Exhibit 10.1

 

LOAN AND SECURITY AGREEMENT

 

This LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of December 28,
2018 (the “Effective Date”) is between TREND DISCOVERY SPV I, LLC, a Delaware
limited liability company (“Lender”), and ECOARK HOLDINGS, INC., a Nevada
corporation (“Borrower”), and provides the terms on which Lender shall lend to
Borrower, and Borrower shall repay Lender. The parties agree as follows:

 

1 ACCOUNTING AND OTHER TERMS

 

Accounting terms not defined in this Agreement shall be construed following
GAAP. Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth in Section 13 of this Agreement. All other terms contained in
this Agreement, unless otherwise indicated, shall have the meanings provided by
the Code to the extent such terms are defined therein.

 

2 LOAN AND TERMS OF PAYMENT

 

2.1 Availability. On the Effective Date, Lender agrees, subject to the terms and
conditions and relying upon the representations and warranties set forth in this
Agreement and within the limits hereof, to make one or more loans (each a
“Loan”, and collectively the “Loans”) to Borrower, and Borrower may make a
request for a Loan or Loans from Lender, at any one time and from time to time,
from the date hereof until the earlier of (i) DEMAND by Lender or (ii) December
27, 2020 or the earlier termination of this Agreement pursuant to the terms
hereof (the “Maturity Date”), in total not in excess of a principal amount of
$1,000,000 in the aggregate at any one time outstanding (collectively, the
“Credit”). If prepaid, the Loans may not be re-borrowed.

 

2.2 Promissory Note. The obligation of the Borrower to repay the original
principal amount of each Loan and to pay interest on the outstanding principal
amount of each Loan shall be evidenced by a Demand Note executed by the Borrower
in the form of Exhibit C hereto (the “Note”). The Lender shall set forth on the
schedule attached to and made a part of the Note, on any separate similar
schedule or on any continuation of such attached schedule or of any such
separate similar schedule annotations evidencing the date and original principal
amount of each Loan and the date and amount of each payment to be applied to the
outstanding principal amount of the Note. The outstanding principal amount set
forth on such attached schedule, on any such separate similar schedule or on any
such continuation shall be presumptive evidence of the outstanding principal
amount of the Note and of the aggregate outstanding principal amounts of all
Loans. No failure by the Lender to make, and no error by the Lender in making,
any annotation on such attached schedule, on any such separate similar schedule
or on any such continuation shall affect the Borrower's obligation to repay the
original principal amount of each Loan, interest on the outstanding principal
amount of each Loan or any other of the Borrower's obligations pursuant to this
Agreement.

 

2.3 Requests for Loans. For each Loan, Borrower shall submit to Lender a
Compliance Certificate and a Notice of Loan at least five (5) Business Days (but
not more than sixty (60) Business Days) prior to the date of such Loan,
specifying the amount of the requested Loan and the date of the requested draw.

 

2.4 Incremental Loans. Provided that no Event of Default exists, the Borrower
may, from time to time, by written notice to Lender elect to request an increase
in the loan commitment for Loans under the Credit hereunder in an aggregate
amount (for all such requests) not to exceed $9,000,000. Each such notice shall
specify the date on which the Borrower proposes that the increase shall be
effective and the amount of the proposed increase being requested (which shall
be a minimum of $1,000,000). The Lender may elect or decline, in its sole
discretion, to provide any such increase requested pursuant to this Section 2.4.

 

2.5 Repayment; Prepayment; Interest Payments.

 

(a)  All outstanding principal and accrued and unpaid interest under each Loan,
and all other outstanding Obligations with respect to each Loan, are due and
payable in full upon the earlier of (i) on DEMAND by Lender, or (ii) the
Maturity Date. Borrower shall have the option to prepay all or any portion of
any outstanding Loans at any time, in whole or in part. In the event of any such
repayment, Borrower may not re-borrower under any such Loans.

 

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(b) Commencing on June 30, 2019 and continuing every six months thereafter until
the Maturity Date, Borrower shall make biannual payments of accrued interest, in
arrears, on the principal amount of all outstanding Loans, at the applicable
rate set forth in Section 2.6 Commencing on June 30, 2019 and continuing every
six months thereafter until the Maturity Date, Borrower shall make biannual
payments of accrued interest, in arrears, on the principal amount of all
outstanding Loans, at the applicable rate set forth in Section 2.6.

 

2.6 Interest.

 

(a) Interest Rate. The outstanding principal amount of each Loan shall bear
interest at a rate per annum equal to twelve percent (12%).

 

(b) Default Rate. Upon the occurrence and during the continuance of an Event of
Default or following acceleration of the Credit, the aggregate outstanding
principal amount of all Loans shall bear interest at the Default Rate.

 

(c) Computation; 365-Day Year. Interest with respect to the Term Loan shall be
computed on the basis of a 365-day year for the actual number of days elapsed.

 

2.7 Application of Payments; Payment Method. All payments to be made by Borrower
under any Loan Document in respect of the Loans shall be made in immediately
available funds in Dollars, without setoff or counterclaim, before 3:00 p.m.
Eastern time on the date when due. Payments of principal and/or interest
received after 3:00 p.m. Eastern time are considered received at the opening of
business on the next Business Day. When a payment is due on a day that is not a
Business Day, the payment shall be due the next Business Day, and additional
fees or interest, as applicable, shall continue to accrue until paid. As to
regularly scheduled payments, Borrower agrees to authorize Lender to initiate
electronic debit (ACH) entries at Borrower’s account at Bank of America which
has been designated by Borrower and to credit such electronic ACH
payments/transfers to the Term Loan.

 

2.8 Commitment Fees. Borrower shall pay to Lender a commitment fee on the
principal amount of each Loan requested hereunder in the amount of 3.5% of the
amount thereof (each a “Commitment Fee”).

 

2.9 Lender Expenses. Borrower shall pay all expenses of Lender (including
reasonable attorneys’ fees and expenses, plus expenses, for documentation and
negotiation of this Agreement, accounting, tax preparation, and other reasonable
professional expenses) payable under this Agreement and incurred through and
after the Effective Date, when due.

