Document:

Exhibit 10.7

 

SECURITIES
PURCHASE AGREEMENT

 

This
SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of September 8, 2017, by and between Nightfood
Holdings, Inc., a Nevada corporation, with headquarters located at 520 White Plains Road, Suite 500, Tarrytown, NY 10591,
(the “Company”), and EAGLE EQUITIES, LLC, a Nevada limited liability company, with its address at 91 Shelton
Ave, Suite 107, New Haven, CT 06511 (the “Buyer”).

 

WHEREAS:

 

A.       The
Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “1933 Act”);

 

B.       Buyer
desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement two 8%
convertible notes of the Company, in the forms attached hereto as Exhibit A and B in the aggregate principal amount of $432,750.00
(with the first note being in the amount of $222,750 and the second note being in the amount of $210,000) (together with any note(s)
issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof,
the “Note”), convertible into shares of common stock, of the Company (the “Common Stock”), upon the terms
and subject to the limitations and conditions set forth in such Note. The first of the two notes (the “First Note”)
shall be paid for by the Buyer as set forth herein. The First Note shall contain an OID of $4,000 such that the face amount shall
be $222,750 while the purchase price shall be $218,750. The second note (the “Second Note”) shall initially be paid
for by the issuance of an offsetting $210,000 secured note issued to the Company by the Buyer (“Buyer Note”), provided
that prior to conversion of the Second Note, the Buyer must have paid off the Buyer Note in cash such that the Second Note may
not be converted until it has been paid for in cash by Buyer.

 

C.       The
Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth
immediately below its name on the signature pages hereto; and

 

NOW
THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:

 

1.       Purchase
and Sale of Note.

 

a.       Purchase
of Note. On each Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase
from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages
hereto.

 

 

________

 Company Initials

     

     

    

 

b.       Form
of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and
sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds
to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal
amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and
(ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchas
e Price.

 

c.       Closing
Date. The date and time of the first issuance and sale of the Note pursuant to this Agreement (the “Closing Date”)
shall be on or about September 8, 2017, or such other mutually agreed upon time. The closing of the transactions contemplated
by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.
Subsequent closings of the Second Note shall occur on or before the date specified in the Buyer Note. The Company may reject
the closing of the back end financing by giving the Buyer written notice at least 30 days prior to the 6 month anniversary of
the Second Note of its intent to reject the funding of the Second Note. In such case both the Buyer Note and the Second Note shall
be terminated.

 

2.       Buyer’s
Representations and Warranties. The Buyer represents and warrants to the Company that:

 

a.       Investment
Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Note, such shares of Common Stock being collectively referred to herein as the “Conversion
Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards
the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act;
provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act.

 

b.       Accredited
Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D
(an “Accredited Investor”). Any of Buyer’s transferees, assignees, or purchasers must be “accredited investors”
in order to qualify as prospective transferees, permitted assignees in the case of Buyer’s or Holder’s transfer, assignment
or sale of the Note.

 

c.       Reliance
on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of
the Buyer to acquire the Securities.

 

    	 	2	 

     

    

 

d.       Information.
The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with
all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for
so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding
the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information
unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries
nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or
affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer
understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that
may constitute a breach of any of the Company's representations and warranties made herein.

 

e.       Governmental
Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.

 

f.       Transfer
or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered
under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities
are sold pursuant to an effective registration statement under the 1933 Act, (b) in the case of subparagraphs (c), (d) and (e)
below, the Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance
and scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred
may be sold, or transferred pursuant to an exemption from such registration, including the removal of any restrictive legend which
opinion shall be accepted by the Company, (c) the Securities are sold or transferred to an “affiliate” (as defined
in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”) of the Buyer who agrees to sell or otherwise
transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold
pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation
S”); (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said
Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the
person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither
the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything
else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bonafide margin
account or other lending arrangement.

 

    	 	3	 

     

    

 

g.       Legends.
The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act
will be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

 

“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security
upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for
sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation
S without any restriction as to the number of securities as of a particular date that can then be immediately sold, and (b) such
holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable
transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act,
and that legend removal is appropriate, which opinion shall be accepted by the Company so that the sale or transfer is effected.
The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed,
in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion
of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as
Rule 144 or Regulation S, within 2 business days, it will be considered an Event of Default under the Note.

 

h.      Authorization;
Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf
of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.

 

i.       Residency.
The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.

 

    	 	4	 

     

    

 

j.       No
Short Sales. Buyer/Holder, its successors and assigns, agrees that so long as the Note remains outstanding, neither the Buyer/Holder
nor any of its affliliates shall not enter into or effect “short sales” of the Common Stock or hedging transaction
which establishes a short position with respect to the Common Stock of the Company. The Company acknowledges and agrees that upon
delivery of a Conversion Notice by the Buyer/Holder, the Buyer/Holder immediately owns the shares of Common Stock described in
the Conversion Notice and any sale of those shares issuable under such Conversion Notice would not be considered short sales.

 

3.       Representations
and Warranties of the Company. The Company represents and warrants to the Buyer that:

 

a.       Organization
and Qualification. The Company and each of its subsidiaries, if any, is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and
other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated
and conducted.

 

b.       Authorization;
Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the
Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation
for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s
Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required,
(iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign this Agreement and the other documents executed
in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery
by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.

 

c.       Issuance
of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance
with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances
with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the
Company and will not impose personal liability upon the holder thereof.

 

    	 	5	 

     

    

 

d.       Acknowledgment
of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue
Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the
Company.

 

e.       No
Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance
of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation
or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of
its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or
its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company
or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). All consents, authorizations,
orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the OTC Markets Exchange
(the “OTC MARKETS”) and does not reasonably anticipate that the Common Stock will be delisted by the OTC MARKETS in
the foreseeable future, nor are the Company’s securities “chilled” by FINRA. The Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to any of the foregoing.

 

f.       Absence
of Litigation. Except as disclosed in the Company’s Periodic Report filings with the SEC, there is no action, suit,
claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company or
any of its subsidiaries, or their officers or directors in their capacity as such, that could have a material adverse effect.
Schedule 3(f) contains a complete list and summary description of any pending or, to the knowledge of the Company, threatened
proceeding against or affecting the Company or any of its subsidiaries, without regard to whether it would have a material adverse
effect. The Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

 

g.       Acknowledgment
Regarding Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in
the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby. The
Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer
or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby
is not advice or a recommendation and is merely incidental to the Buyer’ purchase of the Securities. The Company
further represents to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.

 

    	 	6	 

     

    

 

h.       No
Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly
or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would
require registration under the 1933 Act of the issuance of the Securities to the Buyer.

