Document:

mtem-ex1023_576.htm

 

Exhibit 10.23

MOLECULAR TEMPLATES, INC.

2009 STOCK PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the 2009 Stock Plan (the “Plan”) shall have the same defined meanings in this Stock Option Agreement (the “Option Agreement”).

	
I.
	
NOTICE OF STOCK OPTION GRANT

Name:  

Address:

	
 
	

	
 

The undersigned Participant has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

	
Date of Grant:
	
___________________________

	
Vesting Commencement Date:
	
___________________________

	
Exercise Price per Share:
	
$__________________________

	
Total Number of Shares Granted
	
___________________________

	
Total Exercise Price:
	
$__________________________

	
Type of Option:
	
___________ Incentive Stock Option

	

	
___________ Nonstatutory Stock Option

	
Term/Expiration Date:
	
Tenth Anniversary of Date of Grant

Vesting Schedule:

This Option shall be exercisable, in whole or in part, according to the following vesting schedule:

1

 

Termination Period:

This Option shall be exercisable for three (3) months after Participant ceases to be a Service Provider, unless such termination is due to Participant’s death or Disability, in which case this Option shall be exercisable for twelve (12) months after Participant ceases to be a Service Provider.  Notwithstanding the foregoing sentence, in no event may this Option be exercised after the Term/Expiration Date as provided above and this Option may be subject to earlier termination as provided in the Plan.

	
II.
	
AGREEMENT

1.Grant of Option.  The Administrator of the Company hereby grants to the Participant named in the Notice of Stock Option Grant in Part I of this Agreement (“Participant”), an option (the “Option”) to purchase the number of Shares set forth in the Notice of Stock Option Grant, at the exercise price per Share set forth in the Notice of Stock Option Grant (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference.  Subject to Section 19(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail.

If designated in the Notice of Stock Option Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.  Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option (“NSO”).  Further, if for any reason this Option (or portion thereof) shall not qualify as an ISO, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a NSO granted under the Plan.  In no event shall the Administrator, the Company or any Parent or Subsidiary or any of their respective employees or directors have any liability to Participant (or any other person) due to the failure of the Option to qualify for any reason as an ISO.

2.Exercise of Option.

(a)Right to Exercise.  This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Stock Option Grant and with the applicable provisions of the Plan and this Option Agreement.

(b)Method of Exercise.  This Option shall be exercisable by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) or in a manner and pursuant to such procedures as the Administrator may determine, which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company.  The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares, together with any applicable tax withholding.  This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price, together with any applicable tax withholding.

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise comply with Applicable Laws.  Assuming such compliance, for 

2

 

income tax purposes the Shares shall be considered transferred to Participant on the date on which the Option is exercised with respect to such Shares.

3.Method of Payment.  Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Participant:

(a)cash;

(b)check;

(c)consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

(d)surrender of other Shares which (i) shall be valued at its Fair Market Value on the date of exercise, and (ii) must be owned free and clear of any liens, claims, encumbrances or security interests, if accepting such Shares, in the sole discretion of the Administrator, shall not result in any adverse accounting consequences to the Company.

4.Restrictions on Exercise.  This Option may not be exercised until such time as the Plan has been approved by the stockholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Law.

5.Non-Transferability of Option.  This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Participant only by Participant.  The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of Participant.

6.Term of Option.  This Option may be exercised only within the term set out in the Notice of Stock Option Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option.

7.Tax Obligations.

(a)Tax Withholding.  Participant agrees to make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining Participant) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise.  Participant acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time of exercise.

(b)Notice of Disqualifying Disposition of ISO Shares.  If the Option granted to Participant herein is an ISO, and if Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Date of Grant, or (ii) the date one (1) year after the date of exercise, Participant shall immediately notify the Company in writing of such disposition.  Participant agrees that Participant may be subject to income tax withholding by the Company on the compensation income recognized by Participant.

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8.Entire Agreement; Governing Law.  The Plan is incorporated herein by reference.  The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant.  This Agreement is governed by the internal substantive laws but not the choice of law rules of Texas.

9.No Guarantee of Continued Service.  PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER.  PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

Participant acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof.  Participant has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option.  Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option.  Participant further agrees to notify the Company upon any change in the residence address indicated below. 

4

 

 

			
	
PARTICIPANT
	
 
	
MOLECULAR TEMPLATES, INC.

	
 

Signature
	
 
	
 

By

	
 
	
 
	
 

	
 

Print Name
	
 
	
 

Print Name

	
 
	
 
	
 

	
 

Title
	
 
	
 

Title

	
 
	
 
	
 

	
 

Residence Address
	
 
	
 

 

MOLECULAR TEMPLATES, INC.

SIGNATURE PAGE TO STOCK OPTION AGREEMENT

 

5

 

Exhibit A

 

 

NOTICE OF EXERCISE OF STOCK OPTION

 

 

To:MOLECULAR TEMPLATES, INC.

 

IMPORTANT NOTICE:  This form of Notice of Exercise may only be used at such time as the Company has filed a Registration Statement with the Securities and Exchange Commission under which the issuance of the Shares for which this exercise is being made is registered and such Registration Statement remains effective.

 

 

Ladies and Gentlemen:

 

I hereby exercise my Stock Option to purchase _________ shares (the “Shares”) of the common stock, $.001 par value, of Molecular Templates, Inc.(the “Company”), at the exercise price of $________ per share, pursuant to and subject to the terms of that Stock Option Agreement dated _______________, 201_.

 

I understand the nature of the investment I am making and the financial risks thereof.  I am aware that it is my responsibility to have consulted with competent tax and legal advisors about the relevant national, state and local income tax and securities laws affecting the exercise of the Option and the purchase and subsequent sale of the Shares.

 

I am paying the option exercise price for the Shares as follows:

 

 

 

 

Please issue the Shares (check one):

 

☐ to me; or 

 

☐ to me and ____________________________, as joint tenants with right of survivorship,

 

at the following address:

 

	
	
 

	
 

	
 

 

6

 

My mailing address for stockholder communications, if different from the address listed above, is:

 

	
	
 

	
 

	
 

 

 

Very truly yours,

 

 

 

Participant (signature)

 

 

 

Print Name

 

 

 

Date

 

 
 

 

 
 
7Blueprint

 

 

Exhibit 10.43

  

LOAN
AND SECURITY AGREEMENT

("Agreement")

 

 

THIS LOAN AND SECURITY AGREEMENT AMENDS AND RESTATES HAT CERTAIN
FACTORING AGREEMENT DATED FEBRUARY 12, 2010, AS AMENDED FROM TIME
TO TIME, BETWEEN RESTMARK BANK, A MICHIGAN BANKING CORPORATION
("CRESTMARK") AND CLR ROASTERS, LLC, A FLORIDA LIMITED LIABILITY
COMPANY ("BORROWER") AND ALL LIENS AND SECURITY INTERESTS GRANTED
TO CRESTMARK BY BORROWER SHALL CONTINUE IN FULL FORCE AND EFFECT
WITHOUT ANY INTERRUPTION.

 

This Agreement dated 11-16, 2017, is an agreement
between CRESTMARK
BANK,
a Michigan banking corporation
("Crestmark"), and CLR ROASTERS,
LLC,
a Florida limited liability company
("Borrower"). In this Agreement, Crestmark and Borrower are
collectively the "Parties". Any person who guarantees the
obligations of Borrower (each a "Guarantor") is required to sign
this Agreement. The Parties have the addresses shown on the
schedule ("Schedule") which is attached to this Agreement and is a
part of this Agreement. These are the addresses of the Parties for
all purposes and may be changed by one party giving notice to the
other party in writing of the new address.

 

1. 
PURPOSE. The purpose of this Agreement, including the
Schedule, is to set forth the terms and conditions of the loan from
Crestmark to Borrower ("Loan") and the obligations of Borrower. The
Schedule is part of this Agreement. The promissory note ("Note") to
be signed by Borrower, any guaranty(s), and any other documents now
or hereafter signed by any of the Parties in connection with this
Agreement, the Loan or any document issued by Crestmark or the bank
holding the lockbox ("Lockbox Bank"), including subordination
agreements or intercreditor agreements, are also all part of this
Agreement. All of the documents together are referred to
collectively as the "Loan Documents".

 

2.            

LOAN; LOAN ADVANCES.

 

A.
Any disbursement of money or advance of credit y Crestmark,
including but not limited to amounts advanced for the payment of
interest, fees, expenses and amounts necessary to protect, maintain
and preserve Crestmark's Collateral under the Loan Documents
("Protective Disbursements"), is referred to collectively as an
"Advance". Whether Crestmark makes an Advance is in Crestmark's
sole discretion. If an Advance is made, it will be made in
accordance with the advance formula set forth in the Schedule
("Advance Formula"); but not at any time to exceed the maximum
amount set forth on the Schedule ("Maximum Amount"). Crestmark may
choose to make Protective Disbursements in excess of the Maximum
Amount or Advance Formula in its sole discretion. Each time
Crestmark makes an Advance, including a Protective Disbursement,
the Advance will be debited against an account in Borrower's name
on Crestmark's books ("Loan Account"), and each payment will be
credited against the Loan Account in the manner described in this
Agreement.

 

B.
The total amount Borrower owes to Crestmark will be the aggregate
of the Advances made by Crestmark, the expenses and fees set forth
in the Schedule and any and all costs incurred by Crestmark
(including reasonable attorney's fees), and interest at the rate
set forth in the Note on all amounts advanced (together with all
other obligations of Borrower under the Loan Documents, the
"Obligations" or "Indebtedness").

 

-1-

 

 

C.
Borrower must repay all Advances with respect to the Loan with
interest, which is due monthly as specified in the Note, along with
all other fees and expenses of Crestmark set forth herein or in the
Schedule. Crestmark may in its sole discretion collect any
Obligations due Crestmark by (i) directly applying any funds in the
Lockbox Account, as defined in paragraph 5 below, to the
Obligations (ii) directly applying funds from any reserve to the
Obligations, (iii) collecting the Obligations directly from
Borrower; or (iv) otherwise collecting the Obligations. Borrower
understands that all the Obligations are repayable at any time in
full or in part upon demand by Crestmark. Crestmark may make demand
for partial payments and such demand will not preclude Crestmark
from demanding payment in full at any time.

 

D.
Borrower must comply with its representations, promises, covenants
and reporting requirements set forth in this Agreement, in the
Schedule and in the other Loan Documents. Borrower's failure to do
any of the foregoing is a default ("Default"). The demand nature of
the Obligations is not modified by reference to a Default in this
Agreement or the other Loan Documents and any reference to a
Default is for the purpose of permitting Crestmark to exercise its
remedies for Default, including charging interest at the Extra Rate
provided in the Note.

 

E.
The aggregate amount of all Advances, plus the expenses and fees
set forth in the Schedule, any and all costs incurred by Crestmark
(including reasonable attorney's fees), and interest at the rate
set forth in the Note on all amounts advanced (the "Loan Amount"),
may not, at any time, exceed the Maximum Amount or the Advance
Formula, and Borrower understands that if at any time it should owe
more to Crestmark than the lesser of the Maximum Amount or the
Advance Formula (the "Overformula") it must repay that amount
immediately, whether or not demand to repay the whole of the
Obligations has been made. Protective Disbursements must be
immediately repaid whether or not an Overformula
exists.

