Document:

SECURITIES
PURCHASE AGREEMENT

 

BETWEEN

 

FRANKLY
INC.

 

–
and –

 

RAYCOM
MEDIA, INC.

 

JUNE
26, 2017

 

    	 	 	 

    	 

    

 

Table
of Contents

 

	 	Page
	ARTICLE
    1 INTERPRETATION	1
	1.1	Definitions	1
	ARTICLE
    2 PURCHASE AND SALE	3
	2.1	Agreement
    of Purchase and Sale	3
	2.2	Purchase
    Price	3
	2.3	Payment
    of Purchase Price	3
	2.4	Closing
    Arrangements	3
	2.5	Closing
    Documentation	3
	ARTICLE
    3 REPRESENTATIONS AND WARRANTIES	4
	3.1	Corporation’s
    Representations and Warranties	4
	3.2	Buyer’s
    Representations and Warranties	6
	ARTICLE
    4 COVENANTS	8
	4.1	Conduct
    Before Closing	8
	4.2	Directors	8
	4.3	Personal
    Information	9
	4.4	Amendment
    of Credit Agreement	10
	4.5	Expenses	10
	ARTICLE
    5 CLOSING CONDITIONS	10
	5.1	Conditions
    for the Benefit of the Buyer	10
	5.2	Waiver
    or Termination by the Buyer	11
	5.3	Conditions
    for the Benefit of the Corporation	12
	5.4	Waiver
    or Termination by the Corporation	12
	5.5	Conditions
    Precedent	13
	ARTICLE
    6 SURVIVAL AND INDEMNIFICATION	13
	6.1	Survival	13
	6.2	Indemnity	13
	ARTICLE
    7 GENERAL	14
	7.1	Governing
    Law	14
	7.2	Entire
    Agreement	14
	7.3	Time
    of Essence	14
	7.4	Further
    Assurances	14
	7.5	Assignment
    and Enurement	14
	7.6	Counterparts
    and Electronic Delivery	14

 

    	-i-

    	 

    

 

THIS
AGREEMENT is dated June 26, 2017

 

B
E T W E E N :

 

FRANKLY
INC., a corporation existing under the laws of the Province of British Columbia

 

(the
“Corporation”)

 

-
and -

 

RAYCOM
MEDIA, INC., a corporation existing under the laws of Delaware

 

(the
“Buyer”)

 

CONTEXT:

 

	A.	In
    connection with the Credit Agreement between Corporation and Buyer dated August 31, 2016 (the “Credit Agreement”),
    the Corporation issued to the Buyer a promissory note dated August 31, 2016 (the “Promissory Note”) with
    a current principal amount of U.S.$14,500,000 (the “Principal Amount”).
	 	 
	B.	The
    Corporation wishes to repay U.S.$7,000,000 of the Principal Amount by issuing the Purchased Securities to the Buyer.
	 	 
	C.	The
    Buyer has agreed to accept the Purchased Securities in settlement of U.S.$7,000,000 of the Principal Amount subject to the
    terms and conditions of this Agreement.
	 	 
	D.	The
    Corporation wants to sell to the Buyer, and the Buyer wants to purchase from the Corporation, the Purchased Securities.

 

THEREFORE,
the Parties agree as follows:

 

Article
1

INTERPRETATION

 

1.1
Definitions

 

In
this Agreement the following terms have the following meanings:

 

	1.1.1	“Agreement”
    means this securities purchase agreement as it may be confirmed, amended, modified, supplemented or restated by written agreement
    between the Parties.
	 	 
	1.1.2	“Board”
    means the board of directors of the Corporation.
	 	 
	1.1.3	“Closing”
    means the purchase and sale of the Purchased Securities pursuant to the terms of this Agreement.

 

    	 

    	-2- 

    

 

	1.1.4	“Closing
    Date” means the date which is three business days after date on which the last of the closing conditions set out
    in Article 5 has been satisfied, or such other date as agreed by the Corporation and the Buyer.
	 	 
	1.1.5	“Closing
    Time” means the time at which the Closing occurs on the Closing Date.
	 	 
	1.1.6	“Common
    Shares” means the common shares in the capital of the Corporation.
	 	 
	1.1.7	“Governmental
    Authority” means:

 

	 	1.1.7.1	any
    federal, provincial, state, local, municipal, regional, territorial, aboriginal, or other government, governmental or public
    department, branch, ministry, or court, domestic or foreign, including any district, agency, commission, board, arbitration
    panel or authority and any subdivision of any of them exercising or entitled to exercise any administrative, executive judicial,
    ministerial, prerogative, legislative, regulatory, or taxing authority or power of any nature; and
	 	 	 
	 	1.1.7.2	any
    quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of
    any of them, and any subdivision of any of them.

 

	1.1.8	“Material
    Adverse Effect” means a change, effect, event, circumstance, fact or occurrence that has a material adverse effect
    on the financial condition, business, assets, liabilities or results of operations of the Corporation and its subsidiaries,
    taken as a whole, other than any change (a) relating to the economy, political conditions or securities markets in general;
    (b) relating to any generally applicable change in applicable laws or in applicable generally accepted accounting principles;
    (c) relating to this Agreement and other transactions contemplated by this Agreement or the announcement hereof; (d) relating
    to changes affecting generally the industry in which the Corporation and/or its subsidiaries conduct business; and (e) relating
    to changes in currency exchange rates.
	 	 
	1.1.9	“MI
    61-101” means Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions
    of the securities regulatory authorities of Ontario and Quebec;
	 	 
	1.1.10	“NASDAQ”
    means the NASDAQ Capital Market Exchange.
	 	 
	1.1.11	“Offering”
    is defined in Section 5.1.3.
	 	 
	1.1.12	“Offering
    Price” means the public offering price per Unit for Units issued pursuant to the Offering.
	 	 
