstanding the foregoing waiver, each
Loan Party acknowledges and agrees that (a) no such revocation shall be
effective until written notice thereof has been received by Lender, (b) no such
revocation shall apply to any Obligations in existence on the date of receipt by
Lender of such written notice (including any subsequent continuation, extension,
or renewal thereof, or change in the interest rate, payment terms, or other
terms and conditions thereof), (c) no such revocation shall apply to any
Obligations made or created after such date to the extent made or created
pursuant to a legally binding commitment of Lender, (d) no payment by any
Borrower, any other Loan Party, or from any other source, prior to the date of
Lender’s receipt of written notice of such revocation shall reduce the maximum
obligation of any Loan Party hereunder, and (e) any payment, by any Borrower or
from any source other than a Loan Party which has made such a revocation, made
subsequent to the date of such revocation, shall first be applied to that
portion of the Obligations as to which the revocation is effective and which are
not, therefore, guarantied hereunder, and to the extent so applied shall not
reduce the maximum obligation of any Loan Party hereunder.

 

8.9         Maximum Liability. The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any federal or state
corporate law or other law governing business entities, or any state, federal or
foreign bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the obligations of any Loan Party under this Loan
Guaranty would otherwise be held or determined to be avoidable, invalid or
unenforceable on account of the amount of such Loan Party’s liability under this
Loan Guaranty, then, notwithstanding any other provision of this Loan Guaranty
to the contrary, the amount of such liability shall, without any further action
by the Loan Parties or Lender, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such action or
proceeding (such highest amount determined hereunder being the relevant Loan
Party’s “Maximum Liability”). This Section with respect to the Maximum Liability
of each Loan Party is intended solely to preserve the rights of Lender to the
maximum extent not subject to avoidance under applicable law, and no Loan Party
nor any other Person shall have any right or claim under this Section with
respect to such Maximum Liability, except to the extent necessary so that the
obligations of any Loan Party hereunder shall not be rendered voidable under
applicable law. Each Loan Party agrees that the Obligations may at any time and
from time to time exceed the Maximum Liability of each Loan Party without
impairing this Loan Guaranty or affecting the rights and remedies of Lender
hereunder, provided, that, nothing in this sentence shall be construed to
increase any Loan Party’s obligations hereunder beyond its Maximum Liability.

 

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8.10       Contribution. In the event any Loan Party shall make any payment or
payments under this Loan Guaranty or shall suffer any loss as a result of any
realization upon any collateral granted by it to secure its obligations under
this Loan Guaranty (such Loan Party a “Paying Guarantor”), each other Loan Party
(each a “Non-Paying Guarantor”) shall contribute to such Paying Guarantor an
amount equal to such Non-Paying Guarantor’s “Applicable Percentage” of such
payment or payments made, or losses suffered, by such Paying Guarantor. For
purposes of this Section 8.10, each Non-Paying Guarantor’s “Applicable
Percentage” with respect to any such payment or loss by a Paying Guarantor shall
be determined as of the date on which such payment or loss was made by reference
to the ratio of (a) such Non-Paying Guarantor’s Maximum Liability as of such
date (without giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has
not been determined, the aggregate amount of all monies received by such
Non-Paying Guarantor from Borrowers after the date hereof (whether by loan,
capital infusion or by other means) to (b) the aggregate Maximum Liability of
all Loan Parties hereunder (including such Paying Guarantor) as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been
determined for any Loan Party, the aggregate amount of all monies received by
such Loan Parties from Borrowers after the date hereof (whether by loan, capital
infusion or by other means). Nothing in this provision shall affect any Loan
Party’s several liability for the entire amount of the Obligations (up to such
Loan Party’s Maximum Liability). Each of the Loan Parties covenants and agrees
that its right to receive any contribution under this Loan Guaranty from a
Non-Paying Guarantor shall be subordinate and junior in right of payment to the
payment in full in cash of all of the Obligations. This provision is for the
benefit of Lender and the Loan Parties and may be enforced by any one, or more,
or all of them in accordance with the terms hereof.

 

8.11       Liability Cumulative. The liability of each Loan Party under this
Section 8 is in addition to and shall be cumulative with all liabilities of each
Loan Party to Lender under this Agreement and the other Loan Documents to which
such Loan Party is a party or in respect of any obligations or liabilities of
the other Loan Parties, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.

 

9.PAYMENTS FREE OF TAXES; OBLIGATION TO WITHHOLD; PAYMENTS ON ACCOUNT OF TAXES.

 

(a)       Any and all payments by or on account of any obligation of the Loan
Parties hereunder or under any other Loan Document shall to the extent permitted
by applicable laws be made free and clear of and without reduction or
withholding for any Taxes. If, however, applicable laws require the Loan Parties
to withhold or deduct any Tax, such Tax shall be withheld or deducted in
accordance with such laws as the case may be, upon the basis of the information
and documentation to be delivered pursuant to clause (e) below.