 

3.  RESERVES. If
Crestmark believes in its sole discretion that the prospect for
repayment of the Obligations is impaired or that its Collateral
margin is insufficient, Crestmark may establish cash reserves and
credit balances to protect its interests and the repayment of the
Obligations. The reserve may be established by reducing the Advance
Formula to achieve the target reserve level, withholding monies due
Borrower from any payments Crestmark receives, from a cash payment
from Borrower or any other method Crestmark chooses. Any money in a
reserve account, whether or not it is a cash reserve, will not earn
interest for Borrower, and Crestmark may apply the funds in the
reserve account to reduce the Obligations at any time Crestmark
elects.

 

4. 
FEES AND EXPENSES. In connection with the Loan there are several
types of fees that may be charged and Borrower may be required to
maintain a minimum Loan balance. Such fees and requirements are set
forth in the Schedule. In addition, all expenses of every kind
incurred by Crestmark in connection with the Loan, any Advance,
collection of the Obligations, inspection, and examination are to
be paid by Borrower.

 

5. LOCKBOX.
Borrower must immediately notify all persons who are obligated on
accounts ("Account Debtors") to direct all Account Debtors and any
other person or party that is liable to Borrower (collectively a
"Debtor") to remit all payments due Borrower to the lock box
address or pursuant to the wire transfer or ACH instructions set
forth in the Schedule (the "Lockbox Account"). The remit to address
on all documents related to the accounts, including invoices,
purchase orders, or contracts ("Documents") must be the Lockbox
Account. At Crestmark's request, all Documents must be marked by
Borrower to show assignment to Crestmark, and Borrower must notify
each Account Debtor by mail that the Account has been assigned to
Crestmark and that all payments on the Account, whether made by
mail or electronically or otherwise must be made payable to
Borrower or Crestmark, at Crestmark's sole discretion, to the
Lockbox Account or other address provided by Crestmark in writing.
The language used in such notices shall be approved by Crestmark in
writing. Crestmark may at any time and from time to time, and at
its sole discretion, notify any Debtor or third-party payee to make
payments payable directly to Crestmark or to notify Debtor of the
assignment to Crestmark. All expenses for notification of each
Account Debtor will be paid by Borrower.

 

 

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If
notwithstanding the notice to Debtors, Borrower receives any funds
from a Debtor, including any cash, checks, drafts or wire transfers
from the collection, enforcement, sale or other disposition of the
Collateral (defined below), whether derived in the ordinary course
of business or not, or if Borrower receives any proceeds of
insurance, tax refunds or any and all other funds of any kind,
Borrower shall hold such funds in trust for Crestmark, shall not
mix such funds received with any other funds, and shall immediately
deposit such funds in the Lockbox Account in the form received.
That means if the funds are received by mail, the Debtor checks
will be sent to the Lockbox Account uncashed, and if the funds are
received electronically, the funds will be transferred immediately
to the Lockbox Account electronically. Crestmark will have sole
possession and control over the Lockbox Account. The Lockbox Bank
will process all deposits and Borrower has no right to the Lockbox
Account, it belongs to Crestmark. Crestmark is the owner of all
deposits in the Lockbox Account, and has no duty as to collection
or protection of funds as long as it is not grossly negligent or
commits actual fraud. All expenses plus any applicable
administration and servicing fees of the Lockbox Account will be
paid by Borrower.

 

6. LOAN
ACCOUNT. All of the Obligations
which are owed by Borrower will be shown in the Loan Account and
Borrower will receive a monthly statement either by mail,
electronically or via access to the Crestmark online system at
Crestmark's sole discretion. The statement is binding on Borrower
unless Borrower provides a written objection to Crestmark that is
actually received by Crestmark within fifteen (15) business days of
the time the statement is provided or made available to
Borrower.

 

7. PAYMENTS.
Should a check or other credit
instrument not be collected after Borrower has been given credit
for such payment, then the credit will be reversed and a fee
charged at Crestmark's then standard rate. Crestmark, at its sole
discretion, may establish reserves as set forth above or not apply
a payment that it reasonably believes may be returned unpaid for
any reason or disgorged due to a preference claim or garnishment,
and in such event the Maintenance Fee (as defined in the Schedule)
will still be payable. In the event that any payment received by
Crestmark is sought to be recovered by or on behalf of the payer
(including a trustee in bankruptcy or assignee for the benefit of
creditors), then Borrower agrees to immediately reimburse Crestmark
on demand for any amount so recovered and all of Crestmark's
expenses in connection with any such proceeding, including
reasonable attorneys' fees. This provision shall survive
termination of this Agreement. Any payments received by Crestmark
shall be applied to the Obligations in whatever order Crestmark
determines in its reasonable discretion.

 

-3-

 

 

8.            

SECURITYINTEREST.

 

A. Borrower grants to Crestmark a security
interest in all of its assets, now existing or hereafter arising,
wherever located including all Accounts, Goods, Inventory,
Equipment, Chattel Paper, Instruments, Investment Property,
specifically identified Commercial Tort Claims, Documents, Deposit
Accounts, Letter of Credit Rights, General Intangibles, Contract
Rights, customer lists, furniture and fixtures, books and records
and supporting obligations for any of the foregoing, and all
Proceeds of the foregoing (the "Collateral"), to secure repayment
of the Obligations ("Security Interest"). The
Collateral also includes all monies on deposit with Crestmark, or
on deposit in the Lockbox Account. All capitalized terms used in
this Section SA., which are not otherwise defined shall have the
meanings assigned to them in the Uniform Commercial Code as adopted
in the State of Michigan the "UCC"). Without limiting the forgoing,
"Accounts" will also mean and include any and all other forms of
obligations now owed or hereafter arising or acquired by the
Borrower evidencing any obligation for payment for goods of any
kind, nature, or description sold or leased or services rendered,
and all proceeds of any of the foregoing.

 

B. Borrower gives Crestmark all of the rights of a
secured party under the UCC. Borrower grants Crestmark the
authority to file all appropriate documentation for Crestmark to
perfect its security interest in the Collateral, including a
UCC-1 financing statement listing the Collateral as "All assets of
the Debtor, now existing and hereafter arising, wherever located,"
or similar terms, as well as UCC-3 amendments as may be required
from time to time. All expenses of Crestmark relating to searching,
filing or protecting the Security Interest are part of the
Obligations.

 

C. The Security Interest gives Crestmark rights
with respect to the Collateral and the Security Interest and this
Agreement imposes duties upon Borrower which relate to the
Collateral. Some of the rights and duties are: (i) the
right of Crestmark at any time to notify any persons who may hold
any part of the Collateral, such as Account Debtors and other
debtors, of Crestmark's Security Interest. Borrower understands
that Crestmark may verify Accounts with the Account Debtors; (ii)
Borrower must cooperate with Crestmark in obtaining control of any
Collateral in the possession of third persons, particularly
Collateral consisting of deposit accounts, investment property,
letter of credit rights or other Collateral which is evidenced by
electronic entries; (iii) except for the right of Borrower to sell
its inventory in the ordinary course of business, Borrower shall
not sell or transfer any of the Collateral or grant any other
security interest in the Collateral, except as Crestmark may
specifically agree to in writing. Borrower remains liable to
perform all of its obligations with respect to the Collateral such
as the recognition of any warranties in inventory sold and
Crestmark is under no responsibility to perform any of the
obligations of Borrower; and (iv) Borrower must notify Crestmark
immediately if it knows that any Account Debtor disputes an Account
whether or not such disputes are deemed valid by
Borrower.

 

9.
POWER OF ATTORNEY. Borrower irrevocably appoints Crestmark, or any
person(s) designated by Crestmark, as its attorney-in-fact, which
appointment is coupled with an interest and shall remain in full
force and effect until all Obligations of Borrower to Crestmark
have been fully satisfied and discharged, with full power, at
Borrower's sole expense, to exercise at any time in Crestmark's
reasonable discretion all or any of the following
powers:

 

-4-

 

 

A. Receive, take, endorse, assign, deliver, accept
and deposit, in the name of Crestmark or Borrower, any and all
cash, checks, commercial paper, drafts, remittances and other
instruments and documents relating to the Collateral or the
proceeds thereof.

 

B.
Change Borrower's address on all
invoices and statements of Account mailed or to be mailed to
Borrower's customers and to substitute thereon the address
designated by Crestmark, to place legends on all invoices and
statements of Account mailed or to be mailed to Borrower's
customers, and to receive and open all mail addressed to Borrower,
or to Borrower's trade name at Crestmark's address, or any other
designated address.

 

C. Upon and after the occurrence of a Default, to
change the address for delivery of Borrower's mail to Crestmark's
or an address designated by Crestmark. Borrower specifically
authorizes Crestmark to sign any forms on behalf of Borrower to
affect this change with the United States Postal Service or any
third party and requests such change to be
accepted.

 

D.
Upon and after the occurrence of a
Default, to take or bring, in the name of Crestmark or Borrower,
all steps, actions, suits or proceedings deemed by Crestmark
necessary or desirable to effect collection of or other realization
upon any Collateral.

 

E. Execute on behalf of Borrower any UCC-1 and/or
UCC-3 Financing Statement(s) and/or any notices or other documents
necessary or desirable to carry out the purpose and intent of this
Agreement, and to do any and all things reasonably necessary and
proper to carry out the purpose and intent of this
Agreement.

 

F.
To transfer any lockboxes belonging to
Borrower to Crestmark at Crestmark's sole
discretion.

 

G.            

To
initiate ACH transfers from Borrower's depository
accounts.

 

H.
To endorse and take any action with
respect to bills of lading covering any
inventory.

 

I.
Upon and after a Default, or at any
time in the event that Borrower fails to do so within a reasonable
time, execute, file and serve, in its own name or in the name of
Borrower, mechanics lien or similar notices, or claims under any
payment or performance bond for the benefit of
Borrower.

 

J.
Upon and after a Default, or at any
time in the event that Borrower fails to do so within a reasonable
time, pay any sums necessary to discharge any lien or encumbrance
on the Collateral, which sums shall be included as Obligations
hereunder, and which sums shall accrue interest at the Extra Rate
until paid in full.

 

10.
REPRESENTATIONS. Borrower makes
the following representations and warranties to Crestmark and such
representations and warranties must be true at all times until the
Obligations are paid in full. If Borrower learns that a
representation and warranty once made is no longer true, it has the
duty to immediately notify Crestmark in
writing:

 

A. Borrower is in good standing under the laws of the
state of its organization and is authorized to conduct business in
any state that it conducts business. Borrower has the
power

	

 

	

 

-5-

 

 

and
authority to enter into this Agreement, and the persons signing
this Agreement and all persons who sign any documents with
Crestmark have the appropriate authority. Borrower's organization
identification number, state of organization, and addresses where
it conducts business are as shown on the Schedule.

 

B.            

Borrower's
entry into the Loan Documents do not violate any agreement
which

 

Borrower
has or which binds Borrower.

 

C.            

