Exhibit 10.2

 

Execution Copy

 

LINE OF CREDIT AGREEMENT

 

Dated as of June 29, 2018

 

between

LEARNING TREE INTERNATIONAL, INC., as Borrower

and

THE KEVIN ROSS GRUNEICH LEGACY TRUST, as Lender

 

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Article 1

Definitions

1

1.1

Definitions

1

1.2

Accounting Terms

7

1.3

General Construction

7

1.4

Schedules

7

Article 2

The Loan

7

2.1

The Advances; the Commitment

7

2.2

Interest Rate

8

2.3

The Note

8

2.4

Maturity Date

9

2.5

Prepayment

9

2.6

Taxes

9

2.7

Payments and Computations

10

2.8

Ranking of Loan

10

Article 3

Representations and Warranties OF BORROWER

10

3.1

Organization and Standing

10

3.2

Authority for Agreement; No Conflict

11

3.3

Governmental Consents

11

3.4

Litigation

11

3.5

Borrower SEC Reports

12

3.6

Absence of Undisclosed Liabilities

12

3.7

Taxes

12

3.8

No Defaults

12

3.9

Use of Loan

13

3.10

Approvals and Consents

13

3.11

Liens

13

3.12

Foreign Corrupt Practices Act

13

3.13

Compliance

13

3.14

Investment Company

14

3.15

Full Disclosure

14

Article 4

Representations and Warranties OF the Lender

14

4.1

Legal Capacity

14

4.2

Authority; Enforceability

14

 

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4.3

Consents

14

4.4

Governmental Filings and Consents

15

4.5

Litigation

15

4.6

Funds

15

4.7

Investment Experience

15

4.8

Restricted Securities

15

4.9

No General Solicitation

16

4.10

Residence

16

4.11

No Bad Actor Status

16

Article 5

Affirmative Covenants

16

5.1

Reports and Other Information

16

5.2

Ranking of Loan

17

5.3

Preservation, Taxes.

17

5.4

Use of Proceeds

17

5.5

Financial Covenant

17

Article 6

Negative Covenants

18

6.1

Indebtedness

18

6.2

Liens

19

6.3

Mergers, Consolidations, Sales

20

6.4

Modification of Organizational Documents

21

6.5

Transactions with Affiliates

21

6.6

Sale of Equity Securities

21

Article 7

Conditions Precedent

22

7.1

Conditions Precedent to Closing

22

7.2

Conditions Precedent to Each Advance

23

7.3

No Advances Required in Event of Default

23

Article 8

Events of Default

24

8.1

Events of Default

24

8.2

Remedies

25

Article 9

Miscellaneous

25

9.1

Termination

25

9.2

Entire Agreement; No Assignment

25

9.3

Amendment; Waiver; Cumulative Rights

26

 

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9.4

Governing Law

26

9.5

WAIVER OF JURY TRIAL

26

9.6

Notices

26

9.7

Severability and Savings Clause

26

9.8

Counterparts

26

9.9

Indemnity

27

9.10

Further Assurances

27

 

 

 

EXHIBIT A          Promissory Note

 

EXHIBIT B          Notice of Advance

 

EXHIBIT C          Notice of Conversion

 

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line of credit agreement

 

 

 

LINE OF CREDIT AGREEMENT, dated as of June 29, 2018, by and between LEARNING
TREE INTERNATIONAL, INC., a Delaware corporation (the “Borrower”), and THE KEVIN
ROSS GRUNEICH LEGACY TRUST (the “Lender”).

 

 

W I T N E S S E T H:

 

WHEREAS, the Borrower has requested that the Lender, on the terms and conditions
herein stated, make a Loan by making Advances from time to time to the Borrower;
and

 

WHEREAS, the Lender, on the terms and conditions herein stated, has agreed to
make such Loan.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

Article 1

Definitions

 

1.1     Definitions. As used in this Agreement, and unless the context requires
a different meaning, the following terms have the meanings set forth below:

 

“Action” means (a) any action, suit, proceeding, civil prosecution or arbitral
action before any Governmental Entity, or (b) any action, suit, proceeding or
arbitral action, criminal or civil prosecution, inquiry, examination, audit or
investigation by any Governmental Entity.

 

“Action Capital Line of Credit” means that certain Financing and Security
Agreement, dated as of January 5, 2017, between Borrower, Learning Tree
International USA, Inc., and Action Capital Corporation.

 

“Advance” means an advance by the Lender to the Borrower pursuant to Article 2
hereof.

 

“Affiliate” means, with respect to a Person, any other Person that directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such first Person.

 

“Agreement” means this Line of Credit Agreement, dated as of the date hereof,
between the Borrower and the Lender, as same may be amended from time to time.

 

“Applicable Laws” means all federal, state, local and foreign statutes, laws,
ordinances, judgments, decrees and orders and all governmental rules and
regulations, and any other requirement or rule of law (including common law) or
other pronouncement of any Governmental Entity having the effect of law, in each
case, that is applicable to such Person.

 

 

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“Base Rate” means an interest rate equal to 5.0% per annum.

 

“Borrower” has the meaning set forth in the Preamble.

 

“Borrower Intellectual Property” means the intellectual property owned by or
licensed to the Borrower and incorporated in, underlying or used in connection
with the customer deliverables or the IT systems, including all (i) granted
patents, pending patent applications, and all related continuation,
continuation-in-part, divisional, reissue and re-examinations thereof, utility
models, statutory invention registrations and design patents; (ii) trademarks,
service marks, trade dress, Internet domain names, logos, trade names and
corporate names, and other indicia of source code, and registrations and
applications for registration thereof; (iii) copyrights and registrations and
applications for registration thereof; (iv) mask works and registrations and
applications for registration thereof; (v) computer software, data and
documentation; (vi) inventions, trade secrets and confidential business
information, whether patentable or nonpatentable and whether or not reduced to
practice, know-how, manufacturing and product processes and techniques, research
and development information, unpublished copyrightable works, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information; (vii) other
proprietary rights similar to any of the foregoing (including remedies against
infringements thereof and rights of protection of interest therein under the
laws of all jurisdictions); (viii) the courses of instruction utilized by the
Borrower and its Subsidiaries in producing and performing the products that the
Borrower and its Subsidiaries currently produce, market, sell or license or
currently plan to produce, market, sell or license in the future and the
services that the Borrower and its Subsidiaries currently provide or currently
plan to provide in the future, and (ix) copies and tangible embodiments thereof.

 

“Borrower SEC Reports” means, collectively, (i) the Borrower’s Annual Reports on
Form 10-K, for each of the years ended September 29, 2017, September 30, 2016
and October 2, 2015, in each case, as amended; (ii) the Borrower’s Quarterly
Reports on Form 10-Q for each of the fiscal quarters of the Borrower for the
fiscal years ended September 29, 2017, September 30, 2016 and October 2, 2015,
and for the Borrower’s fiscal quarters through the date of this Agreement; (iii)
the Borrower’s Current Reports on Form 8-K since October 2, 2015 and through the
date of this Agreement; (iv) the Borrower’s Proxy Statements for the Annual
Meetings of Stockholders held in 2018, 2017 and 2016; and (v) all other reports
and filings made by the Borrower with the SEC since October 2, 2015; provided,
however, that each of the foregoing shall include the financial statements
contained in or incorporated by reference into the respective Borrower SEC
Report.

