Exhibit 10.3

 

COMMERCIAL SECURITY AGREEMENT

 

Principal

Loan Date

Maturity

Loan No

Call / Coll

Account

Officer

Initials

$5,000,000.00

02-05-2020

02-05-2021

12448

 

 

 

 

References in the boxes above are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

 

Borrower:

Heritage Global Inc.

12625 High Bluff Drive

San Diego, CA 92130

Lender:

C3bank, National Association

Arlington Office

3727 Arlington Ave

Riverside, CA 92506

 

 

 

 

Grantor:

Heritage Global Inc., Heritage Global Partners Inc.,

Heritage Global LLC, National Loan Exchange and

Heritage Global Capital LLC

12625 High Bluff Drive

San Diego, CA 92130

 

 

 

THIS COMMERCIAL SECURITY AGREEMENT dated February 5, 2020, is made and executed
among Heritage Global Inc., Heritage Global Partners Inc., Heritage Global LLC,
National Loan Exchange and Heritage Global Capital LLC ("Grantor"); Heritage
Global Inc. ("Borrower"); and C3bank, National Association ("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a security interest in the Collateral to secure the Indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note and this
Agreement:

All inventory, equipment, accounts (including but not limited to all
health-care-insurance receivables), chattel paper, instruments (including but
not limited to all promissory notes), letter-of-credit rights, letters of
credit, documents, deposit accounts, investment property, money, other rights to
payment and performance, and general intangibles (including but not limited to
all software and all payment intangibles); all oil, gas and other minerals
before extraction; all oil, gas, other minerals and accounts constituting
as-extracted collateral; all fixtures; all timber to be cut; all attachments,
accessions, accessories, fittings, increases, tools, parts, repairs, supplies,
and commingled goods relating to the foregoing property, and all additions,
replacements of and substitutions for all or any part of the foregoing property;
all insurance refunds relating to the foregoing property; all good will relating
to the foregoing property; all records and data and embedded software relating
to the foregoing property, and all equipment, inventory and software to utilize,
create, maintain and process any such records and data on electronic media; and
all supporting obligations relating to the foregoing property; all whether now
existing or hereafter arising, whether now owned or hereafter acquired or
whether now or hereafter subject to any rights in the foregoing property; and
all products and proceeds (including but not limited to all insurance payments)
of or relating to the foregoing property.

The word collateral shall not include any accounts, chattel paper, instructions
of, or equity interests in, any special purpose vehicle in which HG Capital has
an equity interest but only to the extent such assets have been pledged as
collateral securing an obligation made by a person with an interest in such
special purpose vehicle.

In addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:

(A)All accessions, attachments, accessories, tools, parts, supplies,
replacements of and additions to any of the collateral described herein, whether
added now or later.

(B)All products and produce of any of the property described in this Collateral
section.

(C)All accounts, general intangibles, instruments, rents, monies, payments, and
all other rights, arising out of a sale, lease, consignment

or other disposition of any of the property described in this Collateral
section.

(D)All proceeds (including insurance proceeds) from the sale, destruction, loss,
or other disposition of any of the property described in this Collateral
section, and sums due from a third party who has damaged or destroyed the
Collateral or from that party's insurer, whether due to judgment, settlement or
other process.

(E)All records and data relating to any of the property described in this
Collateral section, whether in the form of a writing, photograph, microfilm,
microfiche, or electronic media, together with all of Grantor's right, title,
and interest in and to all computer software required to utilize, create,
maintain, and process any such records or data on electronic media.

CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures all
obligations, debts and liabilities, plus interest thereon, of either Grantor or
Borrower to Lender, or any one or more of them, as well as all claims by Lender
against Borrower and Grantor or any one or more of them, whether now existing or
hereafter arising, whether related or unrelated to the purpose of the Note,
whether voluntary or otherwise, whether due or not due, direct or indirect,
determined or undetermined, absolute or contingent, liquidated or unliquidated,
whether Borrower or Grantor may be liable individually or jointly with others,
whether obligated as guarantor, surety, accommodation party or otherwise, and
whether recovery upon such amounts may be or hereafter may become barred by any
statute of limitations, and whether the obligation to repay such amounts may be
or hereafter may become otherwise unenforceable. (Initial Here ________ ________
________ ________ )

FUTURE ADVANCES. In addition to the Note, this Agreement secures all future
advances made by Lender to Borrower regardless of whether the advances are made
a) pursuant to a commitment or b) for the same purposes.

BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under this
Agreement or by applicable law, (A) Borrower agrees that Lender need not tell
Borrower about any action or inaction Lender takes in connection with this
Agreement; (B) Borrower assumes the responsibility for being and keeping
informed about the Collateral; and (C) Borrower waives any defenses that may
arise because of any action or inaction of Lender, including without limitation
any failure of Lender to realize upon the Collateral or any delay by Lender in
realizing upon the Collateral; and Borrower agrees to remain liable under the
Note no matter what action Lender takes or fails to take under this Agreement.

 

 

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COMMERCIAL SECURITY AGREEMENT

Loan No: 12448

(Continued)

Page 2

 

 

GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (A) this
Agreement is executed at Borrower's request and not at the request of Lender;
(B) Grantor has the full right, power and authority to enter into this Agreement
and to pledge the Collateral to Lender; (C) Grantor has established adequate
means of obtaining from Borrower on a continuing basis information about
Borrower's financial condition; and (D) Lender has made no representation to
Grantor about Borrower or Borrower's creditworthiness.

GRANTOR'S WAIVERS. Except as prohibited by applicable law, Grantor waives any
right to require Lender to (A) make any presentment, protest, demand, or notice
of any kind, including notice of change of any terms of repayment of the
Indebtedness, default by Borrower or any other guarantor or surety, any action
or nonaction taken by Borrower, Lender, or any other guarantor or surety of
Borrower, or the creation of new or additional Indebtedness; (B) proceed against
any person, including Borrower, before proceeding against Grantor; (C) proceed
against any collateral for the Indebtedness, including Borrower's collateral,
before proceeding against Grantor; (D) apply any payments or proceeds received
against the Indebtedness in any order; (E) give notice of the terms, time, and
place of any sale of any collateral pursuant to the Uniform Commercial Code or
any other law governing such sale; (F) disclose any information about the
Indebtedness, the Borrower, any collateral, or any other guarantor or surety, or
about any action or nonaction of Lender; or (G) pursue any remedy or course of
action in Lender's power whatsoever.

Grantor also waives any and all rights or defenses arising by reason of (A) any
disability or other defense of Borrower, any other guarantor or surety or any
other person; (B) the cessation from any cause whatsoever, other than payment in
full, of the Indebtedness; (C) the application of proceeds of the Indebtedness
by Borrower for purposes other than the purposes understood and intended by
Grantor and Lender; (D) any act of omission or commission by Lender which
directly or indirectly results in or contributes to the discharge of Borrower or
any other guarantor or surety, or the Indebtedness, or the loss or release of
any collateral by operation of law or otherwise; (E) any statute of limitations
in any action under this Agreement or on the Indebtedness; or (F) any
modification or change in terms of the Indebtedness, whatsoever, including
without limitation, the renewal, extension, acceleration, or other change in the
time payment of the Indebtedness is due and any change in the interest rate.