 

3 Conditions Precedent to EACH Credit Extension.

 

Lender’s obligation to make any Loan is subject to the conditions precedent that
lender shall have received, in form and substance satisfactory to lender, such
documents, and completion of such other matters, as lender may reasonably deem
necessary or appropriate, including, without limitation:

 

(a) Receipt of all documents and information reasonably required by Lender to
perform its legal and collateral due diligence to Lender’s satisfaction;

 

(b) Receipt of Borrower’s and each Guarantor’s Operating Documents and a good
standing certificate of Borrower and each Guarantor certified by the Secretary
of State of the state of formation, as of a date no earlier than thirty (30)
days prior to the Effective Date;

 

(c) Execution and delivery of the Loan Documents;

 

(d) Grant of a perfected first priority security interest in all of the
Collateral;

 

(e) Receipt of a duly executed Compliance Certificate and Notice of Loan;

 

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(f) Receipt of the Commitment Fee pursuant to the terms and conditions of
Section 2.8 of this Agreement;

 

(g) Timely receipt of payment of all fees pursuant to the terms and conditions
of the Fee Letter; and

 

(h) A legal opinion from Borrower’s counsel in form and substance satisfactory
to Lender.

 

4 CREATION OF SECURITY INTEREST

 

4.1 Grant of Security Interest. Borrower hereby grants Lender, to secure the
payment and performance in full of all of the Obligations, a continuing security
interest in, and pledges to Lender, the Collateral, wherever located, whether
now owned or hereafter acquired or arising, and all proceeds and products
thereof. Borrower represents, warrants, and covenants that the security interest
granted herein shall be and shall at all times continue to be a first priority
perfected security interest in the Collateral subject only to Permitted Liens
that are permitted to have priority over Lender’s Liens hereunder. If this
Agreement is terminated, Lender’s Lien in the Collateral shall continue until
the Obligations (other than inchoate indemnity obligations) are satisfied in
full, and at such time, Lender shall, at Borrower’s sole cost and expense,
terminate its security interest in the Collateral and all rights therein shall
revert to Borrower. Notwithstanding the foregoing, Lender’s Lien and security
interest in the Collateral shall be subject to all agreements dated before the
Closing Date that grant any Lien or security interest in the Zest Litigation or
any recovery from or proceeds of the Zest Litigation.

 

4.2 Authorization to File Financing Statements. Borrower hereby authorizes
Lender to file financing statements, without notice to Borrower, with all
appropriate jurisdictions to perfect or protect Lender’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Lender
under the Code. Any such financing statements may indicate the Collateral as
“all assets of the Debtor” or words of similar effect, or as being of an equal
or lesser scope, or with greater detail, all in Lender’s discretion.

 

5 REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants as follows:

 

5.1 Due Organization and Authorization. Borrower and each of its Subsidiaries
are duly existing and in good standing as Registered Organizations in their
respective jurisdictions of formation and are qualified and licensed to do
business and are in good standing in any other jurisdiction in which the conduct
of their respective business or ownership of property requires that they be
qualified except where the failure to do so could not reasonably be expected to
have a material adverse effect on Borrower’s business. The execution, delivery
and performance by Borrower of the Loan Documents to which it is a party have
been duly authorized, and do not (i) conflict with any of Borrower’s
organizational documents, (ii) contravene, conflict with, constitute a default
under or violate any material Requirement of Law, (iii) contravene, conflict or
violate any applicable order, writ, judgment, injunction, decree, determination
or award of any Governmental Authority by which Borrower or any of its
Subsidiaries or any of their property or assets may be bound or affected, (iv)
require any action by, filing, registration, or qualification with, or
Governmental Approval from, any Governmental Authority (except such Governmental
Approvals which have already been obtained and are in full force and effect), or
(v) constitute an event of default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to which it is
a party or by which it is bound in which the default could have a material
adverse effect on Borrower’s business.

 

5.2 Collateral. Borrower has good title to, has rights in, and the power to
transfer, each item of the Collateral upon which it purports to grant a Lien
hereunder, free and clear of any and all Liens except Permitted Liens.

 

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5.3 Intellectual Property. Borrower and each of its Subsidiaries own, or possess
the right to use, all of the Intellectual Property that are reasonably necessary
for the operation of their respective businesses, without conflict with the
rights of any other Person, and Schedule 5.3 sets forth a complete and accurate
list of all such Intellectual Property owned or used by each Loan Party and each
of its Subsidiaries. No slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated to
be employed, by the Borrower or any of its Subsidiaries infringes upon any
rights held by any other Person. No material claim or litigation regarding any
of the foregoing is pending or threatened. As of the Effective Date, Borrower
owns or has good and marketable title to all Patents listed on Schedule 5.3.

 

5.4 Litigation. Other than the Zest Litigation, there are no actions or
proceedings pending or, to the knowledge of Borrower, threatened in writing by
or against Borrower or any Subsidiary in which an adverse decision could
reasonably be expected to cause a Material Adverse Change. With respect to the
Zest Litigation: (i) Borrower believes (and does not have, and has not been
informed by any of its Affiliates of, any belief to the contrary) that Zest’s
claims are meritorious and have a reasonable basis in law, (ii) Zest has the
full power and authority to bring such claims, (iii) Borrower has not and has
not permitted Zest to dispose of, transfer, encumber or assign all or any
portion of its claims (or any interest therein) or any proceeds thereof, whether
by way of security, subrogation, assignment to an insurer, or otherwise, (iv)
Borrower has not and has not permitted Zest to set off or agree to set off any
amounts against Zest’s claims, and there exist no rights of set-off or similar
rights against the Borrower or any of its Subsidiaries that could permit any
set-off of or counterclaim against such claims, and (v) Borrower is not aware
(and has not been informed by any of its Affiliates) of any Patents or
applications therefore or other Intellectual Property that have been, are likely
to be, or should be asserted or claimed in connection with or in support of
Zest’s claims except those owned by Borrower or its Subsidiaries.

