Bitzio, Inc. (fka BTZO)

[Arthur]

Here ya go:
https://backend.otcmarkets.com/otcapi/company/sec-filings/11123753/content/html

(bbb) “ Lock Box ” shall have the meaning given to it in Section 2.1(e) hereof.

(ccc) “ Lock Box Account ” shall have the meaning given to it in Section 2.1(e) hereof.

(ddd) “ Lock Box Payments ” shall have the meaning given to it in Section 2.1(e) hereof.

2. REVOLVING LOAN FACILITY.

2.1 Revolving Loan .

(a) Revolving Loan Commitment . Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the representations and warranties set forth herein and in the other Loan Documents, Lender agrees to make Revolving Loans to Borrower from time to time, pursuant to the terms of this Agreement, until, but not including, the Revolving Loan Maturity Date, and in such amounts as Lender may determine from time to time up to the Revolving Loan Availability (and subject at all times to the amounts available to be borrowed in accordance with the Borrowing Base Certificate); provided , however , that the aggregate principal balance of all Revolving Loans outstanding at any time shall not exceed the Revolving Loan Availability; and further provided , however , that, notwithstanding anything contained in this Agreement or any other Loan Documents to the contrary, each Revolving Loan under this Agreement (including any Net Amount to be distributed hereunder) shall be subject to Lender’s approval, which approval may be given or withheld in Lender’s sole and absolute discretion. Revolving Loans made by Lender may be repaid and, subject to the terms and conditions hereof, borrowed again up to, but not including, the Revolving Loan Maturity Date, unless the Revolving Loans are otherwise terminated or extended as provided in this Agreement. The Revolving Loans shall be used by Borrower for the specific purposes permitted hereunder and for no other purpose.

(b) Increase to Revolving Loan Commitment . Borrower may request, from time to time, that the Revolving Loan Commitment be increased to up to Five Million and No/100 United States Dollars (US$5,000,000); and Lender, in its sole and absolute discretion, may make available Revolving Loan Commitment increases to Borrower. Lender’s election to increase the Revolving Loan Commitment from time to time may be granted or denied by Lender in its sole and absolute discretion, however, at a minimum, the following conditions must be satisfied, in Lender’s sole and absolute discretion:

(i) no Event of Default shall have occurred or be continuing, or result from the applicable increase of the Revolving Loan Commitment;

(ii) Borrower shall have executed and delivered a new or revised Revolving Note;

(iii) after giving effect to such increase, the amount of the aggregate outstanding principal balance of all Revolving Loans shall not be in excess of the Revolving Loan Availability;

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(iv) Lender shall have reviewed and accepted, in its sole and absolute discretion, the amount and type of current and historical Receipts of the Credit Parties, Eligible Accounts or other Collateral required for the increase; and

(v) Lender shall have received any and all documents or agreements as it shall require in its sole and absolute discretion.

It is expressly agreed and acknowledged by each of the Credit Parties that, notwithstanding that this Agreement provides for the opportunity to increase the Revolving Loan Commitment as hereby provided: (i) Lender has no obligation of any nature or kind whatsoever to grant or provide any such increase to the Credit Parties; (ii) the Credit Parties did not enter into this Agreement based on any promise, express or implied, by Lender or any of its agents or representatives, or based on any expectation by any of the Credit Parties, that funds or Loans beyond the Revolving Loans made on the Effective Date would be made or provided after the Effective Date; and (iii) each of the Credit Parties hereby fully and unconditionally waives any and all claims, counterclaims, and defenses any of them may have based on any argument that Lender had any obligation or otherwise promised to fund additional Revolving Loans beyond the Revolving Loan funded on the Effective Date, or any argument or implied covenant of fair dealing and good faith that may in any way imply an obligation upon Lender to make such additional Revolving Loans.

