Exhibit 10.1

 

EXECUTION

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

CREDIT AGREEMENT

 

BETWEEN

 

GRANDPARENTS.COM, INC.

 

AND

 

VB FUNDING, LLC

 

DATED: July 8, 2015

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

  

Table of Contents

 

    Page       ARTICLE I. Definitions 1 1.1 Definitions 1 1.2 Accounting Terms 7
1.3 UCC Definitions 7       ARTICLE II. Term Loan Facility 7 2.1 Term Loan 7 2.2
The Note 7 2.3 Advances of Term Loan 7 2.4 Conditions to Additional Advance 7
2.5 Interest 8 2.6 Default Rate 8 2.7 Late Charge 9 2.8 Repayment of Loan 9 2.9
Optional Prepayments 9 2.10 Conversion Rights; Notice of Payments 9 2.11
Computation of Interest and Fees 9 2.12 Evidence of Debt 9 2.13 Payments
Generally 9       ARTICLE III. Representations and Warranties 9 3.1 Good
Standing and Authority 9 3.2 Valid and Binding Obligation 10 3.3 Good Title 10
3.4 Reserved 10 3.5 No Consent or Filing 10 3.6 No Violations 10 3.7 ERISA
Matters 10 3.8 Financial Statements; No Material Adverse Effect; and Solvency 11
3.9 Litigation 11 3.10 No Default 11 3.11 Ownership of Property; Liens, etc. 12
3.12 Environmental Compliance 12 3.13 Insurance 13 3.14 Taxes 13 3.15
Subsidiaries; Equity Interests 13 3.16 Margin Regulations; Investment Company
Act; Public Utility Holding Company Act 13 3.17 Disclosure 13 3.18 Compliance
with Laws 13 3.19 Intellectual Property; Licenses, Etc. 14 3.20 Perfection of
Security Interest 14 3.21 Casualty Events 14 3.22 Labor Matters 14 3.23
Collateral Documents 14 3.24 Certain Transactions 14 3.25 Accounts 14 3.26
Prohibited Person Compliance 15 3.27 Material Contracts 15

 

 i

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

 ARTICLE IV. Affirmative Covenants

15 4.1 Future Financial Statements 15 4.2 Use of Proceeds 15 4.3 Taxes 15 4.4
Insurance 16 4.5 Litigation 16 4.6 Preservation of Existence, etc. 16 4.7 Books
and Records 16 4.8 Material Contracts 17 4.9 Inspection Rights 17 4.10 Continue
Business 17 4.11 Notices 17 4.12 Environmental Compliance 17 4.13 Further
Assurances 17 4.14 Common Stock Reserved 18 4.15 Notice of Registration
Requirement 18 4.16 Covenant to Guarantee Obligations and Give Security 18      
ARTICLE V. Negative Covenants 20 5.1 Borrowed Money 20 5.2 Encumbrances 20 5.3
Guaranties 20 5.4 Sale of Assets 20 5.5 Acquisition or Merger 20 5.6 Ownership
Interests 20 5.7 Investments and Loans 20 5.8 Dividends or Distributions 20 5.9
Pricing of Securities 20 5.10 Commissions 21 5.11 [***] Business 21      
ARTICLE VI. Default 21 6.1 Events of Default 21 6.2 Effects of an Event of
Default 23 6.3 Remedies 23       ARTICLE VII. Expenses and Indemnification 23
7.1 Reimbursement 23 7.2 Indemnity 24       ARTICLE VIII. Other 24 8.1 Notices
24 8.2 Counterparts; Effectiveness 25 8.3 Amendments and Waivers 25 8.4 Delays
and Omissions 25 8.5 Successors and Assigns 25 8.6 Entire Understanding 25 8.7
Severability 25 8.8 Force Majeure 25 8.9 Governing Law 25 8.10 Inconsistent
Provisions 26 8.11 Limitation of Liability 26 8.12 Counterparts 26 8.13
Submission to Jurisdiction 26

8.14

Waiver of Venue 26

 

 ii

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

8.15 Service of Process 26 8.16 Waiver of Jury Trial 27 8.17 Waiver of
Consequential Damages, Etc. 27 8.18 Confidentiality 27 8.19 Amendment and
Restatement 27

 

 iii

 

  

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT is made as of July 8, 2015, by and between
GRANDPARENTS.COM, INC., a Delaware corporation (“Borrower”), and VB FUNDING,
LLC, a Delaware limited liability company (together with its participants,
successors and assigns, “Lender”).

 

Lender previously provided a $1,000,000 bridge loan (the “Bridge Loan”) to
Borrower evidenced by (among other things) that certain Convertible Promissory
Note, dated as of May 18, 2015, in the aggregate principal amount of $1,000,000.

 

Borrower has requested that Lender provide a multi-draw term loan credit
facility to Borrower, and Borrower and Lender desire to amend and restate the
terms of the Bridge Loan to provide therefor, on the terms and conditions set
forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

ARTICLE I. Definitions

 

1.1           Definitions. As used in this Agreement, unless otherwise
specified, the following terms shall have the following respective meanings:

 

“Additional Advance” – as defined in Section 2.3 of this Agreement.

 

“Affiliate” - any Person who now or hereafter has Control of, or is now or
hereafter under common Control with, Borrower or any Subsidiary or over whom or
over which Borrower or any Subsidiary now or hereafter has Control.

 

[***].

 

“Agreement” - this agreement, including any Exhibit or Schedule hereto, as the
same may be amended, supplemented, restated or otherwise modified from time to
time.

 

“Anti-Terrorism Laws” - any Laws relating to terrorism or money laundering,
including, without limitation, Executive Order No. 13224, the USA Patriot Act,
the Laws comprising or implementing the Bank Secrecy Act, and the Laws
administered by the United States Treasury Department’s Office of Foreign Asset
Control (as any of the forgoing Laws may from time to time be amended, renewed,
extended or replaced).

 

“Bridge Note” – as defined in the recitals of this Agreement.

 

“Business Day” - a day of the year which is neither a Saturday or Sunday nor a
legal holiday on which banks are required or authorized by law to close in the
State of New York.

 

“CERCLIS” - the Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the U.S. Environmental Protection Agency.

 

“Change of Control of Borrower” means an event or series of events by which (a)
during any period of twelve (12) consecutive months, a majority of the members
of the board of directors or other equivalent governing body of Borrower cease
to be composed of individuals (i) who were members of the board of directors or
equivalent governing body on the first day of such period, (ii) whose election
or nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body, or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or (b) Steve Leber and Lee Lazarus shall,
at any time, fail to serve on the board of directors or other equivalent
governing body of Borrower.

 

 1 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

“Closing” or “Closing Date” - the closing of the transactions provided for in
this Agreement, or such other date upon which the parties may agree.

 

“Collateral Documents” - collectively, any guaranty, security agreement,
mortgage, assignment of claims or contracts, and any and all other documents at
any time executed and delivered as collateral or security for the Loan, and any
and all amendments, restatements, renewals or replacements thereof.

 

“Constituent Documents” - the certificate of incorporation and by-laws of
Borrower.

 

“Contractual Obligation” - as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Control” - (a) the power to vote at least 51% of the outstanding shares of any
class of stock of a corporation or equity, membership or ownership interest in
any partnership, limited partnership, limited liability company or other
business entity, (b) the beneficial ownership of at least 51% of (i) the
outstanding shares of any class of stock of a corporation or (ii) of any
outstanding equity, membership or ownership interest in any other Person.

 

“Default” - any event or condition that constitutes an Event of Default or that,
with the giving of any notice, the passage of time, or both, would be an Event
of Default.

 

“Default Rate” - when used with respect to the Loan or any other unpaid overdue
amount owing to Lender under any Loan Document, an interest rate equal to 12.5%
per annum, payable in cash upon demand of Lender.

 

“Environment” - any water including, but not limited to, surface water and
ground water or water vapor; any land including land surface or subsurface;
stream sediments; air; fish; wildlife; plants; and all other natural resources
or environmental media.

 

“Environmental Laws” - all foreign, federal, state, county, provincial and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances, regulations, codes and rules relating to the
protection of the Environment and/or governing the use, storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Materials and the policies, guidelines, procedures, interpretations,
decisions, orders and directives of any Governmental Authority with respect
thereto.

 

“Environmental Liability” – any liability, contingent or otherwise (including
any liability for damages, costs of environmental remediation, fines, penalties
or indemnities), of the Borrower or any Subsidiaries directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

 

“Event of Default” - as defined in Article VI of this Agreement.

 

 2 

 

  

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

“Executive Order No. 13224” - Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, as the same has been, or shall hereafter be,
amended, renewed, extended or replaced.

 

“GAAP” - generally accepted accounting principles in the United States of
America in effect from time to time and consistently applied from period to
period.

 

“Governmental Authority” - the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantor” – any Subsidiary of the Borrower other than [***].

 

“Hazardous Materials” - without limitation, any flammable explosives, radon,
radioactive materials, asbestos, asbestos containing materials, urea
formaldehyde foam insulation, lead based paints, polychlorinated biphenyls,
petroleum and petroleum products, methane, hazardous materials, hazardous
wastes, hazardous or toxic substances, pollutant, contaminant, regulated
substance, residual waste or related materials as defined in or subject to any
Environmental Law, including, without limitation, the following federal statutes
and any comparable Connecticut Environmental Laws: the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Sections 1801, et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.), The Clean Water
Act, as amended (33 U.S.C. Sections 1251, et seq.), The Safe Drinking Water Act
(42 U.S.C. Sections 300f, et seq.), The Clean Air Act (42 U.S.C. Sections 7401,
et seq.), and/or regulations adopted pursuant to any such Environmental Law.

 

“Indebtedness” – as defined in Section 5.1 of this Agreement.

 

“Investment” - as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of equity interests of another Person, (b) a loan, advance or
capital contribution to, guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person and any arrangement pursuant to which the investor guarantees
indebtedness of such other Person, or (c) the purchase or other acquisition (in
one transaction or a series of transactions) of assets of another Person that
constitute a division or business unit. For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.

 

“Laws” - collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

“Lien” - any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other
security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any easement, right of way or other encumbrance
on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing).

 

“Loan” - as defined in Section 2.1 of this Agreement.

 

 3 

 

  

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

  

“Loan Document” and collectively, “Loan Documents” - the Collateral Documents,
the Note, and any other document, instrument or agreements executed in
connection with the Loan, as may be amended, modified or supplemented from time
to time.

 

“Loan Notice” - a written notice of a request for a Loan, which shall be
substantially in the form of Exhibit B hereto.

 

“Loan Party” – Borrower and each Guarantor (each a “Loan Party” and
collectively, the “Loan Parties”)

 

“Margin Stock” - as defined under Regulation U of the Board of Governors of the
Federal Reserve System, as amended from time to time.

 

“Material Adverse Effect” - a material adverse effect on: (a) the property,
assets, financial condition, business or operations of Borrowers and its
Subsidiaries, taken as a whole; (b) the ability of Borrower or the Borrower and
the other Loan Parties (taken as a whole) to perform any of its or their payment
or other obligations, as the case may be, under this Agreement, the Note, or any
Collateral Document to which it or they are a party; (c) the legality, validity
or enforceability of the obligations of Borrower or any Loan Party under this
Agreement, the Note, or any Collateral Document to which it is are a party; or
(d) the ability of Lender to exercise its rights and remedies with respect to,
or otherwise realize upon, any of the collateral or any of the security for the
obligations of Borrower or any Subsidiary to Lender under this Agreement, the
Note, or any Collateral Document.

 

“Material Contract”- with respect to Borrower, each agreement or contract to
which Borrower is a party which is material to the business, condition
(financial or otherwise), operations, performance, or properties of Borrower
and/or any of its Subsidiaries and the loss of termination of which, unless
otherwise replaced, would have a Material Adverse Effect.

 

“Maturity Date” – July 8, 2025, unless such date is otherwise accelerated in
accordance with the terms of this Agreement.

 

“Multiemployer Plan” - any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

 

“Note” - as defined in Section 2.2 of this Agreement.

 

“NPL” - the National Priorities List under CERCLA.

 

“Obligations” - all advances to, and debts, liabilities, obligations, covenants
and duties of Borrower or any Subsidiary arising under any Loan Document or
otherwise with respect to the Loan, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against Borrower or any Subsidiary or any Affiliate
thereof of any proceeding under bankruptcy or any other Laws established for the
relief of debtors naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such
proceeding.

 

“Payment Date” - September 30, 2015 and the last Business Day of each succeeding
calendar quarter of Borrower.

 

“Pension Plan” - any pension plan as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974 as amended (“ERISA”) with respect to
which Borrower or any Subsidiary has incurred or may incur liability, including
contingent liability, under Title IV of ERISA, to such plan or to the Pension
Benefit Guaranty Corporation. For purposes of this definition and for purposes
of Section 6.1(i), “Borrower” shall include any trade or business (whether or
not incorporated) which, together with Borrower or a Subsidiary, is deemed to be
a “single employer” within the meaning of Section 4001(b)(1) of ERISA.

 

 4 

 

  

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

“Permitted Indebtedness” means:

 

(i)          Indebtedness evidenced by capitalized lease obligations and
purchase money Indebtedness secured by Liens permitted by clause (v) of the
definition of “Permitted Liens”; provided that the aggregate principal amount of
all such Indebtedness does not exceed $1,000,000 at any one time outstanding;

 

(ii)         Indebtedness listed on Schedule 1.1 hereto;

 

(iii)        Indebtedness under hedging agreements entered into in the ordinary
course of business for the purpose of directly mitigating risks anticipated by
the Loan Parties and not for purposes of speculation or taking a “market view”;

 

(iv)        Indebtedness in respect of netting services, overdraft protections
and other like services, in each case incurred in the ordinary course of
business;

 

(v)         Indebtedness consisting of contingent obligations permitted
hereunder;

 

(vi)        Indebtedness with respect to judgments or awards not constituting an
Event of Default under Section 6.01(h);

 

(vii)       unsecured Indebtedness owing to banks or other financial
institutions under credit cards to officers and employees for, and constituting,
business related expenses in the ordinary course of business;

 

(viii)      Indebtedness that is assumed in connection with any acquisition not
to exceed $1,000,000; provided that, such Indebtedness was not incurred in
contemplation of such acquisition;

 

(ix)         Unsecured indebtedness of a type not otherwise described above, not
to exceed $1,000,000 in the aggregate at any one time outstanding; and

 

(x)          Any extensions, refinancings or modifications of any of the
foregoing (i)-(ix).

