FIRST AMENDMENT TO CREDIT AGREEMENT

 

This FIRST AMENDMENT TO CREDIT AGREEMENT (the “Amendment”) is dated effective as
of the 30th day of December, 2016 (the “Effective Date”), by and between TARSIER
LTD, a corporation incorporated under the laws of the State of Delaware (the
“Borrower”), TARSIER SYSTEMS LTD., a corporation incorporated under the laws of
the State of New York (the “Corporate Guarantor”) (the Borrower and the
Corporate Guarantor hereinafter sometimes collectively referred to as the
“Credit Parties”) and TCA GLOBAL CREDIT MASTER FUND, LP, a Cayman Islands
limited partnership (the “Lender”).

 

RECITALS

 

WHEREAS, the Credit Parties and the Lender executed that certain Senior Secured
Revolving Credit Facility Agreement dated effective as of January 29, 2016 (as
amended, supplemented, renewed, or modified from time to time, the “Credit
Agreement”); and

 

WHEREAS, pursuant to the Credit Agreement, the Borrower executed and delivered
to Lender that certain Revolving Note dated effective as of January 29, 2016,
evidencing an initial Revolving Loan under the Credit Agreement in the amount of
Five Million Dollars ($5,000,000) (such Revolving Note, together with any
amendments, renewals, substitutions, replacements, or modifications from time to
time, collectively referred to as the “Revolving Note”); and

 

WHEREAS, in connection with the Credit Agreement and the Revolving Note, the
Borrower executed and delivered to the Lender various ancillary documents
referred to in the Credit Agreement as the “Loan Documents”; and

 

WHEREAS, the Borrower’s obligations under the Credit Agreement and the Revolving
Note are secured by the following, all of which are included within the Loan
Documents: (i) the Security Agreements; (ii) the Guarantee Agreement; (iii) the
Pledge Agreement; (iv) the Validity Certificate; and (v) UCC-1 Financing
Statements naming the Borrower and the Corporate Guarantor, as debtors, and
Lender, as secured party (the “UCC-1’s”), among other Loan Documents; and

 

WHEREAS, in accordance with Section 14.25 of the Credit Agreement, the Withheld
Amount of Four Million Six Hundred Thousand Dollars ($4,600,000) of the initial
Revolving Loan was withheld and retained by Lender for funding future
Acquisitions, all in accordance with the Credit Agreement; and

 

WHEREAS, the Credit Parties desire to undertake an Acquisition of “NY Bulbs” (as
hereinafter defined), and in that regard, have requested that Lender fund and
release One Million Two Hundred Thousand Dollars ($1,200,000) (the “Additional
Advance”) from the Withheld Amount to fund such Acquisition, and Lender is
amenable to making the Additional Advance for such purpose, all in accordance
with the terms of this Amendment;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants of the
parties hereinafter expressed and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
each intending to be legally bound, agree as follows:

 

1.            Recitals. The recitations set forth in the preamble of this
Amendment are true and correct and incorporated herein by this reference.

 

2.            Capitalized Terms. All capitalized terms used in this Amendment
shall have the same meaning ascribed to them in the Credit Agreement, except as
otherwise specifically set forth herein. In addition, the other definitional and
interpretation provisions of Sections 1.2, 1.3 and 1.4 of the Credit Agreement
shall be deemed to apply to all terms and provisions of this Amendment, unless
the express context otherwise requires.

 

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3.            Conflicts. In the event of any conflict or ambiguity by and
between the terms and provisions of this Amendment and the terms and provisions
of the Credit Agreement, the terms and provisions of this Amendment shall
control, but only to the extent of any such conflict or ambiguity.

 

4.            Funding of Withheld Amount. The Credit Parties have requested the
Additional Advance in the amount of One Million Two Hundred Thousand Dollars
($1,200,000), which Lender hereby agrees to make for the purpose of completing
the Acquisition of NY Bulbs, all subject to the terms and conditions of this
Amendment. Upon funding of the Additional Advance, the Additional Advance shall
be deemed a Revolving Loan under the Credit Agreement and evidenced by the
Revolving Note, and such Additional Advance, together with all other
Obligations, shall be and remain secured by the Security Agreements, the
Guarantee Agreement, the Pledge Agreement, the Validity Certificate, the
UCC-1’s, and all other Loan Documents, as applicable, and which Obligations
shall be and remain due and payable in accordance with the terms of the Credit
Agreement, as amended hereby, and the Revolving Note.