 

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(b)       If any Loan Party shall be required by applicable law to withhold or
deduct any Taxes from any payment, then (i) such Loan Party shall withhold or
make such deductions as are required based upon the information and
documentation it has received pursuant to clause (e) below, (ii) such Loan Party
shall timely pay the full amount withheld or deducted to the relevant
Governmental Authority in accordance with the applicable law, and (iii) to the
extent that the withholding or deduction is made on account of Indemnified
Taxes, the sum payable by the Loan Parties shall be increased as necessary so
that after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section)
the Recipient receives an amount equal to the sum it would have received had no
such withholding or deduction been made. Upon request by Lender or other
Recipient, Borrowers shall deliver to Lender or such other Recipient, as the
case may be, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment of Indemnified Taxes, a copy of
any return required by applicable law to report such payment or other evidence
of such payment reasonably satisfactory to Lender or such other Recipient, as
the case may be.

 

(c)       Without limiting the provisions of subsections (a) and (b) above, the
Loan Parties shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

 

(d)       Without limiting the provisions of subsections (a) through (c) above,
each Loan Party shall, and does hereby, on a joint and several basis indemnify
Lender and each other Recipient (and their respective directors, officers,
employees, affiliates and agents) and shall make payment in respect thereof
within ten (10) days after demand therefor, for the full amount of any
Indemnified Taxes and Other Taxes (including Indemnified Taxes and Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid or incurred by Lender or any other Recipient on account of, or in
connection with any Loan Document or a breach by a Loan Party thereof, and any
penalties, interest and related expenses and losses arising therefrom or with
respect thereto (including the fees, charges and disbursements of any counsel or
other tax advisor for Lender or any other Recipient (or their respective
directors, officers, employees, affiliates, and agents)), whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of any
such payment or liability delivered to Borrowers shall be conclusive absent
manifest error. Notwithstanding any provision in this Agreement to the contrary,
this Section 9 shall remain operative even after the Termination Date and shall
survive the payment in full of all of the Loans.

 

(e)       Lender shall deliver to Borrowers and each Participant shall deliver
to the applicable Lender granting the participation, at the time or times
prescribed by applicable laws, such properly completed and executed
documentation prescribed by applicable laws or by the taxing authorities of any
jurisdiction and such other reasonably requested information as will permit
Borrowers or Lender granting a participation, as the case may be, to determine
(i) whether or not payments made hereunder or under any other Loan Document are
subject to Taxes, (ii) if applicable, the required rate of withholding or
deduction, and (iii) such Lender’s or Participant’s entitlement to any available
exemption from, or reduction of, applicable Taxes in respect of all payments to
be made to such Recipient by the Loan Parties pursuant to this Agreement or
otherwise to establish such Recipient’s status for withholding tax purposes in
the applicable jurisdiction; provided, that each Recipient shall only be
required to deliver such documentation as it may legally provide.

 

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Without limiting the generality of the foregoing, if a Borrower is resident for
tax purposes in the United States:

 

(i)         Lender (or Participant) that is a “United States person” within the
meaning of Section 7701(a)(30) of the Code shall deliver to Borrowers (or Lender
granting a participation as applicable) an executed original of Internal Revenue
Service Form W-9 or such other documentation or information prescribed by
applicable law or reasonably requested by Borrowers (or Lender granting a
participation) as will enable Borrowers (or Lender granting a participation) as
the case may be, to determine whether or not such Lender (or Participant) is
subject to backup withholding or information reporting requirements under the
Code; and

 

(ii)        Lender (or Participant) that is not a “United States person” within
the meaning of Section 7701(a)(30) of the Code (a “Non-U.S. Recipient”) shall
deliver to Borrowers (and Lender granting a participation in case the Non-U.S.
Recipient is a Participant) and Lender on or prior to the date on which such
Non-U.S. Person becomes a party to this Agreement or a Participant (and from
time to time thereafter upon the reasonable request of Borrowers or Lender
granting the participation but only if such Non-U.S. Recipient is legally
entitled to do so), whichever of the following is applicable: (A) executed
originals of Internal Revenue Service Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States is a party; (B)
executed originals of Internal Revenue Service Form W-8ECI; (C) executed
originals of Internal Revenue Service Form W-8IMY and all required supporting
documentation; (D) each Non-U.S. Recipient claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, shall provide
(x) a certificate to the effect that such Non-U.S. Recipient is not (I) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (II) a “10 percent
shareholder” of a Borrower within the meaning of section 881(c)(3)(B) of the
Code, or (III) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) executed originals of Internal Revenue Service
Form W-8BEN; and/or (E) executed originals of any other form prescribed by
applicable law (including FATCA) as a basis for claiming exemption from or a
reduction in United States Federal withholding tax together with such
supplementary documentation as may be prescribed by applicable law to permit
Borrowers or any Lender granting a participation, to determine the withholding
or deduction required to be made. Each Non-U.S. Recipient shall promptly notify
Borrowers (or any Lender granting a participation if the Non-U.S. Recipient is a
Participant) of any change in circumstances which would modify or render invalid
any claimed exemption or reduction.

