SILICON VALLEY BANK AMENDED AND
RESTATED LOAN AND SECURITY
AGREEMENT
This AMENDED
AND RESTATED LOAN AND SECURITY AGREEMENT (this
“Agreement”) dated as of June ___, 2009, between
SILICON VALLEY BANK , a California chartered bank, with its
principal place of business at 3003 Tasman Drive, Santa Clara,
California 95054 (FAX (408) 980-6410) (“Bank”) and
GLOBAL TELECOM & TECHNOLOGY, INC., a Delaware
corporation (“GTTI”) and GLOBAL TELECOM &
TECHNOLOGY AMERICAS, INC. , a Virginia corporation
(“GTTA” and together with GTTI, each a
“Borrower” and collectively, the
“Borrowers”) each with offices at 8484 Westpark Drive,
Suite 720, McLean, VA 22102 (Fax (703) 442-5501),
provides the terms on which Bank shall lend to Borrowers and
Borrowers shall repay Bank. This Agreement amends and restates that
certain Loan and Security Agreement among the parties, dated
March 17, 2008, in its entirety. The parties agree as
follows:
ARTICLE 1
ACCOUNTING AND OTHER TERMS
Accounting terms
not defined in this Agreement shall be construed following GAAP.
Calculations and determinations must be made following GAAP, to the
extent applicable. The term “financial statements”
includes the notes and schedules. The terms “including”
and “includes” always mean “including (or
includes) without limitation,” in this or any Loan Document.
Capitalized terms in this Agreement shall have the meanings set
forth in Section 13. All other terms contained in this
Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined
therein.
ARTICLE 2
LOAN AND TERMS OF PAYMENT
Section 2.1 Promise to Pay . Borrowers hereby
unconditionally promise to pay Bank the unpaid principal amount of
all Advances hereunder with all interest, fees and finance charges
due thereon as and when due in accordance with this
Agreement.
2.1.1 Financing of Accounts or Cash Collections
.
(a)
Advance Rate Applicability . During the term of this
Agreement, for any Subject Month when GTTI’s T3M EBITDA is
greater than $50,000 or GTTI’s Net Liquidity is greater than
$500,000 during any Testing Month, the Streamline Advance Rate will
apply and Bank will finance Borrower’s Streamline Eligible
Accounts, as set forth herein. At all other times, the
Non-Streamline Advance Rate will apply and Bank will finance
Borrower’s Non-Streamline Eligible Accounts as set forth
herein.
(b)
Availability . Subject to the terms of this Agreement,
during any Subject Month in which the Non-Streamline Advance Rate
applies, Borrowers may request that Bank finance specific
Non-Streamline Eligible Accounts. Bank may, in its good faith
business discretion, finance such Non-Streamline Eligible Accounts
by extending credit to Borrowers in an amount equal to the result
of the Non-Streamline Advance Rate multiplied by the face amount of
the Non-Streamline Eligible Account (a “Non-Streamline
Advance”). Subject to the terms of this Agreement, during any
Subject Month in which the Streamline Advance Rate applies,
Borrowers may request that Bank finance Streamline Eligible
Accounts. Bank may, in its good faith business discretion, finance
such Streamline Eligible Accounts by extending credit to Borrowers
in an amount not to exceed the Streamline Advance Rate multiplied
by the aggregate face amount of the Streamline Eligible Accounts,
as determined by Bank from Borrower’s most recent Streamline
Accounts Listing (a “Streamline Advance”). Bank may, in
its sole discretion, (a) change the percentage of the
Non-Streamline Advance Rate for a particular Non-Streamline
Eligible Account on a case by case basis or (b) change
the
percentage of
the Streamline Advance Rate for a particular Streamline Eligible
Account on a case by case basis. When Bank makes an Advance the
Eligible Account becomes a “Financed
Receivable.”
(c)
Maximum Advances . The aggregate face amount of all Financed
Receivables outstanding at any time may not exceed the Facility
Amount.
(d)
Borrowing Procedure .
