CREDIT AND SECURITY AGREEMENT

Exhibit 10.7

CREDIT AND SECURITY AGREEMENT

THIS CREDIT AND SECURITY AGREEMENT (this “Agreement”) is made as of December 8, 2006 between INTL GLOBAL CURRENCIES LIMITED, a corporation organized under the laws of the United Kingdom (the “Borrower”) and BANK OF AMERICA, N.A., a national banking association (the “Lender”).

R E C I T A L S

Pursuant to that certain Promissory Note dated as of January 18, 2005, the Lender established a revolving credit facility in favor of the Borrower pursuant to which the Lender agreed to make advances to the Borrowers from time to time in an aggregate principal amount not to exceed Ten Million Dollars ($10,000,000) at any one time outstanding.

The Borrower has requested that the Lender document an increase in its borrowing ability in the form of a revolving credit facility pursuant to which the Lender will make advances to the Borrower from time to time in an aggregate principal amount not to exceed Twenty Million Dollars ($20,000,000) at any one time outstanding. The Lender has agreed to make this credit facility available to the Borrower, subject to and upon the terms and conditions hereinafter set forth.

AGREEMENTS

SECTION 1. The Revolving Credit Facility .

1.1. Definitions . All capitalized terms used herein and not otherwise defined shall have the following meanings:

“Account Debtor” means any Person who may become obligated to the Borrower under, with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a payment intangible).

“Accounts” shall have the meaning given to such term in the UCC.

“Advances” shall mean all advances made by the Lender to the Borrower under the Revolving Credit Facility.

“Applicable Margin” shall mean 2.40% per annum, or 240 basis points.

“AutoBorrow Service Agreement” means an AutoBorrow Service Agreement in effect from time to time between the Borrower and the Lender.

“Board” means the Board of Governors of the Federal Reserve System of the United States.

“Borrower” shall have the meaning set forth in the recitals above.

“Breakage Fees” means an amount equal to any net loss or out-of-pocket expenses which the Lender may sustain or incur (including, without limitation, any net loss or expense incurred by reason of the liquidation or re-employment of deposits or other funds acquired by the Lender to fund or maintain the Advances, or any swap breakage incurred in connection with any Hedge Agreement), as reasonably determined by the Lender, as a result of any prepayment of any the Advances.

“Business Day” shall mean any day other than Saturday, Sunday or other day on which commercial banks in the Commonwealth of Virginia are authorized to close.

“Business Premises” means the chief executive office of the Borrower.

“Capital Lease” means any lease that has been or should be capitalized on the books of the lessee in accordance with GAAP.

“Chattel Paper” shall have the meaning given to such term in the UCC.

“Closing Date” means the date on which all conditions to closing as set forth in Section 2.1 of the Credit Agreement are satisfied.

“Collateral” shall mean all of the Borrower’s personal property, both now owned and hereafter acquired, including, insofar as any of the following are applicable, but not limited to:

(a) Accounts, including all collateral security of any kind given to any Account Debtor or other Person with respect to any Account;

(b) As-extracted collateral;

(c) Chattel Paper;

(d) Commodity Accounts;

(e) Commodity Contracts;

(f) Deposit Accounts;

(g) Documents;

(h) Equipment;

(i) Farm Products;

(j) Fixtures;

(k) General Intangibles, including, but not limited to, (i) all patents, and all unpatented or unpatentable inventions; (ii) all trademarks, service marks, and trade names; (iii) all copyrights and literary rights; (iv) all computer software programs; (v) all mask works of semiconductor chip products; (vi) all trade secrets, proprietary information, customer lists, manufacturing, engineering and production plans, drawings, specifications, processes and systems;

(l) Goods, and all accessions thereto and goods with which the Goods are commingled;

(m) Health Care Insurance Receivables;

(n) Instruments;

 

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(o) Inventory;

(p) Investment Property;

(q) Letter-of-Credit Rights;

(r) Payment Intangibles;

(s) Promissory Notes;

(t) Software;

(u) The commercial tort claims specifically described on Schedule 1.1.

