EXHIBIT 10.2
CREDIT AGREEMENT
among
WESTERN CAPITAL RESOURCES, INC.,
as Borrower
and
FIFTH THIRD BANK,
as Lender
Dated as of April 21, 2016
TABLE OF CONTENTS
| Section |
Page |
| |
|
| ARTICLE I DEFINITIONS; CONSTRUCTION |
1 |
| 1.01 Definitions |
1 |
| 1.02 Accounting Terms and Determination |
16 |
| 1.03 Terms Generally |
17 |
| |
|
| ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS |
17 |
| 2.01 The Commitments and Loans |
17 |
| 2.02 Requests for Advances |
18 |
| 2.03 Prepayments |
19 |
| 2.04 Termination or Reduction of Commitments |
20 |
| 2.05 Repayment of Loans |
20 |
| 2.06 Interest; Default Rate; Late Fees |
21 |
| 2.07 Fees |
21 |
| 2.08 Computation of Interest and Fees |
22 |
| 2.09 Payments Generally |
22 |
| 2.10 Extension of Maturity Date in respect of Revolving Credit Commitment. |
23 |
| 2.11 Extension of Maturity Date in respect of Acquisition Facility Commitment. |
23 |
| 2.12 Letters of Credit. |
24 |
| |
|
| ARTICLE III YIELD PROTECTION AND ILLEGALITY |
25 |
| 3.01 Illegality; Inability to Determine Rates |
25 |
| 3.02 Recovery of Additional Costs |
26 |
| 3.03 Survival |
26 |
| |
|
| ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS |
26 |
| 4.01 Conditions to Closing |
26 |
| 4.02 Conditions to All Extensions of Credit |
28 |
| |
|
| ARTICLE V REPRESENTATIONS AND WARRANTIES |
29 |
| 5.01 Existence; Power |
29 |
| 5.02 Organizational Power; Authorization; Enforceability |
29 |
| 5.03 Governmental Approvals; No Conflicts |
29 |
| 5.04 Financial Statements; No Material Adverse Effect |
29 |
| 5.05 Litigation |
30 |
| 5.06 Compliance with Laws and Agreements; No Default |
30 |
| 5.07 Title to Assets |
30 |
| 5.08 Environmental Matters |
31 |
| 5.09 Insurance |
31 |
| 5.10 Taxes |
31 |
| 5.11 ERISA Compliance |
32 |
| 5.12 Subsidiaries; Equity Interests; Loan Parties |
32 |
| 5.13 Margin Regulations; Investment Company Act |
32 |
| 5.14 Intellectual Property; Licenses, Etc. |
33 |
| 5.15 Solvency |
33 |
| 5.16 Security Documents |
33 |
| 5.17 Disclosure |
33 |
| ARTICLE VI AFFIRMATIVE COVENANTS |
33 |
| 6.01 Financial Statements and Other Information |
33 |
| 6.02 Notices |
35 |
| 6.03 Payment of Obligations |
36 |
| 6.04 Preservation of Existence, Etc |
36 |
| 6.05 Maintenance of Properties |
36 |
| 6.06 Maintenance of Insurance |
36 |
| 6.07 Compliance with Laws |
36 |
| 6.08 Books and Records |
36 |
| 6.09 Inspection Rights |
37 |
| 6.10 Use of Proceeds |
37 |
| 6.11 Compliance with Environmental Laws |
37 |
| 6.12 Deposit Accounts |
37 |
| 6.13 Material Agreements |
37 |
| 6.14 Information Regarding Collateral |
38 |
| 6.15 Further Assurances |
38 |
| 6.16 Additional Collateral |
38 |
| |
|
| ARTICLE VII FINANCIAL COVENANTS |
40 |
| 7.01 Consolidated Leverage Ratio |
40 |
| 7.02 Consolidated Fixed Charge Coverage Ratio |
40 |
| |
|
| ARTICLE VIII NEGATIVE COVENANTS |
40 |
| 8.01 Liens |
40 |
| 8.02 Indebtedness |
41 |
| 8.03 Investments |
42 |
| 8.04 Fundamental Changes |
43 |
| 8.05 Dispositions |
44 |
| 8.06 Restricted Payments |
45 |
| 8.07 Change in Nature of Business |
45 |
| 8.08 Transactions with Affiliates |
46 |
| 8.09 Restrictive Agreements |
46 |
| 8.10 Amendments of Organizational Documents |
46 |
| 8.11 Accounting Changes |
46 |
| 8.12 Prepayments, Etc. of Indebtedness |
46 |
| 8.13 Amendment, Etc. of Indebtedness |
47 |
| 8.14 Management & Board Fees |
47 |
| |
|
| ARTICLE IX EVENTS OF DEFAULT AND REMEDIES |
47 |
| 9.01 Events of Default |
47 |
| 9.02 Remedies upon Event of Default |
49 |
| |
|
| ARTICLE X MISCELLANEOUS |
49 |
| 10.01 Waivers; Amendments |
49 |
| 10.02 Notices |
50 |
| 10.03 Expenses; Indemnification |
50 |
| 10.04 Successors and Assigns |
51 |
| 10.05 Governing Law; Jurisdiction; Consent to Service of Process |
52 |
| 10.06 WAIVER OF JURY TRIAL |
52 |
| 10.07 Right of Setoff; Payment Set Aside |
53 |
| 10.08 Counterparts; Integration |
53 |
| 10.09 Survival |
53 |
| 10.10 Severability |
54 |
| 10.11 Interest Rate Limitation |
54 |
| 10.12 Confidentiality |
54 |
| 10.13 USA PATRIOT Act Notice |
54 |
Exhibits
| Exhibit A |
- |
Form of Loan Notice |
| Exhibit B-1 |
- |
Form of Revolving Credit Note |
| Exhibit B-2 |
- |
Form of Acquisition Note |
| Exhibit C |
- |
Form of Compliance Certificate |
| Exhibit D |
- |
Form of Intercompany Note & Security Agreement |
Schedules
| Schedule 5.05 |
- |
Litigation |
| Schedule 5.07(b) |
- |
Owned Real Property |
| Schedule 5.07(c)(i) |
- |
Leased Real Property (Lessee) |
| Schedule 5.07(c)(ii) |
- |
Leased Real Property (Lessor) |
| Schedule 5.08(b) |
- |
Environmental Reports |
| Schedule 5.12 |
- |
Subsidiaries; Equity Interests; Loan Parties |
| Schedule 8.01 |
- |
Existing Liens |
| Schedule 8.02 |
- |
Existing Indebtedness |
| Schedule 8.03 |
- |
Existing Investments |
| Schedule 8.08 |
- |
Affiliate Transactions |
CREDIT AGREEMENT
This CREDIT AGREEMENT
(“Agreement”) is entered into as of April 21, 2016, by and between WESTERN CAPITAL RESOURCES, INC., a Minnesota corporation
(the “Borrower”), and FIFTH THIRD BANK, an Ohio banking corporation (the “Lender”).
WITNESSETH:
WHEREAS, the Borrower
has requested that the Lender provide an acquisition credit facility and a revolving credit facility, and the Lender has indicated
its willingness to provide the credit facilities to the Borrower, in each case, on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.01 Definitions.
In addition to the other terms defined herein, the following terms used herein shall have the meanings herein specified (to be
equally applicable to both the singular and plural forms of the terms defined):
“Acquisition
Facility Commitment” means the obligation of the Lender to make Acquisition Loans to the Borrower in an aggregate principal
amount not exceeding $9,000,000.
“Acquisition
Loans” has the meaning specified in Section 2.01(b).
“Acquisition
Note” or “Acquisition Notes” means, individually or collectively as the context may require, the Acquisition
Notes of the Borrower payable to the order of the Lender, in substantially the form of Exhibit B-2 attached hereto.
“Affiliate”
means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or
is Controlled by or is under common Control with the Person specified.
“Agreement”
means this Credit Agreement.
“Applicable Commitment
Fee Margin” means, at any time, 0.25% per annum.
“Applicable Margin”
means 3.50% per annum.
“Attributable
Indebtedness” means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that
would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic
Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable
agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease or other agreement or instrument were accounted for as a Capitalized Lease and (c) all Synthetic Debt of such Person.
“Audited Financial
Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December
31, 2014, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal
year of the Borrower and its Subsidiaries, including the notes thereto.
“Availability
Period” means (a) in respect of the Revolving Credit Commitment, the period from and including the Closing Date to the earliest
of (i) the Maturity Date for the Revolving Credit Commitment, (ii) the date of termination of the Revolving Credit Commitment pursuant
to Section 2.06, and (iii) the date of termination of the commitment of the Lender to make Revolving Loans pursuant to Section
9.02 and (b) in respect of the Acquisition Facility Commitment, the period from and including the Closing Date to the earliest
of (i) the Maturity Date for the Acquisition Facility Commitment and (iii) the date of termination of the commitments of the Lender
to make the Acquisition Loans pursuant to Section 9.02.
“Base Rate”
shall mean the higher of (A) the Prime Rate, and (B) the sum of the Federal Funds Rate plus fifty (50) basis points (0.50%).
If and when the Base Rate (or any component thereof) changes, the rate of interest with respect to any amounts hereunder to which
the Base Rate applies will change automatically without notice to the Borrower, effective on the date of any such change.
“Base Rate Margin”
shall mean such margin as would be required in order that the applicable interest rate for such Loan would be equal to the interest
rate then in effect.
“BCM” means
Blackstreet Capital Management, LLC, a Delaware limited liability company.
“Borrower”
has the meaning specified in the introductory paragraph hereto.
“Business Day”
means (i) with respect to all notices and determinations in connection with the LIBOR Rate, any day (other than a Saturday or Sunday)
on which commercial banks are open in London, England, New York, New York, and Cincinnati, Ohio for dealings in deposits in the
London Interbank Market; and (ii) in all other cases, any day on which commercial banks in Cincinnati, Ohio are required by law
to be open for business; provided that, notwithstanding anything to the contrary in this definition of “Business Day”,
at any time during which a Rate Management Agreement with Lender is then in effect with respect to all or a portion of this Agreement,
then the definitions of “Business Day” and “Banking Day”, as applicable, pursuant to such Rate Management
Agreement shall govern with respect to all applicable notices and determinations in connection with such portion of this Agreement
subject to such Rate Management Agreement. Periods of days referred to in this Agreement will be counted in calendar days unless
Business Days are expressly prescribed.
“Capital Expenditures”
means, with respect to any Person for any period, any expenditure in respect of the purchase or other acquisition of any fixed
or capital asset (excluding normal replacements and maintenance which are properly charged to current operations).
“Capitalized
Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.
“Cash Equivalents”
means any of the following types of Investments, to the extent owned by the Borrower or any of its Subsidiaries free and clear
of all Liens (other than Liens created under the Security Documents):
(a) readily
marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality
thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit
of the United States of America is pledged in support thereof;
(b) time
deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is the Lender
or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal
banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the
District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper
rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each
case with maturities of not more than 90 days from the date of acquisition thereof;
(c) commercial
paper issued by any Person organized under the laws of any state of the United States of America and rated at least “Prime-1”
(or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each
case with maturities of not more than 180 days from the date of acquisition thereof; and
(d) Investments,
classified in accordance with GAAP as current assets of the Borrower or any of its Subsidiaries, in money market investment programs
registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating
obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character,
quality and maturity described in clauses (a), (b) and (c) of this definition.
“CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability Act of 1980.
“CERCLIS”
means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental
Protection Agency.
“Change in Law”
means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation, guideline, directive or treaty (in each case whether or not having the
force of law and including, without limitation, any request, rule guideline or directive (1) in connection with the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) or (2) enacted, promulgated, adopted, issued
or implemented by the Bank of International Settlements, the Basel Committee on Banking Supervision (or any successor or similar
authority), or the United States or foreign financial regulatory authorities), or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having
the force of law) by any Governmental Authority; provided that (x) the Dodd-Frank Wall Street Reform and Consumer Protection
Act and all requests, rules, guidelines or directives issued in connection with that Act, and (y) all requests, rules, guidelines
or directives promulgated by the Lender for International Settlements, the Basel Committee on Banking Supervision (or any successor
authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be
a “Change in Law,” regardless of the date enacted, adopted or issued.
“Change of Control”
means an event or series of events by which:
(a) any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity
as trustee, agent or other fiduciary or administrator of any such plan) other than WCR, LLC, BCM or any of their Affiliates becomes
the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that
a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the
right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option
right”)), directly or indirectly, of 51% or more of the equity securities of the Borrower entitled to vote for members of
the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such
securities that such “person” or “group” has the right to acquire pursuant to any option right); or
(b) any
Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly,
a controlling influence over the management or policies of the Borrower, or control over the equity securities of the Borrower
entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and
taking into account all such securities that such Person or Persons have the right to acquire pursuant to any option right) representing
51% or more of the combined voting power of such securities; or
“Closing Date”
means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Collateral”
means any real and personal property of the Borrower or any other Loan Party or Person in which the Lender is granted a Lien under
any Security Document as security for all or any portion of the Obligations.
“Commitment”
means the Revolving Credit Commitment or the Acquisition Facility Commitment, as the context may require.
“Commodity Exchange
Act” means the Commodity Exchange Act (7 U.S.C. § 1 et. Seq.), as amended from time to time, and any successor statute.
“Compliance Certificate”
means a certificate substantially in the form of Exhibit C.
“Consolidated
EBITDA” means, at any date of determination, an amount equal to Consolidated Net Income of the Borrower and its Non-MSB Subsidiaries
on a consolidated basis for the most recently completed Measurement Period plus (a) the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Interest Charges, (ii) the provision for Federal, state, local and foreign income
taxes payable, (iii) one-time transaction costs for such period incurred in connection with any Investment in any Eligible Portfolio
Company in an aggregate amount not to exceed $400,000 per transaction and approved by the Lender, (iii) depreciation and amortization
expense, and (iv) other non-recurring expenses reducing such Consolidated Net Income which do not represent a cash item in such
period or any future period (in each case of or by the Borrower and its Non-MSB Subsidiaries for such Measurement Period) and minus
(without duplication) (b) the following to the extent included in calculating such Consolidated Net Income: (i) Federal, state,
local and foreign income tax credits and (ii) all non-cash items increasing Consolidated Net Income (in each case of or by the
Borrower and its Non-MSB Subsidiaries for such Measurement Period). Notwithstanding anything in this Agreement to the contrary,
for purposes of calculating the Consolidated Leverage Ratio, subject to successful underwriting by the Lender, in its sole discretion,
the calculation of Consolidated EBITDA of any Eligible Portfolio Company shall be made and based on the actual historical results
of such Eligible Portfolio Company for such Measurement Period, even if such Eligible Portfolio Company was not owned by the Borrower
or any of its Non-MSB Subsidiaries for the entire Measurement Period.
“Consolidated
Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of (a) (i) Consolidated EBITDA, plus (ii) rentals
payable under leases of real or personal, or mixed, property, less (iii) the aggregate amount of Federal, state, local and foreign
income taxes paid in cash (prorated based on the effective tax rate applied to the pre-tax income of the Non-MSB Subsidiaries),
less (iv) the aggregate amount of all Restricted Payments, less (v) the aggregate amount of all Capital Expenditures (other than
(A) Capital Expenditures financed with the proceeds of purchase money indebtedness or capital leases to the extent permitted hereunder,
(B) Capital Expenditures in an amount of up to $75,000.00 per “Cricket Wireless” store and $2,000,000.00 in the aggregate
for all “Cricket Wireless” stores in any fiscal year in respect of pre-opening costs or acquisition costs actually
incurred for such “Cricket Wireless” stores and (C) Capital Expenditures in an aggregate amount not to exceed $520,000.00
for the first quarter of 2015, $2,200,000.00 for the second quarter of 2015, $0.00 for the third quarter of 2015 and $200,000.00
for the fourth quarter of 2015 actually incurred by the Borrower and its Non-MSB Subsidiaries in respect of pre-opening costs for
“Cricket Wireless” stores opened and the Green Communications acquisition during such period) to (b) the sum of (i)
Consolidated Interest Charges, (ii) the aggregate principal amount of all regularly scheduled principal payments or redemptions
or similar acquisitions for value of outstanding debt for borrowed money, but excluding any such payments to the extent refinanced
through the incurrence of additional Indebtedness otherwise expressly permitted under Section 8.02 and (iii) rentals payable under
leases of real or personal, or mixed, property, in each case, of or by the Borrower and its Non-MSB Subsidiaries for the most recently
completed Measurement Period.
“Consolidated
Funded Indebtedness” means, as of any date of determination, for the Borrower and its Non-MSB Subsidiaries on a consolidated
basis, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments,
(b) all purchase money Indebtedness, (c) all direct obligations arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (d) all obligations in respect of the deferred
purchase price of property or services (other than trade accounts payable in the ordinary course of business), (e) all Attributable
Indebtedness, (f) without duplication, all Guaranties with respect to outstanding Indebtedness of the types specified in clauses
(a) through (e) above of Persons other than the Borrower or any Non-MSB Subsidiary, and (g) all Indebtedness of the types referred
to in clauses (a) through (f) above of any partnership or joint venture (other than a joint venture that is itself a corporation
or limited liability company) in which the Borrower or a Non-MSB Subsidiary is a general partner or joint venturer, unless such
Indebtedness is expressly made non-recourse to the Borrower or such Non-MSB Subsidiary.
“Consolidated
Interest Charges” means, for any Measurement Period, the sum of (a) all interest, premium payments, debt discount, fees,
charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred
purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable
with respect to discontinued operations and (c) the portion of rent expense under Capitalized Leases that is treated as interest
in accordance with GAAP, in each case, of or by the Borrower and its Non-MSB Subsidiaries on a consolidated basis for the most
recently completed Measurement Period.
“Consolidated
Leverage Ratio” means, as of any date of determination, the ratio of (a) Consolidated Funded Indebtedness as of such date
to (b) Consolidated EBITDA of the Borrower and its Non-MSB Subsidiaries on a consolidated basis for the most recently completed
Measurement Period.
