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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 14, 2023 (September 11, 2023)
1847 Holdings LLC |
(Exact name of registrant as specified in its charter) |
Delaware |
|
001-41368 |
|
38-3922937 |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
590 Madison Avenue, 21st Floor, New York, NY |
|
10022 |
(Address of principal executive offices) |
|
(Zip Code) |
|
(212) 417-9800 |
|
|
(Registrant's telephone number, including area code) |
|
|
(Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant
to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which
registered |
Common Shares |
|
EFSH |
|
NYSE American LLC |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ☐
Item 1.01 | Entry into a Material Definitive Agreement. |
As previously disclosed, on February 8, 2023,
1847 ICU Eyewear Holdings Inc. (“1847 ICU”), a wholly owned subsidiary of 1847 Holdings LLC (the “Company”),
along with 1847 ICU’s wholly owned subsidiary, ICU Eyewear Holdings, Inc. (“ICU Holdings”) and ICU Holdings’
wholly owned subsidiary ICU Eyewear, Inc. (“ICU Eyewear,” and together with 1847 ICU and ICU Holdings, the “Borrower”)
entered into a loan and security agreement (the “Loan Agreement”) with Industrial Funding Group, Inc. for a revolving
loan of up to $5,000,000, which is evidenced by a secured promissory note in the amount of up to $5,000,000 (the “Original Revolving
Note”). The Loan Agreement, the loans made pursuant thereto (the “Existing Loan”), and the Loan Documents
(as defined in the Loan Agreement) were sold to GemCap Solutions, LLC (“GemCap”) on February 11, 2023.
On September 11, 2023, GemCap sold and assigned
the Existing Loan, the Loan Agreement and the Loan Documents to AB Lending SPV I LLC d/b/a Mountain Ridge Capital (the “New Lender”).
On the same date, the Borrower entered into an Amended and Restated Credit and Security Agreement (the “Credit and Security Agreement”)
with the New Lender for a revolving loan of up to $15,000,000, which Loan(s) (as defined in the Credit and Security Agreement) may be
drawn in advances (the “Advances”) of Revolving Loans (as that term is defined in the Credit and Security Agreement).
On the same date, the New Lender made an Advance of $4,218,984.59 to the Borrower under the Credit and Security Agreement, which was used
to pay the amounts outstanding under the Original Revolving Note, to pay certain closing fees and expenses in connection with the closing
of the Credit and Security Agreement and for general working capital purposes.
To induce the New Lender to enter into the Credit
and Security Agreement, the Company agreed to provide a limited guaranty to the New Lender (the “Limited Guaranty”),
pursuant to which the Company has agreed to guaranty to the New Lender the payment of the difference between (i) the cost (as calculated
in accordance with United States generally accepted accounting principles) of all inventory owned by the Borrower that (A) is in the possession
of Target Corporation and (B) has been included in the Borrowing Base (as defined in the Credit and Security Agreement) (collectively,
the “Guaranteed Inventory”), and (ii) the proceeds, if any, actually realized from the sale, disposition, liquidation
or other recovery of such Guaranteed Inventory and actually received by the New Lender in connection therewith; provided, however, that
the Company has no obligation to make any payment under the Limited Guaranty until (i) the obligations of the Borrower have been accelerated
pursuant to the terms of the Credit and Security Agreement and (ii) the New Lender has used its best efforts to liquidate all of the Collateral
(as defined in the Credit and Security Agreement) and has liquidated substantially all of the Collateral. The Company may satisfy its
obligations under the Limited Guaranty by paying such amounts in cash, or by issuing to the New Lender a number of common shares of the
Company equal to the sum needed to satisfy the obligations under the Limited Guaranty in full divided by a price equal to the lesser of
$4.575 or the closing price of the common shares on the day prior to such issuance (the “Shares”); provided that if
such issuance would violate Section 7.13 of the NYSE American Company Guide, which restricts the issuance of shares equal to 20% or more
of the outstanding common shares for less than the greater of book or market value, then the Company must obtain shareholder approval
of such issuance.
The Revolving Loans made pursuant to the Credit
and Security Agreement mature on September 11, 2026, with all such Revolving Loans bearing interest at an annual rate equal to Term SOFR
plus eight percent (8.00%) per annum or, if at any time the Term SOFR cannot be determined, then at the Base Rate plus seven percent (7.00%),
but in any event at a rate no higher than that permitted under applicable law. “Term SOFR” means the secured overnight financing
rate published by the Federal Reserve Bank of New York for a one-month period on the date that is two (2) business days prior to the first
day of such one-month period and “Base Rate” means a rate per annum equal to the greatest of (i) the Federal Funds Rate in
effect on such day plus 1.00%, (ii) the Prime Rate in effect on such day, and (iii) Term SOFR for a one-month tenor plus 1.00%. However,
following and during the continuation of an event of default (as defined in the Credit and Security Agreement), interest shall accrue
at a default rate equal to such above rate plus two percent (2.00%) per annum. Interest accrued on the Advances shall be payable monthly
on the first day of each month commencing on October 1, 2023.
The Borrower may voluntarily prepay the entire
unpaid principal amount of the Advances prior to the maturity date, but must pay a prepayment fee determined as follows: (i) a fee of
three percent (3.00%) if the prepayment is made on or before September 11, 2024, (ii) a fee of two percent (2.00%) if the prepayment is
made between September 12, 2024 and September 11, 2025, or (iii) a fee of one percent (1.00%) if the prepayment is made between September
12, 2025 and September 11, 2026.
The Credit and Security Agreement contains customary
events of default, including, among others: (i) for failure to pay principal and interest on the Advances when due, or to pay any fees
due under the Credit and Security Agreement; (ii) if any statement, representation or warranty in the Credit and Security Agreement or
any document delivered in connection therewith is at any time found to have been false in any material respect at the time such representation
or warranty was made; (iii) for failure to furnish financial information as required under the Loan Documents (as defined in the Credit
and Security Agreement) when due, furnish any additional information requested by the lender within three (3) days of when requested;
or permit the New Lender or its agents to immediately inspects its books, records, premises, or any collateral; (iv) if any lien, levy,
assessment, injunction, or attachment is issued against the Borrower’s property, (v) for failure to perform any covenant or agreement
contained in the Credit and Security Agreement or any document delivered in connection therewith; (vi) if any judgments or attachments
aggregating in excess of $100,000 at any given time are obtained against the Borrower which remain unstayed for a period of ten (10) days
or are enforced or if there is an indictment of the Borrower or any responsible officer of the Borrower under an criminal statute or proceeding
pursuant to which remedies sought may include the forfeiture of any property of the Borrower; (vii) for any voluntary or involuntary bankruptcy,
insolvency, or dissolution or assignment to creditors; (viii) if a material adverse effect or change of control (each as defined in the
Credit and Security Agreement) shall have occurred; (ix) if the New Lender is no longer a valid, perfect, first-priority lien; (x) a default
under a Material Business Agreement (as that term is defined in the Credit and Security Agreement); (xi) if the Borrower defaults under
any agreement or contract or hedging contract with a third party which default would result in a liability to the Borrower in excess of
$50,000; (xii) if any provision of the Loan Documents is not valid or binding on, and enforceable with respect to each Borrower and the
New Lender; (xiii) if the Borrower’s intellectual property necessary for its business is revoked, terminated, suspended, or adversely
modified and if any such proceedings are not dismissed within thirty (30) days or schedules a hearing on the same; (xiv) if the Collateral
(as defined in the Credit and Security Agreement) is seized or taken, or is subject to litigation that may result in the material impairment
of loss of security under the Credit and Security Agreement, (xv) if there is a business interruption for more than five (5) consecutive
calendar days, (xvi) if there is a guarantor repudiation; (xvii) if there is an indictment or institution of legal proceedings against
the Borrower or its officers or directors seeking in excess of $100,000; and (xviii) for changes to transfer instructions, or termination
thereof, without the written consent of the New Lender.
The Credit and Security Agreement contains representations,
warranties and affirmative and negative financial and other covenants which are customary for loans of this type. The closing of the Credit
and Security Agreement was subject to customary closing conditions, including delivery of the security documents described below.
As collateral security for the payment and performance
of all of the Borrower’s obligations under the Credit and Security Agreement and related loan documents, the Borrower granted to
the New Lender a first priority security interest in all of the assets of the Borrower. In connection with such grant of security interest,
the Borrower also entered into a trademark security agreement (the “Trademark Security Agreement”), pursuant to which
the Borrower granted a security interest in its trademarks and assigned such trademarks upon the occurrence of an event of default.
The foregoing description of the Credit and Security
Agreement, the Limited Guaranty and the Trademark Security Agreement does not purport to be complete and is qualified in its entirety
by reference to the full text of those documents filed as exhibits to this report, which are incorporated herein by reference.
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant. |
The information set forth
under Item 1.01 is incorporated by reference into this Item 2.03.
Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth under Item 1.01 regarding
the issuance of the Shares is incorporated by reference into this Item 3.02. The issuance of the Shares is being made in reliance upon
an exemption from the registration requirements of Section 5 of the Securities Act of 1933, as amended.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit No. |
|
Description of Exhibit |
10.1 |
|
Amended and Restated Credit and Security Agreement, dated September 11, 2023, among AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital, ICU Eyewear, Inc., ICU Eyewear Holdings, Inc. and 1847 ICU Holdings Inc. |
10.2 |
|
Limited Guaranty Agreement, dated September 11, 2023, by 1847 Holdings LLC in favor of AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital |
10.3 |
|
Pledge Agreement, dated September 11, 2023, by 1847 ICU Holdings Inc. in favor of AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital |
10.4 |
|
Pledge Agreement, dated September 11, 2023, by ICU Eyewear Holdings, Inc. in favor of AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital |
10.5 |
|
Trademark Security Agreement, dated September 11, 2023, by 1847 ICU Holdings Inc., ICU Eyewear Holdings, Inc., and ICU Eyewear, Inc., in favor of AB Lending SPV I, LLC, d/b/a Mountain Ridge Capital |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: September 14, 2023 |
1847 HOLDINGS LLC |
|
|
|
/s/ Ellery W. Roberts |
|
Name: Ellery W. Roberts |
|
Title: Chief Executive Officer |
Exhibit 10.1
Execution
Version
AMENDED
AND RESTATED CREDIT AND SECURITY AGREEMENT
among
AB
LENDING SPV I LLC,
d/b/a
Mountain Ridge Capital
(as
Lender),
ICU
EYEWEAR, INC.,
ICU
EYEWEAR HOLDINGS, INC.,
and
1847
ICU HOLDINGS INC.
(each,
a Borrower),
and
the
other Borrowers and Loan Parties from time to time party hereto
Dated
as of September 11, 2023
TABLE
OF CONTENTS
|
Page |
|
|
ARTICLE
1 DEFINITIONS |
2 |
1.1 |
Accounting Terms |
2 |
1.2 |
General Terms |
2 |
1.3 |
UCC Terms |
24 |
1.4 |
General Construction |
24 |
1.5 |
Time |
25 |
1.6 |
Divisions |
25 |
1.7 |
Rates |
25 |
|
|
|
ARTICLE
2 ADVANCES, PAYMENTS |
25 |
2.1 |
Revolving Loans |
25 |
2.2 |
Borrowing Procedure |
25 |
2.3 |
Loan Disbursement |
26 |
2.4 |
Maximum Advances |
26 |
2.5 |
Loan Repayment |
26 |
2.6 |
Statements |
27 |
2.7 |
Additional Payments |
27 |
2.8 |
Use of Proceeds |
27 |
|
|
|
ARTICLE
3 INTEREST AND FEES |
28 |
3.1 |
Interest |
28 |
3.2 |
[Reserved] |
28 |
3.3 |
Unused Facility Fee |
28 |
3.4 |
Collateral Fees |
28 |
3.5 |
Closing Fee |
28 |
3.6 |
Computing Interest and Fees; Conforming Changes |
28 |
3.7 |
Maximum Interest; Controlling Limitation |
29 |
3.8 |
Increased Costs |
30 |
3.9 |
Alternate Rates |
31 |
3.10 |
[Reserved] |
32 |
3.11 |
Compensation for Losses |
32 |
3.12 |
Survival |
32 |
|
|
|
ARTICLE
4 COLLATERAL: GENERAL TERMS |
32 |
4.1 |
Security Interest |
32 |
4.2 |
Perfection |
33 |
4.3 |
Dispositions |
33 |
4.4 |
Preserving Collateral |
33 |
4.5 |
Ownership |
33 |
4.6 |
Defending Lender’s Interests |
34 |
4.7 |
Books and Records |
34 |
4.8 |
Financial Disclosure |
34 |
4.9 |
Laws; Insurance Requirements |
34 |
4.10 |
Inspections and Appraisals |
35 |
4.11 |
Insurance |
35 |
4.12 |
Paying Insurance |
35 |
4.13 |
Paying Taxes |
36 |
4.14 |
Paying Leasehold Obligations |
36 |
4.15 |
Accounts |
36 |
4.16 |
Cash Management |
37 |
4.17 |
Equipment Maintenance |
38 |
4.18 |
No Liability |
38 |
4.19 |
Environmental Matters |
38 |
4.20 |
Financing Statements |
38 |
4.21 |
Pledged Equity Interests |
39 |
|
|
|
ARTICLE
5 REPRESENTATIONS AND WARRANTIES |
40 |
5.1 |
Existence; Authority |
40 |
5.2 |
Formation; Qualification; and Subsidiaries |
40 |
5.3 |
Officers; Directors; Equity Interest Holders; and Capitalization |
40 |
5.4 |
No Governmental Approval; No Conflict |
40 |
5.5 |
Tax Returns |
40 |
5.6 |
Financial Information |
40 |
5.7 |
Name |
41 |
5.8 |
O.S.H.A. and Environmental Compliance. |
41 |
5.9 |
Solvency; No Litigation, No Violation, ERISA |
41 |
5.10 |
Intellectual Property |
41 |
5.11 |
Licenses and Permits |
42 |
5.12 |
Indebtedness Default |
42 |
5.13 |
No Burdensome Restrictions; No Default |
42 |
5.14 |
No Labor Disputes |
42 |
5.15 |
Margin Regulations |
42 |
5.16 |
Investment Company Act |
42 |
5.17 |
Disclosure |
42 |
5.18 |
Hedging Contracts |
42 |
5.19 |
Material Business Agreements |
42 |
5.20 |
Certain Laws and Regulations |
42 |
5.21 |
Anti-Corruption Laws and Sanctions |
43 |
5.22 |
Business Purpose |
43 |
5.23 |
Delivery of Subordinated Indebtedness Documents |
43 |
|
|
|
ARTICLE
6 AFFIRMATIVE COVENANTS |
43 |
6.1 |
Conducting Business; Maintaining Existence; and Assets |
43 |
6.2 |
Violations |
43 |
6.3 |
Financial Covenants |
43 |
6.4 |
Supplemental Instruments |
44 |
6.5 |
Indebtedness |
44 |
6.6 |
Financial Statements |
44 |
6.7 |
Taxes |
44 |
6.8 |
Deposit Accounts |
44 |
6.9 |
Interest Rate Protection |
44 |
6.10 |
Post-Closing Matters |
44 |
|
|
|
ARTICLE
7 NEGATIVE COVENANTS |
45 |
7.1 |
Mergers; Consolidations; and Asset Sales |
45 |
7.2 |
Liens |
45 |
7.3 |
Guarantees |
45 |
7.4 |
Investments |
45 |
7.5 |
Loans |
45 |
7.6 |
Reserved |
46 |
7.7 |
Distributions and Management Fees |
46 |
7.8 |
Indebtedness |
46 |
7.9 |
Business |
46 |
7.10 |
Affiliate Transactions |
46 |
7.11 |
Leases |
47 |
7.12 |
Subsidiaries; Partnerships; and Disqualified Stock |
47 |
7.13 |
Fiscal Year and Accounting Changes |
47 |
7.14 |
Pledging Credit |
47 |
7.15 |
Amending Charter Documents |
47 |
7.16 |
ERISA |
47 |
7.17 |
Prepaying Indebtedness |
47 |
7.18 |
Material Business Agreements |
47 |
7.19 |
Anti-Terrorism Laws; Anti-Corruption Laws; Sanctions |
47 |
7.20 |
Subordinated Indebtedness |
48 |
7.21 |
Modification of Subordinated Indebtedness Documents |
48 |
7.22 |
Amending Leases |
48 |
|
|
|
ARTICLE
8 CONDITIONS PRECEDENT |
48 |
8.1 |
Conditions to Initial Loans |
48 |
8.2 |
Conditions to Each Loan and Advance |
50 |
|
|
|
ARTICLE
9 INFORMATION AS TO THE LOAN PARTIES |
51 |
9.1 |
Disclosure |
51 |
9.2 |
Schedules |
51 |
9.3 |
Notice of Suits and Adverse Events |
51 |
9.4 |
Material Events |
52 |
9.5 |
Annual Financial Statements |
52 |
9.6 |
Monthly Financial Statements |
52 |
9.7 |
Additional Information |
52 |
9.8 |
Projected Operating Budget and Availability Forecast |
53 |
9.9 |
Electronic Reporting |
53 |
|
|
|
ARTICLE
10 EVENTS OF DEFAULT |
53 |
10.1 |
Payment |
53 |
10.2 |
Misrepresentation |
53 |
10.3 |
Not Furnishing Information |
53 |
10.4 |
Liens |
53 |
10.5 |
Covenant Breaches |
54 |
10.6 |
Judgments |
54 |
10.7 |
Insolvency |
54 |
10.8 |
Material Adverse Effect |
54 |
10.9 |
Lender’s Lien Priority |
54 |
10.10 |
Breaches Under Material Business Agreements |
54 |
10.11 |
Cross Default |
54 |
10.12 |
Change of Control |
54 |
10.13 |
Invalidity |
54 |
10.14 |
Intellectual Property |
54 |
10.15 |
Destruction of Collateral |
55 |
10.16 |
Business Interruption |
55 |
10.17 |
Guarantor Repudiation |
55 |
10.18 |
Indictment; Forfeiture |
55 |
10.19 |
Hedging Contracts |
55 |
10.20 |
Subordinated Indebtedness Default |
55 |
10.21 |
Depository Instructions |
55 |
|
|
|
ARTICLE
11 LENDER’S RIGHTS AND REMEDIES AFTER AN EVENT OF DEFAULT |
56 |
11.1 |
Rights and Remedies |
56 |
11.2 |
No Waiver |
57 |
|
|
|
ARTICLE
12 WAIVERS AND JUDICIAL PROCEEDINGS |
57 |
12.1 |
Notice Waiver |
57 |
12.2 |
Delay |
57 |
12.3 |
Jury Waiver |
57 |
|
|
|
ARTICLE
13 EFFECTIVE DATE AND TERMINATION |
58 |
13.1 |
Term |
58 |
13.2 |
Termination |
58 |
|
|
|
ARTICLE
14 LOAN PARTY REPRESENTATIVE |
59 |
14.1 |
Appointment and Relationship |
59 |
14.2 |
Authority |
59 |
14.3 |
Notices |
59 |
14.4 |
Joint and Several Obligations |
59 |
14.5 |
Cross Guaranty |
61 |
14.6 |
Waivers |
62 |
|
|
|
ARTICLE
15 MISCELLANEOUS |
63 |
15.1 |
Governing Law |
63 |
15.2 |
Location of Closing |
63 |
15.3 |
Entire Understanding and Amendments |
63 |
15.4 |
Transfers and Assignments |
64 |
15.5 |
Payment Application |
64 |
15.6 |
Expenses; Indemnity |
64 |
15.7 |
Notice |
65 |
15.8 |
Survival |
67 |
15.9 |
Severability |
67 |
15.10 |
Injunctive Relief |
67 |
15.11 |
Consequential Damages |
67 |
15.12 |
Counterparts and Electronic Signatures |
67 |
15.13 |
Construction |
67 |
15.14 |
Confidentiality and Sharing Information |
67 |
15.15 |
Publicity |
68 |
15.16 |
Creditor-Debtor Relationship |
68 |
15.17 |
Conflict |
69 |
15.18 |
PATRIOT ACT |
69 |
15.19 |
Amendment and Restatement; No Novation; Reaffirmation of Grant
of Security Interest |
69 |
15.20 |
FINAL AGREEMENT |
69 |
SCHEDULES
AND EXHIBITS
Schedule
1.2(a) |
Owned
Real Property |
Schedule
1.2(b) |
Permitted
Liens |
Schedule
4.5 |
Inventory
Locations |
Schedule
4.15(c) |
Loan
Parties’ States of Organization and Chief Executive Offices |
Schedule
4.21 |
Pledged
Equity Interests |
Schedule
5.2 |
Incorporation/Organization/Foreign
Qualification/Subsidiaries |
Schedule
5.3 |
Officers,
Directors, Shareholders, Capitalization |
Schedule
5.7 |
Organization
Name |
Schedule
5.8(b) |
Environmental |
Schedule
5.9(b) |
Litigation |
Schedule
5.10 |
Patents,
Trademarks, Copyrights, and Licenses |
Schedule
5.19 |
Material
Business Agreements |
Schedule
6.8 |
Accounts |
Schedule
7.4 |
Investments |
Schedule
7.8 |
Indebtedness |
Schedule
7.10 |
Affiliate
Transactions |
|
|
Exhibit
A |
Form
of Borrowing Base Certificate |
Exhibit
B |
Form
of Compliance Certificate |
Exhibit
C |
Closing
Checklist |
AMENDED
AND RESTATED CREDIT AND SECURITY AGREEMENT
This
Amended and Restated Credit and Security Agreement (this “Agreement”) is entered into as of September 11, 2023 (the
“Closing Date”) among AB LENDING SPV I LLC, a Delaware limited liability company d/b/a Mountain Ridge Capital
(together with its successors and assigns “Lender”), ICU EYEWEAR, INC., a California corporation (“ICU”),
ICU EYEWEAR HOLDINGS, INC., a California corporation (“ICU CA Holdings”), and 1847 ICU HOLDINGS INC.,
a Delaware corporation (“ICU DE Holdings; and together with ICU, ICU CA Holdings, and each other Person that joins this
Agreement as a Borrower, each a “Borrower” and collectively the “Borrowers”), and the other Loan
Parties (as defined below) from time to time party hereto.
RECITALS
WHEREAS,
Borrowers and Lender, as successor-by-assignment to the former lender, entered into that certain Loan and Security Agreement dated February
9, 2023 (as heretofore amended, restated, supplemented or otherwise modified, the “Original Loan Agreement”) pursuant
to which certain loans and other financial accommodations were made available to Borrowers; and
WHEREAS,
each Borrower has requested that the Original Loan Agreement be amended and restated in its entirety to become effective and binding
on Borrowers pursuant to the terms of this Agreement, and Lender has agreed, subject to the terms of this Agreement, to amend and restate
the Original Loan Agreement in its entirety to read as set forth herein and to provide an amended and restated credit facility to Borrowers,
which shall be used by Borrowers to finance their mutual and collective enterprise; and Lender’s willingness to extend credit to
Borrowers and to administer each Borrower’s collateral security therefor, on a combined basis as more fully set forth in this Agreement,
is done solely as an accommodation to Borrowers and at Borrowers’ request in furtherance of Borrowers’ mutual and collective
enterprise; and
WHEREAS,
each Borrower has agreed to be jointly and severally liable for loans and all other obligations under this Agreement and to guarantee
the obligations of each of the other Borrowers under this Agreement and each of the other Loan Documents (as defined below); and
WHEREAS,
Lender is willing to amend and restate the Original Loan Agreement, as hereinafter set forth, to, among other things, extend the term
of the credit facility; and
WHEREAS,
each Borrower and Lender acknowledges and agrees that (i) the Obligations (as defined below) represent, among other things, the
amendment, restatement, renewal, extension and modification of the Obligations (as defined in the Original Loan Agreement) arising in
connection with the Original Loan Agreement and the other Loan Documents (as defined in the Original Loan Agreement) executed in connection
therewith; (ii) it intends that the collateral pledged and in which each Borrower granted to Lender a continuing security interest
and lien under the Original Loan Agreement and the other Loan Documents (as defined in the Original Loan Agreement) executed in connection
therewith shall secure, without interruption or impairment of any kind, all Obligations (as defined in the Original Loan Agreement) under
the Original Loan Agreement and the other Loan Documents (as defined in the Original Loan Agreement) executed in connection therewith,
as amended, restated, renewed, extended and modified hereunder and, together with all other Obligations (as defined below) hereunder;
and (iii) all security interests and liens evidenced by the Original Loan Agreement and the other Loan Documents (as defined in the Original
Loan Agreement) executed in connection therewith are hereby ratified, confirmed and continued; and
WHEREAS,
Borrowers and Lender intend that (i) the provisions of the Original Loan Agreement and the other Loan Documents (as defined in the Original
Loan Agreement) executed in connection therewith, to the extent restated, renewed, extended, amended and modified by this Agreement and
the other Loan Documents dated as of the date hereof, be hereby superseded and replaced by the provisions of this Agreement and the other
Loan Documents; and (ii) by entering into and performing their respective obligations hereunder, this transaction shall not constitute
a novation or an accord and satisfaction of the Obligations under (and as defined in) the Original Loan Agreement and the other Loan
Documents (as defined in the Original Loan Agreement); and
WHEREAS,
Lender is willing to continue providing Loans and extending other financial accommodations to Borrowers according to the Revolving Commitment
(as defined below), in each case, on the terms and conditions set forth herein.
AGREEMENT
NOW,
THEREFORE, in consideration of the agreements and covenants contained herein, and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree to amend and restate the
Original Loan Agreement to read as follows:
ARTICLE
1
DEFINITIONS
1.1 Accounting
Terms. Except as otherwise provided in this Agreement, all accounting and financial terms used in the Loan Documents
are interpreted, all accounting determinations must be made, and all financial statements delivered in connection with the Loan Documents
must be prepared in accordance with GAAP as in effect from time to time (but if GAAP (or its application) changes after the Closing Date
and that change affects any provision in the Loan Documents, the Loan Documents are interpreted based on GAAP as in effect and applied
immediately before the change). If the Loan Parties adopt a change in accounting principles (including any changes in GAAP) from those
used in preparing the Loan Parties’ financial statements delivered to Lender before the Closing Date or that affects in any material
respect (as determined by Lender in its discretion) the computation of or compliance with any of the provisions of the Loan Documents
then, unless the Loan Documents have been amended to modify the provisions to take into account the change in accounting principles,
all financial restrictions, provisions, and ratios must continue to be computed based on accounting principles in effect before adoption
of the change. Notwithstanding anything to the contrary contained in this Section or in the definition of “Capital Lease Obligations,”
if an accounting change occurs that requires all leases to be capitalized, only those leases (assuming that the leases existed on the
Closing Date) that would constitute capital leases under GAAP on the Closing Date are considered capital leases, and all calculations
and deliverables under the Loan Documents must be made or delivered accordingly.
1.2 General
Terms. The following terms have the following meanings:
“Accommodation
Payment” is defined in Section 14.4.
“Advances”
means the Revolving Loans.
“Affiliate”
of any Person means (1) any Person that, directly or indirectly, Controls, is Controlled by, or is under common Control with that Person
or (2) any Person that is a director or officer (x) of that Person, (y) of any Subsidiary of that Person, or (z) of any Person described
in clause (1) above. For purposes of this definition only, Control of a Person means the power, directly or indirectly, (x) to vote five
percent or more of the securities having ordinary voting power to elect directors of that Person, or (y) to direct or cause the direction
of the management and policies of that Person whether by contract or otherwise.
“Agreement”
is defined on page 1.
“Allocable
Amount” is defined in Section 14.4.
“Anti-Corruption
Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Loan Party or any Subsidiary thereof from
time to time concerning or relating to bribery or corruption.
“Anti-Terrorism
Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Loan Party or any Subsidiary concerning
or relating to terrorism or money-laundering, including the USA PATRIOT Act.
“Applicable
Margin” means (x) with respect to Revolving Loans that are SOFR Loans, eight percent (8.00%) per annum and (y) with respect
to Revolving Loans that are Base Rate Loans, seven percent (7.00%) per annum.
“Applicable
Unused Facility Fee Percentage” means one-half of one percent (0.50%) per annum.
“Approved
Electronic Communication” means each notice, demand, communication, information, document and other material transmitted, posted
or otherwise made or communicated by email, facsimile, or any other equivalent electronic service agreed to by Lender, whether owned,
operated or hosted by Lender, any of its Affiliates, or any other Person, that any party is obligated to, or otherwise chooses to, provide
to Lender under any Loan Document (including any financial statement, financial and other report, notice, request, certificate and other
information material). Approved Electronic Communications does not, however, include any notice, demand, communication, information,
document, or other material that Lender specifically instructs a Person to deliver in physical form.
“Authority”
is defined in Section 4.19(b).
“Authorized
Officer” means a Person’s president, chief executive officer, chief financial officer, or any other officer approved
by Lender in its Discretion.
“Bankruptcy
Code” means Title 11 of the United States Code or any similar federal or state debtor relief laws.
“Base
Rate” means, for any day, a rate per annum equal to the greatest of (i) the Federal Funds Rate in effect on such day plus 1.00%,
(ii) the Prime Rate in effect on such day, and (iii) Term SOFR for a one-month tenor plus 1.00% (100 basis points); provided, further,
that if the Base Rate determined as provided above shall be less than the Floor, then the Base Rate shall be deemed to be the Floor for
the purposes of this Agreement and the other Loan Documents. Any change in the Base Rate due to a change in the Prime Rate shall be effective
on the effective day of such change in the Prime Rate.
“Base
Rate Loan” means any Loan bearing interest at a rate determined by reference to the Base Rate.
“Benchmark”
means, initially, Term SOFR; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR or the then-current
Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has
replaced such prior benchmark rate pursuant to Section 3.9.
“Benchmark
Replacement” means, with respect to any Benchmark Transition Event, the sum of: (a) the alternate benchmark rate (which may
include Term SOFR of a different tenor) that has been selected by the Lender giving due consideration to (i) any selection or recommendation
of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or
then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated
syndicated credit facilities and (b) the related Benchmark Replacement Adjustment; provided that if such Benchmark Replacement as so
determined would be less than the Floor, such Benchmark Replacement shall be deemed to be the Floor for the purposes of this Agreement
and the other Loan Documents.
“Benchmark
Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement,
the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or
zero) that has been selected by the Lender giving due consideration to (a) any selection or recommendation of a spread adjustment, or
method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment,
or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted
Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark
Replacement Conforming Changes” means, with respect to Term SOFR or any Benchmark Replacement, any technical, administrative
or operational changes (including changes to the definition of “Base Rate,” timing and frequency of determining rates and
making payments of interest and other administrative matters) that the Lender determines may be appropriate to reflect the adoption and
implementation of Term SOFR or such Benchmark Replacement and to permit the administration thereof by the Lender in a manner substantially
consistent with market practice (or, if the Lender determines that adoption of any portion of such market practice is not administratively
feasible or if the Lender determines that no market practice for the administration of Term SOFR or the Benchmark Replacement exists,
in such other manner of administration as the Lender determines is reasonably necessary in connection with the administration of this
Agreement).
“Benchmark
Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(a)
in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date
of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such
Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide the tenor of
such Benchmark (or such component thereof) used hereunder; or
(b)
in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark
(or the published component used in the calculation thereof) has been determined and announced by or on behalf of the administrator
of such Benchmark (or such component thereof) or the regulatory supervisor for the administrator of such Benchmark (or such
component thereof) to be no longer representative or not comply with the International Organization of Securities Commissions
(IOSCO) Principles for Financial Benchmarks; provided, that such non-representativeness or non-compliance will be determined by
reference to the most recent statement or publication referenced in such clause (c) and even if any other tenor of such
Benchmark (or such component thereof) continues to be provided on such date.
“Benchmark
Transition Event” means, with respect to any current Benchmark, the occurrence of one or more of the following events with
respect to the then-current Benchmark:
(a)
a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component
used in the calculation thereof) announcing that such administrator has ceased or will cease to provide the tenor of such Benchmark
(or such component thereof) used hereunder, permanently or indefinitely; provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide such tenor of such Benchmark (or such component
thereof);
(b)
a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the
published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank
of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution
authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar
insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the
administrator of such Benchmark (or such component) has ceased or will cease to provide the tenor of such Benchmark (or such
component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor
administrator that will continue to provide such tenor of such Benchmark (or such component thereof); or
(c)
a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the
published component used in the calculation thereof) announcing that the tenor of such Benchmark (or such component thereof) used
herein is not, or as of a specified future date will not be, representative.
“Benchmark
Transition Start Date” means, in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement
Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the ninetieth
(90th) day prior to the expected date of such event as of such public statement or publication of information (or if the expected date
of such prospective event is fewer than ninety (90) days after such statement or publication, the date of such statement or publication).
“Benchmark
Unavailability Period” means the period (if any) (a) beginning at the time that a Benchmark Replacement Date has occurred if,
at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Documents
in accordance with Section 3.9 and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark
for all purposes hereunder and under any Loan Documents in accordance with Section 3.9.
“Beneficial
Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial
Ownership Regulation” means 31 C.F.R. § 1010.230.
“Borrower”
and “Borrowers” are defined on page 1.
“Borrowing
Base” means, at any time, the sum of (1) up to ninety percent (90%) of each Borrower’s Eligible Accounts; plus
(2) determined on a category-by-category and Borrower-by-Borrower basis, up to eighty-five percent (85%) of the Net Orderly Liquidation
Value of each Borrower’s Eligible Inventory; plus (3) determined on a category-by-category and Borrower-by-Borrower basis,
up to eighty-five percent (85%) of the greater of (x) Net Orderly Liquidation Value of each Borrower’s Eligible Target Inventory
and (y) Lender Net Orderly Liquidation Value of each Borrower’s Eligible Target Inventory minus (4) Reserves. Lender may
in its Discretion reduce the advance rates, adjust Reserves, or reduce one or more of the elements used to compute the Borrowing Base.
“Borrowing
Base Certificate” means a certificate executed by a Loan Party Representative’s Authorized Officer that is appropriately
completed and in the form attached as Exhibit A.
“Business
Day” means any day other than Saturday, Sunday, or a legal holiday on which commercial banks are authorized or required by
law to be closed in New York.
“Canadian
Account Debtor” means any Account Debtor which (1) maintains its chief executive office in any territory or province of Canada
(excluding the Province of Quebec), or (2) is an entity organized under the Laws of Canada or any political subdivision thereof (other
than under the Laws of the Province of Quebec).
“Capital
Expenditures” means any expenditure made or liability incurred that in accordance with GAAP is treated as a capital expenditure
(and not as an expense item) in the year in which it was made or incurred.
“Capital
Lease Obligations” of any Person means that Person’s obligations to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases or financing leases on that Person’s balance sheet under GAAP, and the amount
of these obligations is the capitalized amount determined in accordance with GAAP.
“Cash
Concentration Account” means Borrowers’ commercial deposit account maintained at a financial institution selected by
Lender that is designated by Lender as the Cash Concentration Account. The funds in this account are Lender’s sole and exclusive
property and may only be withdrawn by Lender.
“CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.).
“Change
in Law” means the occurrence, after the date of this Agreement of any of the following: (a) the adoption or taking effect of
any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation,
implementation or application thereof by any Governmental Body or (c) the making or issuance of any request, rule, guideline or directive
(whether or not having the force of law) by any Governmental Body; provided that notwithstanding anything herein to the contrary, (x)
the Dodd-Frank Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or
any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall
in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.
“Change
of Control” means any of the following: (1) the Permitted Holders do not own, directly or indirectly, collectively, free and
clear of all Liens, sixty percent (60%) of the outstanding voting Equity Interests of each Loan Party on a fully diluted basis; (2) the
occurrence of any event (whether in one or more transactions) that results in the Permitted Holders not having the power to designate
a majority of the directors (or the individuals performing similar functions) of any Borrower; (3) any merger or consolidation of any
Loan Party with another Person; (4) the sale of all or substantially all of any Loan Party’s assets; or (5) any Loan Party does
not own, free and clear of all Liens, 100% of the outstanding voting Equity Interests of any existing or future Subsidiary.
“Charges”
means all of the following imposed on any Collateral or any Loan Party by any taxing or other similar Governmental Body, domestic or
foreign (including the Pension Benefit Guaranty Corporation or any environmental agency or superfund): all taxes, charges, fees, imposts,
levies, or other assessments (including with respect to net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation and property taxes, custom duties, fees, assessments, Liens, claims, and charges), together with any interest
and any penalties, additions to tax, or additional amounts.
“Charter
Documents” means, as to any Person (other than a natural person), the charter, certificate, or articles of incorporation or
organization, by-laws, regulations, general or limited partnership agreement, limited partnership certificate, formation certificate,
operating agreement, and other similar organizational or governing documents.
“Closing
Date” is defined on page 1.
“Code”
means the Internal Revenue Code of 1986.
“Collateral”
means all real and personal property in which any Loan Party has any interest of any kind, whether now existing or arising or acquired
or received by the Loan Parties in the future, and wherever located, including:
(a)
All Accounts.
(b)
All Inventory.
(c)
All Equipment and Fixtures.
