Exhibit 10.1

 

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (this “Agreement”) is made and entered into by and between
BETTER CHOICE COMPANY INC., a Delaware corporation (“Borrower”), and FRANKLIN
SYNERGY BANK, a Tennessee banking corporation (“Lender”), as of this 6th day of
May, 2019 (the “Closing Date”).

 

WITNESSETH:

 

WHEREAS, Borrower has requested that Lender extend the credit facility to
Borrower described herein; and

 

WHEREAS, subject to the terms and conditions hereof, Lender has agreed to extend
such credit facility to Borrower conditioned upon Borrower entering into this
Agreement.

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

ARTICLE 1     

DEFINITIONS AND USAGE

 

Section 1.1     Defined Terms. As used in this Agreement, the following terms
shall have the following meanings, unless the context expressly requires
otherwise:

 

(a)     “Advance” means any advance or other extension of credit made by Lender
to Borrower pursuant to this Agreement and the Promissory Note.

 

(b)     “Assignment of Deposit Account” means that certain Assignment of Deposit
Account executed by Borrower in favor of Lender with respect to the Money Market
Account and dated as of even date herewith.

 

(c)     “Authorized Representative” means the following, each of whom must be
satisfactory to Lender for the specific purposes involved and appropriate to the
type of person involved: (a) with respect to a corporation, the officer or
officers of the corporation that are duly authorized to act for the corporation
in the specified capacity under the Organizational Documents of the corporation
or applicable law; (b) with respect to a partnership, the general partner or
general partners of the partnership that are duly authorized to act for the
partnership in the specified capacity under the Organizational Documents of the
partnership or applicable law; (c) with respect to a limited liability company,
the manager or members of the limited liability company that are duly authorized
to act for the limited liability company in the specified capacity under the
Organizational Documents of the limited liability company or applicable law; (d)
with respect to a natural person, the natural person if competent and authorized
to act for himself or herself in the specified capacity under applicable law, or
if not, any guardian, custodian, personal representative or other person that is
authorized to act for such natural person in the specified capacity under
applicable law; (e) with respect to a trust, the trustee or trustees of the
trust who are duly authorized to act for the trust in the specified capacity
under the Organizational Documents of the trust or applicable law; and (f) with
respect to any other type of organization, the officers, directors,

 

 

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managers, officials or other representatives of the organization that are duly
authorized to act for the organization in the specified capacity under the
Organizational Documents of the organization or applicable law.

 

(d)     “Business Day” means any day other than a Saturday, Sunday or day on
which commercial banks are authorized to close under the laws of the state in
which notices are to be sent to Lender under Section 10.1 hereof.

 

(e)     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

 

(f)     “Collateral” means any and all collateral securing or intended to secure
the Obligations, as described in Article III hereof.

 

(g)     “Commitment Fee” means an amount equal to TEN THOUSAND AND NO/100
DOLLARS ($10,000.00).

 

(h)     “Conditions Precedent” means those matters or events that by the terms
of the Loan Documents must be completed or must occur or exist before Lender
would become obligated to fund any Advance, including those matters described in
Article IV hereof.

 

(i)     “Debt” means all of a Person’s obligations, contingent or otherwise,
that would be classified on its balance sheet as its liabilities in accordance
with GAAP, including, in any event and without limitation, (a) liabilities
secured by any mortgage, pledge or lien existing on Property owned by such
Person, whether or not the liability secured thereby has been assumed by such
Person; (b) all indebtedness and other similar monetary obligations of such
Person; (c) all guaranties, obligations in respect of letters of credit,
endorsements (other than endorsements of negotiable instruments for purposes of
collection in the ordinary course of business), obligations to purchase goods or
services for the purpose of supplying funds for the purchase or payment of Debt
of others and other contingent obligations in respect of, or to purchase, or
otherwise acquire, or advance funds for the purchase of, Debt of others; (d) all
obligations of such Person to indemnify another Person to the extent of the
amount of indemnity, if any, that would be payable by such Person at the time of
determination; (e) the principal portion of all obligations of such Person under
capital leases (specifically excluding obligations under operating leases), (f)
all obligations of such Person to purchase or repurchase any accounts,
instruments, chattel paper or general intangibles and (g) all obligations of
such Person under any Hedging Agreement.

 

(j)     “Default” means the occurrence of any Event of Default specified in
Article 8 hereof, even though any requirement for notice or lapse of time or
other condition precedent has not been satisfied.

 

(k)     “Default Rate” means the lesser of (a) five percent (5%) above the
Effective Rate, or (b) the highest interest rate permitted by applicable law.

 

(l)     “Dollar(s)” and the sign “$” shall mean lawful money of the United
States of America.

 

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(m)     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.

 

(n)     “Effective Rate” has the meaning ascribed to that term in the Note.

 

(o)     “Event of Default” means the occurrence of any of the events specified
in Article 8 hereof, provided that any requirement in Article 8 for notice or
lapse of time or other condition precedent has been satisfied.

 

(p)     “Financial Statements” means those financial statements of Borrower
heretofore or hereafter delivered to Lender meeting the requirements in Section
6.11 hereof.

 

(q)     “GAAP” means generally accepted accounting principles as in effect from
time to time.

 

(r)     “Governmental Authority” means any national, state, county, municipal or
other government, domestic or foreign, and any agency, authority, department,
commission, bureau, board, court or other instrumentality thereof.

 

(s)     “Governmental Requirements” means all laws, rules, regulations,
ordinances, judgments, decrees, codes, orders, injunctions, notices,
determination, award, franchises, permits, licenses, authorizations, and demand
letters of any Governmental Authority.

 

(t)     “Guarantor” means, collectively, TruPet, LLC, a Delaware limited
liability company, and Bona Vida Inc., a Delaware corporation.

 

(u)     “Lender’s Office” means the office location of Lender where notices are
to be sent as set forth in Section 10.1 hereof.

 

(v)     “Lien” means any interest in Property securing an obligation owed to, or
a claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute, or contract, and including the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale, sale of accounts or general intangibles, trust
receipt or a lease, consignment, or bailment for security purposes. The term
“Lien” includes reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases, and other title exceptions and
encumbrances affecting any Property. For the purposes of this Agreement,
Borrower shall be deemed to be the owner of any Property that it has acquired or
holds subject to a conditional sale agreement, financing lease, or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.

 

(w)     “Loan” means the loan facility described in Section 2.1 hereof and
evidenced by this Agreement and the Note.

 

(x)     “Loan Amount” means an amount equal to SIX MILLION TWO HUNDRED THOUSAND
AND NO/100 DOLLARS ($6,200,000.00); provided, however, that in the event
Borrower desires to decrease amount on deposit in the Money Market Account, as a

 

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condition to such withdrawal the Loan Amount shall likewise be reduced and
Borrower shall execute such documents as Lender may require to evidence such
reduced Loan Amount.

 

(y)     “Loan Documents” means, collectively, all of the agreements, documents,
papers and certificates executed, furnished or delivered in connection with this
Agreement (whether before, at, or after the Closing Date) or at any time
evidencing or securing any of the Obligations, including this Agreement, the
Note, the Security Documents and all other documents, certificates, reports, and
instruments that this Agreement requires or that were executed or delivered (or
both) at Lender’s request.

 

(z)     “Material Adverse Effect” or “Material Adverse Change” means, as
applicable, a material adverse effect on, or material adverse change in, (a) the
business, operations or financial condition of Borrower, (b) the ability of
Borrower to perform its obligations under the Loan Documents, or (c) Lender’s
ability to enforce the rights and remedies granted under the Loan Documents, in
all cases whether attributable to a single circumstance or event or an
aggregation of circumstances or events.

 

(aa)     “Maturity Date” has the meaning ascribed to that term in the Note.

 

(bb)     “Money Market Account” means that certain Money Market Account
Number 3048303 owned by Borrower and held by Lender.

 

(cc)     “Note” means that certain Revolving Promissory Note made by Borrower
payable to the order of Lender and dated as of even date herewith.

