Document:

ex_102571.htm

Exhibit 10.1

 

BioLargo, Inc.

Engagement Extension Agreement

 

December 31, 2017

 

This Engagement Extension Agreement (the “Extension”) references the Engagement Agreement and Scope Letter dated February 1, 2008 (“2008 Agreement”) by and between CFO 911 (the “Advisor)” and BioLargo, Inc. (the “Company”), and written extensions to the Agreement (the “Prior Extensions”), pursuant to which Charles K. Dargan II has been serving as the Company’s Chief Financial Officer. The parties desire to extend the terms of the prior agreements for a period of one year, pursuant to the terms of this Extension. The 2008 Agreement, the Prior Extensions and this Extension are collectively referred to herein as the “Agreement”.

 

Except as expressly amended or modified herein, all terms and conditions set forth in the 2008 Agreement and Prior Extensions are incorporated herein by this reference, and continue to be in full force and effect. The parties acknowledge and confirm that Mr. Dargan has been serving as the Company’s Chief Financial Officer, and continues to do so through today’s date. Retroactively effective as of October 1, 2017, the Advisor and the Company hereby agree to extend the Term of the engagement as set forth in the 2008 Agreement to expire September 30, 2018 (the “Extended Term”). Notwithstanding the foregoing, either party may terminate this Agreement upon 30 days’ written notice. Upon the expiration of this Agreement on September 30, 2018, unless this agreement has been terminated, Advisor shall continue to serve as the Company’s Chief Financial Officer until new terms are agreed upon, or until one of the parties gives notice to terminate the relationship. 

 

During the Extended Term, the Advisor shall receive the compensation as set forth in this Extension. The Company shall issue to Charles K. Dargan II an option (the “Option”) to purchase 300,000 shares of the Company’s common stock. The Option shall vest over a period of 12 months, with 75,000 shares having vested as of December 31, 2017, and the remaining shares to vest 25,000 shares monthly beginning January 31, 2018, and each month thereafter, so long as this Agreement is in full force and effect. The Option shall be exercisable at $0.39 per share, the closing price of the company’s common stock on the last business day of 2017, and shall expire December 31, 2027.

 

AGREED TO AND ACCEPTED THIS 31st DAY OF DECEMBER, 2017 

 

	
			CFO 911

				
			BioLargo, Inc.

			
	
			222 N. Sepulveda Blvd., Suite 2000

				
			14921 Chestnut Street

			
	
			El Segundo, CA 90245, CA

				
			Westminster, CA 92683

			
	
			 

				
			 

			
	
			           /S/CHARLES K. DARGAN II

				
			           /S/DENNIS P. CALVERT

			
	
			By: ____________________________

				
			By: ___________________________

			
	
			Name: Mr. Charles K. Dargan II

				
			Name: Mr. Dennis P. Calvert

			
	
			Title: Chief Executive Officer

				
			Title: President

			
	
			Date Signed: December 31, 2017

				
			Date Signed: December 31, 2017Blueprint

 

Exhibit 10.1

 

LOAN
AGREEMENT

 

among

 

LIBERATED
SYNDICATION INC.,

 

WEBMAYHEM,
INC. and

 

PAIR
NETWORKS, INC.

 

and

 

FIRST
COMMONWEALTH BANK

 

DECEMBER
27, 2017

 

 

 

 TABLE OF
CONTENTS

 

	
SECTION
	

 

	PAGE
	

 

	

 

	

ARTICLE I DEFINITIONS

	

1

	

1.01

	

Certain Definitions.

	

1

	

1.02

	

Construction and Interpretation.

	

12

	

ARTICLE II THE CREDIT FACILITIES

	

13

	

2.01

	

The Revolving Credit Facility Commitment.

	

13

	

2.02

	

Term Loan.

	

15

	

2.03

	

Letters of Credit.

	

15

	

2.04

	

Interest Rates.

	

17

	

2.05

	

Selection of Interest Rate Options.

	

20

	

2.06

	

Late Charge.

	

20

	

2.07

	

Fees and Expenses.

	

20

	

2.08

	

Payments; Prepayments.

	

20

	

2.09

	

Loss of Margin.

	

22

	

2.1

	

Loan Account.

	

23

	

2.11

	

Security.

	

23

	

2.12

	

Indemnity.

	

23

	

ARTICLE III REPRESENTATIONS AND WARRANTIES

	

24

	

3.01

	

Organization and Qualification; No Subsidiaries.

	

24

	

3.02

	

Authority; Power to Carry on Business; Licenses.

	

24

	

3.03

	

Execution and Binding Effect.

	

24

	

3.04

	

Absence of Violations.

	

24

	

3.05

	

Authorizations and Filings.

	

25

	

3.06

	

Ownership and Control.

	

25

	

3.07

	

Officers, Directors and Business.

	

25

	

3.08

	

Title to Property.

	

25

	

3.09

	

Financial Information.

	

25

	

3.1

	

Taxes.

	

25

	

3.11

	

Contracts.

	

26

	

3.12

	

Litigation.

	

26

	

3.13

	

Laws.

	

26

	

3.14

	

ERISA.

	

26

	

3.15

	

Patents, Licenses, Franchises.

	

26

	

3.16

	

Use of Proceeds.

	

26

	

3.17

	

Margin Stock.

	

26

	

3.18

	

No Material Adverse Change.

	

27

	

3.19

	

Security Interest.

	

27

	

3.2

	

Labor Controversies.

	

27

	

3.21

	

Solvency.

	

27

	

3.22

	

Anti-Terrorism Laws.

	

27

	

3.23

	

Governmental Regulation.

	

28

	

3.24

	

Accurate and Complete Disclosure; Continuing Representations and
Warranties.

	

28

	

ARTICLE IV CONDITIONS OF LENDING

	

28

	

4.01

	

Representations and Warranties; Events of Default and Potential
Defaults.

	

28

 

 

-i-

 

 

	

4.02

	

Loan Documents.

	

29

	

4.03

	

UCC Financing Statements.

	

29

	

4.04

	

Other Documents and Conditions.

	

29

	

4.05

	

Details, Proceedings and Documents.

	

31

	

4.06

	

Fees and Expenses.

	

31

	

ARTICLE V AFFIRMATIVE COVENANTS

	

31

	

5.01

	

Reporting and Information Requirements.

	

31

	

5.02

	

Preservation of Existence and Franchises.

	

33

	

5.03

	

Maintenance of Insurance.

	

33

	

5.04

	

Maintenance of Property.

	

34

	

5.05

	

Payment of Liabilities.

	

34

	

5.06

	

Financial Accounting Practices.

	

34

	

5.07

	

Compliance with Laws.

	

34

	

5.08

	

Continuation of and/or Change in Business.

	

34

	

5.09

	

Use of Proceeds.

	

35

	

5.1

	

Lien Searches.

	

35

	

5.11

	

Compliance with Licensing Bodies.

	

35

	

5.12

	

Further Assurances.

	

35

	

5.13

	

Operating Accounts.

	

35

	

5.14

	

Financial Covenants.

	

35

	

5.15

	

Pension Plans.

	

36

	

ARTICLE VI NEGATIVE COVENANTS

	

36

	

6.01

	

Liens.

	

36

	

6.02

	

Indebtedness.

	

37

	

6.03

	

Guarantees and Contingent Liabilities.

	

37

	

6.04

	

Loans and Investments; Subsidiaries.

	

38

	

6.05

	

Distributions.

	

38

	

6.06

	

Transactions with Affiliates.

	

39

	

6.07

	

Indemnification and other Payments.

	

39

	

6.08

	

Disposition of Assets.

	

39

	

6.09

	

Anti-Terrorism Laws.

	

39

	

6.1

	

Margin Stock.

	

40

	

6.11

	

Merger; Consolidation; Business Acquisitions.

	

40

	

6.12

	

Double Negative Pledge.

	

40

	

6.13

	

Sale/Leaseback.

	

40

	

6.14

	

Ownership and Control.

	

40

	

6.15

	

Fiscal Year.

	

40

	

6.16

	

Modifications to Material Documents.

	

40

	

ARTICLE VII DEFAULTS

	

41

	

7.01

	

Events of Default.

	

41

	

7.02

	

Consequences of an Event of Default.

	

43

	

7.03

	

Other Remedies.

	

43

	

ARTICLE VIII MISCELLANEOUS

	

44

 

 

-ii-

 

 

	

8.01

	

Business Days.

	

44

	

8.02

	

Amendments and Waivers.

	

44

	

8.03

	

No Implied Waiver; Cumulative Remedies.

	

44

	

8.04

	

Notices.

	

45

	

8.05

	

Expenses; Taxes; Attorney’s Fees.

	

45

	

8.06

	

Proceedings, Etc.

	

46

	

8.07

	

No Third Party Rights.

	

46

	

8.08

	

Severability.

	

46

	

8.09

	

Governing Law; Consent to Jurisdiction.

	

46

	

8.1

	

Prior Understandings.

	

46

	

8.11

	

Duration; Survival.

	

46

	

8.12

	

Counterparts.

	

47

	

8.13

	

Successors and Assigns.

	

47

	

8.14

	

No Third Party Beneficiaries.

	

47

	

8.15

	

Participation and Assignment.

	

47

	

8.16

	

Exhibits.

	

47

	

8.17

	

Headings.

	

47

	

8.18

	

Indemnity.

	

48

	

8.19

	

Limitation of Liability.

	

48

	

8.2

	

Confidentiality.

	

48

	

8.21

	

Payment of Obligations; Joint and Several Obligations of
Borrowers.

	

49

	

8.22

	

Relative Priority of Security Interests; Limitation of Certain
Liabilities.

	

49

	

8.23

	

Waiver of Trial by Jury.

	

49

 

 

 

 

 

LIST OF EXHIBITS AND SCHEDULES

 

Exhibits:

 

Exhibit
A – Form of Loan Request

Exhibit
B – Form of Compliance Certificate

 

 

Schedules:

 

Schedule 1.1(A)
– Pricing Matrix

Schedule 1.1(B)
– Description of the Transaction

Schedule 3.06 – Ownership and
Control

Schedule 3.07
– Officers, Directors and Business

Schedule 3.15
– Patents, Licenses, Franchises

Schedule 6.01
– Liens

Schedule 6.02
– Indebtedness

 

 

-iii-

 

 

LOAN AGREEMENT

 

THIS
LOAN AGREEMENT (this “Agreement”), is effective as of
December 27, 2017 among LIBERATED
SYNDICATION INC., a Nevada corporation (“Libsyn”), WEBMAYHEM, INC., a Pennsylvania
corporation (“Webmayhem”), and
PAIR NETWORKS, INC., a
Pennsylvania corporation (“Pair Networks” and,
together with Libsyn and Webmayhem, the “Borrowers” and each, a
“Borrower”), and
FIRST
COMMONWEALTH BANK, a Pennsylvania bank and trust company
(the “Bank”).

 

BACKGROUND:

 

The
Borrowers have requested that the Bank extend certain credit
facilities to the Borrowers, and the Bank is willing to do so on
the terms and subject to the conditions set forth
herein.

 

NOW,
THEREFORE, in consideration of the premises and of the mutual
covenants contained in this Agreement, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:

 

ARTICLE
I

 

DEFINITIONS

 

1.01       
Certain
Definitions.

 

In
addition to other words and terms defined elsewhere in this
Agreement, the following words and terms have the following
meanings, respectively, unless the context otherwise clearly
requires:

 

“Adjusted
EBITDA” means:

 

(i)           on
the last day of the first full fiscal quarter following the Closing
Date, EBITDA for such quarter divided by 0.25;

 

(ii)           on
the last day of the second full fiscal quarter following the
Closing Date, (A) the sum of EBITDA for such quarter and for the
preceding quarter, divided by (B) 0.50;

 

(iii)        
on the last day of the third full fiscal quarter following the
Closing Date, (A) the sum of EBITDA for such quarter and the
preceding two quarters, divided by (B) 0.75; and

 

(iv)        
on the last day of the fourth full fiscal quarter following the
Closing Date, and thereafter, trailing four quarter
EBITDA.

 

“Adjusted
Fixed Charges” means:

 

(i)           on
the last day of the first full fiscal quarter following the Closing
Date, Fixed Charges for such quarter, with items (i) and (ii) from
the definition of Fixed Charges for such period divided by
0.25;

 

(ii)       
on the last day of the second full fiscal quarter following the
Closing Date, the sum of Fixed Charges for such quarter and the
preceding quarter, with the sum of items (i) and (ii) from the
definition of Fixed Charges for such period divided by
0.50;

 

 

 

 

(iii)           on
the last day of the third full fiscal quarter following the Closing
Date, the sum of Fixed Charges for such quarter and the preceding
two quarters, with the sum of items (i) and (ii) from the
definition of Fixed Charges for such period divided by 0.75;
and

 

(iv)           on
the last day of the fourth full fiscal quarter following the
Closing Date, trailing four quarter Fixed Charges.

 

“Affiliate”
as to any Person means any other Person (i) which directly or
indirectly controls, is controlled by, or is under common control
with such Person, (ii) which beneficially owns or holds twenty-five
percent (25%) or more of any class of the voting or other Equity
Interests of such Person, or (iii) twenty-five percent (25%) or
more of any class of voting interests or other Equity Interests of
which is beneficially owned or held, directly or indirectly, by
such Person. Control, as used in this definition, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise, including the power to elect a majority of the directors
or trustees of a corporation or trust, as the case may
be.

 

“Agreement”
is defined in the preamble hereof and includes all amendments,
restatements, modifications and supplements hereto from time to
time, including all schedules and exhibits.

 

“Anti-Terrorism
Laws” means any Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot
Act, the Laws comprising or implementing the Bank Secrecy Act, and
the Laws administered by the United States Treasury
Department’s Office of Foreign Asset Control (as any of the
foregoing Laws may from time to time be amended, renewed, extended,
or replaced).

 

“Applicable
Rate” means the rate per annum equal to (i) in the case of
Revolving Credit Loans, the sum of the LIBOR Rate plus the
Applicable Margin or the Prime Rate plus the Applicable Margin, as
determined pursuant to Section 2.04 hereof, and (ii) in the case of
the Term Loan, the sum of the LIBOR Rate plus the Applicable
Margin.

 

“Applicable
Margin” means, as applicable:

 

(a)           the
percentage spread to be added to the Prime Rate applicable to
Revolving Credit Loans under the Prime Rate Option based on the
Borrowers’ Cash Balance as of the most recent fiscal quarter
ended according to the pricing grid on Schedule 1.1(A) below the
heading “Applicable Prime Rate Margin;” or

 

(b)           the
percentage to be added to the LIBOR Rate applicable to Revolving
Credit Loans under the LIBOR Rate Option, and the percentage to be
added to the LIBOR Rate applicable to the Term Loan, in each case
based on the Borrowers’ Cash Balance as of the most recent
fiscal quarter ended according to the pricing grid on Schedule 1.1(A) below the
heading “Applicable LIBOR Margin.”

 

“Asset
Sale” any Disposition of property or series of related
Dispositions of property, excluding any such Disposition permitted
by Section 6.08 hereof.

 

“Bank”
means First Commonwealth Bank, a Pennsylvania bank and trust
company with an office at 437 Grant Street, Frick Building, Suite
1600, Pittsburgh, PA 15219.

 

“Borrower”
and “Borrowers” are defined in the preamble to this
Agreement.

 

 

-2-

 

 

“Borrowers’
Cash Balance” means, as of the date of determination, the
Borrowers’ cash on deposit at the Bank on such
date.

 

“Borrowing
Date” means, with respect to any Loan, the date for the
making thereof or the renewal or conversion thereof at or to the
same or a different Interest Rate Option, which shall be a Business
Day.

 

“Borrowing
Tranche” means specified portions of Loans outstanding as
follows: (i) any Loans to which a LIBOR Rate Option applies that
have the same Interest Period shall constitute one Borrowing
Tranche, and (ii) all Loans to which the Prime Rate applies shall
constitute one Borrowing Tranche.

 

“Business
Day” means any day other than a Saturday or Sunday or a legal
holiday on which commercial banks are authorized or required to be
closed for business in Pittsburgh, Pennsylvania.

 

“Capital
Expenditures” means all expenditures made or liabilities
incurred by any Borrower that are, in accordance with GAAP, treated
as a capital expenditure and not as an expense item for the year in
which they were made or incurred, as the case may be, in each case
excluding any such expenditures made to restore, replace or rebuild
property following any damage, loss, destruction or condemnation,
to the extent such expenditures are made with insurance or
condemnation proceeds.

 

“Capital
Lease” means any lease of any tangible or intangible property
(whether real, personal or mixed), however denoted, that is
required by GAAP to be reflected as a liability on the balance
sheet of the lessee.

 

“Capitalized
Lease Obligation” means, with respect to each Capital Lease,
the amount of the liability reflecting the aggregate discounted
amount of future payments under such Capital Lease calculated in
accordance with GAAP and Statement of Financial Accounting
Standards No. 13 (as supplemented and modified from time to time),
and any corresponding future interpretations by the Financial
Accounting Standards Board or any successor thereto.

 

“Cash
Equivalent” as to any Person, means (a) securities issued or
directly and fully guaranteed or insured by the United States or
any agency or instrumentality thereof (provided that the full faith
and credit of the United States is pledged in support thereof)
having maturities of not more than one year from the date of
acquisition by such Person, (b) time deposits and certificates of
deposit of any commercial bank having, or which is the principal
banking subsidiary of a bank holding company organized under the
laws of the United States, any State thereof or, the District of
Columbia or any foreign jurisdiction having capital, surplus and
undivided profits aggregating in excess of $500,000,000, having
maturities of not more than one year from the date of acquisition
by such Person, (c) repurchase obligations with a term of not more
than 90 days for underlying securities of the types described in
clause (a) above entered into with any bank meeting the
qualifications specified in clause (b) above, (d) commercial paper
issued by any issuer rated at least A-1 by S&P or at least P-1
by Moody's (or carrying an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally),
and in each case maturing not more than one year after the date of
acquisition by such Person or (e) investments in money market funds
substantially all of whose assets are comprised of securities of
the types described in clauses (a) through (d) above.

 

“Closing”
means the closing of the transactions provided for in this
Agreement on the Closing Date.

 

“Closing
Date” means December 27, 2017, or such other date upon which
the parties may agree.

 

 

-3-

 

 

“Code”
means the Internal Revenue Code of 1986 as amended along with the
rules, regulations, decisions and other official interpretations in
connection therewith.

 

“Collateral”
is defined in Section 3.19
hereof.

 

“Commitment
Fees” means the Revolving Credit Facility Commitment Fee and
the Term Loan Commitment Fee.

 

“Commitments”
means the Revolving Credit Facility Commitment and the Term Loan
Commitment.

 

“Commodity
Exchange Act” means the Commodity Exchange Act (7 U.S.C.
§ 1 et seq.), as amended from time to time, and any successor
statute.

 

“Control”
means (a) the power to vote at least 50% of the outstanding shares
of any class of stock of a corporation or equity, membership or
ownership interest in any partnership, limited partnership, limited
liability company or other business entity, or (b) the beneficial
ownership of at least 50% of (i) the outstanding shares of any
class of stock of a corporation or (ii) of any outstanding equity,
membership or ownership interest in any other Person, or (c) the
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise, including the power to elect a majority of the directors
or trustees of a corporation or trust, as the case may
be.

 

“Default
Rate” is defined in Section 2.04(e) hereof.

 

“Disposition”
or “Dispose” means the sale, transfer, license, lease
or other disposition (whether in one transaction or in a series of
transactions, and including any sale and leaseback transaction) of
any property, or the granting of any option or other right to do
any of the foregoing, including any sale, assignment, transfer or
other disposal, with or without recourse, of any notes or accounts
receivable or any rights and claims associated
therewith.

 

“Distributions”
means, for the period of determination, (i) all distributions of
cash, securities or other property on or in respect of any Equity
Interest in any Borrower, (ii) all purchases, redemptions or other
acquisitions by a Borrower of any Equity Interest in such Borrower,
determined in accordance with GAAP, (iii) any payment, loan or
advance to an Equity Interest holder of a Borrower, whether in the
capacity as an equity owner or otherwise, except current salaries
or other current compensation, the payment of which is not
otherwise restricted under the Loan Documents, paid in the ordinary
course of business, consistent with past practice, any payment of
principal, interest, fees or other amounts in respect of any
Indebtedness owed such Borrower to an Equity Interest holder of
such Borrower; and any forgiveness or release without adequate
consideration by a Borrower of any indebtedness or other obligation
owing to such Borrower by an Equity Interest holder of such
Borrower.

 

“EBITDA” means, for the period of
determination (i) Net Income of Borrowers; plus
(ii) depreciation, amortization and
other non-cash charges (including stock issuances and stock
options); plus
(iii) Interest Expense;
plus
(iv) all income, capital or profits
taxes (including franchise and similar taxes), including tax
distributions;plus (or minus)
(v) other extraordinary, unusual or
non-recurring expenses (or credits), subject to review by the Bank
in its reasonable discretion, all determined in accordance with
GAAP.