 

i.       Title
to Property. The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the business of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(i) or such as would
not have a material adverse effect. Any real property and facilities held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions as would not have a material adverse effect.

 

j.       Bad
Actor. No officer or director of the Company would be disqualified under Rule 506(d) of the Securities Act as amended on the
basis of being a "bad actor" as that term is established in the September 19, 2013 Small Entity Compliance Guide published
by the Securities and Exchange Commission.

 

k.       Breach
of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth
in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered
an Event of default under the Note.

 

4.      
COVENANTS.

 

a.       Expenses.
At the Closing, the Company shall reimburse Buyer for expenses incurred by them in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”),
including, without limitation, reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees
for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of
provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions
contemplated by the Documents. When possible, the Company must pay these fees directly, otherwise the Company must make immediate
payment for reimbursement to the Buyer for all fees and expenses immediately upon written notice by the Buyer or the submission
of an invoice by the Buyer.

 

    	 	7	 

     

    

 

b.       Listing.
The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so
long as the Buyer owns any of the Note Securities, shall maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain
and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTC MARKETS
or any equivalent replacement market, the Nasdaq stock market (“Nasdaq”), the New York Stock Exchange
(“NYSE”), or the American Stock Exchange (“AMEX”) and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory
Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of
any notices it receives from the OTC MARKETS and any other markets on which the Common Stock is then listed regarding the
continued eligibility of the Common Stock for listing on such markets.

 

c.       Corporate
Existence. So long as the Buyer beneficially owns the Note, the Company shall maintain its corporate existence and shall not
sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or
substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading on the OTC MARKETS, Nasdaq, NYSE or AMEX.

 

d.       No
Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of
the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.

 

e.       Breach
of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies
available to the Buyer pursuant to this Agreement, it will be considered an event of default under the Note.

 

5.      Governing Law; Miscellaneous.

 

a.       Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard
to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the
state and county of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue
of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum
non conveniens. The Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the
other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service
of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any
other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by law.

 

    	 	8	 

     

    

 

b.       Counterparts;
Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto
by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

 

c.       Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation
of, this Agreement.

 

d.       Severability.
In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.

 

e.       Entire
Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company
nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.

 

    	 	9	 

     

    

 

f.       Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
(iv) via electronic mail or (v) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such
other address as such party shall have specified most recently by written notice. Any notice or other communication required
or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received) or delivery via electronic mail, or the first
business day following such delivery (if delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

 

If
to the Company, to:

 

Nightfood Holdings, Inc.

520 White Plains Road

Suite 500

Tarrytown,
NY 10591

Attn: Sean Folkson, CEO

 

If
to the Buyer:

 

EAGLE
EQUITIES, LLC

91
Shelton Ave, Suite 107

New Haven, CT 06511

Attn: Yakov Borenstein

 

Each
party shall provide notice to the other party of any change in address.

 

g.       Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, the Buyer may assign its rights hereunder to any “qualified person”,
any “permitted assigns”, or “prospective transferee” that acquires or purchases Note Securities in a private
transaction from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the
consent of the Company with Buyer’s Opinion of Counsel. A qualified person is an “accredited investor” transferee,
assignee, or purchaser of the Note who succeeds to the Holder’s right, title and interest to all or a portion of the Note
accompanied with an Opinion of Counsel as provided for in Section 2(f).

 

h.       Third
Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

i.       Survival.
The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the
closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to
indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a
result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set
forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they
are incurred.

 

    	 	10	 

     

    

 

j.       Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

k.       No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.

 

l.       Remedies.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach
by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

    	 	11	 

     

    

 

IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above
written.

 

	NIGHTFOOD
    HOLDINGS, INC.	 
	 	 	 
	By:	/s/
    Sean Folkson	 
	Name: 	Sean
    Folkson, CEO	 
	 	 	 
	EAGLE
    EQUITIES, LLC	 

	 	 	 
	By:	/s/
    Yakov D. Borenstein	 
	Name: 	Yakov Borenstein	 
	Title:	Manager	 

 

AGGREGATE SUBSCRIPTION AMOUNT:   $432,750.00

 

Aggregate
Principal Amount of Notes:

 

Aggregate Purchase Price:

 

Note
1: $222,750.00, less $4,000 in OID and $18,750.00 in legal fees

 

		●	less
                                         $42,288.22 to Auctus Fund, LLC as a redemption premium for a note dated March 20, 2017

		●	less
                                         $115,149.86 to retire a note issued to EMA Financial, LLC

		●	less
                                         $31,519.86 to SkyBridge Ventures, LLC as a redemption premium for a note dated June 30,
                                         2017
	 	 	 

		○	funds
                                         shall be wired to the SkyBridge Ventures, LLC attorney’s, Grushko & Mittman,
                                         P.C., escrow account.

 

Note
2: $210,000.00, less $10,000.00 in legal fees

 

    	 	12	 

     

    

 

 

 

 

 

EXHIBIT
A

144
NOTE - $222,750

 

 

 

 

 

 

 

    	 	13	 

     

    

 

 

 

 

 

EXHIBIT
B

BACK
END NOTE - $210,000

 

 

 

 

 

 

 

14ex10-98.htm

 

Exhibit 10.98

 

BUSINESS LOAN AGREEMENT

 

	
			Borrower:

				
			Collectors Universe, Inc.

			1921 E Alton Ave

			Santa Ana, CA 92705-5836

				Lender:	
			ZB, N.A. dba California Bank & Trust

			Irvine Commercial

			1900 Main Street, Suite #200

			Irvine, CA 92614

			 

			

 

THIS BUSINESS LOAN AGREEMENT dated September 15, 2017, is made and executed between Collectors Universe, Inc. ("Borrower") and ZB, N.A. dba California Bank & Trust ("Lender") on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement.

 

TERM. This Agreement shall be effective as of September 15, 2017, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.

 

ADVANCE AUTHORITY. The following person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of such authority: Joseph Wallace, CFO of Collectors Universe, Inc.

 

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.

 

Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender's counsel.

 

Borrower's Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

 

Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document.

 

Representations and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct.

 

No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document.

 

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:

 

Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Delaware. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 1921 E Alton Ave, Santa Ana, CA 92705-5836. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower's state of organization or any change in Borrower's name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower's business activities.

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			
			(Continued)

			

			
			Page 2

			

			

 

Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business:

 

	
			Borrower

				
			Assumed Business Name

				
			Filing Location

				
			Date

			
	
			Collectors Universe, Inc.

				
			PCGS

				
			Orange County, CA

				
			11-22-2016

			
	
			Collectors Universe, Inc.