 

(dd)     “Obligations” means any and all amounts and liabilities of any nature
owing or to be owing by Borrower to Lender from time to time in respect of the
Loan, whether now existing or hereafter incurred, and all of Borrower’s
undertakings in and under the Loan Documents including all agreements,
representations, warranties, and covenants therein and all renewals, extensions,
modifications, increases, restatements and amendments of any of the foregoing.

 

(ee)     “Obligors” means any and all accommodation parties, endorsers, surety,
guarantors and other parties liable on the Note (and, if applicable, any and all
general partners of Borrower), including without limitation, subject to the
completion of the mergers set forth in Section 2.2, Guarantor.

 

(ff)     “Organizational Documents” means with respect to a corporation, its
charter and bylaws, with respect to a limited liability company, its articles of
organization and operating agreement, with respect to a limited partnership, its
certificate of limited partnership and limited partnership agreement, with
respect to a general partnership, its partnership agreement and with respect to
a trust, its trust agreement, indenture of trust or other document establishing
the trust, together with any and all amendments to any of the foregoing.

 

(gg)     “PBGC” means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

 

(hh)     “Person” (whether or not capitalized) means any individual,
corporation, partnership, joint venture, association, limited liability company,
joint stock company, trust,

 

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unincorporated organization, government, or any agency or political subdivision
thereof, or any other form of entity.

 

(ii)     “Plan” means any employee benefit or other plan established or
maintained, or to which contributions have been made, by Borrower and covered by
Title IV of ERISA or to which Section 412 of the Code applies.

 

(jj)     “Property” or “Properties” means any interest in any kind of property
or asset, whether real, personal, mixed, tangible or intangible.

 

(kk)     “Security Agreement” means that certain Assignment and Security
Agreement dated of even date herewith executed by Borrower (as Debtor) in favor
of Lender (as Secured Party).

 

(ll)     “Security Documents” means any and all agreements or instruments
creating, evidencing or providing security at any time for the Obligations,
including the Security Agreement and appropriate UCC-1 financing statements
identifying Borrower as debtor and Lender as secured party.

 

(mm)     “Service Contract” means a written contract pursuant to which Borrower
is to provide equipment and services to third party customers, in each case to
be evidenced by a written contract satisfactory to Lender.

 

(nn)     “Solvent” means, with respect to any Person on a particular date, that
as of such date (a) the fair value of the Property of such Person is greater
than the total amount of Debt of such Person, (b) the present fair salable value
of the Property of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its Debts as they become
absolute and matured, (c) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
the Property of such Person would constitute an unreasonably small capital, and
(d) such Person does not intend to, or believe or reasonably should have
believed that it will, incur Debts beyond its ability to repay as they become
due.

 

(oo)     “State” means the state of Borrower’s incorporation, organization or
formation, as the case may be, which is described in the preamble of this
Agreement.

 

(pp)     “Transfer” means any voluntary or involuntary sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options
with respect to, or any other transfer or disposition of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) of a legal or beneficial
interest.

 

(qq)     “UCC” means the Uniform Commercial Code as in effect in the State, or,
with respect to any particular matter, the Uniform Commercial Code as in effect
in such other jurisdiction as may be required by law to govern such matter.

 

Section 1.2     Rules of Construction. For the purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:

 

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(a)     Words of masculine, feminine or neuter gender include the correlative
words of other genders. Singular terms include the plural as well as the
singular, and vice versa.

 

(b)     All references herein to designated “Articles,” “Sections” and other
subdivisions or to lettered Exhibits or numbered Schedules are to the designated
Articles, Sections and subdivisions hereof and the Exhibits and Schedules
attached hereto unless expressly otherwise designated in context. All Article,
Section, other subdivision and Exhibit and Schedule captions herein are used for
reference only and do not limit or describe the scope or intent of, or in any
way affect, this Agreement.

 

(c)     The terms “include,” “including,” and similar terms shall be construed
as if followed by the phrase “without being limited to.”

 

(d)     The terms “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section, other subdivision, Exhibit or Schedule.

 

(e)     All Recitals set forth in, and all Exhibits and Schedules to, this
Agreement are hereby incorporated into this Agreement by this reference except
that in the event of any conflict between an Exhibit and/or Schedule and this
Agreement or another Loan Document, the provisions of this Agreement or the Loan
Document, as the case may be, shall prevail over such Exhibit and/or Schedule.
Terms otherwise defined in the preamble or recitals hereof are incorporated into
Section 1.1 hereof by this reference.

 

(f)     No inference in favor of or against any party shall be drawn from the
fact that such party or such party’s counsel has drafted any portion hereof.

 

(g)     All references in this Agreement to a separate promissory note, deed of
trust, instrument or other type of agreement are to such separate document as
the same may be amended, restated, modified and/or supplemented from time to
time pursuant to the applicable provisions thereof. Unless otherwise provided,
all references to statutes and related regulations shall include any amendments
thereof and any successor statutes and regulations.

 

(h)     The words “Borrower” and “Lender” whenever used herein shall include the
respective heirs, executors, administrators, legal representatives, successors
and assigns of the parties hereto, and all those holding under any of them.

 

(i)     Any appointment of Lender as Borrower’s attorney-in-fact hereunder shall
be deemed irrevocable and coupled with an interest.

 

(j)     Where the character or amount of any asset or liability or item of
income or expense is required to be determined, or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, such determination or calculation, to the extent applicable and
except as otherwise specified in this Agreement, shall be made in accordance
with GAAP consistent with those in effect at the Closing Date.

 

(k)     Terms used in this Agreement and defined in the UCC shall have the same
meanings herein, except as otherwise expressly provided or amplified (but not
limited) herein.

 

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(l)     The terms of this Agreement shall govern if determined to be in conflict
with the terms or provisions in any other Loan Document.

 

ARTICLE 2     

LOAN FACILITY

 

Section 2.1     Loan Facility. Subject to the conditions and pursuant to the
terms of the Loan Documents and in reliance upon the representations,
warranties, and covenants set forth in the Loan Documents, and provided no
Default or Event of Default has occurred, Lender agrees to make Advances under
the Note from time to time in an aggregate amount less than or equal to the Loan
Amount.

 

Section 2.2     Purpose. The proceeds of the Loan shall be used by Borrower
refinancing of certain debt of the Guarantor entities in conjunction with a
merger of the Guarantor entities into Borrower and other business purposes of
Borrower.

 

Section 2.3     Interest; Repayment. The Loan shall bear interest at the
Effective Rate and shall be repaid in accordance with the terms of the Note,
provided, that all Obligations shall be due and payable in full on the Maturity
Date.

 

Section 2.4     Borrowing Procedures. An Authorized Representative of Borrower
shall request Advances be made to an operating account maintained with Lender.
Upon satisfaction of the Conditions Precedent, Lender shall make the Advance by
depositing the funds being advanced into Borrower’s operating account with
Lender on the date specified in such request, provided that if a request for an
Advance is received by Lender later than 12:00 p.m. on a business day, Lender
shall not be obligated to make such Advance until the next Business Day. Each
request verbal or written by Borrower for any Advance shall constitute a
representation and warranty by Borrower, as of the date the request or notice is
given and as of the date of the Advance, that (i) such Authorized Representative
of Borrower does not have knowledge of any Event of Default; and (ii) the
representations and warranties contained herein are and will be true and
correct, except as to changes occurring after the date of this Agreement caused
by events, actions or transactions permitted under this Agreement.

 

Section 2.5     Payments; Debit Authority. Each payment under the Note
(including any prepayment and payment of interest) shall be made to Lender at
Lender’s Office in Dollars and in immediately available funds on the date
required by the Loan Documents. Lender may, but shall not be obligated to, debit
the amount of any such payment which is not made by such time to any ordinary
deposit account of Borrower with Lender. Any payment received by Lender after
2:00 p.m. at Lender’s Office on a Business Day (or at any time on a day that is
not a Business Day) shall be deemed made by Borrower and received by Lender on
the following Business Day. Payments that are due on a day that is not a
Business Day shall be payable on the next succeeding Business Day, and any
interest payable thereon shall be payable for such extended time at the interest
rate specified in the Loan Documents.