 

“Equity
Interests” means any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership (or
profit) interests in a Person (other than a corporation),
securities convertible into or exchangeable for shares of capital
stock of (or other ownership or profit interests in) such Person,
and any and all warrants, rights or options to purchase any of the
foregoing, whether voting or nonvoting, and whether or not such
shares, warrants, options, rights or other interests are authorized
or otherwise existing on any date of determination.

 

 

-4-

 

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as in
effect as of the date of this Agreement and as amended from time to
time in the future, and any successor statute of similar impact,
and the rules and regulations thereunder, or from time to time in
effect.

 

“ERISA
Affiliate” means a Person who is under common control with
any Borrower within the meaning of Section 414(b) of the Code
including, but not limited to, a subsidiary of a
Borrower.

 

“ERISA
Event” shall mean (i) with respect to a Pension Plan, a
reportable event under Section 4043 of ERISA as to which event
(after taking into account notice waivers provided for in the
regulations) there is a duty to give notice to the PBGC; (ii) a
withdrawal by any Borrower or any member of the ERISA Group from a
Pension Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations that is treated
as such a withdrawal under Section 4062(e) of ERISA; (iii) a
complete or partial withdrawal by any Borrower or any member of the
ERISA Group from a Multiemployer Plan, notification that a
Multiemployer Plan is in reorganization, or occurrence of an event
described in Section 4041A(a) of ERISA that results in the
termination of a Multiemployer Plan; (iv) the filing of a notice of
intent to terminate a Pension Plan, the treatment of a Pension Plan
amendment as a termination under Section 4041(e) of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension
Plan; (v) an event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Pension Plan; or (vi) the imposition
of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon
Borrower or any member of the ERISA Group.

 

“ERISA
Group” means, at any time, any Borrower and other Loan
Parties and all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common
control and all other entities which, together with any Borrower
and other Loan Parties, are treated as a single employer under
Section 414 of the Code or Section 4001(b)(1) of
ERISA.

 

“Event of
Default” means any of the Events of Default described in
Section 7.01 hereof and referred to
therein as an “Event of Default”.

 

“Excess
Liquidity” means, for the period of determination, cash and
Cash Equivalents as shown on the Borrowers’ consolidated
balance sheet in excess of Four Million Six Hundred Thousand
Dollars ($4,600,000.00).

 

“Excess
Liquidity Application Date” means the date that is no later
than five (5) Business Days after the date on which the annual
financial statements that the Borrowers are required to deliver to
the Bank pursuant to Section 5.01(a) hereof, for the year with
respect to which Excess Liquidity is being determined, are required
to be delivered to the Bank.

 

“Excess
Interest” is defined in Section 2.04(h) hereof.

 

“Executive
Order No. 13224” means Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or
replaced.

 

 

-5-

 

 

“Excluded
Swap Obligation” means, with respect to any guarantor of a
Swap Obligation, including the grant of a security interest to
secure the guaranty of such Swap Obligation, any Swap Obligation
if, and to the extent that, such Swap Obligation is or becomes
illegal under the Commodity Exchange Act or any rule, regulation or
order of the Commodity Futures Trading Commission (or the
application or official interpretation of any thereof) by virtue of
such guarantor’s failure for any reason to constitute an
“eligible contract participant” as defined in the
Commodity Exchange Act and the regulations thereunder at the time
the guaranty or grant of such security interest becomes effective
with respect to such Swap Obligation.  If a Swap Obligation
arises under a master agreement governing more than one swap, such
exclusion shall apply only to the portion of such Swap Obligation
that is attributable to swaps for which such Swap Obligation or
security interest is or becomes illegal.

 

“Fixed
Charges” means, for the period of determination, the sum of:
(i) all scheduled payments of principal of the Obligations paid
during such period, to the extent there is an equivalent, permanent
reduction in the Commitments hereunder; (ii) net cash interest
expense for such period; (iii) income taxes paid or payable; (iv)
Distributions paid in cash, to the extent permitted hereunder; (v)
all fees paid to the Bank under any Loan Document; and (vi)
Unfinanced Capital Expenditures, in
each case determined in accordance with GAAP.

 

“Fixed Charges Coverage Ratio” means,
for the period of determination, the ratio of Adjusted
EBITDA to Adjusted Fixed
Charges, in each case determined in accordance with
GAAP.

 

“GAAP”
means generally accepted accounting principles (as such principles
may change from time to time), which shall include the official
interpretations thereof by the Financial Accounting Standards
Board, applied on a consistent basis as to classification of items
and amounts.

 

“Guarantor”
or “Guarantors” means, singularly or collectively, as
the context may require, any Person that executes and delivers to
the Bank a Guaranty Agreement on or after the date
hereof.

 

“Guaranty”
or “Guaranties” means, singularly or collectively, as
the context may require, any obligation of a Person guaranteeing or
in effect guaranteeing any liability or obligation of any other
Person in any manner, whether directly or indirectly, including any
agreement to indemnify or hold harmless any other Person, any
performance bond or other suretyship arrangement and any other form
of assurance against loss, except endorsement of negotiable or
other instruments for deposit or collection in the ordinary course
of business.

 

“Guaranty
Agreement” or “Guaranty Agreements” means,
singularly or collectively, as the context may require, any
guaranty and suretyship agreement executed and delivered to the
Bank on or after the date hereof in connection with this Agreement,
as each may be amended, modified, supplemented or restated from
time to time.

 

“Indebtedness”
means, as to any Person at any time, without duplication, any and
all indebtedness, obligations or liabilities (whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute
or contingent, or joint or several) of such Person for or in
respect of: (i) borrowed money, (ii) amounts raised under
or liabilities in respect of any note purchase or acceptance credit
facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit or hedge agreement,
(iv) any other transaction (including forward sale or purchase
agreements, capitalized leases and conditional sales agreements)
having the commercial effect of a borrowing of money entered into
by such Person to finance its operations or capital requirements
(but not including trade payables and accrued expenses incurred in
the ordinary course of business which are not represented by a
promissory note or other evidence of indebtedness and which are not
more than sixty (60) days past due), or (v) any Guaranty of
Indebtedness for borrowed money.

 

“Indemnified
Liabilities” shall have the meaning set forth in Section
8.18 hereof.

 

 

 

-6-

 

 

“Indemnitees”
shall have the meaning set forth in Section 8.18 hereof.

 

“Interest
Period” means the period of time selected by the Borrowers in
connection with, and to apply to, any election permitted hereunder
by the Borrowers to have Loans bear interest under the LIBOR Rate
Option. Subject to the last sentence of this definition, such
period shall be in one, two, three or six months, as selected by
the Borrowers. Such Interest Period shall commence on the effective
date of such Interest Rate Option, which shall be (i) the date on
which a Loan is made, or (ii) the date of renewal of, or conversion
to, the LIBOR Rate Option, if the Borrowers are renewing or
converting to the LIBOR Rate Option applicable to any outstanding
Loans. Notwithstanding the second sentence hereof: (A) any Interest
Period that would otherwise end on a date that is not a Business
Day shall be extended to the next succeeding Business Day, unless
such Business Day falls in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day,
and (B) the Borrowers may not select, convert or renew an Interest
Period for any portion of the Loans that would end after the
Revolving Credit Expiry Date, the Term Loan Maturity
Date.

 

“Interest
Rate Option” means the LIBOR Rate Option or the Prime Rate
Option.

 

“Law”
means any applicable law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction,
writ, decree or award of any Official Body.

 

“Letters of
Credit” means any and all letters of credit issued by the
Bank pursuant to this Agreement.

 

“Letter of
Credit Sublimit” means the sum of Five Hundred Thousand
Dollars ($500,000.00).

 

“LIBOR
Rate” means a variable interest rate per annum (rounded
upwards, if necessary to the nearest one hundredth of one percent
(1/100th
of 1%)) equal to ICE Benchmark Administration LIBOR Rate
(“ICE LIBOR”), as published by Bloomberg (or such other
commercially available source providing quotations of ICE LIBOR as
may be designated by the Bank from time to time) at approximately
11:00 a.m., London time, two Business Days prior to the
commencement of the applicable Interest Period, for United States
dollar deposits with a term equivalent to such Interest Period or,
(y) if such rate is not available, the rate of interest per annum
determined by the Bank to be the average rate per annum at which
United States dollar deposits in a similar amount are offered for
such Interest Period by major banks in the London interbank deposit
market at approximately 11:00 a.m. London time two (2) Business
Days prior to the commencement of the Interest Period.
Notwithstanding the foregoing, if the LIBOR Rate, as determined
herein, would be less than zero (0.00), such LIBOR Rate shall be
deemed to be zero (0.00) for purposes of this
Agreement.

 

“LIBOR Rate
Option” means option of the Borrowers to have Loans bear
interest at the LIBOR Rate plus the Applicable Margin.

 

“Lien”
means any mortgage, deed of trust, pledge, lien, security interest,
charge or other encumbrance or security arrangement of any nature
including, but not limited to, any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or
lease intended as, or having the effect of, security for
Indebtedness.

 

“Loan”
or “Loans” means, singularly or collectively, as the
context may require, the loan or loans made by the Bank to the
Borrowers under this Agreement, including, but not limited to, the
Revolving Credit Loan, the Term Loan, and any other credit to the
Borrowers extended by the Bank in accordance with Article II
hereof, as evidenced by the Notes.

 

 

-7-

 

 

“Loan
Account” means that as set forth in Section 2.10 hereof.

 

“Loan
Document” or “Loan Documents” means, singularly
or collectively, as the context may require, (i) this Agreement,
(ii) the Notes, (iii) the Notice of Waiver, (iv) the Security
Agreement, (v) the UCC financing statements filed in accordance
with the Security Agreement, (vi) any Guaranty Agreement, and (vii)
any and all other documents, instruments, certificates and
agreements executed and delivered in connection with this
Agreement, as any of them may be amended, modified, extended or
supplemented from time to time.

 

“Loan
Request” is defined in Section 2.01(c) hereof.

 

“Material
Adverse Change” means any set of circumstances or events
which has any Material Adverse Effect upon (a) the business,
operations, condition (financial or otherwise) of the Borrowers or
the Collateral; (b) the ability of a Borrowers to punctually
perform any of its payment or other obligations under this
Agreement or any other Loan Document; (c) the legality, validity or
enforceability of the obligations of any Borrower under this
Agreement or any other Loan Document; or (d) the ability of the
Bank to exercise its rights and remedies with respect to, or
otherwise realize upon, the Collateral or any other security for
the Obligations.

 

“Material
Adverse Effect” means a material adverse effect on (a) the
business, operations, condition (financial or otherwise) of a
Borrower or the Collateral; (b) the ability of a Borrower to
punctually perform any of its payment or other obligations under
this Agreement or any other Loan Document; (c) the legality,
validity or enforceability of the obligations of any Borrower under
this Agreement or any other Loan Document; or (d) the ability of
the Bank to exercise its rights and remedies with respect to, or
otherwise realize upon, the Collateral or any other security for
the Obligations.

 

“Maximum
Rate” is defined in Section 2.04(h) hereof.

 

“Net Cash
Proceeds” means (a) in connection with any Asset Sale or
any Recovery Event, the proceeds therefrom in the form of cash and
Cash Equivalents (including any such proceeds actually received
from deferred payments), net of attorneys’ fees,
accountants’ fees, amounts required to be reserved for
indemnification, adjustment of purchase price or similar
obligations pursuant to the agreements governing such Asset Sale,
amounts required to be applied to the repayment of debt secured by
a Permitted Lien on any asset that is the subject of such Asset
Sale or Recovery Event (other than any Lien pursuant to the
Security Agreement) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid (after
taking into account any available tax credits or deductions and any
tax sharing arrangements), and (b) in connection with any issuance
or sale of Equity Interests or any incurrence of Indebtedness, the
cash proceeds received from such issuance or incurrence, net of
attorneys’ fees, investment banking fees, accountants’
fees, underwriting discounts and commissions and other customary
fees and expenses actually incurred in connection
therewith.

 

“Net
Income” means, for the period of determination, net income or
loss (after taxes) of Borrowers excluding, however, extraordinary
gains or losses, in each case determined in accordance with
GAAP.

 

“Note”
or “Notes” means, singularly or collectively as the
context may require, the Revolving Credit Note, the Term Loan Note,
any other note or notes of the Borrowers executed and delivered
pursuant to this Agreement, together with all extensions, renewals,
refinancings or refundings in whole or in part, as amended,
modified, supplemented or restated from time to time.

 

“Notice of
Waiver” means the Notice of Waiver of Rights Regarding
Warrants of Attorney, Execution Rights, and Waiver of Rights to
Prior Notice and Judicial Hearing, dated of even date herewith,
executed by the Borrowers for the benefit of the Bank, as may be
amended, modified, restated or supplemented from time to
time.

 

 

-8-

 

 

“Notices”
shall have the meaning set forth in Section 8.04 hereof.

 

“Obligations”
means, collectively, (A) all Indebtedness, whether of principal,
interest, fees, expenses or otherwise, of the Borrowers to the
Bank, whether now existing or hereafter incurred including, but not
limited to, future loans and advances, if any, under this
Agreement, the Notes and the other Loan Documents, as the same may
be amended from time to time, together with any and all extensions,
renewals, refinancings or refundings thereof in whole or in part;
(B) all other obligations for the repayment of borrowed money,
whether of principal, interest, fees, expenses or otherwise, of the
Borrowers to the Bank, whether now existing or hereafter incurred,
whether under letters or advices of credit, lines of credit, other
financing arrangements or otherwise (including, but not limited to,
any obligations arising as a result of any overdrafts), whether or
not related to this Agreement or to the Notes, whether or not
contemplated by the Bank or the Borrowers at the date hereof and
whether direct, indirect, matured or contingent, joint or several,
or otherwise, together with any and all extensions, renewals,
refinancings or refundings thereof in whole or in part; (C) all
liabilities or obligations arising out of or in connection with
overdrafts on deposit or other accounts or out of electronic funds
transfers (whether by wire or wire transfer through automated
clearing houses or otherwise) or out of the return unpaid of, or
other failure of the Bank to receive final payment for, any check,
item, instrument, payment order or other deposit or credit to a
deposit or other account, or out of the Bank’s non-receipt of
or inability to collect funds or otherwise not being made whole in
connection with depository or other similar arrangements; (D) all
liabilities or obligations arising out of or in connection with
treasury management services or Rate Management Obligations;(E) all
costs and expenses including, without limitation, reasonable
attorneys’ fees and legal expenses, incurred by the Bank in
the collection of any of the indebtedness referred to in clauses
(A), (B), (C) or (D) above in amounts due and owing to the Bank
under this Agreement, the Notes or the other Loan Documents; and
(F) any advances made by the Bank for the maintenance,
preservation, protection or enforcement of, or realization upon,
any property or assets now or hereafter made subject to a Lien
granted pursuant to this Agreement, the Notes, the other Loan
Documents or pursuant to any agreement, instrument or note relating
to any of the Obligations, including, without limitation, advances
for taxes, insurance, repairs and the like. The foregoing
notwithstanding, the term “Obligations” shall not
include any Excluded Swap Obligation.

 

“Official
Body” means any government or political subdivision or any
agency, authority, bureau, central bank, board, commission,
department or instrumentality of either, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or
domestic.

 

“PBGC”
means the Pension Benefit Guaranty Corporation established pursuant
to Title IV of ERISA.

 

“Pension
Plan” means at any time an “employee pension benefit
plan” (as such term is defined in Section 3(2) of ERISA)
(including a “multiple employer plan” as described in
Sections 4063 and 4064 of ERISA, but not a Multiemployer Plan)
which is covered by Title IV of ERISA or is subject to the minimum
funding standards under Section 412 or Section 430 of the Code
and either (i) is sponsored, maintained or contributed to by
any member of the ERISA Group for employees of any member of the
ERISA Group or (ii) has at any time within the preceding five
years been sponsored, maintained or contributed to by any entity
which was at such time a member of the ERISA Group for employees of
any entity which was at such time a member of the ERISA Group, or
in the case of a “multiple employer” or other plan
described in Section 4064(a) of ERISA, has made contributions at
any time during the immediately preceding five plan
years.

 

“Permitted
Lien” and “Permitted Liens” are defined in
Section 6.01 hereof.

 

“Person”
means an individual, corporation, limited liability company,
partnership, joint venture, trust, or unincorporated organization
or government or agency or political subdivision
thereof.

 

 

-9-

 

 

“Plan”
means any deferred compensation program, including both single and
multi-employer plans, subject to Title IV of ERISA and established
and maintained for employees, officers or directors of the
Borrowers, any subsidiary of any Borrower or any ERISA
Affiliate.

 

“Pledge
Agreement” means the Pledge Agreement of even date herewith
made by Libsyn for the benefit of the Bank, as amended, modified,
supplemented or restated from time to time.

 

“Potential
Default” means any event or condition which with notice,
passage of time or determination by the Bank, or any combination of
the foregoing, would constitute an Event of Default.

 

“Prime
Rate” means the prime rate of interest as published in The
Wall Street Journal; provided, however, that if The Wall Street
Journal ceases to publish such rate, then the interest rate shall
be determined by reference to a comparable publication designated
by Bank. The Prime Rate may or may not be the most favorable rate
charged by the Bank to its customers from time to time. For any
Loan made at the Prime Rate, the interest rate shall change
simultaneously with changes to the Prime Rate.

 

“Prime Rate
Option” means the option of the Borrowers to have Loans bear
interest at the Prime Rate plus the Applicable Margin.

 

“Prohibited
Transaction” means any transaction which is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt
under Section 4975 of the Code or Section 408 of
ERISA.

 

“Purchase
Agreement” means the Stock Purchase Agreement dated as of
December 27, 2017 between Libsyn and the Seller named therein, as
the same may be amended, modified, supplemented or restated from
time to time, pursuant to which Holdings is acquiring certain
Equity Interests from Seller.

 

“Rate
Management Agreement” means any agreement, device or
arrangement providing for payments which are related to
fluctuations in interest rates, exchange rates, forward rates or
equity prices, including without limitation, any ISDA Master
Agreement between a Borrower and the Bank.

 

“Rate
Management Obligation” means any and all obligations of the
Borrowers to the Bank under or in connection with (i) any and all
Rate Management Agreements, and (ii) any and all cancellations, buy
backs, reversals, terminations or assignments of any Rate
Management Agreement.

 

“Recovery
Event” means any settlement of or payment to a Borrower
with respect to any property or casualty insurance claim or any
condemnation proceeding relating to any asset of such
party.

 

“Reinvestment
Notice” means a written notice executed by an officer of
a Borrower stating that no Event of Default has occurred and is
continuing and that the Borrower intends to use all or a specified
portion of the Net Cash Proceeds of a Recovery Event to acquire or
repair operating assets used or useful in the Borrower's
business.

 

“Reportable
Event” means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder, except any such event as to
which the provision for thirty (30) days’ notice to the PBGC
is waived under applicable regulations.

 

“Required
Deductions” is defined in Section 2.08(a) hereof.

 

 

-10-

 

 

“Reserve
Requirement” means the percentage that the Bank determines to
be the maximum reserve requirement (including, without limitation,
any emergency, marginal, special or supplemental reserve
requirement) prescribed for so-called "Eurocurrency liabilities"
(or any other category of Eurocurrency funding) prescribed by the
Board of Governors of the Federal Reserve System (or under any
successor regulation that the Bank determines to be applicable)
with each change in such maximum reserve requirement automatically,
immediately and without notice changing the LIBOR Rate thereafter
applicable to each LIBOR Rate Option.

 

“Revolving
Credit Expiry Date” means December 27, 2022.

 

“Revolving
Credit Facility Amount” means Two Million Dollars
($2,000,000.00).

 

“Revolving
Credit Facility Commitment” is defined in Section 2.01(a) hereof.

 

“Revolving
Credit Facility Commitment Fee” is defined in Section
2.07 hereof.

 

“Revolving
Credit Loan” or “Revolving Credit Loans”,
singularly or collectively as the context may require, shall have
the meaning forth in Section 2.01(a)
hereof.

 

“Revolving
Credit Note” means the Revolving Credit Note of the
Borrowers, executed and delivered pursuant to Section 2.01(b) of this Agreement, together with all
extensions, renewals, refinancings or refundings, in whole or in
part, as may be amended, modified, supplemented or restated from
time to time.

 

“Security
Agreements” means, collectively, (i) the Security Agreement
made by the Borrowers for the benefit of the Bank, (ii) the Pledge
Agreement, and (iii) each other agreement securing the Obligations
or granting a Lien in favor of the Bank in respect of such
Obligations, each dated of even date herewith and each as amended,
modified, supplemented or restated from time to time.

 

“Solvent”
means, with respect to any Person on a particular date, that on
such date (i) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person, (ii) the
present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its assets and
pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of business,
(iv) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability
to pay as such debts and liabilities mature, and (v) such Person is
not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s
property would constitute unreasonably small capital after giving
due consideration to the prevailing practice in the industry in
which such Person is engaged. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will
be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured
liability.