(v) Letters patent, applications for letters patent, trademarks, applications for trademarks, service marks, trade names, and copyrights, whether registered or unregistered, together with all royalties, fees, and other payments made or to be made with respect to any of the foregoing, and all rights, interests, claims, and demands that the Borrower has or may have and existing and future profits and damages for past or future infringement thereof; and

(w) all proceeds and products of any of the foregoing.

“Collection Account” shall mean the collection account established pursuant to this Agreement.

“Commodity Accounts” shall have the meaning given to such term in the UCC.

“Commodity Contracts” shall have the meaning given to such term in the UCC.

“Credit Facilities” shall mean the Revolving Credit Facility and any other credit facilities established subsequently hereto.

“Default” shall have the meaning set forth in Section 6 of this Agreement.

“Default Rate” shall mean a floating and fluctuating per annum rate of interest calculated by adding the sum of three percent (3.0%) to the rate of interest then in effect.

“Deposit Accounts” shall have the meaning given to such term in the UCC.

“Documents” shall have the meaning given to such term in the UCC.

“EBITDA” shall mean net income before taxes, interest expense, depreciation and amortization, as calculated on a rolling four quarter basis.

“Enforcement Costs” shall mean all reasonable expenses, charges, recordation or other taxes, costs and fees (including reasonable attorneys’ fees and expenses) of any nature whatsoever advanced, paid or incurred by or on behalf of the Lender in connection with (a) the collection or enforcement of this Agreement or any of the other Financing Documents, and (b) the creation, perfection, maintenance, preservation, defense, protection, realization upon, disposition, collection, sale or enforcement of all or any part of the Collateral, and (c) the exercise by the Lender of any rights or remedies available to it under the provisions of this Agreement, or any of the other Financing Documents.

 

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“Environmental Laws” shall mean all laws, statutes, rules, regulations or ordinances which relate to Hazardous Materials and/or the protection of the environment or human health.

“Equipment” shall mean all of the Borrower’s equipment, as such term is defined by the Uniform Commercial Code, together with all additions, parts, fittings, accessories, special tools, attachments, and accessions now and hereafter affixed thereto and/or used in connection therewith, and all replacements thereof and substitutions therefor.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974.

“Event of Default” shall have the meaning set forth in Section 6 of this Agreement.

“Farm Products” shall have the meaning given to such term in the UCC.

“Financing Documents” shall mean this Agreement, the Note, any Hedge Agreement and any other instrument, document or agreement now or hereafter executed, delivered or furnished by the Borrower or any other person evidencing, guaranteeing, securing or in connection with this Agreement or all or any part of the Credit Facilities.

“Fixtures” shall have the meaning given to such term in the UCC.

“GAAP” shall mean generally accepted accounting principles in the United States of America.

“General Intangibles” shall mean all of the Borrower’s general intangibles, as such meaning is defined by the Uniform Commercial Code, together with all of the Borrower’s letters patent, applications for letters patent, trademarks, applications for trademarks, service marks, trade names and copyrights, whether registered or unregistered, together with all goodwill of the business of the Borrower relating thereto, any and all reissues, extensions, divisions or continuations thereof, all royalties, fees and other payments made or to be made to the Borrower with respect thereto, and all rights, interests, claims and demands that the Borrower has or may have in existing and future profits and damages for past and future infringements thereof.

“Goods” shall have the meaning given to such term in the UCC.

“Guarantor” means International Assets Holding Corporation, a Delaware corporation, the guarantor of the obligations of the Borrower under the Revolving Credit Facility.

“Guaranty” shall mean that certain Guaranty executed and delivered by the Guarantor concurrently herewith in respect to the obligations of the Borrower under the Revolving Credit Facility.