(d)
All General Intangibles, Payment Intangibles, and Intellectual Property.
(e)
All Investment Property and the Pledged Equity Interests.
(f)
All Deposit Accounts and any and all monies credited by or due from any financial institution or any other depository.
(g)
All Chattel Paper, Instruments, and Documents.
(h)
All of each Loan Party’s right, title, and interest in and to: (1) its goods and other personal property including all
merchandise returned or rejected by Account Debtors; (2) all of each Loan Party’s rights as a consignor, a consignee, an
unpaid vendor, mechanic, artisan, or other lienor (including stoppage in transit, setoff, detinue, replevin, reclamation, and
repurchase); (3) all additional amounts due to each Loan Party from any Account Debtors; (4) warranty claims; (5) all of each Loan
Party’s contract rights, rights to payment under contract rights, Instruments (including promissory notes), Documents, Chattel
Paper (including electronic chattel paper), warehouse receipts, letters of credit, and money; (6) all Commercial Tort Claims; (7)
all collateral securing any obligations owed to any Loan Party; (8) all Letter-of-Credit Rights; (9) all Supporting Obligations; and
(10) any other goods or personal property or Real Property in which the Loan Parties at any time grant a Lien to Lender under any
Loan Document or under any other agreement.
(i)
All of each Loan Party’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers,
computer software, computer programs, tapes, disks, and documents relating to (a), (b), (c), (d), (e), (f), (g), or (h) of this
definition.
(j)
All Proceeds and Products of (a), (b), (c), (d), (e), (f), (g), (h), and (i) of this definition in whatever form, including: cash,
deposit accounts (whether comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood,
business interruption, and credit insurance), negotiable instruments, and other instruments for the payment of money, chattel paper,
security agreements, documents, eminent domain proceeds, condemnation proceeds, and tort claim proceeds.
“Collateral”
also includes all property of any Person that at any time secures any of the Obligations.
“Collateral
Assignment” means that certain Collateral Assignment of Material Business Agreements, dated as of the Closing Date, by and
between Borrower and Lender, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Commodity
Exchange Act” means the Commodity Exchange Act (7 U.S.C. Section 1 et seq.).
“Compliance
Certificate” means a certificate of the Loan Parties signed by the Loan Party Representative’s Authorized Officer appropriately
completed and in substantially the form of Exhibit B.
“Conforming
Changes” means, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation
of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base
Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the
definition of interest period or any similar or analogous definition, timing and frequency of determining rates and making payments of
interest, timing of borrowing requests or other notices, the applicability and length of lookback periods, and other technical, administrative
or operational matters) that Lender decides may be appropriate to reflect the adoption and implementation of any such rate and to permit
the use and administration thereof by Lender in such manner as Lender shall reasonably select.
“Consents”
means all filings and all licenses, permits, consents, approvals, authorizations, qualifications, and orders of Governmental Bodies and
other third parties, domestic or foreign, necessary to carry on any Loan Party’s business.
“Consignment
Agreements” means those Material Business Agreements with Target.
“Consigned
Inventory” means Inventory owned by a Borrower that is in the possession of another Person on a consignment or other basis
that does not constitute a final sale and acceptance of such Inventory.
“Control”
means possessing, directly or indirectly, the power to direct or cause the direction of the management or policies of a Person (whether
through the ability to exercise voting power, by contract, or otherwise). “Controlling” and “Controlled” have
correlative meanings.
“Control
Agreement” means, with respect to any deposit account, securities account, commodity account, securities entitlement or commodity
contract, an agreement, in form and substance satisfactory to Lender, among Lender, the financial institution or other Person at which
such account is maintained or with which such entitlement or contract is carried and Loan Party maintaining such account, effective to
grant “control” (within the meaning of Articles 8 and 9 under the applicable UCC) over such account to Lender.
“Controlled
Group” means all members of a controlled group of entities and all trades or businesses (whether or not incorporated) under
common control which, together with any Person, are treated as a single employer under Section 414 of the Code.
“Default”
means an event that, with notice, the passage of time, or both, would be an Event of Default.
“Default
Condition” means that either or both a Default and an Event of Default exist.
“Default
Rate” means a rate per annum equal to the lesser of (a) the sum of (i) the highest applicable margins and fees in this Agreement
plus (ii) two percent (2.0%) and (b) the Maximum Rate.
“Dilution”
means, as of any date of determination, an amount, expressed as a percentage, equal to (a) the Dollar amount of non-cash reduction to
Borrowers’ Accounts, including bad debt write-downs, discounts, advertising allowances, rebates, credits, or other dilutive items
during the most recently ended period of twelve (12) fiscal months (or such other period as Lender shall elect in its Discretion), divided
by (b) Borrowers’ billings with respect to Accounts during such period.
“Dilution
Reserve” means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts
by one (1) percentage point for each percentage point by which Dilution is in excess of two and one half of one percent (2.5%), or such
lesser (or greater) amount as Lender, in its Discretion shall determine from time to time.
“Discretion”
means a determination made in good faith in the exercise of Lender’s business judgment from the perspective of a prudent, secured,
asset-based, non-bank lender in the lower midmarket sector. The burden of establishing that Lender did not act in its Discretion is on
the Loan Parties.
“Disqualified
Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable under a sinking fund obligation or otherwise,
or is redeemable in whole within one year after the Termination Date.
“Dodd-Frank
Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L. 111-203, H.R. 4173).
“Dollar”
and the sign “$” means lawful money of the United States of America.
“Earnings
Before Interest and Taxes” means, for any fiscal period, the sum of (1) net income (or loss) for that period (excluding extraordinary
gains and gains on asset sales (other than Inventory sold in the ordinary course of business)); plus (2) all interest expense for that
period; plus (3) all charges against (or minus credits to) income for federal, state, and local taxes for that period, in each case,
calculated on a consolidated basis for the Loan Parties.
“EBITDA”
means, for any fiscal period, the sum of (1) Earnings Before Interest and Taxes for that period; plus (2) depreciation expenses for that
period; plus (3) amortization expenses for that period, in each case, calculated on a consolidated basis for the Loan Parties.
“1847
Holdings” means 1847 Holdings LLC, a Delaware limited liability company.
“Eligible
Accounts” means, at any time, Accounts owned by a Borrower that Lender determines in its Discretion are Eligible Accounts.
Without limiting Lender’s Discretion, Eligible Accounts does not include any Account:
(a)
That is not subject to a first-priority perfected Lien in Lender’s favor.
(b)
That is subject to any Lien (other than a Permitted Lien that does not have priority over Lender’s Lien).
(c)
That is unpaid more than one hundred twenty (120) days after the original invoice date.
(d)
That is owing by an Account Debtor if more than 50% of the Accounts owing from that Account Debtor and its Affiliates are
ineligible.
(e)
That is owing by an Account Debtor other than Target to the extent the aggregate amount of Accounts owing from such Account Debtor
and its Affiliates to Borrowers exceeds twenty-five percent (25%) of the aggregate Eligible Accounts.
(f)
With respect to which any covenant, representation, or warranty in any Loan Document has been breached or is not true.
(g)
That: (1) does not arise from the sale of goods or performance of services in the ordinary course of business; (2) is not evidenced
by an invoice or other documentation satisfactory to Lender in its Discretion that has been sent to the Account Debtor; (3) is
contingent upon a Borrower’s completion of any further performance; (4) is a sale on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment (other than Accounts arising from the sale of goods by an Eligible Consignee),
cash-on-delivery, any repurchase or return basis, or any other similar basis; or (5) is for interest, storage, or other similar
charges.
(h)
For which the goods giving rise to the Account have not been shipped to the Account Debtor, or for which the services giving rise to
the Account have not been performed by a Borrower, or if the Account was invoiced more than once.
(i)
With respect to which any payment has been returned uncollected for any reason.
(j)
That is owed by an Account Debtor that: (1) has applied for, suffered, or consented to the appointment of any receiver, custodian,
trustee, or liquidator; (2) has had a material part of its property taken by any receiver, custodian, trustee, or liquidator; (3)
has filed, or had filed against it, any request or petition for liquidation, reorganization, arrangement, debt adjustment,
winding-up, or a voluntary or involuntary case under any state or federal bankruptcy laws; (4) has admitted in writing its inability
(or is generally unable) to pay its debts as they become due; (5) is insolvent; (6) has stopped operating its business; (7) has sold
a material portion of its assets; (8) requires a Borrower to support its obligations to such Account Debtor with a performance bond;
(9) is the government (or any government department, agency, public corporation, or instrumentality) of any country other than the
U.S. unless the Account is backed by a letter of credit acceptable to Lender in its Discretion that has been assigned to Lender;
(10) is the U.S. government (or any U.S. department, agency, public corporation, or instrumentality) unless the Federal Assignment
of Claims Act of 1940 has been complied with to Lender’s satisfaction; (11) is a natural person; or (12) is an Affiliate,
employee, officer, director, agent, or Equity Interest holder of any Loan Party.
(k)
That is owed by an Account Debtor that (1) does not maintain its chief executive office in the United States, (2) is not organized
under the law of the United States, or any state of the United States, or (3) is not a Canadian Account Debtor, unless, in each case
described above, the sale is on letter of credit, Guaranty, or acceptance terms, in each case satisfactory to Lender in its
Discretion, or such Account is insured by credit insurance satisfactory to the Lender in its Discretion with Lender named as loss
payee.
(l)
That is owed in any currency other than Dollars.
(m)
That is owed by an Account Debtor or any Affiliate of an Account Debtor that is a creditor or supplier of any Loan Party, or that is
otherwise subject to a potential offset, counterclaim, contra account, dispute, deduction, discount, recoupment, reserve, defense,
chargeback, credit, or allowance (but ineligibility is limited to the amount thereof).
(n)
That represents a progress billing or retainage, or relates to services for which a performance, surety or completion bond, or
similar assurance has been issued.
(o)
That is evidenced by a promissory note, chattel paper, or an instrument.
(p)
That is owed by an Account Debtor located in any jurisdiction that requires filing of a “Notice of Business Activities
Report” or other similar report to permit a Borrower to seek judicial enforcement in that jurisdiction of payment of that
Account (unless the applicable Borrower has filed that report or is qualified to do business in that jurisdiction).
(q)
With respect to which a Borrower has made any agreement with the Account Debtor for any reduction to the Account (other than
discounts and adjustments given in the ordinary course of business that are consistent with practices that existed on the Closing
Date and that have been disclosed to Lender in writing), any Account subject to a payment plan, or any Account that was partially
paid and a Borrower created a new receivable for the unpaid portion of the Account.
(r)
That does not comply in all material respects with the requirements of all applicable laws and regulations, whether Federal, state,
or local, including the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act, and Regulation Z of the Board of
Governors of the Federal Reserve System.
(s)
That is for goods that have been sold under a purchase order, contract, or other agreement or understanding (written or oral) that
indicates that any Person other than a Borrower has or has had an ownership interest in the goods, or that indicates any Person
(other than a Borrower) as payee or remittance party.
(t)
That is an Account arising in connection with the sale of tooling.
(u)
That, in each case, is otherwise deemed ineligible by Lender in its Discretion.
If
an Eligible Account becomes ineligible, the Loan Party Representative must notify Lender of that within one (1) Business Day. In determining
the amount of Eligible Accounts, Lender may reduce the face amount of Accounts by (1) all accrued and actual discounts, claims, credits,
pending credits, promotional program allowances, price adjustments, finance charges, or other allowances (including any amount that a
Loan Party may be obligated to rebate to an Account Debtor under any agreement or understanding (written or oral)) and (2) the aggregate
amount of all cash received with respect to Accounts but not yet applied by Borrowers to reduce Accounts.
“Eligible
Consignee” means a consignee that Lender, in its Discretion, deems to be an Eligible Consignee and, in making its determination
of whether a consignee is an Eligible Consignee, Lender may consider, among other things, whether the following requirements are satisfied:
(a)
such consignee shall have executed and delivered a Waiver or other agreement, pursuant to which such consignee, among other things,
either (i) grants to the consigning Borrower and its assigns a purchase money Lien and security interest in, or (ii) waives any
claim to any ownership interest or security interest or Lien with respect to, all Consigned Inventory that is consigned by such
Borrower to such consignee, together with the cash and non-cash proceeds thereof;
(b)
the applicable Borrower shall have filed of record, with such consignee’s authorization, a UCC financing statement, in form
acceptable to Lender, naming such consignee as debtor and such Borrower as secured party (and, if requested by Lender, naming Lender
as assignee, or assigned of record by such Borrower to Lender), covering the Consigned Inventory and the cash and non-cash proceeds
thereof in all appropriate filing locations for the perfection of a first priority security interest in such Consigned Inventory and
the cash and non-cash proceeds thereof; and, after the filing of such financing statements, if requested by Lender, such Borrower
shall have conducted searches of all filings made against such consignee in such filing offices and taken such other action as
Lender may request (including sending an authenticated notification to each holder of a conflicting security interest in such
Consigned Inventory pursuant to Section 9-324 of the UCC, which shall confirm that the security interest in the Consigned Inventory
in favor of such Borrower, together with the cash and non-cash proceeds thereof, is a first priority Lien);
(c)
Lender shall have received certificates of insurance upon the Consigned Inventory in accordance with the provisions of Section
4.11 of this Agreement;
(d)
Lender shall have received a copy of the Consignment Agreements, the filed UCC financing statement, Lien searches required by
Lender, and the insurance certificate and endorsement referred to in clauses (a) through (c) above, and such other instruments,
documents, certificates, opinions or assurances, and the applicable Borrower shall have taken such other action as Lender may have
requested in connection with such consignee; and
(e)
the creditworthiness of such consignee is acceptable to Lender, in its Discretion.
“Eligible
Inventory” means, at any time, Inventory owned by a Borrower that Lender in its Discretion determines is Eligible Inventory.
Without limiting the generality of the immediately preceding sentence, Inventory may not be Eligible Inventory unless it meets all the
following minimum requirements:
(a)
The Inventory is subject to a first-priority Lien in Lender’s favor and, except for Permitted Liens that do not have priority
over Lender’s Lien, is not subject to any other Lien.
(b)
No representation or warranty in any Loan Document with respect to the Inventory has been breached.
(c)
The Inventory (1) is finished goods (excluding, without limitation, work-in-process, tooling inventory, spare or replacement parts,
subassemblies, labels, packaging and shipping materials, supplies, samples, prototypes, displays or display items, bill-and-hold
goods, goods that are returned or marked for return, repossessed goods, defective or damaged goods, or goods that are not of a type
held for sale in the ordinary course of business); (2) is not a discontinued product or a component of a discontinued product; (3)
is not perishable; (4) is not, in Lender’s Discretion, slow moving, obsolete, unmerchantable, defective, unfit for sale, not
salable in the ordinary course of business at prices approximating at least the cost of the Inventory, or unacceptable due to age,
type, category, or quantity; (5) is reflected in Borrowers’ current Inventory report delivered to Lender in accordance with
this Agreement; (6) has not been received by a Borrower on a consignment or other similar basis; (7) is not Consigned Inventory
(unless (w) the premises at which such Consigned Inventory is located is owned by an Eligible Consignee (other than Target), (x)
such Consigned Inventory consists of first quality finished goods, and (y) the Consigned Inventory has been consigned to an Eligible
Consignee (other than Target)); and (8) is not subject to any Person’s claims (other than a Borrower).
(d)
The Inventory (1) is located in the United States; (2) is located at a location owned or leased by a Borrower and, with respect to
any leased location, the lessor has delivered to Lender a Waiver (or Lender in its Discretion has established a Reserve for that
location), is in the possession of an Eligible Consignee (other than Target), or is in any third-party warehouse or other
bailee’s possession and the warehouseman or other bailee has delivered to Lender a Waiver and such other documentation as
Lender may require in its Discretion (or Lender in its Discretion has established a Reserve for that location); (3) is not being
processed offsite at a third-party location or outside processor, or is in transit to or from a third party location or outside
processor (unless the processor has delivered to Lender a Waiver and such other documentation as Lender may require or Lender in its
Discretion has established a Reserve for that Inventory); (4) is not evidenced by a Document; (5) does not contain or bear any
Intellectual Property rights licensed to a Borrower unless Lender is satisfied that Lender may sell or otherwise dispose of the
Inventory without (w) any restriction on the sale or disposal thereof, (x) infringing the licensor’s rights, (y) violating any
contract with the licensor, or (z) incurring any liability to pay royalties; (6) complies with all standards, laws, and regulations
imposed by any Governmental Body; (7) is not subject to reclamation or other similar rights that have been asserted by the seller of
the Inventory; and (8) is not covered by a Document.
If
more than twenty-five percent (25%) of Eligible Inventory becomes ineligible, the Loan Party Representative must notify Lender of that
within one (1) Business Day.
“Eligible
Target Inventory” means, at any time that Target meets all requirements set forth in the definition of “Eligible Consignee”,
Inventory owned by a Borrower that:
(a)
Lender in its Discretion determines is Eligible Target Inventory,
(b)
meets all of the criteria set forth in the definition of “Eligible Inventory” (other than clauses (c)(7) and (d)(2) set
forth therein) in the Discretion of Lender,
(c)
has been placed with Target on a consignment or other similar basis (so long as (w) the premises at which such Consigned Inventory
is located is owned or leased by Target and (x) such Consigned Inventory consists of first quality finished goods), and
(d)
is in the possession of Target.
“Environmental
Complaint” is defined in Section 4.19(b).
“Environmental
Laws” means all federal, state, and local environmental, land use, zoning, health, chemical use, safety, and sanitation laws,
statutes, ordinances, and codes related to protecting the environment or governing the use, storage, treatment, generation, transportation,
processing, handling, production, or disposal of Hazardous Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders, and directives issued by Governmental Bodies with respect to these matters.
“Equity
Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial
interests in a trust, or other equity ownership interests in a Person (and any warrants, options, or other rights entitling the holder
to purchase or acquire any equity ownership interest), but excluding any debt securities convertible into any of the foregoing.
“ERISA”
means the Employee Retirement Income Security Act of 1974.
“ERISA
Affiliate” means an entity, whether or not incorporated, that is under common control with a Borrower within the meaning of
Section 4001 of ERISA or is part of a group that includes a Borrower and that is treated as a single employer under Section 414 of the
Code.
“Event
of Default” is defined in Article 10.
“Excluded
Hedging Obligations” means, with respect to any Guarantor, any Hedging Obligation if, and solely to the extent that, all or
a portion of a Guarantor’s Guaranty of, or the grant by that Guarantor of a Lien under the Loan Documents to secure, the Hedging
Obligations (or any guarantee thereof) is or becomes illegal or unlawful under the Commodity Exchange Act or any rule, regulation or
order of the Commodity Futures Trading Commission by virtue of that Guarantor’s failure for any reason to constitute an “eligible
contract participant” (as defined in the Commodity Exchange Act as of the date of that Guaranty or the grant of a Lien would otherwise
have become effective with respect to such related Hedging Obligation). If a Hedging Obligation arises under a master agreement governing
more than one swap, the exclusion applies only to the portion of the Hedging Obligation that is attributable to swaps for which the Guaranty
or security interest is or becomes illegal.
“Executive
Order No. 13224” means the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001.
“Expenses”
means all fees, costs, expenses, charges, and out-of-pocket disbursements incurred by Lender and its counsel (including the allocated
costs of in-house counsel) and court costs, in any way arising from or in connection with the Loan Documents, any Collateral (including
costs and expenses to preserve and protect Collateral), any Obligations, or the business relationship between Lender and any Loan Party,
including: (1) all costs, expenses, and fees incurred by Lender or its agents in connection with any field examination and any inventory
appraisal; (2) all Lender’s and its counsels’ fees and expenses (including recording fees and insurance policy fees) to prepare,
examine, conduct due diligence with respect to, approve, negotiate, execute, and deliver, and close the transactions contemplated by
the Loan Documents (including without limitation, any consent, amendment, waiver or other modification with respect thereto); (3) all
fees and out-of-pocket disbursements incurred by Lender (including attorneys’ fees) arising from or in connection with (x) any
action taken by Lender to monitor, advise, administer, enforce, or collect any Obligations, any Loan Documents, or any other present
or future documents or agreements between Lender and any one or more of the Loan Parties, (y) the business relationship between Lender
and any Loan Party, and (z) background checks regarding management, principals, or key investors, as Lender determines in its discretion;
(4) all out-of-pocket expenses and fees (including attorneys’ fees) incurred in relation to, in connection with, in defense of,
or in prosecution of any litigation (including any actions to lift the automatic stay or to otherwise in any way monitor or participate
in any Insolvency Proceeding involving a Loan Party) related to the Obligations, the Loan Documents, the Collateral, or any Loan Party
(including any litigation instituted by a Loan Party or any third party, any so called “lender liability” action, any claim
and delivery or other action for possession of, or foreclosure on, any of the Collateral, post judgment enforcement of any rights or
remedies (including enforcing judgments and prosecuting appeals whether discretionary or as of right and whether in connection with pre
judgment or post judgment matters)); (5) all costs, expenses, and fees incurred by Lender or its agents in connection with any appraisals
or environmental assessments (and the Loan Parties must fully cooperate with the appraisers and inspectors and make their property available
for appraisal and inspection in connection with as many appraisals or environmental assessments as Lender may request); and (6) all costs,
expenses, and fees incurred by Lender or its counsel in connection with consultants, expert witnesses, or other professionals retained
by Lender or its counsel to assist, advise, or give testimony with respect to any matter relating to the Loan Documents, the Collateral,
the Obligations, the Loan Parties, or the business relationship between Lender and any one or more of the Loan Parties.
“Extraordinary
Receipts” means any net cash proceeds received by any Loan Party or any of its Subsidiaries not in the ordinary course of business
(and not consisting of proceeds described in Section 2.5(e)(1) or (2)) consisting of (i) pension plan reversions, (ii)
proceeds of insurance claims, (iii) condemnation awards (and payments in lieu thereof), and (iv) indemnity payments.
“Federal
Funds Rate” means, on any day, a fluctuating interest rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such transactions received by the Lender from three (3) Federal funds brokers
of recognized standing selected by it.
“Fixed
Charge Coverage Ratio” means, for any fiscal period, the ratio of (x) EBITDA less (1) Capital Expenditures that were
not specifically funded by Indebtedness (but Capital Expenditures that were funded by a Revolving Loan are subtracted from EBITDA in
calculating the Fixed Charge Coverage Ratio); less (2) taxes paid in cash; less (3) Management Fees and Permitted Dividends
paid in cash, in each case, calculated on a consolidated basis for the Loan Parties to (y) Fixed Charges.
“Fixed
Charges” means, with respect to any fiscal period, the sum of (1) interest expense paid in cash (including that attributable
to the interest component or portion of Capital Lease Obligations) plus (2) scheduled and unscheduled principal payments on Indebtedness
(including with respect to Capital Lease Obligations and subordinated debt (including the Subordinated Indebtedness)), in each case,
of the Loan Parties on a consolidated basis.
“Floor”
means a rate of interest equal to two and one-half percent (2.5%).
“GAAP”
means the generally accepted accounting principles established in the United States of America by the Financial Accounting Standards
Board.
“Governmental
Body” means any nation or government, any state or other political subdivision of a nation or government, or any entity exercising
the legislative, judicial, regulatory, or administrative functions of or pertaining to a government.
“Guarantor”
means each Person that guarantees all or any Obligations.
“Guaranty”
of or by any Person means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing
any Indebtedness or other obligation of any other Person (the “Primary Obligor”) in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect: (1) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of)
any security for its payment; (2) to purchase or lease property, securities, or services to assure the owner of such Indebtedness or
other obligation of the payment of that Indebtedness; (3) to maintain working capital, equity capital, or any other financial statement
condition or liquidity of the Primary Obligor so as to enable the Primary Obligor to pay that Indebtedness or other obligation; or (4)
as an account party in respect of any letter of credit or letter of guaranty issued to support that Indebtedness or obligation (but “Guaranty”
does not include endorsements for collection or deposit in the ordinary course of business). For the avoidance of doubt, “Guaranty”
includes any Guaranty Agreement.
“Guaranty
Agreement” means each guaranty agreement, in form and substance satisfactory to Lender, made by a Guarantor in favor of Lender,
pursuant to which such Guarantor Guarantees the payment and performance of the Obligations, in each case, as the same may be amended,
restated, supplemented, or otherwise modified from time to time.
“Hazardous
Discharge” is defined in Section 4.19(b).
“Hazardous
Substance” means, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or
Toxic Substances, or related materials as defined in CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.),
RCRA, or other applicable Environmental Law.
“Hazardous
Wastes” means all waste materials regulated by CERCLA, RCRA, or applicable state law, and any other applicable federal and
state laws relating to hazardous waste disposal.
“Hedging
Contracts” means any foreign exchange contract, currency swap agreement, futures contract, commodities hedge agreement, interest
rate protection agreement, interest rate future agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, option agreement, or any other similar hedging agreement or arrangement.
“Hedging
Obligations” means a Person’s liabilities under Hedging Contracts.
“Increased
Tax Burden” means the additional federal, state, or local taxes assumed to be payable by a Pass-Through Owner of a Pass-Through
Loan Party due to its status as a Pass-Through Loan Party, as evidenced and substantiated by the tax returns filed by that Pass-Through
Owner (with these taxes calculated for all Pass-Through Owners at the highest federal and state marginal rates applicable to any Pass-Through
Owner and taking into account losses previously allocated to each Pass-Through Owner by that Pass-Through Loan Party to the extent those
losses have not previously been applied to reduce the Increased Tax Burden (but (1) capital losses and capital loss carry forwards are
taken into account only to the extent they are currently usable to offset income or gain allocated by that Pass-Through Loan Party to
a Pass-Through Owner and (2) to the extent that any losses allocated by that Pass-Through Loan Party result in a payback by a Pass-Through
Owner to that Pass-Through Loan Party of previous tax distributions in accordance with this Agreement then those losses are not taken
into account for purposes of determining the Increased Tax Burden)).
“Indebtedness”
of any Person means, as of any date: (1) that Person’s obligations for borrowed money or similar obligations; (2) that Person’s
Capital Lease Obligations; (3) that Person’s obligations that are secured by any Lien on any of its assets or property whether
or not the secured obligation has been assumed by that Person; (4) except for trade accounts payable arising in the ordinary course of
business that are not more than ninety (90) days past due, that Person’s obligations for the unpaid purchase price for goods, property,
or services; (5) that Person’s obligations to purchase goods, property, or services where payment is required regardless of whether
delivery of the goods or property or the performance of the services is ever made or tendered (generally referred to as “take or
pay contracts”); (6) that Person’s obligations for unfunded benefit liabilities under any Plan of that Person or any ERISA
Affiliate; (7) that Person’s obligations for Hedging Obligations, or other similar transactions (valued in an amount equal to the
highest termination payment, if any, that would be payable by that Person upon termination for any reason on the determination date);
(8) that Person’s obligations for outstanding reimbursement and similar obligations under letters of credit, bankers acceptances,
and similar instruments; (9) the aggregate outstanding amount of all Off-Balance Sheet Liabilities (based on the aggregate outstanding
amount as if the transaction were structured as a secured loan and an on balance sheet financing, whether or not shown as a liability
on a consolidated balance sheet of the Person); and (10) that Person’s obligations for or relating to Indebtedness of other Persons
similar to the Indebtedness described in the preceding clauses (based on the maximum amount that may be payable).
“Insolvency
Proceeding” means any proceeding under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law
(including assignments for the benefit of creditors, formal or informal moratoria, compositions, or proceedings seeking reorganization,
liquidation, arrangement, or other similar relief).
“Intellectual
Property” means patents, patent rights, patent applications, copyrights, works that are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of
the preceding, all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the preceding, all rights
to sue for past, present, and future infringement of any of the preceding, inventions, trade secrets, formulae, processes, compounds,
drawings, designs, blueprints, surveys, reports, manuals, and operating standards, goodwill, customer and other lists, trade secret rights,
copyright rights, rights in works of authorship, and contract rights relating to computer software programs.
“Lender”
is defined on page 1.
“Lender
Net Orderly Liquidation Value” means the orderly liquidation value (net of costs and expenses estimated to be incurred in connection
with such liquidation) of Borrowers’ Target Inventory, determined on a category-by-category basis, that is estimated to be recoverable
in an orderly liquidation as determined by Lender in its Discretion. Lender Net Orderly Liquidation Value is expressed as a percentage
of the respective values of types of Eligible Target Inventory, as determined by Lender in its Discretion.
“Lien”
means any mortgage, deed of trust, pledge, hypothecation, assignment, security interest, lien (whether statutory or otherwise), Charge,
claim, encumbrance, preference, priority, or other security agreement or preferential arrangement held or asserted with respect to any
asset of any kind or nature including any conditional sale or other title retention agreement, any lease having substantially the same
economic effect as any of the preceding, and the filing of, or agreement to give, any financing statement under the UCC or comparable
law of any jurisdiction.
“Limited
Guaranty” means that certain Limited Guaranty Agreement, dated as of the Closing Date, made by 1847 Holdings in favor of Lender,
as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Loan”
means each Revolving Loan; and “Loans” means all Revolving Loans.
“Loan
Account” is defined in Section 2.6.
“Loan
Documents” means this Agreement, the Perfection Certificate, each Borrowing Base Certificate, each Compliance Certificate,
the Collateral Assignments, each Pledge Agreement, any Guaranty Agreement, the Limited Guaranty, the Waivers, the Mortgages, if any,
the Subordination Agreements, any Hedging Contracts, and any and all other promissory notes, agreements, instruments and documents, including
guaranties, pledges, powers of attorney, consents, and all other writings before, now, or later executed by any Loan Party or delivered
to Lender with respect to the transactions contemplated by the Loan Documents (including the documents and agreements on the closing
checklist attached as Exhibit C).
“Loan
Party” means each Borrower, each Guarantor (other than 1847 Holdings), and each Person (other than 1847 Holdings) that grants
Lender a Lien on any Collateral to secure any Obligation.
“Loan
Party Representative” means ICU.
“Management
Agreement” means the Management Services Agreement by and between the Manager and ICU DE Holdings, dated February 8, 2023.
“Management
Fees” means the management fees required to be paid by ICU DE Holdings to the Manager in accordance with the Management Agreement.
“Manager”
means 1847 Partners LLC, a Delaware limited liability company.
“Material
Adverse Effect” means a material adverse effect in or on: (1) any Loan Party’s financial condition, operational results,
business, or prospects; (2) any Loan Party’s ability to pay or perform any Obligation in accordance with its terms; (3) the value
of the Collateral, Lender’s Liens on the Collateral, or the priority of Lender’s Lien on any Collateral; (4) the validity
or enforceability of any Loan Document or Lender’s rights or remedies under any Loan Document; or (5) the practical realization
of Lender’s rights and remedies under the Loan Documents.
“Material
Business Agreement” means any agreement, including without limitation, each of the Consignment Agreements, that if terminated,
rescinded, or breached could reasonably be expected to have a Material Adverse Effect on any Loan Party.
“Maturity
Date” means the earlier of (1) the Termination Date or (2) the date on which the Revolving Commitment is reduced to zero or
otherwise terminated.
“Maximum
Borrowing Amount” means, at any time, an amount equal to the lesser of (1) the Revolving Commitment minus all Reserves
and (2) the Borrowing Base.
“Maximum
Rate” means the maximum rate of interest permitted under applicable law from time to time in effect.
“Mortgages”
means each mortgage or other agreement that conveys or evidences a Lien on Owned Real Property that secures any Obligation.
“Multiemployer
Plan” means a “multiemployer plan” as defined in Sections 3(37) and 4001(a)(3) of ERISA.
“Net
Orderly Liquidation Value” means the orderly liquidation value (net of costs and expenses estimated to be incurred in connection
with such liquidation) of Borrowers’ Inventory, determined on a category by category basis, that is estimated to be recoverable
in an orderly liquidation as determined from time to time by reference to the most recent Inventory appraisal acceptable to Lender in
its Discretion. Net Orderly Liquidation Value is expressed as a percentage of the respective appraised values of types of Eligible Inventory.
“Net
Proceeds” shall mean, in connection with the sale or other disposition of any Collateral or other assets, the difference between
(i) the aggregate amount of cash or cash equivalents received by a Loan Party or Subsidiary in connection with such sale or disposition
and (ii) all reasonable and customary costs and expenses actually incurred in connection with such sale or disposition.
“Notice”
is defined under Section 15.7.
“Obligations”
means any and all loans, advances, debts, liabilities, obligations, covenants, and duties (absolute, contingent, matured, or unmatured)
owing by any one or more of the Loan Parties to Lender (or to any of its direct or indirect Subsidiaries or Affiliates) of any kind or
nature, present or future (including any interest accruing after maturity or the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization, or similar proceeding relating to any Loan Party, whether a claim for post filing or postpetition
interest is allowed in that proceeding), whether evidenced by any note, Guaranty, or other instrument, whether arising under any agreement,
instrument, or document (including the Loan Documents), whether for the payment of money, whether arising by reason of extending credit,
opening a letter of credit, loan, equipment lease, or guarantee, under any Hedging Contract (other than, with respect to any Guarantor,
the Excluded Hedging Obligations of that Guarantor, if any) or out of Lender’s non-receipt of or inability to collect funds or
otherwise not being made whole in connection with depository transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing
or hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such indebtedness or liabilities arise or
by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, including any and all of each
Loan Party’s Indebtedness and liabilities under the Loan Documents or under any other agreement between Lender and any Loan Party
and any amendments, extensions, renewals, or increases and all Expenses Lender incurs in the documentation, negotiation, modification,
enforcement, collection, or otherwise in connection with any of the preceding, and all obligations of any Loan Party to Lender to perform
acts or refrain from taking any action.
“OFAC”
means the U.S. Department of the Treasury’s Office of Foreign Assets Control.
“Off-Balance
Sheet Liability” of a Person means: (1) any obligation under a sale and leaseback transaction that is not a Capital Lease;
(2) any so-called “synthetic lease” or “tax ownership operating lease” transaction; (3) the amount of obligations
outstanding under any asset securitization or similar transaction on any determination date that would be characterized as principal
if that asset securitization or similar transaction were structured as a secured lending transaction rather than as a purchase; or (4)
any other transaction (excluding operating leases for purposes of this clause (4)) that is the functional equivalent of or takes the
place of borrowing but that is not a liability on that Person’s balance sheet. The amount of any Off-Balance Sheet Liability is
calculated based on the aggregate amount of obligations outstanding under the transaction on any determination date that would be characterized
as principal if the transaction were structured as a secured lending transaction, whether or not shown as a liability on that Person’s
balance sheet, all in a manner reasonably satisfactory to Lender.
“Original
Indebtedness” is defined under Section 7.8(f).
“Original
Loan Agreement” means that certain Loan and Security Agreement, dated as of February 9, 2023, by and among the Borrowers and
Lender, as assignee of GemCap Solutions, LLC, a Delaware limited liability company.
“Owned
Real Property” means all Real Property listed on Schedule 1.2(a).
“parent”
is defined in the defined term “Subsidiary.”
“Pass-Through
Loan Parties” means each Loan Party that is a limited liability company, a subchapter S corporation, or any other entity that
is disregarded for federal and state income tax purposes while it has elected to be treated as a pass through entity for federal and
state income tax purposes.
“Pass-Through
Owner” is defined under the defined term “Permitted Dividends.”
“Payment
Office” means the office that Lender specifies in writing to the Loan Party Representative.
“Perfection
Certificate” means the perfection certificate or perfection certificates provided by Borrowers to Lender.
“Permitted
Dividends” means dividends and distributions that meet each of the following conditions: (1) they are allowed under all applicable
law; (2) no Event of Default or Default exists or would occur after giving pro forma effect to the dividend or distribution; and (3)
they are made by a Pass-Through Loan Party to its members or shareholders in an aggregate amount equal to the Increased Tax Burden of
its shareholders and members (each, a “Pass-Through Owner”). Permitted Dividends may be made on a quarterly basis
to allow each Pass-Through Owner to pay estimated taxes during the course of the taxable year using reasonable estimates of the anticipated
aggregate amount of Permitted Dividends for that taxable year at the time of payment, provided, that, in the event that the Permitted
Dividends made with respect to a taxable year exceed the tax liability attributable to the final taxable income of the Borrower and its
Subsidiaries for such period, then the Permitted Dividends for the following calendar quarter shall be reduced by such excess; and provided,
further, that if the amount of such excess is greater than Seventy-Five Thousand and No/100 Dollars ($75,000) in the aggregate at any
time, Borrowers must cause the recipients of the excess installments to return the excess Seventy-Five Thousand and No/100 Dollars ($75,000)
to Borrowers within ten (10) days of it becoming known that excess installments were made.
“Permitted
Holders” means 1847 Holdings.