 

Section 2.6     Commitment Fee. Borrower shall pay to Lender the Commitment Fee
on the Closing Date in consideration of Lender’s reserving and making available
the money to fund the Note, and is payable by Borrower as compensation for
Lender’s standing ready to lend pursuant to this Agreement. This fee shall be
deemed to have been unconditionally earned by Lender upon

 

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the closing of the Loan, whether or not any proceeds of the Note are thereafter
requested by Borrower or advanced by Lender.

 

Section 2.7     Required Prepayment. Upon the occurrence of an Event of Default,
at Lender’s option, all of the Obligations shall be payable immediately in cash
or on such other terms as Lender may require.

 

Section 2.8     Optional Prepayment. Borrower may prepay the Loan in whole or in
part without premium or penalty.

 

Section 2.9     Usury. The parties to this Agreement intend to conform strictly
to applicable usury laws as presently in effect. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law
(including the laws of the United States of America and the state in which
Lender’s Office is located), then, in that event, notwithstanding anything to
the contrary in any Loan Document or agreement executed in connection with or as
security for the Obligations, Borrower and Lender agree as follows: (i) the
aggregate of all consideration that constitutes interest under applicable law
which is contracted for, charged, or received under any of the Loan Documents or
agreements, or otherwise in connection with the Obligations, shall under no
circumstance exceed the maximum lawful rate of interest permitted by applicable
law, and any excess shall be credited on the Obligations by the holder thereof
(or, if the Obligations shall have been paid and performed in full, refunded to
Borrower); and (ii) in the event that the maturity of the Obligations is
accelerated by reason of an election of the holder resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest may
never include more than the maximum amount of interest permitted by applicable
law, and excess interest, if any, for which this Agreement provides, or
otherwise, shall be canceled automatically as of the date of such acceleration
or prepayment and, if previously paid, shall be credited on the Obligations (or,
if the Obligations have been paid and performed in full, refunded to Borrower).

 

ARTICLE 3     

COLLATERAL

 

Section 3.1     Collateral. The Obligations shall be secured by the following
“Collateral,” all of which shall be in such form and upon such terms and
conditions satisfactory to Lender:

 

(a)     Security Agreement. A first perfected security interest in all of
Borrower’s present and hereafter interest in the Property described in the
Security Agreement.

 

(b)     Assignment of Deposit Account. A collateral assignment of the Money
Market Account pursuant to the Assignment of Deposit Account.

 

(c)     Accounts. A first perfected security interest in all of Borrower’s
operating and deposit accounts held with Lender.

 

(d)     Guaranties. Subject to the completion of the mergers set forth in
Section 2.2, fully executed Guaranty Agreements executed by Guarantor.

 

 

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(e)     Other Documents. Such other documents, agreements, financing statements,
affidavits, approvals, consents, opinions and other documents as Lender and its
legal counsel deem necessary to adequately secure the Obligations.

 

Section 3.2     Release of Collateral. Provided no Default or Event of Default
has occurred and is continuing, Lender shall release its lien against the
Collateral upon Borrower’s satisfaction and payment in full of the Obligations.

 

ARTICLE 4     

CONDITIONS PRECEDENT

 

Lender’s obligation to make the initial Advance on the Closing Date and each
subsequent Advance is subject to the Conditions Precedent that Lender shall have
received (or agreed in writing to waive or defer receipt of) all of the
following, each duly executed, dated and delivered as of the Closing Date or the
date of each Equipment Loan, in form and substance satisfactory to Lender and
its legal counsel:

 

Section 4.1     Loan Documents. The Loan Documents, all duly executed and
delivered by Borrower, and/or the other parties thereto, as applicable, and, in
the case of each subsequent Advance subject to the completion of the mergers set
forth in Section 2.2, each Guarantor, in such form as is satisfactory to Lender
and its legal counsel.

 

Section 4.2     Organizational Documents. Copies of the Organizational Documents
of Borrower, as amended to the Closing Date, certified by an Authorized
Representative of Borrower and, in the case of each subsequent Advance subject
to the completion of the mergers set forth in Section 2.2, copies of the
Organizational Documents of each Guarantor certified by an Authorized
Representative of each Guarantor.

 

Section 4.3     Resolutions. Certified copies of resolutions of the governing
bodies of Borrower and, in the case of each subsequent Advance subject to the
completion of the mergers set forth in Section 2.2, each Guarantor, authorizing
the execution, delivery, and performance of all Loan Documents to which each is
a party.

 

Section 4.4     Related Entity Documents. If Borrower has, directly or
indirectly, any general partner, member, director, shareholder or other
affiliated or related entity that is not a natural person and that is required
to take any action or give any consent or approval (in the opinion of Lender or
its legal counsel) in connection with the Loan, Borrower shall furnish to Lender
appropriate certificates, Organizational Documents, resolutions and other
documents for such related entity similar to those required of Borrower in this
Article IV.

 

Section 4.5     Certificate of Existence. A certificate of existence regarding
Borrower certified by the Secretary of State of the State, containing no facts
objectionable to Lender.

 

Section 4.6     Intentionally Deleted.

 

Section 4.7     Financial Statements. The respective Financial Statements of,
all containing no matters objectionable to Lender.

 

Section 4.8     Insurance. Evidence that Borrower has obtained policies of
insurance as required by this Agreement and the Security Documents.

 

Section 4.9     Identification. The taxpayer identification number of.

 

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Section 4.10     Patriot Act. Evidence as satisfactory to Lender that Borrower
is in compliance with the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT)
Act of 2001, as such may be amended from time to time.

 

Section 4.11     UCC Searches. Lender shall have received, at Borrower’s
expense, reports of searches of the central and local UCC records indicating no
liens for Borrower objectionable to Lender.

 

Section 4.12     Other. Such other evidence, documents, certificates and items
requested by Lender that are customarily provided in loan transactions of this
type or necessary in connection with any other requirement hereof.

 

Section 4.13     Adverse Change. There shall not have occurred, in the opinion
of Lender, any Material Adverse Change regarding any facts submitted to Lender
in connection with the Loan from that which existed at the time Lender
considered the issuance of the commitment letter for the Loan. In addition,
Borrower shall not be involved in any litigation threatened or existing against
Lender or any affiliate of Lender.

 

ARTICLE 5     

REPRESENTATIONS AND WARRANTIES

 

As an inducement to Lender to enter this Agreement and make the Loan, Borrower
represents and warrants to Lender that as of the Closing Date, and again as of
the date of any Equipment Loan:

 

Section 5.1     Existence; Qualification. The entity type of Borrower is
correctly described in the preamble hereof, and Borrower is duly organized,
legally existing and in good standing under the laws of the State.

 

Section 5.2     Power and Authorization. (a) Borrower has the requisite power
and authority to own its Properties and to transact the business in which it is
now engaged or proposed to be engaged in; (b) Borrower is duly authorized and
empowered to execute and deliver, and to perform and observe the terms and
provisions of the Loan Documents to which it is a party and to carry out the
transactions contemplated hereby and thereby; (c) all action on Borrower’s part
required to be taken for the due execution, delivery and performance of the Loan
Documents has been duly and effectively taken; and (d) Borrower is duly
qualified to do business in every jurisdiction where the character of its
Properties or the nature of its activities makes such qualification necessary.

 

Section 5.3     Binding Obligations. This Agreement is, and the other Loan
Documents, when executed and delivered in accordance with this Agreement, will
be, legal, valid and binding obligations upon and against Borrower enforceable
in accordance with their respective terms, subject to no defense, counterclaim,
set off, or objection of any kind. Lender has taken no action nor has it failed
to take any action that subjects Lender to any liability to Borrower.

 

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Section 5.4     No Consent. The execution, delivery or performance of the Loan
Documents by Borrower to which it is a party does not and will not require any
registration with, consent or approval of, or notice to, or action by, any other
Person.

 

Section 5.5     Location. Borrower’s jurisdiction of organization is as set
forth herein. Borrower shall notify Lender within at least thirty (30) days
following any change in the location of its jurisdiction of organization.

 

Section 5.6     Financial Condition. The Financial Statements of Borrower
heretofore delivered to Lender have been prepared in accordance with the
accounting standards required by this Agreement, and present fairly in all
material respects the financial condition of Borrower, as of the date or dates
and for the period or periods stated therein, subject to finalizing adjustments
determined not to be material. No Material Adverse Change has occurred since the
date of such Financial Statements.

