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EXHIBIT 10.5

 

LOAN AND SECURITY MODIFICATION AGREEMENT

 

This
Loan and Security Modification Agreement is entered into as of
March 21, 2019, by and among SHARPSPRING, INC.
(“Parent”), SHARPSPRING TECHNOLOGIES, INC.
(“SharpSpring Technologies and, together with Parent,
individually and collectively, jointly and severally,
“Borrower” and, collectively, “Borrowers”,
as the context requires) and WESTERN ALLIANCE BANK, an Arizona
corporation (“Bank”).

 

1.            

DESCRIPTION OF EXISTING
INDEBTEDNESS: Among other indebtedness which may be owing by
Borrower to Bank, Borrower is indebted to Bank pursuant to, among
other documents, a Loan and Security Agreement, dated March 21,
2016, by and between Borrower and Bank (as may be amended from time
to time, the “Loan and Security Agreement”).
Capitalized terms used without definition herein shall have the
meanings assigned to them in the Loan and Security
Agreement.

 

2.            

ACKNOWLEDGMENT OF MERGER.
Borrower has informed Bank that, in accordance with Section 7.3 of
the Loan and Security Agreement, Quattro has merged with Parent by
filing a Certificate of Ownership and Merger with the Delaware
Secretary of State on October 15, 2018, whereby Parent is the
surviving entity.

 

3. 

MODIFICATIONS TO LOAN AND SECURITY
AGREEMENT.

 

A. 

All references to
the term “Borrower” in the Loan and Security Agreement
and the other Loan Documents shall be deemed, and each such
reference is amended to mean, Parent and SharpSpring Technologies,
individually or collectively, as the context may
require.

 

B. 

The definition of
Cash Management Sublimit set forth in Section 1.1 of the Loan and
Security Agreement is amended to delete the reference to
“Four Hundred Thousand Dollars ($400,000)” and to
substitute “Six Hundred Thousand Dollars ($600,000)” in
lieu thereof.

 

C. 

Section 6.9(c) of
the Loan and Security Agreement is amended and restated in its
entirety to read as follows:

 

“(c)                      Minimum
Adjusted EBITDA. Parent’s and its Subsidiaries’
quarterly Adjusted EBITDA shall be at least 75% of its projected
Adjusted EBITDA for such period as set forth in Borrower’s
Financial Plan if Borrowers’ projected Adjusted EBITDA is
above zero for such period, or at least 125% of its projected
Adjusted EBITDA for such period as set forth in Borrowers’
Financial Plan if Borrowers’ projected Adjusted EBITDA is
below zero for such period. Based on Borrowers’ Financial
Plan for 2019 provided by Borrowers which has been deemed
acceptable by Bank, the maximum Adjusted EBITDA loss for the
quarters listed below are set forth below:

 

	
 

	
	
 

1

 

 

	

Quarter
Ending

	

Maximum
Adjusted EBITDA Loss

	

March
31, 2019

	

($3,061,000)

	

June
30, 2019

	

($2,702,000)

	

September
30, 2019

	

($2,190,000)

	

December
31, 2019

	

($1,618,000)”

 

D. 

Exhibit D to the
Loan and Security Agreement is deleted in its entirety and replaced
with Exhibit D attached hereto.

 

4. 

CONSISTENT CHANGES. The Loan
Documents are each hereby amended wherever and to the extent
necessary to reflect the changes described above.

 

5. 

NO DEFENSES OF BORROWER/GENERAL
RELEASE. Borrower agrees that, as of this date, it has no
defenses against the obligations to pay any amounts under the Loan
Documents. Each of Borrower and its affiliates (each, a
“Releasing Party”) acknowledges that Bank would not
enter into this Loan and Security Modification Agreement without
Releasing Party’s assurance that it has no claims against
Bank or any of Bank’s officers, directors, employees or
agents. Except for the obligations arising hereafter under this
Loan and Security Modification Agreement, each Releasing Party
releases Bank, and each of Bank’s officers, directors and
employees from any known or unknown claims that Releasing Party now
has against Bank of any nature, including any claims that Releasing
Party, its successors, counsel and advisors may in the future
discover they would have now had if they had known facts not now
known to them, whether founded in contract, in tort or pursuant to
any other theory of liability, including but not limited to any
claims arising out of or related to the Loan and Security Agreement
or the transactions contemplated thereby. Releasing Party waives
the provisions of California Civil Code section 1542, which
states:

 

A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER, MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.