 

“Permitted Liens” means:

 

(i)          Liens securing the Obligations;

 

(ii)         Liens listed on Schedule 1.2 hereof;

 

(iii)        Liens for taxes, assessments and governmental charges the payment
of which is not yet due and payable;

 

(iv)        Liens imposed by law, such as carriers’, warehousemen’s, mechanics’,
materialmen’s supplier’s and other similar Liens arising in the ordinary course
of business and securing obligations (other than Indebtedness for borrowed
money) that are not overdue by more than thirty (30) days or are being contested
in good faith and by appropriate proceedings promptly initiated and diligently
conducted, and a reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor;

 

(v)         Liens securing Indebtedness permitted by clause (i) of the
definition of Permitted Indebtedness on equipment acquired or leased by the
Borrower or any of its Subsidiaries in the ordinary course of its business to
secure the purchase price of, or capital lease obligations pertaining to, such
equipment; provided, however, that (A) no such Lien shall extend to or cover any
other property of the Borrower or any of its Subsidiaries, and (B) the purchase
money Indebtedness secured by any such Lien is incurred within ninety (90) days
after the acquisition of such equipment;

 

 5 

 

  

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

(vi)        deposits and pledges of cash securing obligations incurred in
respect of workers’ compensation, unemployment insurance, social security or
other forms of governmental insurance or benefits or other statutory
obligations;

 

(vii)       easements, zoning restrictions and similar encumbrances on real
property and minor irregularities in the title thereto that do not (A) secure
obligations for the payment of money or (B) materially impair the value of such
property or its use by any Loan Party or any of its Subsidiaries in the normal
conduct of such Person’s business;

 

(viii)      any interest or title of a lessor, licensor, sublessor or
sublicensor under any lease or license not prohibited by this Agreement;

 

(ix)         any attachment or judgment lien arising solely as a result of
judgments or awards that do not constitute an Event of Default hereunder;

 

(x)          Liens in favor of collecting banks arising under Section 4-210 of
the Uniform Commercial Code; and

 

(xi)         Liens (including the right of setoff) in favor of a bank or other
depository institution encumbering deposits granted in the ordinary course of
business.

 

“Permitted Payments” means

 

(i)          any Subsidiary of the Borrower may pay dividends to the Borrower or
any Subsidiary of the Borrower;

 

(ii)         Borrower may pay dividends in the form of capital stock or cash
generally to all holders of common stock in Borrower;

 

(iii)        except as limited elsewhere in this Agreement, payment of
reasonable and customary directors’ fees and expenses and indemnities; and

 

(iv)        other payments, distributions or repurchases to unaffiliated third
parties which are not management, officers or employees of Borrower or any
Subsidiary, not to exceed $1,000,000 in the aggregate during the term of the
Loan.

 

“Person” - any individual, corporation, limited liability company, partnership,
joint venture, trust, unincorporated association, government or political
subdivision or other entity, body, organization or group.

 

“Reportable Event” - any event with regard to a Pension Plan described in
Section 4043(b) of ERISA, or in Regulations issued thereunder.

 

“Responsible Officer” - the chief executive officer, chief operating officer,
president, vice president, chief financial officer, treasurer, assistant
treasurer or secretary of Borrower. Any document delivered hereunder that is
signed by a Responsible Officer of Borrower shall be conclusively presumed to
have been authorized by all necessary corporate and/or other action on the part
of Borrower and such Responsible Officer shall be conclusively presumed to have
acted on behalf of Borrower.

 

 6 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

“Subsidiary” - any corporation, partnership, limited liability company or other
entity, association or organization of which Borrower has Control, or of which
at least 51% of the voting interests is owned by Borrower, directly, or
indirectly through one or more Subsidiaries.

 

“USA Patriot Act” - the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107 56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

 

“Warrant” – a warrant granting Lender the right to purchase common shares in
Borrower, now or hereafter issued pursuant to the Warrant Agreement.

 

“Warrant Agreement” – that certain Warrant Agreement dated as of the date hereof
between Borrower, as issuer, and Lender, as purchaser.

 

“Warrant Documents” – the Warrant Agreement and each Warrant issued pursuant
thereto.

 

1.2           Accounting Terms. All accounting terms not otherwise defined
herein shall have the meaning assigned to them in accordance with GAAP.

 

1.3           UCC Definitions. Unless otherwise defined in this Agreement,
capitalized words shall have the meanings set forth in the Uniform Commercial
Code as in effect in the State of New York.

 

ARTICLE II. Term Loan Facility

 

2.1           Term Loan. As of the date hereof, immediately prior to giving
effect to this Agreement, the outstanding principal balance of the Bridge Loan
was $1,000,000. Subject to the terms and conditions set forth herein, Lender
agrees to amend and restate the Bridge Loan and increase the principal balance
through a term loan (the “Loan”) to Borrower in an aggregate amount not to
exceed $8,000,000.00. Borrower may borrow under this Section 2.1 and Section
2.3, and prepay under Section 2.9. Amounts borrowed may not be reborrowed once
repaid.

 

2.2           The Note. The Loan shall be evidenced by a note (the “Note”)
executed by Borrower, and payable as provided in this Agreement.

 

2.3           Advances of Term Loan. The Loan shall be advanced in two
disbursements. The initial advance of the Loan shall be in the amount of
$5,000,000.00, inclusive of the amount previously funded in connection with the
Bridge Loan, with the remaining $4,000,000.00 of initially funded Loan proceeds
to be disbursed by Lender as of the date hereof upon Borrower’s satisfaction of
all of Lender’s conditions precedent to the Loan closing, as determined in
Lender’s sole discretion. The second advance of the Loan (the “Additional
Advance”) shall be in an amount elected by Borrower, not to exceed
$3,000,000.00, and shall be disbursed upon Borrower’s irrevocable Loan Notice to
Lender, which may be given by a Responsible Officer of Borrower. The Loan Notice
must be received by Lender not later than 11:00 a.m. ten (10) Business Days (and
not more than thirty (30) Business Days) prior to the requested date of the
Additional Advance. The Loan Notice shall be on letterhead of Borrower and
reference the wiring instructions for the account into which such proceeds are
to be deposited and shall specify the requested date of the borrowing of the
Additional Advance (which shall be a Business Day). Following receipt of the
Loan Notice and satisfaction of all conditions specified in Section 2.4, Lender
shall make the principal amount thereof available to Borrower by funding the
Additional Advance via wire transfer of immediately available U.S. Federal
funds.

 

2.4           Conditions to Additional Advance. The obligation of Lender to
honor the Loan Notice and disburse the Additional Advances is subject to the
following conditions precedent:

 

(a)          The representations and warranties of Borrower contained in Article
III or any other Loan Document shall have been true and correct on and as of the
date hereof and shall be remain true when re-made pursuant to the Loan Notice as
of the date of the Additional Advance.

 

 7 

 

  

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

(b)          No Default or Event of Default shall exist, or would result from
the proposed Additional Advance or from the application of the proceeds thereof.

 

(c)          The Additional Advance shall be made on or prior to January 29,
2016, and not thereafter unless agreed to by Lender.

 

(d)          Lender shall have received the Loan Notice in accordance with the
requirements hereof.

 

(e)          Borrower shall have issued and sold a Warrant permitting Lender to
purchase 7,500,000 shares of common stock in Borrower, as more particularly
described in the Warrant Agreement.

 

(f)          Lender shall have received such other approvals, opinions or
documents as it may reasonably request.

 

(g)          The Loan Notice submitted by Borrower shall be deemed to be a
representation and warranty that the conditions specified in Sections 2.4(a) and
2.4(b) have been satisfied on and as of the date of the Additional Advance.

 

2.5           Interest. Subject to the provisions of Section 2.6, the Loan shall
bear interest on the outstanding principal amount thereof at an aggregate fixed
rate per annum equal to seven and one-half percent (7.50%), as follows:

 

(h)          Interest Payable in Cash. A portion of the interest accruing on the
Loan equal to a fixed rate per annum of two and one-half percent (2.50%) shall
be due and payable in arrears, in cash, on each Payment Date and at such other
times as may be specified herein.

 

(i)          Interest Payable in Kind. A portion of the interest accruing on the
Loan equal to a fixed rate per annum of five percent (5.00%) shall be due in
arrears on each Payment Date and at such other times as may be specified herein,
and shall be deemed paid by increasing the outstanding principal balance of the
Loan by such amount.

 

(j)          AHYDO Catch-Up.          Notwithstanding anything to the contrary
contained herein, if (i) the Loan remains outstanding after the fifth
anniversary of the Closing Date and (ii) the aggregate amount of the accrued but
unpaid interest on the Loan (including any amounts treated as interest for
federal income tax purposes, such as original issue discount (“OID”)) as of any
Testing Date occurring after such fifth anniversary exceeds an amount equal to
the Maximum Accrual, then all such accrued but unpaid interest on the Note
(including any amounts treated as interest for federal income tax purposes, such
as OID) as of such time in excess of an amount equal to the Maximum Accrual
shall be paid in cash by the Borrower to the Lender (or any subsequent holder of
the Note) on such Testing Date, it being the intent of the parties hereto that
the deductibility of interest on the Loan shall not be limited or deferred by
reason of Section 163(i) of the Internal Revenue Code of 1986, as amended (the
“IRC”). For these purposes, the “Maximum Accrual” is an amount equal to the
product of the Loan’s issue price (as defined in IRC Sections 1273(b) and
1274(a)) and its yield to maturity, and a “Testing Date” is any Interest Payment
Date and the date on which any “accrual period” (within the meaning of IRC
Section 1272(a)(5)) closes.

 

2.6           Default Rate. If any amount payable by Borrower under any Loan
Document is not paid when due (with regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, then such amount shall
thereafter bear interest at a rate per annum at all times equal to the Default
Rate. While any Event of Default exists and is continuing, Borrower shall pay
interest on the outstanding principal amount of the Loan at a rate per annum at
all times equal to the Default Rate. Accrued and unpaid interest on past due
amounts (including interest on past due interest) shall be due and payable upon
demand. If interest on the outstanding principal amount of the Loan is payable
at the Default Rate, then the amount of interest payable exceeding a fixed rate
per annum of five percent (5.00%) shall be payable in cash on each Payment Date
(or at such other times as may be specified herein), and not in kind.

 

 8 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

2.7           Late Charge. Borrower shall pay to Lender a late charge equal to
five percent (5%) of each payment of principal and/or interest not paid within
ten (10) days of the due date thereof to cover the expenses to Lender resulting
from such delinquent payment.

 

2.8           Repayment of Loan. Subject to the terms of Section 2.10, Borrower
shall repay to Lender on the Maturity Date the aggregate principal amount of the
Loan outstanding on such date.

 

2.9           Optional Prepayments. Subject to the terms of Section 2.10,
Borrower may, at any time and from time to time, voluntarily prepay the Loan in
whole or in part without premium or penalty.

 

2.10         Conversion Rights; Notice of Payments. Lender shall have the right
to convert the principal balance of the Loan to common shares in Borrower as
more particularly described in the Note. In furtherance of Lender’s rights under
this Section 2.10, Borrower shall provide Lender not less than fifteen (15)
days’ prior written notice of any unscheduled cash payment to be made hereunder
together with such financial information as reasonably requested by Lender and
permitted by law to be disclosed, in order for Lender to determine whether or
not to accept such cash payment or elect to convert such portion of the
indebtedness due hereunder to common stock. Each such notice shall specify the
date and amount of such payment. If such notice is given by Borrower, Borrower
shall make such payment, and the payment amount specified in such notice shall
be due and payable on the date specified therein. Any prepayment shall be
accompanied by payment (whether in cash or in kind, as described in Section 2.5)
of all accrued and unpaid interest on the amount prepaid.

 

3.11         Computation of Interest and Fees. All computations of fees and
interest shall be calculated daily on the basis of a 360-day year and actual
days elapsed (which results in more fees or interest, as applicable, being paid
than if computed on the basis of a 365-day year). Interest shall accrue on each
Loan for the day on which such Loan is made. Each determination by Lender of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.

 

3.12         Evidence of Debt. The extensions of the Loan made by Lender shall
be evidenced by one or more accounts or records maintained by Lender in the
ordinary course of business. The accounts or records maintained by Lender shall
be conclusive absent manifest error of the amount of such extensions made by
Lender to Borrower and the interest and payments thereon. Any failure to so
record or any error in doing so shall not, however, limit or otherwise affect
the obligations of Borrower hereunder to pay any amount owing with respect to
the Loan.

 

2.13         Payments Generally. All payments to be made by Borrower shall be
made without condition or deduction for any counterclaim, defense, recoupment or
setoff. Except as otherwise expressly provided herein, all payments by Borrower
hereunder shall be made to Lender in U.S. Dollars and in immediately available
funds not later than 2:00 p.m. on the date specified herein. If any payment to
be made by Borrower shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

 

ARTICLE III. Representations and Warranties

 

Borrower hereby makes the following representations and warranties as of the
date hereof and as of the date of the Additional Advance.

 

3.1           Good Standing and Authority. Borrower is a corporation, duly
organized, and validly existing, and in good standing under the laws of the
State of Delaware. Each Subsidiary is a limited liability company, duly
organized, and validly existing, and in good standing under the laws of the
State of Florida. Borrower and each Subsidiary has all necessary power and
authority to transact the business in which it is engaged; is duly licensed or
qualified and in good standing in each other jurisdiction in which the conduct
of such business requires such licensing or such qualification, except where the
failure to be so licensed or qualified would not have a Material Adverse Effect.
Borrower and each Guarantor has all necessary power and authority to enter this
Agreement and to execute, deliver and perform this Agreement, the Note, the
Collateral Documents and any other document executed in connection with this
Agreement, all of which have been duly authorized by all proper and necessary
action by Borrower and each Guarantor.

 

 9 

 

  

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

3.2           Valid and Binding Obligation. This Agreement, the Collateral
Documents, the Note, and any other document executed in connection herewith
constitute the legal, valid and binding obligations of Borrower and each
Guarantor, enforceable in accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy and insolvency laws and
laws affecting creditor’s rights generally.

 

3.3           Good Title. Borrower and each Subsidiary has good and marketable
title to all of its material assets, none of which is subject to any mortgage,
indenture, pledge, lien, conditional sale contract, security interest,
encumbrance, claim, trust or charge except as otherwise permitted herein.

 

3.4           Reserved.

 

3.5           No Consent or Filing. No consent, license, approval or
authorization of, or registration, declaration or filing with, any court,
Governmental Authority or other Person, which has not been obtained or made, is
required in connection with the valid execution, delivery or performance of this
Agreement, the Note, the Collateral Documents or other documents required by
this Agreement or in connection with any of the transactions contemplated
thereby, other than filings and recordings in connection with the Collateral
Documents.

 

3.6           No Violations. Neither Borrower nor any Subsidiary is in violation
of any term of its Constituent Documents, or of any mortgage, borrowing
agreement or other instrument or agreement pertaining to indebtedness for
borrowed money which would be an Event of Default hereunder. Neither Borrower
nor any Subsidiary is in violation of any term of any other indenture,
instrument, or agreement to which it is a party or by which it may be bound,
resulting, or which might reasonably be expected to result, in a Material
Adverse Effect. Neither Borrower nor any Subsidiary is in violation of any
order, writ, judgment, injunction or decree of any court of competent
jurisdiction. To Borrower’s best knowledge, neither Borrower nor any Subsidiary
is in violation of any statute, rule or regulation of any competent Governmental
Authority, the violation of which would have a Material Adverse Effect. The
execution and delivery of this Agreement, the Note, the Collateral Documents and
other documents required by this Agreement and the performance of all of the
same is and will be in compliance with the foregoing and will not result in any
violation or result in the creation of any mortgage, lien, security interest,
charge or encumbrance upon any properties or assets except in favor of Lender.
There exists no fact or circumstance not disclosed in this Agreement or in the
documents furnished in connection herewith (other than general economic
conditions) which does, or in the future could, have a Material Adverse Effect.