“Hazardous Materials” shall mean hazardous wastes, hazardous substances, toxic chemicals and substances, oil and petroleum products and their by-products, radon, asbestos, pollutants or contaminants.

“Health Care Insurance Receivables” shall have the meaning given to such term in the UCC.

 

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“Hedge Agreement” means any agreement between the Borrower and the Lender or any affiliate of the Lender now existing or hereafter entered into, which provides for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross-currency rate swap, currency option, or any similar transaction or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging the Borrower’s exposure to fluctuations in interest or exchange rates, loan, credit, exchange, security or currency valuations or commodity prices.

“Instruments” shall have the meaning given to such term in the UCC.

“Interest Coverage Ratio” means the ratio of EBITDA to interest expense.

“Interest Payment Date” shall have the meaning set forth in Section 1.2(d).

“Interest Rate Change Date” shall mean the first day of each one month period.

“Inventory” shall mean all of the Borrower’s now owned and hereafter acquired inventory as such term is defined by the Uniform Commercial Code, wherever located and however constituted, including, without limitation, raw materials, work and goods in process, finished goods, goods or inventory returned or repossessed or stopped in transit, supplies, packaging, shipping and other materials, all other goods, merchandise and personal property used or consumed in the business of the Borrower, and all documents and documents of title relating to any of the foregoing.

“Investment Property” shall have the meaning given to such term in the UCC.

“Letter of Credit Rights” shall have the meaning given to such term in the UCC.

“Lender” shall mean Bank of America, N.A., a national banking association.

“Libor-Based Rate” shall mean a per annum rate of interest equal at all times to the sum of the LIBOR Rate plus the Applicable Margin. The Libor-Based Rate shall change immediately and contemporaneously with each change in the LIBOR Rate.

“LIBOR Rate” means, at any time, the rate of interest equal to the rate per annum (rounded upwards to the nearest 1/100 of one percent) equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Lender from time to time) as determined for each Interest Rate Change Date at approximately 11:00 a.m. London time two (2) Business Days prior to the Interest Rate Change Date, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term of one month, as adjusted from time to time in the Lender’s sole discretion for Reserve Requirements, deposit insurance assessment rates and other regulatory costs. If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as reasonably selected by the Lender.

 

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“London Banking Day” means a day on which the Lender’s London Banking Center is open for business and dealing in offshore dollars.

“Note” shall mean the Amended and Restated Revolving Credit Note of even date herewith in the face amount of Twenty Million Dollars ($20,000,000) from the Borrower made payable to the order of the Lender.

“Obligations” shall mean all present and future indebtedness, liabilities and obligations of any kind and nature whatsoever of the Borrower to the Lender both now existing and hereafter arising including, without limitation, obligations arising under, as a result of, on account of, or in connection with, this Agreement and any and all amendments, restatements, supplements and modifications hereof made at any time and from time to time hereafter, the Note, any and all extensions, renewals or replacements thereof, amendments thereto and restatements or modifications thereof made at any time or from time to time hereafter, or the other Financing Documents, including, without limitation, future advances, principal, interest, indemnities, fees, late charges, enforcement costs and other costs and expenses whether direct, contingent, joint, several, matured or unmatured, and the indebtedness owed under any Hedge Agreement, including, without limitation, any master agreement relating to or governing any or all of the foregoing and any related schedule or confirmation, each as amended from time to time.

“Payment Intangibles” shall have the meaning given to such term in the UCC.

“PBGC” shall mean the Pension Benefit Guaranty Corporation or its successor entity.

“Permitted Liens” shall mean liens permitted pursuant to Section 5 of this Agreement.

“Person” shall mean any natural person, individual, company, corporation, partnership, joint venture, unincorporated association, government or political subdivision or agency thereof, or any other entity of whatever nature.

“Personal Property” shall mean all of the Borrower’s personal property, both now owned and hereafter acquired.

