FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made
and entered into as of November 8, 2018, by and between ACF FINCO I LP, a
Delaware limited partnership (“Lender”), and JOHN KEELER & CO. INC., a Florida
corporation doing business as Blue Star Foods (“Borrower”).

 

Recitals:

 

WHEREAS, Lender and Borrower are parties to a certain Loan and Security
Agreement dated as of August 31, 2016 (as at any time amended, restated,
supplemented or otherwise modified, the “Loan Agreement”), pursuant to which
Lender has made certain revolving credit loans to Borrower; and

 

WHEREAS, Borrower has informed Lender of the proposed merger (the “Merger”) of
Borrower with Blue Star Acquisition, Inc., a Florida corporation (“Merger Sub”),
pursuant to which Borrower will be the surviving entity, and whose sole
shareholder and immediate parent would be Blue Star Foods Corp., a Delaware
corporation (“BSFC”), pursuant to a certain Agreement and Plan of Merger and
Reorganization dated November 8, 2018, among BSFC, Merger Sub, Borrower and John
R. Keeler (the “Merger Agreement”);

 

WHEREAS, the Merger, if consummated, would not be permitted under the Loan
Agreement;

 

WHEREAS, Borrower has requested that Lender consent to the Merger and amend the
Loan Agreement and Lender is willing to do so on the terms and subject to the
conditions as hereinafter set forth.

 

NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and
valuable consideration, the receipt and sufficiency of which are hereby
severally acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:

 

1. Definitions. All capitalized terms used in this Amendment, unless otherwise
defined herein, shall have the meanings ascribed to such terms in the Loan
Agreement.

 

2. Consent. Section 8.2 of the Loan Agreement prohibits Borrower from entering
into any transaction or series of transactions that directly or indirectly would
constitute a merger. In addition, Section 8.3 of the Loan Agreement prohibits
Borrower from changing its ownership structure. Notwithstanding the restrictions
contained in Section 8.2 and 8.3 of the Loan Agreement, subject to satisfaction
of each of the conditions precedent contained in Section 9 of this Amendment,
Lender hereby consents to the consummation of the Merger pursuant to the terms
of the Merger Agreement. The consent granted herein relates solely to the
matters as specifically described in this Section and nothing in this Amendment
is intended or shall be construed as Lender’s consent to any other transaction
(including, without limitation, Borrower’s taking or omitting to take any action
similar to the aforesaid matter).

 

   

 

 

3. Amendments to Loan Agreement. The Loan Agreement is hereby amended as
follows:

 

(a) Section 6.11 of the Loan Agreement is amended by deleting such Section and
substituting the following in lieu thereof:

 

6.11. Other Information.

 

(a) Promptly after the sending or filing thereof, copies of any proxy
statements, financial statements or reports that Borrower has made generally
available to its shareholders; copies of any regular, periodic and special
reports or registration statements or prospectuses that Borrower files with the
Securities and Exchange Commission or any other Governmental Unit, or any
securities exchange; and copies of any press releases or other statements made
available by Borrower to the public concerning material changes to or
developments in the business of Borrower; and

 

(b) Such other information relating to the financial condition of Borrower, or
any Property or Collateral of Borrower in, on or respect to which Lender may
have a Lien, as Lender may from time to time reasonably request.

 

(b) Section 8.3 of the Loan Agreement is amended by deleting such Section and
substituting the following in lieu thereof:

 

8.3 Change of Management; Change of Control. (a) Allow a change in the ownership
structure of Borrower, whether by the issuance, sale, transfer, exchange,
assignment or other direct or indirect hypothecation of Equity Interests, or by
the issuance of subscriptions, warrants, options, convertible securities, or
other rights (fixed, contingent or otherwise), to purchase or otherwise acquire
Equity Interests, such that (i) Controlling Equity Holder shall cease to
beneficially own and control at least 51% on a fully diluted basis of the
economic and voting interests in the Equity Interests of Parent, (ii) Parent
ceases to beneficially own and control 100% on a fully diluted basis of the
economic and voting interests in the Equity Interests of Borrower, (iii) any
Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, as amended) other than the Controlling Equity
Holder shall have obtained the power (whether or not exercised) to elect a
majority of the members of the Board of Directors (or similar governing body) of
Borrower, or (iv) Borrower shall cease to beneficially own and control 100% on a
fully diluted basis of the economic and voting interest in the Equity Interests
in its subsidiaries (if any), or (b) permit any person other than (i) John R.
Keeler to hold the office of executive chairman of Borrower (or to perform the
duties generally associated with such office as existing on the Fifth Amendment
Date), (ii) Carlos Faria to hold the office of chief executive officer of
Borrower (or to perform the duties generally associated with such office as
existing on the Fifth Amendment Date), or (iii) Christopher Constable to hold
the office of chief financial officer of Borrower (or to perform the duties
generally associated with such office as existing on the Effective Date), in
each case unless a replacement reasonably acceptable to Lender is appointed
within sixty (60) calendar days.

 

(c) Section 8.7 of the Loan Agreement is amended by deleting paragraph (b)
thereof.

