WKSP Worksport Ltd

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): September 4, 2024

 

WORKSPORT LTD.
(Exact name of registrant as specified in its charter)

 

Nevada		001-40681		35-2696895
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

2500 N America Dr

West Seneca, New York, United States 14224
(Address of principal executive offices) (ZIP Code)

 

Registrant’s telephone number, including area code: (888) 554-8789

 

Not Applicable
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbols		Name of each exchange on which registered
Common		WKSP		The Nasdaq Stock Market LLC
Warrants		WKSPW		The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b -2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On September 4, 2024, Worksport Ltd. (the “Company”), through its wholly owned subsidiary, Worksport USA Operations Corporation, a Colorado corporation (the “Borrower”), entered into a credit and security agreement (the “Agreement”) with Loeb Term Solutions LLC, an Illinois limited liability company (the “Lender”).

 

Pursuant to the terms of the Agreement, Lender provided the Borrower with a loan of $1,487,200, evidenced by a promissory note, dated September 4, 2024, by the Borrower for the benefit of Lender (the “Note”).

 

The transaction closed on September 4, 2024 at which time the Company received net proceeds of $1,437,997.98.

 

The Note stipulates principal interest payments by the Borrower on a weekly basis at an interest rate equal to the lesser of (i) the prime rate plus 7.00% per annum and (ii) the maximum rate allowed by law.

 

The Company and Worksport New York Operations Corporation, a Colorado corporation (the “Sub”) have separately each provided a guaranty in favor of the Lender, guaranteeing all obligations of the Borrower under the Agreement (“Guaranties”).

 

The Company, Borrower, and Sub have each granted the Lender a security interest in substantially all of its assets, excluding the Company’s real property located at 2500 North America Drive, Town of West Seneca, Erie County, New York, as collateral security for the obligations under the Agreement pursuant to security agreements entered with each of them (“Security Agreements”). The Lender holds a first-priority lien on certain Collateral and a second-priority lien on other Collateral, in accordance with an intercreditor agreement between the Lender and Amerisource Funding, Inc. (“Amerisource”).

  

The Agreement contained customary representations, warranties, covenants, and conditions precedent for transactions of this nature.

 

 

This summary does not purport to be complete and is qualified in its entirety by reference to the Agreement, the Note, the Indemnification Agreement, the Mortgage Access Agreement, the Guaranties and the Securities Agreements which are filed as exhibits to this Current Report on Form 8-K.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

In connection with the Agreement described in Item 1.01 of this Current Report on Form 8-K, on September 4, 2024, the Borrower issued the Lender a term promissory note (the “Note”) for a principal amount of up to $1,487,200. The Note bears interest at the lesser of (i) the prime rate plus 7.00% per annum and (ii) the maximum rate allowed by law. The Note shall be repayable in 155 weekly installments of principal and interest on each Wednesday commencing on the first Wednesday after the date of the Note, and then the 156th and final installment due on the 156th Wednesday after the date of the Note (the “Maturity Date”) of all outstanding principal, accrued interest, fees and all other amounts due hereunder. The weekly payments will first be applied to payment of interest, second to late charges and other fees, and the balance, if any, will be applied to the payment of principal.

 

The Agreement includes provisions for default, granting the Lender the right to demand immediate payment of the amounts under the Note. The Note is secured by a mortgage on the Company’s Collateral, and subject to the terms and conditions specified in the Agreement and related security instruments.

 

This summary does not purport to be complete and is qualified in its entirety by reference to the Note, which is filed as an exhibit to this Current Report on Form 8-K.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.		Description
10.1#		Credit and Security Agreement dated September 4, 2024, between Worksport USA Operations Corporation and Loeb Term Solutions LLC.
10.2#		Term Promissory Note, dated September 4, 2024, by Worksport USA Operations Corporation to the benefit of Loeb Term Solutions LLC.
10.3#		Guaranty dated September 4, 2024 by Worksport Ltd.
10.4#		Guaranty dated September 4, 2024 by Worksport New York Operations Limited.
10.5#		Security Agreement dated September 4, 2024 by Worksport USA Operations Corporation.
10.6#		Security Agreement dated September 4, 2024 by Worksport Ltd.
10.7#		Security Agreement dated September 4, 2024 by Worksport New York Operations Limited.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

#Certain sections, schedules, exhibits and similar attachments have been omitted pursuant to Item 601(a)(5) and Item 601(b)(10) of Regulation S-K. The Company hereby undertakes to furnish copies of such omitted materials supplementally upon request by the Securities and Exchange Commission.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	WORKSPORT LTD.
Date: September 10, 2024	By:	/s/ Steven Rossi
	Name:	Steven Rossi
	Title:	Chief Executive Officer (Principal Executive Officer)

 

 

 

Exhibit 10.1

 

CREDIT AND SECURITY AGREEMENT

 

This Credit and Security Agreement (the “Agreement”) is made and entered into as of the day of ___________________, by Worksport USA Operations Corporation, a Colorado corporation with its principal place of business located at 2500 N. America Dr., West Seneca, NY 14224 (“Borrower”), in favor of Loeb Term Solutions LLC, an Illinois limited liability company with an address at 8609 W. Bryn Mawr, Suite 208, Chicago, IL 60631 (“Lender”).

 

Recitals

 

This Agreement, including the Schedule to Credit and Security Agreement of even date herewith as may be amended or restated from time to time, sets forth the terms and conditions of the term loan or equipment line of credit loan (the “Loan”) and the obligations of Borrower. Borrower is required to execute the Schedule. The Schedule is incorporated into and made an integral part of this Agreement.

 

Agreement

 

In consideration of and as an inducement to Lender making the Loan to Borrower as evidenced by that certain Term Promissory Note of even date herewith, as may be amended or restated (the “Note”), and to secure the payment and performance of the Note and of any and all Obligations and liabilities of Borrower to Lender, whether arising in connection with the Loan or any other loans, advances, purchases, acquisitions, or other extensions of credit made to or on behalf of Borrower or any other person for whom Borrower serves as surety or Guarantor in favor of Lender, and whether direct or indirect, absolute or contingent, or now or hereafter existing, or due or to become due (collectively the “Obligations”), the parties hereto agree as follows:

 

1. Terms and Conditions. Borrower and any corporate entity that executes a guaranty of the Obligations in favor of Lender (each a “Guarantor”), agrees to all of the terms and conditions contained in the Note, this Agreement and the Schedule, and in any attachments thereto, and in any other documents relating to the Loan or incorporated herein by reference (the “Loan Documents”).

 

2. Grant of Security Interest. To secure the payment and performance of the Obligations, Borrower hereby grants to Lender a security interest in all of Borrower’s right, title and interest in and to the Collateral (defined below).

 

3. UCC Provisions.

 

a. All capitalized terms not defined herein shall have the meaning given to such terms in the Uniform Commercial Code (“UCC”) as in effect on the date hereof in the Chosen Forum (as defined in the Schedule), except as required by mandatory provisions of law.

 

b. Borrower previously authorized and hereby authorizes Lender to file one or more financing statements, and amendments thereto, relating to all or any part of the Collateral in the Borrower’s state of organization and in any other states or locations selected by Lender. Lender may describe the Collateral as “all assets” of Borrower or words of similar effect in such financing statements.

 

4. Definition of Collateral. The Collateral is all of the Borrower’s now owned or existing or hereafter acquired or arising: Accounts, Goods, Inventory, Equipment (including without limitation the equipment described on Exhibit A attached to the Schedule), Chattel Paper, Instruments, Investment Property, specifically identified Commercial Tort Claims, Documents, Deposit Accounts, Letter of Credit Rights, General Intangibles, Contract Rights, customer lists, furniture and fixtures, books and records and supporting Obligations for any of the foregoing, and all Proceeds of the foregoing (the “Collateral”). The Collateral also includes all monies on deposit with Lender.

 

5. Representations and Covenants Relating to the Collateral.

 

a. Ownership. Borrower is the owner of the Collateral and shall at all times maintain valid title to the Collateral.

 

b. Lien Priority. The security interest granted hereby shall at all times be a valid and perfected first priority security interest, subject only Permitted Encumbrances, if any, set forth in the Schedule, enforceable against Borrower and all third parties securing the Obligations. Borrower shall not permit any financing statement or other instruments similar in effect covering all or any part of the Collateral to be filed or recorded, other than with respect to Permitted Encumbrances, without the prior written consent of Lender. Without limiting the foregoing, Borrower shall not obtain a merchant cash advance loan or any other arrangement wherein Borrower sells or assigns its accounts or future cash.

 

c. Care of Collateral. Borrower, at its own expense, will maintain, keep and preserve the Collateral in the ordinary course of business in good repair, working order and condition (reasonable wear and tear excepted), will from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements, additions, betterments and improvements thereto, will not waste or destroy the Collateral or any part thereof, will not be negligent in the care and use of any Collateral, and will not use any Collateral, in violation of applicable law.

 

d. Disposition of Collateral. Borrower shall not sell, lease, transfer, assign (by operation of law or otherwise) or otherwise dispose of all or any part of the Collateral without the prior written consent of Lender, except for Inventory, furniture, and fixtures in the ordinary course of business.

 

 

e. Principal place of business and Trade Names. Borrower represents, warrants and covenants that: (i) Borrower’s principal place of business and the books and records relating to the Collateral are located at Borrower’s principal place of business specified above; (ii) Borrower has not, within the last five (5) years, transacted business under any trade names other than those specified in the Schedule; and (iii) Borrower will not move its principal place of business or its books and records, or transact business under any new trade names, without giving Lender thirty (30) days prior written notice thereof or without having taken all action required by Lender including but not limited to those in Section 5.f. below with respect to any affected Collateral.

 

f. Location of Collateral. Borrower shall not permit the equipment or other tangible Collateral to be located at any location except at the locations specified in a written Landlord Agreement executed by the landlord and Lender unless:

 

i. Borrower gives Lender thirty (30) days prior written notice thereof

 

ii. Prior to the move, Borrower obtains from the landlord(s) of the premises of the future location(s) an executed lease and provide a copy to Lender;

 

iii. Prior to the move, Borrower obtains from the landlord(s) of the premises of the future location(s) a landlord agreement, in form satisfactory to Lender, executed by the landlord and Lender;

 

iv. Prior to the move, the machinery mover hired by Borrower names Lender as additional insured, loss payee and Lender loss payee on its insurance policy and provides a copy to Lender;

 

v. Borrower has all of the previously installed equipment re-installed;

 

vi. Borrower allows Lender to inspect the equipment at Borrower’s expense to confirm that all previously installed equipment as shown on Exhibit A is re-installed and operating. The reinspection fee will be pulled via ACH; and

 

vii. Within ten (10) days of the completion of the move, Borrower notifies Lender of any surplus equipment left from the move and develops with Lender a plan to sell the surplus.

 

g. Vehicles. If Borrower owns any motor vehicles or construction or earth moving equipment (whether or not registered) (collectively “Vehicles”), Borrower shall comply with the requirements in the Schedule.

 

6. Collection of Accounts. After an event of Default Lender shall have the right to notify the Account debtors of the assignment of the related Accounts to Lender and to direct such Account debtors to make payment of all amounts due or to become due to Borrower thereunder directly to Lender, and upon such notification and at the expense of Borrower Lender may enforce collection of any such Accounts, and adjust, settle or compromise the amount or payment thereof. After the notice from Lender to the account debtors, (i) all amounts and proceeds (in whatever form) received by Borrower in respect of the Accounts shall be received in trust for the benefit of Lender, shall be segregated from other funds of Borrower and shall be forthwith paid over to Lender in the same form as so received (with any necessary endorsement), and applied against the Obligations in such order as Lender shall elect in its sole discretion, and (ii) Borrower shall not adjust, settle or compromise the amount or payment of any Receivable, or release wholly or partly any account debtor, or allow any credit or discount thereon without the prior written consent of Lender. Borrower hereby appoints any officer or agent of Lender as Borrower’s true and lawful attorney-in-fact after an event of Default with power to endorse the name of the Borrower upon any checks or other instruments of payment or Collateral which may come into possession of Lender. This power of attorney shall be irrevocable for the term of this Agreement and all transactions hereunder.

 

7. Further Assurances. Borrower agrees that it shall from time to time, and at its expense, promptly execute and deliver all instruments, documents and assignments, and shall take all further actions that Lender may request in order to perfect, protect and continue any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Collateral, and shall promptly give to the Lender evidence satisfactory to Lender of such action. Without limiting the generality of the foregoing, Borrower shall:

 

a. Take such steps as Lender may request for Lender (i) to obtain an acknowledgment of any bailee having possession of any of the Collateral that the bailee holds such Collateral for Lender, or (ii) to obtain “control” of any investment property, deposit accounts, letter-of-credit rights, electronic chattel paper or other Collateral;

 

b. Upon the request of the Lender, deliver and pledge Lender any original Note, Instrument, Chattel Paper, Instrument or other document evidencing any Collateral and any certificate or instrument evidencing any Security, duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in forms and substance satisfactory to Lender;

 

c. Deliver certificates of title and execute all documentation in order to reflect Lender’s security interest on titled motor Vehicles and vessels;

 

d. Furnish to Lender from time-to-time statements and schedules identifying and describing the Collateral and such other reports and information concerning the Collateral as Lender may request in its sole discretion; and

 

e. Not store, keep or maintain any Collateral at any location other than locations where there is a landlord waiver and/or a mortgagee waiver in favor of Lender, and in forms acceptable to Lender.