(i)
Non-Streamline Advances . Borrowers will deliver an Advance
Request/Invoice Transmittal Form for each Non-Streamline Eligible
Account it offers. Bank may rely on information set forth in or
provided with the Advance Request/Invoice Transmittal
Form.
(ii)
Streamline Advances . Subject to the prior satisfaction of
all other applicable conditions to the making of a Streamline
Advance set forth in this Agreement, to obtain a Streamline
Advance, Borrower shall notify Bank (which notice shall be
irrevocable) by electronic mail, facsimile, or telephone by 3:00
p.m. Eastern time on the Funding Date of the Streamline Advance.
Together with any such electronic or facsimile notification,
Borrower shall deliver to Bank by electronic mail or facsimile a
completed Advance Request/Invoice Transmittal Form executed by a
Responsible Officer or his or her designee. Bank may rely on any
telephone notice given by a person whom Bank believes is a
Responsible Officer or designee.
(e)
Credit Quality; Confirmations . Bank may, at its option,
conduct a credit check of the Account Debtor for each Account
requested by Borrowers for financing as an Advance hereunder in
order to approve any such Account Debtor’s credit before
agreeing to finance such Account. Bank may also verify directly
with Account Debtors, from time to time and not necessarily all at
one time, the validity, amount and other matters relating to such
Accounts (including confirmations of Borrowers’
representations in Section 5.3) by means of mail, telephone or
otherwise, either in the name of Borrowers or Bank from time to
time in its sole discretion.
(f)
Accounts Notification/Collection . Bank may notify any
Person owing Borrowers money of Bank’s security interest in
the funds and verify and/or, if an Event of Default has occurred
and is continuing, collect the amount of the Account.
(g)
Early Termination . This Agreement may be terminated prior
to the Maturity Date as follows: (i) by Borrowers, effective
three Business Days after written notice of termination is given to
Bank; or (ii) by Bank at any time after the occurrence and
during the continuance of an Event of Default, without notice,
effective immediately. If this Agreement is terminated (A) by
Bank in accordance with clause (ii) in the foregoing sentence,
or (B) by Borrowers for any reason, Borrowers shall pay to
Bank a termination fee in an amount equal to Twenty Thousand
Dollars ($20,000.00) (the “Early Termination Fee”). The
Early Termination Fee shall be due and payable on the effective
date of such termination and thereafter shall bear interest at a
rate equal to the highest rate applicable to any of the
Obligations. Notwithstanding the foregoing, Bank agrees to waive
the Early Termination Fee if Bank agrees to refinance and
redocument this Agreement under another division of Bank (in its
sole and exclusive discretion) prior to the Maturity Date. In
addition, (a) if a court of competent jurisdiction finds that
Bank has breached this Agreement, and Borrower has terminated this
Agreement due to such breach, Borrower shall not have to pay the
Early Termination Fee or (b) if Bank decreases the Advance
Rate, and Borrower terminates this Agreement solely due to such
change in Advance Rate, Borrower shall not have to pay the Early
Termination Fee as a result of such termination.
(h)
Maturity . This Agreement shall terminate and all
Obligations outstanding hereunder shall be immediately due and
payable on the Maturity Date.
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(i)
Suspension of Advances . Borrowers’ ability to request
that Bank finance Eligible Accounts hereunder will terminate if, in
Bank’s sole discretion, there has been a Material Adverse
Change.
(j)
Borrower Liability . Either Borrower may, acting singly,
request Advances hereunder. Each Borrower hereby appoints the other
as agent for the other for all purposes hereunder, including with
respect to requesting Advances hereunder. Each Borrower hereunder
shall be obligated to repay all Advances made hereunder, regardless
of which Borrower actually receives said Advance, as if each
Borrower hereunder directly received all Advances.