 

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10.GENERAL PROVISIONS.

 

10.1       Notices.

 

(a)       Notice by Approved Electronic Communications.

 

Lender and each of its Affiliates is authorized to transmit, post or otherwise
make or communicate, in its sole discretion (but shall not be required to do
so), by Approved Electronic Communications in connection with this Agreement or
any other Loan Document and the transactions contemplated therein. Lender is
hereby authorized to establish procedures to provide access to and to make
available or deliver, or to accept, notices, documents and similar items by
posting to Passport 6.0. Each of the Loan Parties and Lender hereby acknowledges
and agrees that the use of Passport 6.0 and other Approved Electronic
Communications is not necessarily secure and that there are risks associated
with such use, including risks of interception, disclosure and abuse and each
indicates it assumes and accepts such risks by hereby authorizing Lender and
each of its Affiliates to transmit Approved Electronic Communications. Passport
6.0 and all Approved Electronic Communications shall be provided “as is” and “as
available”. None of Lender or any of its Affiliates or related persons warrants
the accuracy, adequacy or completeness of Passport 6.0 or any other electronic
platform or electronic transmission and disclaims all liability for errors or
omissions therein. No warranty of any kind is made by Lender or any of its
Affiliates or related persons in connection with Passport 6.0 or any other
electronic platform or electronic transmission, including any warranty of
merchantability, fitness for a particular purpose, non-infringement of
third-party rights or freedom from viruses or other code defects. Each Borrower
and each other Loan Party executing this Agreement agrees that Lender has no
responsibility for maintaining or providing any equipment, software, services or
any testing required in connection with Passport 6.0, any Approved Electronic
Communication or otherwise required for Passport 6.0 or any Approved Electronic
Communication.

 

Prior to the Closing Date, Borrowing Agent shall deliver to Lender a complete
and executed Client User Form regarding Borrowing Agent’s use of Passport 6.0 in
the form of Exhibit C annexed hereto.

 

No Approved Electronic Communications shall be denied legal effect merely
because it is made electronically. Approved Electronic Communications that are
not readily capable of bearing either a signature or a reproduction of a
signature may be signed, and shall be deemed signed, by attaching to, or
logically associating with such Approved Electronic Communication, an
E-Signature, upon which Lender and the Loan Parties may rely and assume the
authenticity thereof. Each Approved Electronic Communication containing a
signature, a reproduction of a signature or an E-Signature shall, for all
intents and purposes, have the same effect and weight as a signed paper
original. Each E-Signature shall be deemed sufficient to satisfy any requirement
for a “signature” and each Approved Electronic Communication shall be deemed
sufficient to satisfy any requirement for a “writing”, in each case including
pursuant to this Agreement, any other Loan Document, the Uniform Commercial
Code, the Federal Uniform Electronic Transactions Act, the Electronic Signatures
in Global and National Commerce Act and any substantive or procedural law
governing such subject matter. Each party or beneficiary hereto agrees not to
contest the validity or enforceability of an Approved Electronic Communication
or E-Signature under the provisions of any applicable law requiring certain
documents to be in writing or signed; provided, that nothing herein shall limit
such party’s or beneficiary’s right to contest whether an Approved Electronic
Communication or E-Signature has been altered after transmission.

 

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(b)       All Other Notices.

 

All notices, requests, demands and other communications under or in respect of
this Agreement or any transactions hereunder, other than those approved for or
required to be delivered by Approved Electronic Communications (including via
Passport 6.0 or otherwise pursuant to Section 10.1(a)), shall be in writing and
shall be personally delivered or mailed (by prepaid registered or certified
mail, return receipt requested), sent by prepaid recognized overnight courier
service, or by email to the applicable party at its address or email address
indicated below,

 

If to Lender:

 

Siena Lending Group LLC
9 W Broad Street, 6th Floor
Stamford, Connecticut 06902
Attention: Steve Sanicola
Email: ssanicola@sienalending.com

 

with a copy to:

 

Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Attention: Miriam L. Cohen, Esq.
Email: mcohen@loeb.com

 

If to Borrowers or any other Loan Party:

 

uSell.com, Inc
150 Executive Dr., Suite Q
Edgewood, New York 11717
Attention: Nikhil Raman
Email: nik@usell.com

 

with a copy to:

 

Nason, Yeager, Gerson, White & Lioce, P.A.
3001 PGA Blvd., Suite 305
Palm Beach Gardens, Florida 33410
Attention: Michael D. Harris, Esq.
Email: mharris@nasonyeager.com

 

or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party delivered as aforesaid. All such notices,
requests, demands and other communications shall be deemed given (i) when
personally delivered, (ii) three (3) Business Days after being deposited in the
mails with postage prepaid (by registered or certified mail, return receipt
requested), (iii) one (1) Business Day after being delivered to the overnight
courier service, if prepaid and sent overnight delivery, addressed as aforesaid
and with all charges prepaid or billed to the account of the sender, or (iv)
when sent by email transmission to an email address designated by such addressee
and the sender receives a confirmation of transmission.