 

Section 5.7     Title. Borrower has good and marketable title to its Properties,
free and clear of all Liens except those referenced or reflected in the
Financial Statements of Borrower or those Liens securing the Obligations.

 

Section 5.8     Intellectual Property. Borrower possesses or has the right to
use all trademarks, service marks, copyrights, trade names, patents, licenses,
and other intellectual property, and rights therein, as are necessary for the
conduct of its business as now conducted and presently proposed to be conducted,
without conflict with the rights or claimed rights of others.

 

Section 5.9     Priority. The Loan Documents, when executed, acknowledged and
delivered, and filed and recorded, as appropriate, grant to Lender a valid,
enforceable and perfected first priority Lien in all Property in which such
documents purport to convey or grant to Lender a lien or security interest. No
chattel mortgage, bill of sale, security agreement, financing statement or other
title retention agreement, except those executed in favor of or with the prior
written consent of Lender, has been or will be executed with respect to such
Property, and no Lien has attached or will attach with respect to such Property.

 

Section 5.10     No Legal Bar or Resultant Lien. Borrower’s execution, delivery
and performance of this Agreement and the other Loan Documents and the
consummation of the transactions contemplated herein and therein, does not and
will not: (a) contravene or breach any provisions of its Organizational
Documents; (b) cause Borrower to be in default under, and will not violate any
provisions of any Governmental Requirement presently in effect having
application to Borrower or to the Property of Borrower; (c) result in any breach
of, or constitute any default under, any indenture, mortgage, deed of trust,
loan or credit agreement, or any other agreement, contract, lease or instrument
to which Borrower is a party or by which Borrower may be bound or affected; or
(d) result in, or require, the creation or imposition of any Lien upon or with
respect to any Property now owned or hereafter acquired by Borrower other than
Permitted Encumbrances, Liens contemplated by the Loan Documents or Liens
otherwise disclosed to, and approved by, Lender in the Financial Statements of
Borrower, and Borrower is not in violation of, has not breached, or is in
default under any of the foregoing.

 

Section 5.11     Investments, Advances, and Guaranties. Borrower has not made
investments in, advances to, or guaranties of the obligations of any Person, or
committed or agreed

 

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to undertake any of these actions or obligations, except as referred to or
reflected in the Financial Statements of Borrower.

 

Section 5.12     Liabilities; Litigation; Labor Disputes; Etc. Borrower has no
material liabilities (individually or in the aggregate) direct or contingent,
except as reflected in the Financial Statements of Borrower. Except as reflected
in such Financial Statements, there is no litigation, legal or administrative
proceeding, investigation, or other action of any nature pending or, to the best
knowledge of Borrower, threatened against or affecting Borrower that involves
the possibility of any judgment or liability not fully covered by insurance. In
addition, Borrower is not involved in any litigation threatened or existing
against Lender or any affiliate of Lender. Borrower has not recently experienced
and is not now experiencing any strike, labor dispute, slowdown, or work
stoppage due to labor disagreements, and no such strike, dispute, slowdown, or
work stoppage is threatened against Borrower.

 

Section 5.13     Compliance with Laws, Etc. Borrower is not in violation of, nor
has Borrower received notice of any violation of, any Governmental Regulation to
which Borrower or any of its Properties are subject. Borrower has not failed to
obtain any license, permit, franchise, or other governmental authorization
necessary to the ownership of any of its Properties or to the conduct of its
business.

 

Section 5.14     Taxes; Governmental Charges. Borrower has filed or caused to be
filed all tax returns and reports required to be filed with any Governmental
Authority and Borrower has paid all due and payable taxes, assessments, fees,
and other governmental charges levied upon it or upon any of its Properties or
income, including interest and penalties, required to be paid to any
Governmental Authority. Borrower has made all required withholding deposits.

 

Section 5.15     No Default. Borrower is not in default in any respect that
affects its business, Properties, operations, or condition, financial or
otherwise, under any indenture, mortgage, deed of trust, credit agreement, note,
agreement, or other instrument to which Borrower is a party or by which it or
its Properties are bound. Borrower is not in violation of its Organizational
Documents. No Default or Event of Default has occurred as of the Closing Date.

 

Section 5.16     ERISA. Borrower is in compliance in all material respects with
the applicable provisions of ERISA. Borrower has not incurred any material
“accumulated funding deficiency” within the meaning of ERISA, and has not
incurred any material liability to PBGC in connection with any Plan.

 

Section 5.17     Casualties; Taking of Collateral, Etc. Neither the business of
Borrower nor the Collateral has been affected as a result of any fire,
explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, cancellation of contracts, permits, concessions by
any domestic or foreign government or any agency thereof, riot, activities of
armed forces or Acts of God or of any public enemy.

 

Section 5.18     No Material Misstatements. No information, exhibit, or report
furnished or to be furnished by Borrower to Lender in connection with this
Agreement contain, as of the date thereof, or will contain as of the Closing
Date, any material misstatement of fact or failed or will fail to state any
material fact, the omission of which would render the statements therein
materially false or misleading.

 

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Section 5.19     Regulation U. Borrower does not intend to use any part of the
proceeds of the Loan, and has not incurred any indebtedness to be reduced,
retired or purchased by it out of such proceeds, for the purpose of purchasing
or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, and it does not own and has no
intention of acquiring any such margin stock.

 

Section 5.20     Solvency. Borrower is Solvent as of the Closing Date.

 

ARTICLE 6     

AFFIRMATIVE COVENANTS

 

Borrower covenants that, during the term of this Agreement and until all
Obligations shall have been paid and performed in full, unless Lender shall
otherwise first consent in writing, Borrower shall:

 

Section 6.1     Payment and Performance. Pay and perform the Obligations
according to the terms of the Loan Documents and do and perform, and cause to be
done and to be performed, every act and discharge all of the Obligations
provided to be performed and discharged by Borrower under the Loan Documents, at
the time or times and in the manner specified.

 

Section 6.2     Expenses. Borrower agrees to pay on demand all out of pocket
costs and expenses of Lender (including the reasonable fees and out of pocket
expenses of Lender’s attorneys, paralegals, accountants, auditors, and
consultants) incurred by Lender in connection with the preparation, execution,
delivery, administration, interpretation, amendment, waiver or enforcement of
this Agreement or the other Loan Documents, or in the protection of Lender’s
rights under the Loan Documents (including any suit for declaratory judgment or
interpretation of the provisions hereof and any bankruptcy, insolvency or
condemnation proceedings involving Borrower, its Property, and/or any
Collateral). In addition, Borrower agrees to pay, and to hold Lender harmless
from all liability for, any stamp, recording, intangibles or other taxes payable
in connection with the execution or delivery of this Agreement, the Advances,
the Collateral, or the issuance or delivery of the Note or any other Loan
Documents, excluding, however, taxes based upon the income or assets of Lender.
Upon Lender’s request, Borrower shall promptly reimburse Lender for all amounts
expended, advanced, or incurred by Lender in endeavoring to satisfy any
obligation of Borrower under this Agreement or any other Loan Documents, or to
perfect a Lien in favor of Lender, or to protect the Property or to collect the
Obligations, or to enforce or protect the rights of Lender under this Agreement
or any other Loan Document, including all court costs, attorney’s and
paralegal’s fees, fees of auditors and accountants, and investigation expenses
reasonably incurred by Lender in connection with any such matters, and all such
amounts shall bear interest at the Default Rate until paid in full. All
obligations of Borrower under this Section shall be part of the Obligations and
shall survive any termination of this Agreement.

 

Section 6.3     ERISA Information and Compliance. Comply with ERISA and all
other applicable laws governing any pension or profit sharing plan or
arrangement to which Borrower is a party. Borrower shall provide Lender with
notice of any “reportable event” or “prohibited transaction” or the imposition
of a “withdrawal liability” within the meaning of ERISA.