Notwithstanding any other provision of this Agreement or other
related document, each Borrower irrevocably waives all rights that
it may have at law or in equity (including, without limitation, any
law subrogating Borrower to the rights of Bank under this
Agreement) to seek contribution, indemnification or any other form
of reimbursement from any other Borrower, or any other Person now
or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by Borrower with respect to the
Obligations in connection with this Agreement or otherwise and all
rights that it might have to benefit from, or to participate in,
any security for the Obligations as a result of any payment made by
Borrower with respect to the Obligations in connection with this
Agreement or otherwise. Any agreement providing for
indemnification, reimbursement or any other arrangement prohibited
under this Article shall be null and void. If any payment is made
to a Borrower in contravention of this Section, such Borrower shall
hold such payment in trust for Bank and such payment shall be
promptly delivered to Bank for application to the Obligations,
whether matured or unmatured.
Section 2.2 Collections, Finance Charges, Remittances
and Fees . The Obligations shall be subject to the
following fees and Finance Charges. Unpaid fees and Finance Charges
may, in Bank’s discretion, accrue interest and fees as
described in Section 9.2 hereof.
2.2.1 Collections . Collections for Non-Streamline
Advances will be credited to the Financed Receivable Balance for
such Financed Receivable and for Streamline Advances, will be
remitted to the applicable Borrower, subject to Section 2.2.7,
but if there is an Event of Default, Bank may apply Collections to
the Obligations in any order it chooses. If Bank receives a payment
for both a Financed Receivable and a non-Financed Receivable, the
funds will first be applied to the Financed Receivable for
Non-Streamline Advances and, if there is no Event of Default then
existing, the excess (or if such payments are received during any
period when Streamline Advances are outstanding, the entire amount)
will be remitted to the applicable Borrower, subject to Section
2.2.7.
2.2.2 Facility Fee . A fully earned,
non-refundable facility fee of Seventeen Thousand Five Hundred
Dollars ($17,500.00) is due upon execution of this
Agreement.
2.2.3 Finance Charges . In computing Finance Charges
on the Obligations under this Agreement, all Collections received
by Bank shall be deemed applied by Bank on account of the
Obligations (a) three (3) Business Days after receipt of
the Collections for all Non-Streamline Advances and (b) one
and one-half (1.5) Business Days after receipt of the Collections
for all Streamline Advances. Borrowers will pay a finance charge
(the “Finance Charge”) on each Financed Receivable
which is equal to the Applicable Rate divided by 360
multiplied by the number of days each such Financed
Receivable is outstanding multiplied by (x) for
Non-Streamline Advances, the outstanding Financed Receivable
Balance for such Financed Receivable and (y) for Streamline
Advances, the Streamline Advance Rate multiplied by the
outstanding Financed Receivable Balance for such Financed
Receivable. The Finance Charge is payable when the Advance made
based on such Financed Receivable is payable in accordance with
Section 2.3 hereof. In the event that the aggregate amount of
Finance Charges and Collateral Handling Fees earned by Bank in any
quarter is less than the Minimum Finance Charge, Borrowers shall
pay to Bank an additional Finance Charge equal to (i) the
Minimum Finance Charge minus (ii) the aggregate amount of all
Finance Charges and Collateral Handling Fees earned by Bank in such
quarter. Such additional Finance Charge shall be payable on the
first day of next quarter
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2.2.4 Collateral Handling Fee . Borrower will pay to
Bank a collateral handling fee (the “Collateral Handling
Fee”) equal to (a) for any Subject Month (as of the
first calendar day of such month), to the extent that Borrower
qualifies for the Streamline Advance Rate, 0.15% per month of
(i) the Streamline Advance Rate multiplied by
(ii) the Financed Receivable Balance for each Financed
Receivable outstanding, based upon a 360 day year or
(b) for any Subject Month (as of the first calendar day of
such month), to the extent that Borrower qualifies for the
Non-Streamline Advance, 0.35% per month of the Financed Receivable
Balance for each Financed Receivable outstanding based upon a
360 day year. This fee is charged on a daily basis which is
equal to the Collateral Handling Fee divided by 30, multiplied by
the number of days each such Financed Receivable is outstanding,
multiplied by the outstanding Financed Receivable Balance. The
Collateral Handling Fee is payable when the applicable Advance is
payable in accordance with Section 2.3 hereof. In computing
Collateral Handling Fees under this Agreement, all Collections
received by Bank shall be deemed applied by Bank on account of
Obligations (x) three (3) Business Days after receipt of
Collections for all Non-Streamline Advances and (y) one and
one-half (1.5) Business Days after receipt of Collections for all
Streamline Advances . If an Event of Default has occurred and is
continuing, the Collateral Handling Fee will increase an additional
0.50% effective immediately upon such Event of Default.