	1.1.13	“Permits”
    is defined in Section 3.1.17.1.
	 	 
	1.1.14	“Principal
    Amount” is defined in the recitals to this Agreement.
	 	 
	1.1.15	“Promissory
    Note” is defined in the recitals to this Agreement.
	 	 
	1.1.16	“Purchase
    Price” is defined in Section 2.2.
	 	 
	1.1.17	“Purchased
    Securities” means (a) the number of Common Shares equal to the Canadian dollar equivalent of U.S.$7,000,000 as of
    the date of this Agreement, divided by the greater of (i) 85% of the closing price of the Common Shares on the TSXV on the
    last trading day completed prior to the issuance of the news release announcing the execution of this Agreement, and (ii)
    85% of the Canadian dollar equivalent of the Offering Price calculated using the exchange rate as of the date of this Agreement,
    and (b) and 675,900 Warrants of the Corporation. 

 

    	 

    	-3- 

    

 

	1.1.18	“Parties”
    means collectively the Corporation and the Buyer and “Party” means any one of them.
	 	 
	1.1.19	“TSXV”
    means the TSX Venture Exchange.
	 	 
	1.1.20	“Unit”
    means a security consisting of one Common Share and one Warrant offered to the public pursuant to the Offering.
	 	 
	1.1.21	“Valuation”
    means the formal valuation required by MI 61-101 in connection with the transactions contemplated by this Agreement.
	 	 
	1.1.22	“Warrant”
    means a common share purchase warrant exercisable until August 31, 2021 and which may be exercised to acquire one Common Share
    at a price equal to the greater of (a) the United States dollar equivalent of the closing price of the Corporation’s
    Common Shares on the TSXV on the last trading day completed prior to the issuance of the news release announcing the execution
    of this Agreement, and (b) 120% of the Offering Price.

 

Article
2

PURCHASE AND SALE

 

2.1
Agreement of Purchase and Sale

 

Subject
to the terms and conditions of this Agreement, on the Closing Date, the Corporation will issue and sell, and the Buyer will purchase,
the Purchased Securities.

 

2.2
Purchase Price

 

The
purchase price payable by the Buyer to the Corporation for the Purchased Securities will be U.S.$7,000,000 (the “Purchase
Price”).

 

2.3
Payment of Purchase Price

 

The
Purchase Price will be satisfied at Closing by a reduction in the Principal Amount of U.S.$7,000,000, following which the Principal
Amount outstanding under the Credit Agreement and the Promissory Note will be U.S.$7,500,000.

 

2.4
Closing Arrangements

 

The
Closing will occur at the Closing Time at the offices of Gowling WLG (Canada) LLP, Suite 1600, One First Canadian Place, 100 King
St. W. Toronto, ON M5X 1G5, when the Corporation will deliver share and warrant certificates representing the Purchased Securities
to the Buyer.

 

2.5
Closing Documentation

 

On
the Closing Date the Corporation and the Buyer will provide each other with the documents set out in Sections 5.1 and Section
5.3, respectively.

 

    	 

    	-4- 

    

 

Article
3

REPRESENTATIONS AND WARRANTIES

 

3.1
Corporation’s Representations and Warranties

 

The
Corporation represents and warrants to the Buyer, as at the date this Agreement is executed by the Corporation and at the Closing
Time, as follows, and acknowledges that the Buyer is relying on the representations and warranties given by the Corporation in
this Agreement, despite any investigation made by or on behalf of the Buyer that:

 

	3.1.1	the
    Corporation is a corporation duly continued and validly existing under the laws of the Province of British Columbia;
	 	 
	3.1.2	the
    execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action (other than
    shareholder approval, including shareholder approval required by MI 61-101, which will be obtained prior to the Closing Date)
    on the part of the Corporation;
	 	 
	3.1.3	each
    of the Corporation and its subsidiaries has all necessary corporate power, authority and capacity to own or lease its assets
    and to carry on its business as currently being conducted;
	 	 
	3.1.4	the
    Corporation has all necessary corporate power, authority and capacity to enter into and perform its obligations under this
    Agreement;
	 	 
	3.1.5	this
    Agreement has been duly executed and delivered by the Corporation. This Agreement constitutes a legal, valid and binding obligation
    of the Corporation, enforceable against the Corporation in accordance with its terms, provided that (i) specific performance,
    injunction and other equitable remedies are discretionary and, in particular, may not be available where damages are considered
    an adequate remedy; and (ii) enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization and other laws
    generally affecting enforceability of creditors’ rights;
	 	 
	3.1.6	the
    entering into of this Agreement by the Corporation and, subject to the receipt of shareholder approval (including as required
    by MI 61-101), the Valuation, NASDAQ approval and TSXV approval, the performance by the Corporation of the transactions contemplated
    by this Agreement do not and will not result in the violation of any of the terms and provisions of any law, judgment or order
    applicable to the Corporation and its subsidiaries, or the constating documents of the Corporation or its subsidiaries, or
    any agreement, written or oral, to which the Corporation or any of its subsidiaries may be a party or by which the Corporation
    or any of its subsidiaries is or may be bound;
	 	 
	3.1.7	the
    authorized capital of the Corporation consists of an unlimited number of Common Shares and an unlimited number of Class A
    restricted voting shares. As at the date hereof, there are 2,133,512 Common Shares validly issued and outstanding as fully
    paid and non-assessable shares of the Corporation. All securities of the Corporation have been issued in compliance with applicable
    laws and have not been issued in violation of any pre-emptive rights or other contractual rights to purchase securities granted
    by the Corporation;

 

    	 

    	-5- 

    

 

	3.1.8	the
    Purchased Securities have been duly and validly authorized and, at the Closing Date, upon reduction of U.S.$7,000,000 of the
    Principal Amount due under the Promissory Note, the Purchased Securities will be validly issued as fully paid and non-assessable
    shares of the Corporation;
	 	 
