REVOLVING CREDIT FACILITY LOAN AND SECURITY
REVOLVING CREDIT FACILITY LOAN And
SECURITY AGREEMENT (“Agreement”) is made as of November
14, 2018 (the “Effective Date”) by and between C-Bond Systems,
Inc. (fka WestMountain Alternative Energy, Inc.), a Colorado corporation having its principal place of business, as
of the Effective Date, at 0000 Xxxxx Xxxx Xxxx, Xxxxxxx, Xxxxx 00000 (the “Company”), and BOCO
Investments, LLC, a Colorado limited liability company (“Lender”).
The Company is in need
of a credit facility to provide additional working capital with the goal of, among other things, growing the Company’s inventory
and accounts receivable. Lender has agreed to provide the Company with such a facility for a term of twenty four (24) months subject
to the terms and conditions specified herein.
Therefore, in consideration of the foregoing, and the representations, warranties, covenants and conditions set forth below,
the Company and Lender, intending to be legally bound, hereby agree as follows:
|1.||Amount and Terms of the Loans.|
Loans. Subject to and in accordance with the terms and conditions of this Agreement and the Note (as defined below), Lender
agrees to lend to the Company up to the principal sum of Four Hundred Thousand Dollars ($400,000) (the “Maximum Loan
Amount”) against the issuance and delivery by the Company of the Secured Promissory Note in the form attached hereto
as Exhibit A and incorporated herein (the “Note”) for use as working capital and to assist
in inventory acquisition. Upon and subject to the terms and conditions set forth herein, Lender may make loans to Company at any
time and from time to time during the twenty four (24) month period from the Effective Date through November 14, 2020 (“Commitment
Period”), up to an aggregate amount not to exceed the Maximum Loan Amount. In no event shall Lender be required to
make any loans hereunder after the expiration of the Commitment Period. At any time when there is no amount owed by Company to
Lender under this Agreement, the Company may terminate this Agreement upon written notice to Lender.
Initial Loan. At Closing (as defined herein), Lender shall advance the initial loan to the Company in the amount of Two Hundred
Thousand Dollars ($200,000).
Principal Loans. Provided Company is not in default under the Note or this Agreement (collectively, the “Transaction
Agreements”) or any other agreement between Company and Lender, and the outstanding principal due and owing under
the Transaction Agreements is less than the Maximum Loan Amount, Company may request in writing that Lender make additional loans
to Company. All such requests must be made by the Company to Lender in writing (each a “Loan Request”)
at least eight (8) Business Days prior to the proposed funding of the loan specifying the amount and proposed funding date of the
loan (“Loan Date”). At least four (4) Business Days prior to the Loan Date the Company shall provide
Lender with such information and supporting documentation as Lender may request (in its sole and absolute discretion) to permit
Lender to evaluate and/or substantiate each Loan Request (the “Supporting Documents”). Each Loan Date
must be between Monday and Thursday, and not on a day that is a federal legal holiday (“Business Day”).
Lender may approve or deny any Loan Request or modify the Loan Date in its sole and absolute discretion. If Lender has approved
a given Loan Request, Lender will transfer the applicable loan proceeds to the Company (or such other recipient as may be agreed
upon between Lender and Company as a condition to approval of the Loan Request) on the Loan Date (as may be modified by Lender)
via cash, wire transfer, or certified funds provided: (1) Company has then complied with all conditions to Lender’s approval
of the Loan Request and all other conditions precedent to funding the Loan Request; (2) Company has certified in writing its agreement
with Lender’s Schedule (as defined below) reflecting amounts that will be outstanding under the Note as of the Loan Date;
and, (3) Company is otherwise not in default under the Transaction Agreements or any other agreement between Lender and the Company.
Obligation to Advance. With the exception of the Initial Loan identified in Section 1.1(a) above, Lender shall have no obligation
to advance any funds to Company. Lender may approve or deny any Loan Request in its sole and absolute discretion. Lender may establish
such conditions to granting or approving a Loan Request as it determines are appropriate in its sole and absolute discretion. Lender
may require additional documents, actions, assurances, or agreements as a condition precedent to disbursing any loan proceeds hereunder
as Lender may determine, in its sole and absolute discretion, are reasonably necessary to protect the interests of Lender hereunder
(including, without limitation, evidence of compliance with the covenants set forth herein and waiver/estoppel agreements affirming
Company has no claims against Lender as of the Loan Date). Company shall be responsible for reasonable costs and fees incurred
in connection with Lender’s evaluation, documentation or granting of any Loan Request in the same fashion set forth in Section
of Loans and Repayments. Lender shall keep a spreadsheet (the “Schedule”) in which Lender shall enter:
(a) the principal amount of each loan it makes to the Company; (b) interest, fees or other charges payable by Company pursuant
to the Transaction Agreements; (c) the amount of any payment made by the Company in satisfaction of any amount due under the Transaction
Agreements; (d) the manner in which any payment by the Company is applied; and, (e) the outstanding principal and interest balance
under the Note as of the date of each payment or Loan Date. Lender need not calculate accrued interest, penalties or other amounts
except on payment dates or Loan Dates (such that the Schedule may accurately reflect amounts due and owing on such dates). The
Company hereby authorizes Lender to keep the Schedule described herein and agrees that the outstanding principal and interest amounts
shown in the Schedule shall constitute conclusive evidence of all loans and repayments and the dates thereof and of the outstanding
amounts due under the Transaction Agreements at any given point in time. The Company hereby appoints Lender as its attorney in
fact to make all such entries on the Schedule, and such appointment is coupled with an interest and shall be irrevocable. Should
the Company believe the liabilities and payments reflected in the Schedule are inaccurate, such amounts shall nonetheless remain
controlling unless the Company can establish, by clear and convincing evidence, that the balance due and owing under the Note is
different than that reflected in the Schedule. All payments received from Company for application to amounts due under the Note
shall first be applied to interest, then to any costs, fees or other amounts chargeable by Lender under the Transaction Agreements,
then to outstanding principal. Lender’s failure to include all amounts properly chargeable under the Transaction Agreements
as of a given payment or Loan Date shall not act as a waiver of Lender’s entitlement to such amounts and Lender may at all
times prior to obtaining a final judgment or acknowledging repayment in full of the Note amend its calculations in the Schedule
to ensure Lender receives the full benefit of all amounts due and owing under the Transaction Agreements.