(c) Revolving Loan Interest and Payments . Except as otherwise provided in this Section, the outstanding principal balance of the Revolving Loans and all other Obligations shall be repaid on or before the Revolving Loan Maturity Date. The principal amount of the Revolving Loans outstanding from time to time shall bear interest at the Interest Rate. The Receipts Collection Fee, accrued and unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to time, and other fees and charges due hereunder, shall be payable on a weekly basis on the weekly anniversary date of the Effective Date, or such other date as Lender and Borrower may agree upon (provided, however, if no such other agreement is made or reached, then on the weekly anniversary date of the Effective Date), commencing on the first such date to occur after the Effective Date and on the Revolving Loan Maturity Date (each a “ Payment Date ”). Any amount of principal or interest on the Obligations which is not paid when due, whether at stated maturity, by acceleration or otherwise, shall at Lender’s option bear interest payable on demand at the Default Rate.

(d) Revolving Loan Principal Repayments .

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(i) Mandatory Principal Prepayments; Overadvances . All Obligations shall be repaid by Borrower on or before the Revolving Loan Maturity Date, unless payable sooner pursuant to the provisions of this Agreement. In the event at any time the aggregate outstanding principal balance of all Revolving Loans hereunder exceeds the Revolving Loan Availability (an “ Over-advance ”), Borrower shall be obligated to eliminate such Over-advance as follows: (A) if the Over-advance exists as of the Effective Date, then: (I) Lender shall determine the amount of the Over-advance, as well as the estimated amount of a payment (“ Estimated Over-advance Payment ”) to be made by Borrower on each Payment Date (or such other time period as Lender may determine, such as a monthly payment) to be applied against the principal balance of the outstanding Revolving Loans, such that the Over-advance would be eliminated over a one hundred twenty (120) day period from the Effective Date, provided, however, in the event that the ratio of the Collateral value (as determined by the Lender) is greater than 130% of the value of the outstanding indebtedness owing hereunder, that the amount of Borrower’s payments to eliminate that Over-advance shall not be greater than ten percent (10%) of the amount of the Over-advance per month; and (II) Lender shall notify Borrower of the amount of the Estimated Over-advance Payment, and on each Payment Date (or such other time period selected by Lender), Borrower shall make the Estimated Over-Advance Payment to Lender, or, at Lender’s election, notwithstanding the priorities set forth in Section 2.1(e)(ii) , Lender may apply any amounts in the Lock Box Account towards the Estimated Over-advance Payment required to be made hereby, until the Over-advance is eliminated in full; or (B) if an Over-advance should occur after the Effective Date and during the term of this Agreement, then: (I) Lender shall determine, in its sole discretion, whether: (1) the Over-advance needs to be paid immediately; or (2) the Over-advance can be cured during a period of time as determined by Lender, in its sole discretion, and if so, what other conditions Lender may impose in connection with such cure period. If Lender elects option (1), then Borrower shall, upon notice or demand from Lender, immediately make such repayments of the Revolving Loans or take such other actions as shall be necessary to immediately eliminate such Over-advance in full (or, notwithstanding the priorities set forth in Section 2.1(e)(ii) , Lender may immediately apply any amounts in the Lock Box Account from time to time to eliminate such Over-advance in full). If Lender elects option (2) above, then Lender shall determine the amount of the Over-advance, the cure period available to Borrower in which to eliminate the Over-advance, and any other conditions to be satisfied by Borrower in connection with the cure period selected by Lender for elimination of the Over-advance, as well as the Estimated Over-advance Payment to be made by Borrower on each Payment Date (or such other time period as Lender may determine, such as a monthly payment) to be applied against the principal balance of the outstanding Revolving Loans, such that the Over-advance would be eliminated over whatever cure period shall have been elected by Lender, in its sole discretion (Lender shall have the right to modify the amount of the Estimated Over-advance Payment from time to time upon notice to Borrower as necessary to cause the elimination of the Over-advance over the cure period selected by Lender); and (II) Lender shall notify Borrower of the amount of the Estimated Over-advance Payment, the cure period selected by Lender during which the Over-advance must be eliminated, and any other conditions applicable thereto, and on each Payment Date (or such other time period selected by Lender), Borrower shall make the Estimated Over-Advance Payment to Lender, or, at Lender’s election, notwithstanding the priorities set forth in Section 2.1(e)(ii) , Lender may apply any amounts in the Lock Box Account towards the Estimated Over-advance Payment required to be made hereby, such that the Over-advance is eliminated in full in the period of time selected by Lender therefor. Credit Parties shall also satisfy whatever other conditions may be imposed by Lender as conditions to allowing Credit Parties a cure period to eliminate the Over-advance. In addition, following collection and payment of all items and fees as required by Section 2.1(e)(ii)(1) – (6), inclusive (other than the Mandatory Principal Repayment Amount), on each Payment Date, an amount equal to fifteen percent (15%) of all amounts collected into the Lock Box Account since the immediately preceding Payment Date (such a period of time hereinafter referred to as the “ Sweep Period ”) shall be paid to Lender to reduce the then outstanding principal balance of all Revolving Loans hereunder (the “ Mandatory Principal Repayment Amount ”). In addition, from time to time, Lender shall have the right to review the amount and type of current and historical Receipts and Eligible Accounts of the Credit Parties, the value of other Collateral, and other factors determined by Lender, and based on such review, Lender may, in its sole and absolute discretion, increase the percentage used for the Mandatory Principal Repayment Amount, which increase shall become applicable and effective immediately upon notice to Borrower. Lender shall apply funds received into the Lock Box Account in accordance with Section 2.1(e) below.