The Loan Documents are fully enforceable against
Borrower and the Collateral. D.There are no litigation or criminal charges
pending or threatened against

Borrower
or Guarantor and neither Borrower nor Guarantor are in default of
any order or

 

judgment
of any court or any governmental agency of any kind. There are no
unsatisfied liens or judgments pending against Borrower in any
jurisdiction except as shown on the Schedule.

 

E. The
financial information furnished by Borrower and Guarantor to
Crestmark has been prepared in accordance with generally accepted
accounting principles, all financial statements are true and
correct, and any projections of the business operations of Borrower
that have been given or will be given to Crestmark in the future
will be based upon Borrower's reasonable assumptions and
estimates.

 

F.
Borrower is the owner of all of the Collateral and there are no
other liens or claims against the Collateral, except the Security
Interest of Crestmark or as shown on the Schedule.

 

G.
All of the Collateral is personal property and none of the
Collateral will be permanently affixed to real estate.

 

H.
Borrower has filed and will file all federal, state, local and
foreign tax returns that it is required to file and has paid and
will pay all taxes and all other governmental charges as they
become due.

 

I.
Borrower is able to pay its debts as they become due and has
sufficient capital to carry on its business. Borrower's obligations
under this Agreement and the Loan Documents, including the
obligation to repay the Loan and the grant of the Security
Interest, do not render Borrower insolvent.

 

J. Borrower only uses the fictitious names, d/b/a's,
tradenames and tradestyles set forth on the Schedule (collectively
the "Tradenames"), and Borrower certifies that all sales and any
and all business done in the name of the Tradenames are the sales
and business of Borrower. Any and all checks, remittances or other
payments received in the name of any of the Tradenames are
Borrower's sole and exclusive property, and are subject to
Crestmark's security interest hereunder. Any and all authority
given to Crestmark by Borrower in this Agreement or elsewhere to
endorse Borrower's name on any checks, negotiable instruments or
other remittances extends with equal and full force and effect to
any checks, negotiable instruments, and other remittances received
in the name of any Tradename.

 

K. All
Accounts assigned to Crestmark by Borrower are and will at all
times be bonafide accounts arising from the sale of inventory or
providing services, and are not subject

	

	

 

-6-

 

 

to
discounts, deductions, allowances, contra items, offset or
counterclaim and are free and clear of all encumbrances of any kind
whatsoever, except as disclosed to Crestmark in writing and
approved by Crestmark in writing.

 

L.
Borrower's assignment of any Accounts
to Crestmark pursuant to this Agreement will not at any time
violate any federal, state and/or local law, rule or regulation,
court or other governmental order or decree or terms of any
contract relating to such Accounts.

 

M. Borrower
possesses all necessary trademarks, trade names, copyrights,
patents, patent rights and licenses to conduct its business as now
operated, without any known conflict with any trademarks, trade
names, copyrights, patents and license rights of any other person
or entity.

 

N.
Borrower's legal name as of the date
hereof as it appears in its official filing with its state of
organization is as set forth in the opening paragraph of this
Agreement. Borrower has not organized another entity or Tradename
using Borrower's name or Tradename as set forth herein in any other
jurisdiction.

 

O.            

As
to all of Borrower's Inventory and Equipment:

 

i.
The Inventory and Equipment are currently located only at the
locations identified on the Schedule, or such other locations as
consented to by Crestmark in writing;

 

ii.
All Inventory is now and at all times hereafter shall be of good
and merchantable quality, free from defects, except as disclosed to
Crestmark in writing;

 

111.
The Inventory and Equipment are and
shall remain free from all liens, claims, encumbrances, and
security interests (except as held by Crestmark, and except as
identified on the Schedule).

 

iv.
The Inventory is not now stored with a bailee, warehouseman or
similar party provided however, at Crestmark's sole discretion,
such Inventory may be deemed eligible upon such party entering into
a waiver letter in form satisfactory to Crestmark.

 

11.            

BORROWER'S
PROMISES.                                                                

Borrower
makes the following promises to

 

Crestmark
and these promises are effective until the Obligations are fully
paid:

 

 

A. To pay all Obligations when due and perform all
terms, conditions and obligations of the Loan
Documents.

 

B. To
permit Crestmark, or its representatives, access to the Collateral
on Borrower's premises or wherever collateral is located and to
Borrower's computer systems, books of account and financial
records. Borrower will pay the cost of Field Examinations as
specified in the Schedule.

 

C. To notify Crestmark promptly of any litigation,
administrative or tax proceeding or other action threatened or
instituted against Borrower or Guarantor or its property, or of any
other material matter which may adversely affect Borrower's
financial condition. The amount

	

	

 

-7-

 

 

of
claims as to which Borrower must notify Crestmark is specified in
the Schedule as the

 

"Borrower
Claims Threshold".

 

D. To pay when due all taxes, assessments and
governmental charges, provided that Borrower has the right to
contest the same as long as it has a cash reserve with Crestmark in
an amount as determined by Crestmark in its sole
discretion.

 

E. To comply with the Financial Covenants described
in the Schedule (if applicable).

 

F. To maintain insurance on its business activities
in such amount and in such form as Crestmark may from time to time
require, and with respect to such insurance if so designated,
Crestmark shall be named as "Lender Loss Payee" under the policy
and receive evidence of the insurance. All insurance which protects
Crestmark shall have at least a 30-day notice to Crestmark prior to
any cancellation. With respect to the insurance, Borrower appoints
Crestmark as its attorney-in-fact to negotiate any and all claims
under all insurance policies and Crestmark also has the power to
negotiate any payments on the insurance policies. Required
insurance is listed on the Schedule.

 

G. To comply with all laws, ordinances and
regulations or other requirements of any governmental authority or
agency applicable to Borrower's business.

 

H. To maintain and preserve all Collateral in good
repair, working order and condition, and with respect to accounts,
pursue collections thereof.

 

I. To provide Crestmark with evidence of ownership of
any Collateral upon the request of Crestmark.

 

J.            

To
maintain a Loan Amount balance which shall not exceed the sum of
Eligible

 

Collateral
times the corresponding Advance Rate.

 

12.           NEGATIVE
COVENANTS. Borrower agrees until the Obligations are paid in full,
it will not without prior written consent of
Crestmark:

 

A. Change its state of organization or its name, or
move its executive office or at any time adopt any assumed name
without giving Crestmark at least 30 days prior written
notice.

 

B. Declare or pay any dividend or make any other
distribution with regard to its equity or purchase or retire any of
its equity without Crestmark's prior written consent, provided if
it is taxed as an S Corporation or other "pass through" entity,
Borrower may prior to a Default distribute profits to its equity
holders in an amount necessary to enable such holders to pay
personal, state and federal taxes directly attributable to the
profits earned by Borrower for such year.

 

C. Obtain any loan or guaranty or assume any
obligation or liability, whether as borrower, guarantor, surety,
indemnitor or otherwise (a "Borrower Obligation") (i) that would
result in or create a Default, or (ii) that together with all other
existing Borrower Obligations would exceed the "Borrower Obligation
Threshold" set forth in the Schedule, without

	

 

	

 

-8-

 

 

Crestmark's
prior written consent, provided, however, that Borrower may be the
borrower under the loans described in those Subordination
Agreement(s) that may be entered into in favor of Crestmark, upon
terms and conditions acceptable to Crestmark, and the Borrower may
make such payments, if any, as permitted under the terms and
conditions of such Subordination Agreements.

 

D. Enter into any transaction with its equity holders
or any affiliates of Borrower except on terms at least as favorable
as would be usual and customary in similar transactions if the
person with whom the transaction is entered into was not related to
Borrower.

 

E. Release, redeem, purchase, or acquire any of its
equity interests without the prior written consent of
Crestmark.

 

F.            

Default
in the payment of any debt to any other person.

 

G. Suffer or permit any judgment, decree or order not
fully covered by insurance to be entered against Borrower or a
Guarantor in an aggregate amount in excess of the "Claims
Threshold" set forth in the Schedule, or permit or suffer any
warrant or attachment to be filed against Borrower, any Guarantor,
or against any property or asset of Borrower or
Guarantor.

 

H. Transfer the ownership of any interest in Borrower
without the prior written consent of Crestmark which shall not be
unreasonably withheld.

 

I. Sell any of the Collateral outside the normal
course of its business without the prior written consent of
Crestmark.

 

J. Purchase
the stock or assets of any other entity without the prior written
consent of Crestmark.

 

K. Make any loans, advances, intercompany transfers
or cash flow between the Borrower and any officer, director,
employee, shareholder, subsidiary, related entity or affiliate of
the Borrower or with any company that has common shareholders,
officers or directors with the Borrower.

 

13. FINANCIAL
REPORTS. Borrower promises that
until the Obligations are fully paid and this Agreement is
terminated, it will keep its books and records in a manner
satisfactory to Crestmark and Crestmark will have the right at any
time to verify any of the Collateral, documentation or books and
records of Borrower in whatever manner and as often as Crestmark
deems necessary. Borrower will permit Crestmark, or its
representatives, access to the Collateral and Borrower's premises
and to Borrower's computer systems, books of account and financial
records. Borrower will furnish to Crestmark the financial reports
identified on the Schedule, certified to by the president or chief
financial officer of Borrower and Borrower's certified public
accountant, if applicable. All financial reports will be prepared
in accordance with generally acceptable accounting principles and
will be true and accurate.

 

14. CRESTMARK'S
REMEDIES. Crestmark has all the
remedies available at law or in equity (including those under the
UCC) in the event of a Default or if Borrower fails to pay the
Obligations on demand, including but not limited to the following:
to charge the Extra Rate;to notify Account Debtors to make the
payments directly to Crestmark; to settle or
compromise

	

	

 

-9-

 

 

any
disputed Account, sue on any Account and make any agreement to deal
with the Accounts as if it were the owner; to offset any of
Borrower's or Guarantor's funds under the control of Crestmark
against the Obligations; and to require Borrower to gather up the
Collateral and make it available to Crestmark for Crestmark to
conduct public or private UCC foreclosure sales. Borrower grants to
Crestmark a license or other right to use, without charge,
Borrower's labels, patents, copyrights, trademarks, rights of use
of any name, trade secrets, tradenames and advertising materials,
or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale and
selling any Collateral, and Borrower's rights under all licenses
and franchise agreements shall inure to Crestmark's benefit. If
Crestmark should proceed against the Collateral and sell any of the
Collateral on credit, Borrower will be credited on the Obligations
only with the amount actually received by Crestmark and Borrower
waives any and all provisions as to notice or a particular method
of sale of any of the Collateral. Borrower will pay all expenses in
connection with the assembly or sale of the Collateral. Crestmark
does not have to incur its own expenses in realizing upon the
Collateral, but all the expenses are for the account of Borrower.
Borrower recognizes that at no time is Crestmark its agent in
dealing with the Collateral, but Crestmark acts only in its own
interest.

 

15.

CUMULATIVE RIGHTS.
Crestmark's rights and remedies under
this Agreementand all other agreements shall be cumulative.
Crestmark shall have all other rights and remedies not inconsistent
herewith as provided under the UCC, by law, or in equity. No
exercise by Crestmark of one right or remedy shall be deemed an
election, and no waiver by Crestmark of any Default on Borrower's
part shall be deemed a continuing waiver. No delay by Crestmark
shall constitute a waiver, election or acquiescence by
it.