 

“Business Day” means a day, other than Saturday, Sunday or other day on which
commercial banks in the city of New York, New York are authorized or required by
law to close.

 

“Closing Date” shall mean the date hereof.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commitment” means $5,000,000, as such amount may be reduced from time to time
pursuant to the terms hereof, and subject to termination upon the occurrence of
an Event of Default.

 

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“Common Stock” means the Common Stock, par value $.0001 per share, of the
Borrower.

 

“Conversion Price” has the meaning set forth in Section 2.3(b).

 

“Conversion Shares” has the meaning set forth in Section 2.3(b).

 

“Covenant Release Conditions” means that each of the following conditions shall
have occurred: (i) not less than three (3) years have elapsed since the Closing
Date; (ii) the Lender shall have made Advances to the Borrower aggregating the
full Commitment; (iii) no Event of Default shall have occurred and be continuing
and no event which with notice or lapse of time or both would constitute an
Event of Default shall have occurred and be continuing; (iv) Borrower’s trailing
twelve (12)-month EBITDA shall be not less than $5,000,000; and (v) no Material
Adverse Effect shall have occurred since the end of the Borrower’s most recently
completed fiscal year, or if less than three months since the end of the
Borrower’s most recently completed fiscal year, since the end of the Borrower’s
preceding fiscal year.

 

“Default Rate” means the rate equal to the Base Rate plus 2% per annum.

 

“Dollars” and “$” means such coin or currency of the United States of America as
is, at the relevant time, legal tender for the payment of public and private
debts.

 

“EBITDA” means the consolidated earnings of the Borrower and its Subsidiaries,
before interest, taxes, depreciation and amortization, measured on a trailing
twelve-month period from the date of measurement; provided, however, that there
shall be excluded from the calculation of EBITDA for such trailing twelve month
period, capital expenditures, classified as such in accordance with GAAP and
accounting principles adopted by the Borrower, made by the Borrower during such
period; and provided further, that earnings, interest, taxes, depreciation and
amortization shall be measured in accordance with the accounting principles
consistently applied and used by the Borrower in the financial statements
included in the Borrower SEC Reports.

 

“EBITDA Target” means ($1,000,000)1.

 

“Euston House Financings” means those certain five (5) “Non Regulated Rental
Agreements” entered into between Learning Tree Limited and the lenders party
thereto, each as more particularly described in the Borrower SEC Reports.

 

“Event of Default” has the meaning set forth in Section 8.1.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and all
regulations thereunder as amended from time to time.

 

“Governmental Entity” means (i) any foreign, federal, state, provincial,
municipal or local government, court, tribunal, administrative agency or
department, (ii) any other governmental, government appointed or regulatory
authority or (iii) any quasi-governmental authority exercising any regulatory,
expropriation or taxing authority that has the force of law under or for the
account of any of the above.

 

 

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1 To be read as negative $1,000,000.

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“Indebtedness” means, as of any determination date, without duplication, the
aggregate of the following: (i) any and all obligations of the Borrower or any
Subsidiary for borrowed money, (ii) any and all obligations of the Borrower or
any Subsidiary evidenced by bonds, indentures, notes, loan agreements or other
similar instruments, (iii) any and all reimbursement obligations of the Borrower
or any Subsidiary arising under: (x) letters of credit, bankers’ acceptances and
bank guaranties and (y) surety bonds, performance bonds and similar instruments
created for the account thereof, (iv) any and all obligations under credit cards
or credit card purchase programs for the account of the Borrower or any
Subsidiary, (v) any and all obligations of the Borrower or any Subsidiary under
any capitalized lease (the amount thereof being that appearing on the financial
statements contained in the Borrower SEC Reports) of the type required to be
capitalized in accordance with GAAP, (vi) any unfunded employer obligation of
the Borrower in connection with employee benefit plans intended to include a
Code Section 401(k) cash or deferred arrangement, including the employer’s share
of all Taxes due with respect to such obligations, (vii) any deferred
compensation for employees of the Borrower or any Subsidiary, including any
unpaid but earned bonuses, including the employer’s portion of any payroll Taxes
imposed on the employer with respect to such compensation, (viii) without
duplication of items described in any other clause of this definition, any and
all deferred, contingent change-of-control or earn-out payments in connection
with acquisitions or other transactions entered into by the Borrower or any
Subsidiary, including the employer’s portion of any payroll Taxes due with
respect to such compensation, (ix) any and all obligations of Borrower or any
Subsidiary issued or assumed as the deferred purchase price of property or
services purchased by Borrower or any Subsidiary (other than trade debt incurred
in the ordinary course of business), and earn-outs and other contingent payments
in respect of the acquisitions entered into by Borrower or any Subsidiary until
such liability on account of any such earn-out or contingent payment becomes
fixed and determinable), (x) the net obligations of the Borrower or any
Subsidiary with respect to any interest rate, currency, commodities or similar
financial swap or hedge agreement of Borrower or any Subsidiary (such net
obligation amount being determined at the close out termination value or
marked-to-market value, as applicable, as of such date), (xi) all obligations of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by the Borrower or
any Subsidiary, whether or not the obligations secured thereby have been
assumed, and (xii) all guarantees of the Borrower or Subsidiary of any of the
foregoing.

 

“Knowledge” means, with respect to an entity, the actual knowledge of any of the
directors, the President, the CEO, the COO, the CFO, a partner or the trustee,
as applicable, of such entity, after taking into account any knowledge such
Person reasonably would have obtained after due inquiry.

 

“Liability” means any direct or indirect liability, Indebtedness, claim, loss,
damage, deficiency, obligation, penalty, responsibility, cost or expense, fixed
or unfixed, choate or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, known or unknown, contingent or otherwise.

 

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“Lien” means, with respect to any asset, any mortgage, lien, equity, pledge,
charge, security interest, conditional sales contract or encumbrance of any kind
in respect of such asset.

 

“Loan” means the aggregate Advances outstanding under the Note and this
Agreement from time to time.

 

“Loan Documents” means this Agreement, the Note, each Notice of Advance, and any
other document, agreement, consent or instrument (excluding the Purchase
Agreement) required to be executed by Borrower pursuant to this Agreement, all
as may be extended, amended and/or modified from time to time.

 

“Material Adverse Effect” means any change, effect, event, circumstance or
development that, individually or when taken together with all other such
similar or related changes, effects, events, circumstances or developments has
had, or would reasonably be expected to have, a material adverse effect on (i)
the business, assets (whether tangible or intangible), Liabilities, condition
(financial or otherwise), results of operations or prospects of the Borrower and
its Subsidiaries, taken as a whole, or (ii) the ability of the Borrower to
perform its obligations pursuant to this Agreement and the other Loan Documents
and to consummate the transactions contemplated hereby and thereby, excluding,
in each case the impact of any changes, effects, events, circumstances or
developments arising from: (A) general economic, capital or financial markets or
industry conditions (including changes in interest rates); (B) conditions
generally affecting any of the industries in which the Borrower and its
Subsidiaries operate; (C) acts of God, natural disasters, calamities, national
or international political or social conditions, including the engagement by any
country in hostility (whether commenced before, on or after the date hereof, and
whether or not pursuant to the declaration of a national emergency or war), or
the occurrence of a military or terrorist attack; (D) changes in Applicable Laws
or GAAP (or, in each case, any interpretation thereof) or in any regulatory,
political, economic or business conditions generally after the date hereof; (E)
any failure of the Borrower to meet any financial or non-financial projections,
forecasts or estimates (it being understood that the underlying facts and
circumstances giving rise to such failure that are not otherwise excluded from
the definition of Material Adverse Effect may be taken into account in
determining whether such underlying facts and circumstances had, or would
reasonably be expected to have, a Material Adverse Effect); (F) the execution or
announcement of this Agreement, the Securities Purchase Agreement or the
transactions contemplated hereby or thereby; (G) compliance by Borrower and its
Subsidiaries with the express terms of this Agreement; or (H) actions taken or
omitted to be taken at the written request or with the written consent of the
Lender; provided, however, that any event or occurrence listed in clauses (A)
and/or (D) that materially impacts the Borrower and its Subsidiaries in a manner
materially disproportionate to the impact on other companies in the industry in
which the Borrower and its Subsidiaries operate will not be excluded.