 

“Swap
Obligation” means any Rate Management Obligation that
constitutes a “swap” within the meaning of section
1a(47) of the Commodity Exchange Act, as amended from time to
time.

 

“Termination
Event” means (i) a Reportable Event, (ii) the termination of
a single employer Plan or the treatment of a single employer Plan
amendment as the termination of such Plan under Section 4041 of
ERISA, or the filing of a notice of intent to terminate a single
employer Plan, or (iii) the institution of proceedings to terminate
a single employer Plan by the PBGC under Section 4042 of ERISA, or
(iv) the appointment of a trustee to administer any single employer
Plan.

 

 

-11-

 

 

“Term
Loan” is defined in Section 2.02(a) hereof.

 

“Term Loan
Commitment” is defined in Section 2.02(a)
hereof.

 

“Term Loan
Commitment Fee” is defined in Section 2.07 hereof.

 

“Term Loan
Facility Amount” means Eight Million Dollars
($8,000,000.00).

 

“Term Loan
Maturity Date” means December 27, 2022.

 

“Term Loan
Note” means the Term Loan Note of the Borrowers, executed and
delivered pursuant to Section 2.02(a) of this Agreement, together
with all extensions, renewals, refinancings or refundings, in whole
or in part, as may be amended, modified, supplemented or restated
from time to time.

 

“Transaction”
means the transactions described on Schedule 1.1(B) attached
hereto.

 

“UCC”
means the Uniform Commercial Code or other similar Law as in effect
on the date of this Agreement and as amended from time to time, of
the Official Body having jurisdiction with respect to all or any
portion of the Collateral granted or assigned to the Bank from time
to time under or in connection with this Agreement or the other
Loan Documents.

 

“Unfinanced
Capital Expenditures” means a Capital Expenditure made from
Borrowers’ internally generated cash flow.

 

“Unreimbursed
Drawings” means drawings made under Letters of Credit that,
for any reason, have not been reimbursed by or on behalf of the
Borrowers, whether through borrowings of Loans hereunder or
otherwise.

 

“Unused
Facility Fee” is defined in Section 2.07 hereof.

 

“USA Patriot Act” means the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has
been, or shall hereafter be, renewed, extended, amended or
replaced.

 

1.02       
Construction and
Interpretation.

 

(a)       Construction.
Unless the context of this Agreement otherwise clearly requires,
references to the plural include the singular, the singular the
plural, the part the whole and “or” has the inclusive
meaning represented by the phrase “and/or”. References
in this Agreement to “judgments” of the Bank include
good faith estimates by the Bank (in the case of quantitative
judgments) and good faith beliefs by the Bank (in the case of
qualitative judgments). The definition of any document or
instrument includes all schedules, attachments and exhibits thereto
and all renewals, extensions, supplements, restatements and
amendments thereof. “Hereunder”, “herein”,
“hereto”, “hereof”, “this
Agreement” and words of similar import refer to this entire
document; “including” is used by way of illustration
and not by way of limitation unless the context clearly indicates
to the contrary; and any action required to be taken by the
Borrowers is to be taken promptly, unless the context clearly
indicates to the contrary.

 

 

 

-12-

 

 

(b)           Accounting
Principles. Except as otherwise provided in this Agreement,
all computations and determinations as to accounting or financial
matters and all financial statements to be delivered pursuant to
this Agreement shall be made and prepared in accordance with GAAP
(including principles of consolidation, where appropriate), and all
accounting or financial terms shall have the meanings ascribed to
such terms by GAAP; provided, however, that except as otherwise
provided herein, all accounting terms used in Section 5.14 (and all defined terms used in the
definition of any accounting terms used in Section 5.14) shall have the meaning given to such
terms (and defined terms) under GAAP as in effect on the date
hereof applied on a basis consistent with those used in preparing
the annual financial statements of Borrowers referred to in Section
5.01(a). In the event of any change
after the date hereof in GAAP, and if such change would result in
the inability to determine compliance with the financial covenants
set forth in Section 5.14 based upon
the Borrowers’ regularly prepared financial statements by
reason of the preceding sentence, then the parties hereto agree to
endeavor, in good faith, to agree upon an amendment to this
Agreement that would adjust such financial covenants in a manner
that would not affect the substance thereof, but would allow
compliance therewith to be determined in accordance with the
Borrowers’ financial statements at that time.

 

ARTICLE
II

 

THE CREDIT
FACILITIES

 

2.01       
The Revolving Credit
Facility Commitment.

 

(a)       Revolving
Credit Loans. (i) Subject to the terms and conditions and
relying upon the representations and warranties set forth in this
Agreement, the Notes and the other Loan Documents, the Bank agrees
(the “Revolving
Credit Facility Commitment”) to make loans (a
“Revolving Credit
Loan” or the“Revolving Credit Loans”)
to the Borrowers at any time or from time to time on or after the
Closing Date and to and including the Business Day immediately
preceding the Revolving Credit Expiry Date in an aggregate
principal amount which shall not exceed at any one time outstanding
the Revolving Credit Facility Amount, less the amount available to
be drawn on all unexpired Letters of Credit, and less all
Unreimbursed Drawings. Within the limits of time and amounts set
forth in this Section 2.01, and
subject to the other provisions of this Agreement including,
without limitation, the Bank’s right to demand repayment of
the Revolving Credit Loans upon the occurrence of an Event of
Default, the Borrowers may borrow, repay and reborrow under this
Section 2.01.

 

(b)      Revolving Credit Note. The
obligations of the Borrowers to repay the unpaid principal amount
of the Revolving Credit Loans made to the Borrowers by the Bank and
to pay interest on the unpaid principal amount thereof will be
evidenced in part by a Revolving Credit Note of the Borrowers,
dated the Closing Date, in form and substance satisfactory to the
Bank. The executed Revolving Credit Note shall be delivered by the
Borrowers to the Bank on the Closing Date.

 

(c)    
Loan Requests.
Except as otherwise provided herein, the Borrowers may from time to
time prior to the Revolving Credit Expiry Date request the Bank to
make Revolving Credit Loans. Except as otherwise provided herein,
the Borrowers may from time to time prior to the Revolving Credit
Expiry Date request the Bank to renew or convert the Interest Rate
Option applicable to existing Revolving Credit Loans. In each such
case, the Borrowers shall deliver to the Bank a duly completed
request substantially in the form of Exhibit A attached hereto or a
request by telephone immediately confirmed in writing by letter,
facsimile or email in such form (each, a “Loan Request”), it being
understood that the Bank may rely on the authority of any
individual making such a request without the necessity of receipt
of such written confirmation, at the following times:

 

(i)         not
later than 1:00 p.m., Pittsburgh, Pennsylvania time on the proposed
Borrowing Date with respect to the making of a Revolving Credit
Loan to which the Prime Rate Option applies;

 

(ii)         not
later than 1:00 p.m., Pittsburgh, Pennsylvania time on the second
(2nd)
Business Day prior to the proposed Borrowing Date with respect to
the making of a Revolving Credit Loan to which the LIBOR Rate
Option applies;

 

 

 

-13-

 

 

(iii)        
not later than 1:00 p.m., Pittsburgh, Pennsylvania time on the last
day of the applicable Interest Period with respect to the
conversion of a Revolving Credit Loan from the LIBOR Rate Option to
the Prime Rate Option; or

 

(iv)         not
later than 1:00 p.m., Pittsburgh, Pennsylvania time on the second
(2nd)
Business Day prior to the proposed Borrowing Date with respect to
(i) the conversion of a Revolving Credit Loan from the Prime Rate
Option to the LIBOR Rate Option or (ii) the renewal of a Revolving
Credit Loan to which the LIBOR Rate Option applies.

 

Each
Loan Request shall be irrevocable and shall specify (i) the
proposed Borrowing Date; (ii) the amount of the proposed
Revolving Credit Loans that are the subject of such request;
(iii) whether the Prime Rate Option or the LIBOR Rate Option
shall apply to the Revolving Credit Loans that are the subject of
such request; and (iv) in the case of a tranche to which the
LIBOR Rate Option applies, an appropriate Interest Period for the
Loans comprising such Borrowing Tranche.

 

(d)     
Making Revolving Credit
Loans. Upon its receipt of a Loan Request to fund a
Revolving Credit Loan, the Bank shall fund such Revolving Credit
Loan to the Borrowers in U.S. Dollars and immediately available
funds into the designated Borrower’s account at the Bank
prior to 4:00 p.m., Pittsburgh, Pennsylvania time, on the
applicable Borrowing Date.

 

(e)       Maximum
Principal Balance of Revolving Credit Loans. The aggregate
principal amount of all Revolving Credit Loans outstanding shall
not exceed the Revolving Credit Facility Amount, less the amount
available to be drawn on all unexpired Letters of Credit, and less
all Unreimbursed Drawings.

 

(f)       Repayment
of Revolving Credit Loans. The Borrowers shall pay interest
on the outstanding principal amount of Revolving Credit Loans from
and including the date on which each Revolving Credit Loan is made,
to but not including the date the outstanding principal amount
thereof is paid in full. Accrued interest on Revolving Credit Loans
to which the LIBOR Rate Option applies shall be payable in arrears
on the last day of each Interest Period for those Loans; provided,
however, that the Borrowers shall pay interest not less frequently
than quarterly. Accrued
interest on Revolving Credit Loans to which the Prime Rate Option
applies shall be payable monthly in arrears on the first day of
each month, commencing on February 1, 2018 through and including
December 1, 2022 and on the Revolving Credit Expiry Date. If not
sooner paid, the entire principal balance of all outstanding
Revolving Credit Loans, all unpaid accrued interest thereon and all
other sums and costs owed to the Bank by the Borrowers pursuant to
the Revolving Credit Loans, shall be immediately due and payable on
the Revolving Credit Expiry Date, without notice, presentment or
demand of any kind.

 

2.02       
Term
Loan.

 

(a)     
Term Loan
Commitment. Subject to the terms and conditions and relying
upon the representations and warranties set forth in this
Agreement, the Notes and the other Loan Documents, the Bank agrees
(the “Term Loan
Commitment”) to make a loan (the “Term Loan”) to the
Borrowers on the Closing Date in a principal amount equal to the
Term Loan Facility Amount. The Term Loan Commitment shall not be a
revolving credit commitment, and upon repayment of any amount of
principal of the Term Loan, the Borrowers may not reborrow the same
hereunder.

 

(b)    
Term Loan Note. The
obligations of the Borrowers to repay the unpaid principal amount
of the Term Loan and to pay interest on the unpaid principal amount
thereof will be evidenced in part by the Term Loan Note of the
Borrower, dated the Closing Date, in form and substance
satisfactory to the Bank. The executed Term Loan Note shall be
delivered by the Borrowers to the Bank on the Closing
Date.

 

 

 

-14-

 

 

(c)    
Repayment of Term
Loan. Commencing on March 30, 2018 and on the last day of
each June, September, December and March thereafter, through and
including September 30, 2022, the Borrowers shall make a payment of
principal on the Term Loan in the amount of Four Hundred Thousand
Dollars ($400,000.00) based on a five-year amortization period.
Accrued interest on the outstanding principal balance of the Term
Loan shall be payable in arrears on the last day of each Interest
Period; provided, however, that the Borrowers shall pay interest
not less frequently than quarterly. The remaining unpaid principal
balance of the Term Loan, together with accrued interest thereon,
shall be due and payable in full on the Term Loan Maturity Date,
without demand.

 

2.03       
Letters of
Credit.

 

(a)  
Commitment to Issue
Letters of Credit. Subject to the requirements set forth
below, the Borrowers may use a portion of the Revolving Credit
Facility Commitment, which portion shall not exceed the Letter of
Credit Sublimit, for the purpose of causing the Bank to issue
standby Letters of Credit for the account of any Borrower, provided
that (i) the applicable Borrower shall execute and deliver a letter
of credit application and reimbursement agreement, in forms
acceptable to the Bank, and comply with any conditions to the
issuance of such Letter of Credit (including payment of any
applicable fees) set forth therein; (ii) the Bank approves the form
of such Letter of Credit; (iii) such Letter of Credit bears an
expiration date not later than one year after the date of issuance;
(iv) the Bank receives a request for issuance not less than three
(3) Business Days prior to the date of issuance (unless the Bank,
in its sole and absolute discretion, agrees to shorter notice in
any instance); (v) the purpose of such Letter of Credit shall be
acceptable to the Bank; and (vi) the conditions set forth in
Article IV hereof are fulfilled to the satisfaction of the Bank as
of the date of the issuance of such Letter of Credit. During the
time each Letter of Credit is issued and outstanding, the
availability of advances under the Revolving Credit Facility
Commitment shall be reduced by the face amount of such Letter of
Credit (whether or not drawn).

 

(b)  
Reimbursement
Obligations. Borrowers are absolutely, unconditionally and
irrevocably obligated, jointly and severally, to reimburse the Bank
for all amounts drawn under each Letter of Credit. If any draft is
presented under a Letter of Credit, the payment of which is
required to be made at any time on or before the Revolving Credit
Expiry date, then payment by the Bank of such draft shall
constitute a Revolving Credit Loan (which shall be a Prime Rate
Loan) hereunder and interest shall accrue from the date the Bank
makes payment on such draft under such Letter of Credit; provided,
however, that if there is not then any Revolving Credit Facility
Amount in an amount at least equal to the amount of the draw,
Borrowers shall immediately reimburse the Bank for any payments
made by the Bank. If any draft is presented under a Letter of
Credit, the payment of which is required to be made after the
Revolving Credit Expiry Date or at the time when an Event of
Default shall then be continuing, then Borrowers shall immediately
pay to the Bank, in immediately available funds, the full amount of
such draft together with interest thereon at the Prime Rate from
the date on which the Bank makes such payment of such draft until
the date it received full reimbursement for such payment from the
Borrowers. Borrowers further agree that the Bank may reimburse
itself for any such drawing at any time from the balance in any
other account of any Borrower maintained with the
Bank.

 

(c) 
Limitation on
Amount. The Bank shall not be obligated or permitted under
this Section 2.03 to issue any Letter of Credit for the account of
any Borrower, to the extent that the sum of (i) the amount that
would be available to be drawn under the proposed Letter of Credit,
plus (ii) the sum of all amounts available to be drawn under all
outstanding Letters of Credit, plus (iii) any Unreimbursed
Drawings, would exceed the lesser of (A) the Letter of Credit
Sublimit, and (B) the excess of the Revolving Credit Facility
Amount over the aggregate principal amount of Revolving Credit
Loans outstanding.

 

 

-15-

 

 

(d)  Obligations Absolute.
Borrowers obligations under this
Section 2.03 (including any obligations to repay draws under
Letters of Credit issued hereunder) shall be absolute and
unconditional under any and all circumstances and irrespective of
the occurrence of any Event of Default or any condition precedent
whatsoever or any setoff, counterclaim or defense to payment that
any Borrower may have or have had against the Bank or any
beneficiary of a Letter of Credit. Borrowers further agree that the
Bank shall not be responsible for, and the Borrowers reimbursement
obligations shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements
thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute
between or among any Borrower, the beneficiary of any Letter of
Credit or any financial institution or other party to which any
Letter of Credit may be transferred or any claims or defenses
whatsoever of any Borrower against the beneficiary of any Letter of
Credit or any such transferee. The Bank shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in
connection with any Letter of Credit. Any action taken or omitted
by the Bank under or in connection with each Letter of Credit and
the related drafts and documents shall be binding upon
Gumby’s and shall not result in any liability on the part of
the Bank, unless the Bank violates any applicable Law regulating
letters of credit.

 

(e)  Reliance by the Bank.
The Bank shall be entitled to rely,
and shall be fully protected in relying upon, any Letter of Credit,
draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, email message,
statement, order or other document believed by it to be genuine and
correct and believed by it to have been signed, sent or made by the
proper Person(s) and upon advice and statements of legal counsel,
independent accountants and other experts selected by the
Bank.

 

(f)  Fees. Borrowers shall pay to the Bank all of the Bank’s
standard fees and charges for the opening, confirmation,
amendment, modification,
presentation or cancellation of a Letter of Credit and otherwise in
respect of a Letter of Credit and shall execute all of the
Bank’s standard agreements in connection with the issuance of
each Letter of Credit. Without limiting the generality of the
foregoing, Borrowers shall pay to the Bank a fee on the issuance of
each letter of credit, such fee to be determined pursuant to
the Pricing Grid attached hereto as Schedule 1.1(A).

 

(g)  Standard of Conduct.
The Bank shall be entitled to
administer each Letter of Credit in the ordinary course of business
and in accordance with its usual practices, modified from time to
time as it deems appropriate under the circumstances, and shall be
entitled to use its discretion in taking or refraining from taking
any action in connection herewith.

 

(h) 
Cash Collateral
Account. In the event that (i) the excess of (A) the amount
of the Revolving Credit Facility Amount, over (B) the aggregate
principal amount of the Revolving Credit Loans then outstanding is
less than (ii) the aggregate undrawn and unexpired face amount of
any outstanding Letters of Credit (to the extent such face amount
is undrawn) and the aggregate face amount of any Unreimbursed
Drawings for any reason (whether because the Revolving Credit
Facility Amount has been reduced or terminated or otherwise),
Borrowers shall forthwith pay
to the Bank an amount equal to the excess of the amount described
in clause (ii) above over the amount described in clause (i) above.
Such amount shall be applied first, against any Unreimbursed
Drawings and second, against the unpaid principal amount of any
Revolving Credit Loans then outstanding, and the remainder shall be
maintained by the Bank in an interest bearing cash collateral
account in the name of and for the benefit of the Bank to secure
the repayment of Borrowers’ obligation to reimburse the Bank
for drafts drawn or that may be drawn under outstanding Letters of
Credit until the earlier of (1) such time as all outstanding
Letters of Credit have expired or been cancelled, and (2) the
excess of the amount described in clause (ii) above over the amount
described in clause (i) above no longer exists.

 

 

-16-

 

 

(i)           Obligations
Secured. The obligations of Borrowers to the Bank in respect of Letters of
Credit shall be guaranteed pursuant to the Loan Documents and shall
be secured by the Collateral.

 

2.04       
Interest
Rates.

 

(a)           Interest
Rate Options for Revolving Credit Loans. The Borrowers shall
pay interest in respect of the outstanding unpaid principal amount
of the Revolving Credit Loans as selected by it from the Prime Rate
Option or LIBOR Rate Option set forth below applicable to the
Revolving Credit Loans, it being understood that, subject to the
provisions of this Agreement, the Borrowers may select different
Interest Rate Options and different Interest Periods to apply
simultaneously to the Revolving Credit Loans comprising different
Borrowing Tranches and may convert to or renew one or more Interest
Rate Options with respect to all or any portion of the Revolving
Credit Loans comprising any Borrowing Tranche; provided that there
shall not be at any one time outstanding more than eight (8)
Borrowing Tranches in the aggregate among all of the Loans. The
Borrowers shall have the right to select from the following
Interest Rate Options applicable to the Revolving Credit
Loans:

 

(i)         Revolving
Credit Prime Rate Option. A fluctuating rate per annum
(computed on the basis of a 365 or 366-day year, as the case may
be, counting the actual days elapsed) equal to the Prime Rate plus
the Applicable Margin, such interest rate to change automatically
from time to time effective as of the effective date of each change
in the Prime Rate; or

 

(ii)       
Revolving Credit LIBOR
Rate Option. A rate per annum (computed on the basis of a
360-day year, counting the actual days elapsed) equal to the LIBOR
Rate as determined for each applicable Interest Period, plus the
Applicable Margin.

 

(b)           Interest
on Term Loan. The Borrowers shall pay interest on the Term
Loan at a rate per annum (computed on the basis of a 360-day year,
counting the actual days elapsed) equal to the Applicable
Rate.

 

(c)           Rate
Quotations. The Borrowers may request from the Bank an
indication of the rates then in effect, but it is acknowledged that
such projection shall not be binding on the Bank, nor shall it
affect the rate of interest which thereafter is actually in effect
when the election is made.

 

(d)         
Interest Periods.
At any time when the Borrowers shall select, convert to or renew a
LIBOR Rate Option, the Borrowers shall notify the Bank thereof at
least two (2) Business Days prior to the effective date of such
LIBOR Rate Option by delivering a Loan Request. The notice shall
specify an Interest Period during which such Interest Rate Option
shall apply. Notwithstanding the preceding sentence, the following
provisions shall apply to any selection of, renewal of, or
conversion to a LIBOR Rate Option:

 

(i)       Amount
of Borrowing Tranche. Each Borrowing Tranche of Loans under
the LIBOR Rate Option shall be in integral multiples of Fifty
Thousand Dollars ($50,000.00) and not less than Fifty Thousand
Dollars ($50,000.00).

 

(ii)  
  Renewals. In
the case of the renewal of a LIBOR Rate Option at the end of an
Interest Period, the first day of the new Interest Period shall be
the last day of the preceding Interest Period, without duplication
in payment of interest for such day.

