Document:

Exhibit 10.3

 Exhibit 10.3 

TIME SHARING AGREEMENT 

THIS TIME SHARING AGREEMENT is entered into effective as of the 17th day of December, 2018, by and between MSG SPORTS &
ENTERTAINMENT, LLC, a Delaware limited liability corporation with a place of business at 2 Penn Plaza, New York, New York 10121 (“Lessor”), and ANDREW LUSTGARTEN, with a mailing address c/o of The Madison Square Garden Company, 2 Penn
Plaza, New York, NY 10121 (“Lessee”). 
 W I T N E S S E T H:

 WHEREAS, Lessor is the lessee and the operator of a Gulfstream Aerospace GV-SP (G550) aircraft,
manufacturer’s serial number 5043, United States registration N107VS (the “Aircraft”); and 
 WHEREAS, Lessor has engaged
fully-qualified and credentialed flight crew to operate the Aircraft; and 
 WHEREAS, Lessor has agreed to lease the Aircraft, with flight
crew, to Lessee on a “time sharing” basis as defined in Section 91.501(c)(1) of the Federal Aviation Regulations (“FAR”) upon the terms and subject to the conditions set forth herein; 

NOW, THEREFORE, in consideration of the foregoing premises, and the covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Lessor and Lessee, intending to be legally bound, hereby agree as follows: 

1.    Lease of Aircraft. Lessor agrees to lease the Aircraft to Lessee pursuant to the provisions of FAR
Section 91.501(b)(6) and Section 91.501(c)(1) and this Agreement, and to provide a fully-qualified and credentialed flight crew for all flights to be conducted hereunder during the Term (as defined in Section 13) hereof. The parties
acknowledge and agree that this Agreement did not result in any way from any direct or indirect advertising, holding out or soliciting on the part of Lessor or any person purportedly acting on behalf of Lessor. Lessor and Lessee intend that the
lease of the Aircraft effected by this Agreement shall be treated as a “wet lease” pursuant to which Lessor provides transportation services to Lessee in accordance with FAR Section 91.501(b)(6) and Section 91.501(c)(1). 

2.    Payment for Use of Aircraft. Lessee shall pay Lessor the following listed actual expenses of each flight (the
“Reimbursement Amount”) conducted under this Agreement (i.e. non-business flights for which reimbursement is required in accordance with Lessor’s policies), not to exceed the maximum amount
legally payable for such flight under FAR Section 91.501(d)(1)-(10): 
  

	 	(a)	 fuel, oil, lubricants and other additives; 

 

	 	(b)	 travel expenses of crew, including food, lodging and ground transportation; 

 

	 	(c)	 hangar and tie-down costs away from the Aircraft’s base of
operation; 

  

	 	(d)	 additional insurance obtained for the specific flight at the request of Lessee; 

 

	 	(e)	 landing fees, airport taxes and similar assessments; 

 

	 	(f)	 customs, foreign permit and similar fees directly related to the flight; 

 

	 	(g)	 in-flight food and beverages; 

 

	 	(h)	 in-flight telecommunication expenses; 

 

	 	(i)	 passenger ground transportation; and 

 

	 	(j)	 flight planning and weather contract services. 

Notwithstanding the foregoing, in the event that any income is required to be imputed to you with respect to personal use of the Aircraft,
calculated using the Standard Industry Fare Level method in accordance with Internal Revenue Service Regulation §1.61-21, the amount payable by you pursuant to this Section 2 shall be reduced by the
amount necessary so that the total out of pocket cost to you, including taxes owed as a result of imputed income, is no greater than the Reimbursement Amount. 

 3.    Operational Control of Aircraft. Lessor and Lessee intend
and agree that on all flights conducted under this Agreement, Lessor shall have complete and exclusive operational control over the Aircraft, its flight crews and maintenance, and complete and exclusive possession, command and control of the
Aircraft. Lessor shall have complete and exclusive responsibility for scheduling, dispatching and flight following of the Aircraft on all flights conducted under this Agreement, which responsibility includes the sole and exclusive right over
initiating, conducting and terminating such flights. Lessee shall have no responsibility for scheduling, dispatching or flight following on any flight conducted under this Agreement, nor any right over initiating, conducting or terminating any such
flight. Nothing in this Agreement is intended or shall be construed so as to convey to Lessee any operational control over, or possession, command and control of, the Aircraft, all of which are expressly retained by Lessor. 