 

3.7           ERISA Matters. Except in compliance with all applicable Laws, no
Pension Plan has been terminated or partially terminated or is insolvent or in
reorganization, nor have any proceedings been instituted to terminate or
reorganize any Pension Plan; neither Borrower nor any Subsidiary has withdrawn
from any Pension Plan, nor has a condition occurred which if continued would
result in a complete or partial withdrawal; neither Borrower nor any Subsidiary
has incurred any withdrawal liability to any Pension Plan; neither Borrower nor
any Subsidiary has incurred any liability to the Pension Benefit Guaranty
Corporation other than for required insurance premiums which have been paid when
due; no Reportable Event has occurred; and no Pension Plan or other “employee
pension benefit plan” as defined in Section 3 of ERISA to which Borrower or any
Subsidiary is a party has an “accumulated funding deficiency.” Each Pension Plan
and each other “employee benefit plan” as defined in Section 3(2) of ERISA to
which Borrower or any Subsidiary is a party is in substantial compliance with
ERISA, and no such plan, or any administrator, trustee or fiduciary thereof has
engaged in a prohibited transaction described in Section 406 of ERISA or in
Section 4975 of the Internal Revenue Code.

 

 10 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

3.8           Financial Statements; No Material Adverse Effect; and Solvency.

 

(a)          Borrower has made available to Lender a true, correct and complete
copy of Borrower’s and its Subsidiaries’ consolidated 10-K annual report for the
period ending December 31, 2014 and a true, correct and complete copy of
Borrower’s and its subsidiaries’ consolidated 10-Q quarterly report for the
period ending March 31, 2015. The foregoing financial statements (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; (ii) fairly
present the financial condition of Borrower and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; and (iii) show all material
indebtedness and other liabilities, direct or contingent, of Borrower and its
Subsidiaries as of the date thereof, including liabilities for taxes, material
commitments and indebtedness.

 

(b)          Schedule 1.1 sets forth all indebtedness for borrowed money
evidenced by a promissory note of Borrower and its Subsidiaries as of the
Closing Date, as well as any other material indebtedness for borrowed money and
other liabilities, direct or contingent, of Borrower and its Subsidiaries as of
the Closing Date, including liabilities for taxes, material commitments and
indebtedness. True, correct and complete copies of all documents, instruments or
agreements evidencing the indebtedness set forth on Schedule 1.1 have been
delivered to Lender.

 

(c)          Except as set forth in Schedule 3.8(b), as of the Closing Date: (i)
there is no outstanding or authorized subscription, warrant, option, or other
right, commitment or arrangement (written or oral, or contingent or otherwise)
to which Borrower or any Subsidiary is a party or by which it is bound, to
purchase or acquire any shares of, or any security directly or indirectly
convertible in or exchangeable or exercisable for, any capital stock of Borrower
or any Subsidiary, (ii) neither Borrower nor any of its Subsidiaries has any
obligation (contingent or otherwise) to issue any warrants, options or other
commitments or arrangements to issue or distribute to holders of any shares of
its capital stock, any evidences of indebtedness, or assets of Borrower or such
Subsidiary, (iii) neither Borrower nor any Subsidiary has any obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof, and (iv) there are no voting agreements
or similar arrangements among Borrower or any Subsidiary or any of their
respective stockholders.

 

(d)          Since the date of the financial statements described in paragraph
(a) above, there has been no event or circumstance, either individually or in
the aggregate, that has had or would reasonably be expected to have a Material
Adverse Effect.

 

(e)          Neither Borrower nor any Subsidiary, on a consolidated basis, is
insolvent as defined in any applicable state or federal statute, nor will
Borrower or any Subsidiary, on a consolidated basis, be rendered insolvent by
the execution and delivery of this Agreement, the Note or any of the Collateral
Documents to Lender. Immediately after giving effect to the making of each of
the Initial Advance and the Additional Advance hereunder, Borrower and its
Subsidiaries, on a consolidated basis, reasonably expect to (i) be able to pay
their debts as they become due, (ii) have funds and capital sufficient to carry
on their business and all businesses in which they are about to engage, and
(iii) own property having a value at both fair valuation and at fair salable
value greater than the amount required to pay its debts as they become due.

 

3.9           Litigation. As of the Closing Date, there are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of Borrower after
due and diligent investigation, threatened or contemplated, at law, in equity,
in arbitration or before any Governmental Authority, by or against Borrower or
any of its Subsidiaries or against any of their properties or revenues that (a)
purport to affect or pertain to this Agreement or any other Loan Document or any
of the transactions contemplated hereby, or (b) except as set forth on Schedule
3.9 hereto, either individually or in the aggregate, if determined adversely,
could reasonably be expected to have a Material Adverse Effect.

 

3.10         No Default. Neither Borrower nor any Subsidiary is in default under
or with respect to any Contractual Obligation that could, either individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. No
Event of Default has occurred and is continuing or would result from the
consummation of the transactions contemplated by this Agreement or any other
Loan Document.

 

 11 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

3.11         Ownership of Property; Liens, etc..

 

(a)          Borrower and each Subsidiary has good record and marketable title
in fee simple to, or valid leasehold interests in, all real property necessary
or used in the ordinary conduct of its business, except for such defects in
title as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

 

(b)          As of the date hereof, Schedule 3.11(b) sets forth a complete and
accurate list of all Liens on the property or assets of Borrower and each of its
Subsidiaries, showing as of the date hereof the lienholder thereof, the
principal amount of the obligations secured thereby and the property or assets
of Borrower or such Subsidiary subject thereto. The property of Borrower and
each of its Subsidiaries is subject to no Liens, other than Permitted Liens.

 

(c)          As of the date hereof, neither Borrower nor any Subsidiary owns any
real property.

 

(d)          As of the date hereof, Schedule 3.11(d) sets forth a complete and
accurate list of all leases of real property under which Borrower or any
Subsidiary is the lessee, showing as of the date hereof the street address,
county or other relevant jurisdiction, state, lessor, lessee, expiration date
and annual rental cost thereof. Each such lease is the legal, valid and binding
obligation of the lessor thereof, enforceable in accordance with its terms and
neither Borrower nor any Subsidiary is a party to any lease of real property
under which Borrower or any Subsidiary is the lessor.

 

3.12         Environmental Compliance.

 

(a)          Borrower and its Subsidiaries conducts in the ordinary course of
business a review of the effect of existing Environmental Laws and claims
alleging potential liability or responsibility for violation of any
Environmental Law on their respective businesses, operations and properties, and
as a result thereof Borrower has reasonably concluded that, except as
specifically disclosed in Schedule 3.12, such Environmental Laws and claims
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(b)          Except as otherwise set forth in Schedule 3.12, none of the
properties currently or formerly owned or operated by Borrower or any of its
Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or
any analogous foreign, state or local list or is adjacent to any such property;
there are no and never have been any underground or above-ground storage tanks
or any surface impoundments, septic tanks, pits, sumps or lagoons in which
Hazardous Materials are being or have been treated, stored or disposed on any
property currently owned or operated by Borrower or any of its Subsidiaries or,
to the best of the knowledge of the Loan Parties, on any property formerly owned
or operated by Borrower or any of its Subsidiaries; there is no asbestos or
asbestos-containing material on any property currently owned or operated by
Borrower or any of its Subsidiaries; and Hazardous Materials have not been
released, discharged or disposed of on any property currently or formerly owned
or operated by Borrower or any of its Subsidiaries.

 

(c)          Except as otherwise set forth on Schedule 3.12, neither Borrower
nor any of its Subsidiaries nor any other potentially responsible party is
undertaking or will be undertaking, and has not completed, either individually
or together with other potentially responsible parties, any investigation or
assessment or remedial or response action relating to any actual or threatened
release, discharge or disposal of Hazardous Materials at any property owned,
leased or operated by such parties, either voluntarily or pursuant to the order
of any Governmental Authority or the requirements of any Environmental Law; and
all Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or operated by
Borrower or any of its Subsidiaries have been disposed of in a manner not
reasonably expected to result in material liability to Borrower or any of its
Subsidiaries.

 

 12 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

3.13         Insurance. The properties of Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of Borrower, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Borrower or the applicable Subsidiary
operates. As of the date hereof, the certificate attached in Schedule 3.13
identifies all insurance coverage maintained by Borrower and its Subsidiaries,
and such other information contained in such certificate is true and correct in
all respects.

 

3.14         Taxes. Borrower and its Subsidiaries have filed all Federal, state
and other material tax returns and reports required to be filed, and have paid
all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax
assessment against Borrower or any Subsidiary thereof that would, if made, be
reasonably expected to have a Material Adverse Effect. Neither Borrower nor any
Subsidiary thereof is party to any tax sharing agreement. Borrower and each of
its Subsidiaries maintain adequate reserves for the payment of payment of any
sales or use tax obligations in each jurisdiction where Borrower or such
Subsidiary is required to pay such taxes.

 

3.15         Subsidiaries; Equity Interests. As of the date hereof, Borrower has
no Subsidiaries other than those specifically disclosed in of Schedule 3.15(a),
and all of the outstanding equity interests in such Subsidiaries have been
validly issued, are fully paid and non-assessable and are owned by Borrower free
and clear of all Liens. As of the date hereof, Borrower has no equity
investments in any other corporation or entity other than those specifically
disclosed in Schedule 3.15(b). The Constituent Documents of Borrower and each
amendment thereto provided to Lender is a true and correct copy of each such
document, each of which is valid and in full force and effect.

 

3.16         Margin Regulations; Investment Company Act; Public Utility Holding
Company Act. Neither Borrower nor any Subsidiary is engaged and will not engage,
principally or as one of its important activities, in the business of purchasing
or carrying margin stock (within the meaning of Regulation U issued by the FRB),
or extending credit for the purpose of purchasing or carrying margin stock.
Neither Borrower nor any of its Subsidiaries is a “holding company”, or a
“subsidiary company” of a “holding company”, or an “affiliate” of a “holding
company”, as such terms are defined in the Public Utility Holding Company Act of
2005; neither Borrower nor any of its Subsidiaries is subject to regulation as a
“public utility” under the Federal Power Act, as amended; nor is it subject to
regulation as an “investment company”, or an “affiliated company” or a
“principal underwriter” of an “investment company”, as such terms are defined in
the Investment Company Act of 1940.

 

3.17         Disclosure. Borrower has disclosed to Lender all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, a breach of which would reasonably be expected to result in
a Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of Borrower
to Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder or under any other Loan
Document (in each case, as modified, supplemented or updated by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not material misleading;
provided that, it is understood and agreed that any projections provided in
connection herewith are by their nature presumptive, subject to significant
uncertainties and contingent on a wide range of factors, any of which are beyond
the control of the Borrower and its Subsidiaries, and that no assurance can be
given that any of the projections will be realized and actual results may vary
significantly.

 

3.18         Compliance with Laws. Borrower and each Subsidiary is in compliance
in all material respects with the requirements of all Laws and all orders,
writs, injunctions and decrees applicable to it or to its properties, except in
such instances in which (a) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings diligently
conducted or (b) the failure to comply therewith, either individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

 13 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

3.19         Intellectual Property; Licenses, Etc.

 

(a)          Borrower and its Subsidiaries own, or possess the right to use, any
and all of the trademarks, service marks, trade names, copyrights, patents,
patent rights, franchises, licenses and other intellectual property rights
(collectively, “Intellectual Property”) that are reasonably necessary for the
operation of their respective businesses, without conflict with the rights of
any other Person, other than as disclosed on Schedule 3.19(a). As of the date
hereof, Schedule 3.19(a) hereto is a complete description of all Intellectual
Property. To the knowledge of the Loan Parties, no slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by Borrower or any Subsidiary
thereof infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing against Borrower or any Subsidiary
thereof is pending or, to the knowledge of Borrower, threatened, which, either
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.

 

(b)          Borrower and its Subsidiaries has all requisite power and authority
and all necessary licenses, permits and approvals (collectively, “Permits”) to
engage in and to otherwise carry on its businesses as now conducted, except for
any such licenses, permits and approvals, the failure of which to obtain or
maintain would not, individually or in the aggregate, have a Materially Adverse
Effect. As of the date hereof, set forth in Schedule 3.19(b) hereto is a
complete description of all Permits. Each Permit is validly issued and in full
force and effect, and Borrower and each of its Subsidiaries, as applicable, has
fulfilled and performed all of its obligations with respect thereto. No event
has occurred which (i) has resulted in, or after notice or lapse of time or both
would result in, revocation or termination of any Permit, or (ii) materially and
adversely affects or in the future would reasonably be expected to materially
adversely affect any of the rights of Borrower or any of its Subsidiaries
thereunder.

 

3.20         Perfection of Security Interest. The Collateral and Lender’s rights
with respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses. Borrower is the owner of the Collateral free
from any Lien and any other claim or demand, and, except for Permitted Liens,
there is no financing statement, security agreement, chattel mortgage, real
estate mortgage or other document filed or recorded with any filing records,
registry or other public office that purports to cover, affect or give notice of
any present or possible future Lien on, or security interest in, any assets or
property of any of Borrower or its Subsidiaries or any rights relating thereto.

 

3.21         Casualty Events. Neither the businesses nor the properties of
Borrower or any of its Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.

 

3.22         Labor Matters. There are no collective bargaining agreements or
Multiemployer Plans covering the employees of Borrower or any of its
Subsidiaries as of the Closing Date and neither Borrower nor any Subsidiary of
Borrower has suffered any strikes, walkouts, work stoppages or other material
labor difficulty within the last five years which, in each case, would
reasonably be expected to have a Material Adverse Effect.

 

3.23         Collateral Documents. The provisions of the Collateral Documents
are effective to create in favor of Lender a legal, valid and enforceable first
priority Lien on all right, title and interest of Borrower and the Guarantors in
the Collateral described therein, in each case subject to Permitted Liens.

 

3.24         Certain Transactions. None of the current or former officers,
directors or employees of Borrower or any Subsidiary (or any partnership, trust
or other entity in which such person has a substantial interest or is also an
officer, director, trustee or partner) is presently a party to any transaction
with Borrower or any Subsidiary (other than for services as employees, officers
and directors), unless the same is on a third-party, arms’ length basis and is
not otherwise prohibited by the Loan Documents.

 

3.25         Accounts. As of the date hereof, Schedule 3.25 sets forth the
account numbers and locations of all bank accounts and securities accounts of
Borrower and its Subsidiaries.

 

 14 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

3.26         Prohibited Person Compliance. Borrower warrants, represents and
covenants that neither Borrower nor any Subsidiary nor any of their respective
Affiliates is or will be a Person (a) that is listed in the Annex to, or is
otherwise subject to the provisions of, Executive Order No. 13224, (b) whose
name appears on the United States Treasury Department’s Office of Foreign Assets
Control (“OFAC”) most current list of “Specifically Designated National and
Blocked Persons,” (c) who commits, threatens to commit or supports “terrorism,”
as defined in Executive Order No. 13224, or (d) who is otherwise affiliated with
any entity or person listed above (any and all parties or persons described in
subparts (a) – (d) above are herein referred to as a “Prohibited Person”).
Borrower covenants and agrees that neither Borrower, nor any Subsidiary nor any
of their respective Affiliates will knowingly (i) conduct any business, nor
engage in any transaction or dealing, with any Prohibited Person, including, but
not limited to, the making or receiving of any contribution of funds, goods, or
services to or for the benefit of a Prohibited Person, or (ii) engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in Executive Order No. 13224. Borrower further covenants and agrees to
deliver (from time to time) to Lender any such certification or other evidence
as may be requested by Lender in its sole and absolute discretion, confirming
each such representation.