“Plan” shall mean any pension, employee benefit, multi-employer, profit sharing, savings, stock bonus or other deferred compensation plan.

“Prime Based Rate” shall mean a floating and fluctuating per annum rate of interest equal at all times to the Prime Rate plus one percent (1%).

“Prime Rate” shall mean the floating and fluctuating per annum rate of interest of the Lender at any time and from time to time established and declared by the Lender in its sole and absolute discretion as its prime rate, and does not necessarily represent the lowest rate of interest charged by the Lender to borrowers.

“Promissory Notes” shall have the meaning given to such term in the UCC.

 

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“Receivables” shall mean all present and future accounts, contract rights, chattel paper, documents and instruments as such terms are defined by the Uniform Commercial Code, including, without limitation, all present and future rights of the Borrower to payment for, or monetary obligations owed to the Borrower on account of, goods or other property sold or leased by the Borrower or services rendered by the Borrower or loans or extensions of credit made or granted by the Borrower, whether or not such rights or monetary obligations are earned by performance and whether due or to become due.

“Reserve Requirements” means the maximum rate (expressed as a decimal) at which reserves (including any marginal, supplemental, emergency or other reserves) are required to be maintained under Regulation D of the Federal Reserve Board or otherwise by any statute or regulation applicable to the class of commercial banks which includes the Lender.

“Revolving Credit Account” shall mean the loan account maintained by the Lender with respect to advances, repayments and prepayments of Advances, the accrual and payment of interest on Advances and all other amounts and charges owing to the Lender in connection with Advances.

“Revolving Credit Amount” shall mean the amount of Twenty Million Dollars ($20,000,000).

“Revolving Credit Expiration Date” shall mean March 31, 2008, or such later date as to which the Lender shall, in its discretion, agree to extend the Revolving Credit Expiration Date.

“Revolving Credit Exposure” shall mean, at any time, the sum of the aggregate principal amount of outstanding Advances.

“Revolving Credit Facility” shall mean the revolving credit facility established pursuant to Section 1.2 hereof in a maximum principal amount at any one time outstanding equal to the Revolving Credit Amount, made available to the Borrower pursuant to this Agreement.

“Software” shall have the meaning given to such term in the UCC.

“Subordinated Debt” shall mean debt of the Borrower, the payment of which subordinated to the repayment of the Advances on terms satisfactory to the Lender in its sole discretion.

“Subsidiary” means an entity of which the Borrower directly or indirectly owns or control securities or other ownership interests representing more than 50% of the ordinary voting power thereof.

“Subsidiary Guaranty” means each guaranty agreement executed and delivered by each Subsidiary of the Borrower to the Lender, in form and substance satisfactory to the Lender in all respects.

“Subsidiary Security Agreement” means each security agreement executed and delivered by each Subsidiary of the Borrower to the Lender, in form and substance satisfactory to the Lender in all respects.

 

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“U.K. Security Agreement” shall mean that certain Fixed and Floating Security Document, dated as of March 11, 2005, as the same may be further amended, modified, supplemented, renewed, extended or restated from time to time.

1.2. Revolving Credit Facility .

(a) Advances . Subject to and upon the provisions of this Agreement and relying upon the representations and warranties herein set forth, the Lender agrees at any time and from time to time to make Advances to the Borrower from the date hereof until the earlier of the Revolving Credit Expiration Date or the date on which this Revolving Credit Facility is terminated pursuant to Section 7 hereof, in an aggregate principal amount at any time outstanding not to exceed the Revolving Credit Amount.

In no event shall the Lender be obligated to make an Advance hereunder if a Default shall have occurred and be continuing. Unless sooner terminated pursuant to other provisions of this Agreement, this Revolving Credit Facility and the obligation of the Lender to make Advances hereunder shall automatically terminate on the Revolving Credit Expiration Date without further action by, or notice of any kind from, the Lender. Within the limitations set forth herein and subject to the provisions of this Agreement, the Borrower may borrow, repay and reborrow under this Revolving Credit Facility. The fact that there may be no Advances outstanding at any particular time shall not affect the continuing validity of this Agreement.