 

 

8. Reserves. Lender requires, and Borrower shall comply with, the reserve requirements, if any, in the Schedule. Notwithstanding the establishment of any reserve, the Borrower will pay interest on the full amount of the Note commencing on the date of the initial funding of the Note. Borrower will not earn interest on any funds held in reserve and the existence of the reserve shall not relieve Borrower of its Obligation to make payments under this Agreement and the Note. Lender will not use the funds in reserve for any other Borrower or client.

 

9. Insurance. Borrower at all times should have the Collateral insured in the Borrower’s name and in the name of the Lender against loss or damage by fire, theft, burglary, pilferage, loss in transit and such other hazards with amounts, under policies and by insurers acceptable to Lender. Each policy shall include a provision for Lender to receive copies directly from the insurance agent of all written notices to policy holder including, but not limited to any invoices, statements of account, certificates of insurance, cancellation or substantial modification. Policies shall show Lender as additional insured, loss payee and Lender’s loss payee in a manner acceptable to Lender. Borrower shall execute and deliver to Lender simultaneously herewith and at any other time hereafter such assignments of policies of insurance as Lender shall reasonably require. All premiums shall be paid by Borrower, and the policies shall be delivered to Borrower, and Certificate of Insurance shall be delivered to Lender. If Borrower fails to do so, Lender may (but shall not be required to) procure such insurance at the Borrower’s expense. BORROWER ALSO GRANTS PERMISSION FOR LENDER TO SPEAK DIRECTLY WITH INSURANCE AGENT AS REQUIRED TO CONFIRM PROPER INSURANCE IS IN PLACE AND IS CURRENT.

 

10. Inspection; Books, Records and Financial Statements and Reports.

 

a. Borrower shall at all times keep accurate and complete records of the Collateral, and, at Borrower’s expense, at any time and without hindrance or delay, permit Lender to inspect the Collateral, and inspect and make extracts from and copies of its books and all records, including preventative maintenance records relating to the Collateral.

 

b. Borrower shall at all times keep, and if requested provide Lender with copies of or allow Lender to inspect, monthly financial records prepared in accordance with generally accepted accounting principles and which are true and accurate in all material respects, including an income statement, balance sheet, statement of cash flows on a consolidated basis, accounts payable aging, accounts receivable aging, inventory report and payroll report.

 

c. Without limiting the foregoing, Borrower shall provide Lender the financial statements and reports set forth in the Schedule.

 

d. Lender shall be permitted to discuss with Borrower’s owners, directors, officers, managers and auditors Borrower’s business, procedures, assets, liabilities, financial positions, results of operations and business prospects.

 

e. Borrower shall keep its records concerning the Collateral and other business records at its principal place of business or at such other location as shall have been notified to Lender upon not less than thirty (30) days written notice. The cost of all such inspections shall be borne by the Borrower.

 

11. Taxes. Borrower shall promptly pay when due all property, payroll and any other taxes, assessments and governmental charges or levies imposed upon the Collateral, except to the extent the validity thereof is being contested in good faith by Borrower and with reserves for payment of such charges or levies in any amount satisfactory to Lender. Lender reserves the right to require Borrower to use an independent payroll service if Borrower is delinquent in paying their payroll taxes on time.

 

12. Lender’s Duties and Powers. If Borrower fails to perform any covenant or Agreement contained herein after any applicable cure and notice period, Lender may (but shall not be obligated to) perform, or cause performance of, such covenant or Agreement at the Borrower’s expense. The powers conferred on Lender hereunder are to protect Lender’s interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers.

 

13. Loans, Dividends or other Distributions to Equity Owners. Borrower covenants and agrees that until all Obligations to Lender are paid in full, it will not declare or pay any dividend or make any other distribution or loan of any kind to its shareholders, members or other equity owners, other than:

 

a. Normal salary of guaranteed distributions in lieu of salary paid to an equity owner that is also an employee of Borrower; and

 

b. With respect to any year in which Borrower is not taxed by the Internal Revenue Services as a “C” corporation, and provided that Borrower is not in Default at that time of such payment, Borrower may make a distribution of profits to its equity owners in an amount not to exceed the sum necessary to enable its equity owners to pay their personal state and federal taxes directly attributable to the profits earned by Borrower for the applicable year.

 

14. Fees and Expenses. Borrower shall upon demand pay to Lender the amount of any and all fees and expenses, including without limitation, the reasonable fees and disbursements of Lender’s counsel and of any experts and agents, which Lender may incur in connection with the preparation, administration and enforcement of this Agreement, or the sale, collection, or other realization upon any of the Collateral. In addition, Borrower shall also pay the fees and expenses set forth in the Schedule.

 

15. Default. Each of the following shall constitute an event of Default under this Agreement (a “Default”):

 

a. Borrower fails to pay any amounts under the Note or any other Obligations when due, provided, however, weekly payments under the Note shall have a 48-hour grace period for bank payment processing issues out of Borrower’s control;

 

b. Borrower fails to observe or perform any of the terms, covenants, representations, promises or conditions contained in this Agreement after 30 days’ written notice;

 

c. Borrower fails to observe or perform any of the terms, covenants or conditions contained in the Note after 30 days’ written notice;

 

 

d. Borrower fails to observe or perform any of the terms, covenants or conditions contained in any Loan Document other than this Agreement or the Note, or any other contract, instrument or Agreement with Lender, which is not cured within 15 days if it is a type of default that can be cured;

 

e. Any representation or warranty made by Borrower herein is false in any material respect as of the time when made or given;

 

f. Borrower or any Guarantor shall make an assignment for the benefit of creditors, file a petition in bankruptcy, petition or apply for the appointment of a custodian, receiver or any trustee for Borrower, Guarantor or the Collateral, or shall commence any proceedings under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statue of any jurisdiction, whether now or hereafter in effect, or if there shall have been filed any such petition or application, or any such proceeding shall have been commenced against Borrower or Guarantor, which is not dismissed within sixty (60) days;

 

g. Any suit is filed against Borrower or Guarantor seeking damages in excess of $25,000 USD and not disclosed to Lender within thirty (30) days;

 

h. Any judgment is entered against Borrower or Guarantor in excess of $25,000 USD;

 

i. Any of the Collateral is taken or sought to be taken by levy, execution, or other process of law;

 

j. A default under any guaranty of the Loan;

 

k. Borrower or Guarantor liquidates, dissolves, or merges into or consolidates with or into any other entity;

 

l. If Borrower opens a new bank account and fails to provide an Automatic ACH Debit Agreement covering such account within five (5) business days of opening such account;

 

m. Any financial statement or report provided to Lender is false in any material respect as of the time when made or given;

 

n. Borrower obtains a merchant cash advance loan or any other arrangement wherein Borrower sells or assigns its accounts or future cash; or

 

o. Any circumstance or event of any nature which in Lender’s sole reasonable discretion may materially and adversely affect the condition, operation, business or assets of Borrower or any Guarantor, or materially impairs the ability of Borrower or any Guarantor to fulfill their Obligations to Lender.

 

16. Remedies. Upon an event of Default, Lender shall have the following remedies which may be exercised cumulatively:

 

a. To declare all amounts owing under the Note and all other Obligations immediately due and payable;

 

b. To exercise any and all rights and remedies provided under this Agreement, the UCC, in law or at equity, including the right to obtain an injunction against Borrower or a decree of specific performance;

 

c. To immediately apply to any court of competent jurisdiction for, and obtain appointment of, a receiver for the Collateral, the Borrower or the Borrower’s business. Borrower consents to any such appointment and agrees not to contest any such motion or appointment;

 

d. Without prior demand or notice, set-off against and apply any accounts, items and monies in the possession of Lender or payable by Lender to Borrower to the Obligations;

 

e. With or without judicial process or the aid or assistance of others, enter upon any premises in which Collateral may be located and, without resistance or interference by Borrower, take physical possession of any items of Collateral and maintain such possession on Borrower’s premises or move the same or any part thereof to such other places as Lender shall choose without being liable to Borrower on account of any losses, damage or depreciation that may occur, and may dispose of all or any part of the Collateral on any premises of Borrower, require Borrower to assemble and make available to Lender or to remove all or any part of the Collateral from any premises in which any part may be located for the purpose of effecting sale or other disposition thereof; and

 

f. Sell any item of the Collateral for cash or other value in any number of lots at a public or private sale without demand or notice (excepting only that Lender shall give Borrower ten (10) days prior written notice of the time and place of any public sale, or the time after which a private sale may be made, which notice Borrower agrees is reasonable). At any public sale Lender may bid for and purchase the whole or any part of the property and rights sold and upon compliance with the terms of such sale may hold or dispose of such property and rights without further accountability to Borrower. Borrower will execute and deliver, or cause to be executed and delivered, such instruments, documents, registration statements, assignments, waivers, certificates and affidavits, and will supply or cause to be supplied such further information and take such further action, as Lender shall require in connection with such sales. Borrower shall be responsible for all costs of sale or other disposition of the Collateral. The proceeds of all sales and collections hereunder shall be applied against the Obligations in such order as Lender shall elect in its sole discretion.

 

 

Failure to exercise any and all rights or remedies Lender may have in the event of any event of Default shall not constitute a waiver of the right to exercise such rights or remedies in the event of any subsequent event of Default, whether of the same or different nature. No waiver of any right or remedy by Lender shall be effective unless made in writing and signed by Lender, nor shall any waiver on one occasion apply to any future occasion.

 

17. Waivers. Borrower and each Guarantor each hereby waive: (a) any requirement for Lender to marshal the Collateral or to resort to the Collateral in any particular order; (b) the right to extend or excuse performance of any of Borrower’s or Guarantor’s Obligations based on force majeure; and (c) to the extent permitted by applicable law, the benefits and advantages of any valuation, stay, appraisement, extension or redemption laws now or hereafter existing which, but for this provision, might be applicable.

 

18. Discharge and Payoff. In recognition of the Lender’s right to have its reasonable attorneys’ fees and other expenses incurred in connection with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Borrower, Lender shall not be required to file terminations or satisfactions of any of Lender’s liens on the Collateral unless and until Borrower and all Guarantors shall have provided general releases in favor of Lender, in form satisfactory to Lender. Borrower understands that this provision constitutes a waiver of its rights under Section 9-513 of the Uniform Commercial Code.

 

19. No Waiver; Cumulative Remedies. No failure on the part of Lender to exercise, and no delay on the part of Lender in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies that may be available to Lender, whether at law, in equity or otherwise. No course of dealing between Borrower and Lender shall operate as a waiver of any rights of Lender under this Agreement or in respect of the Collateral or the Obligations.

 

20. Indemnity. Borrower assumes liability for and does hereby agree to indemnify, protect, save and keep harmless Lender and its agents, from and against any and all liabilities, claims, losses, Obligations, damages, penalties, actions, and suites of whatsoever kind and nature imposed on, incurred by or asserted against Lender or its agents, in any way relating to or growing out of this Agreement, the Note or the Collateral (including without limitation, enforcement of this Agreement and the Note or disposition of the Collateral), except claims, losses or liabilities resulting solely from Lender’s gross negligence or willful misconduct.

 

21. Right of First Refusal. In consideration of the Lender providing the Loan to the Borrower, Borrower hereby agrees that it will, within two (2) days of receipt, provide a copy of any proposal letter, term sheet, letter of intent or commitment letter from any Lender offering to Borrower a refinance of the Loan. Lender shall have the right of first refusal to match the offer(s) of such other Lender(s) within two (2) days of receipt thereof, with a non-response being considered a rejection of such offer(s), and if Lender advises Borrower that it intends to meet the financial and other material terms set forth in such offer(s), Borrower will be obligated to enter into an amendment to this Agreement and the Note extending the terms of this Agreement and the Note for at least the term proposed in such other offer(s), and amending the financial and other material terms set forth in this Agreement and the Note. Notwithstanding the foregoing, Borrower recognizes that this Agreement and the Note can only be terminated as provided herein and therein. Failure of Lender to meet the terms set forth in such letter of interest or commitment letter does not relieve the Borrower from its Obligations hereunder.

 

22. Use of Borrower’s Name, etc. Provided Lender obtains Borrower’s prior written approval in each instance, Borrower hereby authorizes Lender to use the Borrower’s name and tradenames together with variants of such names and related logotypes and the amount of the transaction in advertising that promotes Lender and the business transaction between any Borrower and Lender. Neither Lender nor any of its subsidiaries, affiliates, officers, employees and advertising agents shall have any liability to Borrower arising out of or related to the reasonable exercise of the rights hereby granted to Lender.

 

 

23. Miscellaneous. The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. Neither this Agreement nor any term hereof may be amended orally, nor may any provision hereof be waived orally but only by an instrument in writing signed by Lender and, in the case of an amendment, by Borrower, and any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. This Agreement shall be governed by and construed in accordance with the law of the Chosen Forum, except as required by mandatory provisions of law and except to the extent that the validity or perfection of the security interest hereunder in respect of any particular Collateral are governed by the law of a jurisdiction other than the Chosen Forum. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Each party acknowledges that is has reviewed this Agreement, and the parties hereby agree that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

24. Assignments. This Agreement shall bind the parties hereto and their respective successors and assigns. This Agreement and the Note may be assigned by Lender to a third party, and the Borrower consents to such assignment and agrees that this Agreement and the Note will be in favor of the assignee(s) upon assignment, without any defenses, counterclaims or setoffs of any kind whatsoever. All of the terms of this Agreement and the Note shall inure to the benefit of Lender and its successors and assigns and shall be binding upon each and every one of the Obligors and their respective heirs, executors, administrators, personal representatives, successors and assigns, jointly and severally. Lender may grant participations in all or any portion of, and may assign all or any part of Lender’s rights under, this Agreement and the Note. Lender may disclose to any such participant or assignee any and all information held by or known to Lender at any time with respect to any Obligor.