 

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10.2       Severability. If any provision of this Agreement or any other Loan
Document is held invalid or unenforceable, either in its entirety or by virtue
of its scope or application to given circumstances, such provision shall
thereupon be deemed modified only to the extent necessary to render same valid,
or not applicable to given circumstances, or excised from this Agreement or such
other Loan Document, as the situation may require, and this Agreement and the
other Loan Documents shall be construed and enforced as if such provision had
been included herein as so modified in scope or application, or had not been
included herein or therein, as the case may be.

 

10.3       Integration. This Agreement and the other Loan Documents represent
the final, entire and complete agreement between each Loan Party party hereto
and thereto and Lender and supersede all prior and contemporaneous negotiations,
oral representations and agreements, all of which are merged and integrated into
this Agreement. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS
BETWEEN THE PARTIES THAT ARE NOT SET FORTH IN THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS.

 

10.4       Waivers. The failure of Lender at any time or times to require any
Loan Party to strictly comply with any of the provisions of this Agreement or
any other Loan Documents shall not waive or diminish any right of Lender later
to demand and receive strict compliance therewith. Any waiver of any default
shall not waive or affect any other default, whether prior or subsequent, and
whether or not similar. None of the provisions of this Agreement or any other
Loan Document shall be deemed to have been waived by any act or knowledge of
Lender or its agents or employees, but only by a specific written waiver signed
by an authorized officer of Lender and delivered to Borrowers. Once an Event of
Default shall have occurred, it shall be deemed to continue to exist and not be
cured or waived unless specifically cured pursuant to the terms of this
Agreement or waived in writing by an authorized officer of Lender and delivered
to Borrowers. Each Loan Party waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
Instrument, Account, General Intangible, Document, Chattel Paper, Investment
Property or guaranty at any time held by Lender on which such Loan Party is or
may in any way be liable, and notice of any action taken by Lender, unless
expressly required by this Agreement, and notice of acceptance hereof.

 

10.5       Amendment. This Agreement may not be amended or modified except in a
writing executed by Borrowers, the other Loan Parties party hereto (to the
extent such amendment is directly adverse to such Loan Party), and Lender.

 

10.6       Time of Essence. Time is of the essence in the performance by each
Loan Party of each and every obligation under this Agreement and the other Loan
Documents.

 

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10.7       Expenses, Fee and Costs Reimbursement. Borrowers hereby agree to
promptly and jointly and severally pay (a) all fees, costs and expenses of
Lender (including Lender’s underwriting fees) and (b) all out of pocket fees,
costs and expenses of legal counsel to, and appraisers, accountants, consultants
and other professionals and advisors retained by or on behalf of, Lender, all of
which shall be reasonable, prior to the occurrence and continuance of an Event
of Default, in connection with: (i) all loan proposals and commitments
pertaining to the transactions contemplated hereby (whether or not such
transactions are consummated), (ii) the examination, review, due diligence
investigation, documentation, negotiation, and closing of the transactions
contemplated by the Loan Documents (whether or not such transactions are
consummated), (iii) the creation, perfection and maintenance of Liens pursuant
to the Loan Documents, (iv) the performance by Lender of its rights and remedies
under the Loan Documents, (v) the administration of the Loans (including usual
and customary fees for wire transfers and other transfers or payments received
by Lender on account of any of the Obligations) and Loan Documents, (vi) any
amendments, modifications, consents and waivers to and/or under any and all Loan
Documents (whether or not such amendments, modifications, consents or waivers
are consummated), (vii) any periodic public record searches conducted by or at
the request of Lender (including, title investigations and public records
searches), pending litigation and tax lien searches and searches of applicable
corporate, limited liability company, partnership and related records concerning
the continued existence, organization and good standing of certain Persons),
(viii) protecting, storing, insuring, handling, maintaining, auditing,
examining, valuing or selling any Collateral, (ix) any litigation, dispute, suit
or proceeding relating to any Loan Document, and (x) any workout, collection,
bankruptcy, insolvency and other enforcement proceedings under any and all of
the Loan Documents (it being agreed that such costs and expenses may include the
costs and expenses of workout consultants, investment bankers, financial
consultants, appraisers, valuation firms and other professionals and advisors
retained by or on behalf of Lender), and (c) without limitation of the preceding
clauses (a) and (b), all out of pocket costs and expenses of Lender in
connection with Lender’s reservation of funds in anticipation of the funding of
the initial Loans to be made hereunder. Any fees, costs and expenses owing by
Borrowers or any other Loan Party hereunder shall be due and payable within
three (3) days after written demand therefor. Benefit of Agreement;
Assignability; Servicer.

