EXECUTION
VERSION


 


Rosenthal
& Rosenthal, Inc.


 


Financing
Agreement


 


AGREEMENT
dated October 4, 2018 between Reed’s Inc. (“Borrower”), a Corporation duly organized and presently existing
in good standing under the laws of the State of Delaware whose chief executive office is at 201 Merritt 7 Corporate Park, Norwalk,
Connecticut 06851, and ROSENTHAL & ROSENTHAL, INC. (“Lender”), a New York corporation with an address at
1370 Broadway, New York NY 10018.


 


Borrower
desires to obtain loans and other financial accommodations from Lender on a revolving basis upon the security of the Collateral
(as herein defined). Now, therefore, Borrower and Lender agree as follows.


 


1.
DEFINITIONS


 


As
used in this Agreement, these terms shall have the following meanings which shall be applicable to both the singular and plural
forms of such terms.


 


1.1.
“Account Debtor” shall mean the account debtor with respect to a Receivable and any other person who is obligated
on such Receivable.


 


1.2.
“Affiliate” of a party shall mean any entity controlling, controlled by, or under common control with, the
party, and the term “controlling” and such variations thereof shall mean ownership of a majority of the voting power
of a party.


 


1.3.
“Business Day” shall mean a day on which Lender and major banks in New York City are open for the regular transaction
of business.


 


1.4.
“Closing Date” shall mean the date set forth in the first paragraph of this Agreement.


 


1.5.
“Collateral” shall have the meaning provided in Section 4.1 hereof.


 


1.6.
“Collateral Documents” shall mean any and all security agreements, deposit account control agreements, mortgages
and other documents executed and delivered to Lender to secure the Obligations including but not limited to the LC.


 


1.7.
“Default” shall have the meaning provided in Section 9.1 hereof.


 


1.8.
“Effective Rate” shall have the meaning provided in Section 3.1 hereof.


 


1.9.
“Eligible Inventory” shall mean Inventory owned by Borrower in the ordinary course of its business in which
Lender holds a perfected security interest pursuant to the terms hereof, ranking prior to free and clear of all interests, claims
and rights of others, and has received agreements executed by any landlords and bailees where such Inventory may be located in
accordance with Section 6.15 hereof, and which is and at all times shall continue to be acceptable to Lender in all respects.
Standards of eligibility may be fixed and revised from time to time solely by Lender in its commercially reasonable judgment.
In determining eligibility, Lender may, but need not, rely on certificates of inventory and reports furnished by Borrower, but
reliance thereon by Lender from time to time shall not be deemed to limit Lender’s right to revise standards of eligibility
at any time. In general, Inventory shall not be deemed eligible unless it complies in all respects with the representations, covenants
and warranties hereinafter set forth, made by Borrower with respect thereto and meets all standards meets all standards imposed
by any governmental agency or authority.


 




    	 	 	 



    	 



    

 


1.10.
“Eligible Receivables” shall mean Receivables created by Borrower in the ordinary course of its business which
have been validly assigned to Lender and in which Lender holds a perfected security interest pursuant to the terms hereof ranking
prior to and free and clear of all interests, claims, and rights of others and which are and at all times shall continue to be
acceptable to Lender in all other respects. Standards of eligibility may be fixed and revised from time to time solely by Lender
in its commercially reasonable judgment. In determining eligibility Lender may, but need not, rely on agings, reports and schedules
of Receivables furnished by Borrower, but reliance thereon by Lender from time to time shall not be deemed to limit Lender’s
right to revise standards of eligibility at any time. In general, a Receivable shall not be deemed eligible unless the Receivable
complies with the Minimum Receivable Eligibility Requirements and the Account Debtor on such Receivable is and at all times continues
to be acceptable to Lender and unless each Receivable complies in all respects with the representations, covenants and warranties
hereinafter set forth and meets all standards imposed by any governmental agency or authority.


 


1.11.
“Equipment” shall mean equipment as now or hereafter defined in Article 9 of the UCC.


 


1.12.
“ERISA” shall mean the Employee Retirement Income Security Act.


 


1.13.
“Insolvency Proceeding” shall mean any proceeding commenced by or against any person or entity under any provision
of the United States Bankruptcy Code, or comparable state statute, as amended, or under any other Bankruptcy or insolvency law,
including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors,
or proceedings seeking reorganization, arrangement, or other relief.


 


1.14.
“Intercreditor Agreement” shall mean (a) the Intercreditor Agreement of even date herewith and/or (b) letter
agreement regarding (among other things) the purchase of intellectual property rights of Borrower in consideration for the payment
in full of the Permitted Indebtedness by and between Raptor/Harbor Reed’s SPV LLC and Lender.


 


1.15.
“Inventory” shall mean inventory as now or hereafter defined in Article 9 of the UCC.


 


1.16.
“Inventory Availability” shall have the meaning provided in Section 2.1 hereof.


 


1.17.
“LC” shall have the meaning provided in Section 2.1 hereof.


 


1.18.
“Lease” and “Leased Premises” shall have the meanings provided in Section 9.1 hereof.


 


1.19.
“Loan Account” shall mean the Loan Account as described in Section 2.2 hereof.


 


1.20.
“Loan Availability” shall have the meaning provided in Section 2.1 hereof.


 


1.21.
“Loan Documents” shall mean, collectively, this Agreement, the Intercreditor Agreement, the LC, the Collateral
Documents, and each guaranty, certificate, agreement, or document now or hereafter executed by Borrower or any of its future guarantors
and delivered to Lender in connection with the foregoing or as they may be amended.


 


1.22.
“Margin” shall mean two percent (2%) per annum.


 


1.23.
“Maximum Credit Facility” shall mean $13,000,000.


 


1.24.
“Maximum Rate” shall have the meaning provided in Section 10.2 hereof.


 


1.25. “Minimum
Receivable Eligibility Requirements” shall have the meaning provided in Section 2.3  hereof.


 


1.26.
“Net Amount of Eligible Receivables” shall mean the gross amount of Eligible Receivables less sales, excise
or similar taxes, returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding
or claimed, and less (without duplication) all amounts payable by any Account Debtor on Eligible Receivables of such Account Debtor
that are unpaid more than 60 days following its invoice date.


 




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1.27.
“Obligations” shall mean all obligations, liabilities and indebtedness of Borrower to Lender or an Affiliate
of Lender, however evidenced, arising under this Agreement, any other Loan Document (whether by reason of extension of credit,
guaranty, indemnity or otherwise), or under any other or supplemental financing provided to Borrower by Lender or an Affiliate
of Lender, or independent hereof or thereof, whether now existing or incurred from time to time hereafter and whether before or
after termination hereof, absolute or contingent, joint or several, matured or unmatured, direct or indirect, primary or secondary,
liquidated or unliquidated, and whether arising directly or acquired from others (whether acquired outright, by assignment unconditionally
or as collateral security from another and including participations or interest of Lender in obligations of Borrower to others),
and including (without limitation) all of Lender’s charges, commissions, fees, interest, expenses, costs and attorneys’
fees chargeable to Borrower in connection therewith.


 


1.28.
“Over-advance” shall mean any portion of all loans and advances which on any day exceeds the Loan Availability.


 


1.29.
“Permitted Liens” shall mean the liens of Lender granted under the Loan Documents and any other liens, if any,
described on the attached Exhibit A.


 


1.30.
“Permitted Overadvance” shall have the meaning provided in Section 2.1.


 


1.31.
“Person” shall mean any person, firm, corporation, partnership, limited liability company, association, company,
trust, estate, custodian, nominee or other individual or entity.


 


1.32.
“Pledgor” shall have the meaning specified in Section 9.1.


 


1.33.
“Prime Rate” shall mean the prime rate from time to time publicly announced in New York City by JPMorgan Chase
Bank.


 


1.34.
“Receivables” shall mean all obligations to Borrower for the payment of money arising out of the sale of goods
by Borrower, now existing or hereafter arising, however evidenced, including all accounts, contract rights, general intangibles,
documents, chattel paper and instruments (as each of such terms is now or hereafter defined in the UCC).


 


1.35.
“Receivable Availability” shall have the meaning specified in Section 2.1 hereof.


 


1.36.
“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York, provided,
however, that in the event by reason of mandatory provisions of law, any of the attachment, perfection, or priority of Lender’s
security interest in any of the Collateral is governed by the Uniform Commercial Code as in effect in any jurisdiction other than
the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related
to such provisions.