4.    Scheduling. 

(a)    Lessee will provide Lessor with requests for flight time and proposed flight schedules as far in advance of any
given flight as possible. Lessee or the designated authorized representative(s) of Lessee shall submit scheduling requests under this Agreement to the designated authorized representative(s) of Lessor. Requests for flight time shall be in such form
(whether oral or written) mutually convenient to, and agreed upon by, the parties. In addition to proposed schedules and flight times, Lessee shall upon request provide Lessor with the following information for each proposed flight prior to
scheduled departure: (i) proposed departure point; (ii) destination; (iii) date and time of flight; (iv) the number of anticipated passengers; (v) the nature and extent of luggage to be carried; (vi) the date and time of a
return flight, if any; and (vii) any other pertinent information concerning the proposed flight that Lessor or the flight crew may request. 

(b)    Subject to Aircraft and crew availability and to any usage limitations established by Lessor, Lessor shall use its
good faith efforts, consistent with Lessor’s approved policies, in order to accommodate the needs of Lessee, to avoid conflicts in scheduling, and to enable Lessee to enjoy the benefits of this Agreement; however, Lessee acknowledges and agrees
that notwithstanding anything in this Agreement to the contrary, (i) Lessor shall have sole and exclusive final authority over the scheduling of the Aircraft; and (ii) the needs of Lessor for the Aircraft shall take precedence over
Lessee’s rights and Lessor’s obligations under this Agreement. 
 (c)    Although every good faith effort shall
be made to avoid its occurrence, any flight scheduled under this Agreement is subject to cancellation by either party without incurring liability to the other party. In the event that cancellation is necessary, the canceling party shall provide the
maximum notice practicable. 
 5.    Billing. Lessor shall pay all expenses relating to the operation of the
Aircraft under this Agreement (in accordance with Section 2 hereof) on a monthly basis. As soon as possible after the end of each monthly period during the Term, Lessor shall provide to Lessee an invoice showing all use of the Aircraft by
Lessee under this Agreement during that month and a complete accounting detailing all amounts payable by Lessee pursuant to Section 2 for that month, including such detail supporting all expenses paid or incurred by Lessor for which
reimbursement is sought as Lessee may reasonably request. Lessee shall pay all amounts due to Lessor under this Section 5 not later than 30 days after receipt of the invoice therefor. 

6.    Maintenance of Aircraft. Lessor shall be solely responsible for securing maintenance, preventive maintenance
and inspections of the Aircraft (utilizing an inspection program listed in FAR Section 91.409(f)), and shall take such requirements into account in scheduling the Aircraft hereunder. 

7.    Flight Crew. 

(a)    Lessor shall employ or engage and as between Lessor and Lessee shall be responsible for the payment of all salaries,
benefits and/or compensation for a fully-qualified flight crew with appropriate credentials to conduct each flight undertaken under this Agreement. All flight crewmembers shall be included on any insurance policies that Lessor is required to
maintain hereunder. 
 (b)    The qualified flight crew provided by Lessor shall exercise all of its duties and
responsibilities with regard to the safety of each flight conducted hereunder in accordance with applicable FAR’s. 

  
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The Aircraft shall be operated under the standards and policies established by Lessor. Final authority to initiate or terminate each flight, and otherwise to decide all matters relating to the
safety of any given flight or requested flight, shall rest with the pilot-in-command of that flight. The flight crew may, in its sole discretion, terminate any flight, refuse to commence any flight, or take
any other action that, in the judgment of the pilot-in-command, is necessitated by considerations of safety. No such termination or refusal to commence by the pilot-in-command shall create or support any liability for loss, injury, damage or delay in favor of Lessee or any other person. Lessor shall not be liable to Lessee or any other person for loss, injury or
damage occasioned by the delay or failure to furnish the Aircraft and flight crew pursuant to this Agreement for any reason. 

8.    Insurance. 

(a)    At all times during the Term of this Agreement, Lessor shall maintain at its sole cost and expense
(i) comprehensive aircraft and liability insurance against bodily injury and property damage claims, including, without limitation, contractual liability, premises damage, personal property liability, personal injury liability, death and
property damage liability, public and passenger legal liability coverage, in an amount not less than $100,000,000 for each single occurrence and (ii) hull insurance for the full replacement cost of the aircraft. 

(b)    Any policies of aircraft and liability insurance carried in accordance with this Section 8 and any policies
taken out in substitution or replacement of any such policies (i) shall name Lessee and his employees, agents, licensees, servants and guests as additional insured; (ii) shall provide for 30 days’ written notice to Lessee by such
insurer of cancellation, change, non-renewal or reduction (seven days in the case of war risk and allied perils coverage or such shorter period as is customarily available in the industry); (iii) shall provide
that in respect of the interests of Lessee in such policies, the insurance shall not be invalidated by any action or inaction of Lessor regardless of any breach or violation of any warranties, declarations or conditions contained in such policies by
or binding upon Lessor; and (iv) shall permit the use of the Aircraft by Lessor for compensation or hire to the extent permitted under applicable law. Each such policy shall be primary insurance, not subject to any co-insurance clause and shall be without right of contribution from any other insurance. 