“Permitted
Liens” means (1) Liens in favor of Lender; (2) Liens for taxes, assessments, or other Charges that (x) are not delinquent or
(y) are being contested in good faith by appropriate proceedings that stay the enforcement of those Liens and with respect to which proper
reserves have been taken by the Loan Parties in accordance with GAAP (but only if these Liens have no effect on the priority of Lender’s
Liens or the value of the Collateral, and a stay of enforcement of the Lien is in effect); (3) deposits or pledges to secure obligations
under worker’s compensation, social security, or similar laws, or under unemployment insurance or general liability or product
liability insurance; (4) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases,
statutory obligations, performance bonds, surety and appeal bonds, and other similar obligations arising in the ordinary course of any
Loan Party’s business; (5) mechanics’, workers’, materialmen’s, warehousemen’s, common carriers’,
landlord’s or other similar Liens arising in the ordinary course of any Loan Party’s business with respect to obligations
that are not due or that are being contested in good faith by the applicable Loan Party; (6) Liens placed on equipment and real estate
assets acquired to secure a portion of the purchase price (but only if the Lien does not encumber any other of the Loan Parties’
property); (7) zoning restrictions, easements, encroachments, rights of way, restrictions, leases, licenses, restrictive covenants, and
other similar title exceptions or Liens affecting Real Property, none of which materially impairs the use or value of that Real Property;
and (8) Liens disclosed on Schedule 1.2(b) (but only if the principal amount secured is not increased and no additional assets
become subject to the Lien).
“Person”
means any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated organization,
association, limited liability company, institution, public benefit corporation, joint venture, entity, or Governmental Body.
“Plan”
means any employee benefit plan under Section 3(3) of ERISA, maintained for employees of any Loan Party or any member of the Controlled
Group or any such Plan to which any Loan Party or any member of the Controlled Group is required to contribute on behalf of any of its
employees.
“Pledge
Agreement” means one or more Pledge Agreements dated on or about the Closing Date with respect to the Pledged Equity Interests,
by and among one or more of the Loan Parties and Lender, with each Pledge Agreement being acknowledged by the Loan Party issuing such
Pledged Equity Interests, and as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Pledged
Equity Interests” is defined in Section 4.21.
“Prepayment
Fee” is defined in Section 13.1.
“Primary
Obligor” is defined under the defined term “Guaranty.”
“Prime
Rate” means the per annum rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the United
States (or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve
Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such
rate is no longer quoted therein, any similar rate quoted therein (as determined by the Lender) or any similar release by the Federal
Reserve Board (as determined by the Lender)). Each change in the Prime Rate shall be effective from and including the date such change
is publicly announced as being effective.
“Projections”
is defined in Section 5.6(a).
“RCRA”
means the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.).
“Real
Property” means the Loan Parties’ owned and leased real property.
“Refinance
Indebtedness” is defined under Section 7.8(f).
“Register”
is defined in Section 15.4(c).
“Related
Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers,
employees, agents and advisors of such Person and such Person’s Affiliates.
“Release”
is defined in Section 5.8(b).
“Relevant
Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a
committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New
York, or any successor thereto.
“Reserves”
means any reserves that Lender in its Discretion deems necessary to maintain with respect to the Collateral or any Loan Party (including
for: accrued and unpaid interest on the Obligations, liquidation Expenses, Hedging Obligations volatility reserves, the Dilution Reserve,
rent at locations leased by any Loan Party and for consignee’s, warehousemen’s, and bailee’s charges, Inventory shrinkage,
slow moving inventory, obsolete inventory, changes in Inventory composition or mix, customs charges and shipping charges related to any
Inventory in transit, customer deposits, amounts owed to tooling vendors, future warranty and maintenance claims, contingent liabilities,
indemnified liabilities, uninsured or underinsured losses, and for taxes, fees, assessments, and other governmental charges (including
ad valorem, personal property, sales, and other taxes that may have priority over Lender’s Liens)).
“Revolving
Commitment” means Lender’s commitment under this Agreement to make Revolving Loans available to Borrowers. The Revolving
Commitment is Fifteen Million and No/100 Dollars ($15,000,000) on the Closing Date.
“Revolving
Exposure” means, at any time, the sum of the outstanding principal amount of Revolving Loans.
“Revolving
Loan” means a Loan made under Section 2.1.
“Sanctioned
Country” means, at any time, a country, region or territory that is, or whose government is, the subject or target of any Sanctions.
“Sanctioned
Person” means, at any time, (i) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the
U.S. Department of State, the United Nations Security Council, the European Union or any EU member state, (ii) any Person located, organized
or resident in a Sanctioned Country or (iii) any Person Controlled by any such Person.
“Sanctions”
means economic or financial sanctions or trade embargoes administered or enforced from time to time by (i) the U.S. government, including
those administered by OFAC or the U.S. Department of State or (ii) the United Nations Security Council, the European Union or His Majesty’s
Treasury of the United Kingdom.
“SOFR”
with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as
the administrator of the benchmark, (or a successor administrator) on the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org,
or any successor source.
“SOFR
Loan” means each portion of a Loan that bears interest at a rate determined by reference to Term SOFR (other than pursuant
to clause (iii) of the definition of “Base Rate”).
“Specified
Amount” means (i) in the case of a termination of this Agreement pursuant to Section 13.1, the Revolving Commitment
in effect prior to giving effect thereto, and (ii) in the case of repayment of (or demand of the repayment of) the Obligations in full
for any reason, the Revolving Commitment in effect at such time (prior to giving effect to any termination of the Revolving Commitment
pursuant to Section 11.1 or otherwise).
“Specified
Period” means, with respect to each specific Borrowing Base Certificate delivered to Lender (the “Current Borrowing
Base Certificate”), the period from the last date included in a Borrowing Base Certificate previously delivered to Lender through
and including the date that is two (2) Business Days before the date of the Current Borrowing Base Certificate.
“Subordinated
Indebtedness” means all of the Indebtedness owed by any Borrower to any Person pursuant to terms and conditions (including
terms relating to interest, fees, repayment and subordination) satisfactory to Lender in its sole discretion, (a) the repayment of which
is subordinated to the repayment of the Obligations and (b) with respect to which the Liens securing such Indebtedness, if any, are subordinated
to Lender’s Liens, in each case, pursuant to the terms of a Subordination Agreement.
“Subordinated
Indebtedness Documents” means all instruments, agreements and documents executed in connection with any Subordinated Indebtedness.
“Subordination
Agreement” means a subordination agreement approved by, and in form and substance satisfactory to, Lender in its sole discretion,
as the same may be amended, restated, supplemented, or otherwise modified from time to time pursuant to the terms thereof.
“Subsidiary”
means, with respect to any Person (the “parent”) at any date, any Person the accounts of which would be consolidated
with those of the parent in the parent’s consolidated financial statements if the financial statements were prepared in accordance
with GAAP, as well as any other Person (1) of which Equity Interests representing more than 50% of the Equity Interest or more than 50%
of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of that date,
owned, Controlled, or held, or (2) that is, as of such date, otherwise Controlled, by the parent or one or more Subsidiaries of the parent.
“Target”
means Target Corporation, a Minnesota corporation, together with its Affiliates.
“Term
SOFR” means the forward-looking term rate based on SOFR as published by the Term SOFR Administrator for a one-month period
on the day that is two (2) Business Days prior to the first day of such one-month period, as such rate is published by the Term SOFR
Administrator; provided, that, if the Lender determines that any such lookback or other conventions for this rate selected is not administratively,
operationally, or technically feasible for the Lender, then the Lender may establish another convention in its sole discretion, including
a SOFR rate based on a different time period; provided, further, that if Term SOFR determined as provided above (including pursuant to
the first proviso above) shall be less than the Floor, then Term SOFR shall be deemed to be the Floor for the purposes of this Agreement
and the other Loan Documents.
“Term
SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference
Rate selected by Lender in its reasonable discretion).
“Term
SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Termination
Date” means September 11, 2026.
“Toxic
Substances” means any material that has been shown to have an adverse effect on human health or that is subject to regulation
under the Toxic Substances Control Act (TSCA), 15 U.S.C. Section 2601 et seq., applicable state law, or any other present and future
applicable Federal or state laws related to toxic substances, and includes asbestos, polychlorinated biphenyls (PCBs) and lead based
paints.
“UCC”
means the Uniform Commercial Code as in effect from time to time in New York (but if the law, perfection, or the effect of perfection
or non-perfection of any Lien on any Collateral is governed by the Uniform Commercial Code in effect in a different jurisdiction, “UCC”
means the Uniform Commercial Code as in effect in that other jurisdiction with respect to perfection or the effect of perfection or non-perfection).
“UFCA”
is defined in Section 14.4.
“UFTA”
is defined in Section 14.4.
“Undrawn
Availability” means, as of any determination date, an amount equal to (x) the Maximum Borrowing Amount, minus (y) the sum of
(1) the Revolving Exposure, plus (2) all amounts owed to each Borrower’s trade creditors that are outstanding sixty (60) or more
days beyond the due date, plus (3) fees and Expenses that any Loan Party is liable for but that have not been paid or charged to the
Loan Account, plus (4) all amounts owing for taxes that are past due.
“U.S.
Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities
Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for
purposes of trading in United States government securities.
“USA
Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56.
“Waivers”
means all landlord’s waivers, warehouseman’s waivers, creditor’s waivers, mortgagee waivers, consignee acknowledgments,
processing facility and bailee waivers, and customs broker waivers that are executed and delivered in connection with this Agreement.
1.3 UCC
Terms. Unless defined in the Loan Documents, all terms used in the Loan Documents and defined in the UCC have the meaning
given in the UCC. These UCC terms include: “Account, “Account Debtor,” “Certificated Security,”
“Chattel Paper,” “Commercial Tort Claim,” “Commodities Account, “Deposit
Account,” “Document,” “Equipment,” “Farm Products,” “Financial
Asset,” “Fixture,” “General Intangible,” “Goods,” “Instrument,”
“Inventory,” “Investment Property,” “Lease,” “Lessor,” “Letter-of-Credit
Rights,” “money,” “Payment Intangibles,” “Proceeds,” “Product,”
“Record,” “Secured Party,” “Securities Account,” “Security,”
“Security Entitlement,” “Security Interest,” and “Supporting Obligation.”
1.4 General
Construction. When computing time periods from a specified date to a later specified date, “from” means “from
and including” and “to” and “until” each mean “to but excluding.” In the Loan Documents: (1)
all references to laws and statutes include all regulations and Governmental Body interpretations; (2) all references to laws, statutes,
and regulations include any amendments, renewals, extensions, replacements, or successor laws, statutes, or regulations; (3) any definition
of or reference to any agreement, instrument, or other document means the agreement, instrument, or other document as from time to time
amended, amended and restated, supplemented, modified, substituted, or replaced; (4) any reference to any Person includes that Person’s
successors and assigns (and if the Person is a natural person, that Person’s heirs, executors, and personal representatives) and,
unless expressly stated otherwise, its Subsidiaries; (5) the words “herein,” “hereof,” and “hereunder,”
and words with similar meanings, refer to this Agreement in its entirety and not any particular provision or section; (6) “discretion”
when not capitalized means a determination made by Lender in its sole and absolute discretion; (7) any reference to payment, repayment,
or prepayment means payment in immediately available funds in Dollars; (8) any pronoun covers all genders; (9) wherever appropriate in
the context, terms used in the Loan Documents in the singular also include the plural and vice versa; (10) any reference to any Loan
Document or any other document, agreement, instrument, report, certificate, or other similar deliverable means that the Loan Document
or other deliverable is satisfactory in form and substance to Lender in its discretion; (11) the words “include,” “includes,”
and “including” are treated as being followed by “without limitation”; and (12) captions used in the Loan Documents
are for convenience only and are not taken into account in interpreting the document. All financial and Borrowing Base calculations must
be performed with Inventory valued on a first-in, first-out basis, at the lower of cost or market value. A Default or an Event of Default
exists at all times during the period beginning on the date that it occurs to the date on which it is waived in writing by Lender or,
in the case of a Default, is cured within any cure period expressly provided for in this Agreement. All covenants are given independent
effect so that if a particular action or condition is not permitted by any covenant, the fact that it would be permitted by an exception
to, or otherwise within the limitations of, another covenant does not avoid the occurrence of a default if such action is taken or condition
exists. In addition, all representations and warranties in the Loan Documents are given independent effect so that if a particular representation
or warranty is incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter
is correct or is not breached does not affect the incorrectness or a breach of a representation or warranty.
1.5 Time.
Unless otherwise specified, all time references in the Loan Documents are to Eastern standard time or Eastern daylight saving time, as
in effect in New York, New York on such day.
1.6 Divisions.
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable
event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset,
right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the
subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first
date of its existence by the holders of its equity interests at such time.
1.7 Rates.
Lender does not warrant or accept responsibility for, and shall not have any liability with respect to (a) the continuation, administration,
submission, calculation or selection of, or any other matter related to, the Benchmark, any component definition thereof or rates referenced
in the definition thereof or any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including
whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement)
will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Benchmark or any
other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes.
Lender may select information sources or services in its reasonable discretion to ascertain the Benchmark (or any component definition
thereof or rates referenced in the definition thereof) pursuant to the terms of this Agreement, and shall have no liability to Borrower
or any other Person for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs,
losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error by, or any calculation of
any such rate (or component thereof) provided by, any such information source or service.
ARTICLE
2
ADVANCES, PAYMENTS
2.1 Revolving
Loans. Subject to the terms and conditions in this Agreement, Lender will make Revolving Loans to Borrowers in aggregate
amounts outstanding at any time before the Maturity Date equal to the Maximum Borrowing Amount. This Agreement evidences the obligation
of the Borrower to repay the Revolving Loans, and, from and after the Closing Date, it is intended that this will be a “noteless”
credit agreement; provided, however, at the request of Lender at any time, Borrowers agree that they will prepare, execute
and deliver to Lender an amended and restated promissory note payable to the order of Lender and in a form approved by Lender in its
sole discretion.
2.2 Borrowing
Procedure.
(a)
The Loan Party Representative must submit a request in writing before 11:00 AM (Eastern) on the date of a proposed Loan, specifying
(1) the date of the proposed Loan (which must be a Business Day); and (2) the amount of the Loan, which must be in an amount that
will not cause the Revolving Exposure (after giving effect to the incurrence of such Loan) to exceed the Maximum Borrowing Amount;
provided, that Lender may in its Discretion, elect to accept as timely requests that are received later than 11:00 AM (Eastern) on
the applicable Business Day.
(b)
Concurrent with each request for a Loan pursuant to Section 2.2(a), Loan Party Representative shall deliver to Lender a fully
completed Borrowing Base Certificate certified by an Authorized Officer of Loan Party Representative as being true and correct.
Concurrent with the delivery of the Borrowing Base Certificate, Loan Party Representative shall provide a written report to Lender
of all returns, and all material disputes, claims and other deductions, together with sales and other reports and supporting
information relating to the Accounts, in each case, as of such date and as required by Lender. Lender shall have the right to review
and adjust any calculations made in a Borrowing Base Certificate (i) to reflect Lender’s estimate of declines in value of any
of the Collateral described therein and (ii) to the extent that such calculation is not in accordance with this Agreement or does
not accurately reflect the amount of the Reserves then in effect. In no event shall the Borrowing Base on any date be deemed to
exceed the amount of the Borrowing Base shown on the Borrowing Base Certificate last received by Lender prior to such date, as such
Borrowing Base Certificate may be adjusted from time to time by Lender as authorized herein. If Loan Party Representative fails to
deliver to Lender the Borrowing Base Certificate on the date when due, then notwithstanding any of the provisions contained in this
Agreement or in any other Loan Document to the contrary, Lender may suspend honoring any requests for Loans until a current
Borrowing Base Certificate is delivered to Lender.
2.3 Loan
Disbursement. All Loans will be disbursed from an office or location that Lender designates from time to time. Revolving
Loans may be borrowed, repaid, and reborrowed in accordance with the Loan Documents. If funded by Lender, Lender will make the proceeds
of each Revolving Loan requested by the Loan Party Representative available to it by crediting the Loan to Borrower’s operating
account designated by Borrower to the Lender, in writing. Revolving Loans advanced for the payment of any interest due and owing on the
Obligations or for the payment of any fees or other expenses described in this Agreement shall be treated as a request by the Loan Party
Representative and will be disbursed to Lender and applied to the obligation or liability related to the deemed request.
2.4 Maximum
Advances. Borrowers may not at any time allow the Revolving Exposure to exceed the Maximum Borrowing Amount (and if it
does for any reason Borrowers must immediately and without demand pay the excess to Lender).
2.5 Loan
Repayment.
(a)
The Loans are due and payable in full on the Termination Date (subject to earlier prepayment as provided in this
Agreement).
(b)
Checks, notes, drafts, or other similar items may not be immediately collectible. Accordingly, when calculating outstanding
availability, each payment item deposited in the Cash Concentration Account is treated as received by Lender (and Lender will
provisionally credit the Loan Account) on the Business Day immediately following the day on which Lender receives actual possession
of the payment item for deposit to the Cash Concentration Account. In consideration for this accommodation, Borrowers agree that in
calculating interest and other charges and fees, all payment items deposited in the Cash Concentration Account are treated as having
been credited to the Loan Account on the second Business Day immediately following the Business Day on which the payments are
treated as having been received by Lender under this Section. Each Control Agreement applicable to a Cash Concentration Account
shall provide for the daily sweep of funds in such Cash Concentration Account to a deposit account specified by Lender from time to
time for application to the Obligations in the order and manner Lender determines in its discretion (including Hedging Obligations
owed to Lender and its Affiliates, if any).
(c)
Lender does not have to credit the Loan Account for any payment item that is not satisfactory to Lender in its discretion. All
credits are provisional and are subject to verification and final settlement. Lender may charge the Loan Account for any payment
item that is returned unpaid or otherwise not collected. Any information and data reported to Borrowers under any service that is
received before final posting and confirmation is subject to correction. Lender has no liability for the content of any preliminary
service-related information.
(d)
The Loan Parties must pay all payments under the Loan Documents to Lender (without any deduction whatsoever, including any setoff,
recoupment, or counterclaim), at the Payment Office, not later than 11:59 a.m. (Eastern), on the due date, in Dollars. Lender may in
its discretion pay any Obligations due under the Loan Documents (or other amounts any Loan Party is required to pay under the Loan
Documents) by charging the Loan Account, by making Advances, or by debiting any account of any Loan Party which is subject to
Lender’s control.
(e) Mandatory
Prepayments.
(1) Asset
Sales. Upon any Loan Party’s receipt of the Net Proceeds of the sale or other disposition of any Collateral or other
assets outside the ordinary course of such Loan Party’s business (including Real Property and with respect to sales and other dispositions
allowed by Section 7.1), Borrowers must pay the proceeds to Lender as a mandatory prepayment of the Obligations, in each case,
except as Lender may have otherwise agreed in writing.
(2) Debt
and Equity Issuance. If any Loan Party issues or incurs Indebtedness (other than Indebtedness described in Section 7.8),
or if any Loan Party issues any Equity Interests, Borrowers must by no later than one (1) Business Day after the receipt by Borrowers
of (i) the net cash proceeds from any such issuance or incurrence of Indebtedness or (ii) the net cash proceeds of any issuance of Equity
Interests, as applicable, pay the proceeds to Lender as a mandatory prepayment of the Obligations, in each case, except as Lender may
have otherwise agreed in writing.
(3) Extraordinary
Receipts. When any Loan Party or any of its Subsidiaries receives any Extraordinary Receipts, Borrowers must, no later than
one (1) Business Day after the receipt by Borrowers of the Extraordinary Receipts, pay the proceeds to Lender as a mandatory prepayment
of the Obligations, except as otherwise agreed to by Lender in writing.
(4) Application.
Lender will apply prepayments to the Obligations in the order and manner it determines in its discretion (including cash collateralization
of all Obligations relating to any outstanding Hedging Obligations owed to Lender and its Affiliates, if any).
(5) No
Consent. Nothing in this Section is to be treated as consent or implied consent to any sale, transaction, or occurrence
that is not expressly allowed by the Loan Documents.
2.6 Statements.
Lender will maintain a loan account in accordance with its customary procedures in Borrowers’ name (the “Loan Account”)
in which it will record, among other things, the date and amount of each Advance and the date and amount of each payment (but Lender’s
failure to record this information does not affect Lender’s rights, create any liability, or release any Loan Party from any liability).
2.7 Additional
Payments. Any amounts expended by Lender due to any Loan Party not performing or complying with its obligations under any
Loan Document (including under Sections 4.2, 4.4, 4.6, 4.12, 4.13, 4.15, 6.7, and 15.6) may be charged to the Loan Account
as a Revolving Loan and added to the Obligations.
2.8 Use
of Proceeds. Borrowers may only use the Advances (1) to repay Indebtedness on the Closing Date in accordance with payoff
letters received by (and in form and substance satisfactory to) Lender; (2) to pay fees and Expenses relating to the transactions contemplated
by the Loan Documents; and (3) for general corporate purposes and working capital needs allowed under this Agreement.
ARTICLE
3
INTEREST AND FEES
3.1 Interest.
(a)
Interest on the Loans is payable in arrears on the first (1st) day of each month. Interest charges are computed on the
actual principal amount of Loans outstanding during the applicable period.
(b)
Subject to Section 3.9, all Loans bear interest at a rate per annum equal to the lesser of (i) Term SOFR plus the Applicable
Margin and (ii) the Maximum Rate. If any Loan is converted to a Base Rate Loan in accordance with Section 3.9 or as
otherwise set forth herein, such Base Rate Loan shall bear interest at a rate per annum equal to the lesser of (i) Base Rate plus
the Applicable Margin and (ii) the Maximum Rate
(c)
While an Event of Default exists, the Obligations bear interest at the Default Rate.
3.2 [Reserved].
3.3 Unused
Facility Fee. If during any month the average daily Revolving Exposure for each day of the month does not equal the Revolving
Commitment, then Borrowers must pay to Lender a fee at a rate per annum equal to the Applicable Unused Facility Fee Percentage multiplied
by the amount that the Revolving Commitment exceeds the average daily Revolving Exposure. These fees are payable in arrears on the first
(1st) day of each month and on the Maturity Date.
3.4 Collateral
Fees. Borrowers must pay Lender a collateral monitoring fee in the amount of Five Thousand and No/100 Dollars ($5,000)
on (a) the Closing Date and (b) the first (1st) day of each calendar month after the Closing Date.
3.5 Closing
Fee. Borrowers must pay Lender a closing fee in the amount of Two Hundred and Twenty-Five Thousand and No/100 ($225,000)
on the Closing Date.
3.6 Computing
Interest and Fees; Conforming Changes.
(a)
Interest and fees are computed on the basis of a year of 360 days for the actual number of days elapsed. If any payment is due on a
day that is not a Business Day, the due date is extended to the next Business Day (and interest on that payment is payable at the
applicable interest rate during that extension). Except as specifically provided in the next Section, all interest, fees, and other
amounts due to Lender under the Loan Documents are earned in full on the date when due and are not subject to rebate or proration
for any other reason.
(b)
In connection with the use or administration of Term SOFR, Lender may make Conforming Changes from time to time and, notwithstanding
anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become
effective without any further action or consent of any other party to this Agreement or any other Loan Document. Lender will
promptly notify Loan Party Representative of the effectiveness of any Conforming Changes in connection with the use or
administration of Term SOFR.
3.7 Maximum Interest;
Controlling Limitation.
(a)
Maximum Interest. In no event whatsoever may interest, fees, and other charges charged under the Loan Documents exceed the
Maximum Rate. If interest, fees, and other charges would exceed the Maximum Rate, then the actual rate of interest shall be the Maximum
Rate, and, if in the future, the interest rate would otherwise be less than the Maximum Rate, then the interest rate shall remain at the
Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the
same had not been limited by the Maximum Rate. In the event that, upon payment in full of the Obligations, the total amount of interest
paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this Section 3.7,
have been paid or accrued if the interest rate otherwise provided by this Agreement had at all times been in effect, then Borrowers shall,
to the fullest extent permitted by applicable law, pay to Lender an amount equal to (a) the lesser of (i) the amount of interest which
would have been paid or accrued if the Maximum Rate had, at all times, been in effect and (ii) the amount of interest which would have
been paid or accrued had the interest rate otherwise set forth in this Agreement, at all times, been in effect, less (b) the amount of
interest actually paid or accrued under this Agreement.
(b)
Controlling Limitation. Lender, each Borrower and each other Loan Party each hereby acknowledge, agree, and declare that
it is its intention to expressly comply with all applicable laws in respect of limitations on the amount or rate of interest that can
legally be contracted for, charged or received under or in connection with the Loan Documents. Notwithstanding anything to the contrary
contained in any Loan Document (even if any such provision expressly declares that it controls all other provisions of the Loan Documents),
in no contingency or event whatsoever shall the amount of interest (including the aggregate of all charges, fees, benefits, or other compensation
which constitutes interest under any applicable law) under the Loan Documents paid by Borrowers or any other Loan Party, received by Lender,
agreed to be paid by Borrowers or any other Loan Party, or requested or demanded to be paid by Lender exceed the Maximum Rate, and all
provisions of the Loan Documents in respect of the contracting for, charging, or receiving compensation for the use, forbearance, or detention
of money shall be limited as provided by this Section 3.7. In the event any such interest is paid to Lender by Borrowers or any
other Loan Party in an amount or at a rate which would exceed the Maximum Rate, then, notwithstanding any entry on Lender’s books
otherwise, such excess shall conclusively be deemed to be automatically applied to any unpaid amount of the Obligations other than interest,
in inverse order of maturity, or if the amount of such excess exceeds said unpaid amount, such excess shall be refunded to Borrowers or
such other applicable Loan Party. All interest paid, or agreed to be paid, by Borrowers or any other Loan Party, or taken, reserved, or
received by Lender shall be amortized, prorated, spread, and allocated in respect of the Obligations throughout the full term of this
Agreement. Notwithstanding any provision contained in any of the Loan Documents, or in any other related documents executed pursuant hereto,
the Lender shall not be entitled to charge, receive, take, reserve, collect, or apply as interest any amount which, together with all
other interest under the Loan Documents, would result in a rate of interest under the Loan Documents in excess of the Maximum Rate and,
in the event the Lender ever charges, receives, takes, reserves, collects, or applies any amount in respect of Borrowers or any other
Loan Party that otherwise would, together with all other interest under the Loan Documents, be in excess of the Maximum Rate, such amount
shall automatically be deemed to be applied in reduction of the unpaid principal balance of the Obligations other than interest and, if
the principal balance thereof is paid in full, any remaining excess shall forthwith be refunded to the Borrowers or such other applicable
Loan Party. Each Loan Party and the Lender shall, to the maximum extent permitted under any applicable law, (i) characterize any non-principal
payment as a standby fee, commitment fee, prepayment charge, delinquency charge, expense, or reimbursement for a third-party expense rather
than as interest and (ii) exclude prepayments, acceleration, and the effect thereof. Nothing in any Loan Document shall be construed or
so operate as to require or obligate Borrowers or any Loan Party to pay any interest, fees, costs, or charges greater than is permitted
by any applicable law. Subject to the foregoing, each Loan Party hereby agrees that the actual effective rate of interest from time to
time existing under the Loan Documents, including all amounts agreed to by the Loan Parties pursuant to and in accordance with the Loan
Documents which may be deemed to be interest under any applicable law, shall be deemed to be a rate which is agreed to and stipulated
by the Loan Parties and the Lender in accordance with applicable law.
3.8 Increased Costs.
(a)
Increased Costs Generally. If any Change in Law shall (i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or
participated in by, the Lender or (ii) impose on the Lender any other condition, cost or expense affecting this Agreement or Loans made
or maintained by the Lender, and the result of any of the foregoing shall be to increase the cost to the Lender of making or maintaining
any Loan or of maintaining its obligation to make any Loan, or to reduce the amount of any sum received or receivable by the Lender hereunder
(whether of principal, interest or any other amount) then, upon request of the Lender, the Borrowers will pay to the Lender such additional
amount or amounts as will compensate the Lender for such additional costs incurred or reduction suffered.
(b)
Capital Requirements. If the Lender determines that any Change in Law affecting the Lender or its lending office or its
holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the
Lender’s capital or on the capital of the Lender’s holding company, if any, as a consequence of this Agreement, the commitments
of the Lender or the Loans made or maintained by the Lender, to a level below that which the Lender or its holding company could have
achieved but for such Change in Law (taking into consideration the Lender’s policies and the policies of the Lender’s holding
company with respect to capital adequacy and liquidity), then from time to time the Borrowers will pay to the Lender such additional amount
or amounts as will compensate the Lender or the Lender’s holding company for any such reduction suffered.
(c)
Certificates for Reimbursement; Delay in Requests. A certificate of the Lender setting forth the amount or amounts necessary
to compensate the Lender or its holding company as specified in the foregoing paragraph (a) or (b) and delivered to the Loan Party Representative
shall be conclusive absent manifest error. The Borrowers shall pay the Lender the amount shown as due on any such certificate within ten
(10) Business Days after receipt thereof. Failure or delay on the part of the Lender to demand compensation pursuant to this Section
3.8 shall not constitute a waiver of the Lender’s right to demand such compensation; provided that the Borrowers shall not be
required to compensate the Lender pursuant to this Section for any increased costs incurred or reductions suffered more than nine (9)
months prior to the date that the Lender notifies the Loan Party Representative of the Change in Law giving rise to such increased costs
or reductions and of the Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of
retroactive effect thereof).
3.9 Alternate Rates.
(a)
Temporary Unavailability of Term SOFR. Subject to Section 3.9(b) below, if:
(1)
the Lender shall determine (which determination shall be conclusive absent manifest error) that Term SOFR cannot be determined
pursuant to the definition thereof or that adequate and reasonable means do not exist for ascertaining Term SOFR; or
(2)
the Lender shall determine that Term SOFR will not adequately and fairly reflect the cost of making or maintaining its Loans;
then Lender shall give notice thereof to Borrowers
as promptly as practicable thereafter and, until Lender notifies Borrowers that the circumstances giving rise to such notice no longer
exist, all Obligations shall commence bearing interest at a rate per annum equal to the lesser of (i) Base Rate plus the Applicable Margin
and (ii) the Maximum Rate.
(b)
Effect of Benchmark Transition Event.
(1)
Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence
of a Benchmark Transition Event, the Lender and Borrowers may amend this Agreement to replace the then-current Benchmark with a Benchmark
Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business
Day after the Lender has posted such proposed amendment to Borrowers. No replacement of a Benchmark with a Benchmark Replacement pursuant
to this Section 3.9(b) will occur prior to the applicable Benchmark Transition Start Date.
(2)
Benchmark Replacement Conforming Changes. In connection with the implementation of Term SOFR or a Benchmark Replacement,
the Lender will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the
contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective
without any further action or consent of any other party to this Agreement.
(3)
Notices; Standards for Decisions and Determinations. The Lender will promptly notify Loan Party Representative of (1) any
occurrence of a Benchmark Transition Event, and its related Benchmark Replacement Date and Benchmark Transition Start Date, (2) the implementation
of any Benchmark Replacement, (3) the effectiveness of any Benchmark Replacement Conforming Changes and (4) the commencement or conclusion
of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Lender pursuant to this Section
3.9(b) including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event,
circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error
and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required
pursuant to this Section 3.9(b).
(4)
Benchmark Unavailability Period. Upon Loan Party Representative’s receipt of notice of the commencement of a Benchmark
Unavailability Period, all Loans shall be made as, or converted to, Base Rate Loans. During any Benchmark Unavailability Period, the component
of Base Rate based upon Term SOFR will not be used in any determination of the Base Rate.
(5)
Illegality of SOFR Loans. In the event that on any date the Lender shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto) that the making, maintaining or continuation of its SOFR Loans has become unlawful
as a result of compliance by the Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would
conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to
comply therewith would not be unlawful), including any rule or regulation adopted by the NAIC or its Securities Valuation Office, the
Lender shall give notice (which may be by electronic mail) to Loan Party Representative of such determination. After such notice (1) the
obligation of the Lender to make Loans as SOFR Loans shall be suspended until such notice shall be withdrawn by the Lender, (2) to the
extent such determination by the Lender relates to a Loan then being requested by Borrowers pursuant to a funding request, the Lender
shall make such Loan as a Base Rate Loan, and (3) the Lender’s obligation to maintain its outstanding SOFR Loans (the “Affected
Loans”) shall be terminated and the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination.
3.10 [Reserved].
3.11 Compensation for
Losses. Upon demand of the Lender from time to time, the Borrowers shall promptly compensate the Lender for and hold the Lender
harmless from any loss, cost or expense incurred by it as a result of (a) any payment or prepayment of any Loan accruing interest at
Term SOFR on a day other than the last day of an interest period (whether voluntary, mandatory, automatic, by reason of acceleration,
or otherwise) or (b) any failure by the Borrowers (for a reason other than the failure of the Lender to make a Loan) to prepay or borrow
any Loan accruing interest at Term SOFR on the date or in the amount notified by the Borrowers, including any loss or expense arising
from the liquidation or reemployment of funds or from any fees payable.
3.12 Survival.
All of Borrowers’ obligations under Section 3.8 and Section 3.11 shall survive termination of the Revolving Commitment
and repayment of the Obligations.
ARTICLE
4
COLLATERAL: GENERAL TERMS
4.1 Security Interest.
Pursuant to the Original Loan Agreement, each Borrower granted to Lender a continuing security interest in and Lien upon all of
its Collateral, whether now in existence or hereafter created or acquired and wheresoever situated, as well as in the cash and non-cash
proceeds thereof, including insurance proceeds. All such security interests and Liens are hereby renewed and continued and shall
remain in full force and effect as security for the Obligations. All of the Obligations (including those in existence on the date
hereof under the Original Loan Agreement) shall continue to be secured, without interruption, by all such security interests and Liens
granted in accordance with the Original Loan Agreement, as amended and restated hereby. To secure the prompt payment and performance
of the Obligations (solely to the extent it has not previously done so, but with express intent not to invalidate or impair any such
previous grant or to create a novation or accord and satisfaction), each Loan Party grants to Lender (and each of its Affiliates) a continuing
Lien on, security interest in, pledge of, and assignment of all of its Collateral. Each Loan Party must promptly give Lender written
notice of all commercial tort claims (including the case name, court it is pending in, and a brief description of each claim) and upon
Lender receiving the notice that Loan Party is treated as having granted to Lender a security interest and Lien in and to those commercial
tort claims and all proceeds thereof. In addition, to secure the payment and performance of the Obligations, each Loan Party must also
assign, pledge, and grant to Lender a first priority Mortgage on its Owned Real Property.
4.2 Perfection.
Each Loan Party must immediately take all action that Lender requests to maintain the validity, perfection, enforceability, and priority
of Lender’s Lien on the Collateral or to enable Lender to protect, exercise, or enforce its rights under the Loan Documents and
in the Collateral, including: (1) immediately discharging all Liens other than Permitted Liens; (2) obtaining any Waivers that Lender
may request in its discretion, together, with respect to the Consigned Inventory, the applicable financing statements and other deliverables
required of each Eligible Consignee; (3) delivering to Lender, endorsed (or accompanied by any assignments that Lender may specify) and
stamping or marking, as Lender may specify, all Chattel Paper, Instruments, letters of credit (and advices), and Documents that are part
of the Collateral; (4) entering into lockbox and other custodial arrangements satisfactory to Lender; and (5) executing and delivering
Control Agreements, pledges, Mortgages, notices, and assignments as requested by Lender in its discretion. Each Loan Party authorizes
Lender to file against it one or more financing, continuation, or amendment statements. All Expenses and taxes that Lender incurs in
doing any of the preceding will be charged to the Loan Account as a Revolving Loan and added to the Obligations (or, at Lender’s
option, must be paid by Borrowers to Lender immediately on demand).
4.3 Dispositions.
Each Loan Party must safeguard and protect all Collateral for Lender’s account and may not, except as expressly permitted by this
Agreement, dispose of any Collateral (whether by sale, lease, or otherwise) other than the sale of Inventory in the ordinary course of
business.
4.4 Preserving Collateral.
Each Loan Party must cooperate fully with all of Lender’s efforts to preserve and protect the Collateral and must take any actions
to preserve and protect the Collateral that Lender may request. When a Default Condition exists, Lender may from time to time in its
discretion (and without any Loan Party’s consent), make Revolving Loans for Borrowers’ account that Lender in its discretion
believes are necessary or desirable: (1) to preserve or protect any Collateral; (2) to enhance the likelihood of (or maximize the amount
of) the repayment of the Obligations; or (3) to pay any amount chargeable to any Loan Party under the Loan Documents or applicable law.
All of Lender’s Expenses referred to in this Section (including all Expenses related to bonding a custodian), will be charged to
the Loan Account as a Revolving Loan and added to the Obligations.
4.5 Ownership.
At all times with respect to all Collateral: (1) a Loan Party must be its sole owner and fully authorized and able to sell, transfer,
pledge, and grant Lender a first priority Lien in it; (2) except for Permitted Liens, the Collateral must be free and clear of all Liens;
(3) each document and agreement executed by each Loan Party or delivered to Lender in connection with the Collateral must be true and
correct in all respects; (4) each Loan Party’s signatures and endorsements must be genuine and properly authorized; and (5) each
Loan Party’s Inventory, including the Consigned Inventory may only be located at the locations listed on Schedule 4.5 (as
may be updated from time to time by Loan Party Representative upon five (5) Business Days’ prior written notice to Lender with
new locations in the United States that are acceptable to Lender in its Discretion) and may not be removed from those locations (except
(a) selling Inventory in the ordinary course of business when an Event of Default does not exist, and (b) Inventory temporarily in transit
from one location identified on Schedule 4.5 to another location identified on Schedule 4.5).