 

5.            Funding for Acquisition.

 

(a)           The funding of the Additional Advance shall be subject to the
simultaneous closing of that certain transaction between Borrower, as buyer, and
Randall D. Satin and Lawrence Merson (collectively, the “NY Bulbs
Shareholders”), as sellers, pursuant to which the Borrower shall purchase 100%
of the issued and outstanding capital stock of 1-800 NY BULBS LIMITED, a New
York corporation (“NY Bulbs”), which issued and outstanding capital stock is
owned by the NY Bulbs Shareholders (such purchase transaction sometimes
hereinafter referred to as the “NY Bulbs Acquisition”). In order to satisfy the
foregoing condition of simultaneous closing, the Credit Parties shall cooperate
with the Lender in all respects to close the transactions contemplated by this
Amendment in accordance with the terms and provisions of this Section 5.

 

(b)          On the Effective Date (and subject to all other conditions in this
Amendment), the Lender shall fund the Additional Advance hereunder, which amount
shall be paid and disbursed as follows: (i) all fees, costs and other charges
payable by the Credit Parties in connection with this Amendment shall be
withheld from the Additional Advance hereunder on the Effective Date and paid to
the applicable parties entitled to such fees in accordance with the Loan
Settlement Statement and Joint Disbursement Instructions executed by the
Borrower in connection with the closing of the Additional Advance; (ii) $695,000
shall be paid and disbursed to the NY Bulbs Shareholders in connection with the
NY Bulbs Acquisition (subject to Lender’s receipt of the documentation required
hereunder with respect to the NY Bulbs Acquisition); (iii) up to $100,000 shall
be paid to Chase bank to pay off an existing credit facility obligation of NY
Bulbs (with any portion of said $100,000 not used to pay off Chase to be
disbursed to the Borrower); (iv) up to $106,000 shall be paid to Robert Klein to
pay off an existing obligation of NY Bulbs (with any portion of said $106,000
not used to pay off Mr. Klein to be disbursed to the Borrower); and (v) the
remaining amount shall be paid and disbursed in accordance with the Loan
Settlement Statement and Joint Disbursement Instructions executed by the
Borrower in connection with the funding of the Additional Advance.

 

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(c)           In order to insure the simultaneous closing of the NY Bulbs
Acquisition and the funding of the Additional Advance, the NY Bulbs Acquisition
and the Additional Advance shall be closed simultaneously by and through David
Kahan, P.A., Lender’s counsel (“DKPA”). On the Effective Date, all of the
documents required to be executed by NY Bulbs (post-Acquisition, as a wholly
owned Subsidiary of Borrower) in accordance with Section 3.21 of the Credit
Agreement shall be provided to Borrower. When the Acquisition is “Ready to
Close” (as hereinafter defined), the Borrower and the NY Bulbs Shareholders
shall deliver to DKPA, as applicable, under cover of a closing escrow letter
acceptable to DKPA: (i) all original documents necessary or required to fully
and effectively close the NY Bulbs Acquisition, including a subordination
agreement in form and substance acceptable to Lender executed by the NY Bulbs
Shareholders; (ii) all documents and other items required to be executed,
completed and delivered by NY Bulbs in accordance with Section 3.21 of the
Credit Agreement, so executed and completed by an authorized officer of NY Bulbs
(post-Acquisition), in accordance with the Lender’s closing instructions to the
Credit Parties; and (iii) a closing certification signed by Borrower and the NY
Bulbs Shareholders in substance and form acceptable to Lender and DKPA,
confirming that the NY Bulbs Acquisition is Ready to Close. Although the NY
Bulbs Acquisition and the transactions contemplated by this Amendment are to be
closed simultaneously as contemplated by this Section 5, for purposes of this
Amendment, the Acquisition shall be deemed closed immediately prior to the
closing of the transactions contemplated by this Amendment, such that at the
time of the closing of the transactions contemplated hereby, and funding of the
Additional Advance, NY Bulbs shall be deemed already acquired by the Borrower,
deemed a wholly-owned Subsidiary of the Borrower, and deemed a Corporate
Guarantor and Credit Party hereunder.

