Document:

Blueprint

 Exhibit
10.1

 

	

 

	

Credit Agreement

This
agreement dated as of January 13, 2020 is between JPMorgan Chase
Bank, N.A. (together with its successors and assigns, the
"Bank"), whose address is
450 S Orange Ave, Floor 10, Orlando, FL 32801-3383, and BK Technologies, Inc.
(individually, the "Borrower" and if more than one,
collectively, the "Borrowers"), whose address is 7100
Technology Drive, West Melbourne, FL 32904.

 

1.

Credit
Facilities.

 

1.1

Scope. This agreement governs Facility
A, and, unless otherwise agreed to in writing by the Bank and the
Borrower or prohibited by any Legal Requirement, governs the Credit
Facilities as defined below. The Bank has established procedures
for the Borrower to obtain advances under any Credit Facilities.
Any other procedures that the Bank agrees to regarding obtaining
advances, including automatic loan sweeps, shall not change the
terms or conditions of this agreement or the other Related
Documents regarding the Credit Facilities.

 

1.2

Facility A (Line of Credit). The Bank
has approved a credit facility to the Borrower in a principal
amount not to exceed $5,000,000.00, at any one time outstanding
("Facility A"). Credit under
Facility A shall be repaid as described in a Line of Credit Note
executed at the same time as this agreement, along with any
renewals, modifications, extensions, rearrangements, restatements
and replacements or substitutions.

 

Non Usage Fee. The Borrower will pay
"non-usage fee," calculated on the average daily unused portion
of Facility A at a rate of 0.10% per annum (based on a year deemed
to be comprised of 360 days, unless the calculation would result in
a usurious interest rate, in which case interest will be calculated
on the basis of a 365 or 366 day year, as the case may be), payable
in arrears within thirty (30) days of the end of each annual period
for which the fee is owing. The Bank may begin to accrue the
foregoing fee on the date the Borrower signs or otherwise
authenticates this
agreement.

 

1.3

Borrowing Base. The aggregate principal
amount of advances outstanding at any one time under the Line of
Credit Note evidencing Facility A (the "Aggregate Outstanding Amount") shall not
exceed the Borrowing Base or the maximum amount then available
under Facility A, whichever is less (the "Maximum Available Amount"). If at any
time the Aggregate Outstanding Amount exceeds the Maximum Available
Amount, the Borrower shall immediately pay the Bank an amount equal
to the difference. "Borrowing
Base" means the aggregate of:

 

A. 80%
of the book value of all Eligible Accounts; plus

 

B. 50%
of the lower of cost (determined by the average cost method) or net
realizable value, as determined by the Bank, of all Eligible
Inventory, not to exceed the aggregate of
$2,500,000.00.

 

2.

Definitions
and Interpretations.

 

2.1

Definitions. As used in this agreement,
the following terms have the following respective
meanings:

 

A. "Account"
means as defined under the Uniform Commercial Code of
Florida.

 

B. "Account
Debtor" means the Person obligated on an
Account.

 

C. "Affiliate"
means any Person directly or indirectly controlling, controlled by
or under common control with, another Person.

 

D. "Anti-Corruption
Laws" means all laws, rules,
and regulations of any jurisdiction applicable to the Borrower or
its Subsidiaries from time to time concerning or relating to
bribery or corruption.

 

E. "Collateral"
means all Property, now or in the future subject to any Lien in
favor of the Bank, securing or intending to secure, any of the
Liabilities.

 

F. "Credit
Facilities" means all extensions of credit from the Bank to
the Borrower, existing or extended with this agreement, or
hereafter arising.

 

G. "Distributions"
means all dividends and other distributions made to any Equity
Owners, other than salary, bonuses, and other compensation for
services expended in the current accounting period.

 

 

 

H. "Eligible
Accounts" means, at any time, all of the Borrower's Accounts
in which the Bank has
a first priority continuing perfected Lien and which are earned,
delivered or shipped and invoiced within thirty (30) days of being
earned and which contain selling terms and conditions satisfactory
to the Bank, and are not evidenced by a promissory note or other
instrument or chattel paper. The net amount of any Eligible Account
against which the Borrower may borrow shall exclude all returns,
discounts, credits, and offsets of any nature.

 

Eligible Accounts
do not include Accounts:

(1) which are not owned
by the Borrower free and clear of all claims of Persons other than the Bank;

(2) when the Account
Debtor is an Affiliate of the Borrower or employee, officer,
director, Equity Owner or agent of the Borrower;

(3) when the Account
Debtor is not a resident of the United States or Canada, or the
account is not payable in U.S. Dollars;

(4) subject to the U.S.
Office of Foreign Asset Control Special Designated Nationals and
Blocked Person's List, or when the Account Debtor is otherwise a
Person with whom the Borrower or the Bank is prohibited from doing
business by any applicable Legal Requirement;

(5) when the Bank
determines the creditworthiness, financial or business condition of
the Account Debtor to be unsatisfactory, including but not limited
to any bankrupt Account Debtor;

(6) otherwise
determined to be ineligible by the Bank;

(7) which have not been
paid in full within ninety (90) days from the invoice date;
and

(8) due from any one
Account Debtor to the extent such Accounts constitute more than 25%
of all Eligible Accounts.

 

Eligible Government
Accounts are deemed Eligible Accounts; provided, however, that the
Bank may from time to time condition such eligibility on the
Bank’s receipt of evidence that the Borrower has assigned its
payment rights to the Bank, the assignment has been acknowledged
under the Assignment of Claims Act or similar State law if
applicable, and the Assignment of Claims Act or similar State law
if applicable has been fully complied with. For purposes of this
definition, the term “Eligible Government
Accounts” means all of Borrower’s Accounts when
the Account Debtor is the United States government or any State
government or any department or agency of the United States or any
State and which Accounts otherwise in all respects satisfy the
other requirements of the definition of Eligible
Accounts.

 

In no
event will the balance of any Account of any single Account Debtor
be eligible whenever the portion of the Accounts of such Account
Debtor which have not been paid within ninety (90) days from the
invoice date is in excess of 20% of the total amount outstanding on
all Accounts of such Account Debtor.

 

I. "Eligible
Inventory" means, at any time, all of the Borrower's
Inventory in which the Bank has a first priority continuing
perfected Lien except Inventory which is:

(1) not owned by it
free and clear of all claims of Persons other than the
Bank;

(2) slow moving,
obsolete, unsalable, or unfit for further processing;

(3) work in
process;

(4) subject to
consignment or otherwise in the possession of another
Person;

(5) in transit or
located outside of the United States;

(6) subject to
licensing, intellectual property, or any requirements that would
make it difficult to sell, lease or use;

(7) comprised of
samples, returns, rejected items, re-work items, non-standard
items, odd-lots, or repossessed goods;

(8) produced in
violation of applicable Legal Requirements, including the Fair
Labor Standards Act and the regulations and orders of the
Department of Labor; or

(9) otherwise
determined ineligible by the Bank;

provided, however,
that transportation and storage charges shall be excluded from
amounts otherwise included in Eligible Inventory.

 

J. "Equity
Interests" means equity
ownership interests in a business or not for profit entity, and any
warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.

 

K. "Equity
Owner" means an owner of any Equity Interests.

 

2

 

L. "GAAP"
means generally accepted accounting principles in effect from time
to time in the United States of America, consistently
applied.

 

M. "Inventory"
means as defined under the Uniform Commercial Code of
Florida.

 

N. "Intangible
Assets" means the aggregate amount of: (1) all assets classified as intangible assets under
GAAP, including, without limitation, goodwill, trademarks, patents,
copyrights, organization expenses, franchises, licenses, trade
names, brand names, mailing lists, catalogs, excess of cost over
book value of assets acquired, and bond discount and underwriting
expenses; and (2) loans or advances to, investments in, or
receivables from (i) any Affiliate, officer, director, employee,
Equity Owner or agent of the Borrower or (ii) any Person if such
loan, advance, investment or receivable is outside the Borrower's
ordinary course of business.