 

25. Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed to have been given three (3) business days after deposit in the mail, designated as certified mail, return receipt requested, postage-prepaid, one (1) business day after being entrusted to a reputable commercial overnight delivery service addressed to the party to whom such notice is directed, or upon sending if sent via electronic mail, each in accordance with the information in the Schedule . Any party hereto may change the address to which notices shall be directed under this Paragraph by giving three (3) business days written notice of such change to the other parties.

 

26. WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY OR ANY OTHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER OR ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.

 

27. JURISDICTION AND VENUE. THE PARTIES AGREE THAT ANY ACTION TO ENFORCE BORROWER’S OR GUARANTOR’S OBLIGATIONS TO LENDER OR ANY ACTION RELATING TO OR ARISING OUT OF THE LOAN OR THIS AGREEMENT SHALL BE PROSECUTED IN THE CHOSEN FORUM, AND BORROWER AND GUARANTOR SUBMIT TO THE JURISDICTION OF THE CHOSEN FORUM. BORROWER AND GUARANTOR WAIVE ANY AND ALL RIGHTS TO CONTEST THE JURISDICTION AND VENUE OF ANY ACTION BROUGHT IN THIS MATTER AND BORROWER AND GUARANTOR MAY BRING ANY ACTION AGAINST LENDER ONLY IN THE CHOSEN FORUM.

 

28. USA Patriot Act Notification The following notification is provided to Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318: IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including any deposit account, treasury management account, loan or other extension of credit. Lender may ask for the name, address, date of birth, and other information that will allow us to identify all Borrowers, principals and owners. Lender may also ask to see your driver’s license or other identifying documents.

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

 

Borrower: Worksport USA Operations Corporation			Guarantor: Worksport Ltd.
Signature:			Signature:
Name:	Steven Rossi		Name:	Steven Rossi
Title:	President		Title:	CEO
Date:			Date:
Guarantor: Worksport New York Operations Corporation			Lender: LOEB Term Solutions LLC
Signature:			Signature:
Name:	Steven Rossi		Name:	Howard Newman
Title:	President		Title:	Manager
Date:			Date:

 

 

Exhibit 10.2

 

TERM PROMISSORY NOTE

 

Principal Loan Amount:		$1,487,200.00		City, State:		Chicago, IL
				Date:

 

FOR VALUE RECEIVED, Worksport USA Operations Corporation, a Colorado corporation with its principal place of business located at 2500 N. America Drive, West Seneca, New York 14224 (“Borrower”), promises to pay to the order of Loeb Term Solutions LLC, an Illinois limited liability company with its principal place of business located at 8609 W. Bryn Mawr, Suite 208, Chicago, Illinois 60631 (“Lender”), the principal sum of ONE MILLION FOUR HUNDRED EIGHTY-SEVEN THOUSAND TWO HUNDRED AND NO/100 DOLLARS ($1,487,200.00), together with interest from time to time outstanding at the Prime Rate (as defined below) plus seven percent (7%) per annum (the “Effective Rate”) or the Maximum Rate (as defined below), whichever is lower. Interest shall be computed based on a 365 day year based on a simple interest basis. The Prime Rate shall mean the rate of interest quoted in the Wall Street Journal, Money Rates Section as the “Prime Rate” (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s thirty (30) largest banks). In the event that the Wall Street Journal quotes more than one rate, or a range of rates as the Prime Rate, then the Prime Rate shall mean the highest of the quoted rates. In the event that the Wall Street Journal ceases to publish a Prime Rate, then the Prime Rate shall be the average interest rate of the three largest U.S. money center commercial banks, as determined by Lender. The Effective Rate hereunder shall change each time there is a change in the Prime Rate. As used herein, the “Maximum Rate” shall mean, on any day, the highest non-usurious rate of interest permitted by applicable law on such day.

 

The proceeds of this Note shall be used exclusively for business purposes and not for household, family or personal use.

 

Borrower and all endorsers, sureties, guarantors and any other persons liable or to become liable with respect to the loan (the “Loan”) evidenced by this Term Promissory Note (the “Note”) are each included in the term “Obligors” as used in this Note.

 

This Note is referred to in and was delivered pursuant to a certain Credit and Security Agreement of even date herewith, as may be amended or restated from time to time (the “Security Agreement”). Reference is made to the Security Agreement for additional terms relating to this Note and the security given for this Note. Any capitalized terms used in this Note, if not defined in this Note, will have the meanings assigned to such terms in the Security Agreement.

 

From and after an event of Default (as defined in the Security Agreement) subject to any notice and cure periods provided in the loan documents, and regardless of whether the Lender elects to accelerate the Maturity Date of this Note, the entire principal remaining unpaid hereunder shall bear interest at the rate equal to the Effective Rate plus six percent (6%) per annum or the Maximum Rate, whichever is lower.

 

Borrower understands and agrees that the weekly payments under this Note are based on a five (5) year amortization (the “Amortization Period”), but with a balloon payment of all principal, accrued interest and all other amounts owing hereunder due on the three (3) year Maturity Date (defined below).

 

Payments of principal and interest under this Note shall be payable in lawful money of the United States when due without set-off, counterclaim, deduction or withholding for any reason whatsoever on the dates and in the amounts specified below:

 

Payments of principal and interest shall be made in one hundred and fifty-six (156) consecutive weekly payments as follows: One hundred and fifty-five (155) weekly installments of principal and interest on each Wednesday commencing on the first Wednesday after the date of this Note, and then the one hundred and fifty-sixth (156^th) and final installment due on the one hundred and fifty-sixth (156^th) Wednesday after the date of this Note (the “Maturity Date”) of all outstanding principal, accrued interest, fees and all other amounts due hereunder. It is understood and agreed that weekly payments will first be applied to payment of interest, second to late charges and other fees, and the balance, if any, will be applied to the payment of principal. Borrower understands and agrees that the weekly payments will not fully amortize the Loan over a period of three (3) years, and that the final balloon payment will be substantially higher than the regular weekly payments. In addition, in the event that the Prime Rate increases the Lender may require an adjustment in the weekly payments hereunder by utilizing the Effective Rate in effect on such date and the principal amount outstanding on such date such that the monthly payments so calculated would pay off the Note in full by the end of the Amortization Period, and which adjusted amount the Borrower agrees to pay. In the event of such adjustment in the weekly payment, the Amortization Period of the Loan shall not change. The Lender shall provide Borrower with an amortization table in connection with the Loan closing setting forth, among other things, the then current weekly payment amount, and shall use reasonable efforts to provide Borrower a revised amortization table when it advises Borrower of a change in the weekly payment amount.

 

 

If any payment falls due on a day other than a Business Day, then such payment shall instead be made on the next succeeding Business Day, and interest shall accrue accordingly. Any payment received by Lender after 1:00 p.m. (Central Standard Time) shall not be credited against the indebtedness under this Note until the next succeeding Business Day. “Business Day” means any day excluding Saturday, Sunday, and any day which is a legal holiday under the laws of the State of Illinois or which is a day on which Lender is otherwise closed for transacting business. Borrower shall receive immediate credit on payments only if made in the form of a federal wire transfer of cleared funds.

 

All payments to the Lender shall either (a) be made via ACH payment pursuant to an Automatic ACH Debit Agreement, or (b) are payable to the Lender at the following bank account, or such other account as may be determined by Lender from time to time:

 

Wiring Instructions

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Upon an event of Default or at any time thereafter, subject to any notice and cure periods provided in the Loan Documents, at the option of Lender all principal, interest and any other amounts remaining unpaid hereunder shall immediately become due and payable and Lender shall be entitled to pursue any and all rights and remedies provided by this Note, the Security Agreement and applicable law.

 

It is the intent of the parties that any money or other property charged, taken or received as interest, a finance charge or fee for the Loan, shall not exceed the limits (if any) imposed or provided by applicable law, and Lender hereby waives any right to demand such excess. In the event that any money or other property charged, taken or received as interest, a finance charge or a fee under this Note exceeds the Maximum Rate permitted by applicable law, then without further agreement or notice the obligation to be fulfilled shall be automatically reduced to such limit and all sums received by Lender in excess of those lawfully collectible as interest shall be (a) applied against the principal of the Loan with the same force and effect as though the payor had specifically designated such extra sums to be so applied to principal and Lender had agreed to accept such extra payment(s) as a premium-free prepayment or prepayments, and (b) if there are no outstanding obligations under this Note the remaining amount, if any, shall be refunded to Borrower.

 

Subject to any notice and cure periods provided in the Loan Documents, the Obligors hereby severally: (a) waive presentment, protest, notice of dishonor, and the filing of any suit against or joinder of any other person; (b) waive any exemption of any property, wherever located, from garnishment, levy, execution, seizure or attachment prior to or in execution of judgment, or sale under execution or other process for the collection of debts; (c) waive any right to plead laches as a defense in any action or proceeding; (d) consent and agree that, at any time and from time to time without notice, Lender and any Borrower, Guarantor, or their respective successors and assigns then primarily liable for the Loan may agree to renew, extend or compromise the Loan in whole or in part or to modify the terms of the Loan in any respect whatsoever; and (e) agree that until Lender receives all sums due under this Note in immediately available funds, no Obligor shall be released from liability with respect to the Loan unless Lender expressly releases such Obligor in a writing signed by Lender, and Lender’s release of any Obligor(s) shall not release any other person liable with respect to the Loan.

 

This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

 

Any provision of this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction only, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

 

If this Note is signed by more than one person, then the term “Borrower” as used in this Note shall refer to all such persons jointly and severally, and all agreements, covenants, waivers, consents, representations, warranties and other provisions in this Note are made by and shall be binding upon each and every undersigned person, jointly and severally. The term “Lender” shall be deemed to include any subsequent holder(s) of this Note.

 

This Note cannot be changed or modified orally. Lender shall have the right unilaterally to correct patent errors or omissions. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument.

 

IN WITNESS WHEREOF, the Borrower has caused this Term Promissory Note to be executed as of the date first written above.

 

Borrower:		Worksport USA Operations Corporation
Signature:
Name:		Steven Rossi
Title:		President
Date:

 

 

Exhibit 10.3

 

GUARANTY

 

This Guaranty (“Guaranty”) is made on __________________, by Worksport Ltd., a Nevada corporation with its principal address of 2500 N. America Drive, West Seneca (“Guarantor”), in favor of Loeb Term Solutions LLC (“Lender”) to induce Lender to make a loan and/or extend or continue credit to Worksport USA Operations Corporation, a Colorado corporation (“Borrower”) and because Guarantor has determined that executing and delivering this Guaranty is in Guarantor’s interest and to Guarantor’s financial benefit.

 

1.	Guaranty. Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Lender: (a) the full, prompt and unconditional payment when due of all indebtedness and obligations of Borrower to Lender, including, but not limited to, principal, interest and fees on that certain Term Promissory Note dated as of the same date hereof (the “Note”), as it may be amended or restated and whether on demand, at maturity, pursuant to mandatory or optional prepayments, by acceleration or otherwise; and (b) the punctual and faithful performance and observation by Borrower of all duties, agreements, covenants, representations and obligations of Borrower contained in the Loan Documents (as defined in Section 3) (the above subsections (a) and (b) being collectively referred to as the “Indebtedness”).
2.	Absolute, Unconditional and Continuing Obligation. This Guaranty is an absolute, continuing, unconditional, unlimited, and irrevocable guaranty. Guarantor will not be relieved from any obligations under this Guaranty until this Guaranty is terminated in accordance with Section 14. The obligations and liabilities of Guarantor will continue notwithstanding any defect in the genuineness, validity or enforceability of the Indebtedness or the Loan Documents, or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of the liabilities of a surety or guarantor or which might otherwise limit recourse against Guarantor.
3.	The Loan Documents. The Note, and the Credit and Security Agreement and all other related documents now existing or hereafter arising and executed in connection with the loan evidenced by the Note, including all amendments and restatements thereto (collectively, the “Loan Documents”), are incorporated into and made a part of this Guaranty by reference.
4.	Continuation of Liability. The liability and obligations of Guarantor will in no way be affected, impaired, diminished or released by any action or inaction whatsoever other than the indefeasible payment in full and in cash of the Indebtedness.
5.	Recourse/Exercise of Rights by Lender. At any time when the Indebtedness, or any portion thereof, has not been paid when due (whether by acceleration or otherwise), subject to any notice and cure periods in the Loan Documents, or in the event that an insolvency proceeding is brought by or against the Borrower or the Guarantor, Lender can require that Guarantor pay Lender the amounts owing on this Guaranty.
6.	Subordination/Subrogation. In the event that Guarantor becomes obligated to pay any sums to Borrower, or in the event that Borrower or any subsequent owner of any Collateral is now or hereafter becomes indebted to Guarantor other than for customary salary and bonuses (collectively, “Debt”), the Debt will at all times be subordinate as to lien, payment and all other respects, to the Indebtedness, and Guarantor will not, among other things, accept any payment from Borrower with respect to the Debt without Lender’s prior written consent. Furthermore, until the Indebtedness is indefeasibly paid in full and in cash, and the Loan Agreement is terminated, Guarantor hereby absolutely, irrevocably and unconditionally waives all rights Guarantor may have, at law or in equity, to seek or claim subrogation. Lender has no duty to enforce or protect any rights which the Guarantor may have against Borrower or any other Person, and Guarantor assumes full responsibility for enforcing and protecting such rights.