				
			Professional Sports Authenticators

				
			Orange County, CA

				
			11-22-2016

			
	
			Collectors Universe, Inc.

				
			Professional Stamp Experts

				
			Orange County, CA

				
			11-22-2016

			
	
			Collectors Universe, Inc.

				
			PSA/DNA Authentication Services

				
			Orange County, CA

				
			11-22-2016

			

 

Authorization. Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.

 

Financial Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.

 

Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.

 

Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.

 

Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower's ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.

 

Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing.

 

Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			(Continued)

			
			Page 3

			

			

 

Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral.

 

Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.

 

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:

 

Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

 

Financial Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times.

 

Financial Statements. Furnish Lender with the following:

 

Additional Requirements.

 

Annual Financial Statement. As soon as available, but in no event later than ninety (90) days after the end of each fiscal year, Borrower's balance sheet and income statement for the year ended, audited by a certified public accountant satisfactory to Lender.

 

Interim Financial Statement. As soon as available, but in no event later than forty five (45) days after the end of each quarter, Borrower's balance sheet and income statement for the period ended, prepared by Borrower.

 

Projections. As soon as available, but in no event later than thirty (30) days after the end of each fiscal year, Borrower's balance sheet and income statement projection for the year ended.

 

All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.

 

Additional Information. Furnish such additional information and statements, as Lender may request from time to time.

 

Financial Covenants and Ratios. Comply with the following covenants and ratios:

 

Additional Requirements.

 

Debt Service Coverage Ratio. Maintain a minimum Debt Service Coverage Ratio of 1.50 to 1.00. Debt Service Coverage Ratio means, for any period, the ratio of (a) earnings before interest, income tax expense, depreciation, and amortization minus the sum of tax expense paid in cash (or, if applicable, cash distributions to equity holders to pay income tax expense attributable solely to their equity interests in Borrower), dividends or other distributions paid in cash, and loans or advances to, investments in, or receivables from (i) any affiliate of Borrower or (ii) any third-party if such loan, advance, investment or receivable is outside Borrower’s ordinary course of business to (b) the sum of interest expense paid in cash, prior period current maturities of long term debt and capital lease obligations, all calculated for the Borrower (and its subsidiaries on a consolidated basis). This ratio will be measured as of the end of each fiscal quarter.

 

Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be made in accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct.

 

Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require.

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			(Continued)

			
			Page 4

			

			

 

Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.

 

Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.

 

Loan Fees, Charges and Expenses. In addition to all other agreed upon fees, charges, and expenses, pay the following:

 

Unused Commitment Fee. A quarterly, in arrears, 0.25% fee if the average loan utilization is less than 40%.

 

Loan Proceeds. Use all Loan proceeds solely for Borrower's business operations, unless specifically consented to the contrary by Lender in writing.

 

Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower's books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.

 

Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.

 

Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.

 

Environmental Studies. Promptly conduct and complete, at Borrower's expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.

 

Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender's interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's interest.

 

Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense.

 

Environmental Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			
			(Continued)

			

			
			Page 5

			

			

 

Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.

 

Additional Indebtedness. No additional indebtedness (except purchase money) without prior bank approval.

 

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity.

 

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender:

 

Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts, except to Lender.

 

Continuity of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower's stock, or purchase or retire any of Borrower's outstanding shares or alter or amend Borrower's capital structure.

 

Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.

 

Agreements. Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower's obligations under this Agreement or in connection herewith.

 

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.

 

DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:

 

Payment Default. Borrower fails to make any payment when due under the Loan.

 

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

 

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents.

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			(Continued)

			
			Page 6

			

			

 

False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

 

Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 

Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.

 

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 

Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

 

Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.

 

Insecurity. Lender in good faith believes itself insecure.

 

Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender sends written notice to Borrower or Grantor, as the case may be, demanding cure of such default: (1) cure the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiate steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

 

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise its rights and remedies.

 

DEPOSIT ACCOUNT SECURITY. Borrower hereby grants a security interest to Lender in any and all deposit accounts (checking, savings, money market or time) of Borrower at Lender, now existing or hereinafter opened, to secure the Indebtedness. This includes all deposit accounts Borrower holds jointly with someone else.

 

JURY WAIVER; JUDICIAL REFERENCE. Borrower and Lender each waive their respective rights to a trial before a jury in connection with any disputes related to this Agreement, any of the Related Documents and the transactions contemplated hereby and thereby. Such disputes include without limitation any claim by Borrower or Lender, claims brought by Borrower as a class representative on behalf of others, and claims by a class representative on Borrower's behalf as a class member (so-called "class action" suits). This provision shall not apply if, at the time an action is brought, Borrower's loan is funded or maintained in a state where this jury trial waiver is not permitted by law.

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			(Continued)

			
			Page 7

			

			

 

If a jury trial waiver is not permitted by applicable law and a dispute arises between Borrower and Lender with respect to this Agreement, any of the Related Documents, the enforcement hereof or thereof or the transactions contemplated hereby or thereby, either of Borrower or Lender may require that it be resolved by judicial reference in accordance with California Code of Civil Procedure, Sections 638, et seq., including without limitation whether the dispute is subject to a judicial reference proceeding. The referee shall be a retired judge, agreed upon by the parties, from either the American Arbitration Association (AAA) or Judicial Arbitration and Mediation Service, Inc. (JAMS). If the parties cannot agree on the referee, the party who initially selected the reference procedure shall request a panel of ten retired judges from either AAA or JAMS, and the court shall select the referee from that panel. The referee shall be appointed to sit with all of the powers provided by law. The parties agree that time is of the essence in conducting the judicial reference proceeding set forth herein. The costs of the judicial reference proceeding, including the fee for the court reporter, shall be borne equally by the parties as the costs are incurred, unless otherwise awarded by the referee. The referee shall hear all pre-trial and post-trial matters (including without limitation requests for equitable relief), prepare an award with written findings of fact and conclusions of law and apportion costs as appropriate. The referee shall be empowered to enter equitable relief as well as legal relief, provide all temporary or provisional remedies, enter equitable orders that are binding on the parties and rule on any motion that would be authorized in a trial, including without limitation motions for summary judgment or summary adjudication. Judgment upon the award shall be entered in the court in which such proceeding was commenced and all parties shall have full rights of appeal. This provision will not be deemed to limit or constrain Lender's right of offset, to obtain provisional or ancillary remedies, to interplead funds in the event of a dispute, to exercise any security interest or lien Lender may hold in property or to comply with legal process involving Borrower's accounts or other property.

