Exhibit 10.10

Execution Copy

LOAN AGREEMENT

THIS LOAN AGREEMENT is dated as of March 29, 2019 (this agreement, together with
all amendments and restatements hereto, this “Agreement”), between DIVERSUS,
INC., a Delaware corporation (“Borrower”), and POSITIVE PHYSICIANS HOLDINGS,
INC., a Pennsylvania corporation (“Lender”).

 

RECITALS:

Borrower desires to obtain the Loan (defined below) from Lender.

Lender is willing to make the Loan to Borrower, subject to and in accordance
with the terms of this Agreement and the other Loan Documents (defined below).

In consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the
parties hereto hereby covenant, agree, represent and warrant as follows:

 

ARTICLE 1.

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1 Definitions.

For all purposes of this Agreement, except as otherwise expressly required or
unless the context clearly indicates a contrary intent:

“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, owns more than forty percent (40%) of the voting Capital Stock of,
is in Control of, is Controlled by or is under common ownership or Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person.

“Agreement” shall have the meaning set forth in the introductory paragraph
hereof.

“Applicable Law” shall mean all applicable federal, state, county, municipal and
other governmental statutes, laws, rules, orders, regulations, ordinances,
judgments, decrees and injunctions of Governmental Authorities affecting
Borrower, any guarantors or any of their respective properties or assets,
whether now or hereafter enacted and in force, including, without limitation,
the Americans with Disabilities Act of 1990, and all permits, licenses and
authorizations and regulations relating thereto.

“Borrower” shall have the meaning set forth in the introductory paragraph
hereof.

“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which commercial banks in the State of New York are not open for business.

“Capital Stock” means any and all shares, units, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
including, without limitation, all preferred stock, any and all equivalent
ownership interests in a Person other than a corporation and any and all
warrants, rights or options to purchase any of the foregoing, in each case
whether voting or non-voting.

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“Community Offering” shall have the meaning given to such term in the Standby
Purchase Agreement.

“Control” shall mean the power to direct the management and policies of an
entity, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise.

“Creditors Rights Laws” shall mean any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to its debts
or debtors.

“Debt” shall mean, as of any time, (a) the Outstanding Principal Amount together
with all interest accrued and unpaid thereon and all other sums due to Lender in
respect of the Loan under the Note, this Agreement or the other Loan Documents
and (b) all sums advanced and costs and expenses incurred (including unpaid or
unreimbursed servicing and special servicing fees) by Lender in connection with
the enforcement and/or collection of the Debt or any part thereof.

“Default” shall mean the occurrence of any event hereunder or under the Note or
the other Loan Documents which, but for the giving of notice or passage of time,
or both, would be an Event of Default.

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to
the lesser of (i) the Maximum Legal Rate, and (ii) twelve percent (12.00%).

“Diversus Management Agreement” has the meaning given to such term in the
Standby Purchase Agreement.

“Embargoed Person” shall have the meaning set forth in Section 4.18.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may heretofore have been or shall be amended, restated, replaced or
otherwise modified.

“Event of Default” shall have the meaning set forth in Section 6.1.

“FATCA” shall mean Sections 1471 through 1474 of the IRS Code and any
regulations or official interpretations thereof.

“GAAP” shall mean generally accepted accounting principles in the United States
of America as of the date of the applicable financial report.

“Governmental Authority” shall mean any court, board, agency, commission, office
or other authority of any nature whatsoever for any governmental unit (foreign,
federal, state, county, district, municipal, city or otherwise) whether now or
hereafter in existence.

“Guarantors” shall mean, individually and/or collectively (as the context may
require) Diversus Management, Inc., a Pennsylvania corporation, Gateway Risk
Services, LLC, a Pennsylvania limited liability company Andrews Outsource
Solutions, LLC, a Florida limited liability company and Specialty Insurance
Agency, LLC, a Pennsylvania limited liability company.

“Guaranty” shall mean that certain Guaranty Agreement executed by the Guarantors
and dated as of the date hereof.

 

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“Indebtedness” shall mean, for any Person, without duplication: (a) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (b) all unfunded amounts under a loan agreement, letter
of credit, or other credit facility for which such Person would be liable if
such amounts were advanced thereunder, (c) all amounts required to be paid by
such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, (d) all
indebtedness guaranteed by such Person, directly or indirectly, (e) all
obligations under leases that constitute capital leases for which such Person is
liable, (f) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case whether such
Person is liable contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person otherwise assures a creditor
against loss, (g) all other liabilities or obligations of such Person which are
required to be treated as indebtedness under GAAP and (h) any other similar
liabilities or obligations.

“Indemnified Parties” shall mean (a) Lender, (b) any successor owner or holder
of the Loan or participations in the Loan, (c) any servicer or prior servicer of
the Loan, (d) any investor or any prior investor in the Loan, (e) any trustees,
custodians or other fiduciaries who hold or who have held a full or partial
interest in the Loan for the benefit of any investor or other third party,
(f) any receiver or other fiduciary appointed in a Creditors Rights Laws
proceeding, (g) any officers, directors, shareholders, partners, members,
employees, agents, servants, representatives, contractors, subcontractors,
Affiliates or subsidiaries of any and all of the foregoing, and (h) the heirs,
legal representatives, successors and assigns of any and all of the foregoing
(including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of the Indemnified Parties’ assets
and business) in all cases whether during the term of the Loan or otherwise.

“Initial Closing Date” shall mean the date on which the first disbursement of
the Loan is made in accordance with this Agreement.

“Intercreditor Agreement” shall have the meaning given to such term in the
Standby Purchase Agreement.

“Interest” shall have the meaning set forth in Section 2.4(a).

“Interest Rate” shall mean a rate per annum equal to eight percent (8.00%).

“Lender” shall have the meaning set forth in the introductory paragraph hereof.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give or not to give any of the
foregoing), any conditional sale or other title retention agreement, any
financing or other lease in the nature thereof, and the filing of or agreement
to give any financing statement or other similar form of public notice under the
laws of any jurisdiction.

“Loan” shall mean the loan made by Lender to Borrower pursuant to this
Agreement.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the
Guaranty, the Intercreditor Agreement and all other documents executed and/or
delivered in connection with the Loan.

“Losses” shall mean any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, fines, penalties, charges, fees, judgments,
awards, amounts paid in settlement of whatever kind or nature (including but not
limited to legal fees and other costs of defense).

 

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“Make-Whole Amount” shall mean an amount equal to the amount of Interest which
would accrue on the Term Loan from the date on which the applicable payment or
prepayment is made or is required to be made to the date that is five (5) years
after the Transaction Closing Date, discounted to the date of payment at a
discount rate of 8.00%. For avoidance of doubt, the Make-Whole Amount does not
apply to the Revolving Loan.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, profits, prospects, management, operations or condition (financial or
otherwise) of Borrower and the Guarantors, taken as a whole, (c) the
enforceability, validity of this Agreement or the other Loan Documents, (d) the
ability of Borrower to perform its obligations under this Agreement or the other
Loan Documents or (e) the ability of any Guarantor to perform its obligations
under any Guaranty (not including the merger of certain Guarantors contemplated
by Section 5.1).

“Maturity Date” shall mean the date that is five (5) years following the
Transaction Closing Date or such earlier date on which the final payment of
principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration or
otherwise.

“Maximum Legal Rate” shall mean the maximum non-usurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness evidenced by the Note and as provided
for herein or the other Loan Documents, under the laws of such state or states
whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan Agreement and the Note.

“Merger” shall have the meaning given to such term in the Option Agreement (as
defined in the Standby Purchase Agreement).

“Note” shall mean that certain Promissory Note of even date herewith in the
principal amount of up to the Term Loan Commitment Amount plus the Revolving
Loan Commitment Amount, made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, extended, renewed, supplemented, severed, split, or
otherwise modified from time to time.

“Obligor” means each of the Borrower and each Guarantor.

“OFAC” shall have the meaning set forth in Section 4.18.

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by Responsible Officer of Borrower.

“Outstanding Principal Amount” shall mean, as of any date, an amount equal to
the sum of the Outstanding Term Loan Amount plus the Outstanding Revolving Loan
Amount.

“Outstanding Revolving Loan Amount” shall mean, as of any date, an amount equal
to (a) the portion of the Revolving Loan Commitment Amount which has been
advanced to Borrower pursuant to Section 2.2(b) minus (b) the amount of any
prepayments or repayments of the Loan which have been applied to the Outstanding
Revolving Loan Amount pursuant to Section 2.6.

“Outstanding Term Loan Amount” shall mean, as of any date, an amount equal to
(a) the portion of the Term Loan Commitment Amount which has been advanced to
Borrower pursuant to Section 2.2 minus (b) the amount of any prepayments of the
Loan which have been applied to the Outstanding Term Loan Amount pursuant to
Section 2.6.

 

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“Patriot Act” shall have the meaning set forth in Section 4.19.

“Permitted Indebtedness” shall have the meaning set forth in Section 5.13.