(c)    Lessor shall use reasonable commercial efforts to provide such additional insurance coverage for specific flights
under this Agreement, if any, as Lessee may request in writing. Lessee also acknowledges that any trips scheduled to the European Union may require Lessor to purchase additional insurance to comply with local regulations. The cost of all additional
flight-specific insurance shall be borne by Lessee as set forth in Section 2(d) hereof. 
 (d)    Each party agrees
that it will not do any act or voluntarily suffer or permit any act to be done whereby any insurance required hereunder shall or may be suspended, impaired or defeated. In no event shall Lessor suffer or permit the Aircraft to be used or operated
under this Agreement without such insurance being fully in effect. 
 (e)    Lessor shall ensure that worker’s
compensation insurance with all-states coverage is provided for the Aircraft’s crew and maintenance personnel. 

(f)    Lessor shall deliver certificates of insurance to Lessee with respect to the insurance required or permitted to be
provided by it hereunder not later than the first flight of the Aircraft under this Agreement and upon the renewal date of each policy. 

9.    Taxes. Lessee shall be responsible for paying, and Lessor shall be responsible for collecting from Lessee and
paying over to the appropriate authorities, all applicable Federal transportation taxes and sales, use or other excise taxes imposed by any governmental authority in connection with any use of the Aircraft by Lessee hereunder. Each party shall
indemnify the other party against any and all claims, liabilities, costs and expenses (including attorney’s fees as and when incurred) arising out of its breach of this undertaking. 

10.    Lessee’s Representations and Warranties. Lessee represents and warrants that: 

(a)    He will not use the Aircraft for the purposes of providing transportation of passengers or cargo in air commerce for
compensation or hire or for common carriage. 
 (b)    He shall refrain from incurring any mechanic’s or other liens
in connection with inspection, preventive maintenance, maintenance or storage of the Aircraft, and shall not attempt to convey, mortgage, assign, lease or in any way alienate the Aircraft or create any kind of lien or security interest involving the
Aircraft or do anything or take any action that might mature into such a lien. 

  
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 (c)    He shall not lien or otherwise encumber or create or place any
lien or other encumbrance of any kind whatsoever, on or against the Aircraft for any reason. He also will ensure that no liens or encumbrances of any kind whatsoever are created or placed against the Aircraft for claims against Lessee or by Lessee.

 (d)    He will abide by and conform to all laws, governmental and airport orders, rules and regulations, as shall be
imposed upon the lessee of an aircraft under a time sharing agreement, and applicable company policies of Lessor. 

11.    Lessor’s Representations and Warranties. Lessor represents and warrants that it will abide by and
conform to all such laws, governmental and airport orders, rules and regulations, as shall from time to time be in effect relating in any way to the operation and use of the Aircraft pursuant to this Agreement. 

12.    Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LESSOR HAS MADE NO REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING ANY WITH RESPECT TO ITS CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR TO ANY OTHER PERSON
FOR ANY INCIDENTIAL, CONSEQUENTIAL OR SPECIAL DAMAGES, HOWEVER ARISING. 
 13.    Term. The term of this Agreement
(the “Term”) shall commence on the effective date hereof and, unless terminated in accordance with the provisions hereof, shall remain in full force and effect for so long as you remain employed by The Madison Square Garden Company or any
of its subsidiaries. Notwithstanding the foregoing, either party shall have the right to terminate this Agreement for any reason or no reason by written notice given to the other party not less than 30 days prior to the proposed termination date.

 14.    Limitation of Liability. Lessee, for himself and on behalf of his agents, guests, invitees, licensees,
servants and employees, covenants and agrees that the insurance described in Section 8 hereof shall be the sole recourse for any and all liabilities, claims, demands, suits, causes of action, losses, penalties, fines, expenses or damages,
including attorneys’ fees, court costs and witness fees, attributable to the use, operation or maintenance of the Aircraft pursuant to this Agreement or performance of or failure to perform any obligation under this Agreement. 

15.    Relationship of Parties. Lessor is strictly an independent contractor lessor/provider of transportation
services with respect to Lessee. Nothing in this Agreement is intended, nor shall it be construed so as, to constitute the parties as partners or joint venturers or principal and agent. All persons furnished by Lessor for the performance of the
operations and activities contemplated by this Agreement shall at all times and for all purposes be considered Lessor’s employees or agents. 

16.    Governing Law; Severability. This Agreement shall be governed by and interpreted in accordance with the laws
of the State of New York, without regard to its choice of law rules. If any provision of this Agreement conflicts with any statute or rule of law of the State of New York, or is otherwise unenforceable, such provision shall be deemed null and void
only the extent of such conflict or unenforceability, and shall be deemed separate from, and shall not invalidate, any other provision of this Agreement. 

