Blueprint





 







EXHIBIT 10.1

 



LOAN AND SECURITY AGREEMENT

 


THIS LOAN AND SECURITY AGREEMENT (this
“Agreement”)
dated as of March 29, 2019 (the “Effective Date”), between
EAST WEST BANK, a Delaware
corporation (“Bank”), and NEW AGE BEVERAGES CORPORATION, a
Washington corporation (“Borrower”), provides the terms on
which Bank shall lend to Borrower and Borrower shall repay Bank.
The parties agree as follows:

 


RECITALS

 


A.           Borrower
has requested that Bank provide a senior term loan facility to
Borrower in an aggregate principal amount of $15,000,000 and a
senior revolving credit facility to Borrower in an aggregate
principal amount not to exceed $10,000,000.

 


B. Borrower has requested, and Bank is
willing, on the terms and subject to the conditions set forth
herein, to make loans to Borrower.

 


1 ACCOUNTING
AND OTHER TERMS

 


Accounting terms
not defined in this Agreement shall be construed following GAAP.
Calculations and determinations must be made following GAAP.
Capitalized terms not otherwise defined in this Agreement shall
have the meanings set forth in Section 13. All other terms
contained in this Agreement, unless otherwise indicated, shall have
the meaning provided by the Code to the extent such terms are
defined therein.

 


2 LOANS
AND TERMS OF PAYMENT

 


2.1 Promise
to Pay. Borrower hereby unconditionally promises to pay Bank
the outstanding principal amount of all Credit Extensions and
accrued and unpaid interest thereon as and when due in accordance
with this Agreement.

 



2.2 Revolving Line.

 


(a)           Availability.
Subject to the terms and conditions of this Agreement and to
deduction of Reserves, Bank shall make Advances to Borrower from time to time
after the Effective Date in an aggregate outstanding principal
amount not to exceed the Availability Amount. Amounts borrowed
under the Revolving Line may be repaid and, prior to the Revolving
Line Maturity Date, reborrowed, subject to the applicable terms and
conditions precedent herein.

 


(b)           Interest
Payments. With respect to each Advance, commencing on the
first Payment Date following the Funding Date for such Advance and
continuing on the Payment Date of each month thereafter, Borrower
shall make monthly payments of interest, in arrears, on the
principal amount of such Advance at the rate set forth in Section
2.6(a).

 


(c)           Termination;
Repayment. The Revolving Line terminates on the Revolving
Line Maturity Date, when the principal amount of all Advances, the
accrued and unpaid interest thereon, and all other Obligations
relating to the Revolving Line shall be immediately due and
payable.

 


(d)           Permitted
Prepayment. Borrower shall have the option to prepay the
Advances, in whole or in part, provided Borrower (i) delivers
written notice to Bank of its election to prepay each Advance (or
any part thereof) at least 10 Business Days prior to such
prepayment, and (ii) pays, on the date of such prepayment (A) the
outstanding principal being prepaid plus all accrued and unpaid
interest with respect to the Advances (or the part thereof being
prepaid), and (B) all other sums, if any, that shall have become
due and payable with respect to the Advances, including any
interest at the Default Rate with respect to any past due
amounts.


 







	








 

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(e)           Mandatory
Prepayment Upon an Acceleration. If the Advances are
accelerated by Bank following the occurrence and during the
continuance of an Event of Default, Borrower shall immediately pay
to Bank an amount equal to the sum of (i) all outstanding principal
plus accrued and unpaid interest with respect to the Advances, and
(ii) all other sums, if any, that shall have become due and payable
with respect to the Advances, including any interest at the Default
Rate with respect to any past due amounts.

 


2.3 Term
Loan.

 


(a)           Availability.
Subject to the terms and conditions of this Agreement, upon
Borrower’s request, on the Effective Date, Bank shall make a
term loan advance to Borrower in an aggregate original principal
amount not to exceed the Term Loan Amount (such advance, the
“Term Loan
Advance”). After repayment, neither the Term Loan
Advance nor any portion thereof may be reborrowed.

 


(b)           Interest
Payments. With respect to the Term Loan Advance, commencing
on the first Payment Date following the Effective Date and
continuing on the Payment Date of each month thereafter, Borrower
shall make monthly payments of interest, in arrears, on the
principal amount of the Term Loan Advance at the rate set forth in
Section 2.6(a).

 


(c)           Amortization
Payments. Commencing on the seventh Payment Date following
the Effective Date and continuing on each Payment Date thereafter,
Borrower shall make a payment towards the principal amount of the
Term Loan Advance in an amount equal to $125,000; provided that such payment
amount shall be increased pursuant to the amount of any Incremental
Term Loan Advances borrowed pursuant to Section 2.11 so that the
payment amount on any Payment Date shall be equal to (i) the Term
Loan Amount (as such amount is increased pursuant to Section 2.11)
divided by (ii) 10
divided by (iii) 12. All
outstanding principal and accrued and unpaid interest under the
Term Loan Advance, and all other outstanding Obligations with
respect to the Term Loan Advance, shall be due and payable in full
on the Term Loan Maturity Date.

 


(d)           Mandatory
Prepayment. (i) No later than 120 days after the end of each
fiscal year of Borrower, commencing with the fiscal year ending
December 31, 2019, Borrower shall make a payment towards the
outstanding principal amount of the Term Loan Advance in an amount
equal to (A) 50% of the Excess Cash Flow of Borrower and its
Subsidiaries, on a consolidated basis, so long as the Total
Leverage Ratio, as of the end of such fiscal year, based on
Borrower’s audited financial statements for such period, is
greater than or equal to 1.50 to 1.00 and (B) 35% of the Excess
Cash Flow of Borrower and its Subsidiaries, on a consolidated
basis, so long as the Total Leverage Ratio, as of the end of such
fiscal year, based on Borrower’s audited financial statements
for such period, is less than or equal to 1.50 to
1.00.

 


(ii)           Immediately
upon receipt by Borrower of the proceeds of any Specified Equity
Contribution pursuant to Section 7.13, Borrower shall prepay the
Term Loan Advance in accordance with Section 2.8 in an amount equal
to 100% of such proceeds received, which, for the avoidance of
doubt, shall be net of any reasonable underwriting, legal or other
expenses incurred in connection with such Specified Equity
Contribution.

 


(e)           Permitted
Prepayment. Borrower shall have the option to prepay the
Term Loan Advance, in whole or in part, provided Borrower (i)
delivers written notice to Bank of its election to prepay the Term
Loan Advance (or any part thereof) at least 10 Business Days prior
to such prepayment, and (ii) pays, on the date of such prepayment
(A) the outstanding principal being prepaid plus all accrued and
unpaid interest with respect to the Term Loan Advance (or the part
thereof being prepaid), and (B) all other sums, if any, that shall
have become due and payable with respect to the Term Loan Advance,
including any Prepayment Fee then due and any interest at the
Default Rate with respect to any past due amounts.

 


(f)           Mandatory
Prepayment Upon an Acceleration. If the Term Loan Advance is
accelerated by Bank following the occurrence and during the
continuance of an Event of Default, Borrower shall immediately pay
to Bank an amount equal to the sum of (i) all outstanding principal
plus accrued and unpaid interest with respect to the Term Loan
Advance, and (ii) all other sums, if any, that shall have become
due and payable with respect to the Term Loan Advance, including
any Prepayment Fee then due and any interest at the Default Rate
with respect to any past due amounts.


 







 

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2.4 Requests
for Borrowings. Each borrowing of Credit Extensions shall be
made, subject to the prior satisfaction of the applicable
conditions to the making of such Credit Extension, upon irrevocable
notice by Borrower to Bank.  Each such notice must be in
writing or by telephone (and promptly confirmed in writing) and
must be received by Bank (by hand delivery, email or other
electronic transmission (including “.pdf” or
“.tiff”)) not later than 12:00 p.m., Pacific time, two
Business Days prior to the requested day of any borrowing (or one
Business Day in the case of the Term Loan Advance to be made on the
Effective Date). Each written notice (or confirmation of telephonic
notice) with respect to a borrowing by Borrower pursuant to this
Section 2.4 shall be delivered to Bank in the form of a written
borrowing request, appropriately completed and signed by a
Responsible Officer. Each such telephonic and written borrowing
request shall specify the following information: (a) the aggregate
principal amount of the requested Credit Extension; and (b) the
date of such Credit Extension, which shall be a Business
Day.

 


Bank
shall credit proceeds of the Term Loan Advance and any Advance to
the Designated Deposit Account. Bank may make the Term Loan Advance
or any Advances under this Agreement based on instructions from a
Responsible Officer or, in the case of Advances, without
instructions if the Advances are necessary to meet Obligations
which have become due.

 



2.5 Letters of Credit.

 


(a)           General.
Subject to the terms and conditions set forth herein, Bank agrees
(A) from time to time on any Business Day during the period from
the Effective Date to the fifth Business Day prior to the Revolving
Line Maturity Date, upon the request of Borrower, to issue Letters
of Credit denominated in Dollars for the account of Borrower (in a
form reasonably acceptable to Bank; provided that (x) Borrower will
be the applicant and (y) Borrower will be the account party with
respect to such Letter of Credit), and (B) to honor drafts under
the Letters of Credit.

 


(b)           Requests
and Notices; Certain Conditions. To request the issuance of
a Letter of Credit, Borrower shall deliver to Bank, at least three
Business Days in advance of the requested date of issuance (or such
shorter period as is acceptable to Bank or, in the case of any
issuance to be made on the Effective Date, one Business Day prior
to the Effective Date), a request to issue a Letter of Credit,
which shall specify that it is being issued under this Agreement.
To request an amendment, extension or renewal of an outstanding
Letter of Credit (other than any automatic extension of a Letter of
Credit permitted under Section 2.5(c)) Borrower shall submit the
request to Bank at least three Business Days in advance of the
requested date of amendment, extension or renewal (or such shorter
period as is acceptable to Bank), identifying the Letter of Credit
to be amended, extended or renewed, and specifying the proposed
date (which shall be a Business Day) and other details of the
amendment, extension or renewal. Requests for the issuance,
amendment, extension or renewal of any Letter of Credit must be
accompanied by such other information as shall be necessary to
issue, amend, extend or renew such Letter of Credit. Borrower also
shall submit a letter of credit application on Bank’s
standard form in connection with any request for a Letter of
Credit. A Letter of Credit may be issued, amended, extended or
renewed only if (and on the issuance, amendment, extension or
renewal of each Letter of Credit, Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance,
amendment, extension or renewal, (i) the LC Exposure does not
exceed the LC, FX and Swap Sublimit, and (ii) the sum of
(x) the aggregate outstanding principal amount of all
Advances, plus (y) the
aggregate amount of all LC Exposure would not exceed the principal
amount of the Revolving Line.

 


(c)           Expiration
Date. (i) No Standby Letter of Credit shall expire later
than the earlier of (A) the date that is one year after the date of
the issuance of such Letter of Credit and (B) the date that is five
Business Days prior to the Revolving Line Maturity Date;
provided that any
Standby Letter of Credit may provide for the automatic extension
thereof for any number of additional periods each of up to one year
in duration so long as (x) such additional periods do not extend
beyond the date referred to in the preceding clause (B) and (y)
such Letter of Credit permits Bank to prevent any such extension at
least once in each 12 month period (commencing with the date of
issuance of such Letter of Credit) by giving prior notice to the
beneficiary thereof within a time period during such 12 month
period to be agreed upon at the time such Letter of Credit is
issued. Notwithstanding anything to the contrary in the foregoing,
any Standby Letter of Credit may be extended for additional periods
(each of up to one year in duration) which extend beyond the date
that is five Business Days prior to the Revolving Line Maturity
Date so long as 105% of the then-available face amount of such
Letter of Credit is cash collateralized or backstopped pursuant to
arrangements reasonably satisfactory to Bank on or before the date
that such Letter of Credit is extended beyond the date that is five
Business Days prior to the Revolving Line Maturity
Date.


 







 

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(ii) No
Commercial Letter of Credit shall expire later than the earlier to
occur of (A) 180 days after the issuance thereof and (B) the date
that is five Business Days prior to the Revolving Line Maturity
Date.

 


(d)           Reimbursement.
If Bank makes any LC Disbursement in respect of a Letter of Credit,
Borrower shall reimburse such LC Disbursement by paying to Bank an
amount in Dollars equal to such LC Disbursement not later than 1:00
p.m., Pacific time on the Business Day immediately following the
date on which Borrower receives notice under Section 2.5(f) of such
LC Disbursement; provided that Borrower may,
subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.4 that such payment be financed with an
Advance in an equivalent amount and currency and, to the extent so
financed, Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting Advance.

 


(e)           Obligations
Absolute. The obligations of Borrower to reimburse LC
Disbursements as provided in Section 2.5(d) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of
validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or
other document presented under any Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect, (iii) payment by
Bank under any Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter
of Credit or (iv) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for
the provisions of this Section 2.5, constitute a legal or equitable
discharge of, or provide a right of setoff against,
Borrower’s obligations hereunder. Neither Bank nor any of its
related parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any
Letter of Credit or any payment or failure to make any payment
thereunder (irrespective of any of the circumstances referred to in
the preceding sentence), or any error, omission, interruption, loss
or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including
any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from
causes beyond the control of Bank; provided that the foregoing
shall not be construed to excuse Bank from liability to Borrower to
the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by Borrower
to the extent permitted by applicable law) suffered by Borrower
that are determined by a final and binding decision of a court of
competent jurisdiction to have been caused by Bank’s failure
to exercise care when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of
gross negligence, bad faith or willful misconduct on the part of
Bank (as finally determined by a court of competent jurisdiction),
Bank shall be deemed to have exercised care in each such
determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to
documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, Bank may, in its
sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make
payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit.

 


(f)           Disbursement
Procedures. Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. Bank shall promptly notify
Borrower in writing or by telephone (promptly confirmed in writing)
of such demand for payment and whether Bank has made or will make
an LC Disbursement thereunder; provided that no failure to
give or delay in giving such notice shall relieve Borrower of its
obligation to reimburse Bank with respect to any such LC
Disbursement.

 


(g)           Interim
Interest. If Bank makes any LC Disbursement, then, unless
Borrower reimburses such LC Disbursement in full on the date such
LC Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC
Disbursement is made to and including the date that Borrower
reimburses such LC Disbursement, at the rate per annum then
applicable to Advances; provided that if Borrower fails
to reimburse such LC Disbursement when due pursuant to Section
2.5(d), then Section 2.7(b) shall apply.


 







 

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(h)           Cash
Collateralization. (i) If any Event of Default exists, then
on the Business Day that Borrower receives notice from Bank
demanding the deposit of cash collateral pursuant to this Section
2.5(h), Borrower shall deposit, in an interest-bearing account with
Bank, in the name of Bank and for its benefit (the
“LC Collateral
Account”), an amount in cash in Dollars equal to 105%
of the LC Exposure as of such date (minus the amount denominated in Dollars
then on deposit in the LC Collateral Account); provided that the obligation to
deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to Borrower described in Section 8.4
or Section 8.5.

 


(ii)
Any deposit under Section 2.5(h)(i) above shall be held by Bank as
collateral for the payment and performance of the Obligations in
accordance with the provisions of this Section 2.5(h). Bank shall
have exclusive dominion and control, including the exclusive right
of withdrawal, over such account, and Borrower hereby grants Bank,
for its benefit, a first priority security interest in the LC
Collateral Account. Interest or profits, if any, shall accumulate
in such account. Moneys in such account shall be applied by Bank to
reimburse Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of Borrower for the
LC Exposure at such time or, if any Obligations have been
accelerated, be applied to satisfy other Obligations. If Borrower
is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount
(together with all interest and other earnings with respect
thereto, to the extent not applied as aforesaid) shall be returned
to Borrower promptly but in no event later than three Business Days
after such Event of Default has been cured or waived.

 



2.6 Payment of Interest on the Credit
Extensions.

 


(a)           Interest
Rate.

 


(i)           Advances.
Subject to Section 2.6(b), the principal amount outstanding under
the Revolving Line shall accrue interest at the Prime Rate
plus the Applicable Rate,
which interest, in each case, shall be payable monthly in
accordance with Section 2.6(e) below.

 


(ii)           Term
Loan Advance. Subject to Section 2.6(b), the principal
amount outstanding under the Term Loan Advance shall accrue
interest at the Prime Rate plus the Applicable Rate, which
interest, in each case, shall be payable monthly in accordance with
Section 2.6(e) below.

 


(b)           Default
Rate. Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest
at a rate per annum which is 3.00% above the rate that is otherwise
applicable thereto (the “Default Rate”). Fees and expenses
which are required to be paid by Borrower pursuant to the Loan
Documents (including, without limitation, Bank Expenses) but are
not paid when due shall bear interest until paid at a rate equal to
the highest rate applicable to the Obligations. Payment or
acceptance of the increased interest rate provided in this Section
2.6(b) is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Bank.

 


(c)           Maximum
Rate. Anything herein 
to the contrary notwithstanding, the obligations
of Borrower hereunder shall be subject to the limitation that
payments of interest shall not be required, for any period for
which interest is computed hereunder, to the extent (but only to
the extent) that contracting for or receiving such payment by Bank
would be contrary to the provisions of any law applicable to Bank
limiting the highest rate of interest which may be lawfully
contracted for, charged or received by Bank, and in such event
Borrower shall pay Bank interest at the highest rate permitted by
applicable law (“Maximum
Lawful Rate”); provided, however, that if at
any time thereafter the rate of interest payable hereunder is less
than the Maximum Lawful Rate, Borrower shall continue to pay
interest hereunder at the Maximum Lawful Rate until such time as
the total interest received by Bank is equal to the total interest
that would have been received had the interest payable hereunder
been (but for the operation of this paragraph) the interest rate
payable since the Effective Date as otherwise provided in this
Agreement.


 







 

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(d)           Adjustment
to Interest Rate. Changes to the interest rate of any Credit
Extension based on changes to the Prime Rate shall be effective on
the effective date of any change to the Prime Rate and to the
extent of any such change.

 


(e)           Payment;
Interest Computation. Interest is payable monthly on the
Payment Date of each month and shall be computed on the basis of a
360-day year for the actual number of days elapsed. In computing
interest, (i) all payments received after 12:00 p.m. Pacific time
on any day shall be deemed received at the opening of business on
the next Business Day, and (ii) the date of the making of any
Credit Extension shall be included and the date of payment shall be
excluded; provided,
however, that if
any Credit Extension is repaid on the same day on which it is made,
such day shall be included in computing interest on such Credit
Extension.

 


2.7 Fees
and Expenses. Borrower shall pay to Bank:

 


(a)           Commitment
Fee. A fully earned, non-refundable commitment fee of
$250,000, on the Effective Date;

 


(b)           Unused
Revolving Line Facility Fee. Payable quarterly in arrears on
the last day of each calendar quarter ending after the Effective
Date but prior to the Revolving Line Maturity Date, and on the
Revolving Line Maturity Date, a fee (the “Unused Revolving Line Facility
Fee”) in an amount equal to 0.50% per annum of the
average unused portion of the Revolving Line, as determined by
Bank, computed on the basis of a year with the applicable number of
days as set forth in Section 2.6(e); and

 


(c)           Bank
Expenses. All Bank Expenses (including reasonable
attorneys’ fees and expenses for documentation and
negotiation of this Agreement) incurred through and after the
Effective Date, when due (or, if no stated due date, upon demand by
Bank). Notwithstanding anything to the contrary herein, so long as
no Event of Default has occurred and is continuing, all Bank
Expenses incurred after the Effective Date in excess of $10,000,
individually or in the aggregate, must be pre-approved in writing
by Borrower.

 


(d)           Fees
Fully Earned. Unless otherwise provided in this Agreement or
in a separate writing by Bank, Borrower shall not be entitled to
any credit, rebate or repayment of any fees earned by Bank pursuant
to this Agreement notwithstanding any termination of this Agreement
or the suspension or termination of Bank’s obligation to make
loans and advances hereunder. Bank may deduct amounts owing by
Borrower under the clauses of this Section 2.7 pursuant to the
terms of Section 2.8(c). Bank shall provide Borrower written notice
of deductions made from the Designated Deposit Account pursuant to
the terms of the clauses of this Section 2.7.