	3.1.9	the
    issued and outstanding Common Shares (excluding the Purchased Securities) are listed and posted for trading on the TSXV and
    the Corporation is in compliance in all material respects with the rules and regulations of the TSXV other than the requirement
    to have independent directors on its Board and audit committee;
	 	 
	3.1.10	as
    of the Closing Date, the Common Shares forming part of the Purchased Securities will be listed and posted for trading on the
    TSXV and NASDAQ;
	 	 
	3.1.11	the
    Corporation is a “reporting issuer” in British Columbia, Alberta and Ontario and is in compliance in all material
    respects with applicable securities laws in those jurisdictions;
	 	 
	3.1.12	no
    securities commission or comparable authority has issued any order preventing or suspending the distribution of the Common
    Shares or the trading of securities of the Corporation generally and, to the Corporation’s knowledge, there is no investigation,
    inquiry or proceeding for this purpose that has been commenced or which is pending, contemplated or threatened;
	 	 
	3.1.13	Equity
    Financial Trust Company in Toronto and VStock Transfer, LLC in New York are the duly appointed registrars and transfer agents
    of the Corporation with respect to the Common Shares and Warrants;
	 	 
	3.1.14	the
    Corporation has not retained any financial advisor, broker, agent or finder, nor entered into any agreement entitling any
    person to any broker’s commission or finder’s fee, in respect of the transactions contemplated by this Agreement;
	 	 
	3.1.15	each
    of the Corporation and its subsidiaries has conducted and is conducting its business in compliance in all material respects
    with all applicable laws other than the requirement to have independent directors on its Board and audit committee;
	 	 
	3.1.16	each
    of the Corporation and its subsidiaries owns, possesses and has good and marketable title to all of the assets necessary for
    it to carry on its business as it is currently operated;
	 	 
	3.1.17	except
    as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:

 

		3.1.17.1	the
    Corporation owns, possesses or has obtained all authorizations, registrations, permits, approvals, grants, licences, rights
    or privileges, in each case issued or granted by any provincial, state, municipal, federal or other governmental or regulatory
    authority, agency or body, required to enable the Corporation to carry on its business as currently conducted and to enable
    it to own, lease and operate its assets (the “Permits”); and
	 	 	 
		3.1.17.2	all
    the Permits are valid and subsisting, in full force and effect, and the Corporation is not in default or breach of any Permit,
    and no proceeding is pending or, to the knowledge of the Corporation, threatened, to revoke or limit any Permit;

 

    	 

    	-6- 

    

 

	3.1.18	except
    as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business,
    operations or financial condition of the Corporation:

 

	 	3.1.18.1	the
    Corporation is not in default or alleged to be in default in the performance of any term or obligation to be performed by
    it under any agreement or instrument to which the Corporation is a party or by which the Corporation or its assets are bound;
    and
	 	 	 
	 	3.1.18.2	no
    event, condition or occurrence exists that, after notice or lapse of time or both, would constitute a default under any such
    agreement or instrument;

 

	3.1.19	the
    Corporation and its subsidiaries are in compliance with the provisions of the Credit Agreement and any related security documents
    and have fulfilled all of their covenants therein;
	 	 
	3.1.20	the
    Corporation has filed on SEDAR all documents required to be filed by the Corporation under applicable securities laws in British
    Columbia, Alberta and Ontario;
	 	 
	3.1.21	the
    Corporation has properly completed and filed on a timely basis all tax returns required to be filed by it and all federal,
    state, provincial, local and foreign income, profits, franchise, sales, use, occupancy, excise and other taxes and assessments
    (including interest and penalties) that are or may become payable by or due from the Corporation have been fully paid when
    due or adequate provisions have been made in respect of them in the books and records of the Corporation;
	 	 
	3.1.22	the
    sale of the Purchased Securities will be exempt from prospectus requirements under applicable securities laws pursuant to
    Section 2.14 of National Instrument 45-106 – Prospectus Exemptions of the Canadian Securities Administrators;
	 	 
	3.1.23	all
    “material facts” (as such term is defined in the Securities Act (Ontario)) relating to the Corporation,
    its subsidiaries, its business, assets and liabilities have been disclosed to the Buyer; and
	 	 
	3.1.24	other
    than the receipt of shareholder approval (including as required by MI 61-101), NASDAQ approval and TSXV approval, there are
    no third party consents required by the Corporation or its subsidiaries to consummate the transactions contemplated by this
    Agreement. 

 

3.2
Buyer’s Representations and Warranties

 

The
Buyer represents and warrants to the Corporation that:

 

	3.2.1	the
    Buyer is a corporation duly incorporated and validly existing under the laws of Delaware;
	 	 
	3.2.2	the
    execution, delivery and performance of this agreement has been duly authorized by all necessary corporate action on the part
    of the Buyer;

 

    	 

    	-7- 

    

 

	3.2.3	the
    execution and delivery of this Agreement and performance by the Buyer of the transactions contemplated herein have been duly
    authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part
    of the Buyer. This Agreement and related documents to which it is a party has been duly executed by the Buyer, and when delivered
    by the Buyer in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Buyer, enforceable
    against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy,
    insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights
    generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
    remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law;
	 	 
	3.2.4	the
    Buyer is acquiring the Purchased Securities as principal for its own account and has no direct or indirect arrangement or
    understandings with any other persons to distribute or regarding the distribution of such Purchased Securities (this representation
    and warranty not limiting such Buyer’s right to sell the Purchased Securities in compliance with applicable securities
    laws);
	 	 
	3.2.5	at
    the time the Buyer was offered the Purchased Securities, it was, and as of the date hereof it is: (i) an “accredited
    investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the United States Securities Act of
    1933 or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the United States Securities
    Act of 1933;
	 	 