“Permitted Lien” shall mean, collectively, (a) the lien and security interests
created by the Senior Loan Documents, (b) liens for taxes or mechanics or
materialmens’ liens which the Borrower or the Guarantors, as applicable, are
contesting by appropriate proceedings (acceptable to Lender in its sole
discretion) that stay the enforcement of the liens or other action against the
Borrower or the Guarantors, as applicable.

“Person” shall mean any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

“Prepayment Date” shall mean the earlier to occur of (a) the date on which the
Standby Purchase Agreement is terminated, (b) the date that is one (1) year
following the date hereof, if the Community Offering has not occurred prior to
such date and (c) the date that is one (1) Business Day following the date of
the closing of the Merger.

“Required Financial Item” shall have the meaning set forth in Section 5.10.

“Responsible Officer” shall mean with respect to a Person, the chairman of the
board, president, chief operating officer, chief financial officer, treasurer,
vice president or manager of such Person or such other similar officer of such
Person reasonably acceptable to Lender and appropriately authorized by the
applicable Person in a manner reasonably acceptable to Lender.

“Revolving Borrowing” shall mean any disbursement of the Revolving Loan made in
accordance with Section 2.2(b).

“Revolving Commitment Period” shall mean the date commencing on the date hereof
and ending on the date that is one Business Day prior to the Maturity Date.

“Revolving Loan” shall have the meaning set forth in Section 2.1(b).

“Revolving Loan Commitment Amount” shall mean an amount equal to Five Hundred
Thousand Dollars ($500,000), as may be reduced pursuant to Section 2.5(b)(ii).

“Senior Loan Documents” shall mean that certain Credit Agreement dated as of
January 3, 2017 between Borrower and Oak Street Funding, LLC, and the other
“Credit Documents” as defined therein, as amended in satisfaction of the
condition set forth in Section 3.1(c) and as the same may be further amended,
restated or otherwise modified from time to time in accordance with the terms
hereof.

“Standby Purchase Agreement” shall mean that certain Standby Purchase Agreement
dated as of June 8, 2018 by and among Lender, Positive Physicians Insurance
Exchange, Physician’s Insurance Program Exchange, Professional Casualty
Association and the Standby Purchaser, as amended, restated or otherwise
modified from time to time.

“Standby Purchaser” shall mean Insurance Capital Group, LLC, a Delaware limited
liability company.

 

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“Term Loan” shall have the meaning set forth in Section 2.1(a).

“Term Loan Commitment Amount” shall mean an amount equal to Five Million Five
Hundred Thousand Dollars ($5,500,000), as may be increased pursuant to
Section 2.5(b)(ii).

“Transaction Closing Date” shall mean the date of the closing and completion of
the Community Offering.

Section 1.2 Principles of Construction.

All references to sections, exhibits and schedules are to sections, exhibits and
schedules in or to this Agreement unless otherwise specified. All uses of the
word “including” shall mean “including, without limitation” unless the context
shall indicate otherwise. Unless otherwise specified, the words “hereof,”
“herein” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise specified, all meanings attributed to defined
terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined.

 

ARTICLE 2.

GENERAL TERMS

Section 2.1 The Loan.

(a) Subject to and upon the terms and conditions set forth herein, Lender hereby
agrees to make and Borrower hereby agrees to accept a term loan in an amount not
to exceed the Term Loan Commitment Amount (the “Term Loan”).

(b) Subject to and upon the terms and conditions set forth herein, Lender hereby
agrees to make and Borrower hereby agrees to accept a revolving loan in an
amount not to exceed the Revolving Loan Commitment Amount (the “Revolving
Loan”).

Section 2.2 Disbursements to Borrower.

(a) Following the Transaction Closing Date, provided that all of the conditions
set forth in Section 3.1 and Section 3.2 have been satisfied, Lender shall
advance the Term Loan to Borrower, in one or more advances, in an amount of up
to $5,500,000.

(b) The Revolving Loan shall be disbursed during the Revolving Commitment
Period, provided that all of the conditions set forth in Section 3.1 and
Section 3.2 have been satisfied, upon Borrower’s irrevocable notice to Lender,
which may be given by telephone. Each such notice must be received by Lender not
later than 3:00 p.m. three Business Days prior to the requested date of any
Revolving Borrowing. Any telephonic notice must be confirmed promptly by
delivery to Lender of a written borrowing request for such Revolving Borrowing
signed by a Responsible Officer of Borrower. Each such request (whether
telephonic or written) shall specify (i) the requested date of the Revolving
Borrowing (which shall be a Business Day), and (ii) the principal amount of the
Revolving Borrowing to be borrowed. Each Revolving Loan shall be in the
principal amount of $50,000.00 or any whole multiple of $50,000.00 in excess
thereof or the unused portion of the Revolving Loan Commitment Amount.

Section 2.3 Note and Other Loan Documents. The Loan shall be evidenced by the
Note and this Agreement and guaranteed by the Guaranty.

 

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Section 2.4 Interest Rate; Interest Payments.

(a) Interest on the Outstanding Principal Amount of the Loan (“Interest”) shall
accrue from the Initial Closing Date up to but excluding the Maturity Date at
the Interest Rate.

(b) Interest shall be calculated on the basis of a 360-day year and the actual
number of days elapsed.

(c) On the last day of each month following the Initial Closing Date and on the
Maturity Date, Borrower shall pay to Lender the amount of accrued and unpaid
Interest.

(d) In the event that, and for so long as, any Event of Default shall have
occurred and be continuing, the Outstanding Principal Amount of the Loans shall
accrue interest at the Default Rate.

(e) This Agreement and the other Loan Documents are subject to the express
condition that at no time shall Borrower be required to pay Interest at a rate
which could subject Lender to either civil or criminal liability as a result of
being in excess of the Maximum Legal Rate. If, by the terms of this Agreement or
the other Loan Documents, Borrower is at any time required or obligated to pay
Interest due hereunder at a rate in excess of the Maximum Legal Rate, the
Interest Rate or the Default Rate, as the case may be, shall be deemed to be
immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the Interest due hereunder. All
sums paid or agreed to be paid to Lender for the use or forbearance of the sums
due under the Loan, shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated and spread throughout the full stated term of the
Loan until payment in full so that the rate or amount of interest on account of
the Loan does not exceed the Maximum Legal Rate from time to time in effect and
applicable to the Loan for so long as the Loan is outstanding.

Section 2.5 Loan Payments.

(a) Term Loan.

(i) On the Maturity Date, Borrower shall pay to Lender:

 

  A.

If the Maturity Date occurs as the result of the acceleration of the Loan
following an Event of Default, the Make-Whole Amount; plus

 

  B.

the Outstanding Term Loan Amount; plus

 

  C.

all accrued and unpaid Interest and all other amounts due hereunder and under
the Note and the other Loan Documents.

(b) Revolving Loan.

(i) Borrower shall pay to Lender, on the date that is six (6) months from the
date of any Revolving Borrowing that is made when there are no Revolving Loans
outstanding:

 

  A.

The Outstanding Revolving Loan Amount; plus

 

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  B.

all accrued and unpaid Interest and all other amounts due hereunder and under
the Note and the other Loan Documents on such Revolving Loans.

(ii) In the event that any Revolving Loan is not repaid as required pursuant to
Section 2.5(b)(i), such Revolving Loans shall immediately be converted to a Term
Loan, the Revolving Commitment shall be cancelled and the Term Loan Commitment
shall be increased by the amount of such Revolving Commitment.

(c) Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not later
than 2:00pm, New York time, on the date when due and shall be made in lawful
money of the United States of America in immediately available funds at Lender’s
office or into an account that Lender shall select by not less than three
(3) Business Days prior written notice to Borrower, and any funds received by
Lender after such time shall, for all purposes hereof, be deemed to have been
paid on the next succeeding Business Day.

(d) Whenever any payment to be made hereunder or under any other Loan Document
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be deemed to be the immediately succeeding Business Day.

(e) All payments required to be made by Borrower hereunder or under the Note or
the other Loan Documents shall be made irrespective of, and without deduction
for, any setoff, claim or counterclaim and shall be made irrespective of any
defense thereto.

Section 2.6 Prepayments.

(a) Voluntary Prepayments. Borrower may not, without the prior written consent
of the Lender, which permission may be given or withheld in Lender’s sole
discretion, prepay the Term Loan in whole or in part, except as set forth in
Section 2.6(b). Borrower may from time to time repay the Revolving Loans.

(b) Mandatory Prepayments. On any Prepayment Date, Borrower shall pay to Lender:

(i) the Make-Whole Amount, if such prepayment occurs following the Transaction
Closing Date; plus

(ii) the Outstanding Principal Amount; plus

(iii) all accrued and unpaid Interest and all other amounts due hereunder and
under the Note and the other Loan Documents.

(c) Application of Payments. Amounts prepaid in accordance with this Section 2.6
shall be applied to the Debt in the following order:

(i) first, to pay any costs or expenses owed under this Agreement or any of the
other Loan Documents;

(ii) second, to the Make-Whole Amount;

(iii) third, to pay any accrued and unpaid interest on the Outstanding Principal
Amount as of the date of such prepayment; and

 

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(iv) fourth, to pay the Outstanding Principal Amount.

(d) Any amounts of the Term Loan which are pre-paid may not be reborrowed.