 

 

-17-

 

 

(e)           Interest
after Default. To the extent permitted by Law, upon the
occurrence of an Event of Default, and until such Event of Default
shall have been cured or waived, the Borrowers may not select,
request, convert to, or renew the LIBOR Rate Option for any Loans,
and

 

(i)         Interest
Rates. The rate of interest for each Loan otherwise
applicable pursuant hereto, shall bear interest at a rate per annum
equal to the sum of the rate of interest applicable under the
applicable Prime Rate Option plus an additional two percent (2%)
per annum (the “Default Rate”), and the
Loans to which the LIBOR Rate Option applies shall automatically
convert to the applicable Prime Rate Option at the end of the
then-current Interest Period and no Loans may be made as, renewed
or converted into Loans to which the LIBOR Rate Option
applies.

 

(ii)         Other
Obligations. Each other Obligation hereunder if not paid
when due shall bear interest at the Default Rate from the time such
Obligation becomes due and payable and until it is paid in full;
and

 

(iii)      
Acknowledgment. The
Borrowers acknowledge that the increase in rates referred to in
this Section reflects, among other things, the fact that such Loans
or other amounts have become a substantially greater risk given
their default status and that the Bank is entitled to additional
compensation for such risk; and all such interest shall be payable
by the Borrowers upon demand by the Bank.

 

(f)           Libor
Rate Unascertainable;Illegality; Increased Costs; Deposits Not
Available.

 

(i)       
Unascertainable. If
on any date on which a LIBOR Rate would otherwise be determined,
the Bank shall have determined that: (A) adequate and reasonable
means do not exist for ascertaining such LIBOR Rate; or (B) a
contingency has occurred which materially and adversely affects the
London interbank Eurodollar market relating to the LIBOR Rate, then
the Bank shall have the rights specified in Section 2.03(g).

 

(ii)         Illegality;
Increased Costs; Deposits Not Available. If at any time the
Bank shall have determined that:

 

(A)   
    the making, maintenance or funding of any Loan
to which a LIBOR Rate Option applies has been made impracticable or
unlawful by compliance by the Bank in good faith with any Law or
any interpretation or application thereof by any Official Body or
with any request or directive of any such Official Body (whether or
not having the force of Law), or

 

(B)         such
LIBOR Rate Option will not adequately and fairly reflect the cost
to the Bank of the establishment or maintenance of any such Loan,
or

 

(C)         after
making all reasonable efforts, deposits of the relevant amount in
Dollars for the relevant Interest Period for a Loan, or to banks
generally, to which a LIBOR Rate Option applies, respectively, are
not available to the Bank with respect to such Loan, or to banks
generally, in the interbank Eurodollar market, then the Bank shall
have the rights specified in Section 2.04(g).

 

 

-18-

 

 

(g)           Bank’s
Rights. In the case of any event specified in
Section 2.09(f) above, the Bank shall promptly so notify the
Borrowers thereof. Upon such date as shall be specified in such
notice (which shall not be earlier than the date such notice is
given), the obligation of the Bank to allow the Borrowers to
select, convert to or renew a LIBOR Rate Option shall be suspended
until the Bank shall have later notified the Borrowers of the
Bank’s determination that the circumstances giving rise to
such previous determination no longer exist. If at any time the
Bank makes a determination under Section 2.04(f) and the Borrowers
shall have previously notified the Bank of its selection of,
conversion to or renewal of a LIBOR Rate Option, as applicable, and
such Interest Rate Option has not yet gone into effect, such
notification shall be deemed to provide for selection of,
conversion to or renewal of the Prime Rate Option otherwise
available with respect to such Loans. If the Bank notifies the
Borrowers of a determination under Section 2.04(f)(ii), the
Borrowers shall, subject to the Borrower’s indemnification
Obligations under Section 2.11, as to any Loan of the Bank to
which a LIBOR Rate Option applies, on the date specified in such
notice either convert such Loan to the Prime Rate Option otherwise
available with respect to such Loan or prepay such Loan. Absent due
notice from the Borrowers of conversion or prepayment in the case
of any event specified in Section 2.04(f) above, such Loan
shall automatically be converted to the Prime Rate Option otherwise
available with respect to such Loan upon such specified
date.

 

(h)           Interest
Laws. Notwithstanding any provisions to the contrary
contained in this Agreement or any other Loan Document, the
Borrowers shall not be required to pay, and the Bank shall not be
permitted to collect, any amount of interest in excess of the
maximum amount of interest permitted by applicable Law
(“Excess
Interest”). If any Excess Interest is provided for or
determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any other Loan Document, then,
in such event: (1) the provisions of this subsection shall govern
and control; (2) the Borrowers shall not be obligated to pay any
Excess Interest; (3) any Excess Interest that the Bank may have
received hereunder shall be, at the Bank’s option, (a)
applied as a credit against the outstanding principal balance of
the Loans or accrued and unpaid interest (not to exceed the maximum
amount permitted by Law), (b) refunded to the payor thereof, or (c)
any combination of the foregoing; (4) the interest rate(s) provided
for herein shall be automatically reduced to the maximum lawful
rate allowed from time to time under applicable Law (the
“Maximum
Rate”), and this Agreement and the other Loan
Documents shall be deemed to have been and shall be, reformed and
modified to reflect such reduction; and (5) the Borrowers shall not
have any action against the Bank for any damages arising out of the
payment or collection of any Excess Interest. Notwithstanding the
foregoing, if for any period of time interest on any Loan is
calculated at the Maximum Rate rather than the Applicable Rate
under this Agreement, and thereafter such Applicable Rate becomes
less than the Maximum Rate, the rate of interest payable on such
Loan shall remain at the Maximum Rate until the Bank shall have
received the amount of interest which the Bank would have received
during such period on such Loan had the rate of interest not been
limited to the Maximum Rate during such period.

 

2.05           Selection
of Interest Rate Options.

 

If the
Borrowers fail to select an Interest Rate Option or Interest Period
to apply to any new Revolving Credit Loan in accordance with the
provisions of Section 2.03, the
Borrowers shall be deemed to have elected the LIBOR Rate Option for
a one-month Interest Period. If the Borrowers fail to select a new
Interest Rate Option or Interest Period to apply to any Borrowing
Tranche of Loans under the LIBOR Rate Option at the expiration of
an existing Interest Period applicable to such Borrowing Tranche in
accordance with the provisions of Section 2.03, the Borrowers shall be deemed to have
continued such Borrowing Tranche under the LIBOR Rate Option for an
Interest Period of the same duration as the expiring Interest
Period.

 

 

-19-

 

 

2.06       
Late
Charge.

 

If any
payment of principal of, or interest on, any Note is not paid
within fifteen (15) days of the date when due, the Borrowers shall
pay to the Bank any late charge in the
amount of five percent (5%) of the regular payment or portion
thereof that remains unpaid for more than fifteen (15) days beyond
the due date. The minimum late charge amount is Twenty-Five Dollars
($25.00). This charge will be due and payable within
five (5) days after written notice thereof from the Bank to
the Borrower.

 

2.07       
Fees and
Expenses.

 

(a)       Commitment
Fees. The Borrowers shall pay to the Bank on the Closing
Date: (i) a non-refundable commitment fee in respect of the
Revolving Credit Facility Commitment in the amount of Twenty
Thousand Dollars ($20,000.00) (the “Revolving Credit Facility Commitment
Fee”); and (ii) a non-refundable commitment fee in
respect of the Term Loan Commitment in the amount of Eighty
Thousand Dollars ($80,000.00) (the “Term Loan Commitment
Fee”). The Commitment Fees shall have been fully
earned by the Bank by its commitment to make and the closing of the
Loans and shall not be subject to reduction or refund for any
reason whatsoever.

 

(b)     
Unused Facility
Fee. Accruing from the Closing Date until the Revolving
Credit Expiry Date, the Borrowers shall pay to the Bank, as
consideration for Revolving Credit Facility Commitment hereunder, a
non-refundable commitment fee (the “Unused Facility Fee”)
determined pursuant to the Pricing Grid attached hereto as Schedule
1.1(A) on the average daily difference between the amount of
(i) the Revolving Credit Facility Amount and the (ii) the
sum of the Revolving Credit Loans outstanding, computed on a
quarterly basis, in arrears, on the last Business Day of each
calendar quarter based upon the daily utilization for that quarter
as calculated by the Bank. The Unused Facility Fee shall be payable
in arrears on the first Business Day of April, 2018, with respect
to the quarter ending on March 31, 2018, and on the first Business
Day of each July, October January and April thereafter with respect
to the immediately preceding quarter, and on the Revolving Credit
Expiry Date or upon acceleration of the Revolving Credit
Note.

 

(c)     
Expenses.
The Borrowers agree to pay, upon
demand, costs of collection of all amounts due under the Loans and
under this Agreement, including, without limitation, principal,
interest and fees, or in connection with the enforcement of, or
realization on, any security for the Loans, including, without
limitation, to the extent permitted by applicable law, reasonable
attorneys’ fees and expenses.

 

2.08      
Payments;
Prepayments.

 

(a)   
General. All
payments and prepayments to be made in respect of principal,
interest, fees or other amounts due from the Borrowers under this
Agreement or under the Notes shall be paid to the Bank in United States Dollars, in immediately available
funds. The sum or sums shown on the Bank’s records shall be
evidence of the correct unpaid balances of principal and interest
on the Loans, absent manifest error. If any payment comes due on a
day that is not a Business Day, the Borrowers may make the payment
on the first Business Day following the payment date and pay the
additional interest accrued to the date of payment. The Bank
may in its discretion deduct such payments from any of the
Borrower’s demand or deposit accounts with the Bank on the
due date. All such payments shall be applied at the option of the
Bank to accrued and unpaid interest, outstanding principal and
other sums due under the Loans in such order as the Bank, in its
sole discretion, shall elect. All such payments shall be made
absolutely net of, without deduction or offset for, and altogether
free and clear of, any and all present and future taxes, levies,
deductions, charges and withholdings and all liabilities with
respect thereto, excluding income and franchise taxes imposed on
the Bank under the Laws of the United States or any state or
political subdivision thereof. If the Borrowers are compelled by
Law to deduct any such taxes or levies (other than such excluded
taxes) or to make any such other deductions, charges, or
withholdings (collectively, the “Required Deductions”),
the Borrowers will pay to the Bank an additional amount equal to
the sum of (i) the aggregate amount of all Required Deductions and
(ii) the aggregate amount of United States, federal or state income
taxes required to be paid by the Bank in respect of the Required
Deductions.

 

 

-20-

 

 

(b)  
       Voluntary Prepayments. The
Borrowers may at any time and from time to time prepay the Loans,
in whole or in part, without premium or penalty, upon irrevocable
notice delivered to the Bank no later than 11:00 a.m. at least
three Business Days prior thereto in the case of LIBOR Rate Loans
and at least one Business Day prior thereto in the case of Prime
Rate Loans, which notice shall specify the date and amount of such
prepayment, whether such prepayment is of the Term Loan or the
Revolving Credit Loan, and whether such prepayment is of LIBOR Rate
Loans or Prime Rate Loans; provided, however any prepayment of
LIBOR Rate Loans pursuant to this Section 2.08(b) shall be in an
integral multiple of Fifty Thousand Dollars ($50,000.00), or, if
less, the entire principal amount thereof then outstanding. If a
LIBOR Rate Loan is prepaid pursuant to this Section 2.08(b) on any
day other than the last day of the Interest Period applicable
thereto, the Borrowers shall also pay any amounts owing pursuant to
Section 2.12. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein,
together with accrued interest to such date on the amount prepaid.
Each prepayment of the Loans under this Section 2.08(b) shall be
accompanied by accrued interest to the date of such prepayment on
the amount prepaid.

 

(c)   
       Mandatory
Prepayments.

 

(i)         If
any Indebtedness shall be incurred by the Borrowers (excluding any
Indebtedness permitted to be incurred pursuant to Section 6.02 hereof), or any Equity Interests shall be
issued by the Borrowers (other than Equity Interests (A) issued in
connection with an Acquisition approved by the Bank, or (B) issued
in connection with the redemption of the Equity Interest of a
member of any Borrower otherwise permitted pursuant to this
Agreement), then, in each case, within one Business Day of the date
of receipt by a Borrower of the Net Cash Proceeds therefrom, the
Borrower shall remit to the Bank an amount equal to 100% of such
Net Cash Proceeds, to be applied as set forth in Section
2.08(c)(iv) hereof. The remittance of such net cash proceeds shall
not be deemed to be a waiver of any Event of Default that may occur
as a result of the Borrower’s incurring of such Indebtedness
or issuing such Equity Interests.

 

(ii)         If
on any date a Borrower shall receive Net Cash Proceeds from any
Asset Sale or Recovery Event, then, unless a Reinvestment Notice
shall be delivered in respect to any such Recovery Event, within
five Business Days of the date of receipt by the Borrowers of such
Net Cash Proceeds, the Borrowers shall remit to the Bank, in each
case, an amount equal to 100% of such Net Cash Proceeds, to be
applied as set forth in Section 2.08(c)(iv) hereof; provided,
however, that, notwithstanding the foregoing, so long as no Event
of Default shall have occurred and be continuing, the Borrowers may
reinvest all or any portion of such Net Cash Proceeds in operating
assets used or useful in the Borrower's business so long as the
Borrowers shall have delivered the requisite Reinvestment Notice
and, within 180 days following receipt of such Net Cash Proceeds,
the Borrowers shall have consummated the purchase of such
replacement assets (as certified by the Borrowers in writing to the
Bank); provided, further, that any Net Cash Proceeds not so
reinvested shall be immediately applied to the prepayment of the
Loans as set forth in Section 2.08(c)(iv). The remittance of the
Net Cash Proceeds from such Asset Sale shall not be deemed to be a
waiver of any Event of Default that may occur as a result of such
Asset Sale.

 

(iii)           If
the audited financial statements for any one or more of the fiscal
years ending December 31, 2018, 2019 and 2020 show Excess
Liquidity, then Borrower shall pay to the Bank on the relevant
Excess Liquidity Application Date, in each case, an amount equal to
100% of the Excess Liquidity for such year, to be applied as set
forth in Section 2.08(c)(iv); provided, however, that the Borrowers
shall not be required to make any single payment pursuant to this
Section 2.08(c)(iii) in excess of One Million Sixty-Six Thousand
Six Hundred Sixty-Six and 67/100 Dollars ($1,066,666.67),
regardless of whether Excess Liquidity for any applicable year
exceeds such amount; and provided further that the Borrowers shall
not be required to make aggregate payments pursuant to this Section
2.08(c)(iii) in excess of Three Million Two Hundred Thousand
Dollars ($3,200,000.00); and provided further that the Borrowers
shall not be required to make a payment pursuant to this Section
2.08(c)(iii) if the Term Loan has been repaid in full.

 

 

-21-

 

 

(iv)        
    Net Cash Proceeds required to be paid to the Bank
pursuant to this Section 2.08(c) shall be applied to the principal
installments due pursuant to the Term Loan Note, in inverse order
of maturity, and accrued interest thereon to the date of payment,
until the Term Loan has been repaid in full.

 

2.09       
Loss of
Margin.

 

In the
event that any Law or the interpretation or application thereof by
any Official Body or the compliance with any guideline or request
of any central bank or other Official Body (whether or not having
the force of Law):

 

(a)       subjects
the Bank to any tax with respect to any amounts payable under this
Agreement, the Notes or the other Loan Documents by the Borrowers
or otherwise with respect to the transactions contemplated under
this Agreement, the Notes or the other Loan Documents (except for
taxes on the overall net income of the Bank imposed by the United
States of America or any political subdivision thereof),
or

 

(b)      
imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit, capital maintenance or similar
requirement against assets held by, or deposits in or for the
account of, or Loans or advances or commitment to make Loans or
advances by the Bank, or

 

(c)   
    imposes upon the Bank any other condition with
respect to the Loans or commitment to make Loans made under this
Agreement,

 

and the
result of any of the foregoing is to materially increase the costs
of the Bank, reduce the income receivable by or return on equity of
the Bank or impose any material expense upon the Bank with respect
to any Loan or commitments to make any Loan under this Agreement,
the Bank shall so notify the Borrowers in writing. The Borrowers
agree to pay the Bank the actual amount of any such increase in
cost, reduction in income, reduced return on equity or additional
expense within ten (10) days after presentation by the Bank of a
statement concerning such increase in cost, reduction in income,
reduced return on equity or additional expense. Such statement
shall set forth a brief explanation of the amount and the
Bank’s calculation of the amount, which statement shall be
conclusively deemed correct absent manifest error. If the amount
set forth in such statement is not paid within ten (10) days after
such presentation of such statement, interest will be payable on
the unpaid amount at the Default Rate from the due date until paid
(before and after judgment).

 

2.10           Loan
Account.

 

The
Bank shall open and maintain in its books and records, including
computer records, in accordance with its customary procedures, a
loan account (the “Loan Account”) in the
name of the Borrowers in which shall be recorded the date and
amount of each Loan made by the Bank and the date and amount of
each payment and prepayment in respect thereof. The Bank shall
record in the Loan Account the principal amount of the Loans owing
to the Bank from time to time. Except in the case of manifest error
in computation, the Loan Account will be conclusive and binding on
the Borrowers as to the accuracy of the information contained
therein. Failure by the Bank to make any such notation or record
shall not affect the obligations of the Borrowers to the Bank with
respect to the Loans.

 

 

-22-

 

 

2.11     
  Security.

 

The
Obligations shall be secured by, among other things (a) the
Security Agreement and all UCC-1 financing statements and other
similar instruments executed and recorded with respect thereto, (b)
any Guaranty Agreement that may hereafter be executed and
delivered.

 

2.12       
Indemnity.

 

In
addition to the compensation or payments required by Section2.09,
the Borrowers shall indemnify the Bank against all liabilities,
losses or expenses (including loss of anticipated profits, any
foreign exchange losses and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain
such Loan, from fees payable to terminate the deposits from which
such funds were obtained or from the performance of any foreign
exchange contract) which the Bank sustains or incurs as a
consequence of any:

 

(a)       Payment,
prepayment, conversion or renewal of any Loan to which a LIBOR Rate
Option applies on a day other than the last day of the
corresponding Interest Period (whether or not such payment or
prepayment is mandatory, voluntary or automatic, and whether or not
such payment or prepayment is then due);

 

(b)       
Attempt by the Borrowers to revoke (expressly, by later
inconsistent notices or otherwise) in whole or in part any Loan
Request; or

 

(c)       Default
by the Borrowers in the performance or observance of any covenant
or condition contained in this Agreement or any other Loan
Document, including any failure of the Borrowers to pay when due
(by acceleration or otherwise) any principal, interest, Commitment
Fee or any other amount due hereunder.

 

If the
Bank sustains or incurs any such loss or expense, it shall from
time to time notify the Borrowers of the amount determined in good
faith by the Bank (which determination may include such
assumptions, allocations of costs and expenses and averaging or
attribution methods as the Bank shall deem reasonable) to be
necessary to indemnify the Bank for such loss or expense. Such
notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the
Borrowers to the Bank ten (10) Business Days after such notice is
given.

 

ARTICLE
III

 

REPRESENTATIONS AND
WARRANTIES

 

Each
Borrower hereby represents and warrants to the Bank as
follows:

 

3.01      
Organization and
Qualification; No Subsidiaries.

 

Libsyn
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and is duly
qualified or licensed to do business, and is in good standing in,
all jurisdictions in which the ownership of its properties or the
nature of its activities, or both, makes such qualification
necessary. Each of Webmayhem and Pair Networks is a corporation
duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania, and is duly qualified or
licensed to do business, and is in good standing in, all
jurisdictions in which the ownership of its properties or the
nature of its activities, or both, makes such qualification
necessary Neither Webmayhem nor Pair Networks has any subsidiaries,
and neither holds any Equity Interest in any other Person. Libsyn
has no subsidiaries and holds no Equity Interest in any other
Person other than Webmayhem and Pair Networks.

 

 

-23-

 

 

3.02           Authority;
Power to Carry on Business; Licenses.

 

(a)           Each
Borrower has all requisite corporate power and authority to make
the borrowings provided for herein, to execute and deliver this
Agreement and the Notes in evidence of such borrowings and the
other Loan Documents to which it is a party and to grant and convey
the Liens contemplated under the Security Agreement and the other
Loan Documents to which it is a party, and all such action has been
duly and validly authorized by all necessary proceedings on its
part.

 

(b)           Each
Borrower has all requisite power and authority to own and operate
its properties and to carry on the business as now conducted and as
presently planned to be conducted. Each Borrower has all licenses,
permits, consents and governmental approvals or authorizations
necessary to carry on its business as now conducted or as presently
planned to be conducted.

 

3.03      
Execution and Binding
Effect.

 

Each of
the Loan Documents has been duly and validly executed and delivered
by or on behalf of the Borrower that is a party thereto, and each
such Loan Document constitutes a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its
terms.