	3.2.6	the
    Buyer, either alone or together with its representatives, has such knowledge, sophistication and experience in business and
    financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased Securities,
    and has so evaluated the merits and risks of such investment. The Buyer is able to bear the economic risk of an investment
    in the Purchased Securities and, at the present time, is able to afford a complete loss of such investment;
	 	 
	3.2.7	the
    Buyer acknowledges that it has been afforded, (i) the opportunity to ask such questions as it has deemed necessary of, and
    to receive answers from, representatives of the Corporation concerning the terms and conditions of the offering of the Purchased
    Securities and the merits and risks of investing in the Purchased Securities; (ii) access to information about the Corporation
    and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it
    to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Corporation possesses
    or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect
    to the investment;
	 	 
	3.2.8	other
    than to other Persons party to this Agreement or to the Buyer’s representatives, including, without limitation, its
    officers, directors, partners, legal and other advisors, employees, agents and Affiliates, the Buyer has maintained the confidentiality
    of all disclosures made to it in connection with this Agreement and the transactions contemplated herein (including the existence
    and terms of this Agreement); and
	 	 
	3.2.9	other
    than consummating the transactions contemplated hereunder, the Buyer has not, nor has any Person acting on behalf of or pursuant
    to any understanding with the Buyer, directly or indirectly executed any purchases or sales, including short sales, of the
    securities of the Corporation during the period commencing as of the time that such Buyer first received a term sheet (written
    or oral) from the Corporation or any other Person representing the Corporation setting forth the material pricing terms of
    the transactions contemplated hereunder and ending immediately prior to the execution hereof.

 

    	 

    	-8- 

    

 

Article
4

COVENANTS

 

4.1
Conduct Before Closing

 

Until
the Closing Date, the Corporation will:

 

	4.1.1	conduct
    its business in the ordinary course and maintain the goodwill of its business;
	 	 
	4.1.2	not
    enter into any contract, commitment or transaction pertaining to its business except as necessary to conduct its business
    in the ordinary course;
	 	 
	4.1.3	not
    increase wages, salaries, benefits or other compensation of any of its employees except in the ordinary course of business;
    and
	 	 
	4.1.4	not
    sell, dispose of or encumber any of its assets other than inventories used in the ordinary course of business, other than
    granting Silicon Valley Bank a first-priority security interest in the Corporation’s and its subsidiaries’ accounts
    receivables and cash in connection with a revolving credit line to be extended by Silicon Valley Bank to the Corporation and/or
    its subsidiaries.

 

4.2
Directors

 

	4.2.1	The
    Board currently consists of five directors, namely, Steve Chung, Choong Sik Hyun, Joseph G. Fiveash, III, Tom Rogers and Steve
    Zenz. The Corporation hereby agrees to increase the number of directors on the Board by two, on or before September 30, 2017,
    subject to shareholder approval. 
	 	 
	4.2.2	The
    Corporation hereby agrees that following the Closing Date:

 

	 	4.2.2.1	the
    Corporation covenants and agrees that so long as the Buyer owns Common Shares representing not less than 20% of the issued
    and outstanding Common Shares calculated on a fully-diluted basis, (a) a total of two individuals (neither of whom need be
    independent of the Corporation) designated by the Buyer (the “Buyer Nominees”) will be named, subject to
    TSXV Personal Information Form clearance, as management’s nominees for election as directors in the Corporation’s
    annual management proxy circular mailed to the Corporation’s shareholders, and (b) Buyer will have the right to approve
    one of management’s other nominees (who shall be independent of the Corporation) for election as director in the Corporation’s
    annual management proxy circular mailed to the Corporation’s shareholders;
	 	 	 
	 	4.2.2.2	subject
    to applicable laws and the rules and policies of any stock exchange or quotation system on which any securities of the Corporation
    are listed and posted for trading or quoted, as applicable, at the relevant time, in the event that a vacancy on the Board
    is created as a result of a Buyer Nominee’s death, resignation, disqualification or removal from the Board, then the
    Buyer shall have seven days from the date of such event to select another individual as the Buyer Nominee. Following receipt
    of such notice, the members of the Board (or an appropriate committee thereof) shall review the qualifications and credentials
    of such replacement Buyer Nominee, in good faith in the exercise of their duties, and determine whether to recommend the appointment
    of the individual to the Board to fill the vacancy. In the event that such replacement Buyer Nominee is appointed as a director,
    such individual shall serve on the Board. In the event such individual is not appointed to the Board, the Board shall promptly
    notify the Buyer and the Buyer shall be entitled to select another individual who shall then be subject to approval in accordance
    with the procedures set forth above, and so on as necessary until the vacancy shall be filled with a Buyer Nominee.

 

    	 

    	-9- 

    

 

4.3
Personal Information

 

	4.3.1	The
    Buyer consents to the collection by the Corporation of personal information about the Buyer (as defined under applicable privacy
    laws, the “Personal Information”) for the purpose of completing the transactions contemplated by this Agreement.
    The Buyer consents to the Corporation retaining the Personal Information for as long as permitted or required by law or business
    practices. The Buyer acknowledges that the Corporation may use the Personal Information: (i) internally (for the purpose of
    managing the relationships between and contractual obligations of the Corporation and the Buyer); (ii) for income tax-related
    purposes; (iii) to demonstrate compliance with securities laws; and (iv) in record books prepared in respect of the transactions
    contemplated by this Agreement. The Buyer acknowledges that the Corporation may disclose the Personal Information: (i) to
    the Canada Revenue Agency; (ii) to professional advisers of the Corporation in connection with the performance of their professional
    services; (iii) as required by securities regulatory authorities, stock exchanges and other regulatory bodies; (iv) to a governmental
    or other authority to which the disclosure is required by court order or subpoena compelling that disclosure (if there is
    no reasonable alternative to that disclosure); (v) to a court determining the rights of the parties under this Agreement;
    (vi) to any other parties involved in the transactions contemplated by this Agreement, including legal counsel; (vii) to the
    Corporation’s registrar and transfer agent; and (viii) as otherwise required or permitted by law. The Buyer consents
    to the use and disclosure of the Personal Information set out in this Section 4.3.1.
	 	 