 

16.

LENDER ACTIONS.
To the extent applicable law may
impose duties on Crestmark to exercise remedies in a commercially
reasonable manner, Borrower agrees that it is not commercially
unreasonable for Crestmark: to fail to exercise remedies against
any Collateral or any particular Account Debtor; to proceed against
Account Debtors either directly or through collection agencies; to
advertise disposition of Collateral through publications or media
of general circulation; to hire professional auctioneers to dispose
of Collateral; to dispose of Collateral in wholesale or retail
markets; to disclaim warranties with respect to Collateral; or to
obtain services of attorneys or other professionals. The foregoing
is not an exhaustive list and nothing contained in the foregoing
shall be construed to grant any rights to Borrower or to impose any
duties on Crestmark that would not have been granted or imposed by
this Agreement or by applicable law in the absence of this
Section
1
6. Borrower
agrees that under no circumstances is Crestmark the agent or
representative of Borrower.

 

17.

APPLICATION OF PROCEEDS. Once
collection efforts are commenced by Crestmark, any proceeds of sale
or disposition of Collateral may be applied by Crestmark first to
expenses authorized by this Agreement, including Crestmark's
reasonable attorneys' fees, which Borrower must pay, and the
balance to payment of the Obligations in such manner as Crestmark
may elect. Borrower and Guarantor remain liable for any
deficiency.

 

18.
NOTICES. Any notice is
effective by either party if sent in writing or facsimile with
confirmation of receipt or by certified mail or personal delivery
or expedited mail services to the addresses shown on the Schedule.
In addition, the Borrower consents to Crestmark sending the
Borrower other communications via electronic mail and/or
facsimile.

	

	

 

-10-

 

 

19.            

MISCELLANEOUS PROVISIONS.

 

A. This Agreement is binding upon and is for the
benefit of Borrower and Crestmark, and their respective successors
and assigns. However, under no circumstances may Borrower assign
this Agreement or its rights and duties hereunder. Crestmark may
assign this Agreement and its rights under the Loan Documents and
Borrower will make payments to any such assignee if so
directed.

 

B. Crestmark has the right at any time to assign,
transfer, negotiate or sell participations in this Agreement or the
Obligations or the rights of Crestmark hereunder. In connection
with any assignment, Borrower consents to disclosure of any and all
books, records, files, Loan Documents and all other documents in
the possession or under the control of
Crestmark.

 

C. No delay or failure of Crestmark in exercising any
right or remedy will affect such right or remedy. No delay or
failure of Crestmark to demand strict adherence to the terms of
this Agreement will be deemed to waive Crestmark's rights to demand
such adherence at any time in the future.

 

D. The term "including" means "including, without
limitation", and the term "includes" means "includes, without
limitation". The word "will" shall be construed to have the same
meaning and effect as the word "shall." The definitions of terms in
this Agreement shall apply equally to the singular and plural forms
of the terms defined.

 

E. This Agreement and the other Loan Documents will
be interpreted and determined under the laws of the State of
Michigan without any regard to any conflict of laws
provisions.

 

F. Borrower, at Crestmark's request, will make,
execute and acknowledge any and all further instruments or
agreements necessary to carry out the intent of this Agreement and
the other Loan Documents.

 

G. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if all signatures were upon the same instrument. Delivery
of an executed counterpart of the signature page to this Agreement
by facsimile or electronic mail shall be effective as delivery of a
manually executed counterpart of this Agreement, and any party
delivering such an executed counterpart of the signature page to
this Agreement by facsimile or electronic mail to any other party
shall thereafter also promptly deliver a manually executed
counterpart of this Agreement to such other party, provided that
the failure to deliver such manually executed counterpart shall not
affect the validity, enforceability, or binding effect of this
Agreement.

 

H. Neither Crestmark nor its affiliates, directors,
officers, agents, attorneys or employees are liable to Borrower or
Guarantor or affiliates for any action taken or omitted by it or
any of them under the Loan Documents except for such liability as
may be imposed by law for gross negligence or actual fraud, and no
claim shall be made by Borrower or Guarantor or any of Borrower's
affiliates, directors, officers, agents, or employees for any
special or consequential damages or punitive damages arising out
of, or related to the Loan Documents or the transactions between
the Parties.

	

	

 

-11-

 

 

I. This Agreement and the other Loan Documents
represent the complete Agreement between the parties with respect
to the subject matter of this Agreement, and there are no promises,
undertakings, representations or warranties by Crestmark relative
to the subject matter of this Agreement not expressly set forth in
this Agreement or the other Loan Documents. This Agreement and the
other Loan Documents may be amended only in
writing.

 

J.
If any provision of this Agreement is in conflict with any law or
statute or is otherwise unenforceable, then the provision will be
deemed null and void only to the extent of such provision and the
provision will be deemed severable and the remainder of this
Agreement shall be in full force and effect.

 

K. Any
payment made to Crestmark by either Borrower or Guarantor which is
subsequently invalidated, declared fraudulent or preferential or
otherwise set aside under any bankruptcy, state, federal or
equitablelaw, then to the extent of such invalidity such payment
will be deemed not to have been made and the obligation will
continue in full force and effect. This provision shall survive
termination of this Agreement.

 

L. No Lien Termination Without
Release - In recognition of among other things, Borrower's
indemnification obligations and Crestmark's right to have its
attorneys' fees and other expenses incurred in connection with this
Agreement secured by the Collateral, notwithstanding payment in
full of all Obligations by Borrower, Crestmark shall not be
required to record any terminations or satisfactions of any of its
liens on the Collateral unless and until Borrower and all
guarantors of its obligations have executed and delivered to
Crestmark a general release in a form acceptable to Crestmarkin its
sole discretion. Borrower understands that this provision
constitutes a waiver of its rights Borrower may have under
§9-513 of the UCC.

 

M. Small Business Jobs Act Certification -
Pursuant to Section 4107(d)(2) (the "Section") of the Small
Business Jobs Act of 2010, certification is required from any
business receiving a loan using funds received by the institution
under the Small Business Lending Act. As required by the Section,
the Borrower hereby certifies to Crestmark that the principals of
Borrower and its affiliates have not been convicted of, or
pleaded nolo
contendre to, a sex offense
against a minor (as such terms are defined in section 111 of the
Sex Offender Registration and Notification Act (42 U.S.C.
16911)).

 

The
term "principals" is defined as follows: if a sole proprietorship,
the proprietor; if a partnership, each managing partner and each
partner who is a natural person and holds a 20% or more ownership
interest in the partnership; and if a corporation, limited
liability company, association or a development company, each
director, each of the five most highly compensated executives or
officers of the entity, and each natural person who is a direct or
indirect holder of

20%
or more of the ownership stock or stock equivalent of the
entity.

 

N.            

USA
Patriot Act Notification - The following notification is provided
to

 

Borrower
pursuant to Section 3265 ofthe USA Patriot Act of2001, 31 U.S.C.
Section 5318:

 

IMPORTANT
INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the
government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person
or entity that

	

	

 

-12-

 

 

opens
an account, including any deposit account, treasurymanagement
account, loan or other extension of credit. Crestmark may ask for
the name, address, date of birth, and other information that will
allow us to identify all Borrowers, principals and owners.
Crestmark may also ask to see your driver's license or other
identifying documents.

 

20.

RIGHT OF FIRST REFUSAL.
Inconsideration of Crestmark entering
into this Agreement and making advances to Borrower, Borrower
hereby agrees that it will, within five (5) days of receipt,
provide a copy of any proposal Jetter, term sheet, letter of intent
or commitment letter from any lender offering to Borrower a
refinance of the Obligations. Crestmark shall have the right of
first refusal to match the offer(s) of such other lender(s), and if
Crestmark advises Borrowerthat it intends to meet the financial and
operational terms set forth in such offers (but continuing to
require that the loan be repayable on Demand) , Borrower will be
obligated to enter into an amendment to this Agreement extending
the terms of this Agreement for at least the term proposed in such
other offer(s), and amending the financial and operational terms as
set forth in this Agreement. Notwithstanding the foregoing,
Borrower recognizes that this Agreement can only be terminated as
provided herein. Failure of Crestmark to meet the terms set forth
in such letter of interest or commitment letter does not relieve
the Borrower from its obligations hereunder.

 

21.

INDEMNIFICATION. Borrower
hereby agrees to indemnify, defend and hold Crestmark and its
executive committees, parent affiliates, subsidiaries, agents,
directors, officers, participants, employees, agents and their
successors and assigns (collectively "Indemnified Parties")
harmless against any and all liabilities of any kind, nature or
description and damages whether they are direct, indirect or
consequential, including attorney's fees and other professionals
and experts incurred or suffered directly or indirectly by
Indemnified Parties or asserted against Indemnified Parties by
anyone whosoever, including Borrower or Guarantor, which arise out
of the Loan Documents or the relationship and transaction between
the Parties. This provision shall survive the termination of this
Agreement.

 

22. JOINT AND
SEVERAL OBLIGATIONS. If more
than one person or entity is named as Borrower in this Agreement,
all Obligations, representations, warranties, covenants and
indemnities of Borrower set forth herein and in the other Loan
Documents shall be the joint and several obligations of such
persons and/or entities.

 

23.

JURISDICTION. BORROWER
AND GUARANTOR AGREE THAT ANY ACTION TO ENFORCE BORROWER'S OR
GUARANTOR'S OBLIGATIONS TO CRESTMARK SHALL BE PROSECUTED EITHER IN
THE CIRCUIT COURT OF OAKLAND COUNTY MICHIGAN OR THE UNITED STATES
DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN (UNLESS
CRESTMARK, IN ITS SOLE DISCRETION, ELECTS SOME OTHER JURISDICTION),
AND BORROWER AND GUARANTOR SUBMIT TO THE JURISDICTION OF ANY SUCH
COURT SELECTED BY CRESTMARK. BORROWER AND GUARANTOR WAIVE ANY AND
ALL RIGHTS TO CONTEST THE JURISDICTION AND VENUE OF ANY ACTION
BROUGHT IN THIS MATTER AND BORROWER AND GUARANTOR MAY BRING ANY
ACTION AGAINST CRESTMARK ONLY IN THE CIRCUIT COURT FOR THE COUNTY
OF OAKLAND OR THE FEDERAL COURT OR THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN.

	

	

 

-13-

 

 

24.
WAIVER. ALL PARTIES, INCLUDING BORROWER AND GUARANTOR EACH
KNOWINGLY AND VOLUNTARILY WAIVE ANY CONSTITUTIONAL RIGHT TO A TRIAL
BY JURY WITH RESPECT TO ANY CLAIM, DISPUTE OR CONFLICT BETWEEN THE
PARTIES OR UNDER THE LOAN DOCUMENTS AND AGREE THAT ANY LITIGATION
SHALL BE HEARD BY A COURT OF COMPETENT JURISDICTION SITTING WITHOUT
A JURY. BORROWER AND GUARANTOR ACKNOWLEDGE THAT THEY HAVE HAD THE
OPPORTUNITY TO REVIEW THE EFFECT OF THIS PROVISION WITH COUNSEL OF
THEIR CHOICE.