Grantor waives all rights and defenses arising out of an election of remedies by
Lender even though that election of remedies, such as a non-judicial foreclosure
with respect to security for a guaranteed obligation, has destroyed Grantor's
rights of subrogation and reimbursement against Borrower by operation of Section
580d of the California Code of Civil Procedure or otherwise.

Grantor waives all rights and defenses that Grantor may have because Borrower's
obligation is secured by real property. This means among other things: (1)
Lender may collect from Grantor without first foreclosing on any real property
collateral pledged by Borrower ; and (2) If Lender forecloses on any real
property collateral pledged by the Borrower : (A) The amount of the Borrower's
obligation may be reduced only by the price for which the collateral is sold at
the foreclosure sale, even if the collateral is worth more than the sale price;
(B) The Lender may collect from the Grantor even if the Lender, by foreclosing
on the real property collateral, has destroyed any right the Grantor may have to
collect from the borrower. This is an unconditional and irrevocable waiver of
any rights and defenses the Grantor may have because the Borrower's obligation
is secured by real property. These rights and defenses include, but are not
limited to, any rights and defenses based upon Sections 580a, 580b, 580d, or 726
of the Code of Civil Procedure.

Grantor understands and agrees that the foregoing waivers are unconditional and
irrevocable waivers of substantive rights and defenses to which Grantor might
otherwise be entitled under state and federal law. The rights and defenses
waived include, without limitation, those provided by California laws of
suretyship and guaranty, anti-deficiency laws, and the Uniform Commercial Code.
Grantor further understands and agrees that this Agreement is a separate and
independent contract between Grantor and Lender, given for full and ample
consideration, and is enforceable on its own terms. Grantor acknowledges that
Grantor has provided these waivers of rights and defenses with the intention
that they be fully relied upon by Lender. Until all Indebtedness is paid in
full, Grantor waives any right to enforce any remedy Grantor may have against
Borrower or any other guarantor, surety, or other person, and further, Grantor
waives any right to participate in any collateral for the Indebtedness now or
hereafter held by Lender.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and promises to Lender that:

Perfection of Security Interest. Grantor agrees to take whatever actions are
requested by Lender to perfect and continue Lender's security interest in the
Collateral. Upon request of Lender, Grantor will deliver to Lender any and all
of the documents evidencing or constituting the Collateral, and Grantor will
note Lender's interest upon any and all chattel paper and instruments if not
delivered to Lender for possession by Lender. This is a continuing Security
Agreement and will continue in effect even though all or any part of the
Indebtedness is paid in full and even though for a period of time Borrower may
not be indebted to Lender.

Notices to Lender. Grantor will promptly notify Lender in writing at Lender's
address shown above (or such other addresses as Lender may designate from time
to time) prior to any (1) change in Grantor's name; (2) change in Grantor's
assumed business name(s); (3) change in the management of any Corporation or in
the management or in the members or managers of the limited liability company
Grantor; (4) change in the authorized signer(s); (5) change in Grantor's
principal office address; (6) change in Grantor's state of organization; (7)
conversion of Grantor to a new or different type of business entity; or (8)
change in any other aspect of Grantor that directly or indirectly relates to any
agreements between Grantor and Lender. No change in Grantor's name or state of
organization will take effect until after Lender has received notice.

No Violation. The execution and delivery of this Agreement will not violate any
law or agreement governing Grantor or to which Grantor is a party, and its
certificate or articles of incorporation and bylaws do not prohibit any term or
condition of this Agreement, and its membership agreement does not prohibit any
term or condition of this Agreement.

Enforceability of Collateral. To the extent the Collateral consists of accounts,
chattel paper, or general intangibles, as defined by the Uniform Commercial
Code, the Collateral is enforceable in accordance with its terms, is genuine,
and fully complies with all applicable laws and regulations concerning form,
content and manner of preparation and execution, and all persons appearing to be
obligated on the Collateral have authority and capacity to contract and are in
fact obligated as they appear to be on the Collateral. At the time any account
becomes subject to a security interest in favor of Lender, the account shall be
a good and valid account representing an undisputed, bona fide indebtedness
incurred by the account debtor, for merchandise held subject to delivery
instructions or previously shipped or delivered pursuant to a contract of sale,
or for services previously performed by Grantor with or for the account debtor.
So long as this Agreement remains in effect, Grantor shall not, without Lender's
prior written consent, compromise, settle, adjust, or extend payment under or
with regard to any such Accounts. There shall be no setoffs or counterclaims
against any of the Collateral, and no agreement shall have been made under which
any deductions or discounts may be claimed concerning the Collateral except
those disclosed to Lender in writing.

Location of the Collateral. Except in the ordinary course of Grantor's business,
Grantor agrees to keep the Collateral (or to the extent the Collateral consists
of intangible property such as accounts or general intangibles, the records
concerning the Collateral) at Grantor's address shown above or at such other
locations as are acceptable to Lender. Upon Lender's request, Grantor will
deliver to Lender in form satisfactory to Lender a schedule of real properties
and Collateral locations relating to Grantor's operations, including without
limitation the following: (1) all real property Grantor owns or is purchasing;
(2) all real property Grantor is renting or leasing; (3) all storage facilities
Grantor owns, rents, leases, or uses; and (4) all other properties where
Collateral is or may be located.

Removal of the Collateral. Except in the ordinary course of Grantor's business,
including the sales of inventory, Grantor shall not remove the Collateral from
its existing location without Lender's prior written consent. To the extent that
the Collateral consists of vehicles, or other titled property, Grantor shall not
take or permit any action which would require application for certificates of
title for the vehicles outside the State of California, without Lender's prior
written consent. Grantor shall, whenever requested, advise Lender of the exact
location of the Collateral.

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COMMERCIAL SECURITY AGREEMENT

Loan No: 12448

(Continued)

Page 3

 

 

Transactions Involving Collateral. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, or as otherwise provided
for in this Agreement, Grantor shall not sell, offer to sell, or otherwise
transfer or dispose of the Collateral. While Grantor is not in default under
this Agreement, Grantor may sell inventory, but only in the ordinary course of
its business and only to buyers who qualify as a buyer in the ordinary course of
business. A sale in the ordinary course of Grantor's business does not include a
transfer in partial or total satisfaction of a debt or any bulk sale. Grantor
shall not pledge, mortgage, encumber or otherwise permit the Collateral to be
subject to any lien, security interest, encumbrance, or charge, other than the
security interest provided for in this Agreement, without the prior written
consent of Lender. This includes security interests even if junior in right to
the security interests granted under this Agreement. Unless waived by Lender,
all proceeds from any disposition of the Collateral (for whatever reason) shall
be held in trust for Lender and shall not be commingled with any other funds;
provided however, this requirement shall not constitute consent by Lender to any
sale or other disposition. Upon receipt, Grantor shall immediately deliver any
such proceeds to Lender.