Loan Terms. The outstanding principal advanced to Company pursuant to the Transaction Agreements shall bear interest at the
rate of twelve percent (12%) per annum, compounded annually. All costs, fees or other amounts (other than interest) chargeable
to Company by Lender under the Transaction Agreements shall be added to the outstanding principal on the date such sums are incurred
or on the date they become due and owing from Company, whichever is later. Upon the occurrence of an Event of Default under the
Transaction Agreements, all amounts then outstanding (including principal and interest) shall bear interest at the rate of eighteen
percent (18%) per annum, compounded annually until the Event of Default is cured. Notwithstanding any other provision of the Transaction
Agreements, interest under the Transaction Agreements shall not exceed the maximum rate permitted by law. If any amount is paid
under the Transaction Agreements as interest in excess of such maximum rate, then the amount so paid will not constitute interest
but will constitute a payment on account of the principal amount advanced to the Company pursuant to the Transaction Agreements.
If such excessive interest exceeds the unpaid principal balance of the Note, such excess shall be refunded to the Company.
31, 2018 Inventory and AR Covenant. Company shall achieve an accounts receivable (“AR”) balance plus
inventory (defined herein, when not capitalized, as goods held by Company for sale or lease, or to be furnished under a contract
of service, to third parties) balance equal to the unpaid principal balance of the Note on or before December 31, 2018. Company
shall document its compliance with this Section 2.1 with evidence acceptable to Lender in Lender’s sole and absolute discretion.
period extension. In the event that the Company’s AR balance plus inventory balance is less than the unpaid principal
balance of the Note as of December 31, 2018 (violating the inventory plus AR covenant in Section 2.1 above), the Company shall
have 45 days (through and until February 15, 2019) to cure such violation and establish AR plus inventory equal to the unpaid principal
balance of the Note. Company shall document its compliance with this Section 2.2 with evidence acceptable to Lender in Lender’s
sole and absolute discretion.
March 31, 2019 Inventory and AR Covenant. Commencing March 31, 2019 and at all times thereafter through the remainder of the
Commitment Period and for so long thereafter as there is any amount still due and owing under the Note, Company must maintain AR
balances and inventory such that the outstanding principal borrowed by Company under the Transaction Agreements is less than or
equal to eighty five percent (85%) of AR plus fifty percent (50%) of inventory, all as measured at the same point in time. Thus,
by way of example, if the Company’s AR as of March 31, 2019 is $405,000 and the principal borrowed under the Transaction
Agreements was $400,000, the Company’s inventory would have to be at least $111,501 for the Company to remain in compliance
with the covenant set forth in this Section 2.3. In the event the Company at any time violates the covenant set forth in this Section
2.3, it must cure such violation within ten (10) Business Days by paying down the outstanding principal borrowed under the Transaction
Agreements until such point as the Company is in compliance with the covenants set forth in this Section 2.3. Commencing May 15,
2019 and on or before the 10th day of every fiscal quarter thereafter, Company shall affirm to Lender in writing its
compliance with the covenants set forth in this Section 2.3 as of the end of the quarter previously concluded and shall provide
Lender with financial statements or balance sheets evidencing such compliance. Company shall provide similar confirmation on such
other dates as may be requested by Lender. Company shall provide such additional evidence and documents to demonstrate its compliance
with the covenants in this Section 2.3 as Lender may request. Company’s compliance with the covenants in this Section 2.3
must be demonstrated with evidence acceptable to Lender in Lender’s sole and absolute discretion.
of sales proceeds attributable to cost of goods sold. The term cost of goods sold (“COGS”) is defined
as the amount paid by the Company to manufacture or otherwise acquire the inventory that is conveyed or provided to the Company’s
customer in a sales transaction. The Company represents and warrants that all tangible products or goods conveyed or provided to
the Company’s customers in sales transactions (i.e., inventory as defined above) are, prior to such sale(s) occurring, accounted
for as “inventory” on the Company’s balance sheets. For the duration of the Commitment Period and for so long
thereafter as there is any amount due and owing under the Transaction Agreements, the Company shall use the portion of each sales
transaction attributable to COGS for the sole purpose of acquiring additional inventory for use in future sales transactions or
paying Lender for amounts then due and owing under the Transaction Agreements. Company shall document its compliance with this
Section 2.4 with evidence acceptable to Lender in Lender’s sole and absolute discretion.