17.    Amendment. This Agreement may not be amended, supplemented, modified or terminated, or any of its terms
varied, except by an agreement in writing signed by each of the parties hereto. 
 18.    Counterparts. This Time
Sharing Agreement may be executed in counterparts, each of which shall, for all purposes, be deemed an original and all such counterparts, taken together, shall constitute one and the same agreement, even though all parties may not have executed the
same counterpart. Each party may transmit its signature by facsimile, and such faxed signature shall have the same force and effect as an original signature. 

19.    Successors and Assigns. This Time Sharing Agreement shall be binding upon the parties hereto, and their
respective heirs, executors, administrators, other legal representatives, successors and assigns, and shall inure to the benefit of the parties hereto, and, except as otherwise provided herein, to their respective heirs,

  
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executors, administrators, other legal representatives, successors and permitted assigns. Lessee agrees that he shall not directly or indirectly sublease, assign, transfer, pledge or hypothecate
this Agreement or any part hereof (including any assignment or transfer pursuant to the laws of intestacy) without the prior written consent of Lessor, which may be given or withheld by Lessor in its sole and absolute discretion. 

20.    Notices. All notices or other communications delivered or given under this Agreement shall be in writing and
shall be deemed to have been duly given if hand- delivered, sent by certified or registered mail, return receipt requested, or nationally-utilized overnight delivery service, or confirmed facsimile transmission, as the case may be. Such notices
shall be addressed to the parties at the addresses set forth above, or to such other address as may be designated by any party in a writing delivered to the other in the manner set forth in this Section 20. In the case of notices to Lessor, a
copy of each such notice shall be sent to MSG Sports & Entertainment, 2 Penn Plaza, New York, New York 10121, attention: General Counsel. Notices sent by certified or registered mail shall be deemed received three business days after being
mailed. All other notices shall be deemed received on the date delivered. Routine communications may be made by e-mail or fax to the addresses set forth therein. 

21.    Truth-in-Leasing Compliance.
Lessor, on behalf of the Lessee, shall (i) mail a copy of this Agreement to the Aircraft Registration Branch, Technical Section, of the FAA in Oklahoma City within 24 hours of its execution; (ii) notify the Farmingdale Flight Standards
District Office at least 48 hours prior to the first flight by Lessor under this Agreement of the registration number of the Aircraft, and the location of the airport of departure and departure time of the first flight; and (iii) carry a copy
of this Agreement onboard the Aircraft at all times when the Aircraft is being operated under this Agreement. 

22.    TRUTH IN LEASING STATEMENT UNDER FAR SECTION 91.23: 

(A)    LESSOR HEREBY CERTIFIES THAT THE AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER FAR PART 91 DURING THE 12-MONTH PERIOD PRECEDING THE DATE OF EXECUTION OF THIS AGREEMENT. THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED IN COMPLIANCE WITH THE MAINTENANCE AND INSPECTION REQUIREMENTS OF FAR PART 91 FOR ALL OPERATIONS TO BE
CONDUCTED UNDER THIS AGREEMENT. 
 (B)    MSG SPORTS & ENTERTAINMENT, LLC, 2 PENN PLAZA, NEW YORK, NEW YORK
10121, HEREBY CERTIFIES THAT IT IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT FOR ALL OPERATIONS UNDER THIS AGREEMENT. 

(C)    EACH PARTY HEREBY CERTIFIES THAT IT UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION
REGULATIONS. 
 (D)    THE PARTIES UNDERSTAND THAT AN EXPLANATION OF THE FACTORS BEARING ON OPERATIONAL CONTROL AND THE
PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE. 

  
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 IN WITNESS WHEREOF, Lessor and Lessee have executed this Time Sharing Agreement effective as
of the date first above written. 
  

			
	LESSOR:
	
	MSG SPORTS & ENTERTAINMENT, LLC
		
	By:	 	/s/ Donna Coleman
	Name: Donna Coleman
	Title: EVP & Chief Financial Officer
	
	LESSEE:
	
	/s/Andrew Lustgarten
	Andrew Lustgarten

  
 6ex_132086.htm

Exhibit 10.3

 

MODIFICATION NO. 2 TO 

LOAN AND SECURITY AGREEMENT

 

This Modification No. 2 to Loan and Security Agreement (this “Second Modification”) is entered into as of December 12, 2018 (the “Second Modification Date”), by and between Partners for Growth V, L.P. (“PFG”), Giga-tronics Incorporated, a California corporation, and Microsource, Inc., a California corporation (individually and collectively, jointly and severally, “Borrower”). Capitalized terms used but not defined in this Second Modification shall have the meanings given them in the Loan Agreement.