 

O. "Legal
Requirement" means any law, order, Sanctions, regulation (or interpretation of
any of the foregoing) of any federal, state or local governmental
authority or self regulatory organization having jurisdiction over
the Bank, any Obligor or any of its Subsidiaries or their
respective Properties or any agreement by which any of them is
bound.

 

P. "Liabilities"
means all indebtedness, liabilities and obligations of every kind
and character of the Borrower to the Bank, whether the obligations,
indebtedness and liabilities are individual, joint and several,
contingent or otherwise, now or hereafter existing, including,
without limitation, all liabilities, interest, costs and fees,
arising under or from any note, open account, overdraft, credit
card, lease, Rate Management Transaction, letter of credit
application, endorsement, surety agreement, guaranty, acceptance,
foreign exchange contract or depository service contract, whether
payable to the Bank or to a third party and subsequently acquired
by the Bank, any monetary obligations (including interest) incurred
or accrued during the pendency of any bankruptcy, insolvency,
receivership or other similar proceedings, regardless of whether
allowed or allowable in such proceeding, and all renewals,
extensions, modifications, consolidations, rearrangements,
restatements, replacements or substitutions of any of the
foregoing.

 

Q. "Lien"
means any mortgage, deed of trust, pledge, charge, encumbrance,
security interest, collateral assignment or other lien or
restriction of any kind.

 

R. "Notes"
means all promissory notes,
instruments and/or contracts now or hereafter evidencing the Credit
Facilities.

 

S. "Obligor"
means any Borrower, guarantor, surety, co-signer, endorser, general
partner or other Person who may now or in the future be obligated
to pay any of the Liabilities, and any Person providing
Collateral.

 

T. "Organizational
Documents" means, with respect to any Person, certificates
of existence or formation, documents establishing or governing the
Person including all amendments, and modifications.

 

U. "Person"
means any individual, business or other entity, or any governmental
authority.

 

V. "Property"
means any interest in any kind of property or asset, whether real,
personal or mixed, tangible or intangible .

 

W. "Rate
Management Transaction" means any transaction (including an
agreement with respect thereto) that is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity
or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option, derivative transaction or any other
similar transaction (including any option with respect to any of
these transactions) or any combination thereof, whether linked to
one or more interest rates, foreign currencies, commodity prices,
equity prices or other financial measures.

 

X. "Related
Documents" means this agreement, and any other instrument or
document executed in connection with this agreement or with any of
the Liabilities.

 

Y. "Sanctions"
means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S.
government, including those administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury or the U.S.
Department of State, and (b) if the Borrower has operations
outside of the United States, the United Nations Security Council,
the European Union, any European Union member state, Her
Majesty’s Treasury of the United Kingdom or other relevant
sanctions authority.

 

Z. "Sanctioned
Country" means, at any time, a
country, region or territory which is the subject or target of any
Sanctions.

 

3

 

 

AA. "Sanctioned
Person" means, at any time,
(a) any Person listed in any Sanctions-related list of
designated Persons maintained by (i) the Office of Foreign Assets Control of the U.S.
Department of the Treasury, the U.S. Department of State,
and (ii) if the Borrower has operations outside of the United
States, the United Nations Security Council, the European Union,
any European Union member state, Her Majesty’s Treasury of
the United Kingdom or other relevant sanctions authority
(b) any Person operating,
organized or resident in a Sanctioned
Country (c) any Person controlled by any such Person or Persons
described in the foregoing clauses (a) or (b), or (d) any Person
otherwise the subject of any Sanction.

 

BB. "Subsidiary"
means, as to any particular Person (the "parent"), a Person the
accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as well as any other Person of which
fifty percent (50%) or more of the Equity Interests is directly or
indirectly owned, controlled or held, by the parent or by any
Person or Persons controlled by the parent, either alone or
together with the parent.

 

CC. "Tangible
Net Worth" means total assets less the sum of Intangible
Assets and total liabilities.

 

2.2

Interpretations. If any provision of
this agreement cannot be enforced, the remaining portions of this
agreement shall continue in effect. The provisions of this
agreement shall control in the event
of any conflict or inconsistency between this agreement and the
provisions of any other Related Documents. Any reference to
a particular document includes all modifications, supplements,
replacements, renewals or extensions of that document. Whenever the
Bank's determination, consent, or approval is required under this
agreement or the other Related Documents or whenever the Bank may
at its option take or refrain from taking any action under this
agreement or the other Related Documents, such decision shall be in
the sole discretion of the Bank.

 

3.

Conditions
Precedent to Extensions of Credit.

 

3.1

The following
conditions must be satisfied before any extension of credit
governed by this agreement must be made by the Bank:

 

A. Representations.
The Borrower and any other
parties, represent that all statements
and information contained in the Related Documents is true
and accurate as of the date of the request for credit;

 

B. No
Event of Default. There has been no default, event of
default or event that would constitute a default or event of
default (pending giving of notice or a lapse of time or both), of
any provision of this agreement, the Notes or any other Related
Documents or would result from the extension of
credit;

 

C. Loan
Documents. The Notes, and any other documents which the Bank
may reasonably require to give effect to the transactions described
in this agreement or the other Related Documents have been
delivered to the Bank in form and substance satisfactory to the
Bank;

 

D. Organizational
and Authorizing Documents. The Organizational Documents and
all certificates of authority to transact business, certificates of
good standing, borrowing resolutions, appointments, officer’s
certificates, certificates of incumbency, and other documents which
empower and authorize or evidence the power and authority of
the Borrower or any Obligor to
execute and deliver the Notes and Related Documents (i) are within
its powers, (ii) have been duly authorized by all necessary action
of its governing body, (iii) do not contravene the terms of its
Organizational Documents or other agreement or document governing
its affairs, and (iv) have been delivered to the Bank in a form and
substance satisfactory to the Bank; and

 

E. No
Prohibition or Onerous Conditions. The making of the
extension of credit is not prohibited by and does not subject the
Bank, any Obligor, or any Subsidiary of the Borrower to any penalty
or onerous condition.

 

4.

Affirmative Covenants. The Borrower
agrees to do, and cause each of its Subsidiaries to do, each of the
following:

 

4.1

Insurance. Maintain insurance with
financially sound and reputable insurers, that are satisfactory to
the Bank. The insurance will cover its Property and business
against those casualties and contingencies and in the types and
amounts according to sound business and industry practices, and
furnish to the Bank, upon request, reports on each existing
insurance policy showing such information as the Bank may
reasonably request.

 

4.2

Financial Records. Maintain proper books
and records according to GAAP,
that are consistent with financial statements previously submitted
to the Bank.

 

 

4

 

 

4.3

Inspection. Permit the Bank, and its agents to: (a) inspect
and photograph its Property, to examine and copy files, books and
records, and to discuss its business, operations, prospects,
assets, and financial condition with the Borrower's or its
Subsidiaries' officers and accountants, at times and intervals as
the Bank reasonably determines; (b) perform audits, appraisals or
other inspections of the Collateral, including the records and
documents related to the Collateral; and (c) confirm with any
Person any obligations and liabilities of the Person to the
Borrower or its Subsidiaries. The Borrower will, and will cause its
Subsidiaries to cooperate with any inspection, appraisal or audit.
The Borrower will promptly pay the Bank the reasonable costs and
expenses of any audit or
inspection of the Collateral (including fees and expenses charged
internally by the Bank).

 

4.4

Other Agreements. Comply with all terms
and conditions of all other agreements, whether now or hereafter
existing, between it and any other Person.

 

4.5

Financial Reports. Furnish to the Bank
whatever information, statements, books and records the Bank may
from time to time reasonably request, including at a
minimum:

 

A. Within
sixty (60) days after and as of the end of each fiscal quarter, the
consolidated financial statements of the Borrower and its Subsidiaries prepared
in accordance with GAAP,
including a balance sheet as of the end of that period, and income
statement for that period, and, if requested by the Bank,
statements of cash flow and retained earnings for that period, all
certified as correct by one of its authorized agents.

