CREDIT AGREEMENT is dated as of October 4, 2017, by and between JACOBY & CO. INC., a Nevada corporation (“Borrower”),
and FIFTH THIRD BANK, an Ohio Banking Corporation (the “Bank”).
Borrower has requested the Bank to extend credit to the Borrower. The Bank is willing to extend credit to the Borrower, subject
to the terms and conditions hereinafter set forth.
the Borrower and the Bank agree as follows:
AND ACCOUNTING TERMS
1.1. Definitions. As used herein, the following words and terms shall have the following meanings:
EBITDA” shall mean, for the period in question, Net Income plus Interest Expense plus depreciation
and amortization plus taxes plus rents and operating lease payments minus distributions and dividends to
members and shareholders (net of contributions, which shall not exceed distributions) plus proceeds of all
Subordinated Debt plus/minus any nonrecurring/extraordinary expense or revenue items as determined by the Bank in its
reasonable discretion, calculated in accordance with GAAP applied on a consistent basis but adjusted for non-cash
straight-line rent adjustments and capital expenditures (other than capital expenditures financed with the proceeds of
purchase money Indebtedness or Capital Leases to the extent permitted under this Agreement).
Protocol” shall have the meaning set forth in the definition of LIBOR Rate.
shall mean with respect to any Person, any corporation, partnership, limited liability company, limited liability partnership,
joint venture, trust or unincorporated organization which, directly or indirectly, controls or is controlled by or is under common
control with such Person. For the purpose of this definition, “control” of a Person shall mean the power, direct or
indirect, to direct or cause the direction of the management or policies of such Person whether through the ownership of voting
securities by contract or otherwise; provided that, in any event, any person who owns directly or indirectly forty (40%) percent
or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation
or forty (40%) percent or more of the partnership, membership or other ownership interest of any Person (other than as a limited
partner of such other Person) will be deemed to control such corporation or other Person.
Currency” shall have the meaning provided in Section 9.1.7.
shall mean this Credit Agreement dated as of October 4, 2017, as it may hereafter be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
Legislation” shall have the meaning provided in Section 9.16.
Laws” shall mean any laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot
Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by the United States Treasury Department’s
Office of Foreign Asset Control, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (as
any of the foregoing laws may from time to time be amended, renewed, extended, or replaced).
Services” shall mean each and any of the following commercial bank services provided to the Borrower by the Bank: (i)
commercial credit, credit cards, purchase or debit cards and (ii) cash management, treasury or related services (including, without
limitation, controlled deposit accounts, overnight draft, funds transfer, automated clearinghouse, zero accounts, lockbox, account
reconciliation, disbursement, ACH transactions, return items and interstate depository network services); and (iii) any interest
rate swap, cap, floor, collar, or any similar transaction or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Borrower’s exposure to fluctuations in internet rates.
Services Obligations” of the Borrower shall mean any and all obligations of the Borrower, whether absolute or contingent
and however and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof
and substitutions therefor) in connection with Banking Services.
Person” shall have the meaning provided in Section 4.19(b).
Base” shall mean, at any time, fifty (50%) percent of Borrower Group’s Eligible Inventory plus eighty (80%)
percent of Borrower Group’s Eligible Receivables.
Base Certificate” shall mean a certificate signed and certified as accurate and complete by an Executive Officer of
Borrower, setting forth the calculation of the Borrowing Base, and including such other information as may be reasonably requested
by Bank from time to time.
Date” shall mean, with respect to any Loan, the date on which such Loan is disbursed to the Borrower.
Group” shall mean the Borrower and each Guarantor that is a direct and indirect subsidiary of Borrower.
Day” shall mean (i) with respect to all notices and determinations in connection with the LIBOR Rate, any day (other
than a Saturday or Sunday) on which commercial banks are open in London, England, New York, New York, and Cincinnati, Ohio for
dealings in deposits in the London Interbank Market; and (ii) in all other cases, any day on which commercial banks in Cincinnati,
Ohio are required by law to be open for business; provided that, notwithstanding anything to the contrary in this definition of
“Business Day”, at any time during which a rate management agreement with the Bank is then in effect with respect
to all or a portion of the Revolving Credit Note, then the definitions of “Business Day” and “Banking Day”,
as applicable, pursuant to such rate management agreement shall govern with respect to all applicable notices and determinations
in connection with such portion of the Revolving Credit Note subject to such rate management agreement.
Benefit Plans” shall mean, whether oral or written, formal or informal, funded or unfunded, insured or uninsured, any
bonus, deferred compensation, incentive compensation, share purchase, share option, share appreciation, phantom share, savings,
profit sharing, severance or termination pay, health, dental or other medical, life, disability insurance, mortgage insurance,
employee loan, employee assistance, supplementary unemployment benefit, registered and other pension, retirement and supplementary
retirement, plan, program and every other benefit plan, program, agreement, arrangement or practice maintained or contributed
to for the benefit of any of the Borrower Group’s employees, former employees or their respective dependent or beneficiaries
or under which the Borrower Group has any liability in respect of any of its employees, former employees or their respective dependent
or beneficiaries, but excluding the Canada Pension Plan, the Quebec Pension Plan, any health or drug plan established and administered
by a Canadian Province and workers’ compensation insurance provided by Canadian federal or provincial legislation or a comparable
program established and administered outside Canada.
Insolvency Laws” shall mean any of the Bankruptcy and Insolvency Act (Canada) the Companies’ Creditors Arrangement
Act (Canada), the Winding-Up and Restructuring Act (Canada), the Bankruptcy Code, as at now and hereafter in effect, any successors
to such statutes and any other applicable insolvency or other similar law of any jurisdiction, including any law of any jurisdiction
permitting a debtor to obtain a stay or a compromise of the claims of its creditors against it.
Pension Legislation” shall mean the Pension Benefits Act (Ontario) and regulations adopted thereunder, and any similar
Canadian provincial or federal legislation.
Pension Plans” shall mean a Canadian Benefit Plan which is a registered pension plan, as that term is defined in the
Income Tax Act (Canada), other than a MEPP.
Lease” shall mean (i) any lease of property, real or personal, if the then present value of the minimum rental commitment
thereunder should, in accordance with GAAP applied on a consistent basis, be capitalized on the balance sheet of the lessee, and
(ii) any other such lease the obligations of which are required to be capitalized on the balance sheet of the lessee.
of Control” shall mean any event which results in any Person, or two or more Persons acting in concert, in each case,
acquiring beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended), directly or indirectly, by contract or otherwise, or entering into a contract or arrangement
which upon consummation will result in its or their acquisition of, or control over, securities of Borrower (or other securities
convertible into such securities) representing fifty (50%) percent or more of the combined voting power of all securities of Borrower
entitled to vote in the election of managers.
Date” shall mean October 4, 2017.
shall mean the Internal Revenue Code of 1986, as amended from time to time.
shall mean the obligation of the Bank to make Revolving Credit Loans in the aggregate amount not to exceed Eight Million
Period” shall mean the period from and including the Closing Date to, but not including, the Commitment Termination
Date or such earlier date as the Commitment shall terminate as provided herein.
Termination Date” shall mean October 4, 2018.
shall have the meaning set forth in Section 4.3.
shall mean any event or condition which upon notice, lapse of time, or both, would constitute an Event of Default.
and the symbol “$” shall mean lawful money of the United States of America.
Inventory” means at any time, Borrower Group’s inventory of finished goods held for use or sale in the ordinary
course of Borrower Group’s business, valued by the Bank at the lower of cost or fair market value on a first in, first out
basis; provided that Eligible Inventory shall not include the following: (i) raw materials and work-in-process; (ii) obsolete
items; (iii) samples and packing materials; (iv) returned items; (v) any inventory in which the Bank does not have a valid, first
priority and fully perfected security interest; (vi) any inventory evidenced by negotiable warehouse receipts or documents of
title which have not been issued in the name of the Bank; and (viii) any inventory not in the actual possession of the Borrower
Group or located at any leased location or public warehouse, unless a reasonably satisfactory landlord or warehouseman lien subordination
or waiver has been delivered to the Bank or reserves reasonably satisfactory to the Bank in its discretion have been established
by the Borrower Group with respect thereto, provided, however, inventory in transit shall, notwithstanding the foregoing, be considered
Eligible Inventory under this Section (viii) to the extent said inventory is properly insured, as determined by the Bank in its
reasonable discretion, with the Bank named as a losspayee on any applicable insurance policy. Inventory, which is deemed to be
Eligible Inventory, but which subsequently fails to meet the foregoing criteria for Eligible Inventory, shall immediately cease
to be Eligible Inventory for the purpose of determining the Borrowing Base. To the extent that such inventory once again meets
the foregoing criteria for Eligible Inventory, such inventory shall immediately be Eligible Inventory for purposes of determining
the Borrowing Base.
Receivables” shall mean, at any time, Borrower Group’s accounts receivable that are not more than ninety (90)
days past the original invoice date (less contra accounts); provided that Eligible Receivables shall not include the following:
(i) accounts receivable with respect to which the account debtor is a member, officer, employee, agent or Affiliate of any of
the Borrower Group; (ii) accounts receivable with respect to which the debtor is not a resident of, or does not have its principal
place of business in, the United States or Canada, provided, however, said accounts receivable may be deemed eligible by the Bank
on a case by case basis, if satisfactory letters of credit, credit insurance, or other requested documentation is received by
the Bank; (iii) if the total accounts receivable owed by a debtor to the Borrower Group total more than twenty (20%) percent of
Borrower Group’s total accounts receivable, then Eligible Receivables shall not include any such accounts receivable owed
by said debtor to the Borrower Group that exceed twenty (20%) percent of Borrower Group’s total accounts receivable; and
(iv) any and all accounts receivable owed by a particular debtor if twenty-five (25%) percent or more of the total accounts receivable
owed by said debtor to the Borrower Group are due and outstanding more than ninety (90) days from the original invoice date. In
the event that an Eligible Receivable ceases to be an Eligible Receivable hereunder, the Borrower shall notify the Bank thereof
on and at the time of submission to the Bank of the next Borrowing Base Certificate. In determining the amount of an Eligible
Receivable, the face amount of an account may, in the Bank’s discretion, be reduced, without duplication, to the extent
not reflected in such face amount, by: (a) the amount of all accrued and actual rebates, discounts, claims, credits or credits
pending, promotional program allowances, price adjustments, finance charges or other allowances and (b) the aggregate amount of
all cash received in respect of such account but not yet applied by the Borrower Group to reduce the amount of such account.
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Section references to ERISA are
to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental
thereto or substituted therefor.
Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) which, together with the Borrower Group, would
be deemed to be a member of the same “controlled group” within the meaning of Section 414(b) and (c) of the Code.
of Default” shall mean any Event of Default set forth in Article VIII.
Officer” shall mean the chief executive officer or chief financial officer of Borrower of entity Guarantor, as applicable,
and any other officer or similar official thereof with significant responsibility for the administration of the obligations of
the Borrower or entity Guarantor in respect of this Agreement and the other Loan Documents.
Order” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has
been, or shall hereafter be, renewed, extended, amended or replaced.