Title. Grantor represents and warrants to Lender that Grantor holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral is on file in any public office other than those which reflect
the security interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.

Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause
others to keep and maintain, the Collateral in good order, repair and condition
at all times while this Agreement remains in effect. Grantor further agrees to
pay when due all claims for work done on, or services rendered or material
furnished in connection with the Collateral so that no lien or encumbrance may
ever attach to or be filed against the Collateral.

Inspection of Collateral. Lender and Lender's designated representatives and
agents shall have the right at all reasonable times to examine and inspect the
Collateral wherever located.

Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments
and liens upon the Collateral, its use or operation, upon this Agreement, upon
any promissory note or notes evidencing the Indebtedness, or upon any of the
other Related Documents. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's interest in
the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is
subjected to a lien which is not discharged within fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surety bond or other
security satisfactory to Lender in an amount adequate to provide for the
discharge of the lien plus any interest, costs, attorneys' fees or other charges
that could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the contest
proceedings. Grantor further agrees to furnish Lender with evidence that such
taxes, assessments, and governmental and other charges have been paid in full
and in a timely manner. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's interest in
the Collateral is not jeopardized.

Compliance with Governmental Requirements. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral, including all laws or regulations relating to the undue
erosion of highly-erodible land or relating to the conversion of wetlands for
the production of an agricultural product or commodity. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance during
any proceeding, including appropriate appeals, so long as Lender's interest in
the Collateral, in Lender's opinion, is not jeopardized.

Hazardous Substances. Grantor represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a lien on the
Collateral, used in violation of any Environmental Laws or for the generation,
manufacture, storage, transportation, treatment, disposal, release or threatened
release of any Hazardous Substance. The representations and warranties contained
herein are based on Grantor's due diligence in investigating the Collateral for
Hazardous Substances. Grantor hereby (1) releases and waives any future claims
against Lender for indemnity or contribution in the event Grantor becomes liable
for cleanup or other costs under any Environmental Laws, and (2) agrees to
indemnify, defend, and hold harmless Lender against any and all claims and
losses resulting from a breach of this provision of this Agreement. This
obligation to indemnify and defend shall survive the payment of the Indebtedness
and the satisfaction of this Agreement.

Maintenance of Casualty Insurance. Grantor shall procure and maintain all risks
insurance, including without limitation fire, theft and liability coverage
together with such other insurance as Lender may require with respect to the
Collateral, in form, amounts, coverages and basis reasonably acceptable to
Lender and issued by a company or companies reasonably acceptable to Lender.
Grantor, upon request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at least
thirty (30) days' prior written notice to Lender and not including any
disclaimer of the insurer's liability for failure to give such a notice. Each
insurance policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission or default
of Grantor or any other person. In connection with all policies covering assets
in which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require. If
Grantor at any time fails to obtain or maintain any insurance as required under
this Agreement, Lender may (but shall not be obligated to) obtain such insurance
as Lender deems appropriate, including if Lender so chooses "single interest
insurance," which will cover only Lender's interest in the Collateral.

Application of Insurance Proceeds. Grantor shall promptly notify Lender of any
loss or damage to the Collateral, whether or not such casualty or loss is
covered by insurance. Lender may make proof of loss if Grantor fails to do so
within fifteen (15) days of the casualty. All proceeds of any insurance on the
Collateral, including accrued proceeds thereon, shall be held by Lender as part
of the Collateral. If Lender consents to repair or replacement of the damaged or
destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, pay
or reimburse Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to pay all
of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which
have not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral shall
be used to prepay the Indebtedness.

Insurance Reserves. Lender may require Grantor to maintain with Lender reserves
for payment of insurance premiums, which reserves shall be created by monthly
payments from Grantor of a sum estimated by Lender to be sufficient to produce,
at least fifteen (15) days before the premium due date, amounts at least equal
to the insurance premiums to be paid. If fifteen (15) days before payment is
due, the reserve funds are insufficient, Grantor shall upon demand pay any
deficiency to Lender. The reserve funds shall be held by Lender as a general
deposit and shall constitute a non-interest-bearing account which Lender may
satisfy by payment of the insurance premiums required to be paid by Grantor as
they become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance premiums
required to be paid by Grantor. The responsibility for the payment of premiums
shall remain Grantor's sole responsibility.

Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as Lender
may reasonably request including the following: (1) the name of the insurer; (2)
the risks insured; (3) the amount of the policy; (4) the property insured; (5)
the then current value on the basis of which insurance has been obtained and the
manner of determining that value; and (6) the expiration date of the policy. In
addition, Grantor shall upon request by Lender (however not more often than
annually) have an independent appraiser satisfactory to Lender determine, as
applicable, the cash value or replacement cost of the Collateral.

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COMMERCIAL SECURITY AGREEMENT

Loan No: 12448

(Continued)

Page 4

 

 

Financing Statements. Grantor authorizes Lender to file a UCC financing
statement, or alternatively, a copy of this Agreement to perfect Lender's
security interest. At Lender's request, Grantor additionally agrees to sign all
other documents that are necessary to perfect, protect, and continue Lender's
security interest in the Property. Grantor will pay all filing fees, title
transfer fees, and other fees and costs involved unless prohibited by law or
unless Lender is required by law to pay such fees and costs. Grantor irrevocably
appoints Lender to execute documents necessary to transfer title if there is a
default. Lender may file a copy of this Agreement as a financing statement.

100% EQUITY PLEDGE. 100% OF THE EQUITY INTERESTS IN HERITAGE GLOBAL PARTNERS
INC.; HERITAGE GLOBAL LLC; HERITAGE GLOBAL CAPITAL LLC AND NATIONAL LOAN
EXCHANGE INC..

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Indebtedness.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B)
be added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon the occurrence of any Event of Default.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:

Payment Default. Borrower fails to make any payment when due under the
Indebtedness.

Other Defaults. Borrower or Grantor fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in any of
the Related Documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower or Grantor.

Default in Favor of Third Parties. Borrower or Grantor defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of any other creditor or person that may materially
affect any of Borrower's or Grantor's property or ability to perform their
respective obligations under this Agreement or any of the Related Documents.

False Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or Grantor or on Borrower's or Grantor's behalf under this
Agreement or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter.

Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any collateral
document to create a valid and perfected security interest or lien) at any time
and for any reason.

Insolvency. The dissolution or termination of Borrower's or Grantor's existence
as a going business, the insolvency of Borrower or Grantor, the appointment of a
receiver for any part of Borrower's or Grantor's property, any assignment for
the benefit of creditors, any type of creditor workout, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against Borrower or
Grantor.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or Grantor or by any governmental
agency against any collateral securing the Indebtedness. This includes a
garnishment of any of Borrower's or Grantor's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if there
is a good faith dispute by Borrower or Grantor as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower or Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a surety
bond for the creditor or forfeiture proceeding, in an amount determined by
Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to
any guarantor, endorser, surety, or accommodation party of any of the
Indebtedness or guarantor, endorser, surety, or accommodation party dies or
becomes incompetent or revokes or disputes the validity of, or liability under,
any Guaranty of the Indebtedness.