 

“Maturity Date” means June 29, 2028, or such earlier date on which the Maturity
Date is accelerated pursuant to the provisions of Section 8.2 hereof.

 

“Note” means the convertible promissory note executed and delivered by the
Borrower in substantially the form of Exhibit A.

 

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“Notice of Advance” means the written notice of advance in substantially the
form of Exhibit B.

 

“Notice of Conversion” means the written notice of conversion of all or a
portion of the outstanding balance of the Loan into Conversion Shares, in
substantially the form of Exhibit C.

 

“Order” means any decree, order, judgment, writ, award, injunction, rule or
consent of or by a Governmental Entity.

 

“Permitted Liens” means any Lien permitted by Section 6.2.

 

“Person” means an individual, a corporation, a partnership, a limited liability
company, an association, a trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

 

“Pledge Agreements” means (i) that certain Pledge Agreement, dated as of June
30, 2015, between the Borrower and HSBC Bank USA; (ii) that certain Security
Over Cash, Credit Balances and Deposit Instruments by Customer, dated as of
September 19, 2016, between Borrower and HSBC Bank Canada; (iii) that certain
Facility Letter, dated as of September 19, 2016, between Borrower and HSBC Bank
Canada; and (iv) that certain undated Security Over Cash Deposits – Direct,
between Learning Tree International Limited and HSBC Bank plc.

 

“Purchase Agreement” means the Securities Purchase Agreement, dated as of June
__, 2018, by and among Dr. David C. Collins And Mary C. Collins, The David C.
Collins 1997 Trust, The Mary C. Collins 1997 Trust, DCMA Holdings, L.P., The
Adventures In Learning Foundation, The Collins Family Foundation, The Collins
Family Trust, The Collins Charitable Remainder Unitrust No. 97-1, collectively,
as the Sellers; the Borrower; and the Lender, as Buyer.

 

“SEC” means the Securities and Exchange Commission of the United States.

 

“Securities” has the meaning set forth in Section 4.8.

 

“Securities Act” means the Securities Act of 1933, as amended, and all
regulations thereunder as amended from time to time.

 

“Subsidiary” means a corporation, partnership, trust, limited liability company
or other entity in which a Person, directly or indirectly, owns stock or other
ownership interests representing (i) more than 50% of the voting power of all
outstanding capital stock or equity ownership of such entity or (ii) the right
to receive more than 50% of the net assets of such entity available for
distribution to the holders of capital stock or equity ownership upon a
liquidation or dissolution of such entity.

 

“Tax” or “Taxes” means any tax of any kind whatsoever including any net income,
corporate, capital gains, capital acquisitions, inheritance, gift, alternative
minimum, add-on minimum, gross income, gross receipts, sales, use, ad valorem,
transfer, registration, franchise, profits, license, withholding, estimated,
payroll, employment, social security (or similar), unemployment, disability,
excise, severance, stamp, customs duty, occupation, premium, property,
environmental, value added or windfall profit tax, or any other tax, together
with any interest or any penalty, addition to tax or additional amount imposed
by any Governmental Entity responsible for the imposition of any such item
(domestic or foreign).

 

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“Tax Return” means any return, statement, report or form (including information
returns and reports) filed or required to be filed with a Governmental Entity
(in each case) with respect to Taxes.

 

“Termination Date” means one (1) month prior to the Maturity Date.

 

1.2     Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting principles
consistently applied (“GAAP”), as it applies to an accrual basis of accounting,
as in effect from time to time as satisfactory to the Lender in its reasonable
discretion, except as otherwise specifically provided herein.

 

1.3     General Construction. In this Agreement in the computation of periods of
time from a specified date to a later specified date, the word “from” means
“from and including” and the words “to” and “until” each means “to but
excluding.” The term “hereof”, “hereby”, “hereto”, “hereunder” and similar terms
mean this Agreement, the term “heretofore” means before, and the term
“hereafter” means after, the effective date hereof.

 

1.4     Schedules. In connection with future Advances pursuant to this
Agreement, Borrower shall have the option to provide Lender with updates to the
Schedules to this Agreement; provided, that, Lender, in its discretion, may
consider whether the facts disclosed in the updated information evidence a
breach of the representations and warranties being made or deemed made pursuant
to this Agreement as of the date of this Agreement or as of the date of such
Advance.

 

Article 2

The Loan

 

2.1     The Advances; the Commitment.

 

(a)     Subject to the terms and conditions set forth in this Agreement, the
Lender agrees to make Advances to the Borrower, pursuant to the Notice of
Advance, from time to time on any Business Day during the period from the
Closing Date until the Termination Date with the aggregate amount of Advances
made not to exceed the Commitment. Advances may only be made on the first
Business Day of the Borrower’s fiscal quarter, and shall be requested in writing
by the Borrower pursuant to a Notice of Advance, delivered not less than two (2)
Business Days prior to the date of the requested Advance. Subject to the
satisfaction of all conditions to the making of any Advance set forth in Section
7.2, and the availability of the Commitment as reduced by any Advances
previously made to the Borrower hereunder, the Lender shall fund an Advance on
the date of funding by wire transfer of the amount of the Advance to the account
of the Borrower as set forth in the Notice of Advance. Each Advance shall be in
a minimum principal amount of $250,000 and may be in multiples thereof, not to
exceed $1,000,000 per Advance. Notwithstanding the foregoing, on the initial
Closing under this Agreement, the Borrower may request an Advance of up to
$2,000,000.

 

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(b)     The maximum aggregate amount of all Advances made shall not exceed the
Commitment. No Advances may be made after the Termination Date. Each Advance
shall permanently reduce the Commitment, and once repaid, the amount of an
Advance may not be reborrowed.

 

2.2     Interest Rate.

 

(a)     With respect to each Advance hereunder, the Borrow shall pay to the
Lender, on a quarterly basis, in arrears, interest on the outstanding principal
amount from the date of each such Advance at a rate per annum equal to the Base
Rate. Interest shall be payable on the last day of each fiscal quarter of the
Borrower, on each date that principal payments are paid, and on the Maturity
Date.

 

(b)     Upon the occurrence and during the continuance of an Event of Default,
the entire outstanding amount of the Loan shall bear interest from and after the
date on which such Event of Default occurred, and the Borrower shall pay such
interest at the Default Rate on demand, or if no demand is made, in accordance
with Section 2.2(a) above, until such time as (i) the entire principal amount of
the Loan, or so much thereof as may be then outstanding under this Agreement and
the Note, together with all accrued interest thereon, and all charges, amounts
and other sums evidenced by this Agreement and the Note and the other Loan
Documents shall have been paid to the Lender, or (ii) the Event of Default has
been cured by Borrower to the satisfaction of Lender or waived by Lender (in the
Lender’s sole discretion), whichever is earlier. Upon the cure or waiver of an
Event of Default, the interest rate hereunder shall be as set forth in Section
2.2(a).