Charge Coverage Ratio” shall mean the ratio of Borrower Group’s consolidated (i) Adjusted EBITDA to (ii) the sum
of (a) all principal and interest payments with respect to Indebtedness that were paid or were due and payable by the Borrower
Group during the period in question, and (b) all rents that were paid or payable and all operating lease payments that were paid
or payable by the Borrower Group during the period in question, calculated in accordance with GAAP applied on a consistent basis
but adjusted for non-cash straight-line rent adjustments.
Authority” shall mean any nation or government, any state, province, city or municipal entity or other political subdivision
thereof, and any governmental, executive, legislative, judicial, administrative or regulatory agency, department, authority, instrumentality,
commission, board or similar body, whether federal, state, provincial, territorial, local or foreign.
shall mean guaranties executed by each of the Guarantors, as the same may be amended, restated, supplemented or modified, from
time to time.
shall mean Aaron Locascio, Adam Schoenfeld, Jacoby Holdings LLC, a Delaware limited liability company, Mid-Atlantic Holdings Group
LLC, a Delaware limited liability company, Bio Vapor Solutions LLC, a Delaware limited liability company, MSI Imports LLC, a Washington
limited liability company, Aerospaced LLC, a Florida limited liability company, Warehouse Goods LLC, a Delaware limited liability
company, Quick Draw Holdings, Inc., a Delaware limited liability company, GS Fulfillment LLC, a Delaware limited liability company,
Vape World Distribution LTD., a British Columbia corporation, and HS Products LLC, a Delaware limited liability company.
Materials” shall mean any flammable explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous
or toxic substances, or related materials defined in the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended (49) U.S.C.
Sections 1801, et seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 9601, et seq.), and in the
regulations adopted and publications promulgated pursuant thereto, or any other federal, state or local environmental law, ordinance,
rule or regulation.
Agreement” shall mean any agreement between Borrower and Bank or any affiliate of Bank, now existing or hereafter entered
into, which provides for an interest rate swap, cap, floor, collar, or any similar transaction or any combination of, or option
with respect to, these or similar transactions, for the purpose of hedging Borrower’s exposure to fluctuations in interest
shall mean, without duplication, as to any Person or Persons (i) indebtedness for borrowed money; (ii) indebtedness for the deferred
purchase price of property or services; (iii) indebtedness evidenced by bonds, debentures, notes or other similar instruments;
(iv) obligations and liabilities secured by a Lien upon property owned by such Person, whether or not owing by such Person and
even though such Person has not assumed or become liable for the payment thereof; (v) obligations or liabilities created or arising
under any conditional sales contract or other title retention agreement with respect to property used and/or acquired by such
Person; (vi) obligations of such Person as lessee under Capital Leases; (vii) liabilities of such Person under Hedge Agreements
and foreign currency exchange agreements, as calculated on a basis reasonably satisfactory to the Bank and in accordance with
accepted practice; (viii) all obligations of such Person in respect of bankers’ acceptances; (ix) all obligations, contingent
or otherwise, of such Person as an account party in respect of letters of credit and (x) all guaranties of such Person of the
type of Indebtedness described in clauses (i) through (ix) above. The amount of any Indebtedness of a Person for which recourse
is limited to an identified asset or assets of such Person shall be equal to the lesser of (x) the amount of such Indebtedness
and (y) the fair market value of such asset or assets. For purposes of this definition, the amount of any Indebtedness represented
by a guaranty shall be the maximum amount for which the guaranteeing Person may be liable pursuant to the terms of the instruments
embodying such Indebtedness.
Expense” shall mean all interest expense of the Borrower Group determined on a consolidated basis in accordance with
GAAP applied on a consistent basis.
Currency” shall have the meaning provided in Section 9.17.
shall mean the state in the United States where the Bank’s branch which maintains Borrower Group’s major deposits
is located, or if Borrower Group does not have deposits with the Bank, the Bank’s office in a state of the United States
where Borrower Group’s major banking relationship with it is conducted; if neither of the foregoing apply, then jurisdiction
shall mean the State of Florida.
Waivers” shall mean the Landlord waivers with respect to properties occupied by the Borrower Group, executed for the
benefit of the Bank, as same may be amended, restated, supplemented or modified, from time to time.
Rate” shall mean, as of any date of determination, the rate of interest rounded upwards (the “Rounding Adjustment”),
if necessary, to the next 1/8 of 1% (and adjusted for reserves if the Bank is required to maintain reserves with respect to relevant
advances) fixed by ICE Benchmark Administration Limited (or any successor thereto, or replacement thereof, approved by the Bank,
each an “Alternate LIBOR Source”) at approximately 11:00 a.m., London, England time (or the relevant time
established by ICE Benchmark Administration Limited, an Alternate LIBOR Source, or the Bank, as applicable), two Business Days
prior to such date of determination, relating to quotations for the one month London InterBank Offered Rates on U.S. Dollar deposits,
as displayed by Bloomberg LP (or any successor thereto, or replacement thereof, as approved by the Bank, each an “Approved
Bloomberg Successor”), or, if no longer displayed by Bloomberg LP (or any Approved Bloomberg Successor), such rate as
shall be determined in good faith by the Bank from such sources as it shall determine to be comparable to Bloomberg LP (or any
Approved Bloomberg Successor), all as determined by the Bank in accordance with the Bank’s loan systems and procedures periodically
anything to the contrary contained herein, in no event shall the LIBOR Rate be less than 0% as of any date (the “LIBOR
Rate Minimum”); provided that, at any time during which a rate management agreement with the Bank is then in effect
with respect to all or a portion of the Obligations, the LIBOR Rate Minimum, the Rounding Adjustment and the Adjustment Protocol
(as defined below) shall all be disregarded and no longer of any force and effect with respect to such portion of the Obligations
subject to such Rate Management Agreement. Each determination by the Bank of the LIBOR Rate shall be binding and conclusive in
the absence of manifest error. The LIBOR Rate shall be initially determined as of the date of the initial advance of funds to
Borrower under the Revolving Credit Note and shall be effective until the first Business Day of the month following the period
commencing on the date of such initial advance (such first Business Day being the “First Adjustment Date”).
The interest rate based upon the LIBOR Rate shall be adjusted automatically on the First Adjustment Date and on the first Business
Day of each month thereafter (the “Adjustment Protocol”).
anything herein contained to the contrary, if the Bank, by written or telephonic notice, notifies Borrower that: (i) any change
in any law, regulation or official directive, or in the interpretation thereof, by any governmental body charged with the administration
thereof, has made it unlawful for the Bank to fund or maintain its funding in Eurodollars of any portion of any advance subject
to the LIBOR Rate or otherwise give effect to the Bank’s obligations as contemplated hereby; or (i) (a) LIBOR deposits for
periods of one month are not readily available in the London Interbank Offered Rate Market, (b) by reason of circumstances affecting
such market or other economic conditions, adequate and reasonable methods do not exist for ascertaining the rate of interest applicable
to such deposits, or (iii) the LIBOR Rate as determined by the Bank will not adequately and fairly reflect the cost to the Bank
of making or maintaining advances bearing interest with reference to the LIBOR Rate (including inaccurate or inadequate reflection
of actual costs resulting from the calculation of rates by reporting sources), then, in any of such events: (A) the Bank’s
obligations in respect of the LIBOR Rate shall terminate forthwith, (B) the LIBOR Rate with respect to the Bank shall forthwith
cease to be in effect, (C) Borrower’s right to utilize LIBOR Rate index pricing as set forth in this Agreement and the Revolving
Credit Note shall be terminated forthwith, and (D) amounts outstanding under the Revolving Credit Note shall, on and after such
date, bear interest at a rate per annum equal to: (1) 0.5% plus (2) the floating rate of interest established from time
to time by the Bank at its principal office as its “Prime Rate”, whether or not the Bank shall at times lend
to borrowers at lower rates of interest or, if there is no such Prime Rate, then such other rate as may be substituted by the
Bank for such Prime Rate. Each determination by the Bank of the Prime Rate shall be binding and conclusive in the absence of manifest
error. In the event of a change in the Prime Rate, the interest rate accruing hereunder based upon the Prime Rate shall be changed
immediately with such change to be based upon such new Prime Rate.
shall mean any lien (statutory or otherwise), security interest, mortgage, deed of trust, pledge, charge, conditional sale, title
retention agreement, Capital Lease or other encumbrance or similar right of others, or any agreement to give any of the foregoing.
shall mean, collectively, the loans and advances made by the Bank pursuant to this Agreement.
Documents” shall mean, collectively, this Agreement, the Note, the Security Documents, Hedge Agreements, and each other
agreement executed in connection with the transactions contemplated hereby or thereby.
Business Day” shall mean any day on which commercial banks in London, England are open for general business.
Adverse Effect” shall mean a material adverse effect on (i) the business, operations, properties or condition (financial
or otherwise) of the Borrower Group, or (ii) the ability of the Borrower Group to perform any of its material obligations under
any Loan Document to which it is a party.
Contract” shall mean, with respect to any Person, each contract, instrument or agreement to which such Person is a party
which is material to the business, operations, properties, prospects or condition (financial or otherwise) of such Person or which,
if terminated, could reasonably be expected to result in a Material Adverse Effect.
shall mean a Canadian Benefit Plan which is a multi-employer pension plan, as that term is defined by Canadian Pension Legislation.
Income” shall mean, for any period, the net income (or net loss) for such period calculated in accordance with GAAP
applied on a consistent basis.
of Revolving Credit Loan Borrowing” shall mean the Notice of Revolving Credit Loan Borrowing substantially in the form
attached hereto as Exhibit B.
shall mean (i) all obligations, liabilities and indebtedness of the Borrower to the Bank, whether now existing or hereafter created,
absolute or contingent, direct or indirect, due or not, arising under this Agreement, the Revolving Credit Note or any other Loan
Document, including, without limitation, all obligations, liabilities and indebtedness of the Borrower with respect to the principal
of and interest on the Loans, (ii) any Banking Services Obligations and (iii) all fees, costs, expenses and indemnity obligations
of the Borrower hereunder or under any other Loan Document.
Accounts” shall mean Borrower’s account #7434398447 at the Bank, and any other account at the Bank maintained
by a member of Borrower Group, into which (i) Bank shall credit the proceeds from each Revolving Credit Loan hereunder; and (ii)
all payments made to Borrower Group shall be deposited, wired or ACH’d.
Office” shall mean the Bank’s office located at 2333 Ponce de Leon Blvd, Suite 303, Coral Gables, FL 33134, Attention:
Commercial Loan Administration, or such other office hereinafter designated by the Bank as its Payment Office.
shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
Liens” shall have the meaning set forth in Section 7.1.
shall mean any natural person, corporation, limited liability company, limited liability partnership, business trust, joint venture,
association, company, partnership or Governmental Authority.
shall mean any multi-employer or single-employer plan defined in Section 4001 of ERISA which is subject to Title IV of ERISA,
which is maintained, or at any time during the five calendar years preceding the date of this Agreement was maintained for employees
of the Borrower Group or an ERISA Affiliate.
D” shall mean Regulation D of the Board of Governors of the Federal Reserve System as the same may be amended or supplemented
from time to time.
Event” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan as to which the 30-day notice
requirement has not been waived by the PBGC.
Credit Loan” shall have the meaning specified in Section 2.1.