Adverse Change. A material adverse change occurs in Borrower's or Grantor's
financial condition, or Lender believes the prospect of payment or performance
of the Indebtedness is impaired.

Insecurity. Lender in good faith believes itself insecure.

Cure Provisions. If any default, other than a default in payment, is curable and
if Grantor has not been given a notice of a breach of the same provision of this
Agreement within the preceding twelve (12) months, it may be cured if Grantor,
after Lender sends written notice to Borrower demanding cure of such default:
(1) cures the default within fifteen (15) days; or (2) if the cure requires more
than fifteen (15) days, immediately initiates steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the California Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

Accelerate Indebtedness. Lender may declare the entire Indebtedness, including
any prepayment penalty which Borrower would be required to pay, immediately due
and payable, without notice of any kind to Borrower or Grantor.

--------------------------------------------------------------------------------

COMMERCIAL SECURITY AGREEMENT

Loan No: 12448

(Continued)

Page 5

 

 

Assemble Collateral. Lender may require Grantor to deliver to Lender all or any
portion of the Collateral and any and all certificates of title and other
documents relating to the Collateral. Lender may require Grantor to assemble the
Collateral and make it available to Lender at a place to be designated by
Lender. Lender also shall have full power to enter upon the property of Grantor
to take possession of and remove the Collateral. If the Collateral contains
other goods not covered by this Agreement at the time of repossession, Grantor
agrees Lender may take such other goods, provided that Lender makes reasonable
efforts to return them to Grantor after repossession.

Sell the Collateral. Lender shall have full power to sell, lease, transfer, or
otherwise deal with the Collateral or proceeds thereof in Lender's own name or
that of Grantor. Lender may sell the Collateral at public auction or private
sale. Unless the Collateral threatens to decline speedily in value or is of a
type customarily sold on a recognized market, Lender will give Grantor, and
other persons as required by law, reasonable notice of the time and place of any
public sale, or the time after which any private sale or any other disposition
of the Collateral is to be made. However, no notice need be provided to any
person who, after Event of Default occurs, enters into and authenticates an
agreement waiving that person's right to notification of sale. The requirements
of reasonable notice shall be met if such notice is given at least ten (10) days
before the time of the sale or disposition. All expenses relating to the
disposition of the Collateral, including without limitation the expenses of
retaking, holding, insuring, preparing for sale and selling the Collateral,
shall become a part of the Indebtedness secured by this Agreement and shall be
payable on demand, with interest at the Note rate from date of expenditure until
repaid.

Appoint Receiver. Lender shall have the right to have a receiver appointed to
take possession of all or any part of the Collateral, with the power to protect
and preserve the Collateral, to operate the Collateral preceding foreclosure or
sale, and to collect the rents from the Collateral and apply the proceeds, over
and above the cost of the receivership, against the Indebtedness. The receiver
may serve without bond if permitted by law. Lender's right to the appointment of
a receiver shall exist whether or not the apparent value of the Collateral
exceeds the Indebtedness by a substantial amount. Employment by Lender shall not
disqualify a person from serving as a receiver.

Collect Revenues, Apply Accounts. Lender, either itself or through a receiver,
may collect the payments, rents, income, and revenues from the Collateral.
Lender may at any time in Lender's discretion transfer any Collateral into
Lender's own name or that of Lender's nominee and receive the payments, rents,
income, and revenues therefrom and hold the same as security for the
Indebtedness or apply it to payment of the Indebtedness in such order of
preference as Lender may determine. Insofar as the Collateral consists of
accounts, general intangibles, insurance policies, instruments, chattel paper,
choses in action, or similar property, Lender may demand, collect, receipt for,
settle, compromise, adjust, sue for, foreclose, or realize on the Collateral as
Lender may determine, whether or not Indebtedness or Collateral is then due. For
these purposes, Lender may, on behalf of and in the name of Grantor, receive,
open and dispose of mail addressed to Grantor; change any address to which mail
and payments are to be sent; and endorse notes, checks, drafts, money orders,
documents of title, instruments and items pertaining to payment, shipment, or
storage of any Collateral. To facilitate collection, Lender may notify account
debtors and obligors on any Collateral to make payments directly to Lender.

Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Borrower for any deficiency remaining on
the Indebtedness due to Lender after application of all amounts received from
the exercise of the rights provided in this Agreement. Borrower shall be liable
for a deficiency even if the transaction described in this subsection is a sale
of accounts or chattel paper.

Other Rights and Remedies. Lender shall have all the rights and remedies of a
secured creditor under the provisions of the Uniform Commercial Code, as may be
amended from time to time. In addition, Lender shall have and may exercise any
or all other rights and remedies it may have available at law, in equity, or
otherwise.

Election of Remedies. Except as may be prohibited by applicable law, all of
Lender's rights and remedies, whether evidenced by this Agreement, the Related
Documents, or by any other writing, shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Grantor under this Agreement, after
Grantor's failure to perform, shall not affect Lender's right to declare a
default and exercise its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

Amendments. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.

Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's
costs and expenses, including Lender's attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement. Lender
may hire or pay someone else to help enforce this Agreement, and Grantor shall
pay the costs and expenses of such enforcement. Costs and expenses include
Lender's attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Grantor also
shall pay all court costs and such additional fees as may be directed by the
court.

Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.

Governing Law. This Agreement will be governed by federal law applicable to
Lender and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Agreement has
been accepted by Lender in the State of California.

Choice of Venue. If there is a lawsuit, Grantor agrees upon Lender's request to
submit to the jurisdiction of the courts of Riverside County, State of
California.

Joint and Several Liability. All obligations of Borrower and Grantor under this
Agreement shall be joint and several, and all references to Grantor shall mean
each and every Grantor, and all references to Borrower shall mean each and every
Borrower. This means that each

Borrower and Grantor signing below is responsible for all obligations in this
Agreement. Where any one or more of the parties is a corporation, partnership,
limited liability company or similar entity, it is not necessary for Lender to
inquire into the powers of any of the officers, directors, partners, members, or
other agents acting or purporting to act on the entity's behalf, and any
obligations made or created in reliance upon the professed exercise of such
powers shall be guaranteed under this Agreement.

Preference Payments. Any monies Lender pays because of an asserted preference
claim in Borrower's or Grantor's bankruptcy will become a part of the
Indebtedness and, at Lender's option, shall be payable by Borrower and Grantor
as provided in this Agreement.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate as
a waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Grantor, shall constitute a waiver of any of Lender's rights or of
any of Grantor's obligations as to any future transactions. Whenever the consent
of Lender is required under this Agreement, the granting of such consent by
Lender in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may be
granted or withheld in the sole discretion of Lender.