 

INCREASED COSTS. If any change in a law, rule or regulation, or the interpretation or application thereof, or Lender's compliance with any request, guideline or directive (whether or not having the force of law) of any governmental authority (collectively, a "Change in Law") shall (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against or with respect to the assets of, deposits with or for the account of or credit extended by Lender or (ii) impose on Lender any other condition affecting this Agreement or the loans hereunder or any letter of credit or participation therein and the result of any of the foregoing shall be to increase the cost to Lender of making or maintaining any loan (or its commitment to make any such loan) or to increase the cost to Lender of issuing or maintaining any letter of credit or to reduce the amount of any sum received or receivable by Lender hereunder, then Borrower will pay to Lender such additional amount as will compensate Lender for such additional costs or reduction. If Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on the capital of Lender or Lender's holding company from this Agreement or the loans or letters of credit made or issued by Lender to a level below that which Lender or Lender's holding company could have achieved but for such Change in Law (taking into consideration Lender's policies and the policies of Lender's holding company with respect to capital adequacy), then from time to time Borrower will pay to Lender such additional amount as will compensate Lender or Lender's holding company for any such reduction, as set forth in a certificate of Lender describing in reasonable detail the amount or amounts necessary to compensate Lender or its holding company. The amounts and description in such certificate shall be conclusive absent manifest error, and Borrower agrees to pay to Lender the amount shown in such certificate within ten (10) business days after receipt thereof. Failure or delay on the part of Lender to demand compensation pursuant to this section shall not constitute a waiver of Lender's right to demand such compensation.

 

WAIVER OF DEFENSES AND RELEASE OF CLAIMS. The undersigned hereby (i) represents that neither the undersigned nor any affiliate or principal of the undersigned has any defenses to or setoffs against any Indebtedness or other obligations owing by the undersigned, or by the undersigned's affiliates or principals, to Lender or Lender's affiliates (the "Obligations"), nor any claims against Lender or Lender's affiliates for any matter whatsoever, related or unrelated to the Obligations, and (ii) releases Lender and Lender's affiliates, officers, directors, employees and agents from all claims, causes of action, and costs, in law or equity, known or unknown, whether or not matured or contingent, existing as of the date hereof that the undersigned has or may have by reason of any matter of any conceivable kind or character whatsoever, related or unrelated to the Obligations, including the subject matter of this Agreement. The foregoing release does not apply, however, to claims for future performance of express contractual obligations that mature after the date hereof that are owing to the undersigned by Lender or Lender's affiliates. As used in this paragraph, the word "undersigned" does not include Lender or any individual signing on behalf of Lender. The undersigned acknowledges that Lender has been induced to enter into or continue the Obligations by, among other things, the waivers and releases in this paragraph.

 

DOCUMENT IMAGING. Lender shall be entitled, in its sole discretion, to image or make copies of all or any selection of the agreements, instruments, documents, and items and records governing, arising from or relating to any of Borrower's loans, including, without limitation, this document and the Related Documents, and Lender may destroy or archive the paper originals. The parties hereto (i) waive any right to insist or require that Lender produce paper originals, (ii) agree that such images shall be accorded the same force and effect as the paper originals, (iii) agree that Lender is entitled to use such images in lieu of destroyed or archived originals for any purpose, including as admissible evidence in any demand, presentment or other proceedings, and (iv) further agree that any executed facsimile (faxed), scanned, or other imaged copy of this document or any Related Document shall be deemed to be of the same force and effect as the original manually executed document.

 

NOTICE OF FINAL AGREEMENT. BY SIGNING THIS DOCUMENT THE UNDERSIGNED REPRESENTS AND AGREES THAT; (A) THIS AND THE RELATED DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, (C) THIS DOCUMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

 

PLEDGES. Lender shall at all times have the right to grant security interests in, to pledge and/or to hypothecate all or any portion of its interest in the Loan, including without limitation as collateral in connection with discount window advances, extensions of daylight credit or master account activity, or other programs of the Federal Reserve System or any Federal Reserve Bank.

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			(Continued)

			
			Page 8

			

			

 

PROHIBITED DRUG LAW ACTIVITIES. Notwithstanding any other provision herein or in the Note or any Related Document regarding the use, occupancy or leasing of all or any portion of real property owned, occupied or used by Borrower (collectively, the "Premises") and without limiting the generality of any of the negative covenants of Borrower herein, Borrower shall not use or occupy, or permit the use or occupancy of, the Premises (or any portion thereof), or enter into any lease, license, sublease, occupancy agreement or other agreement (collectively, "Lease") involving or providing for the use or occupancy of the Premises (or any portion thereof), in any manner that would be a violation of any federal, state or local law relating to the use, sale, possession, cultivation or distribution of any controlled substances, including without limitation any activity (whether for commercial or personal purposes) regulated under the Compassionate Use Act of 1996 or any other California law relating to the medicinal use or distribution of marijuana (collectively, "Prohibited Drug Law Activities") or entering into a Lease with any Person engaged or intending to engage in any Prohibited Drug Law Activities.

 

Any Lease involving or providing for the use or occupancy of the Premises entered into by Borrower during the term of the Loan shall expressly prohibit the tenant or other occupant of the Premises (or any portion thereof) from engaging or permitting others to engage in any Prohibited Drug Law Activities. In the event that Borrower becomes aware that any tenant, occupant or other Person is or may be using, occupying or leasing the Premises (or any portion thereof) with the intent to engage or is engaged in any Prohibited Drug Law Activities, Borrower shall terminate its agreement with such tenant, occupant or other Person and take all actions permitted under applicable law to discontinue such activities in or on the Premises and shall immediately notify Lender regarding the Prohibited Drug Law Activities and Borrower's actions to terminate such agreement and the Prohibited Drug Law Activities. Borrower shall keep Lender advised of each action it takes or plans to take in compliance with the requirements of this section.

 

Compliance with this section is a material consideration and inducement to Lender in its agreement to extend the Loan and other financial accommodations to Borrower hereunder. Any failure of Borrower to comply with the requirements under this section shall constitute a non-curable Event of Default upon written notice by Lender to Borrower thereof and, notwithstanding any provision herein or in the Note or the Related Documents with respect to the right to cure an Event of Default, upon the occurrence of any breach, default or non-compliance of or under this section, Lender shall have the right to immediately exercise any and all remedies to which it may be entitled hereunder, under the Note or any of the Related Documents or otherwise under law.

 

In addition and not by way of limitation, Borrower hereby agrees to indemnify, defend and hold Lender harmless from and against any loss, claim, damage or liability arising from or related to Borrower's breach or violation of the covenants set forth herein. Borrower shall, within ten (10) business days following a request from Lender, provide Lender with a written statement setting forth its efforts to comply with the provisions of this section and stating whether, to Borrower's knowledge, any Prohibited Drug Law Activities are or may be on-going or have occurred in, on or around the Premises.