Date. The closing of the loan (the “Closing”) shall be held as of the date hereof or such other date
as may be mutually agreed upon in writing between Lender and Company (the “Closing Date”).
At or before the Closing the Company shall duly execute and issue and deliver to Lender an original wet-signed counterpart of the
term. Company must repay all principal, interest and other amounts then outstanding under the Transaction Agreements on or
before the final day of the Commitment Period (which is defined and referred to in the Note as the Maturity Date). Compliance with
this Section 4.1 requires the Company to ensure that there are no sums still due and owing under the Transaction Agreements after
the Maturity Date (as defined in the Note).
maintain covenant compliance. In the event that the Company violates the covenants set forth in Section 2.3 above, the Company
shall make such mandatory pre-payments to Lender as are necessary to bring the Company into compliance as described in Section
Monthly Interest Payments. Commencing on January 10, 2019 and on or before the 10th day of each month thereafter,
Company shall pay Lender all interest accrued on outstanding principal under the Transaction Agreements as of the end of the month
then concluded. Thus, by way of example, on or before January 10, 2019, Company shall pay all interest accrued under the Transaction
Agreements for the time period from Closing through December 31, 2018. Then, on or before February 10, 2019, Company shall pay
all interest accrued under the Transaction Agreements for the time period from January 1, 2019 through January 31, 2019, and so
of Security Interest. As security for the Obligations (as defined below), Company hereby grants to Lender a security interest
in Company’s right, title and interest in, to and under the following property of Company wherever located and whether now
owned or existing or hereafter acquired, arising or coming into existence, and including all Proceeds (including but not limited
to proceeds from any insurance insuring the same against risk of loss or non-payment), products, accessions, additions, substitutions,
rents, profits and replacements thereof, (collectively, the “Collateral”):
all Inventory, Equipment, Fixtures,
Goods, Accounts, account receivables, contract rights, Commercial Tort Claims, Chattel Paper (tangible and electronic), Deposit
Accounts, Documents, General Intangibles, payment intangibles, Software, Instruments, Promissory Notes, Investment Property, Letter-of-Credit
Rights and letters-of-credit, and Supporting obligations, intellectual property (including, and without limitation, patents, patent
applications, copyrights, trademarks and trade secrets), license rights, distribution rights, and rights to xxx for infringement
of General Intangible or intellectual property rights.
All capitalized terms
used in this Section 5 and not otherwise defined shall have the meanings given to such terms in the Uniform Commercial Code of
the State of Colorado as in effect from time to time. The term “Obligations” means all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by Company to Lender of every kind and description (whether or not
evidenced by any note or instrument and whether or not for the payment of money), now existing or hereafter arising under or pursuant
to the terms of the Transaction Agreements, including, without limitation, all principal, interest, fees, charges, expenses, attorneys’
fees and costs chargeable to and payable by Company hereunder and thereunder, in each case, whether direct or indirect, absolute
or contingent, due or to become due, and whether or not arising after the commencement of a proceeding under Title 11 of the United
States Code (11 U.S.C. Section 101 et seq.), as amended from time to time (including post-petition interest) and whether or not
allowed or allowable as a claim in any such proceeding.
Secured. The security interests granted herein shall be security for the performance of and timely payment of all the Obligations.
of Security Interest. The security interest granted herein shall be senior to all other security interests granted by Company
subsequent to the date hereof and all security interests granted by Company prior to the date of this Agreement.
and Perfection; Power-of Attorney. Immediately upon execution and delivery of this Agreement, Lender may take all steps necessary
to perfect and evidence the perfection of the security interest granted herein, including but not limited to doing so by: (1) the
completion and filing of UCC-1 Financing Statements where the Company has its chief executive office within the meaning of U.C.C.
9-307(b)(3) including but not limited to Texas; and, (2) the completion and filing of an appropriate patent assignment with the
United States Patent and Trademark Office. In addition, the Company hereby covenants and agrees to take all such actions in connection
therewith as the Lender may reasonably request, and to take such further or other actions in such regard as the Lender may reasonably
request from time to time, including but not limited to any such actions relating to the renewal or extension of any provision
for the continuing security interest of the Lender in the Collateral. The security interest granted herein shall be a first-priority
security interest in the Collateral.
Representations and Warranties. Company represents and warrants to Lender, now and for so long as any portion of the Obligations
remains outstanding, that:
Company is the owner of the Collateral (or, in the case of after-acquired Collateral, at the time Company acquires rights in
the Collateral, will be the owner thereof) and that no other person or entity other than Company has (or, in the case of after-acquired
Collateral, at the time Company acquires rights therein, will have) any right, title, claim or interest (by way of security interest,
lien or otherwise) in, against or to the Collateral, with the sole exception of the Permitted Liens (as defined below).