--------------------------------------------------------------------------------

COMMERCIAL SECURITY AGREEMENT

Loan No: 12448

(Continued)

Page 6

 

 

Notices. Any notice required to be given under this Agreement shall be given in
writing, and shall be effective when actually delivered, when actually received
by telefacsimile (unless otherwise required by law), when deposited with a
nationally recognized overnight courier, or, if mailed, when deposited in the
United States mail, as first class, certified or registered mail postage
prepaid, directed to the addresses shown near the beginning of this Agreement.
Any party may change its address for notices under this Agreement by giving
formal written notice to the other parties, specifying that the purpose of the
notice is to change the party's address. For notice purposes, Grantor agrees to
keep Lender informed at all times of Grantor's current address. Unless otherwise
provided or required by law, if there is more than one Grantor, any notice given
by Lender to any Grantor is deemed to be notice given to all Grantors.

Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect, amend, or to continue the security interest granted in this Agreement
or to demand termination of filings of other secured parties. Lender may at any
time, and without further authorization from Grantor, file a carbon,
photographic or other reproduction of any financing statement or of this
Agreement for use as a financing statement. Grantor will reimburse Lender for
all expenses for the perfection and the continuation of the perfection of
Lender's security interest in the Collateral.

Waiver of Co-Obligor's Rights. If more than one person is obligated for the
Indebtedness, Grantor irrevocably waives, disclaims and relinquishes all claims
against such other person which Grantor has or would otherwise have by virtue of
payment of the Indebtedness or any part thereof, specifically including but not
limited to all rights of indemnity, contribution or exoneration.

Severability. If a court of competent jurisdiction finds any provision of this
Agreement to be illegal, invalid, or unenforceable as to any person or
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other person or circumstance. If feasible,
the offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise required by
law, the illegality, invalidity, or unenforceability of any provision of this
Agreement shall not affect the legality, validity or enforceability of any other
provision of this Agreement.

Successors and Assigns. Subject to any limitations stated in this Agreement on
transfer of Grantor's interest, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns. If ownership of the
Collateral becomes vested in a person other than Grantor, Lender, without notice
to Grantor, may deal with Grantor's successors with reference to this Agreement
and the Indebtedness by way of forbearance or extension without releasing
Grantor from the obligations of this Agreement or liability under the
Indebtedness.

Survival of Representations and Warranties. All representations, warranties, and
agreements made by Grantor in this Agreement shall survive the execution and
delivery of this Agreement, shall be continuing in nature, and shall remain in
full force and effect until such time as Borrower's Indebtedness shall be paid
in full.

Time is of the Essence. Time is of the essence in the performance of this
Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:

Agreement. The word "Agreement" means this Commercial Security Agreement, as
this Commercial Security Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Commercial Security
Agreement from time to time.

Borrower. The word "Borrower" means Heritage Global Inc. and includes all
co-signers and co-makers signing the Note and all their successors and assigns.

Collateral. The word "Collateral" means all of Grantor's right, title and
interest in and to all the Collateral as described in the Collateral Description
section of this Agreement.

Environmental Laws. The words "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5
through 7.7 of Division 20 of the California Health and Safety Code, Section
25100, et seq., or other applicable state or federal laws, rules, or regulations
adopted pursuant thereto.

Event of Default. The words "Event of Default" mean any of the events of default
set forth in this Agreement in the default section of this Agreement.

Grantor. The word "Grantor" means Heritage Global Inc., Heritage Global Partners
Inc., Heritage Global LLC, National Loan Exchange and Heritage Global Capital
LLC.

Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser,
surety, or accommodation party to Lender, including without limitation a
guaranty of all or part of the Note.

Hazardous Substances. The words "Hazardous Substances" mean materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a present or potential hazard to human health
or the environment when improperly used, treated, stored, disposed of,
generated, manufactured, transported or otherwise handled. The words "Hazardous

Substances" are used in their very broadest sense and include without limitation
any and all hazardous or toxic substances, materials or waste as defined by or
listed under the Environmental Laws. The term "Hazardous Substances" also
includes, without limitation, petroleum and petroleum by-products or any
fraction thereof and asbestos.

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the
Note or Related Documents, including all principal and interest together with
all other indebtedness and costs and expenses for which Borrower is responsible
under this Agreement or under any of the Related Documents. Specifically,
without limitation, Indebtedness includes the future advances set forth in the
Future Advances provision, together with all interest thereon and all amounts
that may be indirectly secured by the Cross-Collateralization provision of this
Agreement.

Lender. The word "Lender" means C3bank, National Association, its successors and
assigns.

Note. The word "Note" means the Note dated February 5, 2020 and executed by
Heritage Global Inc. in the principal amount of $5,000,000.00, together with all
renewals of, extensions of, modifications of, refinancings of, consolidations
of, and substitutions for the note or credit agreement.

Property. The word "Property" means all of Grantor's right, title and interest
in and to all the Property as described in the "Collateral Description" section
of this Agreement.

--------------------------------------------------------------------------------

COMMERCIAL SECURITY AGREEMENT

Loan No: 12448

(Continued)

Page 7

 

 

Related Documents. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, security
agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and
all other instruments, agreements and documents, whether now or hereafter
existing, executed in connection with the Indebtedness.

BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED
FEBRUARY 5, 2020.

 

GRANTOR:

 

HERITAGE GLOBAL INC.

 

 

 

 

 

By:_____/s/ Kirk Dove_________________________________

 

By:____/s/ Scott West________________________________

Kirk Dove, President of Heritage Global Inc.

 

Scott West, Chief Financial Officer of Heritage

 

 

Global Inc.

 

 

 

HERITAGE GLOBAL PARTNERS INC.

 

 

 

 

 

By:_____/s/ Ross Dove________________________________

 

By:_____ /s/ Scott West ______________________________

Grantor for Heritage Global Partners Inc.

 

Grantor for Heritage Global Partners Inc.

 

 

 

 

 

 

HERITAGE GLOBAL LLC

 

 

 

 

 

By:_____/s/ Ross Dove________________________________

 

By:______ /s/ Scott West _____________________________

Grantor for Heritage Global LLC

 

Grantor for Heritage Global LLC

 

 

 

 

 

 

NATIONAL LOAN EXCHANGE

 

 

 

 

 

By:_____/s/ Ross Dove________________________________

 

By:______ /s/ Scott West ___________________________

Grantor for National Loan Exchange

 

Grantor for National Loan Exchange

 

 

 

 

 

 

HERITAGE GLOBAL CAPITAL LLC

 

 

 

 

 

By:____/s/ Ross Dove_________________________________

 

By:_______ /s/ Scott West ____________________________

Grantor for Heritage Global Capital LLC

 

Grantor for Heritage Global Capital LLC

 

 

 

 

 

 

BORROWER:

 

 

 

 

 

 

 

 

HERITAGE GLOBAL INC.