 

Section 6.4     Taxes and Other Liens. Promptly pay and discharge (in any event,
prior to delinquency) all taxes, assessments, and governmental charges or levies
imposed upon it or upon

 

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any of its Properties by any Governmental Authority as well as all claims of any
kind (including claims for labor, materials, supplies, and rent) which, if
unpaid, might become a Lien upon any or all of its Properties; provided,
however, that Borrower shall not be required to pay any such tax, assessment,
charge, levy, or claim if the amount, applicability, or validity thereof shall
currently be contested in good faith by appropriate proceedings diligently
conducted and if Borrower shall establish reserves therefor adequate under GAAP.

 

Section 6.5     Maintenance. (a) Do or cause to be done all things necessary to
preserve and keep in full force and effect Borrower’s entity existence, name,
rights, and franchises; (b) maintain the Property in good and workable condition
at all times and continue its ownership in the same, and make all repairs,
replacements, additions, and improvements thereto reasonably necessary and; and
(c) maintain capital sufficient to operate its business and to perform and/or
pay all Obligations as they become due.

 

Section 6.6     Further Assurances. Promptly cure any defects in the creation,
issuance, and delivery of the Loan Documents at Borrower’s expense. Borrower, at
Borrower’s expense, will promptly execute and deliver to Lender upon request all
such other and further agreements and instruments in compliance with or
accomplishment of the covenants and agreements of Borrower in the Loan
Documents, or to evidence further and to describe more fully any Collateral, or
to correct any omissions in the Loan Documents, or to state more fully the
Obligations and agreements set out in any of the Loan Documents, or to perfect,
protect, or preserve any Liens created pursuant to any of the Loan Documents, or
to make any recordings, to file any notices, or to obtain any consents, all as
may be reasonably necessary or appropriate in connection therewith for so long
as those “further assurances” advance the spirit and letter of this Agreement.

 

Section 6.7     Compliance with Laws. Observe and comply with all applicable
Governmental Regulations, including all labor laws, to which Borrower, or any of
Borrower’s Properties are subject, and will promptly pay when due all taxes and
assessments upon Borrower’s Properties, and all claims for labor or materials,
rents, and other obligations that, if unpaid, will or might become a Lien
against Borrower’s Properties. In the event any such liability or obligation is
contested by Borrower in good faith, Borrower shall establish reserves with
Lender and/or obtain a bond in amount, form and substance satisfactory to Lender
to meet such liabilities or obligations.

 

Section 6.8     Books and Records. Keep books of record and account, in which
full, true, and correct entries will be made of all dealings or transactions in
accordance with sound accounting principles consistently applied, except only
for changes in accounting principles or practices with which Borrower’s
certified public accountants concur and which changes have been reported to
Lender in writing and with an explanation thereof. Borrower’s books and records
shall at all times be maintained at the address for Borrower set forth in this
Agreement. Lender, or any of its agents, employees, or representatives, at
Lender’s expense shall have the right to visit Borrower’s place or places of
business, at intervals determined by Lender, and, without hindrance or delay, to
inspect, audit, check, and make extracts from the books, records, journals,
orders, receipts, correspondence, and other data relating to Borrower’s
operations; provided that upon the occurrence and during the continuance of an
Event of Default and after the expiration of any applicable notice and cure
periods, the cost of such review shall be at Borrower’s expense. Lender shall
have the right to discuss such matters with Borrower’s Authorized
Representatives and accountants at all times.

 

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Section 6.9     Notice of Certain Events. Promptly give to Lender, if Borrower
learns of the occurrence of any of the following events, notice of (a) any event
that constitutes a Default or Event of Default, together with a detailed
statement by a responsible officer of Borrower of the steps being taken as a
result thereof; (b) the receipt of any notice from, or the taking of any other
action by, the holder of any promissory note, debenture, or other evidence of
Debt of Borrower or of any security (as defined under the Securities Act of
1933, as amended) of Borrower with respect to a claimed default, together with a
detailed statement by a responsible officer of Borrower specifying the notice
given or other action taken by such holder and the nature of the claimed default
and what action Borrower is taking or proposes to take with respect thereto; (c)
any legal, judicial, or regulatory proceedings affecting Borrower in which the
amount involved is material and is not covered by insurance or which, if
adversely determined, would have a Material Adverse Effect; (d) any dispute
between Borrower and any Governmental Authority or any other Person which, if
adversely determined, might interfere with the normal business operations of
Borrower; or (e) any Material Adverse Changes from any facts reflected in the
financial statements of Borrower delivered to Lender pursuant to this Agreement
or from the facts warranted or represented in any Loan Document.

 

Section 6.10     Insurance. Obtain and maintain, in amount, form and substance,
and with insurers satisfactory to Lender, and shall provide to Lender evidence
of, the following insurance in connection with the Loan and the Property:

 

(a)     General Liability. Commercial general liability insurance in an amount
not less than $1,000,000.00 on an “occurrence basis” and $2,000,000.00 on an
aggregate basis insuring Borrower and Lender against claims for personal injury,
including bodily injury, death or property damage. Said insurance is to be kept
in full force and effect at all times throughout the term of this Agreement
until the full payment and performance of the Obligations.

 

(b)     Worker’s Compensation. Worker’s compensation insurance covering Borrower
and its employees, as required by applicable law, which shall contain an
agreement to notify Lender in writing at least thirty (30) days prior to any
cancellation or amendment of such policy. Said insurance is to be kept in full
force and effect at all times throughout the term of this Agreement until the
full payment and performance of the Obligations.

 

(c)     Other. Such other insurance, in such amounts and for such terms, as may
from time to time be reasonably required by Lender insuring against such other
casualties or losses which at the time are commonly insured against by those in
Borrower’s business.

 

The policy described in (a) above shall be evidenced by an Acord 25 certificate
naming Lender as additional insured (and an additional insured endorsement to
said policy in form and substance satisfactory to Lender shall be delivered to
Lender on or prior to the Closing Date) and shall provide that Lender shall
receive not less than thirty (30) days written notice prior to amendment or
cancellation. Borrower will notify Lender of any change in the status of the
insurance required above within five (5) Business Days of Borrower’s receipt of
notice of any such change. The proceeds of the policy described in (a) above
shall be payable by check to Lender or jointly payable to Borrower and to
Lender, in Lender’s discretion, and shall be delivered to Lender, and such
proceeds (after deducting Lender’s reasonable costs and expenses of obtaining
such proceeds) shall be applied by Lender, at Lender’s sole option.

 

Section 6.11     Financial Statements and Reports. Promptly furnish to Lender:

 

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(a)     As soon as available, and in any event within thirty (30) days after the
end of each calendar month, Borrower shall furnish to Lender monthly company
prepared financial statements of Borrower prepared by Borrower and certified as
true and correct by an Authorized Representative of Borrower.

 

(b)     Borrower shall cause Lender to receive the annual local, state and
federal tax returns for Borrower for the immediately preceding month within
thirty (30) days following the filing of such tax return with the applicable
governmental entity during the term of the Loan and until the Note has been
repaid in full. Each tax return shall be certified as true and correct by an
Authorized Representative of Borrower.

 

(c)     Following the occurrence of a Default or an Event of Default and upon
Lender’s request thereafter, Borrower shall provide to Lender updated financial
statements for Borrower within ten (10) days from the date of the such request,
which shall be certified as true and correct by an Authorized Representative
Borrower. Except as otherwise provided in this Section, the financial statements
required under this Section shall be prepared using GAAP and shall include a
balance sheet, an income statement, a statement of cash flow, a statement of
contingent liabilities, and such other information as may be requested by
Lender.

 

 

Section 6.12     Capital. At all times maintain capital sufficient to operate
its business and to perform and/or pay all Obligations as they become due,
including payments due with respect to the Note.

 

Section 6.13     Intentionally Deleted.

 

ARTICLE 7     

NEGATIVE COVENANTS

 

Borrower covenants and agrees that, during the term of this Agreement and until
all Obligations shall have been paid and performed in full, unless Lender shall
otherwise first consent in writing, Borrower will not, either directly or
indirectly:

 

Section 7.1     Transfer. Transfer, or permit to exist any Transfer of, or Lien
on, the Collateral, except, subject to all other provisions of this Article, the
foregoing restrictions shall not apply to sales or leases otherwise permitted by
Lender in writing.