Upon the filing of a UCC-1 financing statement in the appropriate filing office, Lender shall have (or in the case of after-acquired
Collateral, at the time Company acquires rights therein, will have) a perfected security interest in the Collateral to the extent
that a security interest in the Collateral can be perfected by such filing. Upon the filing of a patent assignment in the appropriate
filing office, Lender shall have a perfected security interest in those patents and patent applications included within the Collateral
to the extent that a security interest in such patents and patent applications can be perfected by such filing.
Covenants. Until such time as the Obligations described herein are satisfied in full and this Agreement has been irrevocably
terminated, Company hereby agrees that:
Company shall perform, or assist Lender in performing, all acts that may be necessary to maintain, preserve, protect and perfect
the Collateral, the lien granted to Lender herein and the perfection and priority of such lien including: (i) to procure, execute
and deliver from time to time any endorsements, assignments, financing statements, consents, landlord waivers or other writings
reasonably necessary for Lender to perfect, maintain and protect its lien hereunder and the priority thereof; (ii) to appear in
and defend any action or proceeding which may affect its title to or Lender’s interest in the Collateral; (iii) to permit
Lender the right, at any time during normal business hours, upon reasonable prior notice, to visit and inspect the properties of
Company and its corporate, financial and operating records, and make abstracts therefrom, and to discuss Company’s affairs,
finances and accounts with its officers and independent public accountants; and (iv) to promptly notify Lender in writing if Company
has, or believes it may have a Commercial Tort Claim and to provide a summary description of such claim.
of Collateral. Company shall not assign, sell, convey, lease, transfer, hypothecate, or dispose of the Collateral or any portion
thereof to any third party without Lender’s prior written consent, other than the sales of Inventory to third parties in
the normal course of business.
Company will at its own expense at all times keep all insurable Collateral insured against loss by damage, fire, theft and other
extended coverage hazards. Upon request of Lender, Company shall cause Lender to be named as an additional insured on all insurance
policies insuring any of the Collateral against risk of loss or non-payment and shall deliver certificates of insurance naming
Lender as an additional insured. Lender will be a named insured without liability for premiums and will be the sole loss payee
under all such insurance. On request by Lender, the Company will furnish Lender with certificates issued by the insurer(s) confirming
that the insurance coverage required under this Agreement is maintained and in full force and effect. In addition, at the request
of Lender, the original or certified copies of the actual policies showing the existence of insurance in accordance with this Agreement
will be delivered to Lender. All insurance will provide for prompt written notice to Lender of any failure to pay a premium and
for at least thirty (30) days’ prior written notice to Lender of cancellation or non-renewal of the policy and of any material
change in the coverage or in any of the other terms of the insurance.
Company will at all times keep the Collateral free from any adverse claims, liens, security interests, or encumbrances (other than
Permitted Liens), and in good order and repair and will not waste, destroy or otherwise intentionally impair the value of all or
any part of the Collateral. The term “Permitted Liens” means (i) liens for taxes not yet delinquent or liens for taxes
being contested in good faith and by appropriate proceedings for which adequate reserves have been established; (ii) liens in respect
of property or assets imposed by law which were incurred in the ordinary course of business, such as carriers’, warehousemen’s,
materialmen’s and mechanics’ liens and other similar liens arising in the ordinary course of business which are not
delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings for which
adequate reserves have been established; (iii) liens incurred or deposits made in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other types of social security, and other liens to secure the performance
of tenders, statutory obligations, contract bids, government contracts, performance and return of money bonds and other similar
obligations, incurred in the ordinary course of business, whether pursuant to statutory requirements, common law or consensual
arrangements; or (iv) liens in favor of Lender. Company shall defend the Collateral against, and take such other action as is necessary
to remove, any and all claims, liens, security interests, or encumbrances on the Collateral except Permitted Liens.
Company will pay promptly when due all taxes, assessments, and other charges upon the Collateral.
Company will provide for all maintenance, repairs and replacements to the Collateral in accordance with standard maintenance and
repair procedures and upon request will promptly make available copies of all repairs, maintenance and test reports to Lender.
of Collateral. Company shall not without prior written consent of Lender (i) change Company’s legal name or legal structure
from a corporation, or (ii) change Company’s state of registration. Company shall immediately notify Lender in writing
of any change in the location of its chief executive office or in the location where its books and records are kept.
Property. Company will perform all acts and execute all documents reasonably requested by Lender, including notices of security
interest for each relevant type of intellectual property in forms suitable for filing with the United States Patent and Trademark
Office or the United States Copyright Office, that may be necessary or desirable to record, maintain, preserve, protect and perfect
Lender’s security interest in such intellectual property. Company specifically authorizes Lender to make any filings necessary
or desirable to perfect and preserve its security interest in the intellectual property included within the Collateral. With respect
to intellectual property, Company shall timely file and pay all maintenance fees for patents and renewal fees for trademarks and
will promptly notify Lender in writing of any infringement litigation in connection with any of the intellectual property. Company
shall promptly notify Lender in writing of all newly acquired or created intellectual property (including, without limitation,
any patent applications submitted, and any patents granted, after the date of this Agreement). Such notice shall be considered
timely if given on the same business day the patent application in question is submitted or that Company receives notice that the
patent in question is granted.