 

(c)     Notwithstanding anything set forth herein to the contrary, in no event
shall the total amount of all charges payable under this Agreement or under any
of the Loan Documents which are or would, under Applicable Law, be held to be in
the nature of interest exceed the maximum rate permitted to be charged under
applicable law. Should the Lender receive any payment which is or would be in
excess of that maximum rate permitted to be charged under any such applicable
law, such payment shall have been, and shall be deemed to have been, made in
error, and, at the option of the Lender, shall be applied against any of the
obligations evidenced and/or secured by the Loan Documents or returned to the
Borrower.

 

2.3     The Note.

 

(a)     The Loan shall be evidenced by the Note executed and delivered by the
Borrower in the maximum amount of the Commitment. The Lender shall, and the
Borrower hereby irrevocably authorizes the Lender to, endorse on a schedule
forming a part of the Note, appropriate notations evidencing (i) the date and
amount of each Advance and each payment of principal with respect to the Loan,
and (ii) the date and amount of the outstanding principal amount, or portion
thereof, of the Loan converted into Conversion Shares in accordance with this
Agreement and the Note; provided, however, that, the failure by the Lender to
make any such endorsements or notations shall not affect any obligations of the
Borrower under this Agreement and the Note.

 

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(b)     The principal amount of the outstanding Loan shall be convertible in
whole or in part (in a minimum amount of $100,000), at the option of the Lender
in its sole discretion at any time prior to the Maturity Date, into shares of
Common Stock (“Conversion Shares”) initially at a price per share of $1.00,
subject to downward adjustment pursuant to Section 6.6 ( the “Conversion
Price”), and otherwise in accordance with the terms of the Note. No fractional
Conversion Shares shall be issued, and any amounts that would otherwise result
in a fractional share being issued shall be paid in cash to the Lender. At the
time of conversion of all or a portion of the principal amount of the Note, all
outstanding accrued interest on the principal amount being converted shall be
paid in cash to the Lender.

 

(c)     As promptly as practicable after receipt of a Notice of Conversion that
provides for the conversion of the Note into Conversion Shares, the Borrower
will issue and deliver to the Lender a certificate or certificates evidencing
the Conversion Shares (if certificated), or if the Conversion Shares are not
certificated, will deliver evidence that such shares have been issued in
book-entry form on the Borrower’s share register reflecting the Conversion
Shares held by the Lender.

 

(d)     The Note and the certificates evidencing the Conversion Shares shall
bear the following legend (unless such securities shall be registered under the
Securities Act):

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR UPON RECEIPT BY THE COMPANY OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
UNDER THE ACT.

 

2.4      Maturity Date. The Loan shall be due and payable by the Borrower to the
Lender on the Maturity Date, subject to acceleration as permitted hereunder.

 

2.5     Prepayment. The Borrower shall have the right to voluntarily prepay any
amount hereunder in whole or in part (but if in part, in minimum amounts of
$100,000), upon at least three (3) Business Days’ prior written notice to the
Lender, with accrued interest to the date of such prepayment on the amount
prepaid, without premium or penalty. Amounts repaid or prepaid may not be
reborrowed.

 

2.6     Taxes. Any and all payments by the Borrower hereunder, under the Note or
under any other Loan Document shall be made, in accordance with this Agreement,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings imposed by the United
States or any State thereof (including any political subdivision or taxing
authority thereof), to the extent such items are in the nature of taxes, and all
liabilities with respect thereto (all such imposts, deductions, charges or
withholdings and liabilities with respect thereto being hereinafter referred to
as “Taxes”); provided that, Taxes shall not include taxes imposed on the
Lender’s income by the United States or any state thereof (including any
political subdivision or taxing authority thereof). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder, under the Note or under any other Loan Document to the Lender,
(i) the sum payable under this Agreement shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this provision) the Lender receives an amount
equal to the sum it would have received had no such deductions been made, and
(ii) the Borrower shall pay the full amount deducted to the relevant taxation
authority in accordance with applicable law and such amount paid to the relevant
taxing authority (together with the amount paid to Lender) shall be credited
toward the increased amount to be paid under clause (i) above.

 

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2.7     Payments and Computations. Payments of principal and payments of
interest and any other charges under this Agreement, the Note or any other Loan
Document are to be made by the Borrower to the Lender, in Dollars, in
immediately available funds by 3:00 P.M. Eastern time on the date such payment
is due. If any payment would otherwise be due on a day which is not a Business
Day, then such payment shall be due on the next succeeding Business Day, and
interest shall accrue up to but not including such Business Day. Interest shall
be computed on the basis of a year of 360 days and paid for the actual number of
days elapsed, from and including the first day hereof. All payments made by the
Borrower hereunder, under the Note or under any other Loan Document for any
reason will be made, in accordance with this Agreement, free and clear of and
without deduction for, any set off, counterclaim or defenses. Except for notice
and grace periods specifically provided for herein, presentment for payment,
notice of dishonor, protest and notice of protest are hereby waived. The receipt
by the Lender of payments of interest or principal hereunder or any other sums
due hereunder with knowledge on the part of the Lender of the existence of a
default hereunder shall not be deemed a waiver of such default. No payment by
the Borrower or receipt by the Lender of less than the full amount of interest,
principal and/or the other sums due hereunder shall be deemed to be other than
on account of all such interest, principal and other sums and (except as
expressly set forth herein to the contrary) shall be applied as promptly as
practicable against such interest, principal and/or other sums in such order as
the Lender shall choose in its sole and absolute discretion.

 

2.8     Ranking of Loan. The obligations of the Borrower hereunder and under the
Note are unsecured obligations of the Borrower which shall rank pari passu with
all other unsecured obligations of the Borrower.

 

Article 3

Representations and Warranties OF BORROWER

 

The Borrower represents and warrants to the Lender as follows:

 

3.1     Organization and Standing. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as presently
conducted and as proposed to be conducted by it, to enter into and perform this
Agreement, the other Loan Documents to which it is a party and all other
agreements required to be executed by the Borrower at or prior to the Closing,
and to consummate the transactions contemplated hereby and thereby. The Borrower
is qualified to do business as a foreign corporation and is in good standing in
each of the jurisdictions in which the failure to so qualify would have a
Material Adverse Effect.

 

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3.2     Authority for Agreement; No Conflict. The execution, delivery and
performance by the Borrower of this Agreement and the other Loan Documents and
the consummation by the Borrower of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action. This
Agreement has been, and the other Loan Documents when executed will be, duly
executed and delivered by the Borrower and constitute valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws affecting
creditors’ rights and remedies generally, to general principles of equity
(including principles of commercial reasonableness, good faith and fair
dealing), regardless of whether enforcement is sought in a proceeding at law or
in equity. The execution, delivery and performance of this Agreement and the
other Loan Documents to which the Borrower is a party will not (a) conflict with
or violate any provision of the certificate of incorporation, by-laws and other
organizational documents of the Borrower, (b) conflict with, result in a breach
of, constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of obligations under, create in any party the
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
Indebtedness, Lien or other arrangement to which the Borrower is a party or by
which the Borrower is bound or to which its assets are subject, in a manner that
would or would reasonably be expected to result in a Material Adverse Effect,
(c) result in the imposition of any Lien upon any assets of the Borrower or (d)
violate any Applicable Laws or any Order to which the Borrower or its assets is
subject in a manner that would reasonably be expected to constitute a Material
Adverse Effect.