 

 

 

 

 

By:_______/s/ Kirk Dove_______________________________

 

By:______ /s/ Scott West ____________________________

Kirk Dove, President of Heritage Global Inc.

 

Scott West, Chief Financial Officer of Heritage

 

 

Global Inc.

 

LaserPro, Ver. 19.3.0.038 Copr. Finastra USA Corporation 1997, 2020. All Rights
Reserved. - CA C:\CFI\LPL\E40.FC TR-2032 PR-45

 

 

 

--------------------------------------------------------------------------------

 

AGREEMENT TO PROVIDE INSURANCE

 

Principal

Loan Date

Maturity

Loan No

Call / Coll

Account

Officer

Initials

$5,000,000.00

02-05-2020

02-05-2021

12448

 

 

 

 

References in the boxes above are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

 

Borrower:

Heritage Global Inc.

Lender:

C3bank, National Association

 

12625 High Bluff Drive

 

Arlington Office

 

San Diego, CA 92130

 

3727 Arlington Ave

 

 

 

Riverside, CA 92506

 

 

 

 

Grantor:

Heritage Global Inc., Heritage Global Partners Inc.,

 

 

 

Heritage Global LLC, National Loan Exchange and

 

 

 

Heritage Global Capital LLC

 

 

 

12625 High Bluff Drive

 

 

 

San Diego, CA 92130

 

 

 

INSURANCE REQUIREMENTS. Grantor, Heritage Global Inc., Heritage Global Partners
Inc., Heritage Global LLC, National Loan Exchange and Heritage Global Capital
LLC ("Grantor"), understands that insurance coverage is required in connection
with the extending of a loan or the providing of other financial accommodations
to Heritage Global Inc. ("Borrower") by Lender. These requirements are set forth
in the security documents for the loan. The following minimum insurance
coverages must be provided on the following described collateral (the
"Collateral"):

 

Collateral:

All Inventory and Equipment.

 

Type: All risks, including fire, theft and liability.

 

Amount: Full Insurable Value.

 

Basis: Replacement value.

 

Endorsements: Lender loss payable clause with stipulation that coverage will not
be cancelled or diminished without a

 

minimum of 30 days prior written notice to Lender.

 

Latest Delivery Date: By the loan closing date.

 

INSURANCE COMPANY. Grantor may obtain insurance from any insurance company
Grantor may choose that is reasonably acceptable to Lender. Grantor understands
that credit may not be denied solely because insurance was not purchased through
Lender.

FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Lender, on the latest
delivery date stated above, proof of the required insurance as provided above,
with an effective date of February 5, 2020, or earlier. Grantor acknowledges and
agrees that if Grantor fails to provide any required insurance or fails to
continue such insurance in force, Lender may do so at Grantor's expense as
provided in the applicable security document. The cost of any such insurance, at
the option of Lender, shall be added to the indebtedness as provided in the
security document. GRANTOR ACKNOWLEDGES THAT IF LENDER SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO AN AMOUNT EQUAL TO THE LESSER OF (1) THE UNPAID BALANCE
OF THE DEBT, EXCLUDING ANY UNEARNED FINANCE CHARGES, OR (2) THE VALUE OF THE
COLLATERAL; HOWEVER, GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN
ADDITION, THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION AND MAY NOT MEET THE REQUIREMENTS OF ANY FINANCIAL
RESPONSIBILITY LAWS.

AUTHORIZATION. For purposes of insurance coverage on the Collateral, Grantor
authorizes Lender to provide to any person (including any insurance agent or
company) all information Lender deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.

 

 

--------------------------------------------------------------------------------

AGREEMENT TO PROVIDE INSURANCE

Loan No: 12448

(Continued)

Page 2

 

 

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 5, 2020.

 

GRANTOR:

 

 

 

 

 

 

 

 

HERITAGE GLOBAL INC.

 

 

 

 

 

By:_____/s/ Kirk Dove_________________________________

 

By:_____ /s/ Scott West________________________________

Kirk Dove, President of Heritage Global Inc.

 

Scott West, Chief Financial Officer of Heritage Global Inc.

 

 

 

 

 

 

HERITAGE GLOBAL PARTNERS INC.

 

 

By:_______/s/ Ross Dove_______________________________

 

By:_____ /s/ Scott West ________________________________

Grantor for Heritage Global Partners Inc.

 

Grantor for Heritage Global Partners Inc.

 

 

 

 

 

 

HERITAGE GLOBAL LLC

 

 

 

 

 

By:_______ /s/ Ross Dove ______________________________

 

By:_____ /s/ Scott West _______________________________

Grantor for Heritage Global LLC

 

Grantor for Heritage Global LLC

 

 

 

 

 

 

NATIONAL LOAN EXCHANGE

 

 

 

 

 

By:______ /s/ Ross Dove _______________________________

 

By:_____ /s/ Scott West ______________________________

Grantor for National Loan Exchange

 

Grantor for National Loan Exchange

 

 

 

 

 

 

HERITAGE GLOBAL CAPITAL LLC

 

 

 

 

 

By:______ /s/ Ross Dove _______________________________

 

By:____ /s/ Scott West ________________________________

Grantor for Heritage Global Capital LLC

 

Grantor for Heritage Global Capital LLC

 

FOR LENDER USE ONLY

INSURANCE VERIFICATION

DATE:   ___________________________________

PHONE   ___________________________________

___________

 

AGENT'S NAME:   __________________________________________

 

AGENCY:   __________________________________________________________

ADDRESS:   _____________________________________________________________________________________________________________

INSURANCE COMPANY:   ______________________________________________________

POLICY NUMBER:    _______________________________

EFFECTIVE DATES:   _____________________________________________________________________________________________________

_______________________________________________________________________________________________________________________

COMMENTS:   ___________________________________________________________________________________________________________

____________________________________________________________________________________________________________________________

 

 

LaserPro, Ver. 19.3.0.038 Copr. Finastra USA Corporation 1997, 2020. All Rights
Reserved. - CA C:\CFI\LPL\I10.FC TR-2032 PR-45

 

 

 

--------------------------------------------------------------------------------

 

 

NOTICE OF INSURANCE REQUIREMENTS

Principal

Loan Date

Maturity

Loan No

Call / Coll

Account

Officer

Initials

 

02-05-2020

 

12448

 

 

 

 

References in the boxes above are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

 

Borrower:

Heritage Global Inc.

Lender:

C3bank, National Association

 

12625 High Bluff Drive

 

Arlington Office

 

San Diego, CA 92130

 

3727 Arlington Ave

 

 

 

Riverside, CA 92506

Grantor:

Heritage Global Inc., Heritage Global Partners Inc.,

 

 

 

Heritage Global LLC, National Loan Exchange and

 

 

 

Heritage Global Capital LLC

 

 

 

12625 High Bluff Drive

 

 

 

San Diego, CA 92130

 

 

 

 

 

 

 

 

 

 

TO:

ATTN: Insurance Agent

DATE: February 5, 2020

 

 

 

 

,

 

 

RE:

Policy Number(s):

 

Insurance Companies/Company:

 

 

 

Dear Insurance Agent:

 

Heritage Global Inc. ("Borrower"), is obtaining a loan from C3bank, National
Association. Please send appropriate evidence of insurance to C3bank, National
Association, together with the requested endorsements, on the following
property, which Grantor, Heritage Global Inc., Heritage Global Partners Inc.,
Heritage Global LLC, National Loan Exchange and Heritage Global Capital LLC
("Grantor") is giving as security for the loan.