(b) Use of Proceeds of Advances . The proceeds of the Advances shall be used solely for the purpose of covering timing differences attendant to the Borrower’s foreign currency trading business, and not for working capital or any other purpose.

(c) Liability of Lender . Lender shall in no event be responsible or liable to any person other than Borrower for the disbursement of or failure to disburse the Advances or any part thereof.

(d) Interest on Advances . Except for any period during which an Event of Default shall have occurred and be continuing, the Borrower shall pay interest (calculated on a daily basis) on the unpaid principal balance of the Advances until maturity (whether by acceleration, extension or otherwise) at a per annum rate of interest equal at all times to the Libor-Based Rate in effect from time to time.

After maturity, or during any period in which an Event of Default exists and remains continuing, the unpaid principal balance of the Advances shall bear interest at a rate equal to the Default Rate.

Notwithstanding any other provision of this Agreement, if the Lender determines (which determination shall be conclusive) (i) that any applicable law, rule, or regulation, or any change in the interpretation of any such law, rule, or regulation shall make it unlawful or impossible for the Lender to charge or collect interest at the Libor-Based Rate, or (ii) that quotations of interest rates for the relevant deposits referred to in the definition of the Libor-Based Rate are not being provided in the relevant amounts or for the relevant maturities, then upon notice from the Lender to the Borrower, the entire outstanding principal balance of the Revolving Credit Facility shall bear interest at the Prime-Based Rate.

 

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Until the maturity of the Revolving Credit Facility, all accrued and unpaid interest on all Advances shall be paid monthly on the first day of each month (each, an “Interest Payment Date”).

If not sooner paid, the entire outstanding principal balance of the Advances, together with all accrued and unpaid interest thereon, shall be due and payable on the Revolving Credit Expiration Date.

(e) Revolving Credit Note; Revolving Credit Account . The Borrower’s obligation to pay the Advances with interest shall be evidenced by the Revolving Credit Note. The Lender will maintain the Revolving Credit Account with respect to advances, repayments and prepayments of Advances, the accrual and payment of interest on Advances and all other amounts and charges owing to the Lender in connection with Advances. Except for demonstrable error, the Revolving Credit Account shall be conclusive as to all amounts owing by the Borrower to the Lender in connection with and on account of Advances.

(f) Voluntary Prepayments; Voluntary Termination . Within the limitations set forth herein and subject to the provisions of this Agreement, the Borrower may prepay any Advance in whole or in part, from time to time without premium or penalty (provided, however, that in the event that the Borrower enters into any Hedge Agreement, any prepayment will be subject to payment of Breakage Costs as set forth therein). Any permitted prepayment need not be accompanied by payment of interest on the amount prepaid except, that any prepayment of Advances which constitutes a final payment of all Advances shall be accompanied by payment of all interest thereon accrued through the date of prepayment.

(g) AutoBorrow . Notwithstanding anything contained herein to the contrary, so long as the Borrower opts to use the Lender’s “AutoBorrow” program and has executed and delivered to the Lender an AutoBorrow Service Agreement (which AutoBorrow Service Agreement remains in full force and effect), all Advances to be made hereunder shall be made in accordance with, and all interest accrued on such Advances and all repayments of such Advances shall be payable at the times and in the manner provided for in, the AutoBorrow Service Agreement. To the extent that any of the provisions of Section 1.2(a) through 1.2(f) hereof are inconsistent with provisions of the AutoBorrow Service Agreement, the provisions of the AutoBorrow Service Agreement shall govern. Any Advances made to the Borrower under the AutoBorrow Service Agreement shall nonetheless be deemed to be an Advance hereunder, subject to all other terms hereof.