 

25.
RELEASE. BORROWER AND GUARANTOR RELEASE AND FOREVER DISCHARGE
CRESTMARK, ITS AFFILIATES, OFFICERS, AGENTS, EMPLOYEES AND
DIRECTORS FROM ANY AND ALL CLAIMS OF ANY KIND WHATSOEVER FROM THE
BEGINNING OF TIME TO DATE OF THIS AGREEMENT.

 

 

The
parties have executed this Agreement as of the date and year first
written above.

 

 

 

 

 

 

 

 

 

 

(Signatures
on next page)

	

 

	

 

 

-14-

 

 

 

	

 

	

CRESTMARK:

 

CRESTMARK BANK

a
Michigan banking corporation

  

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 

Gayle S. Finge

	

 

	

 

	

 

	

Gayle S. Finge

	

 

	

 

	

 

	

1st
VP

	

 

 

 

	

 

	

BORROWER:

 

CLR ROASTERS, LLC

 a
Florida limited liability company  

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
David
Briskie

	

 

	

 

	

 

	
David
Briskie

	

 

	

 

	

 

	

Manager

	

 

 

	

 

	
 

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/
Ernesto
G. Aguila

	

 

	

 

	

 

	
Ernesto
G. Aguila

	

 

	

 

	

 

	

Manager

	

 

 

The
undersigned Guarantor by signing this Agreement agrees it has been
read and understands the Agreement and Guarantor agrees to all of
its terms.

 

 

	

 

	

GUARANTOR:

 

 YOUNGEVITY
INTERNATIONAL, INC.

a
Delaware corporation

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
Stephan
R. Wallach

	

 

	

 

	

 

	
Stephan
R. Wallach

	

 

	

 

	

 

	

CEO

	

 

 

 

 

	

 

	

GUARANTOR pursuant to the Personal Guaranty of even
date:

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
Stephan
R. Wallach

	

 

	

 

	

 

	
Stephan
R. Wallach, individually

	

 

	

 

	

 

	

	

 

 

 

GUARANTOR
pursuant to the Guaranty of 
Validity of even date:

Validity of even date:

 

 

	

 

	

GUARANTOR
pursuant to the Guaranty of 
Validity of even date:   

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
NA

	

 

	

 

	

 

	

David Briskie,
Individually

	

 

	

 

	

 

	

 

	

 

 

 

	

 

	

 

 

-15-

 

 

 

	

 

	

 

CRESTMARK:

 

CRESTMARK BANK

a Michigan banking corporation

  

	

 

	

 

	

 

	

 

	

 

	
Date

	
By:  

	
/s/ 

	

 

	

 

	

 

	

	

 

	

 

	

 

	

	

 

 

 

	

 

	

BORROWER:

 

CLR ROASTERS, LLC

 

The undersigned Guarantor by signing this
Agreement agrees
it has been read and understands the
Agreement and Guarantor agrees to all of its
terms. 

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
David
Briskie

	

 

	

 

	

 

	
David
Briskie

	

 

	

 

	

 

	

Manager

	

 

 

	

 

	
 

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
Ernesto
G. Aguila

	

 

	

 

	

 

	
Ernesto
G. Aguila

	

 

	

 

	

 

	

Manager

	

 

 

 

	

 

	
The
undersigned Guarantor by signing this Agreement agrees it has been
read and understands the Agreement and Guarantor agrees to all of
its terms.

	

 

	

 

	

GUARANTOR:

 

YOUNGEVITY INTERNATIONAL, INC.

a
Delaware corporation

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
Stephan
R. Wallach

	

 

	

 

	

 

	
Stephan
R. Wallach

	

 

	

 

	

 

	

CEO

	

 

 

 

	

 

	

GUARANTOR pursuant to the Personal Guaranty of even
date:

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
Stephan
R. Wallach

	

 

	

 

	

 

	
Stephan
R. Wallach, individually

	

 

	

 

	

 

	

	

 

 

 

	

 

	

GUARANTOR pursuant to the Guaranty of

Validity of even date:

  

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
David
Briskie

	

 

	

 

	

 

	
David
Briskie, Individually

	

 

	

 

	

 

	

	

 

 

 

 

-16-

 

 

SCHEDULE TO LOAN AND SECURITY AGREEMENT

 

DATED:                               

11-16                           

, 2017

 

 

This
Schedule is part of the Agreement between:

 

 

CRESTMARK
BANK ("CRESTMARK")

 

5480
CORPORATE DRIVE, SUITE 350

 

TROY,
MICHIGAN 48098

 

 

AND

 

 

CLR
ROASTERS, LLC ("BORROWER")

 

2131
N.W. 72nd AVENUE MIAMI, FL 33122

 

 

The
following paragraph numbers correspond to paragraph numbers
contained in the Agreement.

 

 

2.            

LOAN; .LOAN ADVANCES.

 

 

Advance
Formula: Advances of the Loan may be measured against a percentage
of

 

Eligible
Accounts.

The
Loan Amount may not exceed an amount which is the lesser
of:

 

(a)           Four
Million Five Hundred Thousand and 00/100 Dollars ($4,500,000.00)
("Maximum Amount"); or

 

(b)            

the
sum of:

 

 

(i)            

up
to eighty-five percent (85%) of Eligible Accounts;
plus

 

(ii) 

the
lesser of One Million and 00/100 Dollars ($1,000,000.00) or fifty
percent (50%) of Eligible Inventory or fifty percent (50%) of (i)
above.

 

(subparagraphs
(i)- (ii) are collectively the "Advance Formula"). Crestmark in its
sole discretion may raise or lower any percentage advance rate
with

respect
to the Advance Formula.

 

 

"Eligible Accounts"
means and includes those Accounts,
unless otherwise approved by

 

Crestmark
which:

 

 

(i)            

have
been validly assigned to Crestmark;

 

(ii)            

strictly
comply with all of Borrower's promises, warranties and
representations to

 

Crestmark;

 

(iii)
contain payment terms of not greater than sixty (60) days from the
date of invoice, with the exception of: 1) H&H Coffee Export
Group, which shall contain payment terms of not greater than one
hundred twenty (120) days from the date of

	

 

	

 

 

-17-

 

 

 

 

invoice,
and 2) Rothfos, which shall contain payment terms of not greater
than ninety (90) days from the date of invoice;

(iv)            

are
not older than ninety (90) days from the date of invoice, with the
exception of:

 

1) H&H Coffee Export Group, which shall be not
older than one hundred thirty five (135) days from the date of
invoice, and 2) Rothfos, which shall be not older than one hundred
five (105)
days from the date of invoice ("Past Due Days");
and

(v)           are
invoiced no later than ten (10) days from the last date of service
or sale. Eligible Accounts shall not include the
following:

 

(a)
Accounts with respect to which the Account Debtor is an officer,
employee or agent of Borrower;

 

(b)
Accounts with respect to which services or goods are placed on
consignment, guaranteed sale, or other terms by reason of which the
payment by the Account Debtor may be conditional;

(c)            

Accounts
with respect to which the Account Debtor is not a resident of the
United

 

States
or Canada; provided, however, all Accounts originating from the
Province of Quebec shall be deemed ineligible;

(d) Accounts with respect to which the Account
Debtor is the United States or any department, agency or
instrumentality of the United States;provided,
however, that an Account shall not be
deemed ineligible by reason of this clause (d) if the Borrower has
completed all of the steps necessary, in the sole opinion of
Crestmark, to comply with the Federal Assignment of Claims Act of
1940 (31

U.S.C.
Section 3727) with respect to such Account;

 

(e) Accounts with respect to which the Account
Debtor is any state of the United States or any city, town,
municipality, county or division thereof, provided,
however,
that an Account shall not be deemed ineligible by reason of this
clause (e) if the aggregate amount of such Accounts does not exceed
five percent (5%) of the total of Borrower's Accounts
outstanding;

(f)            

Accounts
with respect to which the Account Debtor is a subsidiary of,
related to,

 

affiliated with, or has common shareholders,
officers or directors with Borrower;(g) Accounts with respect to which Borrower is or
becomes liable to the Account

Debtor
for goods sold or services rendered by the Account Debtor to
Borrower;

 

(h)
those Accounts where Crestmark has notified Borrower that, in
Crestmark's sole discretion, the Account or Account Debtor is not
acceptable to Crestmark;

(i)            

all
of the Accounts owed by an Account Debtor who is the subject of
a

 

bankruptcy,
receivership or similar proceeding;

 

(j) all
of the Accounts owed by an Account Debtor where twenty percent
(20%) or more of all of the Accounts owed by that Account Debtor
are greater than the Past Due Days;

 

(k)
Accounts for which the services have not yet been rendered to the
Account Debtor or the goods sold have not yet been delivered to the
Account Debtor (commonly referred to as "pre-billed
accounts");

(I)            

Accounts
not previously approved by Crestmark where the expected dollar
value

 

for
such Account Debtors is greater than ten percent (10%) of
Borrower's existing

 

Accounts;

	

	

 

 

-18-

 

 

(m)            

COD
and cash sales;

 

(n)            

Accounts
which are disputed.

 

 

"Eligible Inventory"
means and includes that Inventory
(other than packaging materials, chemicals, additives, promotional
items, labels and supplies) which Crestmark, in its sole credit
judgment, deems to be Eligible Inventory. Without limiting the
generality of the forgoing, no Inventory shall be Eligible
Inventory unless:

 

 

(i)            

it
is finished goods or raw materials;

 

(ii)
at all times it strictly complies with all of Borrower's promises,
warranties and representations to Crestmark;

 

(iii)            

it
is in good, new and salable condition;

 

(iv)
it is not slow moving, obsolete or unmerchantable, in Crestmark's
sole and absolute discretion;

(v)            

it
meets all standards imposed by any governmental agency or authority
or any

 

insurer;

 

(vi)
it is at all times subject to Crestmark's duly perfected, first
priority security interest and there exists no other lien or
encumbrance other than as permitted hereunder; and

(vii)                     

it
is in Borrower's possession and control situated at a location in
compliance

 

with
this Agreement.

 

Eligible
Inventory shall not include Inventory that:

 

(a)
is in the hands of any third party, including a warehouseman,
finisher, consignee, etc., unless Crestmark shall have received a
warehouseman's waiver or a third party processor's waiver from such
warehouseman, finisher, consignee, etc.;

 

(b)            

is
subject to any license or other agreement that limits, conditions,
or restricts

 

Borrower's
or Crestmark's right to sell or otherwise dispose of such
Inventory;

 

(c)
is not of a type that Crestmark, in its commercially reasonable
discretion, has determined is not Eligible Inventory;
or

(d)            

is
not in Borrower's possession based upon consignment, guaranteed
sale, or

 

other
terms by reason of which the payment by Borrower may be
conditional.

 

Crestmark
will determine in its sole discretion whether any Collateral is
eligible for an Advance, but no Collateral will be considered
eligible unless the requirements set forth above are met.
Regardless of whether any Collateral is eligible, it is still part
of the Collateral securing the Obligations.

