Second Amended and Restated Credit Facility Agreement

 

 

 

 

 

(a) Subject to the sole discretion of each individual Lender, and subject to the terms and conditions of this Agreement, each of the Lenders severally agrees to extend a LOC, in the aggregate, of up to Ten Million Dollars ($10,000,000) (the “Advances”) to Borrower from time to time from the Effective Date until December 31, 2019. The Advances shall be made pro rata in accordance with each Lender’s percentage as set forth in Schedule A, subject to any pro rata adjustments made for Additional Lenders, provided, however, to the extent such Lender elects not to make an Advance or the full amount of its right to make an Advance (each event, a “Shortfall”), the other Lenders may elect to make up the Shortfall, if any.

 

(b) The Advances shall be evidenced by separate promissory notes of the Borrower in substantially the form of Exhibits A-1 and A-2 attached hereto dated of even date with this Agreement (except for the Note evidencing Borrower’s prior Advances to date, which shall be amended to reflect the increase to the amount of the Advances per this Agreement)(collectively, the “Notes”), and completed with appropriate insertions. One Note shall be payable to the order of each Lender in the principal amount equal to the LOC commitment or, if less, the outstanding amount of all Advances made by such Lender, plus interest accrued thereon, as set forth below. All Advances shall be made pursuant the terms and obligations set forth in the Note.

 

(c) For the purposes of the Advances, subject to the limitations, terms and conditions set forth in the Notes, Borrower may, from time to time, prior to the Due Date (as defined in the Note), draw down, repay, and re-borrow on the Note, by giving notice to Lenders of the amount to be requested to be drawn down.

 

(d) In order to secure Borrower’s performance under the Note, the Borrower and the Lenders entered into an Amended and Restated Security Agreement, dated March 28, 2019 (the “Security Agreement”), the terms of which are incorporated herein by this reference. The Borrower and Lender with enter into an agreement to amend to the Security Agreement to reflect the increase to the amount of the Advances per this Agreement.

 

(e) All Advances shall be used by Borrower for the purchase of inventory and related operational support expenses.

 

(f) The Note and the Security Agreement, together with all of the other agreements, documents, and instruments heretofore or hereafter executed in connection therewith or with the Loan to be made under this Agreement, as the same may be amended, supplemented or modified from time to time, shall collectively be referred to herein as the “Loan Documents.”

 

2. Interest Rate and Fees. Interest and fees shall accrue and be payable on the Loan as set forth in the Note.

 

3. Representations and Warranties of Borrower. Borrower represents and warrants to Lender that:

 

(a) Corporate Existence and Power.

 

(i) Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of California.

 

(ii) Borrower has the power and authority to own its properties and assets and to carry out its business as now being conducted.

 

(iii) Borrower has the power and authority to execute, deliver and perform the Loan Documents to which it is a party, to borrow and guaranty money in accordance with the terms thereof, to execute, deliver and perform its obligations under the Note and the other Loan Documents to which it is a party and any other documents made by it as contemplated hereby, and to grant to Lender liens and security interests in the Collateral (as defined in the Security Agreement) as hereby contemplated.

 

(b) Authorization and Approvals. All corporate action on the part of Borrower, its board of directors, and shareholders necessary for the (a) authorization, execution, delivery and performance by it of the Loan Documents to which it is a party, and (b) the performance of its obligations under the Loan Documents, has been taken or will be taken prior to this Agreement. This Agreement and the other Loan Documents, when executed and delivered by Borrower, shall constitute the valid and binding obligations of Borrower, enforceable in accordance with their respective terms.

 

(c) Pre-existing business relationship; Experience. Borrower has a pre-existing business relationship with Lenders and has such knowledge and experience in financial and business matters: (a) to be capable of evaluating the merits and risks of the LOC, (b) to make an informed decision relating thereto, and (c) to protect its own interests in connection with the transaction contemplated by this Agreement.

 

(d) Compliance with Laws, Etc. The execution and delivery of this Agreement and the Note hereunder does not and will not violate any requirement of law or any contractual obligation of Borrower.

 

(e) Defaults. Borrower is not currently in default of any contractual obligation that would have a material adverse effect on Borrower’s business, assets or financial condition.

 

(f) Litigation. There is no litigation, arbitration or other proceedings taking place, pending or to the knowledge of Borrower threatened against Borrower or any of its assets which questions the validity of this Agreement or the right of Borrower to enter into it or to consummate the transactions contemplated hereby.