2.2.5 Accounting . After each Reconciliation Period,
Bank will provide an accounting of the transactions for that
Reconciliation Period, including the amount of all Financed
Receivables, all Collections, Adjustments, Finance Charges,
Collateral Handling Fees and the Facility Fee. If Borrowers do not
object to the accounting in writing within thirty (30) days it
shall be considered accurate. All Finance Charges and other
interest and fees are calculated on the basis of a 360 day
year and actual days elapsed.
2.2.6 Deductions . Bank may deduct fees,
Finance Charges, Advances which become due pursuant to
Section 2.3, and other amounts due pursuant to this Agreement
from any Advances made or Collections received by Bank.
2.2.7 Lockbox; Account Collection Services . GTTA
shall direct each Account Debtor (and each depository institution
where proceeds of Accounts are on deposit) to remit payments with
respect to the Accounts to a lockbox account established with Bank
or to wire transfer payments to a cash collateral account that Bank
controls (collectively, the “Lockbox”). Upon receipt by
GTTA of any such proceeds, GTTA shall immediately transfer and
deliver same to Bank, along with a detailed cash receipts journal.
Provided no Event of Default exists or an event that with notice or
lapse of time will be an Event of Default, within three
(3) Business Days of receipt of such amounts by Bank,
(a) when GTTA has Non-Streamline Advances outstanding, Bank
will turn over to the applicable Borrower the proceeds of the
Accounts other than Collections with respect to Financed
Receivables and the amount of Collections in excess of the amounts
for which Bank has made a Non-Streamline Advance to GTTA, less any
amounts due to Bank, such as the Finance Charge, the Facility Fee,
payments due to Bank, other fees and expenses, or otherwise or
(b) when GTTA has Streamline Advances outstanding, Bank will
turn over to the applicable Borrower the proceeds of the Accounts,
less any amounts due to Bank, such as the Finance Charge, the
Facility Fee, payments due to Bank, other fees and expenses, or
otherwise; provided , however , Bank may hold such
excess amount, when Non-Streamline Advances are outstanding, with
respect to Financed Receivables as a reserve until the end of the
applicable Reconciliation Period if Bank, in its discretion,
determines that other Financed Receivable(s) may no longer qualify
as an Eligible Account at any time prior to the end of the subject
Reconciliation Period. This Article does not impose any affirmative
duty on Bank to perform any act other than as specifically set
forth herein. All Accounts and the proceeds thereof are Collateral
and if an Event of Default occurs and is continuing, Bank may apply
the proceeds of such Accounts to the Obligations.
Section 2.3 Repayment of Obligations;
Adjustments .
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(i)
Borrowers will repay each Non-Streamline Advance on the earliest
of: (a) the date on which payment is received of the Financed
Receivable with respect to which the Non-Streamline Advance was
made, (b) the date on which the Financed Receivable is no
longer an Non-Streamline Eligible Account, (c) the date on
which any Adjustment is asserted to the Financed Receivable (but
only to the extent of the Adjustment if the Financed Receivable
remains otherwise an Eligible Account), (d) the date on which
there is a breach of any warranty or representation set forth in
Section 5.3 or a breach of any covenant in this Agreement, or
(e) the Maturity Date (including any early termination). Each
payment will also include all accrued Finance Charges and
Collateral Handling Fees with respect to such Non-Streamline
Advance and all other amounts then due and payable
hereunder.
(ii)
Borrower will pay Finance Charges and Collateral Handling Fees on
Streamline Advances monthly, on the first day of the month.
