Exhibit 10.3

 

FIFTH AMENDMENT AND WAIVER TO LOAN AND SECURITY AGREEMENT

 

This FIFTH AMENDMENT AND WAIVER TO LOAN AND SECURITY AGREEMENT (this “Fifth
Amendment”) is made and entered into as of November 5, 2020, by and between EAST
WEST BANK, a Delaware corporation (“Bank”), and NEWAGE, INC., f/k/a NEW AGE
BEVERAGES CORPORATION, a Washington corporation (“Borrower”).

 

WHEREAS, Borrower and Bank are party to that certain Loan and Security
Agreement, dated as of March 29, 2019, by and between Borrower, as borrower, and
Bank, as lender (as amended by that certain First Amendment, Waiver and Consent
to Loan and Security Agreement, dated as of July 11, 2019, that certain Second
Amendment and Waiver to Loan and Security Agreement, dated as of October 9,
2019, that certain Third Amendment and Waiver to Loan and Security Agreement,
dated as of March 13, 2020, that certain Fourth Amendment to Loan and Security
Agreement, dated as of July 6, 2020, and as further amended, restated, amended
and restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”);

 

WHEREAS, Borrower and Bank desire to (i) amend certain provisions of the Loan
Agreement and (ii) waive any default or Event of Default that has arisen or
would otherwise arise under Section 8.2(a) of the Loan Agreement for Borrower
and its Subsidiaries’ failure to achieve, in accordance with Section 7.12(a) of
the Loan Agreement, Adjusted EBITDA of at least -$4,000,000 for the three month
period ending on September 30, 2020; and

 

WHEREAS, pursuant to Section 9.6 of the Loan Agreement, a waiver under the Loan
Agreement may be granted by Bank, and pursuant to Section 12.7 of the Loan
Agreement, the Loan Agreement may be amended by an instrument in writing signed
by Borrower and Bank.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions; Loan Document. Capitalized terms used herein without definition
shall have the meanings assigned to such terms in the Loan Agreement. This Fifth
Amendment shall constitute a Loan Document for all purposes of the Loan
Agreement and the other Loan Documents.

 

2. Waiver. Bank hereby waives any non-compliance by Borrower with the covenant
set forth in Section 7.12(a) of the Loan Agreement as a result of its and its
Subsidiaries’ failure to achieve Adjusted EBITDA of at least -$4,000,000 for the
three month period ending on September 30, 2020 and any default or Event of
Default that may have occurred or would otherwise arise under Section 8.2(a) of
the Loan Agreement as a result thereof.

 

3. Amendment to Section 7.12(a). Section 7.12(a) is hereby deleted in its
entirety and replaced with “[Reserved].”.

 

4. Amendment to Exhibit B. Exhibit B to the Credit Agreement is hereby amended
and restated in its entirety in the form of Annex I attached hereto.

 

 

 

 

5. Conditions to Effectiveness. This Fifth Amendment shall become effective upon
receipt by Bank of counterpart signatures to this Fifth Amendment duly executed
and delivered by Bank and Borrower.

 

6. Expenses. Borrower agrees to pay on demand all expenses of Bank (including,
without limitation, the fees and out-of-pocket expenses of Covington & Burling
LLP, counsel to Bank) incurred in connection with the negotiation, preparation,
execution and delivery of this Fifth Amendment.

 

7. Representations and Warranties. Borrower hereby represents and warrants to
Bank as follows:

 

(a) After giving effect to this Fifth Amendment, the representations and
warranties contained in the Loan Agreement or any other Loan Document shall be
true, accurate and complete in all material respects; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date.

 

(b) After giving effect to this Fifth Amendment, no default or Event of Default
shall have occurred and be continuing.

 

8. No Implied Amendment or Waiver. Except as expressly set forth in this Fifth
Amendment, this Fifth Amendment shall not, by implication or otherwise, limit,
impair, constitute a waiver of or otherwise affect any rights or remedies of
Bank under the Loan Agreement or alter, modify, amend, waive or in any way
affect any of the terms, obligations or covenants contained in the Loan
Agreement, all of which shall continue in full force and effect. Nothing in this
Fifth Amendment shall be construed to imply any willingness on the part of Bank
to agree to or grant any similar or future consent, amendment or waiver of any
of the terms and conditions of the Loan Agreement or the other Loan Documents.

 

9. Release. Borrower hereby acknowledges and agrees that: (a) to its knowledge
neither it nor any of its Affiliates have any claim or cause of action against
Bank (or any of its Affiliates, officers, directors, employees, attorneys,
consultants or agents) under the Loan Agreement as of the date hereof and (b) to
its knowledge, as of the date hereof, Bank has heretofore properly performed and
satisfied in a timely manner all of its obligations to Borrower under the Loan
Agreement. Notwithstanding the foregoing, Bank wishes to eliminate any
possibility that any past conditions, acts, omissions, events or circumstances
would impair or otherwise adversely affect any of Bank’s rights, interests
and/or remedies under the Loan Agreement. Accordingly, for and in consideration
of the agreements contained in this Fifth Amendment and other good and valuable
consideration, Borrower (for itself and its Affiliates and the successors and
assigns of each of the foregoing) (each a “Releasor” and collectively, the
“Releasors”) does hereby fully, finally, unconditionally and irrevocably release
and forever discharge Bank and its Affiliates, officers, directors, employees,
attorneys, consultants and agents (each a “Released Party” and collectively, the
“Released Parties”) from any and all debts, claims, obligations, damages, costs,
attorneys’ fees, suits, demands, liabilities, actions, proceedings and causes of
action, in each case, whether known or unknown, contingent or fixed, direct or
indirect, and of whatever nature or description, and whether in law or in
equity, under contract, tort, statute or otherwise, in each case that exist or
have occurred on or prior to the date of this Fifth Amendment which any Releasor
has heretofore had or now shall or may have against any Released Party by reason
of any act, omission or thing whatsoever done or omitted to be done, except for
a Released Party’s gross negligence or willful misconduct as determined by a
final, non-appealable judgment of a court of competent jurisdiction, prior to
the date hereof arising out of, connected with or related in any way to the Loan
Agreement, or any act, event or transaction related or attendant thereto, or
Bank’s agreements contained therein, or the possession, use, operation or
control in connection therewith of any of the assets of Borrower, or the making
of any advance thereunder, or the management of such advance, in each case on or
prior to the date of this Fifth Amendment.