 


2.
LOANS; Eligibility of Receivables


 


2.1.
Lender shall, in its commercially reasonable discretion, make loans to Borrower from time to time, at Borrower’s request,
which loans in the aggregate shall not exceed the up to the lesser of (A) the Maximum Credit Facility; or (B) the Loan Availability,
which means (a) the Receivable Availability equal to up to eighty percent (80%) of the Net Amount of Eligible Receivables; plus
(b) the Inventory Availability, which means the lesser of (A) (i) up to sixty-five percent (65%) of the lower of cost or market
value of Eligible Inventory consisting of finished goods, but in no event more than up to eighty-five percent (85%) of the orderly
appraised net liquidation value, as set forth in an appraisal obtained at Borrower’s expense and issued by an appraiser
satisfactory to Lender; plus (ii) the lesser of (x) up to thirty-five percent (35%) of Eligible Inventory consisting of raw materials,
but in no event more than up to eighty-five percent 85% of the net orderly liquidation value; or (y) one million dollars ($1,000,000),
or (B) six million dollars ($6,000,000); plus a Permitted Overadvance (the “Permitted Overadvance”) not to exceed
four million dollars ($4,000,000), based upon (x) a percentage of the net orderly liquidation value of Borrower’s registered
and acceptable trademarks, which Lender has determined by appraisal to be two million five hundred thousand dollars ($2,500,000);
plus (y) an amount equal to one hundred percent (100%) of an irrevocable stand-by-letter of credit effective through and including
the Renewal Date (or any extension permitted under Section 10.1 hereof) in favor of Lender naming Lender as irrevocable beneficiary,
with terms and conditions and issued by a bank satisfactory to Lender in amount not less than one million five hundred thousand
dollars ($1,500,000) (“LC”), minus such reserves as Lender may deem, in its sole discretion, to be necessary from
time to time.


 




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2.2.
The making of any loan in excess of the percentages set forth above shall not be deemed to modify such percentages or create any
obligation to make any further such loan. All loans (and all other amounts chargeable to Borrower under this Agreement or any
supplement hereto) shall be charged to a Loan Account in Borrower’s name on Lender’s books. Lender shall render to
Borrower each month a statement of the Loan Account (and all credits and charges thereto) which shall be considered correct and
accepted by Borrower and conclusively binding upon Borrower as an account stated except to the extent that Lender receives a written
notice by registered mail of Borrower’s exceptions within 30 days after such statement has been rendered to Borrower.


 


2.3.
A Receivable meets the Minimum Receivable Eligibility Requirements if 1) the Receivable arose from bona fide completed transactions
and has not remained unpaid for more than the number of days after the invoice date set forth in Section 1.26; 2) the amount of
the Receivable reported to Lender is absolutely owing to Borrower and payment is not conditional or contingent, (such as consignments,
guaranteed sales or right of return or other similar terms); 3) the Receivable did not arise from progress billings, retainages
or bill and hold sales; 4) there are no contra relationships, setoffs, counterclaims or disputes existing with respect thereto
and there are no other facts existing or threatened which would impair or delay the collectibility of all or any portion thereof;
5) the goods giving rise thereto were not at the time of the sale subject to any liens except those permitted in this Agreement;
6) the Account Debtor is not an Affiliate of Borrower; 7) there has been compliance with the Assignment of Claims Act or similar
State or local law, if applicable, if the Account Debtor is the United States or any domestic governmental unit; 8) Borrower has
delivered to Lender such documents as Lender may have requested pursuant to Section 4.2 hereof in connection with such Receivable
and Lender shall have received verifications of such Receivable, satisfactory to it, if sent to the Account Debtor or any other
obligors or any bailees; 9) there are no facts existing or threatened which might in Lender’s commercially reasonable discretion
result in any adverse change in the Account Debtor’s financial condition; 10) not more than 50% of the Receivables of the
Account Debtor or its Affiliates owed to Borrower are more than 60 days past their invoice date or fail to otherwise constitute
Eligible Receivables; 11) the total indebtedness to Borrower of the Account Debtor does not exceed the amount of any customer
credit limits as established from time to time on notice to Borrower; 12) the Account Debtor is deemed creditworthy at all times
by Lender; and 13) all representations and warranties in this Agreement or any other Loan Document with respect to such Receivable
are true and correct.


 


3.
LENDER’S CHARGES


 


3.1.
Borrower agrees to pay to Lender each month interest (computed on the basis of the actual number of days elapsed over a year of
360 days) (a) on that portion of the average daily balances in the Loan Account during the preceding month which does not exceed
the Receivable Availability at a rate per annum equal to the Prime Rate plus the Margin (the “Effective Rate”);
(b) on that portion of the average daily balances in the Loan Account during the preceding month, that exceeds the Inventory Availability
but does not exceed the Loan Availability, at a rate per annum equal to the Prime Rate plus two and one half percent (2.5%) per
annum (the “Inventory Rate”); (c) on the Permitted Overadvances, if any, at a per annum rate equal to three and one
half percent (3.5%) above the Prime Rate (the “Permitted Overadvance Rate”); and (d) on any other Over-advances at
a rate of three percent (3%) above the Permitted Overadvance Rate. Any change in the effective interest rates due to a change
in the Prime Rate shall take effect on the date of such change in the Prime Rate provided, that, with respect to Lender’s
charges, no decrease in the Prime Rate below 4.75% per annum shall be given any effect.


 




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3.2.
Borrower shall pay to Lender a facility fee payable on the Closing Date in the amount of 1.00% of the Maximum Credit Facility
and on the anniversary of such date in each succeeding year, in the amount of 1.00% of the Maximum Credit Facility.


 


3.3.
Borrower shall pay to Lender monthly an administration fee of $1,000 payable in arrears on the first day of each month with respect
to the prior month for the stated term of this Agreement.


 


3.4.
A statement of all of Lender’s charges shall accompany each monthly statement of the Loan Account and such charges shall
be payable by Borrower within 5 days after receipt of such statement. In lieu of the separate payment of charges, Lender at its
option, shall have the right to debit the amount of such charges to Borrower’s Loan Account, which charges shall be deemed
to be first paid by amounts subsequently credited to the Loan Account. Borrower agrees that the minimum charges payable by Borrower
to Lender each month under Section 3.1 hereof shall be $4,000. As more fully provided in Section 10.2 hereof, in no event shall
the interest charges hereunder exceed the Maximum Rate.


 


4.
SECURITY INTEREST IN COLLATERAL


 


4.1.
As security for the prompt performance, observance and payment in full of all of the Obligations, Borrower grants to Lender a
security interest in, a continuing lien upon and a right of setoff against, and Borrower hereby assigns, transfers, pledges and
sets over to Lender (collectively, including any other assets of Borrower in which Lender may be granted a security interest under
any Loan Document, the “Collateral”): (i) all Receivables (whether or not Eligible Receivables and whether
or not specifically listed on any schedules, assignments or reports furnished to Lender) (ii) all of Borrower’s property,
and the proceeds thereof, now or hereafter held or received by or in transit to Lender or held by others for Lender’s account,
including any and all deposits, balances, sums and credits of Borrower with, and any and all claims of Borrower against, Lender,
at any time existing, (iii) all credit insurance policies, and all other insurance and all guarantees relating to the Receivables
or other Collateral, (iv) all books, records and other general intangibles evidencing or relating to Receivables or other Collateral
and the computer hardware and software and media containing such books and records; all deposits, or other security for the obligation
of any person under or relating to Receivables, all of the Borrower’s rights and remedies of whatever kind or nature it
may hold or acquire for the purpose of securing or enforcing Receivables; all right, title and interest of the Borrower in and
to all goods relating to, or which by sale have resulted in, Receivables, including goods returned by or reclaimed or repossessed
from Account Debtors and all goods described in copies of invoices delivered by Borrower to Lender; all rights of stoppage in
transit, replevin, repossession and reclamation and all other rights and remedies of an unpaid vendor or lienor, and all proceeds
of any Letter of Credit naming Borrower as beneficiary and which provides for, guarantees or assures the payment of any Receivable;
(v) all accounts, instruments, chattel paper, documents, general intangibles, deposit accounts, investment property, the LC and
all letter of credit rights, whether or not arising out of the sale of goods or rendition of services, and including choses in
action, causes of action, tax refunds (and claims), and reversions from terminated pension plans; (vi) all of Borrower’s
Inventory and Equipment; and (vii) all proceeds of such Collateral, in any form, including cash, non-cash items, checks, notes,
drafts and other instruments for the payment of money all of which now existing or hereafter arising. Such security interest in
favor of Lender shall continue during the term of this Agreement and until indefeasible payment in full of all Obligations, whether
or not this Agreement shall have sooner terminated. Notwithstanding anything contained herein to the contrary, the Collateral
will not include property, plant and equipment currently being liquidated by Borrower as part of its exit from its manufacturing
plant and related business of producing and bottling branded and private label beverages located at Los Angeles, California.


 




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4.2.
At Lender’s request, Borrower will provide Lender with confirmatory assignment schedules in form satisfactory to Lender,
copies of customers’ invoices, evidence of shipment or delivery, and such further information as Lender may require. Borrower
will take any and all steps and observe such formalities as Lender may request from time to time to create and maintain in Lender’s
favor a valid and first lien upon, security interest in and pledge of all of Borrower’s Receivables and all other Collateral,
including executing all documents that may be requested by Lender to maintain such security interest in and pledge of the Collateral.
Borrower hereby authorizes Lender to file any Financing Statements under the UCC, and renewals and amendments thereof, naming
Borrower as debtor, that are necessary to perfect and maintain the perfection of Lender’s security interest in the Collateral.
Borrower agrees to take all steps necessary to allow Lender to comply with any Federal or state statute, which, in Lender’s
judgment, if not complied with, might afford to any Person an interest in the Collateral that would be superior to Lender’s
security interest in the Collateral. Lender’s security interest in Borrower’s intellectual property is subject to
release pursuant to the terms and conditions of the Intercreditor Agreement.