 

B. Within
one hundred and twenty (120) days after and as of the end of each
of its fiscal years, the consolidated financial statements of
the Borrower and its
Subsidiaries prepared in accordance with GAAP, including a balance sheet and
statements of income, cash flow and retained earnings, such
financial statements to be audited by an independent certified
public accountant of recognized standing satisfactory to the
Bank.

 

C. Within
fifteen (15) days after and as of the end of each calendar month,
the following lists, each certified as correct by one of its
authorized agents:

 

(1) a
list of Accounts, aged from date of
invoice, and

(2) a list of Inventory, valued at the lower of cost
(determined using the first-in, first-out method of inventory
accounting) or wholesale market value.

 

D. Within
fifteen (15) days after and as of the end of each calendar month, a
borrowing base certificate, in form and detail satisfactory to the
Bank, along with such supporting documentation as the Bank may
request.

 

E. Compliance
Certificates. Provide the Bank, together with each financial
statement required under this agreement and at such other times as
the Bank may request, a Compliance Certificate in form satisfactory
to the Bank, certified and executed by Borrower’s chief
financial officer, or other officer satisfactory to the
Bank. In the event of a
conflict between this agreement and the Compliance Certificate, the
terms of this agreement shall control.

 

4.6

Notices of Claims, Litigation, Defaults,
etc. Promptly inform the Bank in writing of: (1) all
existing and threatened litigation, claims, investigations,
administrative proceedings and similar actions or changes in Legal
Requirements affecting it, of which it has knowledge, and could
materially affect its business, assets, affairs, prospects or
financial condition; (2) the occurrence of any event which gives
rise to the Bank's option to terminate the Credit Facilities; (3)
any additions to or changes in the locations of its businesses; and
(4) any alleged breach by the Bank of any provision of this
agreement or of any other Related Document.

 

4.7

Title to Assets and Property. Maintain
good and marketable title to all of its Properties, and defend them
against all claims and demands of all Persons at any time claiming
any interest in them.

 

4.8

Additional Assurances. Promptly make,
execute and deliver any and all agreements, documents, and
instruments that the Bank may request to evidence any of the Credit
Facilities, cure any defect in the execution and delivery of any of
the Related Documents, perfect any Lien or comply with any Legal
Requirement applicable to the Bank or the Credit
Facilities.

 

4.9

Employee Benefit Plans. Maintain each
employee benefit plan as to which it may have any liability, in
compliance with all Legal Requirements.

 

4.10

Banking Relationship.
Establish and maintain its primary
banking depository and disbursement relationship with the
Bank.

 

 

5

 

 

4.11

Compliance with Anti-Corruption Laws and
Sanctions. Maintain in effect and enforce policies and
procedures designed to ensure compliance by the Borrower, its
Subsidiaries and their respective directors, officers, employees
and agents with Anti-Corruption Laws and applicable
Sanctions.

 

5.

Negative
Covenants.

 

5.1

Without the Bank's
written consent, the Borrower will not and no Subsidiary of the
Borrower will:

 

A. Distributions.
Redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of its Equity Interests,
return any contribution to an Equity Owner or, other than stock
dividends and dividends paid to the Borrower, declare or pay any
Distributions; provided, however, that if there is no existing
default under this agreement or any other Related Document and to
do so will not cause a default under this agreement or any other
Related Document the Borrower may pay Distributions to its Equity
Owners.

 

B. Debt.
Incur, contract for, assume, or permit to remain outstanding,
indebtedness for borrowed money, installment obligations, or
obligations under capital leases or operating leases, other than
(1) unsecured trade debt incurred in the ordinary course of
business, (2) indebtedness owing to the Bank, and (3) indebtedness
outstanding as of the date hereof that has been disclosed to the
Bank in writing and that is not to be paid with proceeds of
borrowings under the Credit Facilities.

 

C. Guaranties.
Guarantee or otherwise become or remain liable on the undertaking
of another.

 

D. Liens.
Create or permit to exist any Lien on any of its Property except:
existing Liens known to and approved by the Bank; Liens to the
Bank; Liens incurred in the ordinary course of business securing
current non-delinquent liabilities for taxes, worker’s
compensation, unemployment insurance, social security and pension
liabilities.

 

E. Use
of Proceeds. Use any proceeds of the Credit Facilities: (1)
for any personal, family or household purpose; (2) for the purpose
of "purchasing or carrying any margin stock" within the meaning of
Federal Reserve Board Regulation U; (3) in furtherance of an offer,
payment, promise to pay, or authorization of the payment or giving
of money, or anything else of value, to any Person in violation of
any Anti-Corruption Laws; (4) for the purpose of funding, financing
or facilitating any activities, business or transaction of or with
any Sanctioned Person, or in any Sanctioned Country except to the
extent permitted for a person required to comply with Sanctions; or
(5) in any manner that would result in the violation of any
Sanctions.

 

F. Business
Operations and Continuity of Operations. (1) Engage in any
business activities (a) in violation
of any Legal Requirement; (b) substantially different from
those in which it is presently engaged; (2) fail to maintain its
existence, cease operations, liquidate, merge, transfer, acquire or
consolidate with any other Person, change its name, dissolve,
divide, or allocate any assets under
any plan of division or similar arrangement, create any series
limited liability company, allocate any property to any
series, or sell any assets out of the ordinary course of
business; (3) enter into any arrangement with any Person providing
for the leasing by it of Property which has been sold or
transferred by it to such Person; (4) change its business
organization, the jurisdiction under which its business
organization is formed or organized, or its chief executive office,
or any places of its businesses; or (5) if the Borrower is an
individual, change the name on his/her driver’s license or
state issued identification card, as applicable, without notifying
the Bank within thirty (30) days of the change, or change the state
of his/her principal residence, without notifying the Bank within
thirty (30) days of the change.

 

G. Limitation
on Negative Pledge Clauses. Enter into any agreement with
any Person other than the Bank which prohibits or limits its
ability to create or permit to exist any Lien on any of its
Property, whether now owned or hereafter acquired.

 

H. Conflicting
Agreements. Enter into any agreement containing any
provision which would be violated or breached by the performance of
its obligations under this agreement or any of the other Related
Documents.

 

I. Transfer
of Ownership. Permit any pledge, sale or other transfer of
any Equity Interest in it.

 

J. Limitation on Loans, Advances, Investments, and
Receivables. Purchase, hold or acquire any Equity Interest
or evidence of indebtedness of, make or permit to exist any loans
or advances to, permit to exist any receivable from, or make or
permit to exist any investment or acquire any interest whatsoever
in, any Person, except: (1) extensions of trade credit to customers
in the ordinary course of business on ordinary terms; (2)
commercial paper, certificates of deposit, US Treasury or other
governmental agency obligations; and (3) loans, advances,
investments and receivables existing as of the date of this
agreement that have been disclosed to and approved by the Bank in
writing and that are not to be paid with proceeds of borrowings
under the Credit Facilities.

 

 

6

 

 

K. Organizational
Documents. Unless at least thirty (30) day prior written
notice is provided to the Bank, amend or modify any of its
Organizational Documents.

 

L. Government
Regulation. (1) Be or become subject at any time to any
Legal Requirement or list of any government agency (including,
without limitation, the U.S. Office of Foreign Asset Control list)
that prohibits or limits the Bank from making any advance or
extension of credit to it or from otherwise conducting business
with it, or (2) fail to provide documentary and other evidence of
its identity as may be requested by the Bank at any time to enable
the Bank to verify its identity or to comply with any applicable
Legal Requirement, including, without limitation, Section 326 of
the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

M. Subsidiaries.
Form, create or acquire any Subsidiary.

 

5.2

Financial Covenants. Without the written
consent of the Bank, the Borrower will not:

 

A. Tangible
Net Worth. Permit at any fiscal quarter end, its Tangible
Net Worth to be less than $20,000,000.00.

 

5.3

Financial Statement Calculations. The
financial covenant(s) set forth in Section 5.2 entitled "Financial
Covenants", except as may be otherwise expressly provided with
respect to any particular financial covenant, shall be calculated
on the basis of the Borrower’s financial statements prepared
on a consolidated basis with its Subsidiaries in accordance with
GAAP, provided that, if after the date hereof there occurs any
change in GAAP or in the application thereof on the operation of
any provision hereof and the Bank notifies the Borrower that the
Bank requests an amendment to any provision hereof for such
purpose, regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such
provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such change shall have become
effective until such provision is amended in accordance herewith.
Notwithstanding the foregoing, for purposes of determining
compliance with any financial covenant contained herein, the
effects of FASB Accounting Standards Update 2016-02 (Topic 842)
shall be disregarded.