 

Recitals

 

WHEREAS, PFG and Borrower entered into that certain Loan and Security Agreement dated as of April 27, 2017 (as amended by that certain Waiver and Modification No. 1 to Loan and Security Agreement entered into on March 26, 2018 (the “First Modification”), and as otherwise amended or restated, the “Loan Agreement”) and certain other Security Documents (as defined below), pursuant to which PFG has made available to Borrower the principal amount of $1,500,000, all of which is outstanding on the Second Modification Date, in addition to $157,625 in cumulative deferred interest (calculated as of November 30, 2018) which is due and payable on the Maturity Date;

 

WHEREAS, the parties desire to modify the Loan Agreement, subject to the satisfaction of the conditions set forth in Section 6 (including the Financing Condition, as defined below);

 

NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

Agreement

 

1.     EFFECTIVENESS. Notwithstanding the execution and delivery of this Second Modification by the parties as of the Second Modification Date, the modifications, agreements and terms of this Second Modification shall not be become effective until, but shall automatically become effective upon and as of the date the conditions set forth in Section 6 hereof are satisfied by Borrower (the “Second Modification Effective Date”).

 

2.     DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral, as described in the Loan Agreement, in that certain Intellectual Property Security Agreement and related Collateral Agreements and Notices of even date with the Loan Agreement (the “IPSA”) and the other Loan Documents entered into on the dates of the Loan Agreement and the Loan Agreement. The above-described security documents, together with all other documents securing and/or perfecting security interests in the repayment of the Obligations, shall be referred to herein as the “Security Documents”. Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations are referred to as the “Existing Loan Documents”.

 

 

 

 

3.     DESCRIPTION OF CHANGES IN TERMS. Effective automatically upon the Modification Effective Date:

 

(a)     The Loan – Repayment. The “Repayment” clause of Section 1 of the Schedule is amended and restated to read in its entirety as follows (quotation marks and formatting for convenience of reading only):

 

“     Repayment:     Borrower shall pay interest only monthly on the principal amount of the Loan through April 30, 2019. Commencing on May 1, 2019, Borrower shall make monthly principal payments of $75,000 each (plus interest accrued during each prior month on outstanding principal) until the Maturity Date, on which date the entire unpaid principal balance of the Loan plus any and all accrued and unpaid interest shall be paid.”

 

 

 

(b)     Maturity Date. Section 4 of the Schedule (Maturity Date) is amended and restated to read in its entirety as follows (quotation marks and formatting for convenience of reading only):

 

“4. Maturity Date 

(Section 5.1):      November 1, 2019.” 

 

(b)     Payment of Accrued Interest. On May 1, 2019, Borrower shall pay the Accrued Interest contemplated in Section 2 of the Schedule to the Loan Agreement, which the parties stipulate will be $197,979 as of such date, and the Loan Agreement shall be amended accordingly.

 

4.     CONTINUING VALIDITY. Borrower understands and agrees that in conditionally modifying the existing Obligations, PFG is relying upon Borrower's representations, warranties and agreements as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Second Modification, the terms of the Existing Loan Documents remain unchanged and in full force and effect. PFG's agreement to modify the existing Obligations in no way shall obligate PFG to give any future consents or waivers or make any future modifications to the Obligations. Nothing in this Second Modification shall constitute a satisfaction of the Obligations or a waiver of any Default or Event of Default under the Existing Loan Documents. It is the intention of PFG and Borrower to retain as liable parties all makers and endorsers, if any, of the Existing Loan Documents, unless the party is expressly released by PFG in writing. Unless expressly released herein, no maker, endorser, or guarantor will be released by virtue of this Second Modification. The terms of this paragraph apply not only to this Second Modification, but also to all subsequent loan modification agreements.

 

5.     Borrowers’ Representations And Warranties. Borrower represents and warrants that:

 

(a)     immediately upon giving effect to this Second Modification (i) the representations and warranties contained in the Existing Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent qualified in the updated Representations deliverable to PFG on or before the Second Modification Date), and (ii) no Event of Default has occurred and is continuing;

 

 

 

 

(b)     Borrower has the corporate power and authority to execute and deliver this Second Modification and to perform its obligations under the Existing Loan Documents, in each case as contemplated by this Second Modification;

 

(c)     the Constitutional Documents of Borrower delivered to PFG remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

 

(d)     this Second Modification has been duly authorized, executed and delivered by Borrower and (i) constitutes the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights; (ii) does not conflict with any law or regulation or judgment or the Constitutional Documents of Borrower, or any agreement or document to which Borrower is a party or which is binding upon it or any of this assets; and (iii) does not require any authorization, approval, consent (including stockholder or member consent) of any Person, or any license or registration in any jurisdiction, for its lawful authorization, execution, performance, validity or enforceability, except to the extent such authorization, approval, consent (including stockholder or member consent) of any Person, license or registration is secured on or prior to the Second Modification Date and provided to PFG;

 