Credit Note” shall mean the Revolving Credit Note, in the form attached hereto as Exhibit A, as same may be amended,
restated, supplemented or modified, from time to time.
Agreements” shall mean the Security Agreements executed by the Borrower and each entity Guarantor, for the benefit of
the Bank, as same may be amended, restated, supplemented or modified, from time to time.
Documents” shall mean, collectively, the Security Agreements, the Guaranties, the Landlord Waivers and each other collateral
security document delivered to the Bank hereunder.
Debt” shall mean all Indebtedness which is subordinated in right of payment to the payment of the Obligations on terms
set forth in a subordination agreement that is reasonably satisfactory to the Bank.
Current Liability” of any Plan shall mean the amount, if any, by which the present value of the accrued benefits under
the Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, determined
in accordance with Section 412 of the Code.
1.2. Construction. The definitions of terms herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, pronouns stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and the neuter. The term “including” shall not be limited or exclusive, unless specifically indicated to
the contrary. The word “will” shall be construed to have the same meaning in effect as the word “shall”.
The words “herein”, “hereof’ and “hereunder” and other words of similar import refer to this
Agreement as a whole, including the exhibits and schedules hereto, all of which are by this reference incorporated into this Agreement.
1.3. Accounting Terms. Except as otherwise herein specifically provided, each accounting term used herein shall
have the meaning given to it under GAAP. “GAAP” shall mean those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified Public Accountants acting through the Financial
Accounting Standards Board (“FASB”) or through other appropriate boards or committees thereof, except that any
accounting principle or practice required, in the good faith opinion of the CPA, to be changed by the FASB (or other
appropriate board or committee of the FASB) in order to continue as a generally accepted accounting principle or practice
may be so changed. Any dispute or disagreement between the Borrower and the Bank relating to the determination of GAAP shall,
in the absence of manifest error, be conclusively resolved for all purposes hereof by a written opinion with respect thereto
delivered to the Bank by the CPA.
2.1. Revolving Credit Loans.
Subject to the terms and conditions, and relying upon the representations and warranties, set forth herein, the Bank agrees to
make loans (individually a “Revolving Credit Loan” and, collectively, the “Revolving Credit Loans”)
to the Borrower at any time or from time to time on or after the date hereof and until the Commitment Termination Date, provided,
however, that no Revolving Credit Loan shall be made if, after giving effect to such Revolving Credit Loan, the aggregate
outstanding principal amount of all Revolving Credit Loans would exceed the lesser of the Commitment or the Borrowing Base in
effect at such time. During the Commitment Period, the Borrower may from time to time borrow, repay and reborrow hereunder, subject
to the terms, provisions and limitations set forth herein.
The Borrower shall, not later than 10:00 a.m., Miami, Florida time, on the date of each proposed Revolving Credit Loan under
this Section 2.1, deliver to the Bank a duly completed Notice of Revolving Credit Loan Borrowing, executed by an Executive
Officer. Such notice shall be irrevocable.
The Commitment shall automatically terminate on the last day of the Commitment Period. Upon such termination, the Borrower shall
immediately repay in full the principal amount of the Revolving Credit Loans then outstanding, together with all accrued and unpaid
interest thereon and all other amounts due and payable hereunder.
2.2. Revolving Credit Note. The Revolving Credit Loans made by the Bank shall be evidenced by the Revolving
Credit Note, appropriately completed, duly executed and delivered on behalf of the Borrower at Closing and payable to the
order of the Bank. Borrower shall be liable for all amounts outstanding under the Revolving Credit Note. The date and amount
of each Revolving Credit Loan and the date and amount of each payment or prepayment of principal of each Revolving Credit
Loan may be recorded on the grid schedule annexed to the Revolving Credit Note, and the Borrower authorizes the Bank to make
such recordation; provided, however, that the failure of the Bank to set forth each such Revolving Credit Loan,
payment and other information on such grid shall not in any manner affect the obligation of the Borrower to repay each
Revolving Credit Loan made by the Bank in accordance with the terms of the Revolving Credit Note and this Agreement. The
Revolving Credit Note and the books and records of the Bank shall constitute conclusive evidence of the information so
recorded absent manifest error. The aggregate unpaid amount of the Revolving Credit Loans of the Bank at any time shall be
the principal amount owing on the Revolving Credit Note of the Borrower at such time. Borrower shall make monthly payments of
all accrued and unpaid interest to the Bank, commencing on November 4, 2017, and continuing on the same day each month
during the Commitment Period.
RATE; FEES AND PAYMENTS; USE OF PROCEEDS
3.1. Interest Rate.
The Revolving Credit Loans shall bear interest on the unpaid principal amount thereof at a rate per annum equal to the LIBOR
Rate plus three and one-half (3.50%) percent. The interest rate shall be adjusted pursuant to the Adjustment
Upon the occurrence and during the continuance of an Event of Default, the outstanding principal amount of each Loan, shall,
at the option of the Bank, bear interest payable on demand, at a rate per annum equal to rate set forth under Section 3.1(a) plus five
(5.00%) percent per annum.
A late charge of five (5.00%) percent shall be imposed on each and every payment required hereunder that is not received by
Bank within ten (10) days after it is due. The late charge is not a penalty, but liquidated damages to defray administrative
and related expenses due to such late payment. The late charge shall be immediately due and payable and shall be paid by the
Borrower to the Bank without notice or demand. This provision for late charge is not and shall not be deemed a grace period,
and Bank has no obligation to accept a late payment. Further, the acceptance of a late payment shall not constitute a waiver
of any Event of Default then existing or thereafter arising.
Anything in this Agreement or in the Revolving Credit Note to the contrary notwithstanding, the obligation of the Borrower
to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be paid to
the Bank to the extent that the charging or receipt thereof would not be permissible under the law or laws applicable to the
Bank limiting the rates of interest that may be charged or collected by the Bank. In each such event payments of interest
required to be paid to the Bank shall be calculated at the highest rate permitted by applicable law until such time as the
rates of interest required hereunder may lawfully be charged and collected by the Bank. If the provisions of this Agreement
or the Revolving Credit Note would at any time otherwise require payment by the Borrower to the Bank of any amount of
interest in excess of the maximum amount then permitted by applicable law, the interest payments to the Bank shall be reduced
to the extent necessary so that the Bank shall not receive interest in excess of such maximum amount. Any amount paid or
collected by the Bank as interest which would be in excess of the amount permitted by applicable law shall be deemed applied
to the reduction of the principal balance of the Obligations and not to the payment of interest, but if such Obligations have
been or are thereby paid in full, the excess shall be returned to the Borrower, such application to the principal balance of
the Obligations or the refunding of excess to be a complete settlement and acquittance thereof.
Interest on each Loan shall be calculated on the basis of a year of three hundred sixty (360) days and shall be payable for
the actual days elapsed.
Each determination by the Bank of an interest rate or fee hereunder shall, absent manifest error, be conclusive and binding
for all purposes, so long as such determination is made on a reasonable basis and in good faith.
3.2. Use of Proceeds. The proceeds of the Revolving Credit Loans shall be used by the Borrower to refinance the Borrower’s
credit facilities with Marquis Bank and to finance the Borrower’s general working capital requirements in the ordinary course
3.3. Prepayments; Termination of Commitment.
The Borrower may prepay from time to time the then outstanding Loans, in whole or in part, without premium or penalty, upon
irrevocable written notice to the Bank, specifying the date and amount of repayment. If such notice is given, the Borrower
shall make such repayment and the repayment amount specified in such notice shall be due and payable, on the date specified
therein, together with accrued and unpaid interest to such date on the amount repaid to the Bank. Notwithstanding the
foregoing, a notice of prepayment of the Obligations delivered by the Borrower may state that such notice is conditioned upon
the effectiveness of other credit facilities or securities offerings, in which case if such condition is not satisfied (i)
such notice may be revoked by the Borrower (by notice to the Bank on or prior to the specified effective date) or (ii) with
the consent of the Bank (not to be unreasonably withheld, delayed or conditioned), the repayment date set forth in such
notice may be extended.
To the extent that the aggregate outstanding principal amount of Revolving Credit Loans exceeds the lesser of the Commitment and
the Borrowing Base as then in effect, the Borrower shall, within five (5) Business Days, prepay the Revolving Credit Loans to
the extent necessary to cause compliance therewith.
Each prepayment of principal of a Loan pursuant to this Section 3.3 shall be accompanied by accrued and unpaid interest on
the amount prepaid through the date of prepayment.
3.4. Fees. The Borrower shall pay the Bank a one-time facility fee on the Commitment in the amount of Twenty
Thousand ($20,000) Dollars. The Bank acknowledges that Ten Thousand ($10,000) Dollars in respect of such fee has previously
been paid by the Borrower.
3.5. Other Events.
In the event that any introduction of or change in, on or after the date hereof, any applicable law, regulation, treaty,
order, directive or in the interpretation or application thereof (including, without limitation, any request, guideline or
policy, whether or not having the force of law, of or from any central bank or other governmental authority, agency or
instrumentality and including, without limitation, Regulation D), by any authority charged with the administration or
interpretation thereof shall occur, which: (i) shall subject the Bank to any tax of any kind whatsoever with respect to this
Agreement, the Revolving Credit Note, the Loans, or change the basis of taxation of payments to the Bank of principal,
interest, fees or any other amount payable hereunder (other than any tax that is measured with respect to the overall net
income of the Bank or lending office of the Bank and that is imposed by the United States of America, or any political
subdivision or taxing authority thereof or therein, or by any jurisdiction in which the Bank’s lending office is
located, or by any jurisdiction in which the Bank is organized, has its principal office or is managed and controlled); or
(ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement (whether or
not having the force of law) against assets held by, or deposits or other liabilities in or for the account of, advances or
loans by, or other credit extended by, or any other acquisition of funds by, any office of the Bank; or (iii) shall impose on
the Bank any other condition, or change therein directly relating to this Agreement, the Revolving Credit Note or the Loans;
and the result of any of the foregoing is to increase the cost to the Bank of making, renewing or maintaining or
participating in advances or extensions of credit hereunder or to reduce any amount receivable hereunder, in each case by
an amount which the Bank reasonably deems material, then, in any such case, the Borrower shall pay the Bank, upon demand,
such additional amount or amounts as will reimburse the Bank for such increased costs or reduction.