“Consolidated
Net Income” means, at any date of determination, the net income (or loss) of the Borrower and its Non-MSB Subsidiaries on
a consolidated basis for the most recently completed Measurement Period; provided that Consolidated Net Income shall exclude (a)
extraordinary gains and extraordinary losses for such Measurement Period, (b) the net income of any Non-MSB Subsidiary during such
Measurement Period to the extent that the declaration or payment of dividends or similar distributions by such Non-MSB Subsidiary
of such income is not permitted by operation of the terms of its Organizational Documents or any agreement, instrument or Law applicable
to such Non-MSB Subsidiary during such Measurement Period, except that the Borrower’s equity in any net loss of any such
Non-MSB Subsidiary for such Measurement Period shall be included in determining Consolidated Net Income, and (c) any income (or
loss) for such Period of any Person if such Person is not a Non-MSB Subsidiary, except that the Borrower’s equity in the
net income of any such Person for such Measurement Period shall be included in Consolidated Net Income up to the aggregate amount
of cash actually distributed by such Person during such Period to the Borrower or a Non-MSB Subsidiary as a dividend or other distribution
(and in the case of a dividend or other distribution to a Non-MSB Subsidiary, such Non-MSB Subsidiary is not precluded from further
distributing such amount to the Borrower as described in clause (b) of this proviso).
“Control”
means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.
“Debtor Relief
Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment
for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws
of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
“Default”
means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time,
or both, would be an Event of Default.
“Default Rate”
means an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Loan plus 3% per
annum.
“Disclosed Litigation”
has the meaning set forth in Section 5.05.
“Disposition”
or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction)
of any property by any Person (or the granting of any option or other right to do any of the foregoing), including any sale, assignment,
transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“Dollar”
and “$” mean lawful money of the United States.
“Eligible Portfolio
Company” has the meaning set forth in Section 8.03(g).
“Environmental
Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and
the protection of the environment or the release of any materials into the environment, including those related to hazardous substances
or wastes, air emissions and discharges to waste or public systems.
“Environmental
Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests”
means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person,
all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital
stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition
from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options,
rights or other interests are outstanding on any date of determination.
“ERISA”
means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate”
means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“ERISA Event”
means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2)
of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization;
(d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition
which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
“Event of Default”
has the meaning specified in Section 8.01.
“Excluded Swap
Obligation” means, with respect to any borrower, guarantor or co-obligor of a Swap Obligation, including the grant of a security
interest to secure the Guaranty or co-obligation of such Swap Obligation, any Swap Obligation if, and to the extent that, such
Swap Obligation is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures
Trading Commission (or the application or official interpretation of any thereof) by virtue of such person’s failure for
any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations
thereunder at the time the Guaranty, co-obligation or grant of such security interest becomes effective with respect to such Swap
Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only
to the portion of such Swap Obligation that is attributable to swaps for which such Swap Obligation or security interest is or
becomes illegal.
“Extraordinary
Receipt” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including
tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent
such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments
and any purchase price adjustments, in all events in an amount exceeding $500,000.
“Federal Funds
Rate” means the rate at which funds of Federal Reserve member banks held by the Federal Reserve System are being offered
on each Business Day on the domestic interbank market to other member banks, as reported by the brokerage firm selected by Lender
from time to time, Bloomberg LP (or any successor), as determined by Lender by noon each Business Day. The Federal Funds Rate for
each day which is not a Business Day on which such rate is reported by Bloomberg LP shall be identical to the Federal Funds Rate
on the preceding Business Day. Each determination by Lender of the Federal Funds Rate shall be binding and conclusive in the absence
of manifest error.
“Federal Reserve
Board” means the Board of Governors of the Federal Reserve System of the United States.
“Foreign Subsidiary”
means any Subsidiary that is not organized under the laws of any political subdivision of the United States.
“GAAP”
means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in
the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
“Governmental
Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether
state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national
bodies such as the European Union or the European Central Bank).
“Guarantors”
means, collectively, the Subsidiaries of the Borrower listed on Schedule 5.12 (other than the Unrestricted MSB Subsidiaries)
and each other Subsidiary of the Borrower or Person that shall be required to execute and deliver a Guaranty Agreement or joinder
thereto pursuant to Section 6.16.
“Guaranty”
means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect
of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”)
in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of
the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee
in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss
in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation
of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or
otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guaranty shall be deemed to be an amount
equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guaranty
is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guaranty” as a verb has a corresponding meaning.
“Guaranty Agreement”
means, collectively, the Guaranty Agreement(s) made by the Guarantors in favor of the Lender, together with each other guaranty
and guaranty supplement delivered pursuant to Section 6.16.
“Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious
or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness
or liabilities in accordance with GAAP, (a) all obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) the maximum amount of all direct or contingent
obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments; (c) net obligations of such Person under any Rate Management Agreement; (d) all
obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the
ordinary course of business and not past due for more than 60 days after the date on which such trade account was created); (e)
indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have
been assumed by such Person or is limited in recourse; (f) all Attributable Indebtedness in respect of Capitalized Leases and Synthetic
Lease Obligations of such Person and all Synthetic Debt of such Person; (g) all obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person or any warrant,
right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and (h) all Guaranties of such Person in respect
of any of the foregoing. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership
or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is
a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any
net obligation under any Rate Management Agreement on any date shall be deemed to be the Swap Termination Value thereof as of such
date.
“Indemnitees”
has the meaning specified in Section 10.03(b).
“Investment”
means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guaranty or assumption
of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase or other acquisition
(in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all or a substantial
part of the business of such Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value of such Investment.
“IP Rights”
has the meaning specified in Section 5.17.
“IRS” means
the United States Internal Revenue Service.
“Laws”
means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances,
codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether
or not having the force of law.
“Letter of Credit”
means individually and “Letters of Credit” means collectively, any and all standby letters of credit issued by the
Lender for the account of the Borrower pursuant to Section 2.12 of this Agreement, together with any and all extensions, renewals
or modifications thereof, substitutions therefor or replacements thereof.
“Letter of Credit
Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the standard form
from time to time in use by the Lender.
“Letter of Credit
Documents” means with respect to any Letter of Credit, the Letter of Credit Application, any reimbursement agreements and
any other document, agreement and instrument entered into by the Lender and the Borrower or in favor the Lender and relating to
such Letter of Credit on the Lender’s standard forms then in effect and all supporting documentation.
“Letter of Credit
Sublimit” means an amount equal to $500,000.00. The Letter of Credit Sublimit is part of, and not in addition to, the Revolving
Credit Commitment.
“LIBOR Rate”
means, as of any date of determination in accordance with this Agreement, the rate of interest (rounded upwards, if necessary,
to the next 1/8th of 1% and adjusted for reserves if Lender is required to maintain reserves with respect to relevant
advances) fixed by ICE Benchmark Administration Limited (or any successor thereto or replacement thereof approved by Lender, each
an “Alternate LIBOR Source”) at approximately 11:00 a.m., London, England time (or the relevant time established by
ICE Benchmark Administration Limited, an Alternate LIBOR Source, or Lender, as applicable), two (2) Business Days prior to such
date of determination, relating to quotations for the one (1) month London InterBank Offered Rates on U.S. Dollar deposits, as
published on Bloomberg LP (or any successor thereto, or replacement thereof, as approved by Lender, each an “Approved Bloomberg
Successor”), or, if no longer displayed by Bloomberg LP (or any Approved Bloomberg Successor), such rate as shall be determined
in good faith by Lender from such sources as it shall determine to be comparable to Bloomberg LP (or any Approved Bloomberg Successor),
all as determined by Lender in accordance with this Agreement and Lender’s loan systems and procedures periodically in effect.
Notwithstanding anything to the contrary contained herein, in no event shall the LIBOR Rate be less than 0% as of any date (the
“LIBOR Rate Minimum”); provided, that at any time during which a Rate Management Agreement with Lender is then
in effect with respect to all or a portion of the Obligations, the LIBOR Rate Minimum shall be disregarded and no longer of any
force or effect with respect to such portion of the Obligations subject to such Rate Management Agreement. Each determination by
Lender of the LIBOR Rate shall be binding and conclusive in the absence of manifest error. The LIBOR Rate shall be initially determined
as of the date of the initial advance of funds to Borrower under any Note and shall be effective until the first (1st)
Business Day of the month following the one month period commencing on the date of such initial advance (such first Business Day
being the “First Adjustment Date”). The interest rate based upon the LIBOR Rate shall be adjusted automatically on
the First Adjustment Date and the first (1st) Business Day of each month thereafter.
“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or
nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance
on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
“Loan”
means an extension of credit by the Lender to the Borrower under Article II in the form of a Revolving Loan or an Acquisition Loan.
“Loan Documents”
means this Agreement, the Notes, the Security Documents, the Guaranty Agreement, the Letter of Credit Documents, any Rate Management
Agreement, any Sweep Agreement, any Waivers and all other indemnification agreements, documents, instruments, certificates
and agreements now or hereafter executed in connection with the Loans, as the same may be amended, replaced, or supplemented from
time to time.
“Loan Notice”
means (i) with respect to a Revolving Loan, a notice of request for a Revolving Loan, pursuant to Section 2.02(a), which, if in
writing, shall be substantially in the form of Exhibit A and (ii) with respect to an Acquisition Loan, a notice of request
for an Acquisition Loan, pursuant to Section 2.02(b), which, if in writing, shall be substantially in the form of Exhibit A.
“Loan Party”
means individually, and “Loan Parties” means collectively, the Borrower and each Guarantor.
“Management Agreement”
means that certain Amended and Restated Management and Advisory Agreement dated June 21, 2012, between the Borrower and BCM with
respect to the management services provided by BCM to the Borrower and its Subsidiaries, as the same has been or may be amended
or modified from time to time in accordance with this Agreement.
“Management Fee”
means any fee, cost or expense due to BCM under the Management Agreement.
“Material Adverse
Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties,
liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Borrower or the Borrower and its Non-MSB
Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies of the Lender under any Loan Document, or of
the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is
a party.
“Material Agreement”
means, with respect to any Person, each contract to which such Person is a party involving aggregate consideration payable to or
by such Person of $500,000 or more or otherwise material to the business, condition (financial or otherwise), operations, performance,
properties or prospects of such Person.
“Maturity Date”
means (a) with respect to the Revolving Credit Commitment, the later of (i) April __, 2018 and (ii) if maturity is extended pursuant
to Section 2.10, such extended maturity date as determined pursuant to such Section, (b) with respect to the Acquisition Facility
Commitment, the later of (i) April __, 2018 and (ii) if maturity is extended pursuant to Section 2.11, such extended maturity date
as determined pursuant to such Section and (c) with respect to each Acquisition Loan, such date as is set forth in the Acquisition
Note evidencing such Acquisition Loan; provided, however, that, in each case, if such date is not a Business Day,
the Maturity Date shall be the next Business Day.
“Measurement
Period” means, at any date of determination, the most recently completed four fiscal quarters of the Borrower.
“MSB Entity”
means any Person that engages in a “money services business” as defined in 31 CFR 1010.100(ff) (without regard to any
activity threshold amounts), and includes without limitation the following: currency dealer or exchanger; check casher; issuer
of traveler's checks, money orders or stored value; seller or redeemer of traveler's checks, money orders or stored value; and
money transmitter. For clarity, the Unrestricted MSB Subsidiaries are MSB Entities.
“Multiemployer
Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any
ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated
to make contributions.
“Net Cash Proceeds”
means:
(a) with
respect to any Disposition by any Loan Party or any of its Subsidiaries, or any Extraordinary Receipt received or paid to the account
of any Loan Party or any of its Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection
with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization
of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness
that is secured by the applicable asset and that is required to be repaid in connection with such transaction (other than Indebtedness
under the Loan Documents), (B) the reasonable and customary out-of-pocket expenses incurred by such Loan Party or such Subsidiary
in connection with such transaction and (C) income taxes reasonably estimated to be actually payable within two years of the date
of the relevant transaction as a result of any gain recognized in connection therewith; provided that, if the amount of any estimated
taxes pursuant to subclause (C) exceeds the amount of taxes actually required to be paid in cash in respect of such Disposition,
the aggregate amount of such excess shall constitute Net Cash Proceeds; and
(b) with
respect to the sale or issuance of any Equity Interest by any Loan Party or any of its Subsidiaries, or the incurrence or issuance
of any Indebtedness by any Loan Party or any of its Subsidiaries, the excess of (i) the sum of the cash and Cash Equivalents received
in connection with such transaction over (ii) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket
expenses, incurred by such Loan Party or such Subsidiary in connection therewith.
“Non-MSB Subsidiary”
means individually, and “Non-MSB Subsidiaries” means collectively, all Subsidiaries of the Borrower or any of its Subsidiaries
other than the Unrestricted MSB Subsidiaries.
“Note”
means individually, and “Notes” means collectively, the Revolving Credit Note and/or each Acquisition Note.
“NPL” means
the National Priorities List under CERCLA.
“Obligations”
shall mean, collectively, (i) all indebtedness, whether of principal, interest, fees, expenses, indemnities, reimbursements or
otherwise, of any Loan Party to the Lender, whether now existing or hereafter incurred including, but not limited to, future loans
and advances, if any, under this Agreement, the Notes and the other Loan Documents, as the same may be amended from time to time,
together with any and all extensions, renewals, refinancings or refundings thereof in whole or in part; (ii) all Rate Management
Obligations and all other obligations for the repayment of borrowed money, whether of principal, interest, fees, expenses, indemnities,
reimbursements or otherwise, of any Loan Party to the Lender, whether now existing or hereafter incurred, whether under letters
or advices of credit, lines of credit, other financing arrangements or otherwise (including, but not limited to, any obligations
arising as a result of any overdrafts), whether or not related to this Agreement or to the Notes, whether or not contemplated by
the Lender or any Loan Party at the date hereof and whether direct, indirect, matured or contingent, joint or several, or otherwise,
together with any and all extensions, renewals, refinancings or refundings thereof in whole or in part; (iii) all obligations under
or in connection with any deposit account, lockbox, overdraft protection, automated clearing house service, corporate, purchasing
and other multi-card services, or other cash management service provided to any Loan Party; (iv) all costs and expenses including,
without limitation, to the extent permitted by law, reasonable attorneys’ fees and legal expenses, incurred by the Lender
in the collection of any of the indebtedness referred to in clauses (i), (ii) or (iii) above in amounts due and owing to the Lender
under this Agreement or the other Loan Documents; and (v) any advances made by the Lender for the maintenance, preservation, protection
or enforcement of, or realization upon, any property or assets now or hereafter made subject to a Lien granted pursuant to this
Agreement, the other Loan Documents or pursuant to any agreement, instrument or note relating to any of the Obligations, including,
without limitation, advances for taxes, insurance, repairs and the like; provided, however, that any Excluded Swap
Obligations are specifically excluded from the Obligations.
“Organizational
Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent
or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company,
the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint
venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization
and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate
or articles of formation or organization of such entity.
“Payment Office”
means the office of the Lender located at 31 South Main Street, Greenville, SC 29601, or such other location as to which the Lender
shall have given written notice to the Borrower.
“PBGC”
means the Pension Benefit Guaranty Corporation.
“Pension Plan”
means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer
Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the
Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other
plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.
“Person”
means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
“Plan”
means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or,
with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.
“Pledge Agreement”
means the Pledge Agreement, made by the Borrower, its Non-MSB Subsidiaries and each other Person that shall be required to execute
and deliver a Pledge Agreement or joinder thereto pursuant to Section 6.16 hereof.
“Prime Rate”
shall mean the rate of interest per annum publicly announced by the Lender from time to time as its prime lending rate (for reference
purposes only) with any change thereto being effective as of the opening of business on the date of such change (or if not a Business
Day, the beginning of the day). The Prime Rate is determined solely by the Lender pursuant to market factors and its own operating
needs and is not necessarily the Lender’s best or most favorable rate for commercial or other loans.
“Rate Management
Agreement” means any agreement, device or arrangement providing for payments which are related to fluctuations of interest
rates, exchange rates, forward rates, or equity prices, including, but not limited to, dollar-denominated or cross-currency interest
rate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and any agreement pertaining to equity derivative transactions (e.g., equity
or equity index swaps, options, caps, floors, collars and forwards), including without limitation any ISDA Master Agreement between
the Borrower and the Lender or any affiliate of Fifth Third Bancorp, and any schedules, confirmations and documents and other confirming
evidence between the parties confirming transactions thereunder, all whether now existing or hereafter arising, and in each case
as amended, modified or supplemented from time to time.
“Rate Management
Obligations” means any and all obligations of the Borrower to the Lender or any affiliate of Fifth Third Bancorp, whether
absolute, contingent or otherwise and howsoever and whensoever (whether now or hereafter) created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions therefore), under or in connection with (i) any
and all Rate Management Agreements, and (ii) any and all cancellations, buy-backs, reversals, terminations or assignments of any
Rate Management Agreement.
“Related Parties”
means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and
advisors of such Person and of such Person’s Affiliates.
“Reportable Event”
means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.
“Responsible
Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller
of a Loan Party and any other officer of the applicable Loan Party so designated by any of the foregoing officers in a written
notice to the Lender. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively
presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other
Equity Interest of any Person or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including
any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation
or termination of any such capital stock or other Equity Interest, or on account of any return of capital to any Person’s
stockholders, partners or members (or the equivalent of any thereof), or any option, warrant or other right to acquire any such
dividend or other distribution or payment.
“Revolving Credit
Commitment” means the obligation of the Lender to make Revolving Loans to the Borrower in an aggregate principal amount not
exceeding $3,000,000.
“Revolving Credit
Note” means the Revolving Credit Note of the Borrower payable to the order of the Lender, in substantially the form of Exhibit
B-1 attached hereto.
“Revolving Loan”
has the meaning specified in Section 2.01(a).