 

6.

Representations.

 

6.1

Representations and Warranties by the
Borrower. To induce the Bank to enter into this agreement,
the Borrower represents and warrants as of the date of this
agreement and as of the date of each request for credit under the
Credit Facilities that
each of the following statements is true and correct and shall
remain so until all Credit Facilities and all Liabilities under the
Notes and other Related Documents are paid in full:

 

(a) its name as it
appears in this agreement is its exact name as it appears in its
most recently filed public organic record and other
Organizational Documents,

 

(b) the execution and
delivery of this agreement and the other Related Documents to which
it is a party, and the performance of the obligations they impose,
do not violate any Legal Requirement, conflict with any agreement
by which it is bound, or require the consent or approval of any
other Person,

 

(c) this agreement and
the other Related Documents have been duly authorized, executed and
delivered by all parties thereto (other than the Bank) and are
valid, enforceable and binding agreements, except as may be limited
by bankruptcy, insolvency or other laws affecting the enforcement
of creditors' rights generally and by general principles of
equity,

 

(d) all balance sheets,
profit and loss statements, and other financial statements and
other information furnished to the Bank are accurate and fairly
reflect the financial condition of the Persons to which they apply
on their effective dates, which financial condition has not changed
materially and adversely since those dates,

 

(e) no litigation,
claim, investigation, administrative proceeding or similar action
is pending or threatened against it, and no other event has
occurred which may materially affect it or any of its Subsidiaries'
financial condition, properties, business, affairs or operations,
other than litigation, claims, or other events, if any, that have
been disclosed to and acknowledged by the Bank in
writing,

 

 

7

 

 

(f) all of its tax
returns and reports that are or were required to be filed, have
been filed, and all taxes, assessments and other governmental
charges have been paid in full, except those presently being
contested by it in good faith and for which adequate reserves have
been provided,

 

(g) it is not an
"investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940,
as amended,

 

(h) there are no
defenses or counterclaims, offsets or adverse claims, demands or
actions of any kind, personal or otherwise, that it could assert
with respect to this agreement or the Credit
Facilities,

 

(i) it owns, or is
licensed to use, all trademarks, trade names, copyrights,
technology, know-how and processes necessary for the continued
current conduct of its business, and

 

(j) there has been no default, event of default or
event that would constitute a default or event of default (pending
giving of notice or a lapse of time or both), of any provision of
this agreement, the Notes or any other Related
Documents.

 

6.2

Representations and Warranties Regarding
Borrowing Base. The Borrower represents and warrants as of
the date of this agreement and as of the date of each request for
credit under the Credit Facilities that with respect to the
Borrowing Base, (i) each asset represented by it to be eligible for
Borrowing Base purposes of this agreement conforms to the
eligibility definitions set forth in this agreement; (ii) all asset
values delivered to the Bank will be true and correct, subject to
immaterial variance; and be determined on a consistent accounting
basis; (iii) except as agreed to the contrary by the Bank in
writing, each asset is now and at all times hereafter will be in
its physical possession and shall not be held by others on
consignment, sale or approval, or sale or return; (iv) except as
reflected in schedules delivered to the Bank, each asset is now and
at all times hereafter will be of good and merchantable quality,
free from defects; and (v) each asset is not now and will not at
any time hereafter be stored with a bailee, warehouseman, or
similar Person without the Bank's prior written consent, and in
such event, it will concurrently at the time of bailment cause any
such bailee, warehouseman, or similar Person to issue and deliver
to the Bank, warehouseman receipts in the Bank's name evidencing
the storage of the assets.

 

6.3

Representations and Warranties Regarding
Anti-Corruption Laws and Sanctions. The Borrower represents and warrants as of the date of
this agreement and as of the date of each request for credit under
the Credit Facilities that the Borrower has implemented and
maintains in effect policies and procedures designed to ensure
compliance by the Borrower, its Subsidiaries and their respective
directors, officers, employees and agents with Anti-Corruption Laws
and applicable Sanctions, and the Borrower, its Subsidiaries and
their respective directors and officers and to the knowledge of the
Borrower its employees and agents, are in compliance with
Anti-Corruption Laws and applicable Sanctions in all material
respects. None of (a) the Borrower, any Subsidiary, any of their
respective directors, officers or to the knowledge of the Borrower
employees, or (b) to the knowledge of the Borrower, any agent of
the Borrower or any Subsidiary that will act in any capacity in
connection with or benefit from the credit facility established
hereby, is a Sanctioned Person. No advance, letter of credit, use
of proceeds or other transaction contemplated by the Credit
Facilities will violate Anti-Corruption Laws or applicable
Sanctions.

 

7.

Default/Remedies.

 

7.1

Events of Default/Acceleration. If any
of the following events occurs, the Notes shall become due
immediately, without notice, at the Bank's option:

 

A. Any
Obligor fails to pay when due any of the Liabilities or any other
debt to any Person, or any amount payable with respect to any of
the Liabilities, or under any Note, any other Related Document, or
any agreement or instrument evidencing other debt to any
Person.

 

B. Any
Obligor: (i) fails to observe or perform any other term, covenant,
condition or agreement of any of the Related Documents; (ii) makes
any materially incorrect or misleading representation to the Bank;
or (iii) defaults under the terms of any agreement or instrument
relating to any debt for borrowed money (other than the debt
evidenced by the Related Documents) and the effect of such default
will allow the creditor to declare the debt due before its stated
maturity.

 

C. In
the event (i) there is a default under the terms of any Related
Document, (ii) any Obligor terminates or revokes or purports to
terminate or revoke its guaranty or any Obligor's guaranty becomes
unenforceable in whole or in part, (iii) any Obligor fails to
perform promptly under its guaranty, or (iv) any Obligor fails to
comply with, or perform under any agreement, now or hereafter in
effect, between the Obligor and the
Bank, or any Affiliate of the Bank or their respective
successors and assigns.

 

 

8

 

 

D. There
is any loss, theft, damage, or destruction of any Collateral not
covered by insurance.

 

E. Any
event occurs that would permit the Pension Benefit Guaranty
Corporation to terminate any employee benefit plan of any Obligor
or any Subsidiary of any Obligor.

 

F. Any
Obligor or any of its Subsidiaries: (i) becomes insolvent or unable
to pay its debts as they become due; (ii) makes an assignment for
the benefit of creditors; (iii) consents to or commences any
proceeding under any bankruptcy, reorganization, liquidation,
insolvency or similar laws; (iv) conceals or removes any of its
Property, with intent to hinder, delay or defraud any of its
creditors; (v) makes or permits a transfer of any of its Property,
which may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law; or (vi) makes a transfer of any of its Property to
or for the benefit of a creditor at a time when other creditors
similarly situated have not been paid.

 

G. A
custodian, receiver, or trustee is appointed for any Obligor or any
of its Subsidiaries or for a substantial part of their respective
Property.

 

H. Any
Obligor or any of its Subsidiaries, without the Bank's written
consent: (i) liquidates, divides or
allocates any assets under a plan of division or similar
arrangement, creates any series limited liability company,
allocates any property to any series, or is dissolved; (ii)
merges or consolidates with any other Person; (iii) leases, sells
or otherwise conveys a material part of its assets or business
outside the ordinary course of its business; (iv) leases,
purchases, or otherwise acquires a material part of the assets of
any other Person, except in the ordinary course of its business; or
(v) agrees to do any of the foregoing; provided, however, that any
Subsidiary of an Obligor may merge or consolidate with any other
Subsidiary of that Obligor, or with the Obligor, so long as the
Obligor is the survivor.

