FIRST
AMENDMENT TO CREDIT AGREEMENT


 


THIS
FIRST AMENDMENT (the “Amendment”), dated June 24, 2015, is entered into by and among
QUEST SOLUTION, INC., a Delaware corporation (“Parent”),
QUEST MARKETING, INC., an Oregon
corporation (“QMI”), BAR
CODE SPECIALTIES, INC., a California corporation (“BCSI”;
and together with QMI, individually, a “Borrower” and collectively, the “Borrowers”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION
(the “Lender”).


 


RECITALS


 


WHEREAS,
Parent, Borrowers and the Lender are parties to a Credit Agreement dated December 31, 2014 (as amended, restated or
otherwise modified from time to time, the “Credit
Agreement”);


 


NOW,
THEREFORE, in consideration of the mutual conditions and agreements set forth in the Credit Agreement, the Loan Documents
and this Amendment, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:


 


ARTICLE
I


 


DEFINITIONS


 


1.01.
Incorporated Definitions.
Initially capitalized terms used but not otherwise defined in this Amendment have the respective meanings set forth in the Credit
Agreement, as amended hereby.


 


ARTICLE
II


 


WAIVER
OF DEFAULTS, LIMITED EXTENSION AND CONSENT


 


2.01.
Waiver of Defaults. At
the request of Borrowers, upon the terms and subject to the conditions set forth in this Amendment, the Lender hereby waives any
Events of Default which have occurred and are outstanding as of the date of this Amendment. This waiver shall be effective only
in this specific instance and for the specific purpose for which it is given, and this waiver of Events of Default shall not entitle
the Loan Parties to any other or further waiver (whether as to specific Events of Default or general Events of Default) in any
similar or other circumstances.


 


2.02.
Limited Extension. The
Loan Parties have requested that Lender permit a one-time extension for delivery of Loan Parties’ monthly financial statement
for April 2015 and May 2015 to be delivered by June 26, 2015 and Lender is amendable to such extension. Therefore, Lender hereby
extends the delivery date for the April 2015 and May 2015 financial statements otherwise due under Section
4.1 of the Credit Agreement to June 26, 2015. This is a one-time extension only. The willingness of Lender to extend
the due date as set forth herein does not obligate Lender to or suggest that Lender will make any additional extensions of any
of the obligations of the Loan Parties under Section
4.1 of the Credit Agreement or otherwise. Except as provided herein, the terms of Section
4.1 of the Credit Agreement remain in full force and effect.


 




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2.03.
Limited Waiver of 4.3(a).
Lender hereby agrees that, as of the date hereof, the Fixed Charge Coverage Ratio as set forth in Section
4.3(a) of the Credit Agreement will not be tested for any purpose other than determining whether Loan Parties may make
principal payments on account of the Seller Subordinated Debt. This waiver shall not entitle the Loan Parties to any other or
further waiver in any similar or other circumstances.


 


2.04.
Limited Consent. The Loan
Parties have requested Lender consent to a onetime principal payment under the Seller Subordinated Debt and Lender hereby provides
its consent so long as the following terms and conditions are fulfilled to Lender’s satisfaction:


 


(a)
the aggregate amount of the one-time principal payment is no greater than $1,200,000;


 




(b)
said payment is made on or before June 30, 2015;




 


(c)
Excess Availability is at least $1,000,000, without taking into consideration up to $500,000 of Reserves at Lender’s discretion,
for each of the (i) 30 days before giving effect to such payment and (ii) 30 days after giving effect to such payment; and


 


(d)
delivery to Lender, of which delivery is to Lender’s satisfaction, evidence of compliance with the above conditions, within
5 days prior to making such payment.


 


ARTICLE
III


 


NEW
AND AMENDED DEFINITIONS


 


3.01.
New Definitions. The following
new definitions are hereby added to Section 7.1 of the Credit Agreement in alphabetical order to read in their entirety as follows:


 


“Agreement”
means this Agreement (as defined in the preamble hereto) together with any amendments, restatements or modifications hereto.


 


“First
Amendment” means that certain First Amendment to the Agreement dated as of June 24, 2015.


 


“Free
Cash Flow” means as of any measurement date, on a year-to-date basis, the sum of (i) EBITDA, minus
(ii) Capital Expenditures, minus
(iii) Fixed Charges, plus
(iv) Subordinated Debt incurred or equity raised during the applicable period, plus
(v) the Subordinated Debt Payment Reserve.


 


“Subordinated
Debt Payment Reserve” means the Reserve implemented for the making of principal payments under the Seller Subordinated
Debt, in an aggregate amount of $1,200,000 ($600,000 of such Reserve was established by Lender prior to the execution of the First
Amendment).


 




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3.02.
Amended Definitions. The
following definition in Schedule 1.1 of the Credit Agreement is hereby amended and restated in their entirety to read as follows:


 


“EBITDA”
means, with respect to any fiscal period, the net income (or loss), of Borrowers, minus extraordinary gains, interest income,
non-operating income and income tax benefits and decreases in any change in LIFO reserves,
plus non-cash extraordinary losses, non-cash stock based compensation or expenses paid with stock, deferred net revenues
from service warranty contracts, interest expense, income taxes, depreciation and amortization and increases in any change in
LIFO reserves for such period, in each case, determined in accordance with GAAP.