 

3.27         Material Contracts. Schedule 3.27 sets forth all Material Contracts
of Borrower and its Subsidiaries as of the Closing Date. All Material Contracts
are in full force and effect with no default thereunder by any party thereto. To
Borrower’s knowledge, no party has any claim or right of offset to its
obligations under any Material Contract. True, correct and complete copies of
all Material Contracts in effect as of the Closing Date have been delivered to
Lender.

 

ARTICLE II. Affirmative Covenants

 

Borrower covenants and agrees, and shall cause each Subsidiary to covenant and
agree, so long as any Obligations (other than any contingent indemnification
obligations not then due and owing) remain outstanding, to:

 

4.1           Future Financial Statements. In accordance with and not in
violation of any Applicable Laws (including rules and regulations of the
Securities and Exchange Commission), furnish to Lender or cause to be furnished
to Lender upon request, unless otherwise publicly available:

 

(a)          Public Filings. Copies of all financial information, reports and
other filings made with the Securities and Exchange Commission,
contemporaneously upon filing of the same.

 

(b)          Tax Returns. As soon as available, and in any event within thirty
(30) days after the filing of the same, signed copies of all federal and state
tax returns of Borrower, including all related schedules and forms, for the
requested fiscal year(s), all in reasonable detail and scope and certified by
Borrower’s chief financial officer.

 

(c)          Other Financial Information. Within fifteen (15) days following
Lender’s request therefor, such other financial information as reasonably
requested by Lender and permitted by law to be disclosed.

 

4.2           Use of Proceeds. Use the proceeds of the Loan for working capital
and general corporate purposes only. In no event shall any of Borrower’s or its
Subsidiaries’ existing indebtedness evidenced by a promissory note be repaid
using proceeds of the Loan, other than the indebtedness evidenced by those
promissory notes described on Schedule 4.2.

 

4.3           Taxes. Promptly pay and discharge all of its taxes, assessments
and other governmental charges prior to the date on which penalties are attached
thereto, establish adequate reserves for the payment of taxes
and assessments and make all required withholding and other tax deposits.
Nothing herein shall be interpreted to require the payment of any tax,
assessment or charge so long as its validity is being contested in good faith
and by appropriate proceedings diligently conducted, and Borrower has
established an adequate reserve for any such expense.

 

 15 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

4.4           Insurance.

 

(a)          Keep all its property so insurable insured at all times with
financially sound and reputable insurers against fire, theft and other risks
(including, if required, flood) in coverage, form and amount reasonably
satisfactory to Lender and as is customary in the case of other Persons engaged
in the same or similar business or having similar properties similarly situated.
Such insurance shall be in such minimum amounts that Borrower or any Subsidiary
will not be deemed a co-insurer under applicable insurance laws, regulations and
policies and otherwise shall be in such amounts, contain such terms, be in such
forms and be for such periods as may be reasonably satisfactory to Lender. In
addition, all such insurance shall be payable to Lender as loss payee under a
“standard” or “New York” loss payee clause. Without limiting the foregoing,
Borrower will (a) keep all of its physical property insured with casualty or
physical hazard insurance on an “all risks” basis, with broad form flood and
earthquake coverages and electronic data processing coverage, with a full
replacement cost endorsement and an “agreed amount” clause in an amount equal to
100% of the full replacement cost of such property, and (b) maintain, in amounts
and with deductibles equal to those generally maintained by businesses engaged
in similar activities in similar geographic areas, general public liability
insurance against claims of bodily injury, death or property damage occurring,
on, in or about the properties of Borrower; and business interruption insurance.

 

(b)          Keep adequately insured at all times with financially sound and
reputable insurers all coverage required under applicable worker’s compensation
Laws.

 

(c)          Promptly deliver to Lender certificates of insurance in form and
content acceptable to Lender for any of those insurance policies required to be
carried by Borrower pursuant hereto which shall be in the name of Lender and its
successors and/or assigns, with appropriate endorsements designating Lender as
additional insured and mortgagee or lender loss payee, or both, as requested by
Lender.

 

(d)          Cause each policy of insurance to provide for at least thirty (30)
days prior written cancellation notice to Lender.

 

4.5           Litigation. Promptly notify Lender in writing as soon as Borrower
has knowledge thereof, and furnish or cause to be furnished to Lender such
information regarding the same as Lender may request of (a) the institution or
filing of any litigation, action, suit, claim or counterclaim to which Borrower
is a party, or (b) any administrative proceeding against, or investigation of,
Borrower by or before any regulatory body or governmental agency, in each case,
where (i) the outcome of such litigation, action, suit, claim, counterclaim,
administrative proceeding or investigation would reasonably be expected to have
a Material Adverse Effect, or (ii) such litigation, action, suit, claim,
counterclaim, administrative proceeding or investigation questions the validity
of this Agreement, the Note, or the Collateral Documents, or any action taken or
to be taken pursuant to the foregoing; and furnish or cause to be furnished to
Lender such information regarding the same as Lender may reasonably request.

 

4.6           Preservation of Existence, etc. (a) Preserve, renew and maintain
in full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization, (b) take all reasonable action to maintain
all Permits and all other rights, privileges, permits, licenses and franchises
necessary or desirable in the normal conduct of its business, except to the
extent that failure to do so would not reasonably be expected to have a Material
Adverse Effect; (c) preserve or renew any and all of its registered Intellectual
Property, the non-preservation of which would reasonably be expected to have a
Material Adverse Effect, and (d) preserve and renew grandparents.com and all
other domain name registrations and uniform resource locators, the
non-preservation of which would reasonably be expected to have a Material
Adverse Effect.

 

4.7           Books and Records. Maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of Borrower or such Subsidiary, as the case may be, and at
all times engage Eisner Amper LLC or another nationally recognized certified
public accountant reasonably satisfactory to the Lender as the independent
certified public accountants of Borrower and not permit more than thirty (30)
days to elapse between the cessation of such firm’s (or any successor firm’s)
engagement as the independent certified public accountants of Borrower and the
appointment in such capacity of a successor firm as shall be satisfactory to
Lender.

 

 16 

 

  

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

4.8           Material Contracts. Perform and observe all the terms and
provisions of each Material Contract to be performed or observed by it, maintain
each such Material Contract in full force and effect to the extent Borrower’s
actions thereunder are required to do so, enforce each such Material Contract in
accordance with its terms. No Material Contract shall be voided, terminated,
amended, restated, modified or otherwise altered without the prior written
consent of Lender, which consent shall not be unreasonably withheld, conditioned
or delayed so long as no Event of Default exists.

 

4.9           Inspection Rights. Permit representatives and independent
contractors of Lender to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its directors,
officers, managers and independent public accountants, all at the expense of
Lender and at such reasonable times during normal business hours up to two times
per calendar year, upon reasonable advance notice to Borrower; provided,
however, that when an Event of Default exists Lender (or any of its
representatives or independent contractors) may do any of the foregoing at the
expense of Borrower at any time and without advance notice.

 

4.10         Continue Business. Engage only in the business conducted by it on
the date of this Agreement and other businesses reasonably related or incidental
thereto.

 

4.11         Notices. Promptly notify Lender in writing of the occurrence of (a)
any Event of Default or any act or condition, which, the giving of notice or the
passage of time might become an Event of Default; and (b) any matter that has
resulted or could reasonably be expected to result in a Material Adverse Effect,
including (i) breach or non-performance of, or any default under, a Contractual
Obligation (including, without limitation, under any Material Contract) of
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws.

 

4.12         Environmental Compliance.

 

(a)          Except as, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect: (i) comply in all material respects with all
Environmental Laws; and (ii) not suffer, cause or permit any material disposal
of Hazardous Materials at any property owned, leased or operated by it or any
Subsidiary except in accordance with applicable Environmental Laws.

 

(b)          Upon discovery by Borrower, promptly notify Lender in the event of
the disposal of any Hazardous Substance in violation of any Environmental Law at
any property owned, leased or operated by Borrower, or in the event of any
material Release, or material threatened Release, of a Hazardous Substance in
violation of any Environmental Law from any such property.

 

(c)          Deliver promptly to Lender (i) copies of any documents received
from the United States Environmental Protection Agency or any state, county or
municipal environmental or health agency concerning a violation or alleged
violation by Borrower or any Subsidiary of any Environmental Law; and (ii)
copies of any documents submitted by Borrower to the United States Environmental
Protection Agency or any state, county or municipal environmental or health
agency concerning the operations of Borrower or any Subsidiary.

 

4.13         Further Assurances. Promptly upon request by Lender, (a) correct
any material defect or error that may be discovered in any Loan Document or in
the execution, acknowledgment, filing or recordation thereof, and (b) do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register any and all such further acts, deeds, certificates, assurances and
other instruments as Lender may reasonably require from time to time in order to
(i) carry out more effectively the purposes of the Loan Documents, (ii) to the
fullest extent permitted by applicable Law, subject Borrower’s or any of its
Subsidiaries’ properties, assets, rights or interests to the Liens now or
hereafter intended to be covered by any of the Collateral Documents, (iii)
perfect and maintain the validity, effectiveness and priority of any of the
Collateral Documents and any of the Liens intended to be created thereunder and
(iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more
effectively unto Lender the rights granted or now or hereafter intended to be
granted to Lender under any Loan Document or under any other instrument executed
in connection with any Loan Document to which Borrower or any of its
Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do
so.

 

 17 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

4.14         Common Stock Reserved.

 

(a)          At all times have authorized and will reserve and keep available,
solely for issuance and delivery to Lender, that number of shares of its common
stock that may be required from time to time for issuance and delivery to Lender
upon conversion of the indebtedness pursuant to the Note and in connection with
Lender’s rights under the Warrant Agreement (the “Conversion Shares”).

 

(b)          Take all necessary steps to ensure that such Conversion Shares,
when issued in accordance therewith, shall be duly and validly issued, shall be
fully paid and nonassessable, free and clear of any claim, lien, encumbrance, or
security interest of any kind whatsoever, and free from all preemptive rights of
any security holders of Borrower.

 

(c)          Take all action as may be necessary to assure that such Conversion
Shares may be issued and delivered as provided herein without violation of any
applicable Laws, or of any requirements, of any domestic securities exchange or
inter dealer quotation system upon which the common shares may be listed.

 

4.15         Notice of Registration Requirement. Upon conversion of the Note or
exercise of any Warrant, file a Schedule 13D or Schedule 13G under the
Securities Act of 1934 and take all other actions required by Section 13(d) of
the Securities Act of 1934 and Rule 13-3d thereunder, on Lender’s behalf, at
Lender’s sole cost and expense.

 

4.16         Covenant to Guarantee Obligations and Give Security.

 

(a)          Upon the formation or acquisition of any new direct or indirect
Subsidiary (other than [***]), Borrower shall, at the Borrower’s expense:

 

(i)          within 10 days after such formation or acquisition, cause such
Subsidiary, and cause each direct and indirect parent of such Subsidiary (if it
has not already done so), to duly execute and deliver to Lender a guaranty or
guaranty supplement, in form and substance reasonably satisfactory to the
Lender, guaranteeing Borrower’s obligations under the Loan Documents;

 

(ii)         within 10 days after such formation or acquisition, furnish to
Lender a description of the real and personal properties of such Subsidiary, in
detail reasonably satisfactory to Lender;

 

(iii)        within 15 days after such formation or acquisition, cause such
Subsidiary and each direct and indirect parent of such Subsidiary (if it has not
already done so) to duly execute and deliver to Lender deeds of trust, trust
deeds, deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of
trust, security agreement supplements, trademark assignments and other security
and pledge agreements, as specified by and in form and substance satisfactory to
Lender, securing payment of all the Obligations;

 

(iv)        within 30 days after such formation or acquisition, cause such
Subsidiary and each direct and indirect parent of such Subsidiary (if it has not
already done so) to take whatever action may be reasonably necessary or
advisable in the opinion of Lender to vest in Lender valid and subsisting Liens
on the properties to be subject to security interest delivered pursuant to this
Section 4.17, enforceable against all third parties in accordance with their
terms; and

 

 18 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

(v)         within 60 days after such formation or acquisition, deliver to the
Lender, upon the request of the Lender in its reasonable discretion, a signed
copy of a favorable opinion, addressed to the Lender, of counsel for Borrower
and its Subsidiaries acceptable to Lender as to such matters as Lender may
reasonably request.

 

(b)          Upon the acquisition of any property by Borrower or any Subsidiary
(other than [***]), whether real, personal or otherwise, if such property, in
the reasonable judgment of Lender, shall not already be subject to a perfected
first priority security interest in favor of Lender, then Borrower shall, at
Borrower’s expense:

 

(i)          within 10 days after such acquisition, furnish to Lender a
description of the property so acquired in detail reasonably satisfactory to
Lender; and

 

(ii)         within 15 days after such acquisition, cause Borrower or the
applicable Subsidiary to duly execute and deliver to Lender the appropriate
security and pledge instruments and agreement, as specified by and in form and
substance satisfactory to Lender, securing payment of all the Obligations and
constituting Liens on all such properties;

 

(iii)        within 30 days after such acquisition, cause Borrower or the
applicable Subsidiary to take whatever action may be necessary or advisable in
the opinion of Lender to vest in Lender valid and subsisting first priority
Liens on such property, enforceable against all third parties; and

 

(iv)        within 60 days after such acquisition, deliver to the Lender, upon
the request of Lender in its reasonable discretion, a signed copy of a favorable
opinion, addressed to the Lender, of counsel for Borrower and the Subsidiaries
acceptable to Lender as to such matters as the Lender may reasonably request.

 

(c)          Upon the request of Lender following the occurrence and during the
continuance of an Event of Default, Borrower shall, at Borrower’s expense:

 

(i)          within 10 days after such request, furnish to the Lender a
description of the real and personal properties of Borrower and the Subsidiaries
in detail satisfactory to Lender;

 

(ii)         within 15 days after such request, duly execute and deliver, and
cause each Subsidiary to duly execute and deliver, to Lender all security and
pledge instruments and agreements as specified by and in form and substance
satisfactory to Lender, securing payment of the Obligations and constituting
Liens on all such properties,

 

(iii)        within 30 days after such request, take, and cause each Subsidiary
to take, whatever action may be necessary or advisable in the opinion of Lender
to vest in Lender valid and subsisting first priority Liens on such property,
enforceable against all third parties;

 

(iv)        within 60 days after such acquisition, deliver to the Lender, upon
the request of Lender in its sole discretion, a signed copy of a favorable
opinion, addressed to the Lender, of counsel for Borrower and the Subsidiaries
acceptable to Lender as to such matters as the Lender may reasonably request;
and

 

(v)         Upon request of Lender at any time, promptly execute and deliver any
and all further instruments and documents and take all such other action as the
Lender may deem necessary or desirable in obtaining the full benefits of, or (as
applicable) in perfecting and preserving the Liens of, such security and pledge
instruments and agreements.

 

 19 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

ARTICLE II. Negative Covenants

 

Borrower, without the prior written consent of Lender, covenants and agrees (and
shall cause each Subsidiary to covenant and agree) that so long as any
Obligations (other than contingent indemnification obligations not then due and
owing) remain outstanding, it will not:

 

5.1           Borrowed Money. Except for Permitted Indebtedness, create, incur,
assume or suffer to exist any liability for borrowed money, purchase money
indebtedness or capitalized lease obligations (each such liability,
“Indebtedness”).