 

5.5 No Material Deviation in Financial Statements and Deterioration in Financial
Condition. The consolidated financial statements for Borrower and any Subsidiary
as of and for the fiscal years ended December 31, 2016 and December 31, 2017 and
the first three fiscal quarters for the fiscal year ended December 31, 2018 (the
“Most Recent Financial Statements”) fairly present in all material respects
Borrower’s consolidated financial condition and Borrower’s consolidated results
of operations as of the dates thereof. There has not been any material
deterioration in Borrower’s consolidated financial condition since the date of
the Most Recent Financial Statements.

 

5.6 Solvency. The fair salable value of Borrower’s assets (including goodwill
minus disposition costs) exceeds the fair value of its liabilities; Borrower is
not left with unreasonably small capital after giving effect to the transactions
in this Agreement; and Borrower is able to pay its debts (including trade debts)
as they mature.

 

5.7 Regulatory Compliance. Borrower is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act of
1940, as amended. Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations X, T and U of the Federal
Reserve Board of Governors). Borrower has complied in all material respects with
the Federal Fair Labor Standards Act. Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to
cause a Material Adverse Change. None of Borrower’s properties or assets have
been used by Borrower or, to the best of Borrower’s knowledge, by previous
Persons, in disposing, producing, storing, treating, or transporting any
hazardous substance other than legally. Borrower has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all Governmental Authorities that are necessary to
continue their respective businesses as currently conducted.

 

5.8 Subsidiaries. Borrower does not own any stock, partnership interest or other
equity securities except for (i) the stock, partnership interest or other equity
securities of its Subsidiaries set forth on Schedule 5.8 and (ii) Permitted
Investments.

 

5.9 Tax Returns and Payments; Pension Contributions. Borrower has timely filed
all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower (except for taxes being contested in good faith by Borrower). Borrower
is unaware of any claims or adjustments proposed for any of Borrower’s prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid all amounts necessary to fund all present pension,
profit sharing and deferred compensation plans in accordance with their terms,
and Borrower has not withdrawn from participation in, and has not permitted
partial or complete termination of, or permitted the occurrence of any other
event with respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.

 

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5.10 Brokerage Fees. Borrower has not engaged a broker nor does it owe any
brokerage fees in connection with any debt financing or the transactions
contemplated by this Agreement.

 

6 AFFIRMATIVE COVENANTS

 

Borrower shall do all of the following:

 

6.1 Government Compliance

 

(a) Maintain its and all its Subsidiaries’ legal existence and good standing in
their respective jurisdictions of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
have a material adverse effect on Borrower’s business or operations. Borrower
shall comply, and have each Subsidiary comply, with all laws, ordinances and
regulations to which it is subject, noncompliance with which could have a
material adverse effect on Borrower’s business.

 

(b) Obtain all of the Governmental Approvals necessary for the performance by
Borrower of its obligations under the Loan Documents to which it is a party and
the grant of a security interest to Lender in all of its property. Borrower
shall promptly provide copies of any such obtained Governmental Approvals to
Lender.

 

6.2 Financial Statements, Reports, Certificates

 

(a) Deliver to Lender: (i) as soon as available, but no later than thirty (30)
days after the last day of each fiscal quarter, quarterly financial statements;
(ii) as soon as available, but no later than one hundred twenty (120) days after
the last day of Borrower’s fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an
unqualified opinion on the financial statements from an independent certified
public accounting firm reasonably acceptable to Lender; (iii) within five (5)
days of filing, copies of all statements, reports and notices made available to
Borrower’s security holders and all reports on Form 10-K, 10-Q and 8-K filed
with the SEC; (iv) a prompt report of any legal actions pending or threatened
against Borrower or any Subsidiary that could result in damages or costs to
Borrower or any Subsidiary of One Hundred Thousand Dollars ($100,000.00) or
more; and (v) at least annually, as soon as available, but no later than ten
(10) days after approval by Borrower’s board of directors, and contemporaneously
with any updates or amendments thereto, annual financial projections and
operating budgets for the following fiscal year approved by Borrower’s board of
directors, together with company prepared consolidated balance sheets and income
statements and any related business forecasts used in the preparation of such
annual financial plans, operating budgets and projections.

 

(b) Allow Lender to inspect the Collateral and audit and copy Borrower’s Books
upon reasonable notice to Borrower. The foregoing inspections and audits shall
be at Borrower’s expense.

 

(c) Provide Lender, promptly upon receipt, with a copy of each filing with or
other pleading or decision filed or received in the Zest Litigation, unless
otherwise restricted by the supervising court.

 

6.3 Taxes. Make, and cause each Subsidiary to make, timely payment of all
foreign, federal, state, and local taxes or assessments (other than taxes and
assessments which Borrower is contesting in good faith, with adequate reserves
maintained in accordance with GAAP) and will deliver to Lender, on demand,
appropriate certificates attesting to such payments.

 

6.4 Insurance. Keep its business and the Collateral insured for risks and in
amounts standard for companies in Borrower’s industry and location. All property
policies shall have a loss payable endorsement showing Lender as a loss payee
and waive subrogation against Lender, and all liability policies shall show, or
have endorsements showing, Lender as an additional insured. At Lender’s request,
Borrower shall deliver certified copies of policies and evidence of all premium
payments. If Borrower fails to obtain insurance as required under this Section
6.4 or to pay any amount or furnish any required proof of payment to third
persons and Lender, Lender may make all or part of such payment or obtain such
insurance policies required in this Section 6.4, and take any action under the
policies Lender deems prudent.

 

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6.5 Protection of Intellectual Property Rights

 

(a) (i) Protect, defend and maintain the validity and enforceability of its
Intellectual Property; (ii) promptly advise Lender in writing of material
infringements of its Intellectual Property; and (iii) not allow any Intellectual
Property material to Borrower’s business to be abandoned, forfeited or dedicated
to the public without Lender’s written consent.