(e)     as of the date hereof, with Knowledge that PFG is relying on Borrower’s representations and warranties herein (including the Representations) as a basis for entering into this Second Modification at Borrower’s request, Borrower has no defenses against its obligation to repay the Obligations and it has no claims of any kind against PFG. Borrower acknowledges that PFG has acted in good faith and has conducted its relationship with Borrower in a commercially reasonable manner, including in connection with this Second Modification and in connection with the Existing Loan Documents;

 

(f)     with respect to any Loan Documents binding upon a Person not party to this Second Modification, each such Person has been apprised of this Second Modification, has consented to Borrower’s execution and delivery of this Second Modification and, to the extent not executed concurrently with this Second Modification (or as a condition subsequent hereto), has agreed if so requested by PFG to promptly execute and deliver to PFG a reaffirmation of its obligations under any Existing Loan Documents to which it is a party or is bound;

 

(g)     the IPSA and associated Collateral Agreements and Notices disclose an accurate, complete and current listing of all Collateral that consists of Intellectual Property (as defined in said IP Security Agreement) or Borrower has included revised and updated Intellectual Property schedules as part of an update to the Representations required in Section 6(e) of this Second Modification and as part of the Intellectual Property and Domain Rights update and, as required, the Reaffirmation of IPSA under Section 6(f) of this Second Modification;

 

 

 

 

(h)     Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in the Representations dated as of the Second Modification Date;

 

(i)     as of the Second Modification Date, Borrower has not asserted any commercial tort claims against any Person and has no Knowledge of any basis for so doing; and

 

(j)     Except as expressly stated in this Second Modification, neither PFG nor any agent, employee or representative of PFG has made any statement or representation to Borrower regarding any fact relied upon by Borrower in entering into this Second Modification, (ii) Borrower has made such investigation of the facts pertaining to this Second Modification and all of the matters appertaining thereto, as it deems necessary, and (iii) the terms of this Second Modification are contractual and not a mere recital.

 

Borrower understands and acknowledges that PFG is entering into this Second Modification in reliance upon, and in partial consideration for, the above representations and warranties, and agrees that such reliance is reasonable and appropriate.

 

6.      CONDITIONS. The effectiveness of this Second Modification is conditioned upon satisfaction of each of the following, with the consequence of a failure to meet the following conditions as set forth in the proviso at the end of this Section 6:

 

(a)     Execution and Delivery. Borrower shall have duly executed and delivered to PFG a counterpart of this Second Modification and such other documents and instruments as are otherwise required in this Section 6;

 

(b)     Constitutional and Authority Documents. Applicable only to the extent the same may have been modified or superseded or are no longer accurate since the date of the Loan Agreement, PFG shall have received copies, certified by a duly authorized officer of Borrower, to be true and complete as of the Second Modification Date (or, if later, the Modification Effective Date), of each of (i) the governing documents of Borrower as in effect on the date hereof, and (ii) any necessary resolutions of Borrower authorizing the execution and delivery of this Second Modification, the other documents executed in connection herewith and Borrower’s performance of all of the transactions contemplated hereby, and (iii) an incumbency certificate giving the name and bearing a specimen signature of each individual who shall be so authorized on behalf of Borrower;

 

(c)     Financing Condition. As a condition subsequent, on or before January 8, 2019, Borrower shall have (i) consummated an equity investor financing providing not less than $500,000 in gross cash proceeds to Borrower since November 19, 2018, and (ii) provided true and correct copies of the fully-executed agreements and/or instruments that demonstrate satisfaction of the requirement of this Section 6(c) (the “Financing Condition”);

 

 

 

 

(d)     Lender Expenses. Borrower shall have paid, upon PFG invoice, all unpaid fees and Lender Expenses incurred pursuant to or in connection with this Second Modification;

 

(e)     Updates to Representations. Borrower shall have delivered within one (1) Business Day prior to the Second Modification Date an update to the Representations delivered to PFG on the date of the Loan Agreement, with the information and disclosures contained therein true, correct, accurate and complete as of the Second Modification Date and the date delivered, appended hereto as Exhibit A;

 

(f)     IPSA Update / Reaffirmation. To the extent that Borrower has acquired any Intellectual Property or Domain Rights or made application with any Governmental Body in relation thereto since the date of the First Modification, Borrower shall disclose such acquired or new Intellectual Property and/or Domain Rights in Exhibit B  and shall promptly execute and deliver supplemental Collateral Agreements and Notices in respect of the same in substantially the same form as those appended to the Intellectual Property Security Agreement delivered on the original Effective Date of the Loan Agreement;

 

(g)     Modification Fee. Promptly upon PFG invoice, Borrower shall pay PFG a modification fee in the amount of $15,000.