 


ARTICLE
IV


 


AMENDMENTS


 


4.01.
Amendment to Section 1.1(a).
Clause (i)(C) in Section 1.1(a)
of the Credit Agreement is hereby amended and restated in its entirety to read as follows:


 


“(C)
all Reserves and all Subordinated Debt Reserves, less”


 


4.02.
Amendment to Section 4.3. Section
4.3 of the Credit Agreement is hereby amended by inserting a new clause (c) to Section
4.3 at the end thereof which shall read as follows:


 


“(c)
FREE CASH FLOW. Loan Parties shall maintain a Free Cash Flow measured monthly as of the last day of each month, on a year-to-date
basis, in an amount no greater than the amounts set forth below opposite each measurement date:


 


	Measurement Date	 	Minimum Free Cash Flow	 
	May 31, 2015	 	$	700,000	 
	June 30, 2015	 	$	300,000	 
	July 31, 2015	 	$	300,000	 
	August 31, 2015	 	$	300,000	 
	September 30, 2015	 	$	600,000	 
	October 31, 2015	 	$	400,000	 
	November 30, 2015	 	$	400,000	 
	December 31, 2015	 	$	600,000	”



 


Borrowers’
shall cooperate with Lender in good faith to establish Free Cash Flow covenant levels for measurement dates after December 31,
2015. Failure to establish such covenant levels by no later than January 31, 2016 shall constitute an Event of Default hereunder.


 




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4.03.
Amendment to Section 6.1(i).
Section 6.1(i) of the Credit Agreement
is hereby amended and restated in its entirety to read as follows:


 


“(i)
Any Loan Party makes any payment on any Indebtedness which is subject to a subordination agreement in favor of Lender, in violation
of such subordination agreement or any other Loan Document.”


 


ARTICLE
V


 


AMENDMENT
FEE


 


5.01.
Amendment Fee. Borrowers
hereby agree to pay to Lender, an amendment fee in the amount of $50,000 (the “Amendment
Fee”), which fee is fully earned as of the date of this Amendment and non-refundable for any reason. The Amendment
Fee shall be paid in two (2) separate but equal amounts as follows: (i) $25,000 on the execution of the First Amendment and (ii)
$25,000 on the earlier of (x) the termination of the Credit Agreement and (y) December 15, 2015; provided that the second payment
shall be waived if, as of the determination date of December 15, 2015, the interest paid on the Advances during calendar year
2015 is in an amount greater than $100,000.


 


ARTICLE
VI


 


CONDITIONS
PRECEDENT


 


6.01.
Conditions Precedent. This
Amendment shall not be binding upon Lender until each of the following conditions precedent has been satisfied in form and substance
satisfactory to Lender:


 


(a)
Representations and Warranties.
The representations and warranties contained herein and in the Credit Agreement, as amended hereby, shall be true and correct
in all material respects as of the date hereof as if made on the date hereof, except for such representations and warranties limited
by their terms to a specific date, in which case each such representation and warranty shall be true and correct as of such specific
date;


 


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


 


(c)
Executed Documents. Loan
Parties shall have delivered to Lender an executed original of (i) this Amendment; (ii) the Subordination Agreement by Scot Ross
for the benefit of Lender; (iii) the Subordination Agreement by Tom Miller for the benefit of Lender; and (iv) the Subordination
Agreement by David Marin for the benefit of Lender.


 




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(d)
Equity Documents. Loan
Parties shall have delivered to Lender copies of all documents entered into by Loan Parties after the Closing Date in relation
to equity and capital raises, of which are in form and substance satisfactory to Lender.


 


(e)
Legal and other Fees. Loan
Parties shall have paid to Lender (i) the first payment of the Amendment Fee and (ii) reasonable attorneys’ fees and costs
in connection with the documentation, execution and closing of this Amendment; and


 


(f)
Other. Lender shall have
received such other documents, certificates, corporate resolutions, pledges and information that Lender shall require, including
without limitation, any consents, that Lender shall reasonably require and all proceedings taken in connection with the transactions
each in form and substance satisfactory to Lender.


 


ARTICLE
VII


 


MISCELLANEOUS


 


7.01.
Representations and Warranties.
To induce Lender to enter into this Amendment, Loan Parties represent and warrant to Lender as of the date hereof as follows:


 


(a)
This Amendment has been duly executed and delivered by Loan Parties, constitutes a legal and valid binding obligation of Loan
Parties, enforceable against Loan Parties in accordance with its terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights generally, and has been duly authorized by
all necessary corporate action.


 


(b)
The representations and warranties contained in the Credit Agreement are, after giving effect to this Amendment, true and correct
in all material respects except to the extent any such representation or warranty is expressly stated to have been made as of
a specific date, in which case each such representation and warranty is true and correct as of such specific date, after giving
effect to this Amendment, and no Default or Event of Default has occurred and is continuing.