 

(d)          For purposes of this Section 5, the term “Ready to Close” shall
mean, with respect to the NY Bulbs Acquisition, that all documents relating to
the NY Bulbs Acquisition have been fully and finally executed and delivered by
all applicable parties thereto to DKPA, and all other terms and conditions of
any nature or kind to closing on the NY Bulbs Acquisition have been fully
satisfied and performed, other than payment of the cash portion of the purchase
price for such Acquisition to the NY Bulbs Shareholders.

 

6.           Representations and Warranties. The Credit Parties hereby confirm
and affirm that all representations and warranties made by the Credit Parties
under the Credit Agreement and all other Loan Documents (specifically including
under Section 7 of the Credit Agreement) are true, correct and complete in all
material respects as of the date of the Credit Agreement, and hereby confirm and
affirm that all such representations and warranties remain true, correct and
complete in all material respects as of the date of this Amendment, and by this
reference, the Credit Parties do hereby re-make each and every one of such
representations and warranties herein as of the date of this Amendment, as if
each and every one of such representations and warranties was set forth and
re-made in its entirety in this Amendment by the Credit Parties, as same may be
qualified by revised disclosure schedules attached to this Amendment, if any (if
no revised disclosures are attached to this Amendment, then no such revised
disclosure schedules shall be deemed to exist or to qualify any of the
representations and warranties hereby re-made).

 

7.           Affirmation. The Credit Parties hereby affirm all of their
Obligations to the Lender under all of the Loan Documents and agree and affirm
as follows: (i) that as of the date hereof, the Credit Parties have performed,
satisfied and complied in all material respects with all the covenants,
agreements and conditions under each of the Loan Documents to be performed,
satisfied or complied with by the Credit Parties; (ii) that the Credit Parties
shall continue to perform each and every covenant, agreement and condition set
forth in each of the Loan Documents and this Amendment, and continue to be bound
by each and all of the terms and provisions thereof and hereof; (iii) that as of
the date hereof, no default or Event of Default has occurred or is continuing
under the Credit Agreement or any other Loan Documents, and no event has
occurred that, with the passage of time, the giving of notice, or both, would
constitute a default or an Event of Default under the Credit Agreement or any
other Loan Documents; and (iv) that as of the date hereof, no event, fact, or
other set of circumstances has occurred which could reasonably be expected to
have, cause, or result in a Material Adverse Effect.

 

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8.           Ratification. The Credit Parties hereby acknowledge, represent,
warrant and confirm to Lender that: (i) each of the Loan Documents executed by
the Credit Parties are valid and binding obligations of the Credit Parties,
enforceable against the Credit Parties in accordance with their respective
terms; (ii) the Revolving Note, and all other Obligations of the Credit Parties
under the Revolving Note, the Credit Agreement, all other Loan Documents and
this Amendment, shall be and continue to be and remain secured by and under the
Loan Documents, including the Security Agreements, the Guaranty Agreement, the
Pledge Agreements, the Validity Certificate, and the UCC-1’s; and (iii) no oral
representations, statements, or inducements have been made by Lender, or any
agent or representative of Lender, with respect to the Credit Agreement, this
Amendment or any other Loan Documents.

 

9.          Additional Confirmations. The Credit Parties hereby represent,
warrant and covenant as follows: (i) that the Lender’s Liens and security
interests in all of the “Collateral” (as such term is defined in the Credit
Agreement), are and remain valid, perfected, first-priority Liens and security
interests in such Collateral, and the Credit Parties have not granted any other
Liens or security interests of any nature or kind in favor of any other Person
affecting any of such Collateral.

 

10.           Lender’s Conduct. As of the date of this Amendment, the Credit
Parties hereby acknowledge and admit that: (i) the Lender has acted in good
faith and has fulfilled and fully performed all of its obligations under or in
connection with the Credit Agreement or any other Loan Documents; and (ii) that
there are no other promises, obligations, understandings or agreements with
respect to the Credit Agreement or the Loan Documents, except as expressly set
forth herein, or in the Credit Agreement and other Loan Documents.