If the Bank shall have determined in its reasonable discretion that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank (or any lending office of the Bank) or the Bank’s holding company, with any request or directive
regarding capital adequacy (whether or not having the force of the law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the Bank’s capital or on the capital of the
Bank’s holding company as a consequence of its obligations hereunder to a level below that which the Bank could have
achieved but for such adoption, change or compliance (taking into consideration the Bank’s policies and the policies of
the Bank’s holding company with respect to capital adequacy) by an amount reasonably deemed by the Bank to be material,
then from time to time, the Borrower shall pay to the Bank, the additional amount or amounts as will reimburse the Bank or
the Bank’s holding company for such reduction directly relating to this Agreement, the Revolving Credit Note or the
A certificate of the Bank prepared in good faith and setting forth the basis and calculation of any such determination, and
the amount or amounts payable pursuant to Sections 3.5(a) and 3.5(b) above, shall be conclusive absent manifest error. The
Borrower shall pay the Bank the amount shown as due on any such certificate within thirty (30) days after receipt
3.6. Taxes. Except as required by law, all payments made by the Borrower under this Agreement shall be made free and
clear of, and without reduction for or on account of, any present or future taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding income
and franchise taxes imposed on the Bank by (a) the United States of America or any political subdivision or taxing authority thereof
or therein, (b) the jurisdiction under the laws of which the Bank is organized or in which it has its principal office or is managed
and controlled or any political subdivision or taxing authority thereof or therein, or (c) any jurisdiction in which the Bank’s
lending office is located or any political subdivision or taxing authority thereof or therein (such non-excluded taxes being called
“Taxes”). If any Taxes are required to be withheld from any amounts payable to the Bank hereunder, or under
the Revolving Credit Note, the amount so payable to the Bank shall be increased to the extent necessary to yield to the Bank (after
payment of all Taxes and free and clear of all liability in respect of such Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement and the Revolving Credit Note. If the Borrower fails to pay
Taxes when due to the appropriate taxing authority the Borrower shall indemnify the Bank for any incremental taxes, interest or
penalties that may become payable by the Bank as a result of any such failure together with any actual expenses payable by the
Bank in connection therewith.
3.7. Disbursement of Loans. The Bank shall make the Loans available to the Borrower by crediting an amount equal to
the Loan to the Operating Account designated by Borrower from time to time, unless otherwise agreed upon by the parties hereto.
All payments (including prepayments) to be made by the Borrower on account of principal, interest, fees and reimbursement
obligations shall be made without set-off or counterclaim and shall be made to the Bank, at the Payment Office of the Bank in
Dollars in immediately available funds not later than 4:00 p.m., Ft. Lauderdale, Florida time, on the date on which they are
The Bank may, in its sole discretion while an Event of Default has occurred and is continuing, but shall not be obligated to,
directly charge the Operating Accounts or one or more of the Borrower’s other accounts at the Payment Office or other office
of the Bank for all interest and principal payments due in respect of the Loans and all fees payable hereunder. If any payment
hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business
order to induce the Bank to enter into this Agreement and to make the Loans as provided herein, the Borrower represents and warrants
to the Bank as follows:
4.1. Organization, Corporate Powers, etc. Each member of the Borrower Group (a) is a limited liability company or
corporation duly formed, validly existing and in good standing under the laws of the State or Province in which it was
formed, (b) has the organizational power and authority to own properties and to carry on its business as now being conducted,
(c) is duly qualified to do business in every jurisdiction wherein the conduct of its business or the ownership of its
properties are such as to require such qualification except where the failure to be qualified could not reasonably be
expected to have a Material Adverse Effect, (d) has the organizational power to execute and perform each of the Loan
Documents to which it is a party, (e) that is the Borrower has the power to borrow hereunder and to execute and deliver the
Revolving Credit Note, and (f) is in compliance with all applicable federal, state and local laws, rules and regulations
except where the failure to be in compliance could not reasonably be expected to have a Material Adverse Effect.
4.2. Authorization of Borrowing, Enforceable Obligations. The execution, delivery and performance by the Borrower of
this Agreement, and by each member of the Borrower Group of the other Loan Documents to which any is a party, and the borrowings
by the Borrower hereunder, (a) have been duly authorized by all requisite corporate or company action, (b) will not violate or
require any consent under the articles of organization, bylaws or other organizational documents of any member of the Borrower
Group, except such consents as shall have been delivered to the Bank at Closing, (c) will not violate or require any consent under
(i) any provision of law applicable to the Borrower Group, any governmental rule or regulation, except such consents as shall
have been delivered to the Bank at Closing, or (ii) any order of any court or other agency of government binding on any member
of the Borrower Group, any indenture, agreement or other instrument to which any member of Borrower Group is a party, or by which
any member of the Borrower Group or any of its property is bound, except in each case for such violations which individually or
in the aggregate could not reasonably be expected to result in a Material Adverse Effect, and (d) will not be in conflict with,
result in a breach of or constitute (with due notice and/or lapse of time) a default under, any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the
property or assets of Borrower Group other than as contemplated by this Agreement or the other Loan Documents, except in each
case for such breaches and defaults which individually or in the aggregate could not reasonably be expected to result in a Material
Adverse Effect. This Agreement and each other Loan Document to which any member of the Borrower Group is a party constitutes a
legal, valid and binding obligation of said party, enforceable against said party in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity.
4.3. Financial Condition. The Borrower has heretofore furnished to the Bank the (a) consolidated balance sheet of the
Borrower Group, the related consolidated statements of income and stockholders’ equity and cash flow of the Borrower Group
for the year ended December 31, 2016, audited by independent certified public accountants of recognized standing selected by the
Borrower and reasonably satisfactory to the Bank (the “CPA”), and (b) unaudited consolidated balance sheet
of the Borrower Group, and the related consolidated statements of income, cash flow, and stockholders’ equity of the Borrower
Group, compiled by Borrower’s management, for the six months ended June 30, 2017. Such financial statements were prepared
in conformity with GAAP consistently applied (except, with respect to the interim financial statements, for the absence of footnotes
and normal year-end adjustments) and fairly present the financial position and results of operations of the Borrower Group as
of the date of such financial statements and for the periods to which they relate and, since the date of such financial statements,
no material adverse change in the business, operations or assets or financial condition of the Borrower Group has occurred. There
are no material obligations or liabilities contingent or otherwise, of the Borrower Group which are not reflected on such statements
other than obligations incurred in the ordinary course of business since the date of such financial statements.
4.4. Taxes. All assessed deficiencies resulting from Internal Revenue Service examinations of the federal income tax
returns of the Borrower Group have been discharged or reserved against in accordance with GAAP. The Borrower has filed or caused
to be filed (after giving effect to any extensions actually filed) all federal income tax returns and all other material tax returns
that are required to be filed by any member of the Borrower Group, and has paid or has caused to be paid all taxes as shown on
said returns or on any assessment received by it, to the extent that such taxes have become due, except where such taxes are being
contested in good faith and have been reserved for in accordance with GAAP or for which the failure to make payment would not
reasonably be expected to result in a Material Adverse Effect.
4.5. Title to Properties. Each member of the Borrower Group has good and marketable title to its properties and assets
necessary for the conduct of its business, except for such properties and assets as have been disposed of since the date of such
financial statements as no longer used or useful in the conduct of its business, as have been disposed of in the ordinary course
of business or as otherwise permitted by the Loan Documents, and all such properties and assets are free and clear of all Liens,
except Permitted Liens.
4.6. Litigation. There are no actions, suits or proceedings (whether or not purportedly on behalf of the any member
of the Borrower Group) pending or, to the knowledge of the Borrower, threatened against or affecting Borrower Group at law or
in equity or before or by any Governmental Authority, which involve any of the Loan Documents or which, if adversely determined
against any member of the Borrower Group, could reasonably be expected to result in a Material Adverse Effect; and no member of
the Borrower Group is in default with respect to any judgment, writ, injunction, decree, rule or regulation of any Governmental
Authority which default could reasonably be expected to result in a Material Adverse Effect.
4.7. Agreements. No member of the Borrower Group is not subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or regulation which could reasonably be expected to have a Material Adverse Effect.
4.8. Compliance with ERISA. Each Plan (if any) is in material compliance with ERISA; no Plan is insolvent or in
reorganization, no Plan has an Unfunded Current Liability, and no Plan has an accumulated or waived funding deficiency or
permitted decreases in its funding standard account within the meaning of Section 412 of the Code; no member of the Borrower
Group nor any ERISA Affiliate has incurred any material liability to or on account of a Plan pursuant to Section 4062, 4063,
4064, 4201 or 4204 of ERISA or expects to incur any liability under any of the foregoing sections on account of the
termination of participation in or contributions to any such Plan, no proceedings have been instituted to terminate any Plan,
no condition known to Borrower exists which presents a material risk to a member of the Borrower Group of incurring a
liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no lien imposed under
the Code or ERISA on the assets of the Borrower Group exists or is likely to arise on account of any Plan; and the Borrower
Group may terminate contributions to any other employee benefit plans maintained by it without incurring any material
liability to any person interested therein, excluding welfare benefits payable to employees or former employees of Borrower
Group in the ordinary course of business.
4.9. Federal Reserve Regulations; Use of Proceeds.
Borrower Group is not engaged principally in, nor has as one of its important activities, the business of extending credit
for the purpose of purchasing or carrying any “margin stock” (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System of the United States, as amended to the date hereof). If requested by the Bank, the
Borrower will furnish to the Bank such a statement on Federal Reserve Form U-1.
No part of the proceeds of any Loan will be used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or to carry margin stock or to extend credit to others for the purpose of purchasing or carrying
margin stock, or to refund indebtedness originally incurred for such purposes, or (ii) for any purpose which violates or is
inconsistent with the provisions of the Regulations T, U, or X of the Board of Governors of The Federal Reserve
The proceeds of each Loan shall be used solely for the purposes permitted under Section 3.2.
4.10. Approvals. As of the Closing Date, no registration with or consent or approval of, or other action by, any
Governmental Authority or any other Person is required in connection with the execution, delivery and performance of this
Agreement or the other Loan Documents by the Borrower Group, except such as has been delivered by Borrower at
4.11. Capitalization. As of the Closing Date, the stock of Borrower is held beneficially and of record by Aaron
LoCascio and Adam Schoenfeld, which stock is validly issued, outstanding, fully paid and non-assessable (to the extent
applicable). Each entity Guarantor is a direct or indirect wholly owned subsidiary of Borrower. Borrower owns beneficially
all of the issued and outstanding equity interests or stock, as the case may be, of each entity Guarantor, which securities
are validly issued, outstanding, fully paid and non-assessable (to the extent applicable). The equity interests of each
Guarantor that is a limited liability company are uncertificated securities, and will remain such at all times this Agreement
remains in effect.
4.12. Hazardous Materials. To the best knowledge of the Borrower, (a) the Borrower Group is in compliance with
all federal, state or local laws, ordinances, rules, regulations or policies governing Hazardous Materials, (b) Borrower
Group has not used Hazardous Materials on, from, or affecting any property now owned or occupied or hereafter owned or
occupied by the Borrower Group in any manner which violates federal, state or local laws, ordinances, rules, regulations, or
policies governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials and (c) no prior owner of any such property or any tenant, subtenant, prior tenant or prior subtenant
have used Hazardous Materials on, from, or affecting such property in any manner which violates federal, state or local laws,
ordinances, rules, regulations, or policies governing the use, storage, treatment, transportation, manufacture, refinement,
handling, production or disposal of Hazardous Materials, except, in the case of clauses (a), (b) and (c) of this Section,
where failure to so comply could not reasonably be expected to have a Material Adverse Effect.
4.13. Investment Company Act. No member of Borrower Group is an “investment company”, or a company “controlled”
by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.
4.14. Security Document. Each Security Document shall constitute a valid and continuing lien on and security
interest in the collateral referred to in such Security Document in favor of the Bank which shall be, upon the filing of the
Uniform Commercial Code financing statements and Personal Property Security Act financing statements delivered on the Closing
Date on behalf of Borrower Group at the Florida Secured Transactions Registry and Ontario, to the extent such lien may be
perfected by the filing of a financing statement under the applicable Uniform Commercial Code or Personal Property Security
Act, prior to all other Liens, claims and right of all other Persons other than Permitted Liens, and shall be enforceable as
such against all other Persons other than the holders of Permitted Liens.