 

3.3     Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
Governmental Entity is required on the part of the Borrower in connection with
the execution, delivery and performance of this Agreement and the other Loan
Documents, except such filings as shall have been made prior to and shall be
effective on and as of the Closing and such filings required to be made after
the Closing under applicable federal and state securities laws

 

3.4     Litigation. There is no Action pending, or to the Borrower’s Knowledge,
threatened in writing to be brought, against the Borrower, which questions the
validity of this Agreement. Except as set forth in the Borrower SEC Reports,
there is no Action required to be disclosed in the Borrower SEC Reports as of
the date of such filing which have not been disclosed. Except as set forth on
Schedule 3.4, to the Borrower’s Knowledge, there is no Action pending, or
threatened in writing to be brought, against the Borrower or any Subsidiary
which would or would reasonably be expected to result, either individually or in
the aggregate, in a Material Adverse Effect. Neither the Borrower nor any
Subsidiary is subject to any Order which would or would reasonably be expected
to result, either individually or in the aggregate, in a Material Adverse Effect
for the Borrower. Except as set forth on Schedule 3.4, there is no Action
pending against the Borrower or any Subsidiary, and no Borrower or Subsidiary
has received any written threat of an Action that would not be covered by
insurance against the Borrower or any Subsidiary, in each case by reason of the
past employment relationships of any of the employees or independent contractors
of the Borrower or any Subsidiary.

 

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3.5     Borrower SEC Reports. The Borrower is current in the filing with the SEC
of the periodic and current reports required pursuant to the Exchange Act. As of
the date of this Agreement, the Borrower has filed or furnished to, as
applicable, with the SEC through May 31, 2018, all forms, reports, schedules,
registration statements, proxy statements, certifications and other documents
required to be filed or furnished by the Borrower with the SEC since October 2,
2015. As of their respective dates or if amended or superseded by a subsequent
filing prior to the date hereof, as of the date of the last such amendment or
superseding filing (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of the relevant
meetings, respectively), (a) the Borrower SEC Reports complied as to form in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, as applicable to such Borrower SEC Reports, and (b)
none of the Borrower SEC Reports contained, at the time such Borrower SEC Report
was filed, or if amended or superseded by a subsequent filing prior to the date
hereof, as of the date of the last such amendment or superseded filing, and, in
the case of any proxy statement, at the date mailed to the stockholders (as
supplemented or amended, as the case may be) and at the date of the meeting, any
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.

 

3.6     Absence of Undisclosed Liabilities. Neither the Borrower nor any
Subsidiary thereof has any Liability required to be disclosed in the Borrower
SEC Reports (including the financial statements included or incorporated by
reference therein) which has not been so disclosed. Except as set forth in
Schedule 3.6, all Liabilities of the Borrower and its Subsidiaries have been
incurred in connection with the ordinary course of business and, would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

 

3.7     Taxes. The amount shown in the Borrower SEC Reports as a provision for
Taxes is sufficient in all material respects for the payment of all unpaid Taxes
for all periods ending on or before the date thereof. The Borrower has timely
filed or obtained presently effective extensions with respect to all material
Tax Returns that are or were required to be filed by it, such Tax Returns are
complete and accurate in all material respects and all Taxes shown thereon to be
due and owing have been timely paid. All material Taxes that the Borrower is or
was required by law to have withheld or collected have been duly withheld or
collected and, to the extent required, have been timely paid to the proper
Governmental Entity. Except as set forth on Schedule 3.7, there is no audit or
controversy with respect to Taxes that is pending or, to the Borrower’s
Knowledge, threatened in writing.

 

3.8     No Defaults. No event has occurred or failed to occur and no condition
exists which, upon the execution and delivery of this Agreement and the other
Loan Documents, would constitute an Event of Default or would, with the giving
of notice or the lapse of time, or both, constitute an Event of Default. None of
the Borrower nor any Subsidiary thereof (a) is in payment default under any
outstanding material Indebtedness, or (b) is in default under any covenant, or
other non-monetary agreement or obligation contained in any Indebtedness,
agreements or other instruments to which it is a party which covenant default
would reasonably be expected to result in a Material Adverse Effect.

 

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3.9     Use of Loan. None of the Borrower or its Subsidiaries is engaged
principally, or as of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U and X of the Board of Governors of the Federal Reserve
System) and no part of the proceeds of the Loan have been used to acquire any
margin stock. The proceeds of the Loan will be used to provide working capital
for the Borrower and its Subsidiaries.

 

3.10     Approvals and Consents. All consents, licenses, approvals and
authorizations of, and registrations, declarations and other filings with, any
governmental agency, official or authority which the Borrower is required to
obtain in connection with the execution, delivery, performance or validity of,
or payment under, this Agreement and the other Loan Documents have been duly
obtained and are in full force and effect other than filings required pursuant
to the Securities Act and other applicable securities laws and regulations.

 

3.11     Liens. The Borrower and its Subsidiaries have good and marketable title
to its material assets, free and clear of all Liens (other than Permitted Liens)
or as otherwise set forth in the Borrower SEC Reports. Except for Permitted
Liens, no Indebtedness of the Borrower or any Subsidiary is secured by or
otherwise benefits from any Lien on or with respect to the whole or any material
part of the assets of the Borrower, except as otherwise set forth in the
Borrower SEC Reports.

 

3.12     Foreign Corrupt Practices Act. Except as set forth in Schedule 3.12, to
Borrower’s Knowledge, none of the Borrower, any Subsidiary thereof or any of
their respective officers or employees have, directly or indirectly, made,
offered, promised or authorized any payment or gift of any money or anything of
value to or for the benefit of any “foreign official” (as such term is defined
in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”)),
foreign political party or official thereof or candidate for foreign political
office for the purpose of (a) influencing any official act or decision of such
official, party or candidate, (b) inducing such official, party or candidate to
use his, her or its influence to affect any act or decision of a foreign
governmental authority, or (c) securing any improper advantage, in the case of
(a), (b) and (c) above in order to assist the Borrower or any of its Affiliates
in obtaining or retaining business for or with, or directing business to, any
person. None of the Borrower, any Subsidiary or any of their respective officers
or employees have made or authorized any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment of funds or received or retained any
funds in violation of any law, rule or regulation. To Borrower’s Knowledge, none
of the Borrower, any Subsidiary or any of their respective Affiliates, or to the
Borrower’s Knowledge, any of their respective officers, directors or employees
are the subject of any allegation, voluntary disclosure, investigation,
prosecution or other enforcement action related to the FCPA or any other
anti-corruption law.

 

3.13     Compliance. Since October 2, 2015, each of the Borrower and its
Subsidiaries has, in all material respects, complied with all laws, regulations
and orders applicable to its business as currently conducted or proposed to be
conducted, and has all material permits and licenses required thereby, where
lack of such compliance or absence of such permits and licenses has or would
reasonably be expected to result in a Material Adverse Effect.

