Document:

Lake
County Community Development Block Grant

Economic Loan Fund Program

 

LOAN AGREEMENT

 

 

This Loan Agreement
(the "Loan Agreement"), is made and executed on this 20th day of June, 2013, by and between OURPET’S COMPANY,
(hereinafter the “Borrower"), an Ohio corporation with its main offices located at 1300 East Street, Fairport Harbor,
Ohio 44077 and the BOARD OF LAKE COUNTY COMMISSIONERS (hereinafter the “County”), acting on behalf of Lake County
and located at 105 Main Street, Painesville, OH 44077.

 

WITNESSETH:

 

WHEREAS, COUNTY has
applied for and received federal Community Development Block Grant (“CDBG”) funds from the United States Department
of Housing and Urban Development, for the specific purpose of undertaking economic development activities;

 

WHEREAS, the Borrower
has submitted to the County through the Lake County Port Authority as the Loan Administrator for the Economic Loan Fund Program
for County, (“Loan Administrator”) an application for a loan in the amount of One Hundred and Twenty Five Thousand
Dollars and no/100 Cents ($125,000.00) from the Lake County Community Development Block Grant Economic
Loan Fund for the purposes contained in the Scope of Work, included with the application the Borrower submitted to the Loan Administrator
all of which taken together is contained on Exhibit A, attached hereto and incorporated herein by reference, in the Village of
Fairport Harbor, Lake County, Ohio (the "Project");

 

WHEREAS, the Borrower
has obtained financing from other sources (the “Additional Financing”) to cover the costs of the Project in excess
of the amount requested in its application to the County; and

 

WHEREAS, the County
has determined that the Project meets the conditions set forth in the Lake County Economic Loan Program Guidelines and desires
to loan to the Borrower the amount of One Hundred Twenty Five Thousand Dollars and no/100 Cents ($125,000.00) for the provision
of the Project on the terms and conditions contained herein.

 

STATEMENT OF THE AGREEMENT

 

NOW, THEREFORE,
in consideration of the foregoing and the mutual promises herein contained, the parties hereto agree as follows:

 

		1.	Loan Amount. The County agrees to loan the Borrower the principal amount of One Hundred
and Twenty Five Thousand Dollars and no/100 Cents ($125,000.00), (hereinafter the "Loan"), for payment of the costs associated
with the completion of the Project, as outlined in the Scope of Work, contained on, Exhibit A, which is attached hereto and incorporated
herein by reference.

 

		2.	Disbursement of the Loan. The Loan shall be disbursed to the Borrower upon closing of the
loan and receipt of documentation acceptable to the County.

 

    	 

    	 

    

 

		3.	Evidence of the Loan. The Loan shall be evidenced by the cognovit promissory note of even
date, (hereinafter the “Note”) a copy of which is attached hereto, and incorporated herein as Exhibit B, bearing interest
at the rate of five percent (5%) per annum for the term of the Loan. The term of the Loan shall be five years (5) years.

 

		4.	Repayment of the Loan. The terms of repayment of the Loan shall be as set forth in the Note, and the Borrower shall
make all payments required to be made under

the Note as and when due. The sale or transfer of the
Project or the Project Property will cause the payment of the entire principal balance of the Loan plus any interest accrued to
date, as stated above, to be immediately due and payable.

 

		5.	Security. The Loan shall be secured by a UCC on the Equipment, executed by the Borrower
on the same date as the Note (the "UCC"), a copy of which is attached hereto and incorporated herein as Exhibit C. Hereinafter,
this Agreement, the Note and the Security Documents shall be referred to herein as the "Loan Documents".

 

		6.	Representations of the Borrower. The Borrower
hereby represents and warrants that:

 

a) It has full power and authority
to execute, deliver and perform the Loan Documents, and to enter into and carry out the transactions contemplated thereby. Such
execution, delivery and performance do not, and will not, violate any provision of law applicable to the Borrower and will not
conflict with or result in a default under any agreement or instrument to which the Borrower is a party or by which it or any of
its property or assets is or may be bound. All of the documents necessary to document this transaction have by proper action, been
duly authorized, executed and delivered and all necessary actions have been taken to constitute the Loan Documents valid and binding
obligations of the Borrower.