Statement. Company authorizes Lender to file, in jurisdictions where this authorization will be given effect, a UCC-1 Financing
Statement and continuation statements (including “in lieu” continuation statements) describing the Collateral in the
same manner as it is described herein in order to perfect and maintain Lender’s security interest in the Collateral. In addition,
Company shall execute one or more Financing Statements and continuation statements (including “in lieu” continuation
statements) and such other documents (and pay the cost of filing or recording the same) in all public offices deemed necessary
or desirable by Lender to establish and maintain a valid security interest in the Collateral (free of all other liens and claims
whatsoever) to secure the payment of the Obligations. Company shall promptly take all such further actions as reasonably requested
by Lender to perfect and maintain its security interest in the Collateral.
|6.||Representations and Warranties of the Company.|
As of the Effective
Date, Closing, the date of any Loan Request, all Loan Dates, and for the duration of time that any amount is outstanding under
the Transaction Agreements, the Company represents and warrants to Lender as follows:
Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado. The Company has the requisite corporate power to own, lease and operate its properties and assets
and to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified and is authorized
to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and
of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to
do so would not have a material adverse effect on the Company or its business.
Power. The Company has and will have all requisite corporate power to execute and deliver the Transaction Agreements and to
carry out and perform its obligations thereunder.
All corporate action on the part of the Company, its directors and its shareholders necessary for the authorization, execution,
delivery by the Company of the Transactions Agreements and the performance of the Company’s obligations hereunder and thereunder
has been taken or will be taken prior to the Closing Date and prior to the Company making any Loan Request or accepting any disbursement
of proceeds (or the benefit of any disbursement of proceeds paid to third parties) under the Transaction Agreements. The Transaction
Agreements, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company enforceable
in accordance with their terms.
to Properties and Assets; Liens, Etc. Except as disclosed in the Company’s filings with the Securities and Exchange Commission
and publicly available on the XXXXX system (“SEC filings”), the Company has good and marketable title
to, or valid leasehold interests in, its properties and assets, including the properties and assets currently used in its business,
in each case subject to no Lien other than (i) the Lien of current taxes not yet due and payable, (b) Liens created in connection
with the transactions contemplated hereby and (c) Liens and encumbrances which do not materially detract from the value subject
thereto or materially adversely affect the Company or its business as conducted and proposed to be conducted. For the purposes
hereof, the term “Lien” shall mean, with respect to any property, any security interest, mortgage, pledge,
lien, claim, charge or other encumbrance in, of, or on such property or the income therefrom, including, without limitation, the
interest of a vendor or lessor under a conditional sale agreement, capital lease or other title retention agreement, or any agreement
to provide any of the foregoing, and the filing of any financing statement or similar instrument under the Uniform Commercial Code
or comparable law of any jurisdiction. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased
or used by the Company are in good operating condition and repair and are reasonably fit and usable for the purposes for which
they are being used.
with Laws; Permits. The Company is not in violation of any applicable statute, rule, regulation, order or restriction of any
domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership
or operation of its properties, which violation would materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. The Company has all franchises, permits, licenses and any similar authority
necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect
the business, properties or financial condition of the Company and believes it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as presently proposed to be conducted.
with Other Instruments. The Company is not in violation or default of any term of, and the execution and delivery by the Company
of the Transaction Agreements will not result in any violation or default with respect to, its articles of incorporation or bylaws,
or of any provision of any mortgage, indenture or contract to which it is a party and by which it is bound or of any judgment,
decree, order or writ. The execution, delivery and performance of this Agreement and the other Transaction Agreements, and the
consummation of the transactions contemplated hereby or thereby will not result in any such violation or be in conflict with, give
rise to any acceleration or right to accelerate, or constitute, with or without the passage of time and giving of notice, either
a default under any such provision, instrument, judgment, decree, order or writ or an event that results in the creation of any
Lien upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit,
license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.
There is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, threatened against the Company
that questions the validity of this Agreement or the other Transaction Agreements or which questions the right of the Company to
enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby, or which would reasonably
be expected to result, either individually or in the aggregate, in any material adverse change in the business, assets, liabilities,
operations or condition of the Company, financially or otherwise, or any change in the current equity ownership of the Company,
nor is the Company aware that there is any basis for any of the foregoing. The foregoing includes, without limitation, actions
pending or, to the Company’s knowledge, threatened (or any basis therefor known by the Company) involving the prior employment
of any of the Company’s employees, their use in connection with the Company’s business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. The Company
is not a party to, or to its knowledge subject to, the provisions of any order, writ, injunction, judgment or decree of any arbitration
panel or tribunal, court or other government agency or instrumentality. There is no action, suit, proceeding or investigation by
the Company currently pending or which the Company intends to initiate.
Statements. Except as disclosed in the Company’s SEC filings and balance sheets otherwise provided by Company to Lender,
the Company has no material liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of
business and (ii) obligations under contracts and commitments incurred in the ordinary course of business, which, in both cases,
individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company
is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. The Company maintains and will continue
to maintain a standard system of accounting established and administered in accordance with Generally Accepted Accounting Principles.