 

11.           Redefined Terms. The term “Loan Documents,” as defined in the
Credit Agreement and as used in this Amendment, shall be deemed to refer to and
include this Amendment, and all other documents or instruments executed in
connection with this Amendment and the Acquisition. The term “Financial
Statements,” as defined in the Credit Agreement, shall be deemed to refer to and
include any financial statements provided by Credit Parties to Lender (or
otherwise filed by the Credit Parties with the SEC or any Principal Trading
Market) since the effective date of the Credit Agreement.

 

12.            Representations and Warranties of the Credit Parties. The Credit
Parties hereby make the following representations and warranties to the Lender:

 

(a)       Authority and Approval of Agreement; Binding Effect. The execution and
delivery by the Credit Parties of this Amendment, and all other documents
executed and delivered in connection herewith, and the performance by Credit
Parties of all of their Obligations hereunder and thereunder, have been duly and
validly authorized and approved by each of the Credit Parties and their
respective board of directors pursuant to all applicable laws, and no other
corporate action or consent on the part of the Credit Parties, their respective
board of directors, stockholders or any other Person is necessary or required by
the Credit Parties to execute this Amendment, and the documents executed and
delivered in connection herewith and therewith, to consummate the transactions
contemplated herein and therein, or perform all of the Credit Parties’
Obligations hereunder and thereunder. This Amendment and each of the documents
executed and delivered in connection herewith and therewith have been duly and
validly executed by the Credit Parties (and the officer executing this Amendment
and all such other documents for each Credit Party is duly authorized to act and
execute same on behalf of such Credit Party) and constitute the valid and
legally binding agreements of the Credit Parties, enforceable against the Credit
Parties in accordance with their respective terms, except as such enforceability
may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

 

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13.           Indemnification. Each of the Credit Parties, jointly and
severally, hereby indemnifies and holds the Lender Indemnitees, their successors
and assigns, and each of them, harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and distributions of any kind or nature, payable by any
of the Lender Indemnitees to any Person, including reasonable attorneys’ and
paralegals’ fees and expenses, court costs, settlement amounts, costs of
investigation and interest thereon from the time such amounts are due at the
highest non-usurious rate of interest permitted by applicable law (collectively,
the “Claims”), through all negotiations, mediations, arbitrations, trial and
appellate levels, as a result of, or arising out of, or relating to any matters
relating to this Amendment, the Credit Agreement or any other Loan Documents,
including the assertion of a claim or ruling by a Governmental Authority that
documentary stamp tax, intangible tax or any penalties or interest associated
therewith must be paid by reason of the execution and delivery of the Credit
Agreement of any of the other Loan Documents. The foregoing indemnification
obligations shall survive the termination of the Credit Agreement or any of the
Loan Documents and repayment of the Obligations.

 