 

(b) Provide written notice to Lender within thirty (30) days of entering or
becoming bound by any Restricted License (other than over-the-counter software
that is commercially available to the public). Borrower shall take such steps as
Lender requests to obtain the consent of, or waiver by, any person whose consent
or waiver is necessary for (i) any Restricted License to be deemed “Collateral”
and for Lender to have a security interest in it that might otherwise be
restricted or prohibited by law or by the terms of any such Restricted License,
whether now existing or entered into in the future, and (ii) Lender to have the
ability in the event of a liquidation of any Collateral to dispose of such
Collateral in accordance with Lender’s rights and remedies under this Agreement
and the other Loan Documents.

 

6.6 Litigation Cooperation. From the Effective Date and continuing through the
termination of this Agreement, make available to Lender, without expense to
Lender, Borrower and its officers, employees and agents and Borrower’s Books, to
the extent that Lender may deem them reasonably necessary to prosecute or defend
any third-party suit or proceeding instituted by or against Lender with respect
to any Collateral or relating to Borrower.

 

6.7 Use of Proceeds. Use the proceeds of the Loans for working capital and
general corporate purposes.

 

6.8 Further Assurances. Execute any further instruments and take further action
as Lender reasonably requests to perfect or continue Lender’s Lien in the
Collateral or to effect the purposes of this Agreement.

 

7 NEGATIVE COVENANTS

 

Borrower shall not do any of the following without Lender’s prior written
consent:

 

7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively a “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any material part of its business or property, except for Transfers (a) of
Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment; and (c) in connection with Permitted Liens and Permitted Investments.

 

7.2 Changes in Business, Management, Ownership, or Business Locations. (a)
Engage in or permit any of its Subsidiaries to engage in any business other than
the businesses currently engaged in by Borrower and such Subsidiary, as
applicable, or reasonably related thereto; or (b) liquidate or dissolve.
Borrower shall not, without at least thirty (30) days prior written notice to
Lender: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than Five Thousand
Dollars ($5,000.00) in Borrower’s assets or property), (2) change its
jurisdiction of organization, (3) change its organizational structure or type,
(4) change its legal name, or (5) change any organizational number (if any)
assigned by its jurisdiction of organization.

 

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.

 

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or
permit any Subsidiary to do so, other than Permitted Indebtedness.

 

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7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its
property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the security interest
granted herein, or enter into any agreement, document, instrument or other
arrangement (except with or in favor of Lender) with any Person which directly
or indirectly prohibits or has the effect of prohibiting Borrower or any
Subsidiary from assigning, mortgaging, pledging, granting a security interest in
or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual
Property, except as is otherwise permitted in Section 7.1 of this Agreement and
the definition of “Permitted Liens” herein.

 

7.6 Distributions; Investments. (a) Directly or indirectly acquire or own any
Person, or make any Investment in any Person, other than Permitted Investments,
or permit any of its Subsidiaries to do so; or (b) pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock other
than the redemption of shares held by former employees of Borrower in accordance
with existing or customary contractual commitments.

 

7.7 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower, except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person.

 

7.8 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended, or
undertake as one of its important activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, each as defined in ERISA, to occur;
fail to comply with the Federal Fair Labor Standards Act or violate any other
law or regulation, if the violation could reasonably be expected to have a
material adverse effect on Borrower’s business, or permit any of its
Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from
participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any present pension, profit
sharing and deferred compensation plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.

 

7.9 Material Agreements. Enter into, terminate, amend, restate or otherwise
alter the terms of any material agreements to which Borrower or any of its
Subsidiaries is a party, except in the ordinary course of business, including
but not limited to any litigation funding or investment agreements.

 

8 EVENTS OF DEFAULT

 

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

 

8.1 Payment Default. Borrower fails to pay any principal or interest on the
Loans within three (3) days of the due date.

 

8.2 Covenant Default. Borrower fails or neglects to perform any obligation in
Section 2.9 or Section 6 of this Agreement or violates any covenant in Section 7
of this Agreement or fails or neglects to perform, keep, or observe any other
term, provision, condition, covenant or agreement contained in this Agreement,
any Loan Documents and as to any default under such other term, provision,
condition, covenant or agreement that can be cured, has failed to cure the
default within ten (10) days after the occurrence thereof; provided, however,
grace and cure periods provided under this Section 8.2 shall not apply to
financial covenants or any other covenants that are required to be satisfied,
completed or tested by a date certain.

 

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8.3 Material Adverse Change. A Material Adverse Change occurs.

 

8.4 Attachment; Levy; Restraint on Business. (i) Any material portion of
Borrower’s assets is attached, seized, levied on, or comes into possession of a
trustee or receiver, or (ii) any court order enjoins, restrains, or prevents
Borrower from conducting any material part of its business.

 

8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts)
as they become due or otherwise becomes insolvent; (b) Borrower begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower
and not dismissed or stayed within thirty (30) days.

 

8.6 Other Agreements. There is, under any agreement to which Borrower is a party
with a third party or parties, (a) any default resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount individually or in the aggregate in excess of
Fifty Thousand Dollars ($50,000.00); or (b) any default by Borrower, the result
of which could result in a Material Adverse Change to Borrower’s business.

 

8.7 Judgments. One or more final judgments, orders, or decrees for the payment
of money in an amount, individually or in the aggregate, of at least Fifty
Thousand Dollars ($50,000.00) (not covered by independent third-party insurance
as to which liability has been accepted by such insurance carrier) shall be
rendered against Borrower and the same are not, within ten (10) days after the
entry thereof, discharged or execution thereof stayed or bonded pending appeal,
or such judgments are not discharged prior to the expiration of any such stay.

 

8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any
Loan Document or in any writing delivered to Lender or to induce Lender to enter
this Agreement or any Loan Document, and such representation, warranty, or other
statement is incorrect in any material respect when made.

 

9 LENDER’S RIGHTS AND REMEDIES

 

9.1 Rights and Remedies. When an Event of Default occurs and continues beyond
any applicable grace period Lender may, without notice or demand, do any or all
of the following:

 

(a) declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 of this Agreement occurs, all Obligations are
immediately due and payable without any action by Lender); and

 

(b) exercise all rights and remedies available to Lender under the Loan
Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).