 

b) The provision of the Project
will be completed and the Project will be operated and maintained in such a manner as to conform with all applicable zoning, planning,
building, environmental and other applicable governmental regulations imposed by the federal, state or local governments.

 

c) There are no actions, suits,
or proceedings pending or threatened against or affecting the Borrower or the Project which, if adversely determined, would individually
or in the aggregate materially impair the ability of the Borrower to perform any of its obligations under the Loan Documents or
adversely affect the financial condition of the Borrower.

 

d) The Borrower is not in default
under any of the Loan Documents or in the payment of any indebtedness for borrowed money or under any agreement or instrument evidencing
any such indebtedness, and no event has occurred which by notice, the passage of time or otherwise would constitute any such event
of default.

 

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e) The site of the Project shall
be zoned under a zoning ordinance which permits the provision of the Project thereon in accordance with the plans and specifications
and the operation of the Project; and all utilities, including water, storm and sanitary sewer, gas, electric and telephone, and
rights of access to public ways shall be available or will be provided to the Project site in sufficient locations and capacities
to meet the requirements of operating the Project and of any applicable governmental requirement.

 

f) The Borrower has made no contract
or arrangement of any kind that would give rise to a lien or claim of lien on the Project or other collateral covered by the Loan
Documents, except as otherwise permitted under the Loan Documents.

 

g) All proceeds of the Loan shall
be used for the payment of costs relating to the provision of the Project. No part of any such proceeds shall be knowingly paid
to or retained by the Borrower or any partner, officer, shareholder, director or employee of the Borrower as a fee, kick-back or
consideration of any type. The Borrower has no identity of interest with the general contractor or any architect, subcontractor,
laborer or materialman performing work or services or supplying materials in connection with the provision of the Project.

 

h) The Borrower shall provide an
annual financial statement to the County or its Loan Administrator during each year of the loan term. The annual financial statement
shall be reviewed using generally accepted accounting principles and include a certificate of the Borrower’s chief executive
officer stating that (a) no Event of Default has occurred and is continuing and no event or circumstance which would constitute
an Event of Default, but for the requirement that notice be given or time elapse or both, has occurred and is continuing, or, if
such an Event of Default or such event or circumstance has occurred and is continuing, a statement as to the nature thereof and
the action which the Borrower proposes to take with respect thereto, and (b) no action, suit or proceeding by the Borrower or against
the Borrower at law or in equity, or before any governmental instrumentality or agency, is pending or, to the best of the Borrower’s
knowledge; threatened, which, if adversely determined, would materially impair the right or ability of the Borrower to perform
the transactions contemplated by the Loan Documents or the Lender Loan Documents, or would materially and adversely affect the
Borrower’s business, operations, properties, assets or condition, all as of the date of such certificate, except as disclosed
in such certificate.

 

i) The Project Property has never,
and does not currently contain, nor is it contaminated by, any hazardous or toxic waste materials in violation of any applicable
environmental laws or regulations, including, but not limited to, Section 103 of the Comprehensive Environmental Response, Compensation
and Liability Act, 42 USC 9601 et seq. and Chapter 3734 of the Ohio Revised Code; and no "clean-up" of the Project Property
has occurred pursuant to any applicable federal or state environmental laws or regulations which would give rise to (i) liability
on the part of any person, entity or association to reimburse any governmental authority for the costs of any such "clean-up",
(ii) a lien or encumbrance on the Project site, or (iii) impairment of the site for the intended purpose.

 

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j) The Borrower has demonstrated
to the satisfaction of the County the suitability of the site to undertake the Project and for the loan to be closed.

 

k) Borrower certifies that the
Project will not result in the relocation of a plant, facility or operation from one Lake County community to another, and as further
certified in Exhibit A.

 

l) The Project Property shall be
used for the activities set forth in the Scope of Work and shall not be used for other purposes or activities without the express
written approval of Lake County.

 

m) The Borrower acknowledges the
Lake County CDBG Economic Loan Program Requirements which are attached hereto as Exhibit D and incorporated as part of this Agreement.

 

		7.	Designation. The governing body of the County has by resolution or ordinance, designated
that the Project meets the Guidelines and that the assistance provided through this Agreement is appropriate.