 

provided, however, any material failure of any of the conditions set forth in this Section 6 (as determined in PFG’s good faith and reasonable judgment) shall mean that this Second Modification has not become (or if such failure is in relation to a condition subsequent, is no longer) effective and that the terms of the Currently Effective Forbearance remain in effect (or if such failure is in relation to a condition subsequent, such terms are reinstated).

 

7.     CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary or appropriate to reflect the modifications and other transactions contemplated by this Second Modification.

 

8.     RATIFICATION OF EXISTING LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of the Existing Loan Documents and all security and other collateral granted to PFG thereunder, and confirms that the Indebtedness secured thereby includes, without limitation, the Obligations.

 

9.     Further Assurances. Borrower agrees to execute such further documents and instruments and to take such further actions as PFG may request in its good faith business judgment to carry out the purposes and intent of this Second Modification.

 

 

 

 

10.     RELEASE. FOR AND IN CONSIDERATION OF PFG’S AGREEMENTS CONTAINED HEREIN, BORROWER, TOGETHER WITH ITS, SUCCESSORS AND ASSIGNS (INDIVIDUALLY AND COLLECTIVELY, “RELEASORS”) HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER WAIVES AND DISCHARGES PFG AND EACH OF ITS RESPECTIVE PARENTS, DIVISIONS, SUBSIDIARIES, AFFILIATES, MEMBERS, MANAGERS, PARTICIPANTS, PREDECESSORS, SUCCESSORS, AND ASSIGNS, AND EACH OF THEIR RESPECTIVE CURRENT AND FORMER DIRECTORS, OFFICERS, SHAREHOLDERS, MEMBERS, MANAGERS, PARTNERS, AGENTS, AND EMPLOYEES, AND EACH OF THEIR RESPECTIVE PREDECESSORS, SUCCESSORS, HEIRS, AND ASSIGNS (INDIVIDUALLY AND COLLECTIVELY, THE “RELEASED PARTIES”) FROM ALL POSSIBLE CLAIMS, COUNTERCLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER, WHETHER KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, OR AT LAW OR IN EQUITY, IN ANY CASE ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE SECOND MODIFICATION EFFECTIVE DATE THAT ANY OF THE RELEASORS MAY NOW OR HEREAFTER HAVE AGAINST THE RELEASED PARTIES, IF ANY, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, INCLUDING WITHOUT LIMITATION ARISING DIRECTLY OR INDIRECTLY FROM THE LAWSUIT, ANY PRIOR OR EXISTING LOANS BETWEEN RELEASORS AND RELEASED PARTIES, ANY OF THE EXISTING LOAN DOCUMENTS, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER ANY OF THE EXISTING LOAN DOCUMENTS, AND/OR NEGOTIATION FOR AND EXECUTION OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE. EACH OF THE RELEASORS WAIVES THE BENEFITS OF ANY LAW INCLUDING SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH MAY PROVIDE IN SUBSTANCE: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY IT MUST HAVE MATERIALLY AFFECTED ITS SETTLEMENT WITH THE DEBTOR.” EACH OF THE RELEASORS UNDERSTANDS THAT THE FACTS WHICH IT BELIEVES TO BE TRUE AT THE TIME OF MAKING THE RELEASE PROVIDED FOR HEREIN MAY LATER TURN OUT TO BE DIFFERENT THAN IT NOW BELIEVES, AND THAT INFORMATION WHICH IS NOT NOW KNOWN OR SUSPECTED MAY LATER BE DISCOVERED. EACH OF THE RELEASORS ACCEPTS THIS POSSIBILITY, AND EACH OF THEM ASSUMES THE RISK OF THE FACTS TURNING OUT TO BE DIFFERENT AND NEW INFORMATION BEING DISCOVERED; AND EACH OF THEM FURTHER AGREES THAT THE RELEASE PROVIDED FOR HEREIN SHALL IN ALL RESPECTS CONTINUE TO BE EFFECTIVE AND NOT SUBJECT TO TERMINATION OR RESCISSION BECAUSE OF ANY DIFFERENCE IN SUCH FACTS OR ANY NEW INFORMATION. By entering into this release, Borrower recognizes that no facts or representations are ever absolutely certain and it may hereafter discover facts in addition to or different from those which it presently knows or believes to be true, but that it is the intention of Borrower hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if Borrower should subsequently discover that any fact that it relied upon in entering into this release was untrue, or that any understanding of the facts was incorrect, Borrower shall not be entitled to set aside this release by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever. Borrower acknowledges that it is not relying upon and has not relied upon any representation or statement made by PFG with respect to the facts underlying this release or with regard to any of such party’s rights or asserted rights. Borrower acknowledges that (i) this release may be pleaded as a full and complete defense and/or as a cross-complaint or counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or attempted in breach of this release, and (ii) Borrower acknowledges that the release contained herein constitutes a material inducement to PFG to enter into this Agreement, and that PFG would not have done so but for PFG’s expectation that such release is valid and enforceable in all events. Borrower hereby represents and warrants to and covenants with PFG, and PFG is relying thereon, as follows: (u) except as expressly stated in this Agreement, neither PFG nor any agent, employee or representative of PFG has made any statement or representation to Borrower regarding any fact relied upon by Borrower in entering into this Agreement; (v) Borrower has made such investigation of the facts pertaining to this Agreement and all of the matters appertaining thereto, as it deems necessary; (w) the terms of this Agreement are contractual and not a mere recital; (x) this Agreement has been carefully read by Borrower, the contents hereof are known and understood by Borrower, and this Agreement is signed freely, and without duress, by Borrower; (y) Borrower represents and warrants that it is the sole and lawful owner of all right, title and interest in and to every claim and every other matter which it releases herein, and that it has not heretofore assigned or transferred, or purported to assign or transfer, to any person, firm or entity any claims or other matters herein released; and (z) Borrower shall indemnify PFG, defend and hold it harmless from and against all claims based upon or arising in connection with prior assignments or purported assignments or transfers of any claims or matters released herein.