“SEC” means
the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Securities Laws”
means the Securities Act of 1933, the Securities Exchange Act of 1934 and the applicable accounting and auditing principles, rules,
standards and practices promulgated, approved or incorporated by the SEC.
“Security Agreement”
means the Security Agreement, made by the Borrower, its Non-MSB Subsidiaries and each other Person that shall be required to execute
and deliver a Security Agreement or joinder thereto pursuant to Section 6.16 hereof.
“Security Documents”
means, collectively, the Security Agreement (including any joinders thereto), the Pledge Agreement (including any joinders thereto),
each of the mortgages, collateral assignments, security agreements, pledge agreements or other similar agreements delivered to
the Lender pursuant to Section 6.16, and each of the other agreements, instruments or documents that creates or purports to create
a Lien in favor of the Lender.
“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body
(other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially
owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries”
shall refer to a Subsidiary or Subsidiaries of the Borrower.
“Swap Obligation”
means any Hedging Obligation that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange
Act, as amended from time to time.
“Swap Termination
Value” means, in respect of any one or more Rate Management Agreements, after taking into account the effect of any legally
enforceable netting agreement relating to such Rate Management Agreements, (a) for any date on or after the date such Rate Management
Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b)
for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Rate
Management Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized
dealer in such Rate Management Agreements (which may include the Lender or any Affiliate of the Lender).
“Synthetic Debt”
means, with respect to any Person as of any date of determination thereof, all obligations of such Person in respect of transactions
entered into by such Person that are intended to function primarily as a borrowing of funds (including any minority interest transactions
that function primarily as a borrowing) but are not otherwise included in the definition of “Indebtedness” or as a
liability on the consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP.
“Sweep Agreement”
means any investment and/or borrowing sweep agreement entered into between the Borrower and the Lender on or after the date hereof.
“Synthetic Lease
Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating
obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to
such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
“Threshold Amount”
means $500,000.
“UCC” means
the Uniform Commercial Code as in effect in the State of North Carolina; provided that, if perfection or the effect of perfection
or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than the State of State of North Carolina, “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection
or non-perfection or priority.
“Unfunded Pension
Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant
to Section 412 of the Code for the applicable plan year.
“United States”
and “U.S.” mean the United States of America.
“Unreimbursed
Amount” has the meaning specified in Section 2.03(c)(i).
“Unrestricted
MSB Subsidiary” means Wyoming Financial Lenders, Inc., Express Pawn, Inc. and their respective Subsidiaries, and includes
without limitation any direct or indirect Subsidiary of the Borrower or any of its Subsidiaries that is formed or acquired after
the Closing Date and which meets the requirements of an MSB Entity.
“Waivers”
shall mean, collectively, any and all Warehouseman’s Waivers, Landlord’s Waivers, Mortgagee’s Waivers and Agreements
and Processing Facility Waivers, executed and delivered in connection with this Agreement, in form and substance satisfactory to
the Lender, as amended, modified or supplemented from time to time.
1.02 Accounting
Terms and Determination. Unless otherwise defined or specified herein, all accounting terms used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be
prepared, on a consolidated basis for the Borrower and its Non-MSB Subsidiaries solely (and, in all circumstances, shall exclude
any and all results of operations of any of the Unrestricted MSB Subsidiaries for purposes of calculating and determining the financial
covenants set herein and the accounting terms used herein) in accordance with GAAP as in effect from time to time, applied on a
basis consistent (except (i) as provided above as it relates to the exclusion of the results of operations of the Unrestricted
MSB Subsidiaries and (ii) for such changes approved or required by the Borrower’s independent public accountants) with the
most recent financial statements of the Borrower delivered pursuant to Section 6.01(a); provided, that if the Borrower
notifies the Lender that the Borrower wishes to amend Article VII to eliminate the effect of any change in GAAP on the operation
of any such covenant (or if the Lender notifies the Borrower that it wishes to amend Article VII for such purpose), then the Borrower’s
compliance with such covenant shall be determined on the basis of GAAP requirements in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower
and the Lender.
1.03 Terms
Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”.
The word “will” shall be construed to have the same meaning and effect as the word “shall”. In the computation
of periods of time from a specified date to a later specified date, the word “from” means “from and including”
and the word “to” means “to but excluding”. Unless the context requires otherwise (a) any definition of
or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument
or other document as it was originally executed or as it may from time to time be amended, supplemented or otherwise modified (subject
to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and permitted assigns, (c) the words “hereof”, “herein”
and “hereunder” and words of similar import shall be construed to refer to this Agreement as a whole and not to any
particular provision hereof, (d) all references to Articles, Sections, Exhibits and Schedules shall be construed to refer
to Articles, Sections, Exhibits and Schedules to this Agreement and (e) all references to a specific time shall be construed
to refer to the time in the city and state of the Payment Office, unless otherwise indicated.
ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 The
Commitments and Loans.
(a) Revolving
Credit Commitment. Subject to the terms and conditions set forth herein, the Lender agrees to make loans (each such loan, a
“Revolving Loan”) to the Borrower from time to time, on any Business Day during the Availability Period for the Revolving
Credit Commitment, in an aggregate amount not to exceed at any time outstanding the amount of the Lender’s Revolving Credit
Commitment; provided, however, that after giving effect to any Revolving Loan, the aggregate outstanding amount of
all Revolving Loans plus any outstanding Letters of Credit (whether or not drawn) shall not exceed the Revolving Credit Commitment.
Within the limits of the Revolving Credit Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow
under this Section 2.01(a), prepay under Section 2.03, and reborrow under this Section 2.01(a).
The Borrower’s
obligation to pay the principal of, and interest on, the Revolving Loans shall be evidenced by the records of the Lender and by
the Revolving Credit Note. The entries made in such records shall be prima facie evidence of the existence and amounts of the obligations
of the Borrower therein recorded; provided, that the failure or delay of the Lender in maintaining or making entries into
any such record or any error therein shall not in any manner affect the obligation of the Borrower to repay the Revolving Loans
(both principal and unpaid accrued interest) in accordance with the terms of this Agreement.
The Revolving Credit
Commitment may include an investment and/or borrowing sweep feature on the terms and conditions of the Sweep Agreement, the terms
of which are hereby incorporated in this Agreement by reference. The Sweep Agreement will remain in effect until such time (if
any) as it is terminated in accordance with its terms.
(b) Acquisition
Facility Commitment. Subject to the terms and conditions set forth herein, the Lender agrees to make term loans (each such
term loan, an “Acquisition Loan”) to the Borrower from time to time, on any Business Day during the Availability Period
for the Acquisition Facility Commitment, in an aggregate amount not to exceed at any time outstanding the amount of the Lender’s
Acquisition Facility Commitment; provided, however, that after giving effect to any Acquisition Loan, the aggregate
outstanding principal amount of all Acquisition Loans shall not exceed the Acquisition Facility Commitment. Within the limits of
the Acquisition Facility Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section
2.01(b), prepay under Section 2.03, and reborrow under this Section 2.01(b).
The Borrower’s
obligation to pay the principal of, and interest on, the Acquisition Loans shall be evidenced by the records of the Lender and
by the Acquisition Notes; provided, however, that the aggregate amount of Acquisition Loans made by the Lender with
respect to any Investment in any Eligible Portfolio Company shall be evidenced by a single Acquisition Note, and the Borrower shall
execute an additional Acquisition Note for each Investment in an Eligible Portfolio Company financed under the Acquisition Facility
Commitment. The entries made in such records shall be prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, that the failure or delay of the Lender in maintaining or making entries into any such
record or any error therein shall not in any manner affect the obligation of the Borrower to repay the Acquisition Loans (both
principal and unpaid accrued interest) in accordance with the terms of this Agreement.
To the extent that,
on the last day of the Availability Period, there remains any amount available under the Acquisition Facility Commitment, the Acquisition
Facility Commitment shall terminate on such date, and the Lender shall no longer be obligated to make Acquisition Loans to the
Borrower thereafter.
2.02 Requests
for Advances.
(a) Revolving
Loans. Except as otherwise set forth in any applicable Sweep Agreement, the Borrower shall give the Lender irrevocable telephonic
notice of each requested Revolving Loan and, if requested by the Lender, promptly confirm such notice in a written Loan Notice
on the date of the requested Revolving Loan. Each Loan Notice shall be irrevocable and shall specify: (i) the principal amount
of the Revolving Loan and (ii) the proposed date of such Revolving Loan (which shall be a Business Day). Loan Notices received
after 1:00 p.m. shall be deemed received on the next Business Day.
Upon satisfaction of
the applicable conditions set forth in Section 4.02 (and, if such borrowing is the initial advance under such Commitment, Section
4.01), the Lender shall make funds available to the Borrower by crediting the account of the Borrower on the books of the Lender
with the amount of such funds; provided, however, that if, on the date that a request for advance is made by the
Borrower, there are any amounts that have been drawn under a Letter of Credit, then the proceeds of such Revolving Loan, first,
shall be applied to the payment in full of any outstanding amounts under such Letter of Credit in accordance with Section 2.12(a)
hereof, and second, shall be made available to the Borrower as provided above.
(b) Acquisition
Loans. Each request for an Acquisition Loan shall be made upon the Borrower’s irrevocable notice to the Lender, which
may be given by telephone. Each such notice must be received by the Lender not later than 1:00 p.m. on the date which is not less
than 15 days prior to the requested date of the borrowing. Each telephonic notice by the Borrower pursuant to this Section 2.02(b)
must be confirmed promptly by delivery to the Lender of a written Loan Notice, appropriately completed and signed by a Responsible
Officer of the Borrower. Each Loan Notice (whether telephonic or written) shall specify (i) which Eligible Portfolio Company (if
more than one Eligible Portfolio Company is outstanding at such time) is to be financed with the proceeds of such Acquisition Loan,
(ii) the related Acquisition Note (if such Acquisition Note is outstanding at such time) under which such Acquisition Loan is being
requested or that an additional Acquisition Note will be delivered by the Borrower, (iii) the requested date of the borrowing (which
shall be a Business Day) and (iv) the principal amount of Acquisition Loans to be borrowed on such day.
Upon satisfaction of
the applicable conditions set forth in Section 4.03, the Lender shall make funds available to the Borrower either by (i) crediting
the account of the Borrower on the books of the Lender with the amount of such funds or (ii) wire transfer of such funds, in each
case in accordance with instructions provided to (and reasonably acceptable to) the Lender by the Borrower.
2.03 Prepayments.
(a) Optional.
The Borrower may (i) prepay Revolving Loans at any time and from time to time as directed any applicable Sweep Agreement, and (ii)
upon notice to the Lender, at any time or from time to time voluntarily prepay Revolving Loans and Acquisition Loans in whole or
in part without premium or penalty; provided that such notice must be received by the Lender not later than 1:00 p.m. on
the date of prepayment of such Loan. Each such notice shall specify the date and amount of such prepayment and the Loan to be prepaid.
If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice
shall be due and payable on the date specified therein. Each prepayment of the Acquisition Loans pursuant to this Section 2.03(a)
shall be applied to the principal repayment installments thereof in inverse order of maturity.
(b) Mandatory.
(i) If any Loan Party or any of its Subsidiaries (other than an Unrestricted MSB Subsidiary) Disposes of any property (other than
any Disposition of any property permitted by Section 8.05) which results in the realization by such Person of Net Cash Proceeds
in excess of $250,000 in the aggregate, the Borrower shall prepay an aggregate principal amount of Loans equal to 100% of such
Net Cash Proceeds immediately upon receipt thereof by such Person (such prepayments to be applied as set forth in clause (v) below);
provided, however, that, with respect to any Net Cash Proceeds realized under a Disposition described in this Section
2.03(b)(i), at the election of the Borrower (as notified by the Borrower to the Lender on or prior to the date of such Disposition),
and so long as no Default shall have occurred and be continuing, such Loan Party or such Subsidiary may reinvest all or any portion
of such Net Cash Proceeds in operating assets so long as within 90 days after the receipt of such Net Cash Proceeds, such purchase
shall have been consummated (as certified by the Borrower in writing to the Lender); and provided further, however,
that any Net Cash Proceeds not subject to such definitive agreement or so reinvested shall be immediately applied to the prepayment
of the Loans as set forth in this Section 2.03(b)(i).
(ii) Upon
the sale or issuance by any Loan Party or any of its Subsidiaries (other than an Unrestricted MSB Subsidiary) of any of its Equity
Interests (other than any sales or issuances of Equity Interests to another Loan Party), the Borrower shall prepay an aggregate
principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by such Loan
Party or such Subsidiary (such prepayments to be applied as set forth in clause (v) below).
(iii) Upon
the incurrence or issuance by any Loan Party or any of its Subsidiaries (other than an Unrestricted MSB Subsidiary) of any Indebtedness
(other than Indebtedness expressly permitted to be incurred or issued pursuant to Section 8.02), the Borrower shall prepay an aggregate
principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by such Loan
Party or such Subsidiary (such prepayments to be applied as set forth in clause (v) below).
(iv) Upon
any Extraordinary Receipt received by or paid to or for the account of any Loan Party or any of its Subsidiaries (other than an
Unrestricted MSB Subsidiary), and not otherwise included in clause (ii), (iii) or (iv) of this Section 2.03(b), the Borrower shall
prepay an aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt
thereof by such Loan Party or such Subsidiary (such prepayments to be applied as set forth in clause (v) below); provided,
however, that with respect to any proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity
payments, at the election of the Borrower (as notified by the Borrower to the Lender on or prior to the date of receipt of such
insurance proceeds, condemnation awards or indemnity payments), and so long as no Default shall have occurred and be continuing,
such Loan Party or such Subsidiary may apply within 90 days after the receipt of such cash proceeds to replace or repair the equipment,
fixed assets or real property in respect of which such cash proceeds were received; and provided, further, however, that any cash
proceeds not so applied shall be immediately applied to the prepayment of the Loans as set forth in this Section 2.03(b)(iv).
(v) Each
prepayment of Loans pursuant to the foregoing provisions of this Section 2.03(b) shall be applied, first, ratably to each Acquisition
Loan and to the principal repayment installments thereof in inverse order of maturity and, second, to the outstanding principal
balance of the Revolving Credit Commitment.
(vi) If
for any reason (A) the aggregate face amount of all Letters of Credit issued and outstanding shall exceed the Letter of Credit
Sublimit or (B) the aggregate outstanding amount of all Revolving Loans plus any outstanding
Letters of Credit (whether or not drawn) at any time exceed the Revolving Credit Commitment at such time, the Borrower shall immediately
prepay Revolving Loans and/or cash collateralize any outstanding Letters of Credit (whether or not draw) in an aggregate amount
equal to such excess.
(vii) If
for any reason during the Availability Period the aggregate outstanding amount of all Acquisition Loans at any time exceed the
Acquisition Facility Commitment at such time, the Borrower shall immediately prepay Acquisition Loans in an aggregate amount equal
to such excess.
2.04 Termination
or Reduction of Commitments.
(a) Optional.
The Borrower may, upon notice to the Lender, terminate the Revolving Credit Commitment, or from time to time permanently reduce
the Revolving Credit Commitment; provided that (i) any such notice shall be received by the Lender not later than 11:00
a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate
amount of $50,000.00 or any whole multiple of $5,000.00 in excess thereof and (iii) the Borrower shall not terminate or reduce
the Revolving Credit Commitment if, after giving effect thereto and to any concurrent prepayments hereunder, the aggregate outstanding
amount of all Revolving Loans would exceed the Revolving Credit Commitment.
(b) Mandatory.
The Acquisition Facility Commitment shall be automatically and permanently reduced to zero upon the expiration of the Availability
Period.
2.05 Repayment
of Loans.
(a) Revolving
Loans. The Borrower shall repay to the Lender the outstanding principal amount of all Revolving Loans (together with accrued
and unpaid interest thereon) on the Maturity Date for the Revolving Credit Commitment, as supplemented by the Sweep Agreement (if
any).
(b) Acquisition
Loans. The principal amount of each Acquisition Loan shall be due and payable in accordance with the provisions of the Acquisition
Note evidencing such Acquisition Loan; provided, that (i) in no event shall the Maturity Date of any such Acquisition Loan
be greater than five (5) years, (ii) the principal amount of such Acquisition Loan shall be repayable in equal monthly amounts
necessary to fully amortize such Acquisition Loan over such period and (iii) the entire principal balance, together with all accrued
and unpaid interest and any other charges, advances, and fees, if any, outstanding hereunder shall be due and payable in full on
its Maturity Date.
2.06 Interest;
Default Rate; Late Fees.
(a) Subject
to the provisions of Section 2.06(b), each Loan shall bear interest on the outstanding principal amount thereof at a rate per annum
equal to the LIBOR Rate plus the Applicable Margin for such Loan.
(b)
(i) If any amount
of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal
to the Default Rate to the fullest extent permitted by applicable Laws.
(ii) If
any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard
to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then at the Lender’s option such
amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws.
(iii) At
the Lender’s option, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted
by applicable Laws.
(iv) Accrued
and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.
(c) If
any payment is not paid when due (whether by acceleration or otherwise) or within 10 days thereafter, the Borrower shall pay to
the Lender a late payment fee of 5% of the payment amount, with a minimum fee of $20.00. After an Event of Default, the Borrower
shall pay to the Lender a fixed charge of $25.00, or the Lender may, without notice, increase the interest rate or rates hereunder
to the Default Rate to the fullest extent permitted by applicable laws.
(d) Interest
on each Revolving Loan shall be due and payable in arrears on the first (1st) day of each month commencing on May 1,
2016 and on the Maturity Date (subject to the terms of the Sweep Agreement (if any) with respect to Revolving Loans) applicable
thereto and at such other times as may be specified herein. Interest on the principal amount of any Acquisition Loan shall be due
and payable in accordance with the provisions of the Acquisition Note evidencing such Acquisition Loan. Interest hereunder shall
be due and payable in accordance with the terms hereof (and, with respect to Acquisition Loans, the applicable Acquisition Notes)
before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
2.07 Fees.
(a) Loan
Fee. On or before the Closing Date, the Borrower will pay to the Lender (i) a non-refundable, fully earned loan fee with respect
to the Revolving Credit Commitment in the amount of $15,000 and (ii) a non-refundable loan fee with respect to the Acquisition
Facility Commitment in the amount of $45,000.