 

For purposes of this section, the capitalized term "Person" means any natural person, corporation, division of a corporation, limited liability company, partnership, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof.

 

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:

 

Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender's attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court.

 

Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.

 

Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			(Continued)

			
			Page 9

			

			

 

Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of California without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of California.

 

Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Orange County, State of California.

 

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lenders rights or of any of Borrowers or any Grantors obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

 

Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.

 

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.

 

Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.

 

Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender.

 

Survival of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.

 

Time is of the Essence. Time is of the essence in the performance of this Agreement.

 

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			(Continued)

			
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Advance. The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on a line of credit or multiple advance basis under the terms and conditions of this Agreement.

 

Agreement. The word "Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.

 

Borrower. The word "Borrower" means Collectors Universe, Inc. and includes all co-signers and co-makers signing the Note and all their successors and assigns.

 

Collateral. The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise.

 

Environmental Laws. The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety Code, Section 25100, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.

 

Event of Default. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement.

 

GAAP. The word "GAAP" means generally accepted accounting principles.

 

Grantor. The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.

 

Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan.

 

Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.

 

Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.

 

Indebtedness. The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.

 

Lender. The word "Lender" means ZB, N.A. dba California Bank & Trust, its successors and assigns.

 

Loan. The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.

 

Note. The word "Note" means the Promissory Note executed by Borrower in the original principal amount of $10,000,000.00 dated January 10, 2016, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the Note or Credit Agreement or any other subsequent Notes evidencing further Indebtedness.

 

Permitted Liens. The words "Permitted Liens" mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness outstanding on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled "Indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower's assets.

 

 

 

 

	
			BUSINESS LOAN AGREEMENT

			(Continued)

			
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Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.

 

Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.

 

Security Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.

 

 

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED SEPTEMBER 15, 2017.

 

BORROWER:

 

COLLECTORS UNIVERSE, INC.

  

	
			By:

				/s/ JOSEPH WALLACE	 
	 	Joseph Wallace, CFO/Assistant Secretary of Collectors Universe, Inc.	 

 

LENDER:

 

ZB, N.A. DBA CALIFORNIA BANK & TRUST

 

	
			By:

				/s/ MATT BULLOCK	 
	 	Senior Vice President, Authorized Signer	 

 

	
			*

				
			The parties hereto have entered into that certain Addendum to Business Loan Agreement (“Addendum”) dated of even date herewith, which modifies certain terms and provisions of this Business Loan Agreement. In the event of a conflict between any provision of the Business Loan Agreement and any provisions of the Addendum, the provisions of the Addendum shall control and supersede the conflicting provisions of this Business Loan Agreement.

			

 

 

	
			COLLECTORS UNIVERSE, INC.

				 	ZB, N.A. dba CALIFORNIA BANK & TRUST	 
	 	 	 	 	 	 
	
			By:

				/s/ JOSEPH WALLACE	 	By:	/s/ MATT BULLOCK	 
	 	Joseph Wallace, CFO of Collectors Universe, Inc.	 	 	Senior Vice President, Authorized Signer	 

 

 

 

 

ADDENDUM TO BUSINESS LOAN AGREEMENT

 

This Addendum to Business Loan Agreement (“Addendum”) is dated as of September 15, 2017 by and between Collectors Universe, Inc., a Delaware corporation ("Borrower"), and ZB, N.A., dba California Bank & Trust ("Lender"), with reference to the following: 

 

A.     Concurrently herewith, Borrower and Lender (who shall sometimes be referred to herein, collectively, as the "parties"), are entering into a Business Loan Agreement dated as of September 15, 2017 (the "Loan Agreement"), pursuant to which Lender is providing Borrower with a $3.5 million unsecured term loan (the "Term Loan"); and

 

B.     That Loan Agreement is Lender's standard form of business loan agreement and does not reflect or incorporate all of, and in certain respects conflicts with, the understandings and agreements of the parties that will govern the Term Loan and the respective rights and obligations of the parties with respect thereto; and

 

C.     Accordingly, the parties are hereby entering this Addendum to modify the Loan Agreement in various respects, as set forth hereinafter, to reflect the intentions and all of the agreements of the parties with respect to the Term Loan, and the respective rights and obligations of the parties, under the Loan Agreement.

 

NOW, THEREFORE, with the intent to be legally bound and for good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the parties expressly agree as follows:

 

A.     Addendum Controls. This Addendum is hereby made an integral part of and amends and modifies the Business Loan Agreement in the manner and to the extent set forth hereinafter. In the event of any conflict between any provisions of the Business Loan Agreement and any provisions of this Addendum, the provisions of this Addendum shall control and supersede the conflicting provisions of the Loan Agreement.

 

B.     Amendments and Modifications to Loan Agreement. The provisions of the Loan Agreement are hereby modified and amended in the manner and to the extent set forth below.

 

1.     The second sentence in the first paragraph of the Loan Agreement is hereby replaced with the following:

 

“Borrower has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule to this Agreement.”

 

2.     The following paragraph is hereby added as the second paragraph on page 1 of the Loan Agreement immediately preceding the paragraph entitled "TERM":

 

“The amount of borrowings for Borrower hereunder on a non-revolving term loan is $3,500,000.00 (the "Total Commitment").

 

3.     The following paragraph is hereby added as the fourth paragraph on page 1 of the Loan Agreement immediately following the paragraph entitled "TERM" and immediately preceding the paragraph entitled "ADVANCE AUTHORITY":

 

“Notwithstanding the foregoing or anything to the contrary that may be contained in this Agreement or in the Related Documents, Borrower shall have the right, in its sole discretion, to unilaterally terminate this Agreement and its obligations hereunder and under the Related Documents at any time prior to maturity, without penalty, upon prior written notice to Lender and Borrower's payment in full of all amounts owing by Borrower to Lender under this Agreement and the Related Documents.”

 

4.     Under the heading "CONDITIONS PRECEDENT TO EACH ADVANCE", the section entitled "Loan Documents" on page 1 of the Agreement is amended to read in its entirety as follows:

 

“Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) together with all such Related Documents as Lender may reasonably require for the Loan; all in form and substance reasonably satisfactory to Lender and Lender's counsel.”

 

5.     Under the heading "CONDITIONS PRECEDENT TO EACH ADVANCE", the section entitled "Borrower's Authorization" on page 1 of the Agreement, the word "reasonably" is hereby inserted (i) on the first line, between the words "substance" and "satisfactory" and (ii) on the last line, between the words "may" and "require.