 

		8.	Provision of the Project. The Borrower (a) has provided a marketing plan and management
strategy for the Project; (b) has commenced or shall promptly hereafter commence the provision of the Project; (c) has demonstrated
the Borrower’s capacity to undertake and oversee the Project, as evidenced by documentation of the applicant’s past
performance in economic development Projects; (d) shall pay all expenses incurred in such provision from funds made available therefor
in accordance with this Agreement or otherwise; and (e) shall demand, sue for, levy and recover all sums of money and debts which
may be due and payable under the terms of any contract, order, receipt, guaranty, warranty, writing or instruction in connection
with the provision of the Project and will enforce the terms of any contract, agreement, obligation, bond or other performance
security with respect thereto.

 

		9.	Prevailing Wage Rates. The Borrower confirms that all wages paid to laborers and mechanics
employed on the Project shall be paid at not less than the federal prevailing rates of wages for laborers and mechanics for the
class of work called for by the Project, which wages shall be determined in accordance with the federal requirements, or where
applicable, Chapter 4115, Ohio Revised Code, for determination of prevailing wage rates.

 

		10.	The Borrower Required to Pay Costs in Event Loan Proceeds are Insufficient. In the event
that the proceeds of the Loan and the Additional Financing are not sufficient to pay all costs of the Project, the Borrower will,
nonetheless and irrespective of the cause of such deficiency, complete the Project in accordance with the plans and specifications
and pay all costs of such completion in full from its own funds.

 

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		11.	Events of Default. Each of the following shall
be an "Event of Default":

 

a) The Borrower shall fail to pay
any amount payable pursuant to this Loan Agreement or under the Note on the date on which such payment is due and payable; or

 

b)
The Borrower shall fail to observe and perform any agreement, term or condition contained in this Loan Agreement other than
as required pursuant to subsection (a) above, and such failure continues for a period of thirty (30) days after notice of
such failure is given to the Borrower by the County or for such longer period as the County may agree to in writing;
provided, that if the failure is of such nature that it can be corrected but not within the applicable period, such failure
shall not constitute an Event of Default so long as the Borrower institutes curative action within the applicable period and
diligently pursues such action to completion; or

 

			c) Any representation or warranty made by the Borrower herein or in any other Loan Documents or
in connection herewith shall prove to have been incorrect in any material respect when made; or

 

d) The Borrower shall fail to pay
any indebtedness of the Borrower, or any interest or premium thereon, when due and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to such indebtedness; or

 

e) The Borrower commences a voluntary
case concerning it under titles of the United States Code entitled "Bankruptcy" as now or hereafter in effect, (the "Bankruptcy
Code"), or any successor thereto or an involuntary case is commenced against the Borrower under the Bankruptcy Code and relief
is ordered against the Borrower; or the Borrower is not paying its debts as such debts become due.

 

f) The Borrower relocates a plant,
facility or operation from one Labor Market Area to another which results in the relocation of jobs and the significant loss of
jobs to the Labor Market Area from which the relocation occurred within three years of the date of assistance.

 

		12.	Remedies on Default. Whenever an Event of Default shall have happened and be subsisting,
any one or more of the following remedial steps may be taken:

 

a) If the Loan has not been disbursed,
the County may terminate any and all obligations under this Agreement;

 

b) The County may declare all payments
under the Note to be immediately due and payable, whereupon the same shall become immediately due and payable;

 

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c) The County may exercise any
or all or any combination of the remedies specified in the Security Documents;

 

d) The County may have access to,
inspect, examine and make copies of the books and records accounts and financial data of the Borrower; or

 

e) The County may pursue all remedies
now or hereafter existing at law or in equity to collect all amounts then due and thereafter to become due under this Agreement,
the Note, the Security Documents, or to enforce the performance and observance of any other obligation or agreement of the Borrower
under the Loan Documents.

 

		13.	No Remedy Exclusive. No remedy conferred upon or reserved to the Lake County jurisdiction
by this Agreement is intended to be exclusive of any other remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement, each other loan document, or now or hereafter existing
at law, in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any
such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Lake County jurisdiction to exercise any remedy reserved to it
in this section, it shall not be necessary to give any notice, other than such notice as may be expressly provided for herein or
required by law.

 

		14.	Uses of Loan Amount. It is further agreed that the funds loaned by the County hereunder
will be used by the Borrower as outlined in Exhibit A.

 

		15.	Notification. The Borrower shall immediately notify the County of any change in its financial
position, which would relate to the ability of the Borrower to fulfill its responsibilities under this Loan Agreement or the Note.