Payments of Finance Charges and/or Collateral Handling Fees
received after 3:00 p.m. Eastern time are considered received at
the opening of business on the next Business Day. When a payment is
due on a day that is not a Business Day, the payment is due the
next Business Day and additional fees or interest, as applicable,
shall continue to accrue. In addition, all payments of Finance
Charges and/or Collateral Handling Fees for Streamline Advances
shall be deemed applied by Bank on account of Obligations one and
one-half (1.5) Business Days following receipt of such payment. The
principal amount of all outstanding Streamline Advances, plus all
accrued but unpaid interest thereon are due on the Maturity
Date.
(iii)
Notwithstanding anything to the contrary in the forgoing, during
any Subject Month in which the Non-Streamline Advance Rate applies,
any outstanding Streamline Advances will be immediately converted
to Non-Streamline Advances and repaid in accordance with subsection
(i) above. If Borrower does not have enough Non-Streamline
Eligible Accounts to finance the total Streamline Advances
then-outstanding, Borrower must immediately repay Bank the excess.
Conversely, during any Subject Month in which the Streamline
Advance Rate applies, any outstanding Non-Streamline Advances will
be immediately converted to Streamline Advances and repaid in
accordance with subsection (ii) above. If Borrower does not
have enough Streamline Eligible Accounts to finance the total
Non-Streamline Advances then-outstanding, Borrower must immediately
repay Bank the excess.
(b)
Repayment on Event of Default . If an Event of
Default has occurred and is continuing, Borrowers will, if Bank
demands (or, upon the occurrence of an Event of Default under
Section 8.5, immediately without notice or demand from Bank)
repay all of the Advances. The demand may, at Bank’s option,
include the Advance for each Financed Receivable then outstanding,
and all accrued Finance Charges, the Early Termination Fee,
Collateral Handling Fees , attorneys and professional fees,
court costs and expenses, and any other Obligations.
(c)
Debit of Accounts . Bank may debit any of
Borrowers’ deposit accounts for payments or any amounts
Borrowers owe Bank hereunder, as and when due. Bank shall promptly
notify Borrowers when it debits Borrowers’ accounts. These
debits shall not constitute a set-off.
(d)
Adjustments . If at any time during the term of this
Agreement any Account Debtor asserts an Adjustment with respect to
a Financed Receivable or if a Borrower issues a credit memorandum
with respect to a Financed Receivable, or if any of the
representations, warranties or covenants set forth in
Section 5.3 are no longer true in all material respects, such
Borrower will promptly advise Bank.
Section 2.4 Power of Attorney . Each Borrower
irrevocably appoints Bank and its successors and assigns as
attorney-in-fact and authorizes Bank, to: (i) following the
occurrence and during the continuance of an Event of Default, sell,
assign, transfer, pledge, compromise, or discharge all or any part
of the Financed Receivables; (ii) following the occurrence and
during the continuance of an Event of Default, demand,
collect,
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sue, and give
releases to any Account Debtor for monies due and compromise,
prosecute, or defend any action, claim, case or proceeding about
the Financed Receivables, including filing a claim or voting a
claim in any bankruptcy case in Bank’s or Borrower’s
name, as Bank chooses; (iii) following the occurrence and during
the continuance of an Event of Default, prepare, file and sign
Borrower’s name on any notice, claim, assignment, demand,
draft, or notice of or satisfaction of lien or mechanics’
lien or similar document; (iv) regardless of whether there has
been an Event of Default, notify all Account Debtors to pay Bank
directly; (v) regardless of whether there has been an Event of
Default, receive, open, and dispose of mail addressed to Borrower;
(vi) regardless of whether there has been an Event of Default,
endorse Borrower’s name on checks or other instruments (to
the extent necessary to pay amounts owed pursuant to this
Agreement); and (vii) regardless of whether there has been an
Event of Default, execute on Borrower’s behalf any
instruments, documents, financing statements to perfect
Bank’s interests in the Financed Receivables and Collateral
and do all acts and things necessary or expedient, as determined
solely and exclusively by Bank, to protect or preserve,
Bank’s rights and remedies under this Agreement, as directed
by Bank.