 

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3.14     Investment Company. The Borrower is not an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

 

3.15     Full Disclosure. Except as set forth in Schedule 3.15, there is no fact
which the Borrower has not disclosed in writing to the Lender (including
financial statements and Tax Returns furnished to the Lender) which has resulted
in or would reasonably be expected to result in a Material Adverse Effect, or
which has or would materially affect the ability of the Borrower to perform this
Agreement, the other Loan Documents, or to pay when due its obligations under
this Loan Agreement or the other Loan Documents when due pursuant to this
Agreement.

 

 

 

Article 4

Representations and Warranties OF the Lender

 

The Lender represents and warrants to the Borrower as follows:

 

4.1     Legal Capacity. The Lender is a trust created under the law of the State
of Utah, and has all necessary power and authority to execute, deliver and
perform this Agreement.

 

4.2     Authority; Enforceability.

 

(a)     The Lender has been duly formed and the Lender and the trustee (on
behalf of the Lender) each have full power and authority to execute and deliver
this Agreement and the other Loan Documents to which the Lender is a party and
to consummate the transactions contemplated hereby and thereby.

 

(b)     This Agreement and each other Loan Document to which the Lender is a
party have been or will be duly executed and delivered by the Lender, and
constitute the legal, valid, and binding obligations of the Lender, enforceable
against the Lender in accordance with its respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors’ rights and remedies
generally, to general principles of equity (including principles of commercial
reasonableness, good faith and fair dealing), regardless of whether enforcement
is sought in a proceeding at law or in equity.

 

4.3     Consents. The execution and delivery of this Agreement and the other
Loan Documents to which the Lender is a party and the consummation of the
transactions contemplated hereby and thereby will not (a) conflict with, result
in a breach of, constitute (with or without due notice or lapse of time or both)
a default under, result in the acceleration of obligations under, create in any
party the right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Lien or other arrangement to which the Lender
is a party or by which the Lender is bound or to which the Lender’s assets are
subject, (b) result in the imposition of any Lien upon any assets of the Lender
or (c) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Lender, except, in each case, to the extent such conflict,
breach, default, acceleration, termination, modification, cancellation, notice,
waiver, Lien or violation would not, individually or in the aggregate, prevent,
materially alter or materially delay the transactions contemplated by this
Agreement.

 

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4.4     Governmental Filings and Consents. No consent of any Governmental Entity
is required on the part of the Lender in connection with the execution and
delivery of this Agreement or any of the Loan Documents or the consummation of
the transactions contemplated hereby or thereby, except for (a) such consents,
authorizations, filings, approvals, notices and registrations which, if not
obtained or made, would not prevent, materially alter or materially delay the
consummation of the transactions contemplated by this Agreement, and (b) filings
to be made under the Exchange Act promptly following consummation of the
transactions contemplated hereby.

 

4.5     Litigation. There is no Action pending, or to the Lender’s Knowledge
threatened in writing, against the Lender which questions the validity of this
Agreement, which impairs or limits the ability of the Lender to perform its
obligations under this Agreement, or which might, individually or in the
aggregate, prevent, materially alter or materially delay the ability of the
Lender to consummate the transactions contemplated hereby.

 

4.6     Funds. The Lender has, and will have on the date of each Advance,
sufficient funds to make such Advance in accordance with this Agreement.

 

4.7     Investment Experience. The Lender is (i) an “accredited investor” within
the meaning of Rule 501 of Regulation D promulgated under the Securities Act and
(ii) is able to bear the economic risk of its investment and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Securities. The Lender confirms
that the Securities will be acquired by the Lender for the Lender’s own account,
and not with a view to the resale or distribution of any part thereof, and that
the Lender has no current intention of selling, granting any participation in or
otherwise distributing the Securities. The Lender represents that the Lender has
not been organized solely for the purpose of acquiring the Securities. The
Lender acknowledges and agrees that (a) in making its decision to enter into
this Agreement and to consummate the transactions contemplated hereby, it has
relied solely upon its own investigation and the express representations and
warranties of the Borrower set forth in this Agreement and the other Loan
Documents, and (b) neither the Borrower nor its officers, directors, affiliates,
agents or representatives has made any representation or warranty with respect
to the business of the Borrower, except as expressly set forth in this Agreement
and the other Loan Documents.

 

4.8     Restricted Securities. The Lender understands that the Note and the
Conversion Shares (the “Securities”) have not been, and will not be, registered
under the Securities Act or any state securities laws, by reason of specific
exemptions under the provisions thereof which depend upon, among other things,
the bona fide nature of the investment intent and the accuracy of the Lender’s
representations as expressed herein. The Lender understands that the Securities
are “restricted securities” under U.S. federal and applicable state securities
laws and that, pursuant to these laws, the Lender must hold the Securities
indefinitely unless they are registered with the SEC and registered or qualified
by state authorities, or an exemption from such registration and qualification
requirements is available. The Lender understands that the Securities bear a
legend to the foregoing effect and that the Conversion Shares will continue to
bear a substantially similar legend. The Lender acknowledges that the Borrower
has no obligation to register or qualify the Securities for resale and further
acknowledges that, if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Borrower, which are outside of the Lender’s
control, and which the Borrower is under no obligation, and may not be able, to
satisfy.

 

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4.9     No General Solicitation. The Lender acknowledges that neither the
Borrower nor any other person offered to sell the Securities to it by means of
any form of general solicitation or advertising within the meaning of Rule 502
of Regulation D under the Securities Act or in any manner involving a public
offering within the meaning of Section 4(a)(2) of the Securities Act.

 

4.10     Residence. The Lender’s principal place of business is located in the
state identified in the address provided to the Borrower in writing as
contemplated on the signature page hereto.

 

4.11     No Bad Actor Status. The Lender is not, nor have any of the Lender’s
affiliates been, subject to any of the orders, judgments, decrees or other
conditions set forth in Rule 506(d) of Regulation D promulgated under the
Securities Act.

 

Article 5

Affirmative Covenants

 

In addition to the other undertakings contained in this Agreement, the Borrower
hereby covenants to the Lender that, until the principal amount of the Loan, all
interest thereon and all other amounts payable under this Agreement, the Note
and the other Loan Documents have been paid to the Lender in full or for so long
as the Commitment is outstanding, the Borrower shall perform the following
obligations:

 

5.1     Reports and Other Information.

 

(a)     The Borrower covenants and agrees that it (i) shall keep and maintain
complete and accurate books and records of its financial condition and
(ii) shall permit the Lender and any authorized representatives of the Lender to
have access to and to inspect, examine and make copies of the books and records,
any and all accounts, data and other documents of the Borrower, at all
reasonable times upon the giving of reasonable notice of such intent. The
Borrower shall also provide to the Lender such financial statements and other
documentation as the Lender may reasonably request from time to time, and with
such other information, in such detail as may reasonably be required by the
Lender.

 

(b)     The Lender shall have the right, at any time and from time to time upon
the occurrence and continuation of an Event of Default, to audit the books and
records of the Borrower and its Subsidiaries. In the event that the Lender
audits any such books and records, the Lender shall have the right, in its
reasonable discretion, to choose the auditor. The Borrower shall cooperate with
the Lender in connection with any such independent audit. The Borrower shall be
obligated to pay for the reasonable out-of-pocket cost of any such audit.