 

3.04      
Absence of
Violations.

 

Neither
the execution and delivery of this Agreement or the other Loan
Documents, the consummation of the transactions contemplated in any
of them, nor the performance of or compliance with the terms and
conditions hereof or thereof will (a) violate any Law, (b) conflict
with or result in a breach of or a default under the articles of
incorporation, certificate of organization, by-laws or operating
agreement (as applicable) of the Borrower, (c) conflict with or
result in a breach of or a default under any agreement or
instrument to which any Borrower is a party or by which it or any
of its properties (now owned or acquired in the future) may be
subject or bound or (d) result in the creation or imposition of any
Lien upon any property (owned or leased) of any Borrower (other
than the Liens created by the Security Agreement or the other Loan
Documents in favor of the Bank).

 

3.05      
Authorizations and
Filings.

 

No
authorization, consent, approval, license, exemption or other
action by, and no registration, qualification, designation,
declaration or filing with, any Official Body is or will be
necessary or advisable in connection with the execution and
delivery of this Agreement or the other Loan Documents, the
consummation of the transactions contemplated herein or therein, or
the performance of or compliance by the Borrowers with the terms
and conditions hereof or thereof except for those already obtained
and recordings or filings in connection with the Liens granted to
the Bank pursuant to the Loan Documents.

 

3.06      
Ownership and
Control.

 

Schedule 3.06 sets forth the
authorized and outstanding equity capital of each Borrower. All of
the issued and outstanding equity securities in each Borrower are
fully paid and nonassessable. Except as set forth on Schedule 3.06, there are no
other Equity Interests outstanding of any Borrower, there is no
obligation of any Borrower to issue any such Equity Interest, and
there are no options, warrants or other rights outstanding to
purchase any Equity Interest in any Borrower, or any other
instrument convertible into an Equity Interest in any Borrower.
Webmayhem and Pair Networks are wholly-owned subsidiaries of
Libsyn. The stock of Libsyn is publicly-traded in the
over-the-counter market.

 

 

-24-

 

 

3.07  
     Officers, Directors and
Business.

 

Schedule 3.07 sets forth, as of
the Closing Date (i) the names of all officers and directors of the
Borrower, and (ii) a description of the business of each Borrower
as presently conducted and as presently planned to be
conducted.

 

3.08    
   Title to
Property.

 

Each
Borrower owns good and marketable title to the Collateral held in
its name. None of the Collateral is subject to any Lien, except for
Permitted Liens and Liens in favor of the Bank. Each Borrower has
received all assignments, waivers, consents, bills of sale and
other documents and instruments necessary to establish, protect and
perfect its right, title and interest in and to all of the
Collateral.

 

3.09    
   Financial
Information.

 

The
financial information provided by the Borrowers to the Bank is
accurate and complete and has been prepared in accordance with
GAAP, consistently applied (except with respect to any interim
financial statements, to the extent such statements are subject to
normal year-end adjustments and do not include any notes). The
Borrowers have made full and true disclosure of all pertinent
financial and other material information in connection with the
transactions contemplated hereby. Section 2.05 of the Purchase
Agreement contains certain representations and warranties of the
Seller concerning the historical financial statements of Pair
Networks. The Borrowers have no knowledge that such representations
and warranties are untrue in any material respect.

 

3.10     
  Taxes.

 

All tax
returns required to be filed by the Borrowers have been properly
prepared, executed and filed. All taxes, assessments, fees and
other governmental charges upon each Borrower or upon any of its
properties, income, sales or franchises which are due and payable
have been paid. The reserves and provisions for taxes on the books
of each Borrower are adequate for all open years and for its
current fiscal period. The Borrowers know of no proposed additional
assessment or basis for any assessment for additional taxes
(whether or not reserved against).

 

3.11       
Contracts.

 

The
Borrowers are not in default of the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any material contractual obligation, and no condition
exists which, with the giving of notice of the lapse of time or
both, would constitute such a default.

 

3.12       
Litigation.

 

There
is no pending, contemplated or, to the knowledge of any Borrower,
threatened action, suit or proceeding by or before any Official
Body against or affecting any Borrower or any of the
Collateral.

 

 

-25-

 

 

3.13       
Laws.

 

The
Borrowers are not in violation of any Law, which violation would
reasonably be expected to have a Material Adverse
Effect.

 

3.14       
ERISA.

 

(a)
Each Plan has been and will be maintained and funded in all
material respects in accordance with its terms and with all
provisions of ERISA and other applicable Laws; (b) no Reportable
Event has occurred and is continuing with respect to any Plan; (c)
no liability to the PBGC has been incurred with respect to any
Plan, other than for premiums due and payable; (d) no Plan has been
terminated, no proceedings have been instituted to terminate any
Plan, and there exists no intent to terminate or institute
proceedings to terminate any Plan; (e) no withdrawal, either
complete or partial, has occurred or commenced with respect to any
multi-employer Plan, and there exists no intent to withdraw either
completely or partially from any multi-employer Plan; and (f) there
has been no cessation of, and there is no intent to cease,
operations at a facility or facilities where such cessation could
reasonably be expected to result in a separation from employment of
more than twenty percent (20%) of the total number of employees who
are participants under a Plan.

 

3.15       
Patents, Licenses,
Franchises.

 

Except
as set forth on Schedule
3.15, each Borrower owns or possesses the legal right to use
all of the patents, trademarks, service marks, trade names,
copyrights, licenses, franchises and permits and rights necessary
to own and operate its properties and to carry on its business as
presently conducted and as presently planned to be
conducted.

 

3.16    
   Use of
Proceeds.

 

The
Borrowers shall use the proceeds of the Revolving Credit Loans to
provide financing for the Transaction and for working capital and
other general corporate purposes. The Borrowers shall use the
proceeds of the Term Loan to provide financing for the
Transaction.

 

3.17       
Margin
Stock.

 

The
Borrowers will not borrow under this Agreement for the purpose of
buying or carrying any “margin stock”, as such term is
used in Regulation U and related regulations of the Board of
Governors of the Federal Reserve System, as amended from time to
time. The Borrowers do not own any “margin stock”. The
Borrowers are not engaged in the business of extending credit to
others for such purpose, and no part of the proceeds of any
borrowing under this Agreement will be used to purchase or carry
any “margin stock” or to extend credit to others for
the purpose of purchasing or carrying any “margin
stock”.

 

3.18     
  No Material Adverse
Change.

 

Since
the date of the most recent financial statements delivered by the
Borrowers to the Bank, there has been no Material Adverse
Change.

 

3.19   
    Security Interest.

 

The
security interests in the personal property granted to the Bank
pursuant to the Security Agreement (collectively,
the“Collateral”) (i) will,
after the filing of all necessary financing statements, constitute
and will continue to constitute perfected security interests under
the UCC (or other applicable Law) entitled to all of the rights,
benefits and priorities provided by the UCC (or other applicable
Law) and (ii) except as otherwise permitted under Section 6.01 this Agreement, will be and will continue
to be superior and prior to the rights of all third parties
existing on the date of this Agreement or arising after the date of
this Agreement whether by Lien or otherwise, to the full extent
provided by Law. All such action as is necessary or advisable to
establish such rights of the Bank has been taken or will be taken
at or prior to the time required for such purpose and there will be
upon execution and delivery of the Loan Documents no necessity of
any further action in order to preserve, protect and continue such
rights except the filing of continuation statements and continued
possession or control by the Bank of the Collateral delivered to it
as required by the UCC (or other applicable Law). All filing fees
and other expenses in connection with each such action shall be
paid by the Borrowers and the Bank shall be reimbursed by the
Borrowers for any such fees and expenses incurred by the
Bank.

 

 

-26-

 

 

3.20       
Labor
Controversies.

 

There
are no labor controversies pending or, to the knowledge of any
Borrower, threatened against any Borrower.

 

3.21       
Solvency.

 

After
giving effect to the transactions contemplated by this Agreement
and the Loan Documents and the making of Loans hereunder, each
Borrower shall be Solvent.

 

3.22      
Anti-Terrorism
Laws.

 

(a)           Neither
any Borrower nor any Affiliate of any Borrower is in violation of
any Anti-Terrorism Law or engages in or conspires to engage in any
transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth
in any Anti-Terrorism Law.

 

(b)           Neither
any Borrower nor any Affiliate of any Borrower, nor any agent
acting or benefiting any Borrower or any Affiliate of any Borrower
in any capacity in connection with the Loans or other transactions
hereunder, is any of the following (each, a “Blocked
Person”):

 

(i)           a
Person that is listed in the annex to, or is otherwise subject to
the provisions of, Executive Order No. 13224;

 

(ii)         
a Person owned or controlled by, or acting for or on behalf of, any
Person that is listed in the annex to, or is otherwise subject to
the provisions of, Executive Order No. 13224;

 

(iii)         
a Person with which the Bank is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism
Law;

 

(iv)        
a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in Executive Order No.
13224;

 

(v)         
a Person that is named as a “specially designated
national” on the most current list published by the U.S.
Treasury Department Office of Foreign Asset Control at its official
website or any replacement website or other replacement official
publication of such list; or

 

(vi)        
a Person who is affiliated or associated with a person or entity
listed above.

 

 

 

-27-

 

 

(c)       Neither
any Borrower nor any agent of any Borrower acting in any capacity
in connection with the Loans or other transactions hereunder (i)
conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (ii) deals in, or otherwise engages in any
transaction relating to, any property or interests in property
blocked pursuant to Executive Order No. 13224.

 

3.23      
Governmental
Regulation.

 

No
Borrower is subject to regulation under the Federal Power Act or
the Investment Company Act of 1940 or to any federal or state
statute or regulation limiting its ability to incur Indebtedness
for borrowed money.

 

3.24      
Accurate and Complete
Disclosure; Continuing Representations and
Warranties.

 

No
representation or warranty made by any Borrower under this
Agreement, and no statement made by any Borrower in any financial
statement, certificate, report, exhibit or document furnished to
the Bank pursuant to or in connection with this Agreement or any
other Loan Document, is false or misleading in any material respect
(including by omission of any information necessary to make such
representation, warranty or statement not misleading). No Borrower
is aware of any facts which have not been disclosed to the Bank in
writing that would reasonably be expected to have a Material
Adverse Effect. The representations and warranties set forth herein
are to survive the delivery of the Loan Documents and the making of
the Loans hereunder.

 

ARTICLE
IV

 

CONDITIONS OF
LENDING

 

The
obligation of the Bank to make any Loan is subject to the
satisfaction of the following conditions:

 

4.01       
Representations and
Warranties; Events of Default and Potential
Defaults.

 

The
representations and warranties contained in Article III shall be
true and correct on and as of the date of the making of each Loan
(except to the extent such representation or warranty refers to an
earlier date, in which case, such representation or warranty shall
be true and correct as of such earlier date). On the date of any
Loan, no Event of Default and no Potential Default shall have
occurred and be continuing or exist or shall occur or exist after
giving effect to the Loan to be made on such date. Each request by
the Borrowers for any Loan shall constitute a representation and
warranty by the Borrowers that the conditions set forth in this
Section 4.01 have been satisfied as of
the date of such request. The failure of the Bank to receive notice
from the Borrowers to the contrary before such Loan is made shall
constitute a further representation and warranty by the Borrowers
that the conditions referred to in this Section 4.01 have been satisfied as of the date such
Loan is made.

 

4.02  
     Loan Documents.

 

On the
Closing Date, the Loan Documents, satisfactory in terms, form and
substance to the Bank in its sole discretion, shall have been
executed and delivered to the Bank and shall be in effect and all
filings contemplated thereby shall have been made. The Borrowers
shall also deliver or cause to be delivered such other instruments,
documents and certificates as the Bank or its counsel shall
reasonably require.

 

 

-28-

 

 

4.03  
     UCC
Financing Statements.

 

On or
before the Closing Date, each UCC-1 financing statement (or other
similar required filings) to be filed pursuant to the Security
Agreement shall have been filed.

 

4.04    
   Other
Documents and Conditions.

 

On or
before the Closing Date, the following documents and conditions
shall have been delivered to the Bank or satisfied by or on behalf
of the Borrower:

 

(a)       Certified
Copies of Organizational Documents.

 

(i)           A
certified copy of the articles of incorporation or certificate of
formation (as applicable) of each Borrower, certified by the
Secretary of State of the state in which the Borrower was
organized, shall have been delivered to the Bank.

 

(ii)           A
copy of bylaws or operating agreement (as applicable) of the
Borrower, certified by an authorized officer of the Borrower, shall
have been delivered to the Bank.

 

(b)      
Good Standing
Certificates. A good standing certificate from the state in
which each Borrower was organized and from each other jurisdiction
in which the Borrower is registered to do business shall have been
delivered to the Bank.

 

(c)       Proceedings
and Incumbency. The Bank shall have received a certificate
in form and substance satisfactory to the Bank, dated the Closing
Date, of an authorized officer of the Borrowers, certifying as to
(i) resolutions of the directors or managers of each Borrower
authorizing (A) the Borrower to enter into this Agreement and the
other Loan Documents to which it is a party;and (B) the confession
of judgment provisions of such documents; (ii) incumbency; (iii) no
amendments to the organizational documents of the Borrower; (iv)
the exact legal name of the Borrower; (v) all fictitious and trade
names of the Borrower, if any; (vi) the entity identification
number of the Borrower; and (vii) the tax identification number of
the Borrower. The Bank may conclusively rely on such certification
unless and until a later certificate revising a prior certificate
has been furnished to the Bank.

 

(d)     
Insurance. The Bank
shall have received evidence, in form and substance satisfactory to
the Bank, that the business and all assets of the Borrowers are
adequately insured and that the Bank has been named as additional
insured, lender’s loss payee, as its interests may appear,
entitled to thirty (30) days’ prior written notice of
cancellation or modification, on all such policies of
insurance.

 

(e)       No
Material Adverse Change. No Material Adverse Change shall
have occurred since the date of the most recent financial
statements delivered to the Bank with respect to the Borrower. No
contingency shall have occurred which the Bank, in its sole
discretion, shall determine materially and adversely affects the
financial markets

 

(f)       Lien
Searches. The Bank shall have received: (i) UCC Lien
Searches with respect to the Borrowers (at the state level only) in
each Borrower’s jurisdiction of formation, and (ii) tax lien
searches (at the state and county levels) with respect to each
Borrower in its jurisdiction of formation.

 

(g)     
Termination Statements;
Release Statements and Satisfaction Pieces. The Bank shall
have received evidence satisfactory to the Bank that all necessary
termination statements, release statements, mortgage satisfaction
pieces and any other types of releases in connection with any and
all Liens with respect to the Borrowers that are not permitted
pursuant to Section 6.01 hereof have
been filed or satisfactory arrangements have been made for such
filing (including payoff letters, if applicable), all in form and
substance satisfactory to the Bank.

 

 

 

-29-

 

 

(h)   
  Compliance
Certificate. The Bank shall have received a Compliance
Certificate dated as of the Closing Date, in the form attached as
Exhibit B hereto,
executed by the appropriate officer of the Borrowers, stating that
no Event of Default or Potential Default exists and that Borrowers
are in compliance with all applicable covenants contained in this
Agreement. For purposes of clarity, Borrowers shall not be required
to calculate the Fixed Charges Coverage Ratio for purposes of such
Closing Date Compliance Certificate. The Borrowers’ Cash
Balance shown on such Closing Date Compliance Certificate shall be
used to establish the Applicable Margin and the Unused Facility Fee
until the Compliance Certificate for the fiscal quarter ending
March 31, 2018 is delivered.

 

(i)       Capital
Structure. The Bank shall have completed its review of the
Borrowers’ capital structure as of the Closing Date, all
books and records and governing documents of the Borrowers as the
Bank may determine, all of which the Bank shall have determined to
be satisfactory in its sole discretion.

 

(j)       Opening
Date Balance Sheet. The Borrowers shall have delivered a
balance sheet as of the Closing Date demonstrating to the
satisfaction of the Bank in its reasonable judgment that Borrowers
cash balance on the Closing Date is not less than Two Million
Dollars ($2,000,000.00), of which not less than One Million Five
Hundred Thousand Dollars ($1,500,000.00) is on deposit in one or
more accounts maintained at the Bank.

 

(k)      
Operating Accounts.
The Borrowers shall have established their primary operating
accounts with the Bank; provided, however, that for a period of up
to six (6) months after the Closing Date, the Borrowers may
maintain in one or more accounts at Citizens Bank of Pennsylvania,
S&T Bank and/or PNC Bank, National association up to Seven
Hundred Fifty Thousand Dollars ($750,000.00) in cash, in order to
settle activity in those accounts.

 

(l)       Purchase
Agreement. The Bank shall have received a fully executed
copy of the Purchase Agreement and all other documents and
instruments executed and delivered in connection with the
Transaction, all in form and substance satisfactory to the
Bank.

 

(m)     
Pair Networks Due
Diligence. The Bank shall have completed its accounting and
tax review, and received a quality of earnings report, and such
customer surveys and other business due diligence as may be
requested by the Bank, the results of which the Bank shall have
determined to be satisfactory in its reasonable discretion. The
Bank shall have received copies of the audited financial statements
for Pair Networks for the fiscal years ending December 31, 2015 and
December 31, 2016.

 

(n)   
    Opinion of
Counsel. The Bank shall have received an opinion of counsel
to the Borrower, dated the Closing Date, in form and substance
satisfactory to the Bank in its sole and absolute
discretion.

 

4.05      
Details, Proceedings and
Documents.

 

On the
Closing Date, all legal details and proceedings in connection with
the transactions contemplated to occur pursuant to this Agreement
shall be satisfactory to the Bank and the Bank shall have received
all such counterpart originals or certified or other copies of such
documents and proceedings in connection with such transactions, in
form and substance satisfactory to the Bank, as the Bank may
request from time to time.

 

 

-30-

 

 

4.06      
Fees and
Expenses.

 

The
Borrowers shall have paid all fees and charges as required for the
Closing and relating to the Closing, including Commitment Fees, the
Bank’s legal fees and costs and all other costs and expenses
incurred by the Bank in connection with the transactions
contemplated to occur pursuant to this Agreement.

 

ARTICLE
V

 

 

 

AFFIRMATIVE
COVENANTS

 

Each
Borrower covenants and agrees with the Bank as
follows:

 

5.01      
Reporting and Information
Requirements.

 

The
Borrowers shall deliver or shall cause to be delivered the
following documents to the Bank in such detail as reasonably
requested by the Bank:

 

(a)           Annual
Financial Statements. As soon as practicable, and in any
event within ninety (90) days after the close of each fiscal year
of the Borrowers, the Borrowers shall furnish to the Bank
statements of income, retained earnings and cash flow of the
Borrowers for such fiscal year and a balance sheet of Borrowers as
of the close of such fiscal year, and notes to each, all in
reasonable detail. Such statements and balance sheet shall be
audited by an independent certified public accounting firm selected
by the Borrowers and reasonably acceptable to the Bank, and shall
set forth in comparative form the corresponding figures for the
preceding fiscal year, and shall be prepared in accordance with
GAAP applied on a basis consistent with that of the preceding
fiscal year (except for changes in application in which such
accountants concur). The report of such accountants shall be free
of exception or qualifications not acceptable to the Bank and shall
in any event contain a written statement of such accountants
substantially to the effect that such accountants examined such
statements and balance sheet in accordance with generally accepted
auditing standards.

 

(b)           Quarterly
Reports of the Borrower. As soon as practicable, and in any
event within forty-five (45) days after the end of each quarter,
the Borrowers will furnish to the Bank unaudited statements of
income, retained earnings and cash flow of the Borrowers for such
quarter and for the portion of the fiscal year to the end of such
quarter, and an unaudited balance sheet of Borrowers as of the
close of such quarter, all in reasonable detail. All such income
statements and balance sheets shall be prepared by Borrowers and
certified by the appropriate officer of Borrowers as presenting
fairly the financial position of Borrowers as of the end of such
period and the results of its operations for such period, in
conformity with GAAP applied in a manner consistent with that of
the most recent audited financial statements of Borrowers furnished
to the Bank.

 

(c)       Compliance
Certificate. Concurrently with the delivery of the financial
statements required to be delivered pursuant to Sections 5.01(a)
and (b) hereof, the Borrowers shall deliver to the Bank a
compliance certificate, in the form attached as Exhibit B hereto, executed by
the appropriate officer of the Borrowers, stating that no Event of
Default or Potential Default exists and that Borrowers are in
compliance with all applicable covenants contained in this
Agreement. Such certificate shall include all figures necessary to
calculate the Borrowers’ compliance with all financial
covenants set forth in this Agreement. If an Event of Default or
Potential Default has occurred and is continuing or exists, such
certificate shall specify in detail the nature and period of
existence of the Event of Default or Potential Default and any
action taken or contemplated to be taken by the Borrowers with
respect thereto.

 

 

-31-

 

 

(d)      
Visitation; Audits and
Field Exams. The Borrowers shall permit or shall cause to be
permitted such persons as the Bank may designate, upon reasonable
prior written notice, to visit and inspect any of the properties of
the Borrower, to examine, and to make copies and extracts from, the
books and records of the Borrowers and to discuss the
Borrowers’ affairs with its officers, managers and
independent accountants during normal business hours. Each Borrower
shall and hereby does authorize its officers, managers, employees
and independent accountants to discuss with the Bank its affairs.
The Bank may conduct such audits and field exams at its discretion
and as often as it reasonably deems necessary. The Borrowers shall
pay all reasonable costs incurred in connection with conducting
such audits and field exams; provided, however, that so long as no
Event of Default or Potential Default has occurred and is then
continuing, the Borrowers shall not be required to pay the costs
incurred in connection with conducting more than one (1) such audit
or field exam in any fiscal year. If an Event of Default or
Potential Default has occurred and is continuing, the Borrowers
shall reimburse the Bank all reasonable costs incurred by the Bank
in connection with any and all such audits and field
exams.