 



2.8 Payments; Application of Payments; Debit of
Accounts.

 


(a)           All
payments to be made by Borrower under any Loan Document shall be
made in immediately available funds in Dollars, without setoff or
counterclaim, before 12:00 p.m. Pacific time on the date when due.
Payments of principal and/or interest received after 12:00 p.m.
Pacific time are considered received at the opening of business on
the next Business Day. When a payment is due on a day that is not a
Business Day, the payment shall be due the next Business Day, and
additional fees or interest, as applicable, shall continue to
accrue until paid.

 


(b)           Bank
has the exclusive right to determine the order and manner in which
all payments with respect to the Obligations may be applied.
Borrower shall have no right to specify the order or the accounts
to which Bank shall allocate or apply any payments required to be
made by Borrower to Bank or otherwise received by Bank under this
Agreement when any such allocation or application is not specified
elsewhere in this Agreement.

 


(c)           Bank
may debit any of Borrower’s deposit accounts, including the
Designated Deposit Account, for principal and interest payments or
any other amounts Borrower owes Bank when due. These debits shall
not constitute a set-off.


 







 

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2.9 Withholding.
Payments received by Bank from Borrower under this Agreement will
be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any
Governmental Authority (including any interest, additions to tax or
penalties applicable thereto). Specifically, however, if at any
time any Governmental Authority, applicable law, regulation or
international agreement requires Borrower to make any withholding
or deduction from any such payment or other sum payable hereunder
to Bank, Borrower hereby covenants and agrees that the amount due
from Borrower with respect to such payment or other sum payable
hereunder will be increased to the extent necessary to ensure that,
after the making of such required withholding or deduction, Bank
receives a net sum equal to the sum which it would have received
had no withholding or deduction been required, and Borrower shall
pay the full amount withheld or deducted to the relevant
Governmental Authority. Borrower will, upon request, furnish Bank
with proof reasonably satisfactory to Bank indicating that Borrower
has made such withholding payment; provided, however, that Borrower need not
make any withholding payment if the amount or validity of such
withholding payment is contested in good faith by appropriate and
timely proceedings and as to which payment in full is bonded or
reserved against by Borrower. The agreements and obligations of
Borrower contained in this Section 2.9 shall survive the
termination of this Agreement.

 


2.10 Increased
Costs, Etc. Borrower agrees to reimburse Bank for any
increase in the cost to Bank of, or any reduction in the amount of
any sum receivable by Bank in respect of, Bank’s commitment
to provide the Revolving Line and the making or maintaining of the
Credit Extensions hereunder that may arise in connection with any
Change in Law. Bank shall notify Borrower in writing of the
occurrence of any such event, stating the reasons therefor and the
additional amount required fully to compensate Bank for such
increased cost or reduced amount. Such additional amounts shall be
payable by Borrower directly to Bank within 10 Business Days of
Borrower’s receipt of such notice, and such notice shall, in
the absence of manifest error, be conclusive and binding on
Borrower; provided
that Borrower shall not be required to compensate Bank pursuant to
this Section 2.10 for any increased costs or reductions incurred
more than 180 days prior to the date that Bank notifies Borrower of
the Change in Law giving rise to such increased costs or reductions
and of Bank’s intention to claim compensation therefor;
provided
further that, if
the Change in Law giving rise to such increased costs or reductions
is retroactive, then the 180 day period referred to above shall be
extended to include the period of retroactive effect
thereof.

 


2.11 Incremental
Term Loan Advances.

 


(a)
Borrower may, at any time, on one or more occasions deliver a
written request to Bank to increase the Term Loan Amount by
requesting new term loan commitments to be added to such Term Loan
Amount (any such increase, an “Incremental Term Facility” and any
term loans advanced pursuant to an Incremental Term Facility,
“Incremental Term Loan
Advances”) provided that:

 


(i)           none
of the Incremental Term Facilities, the aggregate Incremental Term
Commitments and the aggregate Incremental Term Loan Advances may
exceed the Incremental Cap;

 


(ii)           no
Incremental Term Commitment may be less than
$5,000,000;

 


(iii)           except
as separately agreed from time to time between Borrower and Bank,
Bank shall not be obligated to provide any Incremental Term
Commitment, and the determination to provide such commitments shall
be within the sole and absolute discretion of Bank;

 


(iv)           the
interest rate applicable to any Incremental Term Facility or
Incremental Term Loan Advances will be determined by Borrower and
Bank; provided
that such interest rate will not be more than the
corresponding interest rate applicable to the Term Loan Advance
unless the interest rate margin with respect to the Term Loan
Advance is adjusted to be equal to the interest rate with respect
to the relevant Incremental Term Facility or Incremental Term Loan
Advances; provided
further that in
determining the applicable interest rate under this clause (iv),
(x) original issue discount or upfront fees paid by Borrower
in connection with any Incremental Term Facility shall be included,
and (y) any amendments to the Applicable Rate in respect of the
Term Loan Advance that become effective subsequent to the Effective
Date but prior to the time of the addition of the relevant
Incremental Term Facility or Incremental Term Loan Advances shall
be included;


 







 

7








 





  



(v)           the
final maturity date with respect to any Incremental Term Loan
Advances shall be the Term Loan Maturity Date;

 


(vi)           (A) any
Incremental Term Facility shall rank pari passu with the then-existing Term
Loan Advance in right of payment and shall rank pari passu with the then-existing Term
Loan Advance with respect to security, (B) any Incremental Term
Facility shall be guaranteed by the Guarantors and secured by all
the Collateral and (C) no Incremental Term Facility may be
guaranteed by any Person which is not a Guarantor or secured by any
assets other than the Collateral;

 


(vii)           any
prepayment (other than any scheduled amortization payment) of
Incremental Term Loan Advances shall be made on a pro rata basis with the existing Term
Loan Advance;

 


(viii)           no
Event of Default shall exist immediately prior to or after giving
effect to any Incremental Term Facility;

 


(ix)           all
representations and warranties set forth in Section 5 and in each
other Loan Document shall be true and correct in all material
respects (or, if qualified by materiality, in all respects) on and
as of the applicable closing date in respect of such Incremental
Term Facility with the same effect as though made on and as of such
date, except to the extent such representations and warranties
expressly relate to an earlier day, in which case they shall be
true and correct in all material respects (or, if qualified by
materiality, in all respects) as of such earlier date;

 


(x)           the
proceeds of any Incremental Term Facility may only be used for
working capital and other general corporate purposes as permitted
by Section 5.10;

 


(xi)           on
the date of the making of any Incremental Term Loan Advances which
will be added to the Term Loan Advance, and notwithstanding
anything to the contrary set forth in Section 2.4 or 2.6, such
Incremental Term Loan Advances shall be added to (and constitute a
part of) the Term Loan Advance; and

 


(xii)           only
Borrower shall be the borrower under any Incremental Term
Facility.

 


(b)           As
a condition precedent to the effectiveness of any Incremental Term
Facility or the making of any Incremental Term Loan Advances,
(i) upon its reasonable request, Bank shall have received
customary written opinions of counsel of Borrower, as well as such
reaffirmation agreements, supplements and/or amendments as it shall
reasonably require and (ii) Bank shall have received a certificate
of Borrower signed by a Responsible Officer thereof:

 


(i)           certifying
and attaching a copy of the resolutions adopted by the governing
body of Borrower approving or consenting to such Incremental Term
Facility and/or Incremental Term Loan Advances; and

 


(ii)           to
the extent applicable, certifying that the conditions set forth in
Sections 2.11(a)(viii)-(ix) have been satisfied.

 


(c)           To
the extent that any Incremental Term Loan Advances are added to the
then outstanding Term Loan Advance, it is acknowledged that the
scheduled amortization payments set forth in Section 2.3(c) shall
be adjusted to give effect to the increase in the Term Loan
Amount.


 







 

8








 






 


3 CONDITIONS
OF LOANS

 


3.1 Conditions
Precedent to Initial Credit Extension. Bank’s
obligation to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and
substance satisfactory to Bank, such documents, and completion of
such other matters, as Bank may reasonably deem necessary or
appropriate, including, without limitation:

 


(a)           duly
executed original signatures to this Agreement;

 


(b)           Equity
Pledge Agreement, dated as of the Effective Date, by and among
Morinda Holdings, Inc., as pledgor, Tahitian Noni Beverages (China)
Company Limited, as company, and Bank, as pledgee;

 


(c)           the
Operating Documents and long-form good standing certificates of
Borrower and each Guarantor certified by the Secretary of State (or
equivalent agency) of Borrower’s or such Guarantor’s
jurisdiction of organization or formation and each jurisdiction in
which Borrower or Guarantor is qualified to conduct business, or
the foreign equivalent of such documents for any entity organized
outside the United States, each as of a date no earlier than 30
days prior to the Effective Date;

 


(d)           a
secretary’s certificate of Borrower and each Guarantor with
respect to Borrower’s and each Guarantor’s Operating
Documents, incumbency, specimen signatures and resolutions
authorizing the execution and delivery of this Agreement and the
other Loan Documents to which it is a party;

 


(e)           certified
copies, dated as of a recent date, of financing statement searches
with respect to Borrower and each Guarantor, as Bank may request,
accompanied by written evidence (including any UCC termination
statements) that the Liens indicated in any such financing
statements either constitute Permitted Liens or have been or, in
connection with the initial Credit Extension, will be terminated or
released;

 


(f)           the
fully executed Representations and Warranties Certificate of
Borrower;

 


(g)           evidence
satisfactory to Bank that the insurance policies and endorsements
required by Section 6.7 hereof are in full force and effect,
together with appropriate evidence showing lender loss payable
and/or additional insured clauses or endorsements in favor of
Bank;

 


(h)           the
IP Agreement, together with the duly executed original signatures
thereto;

 


(i)           the
Guaranty, together with the duly executed original signatures
thereto;

 


(j)           (i)
a legal opinion, dated as of the Effective Date, of Sichenzia Ross
Ference LLP, counsel to Borrower and the Guarantors organized
within the United States, (ii) a legal opinion, dated as of the
Effective Date, of Davis Wright Tremaine LLP, counsel to Borrower,
(iii) a legal opinion, dated as of the Effective Date, of Faegre
Baker Daniels LLP, counsel to the Guarantors organized within the
State of Colorado, (iv) a legal opinion, dated as of the Effective
Date, of Ray Quinney & Nebeker P.C., counsel to the Guarantors
organized within the State of Utah, and (v) a legal opinion, dated
as of the Effective Date, of Baker & McKenzie LLP, counsel to
Tahitian Noni Beverages (China) Company Limited, in each case in
form and substance satisfactory to Bank;

 


(k)           a
duly executed payoff letter with respect to the repayment in full
of the Indebtedness of Borrower, NABC, Inc., NABC Properties, LLC
and New Age Health Sciences, Inc. owed to Siena Lending Group LLC,
termination of
all agreements related thereto and the release of all Liens granted
in connection therewith, with UCC or other appropriate termination
statements and documents effective to evidence the foregoing or
authorization to file the same; and

 


(l)           payment
of the fees and Bank Expenses then due as specified in Section 2.7
hereof.


 







 

9








 






 


3.2 Conditions
Precedent to all Credit Extensions. Bank’s obligations
to make each Credit Extension, including the initial Credit
Extension, is subject to the following conditions
precedent:

 


(a)           timely
receipt of a borrowing request substantially in the form attached
hereto as Exhibit C
and any materials and documents required by Section
2.4;

 


(b)           the
representations and warranties in this Agreement shall be true,
accurate, and complete in all material respects on the date of the
proposed Credit Extension and/or delivery of a borrowing request
substantially in the form attached hereto as Exhibit C, as applicable, and
on the Funding Date of each Credit Extension; provided, however, that such materiality
qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in
the text thereof; and provided, further that those
representations and warranties expressly referring to a specific
date shall be true, accurate and complete in all material respects
as of such date, and no default or Event of Default shall have
occurred and be continuing or would result from the Credit
Extension;

 


(c)           receipt
of a certificate, dated as of the applicable Funding Date, and
signed by a Responsible Officer, confirming compliance with Section
3.2(b);

 


(d)           receipt
of a certificate dated as of the applicable Funding Date, and
signed by a Responsible Officer, in form and substance satisfactory
to Bank, certifying as to the matters set forth in Section
5.6;

 


(e)           receipt
of a certificate, dated as of the applicable Funding Date, and
signed by a Responsible Officer, certifying that as of that Funding
Date, immediately after giving effect to the incurrence of
Indebtedness on such date, Borrower, together with its
Subsidiaries, is in compliance, on a pro forma basis, with the
covenants set forth in Section 7.12, recomputed for the applicable
period most recently ended; and

 


(f)           Bank
determines to its satisfaction and in its sole discretion that
there has not been a Material Adverse Change.

 


3.3 Covenant
to Deliver. Borrower agrees to deliver to Bank each item
required to be delivered to Bank under this Agreement as a
condition precedent to any Credit Extension. Borrower expressly
agrees that a Credit Extension made prior to the receipt by Bank of
any such item shall not constitute a waiver by Bank of
Borrower’s obligation to deliver such item, and the making of
any Credit Extension in the absence of a required item shall be in
Bank’s sole discretion.

 


4 CREATION
OF SECURITY INTEREST AND PLEDGE

 


4.1 Grant
of Security Interest. Borrower hereby grants Bank, to secure
the payment and performance in full of all of the Obligations, a
continuing security interest in, and pledges to Bank, the
Collateral, wherever located, whether now owned or hereafter
acquired or arising, and all proceeds and products
thereof.

 


Borrower
acknowledges that it previously has entered, and/or may in the
future enter, into Bank Services Agreements with Bank. Regardless
of the terms of any Bank Services Agreement, Borrower agrees that
any amounts Borrower owes Bank thereunder shall be deemed to be
Obligations hereunder and that it is the intent of Borrower and
Bank to have all such Obligations secured by the first priority
perfected security interest in the Collateral granted herein (free
and clear of all Liens except for Permitted Liens).

 


If this
Agreement is terminated, Bank’s Lien in the Collateral shall
continue until the Obligations (other than inchoate indemnity
obligations for which no claim has been asserted) are repaid in
full in cash. Upon payment in full in cash of the Obligations
(other than inchoate indemnity obligations for which no claim has
been asserted) and at such time as Bank’s obligation to make
Credit Extensions has terminated, Bank shall, at the sole cost and
expense of Borrower, release its Liens in the Collateral and all
rights therein shall revert to Borrower. In the event (a) all
Obligations (other than inchoate indemnity obligations for which no
claim has been asserted), except for Bank Services, are satisfied
in full, and (b) this Agreement is terminated, Bank shall terminate
the security interest granted herein upon Borrower providing cash
collateral acceptable to Bank in its good faith business judgment
for Bank Services, if any. In the event such Bank Services consist
of outstanding Letters of Credit, Borrower shall provide to Bank
cash collateral in an amount equal to at least 105% of the face
amount of all such Letters of Credit plus all interest, fees, and
costs due or to become due in connection therewith (as estimated by
Bank in its good faith business judgment), to secure all of the
Obligations relating to such Letters of Credit.


 







 

10








 






 


4.2 Priority
of Security Interest. Borrower represents, warrants, and
covenants that the security interest granted herein creates a valid
security interest in favor of Bank in the Collateral and, when
properly perfected by filing of a UCC financing statement, shall
constitute a valid, perfected, first priority security interest in
the Collateral, to the extent such security interest can be
perfected by filing a financing statement under the UCC, free and
clear of all Liens except for Permitted Liens. If Borrower shall
acquire a commercial tort claim, Borrower shall promptly, and in
any event within 10 days thereof, notify Bank in a writing signed
by Borrower of the general details thereof and grant to Bank in
such writing a security interest therein and in the proceeds
thereof, all upon the terms of this Agreement, with such writing to
be in form and substance reasonably satisfactory to
Bank.

 


4.3 Authorization
to File Financing Statements. Borrower hereby authorizes
Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Bank’s
interest or rights hereunder, including a notice that any
disposition of the Collateral, by Borrower or any other Person,
shall be deemed to violate the rights of Bank under the
Code.

 


4.4 Pledge.
To secure the prompt payment and performance in full when due,
whether by lapse of time, acceleration, mandatory prepayment or
otherwise, of the Obligations, Borrower hereby grants, pledges and
assigns to Bank a continuing security interest in any and all
right, title and interest of Borrower in and to the following,
whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Pledged Collateral”):

 


(a)           Pledged
Shares. (i) 100% of the issued and outstanding Capital Stock
of each Domestic Subsidiary (other than any such Subsidiary that is
a Foreign Subsidiary Holding Company) directly owned by Borrower as
set forth on Exhibit
D attached hereto and (ii) 65% (or such greater percentage
that, due to a change in an applicable law after the date hereof,
(1) could not reasonably be expected to cause the undistributed
earnings of such Foreign Subsidiary or such Foreign Subsidiary
Holding Company as determined for United States federal income tax
purposes to be treated as a deemed dividend to such Foreign
Subsidiary’s or such Foreign Subsidiary Holding
Company’s United States parent and (2) could not reasonably
be expected to cause any adverse tax consequences) of the issued
and outstanding Capital Stock entitled to vote (within the meaning
of Treasury Regulations Section 1.956-2(c)(2)) (“Voting Equity”) and 100% of the
issued and outstanding Capital Stock not entitled to vote (within
the meaning of Treasury Regulations Section 1.956-2(c)(2))
(“Non-Voting
Equity”) owned by Borrower of each Foreign Subsidiary
and each Foreign Subsidiary Holding Company, in each case, directly
owned by Borrower set forth on Exhibit D attached hereto, and
in each case together with the certificates (or other agreements or
instruments), if any, representing such Capital Stock, and all
options and other rights, contractual or otherwise, with respect
thereto (collectively, together with the Capital Stock described in
Section 3.4(b) and
3.4(c) below, the “Pledged
Shares”), including, without limitation, the
following:


 



(A)           

all shares,
securities, membership interests and other Capital Stock or other
property representing a dividend or other distribution on or in
respect of any of the Pledged Shares, or representing a
distribution or return of capital upon or in respect of the Pledged
Shares, or resulting from a stock split, revision, reclassification
or other exchange therefor, and any other dividends, distributions,
subscriptions, warrants, cash, securities, instruments, rights,
options or other property issued to or received or receivable by
the holder of, or otherwise in respect of, the Pledged Shares;
and






 



(B)           

without affecting
the obligations of Borrower under any provision prohibiting such
action hereunder or under the Loan Agreement, in the event of any
consolidation or merger involving the issuer of any Pledged Shares
and in which such issuer is not the surviving Person, all Capital
Stock of the successor Person (or such lower amount as specified
above in the case of successor Persons that are Foreign
Subsidiaries or Foreign Subsidiary Holding Companies) formed by or
resulting from such consolidation or merger, to the extent that
such Person is a direct Subsidiary of Borrower.






 


(b)           Additional
Shares. (i) 100% of the issued and outstanding Capital Stock
of any Person that hereafter becomes a Domestic Subsidiary (other
than any such Subsidiary that is a Foreign Subsidiary Holding
Company) directly owned by Borrower and (ii) 65% (or such greater
percentage that, due to a change in an applicable law after the
date hereof, (1) could not reasonably be expected to cause the
undistributed earnings of such Foreign Subsidiary or such Foreign
Subsidiary Holding Company as determined for United States federal
income tax purposes to be treated as a deemed dividend to such
Foreign Subsidiary’s or such Foreign Subsidiary Holding
Company’s United States parent and (2) could not reasonably
be expected to cause any adverse tax consequences) of the Voting
Equity and 100% of the Non-Voting Equity owned by Borrower of any
Person that hereafter becomes a Foreign Subsidiary or a Foreign
Subsidiary Holding Company, in each case, directly owned by
Borrower, including, without limitation, the certificates (or other
agreements or instruments) representing such Capital Stock, and all
options and other rights, contractual or otherwise, with respect
thereto.