 

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(c)     The Borrower shall promptly notify the Lender of (i) the occurrence of
any Event of Default or event that with notice or lapse of time or both, shall
constitute an Event of Default, (ii) the occurrence of any event of default or
material breach of any agreement or covenant or the occurrence or non-occurrence
of any other event which, with the giving of notice or the lapse of time, or
both would constitute an event of default or breach under any other agreement to
which the Borrower or any Subsidiary is a party, which, individually or in the
aggregate, would or would be reasonably expected to result in a Material Adverse
Effect, (iii) the commencement, settlement or conclusion of any Action by or
against the Borrower or any Subsidiary, and (iv) any event which would or would
be reasonably expected to result in a Material Adverse Effect.

 

(d)     The Borrower shall provide to the Lender (i) promptly upon the filing
thereof with the SEC a copy of each Borrower SEC Report and each other filing by
the Borrower with the SEC, under the Securities Act, the Exchange Act or
otherwise, and (ii) promptly upon the sending thereof, notices and all
communications to the stockholders of the Borrower.

 

(e)     The Borrower shall also provide the Lender with such other information
relating to the Borrower and its Subsidiaries as the Lender may from time to
time reasonably request.

 

5.2     Ranking of Loan. The Loan and all other sums payable by the Borrower
hereunder shall be unsecured obligations of Borrower which rank pari passu with
all other unsecured Indebtedness of the Borrower.

 

5.3     Preservation, Taxes.. The Borrower shall (a) preserve and maintain its
legal existence, material rights, privileges and franchises and the legal
existence, material rights, privileges and franchises of each of its
Subsidiaries; (b) comply, and cause each of its Subsidiaries to comply, with all
Applicable Laws if failure to comply with such Applicable Laws, individually or
in the aggregate, would reasonably be expected to result in a Material Adverse
Effect; and (c) pay and discharge all material Taxes, except for any such Taxes
the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained.

 

5.4     Use of Proceeds. The Borrower will use the proceeds of the Loan solely
in compliance with all Applicable Laws, including without limitation,
Regulations U and X of the Board of Governors of the Federal Reserve System and
the Securities Act and the Exchange Act.

 

5.5     Financial Covenant. As of (a) the Closing Date, (b) the date of each
Advance and (c) the last day of each fiscal quarter of the Borrower, EBITDA
shall not be less than the EBITDA Target.

 

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Article 6

Negative Covenants

 

In addition to the other undertakings contained in this Agreement, the Borrower
hereby covenants to the Lender that, until the principal amount of the Loan, all
interest thereon and all other amounts payable under this Agreement, the Note
and the other Loan Documents have been paid to the Lender in full and the
Commitment has been terminated, without the prior written consent of Lender in
its sole discretion, the Borrower will not:

 

6.1     Indebtedness. Incur Indebtedness, or cause or permit any Subsidiary of
the Borrower to incur Indebtedness, except, without duplication, for:

 

(a)     Obligations under this Agreement, the Note and the other Loan Documents;

 

(b)     Indebtedness under to the Action Capital Line of Credit or any
replacement, substitution or refinancing thereof that is approved by the board
of directors of the Borrower up to the maximum amount of the lender’s commitment
thereunder as it exists on the date of this Agreement;

 

(c)     Indebtedness under the Euston House Financings;

 

(d)     Indebtedness arising in the ordinary course of business under any credit
card or credit card purchase program for the account of the Borrower or any
Subsidiary thereof not to exceed $300,000 in the aggregate for the Borrower and
all Subsidiaries at any time outstanding;

 

(e)     Other Indebtedness existing as of the date hereof disclosed in the
Borrower SEC Reports;

 

(f)     Indebtedness in respect of capitalized leases (and extensions, renewals
and replacements thereof);

 

(g)     Indebtedness secured by purchase money security interests permitted by
Section 6.2(m);

 

(h)     Indebtedness comprised of reimbursement obligations arising under or in
connection with (i) letters of credit, bankers’ acceptances and bank guaranties
including the Pledge Agreements and (ii) surety bonds, performance bonds and
similar instruments created for the account thereof, up to an aggregate maximum
amount for (i) and (ii) of $1,000,000 at any time outstanding;

 

(i)     Indebtedness arising as a direct result of Order(s) against the Borrower
or any Subsidiary thereof, in each case not constituting an Event of Default;

 

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(j)     Unsecured Indebtedness representing any Taxes to the extent such Taxes
are being contested by the Borrower or any Subsidiary in good faith by
appropriate proceedings and adequate reserves are being maintained in accordance
with GAAP;

 

(k)     Guaranties of Indebtedness of a Subsidiary permitted under this Section
6.1;

 

(l)     Indebtedness and other obligations under clauses (vi), (vii) and (viii)
of the definition of Indebtedness, in an aggregate amount not exceeding $500,000
at any time outstanding;

 

(m)     Intercompany Indebtedness between Borrower and its Subsidiaries or
between Subsidiaries consistent with past practices; and

 

(n)     If all of the Covenant Release Conditions shall be satisfied at the time
of the borrowing, additional unsecured Indebtedness in an aggregate amount not
exceeding $5,000,000 at any time outstanding which ranks pari passu with or
subordinate to the Loan.

 

6.2     Liens. Create or permit to exist any Lien on any of the real or personal
properties, assets or rights of whatsoever nature (whether now owned or
hereafter acquired) of the Borrower or any Subsidiary thereof, except, without
duplication, for:

 

(a)     Liens on the collateral held by Action Capital or any successor thereof
permitted under Section 6.1(b) with respect to the maximum permissible
Indebtedness under the Action Capital Line of Credit as of the date hereof;

 

(b)     Liens securing reimbursement obligations under the Pledge Agreements up
to a maximum amount of $1,000,000 at any time outstanding;

 

(c)     Liens securing the Euston House Financings up to a maximum amount of
£503,000 at any time outstanding;

 

(d)     Other Liens existing as of the date hereof disclosed in the Borrower SEC
Reports;

 

(e)     Liens for Taxes or other governmental charges not at the time delinquent
or thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves in accordance with GAAP; and

 

(f)     Liens arising in the ordinary course of business (such as (i) Liens of
carriers, warehousemen, mechanics and materialmen and other similar Liens
imposed by law, (ii) Liens incurred in connection with worker’s compensation,
unemployment compensation and other types of social security (excluding Liens
arising under ERISA), (iii) Liens in connection with surety bonds, bids,
performance bonds and similar obligations) for sums not overdue or being
contested in good faith by appropriate proceedings for which adequate reserves
are being maintained and (iv) Liens for security in connection with leaseholds
of the Borrower and classroom services agreements or other similar purposed
deposits.

 

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(g)     In the case of real properties, zoning, building, or other restrictions,
variances, covenants, rights of way, encumbrances, easements and other minor
irregularities in title, none of which, individually or in the aggregate,
interfere in any material respect with the present use of or occupancy of the
affected parcel by the Borrower;

 

(h)     Statutory Liens of landlords with respect to real properties that do not
singly or in the aggregate materially interfere with the use of property in the
ordinary course of business consistent with past practices;

 

(i)     Any interest or title of a lessor, licensor or sublessor under any
lease, license or sublease entered into by Borrower or any Subsidiary as lessor
in the ordinary course of business and covering only the assets so leased, or
subleased;

 

(j)     In the case of the Borrower Intellectual Property owned by the Borrower
or any Subsidiary, exclusive and non-exclusive license agreements entered into
by Borrower or any Subsidiary as licensor in the ordinary course of business
consistent with past practices, pursuant to the sale of Borrower or any
Subsidiary products or services to client of the Borrower or any Subsidiary;

 

(k)     Exclusive and non-exclusive licenses of patents, trademarks, copyrights,
and other intellectual property rights entered into by the Borrower or its
Subsidiaries as licensee in the ordinary course of business consistent with past
practices;

 

(l)     Liens securing Indebtedness in respect of capitalized leases (and
extensions, renewals and replacements thereof);

 

(m)     Liens that constitute purchase money security interests on any property
securing debt incurred for the purpose of financing all or any part of the cost
of acquiring only such property; and

 

(n)     Other Liens securing Orders for the payment of money not constituting an
Event of Default.