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(ii) Optional Prepayments . Borrower may from time to time prepay the Revolving Loan, in whole or in part, provided , however , that if the Borrower prepays more than eighty percent (80%) of the amount of the Revolving Loan Commitment within ninety (90) days following the Effective Date, Borrower shall pay to Lender as liquidated damages and compensation for the costs of being prepared to make funds available hereunder an amount equal to two and 50/100 percent (2.50%) of the Revolving Loan Commitment (the “ Prepayment Penalty ”). The Prepayment Penalty owed pursuant to this Section shall not be applicable with respect to any payment of the Mandatory Principal Repayment Amount.

(e) Collections; Lock Box .

(i) Funds Collected .

(1) Wire Transfers . To the extent any Customers make or pay any Receipts to any Credit Party by a wire transfer or other form of electronic funds transfer, effective as of the Effective Date, the Credit Parties shall direct all of such Customers, in writing, to make all such wire transfer or electronic fund transfer payments directly to the Lock Box Account.

(2) Cash, Checks and Other Payments . To the extent any Customers make or pay any Receipts to any Credit Party by any other form other than wire transfer or other form of electronic funds transfer (such as through cash or a check), then effective as of the Effective Date, the Credit Parties shall direct all of its Customers, in writing, to make, deposit, and/or send, as applicable, all such payments and Receipts directly to the Lock Box Account or a post office box designated by, and under the exclusive control of, Lender (such post office box is referred to herein as the “ Lock Box ”).