 

 

7.	Representations and Warranties. Guarantor represents, warrants and covenants to Lender that: (a) Guarantor has completely read and understands the Loan Documents and agrees to all those portions which apply to Guarantor; (b) Guarantor was provided an opportunity to review the Loan Documents with its legal counsel; (c) any financial statements of Guarantor furnished to Lender are true and correct in all material respects and include all contingent liabilities of Guarantor; (d) since the date of any financial statements furnished to Lender, no material adverse change has occurred in the financial condition of Guarantor; (e) to Guarantor’s knowledge there are no pending or threatened legal proceedings or judgments against Guarantor, and no federal or state tax liens have been filed or threatened against Guarantor; and (f) Guarantor is not in default or claimed default under any agreement for borrowed money. Guarantor agrees to immediately give Lender written notice of any material adverse change in its financial condition.
8.	Expenses. Guarantor agrees to pay all reasonable expenses (including reasonable attorneys’ fees) incurred by Lender in connection with the enforcement of Lender’s rights under the Loan Documents, this Guaranty, and the collection of the Indebtedness.
9.	Transfer of Assets. Guarantor further agrees that until the Indebtedness is indefeasibly paid in full, and in cash, and the Loan Agreement is terminated, Guarantor will not, without Lender’s prior written consent: (i) make any voluntary transfer of any of Guarantor’s assets which would have the effect of materially diminishing Guarantor’s present net worth or (ii) guaranty the debts or obligations of any other person or entity.
10.	Reinstatement. This Guaranty will continue to be effective or will be automatically reinstated, as the case may be, if at any time payment of all or part of the Indebtedness is rescinded or must otherwise be restored or returned by Lender, including in connection with Borrower’s bankruptcy or insolvency.
11.	Joint and Several Liability. The term “Guarantor” shall mean each entity executing this Guaranty, each individually and together collectively, and the obligations of Guarantor and any other guarantor executing a guaranty of all or any portion of the Indebtedness will be joint and several.
12.	Assignability/Binding Effect. This Guaranty shall be assignable by Lender without notice to Guarantor and shall inure to the benefit of Lender and to any subsequent successors and assigns.
13.	Termination. Notwithstanding anything contained herein to the contrary, the liability of Guarantor will be terminated only in the event that (i) Borrower or Guarantor has indefeasibly paid Lender in cash and in full the Indebtedness and (ii) the Loan Agreement is terminated.
14.	Severability. If any provision of this Guaranty is in conflict with any statute or rule of law or is otherwise unenforceable for any reason, then that provision will be deemed null and void to the extent of the conflict or unenforceability and will be deemed severable, but it will not invalidate any other provision of this Guaranty.
15.	Complete Agreement. This Guaranty, and any collateral document executed in favor of Lender, are the final, complete and exclusive expression of the agreement between Guarantor and Lender with respect to the subject matter of this Guaranty. This Guaranty cannot be modified or amended except in a writing signed by both Guarantor and Lender. This Guaranty may be assigned by Lender to a third party in connection with an assignment of the Indebtedness, and the Guarantor consents to such assignment and agrees that this Guaranty will be in favor of the assignee upon assignment, without any defenses, counterclaims or setoffs of any kind whatsoever.
16.	Cumulative Rights. All rights, powers and remedies of Lender hereunder and under the Loan Documents are cumulative and not alternative and shall be in addition to all rights, powers and remedies given to Lender by law and by agreement.

 

 

17.	Choice of Law, Jurisdiction and Venue. This Guaranty shall be governed by and construed in accordance with the laws of the State of Illinois except as required by mandatory provisions of law, and shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. Neither this Guaranty nor any term hereof may be amended orally, nor may any provision hereof be waived orally but only by an instrument in writing signed by Lender and, in the case of an amendment, by Guarantor and any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. The parties agree that any action to enforce Guarantor’s obligations to Lender or any action relating to or arising out of this Guaranty shall be prosecuted in any federal, state or local court situated in the County of Cook, State of Illinois (unless Lender, in its sole discretion, elects some other jurisdiction), and Guarantor submits to the jurisdiction of any such court selected by Lender. Guarantor waives any and all rights to contest the jurisdiction and venue of any action brought in this matter, and Guarantor may bring any action against Lender only in the state or federal courts located in the State of Illinois.
18.	WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY OR ANY OTHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER OR ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER PROVIDING THE FINANCING TO BORROWER AND ACCEPTING THIS GUARANTY FROM GUARANTOR.
19.	SIGNATURES. This Guaranty may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Each party acknowledges that it has reviewed this Guaranty, and the parties that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Guaranty. Delivery of this Guaranty or an executed counterpart hereof shall be deemed a good and valid execution and delivery hereof or thereof.
20.	NOTICE. All notices required to be given to Guarantor shall be deemed given upon the first to occur of (i) deposit thereof in a receptacle under the control of the United States Postal Service, (ii) transmittal by electronic means to a receiver under the control of such party; or (iii) actual receipt by such party or an employee or agent of such party. All notices to Lender shall be deemed given upon actual receipt by a responsible officer of Lender. For the purposes hereof, notices hereunder shall be sent to the following addresses or to such other addresses as each such party may in writing hereafter indicate:

 

GUARANTOR:		Worksport Ltd.		LENDER:		Loeb Term Solutions LLC
Address:		2500 N. America Dr.		Address:		8609 W. Bryn Mawr, Suite 208
City, State & Zip:		West Seneca, NY 14224		City, State & Zip:		Chicago, IL 60631
Office Number:				Office Number:
Mobile Number:				Mobile Number:
Email Address:				Email Address:

 

The Guarantor executes this Guaranty as of the day and year first above written by its duly authorized representative.

 

GUARANTOR:	Worksport Ltd.
Signature:
Print Name:	Steven Rossi
Title:	CEO

 

 

Exhibit 10.4

 

GUARANTY

 

This Guaranty (“Guaranty”) is made on __________________, by Worksport New York Operations Corporation, a New York corporation with its principal address of 2500 N. America Drive, West Seneca (“Guarantor”), in favor of Loeb Term Solutions LLC (“Lender”) to induce Lender to make a loan and/or extend or continue credit to Worksport USA Operations Corporation, a Colorado corporation (“Borrower”) and because Guarantor has determined that executing and delivering this Guaranty is in Guarantor’s interest and to Guarantor’s financial benefit.

 

1.	Guaranty. Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Lender: (a) the full, prompt and unconditional payment when due of all indebtedness and obligations of Borrower to Lender, including, but not limited to, principal, interest and fees on that certain Term Promissory Note dated as of the same date hereof (the “Note”), as it may be amended or restated and whether on demand, at maturity, pursuant to mandatory or optional prepayments, by acceleration or otherwise; and (b) the punctual and faithful performance and observation by Borrower of all duties, agreements, covenants, representations and obligations of Borrower contained in the Loan Documents (as defined in Section 3) (the above subsections (a) and (b) being collectively referred to as the “Indebtedness”).
2.	Absolute, Unconditional and Continuing Obligation. This Guaranty is an absolute, continuing, unconditional, unlimited, and irrevocable guaranty. Guarantor will not be relieved from any obligations under this Guaranty until this Guaranty is terminated in accordance with Section 14. The obligations and liabilities of Guarantor will continue notwithstanding any defect in the genuineness, validity or enforceability of the Indebtedness or the Loan Documents, or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of the liabilities of a surety or guarantor or which might otherwise limit recourse against Guarantor.
3.	The Loan Documents. The Note, and the Credit and Security Agreement and all other related documents now existing or hereafter arising and executed in connection with the loan evidenced by the Note, including all amendments and restatements thereto (collectively, the “Loan Documents”), are incorporated into and made a part of this Guaranty by reference.
4.	Continuation of Liability. The liability and obligations of Guarantor will in no way be affected, impaired, diminished or released by any action or inaction whatsoever other than the indefeasible payment in full and in cash of the Indebtedness.
5.	Recourse/Exercise of Rights by Lender. At any time when the Indebtedness, or any portion thereof, has not been paid when due (whether by acceleration or otherwise), subject to any notice and cure periods in the Loan Documents, or in the event that an insolvency proceeding is brought by or against the Borrower or the Guarantor, Lender can require that Guarantor pay Lender the amounts owing on this Guaranty.
6.	Subordination/Subrogation. In the event that Guarantor becomes obligated to pay any sums to Borrower, or in the event that Borrower or any subsequent owner of any Collateral is now or hereafter becomes indebted to Guarantor other than for customary salary and bonuses (collectively, “Debt”), the Debt will at all times be subordinate as to lien, payment and all other respects, to the Indebtedness, and Guarantor will not, among other things, accept any payment from Borrower with respect to the Debt without Lender’s prior written consent. Furthermore, until the Indebtedness is indefeasibly paid in full and in cash, and the Loan Agreement is terminated, Guarantor hereby absolutely, irrevocably and unconditionally waives all rights Guarantor may have, at law or in equity, to seek or claim subrogation. Lender has no duty to enforce or protect any rights which the Guarantor may have against Borrower or any other Person, and Guarantor assumes full responsibility for enforcing and protecting such rights.

 

 

7.	Representations and Warranties. Guarantor represents, warrants and covenants to Lender that: (a) Guarantor has completely read and understands the Loan Documents and agrees to all those portions which apply to Guarantor; (b) Guarantor was provided an opportunity to review the Loan Documents with its legal counsel; (c) any financial statements of Guarantor furnished to Lender are true and correct in all material respects and include all contingent liabilities of Guarantor; (d) since the date of any financial statements furnished to Lender, no material adverse change has occurred in the financial condition of Guarantor; (e) to Guarantor’s knowledge there are no pending or threatened legal proceedings or judgments against Guarantor, and no federal or state tax liens have been filed or threatened against Guarantor; and (f) Guarantor is not in default or claimed default under any agreement for borrowed money. Guarantor agrees to immediately give Lender written notice of any material adverse change in its financial condition.
8.	Expenses. Guarantor agrees to pay all reasonable expenses (including reasonable attorneys’ fees) incurred by Lender in connection with the enforcement of Lender’s rights under the Loan Documents, this Guaranty, and the collection of the Indebtedness.
9.	Transfer of Assets. Guarantor further agrees that until the Indebtedness is indefeasibly paid in full, and in cash, and the Loan Agreement is terminated, Guarantor will not, without Lender’s prior written consent: (i) make any voluntary transfer of any of Guarantor’s assets which would have the effect of materially diminishing Guarantor’s present net worth or (ii) guaranty the debts or obligations of any other person or entity.
10.	Reinstatement. This Guaranty will continue to be effective or will be automatically reinstated, as the case may be, if at any time payment of all or part of the Indebtedness is rescinded or must otherwise be restored or returned by Lender, including in connection with Borrower’s bankruptcy or insolvency.
11.	Joint and Several Liability. The term “Guarantor” shall mean each entity executing this Guaranty, each individually and together collectively, and the obligations of Guarantor and any other guarantor executing a guaranty of all or any portion of the Indebtedness will be joint and several.
12.	Assignability/Binding Effect. This Guaranty shall be assignable by Lender without notice to Guarantor and shall inure to the benefit of Lender and to any subsequent successors and assigns.
13.	Termination. Notwithstanding anything contained herein to the contrary, the liability of Guarantor will be terminated only in the event that (i) Borrower or Guarantor has indefeasibly paid Lender in cash and in full the Indebtedness and (ii) the Loan Agreement is terminated.
14.	Severability. If any provision of this Guaranty is in conflict with any statute or rule of law or is otherwise unenforceable for any reason, then that provision will be deemed null and void to the extent of the conflict or unenforceability and will be deemed severable, but it will not invalidate any other provision of this Guaranty.
15.	Complete Agreement. This Guaranty, and any collateral document executed in favor of Lender, are the final, complete and exclusive expression of the agreement between Guarantor and Lender with respect to the subject matter of this Guaranty. This Guaranty cannot be modified or amended except in a writing signed by both Guarantor and Lender. This Guaranty may be assigned by Lender to a third party in connection with an assignment of the Indebtedness, and the Guarantor consents to such assignment and agrees that this Guaranty will be in favor of the assignee upon assignment, without any defenses, counterclaims or setoffs of any kind whatsoever.
16.	Cumulative Rights. All rights, powers and remedies of Lender hereunder and under the Loan Documents are cumulative and not alternative and shall be in addition to all rights, powers and remedies given to Lender by law and by agreement.
17.	Choice of Law, Jurisdiction and Venue. This Guaranty shall be governed by and construed in accordance with the laws of the State of Illinois except as required by mandatory provisions of law, and shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. Neither this Guaranty nor any term hereof may be amended orally, nor may any provision hereof be waived orally but only by an instrument in writing signed by Lender and, in the case of an amendment, by Guarantor and any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. The parties agree that any action to enforce Guarantor’s obligations to Lender or any action relating to or arising out of this Guaranty shall be prosecuted in any federal, state or local court situated in the County of Cook, State of Illinois (unless Lender, in its sole discretion, elects some other jurisdiction), and Guarantor submits to the jurisdiction of any such court selected by Lender. Guarantor waives any and all rights to contest the jurisdiction and venue of any action brought in this matter and Guarantor may bring any action against Lender only in the state or federal courts located in the State of Illinois.