	4.3.2	The
    Buyer further acknowledges and consents to (i) the Corporation delivering to the regulatory authorities, including the British
    Columbia Securities Commission, any personal information provided by the Buyer respecting itself including the Buyer’s
    full name, address and telephone number, the amount of Purchased Securities purchased and the Purchase Price, the exemption
    relied on by the Buyer and the date of distribution, (ii) such information being collected indirectly by the British Columbia
    Securities Commission under the authority granted to in applicable securities laws (iii) such information being collected
    for the purposes of the administration and enforcement of applicable securities laws in British Columbia, and (iv) the indirect
    collection of such information by the British Columbia Securities Commission. The Buyer may contact the following public official
    in British Columbia with respect to questions about the British Columbia Securities Commission’s indirect collection
    of such information at the following address and telephone number: British Columbia Securities Commission, P.O. Box 10142,
    Pacific Centre, 701 West Georgia Street, Vancouver, British Columbia V7Y 1L2, Inquiries: (604) 899-6854, Toll free in Canada:
    1-800-373-6393, Facsimile: (604) 899-6581, Email: inquiries@bcsc.bc.ca.

 

    	 

    	-10- 

    

 

4.4
Amendment of Credit Agreement

 

	4.4.1	Additional
    Interest. Commencing as of the Closing Date, the interest rate payable by the Corporation under Section 3.1.1 of the Credit
    Agreement will be increased from ten percent (10%) per annum to fifteen and three-quarters percent (15.75%) per annum, provided
    that the additional interest represented by this five and three-quarters percent (5.75%) increase will accrue and be calculated
    daily and shall be payable quarterly, with each such payment due no later than fifteen (15) days following the end of the
    applicable quarter, payable in the Corporation’s discretion either in cash or an equivalent amount of Common Shares,
    based on the last closing price of the Corporation’s Common Shares on the TSXV on the last trading day before the end
    of the applicable quarter, or if the Corporation’s shares are not then traded on the TSXV, the last closing price of
    the Corporation’s shares on the last trading day before the end of the applicable quarter on such other public exchange
    as the Corporation’s shares may then be traded, and if the Corporation’s shares are not then traded on a public
    exchange, the additional interest shall be paid in cash no later than the first business day following the end of the applicable
    quarter.
	 	 
	4.4.2	Adjustment
    of Mandatory Payments. Commencing as of the Closing Date, the amount of each of the mandatory repayments due under Section
    4.3.2.2 of the Credit Agreement will be reduced from U.S $687,500 to U.S.$355,600, reflecting the proportional reduction in
    the Principal Amount from U.S.$14,500,000 to U.S.$7,500,000.
	 	 
	4.4.3	No
    Other Changes. Other than the changes contemplated in Sections 2.3, 4.4.1 and 4.4.2, all other provisions of the Credit
    Agreement and related security remain in full force and effect.

 

4.5
Expenses

 

The
Corporation will pay to the Buyer on the Closing Date, or reimburse the Buyer for, the following reasonable out-of-pocket expenses,
including reasonable legal fees and disbursements the expenses of the Buyer incurred in negotiating, preparing and executing this
Agreement and consummating the transactions contemplated herein.

 

Article
5

CLOSING CONDITIONS

 

5.1
Conditions for the Benefit of the Buyer

 

The
obligation of the Buyer to complete the purchase of the Purchased Securities will be subject to the fulfilment of the following
conditions at or before the Closing Time:

 

	5.1.1	Representations,
    Warranties and Covenants. The representations and warranties of the Corporation made in this Agreement, and any other
    agreement or document delivered pursuant to this Agreement, will be true and accurate at the Closing Time with the same force
    and effect as though those representations and warranties had been made as of the Closing Time, and for certainty, any representations
    and warranties made as at a date before the Closing Time will be deemed to be made as at the Closing Time. The Corporation
    will have complied with all covenants and agreements to be performed or caused to be performed by it under this Agreement,
    and any other agreement or document delivered pursuant to this Agreement, at or before the Closing Time. In addition, if the
    Closing Date is a date other than the date hereof, the Corporation will have delivered to the Buyer a certificate of a senior
    officer of the Corporation confirming the same. The receipt of that certificate and the completion of the Closing will not
    be deemed to constitute a waiver of any of the representations, warranties or covenants of the Corporation contained in this
    Agreement, or in any other agreement or document delivered pursuant to this Agreement. Those representations, warranties and
    covenants will continue in full force and effect as provided in Article 6.

 

    	 

    	-11- 

    

 

	5.1.2	Consents.
    All filings, notifications and consents with, to or from third parties including shareholder approval (including as required
    by MI 61-101), the Valuation, NASDAQ approval and TSXV conditional approval (subject only to customary conditions) will have
    been made, given or obtained on terms acceptable to the Buyer, acting reasonably, so that the transactions contemplated by
    this Agreement may be completed without resulting in the violation of, or a default under, or any termination, amendment or
    acceleration of any obligation under any licence, Permit, or contract of or affecting the business of the Corporation or any
    of its subsidiaries.
	 	 
	5.1.3	Closing
    of Financing Transaction. The Corporation shall have closed an equity financing of Common Shares on NASDAQ with gross
    proceeds to the Corporation of at least U.S.$11,000,000 (the “Offering”) by October 31, 2017 and the Common
    Shares of the Corporation will be listed for trading on NASDAQ.
	 	 