 

Collateral:

All Inventory and Equipment.

 

Type: All risks, including fire, theft and liability.

 

Amount: Full Insurable Value.

 

Basis: Replacement value.

 

Endorsements: Lender loss payable clause with stipulation that coverage will not
be cancelled or diminished without a

 

minimum of 30 days prior written notice to Lender.

 

Latest Delivery Date: By the loan closing date.

 

RETURN TO:

 

 

 

Arlington Office

 

3727 Arlington Ave

 

Riverside, CA 92506

 

 

LaserPro, Ver. 19.3.0.038 Copr. Finastra USA Corporation 1997, 2020. All Rights
Reserved. - CA C:\CFI\LPL\I11.FC

TR-2032 PR-45

 

 

 

 

 

--------------------------------------------------------------------------------

NOTICE OF INSURANCE REQUIREMENTS

Loan No: 12448

(Continued)

Page 2

 

 

GRANTOR:

 

 

 

 

 

 

 

 

HERITAGE GLOBAL INC.

 

 

 

 

 

By:____ /s/ Kirk Dove ________________________________

 

By:_____/s/ Scott West_______________________________

Kirk Dove, President of Heritage Global Inc.

 

Scott West, Chief Financial Officer of Heritage
Global Inc.

 

 

 

 

 

 

HERITAGE GLOBAL PARTNERS INC.

 

 

 

 

 

By:_____/s/ Ross Dove______________________________

 

By:______ /s/ Scott West ______________________________

Grantor for Heritage Global Partners Inc.

 

Grantor for Heritage Global Partners Inc.

 

 

 

 

 

 

HERITAGE GLOBAL LLC

 

 

 

 

 

By:_____ /s/ Ross Dove_______________________________

 

By:______ /s/ Scott West _____________________________

Grantor for Heritage Global LLC

 

Grantor for Heritage Global LLC

 

 

 

 

 

 

NATIONAL LOAN EXCHANGE

 

 

 

 

 

By:____/s/ Ross Dove________________________________

 

By:_____ /s/ Scott West _______________________________

Grantor for National Loan Exchange

 

Grantor for National Loan Exchange

 

 

 

 

 

 

HERITAGE GLOBAL CAPITAL LLC

 

 

 

 

 

By:_____/s/ Ross Dove_______________________________

 

By:_____ /s/ Scott West ________________________________

Grantor for Heritage Global Capital LLC

 

Grantor for Heritage Global Capital LLC

 

 

 

--------------------------------------------------------------------------------

 

 

DISBURSEMENT REQUEST AND AUTHORIZATION

 

Principal

Loan Date

Maturity

Loan No

Call / Coll

Account

Officer

Initials

$5,000,000.00

02-05-2020

02-05-2021

12448

 

 

 

 

References in the boxes above are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

 

Borrower:

Heritage Global Inc.

Lender:

C3bank, National Association

 

 

12625 High Bluff Drive

 

Arlington Office

 

 

San Diego, CA 92130

 

3727 Arlington Ave

 

 

 

 

Riverside, CA 92506

 

LOAN TYPE.     This is a Variable Rate Nondisclosable Revolving Line of Credit
Loan to a Corporation for $5,000,000.00 due on February 5, 2021.

PRIMARY PURPOSE OF LOAN.     The primary purpose of this loan is for (please
initial):

☐                 Personal, Family, or Household Purposes or Personal
Investment.

☒                 Business (Including Real Estate Investment).

SPECIFIC PURPOSE.     The specific purpose of this loan is: WORKING CAPITAL
REVOLVING LINE OF CREDIT.

DISBURSEMENT INSTRUCTIONS.     Borrower understands that no loan proceeds will
be disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $5,000,000.00 as follows:

 

Other Disbursements:

 

$5,000,000.00

$5,000,000.00 UNDISBURSED

 

 

Note Principal:

 

$5,000,000.00

 

CHARGES PAID IN CASH.     Borrower has paid or will pay in cash as agreed the
following charges:

 

Prepaid Finance Charges Paid in Cash:

 

$0.00

Other Charges Paid in Cash:

 

$318.00

 

$18.00  EXPERIAN - CREDIT REPORTS

 

 

 

$300.00  CORPORATE SERVICE COMPNAY - UCC FILING

 

 

 

$15,000.00  Documentation Fee

 

 

 

$-15,000.00  BORROWERS DEPOSIT

 

 

Total Charges Paid in Cash:

 

$318.00

 

FINANCIAL CONDITION.     BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED FEBRUARY 5, 2020.

 

BORROWER:

 

 

 

 

 

 

 

 

 

 

 

HERITAGE GLOBAL INC.

 

 

 

 

 

 

 

By:

/s/ Kirk Dove

 

By:

/s/ Scott West

 

Kirk Dove, President of Heritage Global Inc.

 

 

Scott West, Chief Financial Officer of Heritage Global Inc.

 

LaserPro, Ver. 19.3.0.038 Copr. Finastra USA Corporation 1997, 2020. All Rights
Reserved. - CA C:\CFI\LPL\I20.FC TR-2032 PR-45

--------------------------------------------------------------------------------

 

NOTICE OF FINAL AGREEMENT

 

Principal

Loan Date

Maturity

Loan No

Call / Coll

Account

Officer

Initials

$5,000,000.00

02-05-2020

02-05-2021

12448

 

 

 

 

References in the boxes above are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

 

Borrower:

Heritage Global Inc.

Lender:

C3bank, National Association

 

12625 High Bluff Drive

 

Arlington Office

 

San Diego, CA 92130

 

3727 Arlington Ave

 

 

 

Riverside, CA 92506

 

 

 

 

 

BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THE WRITTEN
LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THE WRITTEN LOAN
AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

 

 

 

 

 

 

As used in this Notice, the following terms have the following meanings:

 

 

 

Loan.     The term "Loan" means the following described loan: a Variable Rate
Nondisclosable Revolving Line of Credit Loan to a Corporation for $5,000,000.00
due on February 5, 2021.