 

 

 

 

6.     Under the heading "CONDITIONS PRECEDENT TO EACH ADVANCE", in the section entitled "Representations and Warranties" on page 1 of the Agreement, the words "in all material respects" are hereby inserted at the end of the sentence.

 

7.     The second, third, fourth and fifth sentences of the section entitled "Organization" under the heading "REPRESENTATIONS AND WARRANTIES" on page 1 of the Loan Agreement are hereby amended to read in their entirety as follows:

 

“Borrower is duly authorized to transact business in all other states in which it is doing business for which it is required by the laws of such states to be so authorized, and at all times shall be duly qualified as a foreign corporation in all such states, except where the failure to be so authorized or to be so qualified would not have a material adverse effect on Borrower's business or financial condition. Borrower has the full corporate power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower currently maintains an office at 1921 E. Alton Avenue, Santa Ana, CA 92705-5836. Unless Borrower has designated or designates otherwise in writing, the principal office is the office in which Borrower keeps its books and records.”

 

8.     The phrase “except for any instances of non-compliance that would not have, either individually or in the aggregate, a material adverse effect on the financial condition or business operations of Borrower” is hereby added to the end of the final sentence of the section entitled "Organization" under the heading "REPRESENTATIONS AND WARRANTIES" on page 1 of the Loan Agreement.

 

9.     Under the heading "REPRESENTATIONS AND WARRANTIES" in the section entitled "Assumed Business Names", the third line in the chart of Assumed Business Names containing the name "Professional Stamp Experts" is hereby deleted in its entirety.

 

10.     The words "truly and completely disclosed" are hereby replaced with the words "fairly present in all material respects" in the first sentence of the section entitled "Financial Information" under the heading "REPRESENTATIONS AND WARRANTIES" on page 2 of the Loan Agreement.

 

11.     The word "give" is replaced with the words "execute and deliver" in the first sentence of the section entitled "Legal Effect" under the heading "REPRESENTATIONS AND WARRANTIES" on page 2 of the Loan Agreement.

 

12.     Under the heading "REPRESENTATIONS AND WARRANTIES", the paragraph entitled "Properties" on page 2 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

“Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable and except for or in connection with other Permitted Liens: (i) Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties, (ii) all of Borrower's properties are titled in Borrower's legal name, and (iii) Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.”

 

13.     Under the heading "REPRESENTATIONS AND WARRANTIES", the paragraph entitled "Hazardous Substances" on page 2 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

“Hazardous Substances. Except as disclosed to Lender in writing, Borrower represents and warrants that to Borrower's knowledge: (1) during Borrower's occupancy of each of the offices it leases and occupies (the "Business Offices"), there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substances by any person on, under, about or from the Business Offices; (2) there has not been, (a) any breach or violation by Borrower of any Environmental Laws; or (b) any actual, or to Borrower's knowledge threatened, litigation or claims of any kind by any person relating to any of the foregoing environmental matters; (3) neither Borrower, nor any tenant, contractor, agent of Borrower or any other authorized user of the Business Offices, shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substances on, under, about or from the Business Offices; and (4) any such activity shall be conducted in compliance with all applicable federal, state and local laws, regulations, and ordinances, including without limitation all Environmental Laws, except where non-compliance would not have, either individually or in the aggregate, a material adverse effect on the financial condition or operations of Borrower. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup, or other costs under any such laws, and (2) agrees to indemnify, defend and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release by Borrower, or any tenant, contractor or agent of Borrower, of a hazardous waste or substance on the Business Offices. The provisions of this section of the Agreement including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration, or satisfaction of this Agreement.”

 

2

 

 

14.     The Section, entitled "Lien Priority" under the heading "REPRESENTATIONS AND WARRANTIES" on page 2 of the Loan Agreement is deleted in its entirety from the Loan Agreement.

 

15.     Under the heading "REPRESENTATIONS AND WARRANTIES", the paragraph entitled "Binding Effect" on page 2 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

“Binding Effect. This Agreement, the Note, and all Related Documents are binding upon Borrower as well as upon its successors and assigns and are legally enforceable in accordance with their respective terms.”

 

16.     The paragraph entitled "Financial Records", under the heading "AFFIRMATIVE COVENANTS" on page 2 of the Loan Agreement, is hereby amended to read in its entirety as follows:

 

“Financial Records. Maintain its books and records in accordance with the applicable provisions of GAAP, applied on a consistent basis.”

 

17.     Under the heading "AFFIRMATIVE COVENANTS", the paragraph entitled "Interim Financial Statement" on page 2 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Interim Financial Statement. As soon as available, but in no event later than forty five (45) days after the end of the first three (3) quarters of each of Borrower's fiscal years, Borrower's balance sheet and income statement for the quarter then ended, prepared by Borrower."

 

18.     Under the heading "AFFIRMATIVE COVENANTS", the last paragraph of the section entitled "Financial Statements" on page 2 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

“All financial statements required to be provided under this Agreement other than financial projections shall be prepared in accordance with the applicable provisions of GAAP, applied on a consistent basis, and certified by Borrower as fairly presenting, in all material respects, the financial condition and results of operations of Borrower.”

 

19.     Under the heading "AFFIRMATIVE COVENANTS", in the Section entitled "Additional Requirements", at the bottom, of page 2 of the Loan Agreement, the word "reasonably" is hereby inserted between the words "may" and "request".

 

20.     Under the heading "AFFIRMATIVE COVENANTS" in the section entitled "Financial Covenants and Ratios", the paragraph entitled "Debt Service Coverage Ratio" is hereby amended to read as follows:

 

"Debt Service Coverage Ratio. Maintain a minimum Debt Service Coverage Ratio of 1.50 to 1.00. Debt Service Coverage Ratio means, for any period, the ratio of (a) the trailing twelve (12) months of earnings before interest, income tax expense, depreciation, and amortization minus the sum of tax expense paid in cash (or, if applicable, cash distributions to equity holders to pay income tax expense attributable solely to their equity interests in Borrower), and loans or advances to, investments in, or receivables from (i) any affiliate of Borrower or (ii) any third-party if such loan, advance, investment or receivable is outside Borrower's ordinary course of business to (b) the sum of interest expense paid in cash for the trailing twelve (12) month period, prior period current maturities of long term debt and capital lease obligations, all calculated for the Borrower (and its subsidiaries on a consolidated basis). This ratio will be measured as of the end of each fiscal quarter for the trailing twelve (12) months then ended."