 

Prior
to any request for an Advance, Borrower must furnish to Crestmark
invoices, credit memos, purchase orders, evidence of delivery,
proof of shipment, timesheets or any other documents Crestmark
requests, in its sole discretion, with respect to the Accounts that
Borrower is tendering to Crestmark to support the Advance ("Account
Documents"). Crestmark will endeavor to provide the requested
Advance by the end of the next business day following the date it
receives the request as long as the complete package of information
for the request has been received by Crestmark by 10:30 a.m.
Eastern Time on the date of the request for the

	

	

 

-19-

 

 

 

Advance.                               

All
requests for funding will be subject to Crestmark's then standard
fees for electronic funds transfer, wire transfers and check
services.

 

Each
time an Advance is made, the amount of the Obligations will be
increased by the amount of the Advance. Five (5) business days
("Clearance Days") after checks, ACH or wire transfers or other
credit instruments are applied to a specific invoice, Crestmark
will credit the Loan Account with the net amount actually received.
On the date a collection is applied to a specific invoice, Borrower
will receive immediate credit on such funds in determining
availability for Advances.

 

When
Crestmark receives a payment from an Account Debtor, it will
attempt to apply it against the appropriate Account Debtor and
invoice according to the Account Debtor's remittance advice. If it
is not clear which Account Debtor or invoice the payment is to be
applied against, Crestmark may contact Borrower or the payor for
assistance. Unless there is clear error, the application of
payments by Crestmark is final.

 

4.            

FEES
AND EXPENSES. The following
fees will be paid by Borrower:

 

Loan
Fee:
At closing of the Loan and on each one year anniversary of the date
of the Agreement, Borrower will pay Crestmark a loan fee of one
percent (1.00%) of the Maximum Amount. The Loan Fee for the initial
Term shall be fully earned by Crestmark on the date of this
Agreement and is not refundable in any event. The Loan Fee for each
renewal Term will be fully earned as of the date of the renewal of
the Agreement and not refundable in any event.

 

Late
Reportin
g
Fee: Borrower will pay
Crestmark a Late Reporting Fee in an amount equal to One Hundred
Fifty and 00/100 Dollars ($150.00) per document per business day
for any day in which any report, financial statement or schedule
required by the Agreement is delivered late.

 

Lockbox
Fee: Each month Borrower will
pay all costs in connection with the Lockbox and the Lockbox
Account, as determined by Crestmark from time to
time.

 

Documentation
Fee: In consideration of the
extension of the Loan and the execution of this Agreement, Borrower
will pay Crestmark a documentation fee of Seven Hundred Fifty
and

00/100
Dollars ($750.00), which fee is fully earned as of the date hereof
and is non-refundable.

 

Overformula
Fee: In the event of the occurrence of an Overformula,
Borrower will pay to Crestmark an Overformula Fee of the greater
of (i)
0.04937% per day on the amount of such
Overformula, or (ii) Two Hundred Fifty and 00/100 Dollars ($250.00)
per day. Further, such Overformula Fee shall not constitute a
waiver of any rights Crestmark may have as a result of an
Overformula.

 

Misdirection
Fee: In the event that the
Borrower fails to immediately deposit funds in the Lockbox Account
or the Lockbox in the form received as provided in Section 5 of the
Agreement, in addition to all other remedies of Crestmark
hereunder, Borrower shall pay a Misdirection Fee. The Misdirection
Fee is equal to five percent (5.00%) of the amount of the funds
which Borrower deposits in any bank account other than the Lockbox
Account or the

	

 

	

 

 

-20-

 

 

Lockbox,
or are otherwise not remitted to Crestmark as required in the
Agreement. Nothing provided herein shall in any manner authorize
the Borrower to misdirect funds as prohibited by the Agreement.
Crestmark is the owner of all deposits in the Lockbox and the
Lockbox Account, and has no duty as to collection or protection of
funds as long as it is not grossly negligent or commits actual
fraud.

 

Missing
Notation Fee: Borrower will pay to Crestmark a Missing Notation
Fee of five percent (5.00%) of the face amount of each invoice on
any invoice that is sent by Borrower to an Account Debtor that does
not contain the notice as required by Section 5 of the Agreement
hereof.

 

Maintenance Fee: Borrower will pay Crestmark a monthly Maintenance
Fee of one-half of one percent (0.50%) of the higher of the monthly
average outstanding principal balance of the Loan for the preceding
month or the Minimum Loan Balance, due and payable on the first day
of the following month.

 

Term:
This Agreement shall continue in full
force and effect, but if not sooner demanded, for three (3) years
from the date hereof ("Term"), and for additional one (1) year
terms unless written notice of termination from the Borrower is
received by Crestmark not less than thirty (30) days and not more
than ninety (90) days prior to the end of the initial Term or any
renewal Term. In the event of termination by Borrower of this
Agreement or repayment in full of the Obligations prior to the
expiration of the Term or any renewal Term, Borrower shall pay to
Crestmark, as an early termination fee (the "Exit Fee"), as
liquidated damages and not as a penalty, an amount equal to: (i) if
prior to the one year anniversary date of the Agreement, the Exit
Fee will be three percent (3.00%) of the Maximum Amount plus any
unpaid Loan Fees, Maintenance Fees and other fees which are
chargeable to the Borrower hereunder through the end of the initial
Term or renewal Term, (ii) if on and after the one year anniversary
date of the Agreement, but prior to the two year anniversary date
of the Agreement, the Exit Fee will be two percent (2.00%) of the
Maximum Amount plus any unpaid Loan Fees, Maintenance Fees and
other fees which are chargeable to the Borrower hereunder through
the end of the initial Term or renewal Term, and (iii) if on and
after the two year anniversary date of the Agreement and
thereafter, the Exit Fee will be one percent (1.00%) of the Maximum
Amount plus any unpaid Loan Fees, Maintenance Fees and other fees
which are chargeable to the Borrower hereunder through the end of
the initial Term or renewal Term. In the event that payment of the
Obligations shall be accelerated for any reason whatsoever by
Crestmark, the Exit Fee in effect as of the date of such
acceleration shall be paid and such Exit Fee shall also be added to
the outstanding balance of the Obligations in determining the debt
for the purposes of any judgment of foreclosure of any loan
documents given to secure the Obligations.

 

Minimum Loan
Balance: Borrower shall
maintain an average outstanding principal balance of the Loan for
each month in the amount of Two Million and 00/100 Dollars
($2,000,000.00) ("Minimum Loan Balance"). If the actual average
outstanding principal balance of the Loan in any month is less than
the Minimum Loan Balance, Borrower must pay interest and
Maintenance Fees (as defined in the Schedule) for such month
calculated on the Minimum Loan Balance.

	

 

	

 

 

-21-

 

 

5.            

LOCKBOX.

 

The
Lockbox Account means: Drawer #2289

PO
Box 5935

 

Troy,
MI 48007-5935

 

(or) if by wire transfer or ACH
transfer, according to the following instructions: Crestmark
Bank

 

Troy,
MI

 

ABA:
072413764

 

For
Account of: CLR Roasters LLC Account Number:
3055910040

 

 

10.            

REPRESENTATIONS.

 

 

(A)           Borrower's
state of
organization                                                                        is
Florida                        and           its
state organizational identification number is
L07000102507.

 

 

(D) 

List
pending and threatened litigation and unsatisfied judgments:
NONE

 

(F)            

List
Security Interests in the Collateral held by creditors other than
Crestmark as

 

Permitted
Encumbrances:

 

 

The
following financing statements as reflected in the Florida Secured
Transaction Registry as of

 

November
3, 2017, without increase, amendment, modification, extension or
refinancing.

 

 

●       

UCC-1
financing statement bearing file number 201504326650 filed
07/07/2015 by

 

Secured
Party, TCF Equipment Finance, a Division ofTCF National
Bank.

 

●       

UCC-1
financing statement bearing file number 201609227733 filed
10/24/2016 by

 

Secured Party, VFI KR SPE I
LLC.

 

● 

UCC-1 financing statement bearing file number
201700236200 filed 02/08/2017 by Secured Party, Growthfunding Equipment Finance, A Division of
People'sIntermountain Bank.

 

● 

UCC-1 financing statement bearing file number
201701244150 filed 05/17/2017 by Secured Party, Growthfunding Equipment Finance, A Division of
People'sIntermountain Bank.

 

● 

UCC-1 financing statement bearing file number
201701660464 filed 06/28/2017 by Secured Party, Growthfunding
Equipment Finance,
A Division of People's Intermountain
Bank.

	

 

	

 

 

-22-

 

 

 

● 

UCC-1 financing statement bearing file number
201701660480 filed 06/28/2017 by Secured Party, Growthfunding Equipment Finance, A Division of
People'sIntermountain Bank.

 

●       

UCC-1
financing statement bearing file number 20170229822X filed
08/28/2017 by

 

Secured
Party, TCF Equipment Finance, A Division of TCF National
Bank.

 

●       

UCC-1
financing statement bearing file number 20170295187X filed
10/13/2017 by

 

Secured Party, TFG-Fiorida, L.P.

 

NOTE: As to the interests listed above, the listing
thereof in this Loan and Security Agreement shall not, in any
manner whatsoever, be deemed to be an acknowledgement by Crestmark
Bank as to the perfection, priority, validity or enforceability
thereof.

 

(J) 

List
Borrower's Tradenames: NONE

 

11. BORROWER'S
PROMISES:

 

 

C.            

BORROWER
CLAIMS THRESHOLD: Two Thousand Five Hundred Dollars

 

($2,500.00).

 

E.            

FINANCIAL
COVENANTS:                                                                

Borrower
will maintain the following Financial

 

Covenants,
which will be tested on a quarterly basis:

 

I. A minimum Tangible
Net Worth at all times of at
least negative Twenty One Million Five Hundred Thousand and 00/100
Dollars (-$21,500,000.00).
"Tangible Net Worth" means, as of the date of determination, total
assets less total liabilities less the sum of (i) the aggregate
amount of non-trade Accounts Receivable, including Accounts
Receivable from affiliated or related Persons; (ii) prepaid
expenses; (iii) deposits; (iv) net leasehold improvements; (v)
goodwill; and (vi) any other asset which would be treated as an
intangible asset under GAAP, plus Subordinated Debt. "Subordinated
Debt" means any and all indebtedness presently or in the future
incurred by Borrower to any creditor of Borrower entering into a
written subordination agreement with Crestmark.

 

In addition, at no time shall Borrower make any
loans, advances,
intercompany transfers or cash flow
between Borrower and any subsidiary, related entity or affiliate of
Borrower or with any company that has common shareholders, officers
or directors with Borrower.

 

All
of the financial covenants in this Agreement shall be determined in
accordance with GAAP, unless otherwise provided.

 

"GAAP"
means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial

	

 

	

 

 

-23-

 

 

Accounting
Standards Board that are applicable to the circumstances as of the
date of determination and applied on a consistent
basis.

 

F.            

REQUIRED
INSURANCE

 

Without
limiting Crestmark's requirements for insurance coverage, which may
change from time to time, the following is/are the minimum
insurance requirement(s):

 

PROPERTY
DAMAGE- Crestmark named Lender Loss Payee in an amount not less
than the advances made on inventory plus the greater of book or
market value of machinery and equipment and furniture and
fixtures.