 

 

18.	WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY OR ANY OTHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER OR ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER PROVIDING THE FINANCING TO BORROWER AND ACCEPTING THIS GUARANTY FROM GUARANTOR.
19.	SIGNATURES. This Guaranty may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Each party acknowledges that it has reviewed this Guaranty, and the parties that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Guaranty. Delivery of this Guaranty or an executed counterpart hereof shall be deemed a good and valid execution and delivery hereof or thereof.
20.	NOTICE. All notices required to be given to Guarantor shall be deemed given upon the first to occur of (i) deposit thereof in a receptacle under the control of the United States Postal Service, (ii) transmittal by electronic means to a receiver under the control of such party; or (iii) actual receipt by such party or an employee or agent of such party. All notices to Lender shall be deemed given upon actual receipt by a responsible officer of Lender. For the purposes hereof, notices hereunder shall be sent to the following addresses or to such other addresses as each such party may in writing hereafter indicate:

 

GUARANTOR:		Worksport New York Operations Corporation		LENDER:		Loeb Term Solutions LLC
Address:		2500 N. America Dr.		Address:		8609 W. Bryn Mawr, Suite 208
City, State & Zip:		West Seneca, NY 14224		City, State & Zip:		Chicago, IL 60631
Office Number:		888-554-8789		Office Number:
Mobile Number:				Mobile Number:
Email Address:				Email Address:

 

The Guarantor executes this Guaranty as of the day and year first above written by its duly authorized representative.

 

GUARANTOR:	Worksport New York Operations Corporation
Signature:
Print Name:	Steven Rossi
Title:	President

 

 

Exhibit 10.5

 

Date: _____________________

 

Loeb Term Solutions LLC (“LTS”)

8609 W. Bryn Mawr, Suite 208

Chicago, IL 60631

 

RE: Worksport USA Operations Corporation (the “Borrower”)

 

Ladies and Gentlemen:

 

The undersigned (“Indemnitor”) is entering into this Indemnification Agreement (this “Agreement”) to induce LTS to extend or continue to extend financial accommodations to or for the benefit of the Borrower pursuant to the terms of a Term Promissory Note and Security Agreement both dated as of the date hereof between LTS and Borrower, as may be amended or restated (collectively the “Credit Agreement”). All obligations of the Borrower to LTS, whether pursuant to the Credit Agreement, or otherwise, are hereinafter referred to as the “Obligations”. Any capitalized term not defined herein shall have the meaning ascribed thereto in the Credit Agreement.

 

Indemnitor hereby continuously covenants, represents and warrants to LTS that:

 

A.

Financial Statements and Reports. All financial statements – excluding projections and any forward-looking statements – and other final reports made or to be made by the Borrower, or by any direct or indirect, absolute or contingent obligor on the Obligations, to LTS are and shall remain true and correct in all material respects.

 

B.

Machinery & Equipment.

 

	i.	All representations made by Borrower to LTS, and all documents and schedules given by Borrower to LTS, relating to the description, quantity, quality, condition and valuation of the Machinery & Equipment (“M&E”) are and shall be materially true and correct.
	ii.	Borrower has marked all M&E funded by LTS and/or has segregated it from all other M&E.
	iii.	All M&E is located only at the address or addresses of Borrower which have been disclosed to LTS in writing, and landlord, warehouse and mortgagee waivers, as applicable, for all such locations have been provided to LTS.
	iv.	No M&E will be moved from its current location without prior written notice to LTS.
	v.	All M&E will be properly maintained in accordance with manufacturers’ requirements.
	vi.	All M&E will be insured as required in the Credit Agreement or as otherwise required by LTS.

 

C.

Title to Collateral. Borrower:

 

	i.	Is the owner of all collateral heretofore or hereafter pledged by Borrower to LTS (the “Collateral”), free of all security interests, liens or other encumbrances, except LTS’s security interest therein and any other liens which have been approved in writing by LTS, including any liens held by Amerisource Funding, Inc.
	ii.	Has the unconditional authority to grant LTS a security interest in the Collateral.
	iii.	Will not take or fail to take any action (specifically including but not limited to the suffering of any federal tax lien) which will adversely affect the priority of LTS’s security interest in the Collateral.
	iv.	Will not transfer the Collateral to any other person or entity, without the prior written consent of LTS.

 

Indemnitor indemnifies LTS from any loss or damage, including any actual, consequential or incidental loss or damage, suffered by LTS as a result of, or arising out of, the breach of any covenants, warranties or representations (in whole or part) made by Indemnitor to LTS in this Agreement. Indemnitor further indemnifies LTS against, and agrees to reimburse LTS for, all costs and expenses incurred (including reasonable attorneys’ fees) in the negotiation, preparation, administration and/or enforcement of this Agreement.

 

 

Indemnitor obligations hereunder shall not be affected by, and Indemnitor waives any and all claims and defenses arising out of, any of the following:

 

	●	Any failure to perfect or continue the perfection of any security interest in or other lien upon any Collateral.
	●	The invalidity, unenforceability, impropriety of manner of enforcement of, or loss or change in priority of, any security interest or lien in the Collateral.
	●	The failure to protect, preserve or insure any Collateral.
	●	Any failure of the Indemnitor to receive notice of presentment, demand, protest, default, non-payment, partial payment, any intended disposition of any of the Collateral, the acceptance of this Agreement or the Credit Agreement, any extension of credit by LTS to Debtor, and all other notices to which Indemnitor might be otherwise entitled.
	●	Any failure, negligence or omission by LTS in enforcing LTS’s claims against the Borrower or the Collateral.
	●	Any amendment, release, settlement or compromise of the Obligations.
	●	Any amendment, modification or termination of the Credit Agreement or related documents.
	●	The invalidity or unenforceability of the Obligations.
	●	The filing of an insolvency proceeding by or against Borrower.

 

This Agreement shall remain in full force and effect until the later to occur of termination of the Credit Agreement or repayment in full of the Obligations.

 

In the event of any litigation arising hereunder, the prevailing party shall recover its attorney’s fees and expenses from the unsuccessful party. Any action arising hereunder may, at LTS’s election, be prosecuted in any court located in Illinois (the “Acceptable Forums”). We agree that such forum is convenient to us, and we submit to such jurisdiction and waive any objections to jurisdiction or venue. Should we commence an action in any other forum; we waive any right to oppose LTS’s motion or application to transfer such proceeding to a court in the Acceptable Forums.

 

WE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT WE MAY HAVE TO TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY. WE ACKNOWLEDGE THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO LTS IN EXTENDING CREDIT OR CONTINING TO EXTEND FINANCIAL ACCOMMODATIONS TO THE BORROWER, THAT LTS WOULD NOT HAVE EXTENDED SUCH CREDIT OR FINANCIAL ACCOMMODATIONS WITHOUT THIS JURY TRIAL WAIVER, AND THAT WE HAVE BEEN REPRESENTED BY AN ATTORNEY OR HAVE HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS JURY TRIAL WAIVER AND UNDERSTAND THE LEGAL EFFECT OF THIS WAIVER.

 

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Each party acknowledges that is has reviewed this Agreement, and the parties hereby agree that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Delivery of this Agreement or an executed counterpart hereof shall be deemed a good and valid execution and delivery hereof or thereof

 

Name:	Steven Rossi
Address:
Sincerely,
STEVEN ROSSI, Individually

 

 

 

Exhibit 10.6

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”) is made and entered into as of ____________, by Worksport Ltd., a Nevada corporation with its principal place of business and chief executive offices at 2500 N. America Drive, West Seneca, New York 14224 (“Debtor”), in favor of Loeb Term Solutions LLC, an Illinois limited liability company, with an address at 8609 W. Bryn Mawr, Suite 208, Chicago, IL 60631 (“Lender”).

 

In consideration of and as an inducement to Lender making or continuing to make certain loans or financial accommodations (the “Loan”) to Worksport USA Operations Corporation (“Borrower”), which loans have been or will be guaranteed by the Debtor pursuant to that certain Guaranty from the Debtor to the Lender, as may have been or hereafter may be amended and/or restated from time to time (the “Guaranty”), and to secure the payment and performance of the Guaranty and of any and all other obligations and liabilities of Debtor and Borrower to Lender, whether arising in connection with loans, advances, guarantees, purchases, acquisitions, or other extensions of credit made to or on behalf of Debtor, Borrower or any other person for whom Debtor serves as surety or guarantor, and whether direct or indirect, absolute or contingent, or now or hereafter existing, or due or to become due (collectively the “Obligations”), the parties hereto agree as follows:

 

1.

Grant of Security Interest. To secure the payment and performance of the Obligations, Debtor hereby grants to Lender a security interest in all of Debtor’s right, title and interest in and to the Collateral (defined below).

 

2.

UCC Provisions.

 

a.

All capitalized terms not defined herein shall have the meaning given to such terms in the Uniform Commercial Code (“UCC”) as in effect on the date hereof in the state of Illinois, unless the context requires a different meaning.

b.

Debtor previously authorized and hereby authorizes Lender to file one or more financing statements, and amendments thereto, relating to all or any part of the Collateral in the Debtor’s state of organization and in any other states or locations selected by Lender. Lender may describe the Collateral as “all assets” of Debtor or words of similar effect in such financing statements.

 

3.

Definition of Collateral. The Collateral is all of the Debtor’s now owned or existing or hereafter acquired or arising: Accounts, Goods, Inventory, Equipment (including without limitation the equipment described on Exhibit A attached hereto), Chattel Paper, Instruments, Investment Property, specifically identified Commercial Tort Claims, Documents, Deposit Accounts, Letter of Credit Rights, General Intangibles, Intellectual Property, Contract Rights, customer lists, furniture and fixtures, books and records and supporting obligations for any of the foregoing, and all Proceeds of the foregoing (the “Collateral”). The Collateral also includes all monies on deposit or held in reserve with Lender.

 

4.

Representations and Covenants Relating to the Collateral.

 

a.

Ownership. Debtor is the owner of the Collateral and shall at all times maintain valid title to the Collateral.

b.

Lien Priority. The security interest granted hereby shall at all times be a valid and perfected first priority security interest, subject to the terms of any intercreditor agreement executed by Lender, enforceable against Debtor and all third parties, securing the Obligations. Debtor shall not permit any financing statement or other instruments similar in effect covering all or any part of the Collateral to be filed or recorded unless subject to an intercreditor agreement or subordination agreement executed by Lender, without the prior written consent of Lender. Without limiting the foregoing, Debtor shall not enter into any merchant cash advance loans or any other agreements or loans wherein Debtor sells or assigns its accounts or future cash.

c.

Care of Collateral. Debtor, at its own expense, will maintain, keep and preserve the Collateral in the ordinary course of business in good repair, working order and condition (reasonable wear and tear excepted) and from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements, additions, betterments and improvements thereto and will not waste or destroy the Collateral or any part thereof and will not be negligent in the care and use of any Collateral and will not use any Collateral in violation of applicable law.

d.

Disposition of Collateral. Debtor shall not sell, lease, transfer, assign (by operation of law or otherwise) or otherwise dispose of all or any part of the Collateral, except for sales of Inventory, furniture, and fixtures in the ordinary course of business.

e.

Principal place of business and Trade Names. Debtor represents, warrants and covenants that: (i) Debtor’s principal place of business and the books and records relating to the Collateral are located at Debtor’s principal place of business specified above; (ii) Debtor has not, within the last five (5) years, transacted business under any trade names other than those specified herein or otherwise provided to Lender in writing, except Franchise Holdings International, Inc.; and (iii) Debtor will not move its principal place of business or its books and records, or transact business under any new trade names, without giving Lender (30) days prior written notice thereof or without having taken all action required by Section 4.f. below with respect to any affected Collateral.

 

 

	f.	Location of Collateral. Debtor shall not permit the equipment, inventory or other tangible Collateral to be located at any location except at the location specified in the existing written Landlord Agreement executed by the landlord and Lender, unless:

(i)

Debtor gives Lender thirty (30) days prior written notice thereof;

(ii)

Prior to the move, Debtor obtains from the landlord of the premises of the future location an executed lease and provide a copy to Lender;

(iii)

Prior to the move, Debtor obtains from the landlord of the premises of the future location a Landlord Agreement, in form satisfactory to Lender and provides a copy to Lender;

(iv)

Prior to the move, the machinery mover hired by Debtor names Lender as additional insured, loss payee and Lender loss payee on its insurance policy and provides a copy to Lender;

(v)

Debtor has all of the previously installed equipment re-installed;

(vi)

Debtor allows Lender to inspect the equipment at Debtor’s expense to confirm that all previously installed equipment as shown on Exhibit A is re-installed and operating. The reinspection fee will be pulled via ACH; and

(vii)

Within ten (10) days of the completion of the move, Debtor notifies Lender of any surplus equipment left from the move and develops with Lender a plan to sell the surplus.

 

5.

Further Assurances. Debtor agrees that it shall from time to time, and at its expense, promptly execute and deliver all instruments, documents and assignments, and shall take all further actions that Lender may request in order to perfect, protect and continue any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Collateral, and shall promptly give to the Lender evidence satisfactory to Lender of such action. Without limiting the generality of the foregoing, Debtor shall:

 

a.

Take such steps as Lender may request for Lender (i) to obtain an acknowledgment of any bailee having possession of any of the Collateral that the bailee holds such Collateral for the benefit Lender, or (ii) to obtain “control” of any investment property, deposit accounts, letter-of-credit rights, electronic chattel paper or other Collateral;

b.

Mark conspicuously each document, Chattel Paper and Instrument, and at the request of Lender, each of its records pertaining to the Collateral, with a legend in form and substance satisfactory to Lender indicating that such document, Chattel Paper, Instrument or other Collateral is subject to the security interest granted hereby;

c.

Upon the request of the Lender, deliver to Lender any original note, Instrument, Chattel Paper, Instrument or other document evidencing any Collateral and any certificate or instrument evidencing any Security, duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in forms and substance satisfactory to Lender;

d.