 

		16.	Indemnification. To the extent allowable by law, the Borrower shall defend, indemnify and
hold the County and any officials of the State of Ohio harmless against any and all cost, expense, claims or actions arising out
of or connected with the execution and delivery of this Loan Agreement or any other documents related to this transaction. The
provisions related to this section shall survive the termination of this Loan Agreement.

 

		17.	Other Agreements. The Borrower shall not enter into any agreement containing any provision
which would be violated hereunder or under any instrument or document delivered or to be delivered by it hereunder or in connection
herewith.

 

		18.	Miscellaneous.

 

a) Term of Agreement. This
Agreement shall be and remain in full force and effect from the date of its delivery until (a) the termination of this Agreement
pursuant to section 12 hereof or (b) such time as the Loan shall have been fully repaid and all other sums payable by the Borrower
under this Agreement, the Note and the other Loan Documents have been satisfied.

 

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b) Notices. All notices,
certificates, requests or other communications hereunder shall be in writing and shall be deemed to be sufficiently given when
mailed by registered or certified mail, postage prepaid, and addressed to the appropriate address. The Borrower or the County may,
by notice given hereunder, designate any further or different addresses to which subsequent notice, certificates, requests or other
communications shall be sent.

 

c) Extent of Covenants of the
County. All covenants, obligations and agreements of the County contained in this Agreement shall be effective to the extent
authorized and permitted by applicable law. No such covenant, obligation or agreement shall be deemed to be a covenant, obligation
or agreement of any present or future Board of County Commissioners other than in its official capacity.

 

d) Binding Effect. This
Agreement shall inure to the benefit of and shall be binding in accordance with its terms upon the County, the Borrower and their
respective successors and assigns.

 

e) Amendments and Supplements.
This Agreement may not be amended or supplemented except by an instrument in writing executed by the County and the Borrower.

 

f) Severability. If any
provision of this Agreement, or any covenant, obligation, or agreement contained herein is determined by a court to be invalid
or unenforceable, such determination shall not affect any other provision, covenant, obligation or agreement, each of which shall
be construed and enforced as if such invalid or unenforceable portion were not contained herein. Such invalidity or unenforceability
shall not affect any valid and enforceable application thereof, and each such provision, covenant, obligation or agreement, shall
be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent permitted by law.

 

g) Captions. The captions
and headings in this Agreement shall be solely for convenience or reference and shall in no way define, limit or describe the scope
or intent of any provisions or sections of this Agreement.

 

h) Governing Law. This Agreement
shall be deemed to be a contract made under the laws of the State of Ohio in Lake County, Ohio and for all purposes shall be governed
by and construed in accordance with the laws of the State of Ohio.

 

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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement the day and year first above written.

 

 

 

	 	BORROWER: OURPET’S COMPANY
	 	 	 
	 	 	 
	Date: June 20, 2013	By:	/s/Steve
Tsengas
	 	 	Steve Tsengas
	 	Its:	Chairman & CEO
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	BOARD OF LAKE COUNTY COMMISSIONERS
	 	 	 
	 	 	 
	 	/s/Robert E. Aufuldish
	Date:
June 20, 2013	Robert E. Aufuldish, President
	 	 	 
	 	 	 
	Date: June 20, 2013	/s/Judy Moran
	 	Judy Moran
	 	 	 
	 	 	 
	Date:
June 20, 3013	/s/Daniel P. Troy
	 	Daniel P. Troy

 

 

 

    	8LAKE COUNTY
COMMUNITY DEVELOPMENT BLOCK GRANT 

Economic
Loan Fund Program

 

COGNOVIT PROMISSORY NOTE

 

 

	$125,000.00	June 20, 2013

 

For value received,
OURPET’S COMPANY, an Ohio corporation, (the "Borrower"), promises to pay to the order of THE BOARD OF LAKE COUNTY
COMMISSIONERS (the "Lender"), located at 105 Main Street, Painesville, Ohio 44077, or at such other address as may be
designated in writing by the Lender, the principal sum of One Hundred and Twenty Five Thousand Dollars and no/100 Cents ($125,000.00),
or such lesser amount as is the Loan Amount, as defined in the Loan Agreement by and between the Lender and the Borrower, of even
date (the "Loan Agreement") with interest on the amount of principal from time to time outstanding from the Disbursement
Date as defined in the Loan Agreement at the rate of FIVE PERCENT (5%) per annum simple interest amortized over a FIVE-year period.
The principal of and interest on this Note shall be paid in SIXTY (60) consecutive monthly installments due and payable on the
15th day of each calendar month commencing on July 13, 2013 and a final 60th payment in the full amount of principal remaining,
in accordance with the payment schedule attached hereto and made a part hereof as Schedule A.

