23. In violation of those covenants and rules, the Corporate Defendants maintained neither complete nor accurate filings with the SEC or accurate financial statements. For example, at no time did the reports filed with the SEC or company financial statements state that it was in default of the Loan documents, and that the remedy for which could result in foreclosure of the entire business operations of the Corporate Defendants.
24. The parties agreed that TCA would have the benefits of Rule 144 under the Securities Act of 1933 by the Corporate Defendants becoming a reporting company under SEC rules. As such, the Corporate Defendants covenanted that they would register and File the Form 10 within 120 days of the closing date of the Loan Documents, i.e., May 24, 2013, so as to become a fully reporting company required to file periodic reports with the SEC under the Exchange Act, and have its Common Stock registered with the SEC under Section 12 of the Exchange Act. In fact, the Corporate Defendants did not file the Form 10 until March 11, 2015, more than six (6) months delinquent. Moreover, by failing to file accurate and current reports as set forth in paragraph 22 above, TCA is unable to take advantage of the Rule 144 safe harbor in the sale of the securities of the Corporate Defendants. Exhibit A, Sections 10.18, 10.19.
25. Pursuant to Sections 12, 13 and 23 of the Credit Facility Agreement and the other Loan Documents, all of the remedies available to the Plaintiff are triggered, including, without limitation, acceleration of the principal, and default interest at the highest legal rate available by law, and the foreclosure of its security interest.
26. The Individual Defendants executed the Validity Guaranty, the terms of which have now been breached, including without limitation, the requirement that (i) the Lock Box provisions be adhered to, (ii) all reports, financial statements, schedules, certificates and other information required by the Loan documents be delivered to TCA in complete and accurate form, (iii) and all representation and warranties in the Loan documents be correct and complete in all material respects.
27. Notice of default of the Loan Documents was delivered to the Individual Defendants on March 20, 2015, a copy of which is attached as Exhibit J.
28. By failing to adhere to the requirements of the Loan Document as set forth above, the Defendants triggered an Event of Default which has not been timely cured.
29. The Plaintiff has engaged the undersigned law firm and agreed to pay it a reasonable attorney’s fee.