 

I. Proceedings
are commenced under any bankruptcy, reorganization, liquidation, or
similar laws against any Obligor or any of its Subsidiaries and
remain undismissed for sixty (60) days after commencement; or any
Obligor or any of its Subsidiaries consents to the commencement of
those proceedings.

 

J. Any
judgment is entered against any Obligor or any of its Subsidiaries,
or any attachment, seizure, sequestration, levy, or garnishment is
issued against any Property of any Obligor or any of its
Subsidiaries or any Collateral.

 

K. Any
individual Obligor dies, or a guardian or conservator is appointed
for any individual Obligor or all or any portion of their
respective Property, or the Collateral.

 

L. Any
material adverse change occurs in: (i) the Property, financial
condition, business, assets, prospects, liabilities, or operations
of any Obligor or any of its Subsidiaries; (ii) any Obligor's
ability to perform its obligations under the Related Documents; or
(iii) the Collateral.

 

7.2

Cure Periods. Except as expressly
provided to the contrary in this Note or any of the other Related
Documents, the Bank shall not exercise its option to accelerate the
maturity of this Note upon the occurrence of a default unless the
default has not been fully cured (i) within five (5) days after its
occurrence, if the condition, event or occurrence giving rise to
such default can be cured by the payment of money, or (ii) within
thirty (30) days after its occurrence, if the condition, event or
occurrence giving rise to such default is of a nature that it can
be cured only by means other than the payment of
money.

 

Provided, however,
that the Borrower shall have no cure rights if the condition, event
or occurrence giving rise to the default: (a) is described in any
of clauses 3(b), (6), (7), (8), (9), or (11) above or (b)
constitutes a breach of any covenant in any of the Related
Documents prohibiting the sale or transfer of (i) any assets of any
Borrower, Mortgagor, Pledgor, Debtor, Assignor, Trustor or any
similar pledging or borrowing party or (ii) any of the Collateral;
or (c) during the twelve (12) month period immediately preceding
the occurrence of the default, either (i) the same default has
occurred or (ii) three (3) or more other defaults of any nature
have occurred. Notwithstanding the existence of any cure period,
the Bank shall have no obligation to extend credit governed by this
Note, whether by advance, disbursement of a loan or otherwise after
the occurrence of any default or event which with the giving of
notice or the passage of time or both could become a default or
during any cure period. The inclusion of any cure period in this
Note shall have no bearing on the due dates for payments under any
of the Related Documents, whether for purposes of calculating late
payment charges or otherwise.

 

 

9

 

 

7.3

Remedies. At any time after the
occurrence of a default, the Bank may do one or more of the
following: (a) cease permitting the Borrower to incur any
Liabilities; (b) terminate any commitment of the Bank evidenced by
any of the Notes; (c) declare any of the Notes to be immediately
due and payable, without notice of acceleration, presentment and
demand or protest or notice of any kind, all of which are hereby
expressly waived; (d) exercise all rights of setoff; and (e) exercise any and all other
rights pursuant to any of the Related Documents.

 

A. Generally.
The rights of the Bank under this agreement and the other Related
Documents are in addition to other rights (including without
limitation, other rights of setoff) the Bank may have
contractually, by law, in equity or otherwise, all of which are
cumulative and hereby retained by the Bank. Each Obligor agrees to
stand still with regard to the Bank's enforcement of its rights,
including taking no action to delay, impede or otherwise interfere
with the Bank's rights to realize on any Collateral.

 

B. Bank’s
Right of Setoff. If default shall have occurred and be
continuing, the Bank and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits
(general or special time or demand, provisional or final) at any
time held and other obligations at any time owing by the Bank or
any Affiliate to or for the credit or the account of any Borrower
against any of and all the Liabilities, irrespective of whether or
not the Bank shall have made any demand under the Related Documents
and although such obligations may be unmatured. The rights of the
Bank under this Section are in addition to other rights and
remedies (including other rights of setoff) which the Bank may
have.

 

8.

Miscellaneous.

 

8.1

Notice. Any notices and demands under or
related to this agreement shall be in writing and delivered to the
Borrower at its address stated in this agreement and if to the
Bank, Manager Wholesale Lending Services, JPMorgan Chase Bank,
N.A., 10 S. Dearborn, IL1-1145 (Floor L2), Chicago, IL 60603-2300
with a copy addressed to Amine Radi, JPMorgan Chase Bank, N.A., 450
S Orange Ave, Floor 10, Orlando, FL 32801-3383, by one of the
following means: (a) by hand; (b) by overnight courier service; or
(c) by certified or registered mail. Notice shall be deemed given
upon receipt. Any party may change its address for purposes of the
receipt of notices and demands by giving notice of the change in
the manner provided in this provision.

 

8.2

Statements. The Bank may provide the Borrower with account statements or
invoices with respect to any of the Liabilities
("Statements"). Unless otherwise agreed to herein, the Bank
is under no duty or obligation to
provide Statements, which, if provided, will be solely for the
Borrower’s convenience. Statements may contain estimates of
the amounts owed during the relevant billing period, whether of
principal, interest, fees or other Liabilities. If the Borrower
pays the full amount indicated on a Statement on or before the due
date indicated on such Statement, the Borrower shall not be in
default of payment with respect to the billing period indicated on
such Statement; provided, that acceptance by the Bank of any
payment that is less than the total amount actually due at that
time (including but not limited to any past due amounts) shall not
constitute a waiver of the Bank’s right to receive payment in
full at another time.

 

8.3

No Waiver. No delay on the part of the
Bank in the exercise of any right or remedy waives that right or
remedy. No single or partial exercise by the Bank of any right or
remedy precludes any other future exercise of it or the exercise of
any other right or remedy. The making of an advance during the
existence of any default or subsequent to the occurrence of a
default or when all conditions precedent have not been met shall
not constitute a waiver of the default or condition precedent. No
waiver or indulgence by the Bank of any default is effective unless
it is in writing and signed by the Bank, nor shall a waiver on one
occasion bar or waive that right on any future
occasion.

 

8.4

Integration; Severability. This
agreement, the Notes, and the other Related Documents embody the
entire agreement and understanding between the Borrower and the
Bank and supersede all prior agreements and understandings relating
to their subject matter. If any one or more of the obligations of
the Borrower under this agreement, the Notes, or the other Related
Documents or any provision thereof is held to be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining obligations of the Borrower and the
remaining provisions shall not in any way be affected or impaired;
and the invalidity, illegality or unenforceability in one
jurisdiction shall not affect the validity, legality or
enforceability of such obligations or provisions in any other
jurisdiction.

 

8.5

Governing Law and Venue. This agreement
and (unless stated otherwise therein) all Related Documents shall
be governed by and construed in accordance with the laws of the
State of Florida (without giving effect to its laws of conflicts).
The Borrower agrees that any legal action or proceeding with
respect to any of its obligations under this agreement may be
brought by the Bank in any state or federal court located in the
State of Florida, as the Bank in its sole discretion may elect. By
the execution and delivery of this agreement, the Borrower submits
to and accepts, for itself and in respect of its property,
generally and unconditionally, the non-exclusive jurisdiction of
those courts. The Borrower waives any claim that the State of
Florida is not a convenient forum or the proper venue for any such
suit, action or proceeding.

 

 

10

 

 

8.6

Non-Liability of the Bank. The
relationship between the Borrower on one hand and the Bank on the
other hand shall be solely that of borrower and lender. The Bank
shall have no fiduciary obligations to the Borrower. The Bank is
not to be deemed an Affiliate of the Borrower or any of its
Subsidiaries.