Deliver original certificates of title and execute all documentation in order to reflect Lender’s security interest on titled motor vehicles and vessels;

e.

furnish to Lender from time to time statements and schedules identifying and describing the Collateral and such other reports and information concerning the Collateral as Lender may request in its sole discretion; and

f.

Not store, keep or maintain any Collateral at any location other than locations where there is a landlord waiver and/or a mortgagee waiver in favor of Lender, and in forms acceptable to Lender.

 

6.

Insurance. Debtor at all times should have the Collateral insured in the Debtor’s or Borrower’s name against loss or damage by fire, theft, burglary, pilferage, loss in transit and such other hazards with amounts, under policies and by insurers acceptable to Lender. Each policy shall include a provision for Lender to receive copies directly from the insurance agent of all written notices to policy holder including, but not limited to any invoices, statements of account, certificates of insurance, cancellation or substantial modification. Policies shall show Lender as additional insured, loss payee and Lender’s loss payee in a manner acceptable to Lender. Debtor shall execute and deliver to Lender simultaneously herewith and at any other time hereafter such assignments of policies of insurance as Lender shall reasonably require. All premiums shall be paid by Debtor, and a copy of the policies and certificate of insurance shall be delivered to Lender. If Debtor fails to do so, Lender may (but shall not be required to) procure such insurance at the Debtor’s expense. DEBTOR ALSO GRANTS PERMISSION FOR LENDER TO SPEAK DIRECTLY WITH DEBTOR’S INSURANCE AGENT AS REQUIRED TO CONFIRM PROPER INSURANCE IS IN PLACE AND IS CURRENT.

 

7.

Inspection; Books, Records and Financial Statements and Reports.

 

a.

Debtor shall at all times keep accurate and complete records of the Collateral, and, at Debtor’s expense, at a reasonable time, permit Lender to inspect the Collateral, and inspect and make extracts from and copies of its books and all records, including preventative maintenance records relating to the Collateral.

b.

Debtor shall at all times keep, and if requested provide Lender with copies of or allow Lender to inspect, monthly financial records prepared in accordance with generally accepted accounting principles and which, to the knowledge of the Debtor, are true and accurate in all material respects, including an income statement, balance sheet, statement of cash flows, accounts payable agings, accounts receivable agings, inventory reports and payroll reports.

 

 

c.

Lender shall be permitted to discuss with Debtor’s owners, directors, officers, managers and auditors Debtor’s business, procedures, assets, liabilities, financial positions, results of operations and business prospects.

d.

Debtor shall keep its records concerning the Collateral and other business records at its principal place of business or at such other location as shall have been approved by Lender.

e.

The Lender shall have the right to have the Equipment appraised or inspected on an annual basis. At every annual appraisal or inspection the Loan balance shall not exceed 80% of the net fair liquidation value of the Equipment (the “Equipment Cap”), and if the Loan balance exceeds Equipment Cap the Debtor shall make a Loan payment to be in compliance with the Equipment Cap within sixty (60) days of notice. If the Loan does not close within forty-five (45) days of the initial inspection, Lender may perform a reinspection of the Collateral at the Debtor’s expense. After the occurrence of a Default, there shall be no limit on the number of appraisals and inspections, and Debtor shall reimburse Lender for costs related to such appraisals or inspections. Prior to the occurrence of a Default, Lender will give Debtor seventy-two (72) hours prior notice, and the inspection will only be during normal business hours. Debtor authorizes Lender to debit the amount of the Appraisal Expense (as defined below) from Debtor’s bank account via ACH transfer as more fully set forth in the ACH Authorization Agreement.

f.

The cost of all inspections and actions under this Section shall be borne by the Debtor.

 

8.

Taxes. Debtor shall promptly pay when due all property, payroll and any other taxes, assessments and governmental charges or levies imposed upon the Collateral, except to the extent the validity thereof is being contested in good faith by Debtor and with reserves for payment of such charges or levies in any amount satisfactory to Lender. Lender reserves the right to require Debtor to use an independent payroll service if Debtor is delinquent in paying their payroll taxes on time.

 

9.

Lender’s Duties and Powers. If Debtor fails to perform any covenant or agreement contained herein after any applicable cure and notice period, Lender may (but shall not be obligated to) perform, or cause performance of, such covenant or agreement at the Debtor’s expense. The powers conferred on Lender hereunder are to protect Lender’s interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers.

 

10.

Loans, Dividends or other Distributions to Equity Owners. Debtor covenants and agrees that until all Obligations to Lender are paid in full, it will not declare or pay any dividend or make any other distribution or loan of any kind to its shareholders, members or other equity owners, other than:

 

a.

Normal salary, or guaranteed distributions in lieu of salary, paid to an equity owner that is also an employee of Debtor; and

b.

With respect to any year in which Debtor is not taxed by the Internal Revenue Services as a “C” corporation, and provided that Debtor is not in Default at that time of such payment, Debtor may make a distribution of profits to its equity owners in an amount not to exceed the sum necessary to enable its equity owners to pay their personal state and federal taxes directly attributable to the profits earned by Debtor for the applicable year.

 

11.

Fees and Expenses.

 

a.

Debtor shall upon demand pay to Lender the amount of any and all expenses, including without limitation, the reasonable fees and disbursements of Lender’s counsel and of any experts and agents, which Lender may incur in connection with the preparation, administration and enforcement of this Agreement, or the sale, collection from, or other realization upon any of the Collateral.

 

12.

Default. Each of the following shall constitute an event of default under this Agreement (a “Default”):

 

a.

Borrower or Debtor fails to pay any amounts owing to Lender, including but not limited to the Obligations, when due, provided, however, weekly payments under the Loan Documents shall have a forty-eight hour grace period for bank payment processing issues out of Borrower or Debtor’s control;

b.

Debtor fails to observe or perform any of the terms, covenants or conditions contained in this Agreement, the Guaranty or any other contract, instrument or agreement with Lender after 30 days’ written notice;

c.

Borrower fails to observe or perform any of the terms, covenants or conditions contained in any contract, instrument or agreement with Lender after 30 days’ written notice;

d.

Any representation or warranty made by Debtor herein is false in any material respect as of the time when made or given;

e.

Debtor shall make an assignment for the benefit of creditors, file a petition in bankruptcy, petition or apply for the appointment of a custodian, receiver or any trustee for Debtor or the Collateral, or shall commence any proceedings under any bankruptcy, reorganization, arrangement, readjustment of debt (other than a refinance of any active loans as of the effective date herein), dissolution or liquidation law or statue of any jurisdiction, whether now or hereafter in effect, or if there shall have been filed any such petition or application, or any such proceeding shall have been commenced against Debtor, in which an order for relief is entered and is not dismissed within sixty (60) days;

 

 

f.

Any suit is filed against Debtor and not disclosed to Lender within thirty (30) days;

g.

Any judgment is entered against Debtor in excess of $100,000.00 USD;

h.

Any of the Collateral is taken or sought to be taken by levy, execution or other process of law;

i.

Debtor or Borrower liquidates, dissolves, or merges into or consolidates with or into any other entity;

j.

Any financial statement or report provided by Debtor or Borrower to Lender is false in any material respect as of the time when made or given; or

k.

Any circumstance or event of any nature which in Lender’s sole reasonable discretion may materially and adversely affect the condition, operation, business or assets of Debtor or materially impairs the ability of Debtor to fulfill its Obligations to Lender.

 

13.

Remedies. Upon and event of Default, Lender shall have the following remedies which may be exercised cumulatively:

 

a.

To declare all Obligations immediately due and payable;

b.

To exercise any and all rights and remedies provided under this Agreement, the UCC, in law or at equity, including the right to obtain an injunction against Debtor or a decree of specific performance;

c.

To immediately apply to any court of competent jurisdiction for, and obtain appointment of, a receiver for the Collateral, the Debtor and/or the Debtor’s business, all without posting a bond. Debtor consents to any such appointment and agrees not to contest any such motion or appointment;

d.

Without prior demand or notice, to set-off against and apply any accounts, items and monies in the possession of Lender or payable by Lender to Debtor to the Obligations;

e.

With or without judicial process or the aid or assistance of others, to enter upon any premises in which Collateral may be located and, without resistance or interference by Debtor, to take physical possession of any items of Collateral and to maintain such possession on Debtor’s premises or move the same or any part thereof to such other places as Lender shall choose without being liable to Debtor on account of any losses, damage or depreciation that may occur, and may dispose of all or any part of the Collateral on any premises of Debtor, require Debtor to assemble and make available to Lender or to remove all or any part of the Collateral from any premises in which any part may be located for the purpose of effecting sale or other disposition thereof; and

f.

To sell any item of the Collateral for cash or other value in any number of lots at a public or private sale without demand or notice (excepting only that, unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender shall give Debtor ten (10) days prior written notice of the time and place of any public sale, or the time after which a private sale may be made, which notice Debtor agrees is reasonable). At any public sale Lender may bid for and purchase the whole or any part of the property and rights sold and upon compliance with the terms of such sale may hold or dispose of such property and rights without further accountability to Debtor. Debtor will execute and deliver, or cause to be executed and delivered, such instruments, documents, registration statements, assignments, waivers, certificates and affidavits, and will supply or cause to be supplied such further information and take such further action as Lender shall require in connection with such sales. Debtor shall be responsible for all costs of sale or other disposition of the Collateral. The proceeds of all sales and collections hereunder shall be applied against the Obligations in such order as Lender shall elect in its sole discretion.

 

Failure to exercise any and all rights or remedies Lender may have in the event of any event of Default shall not constitute a waiver of the right to exercise such rights or remedies in the event of any subsequent event of Default, whether of the same or different nature. No waiver of any right or remedy by Lender shall be effective unless made in writing and signed by Lender, nor shall any waiver on one occasion apply to any future occasion.

 

14.

Power of Attorney: Debtor irrevocably appoints Lender, or any person(s) designated by Lender, as its attorney-in-fact, which appointment is coupled with an interest and shall remain in full force and effect until all Obligations have been fully and indefeasibly satisfied and discharged, with full power, at Debtor’s sole expense, to perform any and all such acts which Lender deems advisable in its sole and absolute discretion after an Event of Default to carry out the purposes and intent of this Agreement, including signing the Debtor’s name to any certificate of title, bill of sale or other document.

 

15.

Waivers. Debtor hereby waives (a) any requirement for Lender to marshal the Collateral or to resort to the Collateral in any particular order, (b) the right to extend or excuse performance of any of Debtor’s Obligations based on force majeure, and (c) to the extent permitted by applicable law, the benefits and advantages of any valuation, stay, appraisement, extension or redemption laws now or hereafter existing which, but for this provision, might be applicable.

 

16.

Discharge and Payoff. In recognition of the Lender’s right to have its reasonable attorneys’ fees and other expenses incurred in connection with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Debtor, Lender shall not be required to file terminations or satisfactions of any of Lender’s liens on the Collateral unless and until Debtor shall have provided a general release in favor of Lender, in form satisfactory to Lender. Debtor understands that this provision constitutes a waiver of its rights under Section 9-513 of the Uniform Commercial Code.

 

 

17.

No Waiver; Cumulative Remedies. No failure on the part of Lender to exercise, and no delay on the part of Lender in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies that may be available to Lender, whether at law, in equity or otherwise. No course of dealing between Debtor and Lender shall operate as a waiver of any rights of Lender under this Agreement or in respect of the Collateral or the Obligations.

 

18.

Indemnity. Debtor assumes liability for and does hereby agree to indemnify, protect, save and keep harmless Lender and its agents, from and against any and all liabilities, claims, losses, obligations, damages, penalties, actions, and suites of whatsoever kind and nature imposed on, incurred by or asserted against Lender or its agents, in any way relating to or growing out of this Agreement, the Guaranty or the Collateral (including without limitation, enforcement of this Agreement and the Guaranty or disposition of the Collateral), except claims, losses or liabilities resulting solely from Lender’s gross negligence or willful misconduct.

 

19.

Miscellaneous. The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. Neither this Agreement nor any term hereof may be amended orally, nor may any provision hereof be waived orally but only by an instrument in writing signed by Lender and, in the case of an amendment, by Debtor and any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. This Agreement shall be governed by and construed in accordance with the law of the State of Illinois, except as required by mandatory provisions of law and except to the extent that the validity or perfection of the security interest hereunder in respect of any particular Collateral are governed by the law of a jurisdiction other than the State of Illinois. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Each party acknowledges that is has reviewed this Agreement, and the parties hereby agree that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

20.

Assignments. This Agreement shall bind the parties hereto and their respective successors and assigns. This Agreement and the Guaranty may be assigned by Lender to a third party, and the Debtor consents to such assignment and agrees that this Agreement and the Guaranty will be in favor of the assignee(s) upon assignment, without any defenses, counterclaims or setoffs of any kind whatsoever. All of the terms of this Agreement and the Guaranty shall inure to the benefit of Lender and its successors and assigns and shall be binding upon Debtor and its heirs, executors, administrators, personal representatives, successors and assigns. Lender may grant participations in all or any portion of and may assign all or any part of Lender’s rights under, this Agreement and the Guaranty. Lender may disclose to any such participant or assignee any and all information held by or known to Lender at any time with respect to Debtor.

 

21.

Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed to have been given three (3) business days after deposit in the mail, designated as certified mail, return receipt requested, postage-prepaid, one (1) business day after being entrusted to a reputable commercial overnight delivery service, addressed to the party to whom such notice is directed at its address as forth above, or upon sending if sent via electronic mail. Any party hereto may change the address to which notices shall be directed under this Paragraph by giving three (3) business days written notice of such change to the other parties.