 


5.
CUSTODY AND INSPECTION OF COLLATERAL AND RECORDS;


 


COLLECTION
AND HANDLING OF COLLATERAL


 


5.1.
As to all moneys so collected, including all prepayments by customers, Borrower shall on the day received remit all such collections
to Lender in the form received by depositing such collections into an account of Lender specified by Lender and maintained at
Borrower’s expense. All amounts collected on Receivables when received by Lender shall be credited to Borrower’s Loan
Account, adding 1 Business Days for collection and clearance of remittances sent by wire transfer and 3 Business Days for collection
and clearance of all other remittances. Such credits shall be conditional upon final payment to Lender. Nothing contained in this
Section 5.1, or otherwise in this Agreement, shall be deemed to limit Lender’s rights and powers pursuant to Section 7 of
this Agreement.


 


5.2.
All records, ledger sheets, correspondence, contracts, documentation and computer hardware and software and media relating to
or evidencing Receivables or containing information relating to the Receivables shall, until delivered to Lender or removed by
Lender from Borrower’s premises, be kept on Borrower’s premises, without cost to Lender, in appropriate containers
in safe places. Lender shall at all reasonable times have full access to and the right to examine and make copies of Borrower’s
books and records, and shall have full access to Borrower’s computer information systems, to confirm and verify all Receivables
assigned to Lender and to do whatever else Lender deems necessary to protect its interest. Lender may at any time remove from
Borrower’s premises, or require Borrower to deliver certified copies of any contracts, documentation, files and records
relating to Receivables, and any computer hardware, software and media containing information relating to the Receivables or Lender
may, without cost or expense to Lender, use such of Borrower’s personnel, supplies, computer information systems and space
at Borrower’s places of business as may be reasonably necessary for collection of Receivables.


 


5.3.
Borrower will immediately upon obtaining knowledge thereof report to Lender all reclaimed, repossessed or returned merchandise,
Account Debtor claims and any other matter affecting the value, enforceability or collectibility of Receivables. Any merchandise
reclaimed or repossessed by or returned to Borrower, after the occurrence and during the continuation of a Default will, at the
cost and expense of Borrower, be set aside marked with the name of the Lender and will be held by Borrower for the account of
Lender and subject to Lender’s security interest. All claims and disputes relating to Receivables are to be promptly adjusted
by Borrower within a reasonable time, at its own cost and expense. Lender may, at its option, settle, adjust or compromise claims
and disputes relating to Receivables which are not adjusted by Borrower within a reasonable time. Following and during the continuance
of a Default, Lender may, at its option, revoke Borrower’s authority to settle or adjust disputes or to further communicate
with Account Debtors.


 




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5.4
Borrower shall reimburse Lender on demand for all costs of collection incurred by Lender in efforts to enforce payment of Receivables,
recovery of or realization upon any other Collateral, including attorneys’ fees and the fees and commissions of collection
agencies. All and any fees, costs and expenses, of whatever kind and nature, including taxes of any kind, which Lender may incur
in filing public notices, obtaining appraisals of the Collateral, and the reasonable charges of any attorney whom Lender may engage
in preparing and filing documents, making title or lien examinations and rendering opinion letters, as well as all fees, costs
and expenses incurred by Lender (including all attorneys’ fees and including Lender’s out of pocket expenses in conducting
periodic field examinations of Borrower and the Collateral (including any costs of third-party examiners) plus Lender’s
prevailing per diem charge for each of its examiners in the field and office, now $950 per person per day), in administering this
Agreement, protecting, preserving, enforcing or foreclosing any security interests or rights granted to Lender hereunder, whether
through judicial proceedings or otherwise (including advertising costs), enforcing or collecting the Receivables or enforcing
the Loan Documents, recovery of or realization upon any other Collateral, or in defending or prosecuting any actions or proceedings
arising out of or related to its transactions with Borrower, including actions or proceedings that may involve any person asserting
a priority or claim with respect to the Collateral, shall be borne and paid for by Borrower on demand, shall constitute part of
the Obligations and may at Lender’s option be charged to Borrower’s Loan Account. Borrower’s obligations under
this section shall survive termination of this Agreement for any reason.


 


6.
REPRESENTATIONS, COVENANTS AND WARRANTIES


 


As
an inducement to Lender to enter into this Agreement, Borrower represents, covenants and warrants (which shall survive the execution
and delivery of this Agreement) that:


 


6.1.
Borrower is and at all times during the term of this Agreement shall be a Corporation duly organized and presently existing in
good standing under the laws of the State of Delaware and is and at all times during the term of this Agreement shall be duly
qualified and existing in good standing in every other state in which the nature of Borrower’s business requires it to be
qualified. Borrower is not aware, and will upon becoming aware promptly notify Lender, of any person organizing under its name
in another state.


 


6.2.
The execution, delivery and performance of this Agreement are within the corporate powers of Borrower, have been duly authorized
by appropriate corporate action and are not in contravention of the terms of Borrower’s charter or by-laws or of any indenture,
agreement or undertaking to which Borrower is a party or by which it may be bound. Borrower is not now the subject of any pending
governmental investigation or proceeding or of any insolvency proceeding. No receiver or custodian has been appointed for any
of the property of Borrower. No consent, approval or authorization of any person, including stockholders of Borrower or any governmental
or regulatory authority, that has not been obtained, is required in connection with the execution, delivery and performance by
Borrower of this Agreement. Borrower warrants that all financial statements and other reports provided to Lender prior to the
Closing Date are true and correct in all material respects.


 


6.3.
There are no pending suits, Federal or state tax liens, or judgment liens against Borrower or affecting its assets, except for
claims set forth on Schedule 6.3 and Permitted Liens. No assets of Borrower are subject to any liens or encumbrances except for
Permitted Liens. Borrower has no employee benefit plans subject to ERISA that have accumulated funding deficiencies or liquidity
shortfalls as defined and calculated under ERISA or with respect to which Borrower presently has withdrawal liability.


 


6.4.
Borrower is and shall be, with respect to all Inventory, Equipment, intellectual property collateral, cash collateral and other
Collateral, the owner thereof free from any lien, security interest or encumbrance of any kind, except for Permitted Liens, subject
to release of security interest in intellectual property pursuant to the terms and conditions of the Intercreditor Agreement.
No Receivable or any other Collateral has been or shall hereafter be assigned, pledged or transferred to any person other than
the Lender or in any way encumbered or subject to a security interest except to Lender, and except for Permitted Liens, and Borrower
shall defend the same against the claims of all persons.


 




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6.5.
Borrower’s books and records relating to the Receivables and Collateral are and shall be maintained at the office referred
to below. Except as otherwise stated below, the principal executive office of Borrower is located at such address and has been
so located on a continuous basis for not less than six months. Borrower shall not change such location without Lender’s
prior written consent, and, upon making any such change, Lender shall be authorized to file any additional financing statements
or other documents or notices which may be necessary under the UCC or other applicable law and Borrower shall execute and deliver
to Lender any such documents requiring Borrower’s signature, failing which Lender shall be authorized to sign such documents
on behalf of Borrower as Borrower’s attorney-in-fact. The listing of offices on Schedule 6.5 hereto represents all of Borrower’s
places of business. Borrower shall notify Lender of the existence of any additional places of business within 5 Business Days
after any such place of business is established.


 


6.6.
All loans and advances requested by Borrower under this Agreement shall be used for the general corporate and business purposes
of Borrower and in no event shall Borrower request Lender to remit a loan or advance to an account of Borrower that is used for
the specific purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Federal Reserve Board)
or to extend credit to others for the purpose of purchasing or carrying any such margin stock in contravention of Regulation T,
U or X of the Federal Reserve Board; or to the extent that any loans and advances requested by Borrower under this Agreement shall
be used for paying wages of the employees of Borrower, Borrower hereby represents and warrants that it shall withhold and pay
over to the applicable tax authorities any amount thereof as it shall be so required by applicable law.