 

8.7

Indemnification of the Bank. The
Borrower agrees to indemnify, defend and hold the Bank, its parent
companies, Subsidiaries, Affiliates, their respective successors
and assigns and each of their respective shareholders, directors,
officers, employees and agents (collectively, the "Indemnified Persons") harmless from any
and against any and all loss, liability, obligation, damage,
penalty, judgment, claim, deficiency, expense, interest, penalties,
attorneys' fees (including the fees and expenses of any attorneys
engaged by the Indemnified Person) and amounts paid in settlement
("Claims") to which any
Indemnified Person may become subject arising out of or relating to the Credit
Facilities, the Liabilities under this
agreement or any other Related Documents or the Collateral,
except to the limited extent that the
Claims are proximately caused by the Indemnified Person's
gross negligence or willful misconduct. The indemnification provided for in this
paragraph shall survive the termination of this agreement and shall
not be affected by the presence, absence or amount of or the
payment or nonpayment of any claim under, any
insurance.

 

8.8

Counterparts. This agreement may be
executed in multiple counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts, taken
together, shall constitute one and the same agreement.

 

8.9

Advice of Counsel. The Borrower
acknowledges that it has had the opportunity to be advised by
counsel, in the negotiation, execution and delivery of this
agreement and any other Related Documents.

 

8.10

Recovery of Additional Costs. If the
imposition of or any change in any Legal Requirement, or the
interpretation or application of any thereof by any court or
administrative or governmental authority (including any request or
policy not having the force of law) shall impose, modify, or make
applicable any taxes (except federal, state, or local income or
franchise taxes imposed on the Bank), reserve requirements,
liquidity requirements, capital adequacy requirements, Federal
Deposit Insurance Corporation (FDIC) deposit insurance premiums or
assessments, or other obligations which would (A) increase the cost
to the Bank for extending, maintaining or funding the Credit
Facilities, (B) reduce the amounts payable to the Bank under the
Credit Facilities, or (C) reduce the rate of return on the Bank's
capital as a consequence of the Bank's obligations with respect to
the Credit Facilities, then the Borrower agrees to pay the Bank
such additional amounts as will compensate the Bank therefor,
within five (5) days after the Bank's written demand for such
payment. The Bank's demand shall be accompanied by an explanation
of such imposition or charge and a calculation in reasonable detail
of the additional amounts payable by the Borrower, which
explanation and calculations shall be conclusive in the absence of
manifest error.

 

8.11

Expenses. To the extent not prohibited by law, and
regardless of whether the transactions contemplated by this
agreement are consummated, the Borrower is liable to the Bank and
agrees to pay on demand all reasonable costs and expenses of every
kind incurred (or charged by internal allocation) in connection
with the negotiating, preparing, making, servicing and
collection (in bankruptcy or otherwise) of the Credit Facilities and the realization on
any Collateral and any other amounts owed under this agreement or
the Related Documents, including without limitation reasonable
attorneys' fees and court costs. The obligations of the Borrower
under this section shall survive the termination of this
agreement.

 

8.12

Assignments. The Borrower agrees that
the Bank may at any time sell, assign or transfer one or more
interests or participations in all or any part of its rights and
obligations in the Notes to one or more purchasers whether or not
related to the Bank. Notwithstanding anything to the contrary in
this agreement, the Bank may at any time pledge or assign a
security interest in all of any portion of its rights under this
agreement to secure obligations of the Bank to a Federal Reserve
Bank or a Federal Home Loan Bank; provided that no such pledge or
assignment shall release the Bank from any of its obligations
hereunder or substitute any such pledgee or assignee for the Bank
as a party hereto.

 

8.13

Marketing Consent. The Borrower hereby
authorizes the Bank, at Bank's sole expense, and without any prior
approval by or compensation to the Borrower, to include the
Borrower's name and logo in advertising, marketing, tombstones,
case studies and training materials, posted on the Internet
(including social media), on the Bank's Intranet, in pitchbooks and
materials sent to prospective and existing customers, in newspapers
or journals and to give such other publicity to this agreement and
any related products and services, as Bank may from time to time
determine in its sole discretion.

 

 

11

 

 

8.14

Waivers. To the maximum extent not
prohibited by applicable Legal Requirements, each Obligor waives
(a) any right to receive notice of the following matters before the
Bank enforces any of its rights: (i) any demand, diligence,
presentment, dishonor and protest, or (ii) any action that the Bank
takes regarding any Person, any Collateral, or any of the
Liabilities, that it might be entitled to by law or under any other
agreement; (b) any right to require the Bank to proceed against the
Borrower, any other Obligor or any Collateral, or pursue any remedy
in the Bank's power to pursue; (c) any defense based on any claim
that any Obligor's obligations exceed or are more burdensome than
those of the Borrower; (d) the benefit of any statute of
limitations affecting liability of any Obligor or the enforcement
hereof; (e) any defense arising by reason of any disability or
other defense of the Borrower or by reason of the cessation from
any cause whatsoever (other than payment in full) of the obligation
of the Borrower for the Liabilities; and (f) any defense based on
or arising out of any defense that the Borrower may have to the
payment or performance of the Liabilities or any portion thereof.
Each Obligor consents to any extension or postponement of time of
its payment without limit as to the number or period, to any
substitution, exchange or release of all or any part of any
Collateral, to the addition of any other party, and to the release
or discharge of, or suspension of any rights and remedies against,
any Obligor.

 

8.15

Confidentiality. The Bank agrees that it
will treat information provided by the Borrower or its
representatives to the Bank (the "Information") as confidential; provided,
however, that the Bank may disclose the Information (a) to its
Affiliates and its and its Affiliates’ directors, employees,
officers, auditors, consultants, agents, counsel and advisors (such
Affiliates and such Persons collectively, "Representatives"), it being understood
that its Representatives shall be informed by the Bank of the
confidential nature of such Information and be instructed to comply
with the terms of this section to the same extent as is required of
the Bank hereunder; (b) in response to a subpoena or other legal
process, or as may otherwise be required by law, order or
regulation, or upon the request or demand of any governmental or
regulatory agency or authority having jurisdiction over the Bank or
its Representatives or to defend or prosecute a claim brought
against or by the Bank and/or its Representatives; (c) to actual
and prospective assignees, actual and prospective participants, and
actual and prospective swap counterparties, provided that all such
participants, assignees or swap counterparties execute an agreement
with the Bank containing provisions substantially the same as those
contained in this section; (d) to holders of Equity Interests in
the Borrower, other than holders of any Equity Interest in a
publicly traded company; (e) to any Obligor; and (f) with the
Borrower's consent. The restrictions contained in this section
shall not apply to Information which (a) is or becomes generally
available to the public other than as a result of a disclosure by
the Bank or its Representatives in breach of this section, or (b)
becomes available to the Bank or its Representatives from a source,
other than the Borrower or one of its agents, who is not known to
the Bank or its Representatives to be bound by any obligations of
confidentiality to the Borrower, or (c) was known to the Bank or
its Representatives prior to its disclosure to the Bank or its
Representatives by the Borrower or one of its agents or was
independently developed by the Bank or its Representatives, or (d)
was or is, after the date hereof, disclosed (or required to be
disclosed) by the Borrower to the Bank or any of its
Representatives under or in connection with any existing financing
relationship between the Borrower and the Bank or any of its
Representatives, the disclosure of which shall be governed by the
agreements executed in connection with such financing relationship.
Any Person required to maintain the confidentiality of the
Information as provided in this section shall be considered to have
complied with its obligation to do so if such Person has exercised
the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential
information.

 

9.

USA PATRIOT ACT NOTIFICATION. The
following notification is provided to the Borrower pursuant to
Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section
5318:

 

IMPORTANT
INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the
government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each Person
that opens an account, including any deposit account, treasury
management account, loan, other extension of credit, or other
financial services product. What this means for the Borrower: When
the Borrower opens an account, if it is an individual the Bank will
ask for its name, taxpayer identification number, residential
address, date of birth, and other information that will allow the
Bank to identify it, and, if it is not an individual the Bank will
ask for its name, taxpayer identification number, business address,
and other information that will allow the Bank to identify it. The
Bank may also ask, if the Borrower is an individual, to see its
driver’s license or other identifying documents, and if it is
not an individual, to see its Organizational Documents or other
identifying documents.

 

10.