 

4. Representations and Warranties of Each of the Lenders. Each of the Lenders severally represents and warrants to Borrower that:

 

(a) Requisite Power and Authority. Lender has all of the requisite power, authority, and capacity to execute, deliver, and comply with the terms of this Agreement, and such execution, delivery, and compliance does not conflict with, or constitute a default under, any instruments governing Lender, any law, regulation or order, or any agreement to which Lender is a party or by which Lender may be bound. All action on Lender’s part necessary for the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, and the performance of all obligations of Lender hereunder has been taken. This Agreement has been duly executed and delivered by Lender.

 

(b) Pre-existing business relationship; Experience. Lender has a pre-existing business relationship with Borrower and has such knowledge and experience in financial and business matters: (a) to be capable of evaluating the merits and risks of the loan to Borrower, (b) to make an informed decision relating thereto, and (c) to protect its own interests in connection with the transaction contemplated by this Agreement.

 

5. Notices. Any notice, request, instruction, or other document to be given hereunder by any party hereto to any other party will be in writing and will be given by delivery in person, by facsimile transmission, by email or other electronic communication, by overnight courier or by registered or certified mail, postage prepaid (and will be deemed given when delivered if delivered by hand, when transmission confirmation is received if delivered by facsimile, three (3) days after mailing if mailed by United States mail, and one (1) business day after deposited with an overnight courier service if delivered by overnight courier), as follows:

 

 

6. Entire Agreement. This Agreement, the Loan Documents, and the other agreements entered into in connection herewith supersede all prior negotiations and agreements (whether written or oral) and constitute the entire understanding among the parties hereto.

 

7. Successors. This Agreement shall inure to the benefit of and be binding upon the parties named herein and their respective successors and assigns.

 

8. Headings. The section headings contained in this Agreement are for convenience only and shall not control or affect the meaning or construction of any of the provisions of this Agreement.

 

9. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of California without reference to principles of conflict of law and, in the event of any litigation or other dispute in connection with this Agreement or any of the exhibits attached hereto, the venue and jurisdiction of which shall be in Los Angeles County, California.

 

10. Delay, Etc. No delay or omission to exercise any right, power or remedy accruing to any party hereto shall impair any such right, power or remedy of such party nor be construed to be a waiver of any such right, power or remedy, nor constitute any course of dealing or performance hereunder.

 

11. Costs and Attorneys’ Fees. If any action, suit, arbitration proceeding or other proceeding is instituted arising out of this Agreement, the prevailing party shall recover all of such party’s costs, including, without limitation, the court costs and reasonable attorneys’ fees incurred therein, including any and all appeals or petitions therefrom.

 

12. Waiver and Amendment. Any of the terms and provisions of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but only by a written instrument executed by such party. This Agreement may be amended only by an agreement in writing executed by the parties hereto, provided however, the admission of an “Additional Lender” shall not require any consent or approval from the Lenders, and Schedule A may be amended by the Company from time to time to provide for Additional Lenders who join as a party to this Agreement with no consent or approval required from the Lenders. Upon the admission of a new Additional Lender, the Company shall provide the existing Lenders with notice of new Additional Lender and updated Schedule A with the new adjusted Lender Percentages.

 

13. Consent to Amendment and Restatement; Effect of Amendment and Restatement. The Lenders, as of the date of this Agreement, hereby consents to the amendment and restatement of the First Restated Agreement pursuant to the terms of this Agreement and the amendment or amendment and restatement of the other Loan Documents. Upon the execution by all parties to this Agreement, the First Restated Agreement shall be amended and restated in its entirety by this Agreement, and the First Restated Agreement shall thereafter be of no further force and effect and shall be deemed replaced and superseded in all respects by this Agreement.

 

14. Additional Lenders. Notwithstanding anything to the contrary contained herein, a party may become a Lender under this Agreement by executing and delivering an additional counterpart signature page to this Agreement and thereafter shall be deemed an “Lender” for all purposes hereunder.

 

15. Counterparts; Electronic Transmission. This Agreement may be executed in one or more counterparts (any of which may be delivered by fax or electronic mail transmission), each of which will for all purposes be deemed to be an original and all of which will constitute the same instrument.

 

 

 

 

 

 

 

Lenders	Funded Amount	Percentages
Esenjay Investments, LLC	$2,405,000	34%*
Cleveland Capital, L.P.	$2,000,000	29%*
Otto Candies Jr.	$700,000	10%*
Paul Candies Brett Candies Winn Interest, Ltd. David A. Modesett Helen M. Tabone	$250,000 $250,000 $1,000,000 $200,000 $195,000	4%* 4%* 14%* 3%* 3%*
	*Subject to adjustments based on admission of Additional Lenders from time to time by the Company.