 

(d) The Definitions Schedule to the Loan Agreement is amended by deleting from
the definition of “Collateral” clauses (b) and (c) contained therein and
substituting the following in lieu thereof:

 

(b) any real property.

 

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(e) The Definitions Schedule to the Loan Agreement is further amended by
deleting from the definition of “Fixed Charge Coverage Ratio” clause (b)(vii)
contained therein and substituting the following in lieu thereof:

 

(vii) all taxes (and, for any period prior to the Fifth Amendment Date, any
distributions made by Borrower to the holders of its equity interests to enable
such holders to pay applicable federal and state income taxes directly
attributable to the net income of Borrower) actually paid during such period.

 

(f) The Definitions Schedule to the Loan Agreement is further amended deleting
the definition of “Guarantor” contained therein and substituting the following
in lieu thereof:

 

“Guarantor” means each of John R. Keeler, Parent and any other Person now or
hereafter guaranteeing, endorsing, acting as surety of, or otherwise becoming
liable for any Obligations, but excluding a Support Party that has not otherwise
also executed a guaranty agreement in favor of Lender.

 

(g) The Definitions Schedule to the Loan Agreement is further amended by adding
the following new definitions thereto in proper alphabetical sequence:

 

“Controlling Equity Holder” means John R. Keeler.

 

“Fifth Amendment Date” means November [___], 2018.

 

“Parent” means Blue Star Foods Corp., a Delaware corporation.

 

(h) The Disclosure Schedule to the Loan Agreement is amended by amending and
restating disclosure items 5.1, 5.14, 5.19, and 5.21 contained therein as shown
on Exhibit A attached hereto.

 

4. Ratification and Reaffirmation. Borrower hereby ratifies and reaffirms the
Obligations, each of the Loan Documents and all of Borrower’s covenants, duties,
indebtedness and liabilities under the Loan Documents.

 

5. Acknowledgments and Stipulations. Borrower acknowledges and stipulates that
the Loan Agreement and the other Loan Documents executed by Borrower are legal,
valid and binding obligations of Borrower that are enforceable against Borrower
in accordance with the terms thereof; all of the Obligations are owing and
payable without defense, offset or counterclaim (and to the extent there exists
any such defense, offset or counterclaim on the date hereof, the same is hereby
waived by Borrower); the Liens granted by Borrower in favor of Lender are duly
perfected, first priority Liens; and the unpaid principal amount of the Loans on
and as of the opening of business on November 8, 2018, totaled $7,425,386.97.

 

6. Representations and Warranties. Borrower represents and warrants to Lender,
to induce Lender to enter into this Amendment, that no Default or Event of
Default exists on the date hereof; the execution, delivery and performance of
this Amendment have been duly authorized by all requisite corporate action on
the part of Borrower and this Amendment has been duly executed and delivered by
Borrower; and all of the representations and warranties made by Borrower in the
Loan Agreement are true and correct on and as of the date hereof, except to the
extent such representations and warranties were specific to a prior date, in
which case, such representations and warranties were true and correct on and as
of such prior date.

 

7. Reference to Loan Agreement. Upon the effectiveness of this Amendment, each
reference in the Loan Agreement to “this Agreement,” “hereunder,” or words of
like import shall mean and be a reference to the Loan Agreement, as amended by
this Amendment.

 

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8. Breach of Amendment. This Amendment shall be part of the Loan Agreement and a
breach of any representation, warranty or covenant herein shall constitute an
Event of Default.

 

9. Conditions Precedent. The effectiveness of the consent contained in Section 2
hereof and amendments contained in Section 3 hereof are subject to the
satisfaction of each of the following conditions precedent, in form and
substance satisfactory to Lender, unless satisfaction thereof is specifically
waived in writing by Lender:

 

(a) Lender shall have received:

 

(i) a counterpart of this Amendment duly executed by Borrower and acknowledged
by Guarantors;

 

(ii) true, correct and complete copies of (A) the Merger Agreement (including
all disclosure schedules), (B) Borrower’s officer’s closing certificate
delivered in connection therewith, and (C) Parent’s officer’s closing
certificate delivered in connection therewith;

 

(iii) a true, correct and complete copy of the Articles of Merger filed with the
Secretary of State of the State of Florida (and promptly upon receipt thereof, a
file-stamped copy from such Secretary of State);

 

(iv) a guaranty, pledge agreement, and security agreement each duly executed by
Parent (collectively, the “Parent Loan Documents”);

 

(v) a certificate of the secretary of Parent, to which is attached (A) Parent’s
certificate of incorporation, certified by the Secretary of State of the State
of Delaware as of a recent date, (B) Parent’s by-laws, (C) resolutions of the
board of directors of Parent authorizing entry into the Parent Loan Documents,
and (D) the names, titles and specimen signatures of the officers of Parent
authorized to execute and deliver the Parent Loan Documents on behalf of Parent,
and (E) a good standing certificate for Parent issued by the Secretary of State
of the State of Delaware as of a recent date;

 

(vi) a certificate of secretary of Borrower, which (A) certifies that there have
been no changes to the articles of incorporation or by-laws of Borrower since
the Effective Date, and (B) attaches (1) resolutions of the board of directors
of Borrower authorizing entry into the Merger and this Amendment, (2) the names,
titles and specific signatures of the officers of Borrower authorized to execute
and deliver this Amendment and any other Loan Documents on behalf of Borrower,
and (3) a good standing certificate for Borrower issued by the Secretary of
State of the State of Florida as of a recent date;

 

(vii) a wire transfer in immediately available funds in an amount not less than
$725,000 (consisting of proceeds of a capital contribution by Parent in
Borrower) for application to repayment of the Loans then outstanding;

 

(b) No Default or Event of Default shall exist after giving effect to this
Amendment; and

 

(c) Lender shall have received such other documents, instruments and agreements
as Lender may require.