 

GENERAL
AND PROFESSIONAL LIABILITY-Crestmark named as Additional Insured
for an amount not less than the smallest amount required under any
contract with any Account Debtor.

 

12.            

NEGATIVE COVENANTS.

 

 

C.            

BORROWER
OBLIGATION THRESHOLD: Twenty Five Thousand Dollars

 

($25,000).

 

G.            

CLAIMS
THRESHOLD: Two Thousand Five Hundred Dollars
($2,500.00).

 

13.           

FINANCIAL REPORTS.

 

Management
Prepared li'inancial
Statements:
Borrower will deliver to Crestmark
quarterly management prepared financial statements, balance sheets,
and profit and loss statements for quarter then ended, certified to
by the president or chief financial officer of Borrower. Such
reports will set forth the financial affairs and true condition of
Borrower for such time period and will be delivered to Crestmark no
later than forty-five days after the end of each
quarter.

 

Guarantors'
Personal Financial Statements. Upon Crestmark's request, Guarantors will provide
Crestmark with annual personal financial statements on forms
supplied by Crestmark. Such reports will set forth with detail
Guarantors' financial affairs and the true financial condition of
Guarantors, as of the end of each calendar year and shall be
delivered to Crestmark on the earlier of April 30th or 120 days
after the end of each calendar year.

 

Annual
Financial Statements: Each year
Borrower will deliver to Crestmark annual audited financial
statements, cash flow statements, balance sheets, and profit and
loss statements prepared by a certified public accountant
acceptable to Crestmark, all without exceptions. Such reports will
set forth in detail Borrower's true condition as of the end of
Borrower's fiscal year. Borrower shall deliver annual financial
statements no later than one hundred twenty (120) days after the
end of Borrower's fiscal years.

 

All
financial statements are and will be prepared in accordance with
GAAP on an accrual basis applied on a consistent
basis.

	

 

	

 

 

-24-

 

 

Accounts Receivable
Aging, Accounts Payable Aging and Inventory
Reports: Borrower will furnish
to Crestmark the following certified to by the president or chief
financial officer of Borrower within the time periods set
forth:

 

(a)            

Accounts Receivable
Reports:                                                                

Monthly
detailed Accounts Receivable Aging

 

Reports
no later than fifteen (15) days after the end of each month;
and

 

(b) Accounts Payable
Reports: Monthly summary
Accounts Payable Aging Reports no later than fifteen (15) days
after the end of each month; and

 

(c) Inventory Reports:
Monthly Inventory certification
reports no later than fifteen (15) days after the end of each
month. The certification must list Inventory by category and
location as of month end; and

 

Tax
Returns: Upon Crestmark's request, Guarantor and Borrower
will each provide Crestmark with current annual tax returns each
year no later than fifteen (15) days after filing or if an
extension is filed, at the earlier of (a) filing, or (b) the
extension deadline.

 

Field Examinations:
Borrower will reimburse Crestmark for
the costs to perform field examinations of Borrower's books and
records, assets and liabilities, to be performed by Crestmark's
inspector, whether a Crestmark officer or an independent party,
with all expenses (whether for a Crestmark employee or otherwise,
at the rate of the greater of current market rate per examiner, per
day or $900.00 per examiner, per day, for each day of the field
examination including preparation of the field examination report,
together with all out of pocket expenses including, but not limited
to, transportation, hotel, parking, and meals) paid by Borrower.
Field examinations are performed for Crestmark's internal use and
Crestmark has no obligation to provide Borrower or Guarantor with
the results of the examination or copies of any reports or work
papers in whole or in part.

 

Tax
Deposit
Evidence:
Submit payroll summaries and evidence
of tax payments together with copies of bank statements from which
the funds are impounded, as well as, Federal
Forms

940
and 941 to Crestmark upon Crestmark's request.

 

Customer Lists:
Upon Crestmark's request, Borrower
will deliver to Crestmark detailed customer lists showing the
customer's name, address, phone number and any other information
Crestmark reasonably requests.

 

Projections:
Upon Crestmark's request, Borrower
shall deliver to Crestmark, within sixty (60) days prior to each
year-end, an annual financial projection including balance sheet,
income statements, and statement of cash flows together with
assumptions for the following year, broken down
monthly.

 

Other Information:
Borrower and Guarantor will also
deliver to Crestmark such other financial statements, financial
reports, projections, documentation, tax returns and other
information as Crestmark requests from time to
time.

	

 

	

 

 

-25-

 

 

 

18.           

NOTICES.                                

Addresses for Notices are as set forth at the beginning of this Schedule.

 

 

 

 

	

 

	

BORROWER:

CLR
ROASTERS, LLC

a
Florida limited liability company

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
David
Briskie

	

 

	

 

	

 

	
David
Briskie

	

 

	

 

	

 

	

Manager

	

 

 

	

 

	
 

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
Ernesto G.
Aguila

	

 

	

 

	

 

	
Ernesto G.
Aguila

	

 

	

 

	

 

	

Manager

	

 

 

The undersigned Guarantor by signing this
Agreement agrees it has been read and understands the Agreement and Guarantor agrees to
all of its terms.

 

 

 

	

 

	

GUARANTOR:

 

 

YOUNGEVITY
INTERNATIONAL, INC. a Delaware corporation

  

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
Stephan
R. Wallach

	

 

	

 

	

 

	
Stephan R.
Wallach

	

 

	

 

	

 

	

CEO

	

 

 

 

 

	

 

	

GUARANTOR pursuant to the Personal

 

Guaranty of even date:

 

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
Stephan
R. Wallach

	

 

	

 

	

 

	
Stephan R.
Wallach,

Individually

	

 

	

 

	

 

	

	

 

 

	

 

	

GUARANTOR pursuant to the Guaranty of Validity of even
date:

  

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
David
Briskie

	

 

	

 

	

 

	
David
Briskie

	

 

	

 

	

 

	

	

 

 

 

 

 

 

 

 

 

 

 

-26-

 

 

 

 

	

 

	

CRESTMARK:

 

 

CRESTMARK BANK

 

a
Michigan banking corporation

  

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 
Gayle
S. Finger

	

 

	

 

	

 

	
Gayle
S. Finger

	

 

	

 

	

 

	

1st VP

	

 

 

 

 

 

 

-27-

 

 

 

CORPORATE
GUARANTY

 

 

 

This Corporate Guaranty ("Guaranty") is made
on                                                                                                                 11-16 ,
2017 by Youngevity International, Inc., a Delaware corporation
("Guarantor"), in favor of Crestmark Bank (''Crestmark")
to induce Crestmark to make a loan and/or extend or continue credit
to CLR Roasters, LLC, a Florida limited liability company
("Borrower") and because Guarantor, whose economic success is
vitally linked to Borrower's success, has determined that executing
and delivering this Guaranty is in Guarantor's interest and to
Guarantor's financial benefit.

 

1. Guaranty. Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to Crestmark: (a) the
full, prompt and unconditional payment when due of the Indebtedness
(as defined in the Loan and Security Agreement between Crestmark
and Borrower (the "Loan
Agreement")),
including, but not limited to,
principal and interest on that certain $4,500,000.00 Promissory
Note (Line of Credit), (the "Note"), as each may be amended or
restated and whether on demand, at maturity, pursuant to mandatory
or optional prepayments, by acceleration or otherwise; and (b) the
punctual and faithful performance and observation by Borrower of
all duties, agreements, covenants, representations and obligations
of Borrower contained in the Loan Documents (as defined in
 Section
3).

 

2.  Absolute,
Unconditional and Continuing Obligation. This
Guaranty is an absolute, continuing, unconditional, unlimited and
irrevocable guaranty. Guarantor will not be relieved from any
obligations under this Guaranty until this Guaranty is terminated
in accordance with Section
14. The obligations and liabilities of Guarantor will
continue, notwithstanding any defect in the genuineness, validity
or enforceability of the Indebtedness or the Loan Documents, or any
other circumstances which might otherwise constitute a legal or
equitable discharge or defense of the liabilities of a surety or
guarantor or which might otherwise limit recourse against
Guarantor. This is a guarantee of payment and not of
collection.

 

3. The Loan Documents. The Loan Agreement, the
Note, and all other related documents now existing or hereafter
arising and executed in connection with the Loan, including all
amendments and restatements thereto (collectively the
"Loan
Documents"),
are incorporated into and made a part
of this Guaranty by reference.

 

4.
Continuation of Liability. The liability and obligations of
Guarantor will in no way be affected, impaired, diminished or
released by any action or inaction whatsoever other than the
indefeasible payment in full and in cash of the
Indebtedness.

 

5.
Unconditional Waiver of all Defenses. Guarantor unconditionally,
absolutely and irrevocably waives each and every defense, which
under principles of guaranty or suretyship law would otherwise
operate to impair or diminish the liability of Guarantor forthe
Indebtedness.

 

6. Immediate Recourse/Exercise of Rights by Crestmark. At any time when the Indebtedness, or any portion
thereof, has not been paid when due (whether by acceleration or
otherwise), Crestmark can require that Guarantor pay Crestmark the
amounts owing on this Guaranty immediately. Crestmark is not
required to collect first from Borrower, any collateral, any other
guarantor, or any other person. No delay or stay
in any acceleration of the Indebtedness, as
against the Borrower, due to the application of any
bankruptcy, insolvency or other law or proceeding will be effective
under this Guaranty, and Guarantor agrees to immediately pay the
amount of the Indebtedness that would be due and payable but for
such delay or stay. All rights, powers, and remedies of Crestmark
hereunder and under the Loan Documents are cumulative and not
alternative and shall be in addition to all rights, powers, and
remedies given to Crestmark by law and by
agreement.

 

7. Subordination/Subrogation. In the event that Guarantor becomes obligated to
pay any sums to Borrower, or in the event that Borrower or any
subsequent owner of any Collateral is now or hereafter
becomes indebted
to Guarantor, the amount of such
indebtedness will at all times be
subordinate as to lien, time of payment and all other
respects, to
the amounts owing to Crestmark by
Borrower. Furthermore, until the Indebtedness is indefeasibly paid
in full and in cash, Guarantor hereby absolutely, irrevocably and
unconditionally waives all rights Guarantor may have, at law or in
equity to seek or claim subrogation. Crestmark has no duty to
enforce or protect any rights, which the undersigned may have
against Borrower or any other Person and Guarantor assumes full
responsibility for enforcing and protecting these
rights.

 

8. Representations and Warranties.
Guarantor represents, warrants and
covenants to Crestmark that: (a) it is a corporation duly
organized, in good standing, and that the execution and delivery of
this Guaranty and the performance of the obligations under this
Guaranty are within Guarantor's Corporate powers, have been duly
authorized by all necessary actions, including by its board of
directors, and do not contravene its articles or by-laws; (b) it is
a shareholder of Borrower; (c) Guarantor has completely read and
understands the Loan Documents and agrees to all those portions
which apply to Guarantor; (d) Guarantor was provided an opportunity
to review the Loan Documents with its legal counsel; (e) any
financial statements of Guarantor furnished Crestmark are true and
correct and include
all contingent liabilities of
Guarantor; (f)
since the date of any financial
statements furnished to Crestmark, no material adverse change has
occurred in the financial condition of Guarantor; (g) there are no
pending or threatened legal proceedings or judgments against
Guarantor, and no federal or state tax liens have been filed or
threatened against Guarantor; and (h) Guarantor is not in default
or claimed default under any agreement for borrowed money.
Guarantor agrees to immediately give Crestmark written notice of
any material adverse change in its financial
condition.