 







 

11








 






 


(c)           Accessions
and Proceeds. All Accessions and all Proceeds of any and all
of the foregoing.


 


Without
limiting the generality of the foregoing, it is hereby specifically
understood and agreed that Borrower may from time to time hereafter
deliver additional Capital Stock to Bank as collateral security for
the Obligations. Upon delivery to Bank, such additional Capital
Stock shall be deemed to be part of the Pledged Collateral and
shall be subject to the terms of this Agreement whether or not
Exhibit D is
amended to refer to such additional Capital Stock.

 


Notwithstanding
anything to the contrary contained herein, the security interests
granted under this Agreement shall not extend to, and in no event
shall the “Pledged Collateral” include, (i) any general
intangible, permit, lease, license, contract or other instrument of
Borrower if the grant of a security interest in such general
intangible, permit, lease, license, contract or other instrument in
the manner contemplated by the Loan Documents, under the terms
thereof or under applicable law, is prohibited and would result in
the termination thereof or give the other parties thereto the right
to terminate, accelerate or otherwise alter Borrower’s
rights, titles and interests thereunder (including upon the giving
of notice or lapse of time or both); provided, that, (x) any such limitation
described in this clause (i) on the security interests granted
under the Loan Documents shall only apply to the extent that any
such prohibition would not be rendered ineffective pursuant to the
Code or any other applicable law or principles of equity and (y) in
the event of the termination or elimination of any such prohibition
or the requirement for any consent contained in any applicable law,
general intangible, permit, lease, license, contract or other
instrument, to the extent sufficient to permit any such item to
become Pledged Collateral, a security interest in such general
intangible, permit, lease, license, contract or other instrument
shall be automatically and simultaneously granted under the
applicable Loan Document and such general intangible, permit,
lease, license, contract or other instrument shall no longer
constitute “excluded property” and shall be considered
Pledged Collateral; and (ii) those assets with respect to which the
granting of security interests in such assets would be prohibited
by applicable law or regulation (other than to the extent that any
such law, regulation or prohibition would be rendered ineffective
pursuant to the Code or any other applicable law or principles of
equity), or would require governmental consent (after giving effect
to the applicable anti-assignment provisions of the Code or other
applicable law or principles of equity).

 


4.5 Delivery
of Pledged Collateral. Borrower hereby agrees
that:

 


(a)           Delivery
of Certificates. Borrower shall deliver to Bank (i)
simultaneously with or promptly following the execution and
delivery of this Agreement, all certificates (if any) representing
the Pledged Shares of Borrower and (ii) promptly upon the receipt
thereof by or on behalf of Borrower, all other certificates and
instruments constituting Pledged Collateral. Prior to delivery to
Bank, all such certificates and instruments constituting Pledged
Collateral shall be held in trust by Borrower for the benefit of
Bank pursuant hereto. All such certificates and instruments shall
be delivered in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment
in blank, substantially in the form provided in Annex III attached
to the Guaranty.

 


(b)           Additional
Securities. If Borrower shall receive (or become entitled to
receive) by virtue of its being or having been the owner of any
Pledged Collateral, any (i) certificate or instrument, including
without limitation, any certificate representing a dividend or
distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets,
combination of shares or membership or other Capital Stock, stock
splits, spin-off or split-off, promissory notes or other
instruments, (ii) option or right, whether as an addition to,
substitution for, conversion of, or an exchange for, any Pledged
Collateral or otherwise in respect thereof, (iii) dividends payable
in securities, or (iv) distributions of securities or other Capital
Stock or cash or other property in connection with a partial or
total liquidation, dissolution or reduction of capital, capital
surplus or paid-in surplus, then Borrower shall accept and receive
each such certificate, instrument, option, right, dividend or
distribution in trust for the benefit of Bank, shall segregate it
from Borrower’s other property and shall deliver it forthwith
to Bank in the exact form received together with any necessary
endorsement and/or appropriate stock power duly executed in blank,
substantially in the form provided in Annex III attached to the
Guaranty, to be held by Bank as Pledged Collateral and as further
collateral security for the Obligations. Notwithstanding anything
to the contrary herein, the foregoing shall not apply to any funds
received or receivable by Borrower or any Subsidiary from any
Foreign Subsidiary or Foreign Subsidiary Holding Company as a
result of the repatriation of funds between such entities (the
“Repatriated
Funds”) and such Repatriated Funds shall not, at any
time, constitute Pledged Collateral.


 







 

12








 






 



4.6 Voting Rights; Dividend Rights.

 


(a)           So
long as no Event of Default shall have occurred and be continuing,
or if an Event of Default has occurred and is continuing and
Borrower has not received any notice contemplated by Section
4.6(b), Borrower may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this
Agreement or any other Loan Document.

 


(b)           Upon
the occurrence and during the continuance of an Event of Default,
and delivery by Bank to Borrower of notice of its intent to
exercise its rights under this Section 4.6(b), all rights of
Borrower to exercise the voting and other consensual rights that it
would otherwise be entitled to exercise pursuant to Section 4.6(a)
shall cease and all such rights shall thereupon become vested in
Bank, which shall then have the sole right to exercise such voting
and other consensual rights.

 


(c)           So
long as no Event of Default shall have occurred and be continuing
and subject to Section 4.5(b) hereof, or if an Event of Default has
occurred and is continuing and Borrower has not received any notice
contemplated by Section 4.6(d), Borrower may receive and retain any
and all dividends and distributions (other than stock dividends and
other dividends and distributions constituting Pledged Collateral
addressed hereinabove) or interest paid in respect of the Pledged
Collateral to the extent permitted under the Loan
Agreement.

 


(d)           Upon
the occurrence and during the continuance of an Event of Default,
and delivery by Bank to Borrower of notice of its intent to
exercise its rights under this Section 4.6(d):

 


(i)           all
rights of Borrower to receive the dividends, distributions and
interest payments that it would otherwise be authorized to receive
and retain pursuant to Section 4.6(c) shall cease and all such
rights shall thereupon be vested in Bank, which shall then have the
sole right to receive and hold as Pledged Collateral such
dividends, distributions and interest payments; and

 


(ii)           all
dividends and interest payments that are received by Borrower
contrary to the provisions of Section 4.6(d)(i) shall be received
in trust for the benefit of Bank, shall be segregated from other
property or funds of Borrower, and shall be promptly paid over to
Bank as Pledged Collateral in the exact form received, to be held
by Bank as Pledged Collateral and as further collateral security
for the applicable Obligations.

 


Notwithstanding
anything to the contrary herein, the foregoing Section 4.6(d) shall
not apply to any Repatriated Funds received or receivable by
Borrower or any Subsidiary from any Foreign Subsidiary or Foreign
Subsidiary Holding Company and all rights to receive Repatriated
Funds shall remain with Borrower or the applicable Subsidiary, as
the case may be, so long as no Event of Default has occurred and is
continuing.

 


5 REPRESENTATIONS
AND WARRANTIES

 


Borrower represents
and warrants as follows:

 


5.1 Due
Organization, Authorization; Power and Authority. Borrower
is duly existing and in good standing as a Registered Organization
in its jurisdiction of formation and is qualified and licensed to
do business and is in good standing in any jurisdiction in which
the conduct of its business or its ownership of property requires
that it be qualified except where the failure to do so could not
reasonably be expected to have a material adverse effect on
Borrower’s business.

 


The
execution, delivery and performance by Borrower of the Loan
Documents to which it is a party have been duly authorized, and do
not (i) conflict with any of Borrower’s organizational
documents, (ii) contravene, conflict with, constitute a default
under or violate any material Requirement of Law, (iii) contravene,
conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental
Authority by which Borrower or any of its Subsidiaries or any of
their property or assets may be bound or affected, (iv) require any
action by, filing, registration, or qualification with, or
Governmental Approval from, any Governmental Authority (except such
Governmental Approvals which have already been obtained and are in
full force and effect), or (v) conflict with, contravene,
constitute a default or breach under, or result in or permit the
termination or acceleration of, any agreement or instrument by
which Borrower is bound. Borrower is not in default under any
agreement or instrument to which it is a party or by which it is
bound other than any such defaults, which, individually or in the
aggregate, could not reasonably be expected to have a material
adverse effect on Borrower’s business.


 







 

13








 






 


5.2 Collateral.
Borrower has good title to, rights in, and the power to transfer
each item of the Collateral and grants a Lien hereunder free and
clear of any and all Liens except Permitted Liens. Borrower has no
Collateral Accounts at or with any bank or financial institution
other than Bank or Bank’s Affiliates except for the
Collateral Accounts described in the Representations and Warranties
Certificate delivered to Bank in connection herewith and which
Borrower has taken such actions as are necessary to give Bank a
perfected security interest therein, pursuant to the terms of
Section 6.8(b). The Accounts are bona fide, existing obligations of
the Account Debtors.

 


The
Collateral is not in the possession of any third party bailee (such
as a warehouseman) except as otherwise provided in the
Representations and Warranties Certificate. None of the components
of the Collateral shall be maintained at locations other than as
provided in the Representations and Warranties Certificate or as
permitted pursuant to Section 7.2.

 


All
Inventory is in all material respects of good and marketable
quality, free from material defects.

 


Borrower is the
sole owner of the Intellectual Property which it owns or purports
to own except for (a) non-exclusive licenses granted to its
customers in the ordinary course of business, and (b)
over-the-counter software that is commercially available to the
public. Each Patent, Copyright and Trademark which Borrower owns or
purports to own and which is material to Borrower’s business
is valid and enforceable, and no part of the Intellectual Property
which Borrower owns or purports to own and which is material to
Borrower’s business has been judged invalid or unenforceable,
in whole or in part. To the best of Borrower’s knowledge, no
claim has been made that any part of the Intellectual Property
violates the rights of any third party except to the extent such
claim could not reasonably be expected to have a material adverse
effect on Borrower’s business.

 


Except
as noted on the Representations and Warranties Certificate,
Borrower is not a party to, nor is it bound by, any Restricted
License.

 


5.3 Pledged
Collateral.

 


(a)           Authorization
of Pledged Shares. The Pledged Shares are duly authorized
and validly issued, are fully paid and nonassessable (if
applicable) and are not subject to the preemptive rights of any
Person.

 


(b)           Title.
Borrower has good and indefeasible title to the Pledged Collateral
and is the legal and beneficial owner of the Pledged Collateral
free and clear of any Lien, other than Permitted Liens. There
exists no “adverse claim” within the meaning of Section
8-102 of the Code with respect to the Pledged Shares (other than
Permitted Liens).

 


(c)           Exercising
of Rights. (i) The exercise by Bank of its rights and
remedies hereunder will not violate any law or governmental
regulation applicable to Borrower or any material contractual
restriction binding on or affecting Borrower or any of its
property, (ii) there are no restrictions in any organization
document governing the Pledged Collateral or any document related
thereto which would limit or restrict the grant of a Lien pursuant
to this Agreement on the Pledged Collateral, the perfection of such
Lien or the exercise of remedies in respect of such perfected Lien
in the Pledged Collateral as contemplated by this Agrement (except,
in connection with the exercise of remedies, restrictions under the
Code, applicable foreign laws or laws affecting the offering and
sale of securities).

 


(d)           Borrower’s
Authority. No authorization, approval or action by, and no
notice or filing with any Governmental Authority or with the issuer
of any Pledged Shares or any other Person is required either (i)
for the pledge made by Borrower or for the granting of the security
interest by Borrower pursuant to this Agreement (except (A) as have
been already obtained, (B) for the proper filing of a financing
statement under the Code and (C) in the case of any Foreign
Subsidiary, as may be required under the laws of the jurisdiction
in which such Foreign Subsidiary is organized) or (ii) for the
exercise by Bank of its rights and remedies hereunder (except as
may be required by the Code or applicable foreign laws or laws
affecting the offering and sale of securities).


 







 

14








 






 


(e)           Security
Interest/Priority. This Agreement creates a valid security
interest in favor of Bank in the rights of Borrower in the
Collateral and the Pledged Collateral. The taking of possession by
Bank of the certificates representing the Pledged Shares and any
other certificates and instruments constituting Pledged Collateral,
together with the taking of possession by Bank of duly executed
instruments of transfer or assignments in blank, will perfect and
establish the first priority (subject to Permitted Liens) of
Bank’s security interest in such Pledged Shares represented
by certificates and, when properly perfected by filing a uniform
commercial code financing statement or registration, in the
Collateral and all other Pledged Collateral represented by such
Pledged Shares and instruments securing the applicable Obligations
to the extent such security interest can be perfected by filing a
uniform commercial code financing statement. Except as set forth in
this Section 5.3(e), no action is necessary to perfect such
security interest.

 


(f)           Partnership
and Membership Interests. None of the Pledged Shares
consisting of partnership or limited liability company interests
(i) is dealt in or traded on a securities exchange or in a
securities market, (ii) by its terms expressly provides that it is
a security governed by Article 8 of the Code, (iii) is an
Investment Company Security, (iv) is held in a securities account
or (v) constitutes a Security or a Financial Asset.

 


(g)           No
Other Interests. As of the date hereof, Borrower does not
own any Capital Stock in any Subsidiary constituting Pledged
Collateral other than as set forth on Exhibit D attached
hereto.

 


5.4 Litigation.
There are no actions or proceedings pending or, to the knowledge of
any Responsible Officer, threatened in writing by or against
Borrower or any of its Subsidiaries involving more than,
individually or in the aggregate, $250,000.

 


5.5 Financial
Statements; Financial Condition. All consolidated financial
statements for Borrower and any of its Subsidiaries delivered to
Bank fairly present in all material respects Borrower’s
consolidated financial condition and Borrower’s consolidated
results of operations as of the date(s) and for the period(s) set
forth therein. There has not been any material deterioration in
Borrower’s consolidated financial condition since the date of
the most recent financial statements submitted to
Bank.

 


5.6 Solvency.
Borrower is able to pay its debts (including trade debts) as they
mature; the fair saleable value of Borrower’s assets
(including goodwill minus
disposition costs) exceeds the fair value of its liabilities; and
Borrower will not be left with unreasonably small capital
immediately following the consummation of the transactions
contemplated by this Agreement.

 


5.7 Compliance
with Laws and Regulations. Borrower and each Subsidiary have
met the minimum funding requirements of ERISA with respect to any
employee benefit plans subject to ERISA. No event has occurred
resulting from Borrower’s or any of its Subsidiary’s
failure to comply with ERISA that is reasonably likely to result in
Borrower’s incurring any liability that could have a Material
Adverse Change. Borrower is not an “investment company”
or a company “controlled” by an “investment
company” under the Investment Company Act of 1940, as
amended. Borrower is not engaged as one of its important activities
in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulations X, T
and U of the Board of Governors of the Federal Reserve System).
Borrower (a) has complied in all material respects with all
Requirements of Law, and (b) has not violated any Requirements of
Law the violation of which could reasonably be expected to have a
Material Adverse Change. None of Borrower’s or any of its
Subsidiaries’ properties or assets has been used by Borrower
or any Subsidiary or, to the best of Borrower’s knowledge, by
previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally. Borrower
and each of its Subsidiaries have obtained all consents, approvals
and authorizations of, made all declarations or filings with, and
given all notices to, all Governmental Authorities and Regulatory
Agencies that are necessary to for the continued operation of their
respective businesses as currently conducted, except where the
failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Change.

 


5.8 Subsidiaries;
Investments. Borrower does not own any stock, partnership or
other ownership interest, any other equity securities or any other
investments, except for Permitted Investments.


 







 

15








 






 


5.9 Tax
Returns and Payments; Pension Contributions. Borrower and
each Subsidiary have timely filed all tax returns and reports
required to be filed, and have timely paid all foreign, federal,
state and local taxes, assessments, deposits and contributions owed
by Borrower or any Subsidiary except (a) to the extent such taxes
or assessments are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long
as adequate reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made
therefor, or (b) if such taxes, assessments, deposits and
contributions do not, individually or in the aggregate, exceed
$50,000.

 


To the
extent Borrower defers payment of any contested taxes, Borrower
shall (i) notify Bank in writing of the commencement of, and any
material development in, the proceedings, and (ii) post bonds or
take any other steps required to prevent the Governmental Authority
levying such contested taxes from obtaining a Lien upon any of the
Collateral that is other than a Permitted Lien. Borrower is unaware
of any claims or adjustments proposed for any of Borrower’s
or any of its Subsidiaries’ prior tax years which could
result in additional taxes becoming due and payable by Borrower or
any Subsidiary, collectively, in excess of $200,000. Borrower has
paid all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with their
terms, and Borrower has not withdrawn from participation in, and
has not permitted partial or complete termination of, or permitted
the occurrence of any other event with respect to, any such plan
which could reasonably be expected to result in any liability of
Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental
agency.

 


5.10 Use
of Proceeds. Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general
business requirements and to purchase Interest Rate Agreements
pursuant to Section 6.13.

 


5.11 Full
Disclosure. No representation, warranty or other statement
of Borrower in any certificate or written statement given to Bank,
as of the date such representation, warranty, or other statement
was made, taken together with all such written certificates and
written statements furnished to Bank, contains any untrue statement
of a material fact or omits to state a material fact necessary to
make the statements contained in such certificates or statements
not misleading in light of the circumstances in which they were
made (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon
reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections
and forecasts may differ from the projected or forecasted
results).

 


5.12 Definition
of “Knowledge.” For purposes of the Loan
Documents, whenever a representation or warranty is made to
Borrower’s knowledge or awareness, to the “best
of” Borrower’s knowledge, or with a similar
qualification, knowledge or awareness means the actual knowledge,
after reasonable investigation, of any Responsible
Officer.

 


6 AFFIRMATIVE
COVENANTS

 


Borrower covenants
and agrees that, until payment in full of all outstanding
Obligations, and for so long as Bank may have any commitment to
make a Credit Extension hereunder:

 



6.1 Government Compliance.

 


(a)           Borrower
shall, and shall cause each of its Subsidiaries to, maintain its
and each of its Subsidiaries’ legal existence and good
standing in their respective jurisdictions of formation and
maintain qualification in each jurisdiction in which the failure to
so qualify could reasonably be expected to have a Material Adverse
Change. Borrower shall, and shall cause each Subsidiary to, comply
in all material respects, with all laws, ordinances and regulations
to which it is subject.

 


(b)           Borrower
shall, and shall cause each of its Subsidiaries to, obtain all of
the Governmental Approvals necessary for the performance by
Borrower and its Subsidiaries of their obligations under the Loan
Documents to which they are a party and, to the extent applicable,
the grant of a security interest to Bank in all of their respective
property. Borrower shall promptly provide copies of any such
obtained Governmental Approvals to Bank.