 

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10. Additional Covenant. To induce Lender to enter into this Amendment, Borrower
covenants and agrees to deliver to Lender:

 

(a) Within thirty (30) days after the date hereof, the original stock
certificates issued by Borrower to Parent upon consummation of the Merger
together with an irrevocable stock power executed in blank; and

 

(b) Within ninety (90) days after the date hereof, evidence of Parent’s receipt
of an amount not less than $250,000 in gross proceeds from the sale of its
equity interest.

 

11. Expenses of Lender. Borrower agrees to pay, on demand, all costs and
expenses incurred by Lender in connection with the preparation, negotiation and
execution of this Amendment and any other Loan Documents executed pursuant
hereto and any and all amendments, modifications, and supplements thereto,
including, without limitation, the costs and fees of Lender’s legal counsel and
any taxes or expenses associated with or incurred in connection with any
instrument or agreement referred to herein or contemplated hereby.

 

12. Governing Law. This Amendment shall be governed by and construed in
accordance with the internal laws of the State of New York.

 

13. Successors and Assigns. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.

 

14. No Novation. Except as otherwise expressly provided in this Amendment,
nothing herein shall be deemed to amend or modify any provision of the Loan
Agreement or any of the other Loan Documents, each of which shall remain in full
force and effect. This Amendment is not intended to be, nor shall it be
construed to create, a novation or accord and satisfaction, and the Loan
Agreement as herein modified shall continue in full force and effect.

 

15. Counterparts; Facsimile Signatures. This Amendment may be executed in any
number of counterparts and by different parties to this Amendment on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile or other electronic transmission shall be
deemed to be an original signature hereto.

 

16. Further Assurances. Borrower agrees to take such further actions as Lender
shall reasonably request from time to time in connection herewith to evidence or
give effect to the amendments set forth herein or any of the transactions
contemplated hereby.

 

17. Section Titles. Section titles and references used in this Amendment shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreements among the parties hereto.

 

18. Release of Claims. To induce Lender to enter into this Amendment, Borrower
hereby releases, acquits and forever discharges Lender, and all officers,
directors, agents, employees, successors and assigns of Lender, from any and all
liabilities, claims, demands, actions or causes of action of any kind or nature
(if there be any), whether absolute or contingent, disputed or undisputed, at
law or in equity, or known or unknown, that Borrower now has or ever had against
Lender arising under or in connection with any of the Loan Documents or
otherwise. Borrower represents and warrants to Lender that Borrower has not
transferred or assigned to any Person any claim that Borrower ever had or
claimed to have against Lender.

 

19. Waiver of Jury Trial. To the fullest extent permitted by applicable law, the
parties hereto each hereby waives the right to trial by jury in any action,
suit, counterclaim or proceeding arising out of or related to this Amendment.

 

[Signature pages follow]

 

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

 

LENDER:

 

ACF FINCO I LP         By: /s/ John Nooney   Name: John Nooney   Its: Managing
Director         BORROWER:         JOHN KEELER & CO. INC.         By: /s/John
Keeler   Name: John Keeler   Its: Executive Chairman  

 

[Fifth Amendment to Loan and Security Agreement]

 

   

 

 

CONSENT AND REAFFIRMATION

 

Each of the undersigned guarantors of the Obligations of Borrower at any time
owing to Lender hereby (i) acknowledges receipt of a copy of the foregoing Fifth
Amendment to Loan and Security Agreement (the “Amendment”); (ii) consents to
Borrower’s execution and delivery thereof; (iii) agrees to be bound thereby;
(iv) affirms that nothing contained therein shall modify in any respect
whatsoever such guarantor’s guaranty of the Obligations and reaffirms that such
guaranty is and shall remain in full force and effect; and (v) hereby releases,
acquits and forever discharges Lender, and all officers, directors, agents,
employees, successors and assigns of Lender, from any and all liabilities,
claims, demands, actions or causes of action of any kind or nature (if there be
any), whether absolute or contingent, disputed or undisputed, at law or in
equity, or known or unknown, that such guarantor now has or ever had against
Lender arising under or in connection with such guaranty, any of the Loan
Documents or otherwise.

 

IN WITNESS WHEREOF, each of the undersigned has executed this Consent and
Reaffirmation as of the date of the Amendment.

 

  /s/ John Keeler   JOHN R. KEELER         BLUE STAR FOODS CORP.         By: /s/
John Keeler   Name: John Keeler   Title: Executive Chairman