 

The
provisions, waivers and releases set forth in this section are
binding upon each Releasing Party and its shareholders, agents,
employees, assigns and successors in interest. The provisions,
waivers and releases of this section shall inure to the benefit of
Bank and its agents, employees, officers, directors, assigns and
successors in interest. The provisions of this section shall
survive payment in full of the Obligations, full performance of all
the terms of this Loan and Security Modification Agreement and the
other Loan Documents, as modified by this Loan and Security
Modification Agreement, and/or Bank’s actions to exercise any
remedy available under the Loan Documents, as modified by this Loan
and Security Modification Agreement, or otherwise.

 

 

 

2

 

 

 

6. 

CONTINUING VALIDITY. Borrower
understands and agrees that in modifying the existing Loan
Documents, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Loan Documents.
Borrower represents and warrants that the representations and
warranties contained in the Loan and Security Agreement are true
and correct in all material respects as of the date of this Loan
and Security Modification Agreement, and that no Event of Default
has occurred and is continuing. Except as expressly modified
pursuant to this Loan and Security Modification Agreement, the
terms of the Loan Documents remain unchanged and in full force and
effect. Bank’s agreement to modifications to the existing
Loan Documents pursuant to this Loan and Security Modification
Agreement in no way shall obligate Bank to make any future
modifications to the Loan Documents. Nothing in this Loan and
Security Modification Agreement shall constitute a satisfaction of
the Obligations. It is the intention of Bank and Borrower to retain
as liable parties all makers and endorsers of the Loan Documents,
unless the party is expressly released by Bank in writing. No
maker, endorser, or guarantor will be released by virtue of this
Loan and Security Modification Agreement. The terms of this
paragraph shall apply not only to this Loan and Security
Modification Agreement, but also to any subsequent loan and
security modification agreements.

 

7. 

CHOICE OF LAW AND VENUE; JURY TRIAL
WAIVER; REFERENCE PROVISION. This Loan and Security
Modification Agreement constitutes a “Loan Document” as
defined and set forth in the Loan and Security Agreement, and is
subject to Sections 11 and 12 of the Loan and Security Agreement,
which are incorporated by reference herein.

 

8. 

NOTICE OF FINAL AGREEMENT. BY
SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A)
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES, AND (C) THIS WRITTEN AGREEMENT MAY NOT BE CONTRADICTED BY
EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

 

9. 

CONDITIONS
PRECEDENT. As a condition to the effectiveness of this Loan and
Security Modification Agreement, Bank shall have received, in form
and substance satisfactory to Bank, the following:

 

(a)            

corporate
resolutions and incumbency certificates duly executed by each
Borrower; and

 

(b)            

such other
documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate.

 

10. 

COUNTERSIGNATURE. This Loan and
Security Modification Agreement shall become effective only when
executed by Bank and Borrower.

 

[Signature
Page Follows]

 

 

3

 

 

 

	

BORROWER:  
 

	
 

	

BANK:

	
 

	
 

	
 

	
 

	
 

	
 

	

SHARPSPRING,
INC.   

	
 

	

WESTERN ALLIANCE
BANK, an Arizona corporation
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Bradley Stanczak

	
 

	
By:

	
/s/ Dan Wagner

	
 

	
Name:

	
Bradley Stanczak

	
 

	
Name: 

	
Dan Wagner

	
 

	
Title

	
Chief Financial Officer

	
 

	
Title:

	
AVP

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

SHARPSPRING
TECHNOLOGIES, INC.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Bradley Stanczak

	
 

	
 

	
 

	
 

	
Name:

	
Bradley Stanczak

	
 

	
 

	
 

	
 

	
Title:

	
Chief Financial Officer

	
 

	
 

	
 

	
 

  

 

 

4

 

 

EXHIBIT D

COMPLIANCE CERTIFICATE

 

TO: 

WESTERN ALLIANCE
BANK, an Arizona corporation

 

FROM: 

SHARPSPRING, INC.
and SHARPSPRING TECHNOLOGIES, INC.

 

The
undersigned authorized officer of SHARPSPRING, INC., on behalf of
itself and all other Borrowers, hereby certifies that in accordance
with the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the “Agreement”), (i) each
Borrower is in complete compliance for the period ending
_______________ with all required covenants except as noted below
and (ii) all representations and warranties of Borrower stated in
the Agreement are true and correct as of the date hereof. Attached
herewith are the required documents supporting the above
certification. The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to
the next except as explained in an accompanying letter or
footnotes.