 

(e)       Notice
of Event of Default. Immediately upon becoming aware of an
Event of Default or Potential Default, the Borrowers shall give the
Bank notice of the Event of Default or Potential Default, together
with a written statement signed on behalf of the Borrowers setting
forth the details of the Event of Default or Potential Default and
any action taken or contemplated to be taken by the Borrowers with
respect thereto.

 

(f)       Notice
of Material Adverse Change. Immediately upon becoming aware
thereof, the Borrowers shall give the Bank written notice with
respect to any Material Adverse Change or any development or
occurrence that would be likely to have a Material Adverse
Effect.

 

(g)     
Notice of
Proceedings. Immediately upon becoming aware thereof, the
Borrowers shall give the Bank notice of the commencement, existence
or threat of all proceedings by or before any Official Body against
or affecting the Borrowers which, if adversely decided, could
reasonably be expected to have a Material Adverse
Effect.

 

(h)  
    Notice of
Other Matters. Borrowers shall promptly give written notice
to the Bank of the following matters:

 

(i)         Default.
Promptly after any officer of any Borrower has learned of the
occurrence of an Event of Default or Potential Default, a
certificate signed by an Authorized Officer setting forth the
details of such Event of Default or Potential Default and the
action which such Borrower proposes to take with respect thereto;
provided, that, any Event of Default resulting solely from the
failure of a Borrower to give notice of a Potential Default as
required by this clause shall be deemed waived upon the prompt cure
or waiver of such Potential Default without any further action
hereunder.

 

(ii)         Litigation.
Promptly upon knowledge thereof, notice of all actions, suits,
proceedings or investigations before or by any Official Body or any
other Person against any Borrower that relate to the Collateral,
involve a claim or series of claims, with an amount in controversy
in excess of One Million Dollars ($1,000,000.00), or which if
adversely determined would constitute a Material Adverse
Change.

 

(iii)       
Erroneous Financial
Information. Promptly in the event that any Borrower or its
accountants conclude or advise that any previously issued financial
statement, audit report or interim review should no longer be
relied upon or that disclosure should be made or action should be
taken to prevent future reliance, notice in writing setting forth
the details thereof and the action which the Borrower proposes to
take with respect thereto.

 

 

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(iv)         ERISA
Event. Immediately upon the occurrence of any ERISA Event,
notice in writing setting forth the details thereof and the action
which the Borrowers propose to take with respect
thereto.

 

(i)       Further
Information. The Borrowers shall promptly furnish or cause
to be promptly furnished to the Bank such other information, and in
such form, as the Bank may reasonably request from time to
time.

 

5.02       
Preservation of Existence
and Franchises.

 

Each
Borrower shall maintain its existence as a corporation or limited
liability company, as applicable, and the rights associated
therewith, in full force and effect in the state of its formation.
No Borrower shall change its jurisdiction of organization. Each
Borrower shall qualify and remain qualified as a foreign
corporation or limited liability company, as applicable, in each
jurisdiction in which the ownership of its property or the nature
of its activities, or both, makes such qualification
necessary.

 

5.03       
Maintenance of
Insurance.

 

The
Borrowers shall maintain with financially sound and reputable
insurers, insurance with respect to its properties and businesses
including, but not limited to, the Collateral, against such
liabilities, casualties and contingencies and of such types and in
such amounts as are satisfactory to the Bank and as is customary in
the case of Persons engaged in the same or a similar business or
having similar properties in the same geographic areas. The
Borrowers agree to provide the Bank with thirty (30) days’
advance notice of the cancellation, modification or termination of
any such policy of insurance. Borrowers shall maintain business
interruption insurance, and shall keep the Collateral that is
insurable insured against loss or damage by fire, theft, burglary,
pilferage, flood and such other hazards as the Bank shall specify,
in amounts and under policies issued by insurers acceptable to the
Bank, all premiums thereon to be paid by the Borrowers and upon
request of the Bank such policies or copies thereof shall be
delivered to the Bank. Each insurance policy of the Borrowers
required by this section shall contain a standard clause in form
and substance satisfactory to the Bank, naming the Bank, its
successors and assigns, as additional insured and lender loss
payee, as its interests may appear.

 

5.04       
Maintenance of
Property.

 

Borrower shall
maintain or cause to be maintained in good repair, working order
and condition all of its properties and assets and shall make or
cause to be made all needful and proper repairs, renewals,
replacements and improvements thereto so that the business carried
on in connection therewith may be properly and advantageously
conducted at all times.

 

5.05       
Payment of
Liabilities.

 

Each
Borrower shall pay or discharge:

 

(a)       on
or prior to the date on which penalties attach, all taxes,
assessments and other governmental charges or levies imposed upon
it or any of its properties or income, sales or franchises, except
for taxes the validity of which are being contested in good faith
by appropriate proceedings diligently pursued, and with respect to
which adequate reserves have been set aside on its books to the
extent required by GAAP;

 

(b)
      on or prior to the date when due, all
lawful claims of materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons which, if unpaid, might result in
the creation of a Lien upon any of its properties other than those
claims the validity of which are being contested in good faith by
appropriate proceedings diligently pursued, and with respect to
which adequate reserves have been set aside on its books to the
extent required by GAAP;

 

 

 

-33-

 

 

(c)       on
or prior to the date when due, all other lawful claims which, if
unpaid, might result in the creation of a Lien upon any of its
properties other than those claims the validity of which are being
contested in good faith by appropriate proceedings diligently
pursued, and with respect to which adequate reserves have been set
aside on its books to the extent required by GAAP;and

 

(d)   
  all other current liabilities so that none is outstanding
more than sixty (60) days after the due date for each liability,
except for liabilities the validity of which are being contested in
good faith by appropriate proceedings diligently pursued, and with
respect to which adequate reserves have been set aside on its books
to the extent required by GAAP.

 

5.06       
Financial Accounting
Practices.

 

Each
Borrower shall maintain proper books of record and account, in
which full, true and correct entries shall be made of all financial
transactions and matters involving its assets and business, in
order to permit financial statements to be prepared in accordance
with GAAP.

 

5.07      
Compliance with
Laws.

 

Each
Borrower shall comply with all applicable Laws, in each case where
failure to do so has or could reasonably be expected to have a
Material Adverse Effect.

 

5.08      
Continuation of and/or
Change in Business.

 

The
Borrowers shall continue to engage in the business and activities
described on Schedule 3.07 and shall not engage in an
unrelated businesses or activities.

 

5.09      
Use of
Proceeds.

 

The
Borrowers shall use the proceeds of the Loans for the purposes
stated in Section 3.16
hereof.

 

5.10      
Lien
Searches.

 

The
Bank may, but shall not be obligated to, conduct lien searches of
the Borrowers and its assets and properties on an annual basis and
at such other times as the Bank, in its sole discretion, may
determine to be necessary. The Borrowers shall reimburse the Bank
for the Bank’s out-of-pocket costs in connection with one (1)
such lien search per year, provided, however that if an Event of
Default has occurred and is continuing, the Borrowers shall
reimburse the Bank for the Bank’s out-of-pocket costs in
connection with any and all such lien searches.

 

5.11   
   Compliance
with Licensing Bodies.

 

Each
Borrower shall maintain all certificates of compliance and
authority and licenses that are necessary or required by any
Official Body or licensing authority having jurisdiction over such
Borrower.

 

 

 

-34-

 

 

5.12  
     Further
Assurances.

 

Each
Borrower, at its own cost and expense, will cause to be promptly
and duly taken, executed, acknowledged and delivered all such
further acts, documents and assurances as the Bank may reasonably
request from time to time in order to carry out the intent and
purposes of this Agreement more effectively and the transactions
contemplated by this Agreement and to cause the Liens granted under
the Security Agreement or any other Loan Document to be, at all
times, valid, perfected and enforceable against such Borrower party
thereto and all third parties. All expenses of such filings and
recordings, and refilings and rerecordings, shall be borne by the
Borrowers.

 

5.13     
  Operating
Accounts.

 

The
Borrowers shall maintain their primary operating accounts at the
Bank. If the Borrowers shall not have closed all of their accounts
at other banks, other than the PNC VAT account, within six (6)
months after the Closing Date, as required pursuant to section
4.04(k) hereof, then the Borrowers shall use commercially
reasonable efforts to put in place with respect to any such
remaining accounts a deposit account control agreement in form and
substance reasonably satisfactory to the Bank, and such other
agreements and instruments as the Bank may reasonably request in
order to create and perfect a lien on such accounts and the amounts
on deposit therein in favor of the Bank. Borrowers shall not be
required to close the PNC VAT account.

 

5.14       
Financial
Covenants.

 

The
following financial covenants shall apply:

 

(a)           Fixed
Charges Coverage Ratio. The Borrowers shall maintain a
consolidated Fixed Charges Coverage Ratio of not less than 1.50 to
1.00, to be tested on the last day of each fiscal quarter beginning
with the fiscal quarter ending on March 31, 2018. For purposes of
this Section 5.14(a): (i) the Fixed Charges Coverage Ratio for the
fiscal quarter ending on March 21, 2018 shall be determined based
on Adjusted EBITDA and Fixed Charges for such quarter; (ii) the
Fixed Charges Coverage Ratio for the fiscal quarter ending on June
30, 2018 shall be determined based on Adjusted EBITDA and Fixed
Charges for such quarter and the preceding quarter; (iii) the Fixed
Charges Coverage Ratio for the fiscal quarter ending on September
30, 2018 shall be determined based on Adjusted EBITDA and Fixed
Charges for such quarter and the preceding two quarters;and (iv)
the Fixed Charges Coverage Ratio for the fiscal quarter ending on
December 31, 2018 and thereafter shall be determined based on
Adjusted EBITDA and Fixed Charges on a trailing four quarters
basis.

 

(b)           Minimum
Liquidity. Borrowers shall maintain on deposit with the Bank
average daily collected balances of cash and Cash Equivalents in an
amount not less than: Two Million Five Hundred Thousand Dollars
($2,500,000.00), to be tested on the last day of each fiscal
quarter beginning with the fiscal quarter ending on March 31, 2018
and on the last day of each quarter thereafter, through and
including the quarter ending on December 31, 2018; and Three
Million Dollars ($3,000,000.00), to be tested on the last day of
each fiscal quarter thereafter.

 

5.15       
Pension
Plans.

 

The
Borrowers shall (a) keep in full force and effect any and all Plans
which are presently in existence or may, from time to time, come
into existence under ERISA, unless such Plans can be terminated
without material liability to the Borrowers in connection with such
termination; (b) make contributions to all of Borrower’ Plans
in a timely manner and in a sufficient amount to comply with the
requirements of ERISA; (c) comply with all material requirements of
ERISA which relate to such Plans so as to preclude the occurrence
of any Reportable Event, Prohibited Transaction (other than a
Prohibited Transaction subject to an exemption under ERISA) or
material accumulated funding deficiency as such term is defined in
ERISA; and (d) notify the Bank immediately upon receipt by the
Borrowers of any notice of the institution of any proceeding or
other action which may result in the termination of any Plan. The
Borrowers shall deliver to the Bank, promptly after the filing or
receipt thereof, copies of all material reports or notices that the
Borrowers file or receive under ERISA with or from the Internal
Revenue Service, the PBGC, or the U.S. Department of
Labor.

 

 

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ARTICLE
VI

 

NEGATIVE COVENANTS

 

Each
Borrower covenants to Bank as follows:

 

6.01       
Liens.

 

The
Borrowers shall not at any time create, incur, assume or suffer to
exist any Lien on or against any of its assets or other property,
tangible or intangible (including Equity Interests of the
Borrowers), now owned or hereafter acquired or agree to become
liable to do so except for the following (each a
“Permitted
Lien” and collectively the “Permitted
Liens”):

 

(a)       Liens
existing on the Closing Date and described on Schedule 6.01;

 

(b)     
Liens in favor of the Bank;

 

(c)     
Liens arising from taxes, assessments, charges, levies or claims
described in Section 5.05 of this
Agreement that are not yet due and payable or the validity of which
are being contested in good faith by appropriate proceedings
diligently pursued, and with respect to which full reserves have
been set aside;

 

(d)      
pledges or deposits under worker’s compensation, unemployment
insurance and social security laws, or in connection with or to
secure the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases or to secure statutory
obligations, surety, appeal, indemnity performance or other similar
bonds or other pledges or deposits of like nature used in the
ordinary course of business;

 

(e)       any
unfiled materialmen’s, warehouseman’s,
landlord’s, mechanic’s, workmen’s, and
repairmen’s Liens arising in the ordinary course of business
in respect of obligations that are not overdue (provided, that if
such a Lien shall be perfected, it shall be discharged of record
immediately by payment, bond or otherwise);

 

(f)       Purchase
Money Security Interests (as defined in the UCC) or Liens to secure
Capitalized Lease Obligations permitted under Section
6.02(d);provided, however, that such security interests shall be
limited solely to the equipment (including any additions thereto
and proceeds thereof) purchased or leased with the proceeds of such
Indebtedness;

 

(g)    
Liens securing (i) the non-delinquent performance of bids, trade
contracts (other than for borrowed money), leases or statutory
obligations, (ii) contingent obligations on surety, performance or
appeal bonds, and (iii) other non-delinquent obligations of a like
nature, in each case incurred in the ordinary course of business,
provided that all such Liens in the aggregate would not (even if
enforced) reasonably be expected to have a Material Adverse Effect;
and

 

 

 

-36-

 

 

(h)      
Encumbrances consisting of zoning restrictions, easements or other
restrictions or conditions on the use of real property owned by the
Borrower, none of which is violated, in any material respect, by
existing or proposed structures or land use.

 

6.02           Indebtedness.

 

The
Borrowers shall not, at any time, create, incur, assume or suffer
to exist any Indebtedness, except:

 

(a)       Indebtedness
under this Agreement, the Notes or any other Loan Document or any
other document, instrument or agreement between the Borrowers and
the Bank;

 

(b)  
    Indebtedness existing on the Closing Date and
described on Schedule 6.02; provided,
however, that none of such Indebtedness shall be increased,
extended, renewed or refinanced without the prior written consent
of the Bank;

 

(c)       Current
accounts payable, accrued expenses and other expenses arising out
of transactions (other than borrowing) in the ordinary course of
business; and

 

(d)      
Indebtedness secured by Purchase Money Security Interests (as
defined in the UCC) or Capitalized Lease Obligations arising after
the date of this Agreement for purchases or leases of equipment in
the ordinary course of business and in amounts which shall not
exceed Three Hundred Thousand Dollars ($300,000.00) in the aggregate among all
Borrowers, at any time.

 

6.03       
Guarantees and Contingent
Liabilities.

 

The
Borrowers shall not at any time directly or indirectly become or be
liable in respect of any Guaranty, or assume, guarantee, become
surety for, endorse or otherwise agree, become or remain directly
or contingently liable upon or with respect to any obligation or
liability of any other Person.

 

6.04       
Loans and Investments;
Subsidiaries.

 

(a)                     The
Borrowers shall not at any time make or suffer to remain
outstanding any loan or advance to, or purchase, acquire, or own
any stock, bonds, notes or securities of, or any Equity Interest or
any other investment or interest in, or make any capital
contribution or loan to, any other Person, or agree, become or
remain liable to do any of the foregoing, except:

 

(i)           The
endorsement of instruments for collection or deposit in the
ordinary course of business;

 

(ii)           Investments
in direct obligations of the United States of America or any agency
thereof maturing in twelve (12) months or less from the date of
acquisition;

 

(iii)           Investments
in obligations guaranteed by the United States of America maturing
in twelve (12) months or less from the date of
acquisition;

 

(iv)           Investments
in prime commercial paper maturing in one hundred eighty (180) days
or less (rated by Moody’s Investors Service, Inc. at not less
than A-1 and by Standard & Poor’s Corporation at not less
than P-1) on the date of acquisition;

 

 

-37-

 

 

(v)           Investments
in demand deposits, time deposits or certificates of deposit
maturing within one (1) year issued by the Bank or any commercial
bank whose obligations are rated A-1, A or the equivalent or better
by Standard & Poor’s Corporation on the date of
acquisition;

 

(vi)    
    Advances for travel and reasonable out-of-pocket
expenses to officers, directors and employees of the Borrowers all
of which are incurred in the ordinary course of business and are
reimbursable by the Borrowers, provided, the aggregate amount of
all such advances outstanding at any one time does not exceed Fifty
Thousand Dollars ($50,000.00); and

 

(b)        
The Borrowers shall not form any subsidiaries or acquire any
material portion of the Equity Interests of any other Person
without the prior consent of the Bank, which consent the Bank may
not unreasonably withhold or condition. Without limiting the
generality of the foregoing, if the Bank consents to the formation
of any subsidiary of any Borrower, such subsidiary shall be
required to enter into a Guaranty Agreement in favor of the Bank,
and also shall be required to enter into a security agreement in
favor of the Bank, pursuant to which such subsidiary shall grant to
the Bank a security interest in all of its assets as collateral for
the Loans.

 

6.05           Distributions.

 

The
Borrowers shall not declare, make, pay or agree, become or remain
liable to make or pay, any Distribution of any nature (whether in
cash, property, securities or otherwise) on account of or in
respect of any Equity Interest of any Borrower, or on account of
the purchase, redemption, retirement or acquisition of any Equity
Interest (or warrants, options or rights for any such Equity
Interest) of such Borrower, except for cash Distributions and
except for purchases, redemptions, retirements or acquisitions of
Equity Interests (or warrants, options or rights for any Equity
Interest) from one or more employees of any Borrower, in each case
to the extent that no Event of Default has occurred and is
continuing immediately prior to, or would occur after giving effect
to, any such Distribution.

 

6.06           Transactions
with Affiliates.

 

The
Borrowers shall not enter into or carry out any transaction
(including, without limitation, purchasing property or services
from or selling property or services to) with any Affiliate
except:

 

(a)       Equity
holders, officers, directors, employees and Affiliates of a
Borrower may render services to the Borrower for compensation at
substantially the same rates generally paid by third parties
engaged in the same or similar businesses for the same or similar
services; and

 

(b)   
  the Borrowers may enter into and carry out other
transactions with Affiliates if in the ordinary course of a
Borrower’s business, pursuant to the reasonable requirements
of the Borrower’s business, upon terms that are fair and
reasonable and no less favorable to the Borrower than the Borrower
would obtain in a comparable arm’s length
transaction.

 

6.07           Indemnification
and other Payments.

 

The
Borrowers shall not make any deferred purchase price payment,
working capital adjustment payment or indemnification payment, or
reimburse any third-party expenses, except, so long as no Event of
Default or Potential Default exists, as required pursuant to the
Purchase Agreement and the related transaction documents, so long
as the making of any such payment does not result in an Event of
Default or Potential Default, and provided that, subsequent to the
making of any such payment or reimbursement, there remains minimum
availability under the Revolving Credit Commitment of at least Two
Hundred Thousand Dollars ($200,000.00).

 

 

 

-38-

 

 

6.08      
Disposition of
Assets.

 

The
Borrowers shall not Dispose of any of their property, whether now
owned or hereafter acquired, except:

 

(a)           The
sale or Disposition of equipment no longer used or useful in the
business of a Borrower;

 

(b)           The
Disposition of obsolete or worn-out property in the ordinary course
of business; and

 

(c)           Dispositions
of other property in any fiscal year of a Borrower, so long as (i)
such property, together with all other property Disposed of during
such fiscal year, shall have a fair market value not exceeding One
Hundred Thousand Dollars ($100,000.00), and (ii) the purchase price
paid to the Borrower for such property shall be paid solely in
cash.

 

6.09     
  Anti-Terrorism
Laws.

 

Neither
the Borrowers nor any of their respective Affiliates or agents
shall (i) conduct any business or engage in any transaction or
dealing with any Blocked Person, including making or receiving any
contribution of funds, goods or services to or for the benefit of
any Blocked Person, (ii) deal in, or otherwise engage in any
transaction relating to, any property or interests in property
blocked pursuant to Executive Order No. 13224; or (iii) engage in
or conspire to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in Executive Order No. 13224, the USA
Patriot Act or any other Anti-Terrorism Law. The Borrowers shall
deliver to the Bank any certification or other evidence requested
from time to time by the Bank in its sole discretion, confirming
the Borrower’s compliance with this Section.

 

6.10     
  Margin
Stock.

 

The
Borrowers shall not use the proceeds of any Loan, directly or
indirectly, to purchase any “margin stock” (within the
meaning of Regulations U, T or X of the Board of Governors of the
Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying, directly or indirectly, any
margin stock.