Section 2.7 Taxes.

(a) Any and all payments by Borrower under or in respect of this Agreement or
any other Loan Document to which Borrower is a party shall be made free and
clear of, and without deduction or withholding for or on account of, any and all
present or future taxes, levies, imposts, duties, deductions, assessments, fees,
charges or withholdings (including backup withholdings), and all liabilities
(including penalties, interest and additions to tax) with respect thereto,
whether now or hereafter imposed, levied, collected, withheld or assessed by any
taxation authority or other Governmental Authority, unless required by
Applicable Law.

(b) In addition, Borrower hereby agrees to pay any and all present or future
stamp, recording, documentary, excise, property, intangible, filing or similar
taxes, charges or levies that arise from any payment made under or in respect of
this Agreement or any other Loan Document or from the execution, delivery or
registration of, any performance under, enforcement or registration of, from the
receipt or perfection of a security interest under, or otherwise with respect
to, this Agreement, the Note or any other Loan Document.

(c) Borrower hereby agrees to indemnify Lender for, and to hold Lender harmless
against, the full amount of taxes described in this Section 2.7 imposed on or
paid by Lender, or required to be withheld or deducted from a payment to Lender,
and any liability (including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto. The indemnity by Borrower provided
for in this Section 2.7(c) shall apply and be made whether or not such taxes
have been correctly or legally imposed or asserted. A certificate as to the
amount of such payment or liability delivered to Borrower by Lender shall be
conclusive absent manifest error. Amounts payable by Borrower under the
indemnity set forth in this Section 2.7(c) shall be paid within ten (10) days
from the date on which the applicable Lender, as the case may be, makes written
demand therefor.

(d) Lender shall take commercially reasonable actions (consistent with legal and
regulatory restrictions) requested by Borrower to assist Borrower, as the case
may be, at the sole expense of Borrower, to recover from the relevant taxation
authority or other Governmental Authority any taxes in respect of which amounts
were paid by Borrower pursuant to Section 2.7(a), Section 2.7(b) or
Section 2.7(c). However, Lender will not be required to take any action that
would be, in the sole judgment of Lender, legally inadvisable or commercially or
otherwise disadvantageous to Lender in any respect. In no event shall Lender be
required to disclose any tax returns or any other information that, in the sole
judgment of Lender is confidential or proprietary.

Section 2.8 Conversion. At the option of the Lender, to be exercised at any time
following the completion of the Community Offering (as described in the Standby
Purchase Agreement) and prior repayment of the Loan, the Outstanding Principal
Amount shall be exchanged and converted and shall be deemed to be repaid in full
upon the issuance to Lender of a number of shares of Series A Common Stock of
the Borrower equal to the Outstanding Principal Amount plus the amount of any
outstanding Revolving Loans divided by $1.00, as such amount shall be adjusted
to take into account the issuance of any additional Capital Stock of Borrower,
stock splits, or other changes to the capital structure of Borrower. Such
issuance shall occur within five (5) Business Days of the Lender’s written
request therefor.

 

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ARTICLE 3.

Conditions

Section 3.1 Conditions to Initial Disbursement. The obligation of Lender to make
the initial disbursement of the Loan is subject to the satisfaction, in the
discretion of Lender and of the Standby Purchaser, of the following conditions,
subject to Section 2.2:

(a) The effective filing of the Registration Statement (as defined in the
Standby Purchase Agreement);

(b) execution and delivery by Borrower and each Guarantor of each Loan Document
to which such Person is a party;

(c) modification of the terms of the Senior Loan Documents on terms acceptable
to Lender and the Standby Purchaser;

(d) receipt by Lender of a legal opinion from counsel to Borrower and the
Guarantors with respect to the authorization, execution, delivery and
enforceability of the Loan Documents and such other matters requested by Lender;
and

(e) receipt by Lender of an Officer’s Certificate of Borrower and each Guarantor
attaching (i) a certified copy of such Person’s certificate of formation or
incorporation, (ii) a certificate of good standing in respect of such Person
issued by its jurisdiction of formation and each jurisdiction in which it is
registered to do business, (iii) a certified copy of such Person’s articles of
incorporation and bylaws or limited liability operating agreement, (iv) an
incumbency certificate with specimen signatures of the individuals who are
authorized to execute the Loan Documents on behalf of such Person, (v) a
certified copy of the resolutions adopted by the shareholders or members and/or
directors or managers of such Person approving the execution, delivery and
performance by such Person of the Loan Documents to which it is a Party.

Section 3.2 Conditions to Each Disbursement. The obligation of Lender to make
any disbursement of the Loan is subject to the satisfaction, in the discretion
of Lender and of the Standby Purchaser, prior to or at the date for such
disbursement, of the following conditions, subject to Section 2.2:

(a) The delivery by Borrower of a borrowing request in the form of Exhibit A not
less than five (5) Business Days prior to the date of the requested
disbursement;

(b) all of the representations and warranties made by Borrower and/or the
Guarantors shall be true and correct as and when made and as of the date of the
requested disbursement, provided, however, any inaccuracy of such
representations and warranties may be cured by Borrower and/or the Guarantors
prior to such disbursement;

(c) no Default or Event of Default shall have occurred or be in existence, and
no Default or Event of Default would reasonably be expected to occur as the
result of the making of such Disbursement;

(d) Borrower and the Guarantors, on a consolidated basis, shall be in compliance
with the financial covenants described in Section 5.19, and shall remain in
compliance with such covenants, on a pro-forma basis after taking into account
the making of the requested disbursement;

 

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(e) receipt by the Lender of a closing certificate dated as of the date of such
disbursement executed by an officer of Borrower certifying that all of the
conditions set forth in Section 3.1 (if applicable) and this Section 3.2 have
been satisfied; and

(f) no event or circumstance shall have occurred or be in existence that has or
could have a Material Adverse Effect.

 

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Lender that:

Section 4.1 Legal Status and Authority.

(a) Borrower (i) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation; (ii) is duly qualified
to transact business and is in good standing under the laws of each state where
required in order to conduct its business and own the properties owned by it and
(iii) has all powers and all governmental licenses, authorizations,
registrations, permits, consents and approvals required under all Applicable Law
and required in order to carry on its business as now conducted.

(b) Each Guarantor (i) is the type of entity identified in the definition of
“Guarantor” and is duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation; (ii) is duly qualified to transact
business and is in good standing under the laws of each state where required in
order to conduct its business and own the properties owned by it and (iii) has
all powers and all governmental licenses, authorizations, registrations,
permits, consents and approvals required under all Applicable Law and required
in order to carry on its business as now conducted.

Section 4.2 Validity of Documents. (a) The execution, delivery and performance
of this Agreement, the Note and the other Loan Documents by Borrower and each
Guarantor and the borrowing evidenced by the Note and this Agreement (inclusive
of all Exhibits and Schedules) (i) are within its corporate or limited liability
company power and authority; (ii) have been authorized by all requisite
corporate or limited liability company pursuant to its organizational documents;
(iii) will not violate, conflict with, result in a breach of or constitute (with
notice or lapse of time, or both) a default under any provision of law, any
order or judgment of any court or Governmental Authority, any license,
certificate or other approval applicable to it, its organizational documents, or
any indenture, agreement or other instrument to which it is a party or by which
it or any of its assets is or may be bound or affected; (iv) will not result in
the creation or imposition of any Lien upon any of its assets; and (v) will not
require any authorization or license from, or any filing with, any Governmental
Authority, (b) this Agreement, the Note and the other Loan Documents have been
duly executed and delivered by Borrower and each Guarantor through the
undersigned authorized representative of Borrower and each Guarantor and
(c) this Agreement, the Note and the other Loan Documents constitute the legal,
valid and binding obligations of Borrower and each Guarantor. The Loan Documents
are not subject to any right of rescission, set-off, counterclaim or defense by
Borrower or any Guarantor, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable (except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar Creditors Rights Laws, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law)), and neither Borrower nor any Guarantor have asserted any
right of rescission, set-off, counterclaim or defense with respect thereto. No
consent, approval or authorization of or registration, qualification,
designation, declaration or filing with any governmental authority on the part
of the Borrower or any Guarantor is required in connection with the valid
execution and delivery of this Agreement, the Note and/or the , or the other
Loan Documents.

 

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Section 4.3 The authorized and outstanding Capital Stock of the Borrower and
each Guarantor is as set forth on Schedule 4.3. All issued and outstanding
Capital Stock of each such Person is duly authorized and validly issued, fully
paid, non-assessable, free and clear of all Liens other than Permitted Liens and
such Capital Stock was issued in compliance with all Applicable Law. The
identity of the holders of the Capital Stock of the Borrower and each Guarantor
and the percentage of the fully diluted ownership of the Capital Stock of each
such Person is set forth on Schedule 4.3. Except as set forth on Schedule 4.3,
there are no preemptive or other outstanding rights, options, warrants,
conversion rights or similar agreements or understandings for the purchase or
acquisition from the Borrower or any Guarantor of any Capital Stock of any such
Person.