(3) Credit/Debit Card Payments . The parties recognize that in some instances or from time to time, the Credit Parties may elect to take or receive payments from Customers through the use of a credit or debit card (including payments made using a credit or debit card, or other payment mechanisms, through online re-sellers or systems, such as PayPal, Amazon and the like). In the event the Credit Parties shall at any time take or receive any Receipts through the use of a credit or debit card (including payments made using a credit or debit card, or other payment mechanisms, through online re-sellers or systems, such as PayPal, Amazon and the like), then effective as of the date (the “ Credit Card Date ”) when the Credit Parties enter into any agreements with any credit/debit card or other payment processing companies for the processing of credit and debit card payments (including payments made using a credit or debit card, or other payment mechanisms, through online re-sellers or systems, such as PayPal, Amazon and the like) on behalf of the Credit Parties (the “ Payment Processing Companies ”), the Credit Parties shall modify all of its agreements with any such Payment Processing Companies, so as to authorize, direct and cause: (A) all credit/debit card payments from any Customers; and (B) any reserves or holdbacks withheld by any of the Payment Processing Companies, if, as, and when distributed or paid to the Credit Parties, to be deposited directly into the Lock Box Account, rather than any other bank accounts of the Credit Parties. In this regard, effective as of the Effective Date (or, if there are no agreements with any Payment Processing Companies as of the Effective Date, then effective as of the Credit Card Date), the Credit Parties shall obtain from the each of the Payment Processing Companies and deliver to Lender, an estoppel certificate, disbursement direction or other similar document in form and substance acceptable to Lender (the “ Payment Direction ”), pursuant to which the Payment Processing Companies confirm and agree, among other things Lender may require: (I) to the foregoing payment directions; (II) that such payment instructions and directions shall not be changed, amended or terminated, except upon written notice from Lender; and (III) that copies of all statements, notices and other communications sent by any Payment Processing Companies to the Credit Parties, also be delivered to Lender. At any time prior to the Payment Direction being effective and in place, any Receipts received by the Credit Parties from any Payment Processing Companies shall be immediately (within twenty-four (24) hours) re-directed and deposited by Borrower into the Lock Box Account; provided, however, that any such re-direction shall not diminish or abrogate the Credit Parties’ obligation to obtain the Payment Direction from each of the Payment Processing Companies. The Credit Parties shall not enter into any new agreements with any Payment Processing Companies, unless prior to or contemporaneously with entering into such relationships or agreements, such Payment Processing Companies execute a Payment Direction in favor of Lender. Notwithstanding the foregoing to the contrary, so long as the Receipts collected by Credit Parties in any calendar year from any particular Payment Processing Company (which amount can be estimated by Lender based on Receipts collected by Credit Parties in any shorter time period as may be determined by Lender) are less than ten percent (10%) of the total Receipts collected by Credit Parties from all sources in any calendar year (which amount can be estimated by Lender based on Receipts collected by Credit Parties in any shorter time period as may be determined by Lender) (a Payment Processing Company that collects Receipts that are below the 10% threshold as hereby contemplated is sometimes referred to as a “ Non-Material PPC ” and a Payment Processing Company that collects Receipts above the 10% threshold as hereby contemplated is sometimes referred to as a “ Material PPC ”), then Credit Parties shall not have an obligation to deliver the Payment Direction with respect to such particular Payment Processing Company as contemplated by this Section, but only so long as: (x) no Event of Default exists under this Agreement or any other Loan Document, and provided no event has occurred that, with the passage of time, or the giving of notice, or both, would constitute an Event of Default under this Agreement or any other Loan Document; (y) Credit Parties instruct the particular Payment Processing Company to remit all credit/debit card payments from any Customers, any reserves or holdbacks withheld by such Payment Processing Company, and other Receipts, directly into the Lock Box Account, rather than any accounts of the Credit Parties; and (z) to the extent that, despite the foregoing requirement to instruct such Payment Processing Company to remit all Receipts directly into the Lock Box Account, any Credit Party receives any Receipts from such Payment Processing Company directly into an account of the Credit Parties, rather than the Lock Box Account, then Credit Parties shall notify Lender of the receipt of such Receipts or other sums within twenty-four (24) hours of receipt of same, and immediately upon receipt thereof, remit or endorse same to Lender into the Lock Box Account; provided, however, that any such re-direction shall not diminish or abrogate Credit Parties’ obligation to direct, instruct and require all Payment Processing Companies to make all payments and remittances otherwise due to the Credit Parties directly to the Lock Box Account.


The Lender and Credit Parties acknowledge that, in some instances, or if applicable, the mechanics of the payment processing relationships of the Credit Parties with some of its Payment Processing Companies is such that Credit Parties have portals or systems which they access online (the “ Portals ”) through administrative usernames, passwords and other input details required to gain access into such Portals (the “ Access Details ”), and that once the Portals are accessed with the Access Details, the Credit Parties then, through certain user elections and options made by Credit Parties on the Portals, elects to what bank account and when funds from the Payment Processing Companies are transferred to Credit Parties. In this regard, to the extent the payment mechanics of any Payment Processing Companies use Portals and Access Details, then on the Effective Date (or, if acceptable to Lender, in Lender’s sole and absolute discretion, as soon as practicably possible following the Effective Date), Credit Parties shall provide to Lender the web address for the Portals and the Access Details for each of the Payment Processing Companies, and Lender shall have the full right and authority to modify the Access Details, so that only Lender has access to the Portals and access to control all payments and remittances to and from such Payment Processing Companies, and so that Credit Parties do not have access or authority to change or thereafter modify the elections made by Lender on the Portals (provided that Lender shall provide view/read access only to Credit Parties so Credit Parties can see, on a daily basis, the transactions processed by the Payment Processing Companies and movement of funds from the Payment Processing Companies to the Lock Box Account). Lender shall have the absolute right and authority to designate the account to which any remittances from the Payment Processing Companies are made, which account shall be the Lock Box Account. Credit Parties hereby agree to undertake any and all required actions, execute any required documents, instruments or agreements, or to otherwise do any other thing required or requested by Lender in order to effectuate the foregoing with respect to the Portals and Access Details. Credit Parties shall not undertake any action or give any direction to any Payment Processing Companies that is in conflict with, changes, or is otherwise in derogation of the requirements and obligations of Credit Parties set forth in this paragraph. Upon indefeasible payment in full of all Obligations, and termination of all other commitments of Lender to advance sums hereunder, Lender shall provide the Access Details and control of the Portals back to the Credit Parties.