ARTICLE 3
CONDITIONS OF LOANS
Section 3.1 Conditions Precedent to Initial
Advance . Bank’s agreement to make the initial
Advance is subject to the condition precedent that Bank shall have
received, in form and substance satisfactory to Bank, such
documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without
limitation, subject to the condition precedent that Bank shall have
received, in form and substance satisfactory to Bank, the
following:
(a) duly
executed original signatures to the Loan Documents to which it is a
party;
(b) duly
executed original signatures to the completed Corporate Borrowing
Certificates for each Borrower;
(c) good
standing certificate/certificate of foreign qualification from the
Secretary of State of the State of Delaware and Virginia State
Corporation Commission for GTTI and good standing certificate from
the Virginia State Corporation Commission for GTTA, dated no later
than 30 days prior to the Effective Date.
(d) the
Perfection Certificates executed by each Borrower;
(e) evidence
satisfactory to Bank that the insurance policies required by
Section 6.4 hereof are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured
clauses or endorsements in favor of Bank; and
(f) such
other documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate.
Section 3.2 Conditions Precedent to all Advances
. Bank’s agreement to make each Advance, including the
initial Advance, is subject to the following:
(a) receipt
of the Advance Request/Invoice Transmittal Form, as the case may
be;
(b) Bank
shall have (at its option) conducted the confirmations and
verifications as described in Section 2.1.1(e); and
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(c) each
of the representations and warranties in Article 5 shall be
true on the date of the Advance Request/Invoice Transmittal Form,
as the case may be, and on the effective date of each Advance and
no Event of Default shall have occurred and be continuing, or
result from the Advance. Each Advance is a Borrower’s
representation and warranty on that date that the representations
and warranties in Article 5 remain true.
ARTICLE 4
CREATION OF SECURITY INTEREST
Section 4.1 Grant of Security Interest . Each
Borrower hereby grants Bank, to secure the payment and performance
in full of all of the Obligations and the performance of each of
such Borrower’s duties under the Loan Documents, a continuing
security interest in, and pledges and assigns to Bank, the
Collateral, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products thereof. Each
Borrower warrants and represents that the security interest granted
herein shall be a first priority security interest in the
Collateral.
Except as noted on
the Perfection Certificate with respect to such Borrower, no
Borrower is a party to, nor is bound by, any material license or
other agreement with respect to which such Borrower is the licensee
that prohibits or otherwise restricts such Borrower from granting a
security interest in such Borrower’s interest in such license
or agreement or any other property. Without prior consent from
Bank, no Borrower shall enter into, or become bound by, any such
license or agreement which is reasonably likely to have a material
impact on such Borrower’s business or financial condition.
Borrowers shall take such steps as Bank requests to obtain the
consent of, or waiver by, any person whose consent or waiver is
necessary for all such licenses or contract rights to be deemed
“Collateral” and for Bank to have a security interest
in it that might otherwise be restricted or prohibited by law or by
the terms of any such license or agreement, whether now existing or
entered into in the future.
If the Agreement
is terminated, Bank’s lien and security interest in the
Collateral shall continue until Borrowers fully satisfy their
Obligations. If either Borrower shall at any time, acquire a
commercial tort claim, such Borrower shall promptly notify Bank in
a writing signed by such Borrower of the brief details thereof and
grant to Bank in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with
such writing to be in form and substance satisfactory to
Bank.
Upon the
termination of this Agreement and the payment in full of all
monetary Obligations, Bank shall, promptly send the Borrowers,
(i) for each jurisdiction in which a UCC financing statement
is on file to perfect the security interests granted to Bank
hereunder, a termination statement to the effect that Bank no
longer claims a security interest in such financing statement, and
(ii) such other documents necessary or appropriate to
terminate the security interests granted to Bank hereunder as may
be reasonably requested by the Borrowers, all at Borrower’s
sole cost and expense.