(b) Commitment
Fee – Revolving Credit Commitment. The Borrower shall pay to the Lender a commitment fee equal to Applicable Commitment
Fee Margin times the actual daily amount by which the Revolving Credit Commitment exceeds the sum of (i) the outstanding amount
of Revolving Loans plus (ii) the face amount of all Letters of Credit issued and outstanding. The commitment fee shall accrue at
all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not
met, and shall be due and payable monthly in arrears on the 1st day of each calendar month, commencing on May 1, 2016,
and on the last day of the Availability Period for the Revolving Credit Commitment; provided, that if the Lender continues
to have any Revolving Loans and/or if Letters of Credit remain outstanding after the Availability Period, then the unused fee shall
continue to accrue on the daily amount of such outstanding Revolving Loans; provided, further, that any commitment
fees accruing after the Availability Period shall be payable on demand. The commitment fee shall be calculated monthly in arrears,
and if there is any change in the Applicable Commitment Fee Margin during any month, the actual daily amount shall be computed
and multiplied by the Applicable Commitment Fee Margin separately for each period during such month that such Applicable Commitment
Fee Margin was in effect.
(c) Commitment
Fee – Acquisition Facility Commitment. The Borrower shall pay to the Lender a commitment fee equal to Applicable Commitment
Fee Margin times the actual daily amount by which the Acquisition Facility Commitment exceeds the sum of the outstanding amount
of the Acquisition Loans. The commitment fee shall accrue at all times during the Availability Period, including at any time during
which one or more of the conditions in Article IV is not met, and shall be due and payable monthly in arrears on the 1st
day of each calendar month, commencing on May 1, 2016, and on the last day of the Availability Period for the Acquisition Facility
Commitment. The commitment fee shall be calculated monthly in arrears, and if there is any change in the Applicable Commitment
Fee Margin during any month, the actual daily amount shall be computed and multiplied by the Applicable Commitment Fee Margin separately
for each period during such month that such Applicable Commitment Fee Margin was in effect.
2.08 Computation
of Interest and Fees. All computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall
accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day
on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject
to Section 2.09, bear interest for one day. Each determination by the Lender of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.
2.09 Payments
Generally. The Borrower shall make each payment required to be made by them hereunder (whether of principal, interest, fees
or otherwise) prior to 12:00 noon, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the Lender, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments shall be made to the Lender at its Payment Office.
If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest thereon shall be made payable for the period of such
extension. All payments hereunder shall be made in Dollars. The Lender may in its discretion deduct such payments from the Borrower’s
demand or deposit accounts with the Lender on the due date. All such payments shall be applied at the option of the Lender to charges,
fees, accrued and unpaid interest, outstanding principal and other sums due under this Agreement in such order as the Lender, in
its sole discretion, shall elect. Upon the drawing of any Letter of Credit that has been cash collateralized, the funds held as
cash collateral shall be applied (without any further action by or notice to or from the Borrower) to reimburse the Lender.
2.10 Extension
of Maturity Date in respect of Revolving Credit Commitment.
(a) Requests
for Extension. The Borrower may, by notice to the Lender not earlier than one year and not later than 35 days prior to the
Maturity Date then in effect hereunder in respect of the Revolving Credit Commitment (the “Existing RCC Maturity Date”),
request that the Lender extend the Maturity Date in respect of the Revolving Credit Commitment for an additional 364 days from
the Existing RCC Maturity Date.
(b) Notification
by Lender. As soon as practicable after receipt of such request and all necessary information requested by the Lender to make
such determination (but, in any event, no later than the date 30 days prior to the Existing RCC Maturity Date (or, if such date
is not a Business Day, on the next preceding Business Day)), the Lender shall notify the Borrower whether or not the Lender agrees
to such extension. If (and only if) the Lender has agreed so to extend the Maturity Date, then, effective as of the Existing RCC
Maturity Date, the Maturity Date in respect of the Revolving Credit Commitment shall be extended to the date falling 364 days after
the Existing RCC Maturity Date (except that, if such date is not a Business Day, such Maturity Date as so extended shall be the
next preceding Business Day).
(c) Conditions
to Effectiveness of Extensions. Notwithstanding the foregoing, the extension of the Maturity Date in respect of the Revolving
Credit Commitment pursuant to this Section shall not be effective unless:
(i) no
Default shall have occurred and be continuing on the date of such extension and after giving effect thereto; and
(ii) the
representations and warranties contained in this Agreement are true and correct on and as of the date of such extension and after
giving effect thereto, as though made on and as of such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
2.11 Extension
of Maturity Date in respect of Acquisition Facility Commitment.
(a) Requests
for Extension. The Borrower may, by notice to the Lender not earlier than one year and not later than 35 days prior to the
Maturity Date then in effect hereunder in respect of the Acquisition Facility Commitment (the “Existing AFC Maturity Date”),
request that the Lender extend the Maturity Date in respect of the Acquisition Facility Commitment for an additional 364 days from
the Existing AFC Maturity Date.
(b) Notification
by Lender. As soon as practicable after receipt of such request and all necessary information requested by the Lender to make
such determination (but, in any event, no later than the date 30 days prior to the Existing AFC Maturity Date (or, if such date
is not a Business Day, on the next preceding Business Day)), the Lender shall notify the Borrower whether or not the Lender agrees
to such extension. If (and only if) the Lender has agreed so to extend the Maturity Date, then, effective as of the Existing AFC
Maturity Date, the Maturity Date in respect of the Acquisition Facility Commitment of the Lender shall be extended to the date
falling 364 days after the Existing AFC Maturity Date (except that, if such date is not a Business Day, such Maturity Date as so
extended shall be the next preceding Business Day).
(c) Conditions
to Effectiveness of Extensions. Notwithstanding the foregoing, the extension of the Maturity Date in respect of the Acquisition
Facility Commitment pursuant to this Section shall not be effective unless:
(i) no
Default shall have occurred and be continuing on the date of such extension and after giving effect thereto; and
(ii) the
representations and warranties contained in this Agreement are true and correct on and as of the date of such extension and after
giving effect thereto, as though made on and as of such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
2.12 Letters
of Credit.
(a) Letter
of Credit Commitment. From time to time during the period from the Closing Date to the thirtieth (30th) day preceding the Maturity
Date for the Revolving Credit Commitment, subject to the further terms and conditions hereof, the Borrower may request that the
Lender, in lieu of cash advances, issue Letters of Credit under the Revolving Credit Commitment; provided, however,
that after giving effect to the face amount of such Letter of Credit, (x) the sum of the aggregate outstanding advances under the
Revolving Credit Commitment and the aggregate face amount of all Letters of Credit issued and outstanding shall not exceed the
Revolving Credit Commitment and (y) the aggregate face amount of all Letters of Credit issued and outstanding shall not exceed
the Letter of Credit Sublimit. The availability of advances under the Revolving Credit Commitment shall be reduced by the face
amount of each Letter of Credit issued and outstanding (whether or not drawn). Upon a draw under any Letter of Credit, the Borrower
shall immediately reimburse the Lender for such drawing under such Letter of Credit in accordance with the provisions of the Letter
of Credit Documents. If (i) the Borrower shall not have immediately reimbursed the Lender for such drawing under such Letter of
Credit, (ii) the Lender must for any reason return or disgorge such reimbursement or (iii) the Borrower is required to make a payment
under Section 9.01 hereof and fails to make such payment, then the amount of each unreimbursed drawing under such Letter of Credit
and payment required to be made under Section 9.01 hereof shall automatically be converted into an advance under the Revolving
Credit Commitment which shall be made on the date of such drawing for all purposes of this Agreement. The Borrower’s obligation
to reimburse the Lender with respect to each drawing under a Letter of Credit shall be absolute and unconditional.
(b) Each
request for the issuance of a Letter of Credit must be accompanied by the Borrower’s execution of all Letter of Credit Documents
required by the Lender and shall be governed by the terms of this Agreement and by the Letter of Credit Documents executed in connection
therewith. Notwithstanding anything herein to the contrary, no Letter of Credit shall have an expiry date beyond twelve (12) months
from date of issuance; provided, however, that in no event shall any Letter of Credit have an expiry date beyond
the date that is 18 months after the Maturity Date (or, if such day is not a business day, the next preceding business day) (the
“Final LC Maturity Date”). Each Letter of Credit will be issued in the Lender’s sole discretion and in a form
acceptable to the Lender. The Borrower shall pay the Lender’s standard issuance fee on the face amount of each Letter of
Credit upon issuance, together with such other customary fees, commissions and expenses therefor as shall be required by the Lender.
This Agreement is not a pre-advice for the issuance of a letter of credit and is not irrevocable.
(c) Upon
the request of the Lender, (i) if the Lender has honored any full or partial drawing request under any Letter of Credit and the
Borrower shall not have repaid such drawing, or (ii) if, as of the expiration of the Availability Period, any Letter of Credit
remains for any reason remains outstanding, the Borrower shall, in each case, immediately cash collateralize the then outstanding
amount of all Letters of Credit outstanding. Section 9.02 sets forth certain additional events whereby the Borrower has to deliver
cash collateral hereunder. For purposes of this Section 2.12(c) and Section 9.02, “cash collateralize” means to pledge
and deposit with or deliver to the Lender as collateral for the Letters of Credit outstanding, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the Lender (which documents are hereby consented to by the Lender).
Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Lender a security interest in all such
cash, deposit accounts and all balances therein and all proceeds of the foregoing. Such cash collateral shall be maintained in
blocked, non-interest bearing deposit accounts at the Lender. If at any time the Lender determines that any funds held as cash
collateral are subject to any right or claim of any Person other than the Lender or that the total amount of such funds is less
than the aggregate outstanding amount of all Letters of Credit outstanding, the Borrower will, forthwith upon demand by the Lender,
pay to the Lender, as additional funds to be deposited as cash collateral, an amount equal to the excess of (x) such aggregate
outstanding amount over (y) the total amount of funds, if any, then held as cash collateral that the Lender determines to be free
and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as cash collateral,
such funds shall be applied, to the extent permitted under applicable laws, to reimburse the Lender.
(d) In
the event of any conflict between the terms hereof and the terms of any Letter of Credit Document, the terms such Letter of Credit
Document shall control.
ARTICLE III
YIELD PROTECTION AND ILLEGALITY
3.01 Illegality;
Inability to Determine Rates
.
(a) If
the Lender determines (which determination shall be final and conclusive) that, by reason of circumstances affecting the eurodollar
market generally, deposits in dollars (in the applicable amounts) are not being offered to banks in the eurodollar market for the
selected term, or adequate means do not exist for ascertaining the LIBOR Rate, then the Lender shall give notice thereof to the
Borrower. Thereafter, until the Lender notifies the Borrower that the circumstances giving rise to such suspension no longer
exist, (i) the availability of the LIBOR Rate shall be suspended, and (ii) the interest rate for all amounts outstanding under
the Loans shall be converted on the first Business Day of the next calendar month to a rate of interest per annum equal to the
Base Rate plus the Base Rate Margin.
(b) In
addition, if the Lender shall determine (which determination shall be final and conclusive) that any enactment, promulgation or
adoption of or any Change in Law or any change in the interpretation or administration thereof by a Governmental Authority charged
with the interpretation or administration thereof, or compliance by the Lender with any guideline, request or directive (whether
or not having the force of Law) of any such Governmental Authority shall make it unlawful or impossible for the Lender to make
or maintain or fund loans based on the LIBOR Rate, the Lender shall notify the Borrower. Upon receipt of such notice, until the
Lender notifies the Borrower that the circumstances giving rise to such determination no longer apply, (i) the availability of
the LIBOR Rate shall be suspended, and (ii) the interest rate on all amounts outstanding under the Loans shall be converted to
a rate of interest per annum equal to the Base Rate plus the Base Rate Margin either (A) on the first Business Day of the next
calendar month, if the Lender may lawfully continue to maintain or fund loans based on the LIBOR Rate to such day, or (B) immediately
if the Lender may not lawfully continue to maintain or fund loans based on the LIBOR Rate.
3.02 Recovery
of Additional Costs. The Borrower shall pay to the Lender, promptly upon demand therefor, for the Lender’s costs or losses
arising from any Change in Law that are allocated to this Agreement or any Loan outstanding under this Agreement, which allocation
shall be made by the Lender in its sole discretion, using any reasonable method and which costs include, without limitation, (a)
any reserve or deposit requirements (excluding any reserve requirement already reflected in the calculation of the interest rate
in this Agreement) and (b) any capital requirements relating to the Lender’s assets and Loans.
3.03 Survival.
All of the Borrower’s obligations under this Article III shall survive termination of the Commitments and repayment of all
other Obligations hereunder.
ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 Conditions
to Closing. The Lender shall not be obligated to make any Acquisition Loan, the initial advance under the Revolving Credit
Commitment or issue any Letter of Credit until the Borrower shall have satisfied the following conditions (provided that funding
of either Loan hereunder shall evidence such satisfaction or waiver of such conditions):
(a) The
Lender’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or,
in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory
to the Lender:
(i) counterparts
of this Agreement, the Notes and the Guaranty Agreement signed on behalf of each party thereto (other than the Lender);
(ii) counterparts
of the Security Documents signed on behalf of each applicable Loan Party, together with the following:
(A) certificates
representing all the outstanding Equity Interests of each Subsidiary owned by or on behalf of any Loan Party as of the Closing
Date, and any appropriate powers and instruments of transfer, endorsed in blank, with respect to such certificates;
(B) all
documents and instruments, including UCC financing statements and certificates of title, required by law or reasonably requested
by the Lender to be filed, registered or recorded to create or perfect the Liens intended to be created under the Security Documents;
(C) the
results of a search of the UCC (or equivalent) filings made with respect to the Loan Parties in jurisdictions satisfactory to the
Lender, copies of the financing statements (or similar documents) disclosed by such search and evidence satisfactory to the Lender
that the Liens indicated by such financing statements (or similar documents) are permitted by Section 8.02 or have been
released; and
(D) evidence
that all other action that the Lender may deem necessary or desirable in order to perfect the Liens created under the Security
Documents has been taken (including receipt of duly executed payoff letters, UCC-3 termination statements and Waivers and consent
agreements);
(iii) such
certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each
Loan Party as the Lender may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized
to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party
or is to be a party;
(iv) such
documents and certifications as the Lender may reasonably require to evidence that each Loan Party is duly organized or formed,
and that each Loan Party is validly existing, in good standing and qualified to engage in business in each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse Effect;
(v) a
favorable opinion of Malson LLP, counsel to the Loan Parties, addressed to the Lender, as to such matters concerning the Loan Parties
and the Loan Documents as the Lender may reasonably request;
(vi) a
certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a) and
(b) have been satisfied, and (B) that there has been no event or circumstance since the date of the Audited Financial Statements
that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect;
(vii) evidence
that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect, together with the
certificates of insurance, naming the Lender, as an additional insured or loss payee, as the case may be, under all insurance policies
maintained with respect to the assets and properties of the Loan Parties that constitutes Collateral; and
(viii) a
duly completed Compliance Certificate as of the last day of the fiscal quarter of the Borrower ended December 31, 2015, signed
by chief executive officer, chief financial officer, treasurer or controller of the Borrower; and
(ix) such
other instruments, documents and opinions as may be set forth in the closing checklist delivered to the Borrower in connection
with this Agreement or as the Lender shall reasonably require to evidence and secure the Loans, to comply with the provisions hereof
and the requirements of regulatory authorities to which the Lender is subject, all of which, including those referred to above
in this Section 4.01 shall be satisfactory in form, content and substance to the Lender.
(b) All
fees required to be paid to the Lender on or before the Closing Date shall have been paid.
(c) Unless
waived by the Lender, the Borrower shall have paid all fees, charges and disbursements of counsel to the Lender (directly to such
counsel if requested by the Lender) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such
fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or
to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling
of accounts between the Borrower and the Lender).
(d) The
Lender shall have completed a due diligence investigation of the Borrower and its Subsidiaries in scope, and with results, satisfactory
to the Lender, and shall have been given such access to the management records, books of account, contract and properties of the
Borrower and its Subsidiaries and shall have received such financial, business and other information regarding each of the foregoing
Persons and businesses as they shall have requested.
4.02 Conditions
to All Extensions of Credit. The obligation of the Lender to make any Loan or issue any Letter of Credit is subject to the
satisfaction of the following conditions:
(a) The
representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or
which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct
on and as of the date of such Loan or Letter of Credit, except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of
this Section 4.02, the representations and warranties contained in Sections 5.04(a) and (b) shall be deemed to refer to the most
recent statements furnished pursuant to Sections 6.01(a) and (b), respectively.
(b) No
Default shall exist, or would result from the making of such proposed Loan or issuance of such Letter of Credit or from the application
of the proceeds thereof.
(c) The
Lender shall have received a Loan Notice or such Letter of Credit Documents (as applicable) in accordance with the requirements
hereof.
(d) The
Lender shall have received such other approvals, opinions or documents as the Lender may reasonably request.
Each request for any
Loan or the issuance of any Letter of Credit (including any Revolving Loan pursuant to any applicable Sweep Agreement, which Revolving
Loans may be made until the Borrower advises the Lender in writing that such Revolving Loans should not be made) submitted by the
Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) and, to
the extent applicable to an Acquisition Loan, Section 4.03 have been satisfied on and as of the date of the applicable Loan or
Letter of Credit.
4.03 Conditions
to Extension of Acquisition Loans. The obligation of the Lender to make the initial disbursement of any Acquisition Loan evidenced
by an Acquisition Note for an Investment in any Eligible Portfolio Company is subject to the satisfaction of the following conditions:
(a) All
conditions of the preceding Sections 4.02(a) and (b) shall continue to be met.
(b) Without
limiting the generality of clause (a) above, the Borrower shall have complied with the requirements of Section 8.03 with respect
to such Investment in any such Eligible Portfolio Company.