 

Please indicate compliance status by circling Yes/No under
“Complies” column.

 

	

Reporting Covenant

	

Required

	

Complies

	
 

	
 

	
 

	
 

	

A/R
& A/P Agings

	

Monthly
within 30 days

	

Yes

	

No

	

Borrowing
Base Certificate

	

Monthly
within 30 days

	

Yes

	

No

	

Monthly
Recurring Revenue Report for prior 12 months

	

Monthly
within 30 days

	

Yes

	

No

	

Monthly
consolidated financial statements

	

Monthly
within 30 days

	

Yes

	

No

	

Monthly
consolidating financial statements

Compliance
Certificate

	

Monthly
within 30 days

Monthly
within 30 days

	

Yes

Yes

	

No

No

	

Annual
audited financial statements

Annual
operating budget, sales projections and operating plans approved by
board of directors

	

FYE
within 180 days

Annually
no later than 60 days following the beginning of each fiscal year
or board approval

	

Yes

Yes

	

No

No

 

	
 

	
 

	
 

	
 

	

A/R and
Collateral Audit

	

Initial
and Annual

	

Yes

	

No

	
 

	
 

	
 

	
 

	

Deposit
balances with Bank

	

$
___________________

	
 

	
 

	

Deposit
balance outside Bank

	

$
___________________

	
 

	
 

	
 

	
 

	
 

	
 

	

Financial
Covenant

	

Required

	

Actual

	

Complies

	
 

	
 

	
 

	
 

	
 

	

Minimum
Cash at Bank + Availability on Revolving Facility

	

$1,500,000

	

$_____

	

Yes

	

No

 

	

Minimum
MRR Retention Rate (monthly)

Negative
deviation not to exceed 25% of Financial Plan

	

At
least 90%

	

______%

	

Yes

	

No

 

	

Minimum
Adjusted EBITDA (Quarterly)

	

3/31/19
($3,061,000)

6/30/19
($2,702,000)

9/30/19
($2,190,000)

12/31/19
($1,618,000)

	

$_____

	

Yes

	

No

 

 

 

	

 

Comments Regarding Exceptions: See Attached.

	

BANK USE ONLY

	
 

	
 

	
 

	

Received
by:                                                                             

	

Sincerely,

	

AUTHORIZED
SIGNER

	
 

	
 

	
 

	

Date:                                                                             

	
 

	
 

	
 

	
 

	

___________________________________________

	

Verified:
                                                                            

	

SIGNATURE

	

AUTHORIZED
SIGNER

	
 

	
 

	

___________________________________________

	

Date:
                                                                            

	

TITLE

	
 

	
 

	

Compliance
Status

	

Yes
        No

	

___________________________________________

	
 

	

DATE

	
 

 

5Exhibit 4.1

 

THE BANK OF NEW YORK MELLON

NEW YORK’S FIRST BANK-FOUNDED 1784 BY ALEXANDER HAMILTON

 

 

2 HANSON PLACE, 12TH FLOOR, BROOKLYN,
N.Y. 11217

 

 

 

March 26, 2019

 

Hennion & Walsh, Inc.

2001 Route 46, Waterview Plaza

Parsippany, New Jersey 07054

 

Smart Trust 422 (the “Fund”)

 

Dear Sirs:

The Bank of New York
Mellon is acting as trustee for the Fund, consisting of the unit investment trusts (the “Trusts”) included in
the Registration Statement relating to the Fund. We enclosed a list of the securities to be deposited in the Trusts on the date
hereof. The prices indicated therein reflect our evaluation of such securities as of close of business on March 25, 2019, in accordance
with the valuation method set forth in the applicable Standard Terms and Conditions of Trust and Trust Agreements. We consent to
the reference to The Bank of New York Mellon as the party performing the evaluations of the Trust securities in the Registration
Statement (No. 333-229195) filed with the Securities and Exchange Commission with respect to the registration of the sale of the
Units of the Trusts and to the filing of this consent as an exhibit thereto.

 

	 	Very truly yours,
	 	 
	 	/s/ GERARDO CIPRIANO
	 	Gerardo Cipriano
	 	Vice President

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