 


6.7.
Borrower shall maintain its shipping forms, invoices and other related documents in a form satisfactory to Lender and shall maintain
its books, records and accounts in accordance with sound accounting practice. Borrower shall furnish to Lender accounts receivable
agings, accounts receivable roll forward reports (in the form attached hereto as Exhibit B), reconciliations of accounts receivable
collateral and the loan balance on the monthly statements provided by Lender to Borrower’s records, accounts payable ageing
reports, and inventory designations, monthly, not later than (10) days after the end of each month, covering the previous month.
Borrower shall furnish to Lender such other information regarding the business affairs and financial condition of Borrower as
Lender may, from time to time, reasonably request, including (a) audited financial statements prepared at the end of and for each
fiscal year of Borrower, as soon as practical and in any event within one hundred twenty (120) days after the end of each such
fiscal year, including a balance sheet, a statement of income, a statement of cash flows and notes, prepared by independent Certified
Public Accountants reasonably acceptable to Lender; and concurrently with such financial statements, a written statement signed
by such independent public accountants to the effect that, (i) in making the examination necessary for their opinion of such financial
statements, they have not obtained any knowledge of the existence of any Default (form 10-K and the form of auditor letter provided
to Lender are acceptable in lieu of the foregoing), or (ii) if such independent public accountants shall have obtained from such
examination any such knowledge, they shall disclose in such written statement the Default and the nature thereof, (b) financial
statements prepared internally as at the end of and for each of the first, second and third fiscal quarterly period of Borrower,
as soon as practical and in any event within forty-five (45) days after the end of each such fiscal quarter of Borrower, in such
detail and scope as Lender may reasonably require including without limitation, a balance sheet, a statement of income, a statement
of cash flows and notes, (form 10-Q is acceptable in lieu of the foregoing) certified by the Chief Financial Officer of Borrower
(“CFO”); and concurrently with such financial statements, a written statement signed by the CFO to the effect that,
(i) CFO has not obtained any knowledge of the existence of any Default, or (ii) if such CFO has obtained from such examination
any such knowledge, such CFO shall disclose in such written statement the Default and the nature thereof and (c) such other information
regarding the business affairs and financial condition of Borrower as Lender may, from time to time, request. All such statements
and information shall fairly present the financial condition of Borrower, and the results of its operations as of the dates and
for the periods, for which the same are furnished.


 




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6.8.
Borrower shall duly pay and discharge all taxes, assessments, contributions and governmental charges upon or against it or its
properties or assets prior to the date on which penalties attach thereto. Borrower shall be liable for any tax (excluding a tax
imposed on the overall net income of Lender) imposed upon any transaction under this Agreement or giving rise to the Receivables
or which Lender may be required to withhold or pay for any reason and Borrower agrees to indemnify and hold Lender harmless with
respect thereto, and to repay Lender on demand the amount thereof. Until paid by Borrower, Borrower’s liability under this
paragraph shall be added to the Obligations secured hereunder, and may at Lender’s option be charged to Borrower’s
Loan Account but shall nonetheless be independent hereof and continue notwithstanding any termination hereof.


 


6.9.
With respect to each Receivable, Borrower hereby represents and warrants that: each Receivable represents a valid and legally
enforceable indebtedness based upon an actual and bona fide sale and delivery of property in the ordinary course of Borrower’s
business which has been completed and finally accepted by the Account Debtor and for which the Account Debtor is unconditionally
liable to make payment of the amount stated in each invoice, document or instrument evidencing the Receivable in accordance with
the terms thereof, without offset, defense or counterclaim; each Receivable will be paid in full at maturity; no Receivables have
arisen from sales on bill and hold terms; all statements made and all unpaid balances appearing in any invoices, documents, instruments
and statements of account describing or evidencing the Receivables are true and correct and are in all respects what they purport
to be and all signatures and endorsements that appear thereon are genuine and all signatories and endorsers have full capacity
to contract; the Account Debtor owing the Receivable and each validity guarantor, endorser or surety of such Receivable is solvent
and financially able to pay in full the Receivable when it matures; and all recording, filing and other requirements of giving
public notice under any applicable law have been duly complied with.


 


6.10.
Prior to the making of any loans hereunder: 1) Lender shall have received an opinion of Borrower’s counsel in the form,
and as to the matters, required by Lender; 2) Lender shall have received Good standing Certificates and other certifications with
respect to Borrower and any other Person liable on the Obligations from such governmental authorities as Lender shall require;
3) Lender or its agents shall have completed such examinations and appraisals of the Collateral and such searches with regard
to Borrower and its assets, as Lender shall require, all at Borrower’s expense; 4) Lender shall have received a payoff letter
duly executed and delivered by PMC Financial Services Group and Borrower or other evidence of such termination in form and substance
satisfactory to Lender, and any other evidence Lender may require that on the Closing Date there shall be no Liens on the Collateral
other than Permitted Liens; 5) a lockbox or deposit account complying with Section 5.1 shall have been established which is satisfactory
to Lender; 6) Lender shall have received evidence, in form satisfactory to Lender, that Borrower has obtained; 7) the Loan Availability
shall be in an amount equal to or greater than $250,000 plus the sum of all amounts required to be disbursed at closing for the
purpose of paying Lender’s expenses and attorney’s fees chargeable to Borrower hereunder and all amounts required
to be paid to creditors to induce them to release any liens in the Collateral that are not Permitted Liens; and 8) Lender shall
have received evidence that it is filed and has a perfected first and only security interest in all Collateral. Notwithstanding
the foregoing, the parties hereto acknowledge the subordinate security interest of Raptor/Harbor Reeds SPV LLC which is subject
to the terms of the Subordination Agreement executed contemporaneously herewith.


 


6.11.
During the term of this Agreement, including online sales, Borrower shall not make any sales to customers by accepting a credit
card issued to such customers unless Borrower has prior thereto entered into a merchant agreement with a processor, relating to
sales made using such credit card, on terms that are acceptable to Lender, and such processor has agreed to remit the proceeds
of such sales to an account of Borrower with respect to which Lender has control in accordance with Section 9-104 of the UCC.


 




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6.12.
Attached as Exhibit C is a listing of all of Borrower’s patents, trademarks and copyrights. So long as any Obligations remain
outstanding, Lender is hereby irrevocably authorized to use any of Borrower’s patents, trademarks and copyrights for the
purpose of enforcing Lender’s security interest in the Collateral and disposing of any of the Collateral, subject to the
terms and conditions of the Intercreditor Agreement.


 


6.13.
So long as any Obligations remain outstanding, Borrower shall (i) advise Lender of the existence of any commercial tort claims
in favor of Borrower, which advice shall be given to Lender in writing no later than 10 days after Borrower becomes aware of existence
of such a claim in its favor; (ii) within 5 Business Days after Lender’s request therefor, provide Lender with a listing
of all deposit accounts and securities accounts maintained by Borrower and a listing of all letters of credit issued and outstanding
in favor of Borrower as beneficiary and, if requested by Lender, arrange for the execution by each depository bank and financial
intermediary of a control agreement in Lender’s favor with respect to such accounts, and by each letter of credit issuer
of a consent to an assignment of the proceeds of such letter of credit to Lender, in each case in form and content satisfactory
to Lender; (iii) maintain in effect in favor of Lender, agreements (in form satisfactory to Lender) executed by the landlords
of Borrower’s places of business and the bailees of its property, pursuant to which Lender is granted access to such places
of business and such bailees are directed to honor Lender’s instructions with respect to the disposition of such property.


 


6.14.
Until indefeasible payment in full of the Obligations, Borrower shall not (i) make any loans or advances to officers, directors,
shareholders or Affiliates (except through participation in equity-based incentive compensation pursuant to which participants
place shares of stock awarded under a compensation program into a trust which uses the shares as collateral for a loan to such
employee participants from an independent lender); (ii) engage in any other transactions with Affiliates except on terms similar
to those that would be in effect in transactions between unrelated parties (iii) incur or repay indebtedness for borrowed money
or guaranty the obligations of Affiliates or other Persons; (iv) sell, transfer or otherwise dispose of any assets except for
sales of Inventory in the normal course other than sale or liquidation of property, plant and equipment comprising Borrower’s
manufacturing plant and related production and bottling business for branded and private label products in Los Angeles, California;
(v) declare any cash dividends, redeem or repurchase any stock, or make any other distributions in respect of its stock (other
than dividends paid in-kind or through issuance of common stock and distributions of non-cash rights or entitlements to stockholders);
or (vi) enter into any agreements to buy or sell goods on consignment terms; or (vi) merge with or into any entity or undergo
any other restructuring or reorganization including reorganizations that would result in Borrower being organized under the laws
of a state other than Delaware.


 


6.15.
Borrower shall not (i) conduct any business or engage in any transaction or dealing with any Blocked Person (as hereafter defined),
including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person;
(ii) deal in, or otherwise engage in any transaction relating to any property or interests in property blocked pursuant to Executive
Order No. 13224; or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224, the USA Patriot Act or any
other Anti-Terrorism Law. Borrower shall deliver to Lender any certification or other evidence requested from time to time by
Lender in its sole discretion, confirming Borrower’s compliance with this Section. Borrower is not in violation of any Anti-Terrorism
Law and Borrower is not a Person (a “Blocked Person”) that (a) is listed in the annex to, or is otherwise subject
to the provisions of, Executive Order No. 13224; (b) is owned or controlled by, or acting for or on behalf of, any Person that
is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224; (c) any financial institution
is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (d) commits, threatens or conspires
to commit or supports “terrorism” as defined in Executive Order No. 13224; (e) is named as a “specially designated
national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official
website or any replacement website or other replacement official publication of such list, or is affiliated or associated with
a person or entity listed above; (f) conducts any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any Blocked Person, or deals in, or otherwise engages in any transaction relating to, any
property or interests in property blocked pursuant to Executive Order No. 13224.