 

 

 

 

11.     ADVICE OF COUNSEL. PFG and Borrower have prepared this Agreement and all documents, instruments, and agreements incidental hereto with the aid and assistance of their respective counsel. Accordingly, all of them shall be deemed to have been drafted by PFG and Borrower and shall not be construed against either PFG or Borrower.

 

12.     ILLEGALITY OR UNENFORCEABILITY. Any determination that any provision or application of this Agreement is invalid, illegal, or unenforceable in any respect, or in any instance, shall not affect the validity, legality, or enforceability of any such provision in any other instance, or the validity, legality, or enforceability of any other provision of this Agreement.

 

13.     INTEGRATION; CONSTRUCTION; ETC. This Second Modification, the First Modification, the Loan Agreement and the Existing Loan Documents (as modified) and any documents executed in connection herewith or pursuant hereto contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, offers and negotiations, oral or written, with respect thereto and no extrinsic evidence whatsoever may be introduced in any judicial or arbitration proceeding, if any, involving this Second Modification; provided, however, that any financing statements or other agreements or instruments filed by PFG with respect to Borrower shall remain in full force and effect. The quotation marks around modified clauses set forth herein and any differing font styles in which such clauses are presented herein are for ease of reading only and shall be ignored for purposes of construing and interpreting this Second Modification. This Second Modification is subject to the General Provisions of Section 8 of the Loan Agreement. The Existing Loan Documents are hereby amended wherever necessary to reflect the modifications set forth in this Second Modification. The Recitals are incorporated herein by reference.

 

 

 

 

14.     Governing Law; Venue. THIS SECOND MODIFICATION SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. Borrower and PFG submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California, in connection with any proceeding or dispute arising in connection herewith.

 

 

[Signature Page Follows]

 

 

 

 

 

	PFG	 	BORROWER	 
	 	 	 	 
	Partners for Growth V, L.P.	 	GIGA-TRONICS INCORPORATED	 
	 	 	 	 	 	 
	By: 	 	 	 	 	 
	Name: 	Phil Lawson, Manager	 	 	 	 
	Title:	Partners for Growth V, LLC, its	 	By	 	 
	 	General Partner	 	 	President or Vice President	 
	 	 	 	 	 	 
	 	 	 	By	 	 
	 	 	 	 	Secretary or Ass't Secretary	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	MICROSOURCE, INC.	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	By	 	 
	 	 	 	 	President or Vice President	 
	 	 	 	 	 	 
	 	 	 	By	 	 
	 	 	 	 	Secretary or Ass't Secretary	 

 

 

Modification No. 2 to Loan and Security Agreement Signature Page

 

 

 

 

EXHIBIT A

 

REPRESENTATIONS

 

 

 

 

EXHIBIT B

 

NEW INTELLECTUAL PROPERTY / DOMAIN RIGHTS

 

 

Trademarks

 

	
			Serial Number - Registration Number

				
			Date

				
			Mark

				
			Owner

			
	
			C

				 	 	 

 

 

Patents

 

	
			FULL APPLICATION TITLE

				
			APP. NO.

				
			FILING DATE

				
			PATENT NO.

				
			Owner

			
	
			Precision Microwave Frequency Synthesizer and Receiver with delay balanced drift canceling loop

				
			15636515

				
			June 28, 2017

				
			TBD

				
			Giga-tronics Incorporated

			

 

 

Copyrights

 

	
			Copyright Number

				
			Date

				
			Title / Work

				
			Owner

			
	
			None

				 	 	 

 

 

Domains

 

	
			Domain Name

				
			Domain Host

				
			Owner

				
			Administrative Contact of Record

				
			Expiry Date of Domain

			
	
			None

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