4.6 Defending Lender’s
Interests. Until (x) the Obligations are irrevocably paid and performed in full and (y) the Loan Documents are terminated in
writing, Lender’s interests in the Collateral continue in full force and effect. Each Loan Party must defend Lender’s interests
in the Collateral against all Persons. When an Event of Default exists, in addition to all other remedies available pursuant to this
Agreement, at law, or in equity: (1) Lender may take possession of the Collateral (and the indicia of ownership of any Collateral) in
whatever physical form contained (including labels, stationery, documents, instruments, and advertising materials); (2) at Lender’s
request the Loan Parties must assemble the Collateral in the best manner possible and make it available to Lender at a place designated
by Lender; (3) each Loan Party must, and Lender may, at its option, instruct all suppliers, carriers, forwarders, warehousers, consignees,
or others receiving or holding cash, checks, Inventory, documents, or instruments in which Lender holds a Lien to deliver them to Lender
and subject them to Lender’s order (and if they come into any Loan Party’s possession it must hold them in trust for Lender
and immediately deliver them to Lender in their original form (together with any necessary endorsement)); (4) each Loan Party grants
to Lender and its assignees an irrevocable, assignable, non-exclusive license (exercisable without royalty payments or other compensation)
to use, assign, license, or sublicense any present or future Intellectual Property (including in the license or sublicense access to
all media in which any of the licensed items may be recorded or stored and to all related computer programs); (5) each Loan Party grants
to Lender and its assignees an irrevocable, assignable, non-exclusive license and lease or sublease to use, assign, license, or sublicense
any leased Real Property or Owned Real Property (exercisable without paying any royalty, rent, or other compensation); (6) each Loan
Party authorizes Lender to pay, purchase, contest, or compromise any Lien that in Lender’s discretion appears to conflict with
Lender’s Liens (and to pay all related Expenses and to charge the Loan Account); (7) each Loan Party authorizes Lender to hire
security guards or implement other security measures; (8) each Loan Party authorizes Lender to employ and maintain at any of each Loan
Party’s premises a custodian (and each Loan Party grants the custodian full authority to do all acts necessary to protect and preserve
the Collateral); (9) each Loan Party authorizes Lender to lease warehouse facilities to which all or part of the Collateral may be moved;
(10) each Loan Party authorizes Lender to use any Loan Party’s owned or leased lifts, hoists, trucks, and other facilities or equipment
to handle or remove Collateral; (11) each Loan Party authorizes Lender to enter the premises where Collateral is located, to take and
maintain possession of the Collateral; and (12) Lender may at any time take any other steps that Lender in its discretion believes are
necessary or desirable to protect and preserve the Collateral. All of Lender’s Expenses incurred in accordance with the preceding
(including all Expenses related to bonding a custodian), will be charged to the Loan Account as a Revolving Loan and added to the Obligations.
4.7 Books and Records.
Each Loan Party must: (1) keep complete and accurate books and records in which entries are made of all of its dealings and transactions;
(2) establish accruals on its books for all Charges; and (3) on a current basis post on its books earnings, allowances against doubtful
Accounts, advances and investments, and all other proper accruals (including for premiums due on required payments, and accruals for
depreciation, obsolescence, or amortization). All requirements under this Section must be made in all material respects in accordance
with GAAP consistently applied in the Loan Parties’ independent public accountants’ opinion.
4.8 Financial Disclosure.
Each Loan Party irrevocably authorizes and directs its accountants and auditors at any time and promptly after Lender’s request
to deliver to Lender copies of each Loan Party’s financial statements, trial balances, and other accounting records of any sort
in the accountant’s or auditor’s possession, and to disclose to Lender any information the accountants may have concerning
each Loan Party’s financial status and business operations. Each Loan Party irrevocably authorizes all federal, state, and municipal
authorities to furnish to Lender copies of reports or examinations relating to each Loan Party.
4.9 Laws; Insurance
Requirements.
(a)
Each Loan Party must comply with all laws, acts, rules, regulations, and orders of any Governmental Body (except where the failure
to so comply could not reasonably be expected to have a Material Adverse Effect).
(b)
The Loan Parties must at all times cause all Collateral to be maintained strictly in accordance with the requirements of all insurance
carriers that insure any of the Collateral so that all insurance remains in full force and effect.
4.10 Inspections and
Appraisals. Lender may at any time examine, audit, check, inspect, and make abstracts and copies of each Loan Party’s books,
records, audits, correspondence, and all other materials related to the Collateral. Lender and its agents may at any time enter upon
any of each Loan Party’s premises and any premises where any Collateral is located to examine, audit, inspect, or appraise the
Collateral, to conduct field examinations, and to do the things provided in the preceding sentence. Lender may conduct examinations,
audits, inspections, and appraisals at any time Lender elects, in each case, except as provided in the next sentence at the Loan Parties’
expense. Although Lender may conduct as many field examinations and appraisals as Lender desires, if no Default Condition has existed
within sixty (60) days of the date on which an appraisal or an examination was ordered, then the Loan Parties are only required to pay
for (a) two (2) field examinations in any 12-month period and (b) two (2) Inventory appraisals in any 12-month period; provided that,
if Lender conducts a field examination or an appraisal that the Loan Parties would not be obligated to pay for and that examination or
appraisal reveals that a Default Condition exists or that any material Reserve is appropriate, then the cost of that field examination
or appraisal does not count against the limitations set forth herein. Appraisals and field examinations that occurred before the Closing
Date also do not count against the limits in the preceding sentence.
4.11 Insurance.
Each Loan Party bears the full risk of any loss with respect to the Collateral. At each Loan Party’s own cost and expense, in amounts
and with carriers acceptable to Lender, each Loan Party must: (1) keep all properties and assets in which any Loan Party has an interest
insured against fire, flood, sprinkler leakage, those other hazards covered by extended coverage insurance, and other hazards (and for
such amounts) as Lender may require in its discretion and maintain business interruption insurance as is customary for companies engaged
in businesses similar to each Loan Party’s; (2) maintain a bond in amounts that are customary for companies engaged in businesses
similar to the Loan Parties insuring against larceny, embezzlement, and other criminal misappropriations; (3) maintain general and product
liability insurance against claims for personal injury, death, or property damage suffered by others; (4) maintain worker’s compensation
or similar insurance as required by law; and (5) furnish Lender with (a) a status report with respect to the renewal of all insurance
no later than thirty (30) days before expiration, (b) evidence that all insurance has been renewed at least ten (10) days before expiration,
and (c) lender-loss-payable, additional-insured, and mortgagee endorsements, naming Lender as an additional-insured, lender-loss-payee,
and mortgagee, and providing (A) that all insurance proceeds for loss or damage to Collateral must be payable to Lender, (B) no insurance
is affected by any act or neglect of the insured or property owner, and (C) that each policy and loss payable clause may not be cancelled,
amended, or terminated without at least thirty (30) days’ prior written notice to Lender. The Loan Parties must provide copies
of all insurance policies (including the appropriate lender-loss-payee and additional-insured endorsements) within five (5) days after
Lender’s request. Each insurance carrier is directed by Lender and the Loan Parties to make all payments for all losses to Lender
solely in Lender’s name (and not to a Loan Party or to a Loan Party and Lender jointly). If nonetheless any insurance losses are
paid by check, draft, or other instrument payable to any Loan Party or to any Loan Party and Lender jointly, Lender may endorse each
Loan Party’s name and do such other things as Lender may deem advisable to reduce the same to cash. Lender has the sole authority
to adjust and compromise claims under insurance coverage with respect to Collateral and business interruption insurance, and, for the
avoidance of doubt, should any Loan Party receive any payment for losses payable solely to such Loan Party or any of the other Loan Parties,
the Loan Party Representative shall immediately notify Lender and shall deposit such amounts in the Cash Concentration Account in accordance
with the provisions of Section 4.15. All insurance loss recoveries with respect to Collateral received by Lender may be applied
to the Obligations in the order and manner determined by Lender in its discretion (and Lender will pay any surplus to the Loan Parties
or as otherwise required by law). The Loan Parties must pay any deficiency to Lender on demand.
4.12 Paying Insurance.
If any Loan Party does not obtain, maintain, or renew any insurance required by the Loan Documents, Lender may obtain and pay for it
(but all premiums will be charged to the Loan Account as a Revolving Loan and added to the Obligations).
4.13 Paying Taxes.
Each Loan Party must pay, when due, all taxes, assessments, and other Charges levied or assessed against it or any of the Collateral,
including real and personal property taxes, assessments, and Charges, and all franchise, income, employment, social security benefits,
withholding, and sales taxes (except those being disputed in good faith, by expeditious and diligent protest, administrative or judicial
appeal, or similar proceeding (but only if reserves are posted with Lender to protect Lender’s Lien on the Collateral)). If any
tax is or may be imposed on Lender or any Collateral due to any transaction between Lender and any Loan Party, or other Charges are not
paid when due, or if any claim is made which, in Lender’s discretion, may possibly create a Lien on the Collateral, Lender may
without notice to the Loan Parties pay the taxes, assessments, or other Charges and each Loan Party indemnifies and holds Lender harmless
for that payment. All payments by Lender under this Section will be charged to the Loan Account as a Revolving Loan and added to the
Obligations.
4.14 Paying Leasehold
Obligations. Each Loan Party must pay when due its obligations under all leases and must otherwise comply with all other terms
of its leases and keep them in full force and effect and, at Lender’s request, provide evidence of having done so to Lender.
4.15 Accounts.
(a)
Accounts. Each Account: (1) is a valid Account for a bona fide obligation incurred by the named Account Debtor; (2) is for
the fixed amount stated in the invoice for a Borrower’s absolute sale or lease and delivery of goods on stated terms, or for work,
labor, or services rendered by a Borrower on the date each Account is created; and (3) is due and owing without dispute, setoff, counterclaim,
reduction, or defense.
(b)
Solvency. Each Account Debtor is and will be solvent and able to pay all of its Accounts in full when due.
(c)
Locations. Each Loan Party’s state of organization and chief executive office are located at the addresses listed
on Schedule 4.15(c). Until the Loan Party Representative gives Lender thirty (30) days’ prior written notice, all records
must be kept at the executive office listed on Schedule 4.15(c).
(d)
Notification. Lender may at any time notify Account Debtors of Lender’s Lien on Borrowers’ Accounts. When an
Event of Default exists, Lender may notify Account Debtors to make payments directly to Lender (and Lender then has the sole right to
collect Accounts).
(e)
Lender’s Power to Act on the Loan Parties’ Behalf. Lender may at any time receive, endorse, assign, and deliver
in Lender’s or any Loan Party’s name any checks, drafts, and other instruments, and each Loan Party waives notice of presentment,
protest, and non-payment of any instrument so endorsed. Each Loan Party appoints Lender and any of Lender’s designees as its attorney
with power: (A) at any time to: (1) endorse each Loan Party’s name on any notes, acceptances, checks, drafts, money orders, or other
evidences of payment or Collateral; (2) sign each Loan Party’s name on any invoice or bill of lading relating to any Accounts, drafts
against Account Debtors, and assignments and verifications of Accounts; (3) send Account verifications to Account Debtors; and (4) to
do all other acts and things necessary to carry out or implement the Loan Documents and the Loan Party’s obligations under law;
and (B) at any time when an Event of Default exists to: (1) demand payment of the Accounts; (2) enforce payment of the Accounts by legal
proceedings or otherwise; (3) exercise all of the Loan Parties’ rights and remedies with respect to collecting Accounts and any
other Collateral; (4) settle, adjust, compromise, extend, or renew Accounts; (5) settle, adjust, or compromise any legal proceedings brought
to collect Accounts; (6) prepare, file, and sign each Loan Party’s name on a proof of claim in bankruptcy (or other similar document)
against any Account Debtor; and (7) prepare, file, and sign each Loan Party’s name on any notice of Lien, assignment, lien satisfaction,
or other similar document. Each Loan Party ratifies and confirms all actions of the attorney or designee (and the attorney or designee
is not liable for any acts of omission or commission or for any error of judgment or mistake of fact or of law). This power of attorney
is coupled with an interest and is irrevocable while any of the Obligations remain unsatisfied or unperformed. When an Event of Default
or a Default exists, Lender may change the address for delivery of mail to any Loan Party to any address that Lender may designate and
Lender may receive, open, and dispose of all mail addressed to any Loan Party.
(f) No Liability. Lender does not have any liability for any error or omission or delay of any kind occurring in the settlement,
collection, or payment of any of the Accounts or any instrument received in payment of Accounts, or for any damage resulting therefrom.
Lender may accept the return of the goods represented by any of the Accounts (without notice to or consent by any Loan Party), all without
discharging or in any way affecting any Loan Party’s liability.
(g)
Adjustments. Without Lender’s prior written consent, no Loan Party may (1) compromise or adjust any Account (or extend
the time for its payment) or (2) accept any returns of merchandise or grant any discounts, allowances, or credits (except those done in
the ordinary course of Borrowers’ business and consistent with past practices that existed on the Closing Date and that have been
disclosed to Lender in writing).
4.16 Cash Management.
(a)
Borrowers must maintain with a financial institution acceptable to Lender any deposit accounts required by Lender, including Cash
Concentration Accounts. Each deposit account must be subject to a lockbox agreement, a Control Agreement, or other control that is satisfactory
to Lender in its sole discretion. Borrowers must instruct (and these instructions must be satisfactory to Lender in its discretion) all
Account Debtors and other Persons obligated to any Loan Party to make, and Borrowers must ensure that all Account Debtors do make, all
payments to a Cash Concentration Account.
(b)
All funds in a Cash Concentration Account are Lender’s exclusive property and are subject to Lender’s sole control.
Borrowers do not have control over or any interest in a Cash Concentration Account. All collections with respect to Collateral received
by the Loan Parties: (1) are received in trust for Lender and as Lender’s fiduciary; (2) may not be commingled with any of the Loan
Parties’ other funds or property and are held in trust for Lender and as Lender’s fiduciary; and (3) must on the day received
be deposited into a Cash Concentration Account.
(c)
Each Loan Party shall enter into, and cause each depository, securities intermediary or commodities intermediary to enter into,
Control Agreements providing for “full” cash dominion with respect to each deposit, securities, commodity or similar account
maintained by such Person (other than (i) any payroll account, (ii) withholding Tax and fiduciary accounts, and (iii) zero balance accounts).
Loan Parties shall not maintain cash on deposit in disbursement accounts in excess of the sum of (A) outstanding checks and wire transfers
payable from such accounts plus (B) amounts necessary to meet minimum balance requirements.
(d)
To the extent any Person remits payments to an incorrect deposit account or otherwise makes payments not in accordance with the
provisions of this Section 4.16 or an applicable Loan Party’s payment direction, such Loan Party shall contact such Person
and use its commercially reasonable efforts to redirect payment from such Person in accordance with the terms hereof and if such redirection
is not possible, such Loan Party shall deposit or cause to be deposited promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all such collections into a Cash Concentration Account, as applicable.
(e)
Each Loan Party must pay to Lender on demand all fees and Expenses that Lender incurs in connection with (1) forwarding Advance
proceeds and (2) establishing and maintaining the accounts required under the Loan Documents. Lender may (without making demand) charge
all fees and Expenses any Loan Party is obligated to pay under the Loan Documents to the Loan Account as a Revolving Loan and add them
to the Obligations.
4.17 Equipment Maintenance.
Each Loan Party must maintain its Equipment in good operating condition and repair (reasonable wear and tear excepted), in accordance
with industry standards, and must make all necessary replacements and repairs so that its value and operating efficiency are maintained
and preserved. No Loan Party may use or operate the Equipment in a way that violates any law, statute, ordinance, code, rule, or regulation.
4.18 No Liability.
Nothing in this Agreement makes Lender any Loan Party’s agent for any purpose. Lender is not responsible or liable for any reason
for any shortage, discrepancy, damage, loss, or destruction of any Collateral. Lender does not assume any of any Loan Party’s obligations
under any contract or agreement assigned to Lender (and Lender is not responsible for any Loan Party’s obligation under any contract
or agreement).
4.19 Environmental Matters.
(a)
The Loan Parties must ensure that the Real Property complies with all Environmental Laws, except where the failure to comply could
not reasonably be expected to have a Material Adverse Effect, and the Loan Parties must ensure that no Hazardous Substances are on any
Real Property (except as permitted by applicable law or appropriate Governmental Bodies).
(b)
If any Loan Party obtains, gives, or receives notice of any Release or threat of Release of a reportable quantity of any Hazardous
Substances at the Real Property (each, a “Hazardous Discharge”), or receives any notice of violation, request for information,
notification that it is potentially responsible for investigation or cleanup of environmental conditions at the Real Property, demand
letter, or complaint, order, citation, or other written notice with regard to any Hazardous Discharge or violation of Environmental Laws
affecting the Real Property or any Loan Party’s interest in any Real Property (each, an “Environmental Complaint”)
from any Person, including any state agency responsible in whole or in part for environmental matters in the state in which the Real Property
is located or the United States Environmental Protection Agency (each, an “Authority”), then the Loan Parties must
immediately send a written notice to Lender detailing the facts and circumstances giving rise to the Hazardous Discharge or Environmental
Complaint.
(c)
The Loan Parties must immediately send to Lender copies of any request for information, notification of potential liability, or
demand letter relating to potential responsibility with respect to the investigation or cleanup of Hazardous Substances at any other site
owned, operated, or used by any Loan Party to dispose of Hazardous Substances and must continue to forward copies of correspondence between
any Loan Party and the Authority regarding such claims to Lender until the claim is settled. The Loan Parties must immediately forward
to Lender copies of all documents and reports concerning a Hazardous Discharge at the Real Property that any Loan Party is required to
file under any Environmental Laws. All information provided to Lender under the Loan Documents is provided solely to protect its Lien
on the Collateral and does not create any obligation on Lender’s part.
4.20 Financing Statements.
Except for financing statements filed with respect to Permitted Liens, no financing statement covering any of any Loan Party’s
assets is on file in any public office or has been authorized by any Loan Party to be filed in any public office.
4.21 Pledged Equity
Interests.
(a)
Except as provided in this subsection, each Loan Party grants a security interest in, Lien on, and pledges and collaterally assigns
all of each Loan Party’s present and future rights and title to the Equity Interests of each present and future Subsidiary of each
Loan Party (including those listed on Schedule 4.21) (all of the preceding and all proceeds, the “Pledged Equity Interests”).
If, however, any grant hereunder would reasonably be expected to result in a material adverse tax consequence to the granting Loan Party
with respect to its Equity Interests in a Foreign Subsidiary as determined by Lender in its Discretion, then for so long as any such grant
would reasonably be expected to result in a material adverse tax consequence, the Pledged Equity Interests do not include any Equity Interests
in that Foreign Subsidiary to the extent that it would cause more than 65% of the total combined voting power of all classes of capital
stock or similar Equity Interests of any first-tier Foreign Subsidiary (i.e., a Foreign Subsidiary that is a subsidiary of a “United
States person” as defined in Code section 7701(a)(30)) which are entitled to vote (within the meaning of Treasury Regulations section
1.956-2(c)(2)) to be pledged.
(b)
Each Loan Party represents and warrants that (1) Schedule 4.21 is a complete and accurate list of each Loan Party’s
(and its Subsidiaries’) issued and outstanding Equity; (2) the Loan Parties have executed appropriate transfer powers with respect
to the Pledged Equity Interests and have deposited the Pledged Equity Interests and transfer powers with Lender; (3) all Pledged Equity
Interests have been duly authorized, validly issued, are fully paid and non-assessable; (4) with respect to any certificates delivered
to Lender representing any Pledged Equity Interests, either (x) they are Securities as defined in Article 8 of the UCC, or (y) if they
are not Securities, then the Loan Parties must immediately inform Lender in writing so that Lender may take steps to perfect its Lien
as a General Intangible (and no Loan Party may cause such certificates to become Securities as defined in Article 8 of the UCC without
Lender’s prior written consent); (5) all Pledged Equity Interests held by a securities intermediary are subject to a Control Agreement
establishing Lender’s control; (6) none of the Pledged Equity Interests have been issued or transferred in violation of the securities
registration, securities disclosure, or similar laws of any jurisdiction; (7) except as listed on Schedule 4.21, there are no options,
warrants, calls, or commitments whatsoever relating to the Pledged Equity Interests or that obligate the issuer of any Pledged Equity
Interests to issue additional Equity Interests; and (8) no consent, approval, authorization, or other action by, and no giving of notice,
filing with, any Governmental Body or any other Person is required for any Loan Party’s pledge of the Pledged Equity Interests under
this Agreement or for Lender’s exercise of any remedies with respect to the Pledged Equity Interests (except as may be required
in connection with the disposition by laws affecting the offering and sale of securities generally).
(c)
When an Event of Default exists, (1) each Loan Party authorizes Lender to transfer the Pledged Equity Interests into Lender’s
(or any nominee’s) name (but Lender is not obligated to do so); (2) Lender may vote the Pledged Equity Interests; (3) Lender may
receive all dividends and other distributions made with respect to the Pledged Equity Interests; (4) Lender has all the rights and remedies
under the Loan Documents and those available to a secured party under the UCC and applicable law; and (5) Lender may sell, assign, transfer,
and deliver the Pledged Equity Interests at any time and from time to time. If Lender determines that the Pledged Equity Interests are
declining in value or that the Pledged Equity Interests are customarily sold in any recognized market, then Lender does not have to give
the Loan Parties prior notice before selling the Pledged Equity Interests. Otherwise, Lender will give the Loan Party Representative at
least ten (10) days’ prior notice before selling the Pledged Equity Interests. Each Loan Party waives any advertisement requirement
and (except to the extent specifically required by the preceding sentence) waives notice of any kind with respect to a sale of any of
the Pledged Equity Interests.
ARTICLE
5
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents
and warrants that:
5.1 Existence; Authority.
It (a) is duly organized, validly existing and in good standing as a corporation, partnership or limited liability company, as applicable,
under the laws of the jurisdiction of its organization and (b) has the full power, authority, and legal right to enter into the Loan
Documents and to perform its obligations under the Loan Documents. Each Loan Party’s execution, delivery, and performance of the
Loan Documents has been approved by all necessary legal and organizational Persons. All obligations under each Loan Document it executes
are legal, valid, and binding obligations enforceable against it in accordance with their terms.
5.2 Formation; Qualification;
and Subsidiaries. Schedule 5.2 lists: (1) each jurisdiction where each Loan Party is incorporated or organized; (2) each
jurisdiction where each Loan Party is in good standing or qualified to do business; and (3) all of each Loan Party’s Subsidiaries.
The jurisdictions listed on Schedule 5.2 are all of the jurisdictions in which each Loan Party is required to be in good standing
or qualified to do business (excluding those in which a Loan Party’s failure to be in good standing or qualified to do business
could not reasonably be expected to have a Material Adverse Effect).
5.3 Officers; Directors;
Equity Interest Holders; and Capitalization. Schedule 5.3 lists (1) the names and titles of each Loan Party’s executive
officers and directors; (2) the names of each Loan Party’s Equity Interest holders and a description of their Equity Interests
(including certificate numbers and the number of Equity Interests (and the percentage of total Equity Interests)); and (3) all outstanding
subscriptions, options, warrants, calls, rights, and other agreements or commitments related to each Loan Party’s (and its Subsidiaries’)
Equity Interests in any Loan Party (or any of its Subsidiaries).
5.4 No Governmental
Approval; No Conflict. The transactions contemplated by the Loan Documents (1) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Body or any other Person (except for those that have been obtained); (2) do
not violate any law applicable to any Loan Party or any of its Subsidiaries; (3) do not violate or create a default under any indenture,
agreement, or other instrument binding on any Loan Party, any of its Subsidiaries, or any of their respective assets; (4) do not require
any Loan Party to make any payment to any Person (other than Lender); and (5) do not create any Lien on any asset of any Loan Party (except
Liens created under the Loan Documents).
5.5 Tax Returns.
Each Loan Party has (x) timely filed all federal, state, and local tax returns, and all other reports required by law to be filed, and
(y) has timely paid all taxes, assessments, fees, and other governmental charges. Each Loan Party’s provision for taxes on its
books is adequate for all years (including its current fiscal year), and no Loan Party knows of any deficiency or additional assessment
not provided for on its books. No tax Liens have been filed against any asset of any Loan Party and no claims are being asserted for
any taxes.
5.6 Financial Information.
(a)
The Loan Parties’ projected income statements, cash-flow statements, balance sheets, and availability forecasts provided
to Lender prior to the Closing Date (the “Projections”) were prepared by the Loan Party Representative’s Authorized
Officer in good faith, are based on reasonable assumptions and estimates, and reflect the Loan Parties’ judgment based on present
circumstances and the most likely conditions and actions.
(b)
Each of (1) the audited consolidated and consolidating balance sheets of the Loan Parties (and, if applicable, any other Persons)
as of December 31, 2022, and the related income statements, changes in stockholders’ equity, and changes in cash flow and (2) the
consolidated and consolidating balance sheets of the Loan Parties (and, if applicable, any other Persons) as of July 31, 2023, and the
related incomes statements, changes in stockholders’ equity, and changes in cash flow (which were prepared by an Authorized Officer
of the Loan Party Representative and true copies of which were delivered to Lender), were prepared in accordance with GAAP, consistently
applied, and present fairly in all material respects the Loan Parties’ financial condition at such date and the results of their
operations for that period. Since December 31, 2022, there has been no change in (x) the Loan Parties’ financial condition or (y)
the aggregate value of the Loan Parties’ machinery, Equipment, and Real Property (if any) (except changes in the ordinary course
of business that individually or in the aggregate have not and could not reasonably be believed to cause a Material Adverse Effect).
5.7 Name. Except
as stated on Schedule 5.7, during the last five years (1) no Loan Party has been known by any other name, has conducted its business
under any other name, or has sold Inventory under any other name and (2) no Loan Party has been the surviving entity of a merger or consolidation
or has acquired a material portion of the assets of any Person.
5.8 O.S.H.A. and Environmental
Compliance. Each Loan Party has complied with, and (1) its facilities, business, assets, property, and Equipment and (2) its
leaseholds, comply in all material respects with the provisions of the Federal Occupational Safety and Health Act, the Environmental
Protection Act, RCRA, and all other Environmental Laws that the failure to comply with could reasonably be expected to have a Material
Adverse Effect, and no citations, notices, or non-compliance orders have been issued to any Loan Party under any these laws, rules, and
regulations.
(a)
Each Loan Party has been issued all required federal, state, and local licenses, certificates, and permits with respect to Environmental
Laws.
(b)
Except as stated on Schedule 5.8(b), (1) there are no releases, spills, discharges, leaks, or disposals (each, a “Release”)
of Hazardous Substances at, upon, under or within any Real Property; (2) there are no underground storage tanks or polychlorinated biphenyls
on any Real Property; (3) no Real Property has not ever been used as a treatment, storage, or disposal facility for Hazardous Waste; and
(4) no Hazardous Substances are present on the Real Property.
5.9 Solvency; No Litigation,
No Violation, ERISA.
(a)
After giving effect to the transactions contemplated by the Loan Documents, (1) the Loan Parties are and will continue to be solvent,
able to pay their debts as they mature, and have sufficient capital to carry on their business and all businesses in which they are about
to engage and (2) the present fair saleable value of each Loan Party’s assets is more than its liabilities (including contingent
liabilities).
(b)
Except as listed on Schedule 5.9(b), (1) no Loan Party has any pending or threatened litigation, investigation, arbitration,
actions, or proceedings that could reasonably be expected to have a Material Adverse Effect; (2) no Loan Party has violated any statute,
regulation, or ordinance that could reasonably be expected to have a Material Adverse Effect; (3) no Loan Party has violated any order
of any court, Governmental Body, arbitration board, or tribunal that could reasonably be expected to have a Material Adverse Effect; (4)
no Loan Party is a member of any Controlled Group; and (5) no Loan Party maintains or contributes to any Plan or Multiemployer Plan.
5.10 Intellectual Property.
Schedule 5.10 lists all Intellectual Property owned or utilized by any Loan Party. Except as stated on Schedule 5.10, (a)
the Intellectual Property is valid; (b) has been duly registered or filed with all appropriate Governmental Bodies; (c) is all of the
Intellectual Property necessary for the Loan Parties to operate their business; (d) there are no objections to or challenges to the validity
of any Intellectual Property (nor is any Loan Party aware of any grounds for any challenge); (e) all Intellectual Property is either
original material or property developed by a Loan Party or was lawfully acquired by the Loan Party; and (f) all Intellectual Property
has been maintained to preserve its value (except where the failure to do so could not reasonably be expected to have a Material Adverse
Effect).
5.11 Licenses and Permits.
Each Loan Party (a) has complied with and (b) has all licenses or permits required by any applicable federal, state, or local law, or
regulation to operate its business in each jurisdiction where it conducts or plans to conduct business (except where the failure to do
so could not reasonably be expected to have a Material Adverse Effect).
5.12 Indebtedness Default.
No Loan Party is in default under any Indebtedness nor does it reasonably believe that it will be in default under any Indebtedness.
5.13 No Burdensome Restrictions;
No Default. No Loan Party: (a) is subject to any restriction (or is a party to any contract or agreement) whose compliance with
or performance of could reasonably be expected to have a Material Adverse Effect; (b) has agreed (whether on the happening of a contingency
or otherwise) that any of its present or future assets will be subject to a Lien that is not a Permitted Lien; and (c) is in default
under any contract that could reasonably be expected to have a Material Adverse Effect.
5.14 No Labor Disputes.
No Loan Party (a) is involved in any labor dispute (or is aware that any strikes, walkouts, or union organization exist or are threatened)
or (b) is a party to any labor contract that expires within six months after the Termination Date.
5.15 Margin Regulations.
No Loan Party is engaged (nor will it engage) in extending credit for “purchasing” or “carrying” any “margin
stock” (the quoted terms in this Section have the meanings given under Regulation U of the Board of Governors of the Federal Reserve
System). Furthermore, no part of the proceeds of any Advance will be used for “purchasing” or “carrying” “margin
stock.”
5.16 Investment Company
Act. No Loan Party is an “investment company” under the Investment Company Act of 1940 (nor is it Controlled by a
Person that is an “investment company”).
5.17 Disclosure.
No representation or warranty made by any Loan Party in any Loan Document or in any financial statement, report, certificate, or other
document furnished to Lender by any Loan Party is untrue or misleading in any respect or omits any fact or circumstance necessary to
make any statement not misleading. Each Loan Party has disclosed to Lender in writing each fact and circumstance that could reasonably
be expected to have a Material Adverse Effect.
5.18 Hedging Contracts.
No Loan Party is a party to (nor will it be a party to) any Hedging Contract unless (a) it provides that termination damages are payable
on a “two-way basis” without regard to fault on the part of either party and (b) it is entered into in the ordinary course
of business (and not for speculative purposes).
5.19 Material Business
Agreements. Schedule 5.19 lists all of each Loan Party’s Material Business Agreements and no default or event of
default exists under any of these agreements. Further, there is no “material breach” under the Consignment Agreements.
5.20 Certain Laws and
Regulations. The Loan Parties are in compliance with all applicable statutes, rules, and regulations and all judgments, decrees,
and orders of any Governmental Body. No Loan Party or any of its Affiliates is subject to any statute, rule, or regulation that regulates
incurring any Indebtedness (including statutes or regulations related to common or interstate carriers or to selling electricity, gas,
steam, water, telephone, telegraph, or other public utility services).
5.21 Anti-Corruption
Laws and Sanctions. Loan Parties have implemented and maintain in effect policies and procedures designed to ensure compliance
by Loan Parties, their Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable
Sanctions, and Loan Parties, their Subsidiaries and their respective directors, officers and employees and, to the knowledge of Borrowers,
their agents, are in compliance with Anti-Corruption Laws and applicable Sanctions. None of (a) any Individual Guarantor, any Loan Party,
any Subsidiary or any of their respective directors, officers or employees, or (b) to the knowledge of any Borrower, any agent of any
Loan Party or any Subsidiary that will act in any capacity in connection with or benefit from the credit facilities established hereby,
is a Sanctioned Person. No Loan, use of proceeds or other transactions contemplated herein will violate Anti-Corruption Laws or applicable
Sanctions.
5.22 Business Purpose.
The proceeds of the Loans will be used solely for business purposes and not for personal, family, or household purposes.
5.23 Delivery of Subordinated
Indebtedness Documents. Lender has received complete copies of the Subordinated Indebtedness Documents and related documents
(including all exhibits, schedules and disclosure letters referred to therein or delivered pursuant thereto, if any) and all amendments
thereto, waivers relating thereto and other side letters or agreements affecting the terms thereof. None of such documents and agreements
has been amended or supplemented, nor have any of the provisions thereof been waived, except pursuant to a written agreement or instrument
which has been delivered to Lender on or before the Closing Date.
ARTICLE
6
AFFIRMATIVE COVENANTS
Until all Obligations are
irrevocably paid and performed in full (other than contingent obligations with respect to which no claim has been asserted or threatened)
and the Loan Documents are terminated, each Loan Party must:
6.1 Conducting
Business; Maintaining Existence; and Assets.
(a)
Continuously conduct and operate its business according to good business practices, as presently conducted.
(b)
Keep its existence in full force and effect, file all reports and pay all franchise and other taxes and license fees, and do all
other acts and things that are necessary or desirable to maintain its rights, licenses, leases, powers, and franchises.
(c)
Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with all applicable laws of any Governmental Body having
jurisdiction over it or its business. Each Loan Party shall maintain in effect and enforce policies and procedures designed to ensure
compliance by the Loan Parties, their Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption
Laws, Anti-Terrorism Laws and applicable Sanctions.
6.2 Violations.
Immediately notify Lender in writing if any Loan Party or any Collateral violates or is alleged to have violated any Governmental Body’s
laws, statutes, regulations, or ordinances.
6.3 Financial
Covenants.
(a)
Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio (for the Loan Parties on a consolidated basis) of not
less than 1.20 to 1.00 (i) for the fiscal months ending on September 30, 2023, October 31, 2023, and November 30, 2023, as calculated
on a fiscal year-to-date basis, and (ii) for the fiscal month ending on December 31, 2023 and each fiscal month thereafter, as calculated
for the twelve consecutive fiscal months then ended.
(b)
Liquidity. Maintain, at all times, Undrawn Availability (for the Loan Parties on a consolidated basis) of not less than
the product of (i) ten percent (10.0%) multiplied by (ii) the Maximum Borrowing Amount, in each case.
6.4 Supplemental
Instruments. From time to time at the Loan Parties’ expense, execute and deliver, and cause each Subsidiary to execute
and deliver, or cause to be executed and delivered, to Lender all documents, agreements, and instruments, and take or cause to be taken
such further actions (including filing and recording financing statements, fixture filings, Mortgages, deeds of trust, and other documents
and actions) that are required by law or that Lender may request to carry out the terms and conditions of the Loan Documents and to ensure
the perfection and priority of Lender’s Liens.
6.5 Indebtedness.
Pay all Indebtedness when due and not otherwise default under any Indebtedness.
6.6 Financial
Statements. Cause all financial statements delivered to Lender (1) to be prepared as required by this Agreement; (2) to be complete
and correct in all material respects (subject, for interim financial statements, to notes and normal year-end audit adjustments); and
(3) to be prepared in reasonable detail.
6.7 Taxes.
If any tax, assessment, or other Charge creates a Lien on any Collateral Lender may without notice to the Loan Parties pay the tax, assessment,
or other Charges. Any payments under this Section will be charged to the Loan Account as a Revolving Loan and added to the Obligations
(or, at Lender’s option, must be paid to Lender by Borrowers immediately on demand).
6.8 Deposit Accounts.
Each account on Schedule 6.8 (and each other deposit account, securities account, commodity account, securities entitlement or
commodity contract owned by a Borrower at any time) must at all times be subject to a Control Agreement satisfactory to Lender.
6.9 Interest Rate
Protection. Within ten Business Days after Lender’s request, maintain Hedging Contracts on terms and conditions (and with
Persons) acceptable to Lender.
6.10 Post-Closing
Matters. Execute and deliver the documents, take the actions, and complete the tasks in the table below, in each case
within the applicable time limit specified (or such longer period as Lender may agree in its sole discretion):
Requirement |
|
Time Limit |
1. |
Deliver to Lender all Control Agreements and lockbox agreements required by
Lender, in each case duly executed by all parties party thereto and in form and substance satisfactory to Lender in its sole discretion
|
|
Within fourteen (14) days of the Closing Date |
2. |
Deliver to Lender a fully executed Waiver with respect to 1900 Shelton Drive,
Hollister, California, in form and substance satisfactory to Lender in its sole discretion |
|
Within thirty (30) days of the Closing Date. |
3. |
Deliver to Lender complete copies of Target’s standard Terms and Conditions
(as defined in the Target Consignment Agreement, the “POL”) or, in the alternative, access to the website containing such
Terms and Conditions’. |
|
Within thirty (30) days of the Closing Date. |
4. |
Deliver to Lender a fully executed Insurer’s Acknowledgment and Consent
with respect to the Collateral Assignment of Rights under Business Interruption Insurance |
|
Within thirty (30) days of the Closing Date. |
5. |
Deliver to Lender a fully executed Consignee Acknowledgment Agreement with respect
to Target, in form and substance satisfactory to Lender in its sole discretion |
|
Within sixty (60) days of the Closing Date. |
ARTICLE
7
NEGATIVE COVENANTS
Until all Obligations are
irrevocably paid and performed in full (other than contingent obligations with respect to which no claim has been asserted or threatened)
and the Loan Documents are terminated, no Loan Party may:
7.1 Mergers; Consolidations;
and Asset Sales.