 







 

16








 






 


6.2 Financial
Statements, Reports, Certificates. Borrower shall provide
Bank with the following:

 


(a)           as
soon as available, but in any event no later than 45 days after the
last day of each calendar month, a company prepared consolidated
balance sheet, income statement and cash flow statement covering
Borrower’s and its Subsidiaries’ consolidated
operations for such month certified by a Responsible Officer and in
a form acceptable to Bank (the “Monthly Financial
Statements”);

 


(b)           within
60 days after the end of each fiscal year of Borrower, and
contemporaneously with any updates or amendments thereto, (i)
annual operating budgets (including monthly income statements and
quarterly balance sheets and quarterly cash flow statements) for
the following fiscal year of Borrower and its Subsidiaries, and
(ii) annual financial projections for the following fiscal year (on
a quarterly basis), in each case as approved by the Board, together
with any related business forecasts used in the preparation of such
annual financial projections;

 


(c)           as
soon as available, but in any event within 50 days after the
end of each of the first three fiscal quarters of each fiscal year
of Borrower, an unaudited consolidated and consolidating balance
sheet of Borrower and its Subsidiaries as of the end of such fiscal
quarter and consolidated statements of income, shareholders’
equity and cash flow of Borrower and its Subsidiaries for such
fiscal quarter and for the period commencing at the end of the
previous fiscal year and ending with the end of such fiscal
quarter, and including (in each case) in comparative form the
figures for the corresponding fiscal quarter in, and the year to
date portion of, the immediately preceding fiscal year, certified
as complete and correct by the chief financial or accounting
Responsible Officer of Borrower (subject to normal year-end audit
adjustments and the absence of footnotes);

 


(d)           as
soon as available, but in any event within 105 days following the
end of Borrower’s fiscal year, a copy of the consolidated and
consolidating balance sheet of Borrower and its Subsidiaries, and
the related consolidated statements of income, shareholders’
equity and cash flow of Borrower and its Subsidiaries for such
fiscal year, setting forth in comparative form the figures for the
immediately preceding fiscal year, all prepared in accordance with
GAAP and accompanied by (i) an opinion of independent public
accountants of recognized national standing reasonably acceptable
to Bank (which opinion shall not be qualified as to scope or
contain any explanatory paragraph expressing substantial doubt
about the ability of Borrower and its Subsidiaries to continue as a
going concern), stating that such financial statements fairly
present, in all material respects, the consolidated financial
condition, results of operations and cash flows of Borrower and its
Subsidiaries as of the dates and for the periods specified in
accordance with GAAP and (ii) a narrative report and
management’s discussion and analysis of the financial
condition and results of operations of Borrower and its
Subsidiaries for such fiscal year, as compared to amounts for the
previous fiscal year;

 


(e)           contemporaneously
with the furnishing of the financial statements required pursuant
to Sections 6.2(a), (c) and (d), a duly completed Compliance
Certificate signed by a Responsible Officer, (i) certifying that as
of the end of such period covered by the applicable financial
statements, Borrower was in compliance with all of the terms and
conditions of this Agreement, (ii) such officer has not become
aware of any Event of Default or default that has occurred and is
continuing or, if there is any such Event of Default or default,
describing it and the steps, if any, being taken to cure it, and
providing such other information as required thereby, (iii) if Borrower wishes the Applicable Rate to be
based on the rates per annum set forth in Category 1 of the
definition of Applicable Rate, setting forth computations in
reasonable detail showing the Total Leverage Ratio as of the date
of the most recent balance sheet included in such financial
statements, (iv) if financial statements are delivered pursuant to
Section 6.2(c) or (d), certifying as to the compliance by
Borrower and its Subsidiaries with the financial covenants set
forth in Section 7.12, and (v) setting forth such other information
as Bank may reasonably request.

 


(f)           within
five days of filing, copies of all periodic and other reports,
proxy statements and other materials filed by Borrower and/or any
Guarantor with the SEC, any Governmental Authority succeeding to
any or all of the functions of the SEC or with any national
securities exchange, or distributed to its shareholders, as the
case may be. Documents required to be delivered pursuant to the
terms hereof (to the extent any such documents are included in
materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been
delivered on the date on which Borrower posts such documents, or
provides a link thereto, on Borrower’s website; provided, however, Borrower shall
promptly notify Bank in writing (which may be by electronic mail)
of the posting of any such documents;


 







 

17








 






 


(g)           within
five days of delivery, copies of all statements, reports and
notices not otherwise enumerated in this Section 6.2 which are made
available generally to Borrower’s security holders or to any
holders of Subordinated Debt;

 


(h)           prompt
report of any legal actions pending or threatened in writing
against Borrower or any of its Subsidiaries that could result in
damages or costs to Borrower or any of its Subsidiaries of,
individually or in the aggregate, $100,000 or more;

 


(i)           written
notice if any Key Person ceases to hold his or her office with
Borrower, which notice shall be provided to Bank within five days
after such departure;

 


(j)           prompt
written notice of (i) any material change in the composition of the
Intellectual Property, (ii) the registration of any Copyright
(including any subsequent ownership right of Borrower or any
Guarantor in or to any Copyright), Patent or Trademark not
previously disclosed to Bank, or (iii) Borrower’s knowledge
of an event that materially adversely affects the value of the
Intellectual Property; and

 


(k)           promptly,
from time to time, such other information regarding Borrower or
compliance with the terms of any Loan Documents as reasonably
requested by Bank.

 



6.3 Cash Management.

 


(a)           Collection
of Accounts. Borrower shall, and shall cause each Guarantor
to, direct Account Debtors to deliver or transmit all proceeds of
Accounts into a lockbox account, or such other “blocked
account” or “blocked accounts” as specified by
Bank (any such accounts, individually and collectively, the
“Cash Collateral
Account”). Whether or not an Event of Default has
occurred and is continuing, Borrower shall immediately, and in any
event no later than one Business Day after its or any
Guarantor’s receipt of such amounts, deliver all payments on
and proceeds of Accounts to the Cash Collateral
Account.

 


(b)           Reserves.
Notwithstanding any terms in this Agreement to the contrary: (i)
Bank may, in its good faith business judgment, hold any proceeds of
the Accounts and any amounts in the Cash Collateral Account as a
reserve to cover Borrower’s Obligations to Bank (and to pay
such Obligations when due); and (ii) at times when an Event of
Default exists or an event exists that, with notice or passage of
time or both, Bank determines would constitute an Event of Default,
Bank may hold any proceeds of the Accounts and any amounts in the
Cash Collateral Account that are not applied to the Obligations
pursuant to Section 9.1(h) as a reserve to be applied to any
Obligations regardless of whether such Obligations are then due and
payable.

 


(c)           Returns.
Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower or any Subsidiary,
Borrower shall, and shall cause each of its Subsidiaries to,
promptly (i) determine the reason for such return, (ii) issue a
credit memorandum to the Account Debtor in the appropriate amount,
and (iii) provide a copy of such credit memorandum to Bank, upon
request from Bank. In the event any attempted return occurs after
the occurrence and during the continuance of any Event of Default,
Borrower or the applicable Subsidiary (if such Subsidiary is a
Guarantor) shall hold the returned Inventory in trust for Bank, and
immediately notify Bank of the return of the
Inventory.

 


(d)           Verifications;
Confirmations; Credit Quality; Notifications. Bank may, from
time to time, verify and confirm directly with the respective
Account Debtors the validity, amount and other matters relating to
the Accounts, either in the name of Borrower, the applicable
Subsidiary or Bank or such other name as Bank may choose, and
notify any Account Debtor of Bank’s security interest in such
Account.

 


(e)           No
Liability. Bank shall not be responsible or liable for any
shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to an
Account, or for any error, act, omission, or delay of any kind
occurring in the settlement, failure to settle, collection or
failure to collect any Account, or for settling any Account in good
faith for less than the full amount thereof, nor shall Bank be
deemed to be responsible for any of Borrower’s or any
Subsidiary’s obligations under any contract or agreement
giving rise to an Account. Nothing herein shall, however, relieve
Bank from liability for its own gross negligence or willful
misconduct.


 







 

18








 






 


6.4 Inventory
and Equipment; Returns. Borrower shall, and shall cause each
of its Subsidiaries to, keep all Inventory and Equipment in good
and merchantable condition (ordinary wear and tear and casualty and
condemnation excepted) and free from all material defects, except
for Inventory and Equipment (i) sold in the ordinary course of
business, and (ii) for which adequate reserves have been made, in
all cases in the United States and such other locations as to which
Borrower or any Subsidiary gives prior written notice. Returns and
allowances, if any, as between Borrower or any Subsidiary and its
respective Account Debtors shall be on the same basis and in
accordance with the usual customary practices of Borrower or such
Subsidiary, as they exist on the Effective Date. Borrower and each
of its Subsidiaries shall promptly notify Bank of all returns and
recoveries and of all disputes and written claims received
involving Inventory having an individual or aggregate book value of
more than $200,000.

 


6.5 Taxes;
Pensions. Borrower shall timely, and cause each of its
Subsidiaries to timely, file all required tax returns and reports
and pay all foreign, federal, state and local taxes, assessments,
deposits and contributions owed by Borrower and each of its
Subsidiaries, except for deferred payment of any taxes contested
pursuant to the terms of Section 5.9 hereof, and Borrower shall
deliver to Bank, on demand, appropriate certificates attesting to
the payments thereof, and Borrower and its Subsidiaries shall pay
all amounts necessary to fund all present pension, profit sharing
and deferred compensation plans in accordance with their
terms.

 


6.6 Access
to Collateral; Books and Records. At reasonable times, on
one Business Day’s prior notice (provided no notice is
required if an Event of Default has occurred and is continuing),
Bank, or its agents, shall have the right to inspect the Collateral
and the right to audit and copy Borrower’s Books. The
foregoing inspections and audits shall be conducted no more often
than once every 12 months (or more frequently as Bank in its sole
discretion determines the conditions warrant) unless an Event of
Default has occurred and is continuing in which case such
inspections and audits shall occur as often as Bank shall determine
is necessary. The foregoing inspections and audits shall be
conducted at Borrower’s expense and the charge therefor shall
be $1,000 per person per day (or such higher amount as shall
represent Bank’s then-current standard charge for the same),
provided that any such audit does not exceed four Business Days,
plus Bank’s
reasonable out-of-pocket expenses. In the event Borrower and Bank
schedule an audit more than 10 days in advance, and Borrower
cancels or seeks to or reschedules the audit with less than 10 days
written notice to Bank, then (without limiting any of Bank’s
rights or remedies) Borrower shall pay Bank a fee of $1,000 plus
any out-of-pocket expenses incurred by Bank to compensate Bank for
the anticipated costs and expenses of the cancellation or
rescheduling.

 



6.7 Insurance.

 


(a)           Borrower
shall, and shall cause each Subsidiary to, keep its business and
the Collateral insured for risks and in amounts standard for
companies in Borrower’s and such Subsidiary’s
respective industries and located in similar locations and as Bank
may reasonably request. Insurance policies shall be in a form, with
financially sound and reputable insurance companies that are not
Affiliates of Borrower, and in amounts that are satisfactory to
Bank. All property policies shall have a lender’s loss
payable endorsement, in form satisfactory to Bank, showing Bank as
lender’s loss payee. All liability policies shall show, or
have endorsements showing, Bank as an additional insured. Bank
shall be named as lender loss payee and/or additional insured with
respect to any such insurance providing coverage in respect of any
Collateral.

 


(b)           At
Bank’s request, Borrower shall deliver to Bank certified
copies of insurance policies and evidence of all premium payments.
Each provider of any such insurance required under this Section 6.7
shall agree, by endorsement upon the policy or policies issued by
it or by independent instruments furnished to Bank, that it will
give Bank 30 days prior written notice before any such policy or
policies shall be materially altered or canceled. Proceeds payable
under any casualty policy will, at Borrower’s option, be
payable to Borrower to replace the property subject to the claim;
provided that any
such replacement property shall be deemed Collateral in which Bank
has been granted a first priority security interest; provided further that if an Event of
Default has occurred and is continuing, all proceeds payable under
any such policy shall, at Bank’s option, be payable to Bank
to be applied on account of the Obligations.

 


(c)           If
Borrower fails to obtain insurance as required under this Section
6.7 or to pay any amount or furnish any required proof of payment
to third persons and Bank, Bank may make all or part of such
payment or obtain such insurance policies required in this Section
6.7, and take any action under the policies Bank deems
prudent.


 







 

19








 






 



6.8 Accounts.

 


(a)           Borrower
shall, and shall cause each Subsidiary operating in the United
States or China to, (i) within 120 days of the Effective Date,
maintain its primary operating and other deposit accounts, the Cash
Collateral Account and primary securities/investment accounts and
all excess cash with Bank and/or Bank’s Affiliates and (ii)
promptly, and in any event no later than 120 days after the
Effective Date, instruct all parties making payments (including,
but not limited to, in respect of accounts receivable and
dividends) to Borrower and/or any Subsidiary to remit such payments
to an account contemplated by clause (i) above; provided that Borrower and its
Subsidiaries shall be permitted to maintain deposit accounts and
securities/investment accounts with third party financial
institutions in the United States so long as such accounts contain
no more than 15% of Borrower’s and such Subsidiaries’
total cash, Cash Equivalents and investment balances maintained in
the United States; provided further that Borrower and its
Subsidiaries shall be permitted to maintain deposit accounts and
securities/investment accounts with third party financial
institutions located in China so long as such accounts contain no
more than 40% of Borrower and such Subsidiaries’ total cash,
Cash Equivalents and investment balances maintained in
China.

 


(b)           In
addition to and without limiting the restrictions in Section
6.8(a), Borrower and each Guarantor shall provide Bank 10 days
prior written notice before establishing any Collateral Account at
or with any bank or financial institution other than Bank or
Bank’s Affiliates. For each Collateral Account that Borrower
or any Guarantor at any time maintains, Borrower shall, and shall
cause each such Guarantor to, cause the applicable bank or
financial institution at or with which any Collateral Account is
maintained to execute and deliver a Control Agreement or other
appropriate instrument with respect to such Collateral Account to
perfect Bank’s Lien in such Collateral Account in accordance
with the terms hereunder which Control Agreement may not be
terminated without the prior written consent of Bank. The
provisions of the previous sentence shall not apply to deposit
accounts exclusively used for payroll, payroll taxes and other
employee wage and benefit payments to or for the benefit of
Borrower’s or any Guarantor’s employees and identified
to Bank by Borrower or such Guarantor as such (such accounts,
“Excluded
Accounts”).

 



6.9 Protection of Intellectual Property
Rights.

 


(a)           (i)
Borrower shall, and shall cause each of its Subsidiaries to,
protect, defend and maintain the validity and enforceability of its
Intellectual Property; (ii) promptly advise Bank in writing of
material infringements or any other event that could reasonably be
expected to materially and adversely affect the value of its
Intellectual Property; and (iii) not allow any Intellectual
Property material to Borrower’s or any Subsidiary’s
business to be abandoned, forfeited or dedicated to the public
without Bank’s prior written consent.

 


(b)           If
Borrower or any Guarantor (i) obtains any Patent, registered
Trademark, registered Copyright, registered mask work, or any
pending application for any of the foregoing, whether as owner,
licensee or otherwise, or (ii) applies for any Patent or the
registration of any Trademark, then Borrower shall promptly provide
written notice thereof to Bank and shall, and shall cause such
Guarantor to, execute such intellectual property security
agreements and other documents and take such other actions as Bank
may request in its good faith business judgment to perfect and
maintain a first priority perfected security interest in favor of
Bank in such property. If Borrower or any Guarantor decides to
register any Copyrights or mask works in the United States
Copyright Office, Borrower shall, and shall cause such Guarantor
to: (x) provide Bank with at least 10 days prior written notice of
its intent to register such Copyrights or mask works together with
a copy of the application it intends to file with the United States
Copyright Office (excluding exhibits thereto); (y) execute an
intellectual property security agreement and such other documents
and take such other actions as Bank may request in its good faith
business judgment to perfect and maintain a first priority
perfected security interest in favor of Bank in the Copyrights or
mask works intended to be registered with the United States
Copyright Office; and (z) upon the request of Bank, record such
intellectual property security agreement with the United States
Copyright Office. Borrower shall, and shall cause each Guarantor
to, promptly provide to Bank copies of all applications that it
files for Patents or for the registration of Trademarks, Copyrights
or mask works, together with evidence of the recording of the
applicable intellectual property security agreement required for
Bank to perfect and maintain a first priority perfected security
interest in such property.


 







 

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(c)           Prior
to entering into or becoming bound by any Restrictive License
(other than over-the-counter software that is commercially
available to the public), Borrower shall, and shall cause each
Guarantor to, provide written notice to Bank of the material terms of such license or agreement
with a description of its anticipated impact on Borrower’s or
such Guarantor’s business or financial condition.
Borrower shall, and shall cause each Guarantor to, take such steps
as Bank requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for (i) any Restricted License
to be deemed “Collateral” and for Bank to have a
security interest in it that might otherwise be restricted or
prohibited by law or by the terms of any such Restricted License,
and (ii) Bank to have the ability in the event of a liquidation of
any Collateral to dispose of such Collateral in accordance with
Bank’s rights and remedies under this Agreement and the other
Loan Documents.

 


6.10 Protection
of the Pledged Collateral. Borrower shall:

 


(b)           warrant
and defend title to and ownership of the Pledged Collateral of at
its own expense against the claims and demands of all other parties
claiming an interest therein (other than holders of Permitted
Liens), keep the Pledged Collateral free from all Liens, except for
Permitted Liens, and not sell, exchange, transfer, assign, lease or
otherwise dispose of the Pledged Collateral or any interest
therein, except as permitted under the Loan Documents;

 


(c)           not
make or consent to any amendment or other modification or waiver
that is materially adverse to the interests of Bank with respect to
any of the Pledged Collateral or enter into any agreement or allow
to exist any restriction with respect to any of the Pledged
Collateral, in each case, other than pursuant hereto or as may be
permitted under this Agreement;

 


(d)           file
all reports and other information now or hereafter required to be
filed by Borrower with the SEC and any other state, federal or
foreign agency in connection with the ownership of the Pledged
Collateral; and

 


(e)           not,
without promptly executing and delivering, or causing to be
executed and delivered, to Bank such agreements, documents and
instruments as Bank may reasonably request for the purpose of
perfecting its security interest therein, issue or acquire any
Capital Stock constituting Pledged Collateral consisting of an
interest in a partnership or a limited liability company that (i)
is dealt in or traded on a securities exchange or in a securities
market, (ii) by its terms expressly provides that it is a security
governed by Article 8 of the UCC, (iii) is an Investment Company
Security, (iv) is held in a securities account or (v) constitutes a
Security or a Financial Asset.

 


6.11 Litigation
Cooperation. From the date hereof and continuing through the
termination of this Agreement, Borrower shall, and shall cause its
Subsidiaries to, make available to Bank, without expense to Bank,
Borrower, each Subsidiary and each of their respective officers,
employees and agents and Borrower’s Books, to the extent that
Bank may deem them reasonably necessary to prosecute or defend any
third-party suit or proceeding instituted by or against Bank with
respect to any Collateral or relating to Borrower or any
Subsidiary.

 


6.12 Formation
or Acquisition of Subsidiaries; Additional Guarantors.
Notwithstanding and without limiting the negative covenants
contained in Sections 7.3 and 7.7 hereof, at the time that Borrower
forms any direct or indirect Subsidiary or acquires any direct or
indirect Subsidiary after the Effective Date, Borrower shall (a)
provide Bank with at least 10 Business Days prior written notice of
such formation or acquisition and (b) provide to Bank appropriate
certificates and powers and financing statements, pledging all of
the direct or beneficial ownership interest in such new Subsidiary,
in form and substance satisfactory to Bank; provided that if such
Subsidiary is not organized under the laws of the United States,
the pledge of ownership interests in such Subsidiary shall be
limited to 65% of the stock, units or other evidence of ownership
interests held by Borrower or any of its Subsidiaries in such new
Subsidiary which is not organized under the laws of the United
States. In the event that any Subsidiary becomes a Material
Subsidiary, Borrower shall, within 30 days after the end of the
fiscal quarter in which such Subsidiary becomes a Material
Subsidiary (i) cause such new Subsidiary to provide to Bank a
Guaranty, and become a Guarantor hereunder, together with such
appropriate financing statements and/or Control Agreements, all in
form and substance satisfactory to Bank (including being sufficient
to grant Bank a first priority Lien (free and clear of all Liens
except for Permitted Liens) in and to the assets of such Material
Subsidiary), (ii) provide to Bank appropriate certificates and
powers and financing statements, pledging all of the direct or
beneficial ownership interest in such new Subsidiary, in form and
substance satisfactory to Bank and (iii) provide to Bank all other
documentation in form and substance satisfactory to Bank, including
one or more opinions of counsel satisfactory to Bank, which in its
opinion is appropriate with respect to the execution and delivery
of the applicable documentation referred to above. Any document,
agreement, or instrument executed or issued pursuant to this
Section 6.11 shall be a Loan Document.