(4) General Collection Terms . The Credit Parties hereby agree to undertake any and all required actions, execute any required documents, instruments or agreements, or to otherwise do any other thing required or requested by Lender in order to effectuate the requirements of this Section 2.1(e) . Lender shall maintain an account at a financial institution acceptable to Lender in its sole and absolute discretion (the “ Lock Box Account ”), which Lock Box Account is and shall be maintained in Lender’s (or its Affiliate’s) name, and into which all Receipts, whether through wires, electronic fund transfers, credit and debit card payments from any Customers, and all other monies, checks, notes, drafts or other payments or Receipts of any kind received or receivable by, or due to, the Credit Parties shall be deposited. Credit Parties acknowledge that the Lock Box Account may be established by Lender as an “ FBO ” account, pursuant to which the Lock Box Account is in the name of Lender (or its Affiliate) “for the benefit of” the Credit Parties. Notwithstanding any such designation on the Lock Box Account, or any documents entered into or executed by the Credit Parties in connection with the establishment of the Lock Box Account, the Credit Parties hereby agree and acknowledge that: (i) Lender shall at all times have full “control” (within the meaning of the UCC) of the Lock Box Account and all funds deposited therein; (ii) the Credit Parties shall not revoke Lender’s authority or rights with respect to the Lock Box Account and the funds therein (notwithstanding any right Credit Parties may have to do so under ancillary documents executed by the Credit Parties to establish the Lock Box Account); and (iii) Credit Parties shall not take any action or position contrary to the intent of the parties as expressed herein that Lender shall at all times be in full control of the Lock Box Account and the deposits therein. It is the intent of the parties that all Receipts, whether through wires, electronic fund transfers, credit and debit card payments from any Customers, and all other monies, checks, notes, drafts or other payments or Receipts of any kind received or receivable by, or due to, the Credit Parties, shall be deposited directly into the Lock Box Account, rather than any other accounts of Credit Parties, or if received into any account of the Credit Parties, then the Credit Parties shall immediately re-direct and deposit same into the Lock Box Account. In this regard, if any Credit Parties, any Affiliate or Subsidiary, any shareholder, officer, director, employee or agent of the Credit Parties or any Affiliate or Subsidiary, or any other Person acting for or in concert with the Credit Parties, shall receive any monies, checks, notes, drafts or other payments or Receipts, the Credit Parties and each such Person shall receive all such items in trust for, and as the sole and exclusive property of, Lender, and, immediately upon receipt thereof, shall remit the same (or cause the same to be remitted) in kind to the Lock Box Account.