	5.1.4	Deliveries.
    The Corporation will have delivered to the Buyer the following in form and substance satisfactory to the Buyer:

 

	 	5.1.4.1	a
    favourable opinion of counsel to the Corporation, in the form acceptable to the Buyer and its counsel;
	 	 	 
	 	5.1.4.2	the
    consents referred to in Section 5.1.2;
	 	 	 
	 	5.1.4.3	original
    Common Share and Warrant certificates representing the Purchased Securities;
	 	 	 
	 	5.1.4.4	payment
    of the amount payable by the Corporation to the Buyer pursuant to Section 4.5; and
	 	 	 
	 	5.1.4.5	all
    documentation and other evidence reasonably requested by the Buyer in order to establish the due authorization and completion
    of the transactions contemplated by this Agreement, including the taking of all corporate proceedings by the boards of directors
    and shareholders of the Corporation and the Corporation required to effectively carry out the obligations of the Corporation
    and the Corporation pursuant to this Agreement.

 

5.2
Waiver or Termination by the Buyer

 

The
conditions contained in Section 5.1 are inserted for the exclusive benefit of the Buyer and may be waived in whole or in part
by the Buyer at any time without prejudice to any of its rights of termination in the event of non-performance of any other condition
in whole or in part. If any of the conditions contained in Section 5.1 are not fulfilled or complied with by the time that is
required under this Agreement, the Buyer may, at or before the Closing Time provided that it is not in default of its obligations
under this Agreement, terminate this Agreement by notice in writing after that time to the Corporation.

 

    	 

    	-12- 

    

 

5.3
Conditions for the Benefit of the Corporation

 

The
obligation of the Corporation to complete the sale of the Purchased Securities will be subject to the fulfilment of the following
conditions at or before the Closing Time:

 

	5.3.1	Representations,
    Warranties and Covenants. The representations and warranties of the Buyer made in this Agreement, and any other agreement
    or document delivered pursuant to this Agreement, will be true and accurate at the Closing Time with the same force and effect
    as though those representations and warranties had been made as of the Closing Time. The Buyer will have complied with all
    covenants and agreements agreed to be performed or caused to be performed by it under this Agreement, and any other agreement
    or document delivered pursuant to this Agreement, at or before the Closing Time. In addition, if the Closing Date is a date
    other than the date hereof, the Buyer will have delivered to the Corporation a certificate of a senior officer of the Buyer
    confirming the same. The receipt of that certificate and the completion of the Closing will not be deemed to constitute a
    waiver of any of the representations, warranties or covenants of the Buyer contained in this Agreement, or in any other agreement
    or document delivered pursuant to this Agreement. Those representations, warranties and covenants will continue in full force
    and effect as provided in Article 6.
	 	 
	5.3.2	Deliveries.
    The Buyer will have delivered to the Corporation the following in form and substance satisfactory to the Corporation:

 

	 	5.3.2.1	a
    written acknowledgment evidencing the reduction of U.S.$7,000,000 of the Principal Amount due under the Credit Agreement;
    and 
	 	 	 
	 	5.3.2.2	all
    documentation and other evidence reasonably requested by the Corporation in order to establish the due authorization and completion
    of the transactions contemplated by this Agreement, including the taking of all corporate proceedings by the board of directors
    and the shareholders of the Buyer required to effectively carry out the obligations of the Buyer pursuant to this Agreement.

 

	5.3.3	Consents.
    Shareholder approval (including as required by MI 61-101), the Valuation, NASDAQ approval and TSXV conditional approval
    (subject only to customary conditions) will have been made, given or obtained on terms acceptable to the Corporation, acting
    reasonably.

 

5.4
Waiver or Termination by the Corporation

 

The
conditions contained in Section 5.3 are inserted for the exclusive benefit of the Corporation and may be waived in whole or in
part by the Corporation at any time without prejudice to any of its rights of termination in the event of non-performance of any
other condition in whole or in part. If any of the conditions contained in Section 5.3 are not fulfilled or complied with by the
time that is required under this Agreement, the Corporation may, at or before the Closing Time, provided that it is not in default
of its obligations under this Agreement, terminate this Agreement by notice in writing after that time to the Buyer, unless the
condition or conditions which have not been fulfilled are reasonably capable of being fulfilled or caused to be fulfilled by the
Buyer. In that event the Corporation and the Buyer will be released from all obligations under this Agreement other than the Corporation’s
obligations under Section 4.5.

 

    	 

    	-13- 

    

 

5.5
Conditions Precedent

 

The
purchase and sale of the Purchased Securities is subject to the following conditions to be fulfilled at or before the Closing
Time, which conditions are true conditions precedent to the completion of the transactions contemplated by this Agreement:

 

	5.5.1	No
    Action to Restrain. No order of any Governmental Authority will be in force, and no action or proceeding will be pending
    or threatened by any Person:

 

	 	5.5.1.1	to
    restrain or prohibit the completion of the transactions contemplated in this Agreement, including the sale and purchase of
    the Purchased Securities;
	 	 	 
	 	5.5.1.2	to
    restrain or prohibit the Corporation or any of its subsidiaries from carrying on its respective business; or
	 	 	 
	 	5.5.1.3	which
    would have a Material Adverse Effect.

 

If
any of these conditions precedent have not been fulfilled at or before the Closing Time, a Party may provide notice to the other
of the termination of this Agreement and, in such circumstances, the Parties will be released from all obligations under this
Agreement.

 

Article
6

SURVIVAL AND INDEMNIFICATION

 

6.1
Survival

 

All
of the representations, warranties and covenants in this Agreement will survive the Closing.