 







 

21








 






 


6.13 Interest
Rate Agreements. Within 30 days after the Effective Date,
Borrower shall enter into Interest Rate Agreements with Bank or its
Affiliates with an aggregate face amount equal to no less than 50%
of the Term Loan Amount. At all times, Borrower shall maintain
Interest Rate Agreements with an aggregate face amount equal to no
less than 50% of the outstanding principal amount of the Term Loan
Advance.

 


6.14 Material
Licenses; Compliance with Laws. Borrower shall, and shall
cause each of its Subsidiaries to, (i) maintain each Permit,
including each Regulatory Authorization, or file any notice or
registration in, each jurisdiction (including, but not limited to
the United States, China and Japan) in which Borrower or any
Subsidiary is required to obtain any Permit or Regulatory
Authorization or to file any notice or registration, in order to
design, manufacture, store, label, sell, promote, import or
distribute its products, and (ii) promptly provide evidence of the
same to Bank. Borrower shall, and shall cause each of its
Subsidiaries to, comply with the requirements of all applicable
laws, rules, regulations and orders of any Governmental Authority
or Regulatory Agency except to the extent the failure to so comply
could not individually or in the aggregate, reasonably be expected
to have a Material Adverse Change.

 


6.15 Further
Assurances. Borrower shall, and shall cause each Guarantor
to, execute any further instruments and take further action as Bank
reasonably requests to (a) cause this Agreement or any other Loan
Document to be, become or remain valid and effective in accordance
with its terms, (b) perfect or continue Bank’s Lien in the
Collateral and the Pledged Collateral, (c) enable Bank to exercise
and enforce its rights and remedies hereunder in respect of the
Collateral and the Pledged Collateral, and (d) otherwise effect the
purposes of this Agreement, including, without limitation and if
requested by Bank, delivering to Bank upon its request following
the occurrence and continuation of an Event of Default, irrevocable
proxies in respect of the Pledged Collateral. Borrower shall, and
shall cause each Guarantor to, deliver to Bank, within five days
after the same are sent or received, copies of all correspondence,
reports, documents and other filings with any Governmental
Authority regarding compliance with or maintenance of Governmental
Approvals or Requirements of Law or that could reasonably be
expected to have a material adverse effect on any of the
Governmental Approvals or otherwise on the operations of Borrower
or any of its Subsidiaries.

 


6.16 Post-Closing
Obligations. Notwithstanding anything to the contrary herein
or in the other Loan Documents (it being understood that to the
extent that the existence of any of the following post-closing
obligations that is not overdue would otherwise cause any
representation, warranty, covenant, default or Event of Default in
this Agreement or any other Loan Document to be in breach, Bank
hereby waives such breach for the period from the Effective Date
until the first date on which such condition is required to be
fulfilled (giving effect to any extensions thereof) pursuant to
this Section 6.16), Borrower shall deliver or cause to be delivered
the following items to Bank no later than the dates set forth below
(or such later date agreed to by Bank in its sole
discretion):

 


(a)           no
later than 30 days after the Effective Date, (i) Control Agreements
in form and substance reasonably satisfactory to Bank for each
Collateral Account maintained by Borrower or any Subsidiary in the
United States (other than Excluded Accounts), and (ii) that certain
Deposit Account Control Agreement (Withdrawals initially permitted)
in form and substance satisfactory to Bank with respect to the
account of Tahitian Noni Beverages (China) Company Limited;
and

 


(b)           no
later than 30 days after the Effective Date, landlord access
agreements and bailee letters as contemplated by Section 7.2, each
in form and substance reasonably satisfactory to Bank;

 


(c)           no
later than 30 days after the Effective Date, insurance endorsements
from one or more insurance companies reasonably satisfactory to
Bank, evidencing property and liability coverage required to be
maintained pursuant to the Loan Documents, with Bank named as loss
payee or additional insured, as applicable;

 


(d)           no
later than five days after the Effective Date, certificates
evidencing all the Pledged Shares that are certificate and all the
Pledged Shares (as defined in the Guaranty) held by the Guarantors
that are certificated, together with endorsements and/or
appropriate stock powers, in each case, duly executed in blank;
and

 


(d)           no
later than 90 days after the Effective Date, Borrower shall, and
shall cause Morinda Holdings, Inc. and Tahitian Noni Beverages
(China) Company Limited to, each at its own cost and expense,
complete all the procedures and formalities necessary in order to
effect and register the pledge of the equity interests in Tahitian
Noni Beverages (China) Company Limited, pursuant to the Equity
Pledge Agreement, dated as of the Effective Date, by and among
Morinda Holdings, Inc., as pledgor, Tahitian Noni Beverages (China)
Company Limited, as company, and Bank, as pledgee.


 







 

22








 






 


7 NEGATIVE
COVENANTS

 


Borrower
covenants and agrees that, so long as
any credit hereunder shall be available and until the outstanding
Obligations are paid in full or for so long as Bank may have any
commitment to make any Credit Extensions, Borrower shall not do any
of the following without Bank’s prior written
consent:

 


7.1 Dispositions.
Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively, “Transfer”), or permit any of its
Subsidiaries to Transfer, all or any part of its business or
property, except for Transfers (a) of Inventory in the ordinary
course of business; (b) of worn-out or obsolete Equipment that is,
in the reasonable judgment of Borrower or such Subsidiary, no
longer economically practicable to maintain or useful in the
ordinary course of business of Borrower or such Subsidiary; (c)
consisting of Permitted Liens and Permitted Investments; (d)
consisting of the sale or issuance of any stock of Borrower
permitted under Section 7.2 of this Agreement; (e) consisting of
Borrower’s or such Subsidiary’s use or transfer of
money or Cash Equivalents in the ordinary course of its business
for the payment of ordinary course business expenses in a manner
that is not prohibited by the terms of this Agreement or the other
Loan Documents; (f) consisting of the sale of fixed assets and
property which is, as of the date of this Agreement, in the process
of being sold by a Subsidiary of Borrower pursuant to a letter of
intent dated February 4, 2019, as previously disclosed to Bank; (g)
consisting of cash payments in respect of earn-outs, working
capital adjustments and/or dividends under that certain Plan of
Merger, dated as of December 2, 2018, by and among Borrower, New
Age Health Sciences Holdings, Inc. and Morinda Holdings, Inc.,
including, without limitation, dividends payable pursuant to
Borrower’s outstanding shares of Series D Convertible
Preferred Stock, so long as the Morinda Adjusted EBITDA for the
fiscal year ended December 31, 2019 is at least $17,000,000;
provided however,
if the Morinda Adjusted EBITDA for the fiscal year ended December
31, 2019 is less than $17,000,000 such cash payments may be made in
connection with the foregoing so long as such payments under this
clause (g), (i) are funded with proceeds from sales or issuances of
Qualified Stock and (ii) do not exceed the amount of funds received
pursuant to such sales or issuances of Qualified Stock; (h)
consisting of the issuance of Qualified Stock of Borrower in
satisfaction of Borrower’s obligations under the foregoing
clause (g); (i) of non-exclusive licenses for the use of the
property of Borrower or its Subsidiaries in the ordinary course of
business and (j) consisting of the issuance, sale or disposition
(including, without limitation, pursuant to an
“at-the-market” offering) of any Qualified Stock, Stock
Equivalents or Qualified Stock issuable upon conversion or exercise
of any Stock Equivalents (including, without limitation, stock
options and convertible notes).

 


7.2 Changes
in Business, Management, Control, or Business Locations. (a)
Engage in or permit any of its Subsidiaries to engage in any
business other than the businesses currently engaged in by Borrower
and each such Subsidiary, as applicable, or reasonably related
thereto or consistent with business plans announced publicly prior
to the Effective Date; (b) liquidate or dissolve; (c) have a change
in management such that any Key Person ceases to hold his or her
office with Borrower and a replacement satisfactory to the Board is
not made within 90 days after such departure; or (d) permit or
suffer any Change in Control.

 


Borrower shall, and
shall cause each of its Subsidiaries to, not, without at least 30
days prior written notice to Bank: (i) add any new offices or
business locations, including warehouses (unless such new offices
or business locations contain less than $200,000 in
Borrower’s or any Subsidiary’s assets or property) or
deliver any portion of the Collateral valued, individually or in
the aggregate, in excess of $200,000 to a bailee at a location
other than to a bailee and at a location already disclosed in the
Representations and Warranties Certificate, (ii) change its
jurisdiction of organization, (iii) change its organizational
structure or type, (iv) change its legal name, or (v) change any
organizational number (if any) assigned by its jurisdiction of
organization. If Borrower or any Subsidiary intends to deliver any
portion of the Collateral valued, individually or in the aggregate,
in excess of $100,000 to a bailee or leased location, and Bank and
such bailee or landlord are not already parties to a bailee
agreement or landlord access agreement, as applicable, governing
both the Collateral and the location to which Borrower or such
Subsidiary intends to deliver the Collateral, then Borrower will
first receive the written consent of Bank, and such bailee shall
execute and deliver a bailee agreement in form and substance
satisfactory to Bank.

 


7.3 Mergers
or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or
acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another
Person (including, without limitation, by the formation of any
Subsidiary) except for any acquisition of another Person in which
the aggregate consideration paid in connection therewith is less
than $1,000,000 and (i) no default or Event of Default has occurred
and is continuing before and immediately after giving effect to
such acquisition, (ii) the EBITDA (calculated in a manner
satisfactory to Bank in its sole discretion) of the acquired Person
for the 12 month period immediately preceding such acquisition is
greater than $0, and (iii) during the 12 month period immediately
preceding such acquisition, the acquired Person was engaging in the
same or substantially similar business as that of Borrower. A
Subsidiary may merge or consolidate into another Subsidiary or into
Borrower.


 







 

23








 






 


7.4 Indebtedness.
Create, incur, assume, or be liable for any Indebtedness, or permit
any Subsidiary to do so, other than Permitted Indebtedness, or
prepay any Indebtedness or take any actions which impose on
Borrower or any Subsidiary an obligation to prepay an Indebtedness,
except Indebtedness to Bank.

 


7.5 Encumbrance.
Create, incur, allow, or suffer any Lien on any of its property, or
assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except
for Permitted Liens, permit any Collateral not to be subject to the
first priority security interest granted herein, or enter into any
agreement, document, instrument or other arrangement (except with
or in favor of Bank) with any Person which directly or indirectly
prohibits or has the effect of prohibiting Borrower or any
Subsidiary from assigning, mortgaging, pledging, granting a
security interest in or upon, or encumbering any of
Borrower’s or any Subsidiary’s Intellectual Property,
except as is otherwise permitted in Section 7.1 hereof and the
definition of “Permitted Liens” herein.

 


7.6 Maintenance
of Collateral Accounts. Maintain any Collateral Account, or
permit any Subsidiary to do so, except pursuant to the terms of
Section 6.8 hereof.

 


7.7 Distributions;
Investments. (a) Other than as contemplated by Section
7.1(g) and (j), above, pay any dividends or make any distribution
or payment or redeem, retire or purchase any capital stock;
provided that
Borrower may convert any of its convertible securities into other
securities pursuant to the terms of such convertible securities or
otherwise in exchange thereof; or (b) directly or indirectly make
any Investment (including, without limitation, by the formation of
any Subsidiary) other than Permitted Investments, or permit any of
its Subsidiaries to do so. Notwithstanding anything to the contrary
herein, nothing in this Agreement shall prohibit any repatriation
of funds from Foreign Subsidiaries to Borrower or any of its
Domestic Subsidiaries.

 


7.8 Transactions
with Affiliates. Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of Borrower or
any Subsidiary, except for transactions that are in the ordinary
course of Borrower’s or such Subsidiary’s business,
upon fair and reasonable terms that are no less favorable to
Borrower or such Subsidiary, as applicable, than would be obtained
in an arm’s length transaction with a non-affiliated
Person.

 


7.9 Subordinated
Debt. (a) Make or permit any payment on any Subordinated
Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is
subject, or (b) amend any provision in any document relating to the
Subordinated Debt which would increase the amount thereof, provide
for earlier or greater principal, interest, or other payments
thereon, or adversely affect the subordination thereof to the
Obligations owed to Bank.

 


7.10 Inventory
and Equipment. Store the
Inventory or the Equipment of a book value in excess of $250,000
with a bailee, warehouseman, collocation facility or similar third
party, or permit any of its Subsidiaries to do so,
unless, in each case, the third party
has been notified of Bank’s security interest and Bank (a)
has received an acknowledgment from the third party that it is
holding or will hold the Inventory or Equipment for Bank’s
benefit or (b) is in possession of the warehouse receipt, where
negotiable, covering such Inventory or Equipment. Except for
Inventory sold in the ordinary course of business and for movable
items of personal property having an aggregate book value not in
excess of $100,000, and except for such other locations as Bank may
approve in writing, Borrower shall, and shall cause each Guarantor
to, keep the Inventory and Equipment only at the locations set
forth on the Representations and Warranties Certificate and such other locations of which
Borrower gives Bank prior written notice and as to which Bank is
able to take such actions as may be necessary to perfect its
security interest or to obtain a bailee’s acknowledgment of
Bank’s rights in the Collateral.

 


7.11 Compliance.
Become, or permit any Subsidiary to become, an “investment
company” or a company controlled by an “investment
company”, under the Investment Company Act of 1940, as
amended, or undertake as one of its important activities extending
credit to purchase or carry margin stock (as defined in Regulation
U of the Board of Governors of the Federal Reserve System), or use
the proceeds of any Credit Extension for that purpose; fail, or
permit any Subsidiary to fail, to meet the minimum funding
requirements of ERISA or permit a Reportable Event or Prohibited
Transaction (each as defined in ERISA) to occur; fail, or permit
any Subsidiary to fail, to comply with the Federal Fair Labor
Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a material adverse
effect on Borrower’s or such Subsidiary’s business;
withdraw, or permit any Subsidiary to withdraw, from participation
in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any present pension,
profit sharing and deferred compensation plan which could
reasonably be expected to result in any liability of Borrower or
any Subsidiary, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental
agency.


 







 

24








 






 



7.12 Financial Covenants.

 


(a)
Minimum Adjusted
EBITDA. Not suffer or permit the Adjusted EBITDA for
Borrower and its Subsidiaries, for the 12 month period ending on
the last day of any fiscal quarter, commencing with the fiscal
quarter ending March 31, 2019, to be less than the amount set forth
in the table below opposite such date.

 

	

Date

	

Minimum
Adjusted EBITDA


	

March
31, 2019

	

$4,000,000


	

June
30, 2019

	

$4,000,000


	

September 30,
2019

	

$7,000,000


	

December 31,
2019

	

$8,000,000






 

 


(b)
Net Cash. Not
suffer or permit the aggregate Net Cash of Borrower, its
Subsidiaries organized in the United States and its Subsidiaries
organized in China, which is maintained in an account at Bank or
any of Bank’s Affiliates in the United States or in China, to
be less than $5,000,000 in the aggregate at any time on and after
the Effective Date through December 31, 2019.

 


(c)
Total Leverage
Ratio. Not suffer or permit the Total Leverage Ratio as of
the last day of any fiscal quarter, commencing with the fiscal
quarter ending March 31, 2020, to be greater than the maximum ratio
set forth in the table below opposite such date.

 

	

Date

	

Maximum
Total Leverage Ratio


	

March
31, 2020

	

2.50 to
1.00


	

June
30, 2020

	

2.50 to
1.00


	

September 30,
2020

	

2.50 to
1.00


	

December 31,
2020

	

2.00 to
1.00


	

March
31, 2021

	

2.00 to
1.00


	

June
30, 2021

	

2.00 to
1.00


	

September 30,
2021

	

2.00 to
1.00


	

December 31,
2021

	

1.50 to
1.00


	

March
31, 2022

	

1.50 to
1.00


	

June
30, 2022

	

1.50 to
1.00


	

September 30,
2022

	

1.50 to
1.00


	

December 31, 2022
and thereafter

	

1.00 to
1.00






 


(d)
Fixed Charge Coverage
Ratio. Not suffer or permit the Fixed Charge Coverage Ratio
as of the last day of any fiscal quarter, commencing with the
fiscal quarter ending March 31, 2020, to be less than 1.50 to
1.00.

 


7.13 Equity
Cure. In the event Borrower fails to comply with the
financial covenants set forth in Section 7.12 as of the last day of
any fiscal quarter, any cash equity contribution (funded with
proceeds from a sale or issuance of Qualified Stock of Borrower) to
the capital of Borrower after the last day of such fiscal quarter
and on or prior to the day that is 10 Business Days after the day
on which financial statements are required to be delivered for that
fiscal quarter will, at the irrevocable election of Borrower, be
included in the calculation of Adjusted EBITDA solely for the
purposes of determining compliance with such covenants in Section
7.12 at the end of such fiscal quarter (each, a “Cure Quarter”) and any subsequent
period that includes such Cure Quarter (any such equity
contribution so included in the calculation of Adjusted EBITDA, a
“Specified Equity
Contribution”); provided that (a) notice of
Borrower’s intent to accept a Specified Equity Contribution
shall be delivered by Borrower to Bank no later than the day on
which financial statements are required to be delivered for the
applicable fiscal quarter, (b) in each consecutive four fiscal
quarter period there will be at least two fiscal quarters in which
no Specified Equity Contribution is made, (c) the amount of any
Specified Equity Contribution will be no greater than 100% of the
amount required to cause Borrower and its Subsidiaries to be in
compliance with such financial covenants (the “Cure Amount”), (d) there shall be
no more than three Specified Equity Contributions made in the
aggregate after the Effective Date, (e) Specified Equity
Contributions shall not be made in any two consecutive quarters,
(f) the aggregate amount of all Specified Equity Contributions made
under this Section 7.13 shall not exceed $5,000,000, (g) Borrower
shall immediately apply the proceeds of a Specified Equity
Contribution to prepay the Term Loan Advance in accordance with
Section 2.3(d)(ii) and (h) there shall be no reduction in
Indebtedness in connection with any Specified Equity Contribution
(or the application of the proceeds thereof, including application
of such proceeds for purposes of cash netting) for determining
compliance with Section 7.12 for the period ending on the last day
of the applicable Cure Quarter; provided that following any
prepayment of the Term Loan Advance pursuant to Section 2.3(d)(ii)
there shall be a reduction in Indebtedness for determining
compliance with Section 7.12 in future fiscal quarters where such
Cure Quarter is included in the applicable test period (but, for
the avoidance of doubt, there shall be no de-leveraging credit for
the period ending on the last day of the Cure Quarter in respect of
which the Specified Equity Contribution is made). Upon Bank’s receipt of
notice from Borrower of its intent to make a Specified Equity
Contribution pursuant to this Section 7.13 no later than the day on
which financial statements are required to be delivered for the
applicable fiscal quarter, then, until the day that is 10 Business
Days after such date, (x) Bank shall not exercise the right to
accelerate the Term Loan Advance or the Advances and Bank shall not
exercise any right to foreclose on or take possession of the
Collateral and (y) notwithstanding anything to the contrary herein,
the Default Rate shall not be applicable, in each case, solely on
the basis of an Event of Default having occurred and being
continuing as a result of Borrower’s failure to be in
compliance with the financial covenants set forth in Section 7.12
in respect of the period ending on the last day of such fiscal
quarter. If, after giving effect to the foregoing pro forma
adjustment (but not, for the avoidance of doubt, giving pro forma
adjustment to any repayment of Indebtedness in connection
therewith), Borrower is in compliance with the financial covenants
set forth in Section 7.12, Borrower shall be deemed to have
satisfied the requirements of Section 7.12 as of the relevant date
of determination with the same effect as though there had been no
failure to comply on such date, and the applicable breach or
default of Section 7.12 that had occurred shall be deemed cured for
purposes of this Agreement.