Upon request of Lender, the Company will furnish Lender with quarterly, semiannual and annual profit and loss statements and balance
sheets (collectively called the “Financial Statements”). The quarterly and semi-annual Financial Statements will be delivered
to Lender within forty-five (45) days after the end of the applicable period; the annual Financial Statements will be delivered
to Lender within ninety (90) days after the end of the Company’s fiscal year and will be reviewed by Company’s independent certified
accountants. In addition, the Company will provide Lender with such other information about the Company, its financial condition,
the Collateral and its other assets and its liabilities as Lender may from time to time request.
or Finders. The Company has not incurred, and will not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with
this Agreement, the Transaction Agreements or any of the transactions contemplated hereby or thereby. The Company shall indemnify,
protect and hold Lender harmless from all claims for brokerage or finders’ fees or agents’ commissions or any similar
charges in connection with this Agreement, the Transaction Agreements or any of the transactions contemplated hereby or thereby.
of Management. Except as disclosed in the Company’s SEC filings, each officer and key employee of the Company is currently
devoting substantially all of his or her business time to the conduct of the business of the Company. The Company is not aware
that any officer or key employee of the Company is planning to work less than full time at the Company in the future. No officer
or key employee is currently working or, to the Company’s knowledge, plans to work for a competitive enterprise, whether
or not such officer or key employee is or will be compensated by such enterprise.
The Company has in full force and effect fire and casualty insurance policies in amounts customary for companies in similar businesses
Books. The minute books of the Company contain a complete summary of all meetings of directors and shareholders since the time
of incorporation and reflect all transactions referred to in such minutes accurately in all material respects.
|7.||Additional Covenants of the Company.|
For the duration of the Commitment Period and until the repayment in full of the outstanding principal and all accrued and unpaid
interest and other amounts payable under the Note (whichever is longer), the Company covenants and agrees as follows:
the exception of sales of inventory to third parties in the ordinary course of business, the Company shall not undertake any disposition
of material assets without the prior written approval of the Lender.
Company shall deliver to Lender (i) unaudited quarterly financial reports within thirty days after the end of each quarter, and
(ii) a monthly accounting of the Company’s cash balance, AR and inventory. Both shall be in a format reasonably acceptable
to the Lender.
Company shall not incur or agree to incur any indebtedness for borrowed money or financed equipment, or any trade debt in excess
of $50,000 in the aggregate without the prior written consent of the Lender. All such indebtedness shall be on terms and conditions
no more beneficial to a third-party lender than the terms and conditions set forth in the Transaction Agreements.
Company shall not pledge, encumber or grant any security interest in any assets of the Company or any of its subsidiaries to any
third party without the prior written consent of the Lender, excluding the pledge of assets pursuant to this Agreement and the
the prior written approval of Lender, the Company shall not enter into any agreement or promise whereby the Company agrees to issue
shares in the Company, warrants, options (excluding pursuant to an approved employee stock option plan), debt convertible into
shares of the Company, or any other agreement, security, or instrument pledging to issue shares in the Company in consideration
for property or services furnished or to be furnished to the Company or any third party.
Company shall keep its books and records, including balance sheets, financial statements, profit and loss statements, and other
financial records and reports in accordance with Generally Accepted Accounting Principles.
Company shall at all times comply with all laws, rules, regulations orders or restrictions of any domestic or foreign government
or any instrumentality or agency thereof that are applicable to Company. This obligation will include, without limitation, timely
making all required tax filings and payments and the timely filing of all forms, documents and disclosures required or permitted
of Company under the Securities Exchange Act of 1934, applicable rules of the Securities and Exchange Commission, or other actions
necessary to maintain a public listing for the Company’s stock.
shall not, without the prior written consent of Lender, adopt or agree to adopt any plan providing for its reorganization.
|8.||Conditions to Disbursement of Loan Proceeds.|
to consummate the Closing or make any and all loans (including loans made pursuant to Loan Requests) are subject to the fulfillment
of all of the following conditions, any of which may be waived in whole or in part by Lender:
and Warranties. The representations and warranties made by the Company in the Transaction Agreements shall have been true and
correct when made, and shall be true and correct on the date of disbursement. The Company is not in breach of any of its obligations
under the Transaction Agreements.
and Documents. All corporate and other proceedings in connection with the transactions contemplated at the Closing or disbursement,
as applicable, and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and
form to the Lender.
Agreements. The Company shall have duly executed and delivered to the Lender the following documents:
other documents or instruments that Lender may reasonably request in order to perfect the security interest granted by Company
to Lender herein.
Documents. For all loans made pursuant to a Loan Request after Closing, Company shall have provided Lender with sufficient
Supporting Documents (to be determined in Lender’s sole and absolute discretion).
Documents. The Company shall have delivered to the Lender each of the following:
Articles of Incorporation of the Company, certified as of a recent date prior to the Closing by the Secretary of State of Colorado.