 

(a)       The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors, assigns, heirs, beneficiaries and
representatives of Borrowers, each other Loan Party party hereto and Lender;
provided, that neither any Borrower nor any other Loan Party may assign or
transfer any of its rights under this Agreement without the prior written
consent of Lender, and any prohibited assignment shall be void. No consent by
Lender to any assignment shall release any Loan Party from its liability for any
of the Obligations. Lender shall have the right to assign all or any of its
rights and obligations under the Loan Documents to one or more other Persons,
and each Loan Party agrees, to the extent applicable, to execute any agreements,
instruments and documents requested by Lender in connection with any such
assignments. Notwithstanding any provision of this Agreement or any other Loan
Document to the contrary, Lender may at any time pledge or grant a security
interest in all or any portion of its rights under this Agreement and the other
Loan Documents to secure obligations of Lender, including any pledge or grant to
secure obligations to a Federal Reserve Bank.

 

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(b)       In the event of any assignment by Lender of its rights and obligations
under the Loan Documents to an Affiliate of Lender (an “Affiliate Assignee”) and
at all times thereafter, Servicer shall be deemed to act as servicer and agent
for the applicable Affiliate Assignee, and Servicer will retain the sole right
to enforce this Agreement and the other Loan Documents, to approve any
amendment, restatement, modification, supplement or waiver of any provision of
this Agreement or any other Loan Document, and to receive or collect all
payments with respect to the Obligations. By acceptance of any such assignment,
each Affiliate Assignee irrevocably appoints Servicer as servicer and agent for
the purposes of servicing and managing the Loans, and authorizes Servicer to
take such actions and to exercise such powers on behalf of such Affiliate
Assignee as are reasonably necessary or advisable and incidental thereto,
including the sole and exclusive authority to: (i) possess, keep and maintain
books and records with respect to the Loans, (ii) receive, process, account for,
deliver or arrange for the delivery of, all Collections in accordance with the
terms of this Agreement; (iii) monitor and pursue payment of all Obligations;
(iv) monitor, manage and perfect security interests in all Collateral for the
Obligations, including without limitation, to make the determination of whether
any Accounts and Inventory constitute Eligible Accounts or Eligible Inventory,
as applicable, or whether to impose, modify or release any Reserve; (v) exercise
any rights or remedies with respect to the Obligations and the Collateral
available under law or in equity, including, without limitation, any
non-judicial and judicial enforcement, liquidation and collection of the
Obligations, and the engagement of attorneys and other professionals for such
purpose; and (vi) take all lawful actions and procedures required to (A) cause
Borrowers to promptly and diligently comply with Borrowers’ obligations under
the Loan Documents; (B) maximize the value of the Collateral; and (C) collect
and enforce payment of all Obligations. Each Affiliate Assignee agrees that any
action taken by Servicer in accordance with the terms of this Agreement or the
other Loan Documents, and the exercise by Servicer of its powers set forth
herein or therein, together with such other powers that are reasonably
incidental thereto, shall be authorized by and binding upon all of the Affiliate
Assignees. Servicer’s exercise of its discretion in connection with the
foregoing matters, if exercised in good faith, shall exonerate Servicer from
liability to any Affiliate Assignee and other Person for any error in judgment.
Servicer may perform any and all of its duties and exercise its rights and
powers by or through any one or more agents appointed by Servicer. Servicer
shall not be liable to any Affiliate Assignee for any action taken or omitted to
be taken under the Loan Documents, except for losses directly and solely caused
by the Servicer’s gross negligence or willful misconduct, as finally determined
by a court of competent jurisdiction, and Servicer does not assume any
responsibility for any failure or delay in performance or any breach by any Loan
Party or any other Person of any obligations under the Loan Documents. In the
event that a petition seeking relief under Title 11 of the United States Code or
any other Federal, state or foreign bankruptcy, insolvency, liquidation or
similar law is filed by or against any Loan Party, or any other Person obligated
under any Loan Document, Servicer is authorized, to the fullest extent permitted
by applicable law, to act on behalf of the Affiliate Assignees in connection
with such proceeding, including, without limitation, to file proofs of claim on
behalf of itself and the Affiliate Assignees in such proceeding for the total
amount of obligations owed by Loan Parties, or any of them, or any other Person
under any Loan Document.