4.15. No Default or Event of Default. No Default or an Event of Default has occurred and is continuing.
4.16. Material Contracts. Each Material Contract of any member of Borrower Group (a) is in full force and effect
and is binding upon and enforceable, except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general principles of
equity, against said party, as the case may be, and, to the knowledge of the Borrower, all other parties thereto in
accordance with its terms, and (b) to the knowledge of Borrower, there exists no default under any Material Contract by any
member of Borrower Group or, to the knowledge of the Borrower, by any other party thereto, which in either case could
reasonably be expected to have a Material Adverse Effect.
4.17. Permits and Licenses. Borrower Group has all licenses, permits, franchises, or other governmental authorizations
necessary to the ownership of its property or to the conduct of its activities, and shall obtain all such licenses, permits, franchises,
or other governmental authorizations as may be required in the future, except where the failure to have or maintain any such license,
permit, franchise or other governmental authorization could not reasonably be expected to have a Material Adverse Effect.
4.18. Canadian Pension Plan and Benefit Plan Compliance. None of the Canadian Benefit Plans is a defined benefit
plan or contain a defined benefit component. The Canadian Pension Plans are duly registered under the Income Tax Act (Canada)
and Canadian Pension Legislation. Each member of Borrower Group and, to the best knowledge of the Borrower, each funding
agent of a Canadian Benefit Plan, has complied with and performed all of its obligations under and in respect of the Canadian
Benefit Plans under the terms thereof, any funding agreement and all applicable laws. All employer and employee contributions
or premiums to be remitted or paid to or in respect of each Canadian Benefit Plan have been remitted or paid in a timely
fashion in accordance with the terms thereof, any funding agreement and all applicable laws. There have been no improper
withdrawals or applications of the assets of any Canadian Benefit Plan, and there are no actions, suits or claims (other than
routine claims for benefits) pending or threatened against any Canadian Benefit Plan or its assets, and no facts exist which
could give rise to any such actions, suits or claims that might have a Material Adverse Effect.
4.19. Anti-Terrorism Laws.
No member of Borrower Group, nor an Affiliate of any the foregoing, is in violation of any Anti-Terrorism Law or engages in
or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law.
No member of Borrower Group, nor any Affiliate of any of the foregoing, or to her/his/its knowledge, its respective agents acting
or benefiting in any capacity in connection with the Loans or other transactions hereunder, is any of the following (each a “Blocked
Person”): (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;
(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise
subject to the provisions of, the Executive Order; (iii) a Person with which the Bank is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law; (iv) a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order; (v) a Person that is named as a “specially designated national”
on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or
any replacement website or other replacement official publication of such list; or (vi) a Person who is affiliated or associated
with a person or entity listed above.
No member of Borrower Group, nor to the knowledge of Borrower any of its or their agents acting in any capacity in connection
with the Loans or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution
of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant to the Executive Order.
4.20. Disclosure. All information heretofore furnished in writing by the Borrower for purposes of or in connection
with this Agreement or any other Loan Document was, and all such information hereafter furnished in writing by the Borrower will
be, in each case considered as a whole, true and accurate in all material respects on the date as of which such information is
stated or certified. Notwithstanding the forgoing, no representation or warranty is given herein with respect to any projections
other than that the information contained therein was based upon good faith estimates and assumptions believed to be reasonable
at the time made, it being recognized by the Bank that such projections as to future events are not to be viewed as fact and
that actual results during the period or periods covered by any such projections may differ from the projected results.
5.1. Conditions To Initial Revolving Credit Loan. The obligation of the Bank to make the initial Revolving Credit
Loan hereunder is subject to the following conditions precedent:
Note. On or prior to the Closing Date the Bank shall have received the Revolving Credit Note duly executed by
Loan Documents. On or prior to the Closing Date, the Bank shall have received (i) the Security Documents
duly executed by the Borrower and the other signatories thereto; (ii) UCC-1 financing statements and PPSA
financing statements, as the case may be, from Borrower and each entity Guarantor, in a form deemed satisfactory by Bank;
and (iii) each other Loan Document, duly executed by the signatories thereto.
Supporting Documents. The Bank shall have received, on or prior to the Closing Date from each member of Borrower
Group: (i) a certificate of an Executive Officer or manager, as the case may be, of such entity, dated the Closing Date and certifying
(a) that attached thereto is a true and complete copy (including any amendments thereto) of the articles of incorporation, articles
of organization, bylaws, and operating agreement, as the case may be, of such entity; (b) that attached thereto is a true and
complete copy of resolutions adopted by the Board of Directors or managers, as the case may be, of such entity, authorizing the
execution, delivery and performance of this Agreement and of each Loan Document to be delivered on the Closing Date to which it
is a party and the borrowings hereunder; and (c) the incumbency and specimen signature of each Executive Officer or
manager, as the case may be, of such entity executing each Loan Document and any certificates or instruments furnished pursuant
hereto or thereto; and (ii) such other documents as the Bank may reasonably request.
No Material Adverse Effect. There shall not have occurred any Material Adverse Effect since September 30, 2016.
Fees. The Borrower shall have paid Bank (i) all reasonable, out-of-pocket and documented costs and expenses actually
incurred by the Bank in connection with the negotiation, preparation and execution of the Loan Documents (including, without limitation,
such costs and expenses constituting fees and expenses of counsel), and (ii) all fees set forth in Section 3.4 of this Agreement.
Free from Liens. Concurrent with or prior to the Closing, the Borrower shall deliver to the Bank
UCC-3’s terminating all UCC-1 financing statements filed against the assets of Borrower or any entity Guarantor
evidencing Liens that are not Permitted Liens.
The Bank shall receive, on or prior to the Closing Date, proof of insurance covering the personal property and the business
of the Borrower with coverage of at least Five Million ($5,000,000) Dollars, designating the Bank as lender loss payable
with respect to business assets, lender loss payable and mortgagee with respect to real estate, and as additional insured and
loss payee with respect to vehicles, in form and substance reasonably satisfactory to the Bank together with copies of the
related insurance policies.
Borrowing Base Certificate. The Bank shall have received a Borrowing Base Certificate which calculates the Borrowing
Base as of August 31, 2017.
Information, Documentation. The Bank shall receive such other and further information and documentation as it may
5.2. Conditions to All Revolving Credit Loans. The obligation of the Bank to make each Revolving Credit Loan hereunder
is further subject to the following conditions precedent:
Representations and Warranties. The representations and warranties by the Borrower pursuant to this Agreement and
the other Loan Documents shall be true and correct in all material respects on and as of the Borrowing Date, with the same effect
as though such representations and warranties had been made on and as of such date unless such representation is as of a specific
date, in which case, as of such date.
Default. No Default or Event of Default shall have occurred and be continuing on the Borrowing Date or will
result after giving effect to the Loan requested.
borrowing hereunder shall constitute a representation and warranty of the Borrower that the statements contained in clauses (a)
and (b) of this Section 5.2 are true and correct on and as of the Borrowing Date as though such representation and warranty had
been made on and as of such date.
the Commitment Period has expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder
shall have been paid in full, Borrower covenants and agrees with the Bank that each member of the Borrower Group will:
6.1. Corporate Existence, Properties, etc. Do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate or company existence and rights and comply with all laws applicable to it; at all times maintain,
preserve and protect all trade names necessary for the operation of its business and preserve all of its property necessary in
the conduct of its business and keep the same in good repair, working order and condition (normal wear and tear excepted), and
from time to time make, or cause to be made, all needful and proper repairs, renewals, replacements, betterments and improvements
thereto so that the business carried on in connection therewith may be properly conducted at all times; at all times keep its
insurable properties adequately insured and maintain (a) insurance to such extent and against such risks, including fire, as Borrower
has in place on the Closing Date, (b) workmen’s compensation insurance in the amount required by applicable law, (c) public
liability insurance as Borrower Group has in place on the Closing Date, against claims for personal injury or death on properties
owned, occupied or controlled by it, (d) such other insurance as may be required by law or as may be reasonably required by the
Bank. Each such policy of insurance of the Borrower Group shall name the Bank as lender loss payable with respect to business
assets, lender loss payable and mortgagee with respect to real estate, and as additional insured and loss payee with respect to
vehicles, and shall provide for at least thirty (30) days’ prior written notice (or, with respect to non-payment, at least
ten (10) days’ prior written notice) to the Bank of any modification or cancellation of such policies. The Borrower shall
provide to the Bank promptly upon receipt thereof evidence of the annual renewal of each such policy.
6.2. Payment of Indebtedness, Taxes, etc.
Pay all Indebtedness and obligations, now existing or hereafter arising, as and when due and payable, except where (i) the
validity, amount, or timing thereof is being contested in good faith and by appropriate proceedings, which proceedings shall
include good faith negotiations, (ii) the Borrower has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, and (iii) the failure to make such payment pending such contest could not reasonably be expected to
have a Material Adverse Effect.
Pay and discharge or cause to be paid and discharged promptly all taxes, assessments and government charges or levies imposed
upon it or upon its income and profits, or upon any of its property, real, personal or mixed, or upon any part thereof, before
the same shall become in default, as well as all lawful claims for labor, materials and supplies or otherwise which, if unpaid,
might become a lien or charge upon such properties or any part thereof; provided, however, that the Borrower shall
not be required to pay and discharge or cause to be paid and discharged any such tax, assessment, charge, levy or claim so long
as the validity thereof shall be contested in good faith by appropriate proceedings (which proceedings may include good faith
negotiations), and the Borrower, shall have set aside on its books adequate reserves determined in accordance with GAAP with respect
to any such tax, assessment, charge, levy or claim so contested or the failure to make payment pending such contest would not
reasonably be expected to result in a Material Adverse Effect.
6.3. Financial Statements, Tax Returns, Reports, etc.: Furnish to the Bank:
within one hundred twenty (120) days of the end of each calendar year, commencing with the calendar year ending December 31,
2017, the consolidated and consolidating, unqualified financial statements of the Borrower Group which shall include the
balance sheet of the Borrower Group as of the end of such fiscal year, together with the statements of income, cash flow and
stockholders’ equity for the Borrower Group subsidiaries for such fiscal year and as of the end of and for the prior
fiscal year, all prepared in accordance with GAAP. The foregoing financial statements shall be audited by the CPA;
within forty-five (45) days of the end of each calendar quarter, the management-prepared and Executive Officer-certified
consolidated and consolidating financial statements of the Borrower Group which shall include the balance sheet of the
Borrower Group as of the end of such quarter, together with the statements of income, cash flow and stockholders’
equity for the Borrower Group for such quarter and as of the end of and for the prior fiscal year, all prepared in accordance
with GAAP (except for the absence of footnotes and normal year-end adjustments);
within forty-five (45) days of the end of each calendar quarter, the management-prepared and Executive Officer-certified
compliance certificate which shall include covenant calculations and such other information as may be reasonably requested by
within fifteen (15) days of the end of each month, a Borrowing Base Certificate with the requisite supporting documentation
as required thereby;
within fifteen (15) days of the end of each month, a report setting forth the aging of Eligible Receivables, Eligible
Inventory and accounts payable;
tax returns for each of Aaron LoCascio and Adam Schoenfeld, within thirty (30) days of the date the individual in question files
his tax returns. If a tax filing extension is filed, a copy thereof shall be provided to the Bank promptly;
within sixty (60) days of the end of each calendar year, a personal financial statement and liquid asset statement for each
of Aaron Locascio and Adam Schoenfeld; and
within fifteen (15) days of the request, from time to time, such other material information regarding the operations,
business affairs and condition, financial or otherwise, of the Borrower Group as the Bank may reasonably request.