1.3 Additional Provisions .

(a) Interest Calculation . All interest and fees payable under the provisions of this Agreement or the Note shall be computed on the basis of actual number of days elapsed over a year of 360 days.

 

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(b) Late Charges . If the Borrower fails to make any payment of principal, interest, prepayments, fees or any other amount becoming due pursuant to the provisions of this Agreement or the Note (other than the final principal payment due upon maturity), within fifteen (15) days of the date due and payable, the Borrower shall pay to the Lender a late charge equal to five percent (5%) of the amount of such payment. Such 15-day period shall not be construed in any way to extend the due date of any such payment. Late charges are imposed for the purpose of defraying the Lender’s expenses incident to the handling of delinquent payments, and are in addition to, and not in lieu of, the exercise by the Lender of any rights and remedies hereunder or under applicable laws and any fees and expenses of any agents or attorneys which the Lender may employ upon the occurrence of an Event of Default.

(c) Payments . Whenever any payment to be made by the Borrower under the provisions of this Agreement or the Note is due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, in the case of any payment which bears interest, such extension of time shall be included in computing interest on such payment. All payments of principal, interest, fees or other amounts to be made by the Borrower under the provisions of this Agreement or the Note shall be paid without set-off or counterclaim to the Lender at the Lender’s office at 1101 Wooton Parkway, 4 ^th Floor, Rockville, Maryland 20852, in lawful money of the United States of America in immediately available funds.

(d) Interest On Overdue Amounts . If the principal of or interest on, the Note or any other amount required to be paid to the Lender hereunder or under the Note is not paid within fifteen (15) days after the date when the same becomes due and payable, whether by acceleration or otherwise, the Borrower shall on demand from time to time pay to the Lender interest on such principal, interest or other amount from the date due until the date of payment (after as well as before any judgment) at a rate per annum equal to the Default Rate.

(e) Collateral .

(1) In order to secure the full and punctual payment of the Obligations in accordance with the terms thereof, and to secure the performance of this Agreement and the other Financing Documents, the Borrower (i) ratifies and confirms all of its obligations under the U.K. Security Agreement, and agrees that the U.K. Security Agreement remains the valid and binding obligation of the Borrower, enforceable in accordance with its stated terms and, in addition, and (ii) as a supplement thereto, hereby pledges and assigns to the Lender, and grants to the Lender a continuing lien and security interest in and to the Collateral, both now owned and existing and hereafter created, acquired and arising and regardless of where located.

(2) Any future Subsidiary shall (within ten (10) business days after the Borrower’s acquisition or creation thereof) execute and deliver a Subsidiary Guaranty, a Subsidiary Security Agreement, together with such financing statements and other related documents and instruments as the Lender shall require in order to create, perfect, or protect the security interests described therein.

 

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(f) Automatic Debit . To ensure timely payment of all interest and other sums due hereunder, the Borrower hereby authorizes and instructs the Lender to either (i) debit, on the due date thereof, demand deposit account no. 3921313844 maintained at the Lender for the amount then due, or (ii) at the Lender’s option, cause an Advance to be made sufficient to pay the amount then due.

SECTION 2. Conditions Precedent .

2.1. Initial Advance . The Lender shall not be required to make the initial Advance, unless the following conditions precedent have been satisfied in a manner reasonably acceptable to the Lender and its counsel:

(a) Borrower’s Organizational Documents . The Lender shall have received (i) a copy, certified as of a recent date by the jurisdiction of the Borrower’s state or country of organization of the Borrower, of the Borrower’s Charter and Bylaws, and all amendments thereto, (ii) to the extent available, a Certificate of Good Standing (or similar document) for such Borrower issued by the jurisdiction of the Borrower’s state or country of organization, and (iii) a copy, certified to the Lender as true and correct as of the date hereof by such Borrower, of the resolutions of the Borrower authorizing the execution and delivery of this Agreement and the other Financing Documents to which the Borrower are a party and designating by name and title the officers of the Borrower who are authorized to sign this Agreement and such other Financing Documents for and on behalf of the Borrower and to make the borrowings hereunder.