 

6.2
Indemnity

 

The
Corporation acknowledges and agrees that its representations, warranties and covenants in this Agreement are made with the intent
that they may be relied upon in the Buyer’s decision to purchase the Purchased Securities. The Corporation agrees to indemnify
and hold harmless the Buyer and its representatives, directors, officers, employees, legal counsel and agents from and against
all losses, liability, claims, costs, expenses and damages (including all fees, costs and expenses reasonably incurred in investigating,
preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened)
arising out of or based on any representation or warranty of the Corporation in this Agreement being untrue in any material respect
or any breach of a covenant in this Agreement by the Corporation. The rights to indemnification provided in this Section 6.2 will
be in addition to, and not in derogation of, any other rights or remedies which any indemnified party may have. To the extent
that any person entitled to be indemnified under this Section 6.2 is not a party to this Agreement, the Buyer is acting as agent
for that person with respect to those indemnities, and the Buyer will hold the rights and benefits of this Agreement in trust
for, and on behalf of, that person.

 

    	 

    	-14- 

    

 

Article
7

GENERAL

 

7.1
Governing Law

 

This
Agreement is governed by, and is to be construed and interpreted in accordance with, the laws of the Province of Ontario and the
laws of Canada applicable in that Province.

 

7.2
Entire Agreement

 

This
Agreement constitutes the entire agreement between the parties pertaining to the subject matter of this Agreement and supersedes
all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties, and there are no
representations, warranties or other agreements between the Parties, express or implied, in connection with the subject matter
of this agreement except as specifically set out in this Agreement. Provided that the Closing occurs, the rights of the Buyer
set out in Section 4.2 of this Agreement will supersede all prior board member designation/approval rights previously granted
to the Buyer in the share purchase agreement between the Buyer and the Company dated August 31, 2016, as amended. No party has
been induced to enter into this Agreement in reliance on, and there will be no liability assessed, either in tort or contract,
with respect to, any warranty, representation, opinion, advice or assertion of fact, except to the extent it has been reduced
to writing and included as a term in this Agreement.

 

7.3
Time of Essence

 

Time
is of the essence in all respects of this Agreement.

 

7.4
Further Assurances

 

Each
of the Parties, upon the request of the other Party, whether before or after the Closing Date, will do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and delivered all further acts, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably necessary or desirable to complete and give full effect to
the transactions contemplated by this Agreement.

 

7.5
Assignment and Enurement

 

Neither
this Agreement nor any right or obligation under this Agreement may be assigned by either Party without the prior consent of the
other Party. This Agreement enures to the benefit of and is binding upon the Parties and their respective successors and permitted
assigns.

 

7.6
Counterparts and Electronic Delivery

 

This
Agreement may be executed and delivered by the parties in one or more counterparts, each of which will be an original, and each
of which may be delivered by facsimile, e-mail or other functionally equivalent electronic means of transmission, and those counterparts
will together constitute one and the same instrument.

 

    	 

    	-15- 

    

 

Each
of the parties has executed and delivered this Agreement as of date first written above.

 

	 	FRANKLY
    INC.
	 	 	 
	 	Per:	/s/
    Steve Chung
	 	Name:	Steve
    Chung
	 	Title:	Chief
    Executive Officer
	 	 	 
	 	RAYCOM
    MEDIA, INC.
	 	 	 
	 	Per:	/s/
    Warren Spector
	 	Name:	Warren
    Spector
	 	Title:	Chief
    Financial OfficerExhibit 10.1

 

AMENDMENT NO. 4 TO CREDIT AGREEMENT

 

As of June 26, 2017

 

BMO Harris Bank N.A.

770 North Water Street

Milwaukee, Wisconsin 53202

Attention: Corporate Banking

 

Ladies and Gentlemen:

STRATTEC SECURITY CORPORATION, a Wisconsin corporation (the “Company”), hereby agrees with you as follows:

1.             Definitions.  Reference is made to that certain Credit Agreement dated as of August 1, 2011 (as amended, restated, amended and restated or otherwise modified, the “Credit Agreement”) between the Company and BMO Harris Bank N.A. (the “Lender”).  All capitalized terms used and not otherwise defined herein shall have the meanings given to such terms by the Credit Agreement as amended hereby.

2.             Background.  The Company has requested that the Lender agree to extend the term of the Credit Agreement to August 1, 2020.  Subject to all of the terms and conditions hereof, the Lender and the Company have agreed to such amendment on the terms set forth below.

3.             Amendment to Credit Agreement.  Subject to all of the terms and conditions hereof, upon execution and delivery of this Amendment, the Credit Agreement shall be amended as of the date first written above as follows:

a.         All references to the Credit Agreement in the Credit Agreement, the Note and the Loan Documents shall refer to the Credit Agreement as amended hereby.

b.         The definition of “Obligations” is amended and restated in its entirety as follows:

 

“Obligations” means any and all present and future debts, obligations and liabilities of the Company under or in connection with this Agreement, the Note, any Letter of Credit or any other Loan Document, including all obligations to the Lender or any of its Affiliates in respect of Derivatives Contracts, and all present and future debts, obligations and liabilities of the Company to the Lender or any of its Affiliates with respect to any stored value card, commercial credit card or merchant card services, in each case whether now or hereafter made, incurred, or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, whether the Company is liable individually or jointly with others, whether for principal, interest or other debts, obligations or liabilities.

 

c.         The first sentence of Section 2.01 of the Credit Agreement is amended to change the date “August 1, 2019” to “August 1, 2020”.

d.         Section 6.01 is amended to add a new clause (d) in appropriate alphabetical order as follows:

 

(d)          Indebtedness to the Lender or any of its Affiliates with respect to any stored value card, commercial credit card or merchant card services, provided such Indebtedness does not exceed an aggregate of $750,000 at any time outstanding.