(c) The
Lender shall have received a Loan Notice in accordance with the requirements hereof.
(d) The
Lender shall have received such other approvals, opinions or documents as the Lender may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents
and warrants to the Lender that:
5.01 Existence;
Power. Each Loan Party and each of its Subsidiaries (i) is duly organized, validly existing and in good standing under the
Laws of the jurisdiction of its organization, (ii) has all requisite corporate, partnership or limited liability company, as applicable,
power and authority to carry on its business as now conducted, and (iii) except where a failure to be so qualified could not
reasonably be expected to result in a Material Adverse Effect, is duly qualified to do business, and is in good standing or in
existence (as the case may be under applicable Law), in each jurisdiction where such qualification is required.
5.02 Organizational
Power; Authorization; Enforceability. The execution, delivery and performance by each Loan Party of the Loan Documents to which
it is a party are within such Loan Party’s corporate, partnership or limited liability company, as applicable, powers and
have been duly authorized by all necessary corporate, partnership or limited liability company, as applicable, and if required,
shareholder, member, or partner action. This Agreement has been duly executed and delivered by the Borrower, and constitutes,
and each other Loan Document to which any Loan Party is a party, when executed and delivered by such Loan Party, will constitute,
valid and binding obligations of the Borrower or such Loan Party (as the case may be), enforceable against it in accordance with
their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors’ rights generally and by general principles of equity.
5.03 Governmental
Approvals; No Conflicts. The execution, delivery and performance by the Borrower of this Agreement, and by each Loan Party
of the other Loan Documents to which it is a party (a) do not require any consent or approval of, registration or filing with,
or any action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except
filings necessary to perfect Liens created under the Loan Documents, (b) will not violate any applicable Law or the Organizational
Documents of such Person or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture,
material agreement or other material instrument binding on such Person or any of its assets or give rise to a right thereunder
to require any payment to be made by such Person and (d) will not result in the creation or imposition of any Lien on any asset
of such Person, except Liens permitted under Section 8.01.
5.04 Financial
Statements; No Material Adverse Effect. (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition
of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance
with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show
all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness.
(b) The
unaudited consolidated and consolidating balance sheets of the Borrower and its Subsidiaries dated December 31, 2015, and the related
consolidated and consolidating statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter
ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except
as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of
the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii),
to the absence of footnotes and to normal year-end audit adjustments.
(c) Since
the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate,
that has had or could reasonably be expected to have a Material Adverse Effect.
5.05 Litigation.
There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or
against any of their properties or revenues that (a) purport to affect or pertain to this Agreement, any other Loan Document or
the consummation of the transactions contemplated hereby, or (b) except as specifically disclosed in Schedule 5.05 (the
“Disclosed Litigation”), either individually or in the aggregate, if determined adversely, could reasonably be expected
to have a Material Adverse Effect, and there has been no adverse change in the status, or financial effect on any Loan Party or
any Subsidiary thereof, of the matters described in Schedule 5.05.
5.06 Compliance
with Laws and Agreements; No Default. Each Loan Party and each Subsidiary thereof is in compliance in all material respects
with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except
in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect. Neither any Loan Party nor any Subsidiary thereof is in default under
or with respect to, or a party to, any Material Agreement that could, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions
contemplated hereby.
5.07 Title
to Assets. (a) Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to, or valid
leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in
title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of
each Loan Party and each of its Subsidiaries is subject to no Liens, other than Liens set forth on Schedule 8.01, and as
otherwise permitted by Section 8.01.
(b) Schedule
5.07(b) sets forth a complete and accurate list of all real property owned by each Loan Party and each of its Subsidiaries
having a fair market value of $250,000 or more, showing as of the date hereof the street address, county or other relevant jurisdiction,
state, record owner and book and fair value thereof. Each Loan Party and each of its Subsidiaries has good, marketable and insurable
fee simple title to the real property owned by such Loan Party or such Subsidiary, free and clear of all Liens, other than Liens
created or permitted by the Loan Documents.
(c) (i)
Schedule 5.07(c)(i) sets forth a complete and accurate list of all leases of real property under which any Loan Party or
any Subsidiary of a Loan Party is the lessee with an annual rent of $250,000 or more, showing as of the date hereof the street
address, county or other relevant jurisdiction, state, lessor, lessee, expiration date and annual rental cost thereof. Each such
lease is the legal, valid and binding obligation of the lessor thereof, enforceable in accordance with its terms.
(ii) Schedule
5.07(c)(ii) sets forth a complete and accurate list of all leases of real property under which any Loan Party or any Subsidiary
of a Loan Party is the lessor with an annual rent of $250,000 or more, showing as of the date hereof the street address, county
or other relevant jurisdiction, state, lessor, lessee, expiration date and annual rental cost thereof. Each such lease is the legal,
valid and binding obligation of the lessee thereof, enforceable in accordance with its terms.
(d) Schedule
8.03 sets forth a complete and accurate list of all Investments held by any Loan Party or any Subsidiary of a Loan Party on
the date hereof, showing as of the date hereof the amount, obligor or issuer and maturity, if any, thereof.
5.08 Environmental
Matters. (a) The Loan Parties and their respective Subsidiaries conduct in the ordinary course of business a review of the
effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental
Law on their respective businesses, operations and properties, and as a result thereof the Borrower has reasonably concluded that
such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) None
of the properties currently or formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or proposed for
listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property; except
as set forth in the environmental reports listed in Schedule 5.08(b) copies of which have been provided to the Lender, there are
no and never have been any underground or above-ground storage tanks or any surface impoundments, septic tanks, pits, sumps or
lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated
by any Loan Party or any of its Subsidiaries or, to the best of the knowledge of the Loan Parties, on any property formerly owned
or operated by any Loan Party or any of its Subsidiaries; except as set forth in the environmental reports listed in Schedule 5.08(b)
copies of which have been provided to the Lender, there is no asbestos or asbestos-containing material on any property currently
owned or operated by any Loan Party or any of its Subsidiaries; and Hazardous Materials have not been released, discharged or disposed
of on any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries.
(c) Neither
any Loan Party nor any of its Subsidiaries is undertaking, and has not completed, either individually or together with other potentially
responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release,
discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of
any Governmental Authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated,
handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any
of its Subsidiaries have been disposed of in a manner not reasonably expected to result in material liability to any Loan Party
or any of its Subsidiaries.
5.09 Insurance.
The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates
of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged
in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.
5.10 Taxes.
Each of the Borrower and its Subsidiaries and each other Person for whose taxes the Borrower could become liable have timely filed
or caused to be filed all Federal income tax returns and all other material tax returns that are required to be filed by them,
and have paid all taxes shown to be due and payable on such returns or on any assessments made against it or its property and all
other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority, except (i) to the extent
the failure to do so would not have a Material Adverse Effect or (ii) where the same are currently being contested in good faith
by appropriate proceedings and for which such party has set aside on its books adequate reserves. The charges, accruals and reserves
on the books of each of the Borrower and its Subsidiaries in respect of such taxes are adequate in such party’s reasonable
commercial discretion, and no tax liabilities that could be materially in excess of the amount so provided are anticipated. There
is no proposed tax assessment against the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect. Neither
any Loan Party nor any Subsidiary thereof is party to any tax sharing agreement.
5.11 ERISA
Compliance. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other
Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination
letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the
best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. The Borrower
and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect
to any Plan.
(b) There
are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be
expected to result in a Material Adverse Effect.
(c) (i)
No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA
with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect
to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
5.12 Subsidiaries;
Equity Interests; Loan Parties. No Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of Schedule
5.12 (and if such Subsidiary is also an Unrestricted MSB Subsidiary, it is designated as such on such Schedule) and all of
the outstanding Equity Interests in such Persons have been validly issued, are fully paid and non-assessable and are owned by a
Loan Party in the amounts specified on Part (a) of Schedule 5.12 free and clear of all Liens except those created under
the Security Documents. No Loan Party has any equity investments in any other corporation or entity other than those specifically
disclosed in Part (b) of Schedule 5.12. All of the outstanding Equity Interests in the Borrower have been validly issued
and are fully paid and non-assessable. Set forth on Part (d) of Schedule 5.12 is a complete and accurate list of all Loan
Parties, showing as of the Closing Date (as to each Loan Party) the jurisdiction of its incorporation, the address of its principal
place of business and its U.S. taxpayer identification number or, in the case of any non-U.S. Loan Party that does not have a U.S.
taxpayer identification number, its unique identification number issued to it by the jurisdiction of its incorporation.
5.13 Margin
Regulations; Investment Company Act. (a) The Borrower is not engaged and will not engage, principally or as one of its important
activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Federal Reserve
Board), or extending credit for the purpose of purchasing or carrying margin stock.
(b) None
of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.
5.14 Intellectual
Property; Licenses, Etc. Each Loan Party and each of its Subsidiaries own, or possess the right to use, all of the trademarks,
service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively,
“IP Rights”) that are reasonably necessary for the operation of their respective businesses, without conflict with
the rights of any other Person. To the best knowledge of the Borrower, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party or any of its Subsidiaries
infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the
best knowledge of the Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
5.15 Solvency.
As of the date hereof and after giving effect to the transactions contemplated by the Loan Documents, (i) the aggregate value of
each Loan Party’s assets, individually and together with its Subsidiaries on a consolidated basis, will exceed its liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities), (ii) each Loan Party, individually and together with
its Subsidiaries on a consolidated basis, will have sufficient cash flow to enable it to pay its debts as they become due, and
(iii) no Loan Party, individually and together with its Subsidiaries on a consolidated basis, will have unreasonably small capital
for the business in which it is engaged..
5.16 Security
Documents. The provisions of the Security Documents are effective to create in favor of the Lender a legal, valid and enforceable
first priority Lien (subject to Liens permitted by Section 8.01) on all right, title and interest of the respective Loan Parties
in the Collateral described therein. Except for filings completed prior to the Closing Date and as contemplated hereby and by the
Security Documents, no filing or other action will be necessary to perfect or protect such Liens.
5.17 Disclosure.
The Borrower has disclosed to the Lender all agreements, instruments and corporate or other restrictions to which it or any of
its Subsidiaries or any other Loan Party is subject, and all other matters known to it, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information
furnished (whether in writing or orally) by or on behalf of any Loan Party to the Lender in connection with the transactions contemplated
hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case as modified
or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided
that, with respect to projected financial information, the Borrower represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as the Lender
shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, the Borrower shall, and shall cause each Subsidiary to:
6.01 Financial
Statements and Other Information. Deliver to the Lender, in form and detail satisfactory to the Lender:
(a) as
soon as available, but in any event within 120 days after the end of each fiscal year of the Borrower (or if earlier, within 5
days after the date required to be filed by the SEC (without giving effect to any extension permitted by the SEC)) (commencing
with the fiscal year ended December 31, 2015), a consolidated and consolidating balance sheet of the Borrower and its Subsidiaries
as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders’
equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied
by a report and opinion of a certified public accounting firm of nationally recognized standing reasonably acceptable to the Lender,
which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws
and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception
as to the scope of such audit or with respect to the absence of any material misstatement;
(b) as
soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year
of the Borrower (or if earlier, within 5 days after the date required to be filed by the SEC (without giving effect to any extension
permitted by the SEC)) (commencing with the fiscal quarter ended March 31, 2016), a consolidated and consolidating balance sheet
of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements
of income or operations, shareholders’ equity and cash flows for such fiscal quarter and for the portion of the Borrower’s
fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements
to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting
the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries
in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating
statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower to
the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial
statements of the Borrower and its Subsidiaries;
(c) concurrently
with the delivery of the financial statements referred to in Sections 6.01(a) and (b) (commencing with the delivery of the financial
statements for the fiscal year ended December 31, 2016), a duly completed Compliance Certificate signed by the chief executive
officer, chief financial officer, treasurer or controller of the Borrower;
(d) as
soon as available, but in any event at least 15 days before the end of each fiscal year of the Borrower, an annual budget of the
Borrower and its Subsidiaries on a consolidated basis, including forecasts prepared by management of the Borrower, in form satisfactory
to the Lender, of consolidated balance sheets and statements of income or operations and cash flows of the Borrower and its Subsidiaries
on a quarterly basis for the immediately following fiscal year.
(e) concurrently
with the delivery of the financial statements referred to in Section 6.01(a) (commencing with the delivery of the financial statements
for the fiscal year ended December 31, 2016), a certificate of its independent certified public accountants certifying such financial
statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default under the financial
covenants set forth herein or, if any such Default shall exist, stating the nature and status of such event;
(f) promptly
after any request by the Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board
of directors (or the audit committee of the board of directors) of any Loan Party by independent accountants in connection with
the accounts or books of any Loan Party or any Non-MSB Subsidiary, or any audit of any of them;
(g) promptly
after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent
to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements
which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934,
or with any national securities exchange, and in any case not otherwise required to be delivered to the Lender pursuant hereto;
(h) promptly
after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or
any Non-MSB Subsidiary pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to
be furnished to the Lender pursuant to any other clause of this Section 6.01;
(i) promptly,
and in any event within five Business Days after receipt thereof by any Loan Party or any Non-MSB Subsidiary, copies of each notice
or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation
or possible investigation or other inquiry by such agency regarding financial or other operational results of any such Person;
(j) promptly
after the assertion or occurrence thereof, notice of any action or proceeding against or of any noncompliance by any Loan Party
or any Non-MSB Subsidiary with any Environmental Law that could reasonably be expected to have a Material Adverse Effect;
(k) promptly,
such additional information regarding the business, financial, legal or corporate affairs of any Loan Party or any Subsidiary,
or compliance with the terms of the Loan Documents, as the Lender may from time to time reasonably request.
6.02 Notices.
Promptly notify the Lender:
(a) of
the occurrence of any Default;
(b) of
any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance
of, or any default under, a Material Agreement of any Loan Party or any Non-MSB Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between any such Person and any Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting any such Person, including pursuant to any applicable Environmental Laws;
(c) of
the occurrence of any ERISA Event;
(d) of
any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary; and
(e) of
the (i) occurrence of any Disposition of property or assets for which the Borrower is required to make a mandatory prepayment pursuant
to Section 2.03(b)(i), (ii) occurrence of any sale of capital stock or other Equity Interests for which the Borrower is required
to make a mandatory prepayment pursuant to Section 2.03(b)(ii), (iii) incurrence or issuance of any Indebtedness for which the
Borrower is required to make a mandatory prepayment pursuant to Section 2.03(b)(iii), and (iv) receipt of any Extraordinary Receipt
for which the Borrower is required to make a mandatory prepayment pursuant to Section 2.03(b)(iv).
Each notice pursuant to Section 6.02 shall
be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein
and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.02(a)
shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.
6.03 Payment
of Obligations. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including
(a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are
being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its
property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument
or agreement evidencing such Indebtedness.
6.04 Preservation
of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the
Laws of the jurisdiction of its organization except in a transaction permitted by Section 8.04 or 8.05; provided, however,
that the Borrower and its Subsidiaries may consummate any merger or consolidation permitted under Section 8.04; (b) take all reasonable
action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its
business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c)
preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
6.05 Maintenance
of Properties. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of
its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals
and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect;
and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.
6.06 Maintenance
of Insurance. Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with
respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other
Persons and providing for not less than 30 days’ prior notice to the Lender of termination, lapse or cancellation of such
insurance.
6.07 Compliance
with Laws. Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.
6.08 Books
and Records. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower
or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may
be.
6.09 Inspection
Rights. Permit representatives and independent contractors of the Lender to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances
and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable
times during normal business hours up to two times per year (unless an Event of Default has occurred and continuing), upon reasonable
advance notice to the Borrower; provided, however, that when an Event of Default exists the Lender (or any of its
representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal
business hours and without advance notice.
6.10 Use
of Proceeds. Use the proceeds of the Revolving Loans and Letters of Credit only for temporary working capital needs, capital
expenditures and for other general corporate purposes and to refinance a portion of existing Indebtedness to River City Equity,
Inc. on the Closing in an amount not to exceed $750,000.00; provided, however, that no proceeds of the Revolving
Loans shall be used to fund the operations of any Unrestricted MSB Subsidiary. Use the proceeds of Acquisition Loans to refinance
existing Indebtedness to River City Equity, Inc. and / or East West Bank on the Closing Date and, thereafter, for Investments in
Eligible Portfolio Companies only; provided, however, that no proceeds of the Acquisition Loans shall be used to
fund the acquisition of any MSB Entity or any assets of any MSB Entity. No part of the proceeds of any Loan will be used, whether
directly or indirectly, for any purpose that entails a violation of any rule or regulation of the Board of Governors of the Federal
Reserve System, including Regulations T, U or X.
6.11 Compliance
with Environmental Laws. Comply, and cause all lessees and other Persons operating or occupying its properties to comply, in
all material respects, with all applicable Environmental Laws; and conduct any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its
properties, in accordance with the requirements of all Environmental Laws; provided, however, that neither the Borrower nor any
of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation
to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect
to such circumstances in accordance with GAAP.
6.12 Deposit
Accounts. Cause the Borrower and its Non-MSB Subsidiaries (subject to the exceptions herein) to maintain its primary deposit
accounts with the Lender. Notwithstanding the foregoing, (a) AlphaGraphics, Inc. shall have 90 days from Closing to transition
all of its deposit accounts to Lender and (b) PQH Wireless, Inc. shall not be required to maintain their store operating accounts
with Lender (collectively, the “Retail Store Deposit Accounts”) and shall be permitted to keep the existing disbursement/control
account in which such Retail Store Deposit Accounts are deposited (the “Concentration Account”, which is maintained
by Borrower on their behalf), subject to a deposit account control agreement in favor of Lender and in form and substance acceptable
to Lender. The Borrower and its Non-MSB Subsidiaries shall have 30 days from the Closing to cause the Concentration Account to
be subject to such deposit account control agreement. In furtherance of the foregoing, the Borrower shall cause PQH Wireless, Inc.
to implement such processes and cash management systems with the depositary institutions for the Retail Store Deposit Accounts
and the Concentration Account to ensure that deposits in the Retail Store Deposit Accounts shall be transferred to the Concentration
Account on a regular basis consistent with past practices and customs but, in any event, no less frequently than monthly.