 

Notwithstanding the inclusion of Events of Default hereunder, the Credit and the
principal amount of all Loans, together with all accrued and unpaid interest
thereon, shall be due and payable at all times on DEMAND.

 

9.2 Protective Payments. If Borrower fails to obtain the insurance called for by
Section 6.4 of this Agreement or fails to pay any premium thereon or fails to
pay any other amount which Borrower is obligated to pay under this Agreement or
any other Loan Document, Lender may obtain such insurance or make such payment,
and all amounts so paid by Lender immediately due and payable to Lender by
Borrower, bearing interest at the then highest rate applicable to the
Obligations, and secured by the Collateral. Lender will make reasonable efforts
to provide Borrower with notice of Lender obtaining such insurance at the time
it is obtained or within a reasonable time thereafter. No payments by Lender are
deemed an agreement to make similar payments in the future or Lender’s waiver of
any Event of Default.

 

9.3 Lender’s Liability for Collateral. So long as Lender complies with
reasonable lending practices regarding the safekeeping of the Collateral in the
possession or under the control of Lender, Lender shall not be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
to the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other Person. Borrower
bears all risk of loss, damage or destruction of the Collateral.

 

8

 

 

9.4 No Waiver; Remedies Cumulative. Lender’s failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement or any
other Loan Document shall not waive, affect, or diminish any right of Lender
thereafter to demand strict performance and compliance herewith or therewith. No
waiver hereunder shall be effective unless signed by the party granting the
waiver and then is only effective for the specific instance and purpose for
which it is given. Lender’s rights and remedies under this Agreement and the
other Loan Documents are cumulative. Lender has all rights and remedies provided
under the Code, by law, or in equity. Lender’s exercise of one right or remedy
is not an election and shall not preclude Lender from exercising any other
remedy under this Agreement or other remedy available at law or in equity, and
Lender’s waiver of any Event of Default is not a continuing waiver. Lender’s
delay in exercising any remedy is not a waiver, election, or acquiescence.

 

9.5 Demand Waiver. Borrower waives demand, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Lender on which Borrower is
liable.

 

10 NOTICES

 

All notices, consents, requests, approvals, demands, or other communication by
any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below. Lender or Borrower may change its mailing or electronic mail address or
facsimile number by giving the other party written notice thereof in accordance
with the terms of this Section 10.

 

If to Borrower: Ecoark Holdings, Inc.   1010 NW J Street, Suite I   Bentonville,
AR 72712   Attn: Randy May; Peter Mehring   Fax:   Email: rmay@ecoarkusa.com;
pmehring@zestlabs.com     with a copy to: Carmel, Milazzo & DiChiara LLP   55
West 39th Street, 18th Floor   New York, New York 10018   Attn: Peter DiChiara  
Fax:   Email: pdichiara@cmdllp.com     If to Lender: Trend Discovery SVP I, LLC
 

7 Wells Street, Suite 302D

Saratoga Springs, New York 12866

  Attn: Brad Hoagland   Fax:   Email: bhoagland@trenddiscovery.com     with a
copy to: Lippes Mathias Wexler Friedman LLP   50 Fountain Plaza, Suite 1700  
Buffalo, New York 14202   Attn: John J. Koeppel; Brian J. Bocketti   Fax: (716)
853-5100   Email: jkoeppel@lippes.com; bbocketti@lippesc.om

 

9

 

 

11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

 

Except as otherwise expressly provided in any of the Loan Documents, New York
law governs the Loan Documents without regard to principles of conflicts of law.
Borrower and Lender each submit to the exclusive jurisdiction of the State and
Federal courts in Erie County, New York; provided, however, that nothing in this
Agreement shall be deemed to operate to preclude Lender from bringing suit or
taking other legal action in any other jurisdiction to realize on the Collateral
or any other security for the Obligations, or to enforce a judgment or other
court order in favor of Lender. Borrower expressly submits and consents in
advance to such jurisdiction in any action or suit commenced in any such court,
and Borrower hereby waives any objection that it may have based upon lack of
personal jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees
that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to Borrower at the address set forth in,
or subsequently provided to Borrower in accordance with, Section 10 of this
Agreement and that service so made shall be deemed completed upon the earlier to
occur of Borrower’s actual receipt thereof or three (3) days after deposit in
the U.S. mails, proper postage prepaid.

 

BORROWER AND LENDER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

12 GENERAL PROVISIONS

 

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not assign this
Agreement or any rights or obligations under it without Lender’s prior written
consent (which may be granted or withheld in Lender’s discretion). Lender has
the right, following the occurrence and during the continuance of an Event of
Default without the consent of or notice to Borrower, to sell, transfer, assign,
negotiate, or grant participation in all or any part of, or any interest in,
Lender’s obligations, rights, and benefits under this Agreement and the other
Loan Documents.

 

12.2 Indemnification. Borrower agrees to indemnify, defend and hold Lender and
its directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Lender (each, an “Indemnified Person”) harmless
against: (a) all obligations, demands, claims, and liabilities (collectively,
“Claims”) claimed or asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or expenses
in any way suffered, incurred, or paid by such Indemnified Person as a result
of, following from, consequential to, or arising from transactions between
Lender and Borrower (including reasonable attorneys’ fees and expenses), except
for Claims and/or losses directly caused by such Indemnified Person’s fraud,
gross negligence or willful misconduct.

 

12.3 Right of Set-Off. Borrower hereby grants to Lender, a lien, security
interest and right of setoff as security for all Obligations to Lender, whether
now existing or hereafter arising upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Lender or any entity under the control of Lender or in
transit to any of them. At any time after the occurrence and during the
continuance of an Event of Default or acceleration of the Credit, without demand
or notice, Lender may set off the same or any part thereof and apply the same to
any liability or obligation of Borrower even though unmatured and regardless of
the adequacy of any other collateral securing the Obligations. ANY AND ALL
RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY
OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

12.4 Severability of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

 

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12.5 Amendments in Writing; Waiver; Integration. No purported amendment or
modification of any Loan Document, or waiver, discharge or termination of any
obligation under any Loan Document, shall be enforceable or admissible unless,
and only to the extent, expressly set forth in a writing signed by the party
against which enforcement or admission is sought. Without limiting the
generality of the foregoing, no oral promise or statement, nor any action,
inaction, delay, failure to require performance or course of conduct shall
operate as, or evidence, an amendment, supplement or waiver or have any other
effect on any Loan Document. Any waiver granted shall be limited to the specific
circumstance expressly described in it, and shall not apply to any subsequent or
other circumstance, whether similar or dissimilar, or give rise to, or evidence,
any obligation or commitment to grant any further waiver. The Loan Documents
represent the entire agreement about this subject matter and supersede prior
negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of the Loan Documents merge into the Loan Documents.