Certificate of Good Standing or comparable certificate as to the Company, certified as of a recent date prior to the Closing by
the Secretary of State of Colorado.
certificate of the Secretary of the Company, dated as of the Closing, certifying (a) that the Articles of Incorporation of the
Company, delivered to Lender pursuant to Section 8.5(a) hereof, are in full force and effect and have not been amended, supplemented,
revoked or repealed since the date of such certification; (b) that attached thereto is a true and correct copy of the Bylaws of
the Company as in effect on the date of the Closing; (c) that attached thereto are true and correct copies of resolutions duly
adopted by the Board of Directors of the Company and continuing in effect, which authorize the execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions contemplated hereby and thereby; and (d) that there are
no proceedings for the dissolution or liquidation of the Company (commenced or threatened); and
certificate of the Secretary of the Company, dated as of the Closing, certifying the incumbency, signatures and authority of the
officers of the Company authorized to execute and deliver the Transaction Agreements on behalf of the Company and perform the Company’s
obligations thereunder on behalf of the Company.
occurrence of any one or more of the following shall constitute an “Event of Default” under all the Transaction
fails to pay timely any of the principal amount due under the Transaction Agreements on the date the same becomes due and payable
or any accrued interest or other amounts due under the Transaction Agreements on the date the same becomes due and payable.
breaches any provision, covenant or other representation, warranty, term or condition contained in this Transaction Agreements
or any other note or agreement, of any kind or nature, between Company and Lender.
representation or warranty of Company made in the Transaction Agreements or any other agreement, statement, certificate, or communication
given to Lender be false or misleading in any material respect when made or become false or misleading in any material respect
shall (i) fail to make any payment when due under the terms of any bond, debenture, note or other evidence of indebtedness
for money borrowed to be paid by Company and such failure shall continue beyond any period of grace provided with respect thereto,
or (ii) default in the observance or performance of any other agreement, term or condition contained in any bond, debenture,
note or other evidence of indebtedness for borrowed money.
(i) files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law
for the relief of, or relating to, debtors, now or hereafter in effect; (ii) makes any assignment for the benefit of creditors
or takes any corporate action in furtherance of any of the foregoing; (iii) applies for or consents to the appointment of
a receiver, trustee, liquidator or custodian of itself or of all or a substantial part of its property; (iv) is unable, or admits
in writing its inability, to pay its debts generally as they mature, (v) is dissolved or liquidated; (vi) becomes insolvent
(as such term may be defined or interpreted under any applicable statute); or (vii) takes any action for the purpose of effecting
any of the foregoing.
involuntary petition is filed against Company (unless such petition is dismissed or discharged within thirty (30) days under any
bankruptcy statute now or hereafter in effect) or a custodian, receiver, trustee, assignee for the benefit of creditors (or other
similar official) is appointed to take possession, custody or control of any property of Company;
final judgment or order for the payment of money in excess of $10,000 is rendered against the Company and the same shall remain
undischarged for a period of ten (10) days during which execution shall not be effectively stayed, or any judgment, writ, assessment,
warrant of attachment, or execution or similar process shall be issued or levied against the Collateral (as defined above) and
such judgment, writ, or similar process shall not be released, stayed, vacated or otherwise dismissed within ten (10) days after
issue or levy.
cessation of operations by Company.
failure to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct
its business (whether now or in the future).
sale, conveyance, or disposition of all or substantially all of the assets of the Company, the effectuation by the Company of a
transaction or series of related transactions in which more than 50% of the voting power of the Company is disposed of or transferred,
or the consolidation, merger or other business combination of the Company with or into any other Person (as defined below) or Persons
when the Company is not the survivor. “Person” shall mean any individual, corporation, limited liability company, partnership,
association, trust or other entity or organization.
accrues past due accounts payable (whether to a single vendor or service provider or in combination to multiple vendors or service
providers) in excess of fifty thousand dollars ($50,000) other than to legal and accounting professionals.
in good faith believes itself insecure.
otherwise takes action which threatens Lender’s security for this Note or threatens Company’s ability to repay the
of Event of Default. Company shall provide Lender with written notice of any Event of Default (whether occurring under this
Agreement or the Note) within two (2) Business Days of the occurrence, commencement or recurrence of such Event of Default.
Remedies Upon Event of Default. Upon the occurrence of any Event of Default and at any time thereafter, Lender may, at its
option, declare any and all Obligations (as defined above) immediately due and payable without demand or notice of any kind and
the same thereupon shall immediately become and be due and payable without demand or notice, in which event (subject to the further
provisions of the Transaction Agreements) Lender shall have and may exercise from time to time any and all rights and remedies
of a Lender under the Uniform Commercial Code in effect in any and all jurisdictions where UCC-1s or other documents are filed
to perfect or maintain Lender’s security interest, as amended from time to time, and any and all rights and remedies available
to it under any other applicable law, including but not limited to directing account debtors to make payment directly to Lender,
settling, compromising or adjusting any of the Collateral (the same to be binding upon Company), commencing, prosecuting, and defending,
as the case may be, any proceeding to collect or protect any or all of the Collateral, or any other proceeding with respect to
any of the Collateral and selling any of the Collateral at private or public sale on such terms as Lender deems appropriate. Upon
request of Lender, Company will immediately deliver and endorse or cause to be delivered and endorsed, to Lender or in accordance
with Lender’s instructions, any of the Collateral. Any proceeds of any disposition of all or any part of the Collateral may
be applied by Lender toward payment of such of the Obligations, and in such order of application, as Lender may from time to time
elect. The remedies set forth herein shall be cumulative and not alternative and, upon the occurrence of an Event of Default, Lender
may pursue any and all remedies available to it under the Transaction Agreements, at law, in equity, or otherwise.