 

21.     Under the heading "AFFIRMATIVE COVENANTS" in the section entitled "Financial Covenants and Ratios", a paragraph entitled "Funded Debt to EBITDA Ratio" on page 3 of the Loan Agreement is hereby inserted immediately after the paragraph entitled "Debt Service Coverage Ratio" to read as follows:

 

3

 

 

"Funded Debt to EBITDA Ratio. Maintain a maximum Funded Debt to EBITDA Ratio of 1.25 to 1.00. The term "Funded Debt to EBITDA Ratio" means Borrower's outstanding indebtedness for borrowed money divided by consolidated earnings before interest, taxes, depreciation, non-cash stock based compensation and amortization, for the immediately preceding 12 months. This requirement will be evaluated quarterly following completion and delivery by Borrower to Lender of each quarter's financial statements, in accordance with the requirements set forth herein. "For purposes of this covenant, the term Funded Debt as used herein shall not include any operating lease (classified as such under GAAP as in effect on the date hereof) for the Borrower's operations or corporate headquarters."

 

22.     The last paragraph of the Section entitled "Financial Covenants and Ratios", on page 3 of the Loan Agreement under the heading "AFFIRMATIVE COVENANTS" is amended to read in its entirety as follows:

 

“Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be made in accordance with the applicable provisions of GAAP, applied on a consistent basis, and shall be certified by Borrower as true and correct in all material respects.”

 

23.     Under the heading "AFFIRMATIVE COVENANTS", the paragraph entitled "Insurance" on page 3 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

“Insurance. Maintain fire and other risk insurance, public liability insurance and such other insurance as Lender may reasonably require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies reasonably acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form reasonably satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender.”

 

24.     The second and third sentences in the paragraph entitled "Insurance Reports" on page 3 of the Loan Agreement under the heading "AFFIRMATIVE COVENANTS" are hereby deleted.

 

25.     Under the heading "AFFIRMATIVE COVENANTS", the paragraph entitled "Other Agreements" on page 3 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party that are material to Borrower's financial condition or operations, except for any instances of non-compliance that have not had and are not reasonably expected to have, either individually or in the aggregate, a material adverse effect on Borrower's financial condition."

 

26.     Under the heading "AFFIRMATIVE COVENANTS", the paragraph entitled "Unused Commitment Fee" is hereby deleted in its entirety.

 

27.     In the paragraph entitled "Loan Proceeds" under the heading "AFFIRMATIVE COVENANTS" on page 3 of the Loan Agreement, the phrase "and other general corporate purposes" is hereby added after the word "operations" and before the word "unless".

 

28.     Under the heading "AFFIRMATIVE COVENANTS", the paragraph entitled "Operations" on page 3 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Operations. Employ executive officers with substantially similar qualifications and experience as the present executive officers; provide written notice to Lender of any change in Borrower's executive officers; conduct its business in a reasonable and prudent manner."

 

29.     The words "Lender or" are hereby deleted from the paragraph entitled "Environmental Studies" under the heading "AFFIRMATIVE COVENANTS".

 

30.     Under the heading "AFFIRMATIVE COVENANTS", the paragraph entitled "Compliance with Governmental Requirements" on page 3 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

“Compliance with Governmental Requirements. Comply in all material respects with all laws, ordinances and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower's properties, business and operations. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so.”

 

4

 

 

31.     Under the heading "AFFIRMATIVE COVENANTS", the paragraph entitled "Inspection" on page 3 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Inspection. Permit employees or agent of Lender, at any reasonable time on not less than ten (10) days prior written notice to Borrower, to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts and records, except that (1) Borrower shall be required to reimburse Lender for the reasonable out-of-pocket expenses it incurs only for one such inspection or audit each year and Lender shall bear the expenses of any additional inspections or audits in each year, and (2) notwithstanding the foregoing, during the occurrence of an Event of Default and continuance thereof, such examinations and audits may be made without notice as Lender deems appropriate, at the sole expense of Borrower."

 

32.     Under the heading "AFFIRMATIVE COVENANTS", the first two clauses of the paragraph entitled "Environmental Compliance and Reports" on page 3 of the Loan Agreement are hereby amended to read in their entirety as follows:

 

“Borrower shall comply in all material respects with any and all Environmental Laws applicable to it and its operations, except for instances of non-compliance that would not have a material adverse effect on Borrower's financial condition or operations; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part, at or on the Business Offices while occupied by Borrower or by any tenant or agent thereof, any environmental activity where damage to the environment could reasonably be expected to result therefrom, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities;”

 

33.     Under the heading "AFFIRMATIVE COVENANTS", the paragraph entitled "Additional Assurances" on page 3 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Additional Assurances. Make, execute and deliver to Lender such promissory notes, and other documents and agreements as Lender or its attorney may reasonably request to evidence the Loans made hereunder to Borrower."

 

34.     Under the heading "AFFIRMATIVE COVENANTS", the paragraph entitled "Additional Indebtedness" on the top of page 4 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

“Additional Indebtedness. Without the prior written approval of Lender, Borrower shall not incur any additional indebtedness for borrowed money, except for indebtedness under the revolving credit line established under that certain Business Loan Agreement dated as of January 10, 2017 between Borrower and Lender; purchase money indebtedness; indebtedness under capitalized leases; and indebtedness secured by Permitted Liens; and any extensions, refinancings, refundings or renewals of any of the foregoing.”

 

35.     The first sentence of the section entitled "LENDER'S EXPENDITURES" on page 4 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

“If any action or proceeding is commenced that would materially and adversely affect the Borrower or Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower's behalf may (but shall not be obligated to) take any curative action that Lender reasonably deems appropriate.”

 

36.     Under the heading "NEGATIVE COVENANTS", the paragraph entitled "Continuity of Operations" on page 4 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"(1) Engage in any business activities substantially different than those in which Borrower is presently engaged, or (2) cease operations, liquidate, dissolve, or transfer or sell all or substantially all of Borrower's assets out of the ordinary course of business, or consummate a merger or consolidation with another corporation or entity if the persons who were Borrower's shareholders immediately prior to the consummation of the merger or consolidation own, immediately after such consummation, less than a majority of the outstanding voting stock of the Borrower or the surviving corporation or entity in such merger or consolidation if that is other than the Borrower."

 

5

 

 

37.     Under the heading "NEGATIVE COVENANTS", the section entitled "Loans, Acquisitions and Guaranties" on page 4 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Loans and Guaranties. (1) Loan, invest in or advance money or assets to any other person, enterprise or entity other than in connection with or in furtherance of Borrower's business, or (2) incur any obligation as surety or guarantor other than in the ordinary course of Borrower's business."

 

38.     In the paragraph entitled "CESSATION OF ADVANCES" on page 4 of the Loan Agreement, all references to any “Guarantor” are hereby stricken in their entirety, clauses (D) and (E) are hereby deleted in its entirety and clause (C) of that paragraph is amended to read in its entirety as follows:

 

“or (C) there occurs a material adverse change in Borrower's financial condition.”