14.           Waiver and Release. Each of the Credit Parties hereby represents
and warrants to Lender that none of them have any defenses, setoffs, claims,
counterclaims, cross-actions, equities, or any other Claims in favor of the
Credit Parties, to or against the enforcement of any of the Loan Documents, and
to the extent any of the Credit Parties have any such defenses, setoffs, claims,
counterclaims, cross-actions, equities, or other Claims against Lender and/or
against the enforceability of any of the Loan Documents, the Credit Parties each
acknowledge and agree that same are hereby fully and unconditionally waived by
the Credit Parties. In addition to the foregoing full and unconditional waiver,
each of the Credit Parties does hereby release, waive, discharge, covenant not
to sue, acquit, satisfy and forever discharges each of the Lender Indemnitees
and their respective successors and assigns, from any and all Claims whatsoever,
in law or in equity, whether known or unknown, whether suspected or unsuspected,
whether fixed or contingent, which the Credit Parties ever had, now have, or
which any successor or assign of the Credit Parties hereafter can, shall, or may
have against any of the Lender Indemnitees or their successors and assigns, for,
upon or by reason of any matter, cause or thing whatsoever, from the beginning
of the world through and including the date hereof, including, without
limitation, any matter, cause, or thing related to the Credit Agreement, this
Amendment, or any other Loan Documents (collectively, the “Released Claims”).
Without in any manner limiting the generality of the foregoing waiver and
release, Credit Parties hereby agree and acknowledge that the Released Claims
specifically include: (i) any and all Claims regarding or relating to the
enforceability of the Loan Documents as against any of the Credit Parties; (ii)
any and all Claims regarding, relating to, or otherwise challenging the
governing law provisions of the Loan Documents; (iii) any and all Claims
regarding or relating to the amount of principal, interest, fees or other
Obligations due from any of the Credit Parties to the Lender under any of the
Loan Documents; (iv) any and all Claims regarding or relating to Lender’s
conduct or Lender’s failure to perform any of Lender’s covenants or obligations
under any of the Loan Documents; (v) any and all Claims regarding or relating to
any delivery or failure to deliver any notices by Lender to Credit Parties; (vi)
any and all Claims regarding or relating to any failure by Lender to fund any
advances or other amounts under any of the Loan Documents; (vii) any and all
Claims regarding or relating to any advisory services (or the lack thereof)
provided by Lender to any of the Credit Parties for which any advisory fees may
be due and owing and included within the Obligations; and (viii) any and all
Claims based on grounds of public policy, unconscionability, or implied
covenants of fair dealing and good faith. The Credit Parties further expressly
agree that the foregoing release and waiver agreement is intended to be as broad
and inclusive as permitted by the laws governing the Loan Documents, and the
Released Claims include all Claims that the Credit Parties do not know or
suspect to exist, whether through ignorance, oversight, error, negligence, or
otherwise, and which, if known, would materially affect their decision to enter
into this Amendment. The foregoing waiver and release agreements by the Credit
Parties are a material inducement for Lender to enter into this Amendment. In
addition, each of the Credit Parties agrees and acknowledges that it has had an
opportunity to negotiate the terms and provisions of this Amendment, including
the foregoing waiver and release agreements, with and through their own
competent counsel, and that each of the Credit Parties have sufficient leverage
and economic bargaining power, and have used such leverage and economic
bargaining power, to fairly and fully negotiate this Amendment, including the
waiver and release agreements herein, in a manner that is acceptable to the
Credit Parties. The foregoing waiver and release agreements shall survive the
termination of the Credit Agreement or any of the Loan Documents, and repayment
of the Obligations.

 

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15.            Effect on Agreement and Loan Documents. Except as expressly
amended by this Amendment, all of the terms and provisions of the Credit
Agreement and the Loan Documents shall remain and continue in full force and
effect after the execution of this Amendment, are hereby ratified and confirmed,
and incorporated herein by this reference.

 

16.            No Waiver. Neither this Amendment, nor shall Lender’s agreement
to make the Additional Advance, be deemed or construed in any manner as a waiver
by the Lender of any claims, Proceedings, defaults, Events of Default, breaches
or misrepresentations by the Credit Parties under the Credit Agreement, any
other Loan Documents, or any of Lender’s rights or remedies in connection
therewith.

 

17.            Execution. This Amendment may be executed in one or more
counterparts, all of which taken together shall be deemed and considered one and
the same Amendment. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format file or other similar
format file, such signature shall be deemed an original for all purposes and
shall create a valid and binding obligation of the party executing same with the
same force and effect as if such facsimile or “.pdf” signature page was an
original thereof.

 

18.            Fees and Expenses.

 

(a)          Due Diligence Fees. The Credit Parties agree to pay to the Lender a
due diligence fee equal to Five Thousand Dollars ($5,000.00), all of which shall
be due and payable by the Credit Parties upon execution of this Amendment and
withheld from the proceeds of the Additional Advance made hereby.

 

(b)         Asset Monitoring Fee. The Credit Parties agree to pay to the Lender
an asset monitoring fee equal to Two Thousand Dollars ($2,000.00), all of which
shall be due and payable by the Credit Parties upon execution of this Amendment
and withheld from the proceeds of the Additional Advance made hereby.