Section 4.4 Litigation. There is no action, suit or proceeding, judicial,
administrative or otherwise (including any condemnation or similar proceeding),
pending or, to the best of Borrower’s knowledge, threatened or contemplated
against Borrower or any Guarantor or against or affecting any of its or their
assets other than as set forth on Schedule 4.4.

Section 4.5 Agreements. Neither Borrower nor any Guarantor is a party to any
agreement or instrument or subject to any restriction which could be reasonably
likely to have a Material Adverse Effect. Neither Borrower nor any Guarantor is
in default in any material respect in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower, Guarantor or any of its
or their assets is bound. Neither Borrower nor any Guarantor has material
financial obligation under any agreement or instrument to which Borrower or any
Guarantor is a party or by which Borrower, Guarantor or any of its or their
assets is bound, other than (a) obligations incurred in the ordinary course of
the operation of the Borrower’s and Guarantors’ business, (b) obligations under
the Senior Loan Documents and (c) obligations under this Agreement, the Note and
the other Loan Documents. Other than the Senior Loan Documents, and subject to
the Intercreditor Agreement, there is no agreement or instrument to which
Borrower is a party or by which Borrower is bound that would require the
subordination in right of payment of any of Borrower’s obligations hereunder or
under the Note to an obligation owed to another party.

Section 4.6 Financial Condition.

(a) Borrower and each Guarantor is solvent and no proceeding under Creditors
Rights Laws with respect to Borrower or any Guarantor has been initiated.
Neither Borrower nor any Guarantor has initiated any proceeding under Creditors
Rights Laws with respect to Borrower or such Guarantor.

(b) No petition in bankruptcy has been filed by or against Borrower or any
Guarantor in the last ten (10) years, and neither Borrower nor any Guarantor has
made any assignment for the benefit of creditors or taken advantage of any
Creditors Rights Laws in the last ten (10) years.

(c) Neither Borrower nor any Guarantor is contemplating either the filing of a
petition by it under any Creditors Rights Laws or the liquidation of its assets
or property, and neither Borrower nor any Guarantor has any knowledge of any
Person contemplating the filing of any such petition against it.

 

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Section 4.7 Disclosure. Borrower has disclosed to Lender all material facts and
has not failed to disclose any material fact that could cause any representation
or warranty made herein to be materially misleading.

Section 4.8 No Plan Assets. As of the date hereof and throughout the term of the
Loan (a) Borrower is not nor will be an “employee benefit plan,” as defined in
Section 3(3) of ERISA, subject to Title I of ERISA, (b) Borrower is not nor will
be a “governmental plan” within the meaning of Section 3(32) of ERISA, (c) no
transactions by or with Borrower are nor will be subject to any state statute
regulating investments of, or fiduciary obligations with respect to,
governmental plans; and (d) none of the assets of Borrower constitutes or will
constitute “plan assets” of one or more such plans within the meaning of 29
C.F.R. Section 2510.3-101.

Section 4.9 Not a Foreign Person. Borrower is not a “foreign person” within the
meaning of § 1445(f)(3) of the IRS Code.

Section 4.10 Financial Information. All financial data, including, without
limitation, the balance sheets, statements of cash flow, statements of income
and operating expense and rent rolls, that have been delivered to Lender in
respect of Borrower and/or the Guarantors and its and their assets (a) are true,
complete and correct in all material respects, (b) accurately represent the
financial condition of Borrower and/or the Guarantors and its and their assets
in all material respects, as applicable, as of the date of such reports, and
(c) to the extent prepared or audited by an independent certified public
accounting firm, have been prepared in accordance with GAAP throughout the
periods covered, except as disclosed therein. Borrower has no contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected in said financial statements. Since the date of such
financial statements, there has been no materially adverse change in the
financial condition, operations or business of Borrower from that set forth in
said financial statements except as described on Schedule 4.9.

Section 4.11 Taxes. Borrower and each Guarantor have filed all federal, state,
county, municipal, and city income, personal property and other tax returns
required to have been filed by it and has paid all taxes and related liabilities
which have become due pursuant to such returns or pursuant to any assessments
received by it. Borrower knows of no basis for any additional assessment in
respect of any such taxes and related liabilities for prior years.

Section 4.12 Title to Properties. Borrower and each Guarantor have (a) full
corporate, partnership, limited liability company, as appropriate, power,
authority and legal right to own and operate the properties and assets which it
now owns, and to carry on the lines of business in which it is now engaged, and
(b) good and marketable title to its owned properties and assets, subject to no
Lien of any kind, except Permitted Liens.

Section 4.13 Indebtedness. Neither Borrower nor any Guarantor has incurred, has
issued or is liable for any Indebtedness other than Permitted Indebtedness.

Section 4.14 Third Party Representations. Each of the representations and the
warranties made by Borrower and/or the Guarantors in the other Loan Documents
are true, complete and correct in all material respects.

Section 4.15 Federal Reserve Regulations. No part of the proceeds of the Loan
will be used for the purpose of purchasing or acquiring any “margin stock”
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Applicable Law or by the terms and conditions of this
Agreement, the Note or the other Loan Documents.

 

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Section 4.16 Investment Company Act. Borrower is not (a) an “investment company”
or a company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended, (b) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a
“holding company” or a “subsidiary company” within the meaning of the Public
Utility Holding Company Act of 1935, as amended or (c) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.

Section 4.17 Fraudulent Conveyance. Borrower (a) has not entered into the Loan
or any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (b) received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of Borrower’s assets exceeds and will, immediately following the
execution and delivery of the Loan Documents, exceed Borrower’s total
liabilities, including, without limitation, subordinated, unliquidated, disputed
or contingent liabilities. The fair saleable value of Borrower’s assets is and
will, immediately following the execution and delivery of the Loan Documents, be
greater than Borrower’s probable liabilities, including the maximum amount of
its contingent liabilities or its debts as such debts become absolute and
matured. Borrower’s assets do not and, immediately following the execution and
delivery of the Loan Documents will not, constitute unreasonably small capital
to carry out its business as conducted or as proposed to be conducted. Borrower
does not intend to, and does not believe that it will, incur debts and
liabilities (including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
Borrower).

Section 4.18 Embargoed Person. As of the date hereof and at all times throughout
the term of the Loan, including after giving effect to any transfers of
interests permitted pursuant to the Loan Documents, (a) none of the funds or
other assets of Borrower constitute property of, or are beneficially owned,
directly or indirectly, by any person, entity or country which is a sanctioned
person, entity or country under U.S. law, including but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders
or regulations promulgated thereunder (including regulations administered by the
Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury
and the Specially Designated Nationals List maintained by OFAC) with the result
that the investment in Borrower, as applicable (whether directly or indirectly),
is prohibited by Applicable Law or the Loan made by Lender is in violation of
Applicable Law (“Embargoed Person”); (b) unless expressly waived in writing by
Lender, no Embargoed Person has any interest of any nature whatsoever in
Borrower, with the result that the investment in Borrower (whether directly or
indirectly), is prohibited by Applicable Law or the Loan is in violation of
Applicable Law; and (c) none of the funds of Borrower have been derived from any
unlawful activity with the result that the investment in Borrower (whether
directly or indirectly), is prohibited by Applicable Law or the Loan is in
violation of Applicable Law. Borrower covenants and agrees that in the event
Borrower receives any notice that Borrower (or any of their respective
beneficial owners, affiliates or participants) or any Person that has an
interest in Borrower is designated as an Embargoed Person, Borrower shall
immediately notify Lender in writing. At Lender’s option, it shall be an Event
of Default hereunder if Borrower or any other party to the Loan is designated as
an Embargoed Person.

Section 4.19 Patriot Act. All capitalized words and phrases and all defined
terms used in the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001)
and in other statutes and all orders, rules and regulations of the United States
government and its various executive departments, agencies and offices related
to the subject matter of the Patriot Act (collectively referred to in this
Section only as the “Patriot Act”) are incorporated into this Section. Borrower
hereby represents and warrants that Borrower, each Guarantor and each and every
Person affiliated with Borrower or any Guarantor or that has an

 

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economic interest in Borrower or any Guarantor, or, that has or will have an
interest in the transaction contemplated by this Agreement or will participate,
in any manner whatsoever, in the Loan, is: (a) in full compliance with all
applicable requirements of the Patriot Act and any regulations issued
thereunder; (b) operated under policies, procedures and practices, if
applicable, that are in compliance with the Patriot Act and available to Lender
for Lender’s review and inspection during normal business hours and upon
reasonable prior notice; (c) not in receipt of any notice from the Secretary of
State or the Attorney General of the United States or any other department,
agency or office of the United States claiming a violation or possible violation
of the Patriot Act; (d) not a person who has been determined by competent
authority to be subject to any of the prohibitions contained in the Patriot Act;
and (e) not owned or controlled by or now acting and or will in the future act
for or on behalf of any person who has been determined to be subject to the
prohibitions contained in the Patriot Act. Borrower covenants and agrees that in
the event Borrower receives any notice that Borrower, any Guarantor (or any of
their respective beneficial owners, affiliates or participants) or any Person
that has an interest in the Borrower or any Guarantor is indicted, arraigned, or
custodially detained on charges involving money laundering or predicate crimes
to money laundering, Borrower shall immediately notify Lender. At Lender’s
option, it shall be an immediate Event of Default hereunder if Borrower or any
Guarantor or any Controlling principal of Borrower or any Guarantor is indicted,
arraigned or custodially detained on charges involving money laundering or
predicate crimes to money laundering.