 

		If to Lender, then to:
			Lender:	Loeb Term Solutions LLC
			Attention:	Howard M. Newman
			Address:	8609 W. Bryn Mawr, Suite 208
			Phone:
			Email:
			Carbon copy:
			Email address:

 

		If to Debtor, then to:
			Debtor:	Worksport Ltd.
			Attention:	Steven Rossi
			Address:	2500 N. America Drive
				West Seneca, New York 14224
			Phone:
			Email:

 

 

22.

WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY OR ANY OTHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER OR ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.

 

23.

JURISDICTION. THE PARTIES AGREE THAT ANY ACTION TO ENFORCE DEBTOR’S OBLIGATIONS TO LENDER OR ANY ACTION RELATING TO OR ARISING OUT OF THE LOAN OR THIS AGREEMENT SHALL BE PROSECUTED EITHER IN THE CIRCUIT COURT OF COOK COUNTY ILLINOIS OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, AND DEBTOR SUBMITS TO THE JURISDICTION OF ANY SUCH COURT. DEBTOR WAIVES ANY AND ALL RIGHTS TO CONTEST THE JURISDICTION AND VENUE OF ANY ACTION BROUGHT IN THIS MATTER AND DEBTOR MAY BRING ANY ACTION AGAINST LENDER ONLY IN THE CIRCUIT COURT FOR THE COUNTY OF COOK OR THE FEDERAL COURT OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS.

 

24.

Electronic Signatures: THIS AGREEMENT AND THE GUARANTY MAY BE SIGNED AND/OR TRANSMITTED BY FACSIMILE, E-MAIL OF A .PDF DOCUMENT OR USING ELECTRONIC SIGNATURE TECHNOLOGY (E.G., VIA DOCUSIGN OR SIMILAR ELECTRONIC SIGNATURE TECHNOLOGY), AND THAT SUCH SIGNED ELECTRONIC RECORD SHALL BE VALID AND AS EFFECTIVE TO BIND THE PARTY SO SIGNING AS A PAPER COPY BEARING SUCH PARTY’S HAND-WRITTEN SIGNATURE. THE PARTIES FURTHER CONSENT AND AGREE THAT (a) TO THE EXTENT A PARTY SIGNS THIS AGREEMENT OR THE GUARANTY USING ELECTRONIC SIGNATURE TECHNOLOGY, BY CLICKING “SIGN”, SUCH PARTY IS SIGNING THIS AGREEMENT OR THE GUARANTY ELECTRONICALLY, AND (b) THE ELECTRONIC SIGNATURES APPEARING ON THIS AGREEMENT OR THE GUARANTY SHALL BE TREATED, FOR PURPOSES OF VALIDITY, ENFORCEABILITY AND ADMISSIBILITY, THE SAME AS HAND-WRITTEN SIGNATURES.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

 

DEBTOR:
Worksport Ltd.
Signature:
Print Name:	Steven Rossi
Title:	CEO

 

LENDER:
Loeb Term Solutions LLC
Signature:
Print Name:	Howard M. Newman
Title:	Manager

 

 

EXHIBIT A

(NON-EXCLUSIVE EQUIPMENT LIST)

 

 

 

 

 

Exhibit 10.7

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”) is made and entered into as of ____________, by Worksport New York Operations Corporation, a New York corporation with its principal place of business and chief executive offices at 2500 N. America Drive, West Seneca, New York 14224 (“Debtor”), in favor of Loeb Term Solutions LLC, an Illinois limited liability company, with an address at 8609 W. Bryn Mawr, Suite 208, Chicago, IL 60631 (“Lender”).

 

In consideration of and as an inducement to Lender making or continuing to make certain loans or financial accommodations (the “Loan”) to Worksport USA Operations Corporation (“Borrower”), which loans have been or will be guaranteed by the Debtor pursuant to that certain Guaranty from the Debtor to the Lender, as may have been or hereafter may be amended and/or restated from time to time (the “Guaranty”), and to secure the payment and performance of the Guaranty and of any and all other obligations and liabilities of Debtor and Borrower to Lender, whether arising in connection with loans, advances, guarantees, purchases, acquisitions, or other extensions of credit made to or on behalf of Debtor, Borrower or any other person for whom Debtor serves as surety or guarantor, and whether direct or indirect, absolute or contingent, or now or hereafter existing, or due or to become due (collectively the “Obligations”), the parties hereto agree as follows:

 

1.

Grant of Security Interest. To secure the payment and performance of the Obligations, Debtor hereby grants to Lender a security interest in all of Debtor’s right, title and interest in and to the Collateral (defined below).

 

2.

UCC Provisions.

 

a.

All capitalized terms not defined herein shall have the meaning given to such terms in the Uniform Commercial Code (“UCC”) as in effect on the date hereof in the state of Illinois, unless the context requires a different meaning.

b.

Debtor previously authorized and hereby authorizes Lender to file one or more financing statements, and amendments thereto, relating to all or any part of the Collateral in the Debtor’s state of organization and in any other states or locations selected by Lender. Lender may describe the Collateral as “all assets” of Debtor or words of similar effect in such financing statements.

 

3.

Definition of Collateral. The Collateral is all of the Debtor’s now owned or existing or hereafter acquired or arising: Accounts, Goods, Inventory, Equipment (including without limitation the equipment described on Exhibit A attached hereto), Chattel Paper, Instruments, Investment Property, specifically identified Commercial Tort Claims, Documents, Deposit Accounts, Letter of Credit Rights, General Intangibles, Intellectual Property, Contract Rights, customer lists, furniture and fixtures, books and records and supporting obligations for any of the foregoing, and all Proceeds of the foregoing (the “Collateral”). The Collateral also includes all monies on deposit or held in reserve with Lender.

 

4.

Representations and Covenants Relating to the Collateral.

 

a.

Ownership. Debtor is the owner of the Collateral and shall at all times maintain valid title to the Collateral.

b.

Lien Priority. The security interest granted hereby shall at all times be a valid and perfected first priority security interest, subject to the terms of any intercreditor agreement executed by Lender, enforceable against Debtor and all third parties, securing the Obligations. Debtor shall not permit any financing statement or other instruments similar in effect covering all or any part of the Collateral to be filed or recorded unless subject to an intercreditor agreement or subordination agreement executed by Lender, without the prior written consent of Lender. Without limiting the foregoing, Debtor shall not enter into any merchant cash advance loans or any other agreements or loans wherein Debtor sells or assigns its accounts or future cash.

c.

Care of Collateral. Debtor, at its own expense, will maintain, keep and preserve the Collateral in the ordinary course of business in good repair, working order and condition (reasonable wear and tear excepted) and from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements, additions, betterments and improvements thereto and will not waste or destroy the Collateral or any part thereof and will not be negligent in the care and use of any Collateral and will not use any Collateral in violation of applicable law.

d.

Disposition of Collateral. Debtor shall not sell, lease, transfer, assign (by operation of law or otherwise) or otherwise dispose of all or any part of the Collateral, except for sales of Inventory, furniture, and fixtures in the ordinary course of business.

e.

Principal place of business and Trade Names. Debtor represents, warrants and covenants that: (i) Debtor’s principal place of business and the books and records relating to the Collateral are located at Debtor’s principal place of business specified above; (ii) Debtor has not, within the last five (5) years, transacted business under any trade names other than those specified herein or otherwise provided to Lender in writing; and (iii) Debtor will not move its principal place of business or its books and records, or transact business under any new trade names, without giving Lender (30) days prior written notice thereof or without having taken all action required by Section 4.f. below with respect to any affected Collateral.

 

 

f.

Location of Collateral. Debtor shall not permit the equipment, inventory or other tangible Collateral to be located at any location except at the location specified in the existing written Landlord Agreement executed by the landlord and Lender, unless:

 

(i)

Debtor gives Lender thirty (30) days prior written notice thereof;

(ii)

Prior to the move, Debtor obtains from the landlord of the premises of the future location an executed lease and provide a copy to Lender;

(iii)

Prior to the move, Debtor obtains from the landlord of the premises of the future location a Landlord Agreement, in form satisfactory to Lender and provides a copy to Lender;

(iv)

Prior to the move, the machinery mover hired by Debtor names Lender as additional insured, loss payee and Lender loss payee on its insurance policy and provides a copy to Lender;

(v)

Debtor has all of the previously installed equipment re-installed;

(vi)

Debtor allows Lender to inspect the equipment at Debtor’s expense to confirm that all previously installed equipment as shown on Exhibit A is re-installed and operating. The reinspection fee will be pulled via ACH; and

(vii)

Within ten (10) days of the completion of the move, Debtor notifies Lender of any surplus equipment left from the move and develops with Lender a plan to sell the surplus.

 

5.

Further Assurances. Debtor agrees that it shall from time to time, and at its expense, promptly execute and deliver all instruments, documents and assignments, and shall take all further actions that Lender may request in order to perfect, protect and continue any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Collateral, and shall promptly give to the Lender evidence satisfactory to Lender of such action. Without limiting the generality of the foregoing, Debtor shall:

 

a.

Take such steps as Lender may request for Lender (i) to obtain an acknowledgment of any bailee having possession of any of the Collateral that the bailee holds such Collateral for the benefit Lender, or (ii) to obtain “control” of any investment property, deposit accounts, letter-of-credit rights, electronic chattel paper or other Collateral;

b.

Mark conspicuously each document, Chattel Paper and Instrument, and at the request of Lender, each of its records pertaining to the Collateral, with a legend in form and substance satisfactory to Lender indicating that such document, Chattel Paper, Instrument or other Collateral is subject to the security interest granted hereby;

c.

Upon the request of the Lender, deliver to Lender any original note, Instrument, Chattel Paper, Instrument or other document evidencing any Collateral and any certificate or instrument evidencing any Security, duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in forms and substance satisfactory to Lender;

d.

Deliver original certificates of title and execute all documentation in order to reflect Lender’s security interest on titled motor vehicles and vessels;

e.

furnish to Lender from time to time statements and schedules identifying and describing the Collateral and such other reports and information concerning the Collateral as Lender may request in its sole discretion; and

f.

Not store, keep or maintain any Collateral at any location other than locations where there is a landlord waiver and/or a mortgagee waiver in favor of Lender, and in forms acceptable to Lender.

 

6.

Insurance. Debtor at all times should have the Collateral insured in the Debtor’s or Borrower’s name against loss or damage by fire, theft, burglary, pilferage, loss in transit and such other hazards with amounts, under policies and by insurers acceptable to Lender. Each policy shall include a provision for Lender to receive copies directly from the insurance agent of all written notices to policy holder including, but not limited to any invoices, statements of account, certificates of insurance, cancellation or substantial modification. Policies shall show Lender as additional insured, loss payee and Lender’s loss payee in a manner acceptable to Lender. Debtor shall execute and deliver to Lender simultaneously herewith and at any other time hereafter such assignments of policies of insurance as Lender shall reasonably require. All premiums shall be paid by Debtor, and a copy of the policies and certificate of insurance shall be delivered to Lender. If Debtor fails to do so, Lender may (but shall not be required to) procure such insurance at the Debtor’s expense. DEBTOR ALSO GRANTS PERMISSION FOR LENDER TO SPEAK DIRECTLY WITH DEBTOR’S INSURANCE AGENT AS REQUIRED TO CONFIRM PROPER INSURANCE IS IN PLACE AND IT IS CURRENT.

 

7.

Inspection; Books, Records and Financial Statements and Reports.

 

a.

Debtor shall at all times keep accurate and complete records of the Collateral, and, at Debtor’s expense, at a reasonable time, permit Lender to inspect the Collateral, and inspect and make extracts from and copies of its books and all records, including preventative maintenance records relating to the Collateral.

b.

Debtor shall at all times keep, and if requested provide Lender with copies of or allow Lender to inspect, monthly financial records prepared in accordance with generally accepted accounting principles and which , to the knowledge of the Debtor, are true and accurate in all material respects, including an income statement, balance sheet, statement of cash flows, accounts payable agings, accounts receivable agings, inventory reports and payroll reports.

 

 

c.

Lender shall be permitted to discuss with Debtor’s owners, directors, officers, managers and auditors Debtor’s business, procedures, assets, liabilities, financial positions, results of operations and business prospects.

d.

Debtor shall keep its records concerning the Collateral and other business records at its principal place of business or at such other location as shall have been approved by Lender.

e.

The Lender shall have the right to have the Equipment appraised or inspected on an annual basis. At every annual appraisal or inspection the Loan balance shall not exceed 80% of the net fair liquidation value of the Equipment (the “Equipment Cap”), and if the Loan balance exceeds Equipment Cap the Debtor shall make a Loan payment to be in compliance with the Equipment Cap within sixty (60) days of notice. If the Loan does not close within forty-five (45) days of the initial inspection, Lender may perform a reinspection of the Collateral at the Debtor’s expense. After the occurrence of a Default, there shall be no limit on the number of appraisals and inspections, and Debtor shall reimburse Lender for costs related to such appraisals or inspections. Prior to the occurrence of a Default, Lender will give Debtor seventy-two (72) hours prior notice and the inspection will only be during normal business hours. Debtor authorizes Lender to debit the amount of the Appraisal Expense (as defined below) from Debtor’s bank account via ACH transfer as more fully set forth in the ACH Authorization Agreement.

f.

The cost of all inspections and actions under this Section shall be borne by the Debtor.

 

8.