6.4. Field Exam, Appraisals and Access to Premises and Records. Maintain financial records in accordance with GAAP
and permit representatives of the Bank to conduct annual field exams and inventory appraisals (at Borrower’s expense) during
which the Bank shall have access during normal business hours to the premises of the Borrower Group upon reasonable request, to
examine and make excerpts from the minute books, books of accounts, reports and other records and to discuss the affairs, finances
and accounts of the Borrower Group with its Executive Officers or with its CPA, and to conduct such additional field audits at
the Borrower’s expense, as such representatives reasonably deem necessary.
Section 6.5. Notice of Adverse Change. Promptly notify the Bank in writing of (a) any change in the business or the operations which, in the good faith judgment
of Borrower’s Executive Officers, could reasonably be expected to have a Material Adverse Effect, disclosing the nature
thereof, and (b) any information which indicates that any financial statements which are the subject of any representation contained
in this Agreement, or which are furnished to the Bank pursuant to this Agreement, failed, in any material respect, to present
fairly the financial condition and results of operations purported to be presented therein for the period covered thereby, disclosing
the nature thereof.
6.6. Notice of Default. Promptly notify the Bank of any Default or Event of Default which shall have occurred,
which notice shall include a written statement as to such occurrence, specifying the nature thereof and the action which is
proposed to be taken with respect thereto.
6.7. Notice of Litigation. Give the Bank prompt written notice of any action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or other agency (not previously disclosed to the Bank on or before
the Closing Date) which, if adversely determined against the Borrower Group on the basis of the allegations and information
set forth in the complaint or other notice of such action, suit or proceeding, or in the amendments thereof, if any, could
reasonably be expected to either (a) have a Material Adverse Effect; or (b) result in a judgment in excess of Five Hundred
Thousand ($500,000) Dollars.
6.8. ERISA. Promptly deliver to the Bank a certificate by an Executive Officer of Borrower setting forth details as
to such occurrence and such action, if any, which the Borrower Group or such ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed with or by the Borrower Group, ERISA Affiliate, the PBGC,
a Plan participant or the Plan Administrator, with respect thereto: that a Reportable Event has occurred, that an accumulated
funding deficiency has been incurred or an application may be or has been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required installment payments) or an extension of any amortization
period under Section 412 of the Code with respect to a Plan, that a Plan has been or may be terminated, reorganized, partitioned
or declared insolvent under Title IV of ERISA, that a Plan has an Unfunded Current Liability giving rise to a lien under ERISA,
that proceedings may be or have been instituted to terminate a Plan, that a proceeding has been instituted pursuant to Section
515 of ERISA to collect a delinquent contribution to a Plan, or that the Borrower Group or any ERISA Affiliate will or may incur
any liability (including any contingent or secondary liability) to or on account of the termination of or withdrawal from a Plan
under Section 4062, 4063, 4064, 4201 or 4204 of ERISA. The Borrower will deliver to the Bank a complete copy of the annual report
(Form 5500) of each Plan required to be filed with the Internal Revenue Service. In addition to any certificates or notices delivered
to the Bank pursuant to the first sentence hereof, copies of annual reports and any other notices received by the Borrower Group
required to be delivered to the Bank hereunder shall be delivered to the Bank no later than ten (10) days after the later of the
date such report or notice has been filed with the lnternal Revenue Service or the PBGC, given to Plan participants or received
by the Borrower Group.
6.9. Default in Other Agreements. Promptly notify the Bank of any default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement or instrument to which any member of Borrower Group
is a party which could reasonably be expected to have a Material Adverse Effect.
6.10. Banking Relationship. Maintain its primary commercial banking relationship with the Bank, including depository
and treasury management services, provided, however, the Borrower Group may maintain secondary commercial banking relationships
with other banks.
6.11. Preservation of Business. Keep its business and properties necessary for the conduct of its business intact in
all material respects (normal wear and tear excepted), including its present operations, physical facilities, working conditions,
and relationships with suppliers and clients.
6.12. Compliance with Laws; Pension Plans and Benefit Plans.
For each existing, or hereafter adopted, Canadian Benefit Plan, Borrower Group shall comply with and perform in all material respects
all of its obligations under and in respect of the Canadian Benefit Plans under the terms thereof, any funding agreement and all
All employer and employee contributions or premiums to be remitted or paid to or in respect of each Canadian Benefit Plan shall
be remitted or paid in a timely fashion in accordance with the terms thereof, any funding agreement and all applicable laws.
The Borrower shall deliver to the Bank (i) if requested by the Bank, copies of annual information returns, actuarial reports
or other valuations with respect to a Canadian Pension Plan filed with any applicable Governmental Authority; (ii) promptly
after receipt thereof, a copy of any direction, order, notice, ruling or opinion that Borrower Group may receive from any
applicable Governmental Authority with respect to any Canadian Pension Plan; (iii) notification within 30 days of any
increases having a cost to the Borrower Group in excess of $100,000 per annum in the aggregate, in the cost of providing the
Canadian Benefit Plans, including the establishment of any new Canadian Benefit Plan, or the commencement of contributions to
any such plan to which Borrower Group was not previously contributing; and (iv) notification, as soon as possible and in any
event within 30 days, after Borrower knows or has reason to know in the ordinary course of its business procedures that any
of the following events or conditions have occurred or exist, setting forth details respecting such event or condition and
the action, if any, which the Borrower proposes to take with respect thereto: (A) the institution by a pension regulator of
proceedings under Canadian Pension Legislation for the termination, or the appointment of an administrator, of a Canadian
Pension Plan, or the occurrence of any event or condition which constitutes grounds under applicable laws for the termination
of, or the appointment of an administrator to administer, a Canadian Pension Plan; (B) the withdrawal by the any member of
the Borrower Group from a MEPP, or the receipt by the Borrower Group of information to the effect that a MEPP will terminate
or has terminated; (C) any occurrence or event that results, or could reasonably be expected to result, in the loss of a
Canadian Pension Plan’s registered status; (D) the failure to satisfy funding requirements under Canadian Pension
Legislation; (E) the cessation of operations at a facility where employees participating in a Canadian Pension Plan are
employed; and (F) the occurrence of an act or omission which is reasonably likely to give rise to the imposition on Borrower
Group of fines, penalties, taxes or related charges under Canadian Pension Legislation or the Income Tax Act
6.13. Further Assurances. Upon the request of the Bank from time to time, the Borrower shall, at its expense,
duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and
do or cause to be done such further acts as may be reasonably necessary to evidence, perfect, maintain and enforce the
security interests and the priority thereof in the Collateral (as defined in the Security Agreements) and to otherwise
effectuate the provisions or purposes of this Agreement or any of the other Loan Documents.
the Commitment Period has expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder
shall have been paid in full, Borrower covenants and agrees with the Bank that no member of Borrower Group will:
7.1. Liens. lncur, create, assume or suffer to exist any Lien on any of its assets now or hereafter owned, other than
the following (collectively, “Permitted Liens”):
pledges or deposits, in a total amount that shall not exceed One Hundred Thousand ($100,000) Dollars without Bank’s prior
written consent, under workmen’s compensation, unemployment insurance and social security laws or to secure statutory obligations
or surety or appeal bonds or to secure indemnity, performance or other similar bonds in the ordinary course of business;
Liens for taxes, assessments, fees or other governmental charges or the claims of material men, mechanics, carriers,
warehousemen, landlords and other similar persons, the payment of which is not overdue or is being contested in good faith by
appropriate proceedings (which may include good faith negotiations) (provided that the Borrower has set aside on its books
adequate reserves with respect thereto in accordance with GAAP (if any are so required), consistently applied, or for which
the failure to make payment could not reasonably be expected to result in a Material Adverse Effect;
Liens granted to the Bank and any of its Affiliates, including renewals and extensions thereof;
Liens for property or equipment that is leased or financed by the Borrower Group (i.e., purchase money indebtedness);
judgment liens in respect of judgments that do not constitute an Event of Default under Section 8.1 (h);
easements, zoning restrictions, rights of way and similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the Borrower Group;
unperfected Liens relating to trade payables for amounts which are not past due, attaching only to inventory purchased and
which are granted to account creditors from whom the Borrower Group has purchased inventory in the ordinary course of
Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs, duties and taxes
in the ordinary course of business;
Liens on insurance policies and the proceeds thereof securing the financing of the premiums; and
Liens incidental to the conduct of the Borrower Group’s business or the ownership of its property and assets which were
not incurred in connection with the borrowing of money or the obtaining of advances or credit, and which do not in the
aggregate materially detract from or impair the Bank’s rights in and to the Collateral (as defined in the Security
Agreements) or the value of the Borrower Group’s property or assets or which do not materially impair the use thereof
in the operation of the Borrower Group’s business.
7.2. Indebtedness. Incur, create, assume or suffer to exist or otherwise become liable with respect to any Indebtedness,
other than: (a) Indebtedness to the Bank and any of its Affiliates, including renewals and extensions thereof, (b) Subordinated
Debt including renewals and extensions thereof, (c) indebtedness with respect to Capital Leases, (d) Indebtedness incurred as
a result of Borrower entering into non-speculative Hedge Agreements or any similar transactions used to hedge or mitigate risk,
(e) unsecured Indebtedness consisting of obligations owed to trade creditors arising in the ordinary course of business and other
obligations to employees, obligations to providers of utility services and obligations for taxes and similar types of Indebtedness
evidencing obligations related to the day-to-day operation of the Borrower Group, (f) purchase money Indebtedness, and (g) Indebtedness
between Borrower and any Guarantor.
7.3. Guaranties. Guarantee, endorse, become surety for, or otherwise in any way become or be responsible for the
Indebtedness or obligations of any Person (other than Indebtedness permitted under Section 7.2), whether by agreement to
maintain working capital or equity capital or otherwise maintain the net worth or solvency of any Person or by agreement to
purchase the Indebtedness of any other Person, or agreement for the furnishing of funds, directly or indirectly, through the
purchase of goods, supplies or services for the purpose of discharging the Indebtedness of any other Person or otherwise, or
enter into or be a party to any contract for the purchase of merchandise, materials, supplies or other property if such
contract provides that payment for such merchandise, materials, supplies or other property shall be made regardless of
whether delivery of such merchandise, supplies or other property is ever made or tendered.
7.4. Sale of Assets. Sell, assign, lease, transfer or otherwise dispose of any of its now owned or hereafter
acquired properties and assets, whether or not pursuant to an order of a federal agency or commission, except for (a) the
sale of inventory disposed of in the ordinary course of business, (b) the sale or other disposition of properties or assets
no longer used or useful in the conduct of its businesses, (c) sales, transfers and dispositions to Affiliates not prohibited
hereunder, (d) sales, transfers, discounts and dispositions permitted by Section 7.5, and (e) dispositions resulting from any
casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of,
any property or asset of the Borrower Group thereof.