 







 

25








 






 


8 EVENTS
OF DEFAULT

 


Any one
of the following shall constitute an event of default (an
“Event of
Default”) under this Agreement:

 


8.1 Payment
Default. Borrower fails to (a) make any payment of principal
or interest on any Credit Extension when due, or (b) pay any other
Obligations within five Business Days after such Obligations are
due and payable (which five Business Day cure period shall not
apply to payments due on the Revolving Line Maturity Date or the
Term Loan Maturity Date). During the cure period, the failure to
make or pay any payment specified under clause (b) hereunder is not
an Event of Default;

 


8.2 Covenant
Default.

 


(a)
Borrower fails or neglects to perform any obligation in Sections
6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.12, 6.13 or
6.14 or violates any covenant in Section 7; or

 


(b)
Borrower or any Guarantor fails or neglects to perform, keep, or
observe any other term, provision, condition, covenant or agreement
contained in this Agreement or any of the other Loan Documents to
which it is a party, and as to any default (other than those
specified in this Section 8) under such other term, provision,
condition, covenant or agreement that can be cured, has failed to
cure the default within 10 days after the occurrence
thereof;

 


8.3 Material
Adverse Change. If there occurs any circumstance or
circumstances which could reasonably be expected to cause a
Material Adverse Change;

 



8.4 Attachment; Levy; Restraint on
Business.

 


(a)           (i)
The service of process seeking to attach, by trustee or similar
process, any funds of Borrower or of any entity under the control
of Borrower (including a Subsidiary) in excess of $100,000, or (ii)
a notice of lien or levy is filed against any of Borrower’s
or any of a Guarantor’s assets by any Governmental Authority,
and the same under subclauses (i) and (ii) hereof are not, within
10 days after the occurrence thereof, discharged or stayed (whether
through the posting of a bond or otherwise); provided, however, no Credit Extensions
shall be made during any 10 day cure period; or

 


(b)           
(i) any material portion of Borrower’s or any
Guarantor’s assets is attached, seized, levied on, or comes
into possession of a trustee, receiver or person acting in similar
capacity, or (ii) any court order enjoins, restrains, or prevents
Borrower or any Guarantor from conducting all or any material part
of its business;

 


8.5 Insolvency.
(a) Borrower or any Guarantor is unable to pay its debts (including
trade debts) as they become due; (b) Borrower or any Guarantor
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is
commenced against Borrower or any Guarantor and is not dismissed or
stayed within 45 days (but no Credit Extensions shall be made until
any such Insolvency Proceeding is dismissed);

 


8.6 Other
Agreements. There is, under any agreement to which Borrower
or any Guarantor is a party with a third party or parties, (a) any
default resulting in a right by such third party or parties,
whether or not exercised, to accelerate the maturity of any
Indebtedness in an amount individually or in the aggregate in
$250,000; (b) any breach or default by Borrower or Guarantor, the
result of which could have a Material Adverse Change;

 


8.7 Judgments;
Penalties. One or more fines, penalties or final judgments,
orders or decrees for the payment of money in an amount,
individually or in the aggregate, of at least $250,000 (not covered
by independent third-party insurance as to which liability has been
accepted by such insurance carrier) shall be rendered against
Borrower or any Guarantor, and the same are not, within 10 days
after the entry, assessment or issuance thereof, discharged,
satisfied, or paid, or after execution thereof, stayed or bonded
pending appeal, or such judgments are not discharged prior to the
expiration of any such stay (provided that no Credit Extensions
will be made prior to the satisfaction, payment, discharge, stay or
bonding of such fine, penalty, judgment, order or
decree);


 







 

26








 






 


8.8 Misrepresentations.
Borrower, any Guarantor, or any Person acting for Borrower or any
Guarantor makes any representation, warranty, or other statement
now or later in this Agreement, any other Loan Document or in any
writing delivered to Bank or to induce Bank to enter this Agreement
or any other Loan Document, and such representation, warranty or
other statement is incorrect or misleading in any material respect
when made; or

 


8.9 Guaranty.
If any Guaranty of all or a portion of the Obligations ceases for
any reason to be in full force and effect, or any Guarantor fails
to perform any obligation under any such Guaranty or a security
agreement securing any such Guaranty (collectively, the
“Guaranty
Documents”), or any event of default occurs under any
Guaranty Document or any guarantor revokes or purports to revoke a
Guaranty, or any material misrepresentation or material
misstatement exists now or hereafter in any warranty or
representation set forth in any Guaranty Document or in any
certificate delivered to Bank in connection with any Guaranty
Document, in each case when made or deemed made, or if any of the
circumstances described in Sections 8.4 through
8.7 occur with
respect to any Guarantor.

 


8.10 Subordinated
Debt. Any document, instrument, or agreement evidencing any
Subordinated Debt shall for any reason be revoked or invalidated or
otherwise cease to be in full force and effect, any Person shall be
in breach thereof or contest in any manner the validity or
enforceability thereof or deny that it has any further liability or
obligation thereunder, or the Obligations shall for any reason be
subordinated or shall not have the priority contemplated by this
Agreement or any applicable subordination or intercreditor
agreement.

 


9 BANK’S
RIGHTS AND REMEDIES

 


9.1 Rights
and Remedies. Upon the occurrence and during the continuance
of an Event of Default (subject to any applicable grace
periods), Bank may, without notice or demand, do any or all of the
following:

 


(a)           declare
all Obligations immediately due and payable (provided that upon the
occurrence of an Event of Default described in Section 8.5 all
Obligations shall become immediately due and payable without any
action by Bank);

 


(b)           stop
advancing money or extending credit for Borrower’s benefit
under this Agreement or under any other agreement between Borrower
and Bank;

 


(c)           demand
that Borrower (i) deposit cash with Bank in an amount equal to at
least 105% of the aggregate face amount of all Letters of Credit
remaining undrawn (plus all interest, fees, and costs due or to
become due in connection therewith (as estimated by Bank in its
good faith business judgment)), to secure all of the Obligations
relating to such Letters of Credit, as collateral security for the
repayment of any future drawings under such Letters of Credit, and
Borrower shall forthwith deposit and pay such amounts, and (ii) pay
in advance all letter of credit fees scheduled to be paid or
payable over the remaining term of any Letters of
Credit;

 


(d)           terminate
any FX Contracts;

 


(e)           verify
the amount of, demand payment of and performance under, and collect
any Accounts and General Intangibles, settle or adjust disputes and
claims directly with Account Debtors for amounts on terms and in
any order that Bank considers advisable, and notify any Person
owing Borrower money of Bank’s security interest in such
funds. Borrower shall collect all payments in trust for Bank and,
if requested by Bank, immediately deliver the payments to Bank in
the form received from the Account Debtor, with proper endorsements
for deposit;

 


(f)           make
any payments and do any acts it considers necessary or reasonable
to protect the Collateral and/or its security interest in the
Collateral;

 


(g)           enter
premises where the Collateral is located, take and maintain
possession of any part of the Collateral, and pay, purchase,
contest, or compromise any Lien which appears to be prior or
superior to its security interest and pay all expenses incurred in
connection therewith. With respect to Borrower’s owned
premises, Borrower hereby grants Bank a license to enter and occupy
such premises, without charge, to exercise any of Bank’s
rights or remedies. Borrower shall assemble the Collateral if Bank
requests and make it available as Bank designates;


 







 

27








 






 


(h)           setoff
and apply to the Obligations any (i) balances and deposits of
Borrower held by Bank, or (ii) amount held by Bank owing to or for
the credit or the account of Borrower;

 


(i)           ship,
reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral, it being
understood that Bank is hereby granted a non-exclusive,
royalty-free license or other right to use, without charge,
Borrower’s labels, Patents, Copyrights, mask works, rights of
use of any name, trade secrets, trade names, Trademarks, and
advertising matter, or any similar property as it pertains to the
Collateral, in completing production of, advertising for sale, and
selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section 9.1, Borrower’s
rights under all licenses and all franchise agreements inure to
Bank’s benefit;

 


(j)           place
a “hold” on any account maintained with Bank and/or
deliver a notice of exclusive control, any entitlement order, or
other directions or instructions pursuant to any Control Agreement
or similar agreements providing control of any
Collateral;

 


(k)           sell
the Collateral at either a public or private sale, or both, by way
of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower’s
premises) as Bank determines is commercially reasonable, and apply
any proceeds to the Obligations in whatever manner or order Bank
deems appropriate;

 


(l)           sell
the Collateral without giving any warranties as to the
Collateral; provided
that Bank may specifically disclaim
any warranties of title or the like, and this procedure will not be
considered adversely to affect the commercial reasonableness of any
sale of the Collateral; if Bank sells any of the Collateral upon
credit, Borrower will be credited only with payments actually made
by the purchaser, received by Bank and applied to the indebtedness
of the purchaser; and if the purchaser fails to pay for the
Collateral, Bank may resell the Collateral and Borrower shall be
credited with the proceeds of the sale. Bank may credit bid and
purchase at any public sale;

 


(m)           apply
for the appointment of a receiver, trustee, liquidator or
conservator of the Collateral, without notice and without regard to
the adequacy of the security for the Obligations and without regard
to the solvency of Borrower, any Guarantor or any other Person
liable for any of the Obligations;

 


(n)           demand
and receive possession of Borrower’s Books; and

 


(o)           exercise
all rights and remedies available to Bank under the Loan Documents
or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms
thereof).

 


9.2 Power
of Attorney. Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, exercisable following the occurrence
of an Event of Default, to: (a) endorse Borrower’s name on
any checks, payment instruments, or other forms of payment or
security; (b) sign Borrower’s name on any invoice or bill of
lading for any Account or drafts against Account Debtors; (c)
demand, collect, sue, and give releases to any Account Debtor for
monies due, settle and adjust disputes and claims about the
Accounts directly with Account Debtors, and compromise, prosecute,
or defend any action, claim, case or proceeding about any
Collateral (including filing a claim or voting a claim in any
bankruptcy case in Bank’s or Borrower’s name, as Bank
chooses); (d) make, settle, and adjust all claims under
Borrower’s insurance policies; (e) pay, contest or settle any
Lien, charge, encumbrance, security interest, or other claim in or
to the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; (f) dispose of the
Collateral; and (g) transfer the Collateral into the name of Bank
or a third party as the Code permits. Borrower hereby appoints Bank
as its lawful attorney-in-fact to sign Borrower’s name on any
documents necessary to perfect or continue the perfection of
Bank’s security interest in the Collateral regardless of
whether an Event of Default has occurred until all Obligations have
been satisfied in full and the Loan Documents have been terminated.
Bank’s foregoing appointment as Borrower’s
attorney-in-fact, and all of Bank’s rights and powers,
coupled with an interest, are irrevocable until all Obligations
have been fully repaid and performed and the Loan Documents have
been terminated.


 







 

28








 






 


9.3 Protective
Payments. If Borrower fails to obtain the insurance called
for by Section 6.7 or fails to pay any premium thereon or fails to
pay any other amount which Borrower is obligated to pay under this
Agreement or any other Loan Document or which may be required to
preserve the Collateral, Bank may obtain such insurance or make
such payment, and all amounts so paid by Bank are Bank Expenses and
are immediately due and payable, bearing interest at the then
highest rate applicable to the Obligations, and are secured by the
Collateral. Bank will make reasonable efforts to provide Borrower
with notice of Bank obtaining such insurance at the time it is
obtained or within a reasonable time thereafter. No payments by
Bank are deemed an agreement to make similar payments in the future
or Bank’s waiver of any Event of Default.

 


9.4 Application
of Payments and Proceeds. Bank shall have the right to apply
in any order any funds in its possession, whether from Borrower
account balances, payments, proceeds realized as the result of any
collection of Accounts or other disposition of the Collateral, or
otherwise, to the Obligations. Bank shall pay any surplus to
Borrower by credit to the Designated Deposit Account or to other
Persons legally entitled thereto; Borrower shall remain liable to
Bank for any deficiency. If Bank, directly or indirectly, enters
into a deferred payment or other credit transaction with any
purchaser at any sale of Collateral, Bank shall have the option,
exercisable at any time, of either reducing the Obligations by the
principal amount of the purchase price or deferring the reduction
of the Obligations until the actual receipt by Bank of cash
therefor.

 


9.5 Bank’s
Liability for Collateral. So long as Bank complies with
reasonable banking practices regarding the safekeeping of the
Collateral in the possession or under the control of Bank, Bank
shall not be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person.
Borrower bears all risk of loss, damage or destruction of the
Collateral.

 


9.6 No
Waiver; Remedies Cumulative. Bank’s failure, at any
time or times, to require strict performance by Borrower of any
provision of this Agreement or any other Loan Document shall not
waive, affect, or diminish any right of Bank thereafter to demand
strict performance and compliance herewith or therewith. No waiver
hereunder shall be effective unless signed by the party granting
the waiver and then is only effective for the specific instance and
purpose for which it is given. Bank’s rights and remedies
under this Agreement and the other Loan Documents are cumulative.
Bank has all rights and remedies provided under the Code, by law,
or in equity. Bank’s exercise of one right or remedy is not
an election and shall not preclude Bank from exercising any other
remedy under this Agreement or other remedy available at law or in
equity, and Bank’s waiver of any Event of Default is not a
continuing waiver. Bank’s delay in exercising any remedy is
not a waiver, election or acquiescence.

 


9.7 Demand
Waiver. Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension,
or renewal of accounts, documents, instruments, chattel paper and
guarantees held by Bank on which Borrower is liable.

 


10 NOTICES

 


All
notices, consents, requests, approvals, demands, or other
communication by any party to this Agreement or any other Loan
Document must be in writing and shall be deemed to have been
validly served, given, or delivered: (a) upon the earlier of actual
receipt and three Business Days after deposit in the U.S. mail,
first class, registered or certified mail return receipt requested,
with proper postage prepaid; (b) upon transmission, when sent by
electronic mail or facsimile transmission; (c) one Business Day
after deposit with a reputable overnight courier with all charges
prepaid; or (d) when delivered, if hand-delivered by messenger, all
of which shall be addressed to the party to be notified and sent to
the address, facsimile number, or email address indicated below.
Bank or Borrower may change its mailing or electronic mail address
or facsimile number by giving the other party written notice
thereof in accordance with the terms of this Section
10.

 


 




 

29








 






 





If 
to Borrower:

New
Age Beverages Corporation

Denver, CO
80229

Attn: Chief
Executive Officer

Fax: (801)
234-1040

Email: (303)
289-8655





 




If
to
Bank: 


East
West Bank


Santa
Clara, California 95054


Attn:
Kelvin P. Chan






Fax:
(408) 588-9684


Email:
Kelvin.Chan@eastwestbank.com


 


11 CHOICE
OF LAW; VENUE; JURY TRIAL WAIVER

 


Except as otherwise expressly provided in any
of the Loan Documents, this Agreement and the other Loan Documents
shall be governed by and construed in accordance with the law of
the State of New York without regard to principles of conflicts of
law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in New York County, New York;
provided,
however,
that nothing in this Agreement shall be deemed to operate to
preclude Bank from bringing suit or taking other legal action in
any other jurisdiction to realize on the Collateral or any other
security for the Obligations, or to enforce a judgment or other
court order in favor of Bank. Borrower expressly submits and
consents in advance to such jurisdiction in any action or suit
commenced in any such court, and Borrower hereby waives any
objection that it may have based upon lack of personal
jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is
deemed appropriate by such court. Borrower hereby waives personal
service of the summons, complaints, and other process issued in
such action or suit and agrees that service of such summons,
complaints, and other process may be made by registered or
certified mail addressed to Borrower at the address set forth in,
or subsequently provided by Borrower in accordance with, Section 10
of this Agreement and that service so made shall be deemed
completed upon the earlier to occur of Borrower’s actual
receipt thereof or three days after deposit in the U.S. mails,
proper postage prepaid.

 


TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND BANK
EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT,
TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 


This
Section 11 shall survive the termination of this
Agreement.

 


12 GENERAL
PROVISIONS

 


12.1 Termination
Prior to Maturity Date; Survival. All covenants,
representations and warranties made in this Agreement shall
continue in full force until this Agreement has terminated pursuant
to its terms and all Obligations have been satisfied. So long as
Borrower has satisfied the Obligations (other than inchoate
indemnity obligations for which no claim has been asserted, and any
other obligations which, by their terms, are to survive the
termination of this Agreement, and any Obligations under Bank
Services Agreements that are cash collateralized in accordance with
Section 4.1 of this Agreement), this Agreement may be terminated
prior to the Revolving Line Maturity Date and the Term Loan
Maturity Date by Borrower, effective three Business Days after
written notice of termination is given to Bank. Those obligations
that are expressly specified in this Agreement as surviving this
Agreement’s termination shall continue to survive
notwithstanding this Agreement’s termination.

 


12.2 Successors
and Assigns. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party. Borrower may
not assign this Agreement or any rights or obligations under it
without Bank’s prior written consent (which may be granted or
withheld in Bank’s sole discretion). Bank has the right,
without the consent of or notice to Borrower, to sell, transfer,
assign, negotiate, or grant participations in all or any part of,
or any interest in, Bank’s obligations, rights, and benefits
under this Agreement and the other Loan Documents.


 







 

30








 






 


12.3 Indemnification.
Borrower agrees to indemnify, defend and hold Bank and its
directors, officers, employees, advisors, affiliates, attorneys,
agents and any other Person affiliated with or representing Bank
(each, an “Indemnified
Person”) harmless against: (i) all obligations,
demands, claims and liabilities (collectively, “Claims”) claimed or asserted by
any other party in connection with the transactions contemplated by
the Loan Documents; and (ii) all losses or expenses (including Bank
Expenses) in any way suffered, incurred, or paid by such
Indemnified Person as a result of, following from, consequential
to, or arising from transactions between Bank and Borrower
(including, without limitation, reasonable attorneys’ fees
and expenses), except for Claims and/or losses directly caused by
such Indemnified Person’s gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a
final and non-appealable judgment.

 


This
Section 12.3 shall survive until all statutes of limitation with
respect to the Claims, losses and expenses for which indemnity is
given shall have run.

 


12.4 Time
of Essence. Time is of the essence for the performance of
all Obligations in this Agreement.

 


12.5 Severability
of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any
provision.

 


12.6 Correction
of Loan Documents. Bank may correct patent errors and fill
in any blanks in the Loan Documents consistent with the agreement
of the parties.

 


12.7 Amendments
in Writing; Waiver; Integration. No purported amendment or
modification of any Loan Document, or waiver, discharge or
termination of any obligation under any Loan Document, shall be
enforceable or admissible unless, and only to the extent, expressly
set forth in a writing signed by Borrower and Bank. Without
limiting the generality of the foregoing, no oral promise or
statement, nor any action, inaction, delay, failure to require
performance or course of conduct shall operate as, or evidence, an
amendment, supplement or waiver or have any other effect on any
Loan Document. Any waiver granted shall be limited to the specific
circumstance expressly described in it, and shall not apply to any
subsequent or other circumstance, whether similar or dissimilar, or
give rise to, or evidence, any obligation or commitment to grant
any further waiver. The Loan Documents represent the entire
agreement about this subject matter and supersede prior
negotiations or agreements. All prior agreements, understandings,
representations, warranties and negotiations between the parties
about the subject matter of the Loan Documents are merged into the
Loan Documents.

 


12.8 Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when
executed and delivered, is an original, and all taken together,
constitute one Agreement. Executed
copies of the signature pages of this Agreement sent by facsimile
or transmitted electronically in Portable Document Format
(“.pdf”), or any similar format, shall be treated as
originals, fully binding and with full legal force and effect, and
the parties waive any rights they may have to object to such
treatment.