(b) Lists of Locations, Etc. The Borrower shall have delivered to the Lender a list showing the street address, city or county and state of the Borrower’s chief executive office and of any other location where the Borrower conducts or has a place of business;

(c) Insurance . The Borrower shall have delivered to the Lender copies of such insurance policies as the Lender shall reasonably require;

(d) Searches . The Lender shall have received the results of a search by an attorney or company satisfactory to the Lender of the Uniform Commercial Code filings with respect to the Borrower in their jurisdiction of organization or in which any Personal Property is or will be located, accompanied by copies of such filings, if any, and evidence satisfactory to the Lender that any security interest or other lien indicated in any such filing has or will be released or is permitted by the Lender;

(e) Opinions . The Lender shall have received the written opinion of counsel of the Borrower reasonably satisfactory in form and content to the Lender, opining, among other things, that the Borrower are duly organized, validly existing and in good standing, that the Financing Documents executed and delivered by the Borrower has been duly authorized by all requisite corporate action, and that the Financing Documents executed and delivered by the Borrower constitute the legal, valid, binding, and enforceable obligations of the Borrower, enforceable against the Borrower in accordance with the terms thereof, subject to customary exceptions and limitations reasonably acceptable to the Lender.

 

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(f) Financing Documents . The Lender shall have received each of the Financing Documents required by the Lender to be executed and delivered prior to the making of the initial Advance.

(g) Due Diligence . The Lender shall have received and reviewed such financial information and other due diligence reports as the Lender shall reasonably require.

(h) Additional Documents . The Borrower shall have furnished in form and content acceptable to the Lender any additional documents, agreements, certifications, record searches, insurance policies or opinions which the Lender may reasonably deem necessary or desirable.

2.2 All Advances . No Advances, including the initial Advance, shall be made, until compliance to the satisfaction of the Lender with all of the following conditions at the time of and with respect to each Advance:

(a) Representations and Warranties . No representation or warranty made in or in connection with this Agreement and the other Financing Documents shall be untrue, incorrect or incomplete in all material respects on and as of the date of any Advance as if made on such date, specifically including without limitation the Borrower’s representation and warranty as to the purpose of each Advance as set forth in Section 3.13 hereof; and

(b) Event of Default or Default . No Event of Default or Default shall have occurred and be continuing.

SECTION 3. Representations and Warranties . The Borrower represents and warrants to the Lender that, except as specifically set forth on Schedule 3 attached hereto, the following statements are true, correct and complete as of the date hereof and as of each date any Advance is to be made hereunder:

3.1. Authority, Etc . The Borrower is duly organized and in good standing under the laws of their state or country of incorporation, and are qualified to do business in all states where the Borrower does business. The Borrower has the full power and authority to execute, deliver and perform this Agreement and the other Financing Documents to which the Borrower is a party. Neither such execution, delivery and performance, nor compliance by the Borrower with the provisions of this Agreement and of the other Financing Documents to which the Borrower is a party will conflict with or result in a breach or violation of the Borrower’s certificates of formation, articles of organization or operating agreement, or any judgment, order, regulation, ruling or law to which the Borrower is subject or any contract or agreement to which the Borrower is a party or to which the Borrower’s assets and properties is subject, or constitute a default thereunder. The execution, delivery and performance of this Agreement and all other Financing Documents to which the Borrower is a party have been duly authorized and approved by all necessary action by the Borrower and constitutes the legal, valid and binding obligations of the Borrower, enforceable in accordance with their terms except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

 

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3.2. Litigation . There is no litigation or proceeding pending or, to the knowledge of any representative of the Borrower signing this Agreement on behalf of the Borrower, threatened against or affecting the Borrower which might materially adversely affect the business, financial condition or operations of the Borrower or the ability of the Borrower to perform and comply with this Agreement or the other Financing Documents to which the Borrower is a party.