(a)
Merge, consolidate, divide (including by way of an LLC division), or otherwise reorganize with or into any Person or acquire all
or a material portion of any Person’s assets or Equity Interests.
(b)
Sell, pledge, lease, transfer (including by way of an LLC division), or otherwise dispose of any of its properties or assets (except
(1) sales or other dispositions of Equipment that is substantially worn, damaged, or obsolete, not to exceed in the aggregate Two Hundred
Fifty Thousand and No/100 ($250,000) in any consecutive twelve-month period and (2) as otherwise expressly permitted by this Agreement).
7.2 Liens.
Except Permitted Liens, create, assign, transfer, or allow to exist any Lien on any of its property (including the Collateral).
7.3 Guarantees.
Be liable for any other Person’s obligations by assumption, endorsement, Guaranty, or otherwise except for (1) endorsing checks
in the ordinary course of business and (2) guaranteeing or being jointly and severally liable for a Loan Party’s Obligations.
7.4 Investments.
Purchase or acquire the assets, obligations or Equity Interests of, or any other interest in, any Person, except: (1) investments existing
on the Closing Date and listed on Schedule 7.4; (2) obligations issued or guaranteed by the United States of America; (3) commercial
paper with a maturity of not more than one hundred eighty (180) days and a published rating of not less than A-1 or P-1; (4) certificates
of deposit and bankers’ acceptances having maturities of not more than one hundred eighty (180) days; and (5) U.S. money market
funds (x) rated AAA by Standard & Poors, Inc. or with an equivalent rating from Moody’s Investors Service, Inc., or (y) that
invest solely in obligations issued or guaranteed by the United States of America.
7.5 Loans.
Make advances, loans, or credit extensions to any Person (including any Affiliate), except for commercial trade credit in connection
with Inventory sales in the ordinary course of its business and consistent with practices that existed on the Closing Date and that have
been disclosed to Lender in writing.
7.6 Reserved.
7.7 Distributions
and Management Fees.
(a)
Except for Permitted Dividends, pay dividends (or any distribution on account of any of its Equity Interests) or redeem, purchase,
or otherwise acquire directly or indirectly any of its Equity Interests.
(b)
Enter into or issue, as applicable, any subscriptions, options, warrants, calls, rights, or other agreements or commitments of
any kind relating to any Equity Interests of any Loan Party.
(c)
Except for the Management Fees, pay any management, advisory, consulting, or other similar fees to any Person.
7.8 Indebtedness.
Create, incur, assume, or allow to exist any Indebtedness except:
(a) Indebtedness existing
on the Closing Date and listed on Schedule 7.8 (including any extensions, renewals, refinancings, or replacements in
accordance with clause (f) below).
(b)
Indebtedness to Lender.
(c)
Indebtedness to fund Capital Expenditures.
(d)
Indebtedness permitted under Section 7.3.
(e)
Indebtedness under Hedging Contracts required under this Agreement.
(f) Indebtedness that
represents extensions, renewals, refinancings, or replacements (“Refinance Indebtedness”) of any of the
Indebtedness described in clauses (a),(c), (d) and (e) (“Original Indebtedness”) if: (1) the Refinance
Indebtedness does not increase the principal amount or interest rate of the Original Indebtedness; (2) any Liens securing that
Refinance Indebtedness are not extended to any additional property; (3) no Loan Party or any Subsidiary that was not originally
obligated to repay that Original Indebtedness becomes obligated for that Refinance Indebtedness; (4) the Refinance Indebtedness does
not shorten the average weighted maturity of the Original Indebtedness; (5) the terms of the Refinance Indebtedness are not less
favorable to the obligor than the original terms of the Original Indebtedness; and (6) if the Original Indebtedness was subordinated
in right of payment to the Obligations, then the terms and conditions of the Refinance Indebtedness must include subordination terms
and conditions that are at least as favorable to Lender as those that applied to the Original Indebtedness.
(g)
The Subordinated Indebtedness provided that it is at all times subject to a Subordination Agreement.
7.9 Business.
Change in any material respect the nature of the business that it is engaged in on the Closing Date.
7.10 Affiliate
Transactions. Directly or indirectly, purchase, acquire, or lease any property from, or sell, transfer, or lease any property
to, or otherwise deal with, any Affiliate (except transactions in the ordinary course of business that existed on the Closing Date and
are listed on Schedule 7.10, on an arm’s length basis, and on terms no less favorable than terms that could be obtained
from a Person who is not an Affiliate).
7.11 Leases.
Enter as lessee into any lease for real or personal property (unless capitalized and permitted hereunder) without (a) prior written notice
to Lender and (b) with respect to leases of Real Property, if requested by Lender, a Waiver in form and substance satisfactory to Lender
in its discretion.
7.12 Subsidiaries;
Partnerships; and Disqualified Stock.
(a)
Form any Subsidiary of Borrowers unless (1) that Subsidiary expressly becomes a Loan Party and becomes jointly and severally liable
for the Obligations; (2) Borrowers pledge 100% of the Equity Interests of the Subsidiary to Lender; (3) Lender has received all documents
and due diligence (including all “know your customer” requirements, organizational documents, and legal opinions) it may require;
and (4) the Subsidiary grants Lender first-priority perfected Liens in its present and future assets. If a Subsidiary becomes a Borrower,
none of its assets may be included in the Borrowing Base until Lender has conducted a field examination and makes that determination in
its Discretion.
(b)
Enter into any partnership, joint venture, or similar agreement.
(c)
Issue any Disqualified Stock.
7.13 Fiscal Year
and Accounting Changes. Change its fiscal year-end from December 31 or make any material change (1) in accounting treatment and
reporting practices (except as required by GAAP) or (2) in tax reporting treatment (except as required or permitted by law).
7.14 Pledging
Credit. Pledge Lender’s credit on any purchase or for any purpose.
7.15 Amending
Charter Documents. Amend, modify, or waive any term or provision of its Charter Documents (except amendments, modifications,
and waivers acceptable to Lender in its discretion as confirmed in writing before the applicable amendment, modification, or waiver).
7.16 ERISA.
Become part of a Controlled Group or create, maintain, or become obligated to contribute to any Plan or Multiemployer Plan.
7.17 Prepaying
Indebtedness. At any time, directly or indirectly (including by establishing any sinking fund for any Indebtedness) prepay any
Indebtedness (other than to Lender and to the extent permitted by this Agreement) or repurchase, redeem, retire, or otherwise acquire
any Indebtedness.
7.18 Material
Business Agreements. Without Lender’s prior written consent, amend, waive, or modify in any respect the terms of any Material
Business Agreement if that change would be detrimental in any material respect to Lender or any Loan Party.
7.19 Anti-Terrorism
Laws; Anti-Corruption Laws; Sanctions. At any time: (1) directly or through its Affiliates or agents, conduct any business or
engage in any transaction or deal with any Sanctioned Person, including making or receiving any funds, goods, or services to or for the
benefit of any Sanctioned Person; (2) directly or through its Affiliates or agents, deal in, or otherwise engage in any transaction relating
to, any property or interests in property blocked under Executive Order No. 13224; (3) directly or through its Affiliates or agents,
engage in or conspire to engage in any transaction that evades or avoids (or whose purpose is to evade or avoid), or attempts to violate,
any of the prohibitions in Executive Order No. 13224, the USA Patriot Act, or any other Anti-Terrorism Law; or (4) not deliver to Lender
any certification or other evidence requested by Lender in its sole judgment confirming each Loan Party’s compliance with this
Section. No Borrower will request any Loan, and no Borrower nor any of its Subsidiaries or their respective directors, officers, employees
and agents will use the proceeds of any Loan (a) in the furtherance of an offer, payment, promise to pay, or authorization of the payment
or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding,
financing or facilitating any activities, business or transaction of or with any Sanctioned Person or in any Sanctioned Country or (c)
in any manner that would result in the violation of any Anti-Terrorism Law or Sanctions applicable to any party hereto.
7.20 Subordinated
Indebtedness. Except as expressly allowed by the applicable Subordination Agreement, at any time, directly or indirectly, pay,
prepay, repurchase, redeem, retire or otherwise acquire, or make any payment on account of any principal of, interest on or premium payable
in connection with the repayment or redemption of any Subordinated Indebtedness.
7.21 Modification
of Subordinated Indebtedness Documents. Amend, modify, or waive any term or provision of any Subordinated Indebtedness Document.
7.22 Amending
Leases. Amend, modify, or waive any term or provision of any lease of Real Property without notice to Lender (and if such amendment,
modification or waiver would be detrimental in any material respect to Lender or any Loan Party, amendments, modifications, and waivers
must be consented to in writing by Lender in its discretion).
ARTICLE
8
CONDITIONS PRECEDENT
8.1 Conditions
to Initial Loans. Lender’s obligation to make Loans and Advances on the Closing Date is subject to its satisfaction of
each of the following conditions precedent:
(a) Loan
Documents. Lender has received all documents, searches, abstracts, and information required by Lender (including fully-executed
counterparts of each document on the closing checklist attached as Exhibit C that requires a signature as well as all other
documents, instruments, and conditions listed on Exhibit C).
(b) Collateral and
Security. All Collateral items required to be physically delivered to Lender under the Loan Documents have been delivered
(accompanied by any transfer instruments requested by Lender) or arrangements satisfactory to Lender for delivery are in place. All
taxes, fees, Expenses, and other charges have been paid in full that relate to (1) the Collateral, (2) incurring the Obligations,
and (3) delivering the Loan Documents.
(c) Searches.
Lender has received accurate and complete copies of all Lien, pending suit, title, background investigation, and other searches
required by Lender.
(d) Filings;
Registrations; and Recordings. Each document required by the Loan Documents, by law (including UCC financing statements and
Mortgages), or requested by Lender to be filed, registered, or recorded to create or perfect in Lender’s favor a Lien on the
Collateral has been properly filed, registered, or recorded in each jurisdiction where filing, registration, or recordation is
required or requested, and all actions necessary to perfect and protect Lender’s Liens have been taken.
(e) Organizational
Proceedings. Lender has received a copy of the resolutions of each Loan Party’s Board of Directors, Shareholders,
Managers, or Members authorizing (1) executing, delivering, and performing the Loan Documents and (2) granting the Liens on the
Collateral.
(f) Incumbency
Certificates. Lender has received a certificate of each Loan Party’s Secretary, Manager, or other officer acceptable to
Lender as to the incumbency and signature of the Secretary, Manager, or officer and each Loan Party’s Authorized Officers.
(g)
Charter Documents. Lender has received complete copies of (1) each Loan Party’s Charter Documents (certified by the
Secretary of State or other appropriate official of that entity’s jurisdiction of formation, incorporation, or organization) and
(2) each Loan Party’s governance documents.
(h)
Good Standing. Lender has received copies of good standing certificates (or other analogous certificates) for each Loan
Party dated not more than ten (10) days before the Closing Date in each jurisdiction where each Loan Party is required to be in good standing
(or other analogous status), unless the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect.
(i) Legal Opinion.
Lender has received an executed legal opinion from the Loan Parties’ counsel.
(j) No Litigation. No litigation, investigation, or proceeding is pending or threatened against any Loan Party (or against its
officers, directors, or managers), (1) in connection with the Loan Documents or (2) that could (as determined in Lender’s
Discretion) have a Material Adverse Effect. No injunction, writ, or restraining order has been issued by any Governmental Body that
is adverse to any Loan Party (or its business) or is inconsistent with the Loan Documents.
(k) Collateral
Examination. Lender has (1) completed Collateral examinations (including a roll-forward examination) and received appraisals
(all of which must be satisfactory to Lender in its Discretion) and (2) reviewed all books and records in connection with the
Collateral.
(l) Fees. Lender has
received all fees and Expenses payable to Lender.
(m) Financial Statements;
Projections. Lender has received and found satisfactory the financial statements required by Section 5.6(a) and the Projections.
(n) Insurance.
Lender has received evidence that each Loan Party has the insurance required by the Loan Documents and that Lender is listed as
lender-loss-payee, additional-insured, and mortgagee (as required by Lender).
(o) Collection
Accounts. Lender has received (1) agreements establishing the Cash Concentration Account and all other required accounts; (2) a
Control Agreement for each deposit account on the Borrowers; and (3) evidence that Borrowers have directed all Account Debtors to
make all payments to the Cash Concentration Account.
(p) Consents.
Lender has received all Consents and Waivers required by it.
(q) No Adverse Material
Change. Since December 31, 2022, no event, condition, or state of facts has occurred that could reasonably be expected to have a
Material Adverse Effect. No representations made or information supplied to Lender by any Loan Party or its agents or
representatives has turned out to be inaccurate or misleading in any respect.
(r) Contract Review and
Capital Structure. Lender is satisfied with all Material Business Agreements and the Loan Parties’ legal and capital
structure, and has received all Collateral Assignments.
(s) Existing
Indebtedness. Lender has received (1) a satisfactory payoff letter for any existing Indebtedness to be paid on the Closing Date
and (2) evidence that, except for Permitted Liens, there will be no Liens on any Loan Party’s assets.
(t) Interest Rate
Protection. If required by Lender, Borrowers have entered into Hedging Contracts acceptable to Lender.
(u) Undrawn
Availability. After giving effect to the initial Loans and Advances and all other Closing Date transactions, Borrowers’
Undrawn Availability is at least One Million and No/100 Dollars ($1,000,000).
(v) Subordinated Indebtedness
Documents. Lender shall have received (i) from each of the holders of Subordinated Indebtedness duly executed Subordination Agreements,
pursuant to which all Indebtedness and all Liens, if any, of any Borrower to such Persons are subordinated to the Obligations on terms
satisfactory to Lender in its sole discretion, and (ii) evidence in form and substance satisfactory to Lender in its sole discretion
that the current maturity date of all Subordinated Indebtedness is (or has been extended to) at least six (6) months after the Termination
Date.
(w) Tax Returns,
Etc. Lender shall have (i) received true, correct, and complete copies of all federal, state, and local tax returns, and all
other reports required by law to be filed, in each case, by any Loan Party, and (ii) evidence in form and substance satisfactory to
Lender in all respects that each Loan Party has timely paid all taxes, assessments, fees, and other governmental charges.
(x) Other.
(1)
All documents, instruments, and other matters in connection with the assignment of the Original Loan Agreement to Lender must be
satisfactory in form and substance to Lender and its counsel.
(2)
All corporate and other proceedings (and all documents, instruments, and other matters in connection with the transactions contemplated
by the Loan Documents) must be satisfactory in form and substance to Lender and its counsel.
(3)
Lender shall have received (i) all documentation and other information with respect to the Borrowers and any Guarantors that Lender
requires or is required by regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and
regulations, including the USA PATRIOT Act and (ii) background checks regarding management, principals, or key investors, as Lender has
requested in its sole discretion.
(4)
Lender shall have received such other documents, certificates, information or legal opinions as Lender may request, all in form
and substance satisfactory to Lender and if any Loan Party qualifies as a “legal entity customer” under the Beneficial Ownership
Regulation, a Beneficial Ownership Certification in relation to such Loan Party.
8.2 Conditions
to Each Loan and Advance. Lender’s obligation to make any Loan or Advance (including Loans and Advances on the Closing
Date) is subject to the satisfaction of the following conditions precedent on the date each Advance or Loan is requested and made:
(a) Representations and
Warranties. Each representation and warranty made by each Loan Party in (or in connection with any Loan Document) is true,
correct, and complete with the same effect as though made on and as of the date of the Loan or Advance (it being understood that any
representation or warranty that by its terms is made as of a specified date is required to be true and correct only as of that
specified date).
(b) No Default. No
Default Condition exists or would exist after giving effect to the requested Advances or Loans (but nonetheless Lender may in its
discretion continue to make Advances or Loans, and if it does so that does not (1) waive any Event of Default or Default, (2)
establish a course of dealing, or (3) obligate Lender to make any other Advances or Loans).
(c) Borrowing Base
Certificate. Lender shall have received a Borrowing Base Certificate.
(d) Maximum
Advances. After giving effect to the requested Advance or Loan, the aggregate Revolving Exposure does not exceed the Maximum
Borrowing Amount.
Each Advance or Loan request is a representation
and warranty by each Loan Party that each condition precedent to the Advance or Loan has been met on the date the Advance or Loan is requested
and received.
ARTICLE
9
INFORMATION AS TO THE LOAN PARTIES
Until all Obligations are
irrevocably paid and performed in full (other than contingent obligations with respect to which no claim has been asserted or threatened)
and the Loan Documents are terminated, each Loan Party must:
9.1 Disclosure.
Immediately report to Lender all matters materially affecting the value, enforceability, or collectability of any portion of the Collateral
(including any Lien or claim asserted against the Collateral, any loss, damage, or destruction to any material amount of Collateral,
any Loan Party’s reclamation or repossession of any Collateral, the return to any Loan Party of a material amount of goods, or
if any Account Debtor asserts any claims or setoffs against Accounts that exceed One Hundred Thousand and No/100 ($100,000) in the aggregate).
9.2 Schedules.
Deliver to Lender on or before the fifteenth (15th) day of each month, in each case, for the prior month (1) a detailed accounts receivable
aging including all invoices aged by invoice date (reconciled to the general ledger and the Borrowing Base Certificate); (2) a schedule
detailing all Account Dilution; (3) a detailed accounts payable aging including all accounts payable aged by invoice date (reconciled
to the general ledger); (4) an Inventory report (which must include a lower of cost or market calculation) and a perpetual Inventory
report; and (5) a Borrowing Base Certificate (that is calculated as of the last day of the prior month and which is not binding on Lender).
In addition, the Loan Party Representative must deliver to Lender at least one time every seven-day period, an interim Borrowing Base
Certificate (that is calculated as of two (2) Business Days preceding the date such interim Borrowing Base Certificate is delivered and
which is not binding on Lender) reflecting all activity (sales, collections, credits, etc.) impacting Borrowers’ Accounts in the
applicable Specified Period. Unless otherwise agreed to or required by Lender in its Discretion, the amount excluded from Eligible Accounts
and the amount of Eligible Inventory used on any interim Borrowing Base Certificate is the amount stated on the last Borrowing Base Certificate
received by Lender under clause (4) of the first sentence of this Section. Furthermore, the Loan Party Representative must deliver to
Lender at such intervals as Lender may require: (i) assignment schedules; (ii) copies of Account Debtor invoices; (iii) evidence of shipment
and delivery of Goods; and (iv) such further schedules, documents, and information as Lender may require (including trial balances and
test verifications). Lender may confirm and verify Accounts by any manner and through any medium it chooses. All items, reports, and
information under this Section must be (x) satisfactory to Lender in its Discretion, (y) executed by the Loan Party Representative, and
(z) timely delivered to Lender.
9.3 Notice of
Suits and Adverse Events. Furnish Lender with immediate notice of (1) any lapse or other termination of any Consent issued to
any Loan Party by any Governmental Body or any other Person that is material to any Loan Party’s operation of its business; (2)
any refusal by any Governmental Body or any other Person to renew or extend any Consent; (3) copies of any periodic or special reports
filed by any Loan Party with any Governmental Body or Person (but only if (x) a report indicates any material adverse change in any Loan
Party’s business, operations, affairs, or condition or (y) if copies are requested by Lender); and (4) copies of any material notices
and other communications from any Governmental Body that specifically relate to any Loan Party or any Collateral.
9.4 Material Events.
Immediately notify Lender in writing if any of the following occur: (1) any Default Condition; (2) any default by any party under any
Material Business Agreement; (3) any event, development, or circumstance that could reasonably be expected to cause any financial statement,
projection (including the Projections), Borrowing Base Certificate, or other information or report furnished to Lender to be untrue or
misleading (including anything that could reasonably be expected to cause any financial statement to not present fairly in any material
respect, in accordance with GAAP consistently applied, the Loan Parties’ financial condition or operations on a consolidated or
consolidating basis); (4) each default by any Loan Party under any Indebtedness (including any of the Subordinated Indebtedness); (5)
any litigation, suit, or administrative proceeding affecting any Loan Party or the Collateral (whether or not the claim is covered by
insurance); and (6) any other development that could reasonably be expected to have a Material Adverse Effect.
9.5 Annual Financial
Statements. Furnish Lender within one hundred and twenty (120) days after the end of each of the Loan Parties’ fiscal years
(beginning, for the avoidance of doubt, with the fiscal year ending December 31, 2023), the Loan Parties’ audited financial statements
on a consolidated and consolidating basis (including statements of income, stockholders’ equity, and cash flow from the beginning
of the current fiscal year to the end of the current fiscal year) and the balance sheet as at the end of the fiscal year, all prepared
in accordance with GAAP applied on a basis consistent with prior practices, and in reasonable detail and reported on without qualification
by an independent certified public accounting firm selected by the Loan Parties and satisfactory to Lender in its Discretion. In addition,
these financial statements must be accompanied by a Compliance Certificate.
9.6 Monthly Financial
Statements. Furnish Lender within thirty (30) days after the end of each fiscal month, the Loan Parties’ unaudited balance
sheet on a consolidated and consolidating basis and the Loan Parties’ unaudited statements of income, stockholders’ equity,
and cash flow on a consolidated and consolidating basis reflecting the results of operations from the beginning of the fiscal month to
the end of the month (and for the month), prepared on a basis consistent with prior practices and complete and correct in all material
respects (subject to normal and recurring year-end adjustments that individually and in the aggregate are not material) and setting forth
in each case in comparative form the figures from the projected annual operating budget delivered under Section 9.8 for the current
fiscal year. In addition, these financial statements must be accompanied by a Compliance Certificate.
9.7 Additional
Information.
(a)
Promptly furnish Lender with any additional information that Lender may request in its discretion, as well as (1) copies of all
environmental audits and reviews; (2) at least thirty (30) days’ prior written notice of any Loan Party opening any new place of
business, closing any existing place of business, or changing its legal name, entity type, or jurisdiction of organization, incorporation,
or formation; (3) immediately upon any Loan Party’s learning thereof, notice of any material labor dispute, strike, or walkout affecting
any Loan Party and ninety (90) days’ prior written notice of the expiration of any labor contract binding on any Loan Party; (4)(i)
such other information regarding the Collateral, results of operations, business affairs and financial condition of any Loan Party or
any Subsidiary as Lender may request and (ii) information and documentation requested by the Lender for purposes of compliance with applicable
“know your customer” requirements under the USA PATRIOT Act or other applicable anti-money laundering laws; (5) notice of
any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial
owners identified in such certificate; and (6)(i) any complaint or citation from any relevant governmental authority that threatens to
shut down any portion of the business or operations of Loan Parties or otherwise restrict the operations of any Loan Party, and (ii) any
failure of any Loan Party to comply with any product recall, market withdrawal or post-sale warning involving any product manufactured,
distributed or sold by or on behalf of any Loan Party, in each case that could reasonably be expected to result in liability to any Loan
Party.
(b)
Within thirty (30) days after the filing thereof, furnish Lender with a true, correct and complete copy of each of Borrowers’
federal tax returns and any other report filed, or required to be filed, with the IRS; provided, however, that the Loan Parties shall
furnish Lender a true, correct and complete copy of any extension filed with the IRS within fifteen (15) days after the filing thereof.
9.8 Projected
Operating Budget and Availability Forecast. Furnish Lender no later than thirty (30) days after the beginning of each fiscal
year of the Loan Parties (beginning with the first fiscal year after the Closing Date), the Loan Parties’ month-by-month projected
operating budget and cash flows on a consolidated and consolidating basis for the fiscal year (including for each month an income statement,
a cash flow statement, and a balance sheet and availability projection). These projections must be accompanied by a certificate signed
by the Loan Party Representative’s Authorized Officer stating that the projections and forecasts were prepared using sound financial
planning practices consistent with past budgets and financial statements, and that the officer has no reasonable basis to question the
reasonableness of any assumptions on which the projections and forecasts were prepared.
9.9 Electronic
Reporting. Unless otherwise agreed in writing by Lender, all items and information required to be submitted by the Loan Parties
under this Article must be delivered to Lender by the specific method of Approved Electronic Communication designated by Lender. All
information sent by Approved Electronic Communication is treated as an authenticated record sent by the individual and entity whose electronic
mail address is provided on the communication as “sender” or initiating party. In addition to Approved Electronic Communications,
Lender may from time to time require that items and information be provided to Lender in physical form.
ARTICLE
10
EVENTS OF DEFAULT
Each of the following events
is an “Event of Default”:
10.1 Payment.
Any Loan Party does not pay any Obligation when due (whether at maturity, by acceleration, or otherwise).
10.2 Misrepresentation.
Any representation or warranty made or treated as having been made by any Loan Party in any Loan Document, any related agreement, or
in any certificate, document, or financial or other statement furnished to Lender is misleading in any respect on the date when made
or treated as having been made.
10.3 Not Furnishing
Information. Any Loan Party does not (a) furnish financial information required under the Loan Documents when due; (b) furnish
any additional information requested by Lender within three (3) days of when requested; or (c) permit Lender or its agents to immediately
(and without condition) inspect its books, its records, its premises, or any Collateral.
10.4 Liens.
Any Lien (other than Permitted Liens), levy, assessment, injunction, or attachment is issued against any Loan Party’s property.
10.5 Covenant
Breaches. Any Loan Party does not perform, keep, or observe any term, provision, condition, or covenant in this Agreement or
any other Loan Document or in any other agreement with Lender.
10.6 Judgments.
Any judgment or judgments are rendered or judgment liens are filed against any Loan Party (or any of its property) for an aggregate amount
exceeding One Hundred Thousand and No/100 ($100,000) that, within ten (10) Business Days, are not to Lender’s satisfaction satisfied,
stayed, discharged of record, or bonded.
10.7 Insolvency.
Any Loan Party: (a) becomes insolvent; (b) is unable, or admits in writing its inability, to pay its debts as they become due; (c) makes
a general assignment for the benefit of creditors or to a liquidation agent; (d) files on its behalf or consents to an Insolvency Proceeding;
(e) has an Insolvency Proceeding filed or instituted against it that is not dismissed within thirty (30) days after it is filed or instituted;
(f) applies to a court for the appointment of a receiver, trustee, or custodian for any of its assets; (g) has a receiver, trustee, or
custodian appointed for any of its assets (with or without its consent); or (h) commences a self-liquidation of its assets. If an involuntary
proceeding arises under Title 11 of the United States Code, Lender has no obligation to continue any financing from and after the proceeding
begins.
10.8 Material
Adverse Effect. A Material Adverse Effect occurs.
10.9 Lender’s
Lien Priority. For any reason any Lien created under any Loan Document is not a valid, perfected, first-priority Lien (other
than purchase-money Liens on Equipment that are expressly allowed under this Agreement to be senior to Lender’s Liens) or shall
be asserted by any Loan Party not to be a valid, perfected, first-priority Lien.
10.10 Breaches
Under Material Business Agreements. Any default occurs under any Material Business Agreement that any Loan Party is a party to,
that is not cured within any applicable cure period, and that could reasonably be expected to have a Material Adverse Effect.
10.11 Cross Default.
With respect to any Indebtedness with a balance of Fifty Thousand and No/100 ($50,000) or more (a) any Loan Party does not pay any principal
or interest due when and as the same shall become due and payable (whether at stated maturity, on demand, upon acceleration or otherwise)
after any cure period or (b) a default exists under that Indebtedness that allows the holder of the Indebtedness to accelerate the Indebtedness
(whether or not that right has been waived or deferred).
10.12 Change of
Control. A Change of Control occurs.
10.13 Invalidity.
(a) Any provision of any Loan Document is not, for any reason, at all times valid and binding on, and enforceable with respect to, each
Loan Party and each other Person party thereto, or (b) any Loan Party or any other Person party thereto claims in writing that any provision
of any Loan Document is not, for any reason, valid, binding, and enforceable on such Loan Party or any other Person.
10.14 Intellectual
Property. Any Governmental Body: (a) revokes, terminates, suspends, or adversely modifies any of any Loan Party’s Intellectual
Property necessary or desirable to the conduct of its business; (b) begins proceedings to suspend, revoke, terminate, or adversely modify
any of any Loan Party’s Intellectual Property necessary or desirable to the conduct of its business as typically conducted and
those proceedings are not dismissed or discharged within thirty (30) days; or (c) schedules or conducts a hearing on the renewal of any
Intellectual Property material to any Loan Party’s business and the Governmental Body issues a report recommending the termination,
revocation, suspension, or material, adverse modification of any Intellectual Property.
10.15 Destruction
of Collateral. Any portion of the Collateral is seized or taken by a Governmental Body, or any Loan Party (or any Loan Party’s
title or rights) are the subject to litigation that might, as determined by Lender in its discretion, result in material impairment or
loss of the security provided by any Loan Document, or a casualty occurs as to any material asset used in the conduct of any Loan Party’s
business.
10.16 Business
Interruption. Any Loan Party’s operations are interrupted at any time for more than five (5) consecutive calendar days.
10.17 Guarantor
Repudiation. (a) Any Guaranty of any of the Obligations (including without limitation any Guaranty Agreement) (i) is not in full
force and effect or (ii) ceases to be valid and binding on, or enforceable against any Loan Party; (b) any action is taken to discontinue
or to assert that any Guaranty of any of the Obligations (including without limitation any Guaranty Agreement) is not in full force and
effect; (c) any Guarantor of any of the Obligations does not comply with any of the terms or provisions of its Guaranty (including without
limitation any Guaranty Agreement) or any other default occurs under any Guaranty (including without limitation any Guaranty Agreement);
or (d) any Guarantor of any of the Obligations denies or gives Lender notice that it does not have any further liability under any Guaranty
(including without limitation any Guaranty Agreement).
10.18 Indictment;
Forfeiture. The indictment of, or institution of any legal process or proceeding against, any Loan Party, or any of its or their
officers or directors, under any applicable law where the relief, penalties, or remedies sought or available are a felony or include
the forfeiture of more than One Hundred Thousand and No/100 ($100,000) of property of any Loan Party or the imposition of any stay or
other order, the effect of which could be to restrain in any material way the conduct by any Loan Party of its business in the ordinary
course.
10.19 Hedging
Contracts. If any event of default, termination event, or other similar event occurs under any Hedging Contract that a Loan Party
is a party to.
10.20 Subordinated
Indebtedness Default.
(a)
An event of default occurs under any Subordinated Indebtedness Documents or under any Subordinated Indebtedness that is not cured
or waived within any applicable grace period, or if any party to a Subordination Agreement breaches or violates, or attempts to terminate
or challenge the validity (or any other Person shall so challenge the validity) or enforceability of, that Subordination Agreement.
(b)
(i) The subordination or intercreditor provisions of the documents evidencing or governing any Subordinated Indebtedness and/or
Liens securing such Subordinated Indebtedness (including, without limitation, each Subordination Agreement) (all of the foregoing, collectively,
the “Intercreditor Provisions”) shall, in whole or in part, terminate, cease to be effective or cease to be legally
valid, binding and enforceable against any holder of the applicable Indebtedness or Lien or such holder shall fail to comply with such
Intercreditor Provisions; or (ii) any Borrower or any other Person shall, directly or indirectly, disavow or contest in any manner (A)
the effectiveness, validity or enforceability of any of the Intercreditor Provisions, (B) that the Intercreditor Provisions exist for
the benefit of Lender, or (C) that all payments of principal of or premium and interest on the applicable Indebtedness, or realized from
the liquidation of any property of any Loan Party, shall be subject to any of the Intercreditor Provisions.
10.21 Depository
Instructions. Any standing transfer instruction (or any other instruction or agreement regarding any Cash Concentration Account),
is amended or terminated without the written consent of Lender, or any Loan Party directs any Account Debtor to make a payment in respect
of any Account to any place, lockbox or deposit account other than any Cash Concentration Account, as applicable.
ARTICLE
11
LENDER’S RIGHTS AND REMEDIES AFTER AN EVENT OF DEFAULT
11.1 Rights and
Remedies. When an Event of Default occurs under Section 10.7, all Obligations are immediately due and payable and Lender’s
obligation to make Loans or Advances immediately terminates. When any Event of Default exists, Lender has all rights and remedies provided
under the Loan Documents, by law, and under all other existing and future agreements between Lender and any Loan Party. All rights and
remedies are cumulative. Without limiting the preceding, when any Event of Default exists, Lender may, at its election, without notice
and without demand, do any one or more of the following (all of which are authorized by the Loan Parties):
(a)
Declare all Obligations immediately due and payable.
(b)
Stop making Loans or Advances.
(c)
Terminate Lender’s future obligations to any Loan Party (which does not affect Lender’s rights, its Liens on the Collateral,
or the Obligations) including without limitation, by declaring the Revolving Commitment to be terminated, whereupon such Revolving Commitment
and obligation shall be terminated.
(d)
Reduce or condition the Revolving Commitment.
(e)
Settle or adjust disputes and claims directly with Account Debtors for amounts and on terms that Lender determines in its discretion
(and Lender will credit Borrowers’ Loan Account with only the net-cash amounts received by Lender after deducting all Expenses).
(f)
Direct the Loan Parties to hold and segregate all returned Inventory in trust for Lender.
(g)
Make payments and do acts that Lender considers necessary or appropriate in its discretion to protect and preserve its Lien on
the Collateral. If requested by Lender, the Loan Parties must assemble the Collateral, deliver the Collateral to any location specified
by Lender, or allow Lender or its agents to pick up the Collateral.
(h)
Without retaining any Collateral in satisfaction of an obligation (within the meaning of Section 9-620 of the UCC), Lender may
hold or set off and apply to the Obligations any: (1) balances and deposits of any one or more of the Loan Parties held by Lender (including
any amounts received in a lockbox, blocked account, or the Cash Concentration Account); (2) Indebtedness at any time owing to or for the
credit or the account of any Loan Party held by Lender; and (3) all of each Loan Party’s balances and deposits held or controlled
by Lender (including any amounts received in a lockbox, blocked account, or Cash Concentration Account).
(i)
Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Lender
is hereby granted an irrevocable, non-exclusive license or other right to use, license or sub-license (exercisable without payment of
compensation to any Loan Party or any other Person) any or all of each Borrower’s Intellectual Property and any property of a similar
nature, in advertising for sale, marketing, selling and collecting and in completing the manufacturing of any Collateral, and each Borrower’s
rights under all licenses and franchise agreements shall inure to Lender’s benefit.
(j) Sell the Collateral at
either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and
at such places (including any Loan Party’s premises) as Lender determines is commercially reasonable. It is not necessary that
the Collateral be present at any sale. Lender will give notice of the disposition of the Collateral as required by law. Any
deficiency that exists after disposition of the Collateral as provided above must be paid immediately by the Loan Parties. Any
excess will be remitted without interest by Lender to the party or parties legally entitled to the excess.
(k)
Credit bid and purchase at any public sale.
(l) Lender is entitled to the immediate appointment of a receiver for all or any part of the Collateral (whether the receivership is
incidental to a proposed sale of the Collateral under the UCC or otherwise). Each Loan Party consents to the appointment of a receiver
without notice or bond, to the fullest extent not prohibited by applicable law, and waives all notices of and defenses to the appointment
of a receiver and may not oppose any application Lender makes for the appointment of a receiver. At Lender’s option the receivership
may continue until the Obligations are fully satisfied and performed.
In addition, Lender has all
rights and remedies provided by law and any rights and remedies contained in the Loan Documents. The exercise or non-exercise of any right
or remedy does not preclude the exercise of any other right or remedy. All rights and remedies are cumulative.
The proceeds realized from
any sale or other disposition of any Collateral may be applied, first to any Expenses incurred by Lender and then to the remainder of
the Obligations in such order of application as Lender may elect in its discretion, with Borrowers and the other Loan Parties remaining
liable for any deficiency.
11.2 No Waiver.
No delay on Lender’s part in exercising any right, power, or privilege under this Agreement or any Loan Document is a waiver, nor
does any single or partial exercise of any right, power, or privilege under this Agreement or otherwise preclude the exercise of any
other right, power, or privilege.
ARTICLE
12
WAIVERS AND JUDICIAL PROCEEDINGS
12.1 Notice Waiver.
To the fullest extent not prohibited by law, each Loan Party waives all notices and demands that it would otherwise be entitled to receive
(including non-payment of any of the Accounts, demand, presentment, protest, notice of acceptance, notice of Loans or Advances made,
credit extended, or Collateral received or delivered).
12.2 Delay.
Any delay or omission by Lender in exercising any right, remedy, or option does not waive that right (or any other right, remedy, option,
or default).
12.3 Jury Waiver.
EACH LOAN PARTY AND LENDER EACH IRREVOCABLY WAIVES ITS RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY KIND BROUGHT BY ANY SUCH PERSON AGAINST ANOTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. EACH LOAN PARTY AND LENDER EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT
A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION
OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, WHETHER OR NOT SPECIFICALLY SET FORTH THEREIN.