Agreement. The rights and obligations of the Company and the Lender under the Transaction Agreements shall be binding upon
and benefit the successors, assigns, heirs, administrators and transferees of the parties.
Third Party Beneficiaries. Nothing in this Agreement, expressed or implied, is intended to confer upon any third party any
rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
by the Company. The rights, interests or obligations hereunder may not be assigned, by operation of law or otherwise, in whole
or in part, by the Company without the prior written consent of Lender, which may be withheld in Lender’s sole and absolute
of this Agreement. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable,
the offending provision shall be modified to the minimum extent necessary to be enforceable in accordance with the parties original
intentions and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired
Law. This Agreement shall be governed by and construed under the laws of the State of Colorado as applied to agreements among
Colorado residents, made and to be performed entirely within the State of Colorado, without giving effect to conflicts of laws
principles. Exclusive venue for all actions arising out of this Agreement shall be in the District Court in and for Larimer County,
State of Colorado, which shall have authority to adjudicate all claims arising out of this Agreement.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Costs. If Lender hires an attorney to assist in collecting any amount due or in enforcing any right or remedy under this Agreement
or the Transaction Agreements, Company agrees to pay Lender’s reasonable attorney’s fees and collection costs. All
amounts payable by Company under this Section 10.8 shall be payable on demand and shall accrue interest in the same fashion as
principal advanced under the Note with interest beginning to run: (a) from the date Lender incurs the amount in any case where
Lender has requested the Company to pay Lender’s costs and fees as incurred and Company has failed to do so, or (b) from
the date Lender requests reimbursement in any case where Lender has not requested the Company to pay Lender’s costs and fees
Assurances. The Company agrees at any time and from time to time at its expense, upon request of Lender and at Company’s
sole expense, to promptly execute, deliver, or obtain or cause to be executed, delivered or obtained any and all further instruments
and documents and to take or cause to be taken all such other action as the Lender may deem reasonably desirable in obtaining the
full benefits of, or in preserving the liens and/or security interests of, the Transaction Agreements.
All representations, warranties, covenants, obligations and agreements made by the Company in connection the Transaction Agreements
shall survive Closing, the disbursement of the loans and the execution and delivery of this Agreement and the Note.
Waiver. No modification or waiver of any provision of the Transaction Agreements or consent to departure therefrom shall be
effective unless agreed to in writing by the Company and Lender.
and Expenses. At the Closing, the Company shall pay the reasonable legal and due diligence fees and expenses of counsel to
the Lender. If the amount of such costs and fees is not yet known at Closing (i.e., if Lender has not yet received a final xxxx
for the same), such costs and fees shall be payable on demand in the same fashion set forth in Section 10.8.
or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to Lender, upon any breach
or default of the Company under this Agreement or any other Transaction Agreement, shall impair any such right, power or remedy,
nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character
by Lender of any breach or default under this Agreement, or any waiver by Lender of any provisions or conditions of this Agreement
must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under
this Agreement, or by law or otherwise afforded to the Lender, shall be cumulative and not alternative.
and Other Communications. All notices, requests, demands and other communications permitted or required in the Transaction
Agreements shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, (c) sent
by overnight courier of national reputation with delivery confirmation, or (d) sent as electronic mail, in each case delivered
or sent to the party to whom notice is being given to the business address or e-mail address set forth below or, as to each party,
at such other business address or e-mail address as it may hereafter designate in writing to the other party pursuant to the terms
of this Section 10.14. All such notices, requests, demands and other communications shall be deemed communicated or given on (i) the
date received if personally delivered, (ii) five (5) Business Days after deposit in the mail if delivered by mail, (iii) the
date delivered if delivered by overnight courier with delivery confirmation, or (iv) the date of transmission if sent by electronic
mail, except that notices or requests delivered to the Lender via electronic mail shall not be effective until actually received
and read by the Lender. All notices, requests, demands and other communications shall be addressed and given to Lender and Company
as set forth below:
If to Lender:
000 X. Xxxxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
If to Company:
C-BOND SYSTEMS, INC.
0000 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
In the event that any deadline or date on which any action must be taken herein falls on a day other than a Business Day, such
deadline or date on which action must be taken is extended to the next Business Day.
Agreement. This Agreement together with the other Transaction Agreements constitute and contain the entire agreement among
the Company and Lender and supersede any and all prior agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter hereof.
The provisions of this Agreement are cumulative and Lender shall have all the benefits, rights and remedies of and under the
Witness Whereof, the parties have executed this REVOLVING CREDIT FACILITY LOAN And
SECURITY AGREEMENT as of the Effective Date.
C-BOND SYSTEMS, INC., a Colorado corporation
||/s/ Xxxxx X. Xxxxxxxxx
|Print Name: Xxxxx X. Xxxxxxxxx
Its: Chief Executive Officer
Investments, LLC, a Colorado limited liability company
||/s/ Xxxxxx X. Xxxxxxx
|Print Name: Xxxxxx X. Xxxxxxx
|Title: President of Managing Member
Form of Secured Promissory Note