 

12.6 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one Agreement.

 

12.7 Survival. All covenants, representations and warranties made in this
Agreement continue in full force until this Agreement has terminated pursuant to
its terms and all Obligations (other than inchoate indemnity obligations and any
other obligations which, by their terms, are to survive the termination of this
Agreement) have been paid in full and satisfied. Without limiting the foregoing,
except as otherwise provided in Section 4.1, the grant of a security interest by
Borrower in Section 4.1 shall survive until the termination of this Agreement.
The obligation of Borrower in Section 12.2 of this Agreement to indemnify Lender
shall survive until the statute of limitations with respect to such claim or
cause of action shall have run.

 

12.8 Electronic Execution of Documents. The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to
include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity and enforceability as a
manually executed signature or the use of a paper-based recordkeeping systems,
as the case may be, to the extent and as provided for in any applicable law,
including, without limitation, any state law based on the Uniform Electronic
Transactions Act.

 

12.9 Captions. The headings used in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.

 

12.10 Construction of Agreement. The parties mutually acknowledge that they and
their attorneys have participated in the preparation and negotiation of this
Agreement. In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist.

 

12.11 Relationship. The relationship of the parties to this Agreement is
determined solely by the provisions of this Agreement. The parties do not intend
to create any agency, partnership, joint venture, trust, fiduciary or other
relationship with duties or incidents different from those of parties to an
arm’s-length contract.

 

12.12 Third Parties. Nothing in this Agreement, whether express or implied, is
intended to: (a) confer any benefits, rights or remedies under or by reason of
this Agreement on any persons other than the express parties to it and their
respective permitted successors and assigns; (b) relieve or discharge the
obligation or liability of any person not an express party to this Agreement; or
(c) give any person not an express party to this Agreement any right of
subrogation or action against any party to this Agreement.

 

12.13 Assignment. The Lender shall not transfer or assign any or all of the
rights to the Loans without express written approval by Borrower, even during
the occurrence and continuation of an Event of Default.

 

13 DEFINITIONS

 

13.1 Definitions. As used in the Loan Documents, the word “shall” is mandatory,
the word “may” is permissive, the word “or” is not exclusive, the words
“includes” and “including” are not limiting, the singular includes the plural,
and numbers denoting amounts that are set off in brackets are negative. As used
in this Agreement, the following capitalized terms have the following meanings:

 

11

 

 

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.

 

“Affiliate” of any Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person’s senior executive
officers, directors, partners, and, for any Person that is a limited liability
company, that Person’s managers and members.

 

“Agreement” is defined in the preamble of this Agreement.

 

“Borrower” is defined in the preamble of this Agreement.

 

“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.

 

“Business Day” is any day that is not a Saturday, Sunday, or legal holiday on
which commercial banks are authorized or required by law to be closed for
business in New York, New York.

 

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; and (c) certificates of deposit
maturing no more than one (1) year after issue.

 

“Change of Control” means any of the following (i) a sale or other disposition
by Borrower of all or substantially all of its assets; (ii) a merger or
consolidation of Borrower into or with another person or entity, where the
holders of Borrower’s outstanding voting equity securities as of immediately
prior to such merger or consolidation hold less than a majority of the issued
and outstanding voting equity securities of the successor or surviving person or
entity as of immediately following the consummation of such merger or
consolidation; or (iii) any sale, in a single transaction or series of related
transactions, by the holders of Borrower’s outstanding voting equity securities,
to one or more buyers, of such interests or securities, where such holders do
not, as of immediately following the consummation of such transaction(s),
continue to hold at least a majority of Borrower’s issued and outstanding voting
equity securities (other than by the sale of Borrower’s equity securities in a
public offering or to venture capital investors).

 

“Claims” is defined in Section 12.2 of this Agreement.

 

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of New York; provided, that, to the extent
that the Code is used to define any term herein or in any Loan Document and such
term is defined differently in different Articles or Divisions of the Code, the
definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection, or priority of, or remedies with
respect to, Lender’s Lien on any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the State of New York,
the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority, or remedies and for purposes
of definitions relating to such provisions.

 

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

 

“Commitment Fee” is defined in Section 2.8 of this Agreement.

 

“Compliance Certificate” is attached as Exhibit B.

 

12

 

 

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business. The amount of
a Contingent Obligation is the stated or determined amount of the primary
obligation for which the Contingent Obligation is made or, if not determinable,
the maximum reasonably anticipated liability for it determined by the Person in
good faith; but the amount may not exceed the maximum of the obligations under
any guarantee or other support arrangement.

 

“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.

 

“Default Rate” is a per annum rate of interest equal to seventeen percent (17%).

 

“Dollars,” “dollars” or use of the sign “$” means only lawful money of the
United States and not any other currency, regardless of whether that currency
uses the “$” sign to denote its currency or may be readily converted into lawful
money of the United States.

 

“Effective Date” is defined in the preamble hereof.

 

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

 

“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.

 

“Events of Default” are set forth in Section 8 of this Agreement.

 

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

 

“Fee Letter” is that certain fee letter agreement dated as of the date hereof by
and between Borrower and Lender.

 

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

 

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

 

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central Lender or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

 

“Guarantor” means Zest.

 

13

 

 

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

 

“Indemnified Person” is defined in Section 12.2 of this Agreement.