Section 4.20 Bank Holding Company. Borrower is not a “bank holding company” or a
direct or indirect subsidiary of a “bank holding company” as defined in the Bank
Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System.

Section 4.21 No Change in Facts or Circumstances. All information submitted by
Borrower to Lender and in all financial statements, reports, certificates and
other documents submitted in connection with the Loan or in satisfaction of the
terms thereof and all statements of fact made by Borrower in this Agreement or
in the other Loan Documents, are accurate, complete and correct in all material
respects. There has been no material adverse change in any condition, fact,
circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading in any material respect or that would
otherwise have a Material Adverse Effect.

Section 4.22 Survival of Representations. Borrower agrees that, unless expressly
provided otherwise, all of the representations and warranties of Borrower set
forth in this Article 4 and elsewhere in this Agreement and the other Loan
Documents shall survive for so long as any portion of the Debt remains owing to
Lender. All representations, warranties, covenants and agreements made in this
Agreement and in the other Loan Documents shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.

 

ARTICLE 5.

BORROWER COVENANTS

From the date hereof and until payment and performance in full of all
obligations of Borrower under this Agreement, the Note and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:

Section 5.1 Existence. Borrower and each Guarantor shall continuously maintain
(i) its existence and shall not dissolve or permit its dissolution, (ii) its
rights to do business in the applicable State and (iii) its franchises and trade
names, if any; provided, however that Diversus Management, Inc. shall be
permitted to convert to a Pennsylvania limited liability company.

 

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Section 5.2 Applicable Law. Borrower and each Guarantor shall promptly comply in
all material respects with all Applicable Law affecting Borrower, the Guarantors
and their respective assets, or the use thereof, including, without limitation,
Applicable Law relating to OFAC, Embargoed Persons and the Patriot Act.

Section 5.3 Use of Proceeds. The proceeds of the Loan will be used solely for
the Borrower’s and the Guarantors’ working capital purposes in the ordinary
course; provided that, without the prior written consent of Lender, no proceeds
of the Loan shall be used to repay any of Borrower’s Indebtedness under the
Senior Loan Document.

Section 5.4 Other Obligations. Borrower and each Guarantor shall pay and
discharge all trade obligations (defined as balances owed to third parties for
goods, supplies, and services obtained in the ordinary course of business and
purchased on open account) as they mature and all taxes, assessments or other
governmental charges or levies before penalties attach, except such as are being
appropriately contested in good faith and for which an adequate reserve for
payment is being maintained.

Section 5.5 Insurance. Borrower and each Guarantor shall (i) maintain adequate
insurance as is customarily maintained by similar businesses, (ii) ensure that
each policy for such insurance shall contain a provision for thirty (30) days
prior notice to Lender of any cancellation thereof and stipulating Lender as
loss payee, (iii) provide a detailed list of such insurance to Lender upon
request, and (iv) within thirty (30) days of written notice from Lender, obtain
such additional insurance as may be reasonably requested.

Section 5.6 Litigation. Borrower shall give prompt written notice to Lender of
any litigation or governmental proceedings pending or threatened in writing
against Borrower or any Guarantor.

Section 5.7 Notice of Default. Borrower shall promptly advise Lender of any
material adverse change in Borrower’s or any Guarantor’s condition (financial or
otherwise) or of the occurrence of any Default or Event of Default of which
Borrower or any Guarantor has knowledge.

Section 5.8 Cooperate in Legal Proceedings. Borrower shall and shall cause each
Guarantor to reasonably and fully cooperate with Lender with respect to any
proceedings before any court, board or other Governmental Authority which may in
any way affect the rights of Lender hereunder or any rights obtained by Lender
under any of this Agreement, the Note or the other Loan Documents and, in
connection therewith, permit Lender, at Lender’s election, to participate in any
such proceedings.

Section 5.9 Performance by Borrower. Borrower shall and shall cause each
Guarantor to in a timely manner observe, perform and fulfill each and every
covenant, term and provision to be observed and performed by Borrower under this
Agreement, the Note and the other Loan Documents and any amendments,
modifications or changes thereto.

Section 5.10 Information Covenants.

(a) Borrower shall and shall cause each Guarantor to keep adequate books and
records of account in accordance with GAAP or in accordance with other methods
acceptable to Lender in its reasonable discretion (consistently applied), and
furnish to Lender:

(i) annual financial statements of Borrower and each Guarantor audited (on a
consolidated bases) by an accounting firm or other independent certified public
accountant reasonably acceptable to Lender, within ninety (90) days after the
close of each fiscal year of Borrower, except for the year ended December 31,
2018, where such statements shall be furnished to lender within one hundred
twenty (120) days after the close of 2018;

 

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(ii) quarterly unaudited financial statements of Borrower and each Guarantor
within thirty (30) days after the end of each calendar quarter, together with a
certificate of the chief financial officer of Borrower certifying that such
statements have been prepared in accordance with GAAP and containing
calculations of the financial covenants set forth in Section 5.19; and

(iii) such other certificates or evidence acceptable to Lender to confirm that
any funds advanced by Lender hereunder have been used by Borrower in the manner
set forth herein.

(b) Within ten (10) Business Days of Lender’s request, Borrower shall furnish
Lender with such other additional financial or management information relating
to Borrower and/or the Guarantors (including State and Federal tax returns) as
may, from time to time, be reasonably required by Lender in form and substance
reasonably satisfactory to Lender. Borrower shall permit Lender and its agents
to perform an examination and audit of any such books and records at any
reasonable time from time to time during business hours upon no less than one
(1) Business Days written notice, unless a Default or Event of Default is then
in existence, in which case no advance notice shall be required.

(c) Borrower agrees that all financial statements and other items required to be
delivered to Lender pursuant to this Section 5.10 (each a “Required Financial
Item” and, collectively, the “Required Financial Items”) shall: (i) be complete
and correct in all material respects; (ii) present fairly the financial
condition of the party as of the respective dates of the financial statements;
(iii) disclose all liabilities that are required to be reflected or reserved
against; and (iv) be prepared (A) in hardcopy and electronic formats and (B) in
accordance with GAAP or in accordance with other methods acceptable to Lender in
its sole discretion (consistently applied). Borrower shall be deemed to warrant
and represent that, as of the date of delivery of any such financial statement,
there has been no material adverse change in financial condition, nor have any
assets or properties been sold, transferred, assigned, mortgaged, pledged or
encumbered since the date of such financial statement except as disclosed by
Borrower in a writing delivered to Lender. Borrower agrees that all Required
Financial Items shall not contain any misrepresentation or omission of a
material fact.

Section 5.11 Debt Cancellation. Neither Borrower nor any Guarantor shall cancel
or otherwise forgive or release any claim or debt owed to Borrower or such
Guarantor by any Person, except for adequate consideration and in the ordinary
course of Borrower’s or such Guarantor’s business.

Section 5.12 ERISA.

(a) Neither Borrower nor any Guarantor shall engage in any transaction which
would cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights hereunder or under the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under ERISA.

(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its reasonable discretion, that (i) neither
Borrower nor any Guarantor is an “employee benefit plan” as defined in
Section 3(3) of ERISA, or other retirement arrangement, which is subject to
Title I of ERISA or Section 4975 of the IRS Code, or a “governmental plan”
within the meaning of Section 3(32) of ERISA; (ii) neither Borrower nor any
Guarantor is subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more of the
following circumstances is true:

 

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(i) Capital Stock interests in Borrower and the Guarantors are publicly offered
securities, within the meaning of 29 C.F.R. § 2510.3 101(b)(2);

(ii) Less than 25 percent of each outstanding class of Capital Stock in Borrower
and the Guarantors are held by “benefit plan investors” within the meaning of 29
C.F.R.§ 2510.3 101(f)(2), as modified by § 3(42) of ERISA, disregarding the
value of any Capital Stock in Borrower and the Guarantors held by (I) a Person
(other than a benefit plan investor) who has discretionary authority or control
with respect to the assets of Borrower and the Guarantors, (II) any Person who
provides investment advice for a fee (direct or indirect) with respect to the
assets of Borrower and the Guarantors, or (III) any affiliate of a Person
described in the immediately preceding clause (I) or (II);

(iii) Borrower qualifies as an “operating company” or a “real estate operating
company” within the meaning of 29 C.F.R § 2510.3 101(c) or (e) or an investment
company registered under The Investment Company Act of 1940; or

(iv) The assets of Borrower and the Guarantors are not otherwise “plan assets”
of one or more “employee benefit plans” (as defined in Section 3(3) of ERISA)
subject to Title I of ERISA, within the meaning of 29 C.F.R. § 2510.3-101.