 




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For
purposes of this Section 6.15, (i) “Anti-Terrorism Laws” shall mean any laws, regulations, rules, orders and directives
relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing
the Bank Secrecy Act, and the Law administered by the United States Treasury Department’s Office of Foreign Asset Control
(as any of the foregoing laws, regulations, rules, orders and directives may from time to time be amended, renewed, extended,
or replaced); (ii) “Executive Order No. 13224” shall mean Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced; and (iii) “USA
Patriot Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or
replaced.


 


6.16.
Borrower shall deliver to Lender within 5 days of any of Borrower’s senior officers obtaining knowledge of any condition
or event which constitutes, or might reasonably be expected to constitute, a Default or that any Person has given notice to Borrower
or any Affiliates of Borrower or taken any other action with respect to a claimed Default, Borrower shall deliver to Lender an
officer’s certificate describing the same and the period of existence thereof and specifying what action Borrower has taken,
are taking and propose to take with respect thereto.


 


6.17.
Borrower shall until payment in full of all Obligations to Lender and termination of this Agreement: (a) cause to be maintained
at the end of each of its fiscal quarters, Tangible Net Worth in an amount not less than negative $1,500,000 and Working Capital
of not less than negative $2,500,000.


 


7.
BORROWER’S INSURANCE


 


7.1.
Borrower covenants and agrees that, on and after the date hereof, until payment in full of the Obligations and termination of
this Agreement, Borrower shall obtain and maintain in effect, at Borrower’s sole expense, policies of insurance as more
specifically set forth on Exhibit D annexed hereto, in form and substance satisfactory to Lender, each of which shall have ratings
of at least “A-VIII” by A.M. Best Company, and shall otherwise be approved by Lender.


 


7.2.
Borrower hereby directs all insurers under such policies of insurance to pay all proceeds of insurance policies directly to Lender.
Borrower irrevocably makes, constitutes and appoints Lender (and each officer, employee or agent designated by Lender) as Borrower’s
true and lawful attorney-in-fact for the purpose of (i) making, settling and adjusting such claims under all such policies of
insurance if Borrower fails to make such claim within fifteen (15) days after any casualty or fails to diligently prosecute such
claim, (ii) endorsing the name of Borrower on any check, draft, instrument or other item of payment pertaining to the Collateral
received by Borrower or Lender pursuant to any such policies of insurance, and (iii) making all determinations and decisions with
respect to such policies of insurance as they relate to the Collateral. Borrower agrees to provide Lender with prompt written
notice of any change, amendment or modification to any insurance policy.


 


7.3.
Lender is authorized to collect all casualty insurance proceeds and, at Lender’s option: (i) apply (A) such proceeds against
the outstanding principal amount of the Obligations, or (ii) allow Borrower to use such proceeds, or a part thereof, to repair
any damage or restore, replace or rebuild the Collateral that was the subject of such proceeds. Notwithstanding anything herein
to the contrary, at any time when a Default has occurred and is continuing, if Lender receives proceeds of insurance or is holding
proceeds of insurance theretofore received by Lender, Lender may apply the same to the Obligations at any time and from time to
time as it may determine in its discretion. If no Default has occurred and is continuing and Borrower has been permitted to apply
insurance proceeds to repair, restore, replace or rebuild property, then Lender will return any insurance proceeds to Borrower
which Lender continues to hold after any such repair, restoration, replacement or rebuilding of such property is completed to
Lenders’ satisfaction as determined reasonably in its discretion.


 




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7.4.
If Borrower fails to provide Lender with evidence of the insurance coverage required by this Agreement, Lender may purchase insurance,
at Borrower’s expense, to protect Lender’s interests in the Collateral. This insurance may, but need not, protect
the interests of Borrower. The coverage that Lender purchases may not pay any claim that Borrower may make or any claim that is
made against Borrower in connection with the Collateral. Borrower may later cancel any insurance purchased by Lender, but only
after providing Lender with evidence that Borrower has obtained insurance as required by this Agreement. If Lender purchases insurance
for the Collateral, Borrower will be responsible for the costs of that insurance, including interest and any other charges that
may be imposed in connection with the placement of the insurance, until the effective date of the cancellation or expiration of
the insurance. The costs of the insurance shall be added to the Obligations. The costs of the insurance may be more than the cost
of insurance that Borrower may be able to obtain on its own.


 


8.
SPECIFIC POWERS OF LENDER


 


8.1.
Borrower hereby constitutes Lender or its agent, or any other person whom Lender may designate, as Borrower’s attorney,
at Borrower’s own cost and expense to exercise at any time all or any of the following powers which, being coupled with
an interest, shall be irrevocable until all Obligations have been paid in full: (a) to receive, take, endorse, assign, deliver,
accept and deposit, in Lender’s or Borrower’s name, any and all checks, notes, drafts, remittances and other instruments
and documents relating to Receivables and proceeds thereof; (b) to receive, open and dispose of all mail addressed to Borrower
and to notify, following the occurrence and during the continuation of an alleged event of Default, postal authorities to change
the address for delivery thereof to such address as Lender may designate; (c) Following the occurrence and during the continuation
of an alleged event of Default, to transmit to Account Debtors indebted on Receivables notice of Lender’s interest therein
and to request from such Account Debtors at any time, in Borrower’s name or in Lender’s or that of Lender’s
designee, information concerning the Receivables and the amounts owing thereon; (d) Following the occurrence and during the continuation
of an alleged event of Default, to notify Account Debtors to make payment directly to Lender, including by sending the letter
attached hereto as Annex A; and (e) to take or bring, in Borrower’s name or Lender’s, all steps, actions, suits or
proceedings deemed by Lender necessary or desirable to effect collection of the Receivables. In addition, to the extent permitted
by law, Lender may file one or more financing statements, naming Borrower as debtor and Lender as secured party and indicating
therein the types or describing the items of Collateral. Without limitation of any of the powers enumerated above, Lender is hereby
authorized to accept and to deposit all collections in any form, relating to Receivables, received from or for the account of
Account Debtors (whether such collections are remitted directly to Lender by Account Debtors or are forwarded to Lender by Borrower),
including remittances which may reflect deductions taken by Account Debtors, regardless of amount, the Loan Account of Borrower
to be credited only with amounts actually collected on Receivables in accordance with Section 5.1. Borrower hereby releases (i)
any bank, trust company or other firm receiving or accepting such collections in any form, and (ii) Lender and its officers, employees
and designees, from any liability arising from any act or acts hereunder or in furtherance hereof, whether of omission or commission,
and whether based upon any error of judgment or mistake of law or fact; provided however, Borrower’s release does not extend
to acts of gross negligence or willful misconduct.


 




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9.
LENDER’S REMEDIES


 