 

“Insolvency Proceeding” is any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

 

“Intellectual Property” means all of Borrower’s right, title, and interest in
and to the following:

 

(a) its Copyrights, Trademarks and Patents;

 

(b) any and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know-how, operating manuals;

 

(c) any and all source code;

 

(d) any and all design rights which may be available to Borrower;

 

(e) any and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the obligation, to
sue for and collect such damages for said use or infringement of the
Intellectual Property rights identified above; and

 

(f) all amendments, renewals and extensions of any of the Copyrights, Trademarks
or Patents.

 

“Inventory” is all “inventory” as defined in the Code in effect on the Effective
Date with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

 

“Investment” is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.

 

“Lender” is defined in the preamble of this Agreement.

 

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

 

“Loan Documents” are, collectively, this Agreement, a Guaranty Agreement from
the Guarantor in favor of Lender, a Pledge and Security Agreement by the
Guarantor in favor of Lender, a Negative Pledge Agreement by each Subsidiary in
favor of Lender, the Fee Letter, and all other collateral and ancillary
documents as Lender may request in connection herewith and therewith.

 

“Material Adverse Change” is: (a) a material impairment in the perfection or
priority of Lender’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; or (c) a material impairment of the
prospect of repayment of any portion of the Obligations.

 

“Maturity Date” is defined in Section 2.1 of this Agreement.

 

“Notice of Loan” is attached as Exhibit D.

 

14

 

 

“Obligations” are Borrower’s obligations to pay when due any debts, principal,
interest, and other amounts Borrower owes Lender now or later, whether under
this Agreement, the Loan Documents, or otherwise, including, without limitation,
any interest accruing after Insolvency Proceedings begin and debts, liabilities,
or obligations of Borrower assigned to Lender, and to perform Borrower’s duties
under the Loan Documents.

 

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified with the Secretary of State of such Person’s state of formation on a
date that is no earlier than thirty (30) days prior to the Effective Date, and,
(a) if such Person is a corporation, its bylaws in current form, (b) if such
Person is a limited liability company, its limited liability company agreement
(or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current
amendments or modifications thereto.

 

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

 

“Permitted Indebtedness” is:

 

(a) Borrower’s Indebtedness to Lender under this Agreement and the other Loan
Documents;

 

(b) unsecured Indebtedness to trade creditors incurred in the ordinary course of
business;

 

(c) Indebtedness secured by Liens permitted under clause (c) of the definition
of “Permitted Liens” hereunder;

 

(d) Indebtedness existing on the Effective Date which has been heretofore
disclosed by Borrower to Lender and which is not otherwise described in the any
of the foregoing clauses (a) through (e) above; and

 

(e) extensions, refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness (a) through (f) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower or its Subsidiary, as the case may
be.

 

“Permitted Investments” are:

 

(a) Investments (including, without limitation, Subsidiaries) existing on the
Effective Date (but specifically excluding any future Investments in any
Subsidiaries unless otherwise permitted hereunder); and

 

(b) Investments consisting of Cash Equivalents.

 

“Permitted Liens” are:

 

(a) Liens existing on the Effective Date, including Liens arising under this
Agreement and the other Loan Documents;

 

(b) Liens for taxes, fees, assessments or other government charges or levies,
either (i) not due and payable or (ii) being contested in good faith and for
which Borrower maintains adequate reserves on Borrower’s Books, provided that no
notice of any such Lien has been filed or recorded under the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations adopted thereunder;

 

(c) purchase money Liens (including capitalized leases) (i) on Equipment
acquired or held by Borrower incurred for financing the acquisition of the
Equipment securing no more than One Hundred Thousand Dollars ($100,000.00) in
the aggregate amount outstanding per calendar year, or (ii) existing on
Equipment when acquired, if the Lien is confined to the property and
improvements and the proceeds of the Equipment; and

 

15

 

 

(d) Liens incurred in the extension, renewal or refinancing of the Indebtedness
secured by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the Indebtedness may not increase.

 

“Person” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

 

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.

 

“Requirement of Law” is, as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of Borrower.

 

“Restricted License” is any material license or other agreement with respect to
which Borrower is the licensee (a) that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such
license or agreement or any other property, or (b) for which a default under or
termination of could interfere with Lender’s right to sell any Collateral.

 

“SEC” shall mean the Securities and Exchange Commission, any successor thereto,
and any analogous Governmental Authority.

 

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. Unless the context otherwise requires, each reference
to a Subsidiary herein shall be a reference to a Subsidiary of Borrower or
Guarantor.

 

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

 

“Transfer” is defined in Section 7.1 of this Agreement.

 

“Zest” is defined in the definition of Zest Litigation.

 

“Zest Litigation” means that certain action by Borrower’s Subsidiary, Zest Labs,
Inc. (“Zest”), against Wal-Mart Inc., filed on August 1, 2018 in the United
States District Court for the Eastern District of Arkansas – Case #
4:18-cv-00500.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Effective Date.

 

BORROWER       ECOARK HOLDINGS, INC.       By:                       Name:    
Title:           LENDER       TREND DISCOVERY SPV I, LLC       By:     Name:    
Title:    

 

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Schedule 5.3

Intellectual Property

 

18

 

 

Schedule 5.8

Owned Equity Interests

 

19

 

 

EXHIBIT A

 

The Collateral consists of all of Borrower's right, title and interest in and to
the following:

 

All goods, equipment, inventory, contract rights or rights to payment of money,
leases, license agreements, franchise agreements, general intangibles (including
payment intangibles), accounts (including health-care receivables), documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, all certificates of deposit, fixtures,
letters of credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and any copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, now owned or later acquired;
any patents, trademarks, service marks and applications therefor; trade styles,
trade names, any trade secret rights, including any rights to unpatented
inventions, know-how, operating manuals, license rights and agreements and
confidential information, now owned or hereafter acquired; or any claims for
damages by way of any past, present and future infringement of any of the
foregoing; and

 

All Borrower’s books relating to the foregoing and any and all claims, rights
and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

 

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EXHIBIT B

 

Compliance Certificate

 

I, an authorized officer of ECOARK HOLDINGS, INC. (“Borrower”) certify under the
Loan and Security Agreement (as may be amended or modified from time to time,
the “Agreement”) between Borrower and TREND DISCOVERY SPV I, LLC (”Lender”) as
follows for the period ending (all capitalized terms used herein shall have the
meaning set forth in the Agreement):

 

Borrower represents and warrants as follows:

 

Borrower and each Subsidiary is duly existing and in good standing in its state
of formation and qualified and licensed to do business in, and in good standing
in, any state in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to cause a Material Adverse Change. The execution,
delivery and performance of the Loan Documents have been duly authorized, and do
not conflict with Borrower's organizational documents, nor constitute an event
of default under any material agreement by which Borrower is bound. Borrower is
not in default under any agreement to which or by which it is bound in which the
default could reasonably be expected to cause a Material Adverse Change.