 

6.11       
Merger; Consolidation;
Business Acquisitions.

 

The
Borrowers shall not merge or agree to merge with or into or
consolidate with any other Person. The Borrowers shall not acquire
any material portion of the assets or business of any other Person
without the prior written consent of the Bank, which consent the
Bank shall not unreasonably withhold, condition or
delay.

 

6.12       
Double Negative
Pledge.

 

The
Borrowers shall not enter into or suffer to exist any agreement
with any Person, other than in connection with this Agreement or
any other agreement by and between the Borrowers and the Bank that
prohibits or limits the ability of the Borrowers to create, incur,
assume or suffer to exist any Lien upon or with respect to any
property or assets of any kind, real or personal, tangible or
intangible (including, but not limited to, Equity Interests) of the
Borrower.

 

 

-39-

 

 

6.13       
Sale/Leaseback.

 

The
Borrowers shall not enter into any agreement with any party
(“Lender”) to provide for the leasing by any Borrower
of real or personal property that has been or is to be sold or
transferred by the Borrowers to such Lender, or to any Person to
whom funds have been or will be advanced by such Lender on the
security of such property or the rental obligations of the
Borrowers with respect to such property.

 

6.14       
Ownership and
Control.

 

The
Borrowers shall not cause or permit, directly or indirectly, any
change in the control of Webmayhem or Pair Networks. For purposes
of this Section, a change in control of Webmayhem or Pair Networks
means: (a) the failure of Libsyn to own, directly or indirectly,
all of the outstanding Equity Interests in such entity; or (b) the
failure of Libsyn to be able to elect or appoint a majority of the
directors or managers (or other governing body) of such
entity.

 

6.15       
Fiscal
Year.

 

The
Borrowers shall not change their fiscal year from a calendar year
or elect to be designated as an entity other than its current tax
designation without the prior written consent of the
Bank.

 

6.16       
Modifications to Material
Documents.

 

The
Borrowers shall not amend in any respect their organizational
documents, the Management Fee Agreement, or the material terms of
any material contracts without the prior written consent of the
Bank.

 

ARTICLE
VII

 

DEFAULTS

 

7.01       
Events of
Default.

 

An
Event of Default means the occurrence or existence of one or more
of the following events or conditions (whatever the reason for such
Event of Default and whether voluntary, involuntary or effected by
operation of Law):

 

(a)       The
Borrowers shall fail to pay when due any principal of any Loan
(including scheduled installments, mandatory prepayments or any
payment due at maturity), or shall fail to pay within five (5) days
of the due date any interest on any Loan, or any other amount
payable to or on behalf of the Bank pursuant to this Agreement, the
Notes or any other Loan Document; or

 

(b)      
Any representation or warranty made by the Borrowers under this
Agreement or any of the other Loan Documents, or any statement made
by any Borrower in any financial statement, certificate, report,
exhibit or document furnished to the Bank pursuant to this
Agreement or the other Loan Documents, shall prove to have been
false or misleading in any material respect as of the time made;
or

 

(c)       Any
Borrower shall default in the performance or observance of any
covenant, condition, provision or duty contained in this Agreement,
any Note or any other Loan Document (not constituting an Event of
Default under any other provision of this Section 7.01); or

 

 

 

-40-

 

 

 

 

(d)           The
Bank’s security interest or Lien under the Security Agreement
or any of the other Loan Documents is or shall become unperfected
or invalid; or

 

(e)       Any
Borrower, or any Affiliate of any Borrower (as principal or
guarantor or other surety), shall fail to pay any Indebtedness owed
to the Bank, or any Affiliate of the Bank, other than the Loans,
after giving effect to any applicable grace period in the
applicable loan documents; or

 

(f)       Any
Borrower shall (i) default (as principal or guarantor or other
surety) in any payment of principal of or interest on any
obligation (or set of related obligations) to a third party for
borrowed money or, if any obligation (or set of related
obligations) is or are payable or repayable on demand, shall fail
to pay or repay such obligation or obligations when demanded, or
(ii) default in the observance of any other covenant, term or
condition contained in any agreement or instrument by which an
obligation (or set of related obligations) to a third party is or
are created, secured or evidenced, if the effect of such default is
to cause, or permit the holder or holders of such obligation or
obligations (or a trustee or agent on behalf of such holder or
holders) to cause, all or part of such obligation or obligations to
become due before its or their otherwise stated maturity;
or

 

(g)           One
or more judgments or decrees is entered against any Borrower by a
court of competent jurisdiction involving, in the aggregate, a
liability in an amount in excess of Three Hundred Thousand Dollars
($300,000.00) and all such judgments or decrees have not been
vacated, discharged, stayed or bonded pending appeal within thirty
(30) days from the entry thereof; or

 

(h)           A
writ or warrant of attachment, garnishment, execution, distraint or
similar process involving an aggregate amount of money in excess of
Three Hundred Thousand Dollars ($300,000.00) shall have been issued
against any Borrower or any property of any Borrower, which shall
have remained undischarged, unvacated, unbounded, or unstayed
pending appeal for a period of thirty (30) consecutive days from
date of issue or levy; or

 

(i)       Any
Person shall obtain a final, unappealable order or decree in any
court of competent jurisdiction enjoining or prohibiting the
carrying out of the terms and conditions hereof or of any other
Loan Document; or

 

(j)       Any
Borrower shall assign this Agreement, the Notes or its right to
receive any Loan hereunder; or

 

(k)           The
indictment of any Borrower under any criminal statute, or the
commencement of a criminal proceeding against any Borrower, or the
commencement of a civil proceeding against any Borrower, which, if
such civil proceeding were determined adversely to the Borrower,
would have a Material Adverse Effect, and if such civil proceeding
is not dismissed within ninety (90) days of its commencement;
or

 

(l)       The
Bank shall have determined (which determination shall be
conclusive) that a Material Adverse Change has occurred such that
the prospect of payment or performance of any covenant, agreement
or duty under this Agreement, the Notes or any of the other Loan
Documents is impaired or that the Bank is insecure; or

 

(m)           (i)
A Termination Event with respect to a Plan shall occur, (ii) any
Person shall engage in any Prohibited Transaction or Reportable
Event involving any Plan, (iii) an accumulated funding deficiency,
whether or not waived, shall exist with respect to any Plan, (iv)
the Borrowers or any ERISA Affiliate shall be in
“Default” (as defined in Section 4219(c)(5) of ERISA)
with respect to payments due to a multi-employer Plan resulting
from such Borrower’s or any ERISA Affiliate’s complete
or partial withdrawal (as described in Section 4203 or 4205 of
ERISA) from such Plan or (v) any other event or condition shall
occur or exist with respect to a single employer Plan, except that
no such event or condition shall constitute an Event of Default if
it, together with all other events or conditions at the time
existing, would not subject such Borrower to any tax, penalty, debt
or liability which, alone or in the aggregate, would have a
Material Adverse Effect; or

 

 

 

-41-

 

 

 

 

(n)           Any
provision of any Loan Document shall at any time for any reason
cease to be valid and binding and enforceable against any Borrower
other than as a result of any action or omission of the Bank;
or

 

(o)           The
validity, binding effect or enforceability of any Loan Document
against any party thereto shall be contested by any Borrower;
or

 

(p)           Any
Borrower shall deny that it has any, or any further, liability or
obligation under any Loan Document; or

 

(q)           Any
Loan Document shall be terminated, invalidated or set aside, or be
declared ineffective or inoperative or in any way cease to give or
provide to the Bank the benefits purported to be created thereby,
other than as a result of any action or omission of the Bank;
or

 

(r)       A
proceeding shall be instituted in respect of any Borrower seeking
any of the following remedies, provided that, if such proceeding is
an involuntary proceeding, the same shall not have been stayed or
dismissed within ninety (90) days of commencement:

 

(i)           seeking
to have an order for relief entered or seeking a declaration or
entailing a finding that any Borrower is insolvent or a similar
declaration or finding, or seeking dissolution, winding-up, charter
revocation or forfeiture, liquidation, reorganization, arrangement,
adjustment, composition or other similar relief with respect to the
Borrower, its assets or debts under any Law relating to bankruptcy,
insolvency, relief of debtors or protection of creditors,
termination of legal entities or any other similar Law now or
hereinafter in effect; or

 

(ii)           seeking
appointment of a receiver, trustee, custodian, liquidator,
assignee, sequestrator or other similar official for any Borrower
or for all or any substantial part of its property; or

 

(s)       any
Borrower shall become insolvent, shall become generally unable to
pay its debts as they become due, shall voluntarily suspend
transaction of its business, shall make a general assignment for
the benefit of creditors, or shall consent to any order for relief,
declaration, finding or relief described in Section 7.01(s) of this
Agreement, or shall consent to the appointment or to the taking of
possession by any official or other person of all or any
substantial part of its property whether or not any proceeding is
instituted, shall dissolve, wind-up or liquidate itself or any
substantial part of its property, or shall take any action in
furtherance of any of the foregoing.

 

7.02           Consequences
of an Event of Default.

 

(a)       If
an Event of Default specified in subsections (a) through (q) of
Section 7.01 of this Agreement occurs
and continues or exists beyond any applicable notice, cure or grace
period, the Bank will be under no further obligation to make Loans
and may at its option demand the unpaid principal amount of the
Notes, interest accrued on the unpaid principal amount thereof and
all other amounts owing by the Borrowers under this Agreement, the
Notes and the other Loan Documents to be immediately due and
payable without presentment, protest or further demand or notice of
any kind, all of which are expressly waived, and an action for any
amounts due shall accrue immediately.

 

 

 

-42-

 

 

 

 

(b)           If
an Event of Default specified in subsections (r) or (s) of Section
7.01 of this Agreement occurs, the Bank
will be under no further obligation, if any, to make Loans and the
unpaid principal amount of the Notes, interest accrued thereon and
all other amounts owing by the Borrowers under this Agreement, the
Notes and the other Loan Documents shall automatically become
immediately due and payable without presentment, demand, protest or
notice of any kind, all of which are expressly waived, and an
action for any amounts due shall accrue immediately.

 

7.03           Other
Remedies.

 

(a)           If
an Event of Default shall occur and be continuing the Bank shall
have the right, in addition to all other rights and remedies
available to it, without notice to the Borrower, to set-off against
and apply to the then unpaid balance of all the Loans and all other
Obligations against any debt owing to, and any other funds held in
any manner for the account of, the Borrowers by the Bank, including
all funds in all deposit accounts (whether time or demand, general
or special, provisionally credited or finally credited, or
otherwise) now or hereafter maintained by any Borrower for its own
account (but not including funds held in custodian or trust
accounts) with the Bank. Such right shall exist whether or not the
Bank shall have made any demand under this Agreement or any other
Loan Document, whether or not such debt owing to or funds held for
the account of the Borrower is or are matured or unmatured and
regardless of the existence or adequacy of any Collateral, guaranty
or any other security, right or remedy available to any
Bank.

 

(b)           If
an Event of Default shall occur and be continuing, and whether or
not the Bank shall have accelerated the maturity of Loans, the Bank
may proceed to protect and enforce its rights by suit in equity,
action at law and/or other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this
Agreement or the other Loan Documents, including as permitted by
applicable Law the obtaining of the appointment of a
receiver.

 

(c)           In
addition to all of the rights and remedies contained in this
Agreement or in any of the other Loan Documents, the Bank shall
have all of the rights and remedies of a secured party under the
UCC or other applicable Law, all of which rights and remedies shall
be cumulative and non-exclusive, to the extent permitted by Law.
The Bank may exercise all post-default rights granted to the Bank
under the Loan Documents or applicable Law.

 

(d)           Any
notice required to be given by the Bank of a sale, lease, or other
disposition of the Collateral or any other intended action by the
Bank, if given ten (10) days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to the
Borrower.

 

(e)           The
remedies in this Article VII are in addition to, not in limitation
of, any other right, power, privilege or remedy, either at law, in
equity or otherwise, to which the Bank may be
entitled.

 

 

 

-43-

 

 

 

 

ARTICLE
VIII

 

 

 

MISCELLANEOUS

 

8.01           Business
Days.

 

Except
as otherwise provided in this Agreement, whenever any payment or
action to be made or taken under this Agreement, or under the Notes
or under any of the other Loan Documents is stated to be due on a
day which is not a Business Day, such payment or action will be
made or taken on the next following Business Day and such extension
of time will be included in computing interest or fees, if any, in
connection with such payment or action.

 

8.02           Amendments
and Waivers.

 

The
Bank and the Borrowers may from time to time enter into agreements
amending, modifying or supplementing this Agreement, the Notes or
any other Loan Document or changing the rights of the Bank or of
the Borrowers under this Agreement, under the Notes or under any
other Loan Document and the Bank may from time to time grant
waivers or consent to a departure from the due performance of the
obligations of the Borrowers under this Agreement, under the Notes
or under any other Loan Document. Any such agreement, waiver or
consent must be in writing and will be effective only to the extent
specifically set forth in such writing. In the case of any such
waiver or consent relating to any provision of this Agreement, any
Event of Default or Potential Default so waived or consented to
will be deemed to be cured and not continuing, but no such waiver
or consent will extend to any other or subsequent Event of Default
or Potential Default or impair any right consequent
thereto.

 

8.03           No
Implied Waiver;Cumulative Remedies.

 

No
course of dealing and no delay or failure of the Bank in exercising
any right, power or privilege under this Agreement, the Notes or
any other Loan Document will affect any other or future exercise of
any such right, power or privilege or exercise of any other right,
power or privilege except as and to the extent that the assertion
of any such right, power or privilege shall be barred by an
applicable statute of limitations; nor shall any single or partial
exercise of any such right, power or privilege or any abandonment
or discontinuance of steps to enforce such a right, power or
privilege preclude any further exercise of such right, power or
privilege or of any other right, power or privilege. The rights and
remedies of the Bank under this Agreement, the Notes or any other
Loan Document are cumulative and not exclusive of any rights or
remedies that the Bank would otherwise have.

 

8.04           Notices.

 

All
notices, requests, demands, directions and other communications
(collectively “Notices”) under the
provisions of this Agreement or the Notes must be in writing unless
otherwise expressly permitted under this Agreement and must be sent
by first-class or first-class express mail or by private overnight
or next Business Day courier, in all cases with charges prepaid,
and any such properly given Notice will be effective when received.
All Notices will be sent to the applicable party at the addresses
stated below or in accordance with the last unrevoked written
direction from such party to the other parties.

 

 

 

-44-

 

 

 

 

If to
the
Borrowers:            
Liberated Syndication Inc.

5001
Baum Blvd., Ste., 770

Pittsburgh, PA
15213

Attn:
Christopher J. Spencer, CEO

 

and a
copy
to                      
Cohen & Grigsby, P.C.

625
Liberty Avenue

Pittsburgh, PA
15222-3152

Attn:
Paul DeRosa

 

If to
Bank: 

First Commonwealth
Bank

437
Grant Street

Frick
Building, Suite 1600

Pittsburgh, PA
15219

Attn:
Brian J. Sohocki

Facsimile, for
purposes of Loan Requests Only: (412) 690-2206

 

and copy
to: 

Gregory D.
Cribbs

Babst,
Calland, Clements and Zomnir, P.C.

Two
Gateway Center

Pittsburgh, PA
15222

 

8.05     
  Expenses; Taxes;
Attorney’s Fees.

 

The
Borrowers agree to pay or cause to be paid and to save the Bank
harmless against liability for the payment of all reasonable
out-of-pocket expenses including, but not limited to, reasonable
fees and expenses of outside counsel and paralegals for the Bank,
incurred by the Bank from time to time (i) arising in connection
with the preparation, execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents, (ii) relating to
any requested amendments, waivers or consents to this Agreement,
the Notes or any of the other Loan Documents and (iii) arising in
connection with the Bank’s enforcement or preservation of
rights under this Agreement, the Notes or any of the other Loan
Documents including, but not limited to, such expenses as may be
incurred by the Bank in the collection of the outstanding principal
amount of the Loans. The Borrowers agree to pay all stamp,
document, transfer, recording or filing taxes or fees and similar
impositions now or in the future determined in good faith by the
Bank to be payable in connection with this Agreement, the Notes or
any other Loan Document. The Borrowers agree to save the Bank
harmless from and against any and all present or future claims,
liabilities or losses with respect to or resulting from any
omission to pay or delay in paying any such taxes, fees or
impositions. In the event of a determination adverse to any
Borrower of any action at Law or suit in equity in relation to this
Agreement, the Notes or the other Loan Documents, the Borrowers
will pay, in addition to all other sums which the Borrowers may be
required to pay, a reasonable sum for outside attorneys’ and
paralegals’ fees incurred by the Bank or the holder of any
Note in connection with such action or suit. All payments due from
the Borrowers under this Section 8.05
will be added to and become part of the Obligations until paid in
full.

 

8.06           Proceedings,
Etc.

 

All
proceedings taken in connection with the transactions provided for
herein including, without limitation, any surveys, appraisals and
documents required or contemplated by this Agreement, the person
responsible for the execution and preparation thereof, all
sureties, all insurers and the forms of guaranties and policies of
insurance required hereby, shall be satisfactory in form, scope and
content to the Bank.

 

 

 

-45-

 

 

 

 

8.07           No
Third Party Rights.

 

Nothing
in this Agreement, whether express or implied, shall be construed
to give any person other than the parties hereto any legal or
equitable right, remedy or claim under or in respect of this
Agreement, which is intended for the sole use and benefit of the
parties hereto.

 

8.08           Severability.

 

The
provisions of this Agreement are intended to be severable. If any
provision of this Agreement is held invalid or unenforceable in
whole or in part in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability of the provision in any other jurisdiction or the
remaining provisions of this Agreement in any
jurisdiction.

 

8.09           Governing
Law; Consent to Jurisdiction.

 

This
Agreement will be deemed to be a contract under the Laws of the
Commonwealth of Pennsylvania and for all purposes shall be governed
by and construed and enforced in accordance with the substantive
Laws, and not the laws of conflicts, of said Commonwealth. The
Borrowers consent to the exclusive jurisdiction and venue of the
federal and state courts located in the Commonwealth of
Pennsylvania, in any action on, relating to or mentioning this
Agreement, the Notes, the other Loan Documents or any one or more
of them; provided, however, that the Bank may commence and pursue
any action against the Borrower, or enforce its rights against any
Collateral, in any other jurisdiction.

 

8.10           Prior
Understandings.

 

This
Agreement, the Notes and the other Loan Documents supersede all
prior understandings and agreements, whether written or oral, among
the parties relating to the transactions provided for in this
Agreement, the Notes and the other Loan Documents.

 

8.11           Duration;
Survival.

 

All
representations and warranties of the Borrowers contained in this
Agreement or made in connection with this Agreement or any of the
other Loan Documents shall survive the making of, and will not be
waived by the execution and delivery of, this Agreement, the Notes
or the other Loan Documents, by any investigation by the Bank, or
the making of any Loan. Notwithstanding the termination of this
Agreement or the occurrence of an Event of Default, all covenants
and agreements of the Borrowers will continue in full force and
effect from and after the date of this Agreement so long as the
Borrowers may borrow under this Agreement and until payment in full
of the Notes, interest thereon, and all fees and other obligations
of the Borrowers under this Agreement or the Notes. Without
limitation, it is understood that all obligations of the Borrowers
to make payments to or indemnify the Bank will survive the payment
in full of the Notes and of all other obligations of the Borrowers
under this Agreement, the Notes and the other Loan
Documents.

 

8.12           Counterparts.

 

This
Agreement may be executed in any number of counterparts and by the
different parties to this Agreement on separate counterparts each
of which, when so executed, will be deemed an original, but all
such counterparts will constitute but one and the same instrument.
Delivery of an executed counterpart of this Agreement
electronically or by facsimile shall be effective as delivery of an
originally executed counterpart of this Agreement.

 

 

 

-46-

 

 

 

 

8.13           Successors
and Assigns.

 

This
Agreement will be binding upon and inure to the benefit of the
Bank, the Borrowers and their respective successors and assigns,
except that the Borrowers may not assign or transfer any of its
rights under this Agreement.

 

8.14           No
Third Party Beneficiaries.

 

The
rights and benefits of this Agreement and the other Loan Documents
are not intended to, and shall not, inure to the benefit of any
third party.

 

8.15           Participation
and Assignment.

 

The
Bank may from time to time participate, sell or assign all or any
part of the Loans made by the Bank or which may be made by the
Bank, or its right, title and interest in the Loans or in or to
this Agreement, to another lending office, lender or financial
institution without notice to the Borrower. Except to the extent
otherwise required by the context of this Agreement, the word
“Bank” where used in this Agreement means and includes
any holder of a Note originally issued to the Bank and each such
holder of a Note will be bound by and have the benefits of this
Agreement, the same as if such holder had been a signatory to this
Agreement. In connection with any such sale, assignment or grant of
participation, the Bank may make available to any prospective
purchaser, assignee or participant any information relative to the
Borrowers in the Bank’s possession.

 

8.16           Exhibits.

 

All
exhibits and schedules attached to this Agreement are incorporated
and made a part of this Agreement.