 

Section 7.2     Proceeds of Loan. Permit the proceeds of the Loan to be used for
any purpose other than those permitted under this Agreement.

 

Section 7.3     Structure. Suffer or permit any material change to be made to
Borrower’s ownership or management structure or the character of its business as
carried on as of the Closing Date without the prior written consent of Lender.
Notwithstanding the foregoing, Borrower intends to merge both Guarantor entities
into Borrower, and nothing in this Agreement shall be deemed to prevent such
merger or to constitute a default or Event of Default in the event such mergers
occur.

 

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Section 7.4     Assignment. Assign or transfer any of Borrower’s rights,
remedies, powers, duties, liabilities or obligations arising under or pursuant
to any of the Loan Documents.

 

Section 7.5     Additional Debt. Incur, create, assume, or in any manner become
or be liable with respect to any Debt other than Debt owed to Lender.

 

Section 7.6     Sale of Assets, Dissolution, Etc. (a) Sell, lease, transfer or
otherwise dispose of any of its property which is not classified as Collateral,
except in the ordinary course of business for fair market value or more (as used
herein “fair market value” shall be that amount which is within ten percent
(10%) of the appraised value of any of such assets); (b) suffer or permit in
whole or in part dissolution or liquidation; (c) enter into any arrangement,
directly or indirectly, with any Person whereby Borrower shall Transfer any
Property used and/or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such Property or other Property which
Borrower intends to use for substantially the same purpose or purposes as the
Property being sold or transferred; or (d) make or obtain any acquisition of all
or substantially all of the Property or assets of any other Person, or merge or
consolidate with or into, or Transfer (whether in one transaction or in a series
of transactions) all or substantially all of its Properties to any Person.

 

Section 7.7     Inconsistent Agreements. Enter into any agreement containing any
provision that would be violated or breached by the performance by Borrower of
its Obligations.

 

ARTICLE 8     

EVENTS OF DEFAULT

 

The occurrence of any of the following events (each an “Event of Default”) shall
terminate any obligations on the part of Lender to make any Advance hereunder
and, at the option of Lender, shall make all sums of principal, interest and
expenses remaining unpaid on the Loan immediately due and payable, without
notice of default, presentment or demand for payment, protest, or notice of
nonpayment or dishonor, or other notices or demands of any kind, except as
hereinafter specified:

 

Section 8.1     Principal and Interest Payments. Borrower fails to make payment
of any installment of principal or interest on the Obligations within ten (10)
days of the date when due.

 

Section 8.2     Representations and Warranties. Any representation or warranty
made by or on behalf of Borrower or any Obligor in any Loan Document appears to
have been incorrect in any material respect as of the date thereof, or any
representation, warranty, statement (including financial statements),
certificate, or data furnished or made by or on behalf of Borrower or any
Obligor in any Loan Document appears to have been untrue in any material respect
as of the date as of which the facts therein set forth were stated or certified.

 

Section 8.3     Obligations. Excluding obligations set forth in this Article 8,
Borrower or any Obligor fails to perform any of its agreements, obligations or
covenants as required by and contained in any Loan Document and fails to cure
such non-performance within fifteen (15) days after the earlier of (a) receipt
by Borrower of written notice from Lender notifying Borrower that a breach or
default has occurred, or (b) actual knowledge by Borrower that a breach or
default has

 

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occurred; provided that no notice or cure period shall be applicable to a
default occurring under any of the following sections or articles hereof:
Section 6.10 and Article 7.

 

Section 8.4     Involuntary Bankruptcy or Receivership Proceedings. Any of the
following events or conditions occurs with respect to Borrower or any Obligor:
(a) a receiver, custodian, liquidator, or trustee of itself or of any of the
Property of Borrower or any Obligor is appointed by the order or decree of any
court or agency or supervisory authority having jurisdiction; or (b) any of the
Property of Borrower or any Obligor is sequestered by court order; or (c) a
petition is filed against Borrower or any Obligor under any state or federal
bankruptcy, reorganization, debt arrangement, insolvency, readjustment of debt,
dissolution, liquidation or receivership law of any jurisdiction, whether now or
hereafter in effect.

 

Section 8.5     Voluntary Petitions. Borrower or any Obligor files (or takes
formal action authorizing the filing of or takes affirmative steps to prepare to
file) a voluntary bankruptcy petition or other petition to seek relief under any
provision of any bankruptcy, reorganization, debt arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction or
consents to the filing of any such petition against it under any such law.

 

Section 8.6     Assignments for Benefit of Creditors, Etc. Borrower or any
Obligor makes an assignment for the benefit of its creditors, or admits in
writing its inability to pay its debts generally as they become due, or consents
to the appointment of a receiver, trustee, or liquidator of Borrower or of all
or any part of its Property.

 

Section 8.7     Discontinuance of Business, Merger, Control, Etc. Borrower or
any Obligor (a) discontinues its usual business; (b) ceases to continue its
current operations in the manner and scope conducted on the date of this
Agreement; (c) merges or consolidates into any other entity, other than
Borrower; (d) dies or commences to dissolve, wind-up or liquidate itself or (e)
experiences a change of control in its ownership or management without the prior
written consent of Lender;

 

Section 8.8     Cross Default on Other Debt or Security. Subject to any
applicable grace period or waiver prior to any due date, Borrower or any Obligor
fails to make any payment due on any Debt or on any security (as “security” is
defined for purposes of the federal securities laws) or any event shall occur or
any condition shall exist with respect to any Debt or security of Borrower or
any Obligor or under any agreement securing or relating to such Debt or
security, the effect of which is to cause or to permit any holder or trustee of
such Debt or other security or a trustee to cause (whether or not such holder or
trustee elects to cause) any or all of such Debt or security to become due prior
to its stated maturity or prior to its regularly scheduled dates of payment.

 

Section 8.9     Undischarged Judgments. If judgment for the payment of money is
rendered by any court or other Governmental Authority against Borrower which is
not fully covered by valid collectible insurance and such remains unpaid or not
bonded (to Lender’s satisfaction) in full within thirty (30) days after such
judgment is entered.

 

Section 8.10     Violation of Laws. Borrower or any Obligor materially violates
or otherwise materially fails to comply with any Governmental Regulation or
Borrower or any Obligor fails or refuses at any and all times to remain current
on its financial reporting requirements pursuant to such Governmental
Regulations.

 

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Section 8.11     Litigation. Should a court order, injunction, or judgment be
issued in connection with any litigation, the effect of which would have a
Material Adverse Effect on Borrower or any Obligor.

 

Section 8.12     Fire or Casualty. Should any portion of the Collateral be
materially damaged or destroyed by fire or other casualty, which is not
adequately covered by insurance (as determined by Lender in the exercise of its
discretion) to effect the full and complete repair or replacement of same to the
satisfaction of Lender.

 

Section 8.13     Levy. A levy shall be made under any legal process on the
Property, and such levy is not removed within thirty (30) days following such
levy.

 

Section 8.14     Attachment of Liens to Property. Attachment of any involuntary
Lien upon the Collateral which is not removed within thirty (30) days after the
attachment.

 

Section 8.15     Material Adverse Change. The occurrence of any Material Adverse
Change or any event that would result in a Material Adverse Effect. 

 

Section 8.16     Failure of Merger. The failure to complete the mergers
contemplated by Section 2.2 of this Agreement no later than May 10, 2019.

 

 

ARTICLE 9

REMEDIES

 

Section 9.1     General Remedies. Upon the occurrence of an Event of Default,
Lender may declare the entire principal amount of all Obligations then
outstanding, including interest accrued thereon, to be immediately due and
payable without presentment, demand, protest, notice of protest, or dishonor or
other notice of default of any kind, all of which Borrower, to the extent
permitted by applicable law, hereby expressly waives, and, at Lender’s sole
discretion and option, all obligations of Lender under this Agreement shall
immediately cease and terminate unless and until Lender shall reinstate such
obligations in writing. Such acceleration and cessation of Lender’s obligations
shall occur automatically, without any declaration by Lender or any notice, upon
the occurrence of an Event of Default under Sections 8.4, 8.5 and 8.6 hereof.
Upon the occurrence of any Event of Default, Lender may also exercise all rights
against Collateral set forth in the Loan Documents or afforded a creditor under
applicable law, including all rights and remedies afforded by the UCC, and/or
bring an action to protect or enforce its rights under the Loan Documents or
seek, collect or enforce the Obligations by any lawful means. All remedies
provided in this Agreement or in any other Loan Document shall be cumulative, in
addition to all other remedies available to Lender under the principles of law
and equity or pursuant to any other body of law, statutory or otherwise, and the
exercise or partial exercise of any such right or remedy shall not preclude the
exercise of any other right or remedy.