 

This Note does not
of itself constitute a commitment by the Lender to make any disbursement of the Loan (as defined in the Loan Agreement) to the
Borrower. The conditions for making such a disbursement are set forth in the Loan Agreement. The disbursements made by the Lender
to the Borrower shall not exceed the face amount of this Note and the total amount of such disbursement is limited by and subject
to the conditions for making disbursement of the Loan as set forth in the Loan Agreement.

 

The annual rate of
interest stated herein shall apply to a 360-day period and amounts of interest due hereunder shall be computed upon the basis of
30-day months. Installments of principal and interest shall be applied first to interest as provided herein and the balance to
principal due hereunder.

 

The Borrower may prepay
all or any portion of the principal sum hereof at any time without penalty. All such prepayments shall be applied to the payment
of the principal installments due hereon in the inverse order of their maturity, and shall be accompanied by the payment of accrued
interest on the amount of the prepayment to the date thereof.

 

The payment of this
Note and all interest hereon is secured by a UCC filing of even date on the property owned by the Borrower located at 1300 East
Street, Fairport Harbor, Ohio 44077, and 8808 Twinbrook Road, Mentor, Ohio 44060. The covenants,
conditions and agreements contained in the Loan Agreement are hereby made a part of this Note.

 

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If a default shall
occur in the payment of any installment of principal and interest, under this Note, in either case continuing for a period of ten
(10) days after written notice of the failure to make any such payment when due and payable, or if an Event of Default (as defined
in any of the Loan Documents) shall have occurred and be continuing, then, at the option of the Lender, the entire principal sum
and all interest accrued hereon shall become due and payable at once, without demand or notice.

 

If any provision hereof
is in conflict with any statute or rule of law of the State of Ohio or is otherwise unenforceable for any reason whatsoever, then
such provision shall be deemed separable from and shall not invalidate any other provision of this Note.

 

If this Note is placed
in an attorney's hands for collection, or collected by suit or through the bankruptcy or probate, or any other court, either before
or after maturity, there shall be paid to the holder of this Note, reasonable attorney fees, costs and other expenses incurred
by the holder in enforcing the terms of this Note.

 

The undersigned hereby
authorizes any attorney-at-law to appear in any court of record situated in Lake County in the State of Ohio, or elsewhere, where
the undersigned resides or has its principal place of business, signed this Note, or can be found, after the obligation evidenced
hereby, or any part thereof becomes due and is unpaid, and waives the issuance and service of process and confesses judgment against
the undersigned in favor of the holder of this Note for the amount then appearing due, together with the costs of the suit, and
thereupon to release all errors and waive all right to appeal and stay of execution.

 

This Note is executed
in Painesville, Ohio, and shall be construed in accordance with the laws of the State of Ohio.

 

WARNING: BY SIGNING THIS PAPER YOU GIVE
UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR
KNOWLEDGE, AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE (Section 2323.13,
Ohio Revised Code).

 

 

 

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	Signed and acknowledged	 	OURPET’S COMPANY
	 	 	 	 
	Steve Tsengas	 	By:	/s/Steve Tsengas
	Print Name:	 	 	Steve Tsengas, Chairman & CEO

 

 

 

 

 

	STATE OF OHIO	)
	 	) SS:
	COUNTY OF Lake_______	)

 

Before me, a Notary
Public in and for said County and State, personally appeared Steve Tsengas, the Chairman and CEO of OURPET’S COMPANY., an
Ohio corporation (“Company”), who represented that he is the duly authorized agent and Chairman and CEO of the Company
and who acknowledged that he did sign the foregoing instrument and the same is his free and voluntary act and deed as an officer
of the Company, and the free and voluntary act and deed of the Company.

 

	 	/s/Jamie McCullough
	 	Notary Public
	 	 
	 	My commission expires: September 24, 2013

 

 

 

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