ARTICLE
13
EFFECTIVE DATE AND TERMINATION
13.1 Term.
This Agreement inures to the benefit of, and is binding on, the respective successors and permitted assigns of each Loan Party, Lender,
and their respective successors and assigns, is effective on the Closing Date, and continues in full force and effect until the Termination
Date unless sooner terminated as provided in this Agreement. Without limiting Section 11.1, (1) the Aggregate Revolving Commitment
expires on the Maturity Date and (2) all Obligations must be paid in full by Borrowers on the Maturity Date. Borrowers may terminate
this Agreement with at least ninety (90) days’ prior written notice to Lender by (1) paying all Obligations in full (including
the Prepayment Fee in the following sentence); and (2) paying in full (or, at Lender’s election, cash collateralizing to its satisfaction)
Hedging Obligations.
If for any reason this Agreement
is terminated or all Obligations are paid in full before the Termination Date (including under Section 11.1 and this Section
13.1). Borrowers must pay Lender a termination premium (the “Prepayment Fee”) equal to:
Period during which early termination occurs |
|
Prepayment Fee |
On or before the first anniversary of the Closing Date |
|
Three Percent (3%) of the Specified Amount |
After the first anniversary of the Closing Date and on or before the second anniversary of the Closing Date |
|
Two Percent (2%) of the Specified Amount |
After the second anniversary of the Closing Date and before the Termination Date |
|
One Percent (1%) of the Specified Amount |
The Prepayment Fee is also due and payable: (1)
in connection with any termination of this Agreement when an Event of Default exists during any of the applicable periods set forth above;
(2) if any Loan Party becomes subject to an Insolvency Proceeding and this Agreement is terminated or all Obligations are paid in connection
with any Insolvency Proceeding; or (3) in connection with payment of any Obligations by any trustee, receiver, interim receiver, administrator,
custodian, debtor-in-possession, or other court appointed or legally authorized representative. The Loan Parties agree that the Prepayment
Fee is a reasonable estimate of Lender’s damages due to the early termination of this Agreement and the Loan Parties agree that
the amount is reasonable under the current circumstances currently existing. The Prepayment Fee is part of the Obligations and is secured
by the Collateral.
13.2 Termination.
The termination of this Agreement does not affect any Loan Party’s Obligations arising before the effective Termination Date, and
the Loan Documents remain in full force and effect until all Obligations are irrevocably paid and performed in full (other than contingent
obligations with respect to which no claim has been asserted or threatened). The Liens and rights granted to Lender (including the financing
statements) continue in full force and effect notwithstanding the termination of this Agreement or that the Loan Account may from time
to time be in a zero or credit position, until all of the Obligations of each Loan Party have been paid or performed in full (other than
contingent obligations with respect to which no claim has been asserted or threatened). Accordingly, each Loan Party waives any rights
that it may have under the UCC or other applicable law to require that Lender file termination statements or mortgage discharges with
respect to the Collateral unless and until this Agreement has been terminated in accordance with its terms, and all Obligations are irrevocably
paid and performed in full (other than contingent obligations with respect to which no claim has been asserted or threatened). All indemnification
obligations in the Loan Documents survive the termination of the Loan Documents and payment and performance of the Obligations in full.
In addition, certain provisions of the Loan Documents remain in effect even after all Obligations are irrevocably paid and performed
in full.
ARTICLE
14
LOAN PARTY REPRESENTATIVE
14.1 Appointment
and Relationship. The Loan Party Representative is appointed by each Loan Party as its contractual representative under each
Loan Document and each Loan Party irrevocably authorizes the Loan Party Representative to act as the contractual representative with
the rights and duties set forth in the Loan Documents. The Loan Party Representative agrees to act as such contractual representative.
Additionally, each Loan Party appoints the Loan Party Representative as its agent to receive all Loan proceeds in its operating account
and to promptly disburse the Loans to the appropriate Borrower. Lender and its officers, directors, agents, or employees are not liable
to the Loan Party Representative or any Loan Party for any action taken or omitted to be taken by the Loan Party Representative or the
Loan Parties under this Article.
14.2 Authority.
Each Loan Party authorizes the Loan Party Representative on its behalf to execute and deliver to Lender the Loan Documents and all related
agreements, certificates, documents, and instruments as are necessary or appropriate to effect the purposes of the Loan Documents (including
Borrowing Base Certificates and Compliance Certificates). Each Loan Party agrees that any action taken by the Loan Party Representative
(or the other Borrowers) in accordance with the terms of the Loan Documents, and the Loan Party Representative’s exercise of its
powers in the Loan Documents (together with such other powers as are reasonably incidental) are binding on all of the Loan Parties.
14.3 Notices.
Each Loan Party and the Loan Party Representative must immediately notify Lender if a Default Condition exists. Any notice of a Default
Condition provided by Lender to the Loan Party Representative is treated as notice to each Loan Party.
14.4 Joint and
Several Obligations.
(a)
Each Loan Party is jointly and severally liable for all Obligations (except as may be limited by a Guaranty Agreement) and this
joint and several liability is not affected by any extensions, renewals, waivers, or forbearances granted by Lender, Lender’s failure
to give any Loan Party notice of any borrowing or any other notice, Lender’s failure to pursue or preserve its rights against any
Loan Party or other Person, Lender’s release of any Collateral, or any other defense available to a surety.
(b)
Each covenant, agreement, obligation, representation, and warranty of the Loan Parties contained in the Loan Documents is the joint
and several undertaking of each Loan Party. Each Loan Party acknowledges that its obligations might be construed to be, at least in part,
a guarantee of the Obligations of the other Loan Parties and, in full recognition of that fact, each Loan Party consents and agrees that
Lender may, at any time and from time to time without notice or demand, whether before or after any actual or purported termination, repudiation,
or revocation of this Agreement by any Loan Party, and without affecting the enforceability or continuing effectiveness of the Loan Documents
as to any Loan Party or each Loan Party’s joint and several liability for the Obligations: (1) supplement, restate, modify, amend,
waive, increase, decrease, extend, renew, or otherwise change the Loan Documents (including time for payment (including any increase or
decrease of the interest rates or advance rates in the Borrowing Base)); (2) accept partial payments; (3) release, reconvey, terminate,
waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer, or enforce any security or guarantees (and apply any security
and direct the order or manner of sale as determined by Lender); (4) release any Person from any liability with respect to any of the
Loan Documents; (5) settle, release on terms satisfactory to Lender or by operation of applicable law or otherwise liquidate or enforce
any security or Guaranty in any manner, consent to the transfer of any security, and bid and purchase at any sale; or (6) consent to a
merger, change, or any other restructuring or termination of any Loan Party’s existence and correspondingly restructure the Obligations.
(c)
Each Loan Party states and acknowledges that: (1) the Loan Parties desire to utilize their borrowing potential on a consolidated
basis as if they were merged into a single entity and that the Loan Documents establish credit facilities that would not otherwise be
available to the Loan Parties if each Loan Party were not jointly and severally liable for the Obligations; (2) it has determined that
it will benefit specifically and materially from the Loans and Advances under this Agreement; (3) it is both a condition precedent to
Lender’s obligations and the desire of the Loan Parties that each Loan Party execute and deliver the Loan Documents to Lender; and
(4) the Loan Parties have requested and bargained for the structure and terms of and security for the Advances under the Loan Documents.
If for any reason any Loan Party’s obligations under the Loan Documents (or if any Liens securing the joint and several Obligations),
would, but for this Section, be unenforceable under applicable law, then the joint and several liability and each Lien is valid and enforceable
to the maximum extent that would not cause the joint and several liability or Liens to be unenforceable under applicable law (and the
joint and several liability and each Lien is treated as having been automatically amended accordingly at all relevant times).
(d)
To the extent that any Loan Party, under this Agreement as a joint and several obligor or a Guarantor, repays any Obligations constituting
either or both Loans or other Obligations incurred directly and primarily by any other Loan Party (an “Accommodation Payment”),
then the Loan Party making an Accommodation Payment is entitled to contribution and indemnification from (and to be reimbursed by) each
of the other Loan Parties in an amount, for each of the other Loan Parties, equal to a fraction of the Accommodation Payment, the numerator
of which is the other Loan Parties’ Allocable Amount (as defined below) and the denominator of which is the sum of the Allocable
Amounts of all of the Loan Parties. As of any determination date the “Allocable Amount” of each Loan Party is equal
to the maximum liability for Accommodation Payments that could be asserted against that Loan Party without: (1) rendering that Loan Party
“insolvent” within the meaning of Section 101(31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act
(“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”); (2) leaving that Loan Party
with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA; or (3) leaving
that Loan Party unable to pay its debts as they become due within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the
UFTA, or Section 5 of the UFCA. All rights and claims for contribution, indemnification, and reimbursement under this Section and applicable
law are subordinate in right of payment to the prior payment in full of the Obligations. The provisions of this Section, to the extent
expressly inconsistent with other provisions of the Loan Documents, supersede the inconsistent provisions.
14.5 Cross Guaranty.
(a)
Notwithstanding that the Loan Parties are jointly and severally liable for all Obligations, if for any reason the Loan Parties
are found in a final, non-appealable order not to be jointly and severally liable for all Obligations, then provisions of this Section
apply and each Loan Party absolutely and unconditionally guarantees to Lender and its successors and assigns, the full and prompt payment
(whether at stated maturity, by acceleration, or otherwise) and performance of all Obligations (excluding Excluded Hedging Obligations).
Each Loan Party’s Guaranty obligation is in addition to all other Guaranty obligations and is a payment and performance Guaranty,
and its obligations under this Section are absolute and unconditional, irrespective of, and not affected by:
(1)
The genuineness, validity, regularity, enforceability or any future amendment of, or change in, any other Loan Document or any
other agreement, document, or instrument to which the other Loan Parties are or may become a party.
(2)
Lender not enforcing the Loan Documents (including this Section).
(3)
The existence, value, or condition of any Collateral, Lender not perfecting its Lien on any Collateral, Lender releasing any Collateral,
or any Person liable for the Obligations.
(4)
Any other action or circumstances that could be a legal or equitable defense of a surety or guarantor.
(b)
Lender does not have to proceed against any other Person (including any other Loan Party) or any Collateral before requiring payment
by any one or more of the Loan Parties. Lender may proceed, before, after, or at the same time to enforce its rights under this Section
and against any Collateral.
(c)
Each Loan Party waives and agrees that it may not at any time insist on, plead, or claim, or take the benefit or advantage of any
laws, claims, or doctrines related to appraisal, valuation, stay, extension, marshaling, redemption, or exemption. Each Loan Party waives
with respect to its obligations and with respect to any of the Obligations: (1) all defenses with respect to diligence, presentment, demand,
maturity, extension of time, change in nature or form of the Obligations, acceptance, release of security, composition, or agreement arrived
at as to the amount of, or the terms of, the Obligations; (2) notice of adverse change in the other Loan Parties’ financial condition;
and (3) any other fact that might increase the risk to that Loan Party. Each Loan Party also waives the benefit of all provisions of law
that are or might be in conflict with the terms of this Section. Each Loan Party represents, warrants, and agrees that its obligations
under this Section are not and will not be subject to any setoffs, defenses, or counterclaims. Each Loan Party’s obligations under
this Section remain in full force and effect until the Obligations have been irrevocably paid and performed in full and the Loan Documents
have been terminated (other than contingent obligations with respect to which no claim has been asserted or threatened). Each Loan Party
is in the same position as a principal debtor with respect to the Obligations and expressly waives all rights it has and may have to require
that Lender proceed against any other Loan Party or any Collateral before proceeding against, or as a condition to proceeding against,
that Loan Party. The parties acknowledge that, but for the provisions of this Section (including the waivers), Lender would not enter
into the Loan Documents.
(d)
Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, until the Obligations are irrevocably
paid and performed in full (other than contingent obligations with respect to which no claim has been asserted or threatened), each Loan
Party:
(1)
Subordinates and defers all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification,
setoff, or any other rights that a surety could have against a principal, a guarantor, a maker, a co-maker, an obligor, an accommodation
party, a holder, a transferee, and that a Loan Party may have against any Person (including another Loan Party) in connection with or
as a result of a Loan Party performing its obligations under the Loan Documents or any other agreements.
(2)
Irrevocably subordinates and defers any “claim” (as defined in the Bankruptcy Code) against any Person (including the
other Loan Parties and any surety for any of the Obligations), either directly or as an attempted set off to any action instituted by
Lender against any Person (including the other Loan Parties).
(3)
Acknowledges and agrees (x) that this subordination and deferral is intended to benefit Lender and does not limit or otherwise
affect that Loan Party’s liability or the enforceability of this Section and (y) that Lender and its respective successors and assigns
are intended third-party beneficiaries of the waivers and agreements set forth in this Section.
(e)
If Lender enforces its rights with respect to any Collateral (either by judicial foreclosure or by non-judicial sale or enforcement),
Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights, remedies,
and benefits under this Section. If, in the exercise of any of its rights and remedies, Lender forfeits any of its rights or remedies,
including its right to enter a deficiency judgment against any Loan Party or any other Person, whether because of any applicable laws
relating to “election of remedies” or similar laws, the Loan Parties consent to that action by Lender and waive any claim
based on that action, even if the action by Lender results in a full or partial loss of any subrogation or other rights that a Loan Party
might otherwise have had but for Lender’s action. Any election of remedies that results in the denial or impairment of Lender’s
right to seek a deficiency judgment against a Loan Party does not impair the other Loan Parties’ obligation to pay the full amount
of the Obligations. If Lender bids at any foreclosure sale, trustee sale, or at any private sale, Lender may bid all or less than the
amount of the Obligations and the amount of Lender’s bid need not be paid by Lender but will instead be credited against the Obligations.
The amount of the successful bid at any such sale, whether by Lender or any other bidder, is conclusively treated as the fair market value
of the Collateral (and the difference between that bid amount and the remaining balance of the Obligations is conclusively treated as
the amount of the Obligations guaranteed under this Section, notwithstanding that any law, court decision, or ruling may have the effect
of reducing the amount of the deficiency claim but for bidding at any sale).
(f) The Guaranty in this
Section is a continuing Guaranty that remains in full force and effect until the Obligations are irrevocably paid and performed in
full.
(g)
Each Loan Party’s liability under this Section is limited to an amount not to exceed on any determination date the greater
of (1) or (2):
(1)
The net amount of all Loans to the other Loan Parties under this Agreement and then re-loaned or otherwise transferred to or directly
benefiting the subject Loan Party.
(2)
The Loan Party’s Allocable Amount, after taking into account, among other things, that Loan Party’s right of contribution
and indemnification from the other Loan Parties under Section 14.4.
14.6 Waivers.
Each Loan Party waives (1) all rights with respect to subrogation, reimbursement, indemnity, exoneration, contribution, or any other
claim that has or could have against the other Loan Parties or other Person directly or contingently liable for the Obligations, or against
or with respect to the other Person’s (including any Loan Party’s) property (including, any property that is Collateral for
the Obligations), arising in connection with the Loan Documents, until the Loan Documents are terminated and the Obligations are irrevocably
paid and performed in full (other than contingent obligations with respect to which no claim has been asserted or threatened) and (2)
any defense it may otherwise have to paying and performing the Obligations based on any contention that its liability under the Loan
Documents is limited and not joint and several. The preceding waivers and all other waivers in the Loan Documents are a material inducement
to Lender’s agreement to enter into the Loan Documents and to make Advances and other Loans.
ARTICLE
15
MISCELLANEOUS
15.1 Governing
Law.
(a)
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES.
(b)
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH LOAN PARTY AND LENDER CONSENTS TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH LOAN PARTY, AND LENDER IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION. NOTWITHSTANDING THE FOREGOING, LENDER SHALL HAVE THE RIGHT TO BRING
ANY ACTION OR PROCEEDING AGAINST ANY LOAN PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION AS LENDER DEEMS NECESSARY OR APPROPRIATE
IN ORDER TO EXERCISE REMEDIES WITH RESPECT TO THE COLLATERAL.
15.2 Location
of Closing . Each Borrower acknowledges and agrees that it has delivered, with the intent to be bound, its executed counterparts
of this Agreement and each other Loan Document, together with all other documents, instruments, opinions, certificates and other items
required under Section 8.1, to Lender at 405 Lexington Ave, 59th Floor, New York, NY 10174. All parties agree that the closing
of the transactions contemplated by this Agreement has occurred in New York.
15.3 Entire Understanding
and Amendments. This Agreement and the other Loan Documents (including all recitals) are the entire agreement among the parties
related to the subject matter of the Loan Documents. The Loan Documents supersede all prior agreements, commitments (including any commitment
letters), and understandings among the parties related to the subject matter of the Loan Documents. Any promises, representations, warranties,
or guarantees that may arise in the future among the parties are not effective unless they are in a writing signed by each Loan Party’s
and Lender’s respective officers. No part of the Loan Documents may be changed, modified, amended, waived, supplemented, discharged,
cancelled, or terminated orally or by any course of dealing, or in any manner other than by an agreement in writing signed by Lender
and the Loan Parties. Each Loan Party acknowledges that it has been advised by counsel in connection with the execution of the Loan Documents
(or has had the opportunity to be advised) and that it is not relying on any oral representations or statements by Lender in entering
into the Loan Documents.
15.4 Transfers and Assignments.
(a) The Loan
Parties. The Loan Parties may not assign or otherwise transfer any of their rights or Obligations without Lender’s prior
written consent.
(b) Lender. Lender
may at any time sell all or a portion of its interest in the Loan Documents and the Obligations through sales, participations, or
otherwise. Any assignment creates a direct obligation of the Loan Parties to the assignee and each assignee is a
“Lender” for all purposes under the Loan Documents. Further, in connection with Lender’s sale of a participation
or an assignment of any interest in the Loans, Lender may provide to the participant or assignee any financial or other information
it knows of related to the Loan Parties and the Loan Documents.
(c) Register.
Lender may maintain a register to record the names and addresses of each party to a transfer under this Section, the commitments to
make Advances and other Loans, and principal amounts of the Loans owing to Lender and any other Persons under the terms of the Loan
Documents (the “Register”). The entries in the Register are conclusive, and the Loan Parties and Lender may treat
each Person whose name is recorded in the Register as a Lender under the Loan Documents. The Register is available for inspection by
Borrowers, Lender, or any assignee or participant at reasonable times upon reasonable prior written notice.
(d) Pledge. Lender
may at any time grant a Lien in all or any portion of its rights under this Agreement to secure Lender’s obligations to any
Person (including a Federal Reserve Bank).
(e) Notes.
Borrowers must execute and deliver: (1) to Lender, the transferor, and the transferee any consent or release (of all or a portion of
the obligations of the transferor) in connection with each assignment or other transfer under this Section; (2) if Lender’s
entire interest in its commitments to make Advances and other Loans and all of its Advances and other Loans have been transferred to
the transferee, an appropriate replacement note if any Notes have been issued in accordance with Section 2.1 of this
Agreement (if requested by the transferee); and (3) if only a portion of Lender’s interest has been transferred, and if any
Notes have been issued in accordance with Section 2.1 of this Agreement, replacement notes to each of the transferor and the
transferee (if requested by the transferor and/or the transferee).
15.5 Payment Application.
Lender has the continuing and exclusive right to apply or reverse and re-apply any payment and any and all proceeds of Collateral to
any portion of the Obligations in such order as Lender determines. To the extent that any Loan Party makes a payment or Lender receives
any payment or proceeds of the Collateral for any Loan Party’s benefit that are later invalidated, declared to be fraudulent or
preferential, set aside, or required to be repaid to a trustee, debtor-in-possession, receiver, custodian, or any other Person under
any bankruptcy law, common law, or equitable principal, then, to that extent, the Obligations or part of the Obligations intended to
be satisfied is revived and continue as if the payment or proceeds had not been received by Lender.
15.6 Expenses;
Indemnity.
(a)
Borrowers shall pay all Expenses promptly upon request. Borrowers also shall reimburse Lender for all legal, accounting, appraisal,
consulting, and other fees and expenses incurred by it in connection with (i) negotiation and preparation of any Loan Documents, including
any modification thereof; (ii) administration of and actions relating to any Collateral, Loan Documents and transactions contemplated
thereby, including any actions taken to perfect or maintain priority of Lender’s Liens on any Collateral, to maintain any insurance
required hereunder or to verify Collateral; and (iii) subject to the limits of Section 4.10, any examination or appraisal with
respect to any Loan Party or Collateral by Lender’s personnel or a third party.
(b)
Each Loan Party indemnifies Lender and each of its Affiliates and its and its Affiliates’ respective officers, directors,
attorneys, representatives, Affiliates, employees, advisors, and agents (each an “Indemnified Person”) from and against
any and all claims, liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, Expenses, and disbursements
of any kind or nature whatsoever (including attorneys’ fees and disbursements of counsel) that may be imposed on, incurred by, or
asserted against Lender in any litigation, proceeding, or investigation with respect to any aspect of, or any transaction contemplated
by, or referred to in, or any matter related to, the Loan Documents, whether or not Lender is a party to the Loan Documents (each and
all of the foregoing, the “Indemnified Liabilities”). WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH
INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR
OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON. The foregoing to the contrary notwithstanding, no Loan Party shall have any
obligation to any Indemnified Person under this Section with respect to any Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. The Loan Parties must
pay all Expenses when due. The Loan Parties’ obligation to pay the Expenses and all of the reimbursement and indemnification obligations
provided for in the Loan Documents are part of the Obligations, are secured by all of the Collateral, and survive the repayment of the
Obligations.
15.7 Notice.
Any notice or request may be given to the Loan Party Representative (individually or on behalf of each Loan Party) or to Lender at their
addresses stated below (or at such other address as may be specified in a notice designated as a notice of change of address under this
Section). Any notice, request, demand, direction, or other communication (for purposes of this Section only, a “Notice”)
to be given to or made on any party under any provision of the Loan Documents must be given or made in writing (which includes by means
of electronic transmission (i.e., “email”) or facsimile transmission). Any Notice must be delivered to the applicable
parties at the addresses and numbers set forth under their respective names in this Section or in accordance with any later unrevoked
Notice from any party that is given in accordance with this Section. Any notice given to the Loan Party Representative is treated as
having been given to each other Loan Party. Any Notice is effective:
(a)
In the case of hand-delivery, when delivered.
(b)
If given by mail, four (4) days after the Notice is deposited into the U.S. mail.
(c)
In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine number if the sending party
receives a delivery confirmation from its own facsimile machine.
(d)
In the case of other electronic transmission, when actually received.
(e)
If given by other means (including by overnight courier), when actually received.
As of the Closing Date, the applicable parties’
addresses and numbers are as follows:
|
(A) |
If to Lender at: |
AB Lending SPV I LLC
d/b/a Mountain Ridge Capital
Attention:
Telephone:
Email: |
|
|
|
|
|
|
|
And |
|
|
|
|
|
|
|
AB Lending SPV I LLC
d/b/a Mountain Ridge Capital
Attention:
Telephone:
Email: |
|
|
With a copy to
(which is not notice):
|
Parker, Hudson, Rainer & Dobbs LLP
Attention:
Telephone:
Email:
|
|
|
|
|
|
(B) |
If to Loan Party
Representative at:
|
ICU Eyewear, Inc.
Attention:
Telephone:
Email: |
|
|
With a copy to
(which is not notice):
|
Bevilacqua PLLC
Attention:
Telephone:
Email:
|
15.8 Survival.
The Loan Parties’ obligations under Sections 2.7, 3.7, 3.8, 3.11, and 15.6 survive the termination
of the Loan Documents and payment in full of the Obligations.
15.9 Severability.
If any part of the Loan Documents is found for any reason to be unenforceable, all other parts nevertheless remain enforceable.
15.10 Injunctive
Relief. If any Loan Party does not perform, observe, or discharge its obligations or liabilities under the Loan Documents (or
threatens to fail or refuse to perform, observe, or discharge its obligations or liabilities) any remedy at law may prove to be inadequate
relief to Lender. Therefore, Lender is entitled to temporary and permanent injunctive relief in any such case without the necessity of
proving that actual damages are not an adequate remedy.
15.11 Consequential
Damages. Under no circumstances is Lender, its Affiliates, its agents, or its attorneys liable to any Loan Party for any special,
incidental, consequential, or punitive damages (including those arising from any breach of contract, tort, or other wrong relating to
the Obligations, the Loan Documents, the Collateral, or any agreement between Lender and any one or more of the Loan Parties).
15.12 Counterparts
and Electronic Signatures. The Loan Documents may be executed in any number of counterparts with the same effect as if all signatories
had signed the same document. All counterparts must be construed together to constitute one instrument. Any signature delivered by facsimile,
email transmission, DocuSign or other electronic means is treated as an original signature. The words “execution”, “execute”,
“signed”, “signature” and words of like import in or related to this Agreement or any other document to be signed
in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures, the electronic
matching of assignment terms and contract formations on electronic platforms approved by Lender, or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based
on the Uniform Electronic Transactions Act.
15.13 Construction.
Each party and its counsel have reviewed this Agreement. Accordingly, the normal rule of construction that any ambiguities are resolved
against the drafting party does not apply in interpreting this Agreement, any other Loan Document, or any amendments, schedules, or exhibits
to this Agreement and the other Loan Documents.
15.14 Confidentiality
and Sharing Information.
(a)
Lender agrees to take normal and reasonable precautions to maintain the confidentiality of any information designated in writing
as confidential and provided to it by any Borrower or any Subsidiary, except that such information may be disclosed (i) to any Related
Party of Lender, including accountants, legal counsel and other advisors, (ii) to the extent required by applicable laws or regulations
or by any subpoena or similar legal process, (iii) to the extent requested by any examiner, regulatory agency or authority, (iv) 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 Lender or any Related Party of Lender on a nonconfidential basis from a source other than a Borrower, (v) in connection with the exercise
of any remedy hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, and (vi)
subject to provisions substantially similar to this Section 15.14(a), to any actual or prospective assignee or participant, or
(vii) with the consent of Loan Party Representative. Any Person required to maintain the confidentiality of any information as provided
for in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such information as such Person would accord its own confidential information.
(b)
Lender and its Affiliates may offer to the Loan Parties and their Affiliates financial, advisory, investment banking, and other
services. Each Loan Party authorizes Lender to share with its Affiliates any information related to each Loan Party and its Affiliates.
This authorization survives the payment and performance of the Obligations and the termination of the Loan Documents.
15.15 Publicity.
Notwithstanding anything to the contrary set forth herein, each Loan Party authorizes Lender to publicly announce the financial arrangements
entered into among the Loan Parties and Lender (including announcements that are commonly known as tombstones) in any form and media
Lender determines.
15.16 Creditor-Debtor
Relationship. The relationship between Lender, on the one hand, and the Loan Parties, on the other hand, is solely that of creditor
and debtor. Lender does not have any fiduciary relationship or duty to any Loan Party arising out of or in connection with, and there
is no agency, tenancy or joint venture relationship between Lender and the Loan Parties by virtue of, any Loan Document or any transaction
contemplated therein. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document), each Borrower and each other Loan Party acknowledges and agrees,
and acknowledges its Affiliates’ understanding, that: (a)(i) the arranging and other services regarding this Agreement provided
by Lender and any Affiliate thereof, are arm’s-length commercial transactions between the Borrowers, each other Loan Party and
their respective Affiliates, on the one hand, and Lender and, as applicable, its Affiliates, on the other hand, (ii) each of the Borrowers
and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate,
and (iii) each Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions
of the transactions contemplated hereby and by the other Loan Documents; (b)(i) Lender and its Affiliates each is and has been acting
solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting
as an advisor, agent or fiduciary, for any Borrower, any other Loan Party or any of their respective Affiliates, or any other Person
and (ii) neither Lender nor any of its Affiliates has any obligation to any Borrower, any other Loan Party or any of their respective
Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other
Loan Documents; and (c) Lender and its Affiliates may be engaged in a broad range of transactions that involve interests that differ
from those of the Borrower, the other Loan Parties and their respective Affiliates, and neither Lender nor any of its Affiliates has
any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates. To the
fullest extent permitted by law, each of the Borrower and each other Loan Party hereby waives and releases any claims that it may have
against Lender or any Affiliate thereof with respect to any breach or alleged breach of agency or fiduciary duty in connection with any
aspect of any transactions contemplated hereby.
15.17 Conflict.
If there is any conflict, inconsistency, or discrepancy between the provisions of this Agreement and the provisions of the other Loan
Documents, the provisions giving Lender greater rights or remedies (as determined by Lender) govern to the maximum extent not prohibited
by applicable law (it being understood that the purpose of this Agreement and any Loan Document is to add to, and not to limit, detract,
or derogate from, diminish, or otherwise impair or reduce the rights granted to Lender in this Agreement or the Loan Documents). For
greater certainty, where the provisions of this Agreement and the provisions of the other Loan Documents deal with the same subject matter
but are not identical, no conflict between the documents will exist or be deemed to exist unless observing or complying with the provisions
of one document will cause a default under the provisions of the other document.
15.18 PATRIOT
ACT. Lender hereby notifies each Loan Party and each Individual Guarantor that, (a) pursuant to the requirements of the USA Patriot
Act, it is required to obtain, verify and record information that identifies each Loan Party and each Individual Guarantor, which information
includes the name and address of such Loan Party and such Individual Guarantor and other information that will allow Lender to identify
such Loan Party and such Individual Guarantor in accordance with the USA Patriot Act and (b) pursuant to the Beneficial Ownership Regulation,
it is required to obtain a Beneficial Ownership Certificate.
15.19 Amendment
and Restatement; No Novation; Reaffirmation of Grant of Security Interest.
This Agreement serves only to amend and restate the Original Loan Agreement; is not intended to create or result in either a novation
or an accord or satisfaction; does not effect a refinancing, repayment, satisfaction or extinguishment of any of the Obligations outstanding
under the Original Loan Agreement; and does not extinguish, release, terminate or otherwise affect any security interest or other Lien
granted under the Original Loan Agreement or any other Loan Documents. All security interests and Liens granted under or evidenced
by the Original Loan Agreement and the other Loan Documents are hereby ratified, confirmed and continued and shall remain outstanding
and continue to secure all of the Obligations (including those in existence on the date hereof under the Original Loan Agreement).
Borrowers hereby ratify and reaffirm the Original Loan Agreement, as amended and restated herein, and all covenants, duties, liabilities
and obligations thereunder.
15.20 FINAL AGREEMENT.
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of Page Intentionally Left Blank
– Signature Pages Follow]
The Borrowers and Lender entered
into this Agreement on the Closing Date.
|
BORROWERS: |
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|
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ICU EYEWEAR, INC. |
|
a California corporation, |
|
as a Borrower and as Loan Party Representative |
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|
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By: |
/s/ Ellery W. Roberts |
|
Name: |
Ellery W. Roberts |
|
Title: |
Executive Chairman and President |
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|
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ICU EYEWEAR HOLDINGS, INC., a California corporation, as a Borrower |
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|
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By: |
/s/ Ellery W. Roberts |
|
Name: |
Ellery W. Roberts |
|
Title: |
Executive Chairman and President |
|
|
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1847 ICU HOLDINGS INC., a Delaware corporation, as a Borrower |
|
|
|
By: |
/s/ Ellery W. Roberts |
|
Name: |
Ellery W. Roberts |
|
Title: |
Chief Executive Officer |
[Signatures continue on the following page]
Credit and Security Agreement (ICU Eyewear)
|
LENDER: |
|
|
|
AB LENDING SPV I LLC |
|
a Delaware limited liability company |
|
d/b/a Mountain Ridge Capital |
|
|
|
By: |
/s/ Craig Winslow |
|
Name: |
Craig Winslow |
|
Title: |
President and CEO |
Credit and Security Agreement (ICU Eyewear)
Exhibit 10.2
Execution Version
LIMITED GUARANTY AGREEMENT
(COLLECTION)
1847 HOLDINGS LLC
THIS LIMITED GUARANTY AGREEMENT
(COLLECTION) (as amended, restated, supplemented or otherwise modified from time to time, this “Limited Guaranty”)
is made this 11th day of September, 2023, by 1847 HOLDINGS LLC, a Delaware limited liability company (“Limited
Guarantor”), in favor of AB LENDING SPV I LLC, a Delaware limited liability company d/b/a Mountain Ridge Capital (together
with its successors and assigns, “Lender” or the “Guaranteed Party”).
RECITALS:
WHEREAS, Lender has entered
into that certain Amended and Restated Credit and Security Agreement dated September 11, 2023 (as the same may be amended, restated, supplemented
or otherwise modified from time to time, collectively, the “Agreement”) with ICU EYEWEAR, INC., a California
corporation, ICU EYEWEAR HOLDINGS, INC., a California corporation, and 1847 ICU HOLDINGS INC., a Delaware corporation (together
with each Person that joins the Agreement as a Borrower, each a “Borrower”
and collectively the “Borrowers”), and each of the
other Loan Parties from time to time party thereto, pursuant to which Lender may make loans or other extensions of credit from time to
time to Borrowers on the terms and subject to all of the conditions set forth in the Agreement. Capitalized terms used in this Limited
Guaranty, unless otherwise defined herein, shall have the meaning ascribed to them in the Agreement;
WHEREAS, Limited Guarantor,
directly or indirectly through one or more Subsidiaries, owns one hundred percent (100%) of the outstanding equity Interests of Borrowers;
and
WHEREAS, a condition to Lender’s
extension of any credit to Borrowers under the Agreement is the execution and delivery of this Limited Guaranty by Limited Guarantor.
To induce Lender to extend credit to Borrowers under the Agreement, Limited Guarantor has agreed to execute and deliver and be bound by
the terms of this Limited Guaranty.
STATEMENT OF AGREEMENT:
NOW, THEREFORE, in consideration of the agreements and covenants contained herein, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Consignee agrees as follows:
1. (a) Subject to the
limitations set forth in Sections 1(b) and 1(c) of this Limited Guaranty, Limited Guarantor hereby unconditionally and absolutely
guarantees to the Guaranteed Party and its successors and assigns the due and punctual payment, performance and discharge (whether
upon stated maturity, demand, acceleration or otherwise in accordance with the terms thereof) of the Loans and all other Obligations of
Borrowers to the Guaranteed Party (including any portion thereof nominally held by the Guaranteed Party on behalf of others
who have acquired participation interests in any of such Obligations), whether arising under the Agreement or any of the other Loan Documents
and regardless of whether recovery upon any of such Loans or other Obligations becomes barred by any statute of limitations, is void or
voidable under any law relating to fraudulent obligations or otherwise, or is or becomes invalid or unenforceable for any other reason
(all such Loans and other Obligations being hereinafter referred to collectively as the “Guaranteed Obligations”).
Without limiting the generality of the foregoing, the term “Guaranteed Obligations” shall include all costs of
preserving, protecting, or disposing of the Collateral, all court costs and reasonable attorneys’ fees incurred by the Guaranteed
Party in any Insolvency Proceeding of Borrowers or any other Obligor (as hereinafter defined) and any interest, fees or other charges
and expenses accruing under any of the Loan Documents in any such Insolvency Proceeding, whether or not any of the same are recoverable
from Borrowers or such other Obligor under 11 U.S.C. § 506. As used herein, “Obligor” shall individually
and collectively refer to Borrowers and any other Person that is primarily or secondarily liable for the payment of the Obligations and
any Person that has conveyed or may hereafter convey any security interest or lien to Lender in any real or personal property to secure
payment of the Obligations.
(b) Notwithstanding
any other provision herein, this Limited Guaranty is a guaranty of collection, and Limited Guarantor shall have no obligation to make
any payment hereunder until (i) the Obligations have been accelerated pursuant to the Agreement, and (ii) the Guaranteed Party has used
its best efforts to liquidate all of the Collateral and has liquidated substantially all of the Collateral (an “Enforcement Event”).
(c) In no
event, however, shall Limited Guarantor’s liability under this Limited Guaranty exceed the difference between (i) the cost (as calculated
in accordance with GAAP to the reasonable satisfaction of the Guaranteed Party) of all Inventory owned by a Borrower that (A) is in the
possession of Target and (B) has been included in the Borrowing Base in a Borrowing Base Certificate (collectively, the “Guaranteed
Inventory”), and (ii) the proceeds, if any, actually realized from the sale, disposition, liquidation or other recovery of such
Guaranteed Inventory and actually received by Lender in connection therewith.
(d) Nothing
herein shall be construed to limit whatsoever the Guaranteed Party’s right to demand payment from or sue Limited Guarantor with
respect to any claim or cause of action not arising from this Limited Guaranty.