 

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(c)       Servicer may resign on sixty (60) days written notice to Lender and
Borrowing Agent and upon such resignation, Lender will promptly designate a
successor Servicer reasonably satisfactory to Borrowers (provided that no such
approval by Borrowers shall be required (i) in any case where the successor
Servicer is one of the Lender or an Affiliate or Subsidiary of the Lender or
(ii) after the occurrence and during the continuance of any Event of Default).
Any such successor Servicer shall succeed to the rights, powers and duties of
Servicer, and shall in particular succeed to all of Servicer’s right, title and
interest in and to all of the Liens in the Collateral securing the Obligations
created hereunder or any other Loan Document (including the Pledge Agreement and
all account control agreements), and the term “Servicer” shall mean such
successor Servicer effective upon its appointment, and the former Servicer’s
rights, powers and duties as Servicer shall be terminated, without any other or
further act or deed on the part of such former Servicer. However,
notwithstanding the foregoing, if at the time of the effectiveness of the new
Servicer’s appointment, any further actions need to be taken in order to provide
for the legally binding and valid transfer of any Liens in the Collateral from
former Servicer to new Servicer and/or for the perfection of any Liens in the
Collateral as held by new Servicer or it is otherwise not then possible for new
Servicer to become the holder of a fully valid, enforceable and perfected Lien
as to any of the Collateral, former Servicer shall continue to hold such Liens
solely as Servicer for perfection of such Liens on behalf of new Servicer until
such time as new Servicer can obtain a fully valid, enforceable and perfected
Lien on all Collateral, provided that Servicer shall not be required to or have
any liability or responsibility to take any further actions after such date as
such Servicer for perfection to continue the perfection of any such Liens (other
than to forego from taking any affirmative action to release any such Liens).
After any Servicer’s resignation as Servicer, the provisions of this Section
10.8, and any indemnification rights under this Agreement, including without
limitation, rights arising under Section 10.7 hereof, shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Servicer under
this Agreement (and in the event resigning Servicer continues to hold any Liens
pursuant to the provisions of the immediately preceding sentence, the provisions
of this Section 10.8 and any indemnification rights under this Agreement,
including without limitation, rights arising under Article 6 hereof, shall inure
to its benefit as to any actions taken or omitted to be taken by it in
connection with such Liens).

 

10.8       Recordation of Assignment. In respect of any assignment of all or any
portion of any Lender’s interest in this Agreement and/or any other Loan
Documents at any time and from time to time, the following provisions shall be
applicable:

 

(a)       Borrowers, or any agent appointed by Borrowers, shall maintain a
register (the “Register”) in which there shall be recorded the name and address
of each Person holding any Loans or any commitment to lend hereunder, and the
principal amount and stated interest payable to such Person hereunder or
committed by such Person under such Person’s lending commitment. Borrowers
hereby irrevocably appoint Lender (and/or any subsequent Lender appointed by
Lender then maintaining the Register) as Borrowers’ non-fiduciary agent for the
purpose of maintaining the Register.

 

(b)       In connection with any negotiation, transfer or assignment as
aforesaid, the transferor/assignor shall deliver to Lender then maintaining the
Register an assignment and assumption agreement executed by the
transferor/assignor and the transferee/assignee, setting forth the specifics of
the subject transaction, including but not limited to the amount and nature of
Obligations and/or lending commitments being transferred or assigned (and being
assumed, as applicable), and the proposed effective date of such transfer or
assignment and the related assumption (if applicable).

 

(c)       Subject to receipt of any required tax forms reasonably required by
Lender, such Person shall record the subject transfer, assignment and assumption
in the Register. Anything contained in this Agreement or other Loan Document to
the contrary notwithstanding, no negotiation, transfer or assignment shall be
effective until it is recorded in the Register pursuant to this Section 10.9(c).
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error; and each Borrower and each Lender shall treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement and the other Loan Documents. The Register shall be available for
inspection by each Borrower and each Lender at any reasonable time and from time
to time upon reasonable prior notice.

 

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10.9       Participations. Anything in this Agreement or any other Loan Document
to the contrary notwithstanding, Lender may, at any time and from time to time,
without in any manner affecting or impairing the validity of any Obligations,
sell to one or more Persons participating interests in its Loans, commitments
and/or other interests hereunder and/or under any other Loan Document (any such
Person, a “Participant”). In the event of a sale by Lender of a participating
interest to a Participant, (a) such Lender’s obligations hereunder and under the
other Loan Documents shall remain unchanged for all purposes, (b) Borrowers and
Lender shall continue to deal solely and directly with each other in connection
with Lender’s rights and obligations hereunder and under the other Loan
Documents and (c) all amounts payable by Borrowers shall be determined as if
Lender had not sold such participation and shall be paid directly to Lender,
provided, however, a Participant shall be entitled to the benefits of Section 9
as if it were a Lender if Borrowers are notified of the Participation and the
Participant complies with Section 9(e). Borrowers agree that if amounts
outstanding under this Agreement or any other Loan Document are due and payable
(as a result of acceleration or otherwise), each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement and the other Loan Documents to the same extent as if
the amount of its participating interest were owing directly to it as a Lender
under this Agreement; provided, that such right of set-off shall not be
exercised without the prior written consent of Lender and shall be subject to
the obligation of each Participant to share with Lender its share thereof.
Borrowers also agree that each Participant shall be entitled to the benefits of
Section 10.9 as if it were Lender. Notwithstanding the granting of any such
participating interests: (x) Borrowers shall look solely to Lender for all
purposes of this Agreement, the Loan Documents and the transactions contemplated
hereby, (y) Borrowers shall at all times have the right to rely upon any
amendments, waivers or consents signed by Lender as being binding upon all of
the Participants, and (z) all communications in respect of this Agreement and
such transactions shall remain solely between Borrowers and Lender (exclusive of
Participants) hereunder. Lender granting a participation hereunder shall
maintain, as a non-fiduciary agent of Borrowers, a register as to the
participations granted and transferred under this Section containing the same
information specified in Section 10.9 on the Register as if each Participant
were a Lender to the extent required to cause the Loans to be in registered form
for the purposes of Sections 163(f), 165(j), 871, 881, and 4701 of the Code.