WAIVER OF SPECIAL DAMAGES. WITH RESPECT
TO THIS AGREEMENT AND ALL RELATED DOCUMENTS, THE BORROWER WAIVES,
TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THE
UNDERSIGNED MAY HAVE TO CLAIM OR RECOVER FROM THE BANK IN ANY LEGAL
ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.

 

[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

12

 

 

11.

JURY WAIVER. TO THE MAXIMUM EXTENT NOT
PROHIBITED BY APPLICABLE LAW, THE BORROWER AND THE BANK (BY ITS
ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR
OTHERWISE) BETWEEN THE BORROWER AND THE BANK ARISING OUT OF OR IN
ANY WAY RELATED TO THIS AGREEMENT OR THE OTHER RELATED DOCUMENTS.
THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO PROVIDE THE
FINANCING DESCRIBED HEREIN.

 

	
 

	

Borrower:

	
 

	
 

	

BK
Technologies, Inc.

 

	
 

	
 

	
 

	

By:

	
/s/ William P.
Kelly

	
 

	
 

	
 

	
 

	

William P. Kelly,
EVP and CFO  

	
 

	
 

	
 

	
 

	

Printed
Name

	

Title

	
 

	
 

	
 

	
 

	

 

	

 

	
 

	
 

	
 

	

Date
Signed:

	
1/30/20

 

	
 

	
 

	

Bank:

	
 

	
 

	

JPMorgan
Chase Bank, N.A.

	
 

	
 

	
 

	

By:

	
/s/ Amine
Radi

	
 

	
 

	
 

	
 

	
Amine Radi,
Executive Director

	
 

	
 

	
 

	
 

	
 

	

Printed
Name

	

Title

	
 

	
 

	
 

	
 

	

 

	

 

	
 

	
 

	
 

	

Date
Signed:

	
1/30/20

 

 

13Blueprint

170530-V16

  Exhibit
10.2

 

	

 

 

	

Line of Credit Note

 

	
 

	

$5,000,000.00

	
 

	

Date: January 13, 2020

 

THIS
NOTE IS NOT SECURED BY REAL ESTATE LOCATED IN THE STATE OF FLORIDA
AND WAS EXECUTED OR DELIVERED IN THE STATE OF FLORIDA:

 

FLORIDA
DOCUMENTARY STAMP TAX IN THE AMOUNT OF $2,450.00 HAS BEEN PAID ON
OR WILL BE PAID DIRECTLY TO THE DEPARTMENT OF REVENUE, CERTIFICATE
OF REGISTRATION NO. 78-8015377427-3.

 

Promise to Pay. On or before January 31, 2021, for value
received, BK Technologies, Inc. (the "Borrower") promises to pay to
JPMorgan Chase Bank, N.A., whose address is 450 S Orange Ave, Floor
10, Orlando, FL 32801-3383
(the "Bank") or order, in lawful money of the United States of
America, the sum of Five Million and 00/100 Dollars ($5,000,000.00)
or so much thereof as may be advanced and outstanding, plus
interest on the unpaid principal balance computed on the basis of
the actual number of days elapsed in a year of 360 days at the
"Adjusted LIBOR Rate" (the "Note Rate") and at the rate of 3.00%
Per Annum above the Note Rate, at the Bank's option, upon the
occurrence of any default under this Note, whether or not the Bank
elects to accelerate the maturity of this Note, from the date such
increased rate is imposed by the Bank.

 

Definitions. As used in this Note, the following terms have
the following respective meanings:

 

"Adjusted LIBOR Rate" means, with respect to the relevant
Interest Period, the sum of (i) the Applicable Margin plus (ii) (a)
the LIBOR Rate applicable to such Interest Period multiplied by (b)
the Statutory Reserve Rate.

 

"Applicable Margin" means 1.90% Per Annum.

 

"Business Day" means any day that is not a Saturday, Sunday
or other day on which commercial banks in New York City are
authorized or required by law to remain closed; provided that the
term "Business Day" shall also exclude any day on which banks are
not open for general business in London.

 

"Federal Reserve Board" means
the Board of Governors of the Federal Reserve System of the United
States of America.

 

"Interest Period" means each consecutive one month period,
the first of which shall commence on the date of this Note, ending
on the day which corresponds numerically to such date one (1) month thereafter, provided,
however, that if there is no such numerically corresponding day in
such first succeeding month,
such Interest Period shall end on the last Business Day of such
first succeeding month. If an
Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding
Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.

 

"LIBOR Rate" means with respect to any LIBOR advance for any
Interest Period, the London interbank offered rate ("LIBOR") as administered by ICE Benchmark
Administration (or any other person that takes over the
administration of such rate for Dollars, the "IBA") for a period equal in length to
such Interest Period as displayed on pages LIBOR01 or LIBOR02 of
the Reuters screen that displays such rate (or, in the event such
rate does not appear on a Reuters page or screen, on any successor
or substitute page on such screen that displays such rate, or on
the appropriate page of such other information service that
publishes such rate from time to time as shall be selected by the
Bank in its reasonable discretion; in each case, the "LIBOR Screen
Rate") at approximately 11:00 a.m., London time, two (2) Business
Days prior to the commencement of such Interest Period;
provided that, if any LIBOR
Screen Rate shall be less than zero, such rate shall be deemed to
be zero for the purposes of this Note. If no LIBOR Screen Rate is available to the Bank,
the applicable LIBOR Rate for the relevant Interest Period shall
instead be the rate determined by the Bank to be the rate at which
the Bank offers to place U.S. dollar deposits having a
maturity equal to such Interest Period with first-class banks in the London interbank
market at approximately 11:00 A.M. (London time) two Business Days
prior to the first day of such Interest Period.

 

LIBOR is intended to represent the rate at which contributing banks
may obtain short-term borrowings from each other in the London
interbank market. In July 2017, the U.K. Financial Conduct
Authority announced that, after the end of 2021, it would no longer
persuade or compel contributing banks to make rate submissions to
the IBA for purposes of the IBA setting LIBOR. As a result, it is
possible that commencing in 2022, LIBOR may no longer be available
or deemed an appropriate reference rate upon which to determine the
interest rate on LIBOR Rate advances. In light of this eventuality,
public and private sector industry initiatives are currently
underway to identify new or alternative reference rates to be used
in place of LIBOR. In the event LIBOR is no longer available (or in
certain other circumstances), the "Illegality/Alternate Rate of
Interest" provision below provides a mechanism for determining an
alternative rate of interest. The Bank will notify the Borrower in
advance of any change to the reference rate upon which the interest
rate on LIBOR Rate advances is based. However, the Bank does not
warrant or accept any responsibility for, and shall not have any
liability with respect to, the administration, submission or any
other matter related to LIBOR or other rates in the definition of
"LIBOR Rate" or with respect to any alternative, successor rate
thereto, or replacement rate thereof, including without limitation,
whether the composition or characteristics of any such alternative,
successor or replacement reference rate will be similar to, or
produce the same value or economic equivalence of, the LIBOR Rate
or have the same volume or liquidity as did LIBOR prior to its
discontinuance or unavailability.

 

 

"Per
Annum" means for a year deemed to be comprised of 360
days.

 

"Prime Rate" means the rate of
interest last quoted by The Wall Street Journal as the "Prime Rate"
in the U.S. or, if The Wall Street Journal ceases to quote such
rate, the highest per annum interest rate published by the Federal
Reserve Board in Federal Reserve Statistical Release H.15 (519)
(Selected Interest Rates) as the "bank prime loan" rate or, if such
rate is no longer quoted therein, any similar rate quoted therein
(as determined by the Bank) or any similar release by the Federal
Reserve Board (as determined by the Bank). Each change in the Prime
Rate shall be effective from and including the date such change is
publicly announced or quoted as being
effective.

 

"Statutory Reserve Rate" means
a fraction (expressed as a
decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentage (including any marginal, special,
emergency or supplemental reserves) established by the Federal
Reserve Board to which the Bank is subject with respect to the
Adjusted LIBOR Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Federal
Reserve Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D of the Federal Reserve Board.
LIBOR Rate advances shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may
be available from time to time to the Bank under such Regulation D
of the Federal Reserve Board or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in any reserve
percentage.