 

10. Counterparts. This Fifth Amendment may be executed by the parties hereto in
several counterparts, each of which shall be an original and all of which shall
constitute together but one and the same agreement. Delivery of an executed
counterpart of a signature page to this Fifth Amendment by e-mail (e.g., “pdf”
or “tiff”) or telecopy shall be effective as delivery of a manually executed
counterpart of this Fifth Amendment.

 

11. Governing Law. THIS FIFTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW.

 

[Signature Page Follows.]

 

-2-

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

 

  NEWAGE, INC.,   as Borrower         By: /s/ Gregory A. Gould   Name: Gregory
A. Gould   Title: Chief Financial Officer         EAST WEST BANK,   as Bank    
    By: /s/ Kelvin Chan   Name: Kelvin Chan   Title: Managing Director

 

Signature Page to Fifth Amendment to Loan and Security Agreement 

 

 

 

 

Annex I

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

TO: EAST WEST BANK Date:   FROM: NEWAGE, INC. (f/k/a NEW AGE BEVERAGES
CORPORATION)    

 

The undersigned authorized officer of NewAge, INC. (f/k/a New Age Beverages
Corporation) (“Borrower”) certifies that under the terms and conditions of the
Loan and Security Agreement between Borrower and East West Bank (“Bank”) (the
“Agreement”), (i) Borrower is in complete compliance for the period ending
[_______________] with all required covenants except as noted below, (ii) there
are no Events of Default, (iii) all representations and warranties in the
Agreement are true and correct in all material respects on this date except as
noted below; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, (iv)
Borrower, and each of its Subsidiaries, has timely filed all required tax
returns and reports, and Borrower has timely paid all foreign, federal, state
and local taxes, assessments, deposits and contributions owed by Borrower except
as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement,
and (v) no Liens have been levied or claims made against Borrower or any of its
Subsidiaries, if any, relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank. Attached are
the required documents supporting the certification. The undersigned certifies
that these are prepared in accordance with GAAP consistently applied from one
period to the next except as explained in an accompanying letter or footnotes.
The undersigned acknowledges that no borrowings may be requested at any time or
date of determination that Borrower is not in compliance with any of the terms
of the Agreement, and that compliance is determined not just at the date this
certificate is delivered. Capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenants   Required   Complies           Monthly financial statements
  Monthly within 45 days   Yes    No Quarterly financial statements   Quarterly
within 50 days   Yes    No Annual financial statements (CPA Audited)   FYE
within 105 days   Yes    No 10-Q, 10-K and 8-K   Within 5 days after filing with
SEC   Yes    No Board approved projections   FYE within 60 days   Yes    No

 

The following Intellectual Property was registered after the [Effective
Date/date of the last Compliance Certificate] (if no registrations, state
“None”)

 

—————————————————————————————————————

 

Financial Covenant   Required   Actual   Complies               Maximum Total
Leverage Ratio:             Quarters ending 6/30/21 through 9/30/21   2.50 to
1.00       [Yes/No] Quarters ending 12/31/21 through 9/30/22   2.00 to 1.00    
  [Yes/No] Quarter ending 12/31/22 and thereafter   1.50 to 1.00       [Yes/No]
            Minimum Fixed Charge Coverage Ratio (6/30/21 and thereafter):   1.25
to 1.00       [Yes/No]

 

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

 

————————————————————————————————————————————————

 

NEWAGE, INC.       By:             Name:     Title:    

 

 

 

 

Schedule 1 to Compliance Certificate

 

Financial Calculations of Borrower

 

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.

 

Dated: ____________, 20__

 

1. Total Leverage Ratio

 

The Total Leverage Ratio for the fiscal quarter ended [  ]1:

 

Calculation of the Total Leverage Ratio:

 

[  ]

 

 

 

_____ _____

The maximum Total Leverage Ratio permitted by Section 7.12(c) of the Agreement
is the ratio set forth in the table below opposite such date:  

 

Date   Maximum Total Leverage Ratio June 30, 2021   2.50 to 1.00 September 30,
2021   2.50 to 1.00 December 31, 2021   2.00 to 1.00 March 31, 2022   2.00 to
1.00 June 30, 2022   2.00 to 1.00 September 30, 2022   2.00 to 1.00 December 31,
2022 and thereafter   1.50 to 1.00

 

Compliance:

 

 

[Yes] [No]     

 

2. Fixed Charge Coverage Ratio

 

The minimum Fixed Charge Coverage Ratio for the fiscal quarter ended [  ]2:

 

Calculation of the Fixed Charge Coverage Ratio:

 

[  ]

 

 

_____ _____

The minimum Fixed Charge Coverage Ratio permitted by Section 7.12(d) of the
Agreement is the ratio set forth in the table below opposite such date:  

 

Date   Minimum Fixed Charge Coverage Ratio June 30, 2021 and thereafter   1.25
to 1.00

 

Compliance:

 

 

[Yes] [No]    

 

 

1 To be the fiscal quarter most recently ended.

2 To be the fiscal quarter most recently ended.