Section 4.2 Authorization to File Financing
Statements. Each Borrower hereby authorizes Bank to file
financing statements, without notice to such Borrower, with all
appropriate jurisdictions in order to perfect or protect
Bank’s interest or rights hereunder, which financing
statements may indicate the Collateral as “all assets of the
Debtor” or words of similar effect, or as being of an equal
or lesser scope, or with greater detail, all in Bank’s
discretion.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Each
Borrower represents and warrants, jointly and severally, as
follows:
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Section 5.1 Due Organization and Authorization .
Borrower and each Subsidiary is duly existing and in good standing
in its state of formation and qualified and licensed to do business
in, and in good standing in, any state in which the conduct of its
business or its ownership of property requires that it be qualified
except where the failure to do so could not reasonably be expected
to cause a Material Adverse Change. Borrower represents and
warrants to Bank that: (a) Borrower’s exact legal name is
that indicated on the Perfection Certificate and on the signature
page hereof; and (b) Borrower is an organization of the type,
and is organized in the jurisdiction, set forth in the Perfection
Certificate; and (c) the Perfection Certificate accurately
sets forth Borrower’s organizational identification number or
accurately states that Borrower has none; and (d) the
Perfection Certificate accurately sets forth Borrower’s place
of business, or, if more than one, its chief executive office as
well as Borrower’s mailing address if different, and
(e) all other information set forth on the Perfection
Certificate pertaining to Borrower is accurate and complete. If
Borrower does not now have an organizational identification number,
but later obtains one, Borrower shall forthwith notify Bank of such
organizational identification number.
The
execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower’s
organizational documents, nor constitute an event of default under
any material agreement by which Borrower is bound. Borrower is not
in default under any agreement to which or by which it is bound in
which the default could reasonably be expected to cause a Material
Adverse Change.
Section 5.2 Collateral . Borrower has good title
to the Collateral, free of Liens except Permitted Liens. All
inventory is in all material respects of good and marketable
quality, free from material defects. Borrower has no deposit
account, other than the deposit accounts with Bank and deposit
accounts described in the Perfection Certificate delivered to Bank
in connection herewith. The Collateral is not in the possession of
any third party bailee (such as a warehouse). Except as hereafter
disclosed to Bank in writing by Borrower, none of the components of
the Collateral shall be maintained at locations other than as
provided in the Perfection Certificate. In the event that Borrower,
after the date hereof, intends to store or otherwise deliver any
portion of the Collateral to a bailee, then Borrower will first
receive the written consent of Bank and such bailee must
acknowledge in writing that the bailee is holding such Collateral
for the benefit of Bank.
Section 5.3 Financed Receivables . Borrower
represents and warrants for each Financed Receivable:
(a) Such
Financed Receivable is an Eligible Account;
(b) Borrower
is the owner of and has the legal right to sell, transfer, assign
and encumber such Financed Receivable;
(c) The
correct amount is on the Advance Request/Invoice Transmittal Form
and is not disputed;
(d) Other
than for Deferred Revenue financed with a Streamline Advance,
payment is not contingent on any obligation or contract and
Borrower has fulfilled all its obligations as of the Advance
Request/Invoice Transmittal Form date;
(e) Such
Financed Receivable is based on an actual sale and delivery of
goods and/or services rendered, is due to Borrower, is not in
default, has not been previously sold, assigned, transferred, or
pledged and is free of any liens, security interests and
encumbrances other than Permitted Liens;
(f) There
are no defenses, offsets, counterclaims or agreements for which the
Account Debtor may claim any deduction or discount;
8
(g) Borrower
reasonably believes no Account Debtor is insolvent or subject to
any Insolvency Proceedings;
(h) Borrower
has not filed or had filed against it Insolvency Proceedings and
does not anticipate any filing;
(i) Bank
has the right to endorse and/ or require Borrower to endorse all
payments received on Financed Receivables and all proceeds of
Collateral; and
(j) No
representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statement contained in the certificates or
statement not misleading.
Section 5.4 Litigation . There are no actions or
proceedings pending or, to the knowledge of Borrower’s
Responsible Officers, threatened by or against Borrower or any
Subsidiary in which an adverse decision could reasonably be
expected to cause a Material Adverse Change.