 


12.9 Confidentiality.
In handling any confidential information, Bank shall exercise the
same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to
Bank’s Subsidiaries or Affiliates (such Subsidiaries and
Affiliates, together with Bank, collectively, “Bank Entities”); (b) to
prospective transferees or purchasers of any interest in the Credit
Extensions (provided, however, Bank shall use its reasonable best
efforts to obtain any prospective transferee’s or
purchaser’s agreement to the terms of this provision); (c) as
required by law, regulation, subpoena or other order; (d) to
Bank’s regulators or as otherwise required in connection with
Bank’s examination or audit; (e) as Bank considers
appropriate in exercising remedies under the Loan Documents; and
(f) to third-party service providers of Bank so long as such
service providers have executed a confidentiality agreement with
Bank with terms no less restrictive than those contained herein.
Confidential information does not include information that is
either: (i) in the public domain or already in Bank’s
possession when disclosed to Bank, or becomes part of the public
domain (other than as a result of its disclosure by Bank in
violation of this Agreement) after disclosure to Bank; or (ii)
disclosed to Bank by a third party, if Bank does not know that the
third party is prohibited from disclosing the
information.


 







 

31








 





  



Bank
Entities may use confidential information for the development of
databases, reporting purposes and market analysis so long as such
confidential information is aggregated and anonymized prior to
distribution unless otherwise expressly permitted by Borrower. The
provisions of the immediately preceding sentence shall survive the
termination of this Agreement.

 


12.10 Right
of Setoff. Borrower hereby grants to Bank a Lien and a right
of setoff as security for all Obligations to Bank, whether now
existing or hereafter arising upon and against all deposits,
credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Bank or any entity
under the control of Bank (including a Subsidiary or Affiliate of
Bank) or in transit to any of them. At any time after the
occurrence and during the continuance of an Event of Default,
without demand or notice, Bank may setoff the same or any part
thereof and apply the same to any liability or Obligation of
Borrower even though unmatured and regardless of the adequacy of
any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE
ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF
WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

 


12.11 Captions.
The headings used in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.

 


12.12 Construction
of Agreement. The parties mutually acknowledge that they and
their attorneys have participated in the preparation and
negotiation of this Agreement. In cases of uncertainty this
Agreement shall be construed without regard to which of the parties
caused the uncertainty to exist.

 


12.13 Relationship.
The relationship of the parties to this Agreement is determined
solely by the provisions of this Agreement. The parties do not
intend to create any agency, partnership, joint venture, trust,
fiduciary or other relationship with duties or incidents different
from those of parties to an arm’s-length
contract.

 


12.14 Third
Parties. Nothing in this Agreement, whether express or
implied, is intended to: (a) confer any benefits, rights or
remedies under or by reason of this Agreement on any persons other
than the express parties to it and their respective permitted
successors and assigns; (b) relieve or discharge the obligation or
liability of any person not an express party to this Agreement; or
(c) give any person not an express party to this Agreement any
right of subrogation or action against any party to this
Agreement.

 


13 DEFINITIONS

 


13.1 Definitions.
As used in the Loan Documents, the word “shall” is
mandatory, the word “may” is permissive, the word
“or” is not exclusive, the words “includes”
and “including” are not limiting and the singular
includes the plural. As used in this Agreement, the following
capitalized terms have the following meanings:

 


“Account” is any
“account” as defined in the Code with such additions to
such term as may hereafter be made, and includes, without
limitation, all accounts receivable and other sums owing to
Borrower or any Subsidiary.

 


“Account Debtor” is any
“account debtor” as defined in the Code with such
additions to such term as may hereafter be made.


 







 

32








 






 


“Adjusted EBITDA” means, for
Borrower and its Subsidiaries for any period, Consolidated Net
Income for such period plus, to the extent deducted in
determining such Consolidated Net Income for such period (and
without duplication), (i) Interest Expense, (ii) income tax expense
(including tax accruals), (iii) depreciation and amortization (but
excluding patent amortization, if any), (iv) any non-cash charges
or expenses approved by Bank in its sole discretion (other than any
such non-cash item to the extent it represents an accrual of, or
reserve for, anticipated cash expenditures in any future period),
(v) transaction costs and fees (A) related to the negotiation,
execution and delivery of the Loan Documents, or (B) paid after the
Effective Date to Bank in connection with the Loan Documents, (vi)
the amount of the prepayment fee paid on the Effective Date in
connection with the early extinguishment of Indebtedness owed to
Siena Lending Group LLC under that certain Loan and Security
Agreement, dated as of August 10, 2018, by and among Borrower,
NABC, Inc., NABC Properties, LLC, New Age Health Sciences, Inc. and
Siena Lending Group LLC, and (vii) any
costs incurred with respect to liability, casualty events or
business interruption, to the extent covered by insurance (as
confirmed by the applicable insurance company), the proceeds of
which are received during such period or within 120 days
thereafter; provided that, notwithstanding
anything to the contrary herein, any gain or loss from the sale of
fixed assets and property which is, as of the date of this
Agreement, in the process of being sold by a Subsidiary of Borrower
pursuant to a letter of intent dated February 4, 2019, as
previously disclosed to Bank shall be excluded from the calculation
of Adjusted EBITDA. Notwithstanding anything herein to the
contrary, the aggregate amount added back pursuant to the prior
sentence for non-recurring expenses shall not exceed (x) $7,200,000
for the fiscal year ending December 31, 2018 and (y) $500,000 for
any fiscal year thereafter.

 


“Advance” or “Advances” means a revolving credit
loan (or revolving credit loans) under the Revolving
Line.

 


“Affiliate” is, with respect to any
Person, each other Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by
or is under common control with the Person, and each of that
Person’s senior executive officers, directors, partners and,
for any Person that is a limited liability company, that
Person’s managers and members.

 


“Agreement” is defined in the
preamble hereof.

 


“Applicable Rate” means, for any
day, the applicable rate set forth below under the caption
“Prime Rate Spread” based
upon the Total Leverage Ratio as of the end of the fiscal quarter
of Borrower for which consolidated financial statements have
theretofore been most recently delivered pursuant to Section 6.2(c)
or Section 6.2(d):

 

	

Total
Leverage Ratio:

	

Prime
Rate Spread


	

Category
1


Less
than 1.50 to 1.00

	

 


0.25%


	

Category
2


Greater
than or equal to 1.50 to 1.00

	

 


0.50%






 


For
purposes of the foregoing, each change in the Applicable Rate
resulting from a change in the Total Leverage Ratio shall be
effective during the period commencing on and including the second
Business Day following the date of delivery to Bank pursuant to
Section 6.2(c) or Section 6.2(d) of the consolidated financial
statements indicating such change and ending on the date
immediately preceding the effective date of the next such change.
Notwithstanding the foregoing, the Applicable Rate shall be based
on the rates per annum set forth in Category 2 (i) until the
delivery of consolidated financial statements required to be
delivered pursuant to Section 6.2(c) for the first fiscal quarter
ended after the Effective Date, (ii) at any time that an Event of
Default has occurred and is continuing or (iii) if Borrower shall
fail to deliver the consolidated financial statements required to
be delivered pursuant to Section 6.2(c) or Section 6.2(d) or shall
elect not to include in any certificate required to be delivered
pursuant to Section 6.2(e) the computations described in clause
(iii) thereof, in each case within the time periods specified
herein for such delivery, during the period commencing on and
including the day of the occurrence of a default resulting from
such failure and until the delivery thereof.


 







 

33








 





  



“Authorized Signer” is any
individual listed in Borrower’s resolutions who is authorized
to execute the Loan Documents, including making (and executing if
applicable) any Credit Extension request, on behalf of
Borrower.

 


“Availability Amount” is (a) the
Revolving Line minus (b)
the outstanding principal balance of any Advances.

 


“Bank” is defined in the preamble
hereof.

 


“Bank Entities” is defined in
Section 12.9.

 


“Bank Expenses” are all reasonable
fees, costs and expenses (including reasonable attorneys’
fees and expenses, whether generated by in-house or by outside
counsel) for preparing, amending, negotiating, administering,
defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency
Proceedings) or otherwise incurred with respect to Borrower, any
Guarantor or the Collateral.

 


“Bank Services” are any products,
credit services and/or financial accommodations previously, now or
hereafter provided to Borrower or any of its Subsidiaries by Bank
or any Bank Affiliate, including, without limitation, any letters
of credit, cash management services (including, without limitation,
merchant services, direct deposit of payroll, business credit cards
and check cashing services), interest rate swap arrangements and
foreign exchange services as any such products or services may be
identified in Bank’s various agreements related thereto
(collectively, “Bank Services
Agreements”).

 


“Bank Services Agreements” are
defined in the definition of Bank Services.

 


“Board” is Borrower’s board
of directors.

 


“Borrower” is defined in the
preamble hereof.

 


“Borrower’s Books” are all
Borrower’s and its Subsidiaries’ books and records
including ledgers, federal and state tax returns, records regarding
Borrower’s and its Subsidiaries’ assets or liabilities,
the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such
information.

 


“Business Day” is any day that is
not a Saturday, Sunday or a day on which Bank is
closed.

 


“Capital Stock” means all shares of
capital stock (whether denominated as common stock or preferred
stock), equity interests, beneficial, partnership or membership
interests, joint venture interests, participations or warrants,
rights or options for the purchase or acquisition from such Person
of such shares (or such other interests), and all other ownership
or profit interests in, or Stock Equivalents (regardless of how
designated) of, a Person (other than an individual), whether voting
or non-voting.

 


“Cash” means money, currency or a
credit balance in any Deposit Account, in each case determined in
accordance with GAAP.

 


“Cash Collateral Account” is
defined in Section 6.3(a).

 


“Cash Equivalents” means (a)
marketable direct obligations issued or unconditionally guaranteed
by the United States or any agency or any State thereof having
maturities of not more than one year from the date of acquisition;
(b) commercial paper maturing no more than one year after its
creation and having the highest rating from either Standard &
Poor’s Financial Services LLC, a division of The McGraw-Hill
Companies, Inc., and any successor thereto or Moody’s
Investors Service, Inc. and any successor thereto; (c) Bank’s
certificates of deposit issued maturing no more than one year after
issue; and (d) money market funds at least 95% of the assets of
which constitute Cash Equivalents of the kinds described in clauses
(a) through (c) of this definition.


 







 

34








 






 


“CFC” means any Subsidiary that is
a “controlled foreign corporation” within the meaning
of Section 957 of the Internal Revenue Code.

 


“Change in Control” means (a) a
transaction, other than a bona fide equity financing or series of
financings, on terms and from investors reasonably acceptable to
Bank (it being understood and agreed that Borrower’s
investors and their Affiliates as of the Effective Date are
acceptable to Bank) in which any “person” or
“group” (within the meaning of Section 13(d) and
14(d)(2) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of a sufficient number of shares of all
classes of stock then outstanding of Borrower ordinarily entitled
to vote in the election of directors, empowering such
“person” or “group” to elect a majority of
the Board of Directors of Borrower, who did not have such power
before such transaction; or (b) at any time, Borrower shall
cease to own and control, of record and beneficially, directly or
indirectly, 100% of each class of outstanding capital stock of each
of its Subsidiaries free and clear of all Liens (except Liens
created by this Agreement and except for Subsidiaries of which
Borrower holds less than 100% of each class of outstanding capital
stock on the date hereof).

 


“Change in Law” means the
occurrence, after the date of this Agreement, of any of the
following: (i) the adoption or taking effect of any law, rule,
regulation or treaty, (ii) any change in any law, rule, regulation
or treaty or in the administration, interpretation, implementation
or application thereof by any Governmental Authority or (iii) the
making or issuance of any request, rule, guideline or directive
(whether or not having the force of law) by any Governmental
Authority; provided
that, notwithstanding anything herein to the contrary, (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines or directives thereunder or issued in
connection therewith and (y) all requests, rules, guidelines or
directives promulgated by Bank for International Settlements, the
Basel Committee on Banking Supervision (or any successor or similar
authority) or the United States or foreign regulatory authorities,
in each case pursuant to Basel III, shall in each case be deemed to
be a “Change in Law”, regardless of the date enacted,
adopted or issued.

 


“Claims” is defined in Section
12.3.

 


“Code” is the Uniform Commercial
Code, as the same may, from time to time, be enacted and in effect
in the State of New York; provided, that, to the extent
that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles
or Divisions of the Code, the definition of such term contained in
Article or Division 9 shall govern; provided further, that in the event
that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to,
Bank’s Lien on any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the State of
New York, the term “Code” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of
definitions relating to such provisions.

 


“Collateral” is any and all
properties, rights and assets of Borrower described on Exhibit A.

 


“Collateral Account” is any Deposit
Account, Securities Account or Commodity Account.

 


“Commercial Letter of Credit” means
any Letter of Credit issued for the purpose of providing the
primary payment mechanism in connection with the purchase of any
materials, goods or services by Borrower or any of its Subsidiaries
in the ordinary course of business of such Person.

 


“Commodity Account” is any
“commodity account” as defined in the Code with such
additions to such term as may hereafter be made.

 


“Compliance Certificate” is that
certain certificate in the form attached hereto as Exhibit B.

 


“Consolidated Net Income” means,
with respect to Borrower and its Subsidiaries, for any period, the
consolidated net income (or loss) of Borrower and its Subsidiaries
for such period, determined in accordance with GAAP, any
extraordinary gains or losses and any gains or losses from
discontinued operations.

 


 




 

35








 






 


“Contingent Obligation” is, for any
Person, any direct or indirect liability, contingent or not, of
that Person for (a) any indebtedness, lease, dividend, letter of
credit or other obligation of another such as an obligation, in
each case, directly or indirectly guaranteed, endorsed, co-made,
discounted or sold with recourse by that Person, or for which that
Person is directly or indirectly liable; (b) any obligations for
undrawn letters of credit for the account of that Person; and (c)
all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity
prices; but “Contingent Obligation” does not include
endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or,
if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith, but the amount may
not exceed the maximum of the obligations under any guarantee or
other support arrangement.

 


“Control Agreement” is any control
agreement entered into among the depository institution at which
Borrower or any of its Subsidiaries maintains a Deposit Account or
the securities intermediary or commodity intermediary at which
Borrower or any of its Subsidiaries maintains a Securities Account
or a Commodity Account, Borrower or such Subsidiary, as applicable,
and Bank pursuant to which Bank obtains control (within the meaning
of the Code) over such Deposit Account, Securities Account or
Commodity Account.

 


“Copyrights” are any and all
copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work
thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret.

 


“Credit Extension” is any Advance,
any Term Loan Advance or any other extension of credit by Bank for
Borrower’s benefit.

 


“Cure Amount” is defined in Section
7.13.

 


“Cure Quarter” is defined in
Section 7.13.

 


“Default Rate” is defined in
Section 2.6(b).

 


“Deposit Account” is any
“deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

 


“Designated Deposit Account” is the
account number ending [___] (last three digits) maintained by
Borrower with Bank (provided, however, if no such account number is
included, then the Designated Deposit Account shall be any deposit
account of Borrower maintained with Bank as chosen by
Bank).

 


“Disqualified Stock” means any
Capital Stock that, by its terms (or by the terms of any security
or other Capital Stock into which it is convertible or for which it
is exchangeable), or upon the happening of any event or condition
(other than customary asset sale offers and redemptions upon the
change of control, in each case so long as any rights of the
holders thereof upon the occurrence of such change of control or
asset sale shall be subject to the prior repayment in full of the
Obligations), less than 180 days after the last day of the term of
this Agreement (a) matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, (b) is redeemable at the
option of the holder thereof, in whole or in part, (c) provides for
the scheduled payments of dividends or distributions in cash, or
(d) is or becomes convertible into or exchangeable for Indebtedness
or any other Capital Stock that would constitute Disqualified
Stock.

 


“Dollars”, “dollars” or use of the sign
“$” means only
lawful money of the United States and not any other currency,
regardless of whether that currency uses the “$” sign
to denote its currency or may be readily converted into lawful
money of the United States.

 


“Domestic Subsidiary” means any
Subsidiary that is organized under the laws of any State of the
United States or the District of Columbia.


 







 

36








 






 


“Effective Date” is defined in the
preamble hereof.

 


“Equipment” is all
“equipment” as defined in the Code with such additions
to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including
motor vehicles and trailers) and any interest in any of the
foregoing.

 


“ERISA” is the Employee Retirement
Income Security Act of 1974, as amended, and its
regulations.

 


“Event of Default” is defined in
Section 8.

 


“Excess Cash Flow” means for any
period ending on the last day of any fiscal year of Borrower, an
amount (if positive) equal to: (a) Adjusted EBITDA minus (b) the sum, without duplication,
of (i) scheduled permanent repayments of long-term Indebtedness
(including payments under Section 2.3(c) and Section 2.3(e), but
excluding payments under Section 2.3(d)), in each case, to the
extent not financed with long-term Indebtedness, (ii) Interest
Expense paid in cash and added back to the definition of
“Adjusted EBITDA”, (iii) fees and expenses paid to Bank
in connection with its services hereunder and added back to the
definition of “Adjusted EBITDA”, (iv) all cash payments
in respect of capital expenditures as would be reported in
Borrower’s consolidated statement of cash flows made during
such period (except to the extent financed with long-term
Indebtedness), and (v) taxes paid in cash with respect to such
period and added back to the definition of “Adjusted
EBITDA”.

 


“Exchange Act” is the Securities
Exchange Act of 1934, as amended.

 


“Excluded Accounts” is defined in
Section 6.8(b).

 


“Fixed Charge Coverage Ratio” means
the ratio, on a consolidated basis for Borrower and its
Subsidiaries on a trailing 12 month basis, as of any date of
determination, of (a) Adjusted EBITDA as of such date minus the sum, without duplication, of
(i) capital expenditures (except those financed with Indebtedness),
(ii) taxes paid in cash with respect to such period and added back
to the definition of “Adjusted EBITDA” and (iii) all
cash payments of dividends permitted to be paid under this
Agreement to (b) the sum of (i) scheduled permanent repayments of
long-term Indebtedness (including payments under Section 2.3(c) and
Section 2.3(e), but excluding payments under Section 2.3(d), and
including any payments permitted under this Agreement with respect
to Subordinated Debt) during the immediately subsequent 12 month
period and (ii) scheduled payments in respect of all lease
obligations (including, but not limited to, capital lease
obligations).

 


“Foreign Currency” means lawful
money of a country other than the United States.

 


“Foreign Subsidiary” means any
Subsidiary that is not a Domestic Subsidiary.

 


“Foreign Subsidiary Holding
Company” means any Domestic Subsidiary all or
substantially all of the assets of which consist of, directly or
indirectly, the Capital Stock in one or more CFCs and/or
Indebtedness of one or more CFCs and any other assets incidental
thereto.

 


“Funded Debt” means, as of any date
of determination, the aggregate principal amount of Indebtedness
for borrowed money of Borrower and its Subsidiaries outstanding as
of such date, in the amount that would be reflected on a balance
sheet prepared as of such date on a consolidated basis in
accordance with GAAP (including all capital lease obligations,
whether or not reflected on a balance sheet prepared as of such
date on a consolidated basis in accordance with GAAP).

 


“Funding Date” is any date on which
a Credit Extension is made to or for the account of Borrower, which
date shall be a Business Day.

 


“FX Contract” is any foreign
exchange contract by and between Borrower and Bank under which
Borrower commits to purchase from or sell to Bank a specific amount
of Foreign Currency on a specified date.


 







 

37








 






 


“GAAP” is generally accepted
accounting principles, as in effect from time to time in the United
States, set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by
such other Person as may be approved by a significant segment of
the accounting profession, which are applicable to the
circumstances as of the date of determination.

 


“General Intangibles” is all
“general intangibles” as defined in the Code in effect
on the date hereof with such additions to such term as may
hereafter be made, and includes, without limitation, all
Intellectual Property, claims, income and other tax refunds,
security and other deposits, payment intangibles, contract rights,
options to purchase or sell real or personal property, rights in
all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without
limitation key man, property damage and business interruption
insurance), payments of insurance and rights to payment of any
kind.

 


“Governmental Approval” is any
consent, authorization, approval, order, license, franchise,
permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any
Governmental Authority.

 


“Governmental Authority” is any
nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange
and any self-regulatory organization.