 

10.10     Headings; Construction. Section and subsection headings are used in
this Agreement only for convenience and do not affect the meanings of the
provisions that they precede.

 

10.11     USA PATRIOT Act Notification. Lender hereby notifies the Loan Parties
that pursuant to the requirements of the USA PATRIOT Act, it may be required to
obtain, verify and record certain information and documentation that identifies
such Person, which information may include the name and address of each such
Person and such other information that will allow Lender to identify such
Persons in accordance with the USA PATRIOT Act.

 

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10.12     Counterparts; Email Signatures. This Agreement may be executed in any
number of counterparts, all of which shall constitute one and the same
agreement. This Agreement may be executed by signatures delivered by electronic
mail, each of which shall be fully binding on the signing party.

 

10.13     GOVERNING LAW. THIS AGREEMENT, ALONG WITH ALL OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED OTHERWISE IN SUCH OTHER LOAN DOCUMENT) SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO
CONFLICT OF LAW PRINCIPLES (EXCEPT SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATION LAW). FURTHER, THE LAW OF THE STATE OF NEW YORK SHALL APPLY
TO ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR CONNECTED TO OR WITH THIS
AGREEMENT AND ALL SUCH OTHER LOAN DOCUMENTS WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES (EXCEPT SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATION
LAW).

 

10.14     WAIVERS AND JURISDICTION.

 

(a)       CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; CONSENT TO SERVICE OF
PROCESS. ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE
OF NEW YORK IN THE COUNTY OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK OR IN ANY OTHER COURT (IN ANY JURISDICTION)
SELECTED BY THE LENDER IN ITS SOLE DISCRETION, AND EACH BORROWER AND EACH OTHER
LOAN PARTY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFOREMENTIONED COURTS. EACH
BORROWER AND EACH OTHER LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, OR BASED ON UPON 28 U.S.C. § 1404, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING AND ADJUDICATION OF ANY SUCH ACTION, SUIT OR
PROCEEDING IN ANY OF THE AFOREMENTIONED COURTS AND AMENDMENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. EACH
BORROWER AND EACH OTHER LOAN PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR UNDER ANY AMENDMENT, WAIVER, AMENDMENT,
INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY FINANCING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE OTHER TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION,
PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
EACH BORROWER AND EACH OTHER LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON ANY BORROWER OR ANY OTHER LOAN PARTY AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO THE BORROWERS’ NOTICE ADDRESS (ON BEHALF OF THE BORROWERS OR SUCH
LOAN PARTY) SET FORTH IN SECTION 10.1 HEREOF AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE
MAIL, OR, AT THE LENDER’S OPTION, BY SERVICE UPON BORROWERS OR ANY OTHER LOAN
PARTY IN ANY OTHER MANNER PROVIDED UNDER THE RULES OF ANY SUCH COURTS.

 

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10.15     Publication. Each Borrower and each other Loan Party consents to the
publication by Lender of a tombstone, press releases or similar advertising
material relating to the financing transactions contemplated by this Agreement,
and Lender reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table measurements.

 