 

Borrower has good title to the Collateral, free of Liens except Permitted Liens.
All inventory is in all material respects of good and marketable quality, free
from material defects. Borrower is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company Act of
1940, as amended. Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations X, T and U of the Federal
Reserve Board of Governors). Borrower has complied in all material respects with
the Federal Fair Labor Standards Act. Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to
cause a Material Adverse Change. None of Borrower's or any Subsidiary's
properties or assets have been used by Borrower or any Subsidiary or, to the
best of Borrower's knowledge, by previous Persons, in disposing, producing,
storing, treating, or transporting any hazardous substance other than legally.
Borrower and each Subsidiary has timely filed all required tax returns and paid,
or made adequate provision to pay, all material taxes, except those being
contested in good faith with adequate reserves under GAAP. Borrower and each
Subsidiary has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted
except where the failure to obtain or make such consents, declarations, notices
or filings would not reasonably be expected to cause a Material Adverse Change.
Borrower has satisfied and has caused each Subsidiary to satisfy each of the
conditions precedent contained in Section 3 of the Loan Agreement.

 

The undersigned acknowledges that no borrowings may be requested at any time or
date of determination that Borrower is not in compliance with any of the terms
of the Agreement, and that compliance is determined not just at the date this
certificate is delivered.

 

All other representations and warranties in the Agreement are true and correct
in all material respects on this date, and Borrower represents that there is no
existing Event of Default.

 

Sincerely,       ECOARK HOLDINGS, INC.           Signature           Title      
    Date  

 

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EXHIBIT C

 

Form of Demand Note

$[                             ]              , 2018

 

FOR VALUE RECEIVED, the undersigned, ECOARK HOLDINGS, INC. (“Borrower”), a
corporation organized under the laws of ___________, hereby promises to pay, on
the earlier of (i) ON DEMAND or (ii) on the Maturity Date to the order of Trend
Discovery SPV I, LLC (“Lender”) at the payment office of Lender the principal
sum of [ ] 00/100 Dollars ($[ ]), or the aggregate unpaid principal amount of
all Loans (as defined in the Loan Agreement, as defined herein) made by Lender
to Borrower pursuant to the Loan Agreement, whichever is less. Borrower also
agrees to pay any additional amount that is required to be paid pursuant to the
terms and provisions of the Loan Agreement.

 

As used herein, “Loan Agreement” means the Loan and Security Agreement dated as
of December , 2018, between Borrower and Lender, as the same may from time to
time be amended, restated or otherwise modified. Each capitalized term used
herein that is defined in the Loan Agreement and not otherwise defined herein
shall have the meaning ascribed to it in the Loan Agreement.

 

Borrower promises to pay interest on the unpaid principal amount hereof from the
date hereof until the payment in full hereof, at the rates per annum that shall
be determined in accordance with the relevant provisions of the Loan Agreement.
Such interest shall be payable on each date as provided for in the Loan
Agreement. All payments of principal and interest on this Demand Note shall be
made in immediately available funds.

 

This Demand Note is referred to in the Loan Agreement and is entitled to the
benefits thereof. Reference is made to the Loan Agreement for a description of
the right of the undersigned to anticipate payments hereof, the right of the
holder hereof to declare this Demand Note due prior to its stated maturity, and
other terms and conditions upon which this Demand Note is issued.

 

Except as expressly provided in the Loan Agreement, Borrower expressly waives
presentment, demand, protest and notice of any kind. This Demand Note shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to conflicts of laws provisions.

 

BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS DEMAND NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).

 

IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned
has executed this Demand Note by its duly authorized officer as of the date
first written above.

 

  ECOARK HOLDINGS, INC.           By:       Name:     Title:

 

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EXHIBIT D

 

Notice of Loan

 

[Date]_______________________, 20____

Trend Discovery SPV I, LLC

7 Wells Street, Suite 302D

Saratoga Springs, New York 12866

 

Attention: _______________

Ladies and Gentlemen:

The undersigned, ECOARK HOLDINGS, INC., refers to the Loan Agreement, dated as
of December , 2018 (as the same may from time to time be amended, restated or
otherwise modified, the “Loan Agreement”, the terms defined therein being used
herein as therein defined), between the undersigned and TREND DISCOVERY SPV I,
LLC, as Lender, and hereby gives you notice, pursuant to Section 2.3 of the Loan
Agreement that the undersigned hereby requests a Loan under the Loan Agreement,
and in connection therewith sets forth below the information relating to the
Loan (the “Proposed Loan”) as required by Section 2.3 of the Credit Agreement:

(a) The Business Day of the Proposed Loan is __________, 20__.

(b) The amount of the Proposed Loan is $_______________.

The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Loan:

 

(i) the representations and warranties contained in each Loan Document are
correct in all material respects to the extent not otherwise qualified by a
materiality concept, before and after giving effect to the Proposed Loan and the
application of the proceeds therefrom, as though made on and as of such date
(except to the extent any representation or warranty is stated to relate solely
to an earlier date);

 

(ii) no event has occurred and is continuing, or would result from such Proposed
Loan, or the application of proceeds therefrom, that constitutes a Default or
Event of Default; and

 

(iii) the conditions set forth in Section 3 of the Loan Agreement have been
satisfied.

 

  Very truly yours,       ECOARK HOLDINGS, INC.         By:     Print Name:    
Title:  

 

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