 


7.02.
Reaffirmation. Except as
specifically modified by this Amendment, the Credit Agreement and the other Loan Documents remain in full force and effect in
accordance with their respective terms and are hereby ratified, reaffirmed and confirmed by Loan Parties.


 


7.03.
Events of Default. Any
failure to comply with the terms and conditions of this Amendment will constitute an Event of Default under the Credit Agreement.


 


7.04.
Counterparts; Facsimile Signatures.
This Amendment may be executed in any number of and by different parties hereto on separate counterparts, all 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 document (i.e., pdf) transmission shall be deemed to be an original signature
hereto.


 




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7.05.
Governing
Law. This
Amendment is a Loan Document and shall be determined under, governed by, and construed in accordance with the laws of the State
of California without regard to the conflicts of laws principles thereof.


 


7.06.
Successors and Assigns.
This Amendment shall be binding upon and inure to the benefit of Loan Parties and Lender, and all future holders of the Obligations
and their respective successors and assigns, except that Loan Parties may not assign or transfer any of its rights or obligations
under this Amendment without the prior written consent of Lender.


 


7.07.
Attorneys’ Fees; Costs.
Loan Parties agrees to pay, on demand, all reasonable attorneys’ fees and costs incurred in connection with the negotiation,
documentation and execution of this Amendment. If any legal action or proceeding shall be commenced at any time by any party to
this Amendment in connection with its interpretation or enforcement, the prevailing party or parties in such action or proceeding
shall be entitled to reimbursement of its reasonable attorneys’ fees and costs in connection therewith, in addition to all
other relief to which the prevailing party or parties may be entitled.


 


7.08.
Jury Trial Waiver/Arbitration.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AMENDMENT, THE CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AMENDMENT, THE CREDIT
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. Without limiting the applicability of any other provision
of this Amendment, the terms of Section 7.16
and Section 7.17 of
the Credit Agreement shall apply to this Amendment.


 


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of Page Intentionally Left Blank]


 




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


 


	LOAN
    PARTIES:	QUEST
    SOLUTION, INC.,
	 	a
    Delaware corporation, as Parent
	 	 	 
	 	By:	/s/
    Scot Ross
	 	Name:	Scot Ross
	 	Title:	Chief Financial
    Officer
	 	 	 
	 	QUEST
    MARKETING, INC.,
	 	an
    Oregon corporation, as Borrower
	 	 	 
	 	By:	/s/
    Scot Ross
	 	Name:	Scot Ross
	 	Title:	Chief Financial
    Officer
	 	 	 
	 	BAR
    CODE SPECIALTIES, INC.,
	 	a
    California corporation, as Borrower
	 	 	 
	 	By:	/s/
    Scot Ross
	 	Name:	Scot Ross
	 	Title:	Chief Financial
    Officer



 






    	FIRST AMENDMENT TO CREDIT AGREEMENT



    	 



    

 







	 	LENDER:
	 	 
	 	WELLS FARGO
    BANK, NATIONAL ASSOCIATION
	 	 	 
	 	By:	/s/
    Robert Mostert
	 	Name:	Robert
    Mostert
	 	Title:	Authorized Signatory



 



    	FIRST AMENDMENT TO CREDIT AGREEMENT



    	 



    


 


ACKNOWLEDGMENT
AND AGREEMENT OF SUBORDINATED CREDITORS


 


The
undersigned, each a subordinated creditor of
QUEST SOLUTION, INC., a Delaware corporation (“Parent”),
QUEST MARKETING, INC., an Oregon corporation (“QMI”),
BAR CODE SPECIALTIES, INC., a California corporation (“BCSI”;
and together with QMI, individually, a “Borrower”
and collectively, the “Borrowers”),
to Wells Fargo Bank, National Association (“Lender”),
pursuant to separate Subordination Agreements dated December 31, 2014,(the “Subordination
Agreement”), hereby (i) acknowledges receipt of the foregoing Amendment; (ii) reaffirms all obligations to Lender
pursuant to the terms of the Subordination Agreement; (iii) acknowledges that Lender may amend, restate, extend, renew or otherwise
modify the Loan Documents and any indebtedness or agreement of the Borrowers, or enter into any agreement or extend additional
or other credit accommodations, without notifying or obtaining the consent of the undersigned and without impairing the obligations
of the undersigned under the Subordination Agreement.


 


	SUBORDINATED
    CREDITORS:	DAVID
    MARIN
	 	 	 
	 	By:	/s/
    David Marin
	 	Name:	David Marin
	 	 	 
	 	GEORGE
    ZICMAN
	 	 	 
	 	By:	/s/
    George Zicman
	 	Name:	George Zicman
	 	 	 
	 	KURT
    THOMET
	 	 	 
	 	By:	/s/
    Kurt Thomet
	 	Name:	Kurt Thomet




 



    	FIRST AMENDMENT TO CREDIT AGREEMENT



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