9.1.
Borrower agrees that all of the loans and advances made by Lender under the terms of this Agreement, together with all Obligations
of Borrower as defined herein (unless otherwise provided in any instrument evidencing the same or agreement relating thereto),
shall be payable by Borrower at Lender’s demand at the office of Lender in New York, New York. In addition, all Obligations
shall be, at Lender’s option, due and payable without notice or demand upon termination of this Agreement or upon the occurrence
of any one or more of the following events of default (“Default”): (1) if Borrower shall fail to pay to Lender
when due any amounts owing to Lender under any Obligation, or if there shall occur a Default or breach by Borrower or any Affiliate
of Borrower of any of the terms, covenants, conditions or provisions of this Agreement, any Loan Document or any other agreement
by or among Borrower or any of its Affiliates and Lender or any of its Affiliates or if Borrower shall fail to pay when due any
indebtedness for borrowed money; (2) if any person who has pledged, granted, issued or arranged collateral security or the LC
for the Obligations (a “Pledgor”), shall die, terminate or attempt to terminate its obligations; or if any
such person shall breach any of the terms, covenants, conditions or provisions of any agreement or if a material portion of any
tangible Collateral for the Obligations is destroyed or lost or rendered valueless or no longer subject to insurance; (3) if any
representation, warranty, or statement of fact made to Lender or an Affiliate of Lender at any time by or on behalf of Borrower
or an Affiliate of Borrower is false or misleading in any material respect at the time it is made; (4) if an Insolvency Proceeding
is commenced by Borrower or any Pledgor or if an Insolvency Proceeding is commenced against Borrower or any Pledgor and is not
dismissed or stayed within sixty (60) days (provided that no advances will be made prior to the dismissal of such Insolvency Proceeding)
or if a judgment, levy, attachment or distraint against Borrower remains unpaid, unstayed or undismissed for a period of more
than five days, or if Borrower discontinues doing business for any reason, or if a custodian, receiver or trustee of any kind
is appointed for it or any of its property; (5) if at any time Lender shall, in its sole discretion, reasonably exercised, consider
the Obligations insecure or any part of the Receivables unsafe, insecure or insufficient and Borrower shall not on demand furnish
other collateral or make payment on account, satisfactory to Lender; (6) if (x) Borrower shall default under or breach the terms
of any present or future lease (each a “Lease”) of any premises now or hereafter leased by Borrower (“Leased
Premises”) or (y) Lender shall receive notice from any lessor of any Leased Premises that a default has occurred under
any Lease, or that any Lease has been terminated; (7) any employee benefit plan of Borrower subject to ERISA is completely or
partially terminated or the Pension Benefit Guaranty Corporation commences proceedings for the purpose of effecting any such termination
or an event or circumstance occurs which could result in any such termination; or (8) if a claim is made or threatened, or a proceeding
is commenced, by any governmental agency or authority against Borrower or any Affiliate of Borrower under any environmental protection
laws; or (9) if there is a default or breach of any provision of any Intercreditor Agreement; or (10) or upon any Event of Default
as defined or alleged with respect to any indebtedness or obligation evidenced by or referred to in any Increditor Agreement,
including but not limited to a certain April 21, 2017 Subordinated Convertible Non-Redeemable Secured Note (or any replacement)
payable to Raptor/Harbor Reeds SPV LLC; or (11) the LC is terminated, cancelled or no longer in favor of Lender prior to a Renewal
Date and $1,500,000 of the Permitted Overadvance has not been paid to Lender immediately thereafter; or (12) if the LC is not
extended or renewed to Lender’s satisfaction within ninety (90) days prior to any Renewal Date. Upon the occurrence of any
Default, (i) Borrower shall pay to Lender, as liquidated damages and as part of the Obligations, in addition to amounts payable
under Section 10.1 hereof, a charge at the rate of two percent per month upon the outstanding balance of the Obligations from
the date of Default until the date of full payment of the Obligations, which charge shall be in lieu of compensation payable under
Section 3.1 from such date; provided, that in no event shall such rate exceed the Maximum Rate and (ii) Lender shall have the
right (in addition to any other rights Lender may have under this Agreement or otherwise) without further notice or demand to
Borrower, to enforce payment of any Receivables or Collateral, to settle, compromise, or release in whole or in part, any amounts
owing on Receivables or Collateral, to prosecute any action, suit or proceeding with respect to Receivables or Collateral, to
extend the time of payment of any and all Receivables or Collateral, to make allowances and adjustments with respect thereto,
to issue credits in Lender’s name or Borrower’s, to demand payment under the LC (subject to the Subordination Agreement
with Raptor/Harbor Reeds SPV LLC executed contemporaneously herewith) to sell, assign and deliver the Receivables or Collateral
(or any part thereof) and any returned, reclaimed or repossessed merchandise or other property held by Lender or by Borrower for
Lender’s account, at public or private sale, at broker’s board, for cash, upon credit or otherwise, at Lender’s
sole option and discretion, and Lender may bid or become purchaser at any such sale if public, free from any right of redemption
which is hereby expressly waived. Borrower agrees that the giving of five days’ notice by Lender, sent by ordinary mail,
postage prepaid, to the mailing address of Borrower set forth in this Agreement, designating the place and time of any public
sale or the time after which any private sale or other intended disposition of the Receivables or Collateral or any other security
held by Lender is to be made, shall be deemed to be reasonable notice thereof and Borrower waives any other notice with respect
thereto. The net cash proceeds resulting from the exercise of any of the foregoing rights or remedies shall be applied by Lender
to the payment of the Obligations in such order as Lender may elect, and Borrower shall remain liable to Lender for any deficiency.
Notwithstanding anything to the contrary contained in this section, (i) to the extent that an event or occurrence described in
this section consists of Borrower’s failure to take, do or perform an act or action, then such failure shall not constitute
a Default if no other Default has occurred and if such act or action is taken, done or performed by Borrower within 5 Business
Days after Borrower’s receipt of written notice from Lender that the act or action is required to be taken, done or performed
by Borrower and has not been taken, done or performed; and (ii) to the extent that an event or occurrence described in this section
consists of the commencement of a proceeding against Borrower under Federal or state law or the appointment of a receiver or custodian
under Federal or state law, then the commencement of such proceeding or the appointment of such receiver or custodian shall not
constitute a Default if no other Default has occurred and if such proceeding or appointment is contested by Borrower within the
time period and in the manner required by law and is dismissed, terminated or vacated within ten (10) Business Days after such
commencement or appointment.


 




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9.2.
The enumeration of the foregoing rights and remedies is not intended to be exhaustive, and such rights and remedies are in addition
to and not by way of limitation of any other rights or remedies Lender may have under the UCC or other applicable law. Lender
shall have the right, in its sole discretion, to determine which rights and remedies, and in which order any of the same, are
to be exercised, and to determine which Receivables or Collateral are to be proceeded against and in which order, and the exercise
of any right or remedy shall not preclude the exercise of any others, all of which shall be cumulative. No act, failure or delay
by Lender shall constitute a waiver of any of its rights and remedies. No single or partial waiver by Lender of any provision
of this Agreement, or breach or default thereunder, or of any right or remedy which Lender may have shall operate as a waiver
of any other provision, breach, default, right or remedy or of the same provision, breach, default, right or remedy on a future
occasion. Borrower waives presentment, notice of dishonor, protest and notice of protest of all instruments included in or evidencing
any of the Obligations or the Receivables or Collateral and any and all notices or demands whatsoever (except as expressly provided
herein). Lender may, at all times, proceed directly against Borrower to enforce payment of the Obligations or any other rights
and remedies in the Loan Documents and shall not be required to first enforce its rights in the Receivables or Collateral or any
other security granted to it. Lender shall not be required to take any action of any kind to preserve, collect or protect its
or Borrower’s rights in the Receivables or any other security granted to it.


 


9.3.
BORROWER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER CONNECTED WITH
THIS AGREEMENT, THE OBLIGATIONS, THE RECEIVABLES, OR ANY OTHER TRANSACTION BETWEEN THE PARTIES AND BORROWER HEREBY IRREVOCABLY
CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF ANY FEDERAL COURT LOCATED IN SUCH STATE IN
CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE OBLIGATIONS. IN ANY SUCH LITIGATION
BORROWER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED
OR REGISTERED MAIL DIRECTED TO BORROWER AT ITS PLACE OF BUSINESS SET FORTH ABOVE.


 




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9.4.
Borrower hereby agrees to indemnify Lender and hold Lender harmless from and against any liability, loss, damage, suit or proceeding
ever suffered or incurred by Lender (including attorneys’ fee) as a result of Borrower’s failure to observe, perform
or discharge Borrower’s duties hereunder or as a result of Borrower’s breach of any of the representations, warranties
and covenants of this Agreement. This indemnity shall survive termination of this Agreement for any reason.


 


10.
EFFECTIVE DATE, CONTROLLING LAW AND TERMINATION


 


10.1.
This Agreement shall become effective upon acceptance by Lender at its office in the State of New York, and shall continue
in full force and effect until March 30, 2021 (the “Renewal Date”) and from year to year thereafter,
unless sooner terminated as herein provided. Borrower may terminate this Agreement on the Renewal Date or on the anniversary
of the Renewal Date in any year by giving Lender not less than sixty (60) days prior written notice by registered or
certified mail, return receipt requested, and in addition to its other rights hereunder, Lender shall have the right to
terminate this Agreement at any time by giving Borrower one hundred fifty (150) days’ prior written notice. Should a
Default occur hereunder, this Agreement will be terminable by Lender at any time and Borrower shall, upon any such
termination by Lender, pay to Lender, as liquidated damages and as part of the Obligations, in addition to amounts payable
under Section 9.1  hereof, an amount equal to (a) three percent (3%) of the Maximum Credit Facility then in effect, if such
termination occurs on or prior to the first anniversary of the Closing Date; (b) two percent (2%) of the Maximum Credit
Facility then in effect, if such termination occurs after the first anniversary of the Closing Date but on or prior to the
second anniversary of the Closing Date; and (c) one percent (1%) of the Maximum Credit Facility then in effect if such
termination occurs after the second anniversary of the Closing Date. In the event that Lender shall permit termination of
this Agreement by Borrower other than as provided herein, as a condition to such termination, Borrower shall pay to Lender
such additional liquidated damages in addition to performance of any other conditions to such termination. No termination of
this Agreement, however, shall relieve or discharge Borrower of its duties, obligations and covenants hereunder until such
time as all Obligations have been paid in full, and the continuing security interest in Receivables and other
Collateral granted to Lender hereunder or under any other agreement shall remain in effect until such Obligations have been
indefeasibly paid and performed in full and any provision hereof that by its terms survives termination of this Agreement
shall survive pursuant to such terms. No provision hereof shall be modified or amended orally or by course of conduct but
only by a written instrument expressly referring hereto signed by both parties. This Agreement and the Loan Documents
embodies the entire agreement between Lender and Borrower as to the subject matter hereof and supersedes all prior agreements
(whether oral or written) as to the subject matter hereof. This Agreement shall be binding upon and inure to the benefit of
Borrower and Lender and their respective heirs, executors, administrators, successors and assigns, provided, however, that
Borrower may not assign this Agreement or its rights hereunder without Lender’s prior written consent. Borrower
consents to Lender’s sale of participations in the loans made under this Agreement.