7.5. Sales of Notes. Sell, transfer, discount or otherwise dispose of notes, accounts receivable or other obligations
owing to the Borrower Group, with or without recourse, except for collection in the ordinary course of business, without the prior
written consent of Bank.
7.6. Nature of Business. Change or alter the nature of its business, in any material respect, from the nature of the
business engaged in by it on the date hereof and businesses reasonably related thereto.
7.7. Federal Reserve Regulations. Permit any Loan or the proceeds of any Loan to be used for any purpose which violates
or is inconsistent with the provisions of Regulations T, U or X of the Board of Governors of the Federal Reserve System.
7.8. Accounting Policies and Procedures; Tax Status. (a) Permit any change in the accounting policies and procedures
of the Borrower Group, including a change in fiscal year, without the prior written consent of the Bank; provided, however, that
any policy or procedure required to be changed by the FASB (or other board or committee of the FASB in order to comply with GAAP)
may be so changed without the consent of the Bank, or (b) permit any change or take any action to change its tax status under
the Code of the Borrower Group.
7.9. Limitations on Fundamental Changes. Merge or consolidate with, or sell, assign, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now or hereafter acquired)
to any Person, or, liquidate, wind up or dissolve or suffer any liquidation or dissolution, or suffer to exist a Change of Control.
7.10. Minimum Fixed Charge Coverage Ratio. Permit Borrower Group’s Fixed Charge Coverage Ratio to be less
than 1.25, as tested on March 31st, June 30th, September 30th, and December 31st
of each year during the Commitment Period. Testing will be performed using Borrower Group’s financial statements for
the trailing four (4) quarter period ending on the testing day. Testing shall commence with the period ending December 31,
7.11. Transactions with Affiliates. Other than as otherwise set forth herein, enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the rendering of any service, with any Affiliate, except in
the ordinary course of business and upon fair and reasonable terms no less favorable to the Borrower Group than it would obtain
in a comparable arms-length transaction with a Person not an Affiliate. For purposes of this Section 7.11, “Affiliate”
does not include Niche Fishing Charters LLC, a Florida limited liability company.
7.12. Anti-Terrorism Laws. (a) Conduct any business or engage in any transaction or dealing with any Blocked
Person, including making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked
Person, (b) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order; or (c) engage in or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order, the USA
Patriot Act or any other Anti-Terrorism Law. The Borrower shall deliver to the Bank any certification or other evidence
requested from time to time by the Bank in its sole discretion, confirming the Borrower Group’s compliance with this
7.13. Compliance with Pension and Benefit Plans. Establish any new Canadian Pension Plan which is a defined benefit
plan or which contains a defined benefit component. Borrower Group shall not permit pension or other employee benefit plan obligation
and liabilities to remain unfunded other than in accordance with applicable law. Borrower Group shall not voluntarily terminate
any Canadian Pension Plan which is a defined benefit plan or which contains a defined benefit component.
8.1. Events of Default. In the case of the happening of any of the following events (each an “Event of Default”):
failure by the Borrower to pay the principal of or any interest on any Loan or any fees or other amounts payable under this
Agreement or any other Loan Document;
default shall be made in the due observance or performance any covenant, condition or agreement of the Borrower to be
performed pursuant to this Agreement or of the Borrower or its Affiliates to be performed pursuant to any other Loan
any representation or warranty made or deemed made in this Agreement or any other Loan Document shall prove to be false or
misleading in any material respect when made or given or when deemed made or given;
any written report, certificate, financial statement or other instrument furnished in connection with this Agreement or any
other Loan Document or the borrowings hereunder, shall prove to be false or misleading in any material respect when made or
given or when deemed made or given;
default in the performance or compliance in respect of any agreement or condition relating to any Indebtedness of the
Borrower Group (other than the Indebtedness created under this Agreement), individually or in the aggregate, with a
then-outstanding principal balance of One Hundred Thousand ($100,000) Dollars, if the effect of such default is to accelerate
the maturity of such Indebtedness or to permit the holder or obligee thereof (or a trustee on behalf of such holder or obligee) to cause such Indebtedness to become due prior to the stated maturity thereof;
any member of Borrower Group shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11
of the United States Code or any other federal or state bankruptcy, insolvency or similar law, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the employment of a receiver, trustee, custodian, or similar official for any member
of Borrower Group or for a substantial part of its property; (iv) file an answer admitting the material allegations of a
petition filed against it in such proceeding, (v) make a general assignment for the benefit of creditors, (vi) take corporate
action for the purpose of effecting any of the foregoing, (vii) become unable or admit in writing its inability or fail
generally to pay its debts as they become due or (viii) take corporate action for the purpose of effecting any of the
an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction
seeking (i) relief in respect of any member of the Borrower Group or of a substantial part of its property under Title 11 of
the United States Code or any other federal or state bankruptcy insolvency or similar law, (ii) the appointment of a
receiver, trustee, custodian, or similar official for any member of the Borrower Group or for a substantial part of its
property, or (iii) the winding-up or liquidation of any member of the Borrower Group and such proceeding or petition shall
continue undisrnissed for ninety (90) days or an order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for ninety (90) days;
One or more orders, judgments or decrees for the payment of money not covered by insurance shall be rendered against a
member of Borrower Group and the same shall not have been paid in accordance with such judgment, order or decree, which by
itself or together with all other such judgments is in excess of One Hundred Thousand ($100,000) Dollars, and either (i) an
enforcement proceeding shall have been commenced by any creditor upon such judgment, order or decree, or (ii) there shall
have been a period of forty-five (45) consecutive days during which a stay of enforcement of such judgment, order or decree,
by reason of pending appeal or otherwise, was not in effect;
any Plan shall fail to maintain the minimum funding standard required for any Plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted under Section 412 of the Code, any Plan is the subject
of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a Reportable Event shall have
occurred with respect to a Plan or the Borrower Group or any ERISA Affiliate shall have incurred a liability in excess of
Five Hundred Thousand ($500,000) Dollars to or on account of a Plan under Section 515, 4062, 4063, 4063, 4201 or 4204 of
ERISA, and there shall result from any such event or events the imposition of a lien upon the assets of the Borrower Group,
the granting of a security interest, or a liability to the PBGC or a Plan or a trustee appointed under ERISA or a penalty
under Section 4971 of the Code;
any Loan Document or any material provision thereof shall for any reason cease to be in full force and effect in accordance with
its terms or a member of the Borrower Group shall so assert in writing;
any of the Liens purported to be granted pursuant to any Security Document shall cease for any reason to be legal, valid and
enforceable liens on the collateral purported to be covered thereby or shall cease to have the priority purported to be
created thereby, unless such Lien has been released by the Bank in accordance with the terms and conditions hereof or as a
result of the failure of the Bank to file UCC continuation statements after notice from the Borrower to file same;
any Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of a Guaranty, or any Guarantor shall fail to comply with any of the terms or provisions of
the Guaranty to which it is a party;
at any time thereafter during the continuance of any such event, the Bank may, in its sole discretion, without notice to the Borrower,
take any or all of the following actions, at the same or different times, (x) (a) terminate the Commitment and the Loans and (b)
declare (i) the Revolving Credit Note, both as to principal and interest, and (ii) all other Obligations, to be forthwith due
and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Revolving Credit Note to the contrary notwithstanding and (y) exercise any or all of the rights and
remedies afforded to the Bank by the Uniform Commercial Code, the Personal Property Security Act or otherwise possessed by the
Bank; provided, however, that if an event specified in Section 8.1(f) or (g) shall have occurred, the Commitments and
the Loans shall automatically terminate and interest, principal and amounts referred to in the preceding clauses (i) and (ii)
shall be immediately due and payable without presentment, demand, protest, or other notice of any kind, all of which are expressly
waived, anything contained herein or in the Revolving Credit Note to the contrary notwithstanding.
9.1. Notices. Any notice or other communication shall be in writing and shall be conclusively deemed to have been received
by a party hereto and to be effective on the day on which it was delivered to such party at the address set forth below, or, if
sent by email, when actually received, or, if sent by registered or certified mail, on the third Business Day after the day on
which it was mailed in the United States, addressed to such party at the address set forth below:
to the Bank, at:
Ponce de Leon Blvd, Suite 303
Coral Gables, FL 33134
Vivian Alvarez Premock, Senior Vice President
to each such party at such other address as such party shall have designated to the other in a written notice complying as to
delivery with the provisions of this Section 9.1.
9.2. Effectiveness; Survival of Agreement. This Agreement shall become effective on the date on which all parties hereto
shall have signed a counterpart copy hereof and shall have delivered the same to the Bank. All covenants, agreements, representations
and warranties made herein and in the other Loan Documents and in the certificates delivered pursuant hereto or thereto shall
survive the making by the Bank of the Loans herein contemplated and the execution and delivery to the Bank of the Revolving Credit
Note evidencing the Loans and shall continue in full force and effect so long as any Note is unpaid. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Borrower which are contained in this Agreement shall bind and
inure to the benefit of the respective successors and assigns of the Bank. The Borrower may not assign or transfer any
of its interest under this Agreement, the Revolving Credit Note, or any other Loan Document without the prior written consent
of the Bank. The obligations of the Borrower pursuant to Section 9.3 and Section 9.10 shall survive termination of this Agreement
and payment of the Obligations.
9.3. Expenses of the Bank. The Borrower agrees (a) to indemnify, defend and hold harmless the Bank and its officers,
directors, employees, agents, advisors and affiliates (each, an “indemnified person”) from and against any
and all losses, claims, damages, liabilities or judgments to which any such indemnified person may be subject and arising out
of or in connection with the Loan Documents, the financings contemplated hereby, the use of any proceeds of such financings or
any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not
any of such indemnified persons is a party thereto, and to reimburse each of such indemnified persons upon notice and demand for
any reasonable, out-of-pocket and documented expenses, including such expenses constituting legal fees, actually incurred in connection
with the investigation or defending any of the foregoing; provided that the foregoing indemnity will not, as to any indemnified
person, apply to losses, claims, damages, liabilities, judgments or related expenses to the extent arising from the breach of
contract, willful misconduct or gross negligence of such indemnified person; and (b) to reimburse the Bank from time to time,
upon notice and demand, all reasonable, out-of-pocket and documented expenses (including such expenses of its due diligence investigation,
along with disbursements and reasonable fees of counsel) actually incurred in connection with the financings contemplated under
this Agreement (except where the Bank has specifically agreed herein to incur non-reimbursable expenses), the preparation, execution
and delivery of this Agreement and the other Loan Documents, any amendments and waivers hereof or thereof, the security arrangements
contemplated thereby and the enforcement thereof.
9.4. No Waiver of Rights by the Bank. Neither any failure nor any delay on the part of the Bank in exercising any right,
power or privilege hereunder or under the Revolving Credit Note or any other Loan Document shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further exercise of any other right, power or privilege.
9.5. Submission to Jurisdiction; Jury Waiver. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT IN THE STATE OF FLORIDA, COUNTY OF MIAMI-DADE, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT
AND RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO HEREIN OR THEREIN WHERE THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURTS. THE BORROWER AGREES
THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS
AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF FLORIDA. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING CREDIT NOTE OR ANY OTHER LOAN DOCUMENT.