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(ii) Distribution of Funds From the Lock Box Account . The Credit Parties and Lender agree that all payments made to the Lock Box Account, whether in respect of Receipts, as proceeds of Collateral, or otherwise, will be swept from the Lock Box Account to Lender on each Payment Date to be applied according to the following priorities: (1) to unpaid fees and expenses due hereunder, including any recurring fees due pursuant to Section 2.2 hereof; (2) to any custodian/back-up servicer (if applicable); (3) to accrued but unpaid interest owed under Sections 2.1(c) and 2.4 hereof; (4) to the Receipts Collection Fee; (5) if at any time the Lender is not holding or has reserved, in the Lock Box Account or otherwise, an amount equal to at least the Reserve Amount, then twenty percent (20%) of all Receipts received into the Lock Box Account during each Sweep Period shall be withheld and applied by Lender to amounts required to establish the Reserve Amount, until the Reserve Amount is reached, which Reserve Amount (or portion thereof) may be kept and maintained in the Lock Box Account during the duration of this Agreement as additional security for the Obligations; (6) to amounts payable pursuant to Section 2.1(d) , including the Mandatory Principal Repayment Amount, the Estimated Over-Advance Payment, and other amounts required to eliminate any Over-advance; and (7) upon the occurrence of an Event of Default, to Lender, to reduce the balance of the Obligations to zero (each of the foregoing payments, the “ Lock Box Payments ”). The amount remaining in the Lock Box Account following the payment of the Lock Box Payments on each Payment Date (less any amount in the Lock Box Account withheld and applied by Lender to the Reserve Amount) shall be referred to herein as the “ Net Amount ”. The Lender agrees that, provided the Credit Parties are each in good standing under this Agreement and the other Loan Documents, and provided no Event of Default exists under this Agreement or any other Loan Document, and provided no event has occurred that, with the passage of time, or the giving of notice, or both, would constitute an Event of Default under this Agreement or any other Loan Document, and further provided that any Estimated Over-advance Payments have been timely made as required by this Agreement, and subject to the terms and conditions of this Agreement, the Net Amount will be transferred to Borrower from the Lock Box Account via wire transfer or electronic funds transfer to an account designated by the Borrower on the immediately subsequent Payment Date (provided, however, any failure by Lender to transfer the Net Amount to Borrower by such date shall not in any way hinder, impair, or otherwise adversely affect Credit Parties’ Obligations, or Lender’s rights and remedies under this Agreement or any other Loan Documents). The Credit Parties agree to pay all reasonable fees, costs and expenses in connection with opening and maintaining of the Lock Box and the Lock Box Account. All of such reasonable fees, costs and expenses, if not paid by the Credit Parties within five (5) Business Days of Lender’s written request, may be paid by Lender and in such event all amounts paid by Lender shall constitute Obligations hereunder, shall be payable to Lender by any Credit Party upon demand, and, until paid, shall bear interest at the Default Rate. Notwithstanding anything contained herein to the contrary, in the event the amounts collected into the Lock Box Account from time to time, whether in respect of Receipts, as proceeds of Collateral, or otherwise, are at any time not sufficient to pay the amounts due to Lender on any Payment Date under items (1) – (6) above of this Section 2.1(e)(ii), then the Credit Parties shall, without further notice or demand from Lender, pay any such shortfall amounts to the Lock Box Account within three (3) Business Days from the Payment Date for which such amounts were due, or notwithstanding the foregoing order and priority, Lender shall have the right to sweep from the Lock Box Account any such shortfall amounts immediately upon any Receipts coming into the Lock Box Account.

(iii) Power of Attorney . It is intended that all Receipts, and all other checks, drafts, instruments and other items of payment or proceeds of Collateral at any time received, due or owing to the Credit Parties from a Customer, any other Person, or otherwise, shall be deposited directly into the Lock Box Account, and if not deposited directly into the Lock Box Account, shall be immediately remitted or endorsed by the Credit Parties to Lender into the Lock Box Account, and, if that remittance or endorsement of any such item shall not be immediately made for any reason, Lender is hereby irrevocably authorized to remit or endorse the same on Credit Parties’ behalf. For purpose of this Section, the Credit Parties irrevocably hereby make, constitute and appoint Lender (and all Persons designated by Lender for that purpose) as the Credit Parties’ true and lawful attorney and agent-in-fact: (A) to endorse the Credit Parties’ name upon said Receipts or items of payment and/or proceeds of Collateral and upon any chattel paper, document, instrument, invoice or similar document or agreement relating to any Receipts of the Credit Parties; (B) to take control in any manner of any item of payment or proceeds thereof; (C) to have access to the Credit Parties’ operating accounts, through the Credit Parties’ online banking system, or otherwise, to make remittances of any Receipts deposited therein into the Lock Box Account as required hereby; (D) to have access to any lock box or postal box into which any of the Credit Parties’ mail is deposited, and open and process all mail addressed to the Credit Parties and deposited therein; and (E) direct and otherwise deal with all Payment Processing Companies, or other Persons, to insure that all Receipts, payments and reserves as hereby contemplated are remitted to the Lock Box Account.