Section 5.13 No Other Indebtedness. Neither Borrower nor any Guarantor shall
incur, directly or indirectly, any Indebtedness, other than (a) the Indebtedness
arising hereunder and under the other Loan Documents, (b) Indebtedness under the
Senior Loan Documents; provided that the amount of Indebtedness under the Senior
Loan Documents shall not, at any time, exceed the amount of such Indebtedness as
of the Transaction Closing Date (taking into account any prepayment of such
Indebtedness made in connection with the transactions occurring on the
Transaction Closing Date) minus amount of such Indebtedness which is repaid
prior to such time in accordance with the terms of the Senior Loan Documents and
further minus any amortization or payment on the Senior Loan Documents paid
following the Transaction Closing Date and (c) trade accounts payable of
Borrower and Guarantors and other similar obligations incurred in the ordinary
course of business which do not, in the aggregate, exceed $100,000 at any time
(collectively, “Permitted Indebtedness”).

Section 5.14 Assets; Liens. Neither Borrower nor any Guarantor shall, directly
or indirectly, (a) convey, lease, sublease, sell, transfer, assign or otherwise
dispose of, in one transaction or a series of transactions, all or any part of
its business, assets or properties of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible, whether now owned or
hereafter acquired, except in the ordinary course of business consistent with
past practices and except for the transactions relating to entry into the new
Management Agreement between Diversus Management Inc. and Positive Physicians
Insurance Company and the related termination of the existing attorney-in-fact
agreements all as referenced in the Standby Purchase Agreement, or
(b) indirectly, create, incur, assume or permit to exist any Lien or other
encumbrance on or with respect to any property or asset of any kind of Borrower
and Guarantors, whether now owned or hereafter acquired, other than Permitted
Liens.

Section 5.15 Changes in Corporate Structure; Asset Acquisition. Neither Borrower
nor any Guarantor shall, directly or indirectly, (a) make or own any investments
(including without limitation any direct or indirect loans, advances or capital
contributions) in any person, including any joint venture, but excluding
investments, loans or advances by Borrower in its direct or indirect
subsidiaries, (b) other than pursuant to the Option Agreement, enter into any
amalgamation, merger or consolidation, or liquidate,

 

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wind up or dissolve itself (or suffer any liquidation or dissolution); provided,
however that PTPGP, LLC, Professional Third Party, LP, Specialty Insurance
Services, LLC, and Physicians’ Insurance Program Management Company shall be
permitted to merge with and into Diversus Management, Inc. and Diversus
Management, Inc. shall be permitted to convert to a Pennsylvania limited
liability company; provided, further that Borrower provides Lender with prompt
written notice of such merger or conversion, (c) issue any Capital Stock to any
Person or otherwise cause or permit any change in Borrower’s or any Guarantor’s
ownership or capital structure (including, without limitation, by amendment to
the terms of any Capital Stock of Borrower or any Guarantor), (d) acquire, by
purchase or otherwise, the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any person or entity or business unit
thereof in excess of $100,000.00 in the aggregate in any calendar year or
(e) change its business or enter into any new line of business.

Section 5.16 Formation of Subsidiaries. Neither Borrower nor any Guarantor shall
form any subsidiary or acquire any interest in any other Person unless such
Person executes a joinder to this Agreement and the Guaranty in form and
substance satisfactory to Lender and the Standby Purchaser and provides (a) an
Officer’s Certificate of such Person with respect to the matters listed in
Section 3.1(e) and (b) a legal opinion of counsel to such Person with respect to
the execution and enforceability of the documents executed by such Person
pursuant to this Section 5.16.

Section 5.17 Restricted Payments. Borrower shall not cause or permit, directly
or indirectly, (a) any payments of dividends or other payments in respect its
Capital Stock, or (b) any payments of any fees, commissions, compensation or
other amounts to the holders of Borrower’s Capital Stock or Affiliates thereof,
except for those permitted payments identified on Exhibit B attached hereto and
made a part hereof.

Section 5.18 Transactions with Affiliates. Neither Borrower nor any Guarantor
shall enter into, or cause, suffer or permit to exist, directly or indirectly,
any arrangement, transaction or contract with any Affiliates thereof or with any
of the holders of Borrower’s Capital Stock unless (a) such arrangement,
transaction or contract is identified on Exhibit B attached hereto and made a
part hereof, or (b) such arrangement, transaction or contract is on an arm’s
length basis and on commercially reasonable terms.

Section 5.19 Financial Covenants.

(a) Borrower and the Guarantors, on a consolidated basis, shall be in compliance
with each of the following financial covenants in each full calendar quarter
following the Initial Closing Date, as shown on the Borrower’s quarterly
financial statements and calculated in accordance with GAAP consistently
applied:

(i) the Debt Service Coverage Ratio (defined below) shall be at least 1.1 to
1.00, tested as follows:

 

  A.

on a trailing 3-month basis for the quarter ending on June 30, 2019;

 

  B.

on a trailing 6-month basis for the quarter ending on September 30, 2019;

 

  C.

on a trailing 9-month basis for the quarter ending December 31, 2019; and

 

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D. on a trailing 12-month basis for each quarter ending on or after March 31,
2020,

(ii) EBITDA (defined below) shall be at least these amount for the periods
indicated, measured on a trailing 12-month basis:

A. For 2019 - $3,000,000;

B. For 2020 – $2,500,000;

C. For 2021 – $2,400,000; and

D. For 2022 and each year thereafter - $2,200,000;

provided, that, EBITDA shall be at least $3,000,000 for all periods following
the completion of an acquisition by Lender, and

(iii) Funded Indebtedness (defined below), shall not be more than 5.50 times
Adjusted EBITDA, measured on a trailing 12-month basis.

(b) For the purposes of this Section 5.19:

“Adjusted EBITDA” shall, for any period, mean EBITDA plus cash contributions
from Borrower’s shareholders plus, if such amounts are included in the
definition of “Adjusted EBITDA” contained in the Senior Loan Documents (as
amended), draws on this Term Loan during such period.

“Debt Service Coverage Ratio” shall, for any period, mean (a) Adjusted EBITDA
for such period divided by (b) the current portion of Indebtedness plus capital
lease payments not expensed in the current fiscal year during such period.

“EBITDA” shall, for any period, mean earnings before interest expense,
depreciation and amortization expense.

“Funded Indebtedness” shall, for any period, mean the outstanding principal
amount of all Indebtedness of Borrower and the Guarantors, on a consolidated
basis during such period, including, without limitation, the Indebtedness
evidenced by the Senior Loan Documents and the Indebtedness evidenced by this
Agreement, the Note and the Other Loan Documents.

Section 5.20 Modification to Senior Loan Documents. Borrower shall not, without
the prior written consent of Lender, amend, restate or otherwise modify any of
the terms of the Senior Loan Documents; provided that, notwithstanding the
foregoing, Borrower may amend and restate the Senior Loan Documents in
connection with the partial repayment of principal to the Senior Lender in the
amount of $10,000,000.

 

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ARTICLE 6.

EVENTS OF DEFAULT; REMEDIES

Section 6.1 Event of Default. The occurrence of any one or more of the following
events shall constitute an “Event of Default”:

(a) if Borrower shall fail to (i) pay when due any sums which are payable on the
Maturity Date, or (ii) pay when due any other sums payable under the Note, this
Agreement or any of the other Loan Documents if such failure continues for three
(3) days following the due date for such payment;

(b) if any of the representations or covenants contained in Article 4 or Article
5 hereof are breached or violated;

(c) if any representation or warranty of, or with respect to, Borrower, any
Guarantor or any member, general partner, principal or beneficial owner of any
of the foregoing, made herein or in any other Loan Documents, or in any
certificate, report, financial statement or other instrument or document
furnished to Lender shall have been false or misleading in any material adverse
respect when made or would otherwise constitute a Material Adverse Effect;

(d) any one or more of the Loan Documents shall be canceled, terminated, revoked
or rescinded otherwise than in accordance with the terms thereof or with the
express prior written consent of the Lender, or any action at law, suit in
equity or other legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of Borrower or any Guarantor, or
any governmental authority of competent jurisdiction shall issue a judgment,
order, decree or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the terms
thereof; or Borrower or any Guarantor denies that it has any liability or
obligation under any Loan Document, or purports to revoke, terminate or rescind
any Loan Document;

(e) if (i) Borrower or any Guarantor shall commence any case, proceeding or
other action (A) under any Creditors Rights Laws seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or
any substantial part of its assets, or Borrower or any Guarantor shall make a
general assignment for the benefit of its creditors; (ii) there shall be
commenced against Borrower or any Guarantor any case, proceeding or other action
of a nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of sixty (60) days; (iii)
there shall be commenced against Borrower or any Guarantor any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of any order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within sixty
(60) days from the entry thereof; (iv) Borrower or any Guarantor shall take any
action in furtherance of, or indicating its consent in writing or in any legal
proceeding to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii) or (iii) above; or (v) Borrower or any Guarantor shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due;

(f) if (i) Borrower or any Guarantor fails to pay any amount due on the
Indebtedness evidence by the Senior Loan Documents or any of its other
Indebtedness (including principal, interest and any premium or fee thereon, but
excluding Indebtedness evidenced by this Agreement and the other Loan Documents)
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise), and such failure continues beyond the applicable cure period, if
any, (ii) a default occurs under any agreement or instrument evidencing any such
Indebtedness, or under which any Borrower or any Guarantor has outstanding at
the time, any such Indebtedness and such default continues beyond the applicable
cure period, if any, or (iii) any such Indebtedness shall be declared to be due
and payable, or required to be prepaid, prior to the stated maturity thereof as
a result of a default or other similar adverse event;