 

9. Expenses. Guarantor agrees to pay all expenses (including
attorneys' fees) incurred by Crestmark in connection with the
enforcement of Crestmark's rights under the Loan Documents, this
Guaranty, and the collection of the
Indebtedness.

 

10. Transfer
of Assets. Guarantor further
agrees that until the Indebtedness is indefeasibly paid in full,
and in cash, Guarantor will not, without Crestmark's prior written
consent: (i) make any voluntary transfer of any of Guarantor's
assets which would have the effect of materially diminishing
Guarantor's present net worth or (ii) guaranty the debts or
obligations of any other person or entity.

 

-28-

 

 

11.
Reinstatement. This Guaranty will continue to be effective or will
be automatically reinstated, as the case may be, if at any time
payment of all or part of the Indebtedness is rescinded or must
otherwise be restored or returned by Crestmark, including in
connection with Borrower's bankruptcy or insolvency.

 

12. Joint and
Several Liability. The term
"Guarantor" shall mean each person executing this Guaranty, each
individually and together collectively, and the obligations of
Guarantor and any other guarantor executing a guaranty, including
in connection with the Loan will be joint and
several.

 

13. Assignability/Binding Effect. This Guaranty shall be assignable by Crestmark
without notice to Guarantor and shall inure to the benefit of
Crestmark and to any subsequent successors and
assigns.

 

14.
Termination. Notwithstanding anything contained herein to the
contrary, the liability of Guarantor will be terminated only in the
event that (i) Borrower or Guarantor has indefeasibly paid
Crestmark in cash and in full the Indebtedness and (ii) the Loan
Agreement is terminated.

 

15.
Severability. If any provision of this Guaranty is in conflict with
any statute or rule of law or is otherwise unenforceable for any
reason, then that provision will be deemed null and void to the
extent of the conflict or unenforceability and will be deemed
severable, but it will not invalidate any other provision of this
Guaranty.

 

16. Complete
Agreement. This Guaranty is the
final, complete and exclusive expression of the agreement between
Guarantor and Crestmark with respect to the subject matter of this
Guaranty. This Guaranty cannot be modified or amended except in a
writing signed by both Guarantor and Crestmark.

 

The
Guarantor executes this Guaranty as of the day and year first above
written.

 

 

	

WITNESSES:   

	
 GUARANTOR:

	

 

	

 

	

 

	

 

	

 

	
/s/
David S.
Briskie

	
:  

	
/s/ 
Stephan
R. Wallach

	

 

	

 
David
S. Briskie

	

 

	
Stephan
R. Wallach

	

 

	

 

	

 

	

CEO

	

 

 

 

 

-29-

 

 

 

PERSONAL
GUARANTY

 

 

This Personal Guaranty ("Guaranty") is made
on
11-16 , 2017
by Stephan R. Wallach ("Guarantor") in favor of Crestmark Bank
("Crestmark") to induce Crestmark to make a loan and/or extend or
continue credit to CLR Roasters, LLC, a Florida limited liability
company ("Borrower") and because Guarantor has determined that
executing and delivering this Guaranty is in Guarantor's interest
and to Guarantor's financial benefit. Any capitalized terms used in
this Guaranty, if not specifically defined in this Guaranty, will
have the meanings set forth in the Loan Documents (as defined in
Section 3
below).

 

1. Guaranty. Guarantor
hereby absolutely, irrevocably and unconditionally guarantees to
Crestmark: (a) the full, prompt
and unconditional payment when due of all existing and future
obligations and indebtednessof the Borrower to Crestmark, including
but not limited to the Indebtedness as defined in the Loan and
Security Agreement ("Agreement") between Crestmark and Borrower (as
may be amended) and all principal, interest and fees under any and
all related notes, as they may be amended or restated and whether
on demand, at maturity, pursuant to mandatory or optional
prepayments, by accelerationor otherwise; and (b) the punctual and
faithful performance and observation by Borrower of all duties,
agreements, covenants, representations and obligations of Borrower
contained in the Loan Documents (as defined in Section
3).

 

2. Absolute,
Unconditional
and Continuing
Obligation. This Guaranty is an
absolute, continuing, unconditional, unlimited and irrevocable
guaranty. Guarantor will not be relieved from any obligations under
this Guaranty until this Guaranty is terminated in accordance
with Section
1 4. The obligations and liabilities of Guarantor
will continue notwithstanding any defect in the genuineness,
validity or enforceability of the Indebtedness or the Loan
Documents, or any other circumstances which might otherwise
constitute a legal or equitable discharge or defense of the
liabilities of a surety or guarantor or which might otherwise limit
recourse against Guarantor. This is a guarantee of payment and not
of collection.

 

3. The
Loan
Documents.
The Agreement, all related notes, and
all other related documents now existing or hereafter arising and
executed in connection with the loan, including all amendments and
restatements thereto (collectively, "Loa n
Documents"), are
incorporated into and made a part of this Guaranty by
reference.

 

4. Continuation of
Liability. The liability and
obligations of Guarantor will in no way be affected,impaired,
diminished or released by any action or inaction whatsoever other
than the indefeasible payment in full and in cash of the
Indebtedness.

 

5. Unconditional Waiver of all
Defenses. Guarantor
unconditionally, absolutely and irrevocably waives each and every
defense that under principles of guaranty or suretyship law would
otherwise operate to impair or diminish the liability of Guarantor
for the Indebtedness.

 

6. Immediate Recourse/Exercise
of Rights by Crestmark. At any time when the Indebtedness, or any
portion thereof, has not been paid when due (whether by
acceleration or otherwise), Crestmark can require that Guarantor
pay Crestmark the amounts owing on this Guaranty immediately.
Crestmark is not required to collect first from Borrower, any
collateral, any other guarantor or any other person. No delay or
stay in any acceleration of the Indebtedness,

 

-30-

 

 

as
against the Borrower, due to the application of any bankruptcy,
insolvency or other law or proceeding will be effective under this
Guaranty, and Guarantor agrees to immediately pay the amount of the
Indebtedness that would be due and payable but for such delay or
stay. All rights, powers and remedies of Crestmark hereunder and
under the Loan Documents are cumulative and not alternative and
shall be in addition to all rights, powers and remedies given to
Crestmark by law and by agreement.

 

7. Subordination /Subrogation. In the event
that Guarantor becomes obligated to pay any sums to Borrower, or in
the event that Borrower or any subsequent owner of any Collateral
is now or hereafter becomes indebted to Guarantor other than for
customary salary and bonuses (collectively, "Debt"), the Debt will
at all times be subordinate as to lien, payment and all other
respects, to the Indebtedness, and Guarantor will not, among other
things, accept any payment from Borrower with respect to the Debt
without Crestmark's prior written consent. Furthermore, until the
Indebtedness is indefeasibly paid in full and in cash, and the
Agreement is terminated, Guarantor hereby absolutely, irrevocably
and unconditionally waives all rights Guarantor may have, at law or
in equity, to seek or claim subrogation. Crestmark has no duty to
enforce or protect any rights which the Guarantor may have against
Borrower or any other person, and Guarantor assumes full
responsibility for enforcing and protecting such
rights.

 

8. Representations and
Warranties. Guarantor
represents, warrants and covenants to Crestmark that: (a) Guarantor
has completely read and understands the Loan Documents and agrees
to all those portions which apply to Guarantor; (b) Guarantor was
provided an opportunity to review the Loan Documents with its legal
counsel; (c) any financial statements of Guarantor furnished to
Crestmark are true and correct and include all contingent
liabilities of Guarantor; (d) since the date of any financial
statements furnished to Crestmark, no material adverse change has
occurred in the financial condition of Guarantor; (e) there are no
pending or threatened legal proceedings or judgments against
Guarantor, and no federal or state tax liens have been filed or
threatened against Guarantor; and (f) Guarantor is not in default
or claimed default under any agreement for borrowed money.
Guarantor agrees to immediately give Crestmark written notice of
any material adverse change in its financial
condition.

 

9.  Expenses.
Guarantor agrees to pay all expenses
(including attorneys' fees) incurred by Crestmark in connection
with the enforcement of Crestmark's rights under the Loan
Documents, this Guaranty, and the collection of the
Indebtedness.

 

10. Transfer of
Assets. Guarantor further
agrees that until the Indebtedness is indefeasibly paid in full,
and in cash, and the Agreement is terminated, Guarantor will not,
without Crestmark's prior written consent: (i) make any voluntary
transfer of any of Guarantor's assets which would have the effect
of materially diminishing Guarantor's present net worth or (ii)
guaranty the debts or obligations of any other person or
entity.

 

11. Reinstatement.
This Guaranty will continue to be effective or will be
automatically reinstated, as the case may be, if at any time
payment of all or part of the Indebtedness is rescinded or must
otherwise be restored or returned by Crestmark, including in
connection with Borrower's bankruptcy or
insolvency.

 

12. Joint and Several
Liability. The term "Guarantor"
shall mean each person executing this Guaranty, each individually
and together collectively, and the obligations
of

 

-31-

 

 

Guarantor
and any other guarantor executing a guaranty of all or any portion
of the Indebtedness will be joint and several.

 

13.  Assignability/Binding
Effect. This Guaranty shall be
assignable by Crestmark without notice to Guarantor and shall inure
to the benefit of Crestmark and to any subsequent successors and
assigns. In the event of the death of Guarantor, this
Guaranty shall continue in effect against the estate of
Guarantor.

 

14. Termination.
Notwithstanding anything contained herein to the contrary, the
liability of Guarantor will be terminated only in the event that
(i) Borrower or Guarantor has indefeasibly paid Crestmark in cash
and in full the Indebtedness and (ii) the Agreement is
terminated.

 

15. Severability.
If any provision of this Guaranty is
in conflict with any statute or rule of law or is otherwise
unenforceable for any reason, then that provision will be deemed
null and void to the extent of the conflict or unenforceability and
will be deemed severable, but it will not invalidate any other
provision of this Guaranty.

 

 

16. Complete
Agreement.
This Guaranty is the final, complete and
exclusive expression of the agreement between Guarantor and
Crestmark with respect to the subject matter of this Guaranty. This
Guaranty cannot be modified or amended except in a writing signed
by both Guarantor and Crestmark. This Guaranty is in addition to
and not in substitution of any other guarantees from Guarantor in
favor of Crestmark.

 

 

 

The
Guarantor executes this Guaranty as of the day and year first above
written.

 

 

	

WITNESSES:   

	
 GUARANTOR:

	

 

	

 

	

 

	

 

	

 

	
/s/
David S.
Briskie

	
:  

	
/s/ 
Stephan
R. Wallach

	

 

	

 
David
S. Briskie

	

 

	
Stephan
R. Wallach

	

 

	

 

	

 

	
Stephan R. Wallach, individually  

	

 

 

  

 

-32-

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