 

5.2           Encumbrances. Except for Permitted Liens, create, incur, assume or
suffer to exist any mortgage, lien, security interest, pledge or other
encumbrance on any of its property or assets, whether now owned or hereafter
owned or acquired.

 

5.3           Guaranties. Except for obligations with respect to Permitted
Indebtedness, become a guarantor, surety or otherwise liable for the debts or
other obligations of any other Person, whether by agreement to purchase the
indebtedness of any other Person, or agreement for the furnishing of funds to
any other Person through the purchase of goods, supplies or services (or by way
of stock purchase, capital contribution, advance or loan) for the purpose of
paying or discharging the indebtedness of any other Person, or otherwise, except
as an endorser of instruments for the payment of money deposited to its bank
account for collection in the ordinary course of business.

 

5.4           Sale of Assets. Dispose, convey, sell, transfer, lease, or sell
and lease back, all or any portion of its property, assets, or business to any
other Person except: (a) dispositions of obsolete or worn out property, whether
now owned or hereafter acquired, in the ordinary course of business;
(b) dispositions of inventory in the ordinary course of business; and (c)
dispositions of equipment in the ordinary course of business.

 

5.5           Acquisition or Merger. Merge, consolidate, dissolve, or liquidate
with or into any other Person or into any joint venture or partnership with any
other Person.

 

5.6           Ownership Interests. Purchase, redeem, acquire or retire any of
Borrower’s ownership interests whether such interests are in the form of stock,
partnership or limited partnership interests, limited liability company units or
other ownership interests.

 

5.7           Investments and Loans. Make or suffer to exist any Investments in,
or loans or advances to, any other Person except (a) deposits, prepayments,
advance payments or deposits against purchases made in the ordinary course of
Borrower’s regular business; (b) direct obligations to the United States of
America; (c) any existing Investments in, or existing advances to, any Affiliate
or Subsidiary; (d) temporary advances to employees to cover expenses incurred in
the ordinary course of Borrower’s business; (e) loans and advances to officers,
directors and employees on third-party, arms’ length terms and other
Investments, loans or advances, not to exceed $1,000,000.00 in the aggregate at
any time.

 

5.8           Dividends or Distributions. Except for Permitted Payments, pay,
make or declare, directly or indirectly, any dividends or distributions on
account of the capital stock of Borrower (including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such stock or other equity interest, or on
account of any return of capital), or incur any obligation (contingent or
otherwise) to do so.

 

5.9           Pricing of Securities. (a) Reduce the pricing of any existing
subscription, warrant, option, or other right, commitment or arrangement
(written or oral, or contingent or otherwise) to purchase or acquire any shares
of, or any security directly or indirectly convertible in or exchangeable or
exercisable for, any capital stock of Borrower or any Subsidiary without
Lender’s prior written consent; provided, however, that Lender shall not
withhold its consent to any such reduction in repricing so long as the pricing
for Lender’s conversion rights under the Note and the exercise price under the
Warrant are concurrently reduced by the same percentage pursuant to
documentation reasonably acceptable to Lender; and (b) issue, sell, grant or
enter into any new, replacement or supplemental subscription, warrant, option,
or other right, commitment or arrangement (written or oral, or contingent or
otherwise) to purchase or acquire any shares of, or any security directly or
indirectly convertible in or exchangeable or exercisable for, any capital stock
of Borrower or any Subsidiary that provides for pricing which is less than the
pricing for Lender’s conversion rights under the Note or the exercise price
under the Warrant; provided, however, that Lender shall not withhold its consent
to any of the foregoing so long as the pricing for Lender’s conversion rights
under the Note and the exercise price under the Warrant (as the case may be) are
concurrently reduced to the same pricing. For purpose of this Section 5.9, the
preferred equity offering by Borrower to Mel Harris and other accredited
investors shall be deemed “existing” within the meaning of this Section 5.9.

 

 20 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

5.10         Commissions. Engage, hire, employ or pay any brokers, investment
bankers, consultants or other professionals, or any director, officer or
employee of Borrower or any Subsidiary, or any other Person, in connection with
the solicitation, obtaining, raising, negotiating or borrowing of any loan,
credit facility, raising of capital or other financing or capital transaction,
including, without limitation, the Loan.

 

5.11         [***] Business.

 

(a)          Cause or permit [***] to acquire any property or asset (including
as holder of any loan) having a value in excess of $1,000,000, excluding any
deposit account exclusively holding member dues.

 

(b)          Cause or permit [***] to withhold its customer data with Borrower
at all times during the term of the Loan.

 

(c)          Cause or permit [***] to engage in any line of business or provide
any service, except to the extent such business or service is provided to
[***]’s customers indirectly by Borrower or another Subsidiary, acting through
contractual agreement with [***].

 

ARTICLE III. Default

 

6.1           Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default (individually, “Event of
Default”, or, collectively, “Events of Default”):

 

(a)          Nonpayment. Borrower or any Guarantor fails to pay within three (3)
Business Days of when due (pursuant to the terms of the Note or this Agreement)
whether by acceleration or otherwise (i) principal of the Loan or (ii) interest
on, or any fee or premium provided for hereunder or in the Note or any other
Loan Document, provided, such three (3) Business Day grace period shall not be
applicable to the payment required on the Maturity Date.

 

(b)          Negative Covenants. Borrower or any Subsidiary fails to perform,
observe of comply with any of the covenants or agreements contained in Article V
of this Agreement.

 

(c)          Other Covenants. Borrower or any Subsidiary fails to perform,
observe or comply with any of the covenants or agreements contained in this
Agreement, other than in Article V, or in any other agreement with Lender or any
of Lender’s Affiliates (whether or not related to the Loan), which is not
remedied within thirty (30) days after occurrence thereof.

 

(d)          Voluntary Insolvency Proceedings. Borrower or any Subsidiary (i)
files a petition or request for liquidation, reorganization, arrangement,
adjudication as a bankrupt, or other similar relief under the bankruptcy,
insolvency or similar Laws of the United States of America or any state or
territory thereof or any foreign jurisdiction, now or hereafter in effect; (ii)
consents to the filing of a petition in any bankruptcy, liquidation,
reorganization or insolvency proceeding; (iii) makes a general assignment for
the benefit of creditors; (iv) consents to the appointment of a receiver or
trustee for Borrower or any Subsidiary or any of Borrower’s or any Subsidiary’s
assets, including, without limitation, the appointment of or taking possession
by a “custodian” as defined in the federal Bankruptcy Code; (v) makes any, or
sends notice of any intended, bulk sale; or (vi) executes a consent to any other
type of insolvency proceeding (under the federal Bankruptcy Code or otherwise)
or any formal or informal proceeding for the dissolution or liquidation of, or
settlement of claims against or winding up of affairs of, Borrower or any
Subsidiary.

 

 21 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

(e)          Involuntary Insolvency Proceedings. The appointment of a receiver,
trustee, custodian or officer performing similar functions for Borrower or any
Subsidiary or any of Borrower’s or any Subsidiary’s assets, including, without
limitation, the appointment of or taking possession by a “custodian” as defined
in the federal Bankruptcy Code; or the filing against Borrower or any Subsidiary
of a request or petition for liquidation, reorganization, arrangement,
adjudication as a bankrupt or other relief under the bankruptcy, insolvency or
similar Laws of the United States of America or any state or territory thereof
or any foreign jurisdiction, now or hereafter in effect; or the institution
against Borrower or any Subsidiary of any other type of insolvency proceeding
(under the federal Bankruptcy Code or otherwise) or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims against
or winding up of affairs of Borrower or any Subsidiary, and the failure to have
such appointment vacated or such petition or proceeding dismissed within 60 days
after such appointment, filing or institution.

 

(f)          Representations. Any certificate, statement, representation,
warranty or financial statement furnished by or on behalf of Borrower or any
Subsidiary pursuant to or in connection with this Agreement (including, without
limitation, representations and warranties contained herein), the Note, the
Warrant Agreement, any other Loan Document, or as an inducement to Lender or any
of Lender’s Affiliates to enter into this Agreement or the Note proves to have
been false in any material respect at the time as of which the facts therein set
forth were certified, or to have omitted any material contingent or unliquidated
liability or claim against Borrower or any Subsidiary, or on the date of the
execution of this Agreement there is any materially adverse change in any of the
facts disclosed by any such statement or certificate, which change is not
disclosed by Borrower or any Subsidiary to Lender at or prior to the time of
such execution.

 

(g)          Other Indebtedness and Agreements. Borrower or any Subsidiary fails
to pay any Indebtedness with principal amount in excess of $100,000 owing by
Borrower or any Subsidiary when due (or, if permitted by the terms of the
applicable document, within any applicable grace period), whether such
Indebtedness shall become due by scheduled maturity, by required prepayment, by
acceleration, by demand or otherwise, or Borrower or any Subsidiary fails to
perform or observe any material term, covenant or agreement on its part to be
performed under any agreement or instrument (other than this Agreement)
evidencing or securing or relating to any such Indebtedness owing by Borrower or
any Subsidiary when required to be performed if the effect of such failure is to
permit the holder to accelerate the maturity of such Indebtedness.

 

(h)          Judgments. Any judgment or judgments in excess of $100,000 (other
than any judgment for which Borrower or any Subsidiary is insured) against
Borrower or any Subsidiary remain unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of sixty (60) days or more.

 

(i)          Pension Default. Any Reportable Event which Lender determines
constitutes grounds for the termination of any Pension Plan by the Pension
Benefit Guaranty Corporation (“PBGC”) or for the appointment by an appropriate
United States district court of a trustee to administer any Pension Plan occurs
and continues for 30 days or more after written notice thereof to Borrower or
any Subsidiary by Lender; or the PBGC institutes proceedings to terminate any
Pension Plan or to appoint a trustee to administer any Pension Plan; or a
trustee is appointed by an appropriate United States district court to
administer any Pension Plan; or any Pension Plan is terminated; or Borrower or
any Subsidiary withdraws from a Pension Plan in a complete withdrawal or a
partial withdrawal; or Borrower or any Subsidiary fails to pay to any Pension
Plan any contribution which it is obligated to pay under the terms of such plan
or any agreement, or which is required to meet statutory minimum funding
standards of Section 412 of the Internal Revenue Code or Section 303 of ERISA.

 

 22 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

(j)          Challenge to Collateral Documents. Borrower or any Subsidiary,
directly or indirectly, challenges, or indicates its intention to challenge, the
validity and binding effect of any provision of the Note, the Collateral
Documents or any Warrant Document, for any reason (except to the extent
permitted by their express terms) cease to be effective or cease to have the
priority lien position required by the terms thereof or by this Agreement or the
collateral is no longer available, for any reason.

 

(k)          Change of Control. There is a Change of Control of Borrower.

 

(l)          Termination of Business. Borrower or any Loan Party terminates its
legal existence or its business or ceases to operate as a going concern.

 

(m)          Material Adverse Change. Any event or condition in Borrower’s or
any Subsidiary’s business, operations or financial condition occurs or exists
that has, or in Lender’s judgment, is likely to have, a Material Adverse Effect.

 

6.2           Effects of an Event of Default.

 

(a)          Upon the occurrence and continuation of one or more Events of
Default (except a default under either Section 6.1(d) or 6.1(e) hereof), Lender
shall have the right to declare the principal of the Loan then outstanding to be
immediately due and payable, together with all interest thereon and fees and
expenses accruing under this Agreement without presentation, demand or further
notice of any kind to Borrower or any Subsidiary and, if applicable, Borrower
shall no longer be permitted to obtain the Additional Advance.

 

(b)          Upon the occurrence and continuation of one or more Events of
Default under Section 6.1(d) or 6.1(e) hereof, Lender’s commitments and other
obligations hereunder shall be cancelled immediately, automatically and without
notice, and the Loan shall become immediately due and payable without
presentation, demand or notice of any kind to Borrower or any Subsidiary.

 

(c)          Borrower, for itself and on behalf of each of its Subsidiaries,
hereby waives as a defense to the nonperformance of any obligations under the
Loan Documents, the occurrence of unforeseen market conditions such as the
dysfunctionality or seizure of the credit markets.

 

6.3           Remedies. Upon the occurrence and during the continuance of any
Event of Default or upon any termination of this Agreement as a result of an
Event of Default, then Lender shall have all of its rights under this Agreement,
the Note, the other Loan Documents or otherwise under Law. In addition to, and
without limitation of, any rights of Lender under applicable Law, if any Event
of Default occurs. Lender may, in its sole discretion, exercise alternately or
cumulatively any of the remedies available hereunder or under any other Loan
Document securing the indebtedness, or at law or equity. The failure to exercise
one or more of such remedies upon the happening of an Event of Default shall not
constitute a waiver of the right to exercise the same at any subsequent time in
respect of the same Event of Default or any other Event of Default. Neither the
acceptance by Lender of any payment hereunder which is less than payment in full
of all amounts due and payable at the time of such payment, or any negotiation
or discussion with Borrower or any Subsidiary, shall constitute a waiver of the
right to exercise one or more of such remedies at that time or at any subsequent
time or nullify any prior exercise of any remedy, except as and to the extent
otherwise provided by Law.

 

ARTICLE II. Expenses and Indemnification

 

7.1           Reimbursement. Borrower shall reimburse Lender promptly upon
request by Lender for all of its reasonable expenses including, without
limitation, counsel fees and expenses (whether outside or internal), filing fees
and recording fees incurred in connection with this Agreement and with any
indebtedness subject hereto, for any taxes which Lender or any of Lender’s
Affiliate may be required to pay in connection with the execution and delivery
of this Agreement, the Note, the Collateral Documents, any other Loan Document
and/or the Warrant Documents for the preparation of any modifications,
amendments or renewals thereof, and for any expenses, including counsel fees and
expenses (whether outside or internal) incident to the enforcement of any
provision of this Agreement, the Note, the Collateral Documents, any other Loan
Document and/or the Warrant Documents, including any filing under applicable
Laws relating to or resulting from the ownership (or potential ownership) of
shares of common stock in Borrower and also including any filing made on
Schedule 13D or Schedule 13G promulgated by the U.S. Securities and Exchange
Commission or otherwise in connection with Section 13(d) of the Securities Act
of 1934 and Rule 13-3d thereunder. Notwithstanding anything to the contrary
contained herein, Borrower shall not be required to pay more than $75,000 of
Lender’s legal fees (of which $25,000 has been previously deposited with counsel
for the Lender) incurred in connection with the documentation and negotiation of
the Loan and the execution and delivery of the Loan Documents.

 

 23 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

7.2           Indemnity. Borrower shall indemnify Lender and its Affiliates,
directors, officers, employees, agents and advisors (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses (including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by
Borrower or any Subsidiary arising out of, in connection with, or as a result of
(i) the execution or delivery of this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or thereunder, the
consummation of the transactions contemplated hereby or thereby, or the
administration of this Agreement and the other Loan Documents, (ii) the Loan or
the use or proposed use of the proceeds therefrom, (iii) the Warrant Documents,
(iv) any actual or alleged presence or release of Hazardous Materials on or from
any property owned or operated by Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to Borrower or any of its
Subsidiaries, or (v) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory, whether brought by a third party or by Borrower or any
Subsidiary, and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
(A) are determined by a court of competent jurisdiction by final and
non-appealable judgment to have resulted from the gross negligence, bad faith or
willful misconduct of such Indemnitee or (B) result from a claim brought by
Borrower or any Subsidiary against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if Borrower
or any Subsidiary has obtained a final and non-appealable judgment in its favor
on such claim as determined by a court of competent jurisdiction.