 

Section 9.2     Default. Upon the occurrence of a Default or at any time
thereafter until such Default no longer exists, Borrower agrees that Lender, in
its sole discretion, and may immediately cease making Advances or Equipment
Loans, all without liability whatsoever to Borrower or any other Person, all of
which is expressly waived hereby. Borrower releases Lender from any and all
liability whatsoever, whether direct, indirect, or consequential, and whether
seen or unforeseen, resulting from or arising out of or in connection with
Lender’s determination to cease making Advances pursuant to this Section.

 

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Section 9.3     No Waiver. The acceptance by Lender at any time and from time to
time of part payment on the Note shall not be deemed to be a waiver of any
Default or Event of Default then existing. No delay or omission by Lender to
exercise any right, power or remedy accruing to Lender upon any Default or Event
of Default under this Agreement or the other Loan Documents shall impair any
such right, power or remedy of Lender, nor shall it be construed to be a waiver
of any such Default or Event of Default or an acquiescence therein, or in any
similar Default or Event of Default thereafter occurring; nor shall any single
or partial exercise of any such right or power preclude other or further
exercise thereof, or the exercise of any other right or power of Lender under
this Agreement or the other Loan Documents; nor shall any waiver or any single
Default or Event of Default be deemed a waiver of any other Default or Event of
Default theretofore or thereafter occurring, or be deemed to be a continuing
waiver. Any waiver, permit, consent or approval of any kind or character on the
part of Lender of any Default or Event of Default, or any waiver on the part of
Lender of any provision or condition of this Agreement or the other Loan
Documents, must be in writing and shall be effective only to the extent
specifically set forth in such writing.

 

Section 9.4     Lender’s Performance of Borrower’s Covenants and Duties. Should
any covenant, duty or agreement of Borrower fail to be performed in accordance
with its terms hereunder or under any other Loan Document, Lender may, at its
option, perform, or attempt to perform, such covenant, duty or agreement on
behalf of Borrower. Borrower shall, at the request of Lender, promptly pay any
amount expended by Lender in such performance or attempted performance to
Lender, together with interest thereon at the Default Rate from the date of such
expenditure by Lender until paid; except that Lender does not assume and shall
not have, except by express written consent of Lender, any liability for the
performance of any duties of Borrower under this Agreement or under the other
Loan Documents.

 

Section 9.5     Right of Set off. Upon the occurrence and during the continuance
of any Event of Default, Lender is authorized, at any time and from time to
time, without notice to Borrower (any such notice being expressly waived by
Borrower), to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at any
time owing by Lender to or for the credit or the account of Borrower against any
and all of the Obligations, irrespective of whether or not Lender shall have
accelerated the Obligations or made any demand under this Agreement or the Note
and although such obligations may be unmatured.

 

ARTICLE 10

GENERAL PROVISIONS

 

Section 10.1     Notices. All notices, requests, demands, directions and other
communications (collectively “notices”) required under this Agreement shall be
in writing (including communication by facsimile transmission) and shall be sent
by hand, by registered or certified mail return receipt requested, by overnight
courier service maintaining records of receipt, or by facsimile transmission
with confirmation in writing mailed first class, in all cases with charges
prepaid. Any such properly given notice shall be effective upon the earlier of
receipt or (a) the date delivered by hand, or (b) the third Business Day after
being mailed, or (c) the following Business Day if sent by overnight courier
service, or (d) upon sender’s receipt of transmission confirmation, if sent by
facsimile. All notices shall be sent to the applicable party at its address

 

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(or facsimile number) set forth below or in accordance with the last written
direction from such party to the other party hereto:

 

 

 

Borrower:

Better Choice Company Inc.

   

81 Prospect Street

   

Brooklyn, New York 11201

   

Attention: Damian Dalla-Longa

   

Fax: N/A

           

With a copy to:

Latham & Watkins LLP

     

885 Third Avenue

     

New York, New York 10022-4834

     

Attention: Erika L. Weinberg

     

Fax: (212) 751-4864

                                 

Lender:

Franklin Synergy Bank

   

3325 West End Avenue

   

Nashville, Tennessee 37203

   

Attention: Melinda Bailey

   

Fax: (615) 515-8100

                   

With a copy to:

Thompson Burton PLLC

     

6100 Tower Circle, Suite 200

     

Franklin, Tennessee 37067

     

Attention:  J. Bryan Echols

     

Fax: (615) 807-6804

 

Section 10.2     Term of This Agreement. This Agreement shall be binding on
Borrower as long as any portion of the Obligations remains outstanding or Lender
has any obligations to make Advances hereunder, provided however, Borrower’s
representations and warranties, and Borrower’s agreements of indemnity shall
survive the payment and performance in full of the Obligations and shall
continue in full force and effect so long as the possibility of such
liabilities, claims, or losses exists.

 

Section 10.3     Invalidity. If any one or more of the provisions contained in
any Loan Document for any reason shall be held invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of any Loan Document.

 

Section 10.4     Survival of Agreements. All representations and warranties of
Borrower in this Agreement and the other Loan Documents and all covenants and
agreements in this Agreement and the other Loan Documents not fully performed
before the Closing Date of this Agreement shall survive the Closing.

 

Section 10.5     Successors and Assigns. Borrower shall not assign its rights or
delegate its duties under this Agreement or any other Loan Document. All
covenants and agreements made by or on behalf of Borrower in any Loan Document
shall bind Borrower’s successors and assigns and shall inure to the benefit of
Lender and its successors and assigns.

 

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Section 10.6     Renewal, Extension, or Rearrangement. All provisions of this
Agreement or any other Loan Document relating to the Obligations shall apply
with equal force and effect to each and all promissory notes, amendment,
restatement or other modification hereafter executed which in whole or in part
represent a renewal, extension for any period, increase, or rearrangement of any
part of the Obligations.

 

Section 10.7     Waivers. Pursuant to Tennessee Code Annotated Section
47-50-112, no action or course of dealing on the part of Lender, its officers,
employees, consultants, or agents, nor any failure or delay by Lender with
respect to exercising any right, power, or privilege of Lender under any Loan
Document shall operate as a waiver thereof, except as otherwise provided in such
Loan Document. Lender may from time to time waive any requirement hereof,
including any of the Conditions Precedent; however, no waiver shall be effective
unless in writing and signed by Lender. The execution by Lender of any waiver
shall not obligate Lender to grant any further, similar, or other waivers.

 

Section 10.8     Construction; Governance. This Agreement and the other Loan
Documents constitute a contract made under and shall be construed in accordance
with and governed by the laws of the state in which Lender’s Office is located
(without regard to its conflict of law principles). The terms of this Agreement
shall govern if determined to be in conflict with the terms or provisions in any
other Loan Document.

 

Section 10.9     Nature of Commitment. Lender’s obligation to accept the Note or
make any Advances thereunder shall be deemed to be pursuant to a contract to
make a loan or to extend debt financing or financial accommodations to or for
the benefit of Borrower within the meaning of Sections 365(c(2) and 365(e)(2)(B)
of the United States Bankruptcy Code, 11 U.S.C. § 101 et seq.

 

Section 10.10     Disclosures. Every reference in this Agreement to disclosures
of Borrower to Lender (except the subsequent Financial Statements of Borrower),
to the extent that such references refer or are intended to refer to disclosures
at or prior to the execution of this Agreement, shall be deemed strictly to
refer only to written disclosures delivered to Lender concurrently with the
execution of this Agreement and referred to specifically in the Loan Documents.
The parties hereto intend that such disclosures are to be limited to those
presented in an orderly manner at the time of executing this Agreement and are
not to be deemed to include expressly or impliedly any disclosures that
previously may have been delivered from time to time to Lender, except to the
extent that such previous disclosures are again presented to Lender in writing
concurrently with the execution of this Agreement.