6.13 Material
Agreements. Perform and observe all the terms and provisions of each Material Agreement to be performed or observed by it,
maintain each such Material Agreement in full force and effect, enforce each such Material Agreement in accordance with its terms,
take all such action to such end as may be from time to time requested by the Lender and, upon request of the Lender, make to each
other party to each such Material Agreement such demands and requests for information and reports or for action as any Loan Party
or any of its Subsidiaries is entitled to make under such Material Agreement, and cause each of its Subsidiaries to do so, except,
in any case, where the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
6.14 Information
Regarding Collateral. Each of the Borrower and its Non-MSB Subsidiaries (as applicable) will furnish to the Lender prompt written
notice of any change (i) in its corporate name or in any trade name used to identify it in the conduct of its business or in the
ownership of its properties, (ii) in the location of its chief executive office, its principal place of business, any office in
which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility), (iii) in its identity or corporate structure or (iv)
in its Federal Taxpayer Identification Number. Each of the Borrower and its Non-MSB Subsidiaries agrees not to effect or permit
any change referred to in the preceding sentence unless any such change is permitted under this Agreement and all filings have
been made under the UCC or otherwise that are required in order for the Lender to continue at all times following such change to
have a valid, legal and perfected security interest in all the Collateral or unless the Lender has consented to such change. Each
of the Borrower and its Non-MSB Subsidiaries (as applicable) also agrees to promptly notify the Lender if any material portion
of the Collateral is damaged or destroyed.
6.15 Further
Assurances.
(a) Cause
each Loan Party and its Non-MSB Subsidiaries to execute any and all further documents, financing statements, agreements and instruments,
and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds
of trust and other documents), which may reasonably be required under any applicable law, or which the Lender may request, to effectuate
the transactions contemplated by the Loan Documents or to grant, preserve, protect or perfect the Liens created or intended to
be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Borrower. Each Loan
Party and its Non-MSB Subsidiaries also agrees to provide to the Lender, from time to time upon request, evidence reasonably satisfactory
to the Lender as to the perfection and priority of the Liens created or intended to be created by the Security Documents.
(b) Notify
the Lender if any material assets (including any real property or improvements thereto or any interest therein) are acquired by
any of the Borrower and its Non-MSB Subsidiaries after the Closing Date (other than assets constituting Collateral under the Security
Agreement that have become subject to the Liens granted under such Security Documents upon acquisition thereof), and, if requested
by the Lender, the Borrower will cause such assets to be subjected to a Lien securing the Obligations and will take such actions
as shall be necessary or reasonably requested by the Lender to grant and perfect such Liens, including actions described in paragraph
(a) of this Section, all at the expense of the Borrower.
6.16 Additional
Collateral.
(a) With
respect to any property acquired after the date hereof by the Borrower or any Loan Party that is a Subsidiary of the Borrower (other
than (x) any property described in Sections 6.16(b), (c) or (d), (y) any property subject to a Lien expressly
permitted by Section 8.01 and (z) property acquired by any Foreign Subsidiary) as to which the Lender does not have a perfected
lien, promptly (i) execute and deliver to the Lender such amendments to the Security Documents (as applicable) and such other documents
as the Lender deems necessary or advisable to grant to the Lender a security interest in such property and (ii) take all actions
necessary or advisable to grant to the Lender a perfected first priority security interest in such property, including the filing
of UCC financing statements in such jurisdictions as may be required by the Security Documents or by law or as may be requested
by the Lender.
(b) With
respect to any fee interest in any real property having a value (together with improvements thereof) of at least $250,000 acquired
after the date hereof by the Borrower or any Loan Party that is a Subsidiary of the Borrower (other than (x) any such real property
subject to a Lien expressly permitted by Section 8.01 and (z) real property acquired by any Foreign Subsidiary), promptly
(i) execute and deliver a first priority mortgage instrument, in favor of the Lender covering such real property, (ii) if requested
by the Lender, provide the Lender with (x) title and extended coverage insurance covering such real property in an amount at least
equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Lender) as well
as a current ALTA survey thereof, together with a surveyor’s certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Lender in connection with such mortgage instrument, each of the foregoing in form and substance reasonably
satisfactory to the Lender and (iii) if requested by the Lender, deliver to the Lender legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Lender.
(c) With
respect to any new Subsidiary (other than an Unrestricted MSB Subsidiary or a Foreign Subsidiary) created or acquired after the
date hereof by the Borrower or any Loan Party that is a Subsidiary of the Borrower (which, for the purposes of this Section 6.17(c),
shall include any existing Subsidiary that ceases to be a Foreign Subsidiary and any existing Unrestricted MSB Subsidiary that
ceases to be an Unrestricted MSB Subsidiary), promptly (i) execute and deliver to the Lender a joinder and/or supplement (as the
case may be) to the Guaranty Agreement and the applicable Security Documents, pursuant to which it shall join the Guaranty and
the Security Documents to which each of the Guarantors is a party and such other documents as the Lender deems necessary or advisable
to grant to the Lender a perfected first priority security interest in the equity interests of such new Subsidiary that is owned
by any Loan Party, (ii) deliver to the Lender the certificates, if any, representing such Equity Interests, together with, if applicable,
undated stock powers, in blank, executed and delivered by a duly authorized officer of such Person, (iii) cause such new Subsidiary
(A) to take such actions necessary or advisable to grant to the Lender a perfected first priority security interest in the Collateral
described in the applicable Security Documents with respect to such new Subsidiary, including the filing of UCC financing statements
in such jurisdictions as may be required by such Security Documents or by law or as may be requested by the Lender and (C) to deliver
to the Lender a certified copy of the Organizational
Documents of such Subsidiary, and a certified copy of all documents authorizing such Subsidiary’s execution, delivery and
performance of the Guaranty Agreement and the Security Documents to which it is a party, and (iv) if requested by the Lender,
deliver to the Lender legal opinions relating to the matters described above, which opinions shall be in form and substance, and
from counsel, reasonably satisfactory to the Lender.
(d) With
respect to any new Foreign Subsidiary that is a Subsidiary created or acquired after the date hereof by the Borrower or any Loan
Party that is a Subsidiary of the Borrower, promptly (i) execute and deliver to the Lender such amendments to the Security Documents
and such other documents as the Lender deems necessary or advisable to grant to the Lender a perfected first priority security
interest in the Equity Interests of such new Subsidiary that is owned by such Loan Party (provided that in no event shall more
than 66% of the total outstanding voting Equity Interests of any such new Subsidiary be required to be so pledged), (ii) deliver
to the Lender the certificates, if any, representing such Equity Interests, together with, if applicable, undated stock powers,
in blank, executed and delivered by a duly authorized officer of such Loan Party, and take such other action as may be necessary
or, in the opinion of the Lender, desirable to perfect the Lender’s security interest therein, and (iii) if requested by
the Lender, deliver to the Lender legal opinions relating to the matters described above, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Lender.
6.17 Unrestricted
MSB Subsidiaries. Notwithstanding anything to the contrary set forth herein, the Borrower shall ensure that the operations
of each Unrestricted MSB Subsidiary remain entirely independent from the operations of the Borrower and its Non-MSB Subsidiaries;
provided, however, that the Unrestricted MSB Subsidiaries and PQH Wireless, Inc. and its Subsidiaries shall be permitted
to continue to share those existing locations that are currently shared as of the Closing Date, so long as rent will be prorated
for each Subsidiary and funds will be accounted separately for on each Subsidiary’s books. In addition, no funds of any Unrestricted
MSB Subsidiary shall be deposited or maintained in any accounts with the Lender at any time.
ARTICLE VII
FINANCIAL COVENANTS
So long as the Lender
shall have any Commitment hereunder and/or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter
of Credit shall remain outstanding, the Borrower shall not:
7.01 Consolidated
Leverage Ratio. Permit the Consolidated Leverage Ratio at any time during any period of four fiscal quarters of the Borrower
to be greater than 2.25 to 1.
7.02 Consolidated
Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any fiscal quarter of the
Borrower to be less than 1.15 to 1.
ARTICLE VIII
NEGATIVE COVENANTS
So long as the Lender
shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, the Borrower shall not, nor shall it permit any Non-MSB Subsidiary to, directly or indirectly:
8.01 Liens.
Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter
acquired, or sign or file or suffer to exist under the UCC of any jurisdiction a financing statement that names the Borrower or
any of its Non-MSB Subsidiaries as debtor, or assign any accounts or other right to receive income, other than the following:
(a) Liens
pursuant to any Loan Document and any other Liens in favor of the Lender;
(b) Liens
existing on the date hereof and listed on Schedule 8.01 and any renewals or extensions thereof, provided that (i) the property
covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as contemplated by Section
8.02(c), (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the
obligations secured or benefited thereby is permitted by Section 8.02(c);
(c) Liens
for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;
(d) carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;
(e) pledges
or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other
social security legislation, other than any Lien imposed by ERISA;
(f) deposits
to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(g) easements,
rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial
in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the applicable Person;
(h) Liens
securing judgments for the payment of money not constituting an Event of Default under Section 9.01(h); and
(i) Liens
securing Indebtedness permitted under Section 8.02(e); provided that (i) such Liens do not at any time encumber any property other
than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market
value, whichever is lower, of the property being acquired on the date of acquisition.
8.02 Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness
of a Non-MSB Subsidiary of the Borrower owed to the Borrower or a wholly-owned Non-MSB Subsidiary of the Borrower, which Indebtedness
shall (i) on terms (including subordination terms) acceptable to the Lender and (ii) be otherwise permitted under the provisions
of Section 8.03; provided, however, that any Indebtedness of a Non-MSB Subsidiary that is providing a limited Guaranty
under the Guaranty Agreement to the Borrower or a wholly-owned Non-MSB Subsidiary of the Borrower, shall be evidenced by a promissory
note and security agreement (granting a blanket liens on the assets of such Subsidiary) substantially in the form of Exhibit
D attached hereto (each, an “Intercompany Note & Security Agreement”), that has been delivered to Lender either
endorsed in blank or together with an undated instrument of transfer executed in blank by the applicable Non-MSB Subsidiary(ies)
that are the payee(s) on such note and for which the holder thereof has filed a UCC Financing Statement to perfect the lien granted
under such Intercompany Note & Security Agreement or has authorized the Lender to make such filing on its behalf;
(b) Indebtedness
under the Loan Documents and any other Indebtedness to the Lender;
(c) Indebtedness
outstanding on the date hereof and listed on Schedule 8.02 and any refinancings, refundings, renewals or extensions thereof;
provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension
except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and the direct or any
contingent obligor with respect thereto is not changed, as a result of or in connection with such refinancing, refunding, renewal
or extension;
(d) Guaranties
of the Borrower or any Guarantor in respect of Indebtedness otherwise permitted hereunder of the Borrower or any other Guarantor;
and
(e) Indebtedness
in respect of Capitalized Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within
the limitations set forth in Section 8.01(i); provided, however, that the aggregate amount of all such Indebtedness
at any one time outstanding shall not exceed $500,000.
8.03 Investments.
Make or hold any Investments, except:
(a) Investments
held by the Borrower and its Non-MSB Subsidiaries in the form of Cash Equivalents;
(b) advances
to officers, directors and employees of the Borrower and Non-MSB Subsidiaries in an aggregate amount not to exceed $50,000 at any
time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;
(c) (i)
Investments by the Borrower and its Non-MSB Subsidiaries in their respective Non-MSB Subsidiaries outstanding on the date hereof,
(ii) additional Investments by the Borrower and its Non-MSB Subsidiaries in Loan Parties and (iii) Investments by the Borrower
in the Unrestricted MSB Subsidiaries outstanding (and limited to such amounts as in existence on) the date hereof (it being understood
and agreed that none of the Borrower or its Non-MSB Subsidiaries shall make any further Investments in the Unrestricted MSB Subsidiaries);
(d) Investments
consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled
account debtors to the extent reasonably necessary in order to prevent or limit loss;
(e) Guaranties
permitted by Section 8.02; provided, that neither the Borrower nor any Non-MSB Subsidiary shall guaranty or provide any
security for Indebtedness of an Unrestricted MSB Subsidiary;
(f) Investments
existing on the date hereof and set forth on Schedule 8.03;
(g) unless
otherwise approved by the Lender in writing, the purchase or other acquisition of all of the Equity Interests in, or all or substantially
all of the property of, any Person that, upon the consummation thereof, will be wholly-owned directly by the Borrower or one or
more of its wholly-owned Non-MSB Subsidiaries (including as a result of a merger or consolidation) (each such Person that meets
the requirements of this Section 8.03(g) is an “Eligible Portfolio Company”); provided that, with respect to each purchase
or other acquisition made pursuant to this Section 8.03(h):
(i) any
such newly-created or acquired Subsidiary shall comply with the requirements of Section 6.16;
(ii) in
no event shall the lines of business of the Person to be (or the property of which is to be) so purchased or otherwise acquired
include any (A) “payday” stores, other “payday” lending products, retail pawn stores and related pawn loan
products and any other similar lines of business conducted by any Unrestricted MSB Subsidiary and (B) any other line or lines of
business in which the Lender would be prohibited from investing pursuant to applicable Law or the Lender’s internal investment
and/or credit policies in effect from time to time (as determined by the Lender in its sole discretion), including without limitation
any MSB Entity;
(iii) such
purchase or other acquisition shall be consummated in accordance with all applicable Laws and shall not be by means of a hostile
takeover, hostile tender offer or other similar hostile transaction;
(iv) such
purchase or other acquisition shall not include or result in any contingent liabilities that could reasonably be expected to be
material to the business, financial condition, operations or prospects of the Borrower and its Non-MSB Subsidiaries, taken as a
whole (as determined in good faith by the board of directors (or the persons performing similar functions) of the Borrower or such
Non-MSB Subsidiary if the board of directors is otherwise approving such transaction and, in each other case, by a Responsible
Officer);
(v) (A)
immediately before and immediately after giving pro forma effect to any such purchase or other acquisition, no Default shall have
occurred and be continuing and (B) immediately after giving effect to such purchase or other acquisition, the Borrower and its
Non-MSB Subsidiaries shall be in pro forma compliance with all of the covenants set forth in Article VII, such compliance to be
determined on the basis of the financial information most recently delivered to the Lender pursuant to Section 6.01(a) or (b) as
though such purchase or other acquisition had been consummated as of the first day of the fiscal period covered thereby;
(vi) the
Borrower shall deliver to the Lender at least five (5) Business Days before the consummation of the Investment in such Eligible
Portfolio Company copies of any agreements entered into or proposed to be entered into by the Borrower, any Loan Parties and such
other Person(s) in connection with such Eligible Portfolio Company and shall deliver to the Lender such other information about
such Person or its assets as any Bank may reasonably require; and
(vii) the
Borrower shall have delivered to the Lender, at least five Business Days prior to the date on which any such purchase or other
acquisition is to be consummated, a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the
Lender, certifying that all of the requirements set forth in this clauses (i) through (vii) above have been satisfied or will be
satisfied on or prior to the consummation of such purchase or other acquisition.
8.04 Fundamental
Changes. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of
any Person, except that, so long as no Default exists or would result therefrom:
(a) any
Non-MSB Subsidiary may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or
(ii) any one or more other Non-MSB Subsidiaries, provided that when any Loan Party is merging with another Non-MSB Subsidiary,
(A) such Loan Party shall be the continuing or surviving Person and (B) if two or more Loan Parties are merging and one or more
of such Loan Parties is providing a limited Guaranty under the Guaranty Agreement, then the continuing or surviving Person shall
be the Loan Party that has provided an unlimited Guaranty under the Guaranty Agreement or, if both such Loan Parties are providing
limited Guaranties, then the continuing or surviving Person shall be the Loan Party who is providing a greater limited Guaranty
under the Guaranty Agreement;
(b) any
Loan Party may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to
another Loan Party;
(c) any
Non-MSB Subsidiary that is not a Loan Party may dispose of all or substantially all its assets (including any Disposition that
is in the nature of a liquidation) to (i) another Non-MSB Subsidiary that is not a Loan Party or (ii) to a Loan Party;
(d) in
connection with any acquisition permitted under Section 8.03(g), any Non-MSB Subsidiary of the Borrower may merge into or consolidate
with any other Person or permit any other Person to merge into or consolidate with it; provided that (i) the Person surviving such
merger shall be a wholly-owned Non-MSB Subsidiary of the Borrower, (ii) in the case of any such merger to which any Loan Party
(other than the Borrower) is a party, such Loan Party is the surviving Person and (iii) such other Person is not or would not become
upon the closing of such transaction an Unrestricted MSB Subsidiary; and
(e) so
long as no Default has occurred and is continuing or would result therefrom, any Non-MSB Subsidiary of the Borrower may merge into
or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided, however,
that in each case, immediately after giving effect thereto (i) in the case of any such merger to which the Borrower is a party,
the Borrower is the surviving corporation, (ii) in the case of any such merger to which any Loan Party (other than the Borrower)
is a party, such Loan Party is the surviving corporation and (iii) such other Person is not or would not become upon the closing
of such transaction an Unrestricted MSB Subsidiary.
8.05 Dispositions.
Make any Disposition or enter into any agreement to make any Disposition, except:
(a) Dispositions
of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;
(b) Dispositions
of inventory in the ordinary course of business;
(c) Dispositions
of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement
property;
(d) Dispositions
of property by any Non-MSB Subsidiary to the Borrower or to a wholly-owned Non-MSB Subsidiary; provided that if the transferor
of such property is a Guarantor, the transferee thereof must either be the Borrower or a Guarantor;
(e) Dispositions
related to closures of unprofitable or underperforming retail locations by PQH Wireless, Inc., the Unrestricted MSB Subsidiaries
or any other retail businesses acquired by Borrower or any of its Non-MSB Subsidiaries in the future; provided, that the Net Cash
Proceeds thereof are applied to the prepayment of the Loans in accordance with the provision of Section 2.03(b);
(f) Dispositions
permitted by Section 8.04; and
(g) Dispositions
by Borrower of its Equity Interests in Unrestricted MSB Subsidiaries.
provided, however, that any Disposition
pursuant to Section 8.05(a) through Section 8.05(e) shall be for fair market value.