2. LIMITED
GUARANTOR HEREBY WAIVES: notice of acceptance hereof; notice of any Loans or other extensions of credit from time to time made by
Lender to Borrowers and the creation or existence of any Guaranteed Obligations; notice of the amount of Guaranteed Obligations from time
to time, subject to Limited Guarantor’s right to make inquiry of Lender to ascertain the amount of Guaranteed Obligations at any
reasonable time; notice of any adverse change in Borrowers’ financial condition or of any other fact which might increase Limited
Guarantor’s risk; notice of presentment for payment, demand, protest and notice thereof as to any note or other Instrument; notice
of any Default, Event of Default or acceleration and all other notices and demands to which Limited Guarantor might otherwise be
entitled under applicable law; any defense that Borrowers may at any time assert based upon the statute of limitations, the statute
of frauds, failure of consideration, fraud, bankruptcy, lack of legal capacity, usury, or accord and satisfaction; any defense that other
indemnity, guaranty or security was to be obtained; any defense or claim that any person purporting to bind Borrowers to the payment
or collection of Guaranteed Obligations did not have actual or apparent authority to do so; any right to contest the commercial reasonableness
of the disposition of any or all Collateral; and any defense or claim that any act or failure to act by the Guaranteed
Party had the effect of increasing Limited Guarantor’s risk of payment. Limited Guarantor further waives any right Limited Guarantor
may have under applicable law to any right to appraisement, valuation, stay of execution, or notice of election to declare due the
amount of any Guaranteed Obligations or with regard to Lender’s enforcement of any Lien or other interest the Guaranteed
Party may hold in any property of Borrowers, or any of them.
3. If
any Enforcement Event shall occur, then, Lender may, without notice to or demand upon Limited Guarantor, make the Guaranteed Obligations
immediately due and payable hereunder as to Limited Guarantor, and Lender shall be entitled to enforce the obligations of Limited Guarantor
hereunder for the benefit of the Guaranteed Party.
4. The Guaranteed
Party shall have a Lien upon or right of set-off to any and all credits and any and all other property of Limited Guarantor, now or at
any time whatsoever with or in the possession of the Guaranteed Party or any Person holding for the Guaranteed Party as security
for any and all Guaranteed Obligations, no matter how or when arising and whether under this or any other instrument or agreement or otherwise.
5. The
obligations of Limited Guarantor under this Limited Guaranty are absolute and unconditional, irrespective of the validity, legality or
enforceability of any of the Loan Documents and, to the fullest extent permitted by applicable law, irrespective of any other circumstance
whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of
the parties that the obligations of Limited Guarantor hereunder shall be absolute and unconditional under any and all circumstances. Without
limiting the generality of the foregoing, Limited Guarantor consents and agrees that, without notice to or by Limited Guarantor and without
affecting or impairing the liability or obligations of Limited Guarantor hereunder, the Guaranteed Party may: compromise or settle,
extend the period of duration or the time for the payment, discharge or performance of any of the Guaranteed Obligations or increase the
amount of the Guaranteed Obligations; refuse to enforce, or release all or any Obligors or other Persons liable for the payment of any
of the Guaranteed Obligations; increase, decrease or otherwise alter the rate of interest payable with respect to any of the
Guaranteed Obligations or grant other indulgences to Borrowers in respect thereof; amend or modify in any manner, or terminate or
release, any Loan Documents or other agreements now or hereafter evidencing, securing or otherwise relating to any of the Guaranteed Obligations
(other than this Limited Guaranty); release, surrender, exchange, modify or impair any and all Collateral or other property at any time
securing (directly or indirectly) any of the Guaranteed Obligations or on which the Guaranteed Party at any time may have a Lien;
extend the time of payment of any Collateral consisting of Accounts, Instruments, Chattel Paper or other rights to the payment
of money; refuse to enforce its rights, or make any compromise or settlement or agreement therefor, in respect of any and all of such
Collateral and other property, or with any Person liable for any of the Guaranteed Obligations, or with any other Person whatsoever; or
release or substitute any one or more of the endorsers or guarantors of the Guaranteed Obligations.
6. The Guaranteed
Party shall not be under any obligation to marshal any assets in favor of Limited Guarantor or against or in payment of any or all of
the Guaranteed Obligations. Limited Guarantor shall pay all expenses incurred by the Guaranteed Party in connection with enforcement
of the Guaranteed Party’s rights under this Limited Guaranty, including court costs, collection charges and other expenses,
and reasonable attorneys’ fees. If and to the extent the Guaranteed Party receives any payment on account of any of the Guaranteed
Obligations (whether from Borrowers or any other Obligor or from the sale or other disposition of any Collateral) and such payment or
any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other Person in any Insolvency Proceeding, then the part of the Guaranteed Obligations intended to be satisfied shall
be revived and continued in full force and effect as if said payment had not been made. The foregoing provisions of this paragraph shall
survive the termination or revocation of this Limited Guaranty.
7. Any
and all present and future debts and obligations of Borrowers to Limited Guarantor are hereby postponed in favor of and subordinated to
the full payment of the Guaranteed Obligations. The provisions of this Limited Guaranty shall be supplemental to and not in derogation
of any rights and remedies of the Guaranteed Party or any affiliate of the Guaranteed Party under any separate subordination
agreement that the Guaranteed Party or such affiliate may at any time or from time to time enter into with Limited Guarantor.
8. Limited
Guarantor represents, warrants and covenants to the Guaranteed Party, as an inducement to the Guaranteed Party to make Loans
or otherwise grant credit to Borrowers under the Loan Documents, that, as of the date of this Limited Guaranty, the fair saleable value
of Limited Guarantor’s assets exceeds Limited Guarantor’s liabilities; Limited Guarantor is meeting current liabilities as
they mature; there are not now pending any material court or administrative proceedings or undischarged judgments against Limited Guarantor
and no federal or state tax Liens have been filed or threatened against Limited Guarantor nor is Limited Guarantor in default or claimed
default under any agreement for borrowed money; Limited Guarantor is duly authorized to execute and deliver this Limited Guaranty, and
the person signing on its behalf below has been duly authorized to do so by the board of directors (or equivalent governing body) of Limited
Guarantor; and this Limited Guaranty is a valid, binding and lawful obligation of Limited Guarantor, enforceable against Limited Guarantor
in accordance with the terms hereof. Limited Guarantor shall immediately give the Guaranteed Party written notice of any material
adverse change in Limited Guarantor’s financial condition, including litigation commenced, tax liens filed, defaults claimed under
Limited Guarantor’s indebtedness for borrowed money or Insolvency Proceedings commenced by or against Limited Guarantor. Limited
Guarantor shall at such reasonable times as the Guaranteed Party may request in its sole discretion furnish Limited Guarantor’s
current financial statements to the Guaranteed Party and permit the Guaranteed Party or any of its representatives to inspect
Limited Guarantor’s financial records and properties and make extracts from such records in order to evaluate the financial
condition of Limited Guarantor. Limited Guarantor shall preserve and maintain its limited liability company existence and all of its material
rights, privileges and franchises and will not reorganize or consolidate with or merge into any other Person (unless the continuing
or surviving Person is acceptable to Lender (in its sole and absolute discretion) and assumes as primary obligor the obligations
of Limited Guarantor under this Limited Guaranty, pursuant to documentation in form and substance acceptable to Lender), nor dispose
of (whether in one transaction or a series of transactions) all or any substantial part of its property, whether now owned or hereafter
acquired.
9. This
Limited Guaranty is a primary and original obligation of Limited Guarantor and is an absolute, unconditional and continuing guaranty of
collection of all of the Guaranteed Obligations (subject to the limitations set forth hereinabove), and shall remain in full force
and effect until all of the Guaranteed Obligations have been paid in full and the Revolving Commitment has been terminated, without regard
to future changes in conditions, including change of law or any invalidity or irregularity with respect to the issuance of any obligations
of Borrowers to the Guaranteed Party or with respect to the execution and delivery of any agreement between Borrowers and the Guaranteed
Party. This Limited Guaranty shall be in addition to any other present or future guaranty or other security for any of the Guaranteed
Obligations, shall not be prejudiced or unenforceable by the invalidity of any such other guaranty or security and is not conditioned
upon or subject to the execution by any other Person of this Limited Guaranty or any other guaranty or suretyship agreement. Except as
expressly set forth herein, the liability of Limited Guarantor under this Limited Guaranty shall not be contingent upon the exercise or
enforcement by the Guaranteed Party of any remedies that any or all of them may have against Borrowers or any other Obligor or the
enforcement of any Lien or realization upon any Collateral in which the Guaranteed Party may at any time possess a Lien. No payment
of any of the Guaranteed Obligations by Borrowers or any other Person, or from the proceeds of any property securing payment of the Guaranteed
Obligations, shall reduce or otherwise affect Limited Guarantor’s liability hereunder for the payment of the remaining Guaranteed
Obligations.
10. The Guaranteed
Party shall have the right to seek recourse against Limited Guarantor to the full extent provided for herein and in any other document
or instrument evidencing any obligations of Limited Guarantor to the Guaranteed Party, and against Borrowers to the full extent provided
for in any Agreement between the Guaranteed Party and one or more of Borrowers. No election to proceed in one form of action
or proceeding, or against any party, or on any obligation, shall constitute a waiver of the Guaranteed Party’s right to proceed
in any other form of action or proceeding or against any other Obligor unless the Guaranteed Party has expressly waived such
right in writing. No delay or failure by Guaranteed Party in exercising its rights hereunder shall operate as a waiver of such rights.
11. Limited
Guarantor is fully aware of the financial condition of Borrowers. Limited Guarantor delivers this Limited Guaranty based solely upon Limited
Guarantor’s own independent investigation and in no part upon any representation or statement of the Guaranteed Party with
respect thereto. Limited Guarantor is in a position to obtain, and hereby assumes full responsibility for obtaining, any additional information
concerning Borrowers’ financial condition as Limited Guarantor may deem material to Limited Guarantor’s obligations hereunder
and Limited Guarantor is not relying upon, nor expecting the Guaranteed Party to furnish Limited Guarantor with, any information
in the Guaranteed Party’s possession concerning Borrowers’ affairs or financial condition. Limited Guarantor hereby knowingly
accepts the full range of risks encompassed within a contract of “guaranty,” which risks include, without limitation, the
possibility that Borrowers will contract additional Guaranteed Obligations for which Limited Guarantor may be liable hereunder after Borrowers’
financial condition or ability to pay its lawful debts when they fall due has deteriorated.
12. If
for any reason Borrowers have no legal existence or are under no legal obligation to discharge any of the Guaranteed Obligations,
or if any of the Guaranteed Obligations have become unrecoverable from Borrowers by reason of any Insolvency Proceeding of Borrowers or
by other operation of law or for any other reason, this Limited Guaranty shall nevertheless be binding on Limited Guarantor to the
same extent as if Limited Guarantor had at all times been the principal obligor on all such Guaranteed Obligations (subject to the terms,
conditions and limitations set forth herein). In the event that acceleration of the time for payment of any of the Guaranteed Obligations
is stayed upon the commencement of any Insolvency Proceeding or for any other reason, all such amounts otherwise subject to acceleration
under the terms of any instrument or agreement evidencing or securing the payment of the Guaranteed Obligations or otherwise executed
in connection therewith shall be immediately due and payable by Limited Guarantor, subject and up to the limitations set forth herein.
13. To
the fullest extent permitted by applicable law, Limited Guarantor waives any right that it may have to terminate or revoke this Limited
Guaranty. If notwithstanding the foregoing waiver, Limited Guarantor shall nevertheless have any right under applicable law to terminate
or revoke this Limited Guaranty, Limited Guarantor agrees that such termination or revocation shall not be effective as to the Guaranteed
Party until a written notice of such termination or revocation, specifically referring to this Limited Guaranty and signed by Limited
Guarantor, is actually received by an officer of the Guaranteed Party who is familiar with Borrowers’ account with the Guaranteed
Party and this Limited Guaranty; but any such termination or revocation shall not affect or impair the obligation of Limited Guarantor
or Limited Guarantor’s successors or assigns with respect to any of the Guaranteed Obligations owing to the Guaranteed Party
and existing at the time of the receipt by the Guaranteed Party of such revocation or to arise out or in connection with any transactions
theretofore entered into by the Guaranteed Party with or for the account of Borrowers. If the Guaranteed Party makes Loans or
grants other extensions of credit to or for the benefit of Borrowers or takes other action after the termination or revocation by
Limited Guarantor but prior to the Guaranteed Party’s actual receipt of such written notice of termination or revocation, then
the rights of the Guaranteed Party with respect to such Guaranteed Obligations shall be the same as if such termination or revocation
had not occurred.
14. Limited
Guarantor agrees that all the rights, benefits and privileges herein and hereby conferred upon the Guaranteed Party shall vest in
and be enforceable by the Guaranteed Party and its successors and assigns. Limited Guarantor further agrees that all obligations
and duties herein shall be binding upon Limited Guarantor and upon Limited Guarantor’s successors and assigns; provided,
further, that Limited Guarantor may not assign any of its rights, or delegate any of its obligations, under this Limited Guaranty
without the prior written consent of the Lender in its sole and absolute discretion, and any such purported assignment by Limited Guarantor
without the written consent of Lender shall be void and of no effect.
15. All
sums payable by Limited Guarantor hereunder shall be paid in full and in Dollars, without deduction, offset or counterclaim, and free
and clear of any taxes or other charges, all of which will be for the account of, and paid in full when due by, Limited Guarantor.
In the event Limited Guarantor has not paid in Dollars the sums owing to the Guaranteed Party within five (5) Business Days of Guaranteed
Party’s written demand therefor (after such sums have become due and payable pursuant to Section 1(b) hereof following the occurrence
of an Enforcement Event), then Limited Guarantor will promptly issue and register (or direct its transfer agent to issue and register)
in the Limited Guarantor’s share register, in the name of the Guaranteed Party or its designee, the number of shares of common stock
of Limited Guarantor equal to the amount of the Guaranteed Obligations then due to the Guaranteed Party under this Guaranty divided
by $0.1830 (subject to adjustment for stock splits, stock combinations, recapitalizations and similar transactions) (the “Springing
Grant”); provided that, subject to Shareholder Approval (as defined below), to the extent the then-applicable market
price of common stock of Limited Guarantor on the closing date prior to the date of such issuance is less than $0.1830 per share, then
Limited Guarantor shall increase the number of shares issued to the Guaranteed Party so that the Guaranteed Party will receive shares
with an aggregate value equal to the sum needed to satisfy the Guaranteed Obligations in full. For purposes hereof, “Shareholder
Approval” means the approval of the holders of a majority of the Limited Guarantor’s then outstanding shares of common
stock to permit the issuance of additional shares of common stock as contemplated by the immediately preceding proviso (the “Proviso”)
in accordance with Section 7.13 of the NYSE American Company Guide. Notwithstanding anything to the contrary set forth herein, in no event
shall the Limited Guarantor issue shares of common stock pursuant to the Proviso until Shareholder Approval shall have been obtained;
provided, that, in the event that the Limited Guarantor has failed to obtain Shareholder Approval to issue the additional shares described
in the Proviso within five (5) Business Days of the date, if any, on which Guaranteed Party makes written demand for payment of the Guaranteed
Obligations, Guarantor shall satisfy the remaining unpaid portion of the Guaranteed Obligations in Dollars (and in any case, Guarantor
shall remain liable for such unpaid portion of the Guaranteed Obligations until the same are paid in full). The Limited Guarantor shall
hold a special meeting of its members on or before the date that is one hundred twenty (120) calendar days after the date hereof, for
the purpose of obtaining Shareholder Approval, with the recommendation of the Limited Guarantor’s Board of Directors that such proposal
be approved, and the Limited Guarantor shall solicit proxies from its members in connection therewith in the same manner as all other
management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal.
In addition, all members of the Limited Guarantor’s Board of Directors and all of the Limited Guarantor’s executive officers
shall vote in favor of such proposal, for purposes of obtaining the Shareholder Approval, with respect to all shares of common stock of
the Limited Guarantor then held by such Persons. The Limited Guarantor shall use its best efforts to obtain such Shareholder Approval.
If the Limited Guarantor does not obtain Shareholder Approval at the first meeting, the Limited Guarantor shall call a meeting as often
as possible thereafter to seek Shareholder Approval until the Shareholder Approval is obtained. Limited Guarantor further agrees that,
so long as this Limited Guaranty is outstanding, it will (x) have authorized and reserved, free from any preemptive rights, the number
of shares of its common stock which would then be required in order to pay the Guaranteed Obligations in full and (y) execute and deliver
to the Guaranteed Party, upon the Guaranteed Party’s request and in form and substance reasonably satisfactory to the Guaranteed
Party, such other documents as may be required to evidence the Springing Grant (as it may be increased in accordance with this paragraph).
16. Any
provision of this Limited Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and without affecting
the validity or enforceability of such provision in any other jurisdiction. To the extent any performance of this Limited Guaranty
would violate any applicable usury statute or other applicable law, the obligation to be fulfilled shall be reduced to the limit legally
permitted, so that this Limited Guaranty shall not require any performance in excess of the limit legally permitted, but such obligations
shall be fulfilled to the limit of the legal validity. The provisions of the paragraph shall control every other provision of this
Limited Guaranty.
17. THIS
LIMITED GUARANTY, ALL ACTS AND TRANSACTIONS HEREUNDER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES. AS PART OF THE CONSIDERATION
FOR THE GUARANTEED PARTY’S MAKING LOANS OR OTHERWISE GRANTING CREDIT TO BORROWERS, LIMITED GUARANTOR HEREBY AGREES THAT ALL
ACTIONS, SUITS OR PROCEEDINGS ARISING DIRECTLY OR INDIRECTLY HEREUNDER MAY, AT THE OPTION OF THE GUARANTEED PARTY, BE LITIGATED IN
THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND LIMITED GUARANTOR
HEREBY EXPRESSLY CONSENTS TO THE JURISDICTION OF SUCH COURTS, AND CONSENTS THAT ANY SERVICE OF PROCESS IN SUCH ACTION OR PROCEEDINGS
MAY BE MADE BY PERSONAL SERVICE UPON LIMITED GUARANTOR WHEREVER LIMITED GUARANTOR MAY BE THEN LOCATED, OR BY CERTIFIED OR REGISTERED MAIL
DIRECTED TO LIMITED GUARANTOR AT LIMITED GUARANTOR’S LAST KNOWN ADDRESS.
18. This
Limited Guaranty expresses the entire understanding of the parties hereto with respect to the subject matter hereof and may not be changed
orally, and no obligation of Limited Guarantor can be released or waived by the Guaranteed Party or any officer or agent of the Guaranteed
Party, except by a writing signed by a duly authorized officer of Lender.
19. Until
all of the Guaranteed Obligations have been paid in full and the Revolving Commitment has been terminated, Limited Guarantor shall have
no claim, right or remedy (whether or not arising in equity, by contract or applicable law) against Borrowers or any other Person by reason
of Limited Guarantor’s payment or other performance hereunder. Without limiting the generality of the foregoing, Limited Guarantor
hereby subordinates to the full and final payment of the Guaranteed Obligations any and all legal or equitable rights or claims
that Limited Guarantor may have to reimbursement, subrogation, indemnity and exoneration and agrees that until all of the Guaranteed Obligations
has been paid in full and the Agreement has been terminated, Limited Guarantor shall have no recourse to any assets or property of Borrowers
(including any assets securing any of the Guaranteed Obligations) and no right of recourse against or contribution from any other
Person in any way directly or contingently liable for any of the Guaranteed Obligations, whether any of such rights arise under contract,
in equity or under applicable law.
20. As
used herein, all references to the term “Limited Guarantor” shall mean Limited Guarantor and Limited Guarantor’s successors
and assigns (including any receiver, trustee or custodian for Limited Guarantor or any of its assets or Limited Guarantor in its capacity
as Borrowers or Borrowers-in-possession under the Bankruptcy Code); all references to the term “the Guaranteed Party”
shall mean the Guaranteed Party and its successors and assigns and all references to the term “Borrowers” shall mean
each of the Borrowers and its and their successors and assigns (including any receiver, trustee or custodian for Borrowers or any of its
or their assets or Borrowers in their capacity as Borrowers or Borrowers-in-possession under the Bankruptcy Code); all references
to the plural shall also mean the singular, and all references to the singular shall also mean the plural; and all references to “include”
or “including” shall mean “including, without limitation.”
21. TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, LIMITED GUARANTOR AND, BY ITS ACCEPTANCE HEREOF, THE GUARANTEED PARTY, EACH IRREVOCABLY
WAIVES ITS RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY
OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY KIND BROUGHT BY ANY SUCH PERSON AGAINST
ANOTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. LIMITED GUARANTOR AND, BY ITS ACCEPTANCE HEREOF, THE GUARANTEED
PARTY, EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS LIMITED GUARANTY OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, WHETHER
OR NOT SPECIFICALLY SET FORTH THEREIN.
[Remainder of Page Intentionally
Left Blank; Signature Pages Follow.]
IN WITNESS WHEREOF, Limited
Guarantor has caused this Limited Guaranty to be duly executed and delivered on the date first written above.
|
LIMITED GUARANTOR: |
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1847 HOLDINGS LLC |
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|
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By: |
/s/ Ellery W. Roberts |
|
Name: |
Ellery W. Roberts |
|
Title: |
Chief Executive Officer |
Accepted on September 11, 2023
LENDER:
AB Lending SPV I LLC, |
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a Delaware limited liability company
d/b/a Mountain Ridge Capital |
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|
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By: |
/s/ Craig Winslow |
|
Name: |
Craig Winslow |
|
Title: |
President and CEO |
|
10
Exhibit 10.3
Execution Version
PLEDGE
AGREEMENT
This Pledge Agreement (as
amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) is entered into as of September
11, 2023, by and between 1847 ICU HOLDINGS INC., a Delaware corporation (hereinafter referred to as “Pledgor”)
and AB LENDING SPV I LLC, a Delaware limited liability company d/b/a Mountain Ridge Capital (together with its successors and assigns
“Lender”).
RECITALS:
ICU
EYEWEAR, INC., a California corporation (“ICU”), ICU EYEWEAR HOLDINGS, INC., a California corporation (“Issuer”),
and Pledgor (together with ICU and Issuer, and each other Person that joins the Credit Agreement (defined below) as a Borrower, each a
“Borrower” and collectively the “Borrowers”), each of the other
Loan Parties from time to time party thereto, and Lender are parties to a certain Amended and Restated Credit and Security Agreement,
dated the date hereof (as amended, restated, supplemented or otherwise modified from time to time, as the “Credit Agreement”),
pursuant to which Lender has agreed, subject to the terms and conditions set forth in the Credit Agreement, to make loans to Borrowers.
Pledgor is the record and
beneficial owner of the Equity Interests listed on Schedule I hereto.
A condition to the making
of any loans under the Credit Agreement is Pledgor’s pledge to Lender of one hundred percent (100%) of its Equity Interests of ICU
CA Holdings, as security for the Obligations, whether arising under the Credit Agreement or under any of the other Loan Documents.
NOW, THEREFORE, for
and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1.
Definitions. Capitalized terms used herein, unless otherwise defined, shall have the
meanings ascribed to such terms in the Credit Agreement. As used herein, the following terms shall have the following meanings:
“Full Payment”
means the indefeasible payment in full in cash of the Secured Obligations (as hereinafter defined) and termination of all commitments
of Lender to make loans or extend financial accommodations to Borrowers under the Credit Agreement.
“Pledged
Collateral” has the meaning assigned to such term in Section 2 hereof.
“Pledged
Equity Interests” means the Equity Interests listed on Schedule I hereto.
“Powers”
means transfer powers, in form and substance satisfactory to Lender, pursuant to which Pledgor assigns, in blank, all Equity Interests
and other Pledged Collateral evidenced by certificates.
“Secured
Obligations” means, collectively, (a) all Obligations; (b) all indebtedness, liabilities and obligations of Pledgor to Lender
under this Agreement; and (c) all of Pledgor’s indebtedness, liabilities and obligations under each Credit Agreement or guaranty
agreement made by Pledgor in favor of Lender.
As used herein, the words “herein,”
“hereof,” “hereunder,” and “hereon” shall have reference to this Agreement taken as a whole and not
to any particular provision hereof. The terms “include,” “includes” and “including” as used herein
shall be deemed to be followed by the words “without limitation” whether or not they are in fact followed by such words or
words of like import.
2.
Pledge and Grant of Security Interest. To secure the timely payment and performance of the Secured Obligations, Pledgor hereby
pledges, assigns, transfers, sets over and delivers to Lender and grants to Lender a security interest in the following (collectively,
the “Pledged Collateral”): (i) all of the Pledged Equity Interests and all rights relating thereto, and all options,
if any, for the purchase of shares of the capital stock or other Equity Interests of Issuer owned by Pledgor, (ii) all Powers with respect
to such Equity Interests that are evidenced by one or more certificates, and (iii) all proceeds thereof and dividends at any time
payable in connection therewith.
3.
Voting Rights. During the term of this Agreement, and so long as no Event of Default
shall have occurred, Pledgor shall have the right to vote all or any portion of the respective Pledged Equity Interests owned by Pledgor
on all corporate or company questions for all purposes not inconsistent with the terms of this Agreement or the Loan Documents. To that
end, if Lender shall transfer all or any portion of the Pledged Collateral into its name or the name of its nominee as herein authorized,
Lender shall, upon the request of Pledgor, unless an Event of Default shall have occurred, execute and deliver or cause to be executed
and delivered to Pledgor, proxies with respect to the Pledged Collateral. Pledgor hereby grants to Lender, effective upon or after the
occurrence of any Event of Default, an IRREVOCABLE PROXY pursuant to which Lender shall be entitled to exercise all voting powers
pertaining to Pledgor’s respective portion of the Pledged Collateral, including, without limitation, to call and attend all meetings of
the holders of Equity Interests of Issuer to be held from time to time with full power to act and vote in the name, place and stead of
Pledgor, and any and all proxies previously executed by Pledgor shall automatically terminate and thereafter be null and void and of no
effect whatsoever.
4.
Collection of Dividend Payments. During the term of this Agreement, and so long as
no Event of Default shall have occurred and to the extent permitted by the terms of the Credit Agreement, Pledgor shall have the right
to receive and retain any and all sums payable by Issuer on account of any of the Pledged Collateral. Upon and after the occurrence of
any Event of Default, all sums payable by Issuer on account of any of the Pledged Collateral shall be paid to Lender and any such sum
received by Pledgor shall be deemed to be held by Pledgor in trust for Lender and shall be forthwith turned over to Lender for application
to the Secured Obligations in such order of application as Lender may elect.
5.
Lender’s Duties. Lender shall have no duty with respect to any of the Pledged Collateral other than the duty to use reasonable
care in the safe custody of any tangible items of the Pledged Collateral in its possession. Without limiting the generality of the foregoing,
Lender shall be under no obligation to sell any of the Pledged Collateral or otherwise to take any steps necessary to preserve the value
of any of the Pledged Collateral or to preserve rights in the Pledged Collateral against any other parties, but may do so at its option,
and all expenses incurred in connection therewith shall be for the sole account of Pledgor.
6.
Representations and Warranties of Pledgor. Pledgor warrants and represents that:
(a) Pledgor is
the legal and beneficial owner of its Pledged Collateral;
(b) all of the Pledged Equity Interests pledged by Pledgor hereunder have been duly and validly issued, are fully paid and nonassessable,
and are owned by Pledgor free of any liens, charges or encumbrances except for Lender’s security interests hereunder and under the
Credit Agreement;
(c) the
Pledged Equity Interests constitute at least the percentage of the issued and outstanding capital stock or other Equity Interests of
Issuer listed on Schedule I hereto;
(d) there
are no restrictions upon the voting rights or, other than applicable securities laws, upon the transfer of any of the Pledged Collateral;
(e) Pledgor has the right to vote, pledge and grant a security interest in or otherwise transfer its respective portion of the Pledged
Collateral without the consent of any other Person and free of any encumbrances and applicable restrictions imposed by any governmental
agency or regulation and without any restriction under the by-laws, charter, operating agreement or partnership agreement, as applicable,
of Issuer or any agreement among Issuer’s shareholders, members, managers or partners, as applicable;
(f) the execution, delivery and performance by Pledgor of this Agreement and the exercise by Lender of its rights and remedies hereunder
do not and will not result in the violation of the by-laws, charter, operating agreement or partnership agreement, as applicable, of Pledgor,
or any agreement, indenture or instrument, any license, judgment, decree, order, law, statute or other governmental rule or regulation,
including, without limitation, any federal or state laws or regulations governing the sale or exchange of securities;
(g) no consent, filing, approval, registration or recording is required (i) for the pledge by Pledgor of the Pledged Collateral pursuant
to this Agreement or (ii) to perfect the Lien created by this Agreement, except for possession by Lender of any certificate evidencing
Pledged Equity Interests or the filing of a UCC financing statement with respect to the Pledged Collateral; and
(h) none of the Pledged Collateral is held or maintained in the form of a securities entitlement or credited to any securities account.
7.
Affirmative Covenants of Pledgor. Until Full Payment, Pledgor covenants that Pledgor
will:
(a) warrant
and defend, at Pledgor’s own expense, Lender’s right, title, special property and security interest in and to the Pledged
Collateral against the claims of any person or entity;
(b) promptly deliver to Lender all written notices, and promptly give written notice to Lender of any other notices, received by Pledgor
with respect to the Pledged Collateral; and
(c) with respect to any Equity Interests that are evidenced by one or more certificates, deliver to Lender promptly to hold under this
Agreement (i) certificates evidencing any Equity Interests of Issuer acquired by Pledgor by virtue of the exercise of any options included
within the Pledged Collateral, and (ii) Powers duly executed in blank with signatures properly attested.
8.
Negative Covenants of Pledgor. Until Full Payment, Pledgor
covenants that Pledgor will not:
(a) sell, transfer, convey or otherwise dispose of any of the Pledged Collateral or any interest therein;
(b) incur or permit to be incurred any pledge, lien, charge, or encumbrance or any security interest whatsoever in or with respect
to any of the Pledged Collateral or the proceeds thereof, other than the security interest created by the Credit Agreement and the other
Loan Documents;
(c) consent to the issuance by Issuer of any new stock or other Equity Interest; or
(d) consent to any merger or other consolidation of Issuer with or into any other corporation or entity.
9.
Irrevocable Authorization and Instructions. To the extent that any portion of the Pledged
Collateral may now or hereafter consist of uncertificated securities within the meaning of Article 8 of the UCC, Pledgor irrevocably authorizes
and instructs Issuer to comply with any instruction received by Issuer from Lender with respect to the Pledged Collateral without any
other or further instructions from or consent of Pledgor, and Pledgor agrees that Issuer shall be fully protected in so complying; provided,
however, that Lender agrees that it will not issue or deliver any such instructions except upon the occurrence of an Event of Default.
10.
Subsequent Changes Affecting Pledged Collateral. Pledgor hereby represents to Lender
that Pledgor has made Pledgor’s own arrangements for keeping informed of changes or potential changes affecting the Pledged Collateral
(including rights to convert, rights to subscribe, payment of dividends and distributions, reorganization or other exchanges, tender offers
and voting rights), and Pledgor hereby agrees that Lender shall have no responsibility or liability for informing Pledgor of any such
changes or potential changes or for taking any action or omitting to take any action with respect thereto. Lender may, upon or at any
time after the occurrence of an Event of Default, at its option and without notice to Pledgor, transfer or register the Pledged Collateral
or any portion thereof into its name or the names of its nominee with or without any indication that such Pledged Collateral is subject
to the security interest hereunder.
11.
Pledged Share Adjustments. If during the term of this Agreement any stock dividend,
reclassification, readjustment or other change is declared or made in the capital structure of Issuer, or any option included within the
Pledged Collateral is exercised, or both, all new, substituted and additional shares, or other securities or Equity Interests, issued
by reason of any such change or exercise shall be delivered to and held by Lender under terms of this Agreement in the same manner as
the Pledged Collateral originally pledged hereunder.
12.
Warrants, Options and Rights. If during the term of this Agreement subscription warrants
or any other rights or options shall be issued or exercised in connection with the capital stock of Issuer, then such warrants, rights
and options shall be immediately assigned by the Pledgor to Lender and all new stock or other securities or Equity Interests so acquired
by Pledgor shall be immediately assigned to Lender to be held under the terms of this Agreement in the same manner as the Pledged Collateral
originally pledged hereunder.
13.
Registration. If Lender determines that it is advisable to register under or otherwise
comply in any way with the Securities Act of 1933 or any similar federal or state law, or if such registration or compliance is required
with respect to the securities included in the Pledged Collateral prior to sale thereof by Lender, then upon or at any time after the
occurrence of an Event of Default, Pledgor will use Pledgor’s best efforts to cause any such registration to be effectively made,
at no expense to Lender, and to continue such registration effective for such time as may be reasonably necessary in the opinion of Lender,
and will reimburse Lender for any expense incurred by Lender, including reasonable attorneys’ fees and accountant’s fees and
expenses, in connection therewith.
14.
Consent. Pledgor hereby consents that, from time to time, before or after the occurrence
or existence of any Event of Default, and with or without notice to or assent from Pledgor, any other security at any time held by or
available to Lender for any of the Secured Obligations may be exchanged, surrendered, or released, and any of the Secured Obligations
may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released, in whole or in part, as Lender may
see fit, and Pledgor shall remain bound under this Agreement.
15.
Remedies Upon Default. Upon or after the occurrence of any Event of Default, Lender
shall have, in addition any other rights given by law or the rights given hereunder or under the Loan Documents, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under the UCC. In addition, with respect to the Pledged Collateral,
or any part thereof, which shall then be or shall thereafter come into Lender’s possession or custody, Lender may sell or cause
the same to be sold at any broker’s board or at public or private sale, in one or more sales or lots, at such price as Lender may
deem best, and for cash or on credit or for future delivery, without assumption of any credit risk, and the purchaser of any or all of
the Pledged Collateral so sold shall thereafter hold the same absolutely, free from any claim, encumbrance or right of any kind whatsoever.
Unless the Pledged Collateral threatens to decline speedily in value or is or becomes of a type sold on a recognized market, Lender will
give Pledgor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Pledged Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies or other financial institutions disposing of property similar to the Pledged Collateral shall be deemed to
be commercially reasonable. Any requirements of reasonable notice shall be met if such notice is mailed to Pledgor, as provided in Section
20 below, at least ten (10) days before the time of the sale or disposition. Any other requirement of notice, demand or advertisement
for sale is, to the extent permitted by law, waived. Lender may, in its name, or in the name of its designees or nominees, buy at any
public sale of the Pledged Collateral and, if permitted by applicable law, buy at any private sale thereof. Pledgor will pay to Lender
on demand all expenses (including, without limitation, court costs and reasonable attorneys’ fees and expenses) of, or incident
to, the enforcement of any of the provisions hereof and all other charges due against the Pledged Collateral and any expenses of Pledged
Collateral. In connection with any sale of Pledged Collateral by Lender, Lender shall have the right to execute any document or form,
in its name or in the name of Pledgor, which may be necessary or desirable in connection with such sale, including, without limitation,
Form 144 promulgated by the Securities and Exchange Commission. In view of the fact that federal and state securities laws may impose
certain restrictions on the method by which a sale of the Pledged Collateral may be effected after an Event of Default, Pledgor agrees
that Lender may, from time to time, attempt to sell all or any part of the Pledged Collateral by means of a private placement. In so doing,
Lender may solicit offers to buy the Pledged Collateral, or any part of it, for cash, from a limited number of investors deemed by Lender,
in its reasonable judgment, to be responsible parties who might be interested in purchasing the Pledged Collateral, and if Lender solicits
such offers from not less than four (4) such investors, then the acceptance by Lender of the highest offer obtained therefrom shall be
deemed to be a commercially reasonable method of disposing of the Pledged Collateral.
16.
Term. This Agreement shall constitute a continuing agreement and shall remain in full
force and effect until Full Payment.
17.
Successors and Assigns. This Agreement shall be binding upon Pledgor and Pledgor’s
legal representatives, administrators, heirs, executors, successors and assigns, and shall inure to the benefit of Lender and its successors
and assigns. In the event of a sale or assignment by Lender of all or any part of the Secured Obligations, Lender may assign or transfer
its rights and interests under this Agreement in whole or in part to the purchaser or purchasers of such Secured Obligations, whereupon
such purchaser or purchasers shall become vested with all of the powers and rights given to Lender hereunder, and Lender shall thereafter
be forever released and fully discharged from any liability or responsibility hereunder with respect to the rights and interests so assigned.
18.
Construction. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but, if any provision of this Agreement
shall be held to be prohibited or invalid under any applicable law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
19.
Cooperation and Further Assurances. Pledgor agrees that Pledgor will cooperate with
Lender and will upon Lender’s request execute and deliver, or cause to be executed and delivered, all such other Powers, instruments,
and documents, and will take all such other action as Lender may reasonably request from time to time, in order to carry out the provisions
and purposes hereof, including delivering to Lender, if requested by Lender, irrevocable proxies with respect to the Pledged Equity Interests
in form satisfactory to Lender. Until receipt thereof, this Agreement shall constitute Pledgor’s proxy to Lender or its nominee
to vote all shares of the Pledged Equity Interests then registered in Pledgor’s name.
20.
Notices. All notices, demands, requests, consents, approvals and other communications
required or permitted hereunder must be in writing and shall be effective upon receipt by the noticed party. Acceptable methods for giving
notices hereunder shall include first-class U.S. mail, commercial courier service and electronic transmission. Regardless of the manner
in which notice is provided, notices may be sent to the address for Lender set forth in the Credit Agreement and the address for Pledgor
as set forth on the signature pages hereto or, in either case, to such other address as either party may give to the other for such purpose
in accordance with this Section 20.