3.3. No Subsidiaries . The Borrower does not directly or indirectly own or control securities or other ownership interests in any corporation, partnership, association, organization or other business entity representing more than 50% of the ordinary voting power thereof. This information will be updated in writing by the Borrower as of the date of the formation or acquisition of each new Subsidiary.

3.4. Financial Condition . The Borrower has heretofore furnished to the Lender certain financial statements. Such financial statements and all other financial statements and information furnished or to be furnished to the Lender hereunder have been and will be prepared in accordance with generally accepted accounting principles (subject to year-end adjustments and the omission of footnote information) and fairly present the financial condition of the Borrower as of the dates thereof and the results of the Borrower’s operations for the periods covered thereby. No material adverse change in the business, financial condition, prospects or operations of the Borrower has occurred since the date of such financial statements. The Borrower does not have any indebtedness or liabilities other than that reflected on such financial statements or expressly permitted by the provisions of this Agreement, and accounts payable incurred in the ordinary course of business since the date of such financial statements. The Borrower is not in default under any obligation for borrowed money.

3.5. Taxes . The Borrower has filed all federal, state and local income, excise, property and other tax returns which are required to be filed and have paid all taxes as shown on such returns or assessments received by the Borrower (including, without limitation, all F.I.C.A. payments and withholding taxes, if appropriate), except for such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. No tax liens have been filed and no claims are being asserted with respect to such taxes or assessments.

3.6. Borrower’s Name . The correct legal name of the Borrower is those specified on the signature page of this Agreement. The Borrower has conducted business under their legal name since their date of formation. The Borrower does not do business under any trade or fictitious names.

3.7. Compliance with Laws . (a) To the knowledge of the Borrower, Borrower is not in violation of any applicable federal, state or local law, statute, rule, regulation or ordinance and has not received any notice of, and is not the subject of, any investigation or complaint alleging that the Borrower or any other property owned, leased, operated or used by the Borrower is in violation of any such law, statute, rule, regulation or ordinance, including, without limitation, Environmental Laws other than violations that will not have a material adverse effect on the business, operations or financial condition of the Borrower.

 

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(b) To the actual knowledge of the Borrower, no Hazardous Materials have been used, located, installed, spilled, treated, released or stored on, under or from any property in or on which the Borrower conducts its operations except for those which have been handled in a manner not prohibited by applicable Environmental Laws or which will not have a material adverse effect on the business, operations or financial condition of the Borrower.

3.8. Federal Reserve Board Regulations . No part of the proceeds of the Advances will be used for any purpose which entails a violation of Regulations U, T or X of the Board of Governors of the Federal Reserve System of the United States (the “Board”).

3.9. ER1SA . No Plan maintained by the Borrower or any trade or business group with which the Borrower is affiliated subject to the requirements of ERISA has been terminated, no lien exists against the Borrower in favor of the PBGC, and no “reportable event” (as such term is defined in ERISA) has occurred with respect to any such Plan. The Borrower has not incurred any “accumulated funding deficiency” within the meaning of ERISA or any liability to the PBGC in connection with any Plan. Borrower doeses not have any withdrawal or other liability (absolute, contingent or otherwise) with respect to any multi-employer plan as defined by Section 3(37) of ERISA. The Borrower has complied with in all material respects all provisions of ERISA and with all provisions of any Plan sponsored, maintained by, or contributed to, by the Borrower.

3.10. Licenses, etc . The Borrower has obtained and now hold all material licenses, permits, franchises, patents, trademarks, copyrights and trade names which are necessary to the conduct of the business of the Borrower as now conducted free of any conflict with the rights of any other person.

3.11. Labor Matters . Except as disclosed in writing to the Lender, the Borrower is not subject to any collective bargaining agreements or any agreements, contracts, decrees or orders requiring the Borrower to recognize, deal with or employ any persons organized as a collective ba