8.06 Restricted
Payments. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise)
to do so, or issue or sell any Equity Interests or accept any capital contributions, except that, so long as no Default shall have
occurred and be continuing at the time of any action described below or would result therefrom:
(a) each
Non-MSB Subsidiary may make Restricted Payments to its shareholders or unit holders (including Borrower), any Non-MSB Subsidiaries
of the Borrower that are Guarantors and any other Person that owns a direct Equity Interest in such Non-MSB Subsidiary, ratably
according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;
(b) the
Borrower and each Non-MSB Subsidiary may declare and make dividend payments or other distributions payable solely in the common
stock or other common Equity Interests of such Person;
(c) so
long as no Event of Default exists or would occur as a result thereof, the Borrower and each Non-MSB Subsidiary may make Restricted
Payments necessary to effect buybacks of Equity Interest in such Person pursuant to employment agreements or shareholder agreements
applicable to the Borrower or such Non-MSB Subsidiary in an aggregate amount not to exceed $500,000 in any fiscal year;
(d) except
to the extent the Net Cash Proceeds thereof are required to be applied to the prepayment of the Loans pursuant to Section 2.03(b)(ii),
the Borrower and each Non-MSB Subsidiary may purchase, redeem or otherwise acquire its common Equity Interests with the proceeds
received from the substantially concurrent issue of new common Equity Interests;
(e) the
Borrower may declare or pay cash dividends to its stockholders solely out of net income of the Borrower, its Non-MSB Subsidiaries
and its Unrestricted MSB Subsidiaries arising after March 31, 2016; provided, that (i) there are no outstanding Revolving
Loans or unpaid interest thereon at such time, (ii) immediately before and immediately after giving pro forma effect to such cash
dividends, no Default shall have occurred and be continuing and (iii) immediately after giving effect to such cash dividends, the
Borrower and its Non-MSB Subsidiaries shall be in pro forma compliance with all of the covenants set forth in Article VII, such
compliance to be determined on the basis of the financial information most recently delivered to the Lender pursuant to Section
6.01(a) or (b); and
(f) the
Borrower may issue and sell its common Equity Interests, so long as the Net Cash Proceeds thereof are applied to the repayment
of Loans pursuant to Section 2.03(b)(ii).
8.07 Change
in Nature of Business. Engage in any material line of business substantially different from those lines of business conducted
by the Borrower and its Non-MSB Subsidiaries on the date hereof or any business substantially related or incidental thereto, except
through the acquisition of an Eligible Portfolio Company.
8.08 Transactions
with Affiliates. Enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary
course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Non-MSB Subsidiary
as would be obtainable by the Borrower or such Non-MSB Subsidiary at the time in a comparable arm’s length transaction with
a Person other than an Affiliate; provided that the foregoing restriction shall not apply to transactions between or among the
Loan Parties. As of the Closing Date, Schedule 8.08 sets forth certain agreements between the Borrower, one or more of its
Non-MSB Subsidiaries and one or more Affiliates of the Borrower (collectively, the “Affiliate Agreements”), which the
Borrower represents and warrants to the Lender that such Affiliate Agreements are on fair and reasonable terms that such Person
could obtain in a comparable arm’s length transaction with a Person other than an Affiliate. Neither the Borrower nor any
of its Non-MSB Subsidiaries will amend, modify or supplement any such Affiliate Agreement or provision thereof in any manner, except
for such amendments, modifications or supplements that are on fair and reasonable terms that such Person could obtain in a comparable
arm’s length transaction with a Person other than an Affiliate.
8.09 Restrictive
Agreements. Enter into or permit to exist any Material Agreement (other than this Agreement or any other Loan Document) that
(a) limits the ability (i) of any Non-MSB Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise
transfer property to or invest in the Borrower or any Guarantor, except for any agreement in effect at the time any Non-MSB Subsidiary
becomes a Non-MSB Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation of such Person
becoming a Non-MSB Subsidiary of the Borrower, (ii) of any Non-MSB Subsidiary to Guaranty the Indebtedness of the Borrower or (iii)
of the Borrower or any Non-MSB Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; provided,
however, that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness
permitted under Section 8.02(i) solely to the extent any such negative pledge relates to the property financed by or the subject
of such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure
another obligation of such Person.
8.10 Amendments
of Organizational Documents; Management Agreement. Amend any of its Organizational Documents or amend the Management Agreement
in any manner that would result in an increase in any payments to BCM thereunder, without the prior written consent of the Lender;
provided, however, that within forty-five (45) days of the Closing Date, Borrower may amend its Organizational Documents
to convert from a Minnesota corporation to a Delaware corporation in accordance with all applicable requirements of Minnesota and
Delaware law (the “Conversion”) if (i) no Event of Default exists under the Loan Documents at the time of such Conversion,
(ii) the Borrower promptly provides (a) any and all amendments and/or restatements to the Borrower’s Organizational Documents
executed and/or entered into in accordance with such Conversion (including a certified copies of all documents filed with the Minnesota
and/or Delaware Secretary of State), (b) all information necessary for the Lender to prepare and file such UCC Financing Statements
and/or amendments as the Lender deems appropriate to reflect the Conversion (c) any and all other documentation and related information
reasonably requested by the Lender with respect to the Conversion. In furtherance of the foregoing, upon the effectiveness of the
Conversion, each reference to “Western Capital Resources, Inc., a Minnesota corporation”, in the Loan Documents shall
automatically be deemed to refer to “Western Capital Resources, Inc., a Delaware corporation”, without further action
of any of the parties.
8.11 Accounting
Changes. Make any change in (a) accounting policies or reporting practices, except as required by GAAP, or (b) fiscal year.
8.12 Prepayments,
Etc. of Indebtedness. Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any Indebtedness, except (a) the prepayment of the Loans
in accordance with the terms of this Agreement and (b) regularly scheduled or required repayments or redemptions of Indebtedness
set forth in Schedule 8.02 and refinancings and refundings of such Indebtedness in compliance with Section 8.02(g).
8.13 Amendment,
Etc. of Indebtedness. Amend, modify or change in any manner any term or condition of any Indebtedness set forth in Schedule
8.02, except for any refinancing, refunding, renewal or extension thereof permitted by Section 8.02(g).
8.14 Management
& Board Fees. Make any payment (a) of management fees or any similar fees to any Person other than in accordance with the
terms of the Management Agreement and (b) to board members and chairpersons who provide management, oversight and guidance to Subsidiaries
on behalf of the Borrower in an aggregate amount not to exceed $750,000 in any calendar year. Notwithstanding the foregoing, Borrower
shall be permitted to receive management fees from its Subsidiaries without limitation.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
9.01 Events
of Default. Any of the following shall constitute an Event of Default:
(a) The
Borrower or any other Loan Party fails to (i) pay when and as required to be paid herein, any amount of principal of any Loan or
any amounts owed under any Letters of Credit or deposit any funds as cash collateral in respect of any Letters of Credit that are
issued and outstanding, or (ii) pay within three days after the same becomes due, any interest on any Loan or on any amounts owed
under any Letter of Credit, or any fee due hereunder, or (iii) pay within five days after the same becomes due, any other amount
payable hereunder or under any other Loan Document or (iv) pay on the due date thereof any amount of any other Obligations owed
to the Lender pursuant to any other document now or in the future evidencing or securing any such Obligations; or
(b) The
Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.04, 6.09, 6.10,
6.12, 6.16, 6.17, 6.19 or Article VII or Article VIII; or
(c) Any
Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 9.01(a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or
(d) Any
representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan
Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or
misleading when made or deemed made; or
(e) (i)
Any Loan Party or any Non-MSB Subsidiary thereof (A) fails to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guaranty (other than Indebtedness hereunder and
Indebtedness under Rate Management Agreements) having an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount,
unless cured within 5 days of receiving notice, or (B) fails to observe or perform any other agreement or condition relating to
any such Indebtedness or Guaranty or contained in any instrument or agreement evidencing, securing or relating thereto, or any
other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guaranty (or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness
to be made, prior to its stated maturity, or such Guaranty to become payable or cash collateral in respect thereof to be demanded;
or (ii) there occurs under any Rate Management Agreement an Early Termination Date (as defined in such Rate Management Agreement)
resulting from (A) any event of default under such Rate Management Agreement as to which a Loan Party or any Subsidiary thereof
is the Defaulting Party (as defined in such Rate Management Agreement) or (B) any Termination Event (as so defined) under such
Rate Management Agreement as to which a Loan Party or any Non-MSB Subsidiary thereof is an Affected Party (as so defined) and,
in either event, the Swap Termination Value owed by such Loan Party or such Non-MSB Subsidiary as a result thereof is greater than
the Threshold Amount; or
(f) Any
Loan Party or any Non-MSB Subsidiary thereof institutes or consents to the institution of any proceeding under any Debtor Relief
Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee,
custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or
any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application
or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under
any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent
of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding;
or
(g) (i)
Any Loan Party or any Non-MSB Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against
all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its
issue or levy; or
(h) There
is entered against any Loan Party or any Non-MSB Subsidiary thereof (i) one or more final judgments or orders for the payment of
money in an aggregate amount (as to all such judgments and orders) exceeding the Threshold Amount (to the extent not covered by
independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified
of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement
proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which
a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or
(i) (i)
An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate
amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration
of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under
a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
(j) Any
provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party
or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party
denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate
or rescind any provision of any Loan Document; or
(k) There
occurs any Change of Control; or
(l) Any
Security Document after delivery thereof pursuant to Section 4.01 or 6.16 shall for any reason (other than pursuant to the terms
thereof or other than as a result of the Lender’s direct action or failure to act) cease to create a valid and perfected
first priority Lien (subject to Liens permitted by Section 8.01) on the Collateral purported to be covered thereby.
9.02 Remedies
upon Event of Default. Upon the occurrence of any one or more of the Events of Default, at the Lender’s option, all obligations
on the Lender’s part to make the Loan or issue Letters of Credit, or to make any further disbursements hereunder shall cease
and terminate, and the Loan and all sums then or thereafter due under any and all of the Loan Documents shall thereupon become
immediately due and payable. In addition, the Lender at its option may require the Borrower to, and the Borrower shall thereupon,
cash collateralize the then outstanding amount of all Letters of Credit outstanding (in an amount equal to the then outstanding
amount thereof). Without limitation of the foregoing, upon the occurrence of an Event of Default described in subsections
(f) or (g) of Section 9.01 of this Agreement, the Lender’s obligation to make advances under the Commitments shall automatically
terminate and the Loans and all other Obligations of the Borrower hereunder and under the other Loan Documents shall immediately
and automatically become due and payable, without presentment, demand, protest, notice of protest, declaration or notice of acceleration
or intention to accelerate, and the Borrower hereby expressly waives any such notice or demand, anything contained herein or in
any other Loan Document to the contrary notwithstanding. Upon the occurrence of an Event of Default, Lender may (a) set off the
amounts due Lender under the Loan Documents against any and all accounts, credits, money, securities or other property of Borrower
now or hereafter on deposit with, held by or in the possession of Lender to the credit or for the account of Borrower, without
notice to or the consent of Borrower and (b) enforce any or all of its rights hereunder or under any other Loan Documents, or at
law or in equity.
ARTICLE X
MISCELLANEOUS
10.01 Waivers;
Amendments.
(a) No
failure or delay by the Lender in exercising any right or power hereunder or any other Loan Document, and no course of dealing
among the Borrower and the Lender, shall operate as a waiver thereof, nor shall any single or partial exercise of any such right
or power or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof
or the exercise of any other right or power hereunder or thereunder. The rights and remedies of the Lender hereunder and under
the other Loan Documents are cumulative and are not exclusive of any rights or remedies provided by law. No waiver of any provision
of this Agreement or any other Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan
shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Lender may have had notice or
knowledge of such Default or Event of Default at the time.
(b) No
amendment or waiver of any provision of this Agreement or the other Loan Documents, nor consent to any departure by any Loan Party
therefrom, shall in any event be effective unless the same shall be in writing and signed by such Loan Party and the Lender and
then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
10.02 Notices.
(a) Except
in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications
to any party herein to be effective shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows:
| |
To the Borrower: |
Western Capital Resources, Inc. |
| |
|
11550 “I” Street, Suite 150 |
| |
|
Omaha, NE 68137 |
| |
|
Attention: |
| |
|
|
| |
To the Lender: |
Fifth Third Bank |
| |
|
31 South Main Street |
| |
|
Greenville, SC 29601 |
| |
|
Attention: Portfolio Management |
Any party hereto may change its address
or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All such notices and other
communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery,
or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited
into the mails or if delivered, upon delivery; provided, that notices delivered to the Lender pursuant to Article II
shall not be effective until actually received by the Lender at its address specified in this Section 10.02.
(b) Any
agreement of the Lender herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request
of the Borrower. The Lender shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the
Borrower to give such notice and the Lender shall not have any liability to the Borrower or other Person on account of any action
taken or not taken by the Lender in reliance upon such telephonic or facsimile notice. The obligation of the Borrower to repay
the Loans and all other Obligations hereunder shall not be affected in any way or to any extent by any failure of the Lender to
receive written confirmation of any telephonic or facsimile notice or the receipt by the Lender of a confirmation which is at variance
with the terms understood by the Lender to be contained in any such telephonic or facsimile notice.
10.03 Expenses;
Indemnification.
(a) The
Borrower shall pay (i) all reasonable, out-of-pocket costs and expenses of the Lender (including, without limitation, the reasonable
fees, charges and disbursements of outside counsel actually incurred at standard hourly rates) in connection with the preparation
and administration of the Loan Documents and any amendments, modifications or waivers thereof (whether or not the transactions
contemplated in this Agreement or any other Loan Document shall be consummated), and (ii) all out-of-pocket costs and expenses
(including, without limitation, the reasonable fees, charges and disbursements of outside counsel actually incurred at standard
hourly rates) incurred by the Lender in connection with the enforcement or protection of its rights in connection with this Agreement
and the other Loan Documents, including its rights under this Section, or in connection with the Loans made hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
(b) The
Borrower shall indemnify the Lender and each Related Party of the Lender (each, an “Indemnitee”) against, and hold
each of them harmless from, any and all costs, losses, liabilities, claims, damages and related expenses, including the fees, charges
and disbursements of any counsel for any Indemnitee, which may be incurred by or asserted against any Indemnitee arising out of,
in connection with or as a result of (i) the execution or delivery of any this Agreement or any other agreement or instrument contemplated
hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of any of the transactions
contemplated hereby, (ii) any Loan or any actual or proposed use of the proceeds therefrom, (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property owned by the Borrower or any Environmental Liability related in any way
to the Borrower or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort, or any other theory and regardless of whether any Indemnitee is a party thereto; provided,
that no Borrower shall be obligated to indemnify any Indemnitee for any of the foregoing arising out of such Indemnitee’s
gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and nonappealable judgment.
(c) The
Borrower shall pay, and hold the Lender harmless from and against, any and all present and future stamp, documentary, and other
similar taxes with respect to this Agreement and any other Loan Documents, any collateral described therein, or any payments due
thereunder, and save the Lender harmless from and against any and all liabilities with respect to or resulting from any delay or
omission to pay such taxes.
(d) To
the extent permitted by applicable law, the Borrower shall not assert, and hereby waive, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages (as opposed to actual or direct damages) arising
out of, in connection with or as a result of, this Agreement or any agreement or instrument contemplated hereby, the transactions
contemplated therein, any Loan or the use of proceeds thereof.
(e) All
amounts due under this Section shall be payable promptly after written demand therefore.
(f) Each
reference in this Agreement or any other Loan Document to any fees, expenses or disbursements of attorneys for or counsel to Lender
shall be deemed to mean fees, expenses or disbursements actually incurred at standard hourly rates without reference to any statutory
presumption or percentage, including, without limitation, N.C.G.S. Section 6-21.2 or any successor statute.
10.04 Successors
and Assigns.
(a) The
provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns, except that the Borrower may not assign or transfer any of its rights hereunder without the prior written consent
of the Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void).
(b) The
Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement and
the other Loan Documents (including all or a portion of the Revolving Credit Commitment, the Acquisition Facility Commitment and
the Loans at the time owing to it); provided, that the Borrower must give its prior written consent (which consent shall
not be unreasonably withheld or delayed and it being understood that the Borrower shall be deemed to be acting reasonably in withholding
its consent to an assignment resulting in any material increased cost or obligation to the Borrower) to any assignment, except
an assignment to an Affiliate of the Lender, assignment arising out of the sale of all or substantially all of the assets or of
a portfolio of Lender or during the occurrence and continuation of an Event of Default. Upon the execution and delivery of an assignment
agreement by the Lender and such assignee and payment by such assignee of an amount equal to the purchase price agreed between
the Lender and such assignee, such assignee shall become a party to this Agreement and the other Loan Documents and shall have
the rights and obligations of a Lender under this Agreement, and the Lender shall be released from its obligations hereunder to
a corresponding extent. Upon the consummation of any such assignment hereunder, the Lender, the assignee and the Borrower shall
make appropriate arrangements to have new Notes issued to reflect such assignment.
(c) The
Lender may at any time, without the consent of the Borrower, sell participations to one or more banks or other entities (a “Participant”)
in all or a portion of the Lender’s rights and obligations under this Agreement; provided, that (i) the Lender’s
obligations under this Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible to the other parties
hereto for the performance of its obligations hereunder, and (iii) the Borrower and the Lender shall continue to deal solely
and directly with each other in connection with the Lender’s and the Borrower’s rights and obligations under this Agreement
and the other Loan Documents.