 

ARTICLE III. Other

 

8.1           Notices. Any notice required or permitted to be given under this
Agreement or any other Loan Document shall be in writing and either shall be
sent by overnight courier service, personally delivered, or sent by U.S.
certified or registered mail, to a representative of the receiving party. All
such communications shall be sent, delivered or mailed, addressed to the party
for whom it is intended at its address set forth below.

 

If to Borrower or any Subsidiary:

Grandparents.com, Inc.
589 Eighth Avenue, 6th floor
New York New York 10018
Facsimile: (646) 654-6106
Attention: Matthew Schwartz, VP & Chief

 

Compliance Officer

    If to Lender: VB Funding, LLC
190 Farmington Avenue
Farmington, CT 06032
Facsimile: (860) 676-8617
Attention: VJ Dowling

 

Notices and other communications which are sent by overnight courier service or
U.S. certified or registered mail or personally delivered shall be deemed to
have been given when delivered to the designated address of the representative
of the receiving party. Any party may designate a change of address within the
United States of America by written notice to the other parties by giving at
least ten (10) days prior written notice of such change of address.

 

 24 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

8.2           Counterparts; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. Delivery of an executed counterpart of a
signature page of this Agreement by electronic mail or telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.

 

8.3           Amendments and Waivers. No modification, rescission, waiver,
release or amendment of any provision of this Agreement shall be made except by
another written agreement subscribed by duly authorized officers of Borrower and
Lender.

 

8.4           Delays and Omissions. No course of dealing and no delay or
omission by Lender in exercising any right or remedy hereunder or with respect
to any indebtedness of Borrower to Lender shall operate as a waiver thereof or
of any other right or remedy, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other
right or remedy. Lender may remedy any default by Borrower hereunder or with
respect to any other person, firm or corporation in any reasonable manner
without waiving the default remedied and without waiving any other prior or
subsequent default by Borrower and shall be reimbursed for its expenses in so
remedying such default. All rights and remedies of Lender hereunder are
cumulative.

 

8.5           Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Lender, Borrower and their respective successors and
assigns, except that (a) Borrower may not assign or transfer any of its rights
hereunder without the prior written consent of Lender, and (b) provided no
Default or Event of Default has occurred and is continuing, Lender may not
assign or transfer any of its rights hereunder to a Person, other than an
Affiliate of Lender, without the prior written consent of Borrower. Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto and their respective successors and
assigns permitted hereby) any legal or equitable right, remedy or claim under or
by reason of this Agreement.

 

8.6           Entire Understanding. This Agreement, the Collateral Documents and
any other Loan Documents represent the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof and
supersede all prior negotiations and writings between the parties, including
specifically, but without limitation, the application for the Loan, any
commitment letter and correspondence related thereto.

 

8.7           Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

8.8           Force Majeure. Borrower agrees that Lender shall not be liable and
Borrower will indemnify and hold Lender harmless from and against any error,
failure or delay in the performance of any of Lender’s obligations under this
Agreement which cause is beyond the control of Lender, including, without
limitation, any natural disaster, fire, flood, storm, war, strike, civil unrest,
terrorism, error in inoperability of communication equipment or links or power
supply, compliance with Laws or governmental order, direction of a jurisdiction
or any other circumstances beyond the control of Lender or actions taken by
Lender which were reasonably believed by Lender to be taken pursuant to this
Agreement.

 

8.9           Governing Law. THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE
OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON,
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OTHER THAN
NEW YORK GENERAL OBLIGATIONS LAW 5 1401 AND 5 1402.

 

 25 

 

  

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

8.10         Inconsistent Provisions. The terms of this Agreement and any
related agreements, instruments or other documents, including, without
limitation, the Note and the Collateral Documents, shall be cumulative except to
the extent that they are specifically inconsistent with each other, in which
case the terms of this Agreement shall prevail.

 

8.11         Limitation of Liability. To the fullest extent permitted by
applicable Law, Borrower shall not assert, and hereby waives any claim against
Lender, on any theory of liability, for special, indirect, consequential or
punitive damages (but excluding direct or actual damages) arising out of, in
connection with or as a result of, this Agreement, any related Loan Documents,
the transactions contemplated hereby or thereby or any Loan or the use of the
proceeds.

 

8.12         Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same agreement. Borrower agrees that in
any legal proceeding, a copy of this Agreement kept in Lender’s course of
business may be admitted into evidence as an original.

 

8.13         Submission to Jurisdiction. BORROWER IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR
PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN
CONTRACT OR IN TORT OR OTHERWISE, AGAINST LENDER OR ANY RELATED PARTY IN ANY WAY
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS RELATING HERETO, IN ANY FORUM
OTHER THAN THE COURTS OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN
NEW YORK COUNTY IN THE BOROUGH OF MANHATTAN AND OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS
TO THE EXCLUSIVE (SUBJECT ONLY TO THE LAST SENTENCE OF THIS SECTION 8.14)
JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION, LITIGATION OR PROCEEDING WILL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS AGREEMENT WILL AFFECT ANY RIGHT THAT LENDER MAY OTHERWISE
HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST
BORROWER OR ANY OF ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.

 

8.14         Waiver of Venue. BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT
REFERRED TO IN SECTION 8.13. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.

 

8.15         Service of Process. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES HEREIN. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

 26 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

8.16         Waiver of Jury Trial. 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 AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). BORROWER (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF LENDER OR ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER OR SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

8.17         Waiver of Consequential Damages, Etc.. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, BORROWER SHALL NOT ASSERT, AND BORROWER HEREBY
WAIVES, ANY CLAIM AGAINST LENDER OR ANY OTHER INDEMNITEE, ON ANY THEORY OF
LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED
TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT
OF, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. NO
INDEMNITEE SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY UNINTENDED
RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH
TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS IN
CONNECTION WITH THIS NOTE OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

8.18         Confidentiality. All references to Lender or its Affiliates
contained in any press release, advertisement, promotional material or other
information prepared by Borrower or any Subsidiary must be approved in writing
by Lender in advance of issuance and all references to Borrower or its
Affiliates contained in any press release, advertisement, promotional material
or other information prepared by Lender must be approved in writing by Borrower
in advance of issuance. Notwithstanding the foregoing, each of Borrower and
Lender retains the right in its sole discretion to disclose this Agreement
(including its terms and conditions), as well as the identity of the Borrower or
Lender, respectively, as needed to comply with its obligations under applicable
Laws, including stock exchange regulations.

 

8.19         Amendment and Restatement. This Agreement and the other Loan
Documents amend and restate in their entireties all notes, security agreements
and other documents, instruments and other agreements executed in connection
with the Bridge Loan. The parties hereto acknowledge and agree that (a) this
Agreement, the Note and the other Loan Documents do not constitute a novation,
payment and reborrowing or termination of the obligations evidenced by the
documents, instruments and other agreements evidencing and governing the Bridge
Loan; (b) the Bridge Loan has not become due and payable prior to the date
hereof as a result of the amendment and restatement thereof; (c) the obligations
in respect of the Bridge Loan are in all respects continuing with only the terms
thereof being amended and restated as provided in this Agreement and the other
Loan Documents; and (d) upon the effectiveness of this Agreement, the Bridge
Loan will become part of the Loan on the terms and conditions set forth
hereunder and the other Loan Documents, and amend and restate such agreements
executed in connection with the Bridge Loan.

 

[Signature Page Follows]

 

 27 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to be
signed by their duly authorized officers as of the date first written above.

 

  Borrower:       GRANDPARENTS.COM, INC         By: /s/ Steve Leber     Name:
Steve Leber     Title: CEO         Lender:       VB FUNDING, LLC         By: /s/
Vincent J. Dowling, Jr.     Name: Vincent J. Dowling, Jr.     Title: Managing
Member      

 

CREDIT AGREEMENT

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

THE UNDERSIGNED JOINS THIS CREDIT AGREEMENT FOR THE SOLE PURPOSE OF GUARANTEEING
LENDER’S OBLIGATION TO FUND THE ADDITIONAL ADVANCE PURSUANT TO SECTION 2.3 OF
THIS CREDIT AGREEMENT, UPON BORROWER’S SATISFACTION OF ALL CONDITIONS PRECEDENT
THERETO, AND FOR NO OTHER PURPOSE.

 

/s/ [***]              

[***]

 

CREDIT AGREEMENT

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

Exhibits

 

Exhibit A - Form of Loan Notice

 

Schedules

 

Schedule 1.1– Existing Indebtedness     Schedule 1.2 – Existing Liens    
Schedule 3.8(b) – List of Stock Options and Warrants     Schedule 3.9 – List of
Litigation and Other Actions     Schedule 3.11(b) – List of Liens     Schedule
3.11(d) – List of Leased Real Property

 

Schedule 3.12 – Environmental Claims     Schedule 3.13 – Insurance

 

Schedule 3.15(a) – List of Subsidiaries     Schedule 3.15(b) – List of
non-Subsidiary Equity Investments     Schedule 3.19(a) – List of Intellectual
Property     Schedule 3.19(b) – List of Permits

 

Schedule 3.25 – List of Bank Accounts     Schedule 3.27 – List of Material
Contracts

 

Schedule 4.2 – Promissory Notes to be Repaid with Loan Proceeds

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

EXHIBIT A

 

FORM OF LOAN NOTICE

 

[LETTERHEAD OF BORROWER]

 

Date:    

 

To:VB Funding, LLC

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of July ___, 2015
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), between Grandparents.com, Inc., a Delaware corporation
(“Borrower”), and VB Funding, LLC.

 

Borrower hereby requests the Additional Advance:

 

1.On [________] (a Business Day); and

 

2.In the amount of $______________; and

 

3.The proceeds of which are requested to be credited to the following account of
Borrower:

 

Bank:     Address:     ABA:     For Credit To:     Account No.:    

 

Borrower hereby represents and warrants that the conditions specified in Section
2.4 shall be satisfied on and as of the date of such borrowing.

 

Borrower represents and warrants that each of the representations and warranties
set forth in Article III or any other Loan Document was true and correct as of
the date hereof, and the undersigned hereby remakes and reaffirms such
representations and warranties as of the date hereof. To the extent any such
representation or warranty specifically refers to an earlier date, then for
purposes of this certificate, such representation and warranty shall be deemed
to refer to the date hereof (provided, the representations and warranties
contained in subsection (a) of Section 3.8 shall be deemed to refer to the most
recent statements furnished pursuant to clause (a), respectively, of Section
4.1).

 

  GRANDPARENTS.COM, INC.       By:       Name:     Title:

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

Schedule 1.1 - List of Indebtedness and Liabilities

 

Date  Unsecured Note Holder  Maturity  Principle
Balance as 
of 3-31-14   Int.
 Rate   Outstanding
Principal &
Cummulative 
Interest @
6/30/15   Notes/
Comments 2/23/2012  Leber Bernstein Group LLC  Contingent  $612,500    5% 
$715,115   Note 1 2/23/2012  Meadows Capital LLC  Contingent  $308,914    5% 
$351,671   Note 1 2/23/2012  Steve Leber  Contingent  $78,543    5%  $91,702  
Note 1 2/26/2013  Steve Leber  6/30/2015  $100,000    10%  $123,342   Note 2
2/26/2013  Mel Harris  6/30/2015  $100,000    10%  $123,342   Note 2 2/26/2013 
Meadows Capital LLC  6/30/2015  $100,000    10%  $123,342   Note 2 2/5/2015  Lee
Lazarus  Demand  $50,000    10%  $51,986   Note 2 2/5/2015  Steve Leber  Demand 
$50,000    10%  $51,986   Note 2 4/28/2015  Mel Harris  Various  $450,000    5% 
     Note 3 5/18/2015  VB Funding LLC  5/18/2016  $1,000,000    7.5%       Note
4

 

Note 1:Maturity is when Company has EBITDA equal to or greater than $2.5 million
or completes an equity or debt financing with gross proceeds to the Company of
at least $10 Million.

 

Note 2:To be repaid from proceeds of currently contemplated transaction

 

Note 3:Consists of two $25,000 demand notes as well as a $150,000 & $250,000
loan to the Company. The lender has agreed to convert the aggregate ($450,000)
into a preferred stock offering which, if it ocurs, shall cancel the $450K
indebtedness.

 

Note 4:Convertible Promissory Note

 

Schedule 1.2 - Existing Liens

 

None.

 

Schedule 3.8(b) - List of Stock Options and Warrants

 

Warrant or Option  Holder  Date of
Issuance  Expiration
Date  No. of
Common
Shares for
Fully
Vested
Options/
Warrants   Current
Exercise
Price  Warrants  ALAN R. ORTEGA  7/16/2012  2/23/2017   3,762   $0.23  Warrants 
BMA SECURITIES, INC.  7/16/2012  2/23/2017   338,312   $0.23  Warrants  CHRISTOS
ANGELO KALATOUDIS  7/16/2012  2/23/2017   165,514   $0.23  Warrants  DAVID
EISENBERG  7/16/2012  2/23/2017   60,186   $0.23  Warrants  GEORGE BELESIS 
7/16/2012  2/23/2017   67,710   $0.23  Warrants  JEFFREY A. SILVERMAN 
7/16/2012  2/23/2017   500,000   $0.23 

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

Warrants  JOHN BELESIS  7/16/2012  2/23/2017   92,537   $0.23  Warrants  JOHNNIE
M. JONES  7/16/2012  2/23/2017   15,047   $0.23  Warrants  JON P. PECORELLA 
7/16/2012  2/23/2017   22,570   $0.23  Warrants  JOSEPH CONIGLIO  7/16/2012 
2/23/2017   3,010   $0.23  Warrants  RON CANTALUPO  7/16/2012  2/23/2017 
 67,710   $0.23  Warrants  SCOTT J. LEVINE  7/16/2012  2/23/2017   37,617  
$0.23  Warrants  David L. Feavel  12/7/2012  12/7/2017   250,000   $0.50 
Warrants  Nicholas Krafft  12/7/2012  12/7/2017   25,000   $0.50  Warrants 
Richard Cohen  12/14/2012  12/14/2017   150,000   $0.50  Warrants  Phil Meisel 
12/29/2012  12/19/2017   125,000   $0.25  Warrants  Deepak Chopra, LLC 
1/1/2013  12/31/2016   1,500,000   $0.30  Warrants  Mel Harris Declaration of
Trust  1/8/2013  1/8/2018   3,000,000   $0.25  Warrants  Nicholas Krafft 
1/29/2013  1/29/2018   25,000   $0.50  Warrants  Jeffrey Wasserman  1/31/2013 
1/31/2018   500,000   $0.60  Warrants  Mel Harris Declaration of Trust 
1/31/2013  1/31/2018   500,000   $0.25  Warrants  Michael Q. Egan  2/1/2013 
2/1/2018   25,000   $0.50  Warrants  Arlene Wildenburg  2/26/2013  2/26/2018 
 25,000   $0.25  Warrants  Dr. Robert Cohen  2/26/2013  2/26/2018   240,000  
$0.25  Warrants  Dr. Robert Cohen  2/26/2013  2/26/2018   100,000   $0.25 
Warrants  Jan Stein  2/26/2013  2/26/2018   25,000   $0.25  Warrants  Joseph
Bernstein  2/26/2013  2/26/2018   380,000   $0.25  Warrants  Joseph Bernstein 
2/26/2013  2/26/2018   100,000   $0.25  Warrants  Steve Leber  2/26/2013 
2/26/2018   380,000   $0.25  Warrants  Steve Leber  2/26/2013  2/26/2018 
 100,000   $0.25  Warrants  David Eisenberg  3/16/2013  2/23/2017   250,000  
$0.23  Warrants  Demetrios Mallios  3/16/2013  2/23/2017   51,373   $0.23 
Warrants  Eric Mirman  3/16/2013  2/23/2017   51,373   $0.23  Warrants  Erik
Anderson  3/16/2013  2/23/2017   10,000   $0.23  Warrants  Jacqueline Senn 
3/16/2013  2/23/2017   10,000   $0.23  Warrants  John Ward  3/16/2013 
2/23/2017   10,000   $0.23  Warrants  Maria Cummings  3/16/2013  2/23/2017 
 20,000   $0.23  Warrants  Michael Egan  3/16/2013  2/23/2017   5,000   $0.23 
Warrants  Robert Bursky  3/16/2013  2/23/2017   26,805   $0.23  Warrants  Russ
Steward  3/16/2013  2/23/2017   282,554   $0.23  Warrants  Stacey Thomson 
3/16/2013  2/23/2017   25,687   $0.23  Warrants  Theresa Montuori  3/16/2013 
2/23/2017   5,000   $0.23  Warrants  Thomas Pinou  3/16/2013  2/23/2017 
 25,687   $0.23  Warrants  Leon Frenkel  4/1/2013  4/1/2018   150,000   $0.25 
Warrants  Mel Harris Declaration of Trust  4/2/2013  4/2/2018   500,000   $0.25 
Warrants  Alla Pasternack  4/4/2013  4/4/2018   50,000   $0.25  Warrants 
Gilbert Insurance Services, Inc 401K Profit Sharing Plan  4/26/2013  4/26/2018 
 250,000   $0.25  Warrants  Robert Frome  5/6/2013  5/6/2018   25,000   $0.25 