 




    	 	15	 



    	 



    

 


10.2.
ALL LOANS SHALL BE DISBURSED BY LENDER FROM ITS OFFICE IN THE STATE OF NEW YORK, SHALL BE PAYABLE BY BORROWER AT SUCH OFFICE,
AND THIS AGREEMENT AND ALL TRANSACTIONS THEREUNDER SHALL BE DEEMED TO BE CONSUMMATED IN SUCH STATE AND SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THAT STATE. If any part or provision of this Agreement is invalid or in contravention
of the applicable laws or regulations of any controlling jurisdiction, such part or provision shall be severable without affecting
the validity of any other part or provision of this Agreement. Notwithstanding any provision herein or in any related document,
Lender shall never be entitled to receive, collect, or apply, as interest on the Loan Account, any amount in excess of the maximum
rate of interest (“Maximum Rate”) permitted to be charged from time to time by applicable law (if such law
imposes any maximum rate), and in the event Lender ever receives, collects, or applies as interest, any amount in excess of the
Maximum Rate, such amount shall be deemed and treated as a partial prepayment of the principal of the Loan Account; and, if the
principal of the Loan Account and all other of Lender’s charges other than interest are paid in full, any remaining excess
shall be paid to Borrower.


 


11.
Miscellaneous


 


11.1.
Unless otherwise specifically provided in this Agreement, any notices, requests, demands or other communications permitted or
required to be given under this Agreement shall be in writing and shall be sent by facsimile, hand delivery or by a nationally
recognized overnight delivery service, to the addresses and facsimile numbers of the parties set forth below (or to such other
address or facsimile number as a party may hereafter designate by a notice to the other that complies with this section) and shall
be deemed given (a) in the case of a notice sent by facsimile, when received by the recipient if the sending party receives a
confirmation of delivery from its own facsimile machine; and (b) in the case of a notice that is hand delivered or sent by such
overnight courier, when delivered (provided that the sending party retains a confirmation of delivery). Any notice which, pursuant
to the terms hereof must be sent by Borrower by certified or registered mail shall be deemed given and effective when received
by Lender, or Borrower, as the case may be.


 


	 	If
    to Lender:	If
    to Borrower:	 
	 	Rosenthal
    & Rosenthal, Inc.	Reed’s
    Inc.	 
	 	1370
    Broadway	201
    Merritt 7 Corporate Park	 
	 	New
    York NY 10018	Norwalk,
    Connecticut 06851	 
	 	Attn:
    Robert Miller	Attn:
    Valentin Stalowir	 
	 	Facsimile:
    (212) 356-0989	Facsimile:
    	 	 
	 	 	 	 
	 	with
    a copy to	 	 
	 	Wilentz,
    Goldman & Spitzer, P.A.	 	 
	 	Paul
    H. Shur, Esq.	 	 
	 	110
    William Street	 	 
	 	26th
    Floor	 	 
	 	New
    York, NY 10038-0958	 	 
	 	Email:
    pshur@wilentz.com	 	 


 


11.2.
Nothing contained herein shall impose on Lender any liability for any contracts, undertakings or other obligations of Borrower
to others, including obligations of Borrower to any Account Debtor for breach of the terms of any contract of sale between Borrower
and the Account Debtor.


 


11.3.
Wherever in this Agreement (i) the term “including” appears, such term shall be deemed to mean “including without
limitation”; (ii) the term “satisfactory” or “acceptable” to Lender appears, such terms shall be
deemed to mean “acceptable” or “satisfactory” to Lender and its counsel in their commercially reasonable
discretion; and (iii) the terms “in the opinion” or “in the judgment” of Lender appear, such terms shall
be deemed to mean commercially reasonably determined “in the sole opinion” and “in the sole judgment”
of Lender and its counsel.


 




    	 	16	 



    	 



    

 


11.4.
Terms used in this Agreement that are not defined in this Agreement but are defined in the UCC shall have the meanings given in
the UCC.


 


11.5.
DRAFTING PRESUMPTION. In the event of any ambiguity or dispute regarding the definition or meaning of any word, phrase, or other
verbiage, or the construction of any provision in this Agreement, there shall be no presumption favoring the definition, meaning
or construction propounded by a particular party based upon which party (or which party’s attorney) drafted the word, verbiage
or provision at issue, and same will be deemed mutually drafted.


 


IN
WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be executed by their respective corporate officers thereto
duly authorized as of the day and year first above written.


 


	 	REED’S
    INC.
	 	 
	 	By:	/s/
    Valentin Stalowir
	 	Name:
    	Valentin
    Stalowir
	 	Title:
    	Chief
    Executive Officer


 


	 	Accepted:
	 	 
	 	ROSENTHAL
    & ROSENTHAL, INC.
	 	 	 
	 	By:	/s/
    Robert L. Martucci
	 	Name:
    	Robert
    L. Martucci
	 	Title:
    	Senior
    Vice President


 




    	 	17	 



    	 



    

 


STATE
OF CONNECTICUT )


:SS.


COUNTY
OF ___________)


 


BE
IT REMEMBERED, that on this ____________ day of September, 2018, before me the subscriber, an officer duly authorized to take
acknowledgments for use in the State of Connecticut, personally appeared Valentin Stalowir, who I am satisfied is the person
who executed the within document as Chief Executive Officer of Reed’s, Inc., and I having first made known to him the contents
thereof, he did thereupon acknowledge that said document is the voluntary act and deed of Reed’s, Inc., made by virtue of
authority from Reed’s, Inc.’s By-Laws for the uses and purposes therein expressed.


 


	 	 
	 	Name:
	 	Title:
	 	My
    Commission expires:


 




    	 	 	 



    	 



    

 


Exhibit
A


 


PERMITTED
LIENS


 


(a)
the security interests and liens of Lender;


 


(b)
liens securing the payment of taxes, assessments or other governmental charges or levies either not yet overdue or the validity
of which are being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower or Subsidiary,
as the case may be and with respect to which adequate reserves have been set aside on its books;


 


(c)
non-consensual statutory liens (other than liens securing the payment of taxes) arising in the ordinary course of such Borrower’s
business to the extent: (i) such liens secure indebtedness which is not overdue or (ii) such liens secure indebtedness relating
to claims or liabilities which are fully insured and being defended at the sole cost and expense and at the sole risk of the insurer
or being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower, in each case prior
to the commencement of foreclosure or other similar proceedings and with respect to which adequate reserves have been set aside
on its books;


 


(d)
zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of real property which do not interfere
in any material respect with the use of such real property or ordinary conduct of the business of such Borrower as presently conducted
thereon or materially impair the value of the real property which may be subject thereto;


 


(e)
purchase money security interests in machinery and equipment (including capital leases);


 


(f)
pledges and deposits of cash by any Borrower after the date hereof in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security benefits consistent with the current practices of such
Borrower as of the date hereof;


 


(g)
pledges and deposits of cash by Borrower after the date hereof to secure the performance of tenders, bids, leases, trade contracts
(other than for the repayment of indebtedness), statutory obligations and other similar obligations in each case in the ordinary
course of business consistent with the current practices of Borrower as of the date hereof; provided, that, in connection with
any performance bonds issued by a surety or other person, the issuer of such bond shall have waived in writing any rights in or
to, or other interest in, any of the Collateral in an agreement, in form and substance satisfactory to Lender;


 


(h)
liens arising from (i) operating leases and the precautionary UCC financing statement filings (satisfactory to Lender) in respect
thereof and (ii) equipment or other materials which are not owned by Borrower located on the premises of such Borrower (but not
in connection with, or as part of, the financing thereof) from time to time in the ordinary course of business and consistent
with current practices of such Borrower and the precautionary UCC financing statement filings (satisfactory to Lender) in respect
thereof;


 


(i)
judgments and other similar liens arising in connection with court proceedings that do not constitute a Default, provided, that,
(i) such liens are being contested in good faith and by appropriate proceedings diligently pursued, (ii) adequate reserves or
other appropriate provision, if any, as are required by GAAP have been made therefor, and (iii) a stay of enforcement of any such
liens is in effect; and


 


(j)
any other liens to which Lender has consented in writing, including but not limited to Raptor/Harbor Reed’s SPV LLC secured
note.


 




    	 	 	 



    	 



    

 


Schedule
6.3


 


Litigation,
Liens and Judgments


 


As
disclosed in the Los Angeles County litigation search dated 9/13/18


 




    	 	 	 



    	 



    

 


Schedule
6.5


 


Other
locations of Borrower


 


	a.	Cano
    Logistics – 13100 South Broadway, Los Angeles, CA 90061 (Inventory)
	b.	Global
    Freight – 13171 Charles Willard, Carson, CA 90746 (Inventory)
	c.	Henningsen
    Cold Storage – 229 Maple Street, Scranton, PA 18504 (Inventory)
	d.	LAGROU
    DES PLAINES, INC. – 1800 South Wolf Road, Des Plaines, IL 60018 (Inventory)
	e.	Lion
    Brewery -700 N Pennsylvania Avenue, Wilkes-Barre, PA 18705 (Inventory)
	f.	Odom
    Corporation – 1825 Raymond Avenue, Renton, WA 98057 (Inventory)
	g.	PRI-PAK
    – 200 Schenley Place, Greendale, IN 47025 (Inventory)
	h.	RC
    Moore, Inc. – 301 Oak Street, Pittson, PA 18640 (Inventory)
	i.	States
    Logistics Services Inc. – 5590 E. Francis Street, Ontario, CA 91761 (Inventory)
	j.	201
    Merritt 7 Corporate Park, Norwalk, CT 06840
	k.	13000
    South Spring Street, Los Angeles, CA 90061


 




    	 	 	 



    	 



    

 


ANNEX
A


 


TO
ALL CUSTOMERS OF: REED’S INC.