(vi) Authorization to Deduct Amounts in Lock Box .

(1) Notwithstanding anything contained in this Agreement to the contrary, any time that any charges, fees, amounts or other Obligations are due and owing by any Credit Parties to Lender under this Agreement or any other Loan Document, Lender shall have the right, and is hereby authorized, to deduct such charges, fees, amounts or other Obligations directly from the Lock Box Account and from all receipts from time to time deposited therein.

(2) Notwithstanding anything contained herein to the contrary and in addition to the amounts provided in Section 2.1(e)(ii) , the Lender may from time to time, in its sole and absolute discretion, retain in the Lock Box Account any and all amounts deposited into the Lock Box Account by any Customer that the Lender deems necessary or appropriate (i) to prevent any insecurity by the Lender with respect to the total value of the Collateral (including, but not limited to, the amount held in the Lock Box Account at any time) when compared to the outstanding amount of all Obligations owed to the Lender; and (ii) to ensure that the Collateral (including, but not limited to the amount held in the Lock Box Account) is and remains of a value to adequately serve as appropriate security for the Obligations of the Credit Parties hereunder.

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2.2 Fees .

(a) Asset Monitoring Fee . Borrower agrees to pay to Lender an asset monitoring fee (“ Asset Monitoring Fee ”) equal to One Thousand Five Hundred and No/100 United States Dollars (US$1,500.00), which shall be due and payable on the Effective Date, and thereafter on the first day of each third (3 rd ) calendar month during the term of this Agreement. The Asset Monitoring Fee shall be increased in increments of Five Hundred and No/100 United States Dollars (US$500.00) each time the Revolving Loan Commitment amount is increased pursuant to Section 2.1(b ); provided that the Asset Monitoring Fee shall never exceed Two Thousand Five Hundred and No/100 United States Dollars (US$2,500.00).

(b) Transaction Advisory Fee . In addition to the Advisory Fee contained in Section 2.2(f) herein, the Borrower agrees to pay to Lender a transaction advisory fee equal to four percent (4.0%) of the Revolving Loan Commitment as of the Effective Date, and two percent (2.0%) on the amount of any increase thereof pursuant to Section 2.1(b) , which shall be due and payable on the Effective Date and on the date of any increase to the Revolving Loan Commitment pursuant to Section 2.1(b ).

(c) Due Diligence Fees . Borrower agrees to pay a due diligence fee equal to Fifteen Thousand and No/100 United States Dollars (US$15,000.00), which shall be due and payable in full on the Effective Date, or any remaining portion thereof shall be due and payable on the Effective Date if a portion of such fee was paid upon the execution of any term sheet related to this Agreement.

(d) Document Review and Legal Fees . Borrower agrees to pay a document review and legal fee equal to Fifty Thousand and No/100 United States Dollars (US$50,000.00) which shall be due and payable in full on the Effective Date, or any remaining portion thereof shall be due and payable on the Effective Date if a portion of such fee was paid upon the execution of any term sheet related to this Agreement.

(e) Other Fees . Borrower also agrees to pay to the Lender (or any designee of the Lender), upon demand, or to otherwise be responsible for the payment of, any and all other costs, fees and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Lender and of any experts and agents, which the Lender may incur or which may otherwise be due and payable in connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver, subordination, or other modification or termination of this Agreement or any other Loan Documents (provided that there shall be no fees for the preparation and negotiation of this Agreement other than as specifically set forth in the closing or settlement statement executed by Borrowers and Lender on the Effective Date); (ii) any documentary stamp taxes, intangibles taxes, recording fees, filing fees, or other similar taxes, fees or charges imposed by or due to any Governmental Authority in connection with this Agreement or any other Loan Documents; (iii) the exercise or enforcement of any of the rights of the Lender under this Agreement or the Loan Documents; or (iv) the failure by the Credit Parties to perform or observe any of the provisions of this Agreement or any of the Loan Documents. Included in the foregoing shall be the amount of all expenses paid or incurred by Lender in consulting with counsel concerning any of its rights under this Agreement or any other Loan Document or under applicable law. All such costs and expenses, if not so immediately paid when due or upon demand thereof, shall bear interest from the date of outlay until paid, at the Default Rate. All of such costs and expenses shall be additional Obligations of the Credit Parties to Lender secured under the Loan Documents. The provisions of this Subsection shall survive the termination of this Agreement.