 

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(g) if Borrower or any of its Affiliates shall be in default under any of its
obligations under the Diversus Management Agreement or any other agreement
entered into in connection with the Standby Purchase Agreement;

(h) if Borrower or any Guarantor shall have rendered against it a money judgment
as finally determined by a court of competent jurisdiction with respect to any
litigation, arbitration or mediation, in an amount equal to or greater than
$500,000 (net of insurance issued by unrelated third parties), or which would
reasonably be expected to result in a Material Adverse Effect;

(i) if any federal tax lien is filed against Borrower and same is not discharged
of record (by payment, bonding or otherwise) within thirty (30) days after same
is filed;

(j) if Borrower shall fail to deliver to Lender any Required Financial Item when
the same is due, or if no due date is specified therefor, within thirty
(30) days after written request by Lender;

(k) if any Person other than those Persons named in Schedule 4.3 shall hold the
legal and beneficial title to any of the Capital Stock of Borrower (other than
by reason of a transfer of such Capital Stock by any such Person to an Affiliate
of such Person; provided that Lender is given prior written notice of such
transfer, together with an amended form of Schedule 4.3 reflecting such
transfer); or

(l) if any event, development or circumstance shall have occurred that, in the
reasonable judgment of Lender and/or the Standby Purchaser, could constitute a
Material Adverse Effect.

Section 6.2 Remedies.

(a) Upon the occurrence and during the continuance of an Event of Default,
Lender may, in addition to any other rights or remedies available to it pursuant
to this Agreement, the Note and the other Loan Documents or at law or in equity,
take such action, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower, including, without limitation,
declaring the Debt to be immediately due and payable, and Lender may enforce or
avail itself of any or all rights or remedies provided in this Agreement, the
Note and the other Loan Documents against Borrower and the Guarantors,
including, without limitation, all rights or remedies available at law or in
equity. Upon any Event of Default described in Section 6.1(e) (with respect to
Borrower only), the Debt and all other obligations of the members of Borrower
under this Agreement, the Note and the other Loan Documents shall immediately
and automatically become due and payable, without notice or demand, and Borrower
hereby expressly waives any such notice or demand, anything contained herein or
in the Note and the other Loan Documents to the contrary notwithstanding.

(b) Upon the occurrence and during the continuance of an Event of Default, all
or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under this Agreement, the Note or the other
Loan Documents executed and delivered by, or applicable to, Borrower or at law
or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable. Any
such actions taken by Lender shall be cumulative and concurrent and may be
pursued independently, singularly, successively, together or otherwise, at such
time and in such order as Lender may determine in its sole discretion, to the
fullest extent permitted by Applicable Law, without impairing or otherwise
affecting the other rights and remedies of Lender permitted by Applicable Law,
equity or contract or as set forth herein or in the Note

 

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or the other Loan Documents. No delay or omission to exercise any remedy, right
or power accruing upon an Event of Default shall impair any such remedy, right
or power or shall be construed as a waiver thereof, but any such remedy, right
or power may be exercised from time to time and as often as may be deemed
expedient. A waiver of one Default or Event of Default with respect to Borrower
or any Guarantor shall not be construed to be a waiver of any subsequent Default
or Event of Default by Borrower or any Guarantor to impair any remedy, right or
power consequent thereon.

(c) Upon the occurrence and during the continuance of an Event of Default,
Lender may, but without any obligation to do so and without notice to or demand
on Borrower and without releasing Borrower from any obligation hereunder or
being deemed to have cured any Event of Default hereunder, make, do or perform
any obligation of Borrower hereunder in such manner and to such extent as Lender
may deem necessary. All such costs and expenses incurred by Lender in remedying
such Event of Default or such failed payment or act or in appearing in,
defending, or bringing any action or proceeding shall bear interest at the
Default Rate, for the period after Borrower receives written notice of such cost
or expense being incurred through and including the date of payment to Lender.
All such costs and expenses incurred by Lender together with interest thereon
calculated at the Default Rate shall be deemed to constitute a portion of the
Debt and shall be due and payable promptly (but in no event more than ten
(10) days) following written demand by Lender therefor.

ARTICLE 7.

ASSIGNMENT

Section 7.1 Assignment by Borrower. Borrower may not assign this Agreement or
delegate any of its obligations or liabilities hereunder.

Section 7.2 Assignment by Lender. Lender may assign its rights and obligations
hereunder or sell participating interests in the Loan and/or this Agreement.
Borrower agrees to cooperate with Lender in any such sale and/or assignment.

ARTICLE 8.

EXPENSES; INDEMNIFICATIONS

Section 8.1 Expenses. Borrower shall pay: (i) all reasonable out-of-pocket
expenses incurred by Lender, including the reasonable fees, charges and
disbursements of outside counsel for Lender, in connection with its underwriting
activities, in connection with the credit facilities provided for herein, and/or
preparation, administration, and documentation of this Agreement, the Loan and
related Loan Documents, or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated); (ii) all out-of-pocket expenses incurred by
Lender, including the fees, charges and disbursements of outside counsel for
Lender, in connection with the enforcement, collection or protection of its
rights in any way related to the Loan and Loan Documents, including its rights
under this Article 8 and/or in the collection of the Loan, as well as all other
obligations and liabilities of Borrower to Lender as a result of the occurrence
of an Event of Default hereunder or in the pursuit of any remedy of Lender
available to it under or pursuant to the Loan or any of the Loan Documents, both
before and after entry of a judgment, whether inside or outside of bankruptcy,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations with respect to this Agreement, the Loan and Loan
Documents (whether inside or outside of bankruptcy) being reimbursed by the
Borrower under this Article 8, include without limiting the generality of the
foregoing, costs and expenses incurred in connection with: (a) filed
examinations and preparation of reports based on fees charged by a third party
retained by Lender or the internally allocated fees for such persons employed by
Lender; (b) background and/or credit checks; (c) sums paid or incurred to take
any action required of the Borrower, which the Borrower fails to take; and
(d) forwarding loan proceeds and collecting checks and other items of payment

 

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Section 8.2 Indemnification. Borrower shall at all times protect, indemnity,
defend and save harmless each of the Indemnified Parties from and against any
and all Losses of which such Indemnified Party may at any time sustain or incur
by reason of or in consequence of or arising out of the execution and delivery
of, the consummation of the transactions contemplated by, or the amendment or
modification of, or any waiver or consent under or in respect of the Loan or any
of the Loan Documents.

Section 8.3 Survival. The obligations and liabilities of Borrower under this
Article 8 shall fully survive indefinitely notwithstanding any termination,
satisfaction or assignment hereof.

ARTICLE 9.

NOTICES

Section 9.1 Notices. All notices or other written communications hereunder shall
be deemed to have been properly given (a) upon delivery, if delivered in person
or by facsimile transmission with receipt acknowledged by the recipient thereof
and confirmed by telephone by sender, (b) one (1) Business Day after having been
deposited for overnight delivery with any reputable overnight courier service,
or (c) three (3) Business Days after having been deposited in any post office or
mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

 

  If to Borrower:    Diversus, Inc.      100 Berwyn Park, 850 Cassatt Road,     

 

Suite 220, Berwyn, PA 19312

     Attn: Gregory Campbell, Chair      Email: gcampbell@cdvcapital.com     
Fax:   with a copy to:      If to Lender:    Positive Physicians Insurance
Company      850 Cassatt Road, Suite 220      Berwyn, PA 19312      Attnt: Lewis
S. Sharps, M.D.      Email:      Fax:   with a copy to:    Insurance Capital
Group, LLC     

c/o ICG Management, LLC

767 5th Avenue

     New York, New York 10153      Attn: Matthew T. Popoli, Craig A. Huff, Jack
Sun     

Email:  mpopoli@insurancecap.com; chuff@reservoircap.com; jsun@insurancecap.com

     Fax:

or addressed as such party may from time to time designate by written notice to
the other parties. Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.

 

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ARTICLE 10.

FURTHER ASSURANCES

Section 10.1 Replacement Documents. Upon receipt of an affidavit of an officer
of Lender as to the loss, theft, destruction or mutilation of the Note, this
Agreement or any of the other Loan Documents, which affidavit shall contain an
appropriate indemnity against loss to Borrower or any other party to the Loan
Document that has been lost, stolen or destroyed, and, in the case of any such
mutilation, upon surrender and cancellation of the Note, this Agreement or such
other Loan Document, Borrower will issue, or will cause the applicable member of
Borrower to issue, in lieu thereof, a replacement thereof, dated the date of the
Note, this Agreement or such other Loan Document, as applicable, in the same
principal amount thereof and otherwise of like tenor.

ARTICLE 11.