 


Attention:
Accounts Payable Supervisor


 


All
accounts receivables of REED’S INC. have been assigned and are payable to Rosenthal & Rosenthal, Inc. Accordingly, payment
of all accounts receivables arising from sales made or services rendered by REED’S INC. to you whether now existing or hereafter
arising are to be made directly and only to:


 


Rosenthal
& Rosenthal, Inc.


1370
Broadway


New
York, NY 10018


Attn:


 


or
pursuant to such other instructions as Rosenthal & Rosenthal, Inc. may hereafter provide.


 


This
notification of assignment of accounts receivables is being given to you in accordance with the provisions of the Uniform Commercial
Code. If you should make payment to REED’S INC. or anyone else other than Rosenthal & Rosenthal, Inc., unless otherwise
instructed by Rosenthal & Rosenthal, Inc. hereafter such payment will not constitute payment of the account
receivable, and may subject you to double liability for the sums due in connection therewith.


 


	 	Very
    truly yours,
	 	 
	 	REED’S
    INC.
	 	 	 
	 	By:
    	 
	 	Name:	 
	 	Title:	 


 




    	 	 	 



    	 



    

 


Exhibit
B


 


MONTHLY
ACCOUNTS RECEIVABLE ROLLFORWARD REPORT


 


SAMPLE
FORM


 


	 	 	 	 	+
    	 	-
    	 	-
    	 	-
    	 	+
    	 	-
    	 	+
    	 	 
	 	 	Beginning	 	Gross	 		 	(Net	 		 	Debit	 	(Credit	 	Non
    A/R	 	Ending
	Date	 	Balance	 	Sales	 	(Credits)	 	Collections)	 	(Discounts)	 	Adj	 	Adj)	 	Cash	 	Balance
	8/31/2018	 	 	 	 	 	 	 	 	 	Enter
    opening aging balance here 	 	 
	9/1/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/2/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/3/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/4/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/5/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/6/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/7/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/8/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/9/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/10/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/11/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/12/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/13/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/14/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/15/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/16/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/17/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/18/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/19/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/20/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/21/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/22/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/23/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/24/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/25/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/26/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/27/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/28/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/29/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	9/30/2018	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    
	 	 	0.00
    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00
    







 


	 	Balance
    per Aging	 	 
	 	Calculated
    balance	 	0.00
    
	 	 	 	Variance


 




    	 	 	 



    	 



    

 


Exhibit
C


 


PATENTS,
TRADEMARKS AND COPYRIGHTS


 


Trademarks
in the United States


 





	 	Trademark	Serial/Reg.
    No.	Class
	 	REED'S
    ORIGINAL GINGER BREW ALL-NATURAL JAMAICAN STYLE GINGER ALE	86035664/4513979	 
	 	VIRGIL’S	78867175/3213043	 
	 	DR.
    BETTER	85892888/4432318	 
	 	BELIEVE
    THE UNBELIEVABLE	87836349	 
	 	REED’S	87721630	 




 


Patents
in United States


 


None


 


Copyrights
in United States


 


None


 




    	 	 	 



    	 



    

 


Exhibit
D


 


A.
Specific Insurance Requirements.


 


(i)
Property Insurance - An all risks property insurance policy, including coverage for fire, theft, collision, burglary, pilferage,
loss in transit, explosion, spoilage, wind, hail, earthquake, flood, collapse, sinkhole and terrorism (domestic and foreign),
for an amount not less than one hundred percent (100%) of the replacement cost of the Collateral (exclusive of costs for foundations,
underground utilities and footings for any Collateral consisting of real property, if applicable) without deduction for physical
depreciation. Earthquake coverage will be required for any Collateral consisting of real property, if applicable, if the locations
PML/SEL exceeds 20% with a limit equal to the PML/SEL. Earthquake deductibles shall not be greater than five percent (5%) of the
total insured value of the property. If all or any portion of the improvements at any real property Collateral is, at any time
during the term of this Agreement, located in a special flood hazard area or such other area as Lender may determine its reasonable
discretion, flood coverage in an amount equal to (1) the maximum amount of such insurance available through the National Flood
Insurance Program and (2) such additional flood coverage in form and substance and in amounts as may be reasonably required by
Lender. “All risks” shall provide coverage for all direct damage to property except as specifically excluded by the
policy. Such all risks property insurance policy shall contain a 438 BFU endorsement, or an equivalent New York Standard Mortgagee
(if applicable) and Lenders Loss Payable Endorsement (CG 12 18 06 95 provision “C” or its equivalent, and: (A) no
coinsurance provision or an agreed amount endorsement waiving any coinsurance provisions; (B) a deductible not to exceed $50,000;
(C) if applicable, ordinance or law coverage including (1) loss in value to the undamaged portion of the building(s) to full replacement
value, (2) demolition costs with a limit per loss of ten percent (10%) of the value of the building(s) affected by loss, and (3)
increased costs of construction with a limit per loss of ten percent (10%) of the value of the building(s) affected by loss; (D)
if applicable, equipment breakdown coverage including, but not limited to, loss or damage from electrical injury, machinery and
equipment breakdown, and explosion of steam boilers, air conditioning equipment, high pressure piping, pressure vessels or similar
apparatus; and (E) business income and/or loss of rents coverage, if applicable, in amount equal to the estimated net operating
income and continuing expenses for the property for a period of twelve (12) months, which may be increased from time to time by
Lender, with a 180 Day Extended Period of Indemnity (or such other period of time as may be needed, in Lender’s commercially
reasonable discretion, to return to normal operating levels);


 


(ii)
Liability Insurance – (A) a commercial general liability policy insuring against claims for personal injury, bodily injury,
death or property damage occurring upon, in or about Borrower’s premises, to be on an “occurrence” form, with
limits not less than $1,000,000 per occurrence and $2,000,000 general aggregate; (B) if applicable, a business automobile liability
policy with symbol 1 with limits not less than $1,000,000 per accident; and (C) if applicable, a workers compensation policy with
limits not less than statutory requirements for workers compensation and an employer’s liability limit of not less than
$1,000,000 each accident and $1,000,000 per employee and policy aggregate for bodily injury by disease. Each commercial general
liability policy shall contain a per location general aggregate if covering multiple locations; (D) if applicable, Products Recall
expense and indemnity policy with a limit not less than $5,000,000 per occurrence and annual aggregate, (E) if applicable, Cyber
Liability insurance with a limit of not less than $1,000,000 per occurrence and annual aggregate, and (F) such additional liability
coverages as deemed necessary during the lender’s loan due diligence process.


 


(iii)
Umbrella or Excess Liability Insurance –A commercial umbrella or excess liability policy with limits not less than $5,000,000
which, at a minimum, shall schedule the following policies as “underlying”: commercial general & products liability,
business automobile liability and employer’s liability.


 




    	 	 	 



    	 



    

 


(iv)
if applicable, a “Blanket Crime” policy including employee dishonesty, forgery or alteration, theft, disappearance
and destruction, robbery and safe burglary, property, and computer fraud coverage.


 


B.
General Insurance Requirements.


 


(i)
All insurance premiums on all policies must be paid as and when due and payable, consistent with the past practices of Borrower.
All outstanding premiums for the current policy term are to be paid prior to the effective date of such policy;


 


(ii)
No insurance policy required hereunder shall be permitted to provide for premium assessments to be made against Lender;


 


(iii)
Borrower shall provide the following prior to the effective date of such policy: (i) an ACORD 25 or equivalent certificate of
liability insurance and (ii) an ACORD 28 or equivalent certificate of property insurance;


 


(iv)
Prior to the renewal date of each insurance policy required hereunder, Borrower shall provide certificates of insurance providing
evidence that the policies have been renewed on forms ACORD 28 and ACORD 25;


 


(v)
Borrower shall provide promptly upon Lender’s request complete copies of the insurance policies providing the coverage required
hereunder;


 


(vi)
Each property policy and to the extent possible, each liability policy shall contain a provision providing not less than thirty
(30) days’ prior written notice to Lender of cancellation and not less than ten (10) days’ prior written notice to
Lender of cancellation for non-payment of premium;


 


(vii)
Lender is to be named (A) the first mortgagee (if applicable) and first lender loss payee with respect to the property insurance
coverage, and (B) an additional insured with respect to general liability and umbrella or excess liability insurances, as follows:
Rosenthal & Rosenthal, Inc., 1370 Broadway, New York, NY 10018.


 


(viii)
A waiver of subrogation shall be provided on all liability policies of insurance waiving rights of recovery against Lender; and


 


(ix)
The limits of insurance contained herein are minimum limits established by Lender and shall not be construed to mean that Lender
represents or warrants that the required limits contained herein are adequate for protection to Borrower, nor limit the liability
of Borrower to the limits stated herein.