 

 

 

Loan Agreement.     The term "Loan Agreement" means one or more promises,
promissory notes, agreements, undertakings, security agreements, deeds of trust
or other documents, or commitments, or any combination of those actions or
documents, relating to the Loan, including without limitation the following:

 

 

 

LOAN DOCUMENTS

 

 

 

-  Business Loan Agreement

 

-  Promissory Note

-  CA Commercial Security Agreement: Collateral owned by

 

-  FL National UCC Financing Statement (Rev. 04/20/11):

Heritage Global Inc., Heritage Global Partners Inc., Heritage Global LLC,
National Loan Exchange and Heritage Global Capital LLC

 

Collateral owned by Heritage Global Inc., Heritage Global Partners Inc.,
Heritage Global LLC, National Loan Exchange and Heritage Global Capital LLC

-  National UCC Instructions 04/20/11

 

-  National UCC Addendum Instructions 04/20/11

-  Agreement to Provide Insurance

 

-  Notice of Insurance Requirements

-  Disbursement Request and Authorization

 

-  Notice of Final Agreement

 

 

 

Parties.     The term "Parties" means C3bank, National Association and any and
all entities or individuals who are obligated to repay the loan or have pledged
property as security for the Loan, including without limitation the following:

 

 

 

 

Borrower:

Heritage Global Inc.

Grantor(s):

Heritage Global Inc., Heritage Global Partners Inc., Heritage Global LLC,
National Loan Exchange and Heritage Global Capital LLC

 

 

 

 

 

Each Party who signs below, other than C3bank, National Association,
acknowledges, represents, and warrants to C3bank, National Association that it
has received, read and understood this Notice of Final Agreement. This Notice is
dated February 5, 2020.

 

BORROWER:

 

 

 

 

 

 

 

 

 

 

 

HERITAGE GLOBAL INC.

 

 

 

 

 

 

 

By:

/s/ Kirk Dove

 

By:

/s/ Scott West

 

Kirk Dove, President of Heritage Global Inc.

 

 

Scott West, Chief Financial Officer of Heritage Global Inc.

 

 

--------------------------------------------------------------------------------

NOTICE OF FINAL AGREEMENT

Loan No: 12448

(Continued)

Page 2

 

 

GRANTOR:

 

 

 

 

 

 

 

 

HERITAGE GLOBAL INC.

 

 

 

 

 

By:____/s/ Kirk Dove_________________________________

 

By:______/s/ Scott West______________________________

Kirk Dove, President of Heritage Global Inc.

 

Scott West, Chief Financial Officer of Heritage

 

 

Global Inc.

 

 

 

HERITAGE GLOBAL PARTNERS INC.

 

 

 

 

 

By:____/s/_Ross Dove________________________________

 

By:______/s/ Scott West______________________________

Grantor for Heritage Global Partners Inc.

 

Grantor for Heritage Global Partners Inc.

 

 

 

 

 

 

HERITAGE GLOBAL LLC

 

 

 

 

 

By:_______ /s/_Ross Dove ___________________________

 

By:______ /s/ Scott West ______________________________

Grantor for Heritage Global LLC

 

Grantor for Heritage Global LLC

 

 

 

 

 

 

NATIONAL LOAN EXCHANGE

 

 

 

 

 

By:_______ /s/_Ross Dove _________________________

 

By:_____ /s/ Scott West ______________________________

Grantor for National Loan Exchange

 

Grantor for National Loan Exchange

 

 

 

 

 

 

HERITAGE GLOBAL CAPITAL LLC

 

 

 

 

 

By:________ /s/_Ross Dove __________________________

 

By:_____ /s/ Scott West _______________________________

Grantor for Heritage Global Capital LLC

 

Grantor for Heritage Global Capital LLC

 

 

 

LENDER:

 

 

 

 

 

 

 

 

C3BANK, NATIONAL ASSOCIATION

 

 

 

 

 

X___/s/ _Maria Machuca _____________________________

 

 

Authorized Signer

 

 

 

 

 

 

LaserPro, Ver. 19.3.0.038 Copr. Finastra USA Corporation 1997, 2020. All Rights
Reserved. - CA C:\CFI\LPL\I21.FC TR-2032 PR-45

--------------------------------------------------------------------------------

 

NOTICE OF FINAL AGREEMENT

 

Principal

Loan Date

Maturity

Loan No

Call / Coll

Account

Officer

Initials

$5,000,000.00

02-05-2020

02-05-2021

12448

 

 

 

 

References in the boxes above are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

 

Borrower:

Heritage Global Inc.

Lender:

C3bank, National Association

 

12625 High Bluff Drive

 

Arlington Office

 

San Diego, CA 92130

 

3727 Arlington Ave

 

 

 

Riverside, CA 92506

 

 

 

 

 

BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THE WRITTEN
LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THE WRITTEN LOAN
AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

 

 

 

 

 

 

As used in this Notice, the following terms have the following meanings:

 

 

 

Loan.     The term "Loan" means the following described loan: a Variable Rate
Nondisclosable Revolving Line of Credit Loan to a Corporation for $5,000,000.00
due on February 5, 2021.

 

 

 

Loan Agreement.     The term "Loan Agreement" means one or more promises,
promissory notes, agreements, undertakings, security agreements, deeds of trust
or other documents, or commitments, or any combination of those actions or
documents, relating to the Loan, including without limitation the following:

 

 

 

LOAN DOCUMENTS

 

 

 

-  Business Loan Agreement

 

-  Promissory Note

-  CA Commercial Security Agreement: Collateral owned by

 

-  FL National UCC Financing Statement (Rev. 04/20/11):

Heritage Global Inc., Heritage Global Partners Inc., Heritage Global LLC,
National Loan Exchange and Heritage Global Capital LLC

 

Collateral owned by Heritage Global Inc., Heritage Global Partners Inc.,
Heritage Global LLC, National Loan Exchange and Heritage Global Capital LLC

-  National UCC Instructions 04/20/11

 

-  National UCC Addendum Instructions 04/20/11

-  Agreement to Provide Insurance

 

-  Notice of Insurance Requirements

-  Disbursement Request and Authorization

 

-  Notice of Final Agreement

 

 

 

Parties.     The term "Parties" means C3bank, National Association and any and
all entities or individuals who are obligated to repay the loan or have pledged
property as security for the Loan, including without limitation the following:

 

 

 

 

Borrower:

Heritage Global Inc.

Grantor(s):

Heritage Global Inc., Heritage Global Partners Inc., Heritage Global LLC,
National Loan Exchange and Heritage Global Capital LLC

 

 

 

 

 

Each Party who signs below, other than C3bank, National Association,
acknowledges, represents, and warrants to C3bank, National Association that it
has received, read and understood this Notice of Final Agreement. This Notice is
dated February 5, 2020.

 

BORROWER:

 

 

 

 

 

 

 

 

 

 

 

HERITAGE GLOBAL INC.

 

 

 

 

 

 

 

By:

/s/ Kirk Dove

 

By:

/s/ Scott West

 

Kirk Dove, President of Heritage Global Inc.

 

 

Scott West, Chief Financial Officer of Heritage Global Inc.

 

 

--------------------------------------------------------------------------------

NOTICE OF FINAL AGREEMENT

Loan No: 12448

(Continued)

Page 2

 

 

 

LaserPro, Ver. 19.3.0.038 Copr. Finastra USA Corporation 1997, 2020. All Rights
Reserved. - CA C:\CFI\LPL\I21.FC TR-2032 PR-45