9.6. Extension of Maturity. Except as otherwise expressly provided herein, whenever a payment to be made hereunder
shall fall due and payable on any day other than a Business Day, such payment may be made on the next succeeding Business Day,
and such extension of time shall be included in computing interest.
9.7. Modification of Agreement. No modification or amendment or waiver of any provision
of this Agreement, the Revolving Credit Note, or any other Loan Document shall in any event be effective unless the same shall
be in writing and signed by the Bank and the Borrower, and no waiver of any provision of this Agreement, the Revolving Credit
Note, or any other Loan Document, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Bank, and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in the same, similar or other circumstance unless required by the terms of this Agreement.
9.8. Severability. In case any one or more of the provisions contained in this Agreement,
the Revolving Credit Note, or in any other Loan Document should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired
9.9. Sale of Participations; Assignments. The Bank reserves the right to sell participations
in the Loans to such banks, lending institutions or other parties as it may choose with notice to the Borrower. The Bank reserves
the right to sell and assign its rights, duties or obligations with respect to the Loans to such banks, lending institutions or
other parties as it may choose but only with the prior written consent of the Borrower not to be unreasonably withheld or delayed
(provided that no such consent of the Borrower shall be required if an Event of Default shall have occurred and be continuing).
The Bank may furnish any information concerning the Borrower in its possession from time to time to any assignee or participant
(or proposed assignee or participant), provided that the Bank shall notify any such assignee or participant (or proposed assignee
or participant) in connection with any contemplated participation in, or assignment of, the Loans, that such information is confidential
and shall obtain an agreement from such transferee or participant requiring that such transferee or participant treat such information
as confidential and use commercially reasonable efforts to maintain the confidentiality of same.
9.10. Reinstatement; Certain Payments. If claim is ever made upon the Bank for repayment
or recovery of any amount or amounts received by the Bank in payment or on account of any of the Obligations under this Agreement,
the Bank shall give prompt notice of such claim to the Borrower, and if the Bank repays all or part of said amount by reason of
(a) any judgment, decree or order of any court or administrative body having jurisdiction over the Bank or any of its property,
or (b) any settlement or compromise of any such claim effected by the Bank with any such claimant, then and in such event the
Borrower agrees that any such judgment, decree, order, settlement or compromise shall be binding upon such Borrower notwithstanding
the cancellation of the Revolving Credit Note or other instrument evidencing the Obligations under this Agreement or the termination
of this Agreement, and the Borrower shall be and remain liable to the Bank hereunder for the amount so repaid or recovered to
the same extent as if such amount had never originally been received by the Bank.
9.11. Right of Setoff. If an Event of Default shall have occurred and be continuing,
the Bank and each other Affiliate of the Bank are each hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any
time held and ether indebtedness at any time owing by the Bank to or for the credit or the account of the Borrower against any
and all the Obligations. The rights of the Bank under this Section 9.11 are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Bank may have.
9.12. Confidentiality. The Bank agrees to take normal and reasonable precautions to
maintain the confidentiality of any non-public information relating to the Borrower or its business, other than any such information
that is available to the Bank on a non-confidential basis prior to disclosure by the Borrower, except that such information may
be disclosed (a) to any Affiliate, director, officer, employee, agent, advisor, legal counsel, consultants or other representatives
of the Bank, on a confidential basis with, in each case, a need to know such information in connection with the transactions contemplated
by this Agreement, (b) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (c)
to the extent requested by any regulatory agency or authority purporting to have jurisdiction over it (including any self-regulatory
authority such as the National Association of Insurance Commissioners), (d) to the extent that such information becomes publicly
available other than as a result of a breach of this Section, or which becomes available to the Bank or any Affiliate, director,
officer, employee, agent, advisor, legal counsel, consultants or other representatives of the Bank on a non-confidential basis
from a source other than the Borrower or any Affiliate thereof, (e) in connection with the exercise of any remedy hereunder or
under any other Loan Documents or any suit, action or proceeding relating to this Agreement or any other Loan Documents or the
enforcement of rights hereunder or thereunder, (f) subject to execution by such Person of an agreement containing provisions substantially
the same as those of this Section, to (i) any assignee of or participant in, or any prospective assignee of or participant in,
any of its rights or obligations under this Agreement, or (ii) any actual or prospective party to any swap or derivative or other
transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder,
or (g) with the prior written consent of the Borrower.
9.13. Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall constitute an original, but all of which, taken together, shall constitute one and the same instrument. Delivery
of an executed counterpart to this Agreement by facsimile transmission or by electronic mail shall be as effective as delivery
of a manually executed counterpart hereof.
9.14. Headings. Section headings used herein are for convenience of reference only and are not to affect the construction
of or be taken into consideration in interpreting this Agreement.
9.15. Construction. This Agreement is the result of negotiations between, and has
been reviewed by, the Borrower and the Bank and their respective counsel. Accordingly, this Agreement shall be deemed to be the
product of each party hereto, and no ambiguity shall be construed in favor of or against either the Borrower or the Bank.
9.16. USA PATRIOT Act; Anti-Money Laundering Legislation. Borrower acknowledges that,
pursuant to the Anti-Terrorism Laws, and other applicable anti-money laundering, anti-terrorist financing, government sanction
and “know your client” laws, whether within the United States, Canada or elsewhere (collectively, including any guidelines
or orders thereunder, “AML Legislation”), the Bank may be required to obtain, verify and record information
regarding Borrower, its respective directors, authorized signing officers, direct or indirect shareholders or other Persons in
control of Borrower, and the transactions contemplated hereby. Borrower shall promptly provide all such information, including
supporting documentation and other evidence, as may be reasonably requested by the Bank, or any prospective assign or participant
of the Bank, in order to comply with any applicable AML Legislation, whether now or hereafter in existence.
9.17. Judgment Currency. If for the purpose of obtaining a judgment in any court it
is necessary to convert any amount owing or payable to Bank under this Agreement or any Loan Document from the currency in which
it is due (the “Agreed Currency” into a particular currency (the “Judgment Currency”), the
rate of exchange applied in that conversion shall be that at which Bank, in accordance with its normal procedures, could purchase
the Agreed Currency with the Judgment Currency at or about noon on the Business Day immediately preceding the date on which judgment
is given. The obligation of the Borrower in respect of any amount owing or payable under this Agreement to Bank in the Agreed
Currency shall, notwithstanding any judgment and payment in the Judgment Currency, be satisfied only to the extent that the Bank,
in accordance with its normal procedures, could purchase the Agreed Currency with the amount of the Judgment Currency so paid
at or about noon on the next Business Day following that payment; and if the amount of the Agreed Currency which the Bank could
so purchase is less than the amount originally due in the Agreed Currency the Borrower shall, as a separate obligation and notwithstanding
the judgment or payment, indemnify Bank against any loss.
9.18. Choice of Law. This
Agreement shall be construed in accordance with and governed by the laws of the State of Florida without giving effect to
principles of conflict or choice of laws.
ON FOLLOWING PAGES]
WITNESS WHEREOF, the Borrower and the Bank have caused this Agreement to be duly executed
by their duly authorized officers, as of the day and year first above written.
FIFTH THIRD BANK
Vivian Alvarez Premock
Vivian Alvarez Premock
Senior Vice President
JACOBY & CO. INC.
OF REVOLVING CREDIT NOTE
VALUE RECEIVED, JACOBY & CO. INC., a Nevada corporation (the “Borrower”) promises to pay to the order of
FIFTH THIRD BANK, an Ohio Banking Corporation (the “Bank”), on or before the Commitment Termination Date, EIGHT
MILLION ($8,000,000) DOLLARS or, if less, the unpaid principal amount of all Revolving Credit Loans made by the Bank to the Borrower
under the Credit Agreement referred to below.
interest on the principal balance from time to time outstanding under this Note shall be payable monthly, commencing on November
4, 2017, and continuing on the 4th day of each month thereafter.
Note is the “Revolving Credit Note” referred to in that certain Credit Agreement dated as of October 4, 2017, between
the Borrower and the Bank (as the same may be amended, modified or supplemented from time to time, the “Credit Agreement”)
and is issued pursuant to and entitled to the benefits of the Credit Agreement to which reference is hereby made for a more complete
statement of the terms and conditions under which the Revolving Credit Loans evidenced hereby were made and are to be repaid.
Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.
Bank shall record the date and amount of each Revolving Credit Loan and the date and amount of each payment or prepayment of principal
of each Revolving Credit Loan on the grid schedule annexed to this Note; provided, however, that the failure of
the Bank to set forth such Revolving Credit Loans, payments and other information on the attached grid schedule shall not in any
manner affect the obligation of the Borrower to repay the Revolving Credit Loans made by the Bank in accordance with the terms
of this Note.
Note is subject to prepayment as provided in Section 3.3 of the Credit Agreement. Subject to the immediately preceding sentence,
no reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligation
of the Borrower, which is absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective
times, and in the currency herein prescribed.
the occurrence and during the continuance of an Event of Default, the unpaid balance of the principal amount of this Note together
with all accrued but unpaid interest thereon, may become, or may be declared to be, due and payable in the manner, upon the conditions
and with the effect provided in the Credit Agreement.
payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in immediately
available funds at the Payment Office of the Bank, or in such other manner in accordance with the terms of the Credit Agreement
and the Loan Documents.
Borrower waives presentment, demand, protest, and notice of any kind in connection with this Note.
NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
ON THE FOLLOWING PAGE)
WITNESS WHEREOF, the Borrower has caused this Note to be executed and delivered by
its duly authorized officer as of the day and year and at the place first above
JACOBY & CO. INC.
Date of Loan
OF REVOLVING CREDIT LOAN BORROWING
Ponce de Leon Blvd., Suite 303
Gables, FL 33134
Vivian Alvarez Premock, South Florida Middle Market – Team Lead
to the Credit Agreement dated as of October 4, 2017 (as the same may have been and may hereafter be amended, modified or supplemented
the “Credit Agreement”) by and between the undersigned Borrower and the Bank, the Borrower hereby gives the
Bank notice that Borrower requests a Revolving Credit Loan as follows:
requested Borrowing Date is __________________,
The amount of the requested borrowing is $_____________________,
which shall be deposited into the Operating Account (as designated by Borrower from time to time
) on __________________ (date).
Borrower hereby certifies that (i) the representations and warranties contained in the Credit Agreement and the other Loan Documents
are true, correct and complete in all material respects on and as of the date hereof to the same extent as though made on and
as of the date hereof, except for such representations and warranties that are made as of a specific date; (ii) no Default or
Event of Default has occurred and is continuing under the Credit Agreement or will result after giving effect to the Loan requested
hereunder; and (iii) the amount of the proposed borrowing hereunder will not cause the aggregate outstanding principal amount
of Revolving Credit Loans (after giving effect to the proposed borrowing requested hereunder) to exceed the lesser of the Commitment
or the Borrowing Base set forth in the last Borrowing Base Certificate delivered to the Bank.
terms used herein but not defined shall have the respective meanings given to them in the Credit Agreement.
WITNESS WHEREOF, Borrower has caused this document to be executed and delivered by its Executive
Officer as of the date written above.