21.
Lender Appointed Attorney-In-Fact. Pledgor hereby constitutes and appoints Lender, with full power of substitution,
Pledgor’s attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing
any instrument which Lender may deem necessary or advisable to accomplish the purposes hereof, which appointment is coupled with an interest
and is irrevocable. Without limiting the generality of the foregoing, Lender shall have the power to arrange for the transfer, upon or
at any time after the occurrence of an Event of Default, of any of the Pledged Collateral on the books of Issuer to the name of Lender.
Pledgor agrees to indemnify and save Lender harmless from and against any liability or damage which Lender may suffer or incur in the
exercise or performance of any of Lender’s powers and duties specifically set forth herein, except as the result of Lender’s
gross negligence or willful misconduct.
22.
Counterparts; Execution. This Agreement may be executed in any number of counterparts (which may be delivered electronically)
and by the different parties hereto on separate counterparts, each of which, when executed and delivered, shall be deemed an original,
but all such counterparts shall constitute but one and the same instrument. Any signature page delivered by telecopy machine, transmitted
electronically in Portable Document Format (“.pdf”) or by other electronic means shall be valid and binding to the same extent
as an original signature page.
23.
WAIVERS. PLEDGOR HEREBY WAIVES: NOTICE OF LENDER’S ACCEPTANCE OF THIS AGREEMENT;
NOTICE OF EXTENSIONS OF CREDIT, LOANS, ADVANCES OR OTHER FINANCIAL ASSISTANCE BY LENDER TO BORROWERS; PRESENTMENT AND DEMAND FOR PAYMENT
OF ANY OF THE SECURED OBLIGATIONS; PROTEST AND NOTICE OF DISHONOR OR DEFAULT WITH RESPECT TO ANY OF THE SECURED OBLIGATIONS; AND ALL OTHER
NOTICES TO WHICH PLEDGOR MIGHT OTHERWISE BE ENTITLED EXCEPT AS HEREIN OTHERWISE EXPRESSLY PROVIDED.
24.
Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES.
25.
Venue and Consent to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF PLEDGOR AND LENDER CONSENTS TO THE EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF PLEDGOR AND LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION. NOTWITHSTANDING THE FOREGOING,
LENDER SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST PLEDGOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
AS LENDER DEEMS NECESSARY OR APPROPRIATE IN ORDER TO EXERCISE REMEDIES WITH RESPECT TO THE PLEDGED COLLATERAL.
26.
Jury Waiver. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY,
IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY EITHER AGAINST THE OTHER OR AGAINST ANY AFFILIATE, OFFICER, DIRECTOR,
EMPLOYEE OR AGENT OF THE LENDER, OR ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH
PARTY TO THIS AGREEMENT AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING,
THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS,
WHETHER OR NOT SPECIFICALLY SET FORTH THEREIN.
[Remainder of Page Intentionally Left Blank
– Signature Pages Follow]
IN WITNESS WHEREOF, Pledgor
has signed, sealed and delivered this Agreement, on the day and year first above written.
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PLEDGOR: |
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1847 ICU HOLDINGS INC., |
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a Delaware corporation |
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By: |
/s/ Ellery W. Roberts |
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Name: |
Ellery W. Roberts |
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Title: |
Chief Executive Officer |
[Signatures continue on the following page]
Pledge Agreement (1847 ICU Holdings Inc. (DE))
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Accepted and agreed to, this 11th day of September, 2023: |
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LENDER: |
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AB Lending SPV I LLC, a Delaware limited liability company d/b/a Mountain Ridge Capital |
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By: |
/s/ Greg Gentry |
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Name: |
Greg Gentry |
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Title: |
Managing Director |
Pledge Agreement (1847 ICU Holdings Inc. (DE))
SCHEDULE I
Pledgor |
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Issuer |
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Description |
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Certificate No. |
1847 ICU Holdings Inc., a Delaware corporation |
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ICU Eyewear Holdings, Inc., a California corporation |
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1,000 shares of common stock |
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N/A |
ACKNOWLEDGMENT AND AGREEMENT OF ISSUER
The undersigned (“Issuer”)
hereby acknowledges, represents and agrees that: (i) Issuer has received a true and correct copy of the within and foregoing Pledge
Agreement (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “Agreement”);
(ii) the Agreement has been duly recorded and noted on the books and records of Issuer and will be maintained as part of such books and
records; (iii) the Agreement does not violate any term, condition or covenant of the by-laws, charter, operating agreement or partnership
agreement, as applicable, of Issuer, or of any other agreement to which Issuer is a party; (iv) upon and after the occurrence of
an Event of Default, Issuer will comply with written instructions originated by Lender without further consent of Pledgor as the registered
owner of the Pledged Collateral; (v) Issuer consents to the execution of the Agreement and to the assignment, transfer and pledge
of the Pledged Collateral effected thereby; and (vi) upon and after the occurrence of an Event of Default, Issuer consents to a public
or private sale or sales of all or any part of the Pledged Collateral by Lender in accordance with the terms of the Agreement and consents
to each purchaser of all or any part of the Pledged Collateral at such sale or sales becoming a shareholder, member, partner or other
owner, as applicable, of Issuer thereby entitled to the same rights and privileges and subject to the same duties as the owner of the
applicable Pledged Collateral under the by-laws, charter, operating agreement or partnership agreement, as applicable, of Issuer.
Each capitalized term used
herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Agreement. This Acknowledgement and Agreement
of Issuer is executed and shall be dated as of the date of the Agreement.
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ISSUER: |
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ICU EYEWEAR HOLDINGS, INC. |
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By: |
/s/ Ellery W. Roberts |
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Name: |
Ellery W. Roberts |
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Title: |
Chief Executive Officer |
Acknowledgement and Agreement of Issuer – Pledge Agreement (1847
ICU Holdings Inc.)
Exhibit 10.4
Execution Version
PLEDGE
AGREEMENT
This Pledge Agreement (as
amended, restated, supplemented or otherwise modified from time to time, this “Agreement”) is entered into as of September
11, 2023, by and between ICU EYEWEAR HOLDINGS, INC., a California corporation (hereinafter referred to as “Pledgor”)
and AB LENDING SPV I LLC, a Delaware limited liability company d/b/a Mountain Ridge Capital (together with its successors and assigns
“Lender”).
RECITALS:
ICU EYEWEAR, INC.,
a California corporation (“Issuer”), Pledgor, and 1847 ICU HOLDINGS INC., a Delaware corporation (“ICU
DE Holdings; and together with Issuer, Pledgor, and each other Person that joins this Agreement as a Borrower, each a “Borrower”
and collectively the “Borrowers”), each of the other Loan Parties from time to time party thereto, and Lender are parties
to a certain Amended and Restated Credit and Security Agreement, dated the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, as the “Credit Agreement”), pursuant to which Lender has agreed, subject to the terms and
conditions set forth in the Credit Agreement, to make loans to Borrowers.
Pledgor is the record and
beneficial owner of the Equity Interests listed on Schedule I hereto.
A condition to the making
of any loans under the Credit Agreement is Pledgor’s pledge to Lender of one hundred percent (100%) of its Equity Interests of the
Issuer, as security for the Obligations, whether arising under the Credit Agreement or under any of the other Loan Documents.
NOW, THEREFORE, for
and in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
Capitalized terms used herein, unless otherwise defined, shall have the meanings ascribed to such terms in the Credit Agreement. As used
herein, the following terms shall have the following meanings:
“Full Payment”
means the indefeasible payment in full in cash of the Secured Obligations (as hereinafter defined) and termination of all commitments
of Lender to make loans or extend financial accommodations to Borrowers under the Credit Agreement.
“Pledged
Collateral” has the meaning assigned to such term in Section 2 hereof.
“Pledged
Equity Interests” means the Equity Interests listed on Schedule I hereto.
“Powers”
means transfer powers, in form and substance satisfactory to Lender, pursuant to which Pledgor assigns, in blank, all Equity Interests
and other Pledged Collateral evidenced by certificates.
“Secured
Obligations” means, collectively, (a) all Obligations; (b) all indebtedness, liabilities and obligations of Pledgor to Lender
under this Agreement; and (c) all of Pledgor’s indebtedness, liabilities and obligations under each Credit Agreement or guaranty
agreement made by Pledgor in favor of Lender.
As used herein, the words “herein,”
“hereof,” “hereunder,” and “hereon” shall have reference to this Agreement taken as a whole and not
to any particular provision hereof. The terms “include,” “includes” and “including” as used herein
shall be deemed to be followed by the words “without limitation” whether or not they are in fact followed by such words or
words of like import.
2. Pledge
and Grant of Security Interest. To secure the timely payment and performance of the Secured Obligations, Pledgor hereby pledges, assigns,
transfers, sets over and delivers to Lender and grants to Lender a security interest in the following (collectively, the “Pledged
Collateral”): (i) all of the Pledged Equity Interests and all rights relating thereto, and all options, if any, for the purchase
of shares of the capital stock or other Equity Interests of Issuer owned by Pledgor, (ii) all Powers with respect to such Equity Interests
that are evidenced by one or more certificates, and (iii) all proceeds thereof and dividends at any time payable in connection therewith.
3.
Voting Rights. During the term of this Agreement, and so long as no Event of Default
shall have occurred, Pledgor shall have the right to vote all or any portion of the respective Pledged Equity Interests owned by Pledgor
on all corporate or company questions for all purposes not inconsistent with the terms of this Agreement or the Loan Documents. To that
end, if Lender shall transfer all or any portion of the Pledged Collateral into its name or the name of its nominee as herein authorized,
Lender shall, upon the request of Pledgor, unless an Event of Default shall have occurred, execute and deliver or cause to be executed
and delivered to Pledgor, proxies with respect to the Pledged Collateral. Pledgor hereby grants to Lender, effective upon or after the
occurrence of any Event of Default, an IRREVOCABLE PROXY pursuant to which Lender shall be entitled to exercise all voting powers
pertaining to Pledgor’s respective portion of the Pledged Collateral, including, without limitation, to call and attend all meetings
of the holders of Equity Interests of Issuer to be held from time to time with full power to act and vote in the name, place and stead
of Pledgor, and any and all proxies previously executed by Pledgor shall automatically terminate and thereafter be null and void and
of no effect whatsoever.
4. Collection
of Dividend Payments. During the term of this Agreement, and so long as no Event of Default shall have occurred
and to the extent permitted by the terms of the Credit Agreement, Pledgor shall have the right to receive and retain any and all
sums payable by Issuer on account of any of the Pledged Collateral. Upon and after the occurrence of any Event of Default, all sums
payable by Issuer on account of any of the Pledged Collateral shall be paid to Lender and any such sum received by Pledgor shall be
deemed to be held by Pledgor in trust for Lender and shall be forthwith turned over to Lender for application to the Secured
Obligations in such order of application as Lender may elect.
5. Lender’s
Duties. Lender shall have no duty with respect to any of the Pledged Collateral other than the duty to use reasonable care in the
safe custody of any tangible items of the Pledged Collateral in its possession. Without limiting the generality of the foregoing, Lender
shall be under no obligation to sell any of the Pledged Collateral or otherwise to take any steps necessary to preserve the value of any
of the Pledged Collateral or to preserve rights in the Pledged Collateral against any other parties, but may do so at its option, and
all expenses incurred in connection therewith shall be for the sole account of Pledgor.
6.
Representations and Warranties of Pledgor. Pledgor warrants and represents that:
(a) Pledgor
is the legal and beneficial owner of its Pledged Collateral;
(b) all
of the Pledged Equity Interests pledged by Pledgor hereunder have been duly and validly issued, are fully paid and nonassessable, and
are owned by Pledgor free of any liens, charges or encumbrances except for Lender’s security interests hereunder;
(c) the
Pledged Equity Interests constitute at least the percentage of the issued and outstanding capital stock or other Equity Interests of Issuer
listed on Schedule I hereto;
(d) there
are no restrictions upon the voting rights or, other than applicable securities laws, upon the transfer of any of the Pledged Collateral;
(e) Pledgor
has the right to vote, pledge and grant a security interest in or otherwise transfer its respective portion of the Pledged Collateral
without the consent of any other Person and free of any encumbrances and applicable restrictions imposed by any governmental agency or
regulation and without any restriction under the by-laws, charter, operating agreement or partnership agreement, as applicable, of Issuer
or any agreement among Issuer’s shareholders, members, managers or partners, as applicable;
(f) the
execution, delivery and performance by Pledgor of this Agreement and the exercise by Lender of its rights and remedies hereunder do not
and will not result in the violation of the by-laws, charter, operating agreement or partnership agreement, as applicable, of Pledgor,
or any agreement, indenture or instrument, any license, judgment, decree, order, law, statute or other governmental rule or regulation,
including, without limitation, any federal or state laws or regulations governing the sale or exchange of securities;
(g) no
consent, filing, approval, registration or recording is required (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this
Agreement or (ii) to perfect the Lien created by this Agreement, except for possession by Lender of any certificate evidencing Pledged
Equity Interests or the filing of a UCC financing statement with respect to the Pledged Collateral; and
(h) none
of the Pledged Collateral is held or maintained in the form of a securities entitlement or credited to any securities account.
7.
Affirmative Covenants of Pledgor. Until Full Payment, Pledgor covenants that Pledgor
will:
(a) warrant
and defend, at Pledgor’s own expense, Lender’s right, title, special property and security interest in and to the Pledged
Collateral against the claims of any person or entity;
(b) promptly
deliver to Lender all written notices, and promptly give written notice to Lender of any other notices, received by Pledgor with respect
to the Pledged Collateral; and
(c) with
respect to any Equity Interests that are evidenced by one or more certificates, deliver to Lender promptly to hold under this Agreement
(i) certificates evidencing any Equity Interests of Issuer acquired by Pledgor by virtue of the exercise of any options included within
the Pledged Collateral, and (ii) Powers duly executed in blank with signatures properly attested.
8.
Negative Covenants of Pledgor. Until Full Payment, Pledgor covenants that Pledgor
will not:
(a) sell,
transfer, convey or otherwise dispose of any of the Pledged Collateral or any interest therein;
(b) incur
or permit to be incurred any pledge, lien, charge, or encumbrance or any security interest whatsoever in or with respect to any of the
Pledged Collateral or the proceeds thereof, other than the security interest created by the Credit Agreement and the other Loan Documents;
(c) consent
to the issuance by Issuer of any new stock or other Equity Interest; or
(d) consent
to any merger or other consolidation of Issuer with or into any other corporation or entity.
9.
Irrevocable Authorization and Instructions. To the extent that any portion of the
Pledged Collateral may now or hereafter consist of uncertificated securities within the meaning of Article 8 of the UCC, Pledgor irrevocably
authorizes and instructs Issuer to comply with any instruction received by Issuer from Lender with respect to the Pledged Collateral
without any other or further instructions from or consent of Pledgor, and Pledgor agrees that Issuer shall be fully protected in so complying;
provided, however, that Lender agrees that it will not issue or deliver any such instructions except upon the occurrence
of an Event of Default.
10.
Subsequent Changes Affecting Pledged Collateral. Pledgor hereby represents to Lender
that Pledgor has made Pledgor’s own arrangements for keeping informed of changes or potential changes affecting the Pledged Collateral
(including rights to convert, rights to subscribe, payment of dividends and distributions, reorganization or other exchanges, tender
offers and voting rights), and Pledgor hereby agrees that Lender shall have no responsibility or liability for informing Pledgor of any
such changes or potential changes or for taking any action or omitting to take any action with respect thereto. Lender may, upon or at
any time after the occurrence of an Event of Default, at its option and without notice to Pledgor, transfer or register the Pledged Collateral
or any portion thereof into its name or the names of its nominee with or without any indication that such Pledged Collateral is subject
to the security interest hereunder.
11.
Pledged Share Adjustments. If during the term of this Agreement any stock dividend,
reclassification, readjustment or other change is declared or made in the capital structure of Issuer, or any option included within
the Pledged Collateral is exercised, or both, all new, substituted and additional shares, or other securities or Equity Interests, issued
by reason of any such change or exercise shall be delivered to and held by Lender under terms of this Agreement in the same manner as
the Pledged Collateral originally pledged hereunder.
12.
Warrants, Options and Rights. If during the term of this Agreement subscription warrants
or any other rights or options shall be issued or exercised in connection with the capital stock of Issuer, then such warrants, rights
and options shall be immediately assigned by the Pledgor to Lender and all new stock or other securities or Equity Interests so acquired
by Pledgor shall be immediately assigned to Lender to be held under the terms of this Agreement in the same manner as the Pledged Collateral
originally pledged hereunder.
13.
Registration. If Lender determines that it is advisable to register under or otherwise
comply in any way with the Securities Act of 1933 or any similar federal or state law, or if such registration or compliance is required
with respect to the securities included in the Pledged Collateral prior to sale thereof by Lender, then upon or at any time after the
occurrence of an Event of Default, Pledgor will use Pledgor’s best efforts to cause any such registration to be effectively made,
at no expense to Lender, and to continue such registration effective for such time as may be reasonably necessary in the opinion of Lender,
and will reimburse Lender for any expense incurred by Lender, including reasonable attorneys’ fees and accountant’s fees
and expenses, in connection therewith.
14.
Consent. Pledgor hereby consents that, from time to time, before or after the occurrence
or existence of any Event of Default, and with or without notice to or assent from Pledgor, any other security at any time held by or
available to Lender for any of the Secured Obligations may be exchanged, surrendered, or released, and any of the Secured Obligations
may be changed, altered, renewed, extended, continued, surrendered, compromised, waived or released, in whole or in part, as Lender may
see fit, and Pledgor shall remain bound under this Agreement.
15.
Remedies Upon Default. Upon or after the occurrence of any Event of Default, Lender
shall have, in addition any other rights given by law or the rights given hereunder or under the Loan Documents, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under the UCC. In addition, with respect to the Pledged Collateral,
or any part thereof, which shall then be or shall thereafter come into Lender’s possession or custody, Lender may sell or cause
the same to be sold at any broker’s board or at public or private sale, in one or more sales or lots, at such price as Lender may
deem best, and for cash or on credit or for future delivery, without assumption of any credit risk, and the purchaser of any or all of
the Pledged Collateral so sold shall thereafter hold the same absolutely, free from any claim, encumbrance or right of any kind whatsoever.
Unless the Pledged Collateral threatens to decline speedily in value or is or becomes of a type sold on a recognized market, Lender will
give Pledgor reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Pledged Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies or other financial institutions disposing of property similar to the Pledged Collateral shall be deemed to
be commercially reasonable. Any requirements of reasonable notice shall be met if such notice is mailed to Pledgor, as provided in Section
20 below, at least ten (10) days before the time of the sale or disposition. Any other requirement of notice, demand or advertisement
for sale is, to the extent permitted by law, waived. Lender may, in its name, or in the name of its designees or nominees, buy at any
public sale of the Pledged Collateral and, if permitted by applicable law, buy at any private sale thereof. Pledgor will pay to Lender
on demand all expenses (including, without limitation, court costs and reasonable attorneys’ fees and expenses) of, or incident
to, the enforcement of any of the provisions hereof and all other charges due against the Pledged Collateral and any expenses of Pledged
Collateral. In connection with any sale of Pledged Collateral by Lender, Lender shall have the right to execute any document or form,
in its name or in the name of Pledgor, which may be necessary or desirable in connection with such sale, including, without limitation,
Form 144 promulgated by the Securities and Exchange Commission. In view of the fact that federal and state securities laws may impose
certain restrictions on the method by which a sale of the Pledged Collateral may be effected after an Event of Default, Pledgor agrees
that Lender may, from time to time, attempt to sell all or any part of the Pledged Collateral by means of a private placement. In so
doing, Lender may solicit offers to buy the Pledged Collateral, or any part of it, for cash, from a limited number of investors deemed
by Lender, in its reasonable judgment, to be responsible parties who might be interested in purchasing the Pledged Collateral, and if
Lender solicits such offers from not less than four (4) such investors, then the acceptance by Lender of the highest offer obtained therefrom
shall be deemed to be a commercially reasonable method of disposing of the Pledged Collateral.
16.
Term. This Agreement shall constitute a continuing agreement and shall remain in full
force and effect until Full Payment.
17.
Successors and Assigns. This Agreement shall be binding upon Pledgor and Pledgor’s
legal representatives, administrators, heirs, executors, successors and assigns, and shall inure to the benefit of Lender and its successors
and assigns. In the event of a sale or assignment by Lender of all or any part of the Secured Obligations, Lender may assign or transfer
its rights and interests under this Agreement in whole or in part to the purchaser or purchasers of such Secured Obligations, whereupon
such purchaser or purchasers shall become vested with all of the powers and rights given to Lender hereunder, and Lender shall thereafter
be forever released and fully discharged from any liability or responsibility hereunder with respect to the rights and interests so assigned.
18.
Construction . Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but, if any provision of this Agreement shall be held to be prohibited
or invalid under any applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Agreement.
19.
Cooperation and Further Assurances. Pledgor agrees that Pledgor will cooperate with
Lender and will upon Lender’s request execute and deliver, or cause to be executed and delivered, all such other Powers, instruments,
and documents, and will take all such other action as Lender may reasonably request from time to time, in order to carry out the provisions
and purposes hereof, including delivering to Lender, if requested by Lender, irrevocable proxies with respect to the Pledged Equity Interests
in form satisfactory to Lender. Until receipt thereof, this Agreement shall constitute Pledgor’s proxy to Lender or its nominee
to vote all shares of the Pledged Equity Interests then registered in Pledgor’s name.
20.
Notices. All notices, demands, requests, consents, approvals and other communications
required or permitted hereunder must be in writing and shall be effective upon receipt by the noticed party. Acceptable methods for giving
notices hereunder shall include first-class U.S. mail, commercial courier service and electronic transmission. Regardless of the manner
in which notice is provided, notices may be sent to the address for Lender set forth in the Credit Agreement and the address for Pledgor
as set forth on the signature pages hereto or, in either case, to such other address as either party may give to the other for such purpose
in accordance with this Section 20.
21.
Lender Appointed Attorney-In-Fact. Pledgor hereby constitutes and appoints Lender,
with full power of substitution, Pledgor’s attorney-in-fact for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument which Lender may deem necessary or advisable to accomplish the purposes hereof, which
appointment is coupled with an interest and is irrevocable. Without limiting the generality of the foregoing, Lender shall have the power
to arrange for the transfer, upon or at any time after the occurrence of an Event of Default, of any of the Pledged Collateral on the
books of Issuer to the name of Lender. Pledgor agrees to indemnify and save Lender harmless from and against any liability or damage
which Lender may suffer or incur in the exercise or performance of any of Lender’s powers and duties specifically set forth herein,
except as the result of Lender’s gross negligence or willful misconduct.
22.
Counterparts; Execution. This Agreement may be executed in any number of counterparts
(which may be delivered electronically) and by the different parties hereto on separate counterparts, each of which, when executed and
delivered, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. Any signature page
delivered by telecopy machine, transmitted electronically in Portable Document Format (“.pdf”) or by other electronic means
shall be valid and binding to the same extent as an original signature page.
23.
WAIVERS. PLEDGOR HEREBY WAIVES: NOTICE OF LENDER’S ACCEPTANCE OF THIS AGREEMENT;
NOTICE OF EXTENSIONS OF CREDIT, LOANS, ADVANCES OR OTHER FINANCIAL ASSISTANCE BY LENDER TO BORROWERS; PRESENTMENT AND DEMAND FOR PAYMENT
OF ANY OF THE SECURED OBLIGATIONS; PROTEST AND NOTICE OF DISHONOR OR DEFAULT WITH RESPECT TO ANY OF THE SECURED OBLIGATIONS; AND ALL
OTHER NOTICES TO WHICH PLEDGOR MIGHT OTHERWISE BE ENTITLED EXCEPT AS HEREIN OTHERWISE EXPRESSLY PROVIDED.
24. Governing
Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO ITS CONFLICTS OF LAW PRINCIPLES.
25. Venue
and Consent to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH OF PLEDGOR AND LENDER CONSENTS TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF PLEDGOR AND LENDER IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION. NOTWITHSTANDING THE FOREGOING, LENDER SHALL HAVE THE RIGHT TO
BRING ANY ACTION OR PROCEEDING AGAINST PLEDGOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION AS LENDER DEEMS NECESSARY OR APPROPRIATE
IN ORDER TO EXERCISE REMEDIES WITH RESPECT TO THE PLEDGED COLLATERAL.
26. Jury
Waiver. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY EITHER AGAINST THE OTHER OR AGAINST ANY AFFILIATE, OFFICER, DIRECTOR, EMPLOYEE OR AGENT OF
THE LENDER, OR ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH PARTY TO THIS
AGREEMENT AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING,
THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR
ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS, WHETHER OR NOT SPECIFICALLY SET FORTH THEREIN.
[Remainder of Page Intentionally Left Blank
– Signature Pages Follow]
IN WITNESS WHEREOF, Pledgor
has signed, sealed and delivered this Agreement, on the day and year first above written.
|
PLEDGOR: |
|
|
|
|
ICU EYEWEAR HOLDINGS, INC. |
|
|
|
|
By: |
/s/ Ellery W. Roberts |
|
Name: |
Ellery W. Roberts |
|
Title: |
Executive Chairman and President |
[Signatures continue on the following page]
Pledge Agreement – ICU CA Holdings (ICU Eyewear)
|
Accepted and agreed to, this 11th day of September, 2023: |
|
|
|
|
LENDER: |
|
|
|
|
AB Lending
SPV I LLC, d/b/a Mountain Ridge Capital |
|
|
|
By: |
/s/ Craig Winslow |
|
Name: |
Craig Winslow |
|
Title: |
President and CEO |
Pledge Agreement – ICU CA Holdings (ICU Eyewear)
SCHEDULE I
Pledgor |
|
Issuer |
|
Description |
|
Certificate No. |
ICU Eyewear Holdings, Inc., a California corporation |
|
ICU Eyewear, Inc., a California corporation |
|
50,379 shares of common stock |
|
N/A |
ACKNOWLEDGMENT AND AGREEMENT OF ISSUER
The undersigned (“Issuer”)
hereby acknowledges, represents and agrees that: (i) Issuer has received a true and correct copy of the within and foregoing Pledge
Agreement (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “Agreement”);
(ii) the Agreement has been duly recorded and noted on the books and records of Issuer and will be maintained as part of such books and
records; (iii) the Agreement does not violate any term, condition or covenant of the by-laws, charter, operating agreement or partnership
agreement, as applicable, of Issuer, or of any other agreement to which Issuer is a party; (iv) upon and after the occurrence of
an Event of Default, Issuer will comply with written instructions originated by Lender without further consent of Pledgor as the registered
owner of the Pledged Collateral; (v) Issuer consents to the execution of the Agreement and to the assignment, transfer and pledge
of the Pledged Collateral effected thereby; and (vi) upon and after the occurrence of an Event of Default, Issuer consents to a public
or private sale or sales of all or any part of the Pledged Collateral by Lender in accordance with the terms of the Agreement and consents
to each purchaser of all or any part of the Pledged Collateral at such sale or sales becoming a shareholder, member, partner or other
owner, as applicable, of Issuer thereby entitled to the same rights and privileges and subject to the same duties as the owner of the
applicable Pledged Collateral under the by-laws, charter, operating agreement or partnership agreement, as applicable, of Issuer.
Each capitalized term used
herein, unless otherwise defined herein, shall have the meaning ascribed to such term in the Agreement. This Acknowledgement and Agreement
of Issuer is executed and shall be dated as of the date of the Agreement.
|
ISSUER: |
|
|
|
|
ICU EYEWEAR, INC. |
|
|
|
|
By: |
/s/ Ellery W. Roberts |
|
Name: |
Ellery W. Roberts |
|
Title: |
Executive Chairman and President |
Acknowledgement and Agreement
of Issuer – Pledge Agreement – ICU CA Holdings (ICU Eyewear)
Exhibit 10.5
Execution Version
TRADEMARK SECURITY AGREEMENT
This Trademark Security Agreement
(this “Trademark Security Agreement”) is made this 11th day of September 2023, by and among the Grantor
listed on the signature pages hereof (“Grantor”), and AB LENDING SPV I LLC, a Delaware limited liability company
d/b/a Mountain Ridge Capital (together with its successors and assigns in such capacity, “Lender”).
W I T N E S S E T H:
WHEREAS, pursuant to that
certain Amended and Restated Credit and Security Agreement dated as of 11th day of September, 2023 (as amended, restated, supplemented,
or otherwise modified from time to time, the “Credit Agreement”) by and among by and among, inter alia, ICU
EYEWEAR, INC., a California corporation (“ICU”), ICU EYEWEAR HOLDINGS, INC., a California corporation (“ICU
CA Holdings”), and 1847 ICU HOLDINGS INC., a Delaware corporation (“ICU DE Holdings”; and together
with ICU, ICU CA Holdings, and together with each other Person that joins the Credit Agreement as a Borrower, each individually, a “Borrower”,
and, collectively “Borrowers”), each of the other Loan Parties party thereto from time to time, and Lender, Lender
has agreed to make certain financial accommodations available to Borrowers from time to time pursuant to the terms and conditions thereof;
WHEREAS, pursuant to the Credit
Agreement, Lender is willing to make the financial accommodations to Borrowers as provided for in the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement); and
WHEREAS, pursuant to the Credit
Agreement, Grantor is required to execute and deliver to Lender, this Trademark Security Agreement;
NOW, THEREFORE, in consideration
of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Grantor hereby agrees as follows:
1. DEFINED
TERMS. All initially capitalized terms used but not otherwise defined herein have the meanings given to them in the Credit Agreement,
and this Trademark Security Agreement shall be subject to the rules of construction set forth in the Credit Agreement, which rules of
construction are incorporated herein by this reference, mutatis mutandis.
2. GRANT
OF SECURITY INTEREST IN TRADEMARK COLLATERAL. Grantor hereby unconditionally grants, assigns, and pledges to Lender, to secure the
Obligations, a continuing security interest (referred to in this Trademark Security Agreement as the “Security Interest”)
in all of Grantor’s right, title and interest in and to the following, whether now owned or hereafter acquired or arising (collectively,
the “Trademark Collateral”):
(a) all
of its owned trademarks and licensed trademarks including those referred to on Exhibit A;
(b) all
goodwill of the business connected with the use of, and symbolized by, each trademark and each licensed trademark; and
(c) all
products and proceeds (as that term is defined in the UCC) of the foregoing, including any claim by Grantor against third parties for
past, present or future (i) infringement or dilution of any trademark or any trademarks exclusively licensed under any intellectual
property license, including the right to receive any damages, (ii) injury to the goodwill associated with any trademark, or (iii) right
to receive license fees, royalties, and other compensation under any licensed trademark.
3. SECURITY
FOR SECURED OBLIGATIONS. This Trademark Security Agreement and the Security Interest created hereby secures the payment and performance
of the Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Trademark Security
Agreement secures the payment of all amounts which constitute part of the Obligations and would be owed by Grantor, to Lender, whether
or not they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving Grantor.
4. SECURITY
AGREEMENT. The Security Interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security
interests granted to Lender, pursuant to the Credit Agreement. Grantor hereby acknowledges and affirms that the rights and remedies of
Lender with respect to the Security Interest in the Trademark Collateral made and granted hereby are more fully set forth in the Credit
Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein. To the extent there is
any inconsistency between this Trademark Security Agreement and the Credit Agreement, the Credit Agreement shall control.
5. AUTHORIZATION
TO SUPPLEMENT. If Grantor shall obtain rights to any new trademarks, the provisions of this Trademark Security Agreement shall automatically
apply thereto. Grantor shall give prompt notice in writing to Lender with respect to any such new trademarks or renewal or extension of
any trademark registration. Without limiting Grantor’s obligations under this Section, Grantor hereby authorizes Lender unilaterally
to modify this Trademark Security Agreement by amending Exhibit A to include any such new trademark rights of Grantor. Notwithstanding
the foregoing, no failure to so modify this Trademark Security Agreement or amend Exhibit A shall in any way affect, invalidate
or detract from Lender’s continuing security interest in all Collateral, whether or not listed on Exhibit A.
6. COUNTERPARTS.
This Trademark Security Agreement is a Loan Document. This Trademark Security Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same Trademark Security Agreement. Delivery of an executed counterpart
of this Trademark Security Agreement by any electronic method of transmission shall be equally as effective as delivery of an original
executed counterpart of this Trademark Security Agreement. Any party delivering an executed counterpart of this Trademark Security Agreement
by any electronic method of transmission also shall deliver an original executed counterpart of this Trademark Security Agreement but
the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Trademark
Security Agreement.
7. CHOICE
OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE PROVISION. THE VALIDITY OF THIS TRADEMARK SECURITY AGREEMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO,
AND ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THIS TRADEMARK SECURITY AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING VENUE
SET FORTH IN SECTION 15.1(b) OF THE CREDIT AGREEMENT AND JURY WAIVER SET FORTH IN SECTION 12.3 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS
ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.
[Remainder of Page Intentionally
Left Blank – Signature Pages Follow]
IN WITNESS WHEREOF, the parties
hereto have caused this Trademark Security Agreement to be executed and delivered as of the day and year first above written.
|
GRANTOR: |
|
|
|
ICU EYEWEAR, INC. |
|
|
|
By: |
/s/
Ellery W. Roberts |
|
Name: |
Ellery W. Roberts |
|
Title: |
Executive Chairman and President |
[Signatures continue on the following page]
Trademark Security Agreement (ICU Eyewear)
|
ACCEPTED AND ACKNOWLEDGED BY: |
|
|
|
LENDER: |
|
|
|
AB LENDING SPV I LLC, |
|
d/b/a Mountain Ridge Capital |
|
|
|
|
By: |
/s/ Craig
Winslow |
|
Name: |
Craig Winslow |
|
Title: |
President and CEO |
Trademark Security Agreement (ICU Eyewear)
EXHIBIT A
to
TRADEMARK SECURITY AGREEMENT
Trademark Applications
Grantor |
|
Country |
|
Mark |
|
Serial No. |
|
Filing Date |
ICU Eyewear, Inc. |
|
USA |
|
ICU HEALTH |
|
97720180 |
|
Dec. 15, 2022 |
ICU Eyewear, Inc. |
|
USA |
|
ICU EYEWEAR |
|
97331042 |
|
Mar. 25, 2022 |
Registered Trademarks
Grantor |
|
Country |
|
Mark |
|
Registration No. |
|
Registration Date |
ICU Eyewear, Inc. |
|
USA |
|
ICU HEALTH |
|
6861871 |
|
Oct. 04, 2022 |
ICU Eyewear, Inc. |
|
USA |
|
ICU HEALTH |
|
6783810 |
|
Jul. 05, 2022 |
ICU Eyewear, Inc. |
|
USA |
|
SCREEN VISION BY ICU EYEWEAR |
|
6048223 |
|
May 05, 2020 |
ICU Eyewear, Inc. |
|
USA |
|
SCREEN VISION |
|
6207631 |
|
Nov. 24, 2020 |
ICU Eyewear, Inc. |
|
USA |
|
STUDIO BY ICU EYEWEAR |
|
5707618 |
|
Mar. 26, 2019 |
ICU Eyewear, Inc. |
|
USA |
|
OMNI-FOCUS |
|
5087993 |
|
Nov. 22, 2016 |
ICU Eyewear, Inc. |
|
USA |
|
ICU ECO EYEWEAR |
|
4815904 |
|
Sep. 22, 2015 |
ICU Eyewear, Inc. |
|
USA |
|
ICU ECO EYEWEAR |
|
4682714 |
|
Feb. 03, 2015 |
ICU Eyewear, Inc. |
|
USA |
|
DR. DEAN |
|
4463335 |
|
Jan. 07, 2014 |
ICU Eyewear, Inc. |
|
USA |
|
FISHERMAN EYEWEAR |
|
4457314 |
|
Dec. 31, 2013 |
ICU Eyewear, Inc. |
|
USA |
|
WINK |
|
4011379 |
|
Aug. 16, 2011 |
ICU Eyewear, Inc. |
|
USA |
|
DR. DEAN EDELL |
|
3205668 |
|
Feb. 06, 2007 |
ICU Eyewear, Inc. |
|
USA |
|
GUIDELINE |
|
3041676 |
|
Jan. 10, 2006 |
ICU Eyewear, Inc. |
|
USA |
|
ZOOM EYEWORKS |
|
3072132 |
|
Mar. 21, 2006 |
ICU Eyewear, Inc. |
|
USA |
|
ZOOM |
|
3269129 |
|
Jul. 24, 2007 |
ICU Eyewear, Inc. |
|
USA |
|
ICU EYEWEAR STUDIO COLLECTION |
|
3306261 |
|
Oct. 09, 2007 |
ICU Eyewear, Inc. |
|
USA |
|
ZOOM EXPRESSIONS |
|
3305598 |
|
Oct. 09, 2007 |
ICU Eyewear, Inc. |
|
USA |
|
SLIM VISION |
|
2545708 |
|
Mar. 12, 2002 |
ICU Eyewear, Inc. |
|
USA |
|
FLIP & FOCUS |
|
2545707 |
|
Mar. 12, 2002 |
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