 

(c)          Document Review and Legal Fees. The Credit Parties agree to pay to
the Lender or its counsel a document review and legal fee equal to Twelve
Thousand Five Hundred Dollars ($12,500.00) for the preparation, negotiation, and
execution of this Amendment and all other documents in connection herewith, all
of which shall be due and payable by the Credit Parties upon execution of this
Amendment and withheld from the proceeds of the Additional Advance made hereby.

 

(d)         Transaction Fees. The Credit Parties agrees to pay to Lender a
transaction advisory fee equal to two percent (2%) of the amount of the
Additional Advance made hereby, which fee shall be due and payable by the Credit
Parties upon execution of this Amendment and withheld from the proceeds of the
Additional Advance made hereby.

 

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19.           Additional Agreements.

 

(a)       Reconfirmation of Lock Box Deposits. Credit Parties hereby re-confirm
their obligation to insure that all Receipts, and all other checks, drafts,
instruments and other items of payment or proceeds of Collateral at any time
received, due, owing, payable, or paid to Credit Parties from a Customer or
otherwise, shall be deposited directly into the Lock Box Account, and in that
regard, Credit Parties hereby re-confirm that they have, prior to the date
hereof, affirmatively directed and instructed all of their Customers to make and
re-direct all payments and remittances otherwise due to the Credit Parties
directly to the Lock Box Account. To the extent Credit Parties at any time
receive any Receipts or other checks, drafts, instruments and other items of
payment or proceeds of Collateral to any of its accounts (and not the Lock Box
Account), then Credit Parties shall notify Lender of the receipt of such
Receipts or other sums within twenty-four (24) hours of receipt of same, and
immediately upon receipt thereof, remit or endorse same to Lender into the Lock
Box Account; provided, however, that any such re-direction shall not diminish or
abrogate Credit Parties’ obligation to direct, instruct and require all
Customers and other Persons to make all payments and remittances otherwise due
to the Credit Parties directly to the Lock Box Account.

 

(b)       Reduction of Reserve Amount. So long as no Event of Default exists
under the Credit Agreement or any other Loan Documents, and provided no event
has occurred that, with the passage of time, or the giving of notice, or both,
would constitute an Event of Default under the Credit Agreement or any other
Loan Documents, then Lender agrees that the Reserve Amount under the Credit
Agreement shall be reduced to ten percent (10%) of: (i) the then applicable
Revolving Loan Commitment; less (ii) any portion of the Withheld Amount not yet
disbursed to Borrower.

 

(c)       Extended Maturity Date. The Borrower and Lender hereby agree and
acknowledge that the Revolving Loan Maturity Date has been extended to the
earlier of: (i) August 30, 2018; (ii) upon prepayment of the Revolving Note and
all other Obligations by Borrower; or (iii) the occurrence of an Event of
Default and acceleration of the Revolving Note and all other Obligations
pursuant to the Credit Agreement and other Loan Documents.

 

(d)       Over-Advance. Provided no Event of Default exists under the Credit
Agreement or any other Loan Documents, and provided no event has occurred that,
with the passage of time, or the giving of notice, or both, would constitute an
Event of Default under the Credit Agreement or any other Loan Documents, then
Lender hereby agrees that it shall not declare an Over-advance under the Credit
Agreement for a period of ninety (90) days after the Effective Date of this
Amendment.

 

(e)       Advisory Fees. The Advisory Fee under the Credit Agreement is hereby
increased to Six Million and No/100 United States Dollars (US$6,000,000.00),
which Advisory Fee shall be paid in the manner set forth in the Credit
Agreement.

 

[Signatures on the following page]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of
the day and year first above written.

 

CREDIT PARTIES:         TARSIER LTD., a Delaware corporation         By: /s/
Isaac H. Sutton   Name: Isaac H. Sutton   Title: Chief Executive Officer  

 

TARSIER SYSTEMS, LTD., a New York corporation         By: /s/ Isaac H. Sutton  
Name: Isaac H. Sutton   Title: Chief Executive Officer  

 

LENDER:         TCA GLOBAL CREDIT MASTER FUND, LP         By: TCA Global Credit
Fund GP, Ltd.   Its: General Partner         By: /s/ Robert Press     Robert
Press, Director  

 

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