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(f) Advisory Fees . The Borrower shall pay to Lender a fee for advisory services provided by the Lender to the Borrower prior to the Effective Date in the amount of Three Million Two Hundred Thousand and No/100 United States Dollars (US$3,200,000.00) (the “ Advisory Fee ”) by issuing to Lender that number of shares of the Borrower’s Series E Convertible Preferred Stock (“ Series E Preferred ”) equal to the Advisory Fee. It is agreed that the number of shares of Series E Preferred issuable to Lender under this Section 2.2(f) shall be [?] (including any Common Stock into which the Series E Preferred is convertible, the “ Advisory Fee Shares ”). The Borrower shall instruct its transfer agent (the “ Transfer Agent ”) to issue certificates representing the Advisory Fee Shares issuable to the Lender immediately upon the Borrower’s execution of this Agreement, and shall cause its Transfer Agent to deliver such certificates to Lender within five (5) Business Days from the Effective Date. Upon conversion of the share of Series E Preferred, the Lender shall never be in possession of an amount of Common Stock greater than 4.99% of the issued and outstanding Common Stock of the Borrower provided, however that this ownership restriction described in this Section may be waived by Lender, in whole or in part, upon 61 days’ prior written notice. In the event such certificates representing the Advisory Fee Shares issuable hereunder shall not be delivered to the Lender within said five (5) Business Day period, same shall be an immediate default under this Agreement and the other Loan Documents. The Advisory Fee Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of the Borrower’s Common Stock. The Advisory Fee Shares shall be deemed fully earned as of the Effective Date, regardless of the amount or number of Revolving Loans made hereunder. Notwithstanding anything contained in this Section to the contrary, in the event that the Borrower has satisfied all of the Obligations owing to the Lender on or prior to ninety (90) days following the Effective Date, the Advisory Fee shall be reduced to One Million Six Hundred Thousand United States Dollars (US$1,600,000).

And this applies to all of BTZO's subsidiaries:

7.1 Subsidiaries . A list of all of the Borrower’s Subsidiaries and each of the Guarantor’s Subsidiaries are listed on Schedule 7.1 hereto. All of such Subsidiaries are wholly-owned Subsidiaries of the Borrower or a Guarantor, as applicable, and except for such Subsidiaries as listed on Schedule 7.1 , no Borrower or Guarantor has any Control over, any other Person.

And:

9.10 Transactions with Affiliates . The Credit Parties shall not enter into any transaction with any of its Affiliates, except in the Ordinary Course of Business of the Credit Parties and upon fair and reasonable terms that are no less favorable to the Credit Parties than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate of the Credit Parties.

BTZO appears to have triggered a Default:

10.7 Financial Statements . The Credit Parties shall at all times maintain a system of accounting capable of producing its individual and consolidated financial statements in compliance with GAAP (provided that monthly financial statements shall not be required to have footnote disclosure, are subject to normal year-end adjustments and need not be consolidated), and shall furnish to Lender or its authorized representatives such information regarding the business affairs, operations and financial condition of the Credit Parties as Lender may from time to time request or require, including, but not limited to:

12.15 Lock Box Account . (i) The determination in good faith by the Lender that there has been a failure to perform or default in the performance by a Credit Party of Section 2.1(e) of this Agreement; or (ii) the failure of the Borrower to cause sufficient funds to be on deposit in the Lock Box Account to permit the Lender to withdraw payments at any such time payments are due to Lender by Borrower pursuant hereto.