WAIVERS

Section 11.1 Remedies Cumulative; Waivers. The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against the members of Borrower
pursuant to this Agreement, the Note or the other Loan Documents, or existing at
law or in equity or otherwise. Lender’s rights, powers and remedies may be
pursued singularly, concurrently or otherwise, at such time and in such order as
Lender may determine in Lender’s sole discretion. No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. A waiver of one Default or Event of
Default with respect to Borrower shall not be construed to be a waiver of any
subsequent Default or Event of Default by Borrower or to impair any remedy,
right or power consequent thereon.

Section 11.2 Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement,
the Note and the other Loan Documents, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in a writing
signed by the party against whom enforcement is sought, and then such waiver or
consent shall be effective only in the specific instance, and for the purpose,
for which given. Except as otherwise expressly provided herein, no notice to, or
demand on Borrower, shall entitle Borrower to any other or future notice or
demand in the same, similar or other circumstances.

Section 11.3 Delay Not a Waiver. Neither any failure nor any delay on the part
of Lender in insisting upon strict performance of any term, condition, covenant
or agreement, or exercising any right, power, remedy or privilege under this
Agreement, the Note or the other Loan Documents, or any other instrument given
as security therefor, shall operate as or constitute a waiver thereof, nor shall
a single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement, the Note or the other Loan Documents, Lender shall
not be deemed to have waived any right either to require prompt payment when due
of all other amounts due under this Agreement, the Note and the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.

 

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Section 11.4 Waiver of Trial by Jury. To the extent permitted by applicable law,
Borrower and Lender, by acceptance of this Agreement, hereby waive, to the
fullest extent permitted by applicable law, the right to trial by jury in any
action, proceeding or counterclaim, whether in contract, tort or otherwise,
relating directly or indirectly to the Loan, the application for the Loan, this
Agreement, the Note or the other Loan Documents or any acts or omissions of
Lender or Borrower.

Section 11.5 Waiver of Notice. Borrower shall not be entitled to any notices of
any nature whatsoever from Lender except (a) with respect to matters for which
this Agreement specifically and expressly provides for the giving of notice by
Lender to Borrower and (b) with respect to matters for which Lender is required
by Applicable Law to give notice, and Borrower hereby expressly waives the right
to receive any notice from Lender with respect to any matter for which this
Agreement does not specifically and expressly provide for the giving of notice
by Lender to Borrower.

Section 11.6 Remedies of Borrower. In the event that a claim or adjudication is
made that Lender or its agents have acted unreasonably or unreasonably delayed
acting in any case where by Applicable Law or under this Agreement, the Note and
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower’s sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment. Lender agrees that, in such event, it shall
cooperate in expediting any action seeking injunctive relief or declaratory
judgment.

Section 11.7 Waiver of Statute of Limitations. To the extent permitted by
Applicable Law, Borrower hereby expressly waives and releases on behalf of
itself and the other members of Borrower, to the fullest extent permitted by
Applicable Law, the pleading of any statute of limitations as a defense to
payment of the Debt or performance of its obligations hereunder, under the Note
or other Loan Documents.

Section 11.8 Waiver of Counterclaim. Borrower hereby waives on behalf of itself
and the other members of Borrower, the right to assert a counterclaim, other
than a compulsory counterclaim, in any action or proceeding brought against it
by Lender or its agents arising out of or in any way connected with the Loan
Agreement, the Note or any of the other Loan Documents.

Section 11.9 Sole Discretion of Lender. Wherever pursuant to this Agreement
(a) Lender exercises any right given to it to approve or disapprove, (b) any
arrangement or term is to be satisfactory to Lender, or (c) any other decision
or determination is to be made by Lender, the decision to approve or disapprove
all decisions that arrangements or terms are satisfactory or not satisfactory,
and all other decisions and determinations made by Lender, shall be in the sole
discretion of Lender, except as may be otherwise expressly and specifically
provided herein.

 

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ARTICLE 12.

MISCELLANEOUS

Section 12.1 Survival. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Debt is outstanding and unpaid unless a longer
period is expressly set forth in this Agreement, the Note or the other Loan
Documents. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the legal representatives, successors
and assigns of such party. All covenants, promises and agreements in this
Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.

Section 12.2 Governing Law. This Agreement shall be governed, construed, applied
and enforced in accordance with the Applicable Laws of the state of New York and
Applicable Laws of the United States of America.

Section 12.3 Headings. The Article and/or Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

Section 12.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

Section 12.5 Preferences. During the continuance of an Event of Default, Lender
shall have the continuing and exclusive right to apply or reverse and reapply
any and all payments by Borrower to any portion of the obligations of Borrower
hereunder. To the extent Borrower makes a payment or payments to Lender, which
payment or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party under any Creditors Rights Laws, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.

Section 12.6 Incorporation of Schedules. The Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.

Section 12.7 Offsets, Counterclaims and Defenses. Any assignee of Lender’s
interest in and to this Agreement, the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.

Section 12.8 No Joint Venture or Partnership; No Third Party Beneficiaries.

(a) Borrower and Lender intend that the relationships created under this
Agreement, the Note and the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender.

 

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(b) This Agreement, the Note and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement, the Note
or the other Loan Documents shall be deemed to confer upon anyone other than
Lender and Borrower any right to insist upon or to enforce the performance or
observance of any of the obligations contained herein or therein. All conditions
to the obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.

(c) Notwithstanding anything to the contrary contained herein, Lender is not
undertaking the performance of any obligations with respect to such agreements,
contracts, certificates, instruments, franchises, permits, trademarks, licenses
and/or other documents.

(d) By accepting or approving anything required to be observed, performed or
fulfilled or to be given to Lender pursuant to this Agreement, the Note or the
other Loan Documents, including, without limitation, any Officer’s Certificate,
balance sheet, statement of profit and loss or other financial statement,
survey, appraisal, or insurance policy, Lender shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, the legality or
effectiveness of same, and such acceptance or approval thereof shall not
constitute any warranty or affirmation with respect thereto by Lender.

(e) Borrower recognizes and acknowledges that in accepting this Agreement, the
Note and the other Loan Documents, Lender is expressly and primarily relying on
the truth and accuracy of the representations and warranties set forth in
Article 4 without any obligation to investigate the Borrower and notwithstanding
any investigation of the Borrower by Lender; that such reliance existed on the
part of Lender prior to the date hereof, that the warranties and representations
are a material inducement to Lender in making the Loan; and that Lender would
not be willing to make the Loan and accept the this Agreement, the Note and the
other Loan Documents in the absence of the warranties and representations as set
forth in Article 4.

Section 12.9 Conflict; Construction of Documents; Reliance. In the event of any
conflict between the provisions of this Agreement, the Note or any of the other
Loan Documents, the provisions of this Agreement shall control. Wherever the
phrase “during the continuance of an Event of Default” or the like appears
herein or in any other Loan Document, such phrase shall not mean or imply that
Lender has any obligation to accept a cure of such Event of Default. The parties
hereto acknowledge that they were represented by competent counsel in connection
with the negotiation, drafting and execution of this Agreement, the Note and the
other Loan Documents and this Agreement, the Note and the other Loan Documents
shall not be subject to the principle of construing their meaning against the
party which drafted same. Borrower acknowledges that, with respect to the Loan,
Borrower shall rely solely on its own judgment and advisors in entering into the
Loan without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under this Agreement, the Note and the other
Loan Documents or any other agreements or instruments which govern the Loan by
virtue of the ownership by it or any parent, subsidiary or Affiliate of Lender
of any equity interest any of them may acquire in Borrower, and Borrower hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Lender’s exercise of any such rights or
remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse-to or competitive with the business of Borrower or its
Affiliates.

 

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Section 12.10 Entire Agreement. This Agreement, the Note and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written between
Borrower and Lender are superseded by the terms of this Agreement, the Note and
the other Loan Documents.

Section 12.11 Liability. The obligations and liabilities of Borrower and the
Guarantors under the Loan Documents shall be joint and several. This Agreement
shall be binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns forever.

Section 12.12 Duplicate Originals; Counterparts. This Agreement may be executed
in any number of duplicate originals and each duplicate original shall be deemed
to be an original. The failure of any party hereto to execute this Agreement, or
any counterpart hereof, shall not relieve the other signatories from their
obligations hereunder.

Section 12.13 Time of Essence. Time is of the essence with respect to each and
all of the provisions of this Agreement.

[signatures on following page(s)]

 

29

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.

 

BORROWER: DIVERSUS, INC. By:  

/s/ Leslie Latta

Name: Leslie Latta Title: COO

Signature Page to Loan Agreement

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.

 

LENDER: POSITIVE PHYSICIANS HOLDINGS, INC. By:  

/s/ Lewis Sharps, M.D.

Name: Lewis Sharps, M.D. Title: President

Signature Page to Loan Agreement

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Exhibit A

Form of Disbursement Request

[to come]

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Exhibit B

Permitted Affiliate Transactions

1. Payment of consultancy fees in an amount to be agreed to Gregory Campbell in
respect of certain acquisition and financial advisory services to be performed
by him.

2. Payment of salary, bonus and other fringe benefits to Kurt Gingrich, and to
any other employee of Diversus or its Affiliates who also holds shares of stock
in Diversus; on the same terms that such payments are made as of the date hereof
(with such adjustments as may be made in the ordinary course of business
consistent with past practice).