 

8.17           Headings.

 

The
section headings contained in this Agreement are for convenience
only and do not limit or define or affect the construction or
interpretation of this Agreement in any respect.

 

8.18           Indemnity.

 

In
addition to the payment of expenses pursuant to Section 8.05 hereof, whether or not the transactions
contemplated hereby shall be consummated, the Borrowers agree to
indemnify, pay and hold the Bank and the officers, directors,
employees, agents, consultants, auditors, affiliates and attorneys
of the Bank (collectively called the “Indemnitees”), harmless
from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs,
expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of outside counsel
for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto)
that is imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this
Agreement or the other Loan Documents, the consummation of the
transactions contemplated by this Agreement, the statements
contained in the commitment letters, if any, delivered by the Bank,
the Bank’s agreement to make the Loans hereunder, the use or
intended use of the proceeds of any of the Loans or the exercise of
any right or remedy hereunder or under any of the other Loan
Documents, any error, failure or delay in the performance of any of
the Bank’s obligations under this Agreement caused by natural
disaster, fire, war, strike, civil unrest, error or inoperability
of communication equipment or lines or any other circumstances
beyond the control of the Bank or actions taken by the Bank which
were reasonably believed by the Bank to be taken pursuant to and in
compliance with this Agreement including, but not limited to,
actions taken by the Bank to amend or cancel any funds transfer
instructions or any decision by the Bank to effect or not to effect
the transfer as provided in this Agreement, or any other such
action taken by the Bank in good faith pursuant to its
responsibilities under this Agreement (the “Indemnified
Liabilities”); provided, however, that the Borrowers
shall have no obligation to an Indemnitee hereunder with respect to
Indemnified Liabilities arising from the gross negligence or
willful misconduct of that or another Indemnitee as finally
determined by a court of competent jurisdiction.

 

 

 

-47-

 

 

 

 

8.19           Limitation
of Liability.

 

To the
fullest extent permitted by Law, no claim may be made by the
Borrowers against the Bank or any affiliate, director, officer,
employee, attorney or agent of the Bank for any special,
incidental, consequential or punitive damages in respect of any
claim arising from or relating to this Agreement or any other Loan
Document or any statement, course of conduct, act, omission or
event occurring in connection herewith or therewith (whether for
breach of contract, tort or any other theory of liability). The
Borrowers hereby waive, release and agree not to sue upon any claim
for any such damages, whether such claim presently exists or arises
hereafter and whether or not such claim is known or is suspected to
exist in its favor. This Section 8.19
shall not limit any rights of the Borrowers arising solely out of
willful misconduct as finally determined by a court of competent
jurisdiction.

 

8.20           Confidentiality.

 

(a)       General.
The Bank agrees to keep confidential all information obtained from
the Borrowers that is nonpublic and confidential or proprietary in
nature (including any information a Borrower specifically
designates as confidential), except as provided below, and to use
such information only in connection with this Agreement and for the
purposes contemplated hereby. The Bank shall be permitted to
disclose such information (i) to outside legal counsel, accountants
and other professional advisors who need to know such information
in connection with the administration and enforcement of this
Agreement, subject to the agreement of such Persons to maintain the
confidentiality, (ii) to assignees and participants, and
prospective assignees and participants, (iii) to the extent
requested by any bank regulatory authority or, with notice to the
Borrower, as otherwise required by applicable Law or by any
subpoena or similar legal process, or in connection with any
investigation or proceeding arising out of the transactions
contemplated by this Agreement or the other Loan Documents, (iv) if
it becomes publicly available other than as a result of a breach of
this Agreement or becomes available from a source not known to be
subject to confidentiality restrictions, or (v) if the Borrowers
shall have consented to such disclosure.

 

(b)           Sharing
Information with Affiliates of the Bank. The Borrowers
acknowledge that from time to time financial advisory, investment
banking and other services may be offered or provided to the
Borrowers or one or more of their Affiliates (in connection with
this Agreement or otherwise) by the Bank or by one or more
subsidiaries or Affiliates of the Bank and the Borrowers hereby
authorize the Bank to share any information delivered to the Bank
by the Borrowers pursuant to this Agreement, or in connection with
the decision of the Bank to enter into this Agreement, to any such
subsidiary or Affiliate of the Bank, it being understood that any
such subsidiary or Affiliate of the Bank receiving such information
shall be bound by the provisions of this Section as if it were a
Bank hereunder. Such authorization shall survive the repayment of
the Loans.

 

8.21           Payment
of Obligations; Joint and Several Obligations of
Borrowers.

 

The
Borrowers shall be jointly and severally liable for the Obligations
in connection with Loans. Without limiting the generality of the
foregoing, each Borrower hereby acknowledges and agrees that any
and all actions, inactions or omissions by any one of the Borrowers
in connection with, related to or otherwise affecting the Loans are
the obligations of, and inure to and are binding upon, each and all
of the Borrowers, jointly and severally.

 

 

-48-

 

 

 

 

8.22           Relative
Priority of Security Interests; Limitation of Certain
Liabilities.

 

To the
extent any portion of the Obligations of a Borrower may be
determined by final order of a court of competent jurisdiction to
be in the nature of the obligations of a surety (the
“Suretyship Portion”), any security interests in any
assets of such Borrower securing the Suretyship Portion shall be
subordinate to the security interests in the assets of such
Borrower securing the remaining portion of the Obligations. If the
Suretyship Portion would otherwise be held or determined to be
void, invalid or unenforceable on account of its amount,
notwithstanding any other provision of this Agreement to the
contrary, the aggregate amount of such liability shall, without any
further action by the Bank, the Borrowers or any other Person, be
automatically limited and reduced to the highest amount which is
valid and enforceable as determined in such action or
proceeding.

 

8.23           Waiver
of Trial by Jury.

 

THE
BORROWERS EXPRESSLY, KNOWINGLY AND VOLUNTARILY WAIVE ALL BENEFIT
AND ADVANTAGE OF ANY RIGHT TO A TRIAL BY JURY, AND WILL NOT AT ANY
TIME INSIST UPON, OR PLEAD OR IN ANY MANNER WHATSOEVER CLAIM OR
TAKE THE BENEFIT OR ADVANTAGE OF A TRIAL BY JURY IN ANY ACTION
ARISING IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE
OTHER LOAN DOCUMENTS.

 

 

-49-

 

IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed and delivered this Agreement as of the date set forth
at the beginning of this Agreement as a document under
seal.

 

LIBERATED
SYNDICATION INC.

 

 

 

By:

Name:

Title:

 

 

 

WEBMAYHEM,
INC.

 

 

 

By:

Name:

Title:

 

 

 

PAIR
NETWORKS, INC.

 

 

 

By:

Name:

Title:

 

 

 

 

FIRST
COMMONWEALTH BANK

 

 

 

By:                                                                

Brian
J. Sohocki, Senior Vice President

.

.

 

 

 

 

	

	

[Loan
Agreement Signature Page]

	
 

 

 

 

SCHEDULE 1.1(A)

PRICING GRID

 

	

Level

	

Borrowers’ Cash Balance

	

Applicable LIBOR Margin

	

Applicable Prime Rate Margin

	

Unused Facility Fee

	

Letter of Credit Fee

	

I

	

<
$6,000,000.00

	

1.75%

	

0.75%

	

0.25%

	

1.75%

	

II

	

≥
$6,000,000.00

<
$9,000,000.00

	

1.50%

	

0.50%

	

0.20%

	

1.50%

	

III

	

>
$9,000,000.00

	

1.25%

	

0.25%

	

0.15%

	

1.25%

 

For
purposes of determining the Applicable Margin and
fees:

 

(a)       The
Applicable Margin, Unused Facility Fee and Letter of Credit Fee as
of the Closing Date shall be determined based on the
Borrowers’ Cash Balance as of the Closing Date as shown on
the Closing Date Compliance Certificate.

 

(b)      
The Applicable Margin, Unused Facility Fee and Letter of Credit Fee
shall be recomputed as of the end of the fiscal quarter ending
March 31, 2018 and each fiscal quarter ending thereafter based on
the Borrowers’ Cash Balance as of such fiscal quarter end.
Any increase or decrease in the Applicable Margin, Unused Facility
Fee and Letter of Credit Fee computed as of a quarter end shall be
effective on the date on which the Compliance Certificate
evidencing such computation is due to be delivered under Section
5.01(c) of the Loan Agreement. If a Compliance Certificate is not
delivered when due in accordance with the Loan Agreement, then the
rates in Level I shall apply as of the first Business Day after the
date on which such Compliance Certificate was required to have been
delivered and shall remain in effect until the date on which such
Compliance Certificate is delivered.

 

(c)       If,
as a result of any restatement of or other adjustment to the
financial statements of the Borrowers or for any other reason, the
Borrowers determine or the Bank determines that (i) the
Borrowers’ Cash Balance as calculated by the Borrowers as of
any applicable date was inaccurate, and (ii) a proper calculation
of Borrowers’ Cash Balance would have resulted in higher
pricing for such period, the Borrowers shall immediately and
retroactively be obligated to pay to the Bank, promptly on demand
by the Bank (or, after the occurrence of an actual or deemed entry
of an order for relief with respect to the Borrowers under the
Bankruptcy Code of the United States, automatically and without
further action by the Bank), an amount equal to the excess of the
amount of interest and fees that should have been paid for such
period over the amount of interest and fees actually paid for such
period. If any inaccurate financial statement or Compliance
Certificate would, if corrected, have led to the application of a
lower Applicable Margin for any period for which interest has
already been paid, Bank shall not be required to refund or return
any portion of such interest, but instead, the amount by which the
interest actually paid by the Borrowers exceeds the amount that
would have been paid had the correct Applicable Margin been applied
shall be credited against the next payment(s) due from Borrowers.
This paragraph shall not limit the rights of the Bank, under
Section 2.04(e) or Article VII. The Borrowers’ obligations
under this paragraph shall survive the termination of the
Commitments and the repayment of all other Obligations
hereunder.

 

 

 

SCHEDULE 3.06

OWNERSHIP AND CONTROL

 

 

Liberated Syndication Inc.

 

Common Stock

Authorized:
200,000,000

Issued
and Outstanding as of date of close – 29,565,008

Assumes
1,599,148 common shares issued to Seller at closing ($2,500,000 /
$1.56)

 

Preferred Stock

Authorized:
10,000,000

Issued
and Outstanding as of date of close – zero

 

 

 

Webmayhem, Inc. – Liberated Syndication Inc. owns 100%
of the issued and outstanding shares of Webmayhem,
Inc.

 

pair Networks, Inc. – Liberated Syndication Inc. owns
100% of the issued and outstanding shares of pair Networks,
Inc.

 

 

 

SCHEDULE 3.07

OFFICERS, DIRECTORS AND BUSINESS

 

 

 

The
following serve in the noted capacity for Liberated Syndication
Inc., Webmayhem Inc, and pair Networks, Inc.

 

Christopher J.
Spencer, Chief Executive Officer and Chairman of the
Board

 

John
Busshaus, Chief Financial Officer

 

Denis
Yevstifeyey, Director

 

Douglas
Polinksy, Director

 

J.
Gregory Smith, Director

 

 

 

Liberated
Syndication Inc. is the parent company for the wholly owned
subsidiaries: Webmayhem Inc and pair Networks, Inc. Webmayhem dba
Libsyn provides podcast hosting and distribution services. pair
Networks, Inc. provides web hosting, domain registration and
security services.

 

 

 

SCHEDULE 3.15

PATENTS, LICENSES, FRANCHISES

 

 

 

None.

 

 

SCHEDULE 6.01

LIENS

 

 

 

Capital
lease for Emerson Batteries. Please see below on Indebtedness
Schedule 6.02.

 

 

SCHEDULE 6.02

INDEBTEDNESS

 

 

 

 

Master
Lease No. 2014254 dated August 22, 2014 between pair Networks, Inc
and First American Commercial Bancorp, Inc.

 

 

 

 

EXHIBIT A

 

FORM OF LOAN REQUEST

 

(See
attached)

 

 

 

 

LOAN REQUEST

 

TO: 

First Commonwealth
Bank

437
Grant Street

Frick
Building, Suite 1600

Pittsburgh, PA
15219

Attention: 
Brian J. Sohocki

 

FROM: 

Liberated
Syndication Inc. (“Borrower”)

 

RE: 

Loan Agreement
dated as of December 27, 2017, between the Borrowers and the Bank
(as the same may be further amended, restated, modified or
supplemented, the “Loan Agreement”)

 

Capitalized
terms not otherwise defined herein shall have the respective
meanings ascribed to them in the Loan Agreement.

 

1.           

Pursuant to the
Loan Agreement, the undersigned irrevocably requests [check one box under 1(a) below and fill in
blank space next to the box as appropriate]:

 

1(a)    

☐            

New Revolving
Credit Loan OR

 

☐ 

Renewal of the
LIBOR Rate Option
applicable to an outstanding Revolving Credit Loan originally made
on _______________ OR

 

☐ 

Conversion of the
Prime Rate Option applicable to an outstanding Revolving Credit
Loan originally made on ____________ to a Revolving Credit Loan to
which the LIBOR Rate Option applies, OR

 

☐ 

Conversion of the
LIBOR Rate Option applicable to an outstanding Revolving Credit
Loan originally made on _____________ to a Revolving Credit Loan to
which the Prime Rate Option applies.

 

SUCH
NEW, RENEWED OR CONVERTED LOAN SHALL BEAR INTEREST:

 

[Check one box under 1(b) below and fill in blank spaces in line
next to box]:

 

1(b)(i) 

☐ 

Under the Prime Rate Option.
Such Loan shall have a Borrowing Date of ___________________ (which
date shall be (i) on the Business Day of the receipt by the Bank by
1:00 p.m., Pittsburgh, Pennsylvania time, of this Loan Request for
making a new Revolving Credit Loan, renewing a Loan to which the Prime
Rate Option applies; or (ii) the last day of the preceding Interest
Period for converting a Loan to which the LIBOR Rate Option applies
to a Loan to which the Prime Rate Option applies), OR

 

      (ii) 

☐ 

Under the LIBOR Rate Option.
Such Loan shall have a Borrowing Date of ___________________ (which
date shall be two (2) Business Days subsequent to the Business Day
of the receipt by the Agent by 1:00 p.m., Pittsburgh, Pennsylvania
time, of this Loan Request for making a new Revolving Credit Loan,
renewing a Loan to which the LIBOR Rate Option applies, or
converting a Revolving Credit Loan to which the Prime Rate Option
or the LIBOR Rate Option applies to a Revolving Credit Loan to
which the LIBOR Rate Option applies).

 

 

 

 

 

(c) 

In the case of a
Loan under the LIBOR Rate Option, the Interest Period applicable
thereto shall be ____________ months [specify one (1), two (2), three (3) or six
(6) months].

 

2. 

Such Loan is in the
principal amount of $____________________ or the principal amount
to be renewed or converted is $____________________.

 

As of
the date hereof and the date of making of the above-requested Loans
(and after giving effect thereto): the Borrowers have performed and
complied with all covenants and conditions of the Loan Agreement;
all of Borrower’s representations and warranties therein are
true and correct (except representations and warranties which
expressly relate solely to an earlier date or time, which
representations and warranties were true and correct on and as of
the specific dates or times referred to therein); no Event of
Default or Potential Default has occurred and is continuing or
shall exist; and the making of such Loan shall not contravene any
Law applicable to the Borrower; and the making of any Revolving
Credit Loan shall not cause the aggregate amount of such Loans to
exceed the Borrowing Base.

 

 

 

The
undersigned certifies to the Bank as to the accuracy of the
foregoing.

 

 

 

LIBERATED
SYNDICATION INC.

 

 

 

By:
__________________________

Name:________________________

Title:_________________________

 

 

 

EXHIBIT B

 

FORM OF COMPLIANCE CERTIFICATE

 

(See
attached)

 

 

 

 

 

COMPLIANCE
CERTIFICATE

____________,
201__

 

 

First
Commonwealth Bank

Corporate
Banking

Frick
Building, Suite 1600

437
Grant Street

Pittsburgh,
PA 15219

Attn:
Brian J. Sohocki

 

 

Dear
Mr. Sohocki:

 

I refer
to the Loan Agreement effective as of December 27, 2017 (as
amended, modified, supplemented or restated from time to time, the
“Loan Agreement”) among Liberated Syndication Inc.,
Webmayhem, Inc. and Pair Networks, Inc. (the
“Borrowers”), and First Commonwealth Bank (the
“Bank”). Unless otherwise defined herein, terms defined
in the Loan Agreement are used herein with the same
meanings.

 

The
undersigned does hereby certify on behalf of the Borrowers as of
__________, 201__ (the “Report Date”), as
follows:

 

1.            

CHECK
ONE:

 

    ____ 

The annual audited
financial statements of the Borrowers being delivered to the Bank
with this Compliance Certificate: (a) present fairly the financial
position of the Borrowers and their results of operations and cash
flows for the most recent fiscal year; and (b) comply with the
reporting requirements for such financial statements as set forth
in the Loan Agreement.

 

OR

 

____ 

The quarterly
financial statements of the Borrowers being delivered to the Bank
with this Compliance Certificate: (a) present fairly the financial
position of the Borrowers and their results of operations and cash
flows for the most recent month ending as of the Report Date and
the fiscal year through that date, prepared, and certified by the
appropriate officer of Borrowers as having been prepared, in
accordance with GAAP consistently applied (subject to the absence
of footnotes and normal year-end adjustments), and (b) satisfy and
comply with the reporting requirements for such financial
statements as set forth in the Loan Agreement.

 

2. 

The representations
and warranties of the Borrowers contained in Article III of the
Loan Agreement, and in each of the other Loan Documents, are true
and accurate on and as of the Report Date (except representations
and warranties which expressly relate solely to an earlier date or
time, which representations and warranties are true and correct on
and as of the specific dates or times referred to therein). The
Borrowers are in compliance with, and since the date of the most
recent previously delivered Compliance Certificate has performed
and complied with, all covenants and conditions contained in the
Loan Agreement.

 

 

 

 

3. 

No Event of Default
or Potential Default exists on the Report Date; no Event of Default
or Potential Default has occurred or is continuing since the date
of the most recent previously delivered Compliance Certificate; no
Material Adverse Change has occurred since the date of the most
recent previously delivered Compliance Certificate; and no event
has occurred or is continuing since the date of the most recent
previously delivered Compliance Certificate that may reasonably be
expected to result in a Material Adverse Change.

 

[NOTE:
If any Event of Default, Potential Default, Material Adverse Change
or event which may reasonably be expected to result in a Material
Adverse Change has occurred or is continuing, set forth on an
attached sheet the nature thereof and the action which the
Borrowers have taken, is taking or proposes to take with respect
thereto.]

 

4. 

Minimum Fixed Charge Coverage
Ratio (Section 5.14(a)). (For periods beginning with the
fiscal quarter ending on March 31, 2018 and thereafter.) The Fixed
Charges Coverage Ratio is _____ to 1.0 for the period ended as of
the Report Date, which is not less than the permitted minimum ratio
of 1.50 to 1.00 for the relevant period, based on Adjusted EBITDA
calculated as set forth in paragraph 4(A) below and Adjusted Fixed
Charges calculated as set forth in paragraph 4(B)
below.

 

(A) 

Adjusted EBITDA for
the period ending as of the Report Date equals $________________,
and is calculated by dividing EBITDA, determined as set forth
below, by the applicable divisor set forth in the Loan
Agreement:

 

	

Net
Income (loss) for such period

	

 $

	

Plus
all deductions for depreciation, amortization and non-cash charges
to Net Income for such period

	

+
$

	

Plus
Interest Expense deducted in computing net income (loss) for such
period

	

+
$_______________

	

Plus
all income, capital or profits taxes deducted in computing net
income (loss) for such period

	

+
$_______________

	

Plus
any non-recurring costs permitted under the definition of
EBITDA

	

+
$_______________

	

Equals
EBITDA

	

=
$

 

(B) 

Adjusted Fixed Charges for the
period ending as of the Report Date equals $______________, and is
calculated by dividing Fixed Charges, determined as set forth
below, by the applicable divisor set forth in the Loan
Agreement:

 

	

Required principal
amortization for such period on the Obligations

	

   $

	

Plus
net cash interest expense for such period

	

+
$

	

Plus
income taxes paid or payable

	

+
$_______________

	

Plus
Permitted Distributions paid in cash

	

+
$

	

Plus
Fees paid during such period to the Bank

	

+
$

	

Plus
Unfinanced Capital Expenditures

	

+
$_______________

	

Equals
Fixed Charges

	

=
$_______________

 

5. 

Minimum Liquidity. (Section
5.14(b)). Borrowers’ cash and Cash Equivalents maintained at
the Bank, as shown on the balance sheet accompanying this
Certificate, as of the Report Date totals $______________, which is
not less than the minimum amount required by the Loan
Agreement.

 

 

 

 

 

IN
WITNESS WHEREOF, the undersigned has executed this Compliance
Certificate as of the date first set forth above.

 

LIBERATED
SYNDICATION INC.

 

 

 

By:
_____________________________________

Name:
___________________________________

Title:
____________________________________

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