(d) The
Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement and the Notes
to secure its obligations to a Federal Reserve Bank without complying with this Section; provided, that no such pledge or
assignment shall release the Lender from any of its obligations hereunder or substitute any such pledgee or assignee for the Lender
as a party hereto.
10.05 Governing
Law; Jurisdiction; Consent to Service of Process.
(a) This
Agreement and the other Loan Documents shall be construed in accordance with and be governed by the law (without giving effect
to the conflict of law principles thereof) of the State of North Carolina.
(b) The
Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the
United States District Court of the Western District of North Carolina, and of any state court of the State of North Carolina located
in Mecklenburg County and any appellate court from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document or the transactions contemplated hereby or thereby, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action
or proceeding may be heard and determined in such North Carolina state court or, to the extent permitted by applicable law, such
Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement
or any other Loan Document shall affect any right that the Lender may otherwise have to bring any action or proceeding relating
to this Agreement or any other Loan Document against the Borrower or its properties in the courts of any jurisdiction.
(c) The
Borrower irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of
any such suit, action or proceeding described in paragraph (b) of this Section and brought in any court referred to in paragraph
(b) of this Section. Each of the parties hereto irrevocably waives, to the fullest extent permitted by applicable law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any such court.
10.06 WAIVER
OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT CONTEMPLATED HEREBY
OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
10.07 Right
of Setoff; Payment Set Aside.
(a) In
addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, the Lender
shall have the right, at any time or from time to time upon the occurrence and during the continuance of an Event of Default, without
prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law,
to set off and apply against all deposits (general or special, time or demand, provisional or final) of the Borrower at any time
held or other obligations at any time owing by the Lender to or for the credit or the account of the Borrower against any and all
Obligations held by the Lender, irrespective of whether the Lender shall have made demand hereunder and although such Obligations
may be unmatured. The Lender agrees promptly to notify the Borrower after any such set-off and any application made by the Lender;
provided, that the failure to give such notice shall not affect the validity of such set-off and application.
(b) To
the extent that any payment by or on behalf of the Borrower is made to the Lender exercises its right of setoff, and such payment
or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then to the extent of
such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such setoff had not occurred.
10.08 Counterparts;
Integration. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.
This Agreement, the other Loan Documents, and any separate letter agreement(s) relating to any fees payable to the Lender constitute
the entire agreement among the parties hereto and thereto regarding the subject matters hereof and thereof and supersede all prior
agreements and understandings, oral or written, regarding such subject matters.
10.09 Survival.
All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto
and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made
by any such other party or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is
outstanding and unpaid and so long as the Revolving Credit Commitment or the Acquisition Facility Commitment has not expired or
terminated. The provisions of Section 10.03 shall survive and remain in full force and effect regardless of the consummation
of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination
of this Agreement or any provision hereof. All representations and warranties made herein, in the certificates, reports, notices,
and other documents delivered pursuant to this Agreement shall survive the execution and delivery of this Agreement and the other
Loan Documents, and the making of the Loans.
10.10 Severability.
Any provision of this Agreement or any other Loan Document held to be illegal, invalid or unenforceable in any jurisdiction, shall,
as to such jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability without affecting the
legality, validity or enforceability of the remaining provisions hereof or thereof; and the illegality, invalidity or unenforceability
of a particular provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.
10.11 Interest
Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which may be treated as interest on such Loan under applicable law (collectively,
the “Charges”), shall exceed the maximum lawful rate of interest (the “Maximum Rate”) which may be contracted
for, charged, taken, received or reserved by the Lender in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the
extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of
the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans
or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon
at the Federal Funds Rate to the date of repayment, shall have been received by the Lender.
10.12 Confidentiality.
Lender agrees to keep information obtained by it pursuant hereto and the other Loan Documents, whether before or after the Closing
Date, confidential in accordance with Lender’s customary practices and agrees that it shall only use such information in
connection with the transactions contemplated by this Agreement and not disclose any such information other than (a) to its Affiliates
and to its and its Affiliate’s employees, representatives and agents; provided, that such Persons are informed of
the confidential nature of such information and instructed to keep such information confidential, (b) to the extent such information
presently is or hereafter becomes (i) publicly available other than as a result of a breach of this Section or (ii) available to
Lender on a non-confidential basis from a source other than the Borrower or any other Loan Party; provided, that such information
was not furnished by a source known by it to be prohibited from disclosing such information by contractual, legal or fiduciary
obligation to the Borrower or any other Loan Party, (c) to the extent disclosure is required by law, regulation or judicial order
or requested or required by bank regulators or auditors or any other regulatory authority purporting to have jurisdiction over
it, (d) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder or (e) to current or
prospective assignees, participants and contractual counterparties in any Rate Management Agreement permitted hereunder and to
their respective legal or financial advisors, in each case and to the extent such assignees, participants, grantees or counterparties
agree to be bound by, and to cause their advisors to comply with, the provisions of this Section 10.12. Notwithstanding
any other provision in this Agreement, Lender hereby agrees that the Borrower (and each of its officers, directors, employees,
accountants, attorneys and other advisors) may disclose to any and all Persons, without limitation of any kind, the U.S. tax treatment
and U.S. tax structure of the Loans and the transactions contemplated hereby and all materials of any kind (including opinions
and other tax analyses) that are provided to it relating to such U.S. tax treatment and U.S. tax structure.
10.13 USA
PATRIOT Act Notice. The Lender hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title
III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the name and address of such Person and other information
that will allow the Lender to identify each such Person in accordance with the Act.
[SIGNATURES ON THE FOLLOWING PAGE]
WITNESS the due execution
hereof as a document under seal, as of the date first written above.
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WESTERN CAPITAL RESOURCES, INC. |
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By: |
/s/ John Quandahl |
(SEAL) |
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Name: |
John Quandahl |
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Title: |
CEO |
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FIFTH THIRD BANK |
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By: |
/s/ Charles Arndt |
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Name: |
Charles Arndt |
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Title: |
Senior Vice President |
|
EXHIBIT A
FORM OF LOAN NOTICE
Date: ___________, _____
Ladies and Gentlemen:
Reference is made to
that certain Credit Agreement, dated as of April __, 2016 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), between
WESTERN CAPITAL RESOURCES, INC., a Minnesota corporation (the “Borrower”), and FIFTH THIRD BANK.
The undersigned hereby
requests (select one):
¨
A borrowing of a Revolving Loan
¨
A borrowing of an Acquisition Loan
1. On
_____________________________________________ (a Business Day).
2. In
the amount of $_______________
[The Revolving Loan
requested herein complies with the proviso to the first sentence of Section 2.01(a) of the Agreement.]1[The
Acquisition Loan requested herein complies with the proviso to the first sentence of Section 2.02(a) of the Agreement.]2
The Borrower hereby
represents and warrants that the conditions specified in Sections [4.02(a) and (b)] 3
[4.03(a) and (b)] 4shall be satisfied on and as of
the date of the applicable Loan.
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WESTERN CAPITAL RESOURCES, INC. |
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By: |
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(SEAL) |
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Name: |
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Title: |
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1 Include
this sentence in the case of a Revolving Loan.
2 Include
this sentence in the case of an Acquisition Loan.
3 Include these Section references
in the case of a Revolving Loan.
4 Include these Section references
in the case of an Acquisition Loan.
EXHIBIT B-1
FORM OF
REVOLVING CREDIT NOTE
| $3,000,000.00 |
April __, 2016 |
FOR VALUE RECEIVED,
the undersigned (the “Borrower”), hereby promises to pay to FIFTH THIRD BANK, an Ohio banking corporation (the “Lender”),
in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each Revolving Loan
from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of April __, 2016 (as amended,
restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement”; the terms
defined therein being used herein as therein defined), between the Borrower and the Lender.
The Borrower promises
to pay (i) interest on the unpaid principal amount of each Revolving Loan from the date of such Loan until such principal amount
is paid in full, at such interest rates and at such times as provided in the Credit Agreement and (ii) the principal amount of
each Revolving Loan in such amounts and at such times as provided in the Credit Agreement. All payments of principal and interest
shall be made to the Lender in Dollars in immediately available funds at the Lender’s Payment Office in accordance with the
provisions of the Loan Agreement, the terms of which are incorporated herein by reference. If any amount is not paid in full when
due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual
payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement.
This Revolving Credit
Note is entitled to the benefits set forth in the Credit Agreement and may be prepaid in whole or in part subject to the terms
and conditions provided therein. This Revolving Credit Note is also entitled to the benefits of any and all Security Documents
and other Loan Documents executed in connection with the Credit Agreement and securing the Borrower’s obligations thereunder.
Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then
remaining unpaid on this Revolving Credit Note shall become, or may be declared to be, immediately due and payable all as provided
in the Credit Agreement.
The Borrower, for itself,
its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Revolving Credit Note.
THIS REVOLVING CREDIT
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
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WESTERN CAPITAL RESOURCES, INC. |
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By: |
|
(SEAL) |
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Name: |
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Title: |
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EXHIBIT B-2
FORM OF
ACQUISITION NOTE
| $_______________.00 |
_____________ ___, 201__ |
FOR VALUE RECEIVED,
the undersigned (the “Borrower”), hereby promises to pay to FIFTH THIRD BANK, an Ohio banking corporation (the “Lender”),
in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of $____________ as may
be provided to the Borrower by the Lender in accordance with the provisions made by the Lender to the Borrower under that
certain Credit Agreement, dated as of April __, 2016 (as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined), between
the Borrower and the Lender.
The Borrower promises
to pay (i) interest on the unpaid principal amount of the Acquisition Loan made under this Acquisition Note from the date of such
Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement
and this Acquisition Note and (ii) the principal amount of the Acquisition Loan made under this Acquisition Note in such amounts
and at such times as provided in the Credit Agreement and this Acquisition Note.
Payments of Principal
and Interest.5 In addition to
any payments of principal or interest required to be made by the Borrower pursuant to and in accordance with the provisions of
the Credit Agreement, the Borrower promises to pay (i) the principal amount of the Acquisition Note made under this Acquisition
Note in equal consecutive monthly installments in the amount of $______________ each, commencing on ___________ ___, 201__, and
continuing on the ____ day of each month thereafter, and a final installment of all outstanding principal on _____________, 20__6
(the “Maturity Date”) and (ii) interest on the unpaid principal amount of the Acquisition Loan made under
this Acquisition Note in arrears on the ___ day of each month commencing on _________ __, 201__ and on the Maturity Date and at
such other times as may be specified in the Credit Agreement. Any outstanding principal and accrued interest shall be due and
payable in full on the Maturity Date.
All payments of principal
and interest shall be made to the Lender in Dollars in immediately available funds at the Lender’s Payment Office in accordance
with the provisions of the Loan Agreement, the terms of which are incorporated herein by reference. If any amount is not paid in
full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date
of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement.
This Acquisition Note
is entitled to the benefits set forth in the Credit Agreement and may be prepaid in whole or in part subject to the terms and conditions
provided therein. This Acquisition Note is also entitled to the benefits of any and all Security Documents and other Loan Documents
executed in connection with the Credit Agreement and securing the Borrower’s obligations thereunder. Upon the occurrence
and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Acquisition Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement.
5 Principal and interest payments
to commence on the day of the immediately following month that corresponds with the date of this Acquisition Note (or if none,
the last day of such immediately following month). The monthly principal payment will be an amount equal to the face amount of
this Acquisition Note divided by the total number of months from the date of such Acquisition Note to its Maturity Date.
6 Maturity Date to be such term
(not to exceed 60 months from date of Acquisition Note), as requested by the Borrower and subject to the Lender’s approval
in its sole discretion.
The Borrower, for itself,
its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Acquisition Note.
THIS ACQUISITION NOTE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
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WESTERN CAPITAL RESOURCES, INC. |
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By: |
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(SEAL) |
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Name: |
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Title: |
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EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
Financial Statement Date: ________, ____
To: FIFTH THIRD BANK
Ladies and Gentlemen:
Reference is made to
that certain Credit Agreement, dated as of April __, 2016 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among
WESTERN CAPITAL RESOURCES, INC., a Minnesota corporation (the “Borrower”), and FIFTH THIRD BANK (the “Lender”).
The undersigned Responsible
Officer7 hereby certifies as of the date hereof that he/she is the ___________________________________ of the Borrower,
and that, as such, he/she is authorized to execute and deliver this Certificate to the Lender on the behalf of the Borrower, and
that:
[Use following paragraph 1 for fiscal
year-end financial statements]
Attached hereto as
Schedule 1 are (i) the year-end audited financial statements required by Section 6.01(a) of the Agreement for the fiscal
year of the Borrower ended as of the above date, together with the report and opinion of an independent certified public accountant
required by such section and (ii) the consolidating balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal
year and the related consolidating statements of income or operations, shareholders’ equity and cash flows for such fiscal
year. Such consolidating statements are fairly stated in all material respects when considered in relation to the consolidated
financial statements of the Borrower and its Subsidiaries.
[Use following paragraph 1 for fiscal
quarter-end financial statements]
Attached hereto as
Schedule 1 are the unaudited financial statements required by Section 6.01(b) of the Agreement for the fiscal quarter of
the Borrower ended as of the above date. Such consolidated financial statements fairly present the financial condition, results
of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating financial statements are
fairly stated in all material respects when considered in relation to the consolidated financial statements of the Borrower and
its Subsidiaries.
The undersigned has
reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the Borrower during the accounting period covered by the attached
financial statements.
A review of the activities
of the Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Borrower performed and observed all its Obligations under the Loan Documents, and
| 7 | This certificates should be from the chief executive officer or treasurer of the Borrower. |
[select one:]
[to the best knowledge
of the undersigned during such fiscal period, the Borrower performed and observed each covenant and condition of the Loan Documents
applicable to it, and no Default has occurred and is continuing.]
—or—
[the following covenants
or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]
1. The
representations and warranties of the Borrower contained in Article V of the Agreement and all representations and warranties of
any Loan Party that are contained in any document furnished at any time under or in connection with the Loan Documents, are true
and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Compliance
Certificate, the representations and warranties contained in subsections (a) and (b) of Section 5.04 of the Agreement shall be
deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Agreement,
including the statements in connection with which this Compliance Certificate is delivered.
2. The
financial covenant analyses and information set forth on Schedule 2 attached hereto are true and accurate on and as of the
date of this Certificate.
3. Without
limiting the generality of the foregoing, the Borrower and its Non-MSB Subsidiaries have fully complied with the provisions of
Sections 6.17 and 8.03(c) and (e) of the Credit Agreement
IN WITNESS WHEREOF,
the undersigned has executed this Certificate as of ____________________, _______.
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WESTERN CAPITAL RESOURCES, INC. |
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By: |
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(SEAL) |
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Name: |
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Title: |
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For the Quarter/Year ended ___________________,
____ (“Statement Date”)
SCHEDULE 2
to the Compliance Certificate
($ in 000’s)
I. Section
7.01 – Consolidated Leverage Ratio.
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A. |
Consolidated Funded Indebtedness at Statement Date |
|
$______ |
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B. |
Consolidated EBITDA for Subject Period (Line II.A.10 below): |
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$______ |
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C. |
Consolidated Leverage Ratio (Line I.A ÷ Line I.B): |
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____ to 1 |
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Maximum permitted: |
2.25 to 1 |
II. Section
7.02 – Consolidated Fixed Charge Coverage Ratio.
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A. |
Consolidated EBITDA for Measurement Period ending on above date (“Subject Period”): |
|
$______ |
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1. |
Consolidated Net Income for Subject Period: |
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$______ |
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2. |
Consolidated Interest Charges for Subject Period: |
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$______ |
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3. |
Provision for income taxes for Subject Period: |
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$______ |
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4. |
Depreciation expenses for Subject Period: |
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$______ |
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5. |
One-time transactions costs in connection with any Investment in an Eligible Portfolio Company for Subject Period (not to exceed $400,000 per transaction): |
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$______ |
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6. |
Amortization expenses for Subject Period: |
|
$______ |
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7. |
Non-recurring non-cash reductions of Consolidated Net Income for Subject Period: |
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$______ |
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8. |
Income Tax credits for Subject Period: |
|
$______ |
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9. |
Non-cash increases to Consolidated Net Income for Subject Period: |
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$______ |
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10. |
Consolidated EBITDA (Lines II.A.1 + 2 + 3 + 4 + 5 + 6 + 7 – 8 – 9): |
|
$______ |
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B. |
Rental payments for Subject Period: |
|
$______ |
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C. |
Income taxes paid in cash for Subject Period: |
|
$______ |
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D. |
Restricted Payments, etc. for Subject Period: |
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$______ |
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E. |
Cash Capital Expenditures for Subject Period: |
|
$______ |
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F. |
Eligible Cricket Wireless Expenditures for Subject Period8: |
|
$______ |
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G. |
Consolidated Interest Charges for Subject Period: |
|
$______ |
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H. |
Scheduled Principal payments, etc. for Subject Period: |
|
$______ |
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I. |
Rental payments for Subject Period: |
|
$______ |
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J. |
Consolidated Fixed Charge Coverage Ratio ([Line II.A.10 + Line II.B – Line II.C – Line II.D – Line II.E + Line II.F] ÷ [Line II.G + Line II.H + Line II.I]): |
|
____ to 1 |
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Minimum required: |
1.15 to 1 |
8 Capital Expenditures in an
amount of up to $75,000.00 per “Cricket Wireless” store and $2,000,000.00 in the aggregate for all “Cricket Wireless”
stores in any fiscal year in respect of pre-opening costs or acquisition costs actually incurred for such “Cricket Wireless”
stores are eligible. This amount may not exceed $520,000.00 for the first quarter of 2015, $2,200,000.00 for the second quarter
of 2015, $0.00 for the third quarter of 2015 and $200,000.00 for the fourth quarter of 2015 actually incurred by the Borrower and
its Subsidiaries in respect of pre-opening costs for “Cricket Wireless” stores opened and the Green Communications
acquisition during such period).