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

Warrants  Robert Frome  5/20/2013  5/20/2018   25,000   $0.25  Warrants  Feliks
Frenkel  5/30/2013  5/30/2018   60,000   $0.25  Warrants  Grandparents Capital
LLC  5/31/2013  5/31/2018   1,002,800   $0.25  Warrants  Michael Egan 
5/31/2013  5/31/2018   50,000   $0.25  Warrants  Steve Gidumal  6/17/2013 
6/17/2018   125,000   $0.25  Warrants  Aurora Frid  6/20/2013  6/20/2018 
 40,000   $0.30  Warrants  Clare Davis  6/20/2013  6/20/2018   50,000   $0.30 
Warrants  Deborah Long  6/20/2013  6/20/2018   75,000   $0.30  Warrants 
Gretchen Schmoker  6/20/2013  6/20/2018   36,000   $0.30  Warrants  Joseph
Bernstein  6/20/2013  6/20/2018   1,000,000   $0.25  Warrants  L&M Medical
Ventures LLC  6/20/2013  6/20/2018   25,000   $0.25  Warrants  Lee Lazarus 
6/20/2013  6/20/2018   1,000,000   $0.25  Warrants  Leon Bernstein  6/20/2013 
6/20/2018   48,000   $0.30  Warrants  Marion Owens  6/20/2013  6/20/2018 
 38,400   $0.30  Warrants  Raphael Bernstein  6/20/2013  6/20/2018   12,000  
$0.30  Warrants  Robert Cohen  6/20/2013  6/20/2018   1,000,000   $0.25 
Warrants  Steve Leber  6/20/2013  6/20/2018   1,000,000   $0.25  Warrants 
Yitzchok Frid  6/20/2013  6/20/2018   48,000   $0.30  Warrants  Matthew Dontzin 
6/25/2013  6/25/2018   250,000   $0.25  Warrants  David Kikumoto  7/1/2013 
7/1/2018   100,000   $0.25  Warrants  Lauren Busch  7/1/2013  7/1/2018 
 50,000   $0.25  Warrants  Joseph Rutledge  7/12/2013  7/12/2018   15,000  
$0.14  Warrants  Thomas K. Ireland Revocable Trust  7/22/2013  7/22/2018 
 50,000   $0.25  Warrants  Thomas K. Ireland Revocable Trust  7/22/2013 
7/22/2018   50,000   $0.25  Warrants  Thomas K. Ireland Revocable Trust 
7/22/2013  7/22/2018   50,000   $0.25  Warrants  Thomas K. Ireland Revocable
Trust  7/22/2013  7/22/2018   50,000   $0.25  Warrants  Thomas K. Ireland
Revocable Trust  7/22/2013  7/22/2018   50,000   $0.25  Warrants  Mel Harris
Declaration of Trust  7/30/2013  7/30/2018   500,000   $0.25  Warrants  Chris
Burns  8/7/2013  8/7/2018   35,000   $0.25  Warrants  Ark Interests LLC 
8/22/2013  8/22/2018   150,000   $0.25  Warrants  Segal Family Trust  8/22/2013 
8/22/2018   150,000   $0.25  Warrants  Whitman Family Trust  8/22/2013 
8/22/2018   150,000   $0.25  Warrants  Todd J. Phillips Living Trust  8/27/2013 
8/27/2018   100,000   $0.25  Warrants  Kohan 2001 Trust  8/28/2013  8/28/2018 
 100,000   $0.25  Warrants  Edward Stone  8/29/2013  2/26/2018   50,000   $0.25 
Warrants  Gilbert Insurance Services, Inc 401K Profit Sharing Plan  9/3/2013 
9/3/2018   100,000   $0.25  Warrants  Segal Family Trust  9/3/2013  9/3/2018 
 100,000   $0.25  Warrants  Scott S. Rosenblum  9/4/2013  12/19/2017   100,000  
$0.25  Warrants  Patty & Ed Goren  9/12/2013  9/12/2018   100,000   $0.25 
Warrants  Schreier Family Trust  9/16/2013  9/16/2018   50,000   $0.25 
Warrants  Weil Living Trust  9/17/2013  9/17/2018   50,000   $0.25 

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

Warrants  Michael D. Karlin Revocable Trust  10/4/2013  10/4/2018   100,000  
$0.25  Warrants  Ackerman Family Trust  10/9/2013  10/9/2018   100,000   $0.25 
Warrants  Lloyd Moriber  10/11/2013  10/11/2018   100,000   $0.25  Warrants 
Matthew Schwartz  10/14/2013  10/14/2018   100,000   $0.16  Warrants 
Grandparents Capital LLC  10/21/2013  10/21/2018   100,000   $0.25  Warrants 
Mel Harris Declaration of Trust  10/21/2013  10/21/2018   500,000   $0.25 
Warrants  Nigel Norton  11/11/2013  11/11/2018   100,000   $0.25  Warrants 
Irwin Nachimson  11/14/2013  11/14/2018   100,000   $0.25  Warrants  Dennis
Martin  12/12/2013  12/12/2018   15,000   $0.25  Warrants  Derek Bronston 
12/12/2013  12/12/2018   15,000   $0.25  Warrants  Sean Mosher-Smith 
12/12/2013  12/12/2018   15,000   $0.25  Warrants  Scott S. Rosenblum 
12/13/2013  12/13/2018   50,000   $0.25  Warrants  Lloyd Moriber  12/18/2013 
12/18/2018   100,000   $0.25  Warrants  Gerald Robins  12/23/2013  12/23/2018 
 100,000   $0.25  Warrants  Arnold Lieber  1/13/2014  1/13/2019   50,000  
$0.25  Warrants  Mel Harris Declaration of Trust  1/13/2014  1/13/2019 
 300,000   $0.25  Warrants  Howard Michaels  2/14/2014  2/14/2019   300,000  
$0.25  Warrants  Kathryn Ann Chesler Revocable Trust  2/19/2014  2/19/2019 
 50,000   $0.25  Warrants  Rudi Tanzi  2/19/2014  2/19/2019   160,000   $0.25 
Warrants  Ira Elegant  2/27/2014  2/27/2019   25,000   $0.25  Warrants  Richard
Friedman  3/10/2014  3/10/2019   100,000   $0.25  Warrants  Michael Holtz 
3/12/2014  3/12/2019   150,000   $0.25  Warrants  Michael L. Landa Intervivos
Revocable Trust (dtd 10/13/1998 Michael L. Landa as Trustee)  3/12/2014 
3/12/2019   100,000   $0.25  Warrants  Stanley Zaslow  3/12/2014  3/12/2019 
 100,000   $0.25  Warrants  F&MWL Enterprises, LLC (M.Walter Levine)  3/13/2014 
3/13/2019   50,000   $0.25  Warrants  Marvin Rosen  3/13/2014  3/13/2019 
 50,000   $0.25  Warrants  Thomas Kaplan  3/13/2014  3/13/2019   10,000   $0.25 
Warrants  Matthew Schwartz  3/15/2014  3/15/2019   300,000   $0.31  Warrants 
Arthur Goldberg  3/16/2014  3/16/2019   50,000   $0.25  Warrants  Jay Zises 
3/17/2014  3/17/2019   100,000   $0.25  Warrants  Avi Mirman  3/20/2014 
2/23/2017   1,886,805   $0.23  Warrants  G Tyler Rennels  3/20/2014  2/23/2017 
 250,000   $0.23  Warrants  Karen Kang Ting  3/20/2014  2/23/2017   50,000  
$0.23  Warrants  The Archer Financial Group Inc., 401K Plan  4/1/2014  4/1/2019 
 100,000   $0.25  Warrants  Irving Lee Zackheim  4/7/2014  4/7/2019   250,000  
$0.25  Warrants  Robert Frome  4/7/2014  4/7/2019   50,000   $0.25  Warrants 
Mel Harris Declaration of Trust  4/9/2014  4/9/2019   300,000   $0.25  Warrants 
Benjamin Milbrath  5/28/2014  5/28/2019   200,000   $0.25  Warrants  D.A.
Davidson & Co, Custodian FBO Benjamin Milbrath ROTH IRA  6/6/2014  6/6/2019 
 200,000   $0.25 

 

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

Warrants  Alan Stewart Harris  6/10/2014  6/10/2019   100,000   $0.25  Warrants 
Mel Harris Declaration of Trust  6/10/2014  6/10/2019   100,000   $0.25 
Warrants  CV Starr & Company Inc  6/16/2014  6/16/2019   1,000,000   $0.25 
Warrants  Mel Harris Declaration of Trust  6/20/2014  6/20/2019   500,000  
$0.25  Warrants  Joseph Bernstein  6/26/2014  6/26/2019   275,000   $0.25 
Warrants  Jamie Jo Harris (Assigned Feb’15)  7/1/2014  7/1/2019   1,000,000  
$0.34  Warrants  Jane Seymour  7/1/2014  7/1/2019   250,000   $0.34  Warrants 
Jane Seymour  7/1/2014  7/1/2019   250,000   $0.45  Warrants  Jane Seymour 
7/1/2014  7/1/2019   250,000   $0.50  Warrants  Jane Seymour  7/1/2014 
7/1/2019   250,000   $0.50  Warrants  Mel Harris Declaration of Trust  7/1/2014 
7/1/2019   1,000,000   $0.34  Warrants  Mel Harris Declaration of Trust 
7/1/2014  7/1/2019   1,000,000   $0.34  Warrants  Mel Harris Declaration of
Trust  7/1/2014  7/1/2019   1,000,000   $0.34  Warrants  Mel Harris Declaration
of Trust  7/1/2014  7/1/2019   1,000,000   $0.34  Warrants  Nancy Ryan 
7/1/2014  7/1/2019   50,000   $0.34  Warrants  James C. and Sandra K. Peterson 
7/7/2014  7/7/2019   300,000   $0.25  Warrants  Cary Presant  7/16/2014 
7/16/2019   100,000   $0.44  Warrants  James C. and Sandra K. Peterson 
8/1/2014  8/1/2019   250,000   $0.35  Warrants  George Cain  8/5/2014  8/5/2019 
 100,000   $0.35  Warrants  Irving Lee Zackheim  8/5/2014  8/5/2019   500,000  
$0.35  Warrants  Michelle Jou  8/5/2014  8/5/2019   200,000   $0.35  Warrants 
Marian Stier  8/8/2014  8/8/2019   12,500   $0.40  Warrants  Gilbert Insurance
Services, Inc 401K Profit Sharing Plan  8/11/2014  8/11/2019   100,000   $0.40 
Warrants  D.A. Davidson & Co, Custodian FBO Benjamin Milbrath ROTH IRA 
8/22/2014  8/22/2019   225,000   $0.35  Warrants  Eric Cremers  8/27/2014 
8/27/2019   250,000   $0.35  Warrants  Marian Stier  9/8/2014  9/8/2019 
 12,500   $0.40  Warrants  Dave Angstadt  10/21/2014  10/21/2019   250,000  
$0.18  Warrants  Laurie Meadoff  10/21/2014  10/21/2019   250,000   $0.18 
Warrants  Marian Stier  10/21/2014  10/21/2019   100,000   $0.18  Warrants 
Michael Fichtel (via KGW,LLC)  10/21/2014  10/21/2019   50,000   $0.35 
Warrants  Michael Wellesley-Wesley  10/21/2014  10/21/2019   100,000   $0.35 
Warrants  Mintz Levin, Cohn, Ferris, Glovsky and Popeo, P.C.  10/21/2014 
10/21/2019   100,000   $0.18  Warrants  SQP Ltd.  10/21/2014  10/21/2019 
 250,000   $0.35  Warrants  Jim Erlick  10/29/2014  10/29/2019   8,334   $0.30 
Warrants  Jim Erlick  10/29/2014  10/29/2019   7,576   $0.33 

 

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission. 