4.             Conditions.  Notwithstanding any other provision of this Amendment, this Amendment shall not become effective unless and until:

a.         It has been executed and delivered by all parties to the Credit Agreement as amended hereby;

b.         The First Amendment to Amended and Restated Security Agreement, to be dated as of the date hereof (the “Security Agreement Amendment”), shall have been executed and delivered by the Company, in form and substance satisfactory to the Lender;

c.         The Lender shall have received certificates as of a recent date of the good standing (or comparable standing) of the Company under the laws of its jurisdiction of organization;

d.         The Lender shall have received a certificate of an appropriate officer of the Company certifying as to the incumbency and genuineness of the signature of each officer of the Company executing this Amendment and the Security Agreement Amendment and certifying that attached thereto is a true, correct and complete copy of (i) the articles of incorporation of the Company and all amendments thereto, certified as of a recent date by the Wisconsin Department of Financial Institutions, (ii) the bylaws of the Company all amendments thereto, (iii) the resolutions duly adopted by the board of directors of the Company authorizing the borrowings contemplated hereunder and the execution, delivery and performance of this Amendment and the Security Agreement Amendment;

e.         The Lender shall have received (i) searches of UCC filings in the jurisdiction of incorporation of the Company, copies of the financing statements on file in such jurisdiction and evidence that no Liens exist other than Permitted Liens and (ii) tax lien and judgment searches; and

 

2

f.          The Company shall have delivered such other corporate documents as Lender or its counsel may reasonably request, in form and substance satisfactory to the Lender.

5.             Representations and Warranties.  The Company hereby repeats and reaffirms the representations and warranties set forth in Article V of the Credit Agreement, including without limitation the representations and warranties set forth in Section 5.05 thereof which are made hereunder with respect to the most recent financial statements and related information provided pursuant to Section 7.06 of the Credit Agreement.  The Company also represents and warrants that (A) since March 31, 2017 there has been no material adverse change in the property, financial condition or business operations of the Company and its Subsidiaries, taken as a whole, and (B) the execution, delivery and performance of this Amendment are within the corporate powers of the Company, have been duly authorized by all necessary corporate action and do not and will not (i) require any consent or approval of the shareholders of the Company; (ii) violate any provision of the articles of incorporation or by-laws of the Company or of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the Company or any Subsidiary; (iii) require the consent or approval of, or filing or registration with, any governmental body, agency or authority; or (iv) result in any breach of or constitute a default under, or result in the imposition of any lien, charge or encumbrance upon any property of the Company or any Subsidiary pursuant to any indenture or other agreement or instrument under which the Company or any Subsidiary is a party or by which it or its properties may be bound or affected.  This Amendment constitutes, and each of the documents required herein when executed and delivered hereunder will constitute, legal, valid and binding obligations of the Company or other signatory enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy or similar laws affecting the enforceability of creditors’ rights generally.

6.             Confirmation of Agreements.  Except as expressly provided above, the Credit Agreement and the Loan Documents shall remain in full force and effect.  This Amendment does not constitute a waiver or amendment of any term, condition or covenant in the Credit Agreement other than as specifically set forth above.  Nothing contained in this Amendment or in any other document, or any course of dealing with the Company, shall be construed to imply that there is any agreement by the Lender to provide any waiver or agree to any amendment in the future.  This Amendment shall not release, discharge or satisfy any present or future debts, obligations or liabilities to the Lender of the Company or of any debtor, guarantor or other person or entity liable for payment or performance of any of such debts, obligations or liabilities of the Company, or any mortgage, security interest, lien or other collateral or security for any of such debts, obligations or liabilities of the Company or such debtors, guarantors or other persons or entities, or waive any default except as expressly provided herein, and the Lender expressly reserves all of its rights and remedies with respect to the Company and all such debtors, guarantors or other persons or entities, and all such mortgages, security interests, liens and other collateral and security.  This is an amendment and not a novation.  The Company acknowledges and agrees that the obligations under the Credit Agreement and the Note exist and are owing with no offset, defense or counterclaim assertible by the Company and that the Credit Agreement, the Note and the Loan Documents are valid, binding and fully enforceable according to their respective terms.

 

3

7.             Miscellaneous.  The Company shall be responsible for the payment of all fees and out-of-pocket disbursements incurred by the Lender in connection with the preparation, execution, delivery, administration and enforcement of this Amendment including all costs of collection, and including without limitation the reasonable fees and disbursements of counsel for the Lender, whether or not any transaction contemplated by this Amendment is consummated.  The provisions of this Amendment shall inure to the benefit of any holder of the Note, and shall inure to the benefit of and be binding upon any successor to any of the parties hereto.  All agreements, representations and warranties made herein shall survive the execution of this Amendment and the making of the loans under the Credit Agreement, as so amended.  This Amendment shall be governed by and construed in accordance with the internal laws of the State of Wisconsin.  This Amendment may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Amendment is solely for the benefit of the parties hereto and their permitted successors and assigns.  No other person or entity shall have any rights under, or because of the existence of, this Amendment.

[Remainder of this page is intentionally left blank; signature page follows.]

 

4

If the foregoing is satisfactory to you, please sign the form of acceptance below and return a signed counterpart hereof to the Company.

 

	 	
Very truly yours,

	 	 
	 	
STRATTEC SECURITY CORPORATION

	 	 	 
	
(CORPORATE SEAL)

	
By:

	
/s/ Frank J. Krejci

	 	
Name:

	
Frank J. Krejci

	 	
Title:

	
President and Chief Executive Officer

	 	 	 
	 	
And by:

	
/s/ Patrick J. Hansen

	 	
Name:

	
Patrick J. Hansen

	 	
Title:

	
Senior Vice President and

	 	 	
Chief Financial Officer

 

[Signature page to Strattec Security Corporation

Amendment No. 4 to Credit Agreement]

 

Agreed to as of the date first above written.

 

	
 

	
BMO HARRIS BANK N.A.

	 	 	 
	 	
By:

	
/s/ Mark Czarnecki

	 	
Name:

	
Mark Czarnecki

	 	
Title:

	
Senior Vice President

 

[Signature page to Strattec Security Corporation

Amendment No. 4 to Credit Agreement]

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