 


“Guarantor” means each of New Age
Health Sciences, Inc., NABC Properties, LLC, NABC, Inc., Morinda
Holdings, Inc., Morinda, Inc., Tropical Resources, Inc., Morinda
USA, Inc., Morinda Worldwide, Inc., Morinda Japan GK and any other
Material Subsidiary providing a Guaranty in favor of
Bank.

 


“Guaranty” is any guarantee of all
or any part of the Obligations, as the same may from time to time
be amended, restated, modified or otherwise
supplemented.

 


“Guaranty Documents” is defined in
Section 8.9.

 


“Incremental Cap” means
$10,000,000.

 


“Incremental Term Commitment” means
any commitment made by Bank to provide all or any portion of any
Incremental Term Facility or Incremental Term Loan
Advances.

 


“Incremental Term Facility” is
defined in Section 2.11(a).

 


“Incremental Term Loan Advances” is
defined in Section 2.11(a).

 


“Indebtedness” is, with respect to
any Person, (a) all indebtedness for borrowed money or the deferred
price of property or services, including, without limitation,
reimbursement and other obligations with respect to surety bonds
and letters of credit, (b) all obligations evidenced by notes,
bonds, debentures or similar instruments, (c) all capital lease
obligations, (d) all Contingent Obligations, including, but not
limited to, any sublimit contained therein, and (e) all obligations
pursuant to any Interest Rate Agreements.

 


“Indemnified Person” is defined in
Section 12.3.

 


“Insolvency Proceeding” is any
proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.


 







 

38








 






 


“Intellectual Property” means, with
respect to any Person, all of such Person’s right, title, and
interest in and to the following:

 


(a)           its
Copyrights, Trademarks and Patents;

 


(b)           any
and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know-how and
operating manuals;

 


(c)           any
and all source code;

 


(d)           any
and all design rights which may be available to such
Person;

 


(e)           any
and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the
obligation, to sue for and collect such damages for said use or
infringement of the Intellectual Property rights identified above;
and

 


(f)           all
amendments, renewals and extensions of any of the Copyrights,
Trademarks or Patents.

 


“Interest Expense” means, for any
period, the consolidated interest expense of Borrower and its
Subsidiaries for such period (including all imputed interest on
capital leases) for the Credit Extensions and other Indebtedness
permitted hereunder.

 


“Interest Rate Agreement” means,
with respect to any Person, any interest rate protection agreement,
interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other
similar agreement or arrangement to which such Person is a party or
of which it is a beneficiary and which agreement conforms to the
standards published by the International Swaps and Derivatives
Association, Inc.

 


“Inventory” is all
“inventory” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be
made, and includes without limitation all merchandise, raw
materials, parts, supplies, packing and shipping materials, work in
process and finished products in which Borrower or any Guarantor
has any interest, including without limitation such inventory as is
temporarily out of Borrower’s or such Guarantor’s
custody or possession or in transit and including any returned
goods and any documents of title representing any of the
above.

 


“Investment” is any beneficial
ownership interest in any Person (including stock, partnership or
limited liability company interest or other securities), and any
loan, advance or capital contribution to any Person.

 


“IP Agreement” is that certain
Intellectual Property Security Agreement by and among Borrower, New
Age Health Sciences, Inc., Morinda, Inc. and Bank dated as of March
29, 2019, as may be amended, modified or restated from time to
time.

 


“Key Persons” are Borrower’s
Chief Executive Officer and Borrower’s Chief Financial
Officer, who are, respectively, Brent Willis and Gregory Gould as
of the Effective Date.

 


“LC Collateral Account” is defined
in Section 2.5(h)(i).

 


“LC Disbursement” means a payment
or disbursement made by Bank pursuant to a Letter of
Credit.

 


“LC Exposure” means, at any time,
the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit at such time and (b) the aggregate principal
amount of all LC Disbursements that have not yet been reimbursed at
such time.


 







 

39








 






 


“LC, FX and Swap Sublimit” is and
aggregate principal amount equal to $5,000,000.

 


“Letter of Credit” is a Standby
Letter of Credit or a Commercial Letter of Credit issued by Bank
upon request of Borrower based upon an application, guarantee,
indemnity, or similar agreement.

 


“Lien” is a claim, mortgage, deed
of trust, levy, charge, pledge, security interest or other
encumbrance of any kind, whether voluntarily incurred or arising by
operation of law or otherwise against any property.

 


“Loan Documents” are, collectively,
this Agreement and any schedules, exhibits, certificates, notices
and any other documents related to this Agreement, the IP
Agreement, any Interest Rate Agreements, any Bank Services
Agreements, any subordination agreement, any notes or guaranties
executed by Borrower or any Guarantor, and any other present or
future agreement by Borrower and/or any Guarantor with or for the
benefit of Bank, all as amended, restated or otherwise modified
from time to time.

 


“Maximum Lawful Rate” is defined in
Section 2.6(c).

 


“Material Adverse Change” is (a) a
material impairment in the perfection or priority of Bank’s
Lien in the Collateral or in the value of such Collateral; (b) a
material adverse change in the business, operations or condition
(financial or otherwise) of Borrower or any of its Subsidiaries; or
(c) a material impairment of the prospect of repayment of any
portion of the Obligations.

 


“Material Subsidiary” means, as of
any date, any Subsidiary of Borrower that (i) owns more than 5% of
the assets and properties of Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, (ii)
accounts for more than 5% of Adjusted EBITDA of Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP, in any consecutive 12 month period, or (iii) receives more
than 5% of the total revenues of Borrower and its
Subsidiaries.

 


“Monthly Financial Statements” is
defined in Section 6.2(a).

 


“Morinda Adjusted EBITDA” means for
Morinda Holdings, Inc. and its Subsidiaries, the net income before
interest, income taxes, depreciation and amortization, determined
in accordance with GAAP but applied and calculated in a manner
consistent with the EBITDA calculation derived from the audited
financial statements of Borrower for the fiscal year ended December
31, 2019, adjusted to exclude non-cash share based compensation,
other income and other expenses.

 


“Net Cash” means, for any Person,
at any time, all of such Person’s unrestricted Cash and Cash
Equivalents, in each case maintained in an account at Bank or any
of Bank’s Affiliates in the United States or in China,
minus the aggregate unpaid
amount of all the Obligations outstanding hereunder.

 


“Non-Voting Equity” is defined in
Section 4.4(a).

 


“Obligations” are Borrower’s
obligations to pay when due any debts, principal, interest, fees,
Bank Expenses, the Unused Revolving Line Facility Fee and other
amounts Borrower owes Bank now or later, whether under this
Agreement, the other Loan Documents, or otherwise, including,
without limitation, all obligations relating to Bank Services and
interest accruing after Insolvency Proceedings begin and debts,
liabilities or obligations of Borrower assigned to Bank, and to
perform Borrower’s duties under the Loan
Documents.

 


“Operating Documents” are, for any
Person, such Person’s formation documents, as certified by
the Secretary of State (or equivalent agency) of such
Person’s jurisdiction of organization on a date that is no
earlier than 30 days prior to the Effective Date, and, (a) if such
Person is a corporation, its bylaws in current form, (b) if such
Person is a limited liability company, its limited liability
company agreement (or similar agreement), and (c) if such Person is
a partnership, its partnership agreement (or similar agreement),
each of the foregoing with all current amendments or modifications
thereto.


 







 

40








 






 


“Patents” means all patents, patent
applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

 


“Payment Date” is (a) with respect
to Term Loan Advance, the first calendar day of each month and (b)
with respect to Advances, the first calendar day of each
month.

 


“Permits” means all permits,
licenses, registrations, certificates, orders, approvals,
authorizations, consents, waivers, franchises, variances and
similar rights issued by or obtained from any Governmental
Authority or any other Person, including, without limitation, those
relating to Regulatory Authorizations.

 


“Permitted Indebtedness”
is:

 


(a)           Borrower’s
Indebtedness to Bank under this Agreement and the other Loan
Documents;

 


(b)           Indebtedness
existing on the Effective Date which is shown on the
Representations and Warranties Certificate;

 


(c)           Subordinated
Debt;

 


(d)           unsecured
Indebtedness to trade creditors incurred in the ordinary course of
business;

 


(e)           Indebtedness
incurred as a result of endorsing negotiable instruments received
in the ordinary course of business;

 


(f)           Indebtedness
secured by Liens permitted under clauses (a) and (c) of the
definition of “Permitted Liens” hereunder;

 


(g)           Indebtedness
in respect of Interest Rate Agreements entered into in the ordinary
course of business to hedge risks with respect to Borrower’s
interest rate; and

 


(h)           extensions,
refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness in clauses (a) through (g) above;
provided that the
principal amount thereof is not increased or the terms thereof are
not modified to impose more burdensome terms upon Borrower or its
Subsidiaries, as the case may be.

 


“Permitted Investments”
are:

 


(a)           Investments
(including, without limitation, Investments in Subsidiaries)
existing on the Effective Date which are shown on the
Representations and Warranties Certificate;

 


(b)           Investments
consisting of Cash Equivalents;

 


(c)           Investments
consisting of the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
Borrower’s business;

 


(d)           Investments
consisting of Deposit Accounts (but only to the extent that
Borrower is permitted to maintain such accounts pursuant to Section
6.8 of this Agreement) in which Bank has a first priority perfected
security interest;

 


(e)           Investments
accepted in connection with Transfers permitted by Section
7.1;

 


(f)           Investments
consisting of the creation of a Subsidiary for the purpose of
consummating a merger transaction permitted by Section 7.3 of this
Agreement, which is otherwise a Permitted Investment;


 







 

41








 






 


(g)           Investments
(i) by Borrower in Guarantors not to exceed $250,000 in the
aggregate in any 12 month period and (ii) by Subsidiaries in other
Subsidiaries who are Guarantors or in Borrower;

 


(h)           Investments
consisting of (i) travel advances and employee relocation loans and
other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors
relating to the purchase of equity securities of Borrower or its
Subsidiaries pursuant to employee stock purchase plans or
agreements approved by the Board, not to exceed, in the case of
this clause (h), $100,000 outstanding in the aggregate at any
time;

 


(i)           Investments
(including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with,
customers or suppliers arising in the ordinary course of business;
and

 


(j)           Investments
consisting of notes receivable of, or prepaid royalties and other
credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this paragraph
(j) shall not apply to Investments of Borrower in any
Subsidiary.

 


“Permitted Liens” are:

 


(a)           Liens
existing on the Effective Date which are shown on the
Representations and Warranties Certificate or arising under this
Agreement or the other Loan Documents;

 


(b)           Liens
for taxes, fees, assessments or other government charges or levies,
either (i) not due and payable or (ii) being contested in good
faith and for which Borrower maintains adequate reserves on
Borrower’s Books, provided that no notice of any
such Lien has been filed or recorded under the Internal Revenue
Code of 1986, as amended, and the Treasury Regulations adopted
thereunder;

 


(c)           purchase
money Liens (i) on Equipment acquired or held by Borrower incurred
for financing the acquisition of the Equipment and securing no more
than $100,000 in the aggregate amount outstanding, or (ii) existing
on Equipment when acquired, if the Lien is confined to the property
and improvements and the proceeds of the Equipment;

 


(d)           Liens
of carriers, warehousemen, suppliers or other Persons that are
possessory in nature arising in the ordinary course of business so
long as such Liens attach only to Inventory, securing liabilities
in the aggregate amount not to exceed $100,000 and which are not
delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings which
proceedings have the effect of preventing the forfeiture or sale of
the property subject thereto;

 


(e)           Liens
to secure payment of workers’ compensation, employment
insurance, old-age pensions, social security and other like
obligations incurred in the ordinary course of business (other than
Liens imposed by ERISA);

 


(f)           Liens
incurred in the extension, renewal or refinancing of the
Indebtedness secured by Liens described in clauses (a) through (c)
above, but any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness may not increase;

 


(g)           leases
or subleases of real property granted in the ordinary course of
Borrower’s business (or, if referring to another Person, in
the ordinary course of such Person’s business), and leases,
subleases, non-exclusive licenses or sublicenses of personal
property (other than Intellectual Property) granted in the ordinary
course of Borrower’s business (or, if referring to another
Person, in the ordinary course of such Person’s business), if
the leases, subleases, licenses and sublicenses do not prohibit
granting Bank a security interest therein;

 


(h)           non-exclusive
licenses of Intellectual Property granted to third parties in the
ordinary course of business;


 







 

42








 






 


(i)           Liens
arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under Sections
8.4 and 8.7; and

 


(j)           Liens
in favor of other financial institutions arising in connection with
Borrower’s deposit and/or securities accounts held at such
institutions; provided that (i) Bank has a
first priority perfected security interest in the amounts held in
such deposit and/or securities accounts and (ii) such accounts are
permitted to be maintained pursuant to Section 6.8 of this
Agreement.

 


“Person” is any individual, sole
proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

 


“Pledged Collateral” is defined in
Section 4.4(a).

 


“Pledged Shares” is defined in
Section 4.4(a).

 


“Prepayment Fee” is, with respect
to the Term Loan Advance subject to prepayment prior to the Term
Loan Maturity Date, whether by mandatory or voluntary prepayment,
acceleration or otherwise, an additional fee payable to Bank in an
amount equal to:

 


(i)           for
a prepayment made on or after the Effective Date through and
including the first anniversary of the Effective Date, 2.00% of the
principal amount of the Term Loan Advance prepaid; and

 


(ii)           for
a prepayment made after the date which is after the first
anniversary of the Effective Date through and including the second
anniversary of the Effective Date, 1.00% of the principal amount of
the Term Loan Advance prepaid.

 


“Prime Rate” is the rate of
interest per annum from time to time published in the money rates
section of The Wall Street
Journal or any successor publication thereto as the
“prime rate” then in effect; provided that, if such rate of
interest, as set forth from time to time in the money rates section
of The Wall Street
Journal, becomes unavailable for any reason as determined by
Bank, the “Prime Rate” shall mean the rate of interest
per annum announced by Bank as its prime rate in effect at its
principal office in the State of California (such Bank announced
Prime Rate not being intended to be the lowest rate of interest
charged by Bank in connection with extensions of credit to
debtors).

 


“Qualified Stock” means any Capital
Stock other than Disqualified Stock.

 


“Registered Organization” is any
“registered organization” as defined in the Code with
such additions to such term as may hereafter be made.

 


“Regulatory Agencies” means any
Governmental Authority that is concerned with the use, control,
safety, efficacy, reliability, manufacturing, testing, marketing,
distribution, sale or other product development and
commercialization activities relating to any product of Borrower or
any of the Subsidiaries, including the U.S. Food and Drug
Administration and any successor entity and all similar agencies in
other jurisdictions.

 


“Regulatory Authorizations” means
all approvals, clearances, notifications, authorizations, orders,
exemptions, registrations, listings, certifications, licenses and
permits granted by, submitted to or filed with any Regulatory
Agencies necessary for the testing, manufacture, development,
distribution, use, storage, import, export, transport, promotion,
marketing, sale or other commercialization of any product of
Borrower or any Subsidiary in any country or
jurisdiction.

 


“Repatriated Funds” is defined in
Section 4.5(b).

 


“Representations and Warranties
Certificate” is a completed certificate signed by
Borrower entitled “Representations and Warranties
Certificate”.


 







 

43








 






 


“Requirement of Law” is as to any
Person, the organizational or governing documents of such Person,
and any law (statutory or common), treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its
property is subject.

 


“Reserves” means, as of any date of determination,
such amounts as Bank may from time to time establish and revise in
its good faith business judgment, reducing the amount of Advances
and other financial accommodations which would otherwise be
available to Borrower (a) to reflect events, conditions,
contingencies or risks which, as determined by Bank in its good
faith business judgment, do or may adversely affect (i) the
Collateral or any other property which is security for the
Obligations or its value (including without limitation any increase
in delinquencies of Accounts), (ii) the assets, business or
prospects of Borrower or any Guarantor, or (iii) the security
interests and other rights of Bank in the Collateral (including the
enforceability, perfection and priority thereof); (b) to reflect
Bank’s reasonable belief that any collateral report or
financial information furnished by or on behalf of Borrower or any
Guarantor to Bank is or may have been incomplete, inaccurate or
misleading in any material respect; or (c) in respect of any
state of facts which Bank determines constitutes an Event of
Default or may, with notice or passage of time or both, constitute
an Event of Default.

 


“Responsible Officer” is any of the
Chief Executive Officer, President, Chief Financial Officer and
Controller of Borrower.

 


“Restricted License” is any
material license or other agreement with respect to which Borrower
is the licensee (a) that prohibits or otherwise restricts Borrower
from granting a security interest in Borrower’s interest in
such license or agreement or any other property, or (b) for which a
default under or termination of could interfere with Bank’s
right to sell any Collateral.

 


“Revolving Line” is an aggregate
principal amount equal to $10,000,000.

 


“Revolving Line Maturity Date” is
the date that is four years after the Effective Date or such
earlier date as may be specified by Bank pursuant to the annual
review of its credit committee.

 


“SEC” shall mean the Securities and
Exchange Commission, any successor thereto, and any analogous
Governmental Authority.

 


“Securities Account” is any
“securities account” as defined in the Code with such
additions to such term as may hereafter be made.

 


“Specified Equity Contribution” is
defined in Section 7.13.

 


“Standby Letter of Credit” means
any Letter of Credit other than any Commercial Letter of
Credit.

 


“Stock Equivalents” means all
securities convertible into or exchangeable for Capital Stock or
any other Stock Equivalent, and all warrants, options or other
rights to purchase, subscribe for or otherwise acquire any Capital
Stock or any other Stock Equivalent, whether or not presently
convertible, exchangeable or exercisable. For the avoidance of
doubt, “Stock Equivalent” shall not include debt
instruments that are convertible into Capital Stock or Stock
Equivalents.

 


“Subordinated Debt” is indebtedness
incurred by Borrower subordinated to all of Borrower’s now or
hereafter existing indebtedness to Bank (pursuant to a
subordination, intercreditor or other similar agreement in form and
substance satisfactory to Bank entered into between Bank and the
other creditor), on terms acceptable to Bank in its sole
discretion.

 


“Subsidiary” is, as to any Person,
a corporation, partnership, limited liability company or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both,
by such Person. Unless the context otherwise requires, each
reference to a Subsidiary herein shall be a reference to a
Subsidiary of Borrower.


 







 

44








 






 


“Term Loan Advance” is each defined
in Section 2.3(a) of this Agreement.

 


“Term Loan Amount” is
$15,000,000.

 


“Term Loan Maturity Date” is the
date that is four years after the Effective Date.

 


“Total Leverage Ratio” means the
ratio, as of any date of determination, of (a) Funded Debt as of
such date to (b) Adjusted EBITDA for the period of four consecutive
fiscal quarters then most recently ended for which financial
statements under Section 6.2(c) or Section 6.2(d), as applicable,
have been delivered (or are required to have been delivered), in
each case for Borrower and its Subsidiaries on a consolidated
basis.

 


“Total Liabilities” is on any day,
obligations that should, under GAAP, be classified as liabilities
on Borrower’s consolidated balance sheet, including all
Indebtedness.

 


“Trademarks” means any trademark
and servicemark rights, whether registered or not, applications to
register and registrations of the same and like protections, and
the entire goodwill of the business of Borrower connected with and
symbolized by such trademarks.

 


“Transfer” is defined in Section
7.1.

 


“Unused Revolving Line Facility
Fee” is defined in Section 2.7(b).

 


“Voting Equity” is defined in
Section 4.4(a).





[Signature page
follows.]

 




 

45








 






 


IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed as of the Effective
Date.

 


BORROWER:


 


NEW
AGE BEVERAGES CORPORATION


 


 


By________________________________________


 


Name:_____________________________________


 


Title:______________________________________


 


 


BANK:


 


EAST
WEST BANK


 


 


By________________________________________


 


Name:_____________________________________


 


Title:______________________________________


 


 

 


 

 




 

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