 

Illegality/Alternate Rate of
Interest. If:

 

(i)

any applicable
domestic or foreign law, treaty, rule or regulation now or later in
effect (whether or not it now applies to the Bank) or the
interpretation or administration thereof by a governmental
authority charged with such interpretation or administration, or
compliance by the Bank with any guideline, request or directive of
such an authority (whether or not having the force of law), shall
make it unlawful or impossible for the Bank to maintain or fund the
advances evidenced by this Note, or

 

(ii)

the Bank determines
that quotations of interest rates for the relevant deposits
referred to in the definition of Adjusted LIBOR Rate are not being
provided for purposes of determining the interest rate on the
advances evidenced by this Note, or

 

(iii)

the Bank determines
that the relevant interest rates referred to in the definition of
Adjusted LIBOR Rate do not accurately cover the cost to the Bank of
making funding or maintaining the advances evidenced by this
Note,

 

then,
upon notice of such circumstances from the Bank to the Borrower:
(a) the obligation of the Bank to make advances shall be suspended until the Bank
notifies the Borrower that the circumstances giving rise to the
suspension no longer exists, and (b) subject to the terms and
conditions of this Note and the other Related Documents, the entire
outstanding balance of any advance shall be replaced with an
advance bearing interest at the greater of (x) Prime Rate and (y)
2.50% (the "Interim Alternate
Rate"), and the Borrower may request advances upon this Note
bearing interest at the Interim Alternate Rate.

 

In no
event shall the interest rate exceed the maximum rate allowed by
law. Any interest payment that would for any reason be unlawful
under applicable law shall be applied to principal.

 

Interest
will be computed on the unpaid principal balance from the date of
each borrowing.

 

Interest Payments. Until maturity, the Borrower will pay
consecutive monthly installments of interest only commencing
February 1, 2020.

 

The
Borrower shall make all payments on this Note and the other Related
Documents, without setoff, deduction, or counterclaim, to the Bank
at the Bank's address above or at such other place as the Bank may
designate in writing. If any payment of principal or interest on
this Note shall become due on a day that is not a Business Day, the
payment will be made on the next succeeding Business Day. Payments
shall be allocated among principal, interest and fees at the
discretion of the Bank unless otherwise agreed or required by
applicable law. Acceptance by the Bank of any payment that is less
than the payment due at that time shall not constitute a waiver of
the Bank's right to receive payment in full at that time or any
other time.

 

2

 

 

Authorization for Direct Payments (ACH Debits). To
effectuate any payment due under this Note or under any other
Related Documents, the Borrower hereby authorizes the Bank to
initiate debit entries to Account Number
______________________________ at the Bank and to debit the same to
such account. This authorization to initiate debit entries shall
remain in full force and effect until the Bank has received written
notification of its termination in such time and in such manner as
to afford the Bank a reasonable opportunity to act on it. The
Borrower represents that the Borrower is and will be the owner of
all funds in such account. The Borrower acknowledges: (1) that such
debit entries may cause an overdraft of such account which may
result in the Bank’s refusal to honor items drawn on such
account until adequate deposits are made to such account; (2) that
the Bank is under no duty or obligation to initiate any debit entry
for any purpose; and (3) that if a debit is not made because the
above-referenced account does not have a sufficient available
balance, or otherwise, the payment may be late or past
due.

 

Late Fee. Any principal or
interest which is not paid within 10 days after its due date
(whether as stated, by acceleration or otherwise) shall be subject
to a late payment charge of five percent (5.00%) of the total
payment due, in addition to the payment of interest, up to the
maximum amount of One Thousand Five Hundred and 00/100 Dollars
($1,500.00) per late charge. The Borrower agrees to pay and
stipulates that five percent (5.00%) of the total payment due is a
reasonable amount for a late payment charge. The
Borrower shall pay the late payment charge upon demand by
the Bank or, if billed, within the time
specified.

 

Purpose of Loan. The Borrower acknowledges and agrees that
this Note evidences a loan for a business, commercial, agricultural
or similar commercial enterprise purpose, and that no advance shall
be used for any personal, family or household purpose. The proceeds
of the loan shall be used only for the Borrower's working capital
purposes.

 

Credit Facility. The Bank has approved a credit facility to
the Borrower in a principal amount not to exceed the face amount of
this Note. The credit facility is in the form of advances made from
time to time by the Bank to the Borrower. This Note evidences the
Borrower's obligation to repay those advances. The aggregate
principal amount of debt evidenced by this Note is the amount
reflected from time to time in the records of the Bank. Until the
earliest to occur of maturity, any default, event of default, or
any event that would constitute a default or event of default but
for the giving of notice, the lapse of time or both, the Borrower
may borrow, pay down and reborrow under this Note subject to the
terms of the Related Documents.

 

Usury. The Bank does not intend to charge, collect or
receive any interest that would exceed the maximum rate allowed by
law. If the effect of any applicable law is to render usurious any
amount called for under this Note or the other Related Documents,
or if any amount charged or received with respect to this Note, or
any prepayment by the Borrower, results in the computation or
earning of any interest in excess of that permitted by law, then
any and all excess interest shall be (and the same hereby is)
waived by the Bank, and any and all excess amounts collected by the
Bank shall be automatically credited against, and shall be deemed
to have been payments in reduction of, the then outstanding
principal balance of this Note, and any portion of such excess paid
to the Bank which exceeds the then outstanding principal balance of
this Note shall be paid by the Bank to the Borrower), and the
provisions of this Note and the other Related Documents shall
immediately be deemed reformed and the amounts thereafter
collectable reduced, without the necessity of the execution of any
new document, so as to comply with the then applicable law. All
sums paid, or agreed to be paid, by the Borrower for the use,
forbearance, or detention of money under this Note or the other
Related Documents shall, to the maximum extent permitted by
applicable law, be amortized, prorated, allocated and spread
throughout the full term of such indebtedness until payment in full
thereof, so that the rate or amount of interest on account of such
indebtedness does not exceed the usury ceiling from time to time in
effect and applicable to such indebtedness, for so long as such
indebtedness is outstanding. To the extent federal law permits the
Bank to contract for, charge or receive a greater amount of
interest, the Bank will rely on federal law instead of Florida
law.

 

 

[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

3

 

Miscellaneous. This Note binds the Borrower and its
successors, and benefits the Bank, its successors and assigns. Any
reference to the Bank includes any holder of this Note. This Note
is subject to that certain Credit Agreement by and between the
Borrower and the Bank, dated January 13, 2020, and all amendments, restatements and
replacements thereof (the "Credit Agreement") to which
reference is hereby made for a more complete statement of the terms
and conditions under which the loan evidenced hereby is made and is
to be repaid. The terms and provisions of the Credit Agreement are
hereby incorporated and made a part hereof by this reference
thereto with the same force and effect as if set forth at length
herein. No reference to the Credit Agreement and no provisions of
this Note or the Credit Agreement shall alter or impair the
absolute and unconditional obligation of the Borrower to pay the
principal and interest on this Note as herein prescribed.
Capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in the Credit
Agreement. If any one or
more of the obligations of the Borrower under this Note or any
provision hereof is held to be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the
remaining obligations of the Borrower and the remaining provisions
shall not in any way be affected or impaired; and the invalidity,
illegality or unenforceability in one jurisdiction shall not affect
the validity, legality or enforceability of such obligations or
provisions in any other jurisdiction. Time is of the essence under
this Note and in the performance of every term, covenant and
obligation contained herein.

 

 

 

	
 

	
 

	
 

	

Borrower:

	

Address:

	

7100
Technology Drive

West
Melbourne, FL 32904

	
 

	

BK
Technologies, Inc.

	
 

	
 

	
 

	

By:

	

/s/
William
P. Kelly

	
 

	
 

	
 

	
 

	

William P. Kelly,
EVP and CFO  
 

	
 

	
 

	
 

	
 

	

Printed
Name

	

Title

	
 

	
 

	
 

	
 

	

 

	

 

	
 

	

Date
Signed:

	
1/30/20

 

 

 

 

4

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