10.16     Confidentiality. Lender agrees to use commercially reasonable efforts
not to disclose Confidential Information to any Person without the prior consent
of Borrowers; provided, however, that nothing herein contained shall limit any
disclosure of the tax structure of the transactions contemplated hereby, or the
disclosure of any information (a) to the extent required by applicable law,
statute, rule, regulation or judicial process or in connection with the exercise
of any right or remedy under any Loan Document, or as may be required in
connection with the examination, audit or similar investigation of the Lender or
any of its Affiliates, (b) to examiners, auditors, accountants or any regulatory
authority, (c) to the officers, partners, managers, directors, employees, agents
and advisors (including independent auditors, lawyers and counsel) of the Lender
or any of its Affiliates, (d) in connection with any litigation or dispute which
relates to this Agreement or any other Loan Document to which the Lender is a
party or is otherwise subject, (e) to a subsidiary or Affiliate of the Lender,
(f) to any assignee or participant (or prospective assignee or participant)
which agrees to be bound by this Section 10.17 and (g) to any lender or other
funding source of the Lender (each reference to Lender in the foregoing clauses
shall be deemed to include the actual and prospective assignees and participants
referred to in clause (f) and the lenders and other funding sources referred to
in clause (g), as applicable for purposes of this Section 10.17), and provided
further, that in no event shall the Lender be obligated or required to return
any materials furnished by or on behalf of Borrowers or any other Loan Party or
Other Obligor. The obligations of the Lender under this Section 10.17 shall
supersede and replace the obligations of the Lender under any confidentiality
letter or provision in respect of this financing or any other financing
previously signed and delivered by the Lender to Borrowers or any of their
respective Affiliates.

 

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10.17     Borrowing Agency Provisions.

 

(a)       Each Borrower hereby irrevocably designates Borrowing Agent to be its
attorney and agent and in such capacity to (i) borrow, (ii) request advances,
(iii) request the issuance of Letters of Credit, (iv) sign and endorse notes,
(v) execute and deliver all instruments, documents, applications, security
agreements, reimbursement agreements and letter of credit agreements for Letters
of Credit and all other certificates, notice, writings and further assurances
now or hereafter required hereunder, (vi) make elections regarding interest
rates, (vii) give instructions regarding Letters of Credit and agree with the
issuer thereof upon any amendment, extension or renewal of any Letter of Credit
and (viii) otherwise take action under and in connection with this Agreement and
the other Loan Documents, all on behalf of and in the name such Borrower, and
hereby authorizes Lender to pay over or credit all Loan proceeds hereunder in
accordance with the request of Borrowing Agent.

 

(b)       The handling of this credit facility as a co-borrowing facility with a
borrowing agent in the manner set forth in this Agreement is solely as an
accommodation to the Borrowers and at their request. Lender shall not incur
liability to any Borrower as a result thereof. To induce Lender to do so and in
consideration thereof, each Borrower hereby indemnifies Lender and holds Lender
harmless from and against any and all liabilities, expenses, losses, damages and
claims of damage or injury asserted against Lender by any Person arising from or
incurred by reason of the handling of the financing arrangements of Borrowers as
provided herein, reliance by Lender on any request or instruction from Borrowing
Agent or any other action taken by Lender with respect to this Section 10.18
except due to willful misconduct or negligence by the indemnified party (as
determined by a court of competent jurisdiction in a final and non-appealable
judgment).

 

(c)       All Obligations shall be joint and several, and each Borrower shall
make payment upon the maturity of the Obligations by acceleration or otherwise,
and such obligation and liability on the part of each Borrower shall in no way
be affected by any extensions, renewals and forbearance granted by Lender to any
Borrower, failure of Lender to give any Borrower notice of borrowing or any
other notice, any failure of Lender to pursue or preserve its rights against any
Borrower, the release by Lender of any Collateral now or thereafter acquired
from any Borrower, and such agreement by each Borrower to pay upon any notice
issued pursuant thereto is unconditional and unaffected by prior recourse by
Lender to the other Borrowers or any Collateral for such Borrower’s Obligations
or the lack thereof. Each Borrower waives all suretyship defenses.

 

[signature page follows]

 

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IN WITNESS WHEREOF, Borrowers, each other Loan Party signatory hereto, and
Lender have signed this Agreement as of the date first set forth above.

 

BORROWERS:   LENDER:       WE SELL CELLULAR LLC   SIENA LENDING GROUP LLC      
By: /s/ Nikhil Raman   By: /s/ James Persico   Name: Nikhil Raman     Name:
James Persico   Title: Manager     Title: Authorized Signatory       UPSTREAM
PHONE COMPANY USA, INC.   By: /s/ Steve Sanicola       Name: Steve Sanicola    
  Title: Authorized Signatory By: /s/ Nikhil Raman       Name: Nikhil Raman    
  Title: Chief Executive Officer    

 

PHONEX, INC.       By: /s/ Nikhil Raman     Name: Nikhil Raman     Title: Chief
Executive Officer       GUARANTORS:       USELL.COM, INC.       By: /s/ Nikhil
Raman     Name: Nikhil Raman     Title: Chief Executive Officer       BST
DISTRIBUTION, INC.       By: /s/ Nikhil Raman     Name: Nikhil Raman     Title:
Chief Executive Officer  

 

 

 

 

UPSTREAM PHONE HOLDINGS, INC.       By: /s/ Nikhil Raman     Name: Nikhil Raman
    Title: Chief Executive Officer       HD CAPITAL HOLDINGS, LLC       By: /s/
Daniel Brauser     Name: Daniel Brauser     Title: Manager