 

Section 10.11     Participation. Borrower agrees and consents to Lender’s sale
or transfer, whether now or later, of one or more participation interests in the
Loan to one or more purchasers, whether related or unrelated to Lender. Lender
may provide, without any limitation whatsoever, to any one or more purchasers,
or potential purchasers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy Borrower may have with respect to such matters.
Borrower additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. Borrower also agrees that the purchasers of any such participation
interests will be considered as the absolute owners of such interests in the
Loan and will have all the rights granted under the participation agreement or
agreements governing the sale of such participation interests. Borrower further
waives all rights of offset or counterclaim that it may

 

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have now or later against Lender or against any purchaser of such a
participation interest and unconditionally agrees that either Lender or such
purchaser may enforce Borrower’s obligation under the Loan irrespective of the
failure or insolvency of any holder of any interest in the Loan. Borrower
further agrees that the purchaser of any such participation interests may
enforce its interests irrespective of any personal claims or defenses that
Borrower may have against Lender.

 

Section 10.12     Distribution of Information. Borrower hereby authorizes
Lender, as Lender may elect in its sole discretion, to discuss with and furnish
to any affiliate of Lender, to any government or self-regulatory agency with
jurisdiction over Lender, or to any participant or prospective participant, all
financial statements, audit reports and other information pertaining to Borrower
and any Obligor whether such information was provided by Borrower or prepared or
obtained by Lender or third parties. Neither Lender nor any of its employees,
officers, directors or agents make any representation or warranty regarding any
audit reports or other analyses of Borrower which Lender may elect to
distribute, whether such information was provided by Borrower or prepared or
obtained by Lender or third parties, nor shall Lender or any of its employees,
officers, directors or agents be liable to any Person receiving a copy of such
reports or analyses for any inaccuracy or omission contained in such reports or
analyses or relating thereto.

 

Section 10.13     Entire Agreement; No Oral Representations. This Agreement
represents the entire agreement between the parties hereto except for such other
agreements set forth in the Loan Documents, superseding any and all other
agreements, promises or representations existing prior to or made simultaneously
with this Agreement. Any oral statements regarding the subject matter of this
Agreement are merged herein.

 

Section 10.14     Amendments. Neither this Agreement nor any of the other Loan
Documents may be modified or amended except in writing signed by the parties
hereto or thereto.

 

Section 10.15     Indemnification. It is agreed that Lender has not made
Borrower its agent and their relationship is merely one between a lender and a
borrower. Borrower shall indemnify Lender and the respective directors,
officers, employees, agents and advisors of Lender (each, an “Indemnitee”)
against, and hold each of them harmless from, any and all costs, losses,
liabilities, claims, damages and related expenses, including the fees, charges
and disbursements of any counsel for any Indemnitee, which may be incurred by or
asserted against any Indemnitee arising out of, in connection with or as a
result of (a) the execution or delivery of this Agreement or any other Loan
Document, the performance by Borrower of the obligations or the consummation of
any of the transactions contemplated hereby or thereby; (b) the disbursement of
any Advance or any actual or proposed use of the proceeds therefrom; or (c) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort, or any other theory and
regardless of whether any Indemnitee is a party thereto. The foregoing provision
shall survive the term of this Agreement and the payment and performance in full
of the Obligations and shall continue in full force and effect so long as the
possibility of such liabilities, claims or losses exists. All amounts due under
this Section shall be payable promptly by Borrower after written demand by
Lender.

 

Section 10.16     No Marshalling of Assets. Lender may proceed against the
Collateral and against parties liable therefore in such order as it may elect,
and neither Borrower nor any Obligor nor any creditor of Borrower shall be
entitled to require Lender to marshall assets. The benefit of any rule of law or
equity to the contrary is hereby expressly waived.

 

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Section 10.17     Impairment of Collateral. Lender may, in its sole discretion,
release any of the Collateral or release any party liable therefore. The
defenses of impairment of collateral and impairment of recourse and any
requirement of diligence on Lender’s part in collecting the Obligations are
hereby expressly waived.

 

Section 10.18     Relationship of Lender and Borrower. Lender and Borrower
intend that the relationship between them shall be solely that of creditor and
debtor. Nothing contained in any of the Loan Documents, nor the consummation of
the transactions contemplated herein or therein, shall be deemed or construed to
create a partnership, tenancy-in-common, joint tenancy, joint venture or
co-ownership by or between Lender and Borrower, or to create a relationship
between Lender and Borrower other than that of creditor and debtor, or to cause
Lender to be liable or responsible in any way for the actions, liabilities,
debts or obligations of Borrower.

 

Section 10.19     Joint and Several Liability. Notwithstanding anything to the
contrary contained herein or in the other Loan Documents to the contrary, if
Borrower consists of more than one Person: (a) the duties, covenants,
obligations, representations and warranties of each Borrower in this Agreement
and the other Loan Documents are and shall be joint and several obligations of
each Borrower; and (b) each Borrower hereby waives any and all rights of
subrogation, reimbursement, contribution, indemnity or otherwise arising by
contract or operation of law, including any lien rights from or against the
other Borrower until the Loan is paid in full and all Obligations are fulfilled.

 

Section 10.20     Counterparts. This Agreement and the other Loan Documents may
be executed in any number of counterparts or counterpart signature pages (by
facsimile transmission or otherwise), each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute but one and the
same instrument.

 

Section 10.21     Time of Essence. Time is of the essence with regard to each
and every provision of this Agreement and the other Loan Documents.

 

Section 10.22     Jurisdiction; Venue; Service of Process. BORROWER HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE MIDDLE DISTRICT OF TENNESSEE AND OF ALL TENNESSEE STATE COURTS LOCATED IN
DAVIDSON COUNTY, TENNESSEE, INCLUDING THE CHANCERY COURT FOR DAVIDSON COUNTY,
TENNESSEE, FOR ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY OF THE OBLIGATIONS, ANY COLLATERAL, OR
ANY RELATIONSHIP BETWEEN LENDER AND BORROWER, AND AGREES NOT TO CONTEST OR
CHALLENGE VENUE IN ANY SUCH COURTS. Borrower irrevocably consents to the service
of process of any such courts in any such action or proceeding by registered or
certified mail, postage prepaid, return receipt requested, to Borrower at the
address provided pursuant to Section 10.1 hereof, and agrees that such service
shall become effective thirty (30) days after such mailing. However, nothing
herein shall affect the right of Lender or Borrower to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against Lender or Borrower in any other jurisdiction. This Section does
not confer or expand any standing to Borrower to bring any cause of action.

 

Section 10.23     Jury Waiver. BORROWER AND LENDER HEREBY KNOWINGLY, WILLINGLY
AND IRREVOCABLY WAIVES ITS AND THEIR RIGHTS TO DEMAND A

 

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JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, ANY OF THE OBLIGATIONS, ANY COLLATERAL, OR ANY RELATIONSHIP BETWEEN
LENDER AND BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE
FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS SECTION MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.

 

Section 10.24     Waiver of Certain Damages. IN ANY ACTION TO ENFORCE THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, BORROWER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS UNDER THE LAWS OF ANY STATE TO CLAIM
OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES
OTHER THAN ACTUAL DIRECT DAMAGES.

 

 

 

[SIGNATURE PAGE TO FOLLOW]

 

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ENTERED INTO as of the date first written above.

 

BORROWER:

 

 

BETTER CHOICE COMPANY INC., a Delaware corporation

 

 

By:/s/ Damian Dalla-Longa                                           

 

Print Name: Damian Dalla-Longa

 

Title: Co-CEO

 

 

 

LENDER:

 

 

FRANKLIN SYNERGY BANK, a Tennessee banking corporation

 

By: /s/ Melinda M. Bailey                  

           MELINDA M. BAILEY

           Senior Vice President

 

 

 

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