 

39.     Under the heading "DEFAULT", the paragraph entitled "Default in Favor of Third Parties" on page 4 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Default in Favor of Third Parties. Borrower defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement to which Borrower is a party, in favor of any other creditor or other party thereto, that would materially and adversely affect Borrower's ability to repay the Loans or perform its obligations under this Agreement or any of the Related Documents."

 

40.     The section entitled "False Statements" under the heading "DEFAULT" on page 4 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"False Statements. Any warranty, representation or statement made or furnished to Lender in writing by Borrower or on Borrower's behalf under either this Agreement or any of the Related Documents was false or misleading in any material respect when made, or becomes false or misleading in any material respect at any time thereafter."

 

41.     Under the heading "DEFAULT", the first sentence of the paragraph entitled "Creditor or Forfeiture Proceedings" on page 4 of the Loan Agreement is hereby amended to read as follows:

 

"Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceedings, self-help repossession or any other method, by any creditor of Borrower or by any governmental agency against a material portion of Borrower's assets."

 

42.     Under the heading "DEFAULT", the second sentence of the paragraph entitled "Creditor or Forfeiture Proceedings" on page 4 of the Loan Agreement is hereby deleted in its entirety.

 

43.     The sections entitled "Defective Collateralization" and "Events Affecting Guarantor" are hereby deleted in their entirety from the Section of the Business Loan Agreement entitled "DEFAULT" on page 4 thereof.

 

44.     The word "material" is hereby added between the words “any” and “part” in the section entitled "Insolvency" under the heading entitled "DEFAULT" on page 4 of the Loan Agreement.

 

45.     Under the heading "DEFAULT", the paragraph entitled "Change in Ownership" on page 4 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Change in Ownership. Any change in ownership of forty-nine percent (49%) or more of the common stock of Borrower, except as a result of sales of shares of common stock in SEC-registered offerings."

 

46.     Under the heading "DEFAULT", the paragraph entitled "Adverse Change" on page 4 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Adverse Change. A material adverse change occurs in Borrower's financial condition."

 

47.     The sentence entitled "Insecurity", under the heading "DEFAULT" on page 4 of the Business Loan Agreement, is deleted in its entirety.

 

6

 

 

48.     Under the heading "DEFAULT", the paragraph entitled "Right to Cure" on the top of page 5 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Right to Cure. If any default, other than a payment default on Indebtedness, is curable, it may be cured if, after Lender sends written notice to Borrower demanding cure of such default, Borrower: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's reasonable discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical."

 

49.     The paragraph entitled "DEPOSIT ACCOUNT SECURITY" on page 5 of the Loan Agreement is hereby deleted in its entirety.

 

50.     In the Section entitled "WAIVER OF DEFENSES AND RELEASE OF CLAIMS" on page 5 of the Loan Agreement, except in the penultimate sentence thereof, the term "undersigned", wherever it appears, shall mean "the Borrower".

 

51.     Under the heading "PROHIBITED DRUG LAW ACTIVITIES" on page 6 of the Loan Agreement the second paragraph is hereby amended in its entirety to read as follows:

 

"Any lease entered into by Borrower providing for the use or occupancy of premises in which Borrower is landlord during the term of the Loan shall expressly prohibit the tenant under such lease or other occupant of such premises (or any portion thereof) from engaging or permitting others to engage in any Prohibited Drug Law Activities."

 

52.     The paragraph entitled "Subsidiaries and Affiliates of Borrower" under the heading "MISCELLANEOUS PROVISIONS" on page 7 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Subsidiaries of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's majority or wholly-owned subsidiaries. Notwithstanding the foregoing, however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates."

 

53.     The phrase "in all material respects" is hereby inserted on page 7 of the Loan Agreement in the section entitled "Survival of Representations and Warranties" under the heading "MISCELLANEOUS," (1) between the word "Borrower" and the phrase "at the time each Loan Advance is made," and (2) between the word "effect" and the phrase "until such time as Borrower's Indebtedness shall be paid in full,".

 

54.     The following paragraph is hereby added as the last paragraph under the heading entitled "MISCELLANEOUS PROVISIONS" on page 7 of the Loan Agreement:

 

"No Collateral. Notwithstanding anything to the contrary set forth herein or in the Related Documents, it is expressly acknowledged and agreed by the parties that (1) the Loan is and shall be unsecured and uncollateralized, (2) Borrower is not granting any security interest in or any other lien or encumbrance on, or any other rights or interests in or to, any of its assets or properties to Lender for the purpose of securing Borrower's obligations under this Loan Agreement or the Related Documents, and (3) any provisions in this Loan Agreement or any of the Related Documents relating to "Collateral" or imposing any obligations on Borrower with respect to Collateral, and any representations or warranties in this Loan Agreement or any of the Related Documents with respect to Collateral, are hereby stricken in their entirety from the Loan Agreement and such Related Documents will have no force or effect whatsoever."

 

55.     The definition of the term "Grantor" is hereby deleted from the Section entitled "DEFINITIONS" on page 7 of the Loan Agreement.

 

56.     The definition of the term "Note under the heading "MISCELLANEOUS PROVISIONS" on page 8 of the Loan Agreement is hereby amended to read in its entirety as follows:

 

"Note. The word "Note" means the Promissory Note executed by Borrower in the original principal amount of $3,500,000.00 dated September 12, 2017, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the Note or Credit Agreement or any other subsequent Notes evidencing further Indebtedness."

 

7

 

 

57.     The following sentence is hereby added to the end of the definition of the words "Permitted Liens" under the heading entitled "DEFINITIONS" on page 8 of the Loan Agreement:

 

"For purposes of this Agreement, including this paragraph, purchase money liens and purchase money security interests shall include liens and security interests on equipment or other property which Borrower possesses under capitalized or operating leases, whether in existence on the date hereof or entered into by Borrower at any time hereafter."

 

[Signature page to follow.]

 

8

 

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Addendum to Business Loan Agreement as of the date first set forth above.

 

 

	
			BORROWER:

				
			 

			
	 	 
	
			COLLECTORS UNIVERSE, INC.,

			a Delaware corporation

				 
	
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

			
	
			By: 

				
			/s/ JOSEPH WALLACE

				
			 

			
	
			Name: Joseph Wallace

			Its: CFO/Assistant Secretary

				
			 

			

 

 

LENDER:

 

Z.B. N.A. dba California Bank & Trust

 

 

	
			By:

				/s/ MATT BULLOCK	 
	
			Name:

				Matt Bullock	 
	
			Its:

				Senior Vice President	 

    

9

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