 

Warrants  Starr Insurance Holdings, Inc  11/7/2014  4/11/2018   10,719,477  
$0.05  Warrants  Starr Insurance Holdings, Inc  11/7/2014  4/11/2018 
 10,719,477   $0.05  Warrants  Thomas Butler  11/12/2014  11/12/2019   10,000  
$0.20  Warrants  Jonathan Reinsdorf  12/17/2014  11/12/2019   100,000   $0.35 
Warrants  Milbrath  1/9/2015  1/9/2020   200,000   $0.35  Warrants  Millenium
Trust for the Benefit of Seymour Tessler  1/14/2015  1/14/2020   100,000  
$0.35  Warrants  Millenium Trust for the Benefit of Andrea Tessler  1/23/2015 
1/23/2020   50,000   $0.35  Warrants  James C. and Sandra K. Peterson 
2/25/2015  2/25/2020   150,000   $0.35  Warrants  David Moore  3/11/2015 
3/11/2020   200,000   $0.25  Warrants  VB Funding, LLC  5/18/2015  5/18/2025 
 500,000   $0.30  2012 GP Plan Options  Aurora Frid  2/24/2012  2/24/2022 
 5,000   $0.60  2012 GP Plan Options  Caitlin Janovic  2/24/2012  2/24/2022 
 25,000   $0.25  2012 GP Plan Options  Clare Davis  2/24/2012  2/24/2022 
 50,000   $0.25  2012 GP Plan Options  David Kikumoto  2/24/2012  2/24/2022 
 50,000   $0.60  2012 GP Plan Options  Deborah Burns  2/24/2012  2/24/2022 
 120,000   $0.25  2012 GP Plan Options  Deborah Long  2/24/2012  2/24/2022 
 50,000   $0.60  2012 GP Plan Options  James Meiskin  2/24/2012  2/24/2022 
 50,000   $0.60  2012 GP Plan Options  Jeffrey Mahl  2/24/2012  2/24/2022 
 250,000   $0.60  2012 GP Plan Options  Jeffrey Wasserman  2/24/2012  2/24/2022 
 150,000   $0.25  2012 GP Plan Options  Jennifer Fragale  2/24/2012  2/24/2022 
 75,000   $0.25  2012 GP Plan Options  Jeremy Office  2/24/2012  2/24/2022 
 250,000   $0.25  2012 GP Plan Options  John Connolly  2/24/2012  2/24/2022 
 50,000   $0.25  2012 GP Plan Options  Jordan Leber  2/24/2012  2/24/2022 
 250,000   $0.25  2012 GP Plan Options  Joseph Bernstein  2/24/2012  2/24/2022 
 1,000,000   $0.25  2012 GP Plan Options  Kristen Sturt  2/24/2012  2/24/2022 
 50,000   $0.25  2012 GP Plan Options  Laurie Meadoff  2/24/2012  2/24/2022 
 250,000   $0.33  2012 GP Plan Options  Leon Bernstein  2/24/2012  2/24/2022 
 50,000   $0.25  2012 GP Plan Options  Marion Owens  2/24/2012  2/24/2022 
 10,000   $0.25  2012 GP Plan Options  Matthew Schwartz  2/24/2012  2/24/2022 
 200,000   $0.25  2012 GP Plan Options  Paul Millar  2/24/2012  2/24/2022 
 50,000   $0.25  2012 GP Plan Options  Robert Cohen  2/24/2012  2/24/2022 
 1,000,000   $0.25  2012 GP Plan Options  Shannon Copfer  2/24/2012  2/24/2022 
 75,000   $0.25  2012 GP Plan Options  Steve Leber  2/24/2012  2/24/2022 
 1,000,000   $0.25  2012 GP Plan Options  Richard Kahn  2/27/2012  2/27/2022 
 30,000   $0.63  2012 GP Plan Options  Sara Breslau  4/3/2012  4/3/2022 
 250,000   $0.25  2012 GP Plan Options  Gretchen Schmoker  5/3/2012  5/3/2022 
 10,000   $0.50  2012 GP Plan Options  LaToya Monah  5/3/2012  5/3/2022 
 10,000   $0.25  2012 GP Plan Options  Yitzchok Frid  5/3/2012  5/3/2022 
 10,000   $0.50  2012 GP Plan Options  Sara Schwartz  5/7/2012  5/7/2022 
 25,000   $0.25  2012 GP Plan Options  Lee Lazarus  5/30/2012  5/30/2022 
 100,000   $0.25  2012 GP Plan Options  Mel Harris  5/30/2012  5/30/2022 
 500,000   $0.25  2012 GP Plan Options  Bruce Glatman  9/13/2012  9/13/2022 
 5,000   $0.40  2012 GP Plan Options  Bruce Glatman  9/13/2012  9/13/2022 
 12,500   $0.40 

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

2012 GP Plan Options  Deborah Burns  9/13/2012  9/13/2022   50,000   $0.25  2012
GP Plan Options  Dennis Martin  9/13/2012  9/13/2022   20,000   $0.25  2012 GP
Plan Options  Derek Bronston  9/13/2012  9/13/2022   20,000   $0.25  2012 GP
Plan Options  Ellen Breslau  9/13/2012  9/13/2022   50,000   $0.25  2012 GP Plan
Options  Larry King  9/13/2012  9/13/2022   100,000   $0.40  2012 GP Plan
Options  Larry King  9/13/2012  9/13/2022   250,000   $0.40  2012 GP Plan
Options  Matthew Schwartz  9/13/2012  9/13/2022   25,000   $0.25  2012 GP Plan
Options  Raphael Bernstein  9/13/2012  9/13/2022   10,000   $0.60  2012 GP Plan
Options  Sean Mosher-Smith  9/13/2012  9/13/2022   20,000   $0.25  2012 GP Plan
Options  Sid Young  9/13/2012  9/13/2022   5,000   $0.40  2012 GP Plan Options 
Sid Young  9/13/2012  9/13/2022   12,500   $0.40  2012 GP Plan Options  Thomas
Corry  9/13/2012  9/13/2022   50,000   $0.25  2012 GP Plan Options  Aurora Frid 
12/19/2012  12/19/2022   12,500   $0.30  2012 GP Plan Options  Caitlin Janovic 
12/19/2012  12/19/2022   12,500   $0.30  2012 GP Plan Options  Clare Davis 
12/19/2012  12/19/2022   7,500   $0.30  2012 GP Plan Options  Deborah Burns 
12/19/2012  12/19/2022   100,000   $0.30  2012 GP Plan Options  Deborah Long 
12/19/2012  12/19/2022   15,000   $0.30  2012 GP Plan Options  Ellen Breslau 
12/19/2012  12/19/2022   100,000   $0.30  2012 GP Plan Options  Gretchen
Schmoker  12/19/2012  12/19/2022   12,500   $0.30  2012 GP Plan Options  Jeffrey
Mahl  12/19/2012  12/19/2022   50,000   $0.30  2012 GP Plan Options  Jennifer
Fragale  12/19/2012  12/19/2022   15,000   $0.30  2012 GP Plan Options  Jordan
Leber  12/19/2012  12/19/2022   25,000   $0.30  2012 GP Plan Options  Kristen
Sturt  12/19/2012  12/19/2022   15,000   $0.30  2012 GP Plan Options  LaToya
Monah  12/19/2012  12/19/2022   25,000   $0.30  2012 GP Plan Options  Leon
Bernstein  12/19/2012  12/19/2022   12,500   $0.30  2012 GP Plan Options  Marion
Owens  12/19/2012  12/19/2022   2,500   $0.30  2012 GP Plan Options  Matthew
Schwartz  12/19/2012  12/19/2022   25,000   $0.30  2012 GP Plan Options  Paul
Millar  12/19/2012  12/19/2022   15,000   $0.30  2012 GP Plan Options  Raphael
Bernstein  12/19/2012  12/19/2022   12,500   $0.30  2012 GP Plan Options  Sara
Schwartz  12/19/2012  12/19/2022   15,000   $0.30  2012 GP Plan Options  Shannon
Copfer  12/19/2012  12/19/2022   15,000   $0.30  2012 GP Plan Options  Yitzchok
Frid  12/19/2012  12/19/2022   12,500   $0.30  2012 GP Plan Options  Deborah
Burns  6/20/2013  6/20/2023   500,000   $0.25  2012 GP Plan Options  Ellen
Breslau  6/20/2013  6/20/2023   500,000   $0.25  2012 GP Plan Options  Lori
Fagien  6/20/2013  6/20/2023   10,000   $0.25  2012 GP Plan Options  Marian
Heard  6/20/2013  6/20/2023   50,000   $0.14  2012 GP Plan Options  Matthew
Schwartz  6/20/2013  6/20/2023   200,000   $0.25  2012 GP Plan Options  Lee
Lazarus  12/9/2013  12/9/2023   750,000   $0.13  Non-Plan Options  Lee Lazarus 
12/9/2013  12/9/2023   3,250,000   $0.13  2012 GP Plan Options  Brittany Hutzel 
3/14/2014  3/14/2024   15,000   $0.31  2012 GP Plan Options  Clare Davis 
3/14/2014  3/14/2024   15,000   $0.31  2012 GP Plan Options  Kristen Sturt 
3/14/2014  3/14/2024   40,000   $0.31  2012 GP Plan Options  Latoya Monah 
3/14/2014  3/14/2024   30,000   $0.31  2012 GP Plan Options  Paul Millar 
3/14/2014  3/14/2024   25,000   $0.31  2012 GP Plan Options  Sara Schwartz 
3/14/2014  3/14/2024   40,000   $0.31 

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

2012 GP Plan Options  Nancy Diamond  5/7/2014  5/7/2016   60,000   $0.30  2012
GP Plan Options  Siary Nunez  6/2/2014  6/2/2024   25,000   $0.30  2012 GP Plan
Options  Deborah Burns  7/1/2014  7/1/2019   250,000   $0.34  2012 GP Plan
Options  Ellen Breslau  7/1/2014  7/1/2019   250,000   $0.34  2012 GP Plan
Options  Riaz Latifullah  7/1/2014  7/1/2019   5,000,000   $0.34  2012 GP Plan
Options  Steve Leber  7/1/2014  7/1/2024   5,000,000   $0.34  2012 GP Plan
Options  Matthew Schwartz  10/9/2014  10/9/2024   1,000,000   $0.28  2012 GP
Plan Options  Ann Abernathy  10/21/2014  10/21/2019   100,000   $0.18  2012 GP
Plan Options  David Simon  4/9/2015  4/9/2020   250,000   $0.21  2012 GP Plan
Options  Michael Troughton  4/9/2015  4/9/2025   200,000   $0.21  2012 GP Plan
Options  Not Yet Issued         3,415,000                Total   87,324,323  
   

  

Schedule 3.9 – List of Litigation and Other actions

 

Not applicable

 

Schedule 3.11(b) – List of Liens

 

Not applicable

  

Schedule 3.11(d)(i) – List of Leased Real Property

 

We lease approximately 5,000 square feet in our headquarters located at 589
Eighth Avenue, 6th Floor, New York, NY 10018. The lease expires on September 30,
2015. Our current monthly rent payment under the lease is approximately $15,000
per month. We are working with the landlord on a possible renewal.

 

We also lease a corporate apartment for $3,700/mo on 42nd street for our Chief
Financial Officer (per his Employment Agreement). The Lease expires this month
and we are exploring other less expensive alternatives or possibly doing away
with it altogether.

  

Schedule 3.12 - Environmental Claims

 

Not Applicable

  

Schedule 3.15(a) – List of Subsidiaries

 

American Grandparents Association LLC (Active in Florida)

Grandparents Insurance Solutions LLC (Active in Florida)

Grand Card LLC (Active in Florida)

Grand Corp LLC (Active in Florida)

Grand Inspirations LLC (Inactive-Administratively dissolved)

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

Schedule 3.15(b) – List of non-Subsidiary Equity Investments

 

Not applicable

  

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

Schedule 3.19(a) – List of Intellectual Property

 

TRADEMARKS   Appl. No./
Reg No   Appl. Date/
Reg Date   Attorney of Record   Status GRANDEST ADVENTURES   3594674   3/24/2009
  Sills Cummis & Gross (as of 1/18/12)   Registered *GRANDPARENTS.COM (Class
025)   3637229   6/16/2009   Joshua M. Gerben (as of 10/9/13) (changed from
Sills Cummis & Gross)   Registered *GRANDPARENTS.COM (Classes 035, 038, 039,
041)   3503215   9/16/2008   Joshua M. Gerben (as of 10/9/13) (changed from
Sills Cummis & Gross)   Registered *GRANDPARENTS.COM IT’S GREAT TO BE GRAND. &
Design   3775059   4/13/2010   Joshua M. Gerben (as of 10/9/13) (changed from
Sills Cummis & Gross)   Registered AMERICAN GRANDPARENTS ASSOCIATION   86653285
  6/5/2015   Joshua M. Gerben (as of 6/8/15)   Submitted AGA (Standard Mark)  
86653373   6/5/2015   Joshua M. Gerben (as of 6/8/15)   Submitted AGA American
Grandparents Association (styalized w/ design)   86653028   6/5/2015   Joshua M.
Gerben (as of 6/8/15)   Submitted GRANDPARENTS INSURANCE PLANS   4200271  
8/28/2012   Sills Cummis & Gross (as of 1/18/12)   Registered *GRAND CARD  
85/615047   5/2/2012   Sills Cummis & Gross (as of the time of filing)  
Published Statement of Use/4th Extension of Time due December 4, 2014 GRAND
INSPIRATIONS   85/591533   4/6/2012   Sills Cummis & Gross (as of the time of
filing)   Published Statement of Use/3rd Extension of Time due August 26, 2014
GRAND CORPS   4506322   4/1/2014   Sills Cummis & Gross (as of the time of
filing)   Registered TIMELESS YOU   86/122,123   11/18/2013   Sills Cummis &
Gross (as of the time of filing)   Pending

 

*Subject to licensing in accordance with that certain Alliance Agreement, among
Cegedim Inc. (Opus Health Division) and Grandparents.com, Inc., dated as of
March 28, 2013.

 

PATENTS   Appl. No./Reg No   Appl. Date/Reg
Date   Attorney of Record
Status   Status SYSTEM AND METHOD FOR INCENTIVIZING PURCHASES**   61/693992  
08/28/2012   N/A   Provisional

 

**Patents referenced in that certain Alliance Agreement, among Cegedim Inc.
(Opus Health Division) and Grandparents.com, Inc., dated as of March 28, 2013,
including but not limited to provisional patent 61/693992 (System and method for
incentivizing purchases), are jointly held by Grand Card and Cegedim Inc. and
not exclusive property of any Loan Party.

 

Schedule 3.19(b) – List of Permits

 

Not applicable

 

 

 

 

Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in
places marked

“[***]” and has been filed separately with the Securities and Exchange
Commission

pursuant to a Confidential Treatment Application filed with the Commission.

 

Schedule 3.25 – List of Bank Accounts

 

    JPMORGAN CHASE BANK ACCOUNTS             Company Accounts   Purpose   Acount
# 1   Grandparents.com, Inc.   Day to Day Operating account   ****** 2   Grand
Card LLC   Grand Card program   ****** 3   American Grandparents Association LLC
  AGA Membership Revenue   ****** 4   Grandparents Insurance Solutions LLC  
Insurance Royalty revenue   ******

  

Schedule 3.27 -Material Contracts

 

1)Letter Agreement by and between HSNi, LLC and Grandparents.com, Inc., dated as
of February 18, 2015.

 

2)Program Agreement by and between Aetna Life Insurance Company and
Grandparents.com, Inc., dated as of October 9, 2013, as amended by that certain
Amendment No. 1 to Program Agreement, dated as of June 4, 2015, and as frther
amended by that certain Amendment No. 2 to Program Agreement, dated as of June
4, 2015.

 

3)Upline Marketing Agreement by and between Aetna Life Insurance Company and
Grandparents Insurance Solutions LLC, dated as of 2015.

 

4)Marketing General Agent Contract, by and among Aetna Health and Life Insurance
Company, Aetna Life Insurance Company, and Grandparents Insurance Solutions LLC,
dated as of October 31, 2014.

 

5)Marketing General Agent Contract (Addendum), by and among Aetna Health and
Life Insurance Company, Aetna Life Insurance Company, and Grandparents Insurance
Solutions LLC, dated as of October 31, 2014.

 

Schedule 4.2 - Promissory Notes to be Repaid with Loan Proceeds

 

Date  Unsecured Note Holder  Maturity  Principle
Balance as of
3-31-14   Int. Rate   Outstanding
Principal &
Cummulative
Interest @
6/30/15  2/26/2013  Steve Leber  6/30/2015  $100,000    10%  $123,342 
2/26/2013  Mel Harris  6/30/2015  $100,000    10%  $123,342  2/26/2013  Meadows
Capital LLC  6/30/2015  $100,000    10%  $123,342  2/5/2015  Lee Lazarus 
Demand  $50,000    10%  $51,986  2/5/2015  Steve Leber  Demand  $50,000    10% 
$51,986                     $474,000