Taxes. Debtor shall promptly pay when due all property, payroll and any other taxes, assessments and governmental charges or levies imposed upon the Collateral, except to the extent the validity thereof is being contested in good faith by Debtor and with reserves for payment of such charges or levies in any amount satisfactory to Lender. Lender reserves the right to require Debtor to use an independent payroll service if Debtor is delinquent in paying their payroll taxes on time.

 

9.

Lender’s Duties and Powers. If Debtor fails to perform any covenant or agreement contained herein after any applicable cure and notice period, Lender may (but shall not be obligated to) perform, or cause performance of, such covenant or agreement at the Debtor’s expense. The powers conferred on Lender hereunder are to protect Lender’s interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers.

 

10.

Loans, Dividends or other Distributions to Equity Owners. Debtor covenants and agrees that until all Obligations to Lender are paid in full, it will not declare or pay any dividend or make any other distribution or loan of any kind to its shareholders, members or other equity owners, other than:

 

a.

Normal salary, or guaranteed distributions in lieu of salary, paid to an equity owner that is also an employee of Debtor; and

b.

With respect to any year in which Debtor is not taxed by the Internal Revenue Services as a “C” corporation, and provided that Debtor is not in Default at that time of such payment, Debtor may make a distribution of profits to its equity owners in an amount not to exceed the sum necessary to enable its equity owners to pay their personal state and federal taxes directly attributable to the profits earned by Debtor for the applicable year.

 

11.

Fees and Expenses.

 

a.

Debtor shall upon demand pay to Lender the amount of any and all expenses, including without limitation, the reasonable fees and disbursements of Lender’s counsel and of any experts and agents, which Lender may incur in connection with the preparation, administration and enforcement of this Agreement, or the sale, collection from, or other realization upon any of the Collateral.

 

12.

Default. Each of the following shall constitute an event of default under this Agreement (a “Default”):

 

a.

Borrower or Debtor fails to pay any amounts owing to Lender, including but not limited to the Obligations, when due, provided, however, weekly payments under the Loan Documents shall have a forty-eight hour grace period for bank payment processing issues out of Borrower or Debtor’s control;

b.

Debtor fails to observe or perform any of the terms, covenants or conditions contained in this Agreement, the Guaranty or any other contract, instrument or agreement with Lender after 30 days’ written notice;

c.

Borrower fails to observe or perform any of the terms, covenants or conditions contained in any contract, instrument or agreement with Lender after 30 days’ written notice;

d.

Any representation or warranty made by Debtor herein is false in any material respect as of the time when made or given;

e.

Debtor shall make an assignment for the benefit of creditors, file a petition in bankruptcy, petition or apply for the appointment of a custodian, receiver or any trustee for Debtor or the Collateral, or shall commence any proceedings under any bankruptcy, reorganization, arrangement, readjustment of debt (other than a refinance of any active loans as of the effective date herein), dissolution or liquidation law or statue of any jurisdiction, whether now or hereafter in effect, or if there shall have been filed any such petition or application, or any such proceeding shall have been commenced against Debtor, in which an order for relief is entered and is not dismissed within sixty (60) days;

 

 

f.

Any suit is filed against Debtor and not disclosed to Lender within thirty (30) days;

g.

Any judgment is entered against Debtor in excess of $100,000.00 USD;

h.

Any of the Collateral is taken or sought to be taken by levy, execution or other process of law;

i.

Debtor or Borrower liquidates, dissolves, or merges into or consolidates with or into any other entity;

j.

Any financial statement or report provided by Debtor or Borrower to Lender is false in any material respect as of the time when made or given; or

k.

Any circumstance or event of any nature which in Lender’s sole reasonable discretion may materially and adversely affect the condition, operation, business or assets of Debtor or materially impairs the ability of Debtor to fulfill its Obligations to Lender.

 

13.

Remedies. Upon and event of Default, Lender shall have the following remedies which may be exercised cumulatively:

 

a.

To declare all Obligations immediately due and payable;

b.

To exercise any and all rights and remedies provided under this Agreement, the UCC, in law or at equity, including the right to obtain an injunction against Debtor or a decree of specific performance;

c.

To immediately apply to any court of competent jurisdiction for, and obtain appointment of, a receiver for the Collateral, the Debtor and/or the Debtor’s business, all without posting a bond. Debtor consents to any such appointment and agrees not to contest any such motion or appointment;

d.

Without prior demand or notice, to set-off against and apply any accounts, items and monies in the possession of Lender or payable by Lender to Debtor to the Obligations;

e.

With or without judicial process or the aid or assistance of others, to enter upon any premises in which Collateral may be located and, without resistance or interference by Debtor, to take physical possession of any items of Collateral and to maintain such possession on Debtor’s premises or move the same or any part thereof to such other places as Lender shall choose without being liable to Debtor on account of any losses, damage or depreciation that may occur, and may dispose of all or any part of the Collateral on any premises of Debtor, require Debtor to assemble and make available to Lender or to remove all or any part of the Collateral from any premises in which any part may be located for the purpose of effecting sale or other disposition thereof; and

f.

To sell any item of the Collateral for cash or other value in any number of lots at a public or private sale without demand or notice (excepting only that, unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender shall give Debtor ten (10) days prior written notice of the time and place of any public sale, or the time after which a private sale may be made, which notice Debtor agrees is reasonable). At any public sale Lender may bid for and purchase the whole or any part of the property and rights sold and upon compliance with the terms of such sale may hold or dispose of such property and rights without further accountability to Debtor. Debtor will execute and deliver, or cause to be executed and delivered, such instruments, documents, registration statements, assignments, waivers, certificates and affidavits, and will supply or cause to be supplied such further information and take such further action as Lender shall require in connection with such sales. Debtor shall be responsible for all costs of sale or other disposition of the Collateral. The proceeds of all sales and collections hereunder shall be applied against the Obligations in such order as Lender shall elect in its sole discretion.

 

Failure to exercise any and all rights or remedies Lender may have in the event of any event of Default shall not constitute a waiver of the right to exercise such rights or remedies in the event of any subsequent event of Default, whether of the same or different nature. No waiver of any right or remedy by Lender shall be effective unless made in writing and signed by Lender, nor shall any waiver on one occasion apply to any future occasion.

 

14.

Power of Attorney: Debtor irrevocably appoints Lender, or any person(s) designated by Lender, as its attorney-in-fact, which appointment is coupled with an interest and shall remain in full force and effect until all Obligations have been fully and indefeasibly satisfied and discharged, with full power, at Debtor’s sole expense, to perform any and all such acts which Lender deems advisable in its sole and absolute discretion after an Event of Default to carry out the purposes and intent of this Agreement, including signing the Debtor’s name to any certificate of title, bill of sale or other document.

 

15.

Waivers. Debtor hereby waives (a) any requirement for Lender to marshal the Collateral or to resort to the Collateral in any particular order, (b) the right to extend or excuse performance of any of Debtor’s Obligations based on force majeure, and (c) to the extent permitted by applicable law, the benefits and advantages of any valuation, stay, appraisement, extension or redemption laws now or hereafter existing which, but for this provision, might be applicable.

 

16.

Discharge and Payoff. In recognition of the Lender’s right to have its reasonable attorneys’ fees and other expenses incurred in connection with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Debtor, Lender shall not be required to file terminations or satisfactions of any of Lender’s liens on the Collateral unless and until Debtor shall have provided a general release in favor of Lender, in form satisfactory to Lender. Debtor understands that this provision constitutes a waiver of its rights under Section 9-513 of the Uniform Commercial Code.

 

 

17.

No Waiver; Cumulative Remedies. No failure on the part of Lender to exercise, and no delay on the part of Lender in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies that may be available to Lender, whether at law, in equity or otherwise. No course of dealing between Debtor and Lender shall operate as a waiver of any rights of Lender under this Agreement or in respect of the Collateral or the Obligations.

 

18.

Indemnity. Debtor assumes liability for and does hereby agree to indemnify, protect, save and keep harmless Lender and its agents, from and against any and all liabilities, claims, losses, obligations, damages, penalties, actions, and suites of whatsoever kind and nature imposed on, incurred by or asserted against Lender or its agents, in any way relating to or growing out of this Agreement, the Guaranty or the Collateral (including without limitation, enforcement of this Agreement and the Guaranty or disposition of the Collateral), except claims, losses or liabilities resulting solely from Lender’s gross negligence or willful misconduct.

 

19.

Miscellaneous. The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. Neither this Agreement nor any term hereof may be amended orally, nor may any provision hereof be waived orally but only by an instrument in writing signed by Lender and, in the case of an amendment, by Debtor and any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. This Agreement shall be governed by and construed in accordance with the law of the State of Illinois, except as required by mandatory provisions of law and except to the extent that the validity or perfection of the security interest hereunder in respect of any particular Collateral are governed by the law of a jurisdiction other than the State of Illinois. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Each party acknowledges that is has reviewed this Agreement, and the parties hereby agree that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

 

20.

Assignments. This Agreement shall bind the parties hereto and their respective successors and assigns. This Agreement and the Guaranty may be assigned by Lender to a third party, and the Debtor consents to such assignment and agrees that this Agreement and the Guaranty will be in favor of the assignee(s) upon assignment, without any defenses, counterclaims or setoffs of any kind whatsoever. All of the terms of this Agreement and the Guaranty shall inure to the benefit of Lender and its successors and assigns and shall be binding upon Debtor and its heirs, executors, administrators, personal representatives, successors and assigns. Lender may grant participations in all or any portion of and may assign all or any part of Lender’s rights under, this Agreement and the Guaranty. Lender may disclose to any such participant or assignee any and all information held by or known to Lender at any time with respect to Debtor.

 

21.

Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed to have been given three (3) business days after deposit in the mail, designated as certified mail, return receipt requested, postage-prepaid, one (1) business day after being entrusted to a reputable commercial overnight delivery service, addressed to the party to whom such notice is directed at its address as forth above, or upon sending if sent via electronic mail. Any party hereto may change the address to which notices shall be directed under this Paragraph by giving three (3) business days written notice of such change to the other parties.

 

		If to Lender, then to:
			Lender:	Loeb Term Solutions LLC
			Attention:	Howard M. Newman
			Address:	8609 W. Bryn Mawr, Suite 208
			Phone:
			Email:
			Carbon copy:
			Email address:

 

		If to Debtor, then to:
			Debtor:	Worksport New York Operations Corporation
			Attention:	Steven Rossi
			Address:	2500 N. America Drive
				West Seneca, New York 14224
			Phone:
			Email:

 

 

22.

WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY OR ANY OTHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER OR ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.

 

23.

JURISDICTION. THE PARTIES AGREE THAT ANY ACTION TO ENFORCE DEBTOR’S OBLIGATIONS TO LENDER OR ANY ACTION RELATING TO OR ARISING OUT OF THE LOAN OR THIS AGREEMENT SHALL BE PROSECUTED EITHER IN THE CIRCUIT COURT OF COOK COUNTY MICHIGAN OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, AND DEBTOR SUBMITS TO THE JURISDICTION OF ANY SUCH COURT. DEBTOR WAIVES ANY AND ALL RIGHTS TO CONTEST THE JURISDICTION AND VENUE OF ANY ACTION BROUGHT IN THIS MATTER AND DEBTOR MAY BRING ANY ACTION AGAINST LENDER ONLY IN THE CIRCUIT COURT FOR THE COUNTY OF COOK OR THE FEDERAL COURT OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS.

 

24.

Electronic Signatures: THIS AGREEMENT AND THE GUARANTY MAY BE SIGNED AND/OR TRANSMITTED BY FACSIMILE, E-MAIL OF A .PDF DOCUMENT OR USING ELECTRONIC SIGNATURE TECHNOLOGY (E.G., VIA DOCUSIGN OR SIMILAR ELECTRONIC SIGNATURE TECHNOLOGY), AND THAT SUCH SIGNED ELECTRONIC RECORD SHALL BE VALID AND AS EFFECTIVE TO BIND THE PARTY SO SIGNING AS A PAPER COPY BEARING SUCH PARTY’S HAND-WRITTEN SIGNATURE. THE PARTIES FURTHER CONSENT AND AGREE THAT (a) TO THE EXTENT A PARTY SIGNS THIS AGREEMENT OR THE GUARANTY USING ELECTRONIC SIGNATURE TECHNOLOGY, BY CLICKING “SIGN”, SUCH PARTY IS SIGNING THIS AGREEMENT OR THE GUARANTY ELECTRONICALLY, AND (b) THE ELECTRONIC SIGNATURES APPEARING ON THIS AGREEMENT OR THE GUARANTY SHALL BE TREATED, FOR PURPOSES OF VALIDITY, ENFORCEABILITY AND ADMISSIBILITY, THE SAME AS HAND-WRITTEN SIGNATURES.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

 

DEBTOR:
Worksport New York Operations Corporation
Signature:
Print Name:	Steven Rossi
Title:	President

 

LENDER:
Loeb Term Solutions LLC
Signature:
Print Name:	Howard M. Newman
Title:	Manager

 

 

EXHIBIT A

(NON-EXCLUISIVE EQUIPMENT LIST)

 

 

 

 

v3.24.2.u1

Cover	Sep. 04, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 04, 2024
Entity File Number	001-40681
Entity Registrant Name	WORKSPORT LTD.
Entity Central Index Key	0001096275
Entity Tax Identification Number	35-2696895
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	2500 N America Dr
Entity Address, City or Town	West Seneca
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	14224
City Area Code	(888)
Local Phone Number	554-8789
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common
Title of 12(b) Security	Common
Trading Symbol	WKSP
Security Exchange Name	NASDAQ
Warrants
Title of 12(b) Security	Warrants
Trading Symbol	WKSPW
Security Exchange Name	NASDAQ

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