Section 5.5 No Material Deviation in Financial
Statements . All consolidated financial statements for
Borrower and any Subsidiary delivered to Bank fairly present in all
material respects Borrower’s consolidated financial condition
and Borrower’s consolidated results of operations. There has
not been any material deterioration in Borrower’s
consolidated financial condition since the date of the most recent
financial statements submitted to Bank.
Section 5.6 Solvency . Borrower is able to pay
its debts (including trade debts) as they mature.
Section 5.7 Regulatory Compliance . Borrower is
not an “investment company” or a company
“controlled” by an “investment company”
under the Investment Company Act. Borrower is not engaged as one of
its important activities in extending credit for margin stock
(under Regulations X, T and U of the Federal Reserve Board of
Governors). Borrower has complied in all material respects with the
Federal Fair Labor Standards Act. Borrower has not violated any
laws, ordinances or rules, the violation of which could reasonably
be expected to cause a Material Adverse Change. None of
Borrower’s or any Subsidiary’s properties or assets has
been used by Borrower or any Subsidiary or, to the best of
Borrower’s knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous
substance other than legally. Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate
provision to pay, all material taxes, except those being contested
in good faith with adequate reserves under GAAP. Borrower and each
Subsidiary has obtained all consents, approvals and authorizations
of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its
business as currently conducted except where the failure to obtain
or make such consents, declarations, notices or filings would not
reasonably be expected to cause a Material Adverse
Change.
Section 5.8 Subsidiaries . Borrower does not own
any stock, partnership interest or other equity securities except
for Permitted Investments.
Section 5.9 Full Disclosure . No written
representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements contained in the certificates or
statements not misleading.
9
ARTICLE 6
AFFIRMATIVE COVENANTS
Until all monetary
Obligations are paid in full and this Agreement has terminated,
Borrowers shall do all of the following:
Section 6.1 Government Compliance . Each
Borrower shall maintain its and all Subsidiaries’ legal
existence and good standing in its jurisdiction of formation and
maintain qualification in each jurisdiction in which the failure to
so qualify would reasonably be expected to have a Material Adverse
Change. Each Borrower shall comply, and have each Subsidiary
comply, with all laws, ordinances and regulations to which it is
subject, noncompliance with which could have a material adverse
effect on such Borrower’s business or operations or would
reasonably be expected to cause a Material Adverse
Change.
Section 6.2 Financial Statements, Reports,
Certificates .
(a) Each
Borrower shall deliver to Bank, unless otherwise noted: (i) as
soon as available, but no later than thirty (30) days after
the last day of each month, a company prepared consolidating
balance sheet and income statement covering Borrowers’
operations during the period certified by a Responsible Officer and
in substantially the same form as provided to Bank in connection
with its underwriting; (ii) (A) within five (5) days of
mailing, copies of all statements, reports and notices mailed to
GTTI’s security holders or to any holders of Subordinated
Debt and (B) within five (5) days of filing, if such
reports have not been made public, all reports on Form 10-K, 10-Q
and 8-K filed with the Securities and Exchange Commission;
(iii) a prompt report of any legal actions pending or
threatened in writing against Borrower or any Subsidiary that could
reasonably be expected to result in damages or costs to Borrower or
any Subsidiary of One Hundred Thousand Dollars ($100,000.00) or
more; and (iv) budgets, sales projections, operating plans or
other financial information reasonably requested by
Bank.
(b) Within
thirty (30) days after the last day of each month, Borrower
shall deliver to Bank with the monthly financial statements a
Compliance Certificate signed by a Responsible Officer in the form
of Exhibit B .
(c) During
any Subject Month in which the Streamline Advance Rate applies,
provide Bank with, as soon as available, but no later than five
(5) days following each Reconciliation Period, a Streamline
Accounts Listing.
(d) Upon
Bank’s request, provide a written report respecting any
Financed Receivable, if payment of any Financed Receivable does not
occur by its due date and include the reasons for the
delay.
(e) Provide
Bank with, as soon as avai
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