 

6.3     Mergers, Consolidations, Sales. Not, and not permit any Subsidiary to:

 

(a)     merge or consolidate, or purchase or otherwise acquire all or
substantially all of the assets or any capital securities of any class of, or
any partnership or joint venture interest in, any other Person or business; or

 

(b)     sell, transfer, convey or lease all or any substantial part of its
assets or capital securities (including the sale of capital securities of any
Subsidiary) except for sales of inventory or provision of services in the
ordinary course of business;

 

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provided, however, the restrictions set forth in paragraphs (a) and (b) shall
not apply to: (i) any such merger, consolidation, sale, transfer, conveyance,
lease or assignment of or by any Subsidiary into the Borrower or into any other
Subsidiary; (ii) any purchase or other acquisition by the Borrower or any
Subsidiary of the assets or capital securities of any other Subsidiary; (iii)
liquidation of any Subsidiary resulting in the distribution of the asset thereof
to another Subsidiary or the Borrower; or (iv) sales and dispositions of assets
between the Borrower and any Subsidiary or between Subsidiaries in accordance
with the accounting policies of the Borrower and Subsidiaries.

 

6.4     Modification of Organizational Documents. Not permit the charter,
by-laws or other organizational documents of the Borrower or any Subsidiary to
be amended or modified in any way in a manner that is adverse to the Lender.

 

6.5     Transactions with Affiliates. Other than transactions consistent with
past practices in the ordinary course of business, or otherwise permitted
hereunder not, and not permit any Subsidiary to (a) pay any management fees to,
(b) redeem any securities of, or (c) enter into, or cause, suffer or permit to
exist any transaction, arrangement or contract with any Affiliate which is on
terms which are less favorable than are obtainable from any Person which is not
an Affiliate of the Borrower; provided, the foregoing shall not prohibit: (x)
any Subsidiary paying management fee to the Borrower for services rendered and
(y) intercompany transfer pricing between the Borrower and its Subsidiaries in
the ordinary course of business consistent with past practices.

 

6.6     Sale of Equity Securities. If the Borrower shall issue or sell any
shares of its Common Stock without consideration or for a consideration per
share less than the Conversion Price in effect immediately prior to the time of
such issuance or sale (any such issuance or sale herein referred to as a
“Dilutive Issuance”), then, forthwith upon such Dilutive Issuance, the
Conversion Price shall be reduced automatically to the price determined by
dividing:

 

(a)     an amount equal to the sum of (i) the total number of shares of Common
Stock outstanding immediately prior to such issuance or sale (including as
outstanding all shares of Common Stock issuable upon conversion of the
outstanding Loan at the existing Conversion Price) multiplied by the existing
Conversion Price in effect immediately prior to such issuance or sale, plus (ii)
the consideration, if any, received by the Corporation upon such issuance or
sale of additional securities, by

 

(b)     the total number of shares of Common Stock outstanding immediately after
such issuance or sale (including as outstanding all shares of Common Stock
issuable upon conversion of the outstanding Loan at the existing Conversion
Price).

 

(c)     Notwithstanding the foregoing, no adjustment of the Conversion Price
shall be made (x) in respect of any options (both qualified and non-qualified),
restricted stock grants or other securities issued pursuant to the Borrower’s
2018 Equity Incentive Plan (as it may be amended or any successor equity
incentive plan that is approved by the Board and the Borrower’s stockholders) or
any non-qualified stock options granted by the Board, (y) the exercise of any
outstanding options or options granted hereafter pursuant to the Borrower’s 2007
Equity Incentive Plan or the 2018 Equity Incentive Plan (as it may be amended or
any successor equity incentive plan that is approved by the Board and the
Borrower’s stockholders) or any non-qualified stock options granted by the
Board, or (z) the sale of any equity securities of the Borrower or securities
convertible into equity securities of the Borrower pursuant to a public offering
registered under the Securities Act.

 

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Article 7

Conditions Precedent

 

7.1     Conditions Precedent to Closing. The effectiveness of the Lender’s
Commitment, and if requested by the Borrower, to make the initial Advance on the
Closing Date, is subject to the fulfillment, as determined in the sole
discretion of the Lender, of the following conditions precedent on or prior to
the Closing Date:

 

(a)     Representations and Warranties True. The representations and warranties
of the Borrower contained in this Agreement and in all certificates, documents
and instruments delivered pursuant to this Agreement and the other Loan
Documents shall be true and correct in all material respects as of the date made
or deemed made;

 

(b)     Performance and Compliance. The Borrower shall have performed and
complied with all agreements and conditions in this Agreement which are required
to be performed or complied with by the Borrower on or prior to the Closing
Date;

 

(c)     No Event of Default. No Event of Default, or event which with notice or
lapse of time or both would become an Event of Default, shall have occurred and
be continuing;

 

(d)     Loan Documents and other Documents. The Lender shall have received duly
executed original copies of the following documents:

 

(i)     this Agreement;

 

(ii)     the Note; and

 

(iii)     such other documents, approvals, certificates or instruments as are
reasonably requested by the Lender.

 

(e)     Purchase Agreement Closing. The transactions contemplated by the
Purchase Agreement shall have been consummated.

 

(f)     No Material Adverse Effect. Since December 31, 2017, no Material Adverse
Effect shall have occurred with respect to the Borrower;

 

(g)     Secretary’s Certificate. The Borrower shall deliver a certificate of the
Secretary of the Borrower as to (i) the Certificate of Incorporation of the
Borrower, as amended, and the By-Laws of the Borrower, as amended, (ii) the
incumbency and signatures of the executive officers executing the Loan
Documents, and (iii) resolutions adopted by the Board of Directors of the
Borrower approving the transactions contemplated by this Agreement,

 

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(h)     Other Approvals. All of the Loan Documents shall be satisfactory in form
and substance to the Lender.

 

7.2     Conditions Precedent to Each Advance.

 

The obligation of the Lender to provide any Advance is subject to the
fulfillment, as determined by the Lender, of the following conditions precedent
on or prior to the making of such Advance:

 

(a)     the representations and warranties of the Borrower contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects, before and after giving effect to the proposed Advance, as though made
on and as of such date;

 

(b)     no event has occurred and is continuing, or would result from such
proposed Advance or from the application of the proceeds therefrom, which
constitutes an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both;

 

(c)     before and after giving effect to the proposed Advance and to the
application of the proceeds therefrom, the aggregate unpaid principal amount of
all Advances outstanding from all Borrowers does not exceed the Commitment;

 

(d)     as of the date of the Advance and after giving effect to the Advance,
the Borrower shall be in compliance with the financial covenant set forth in
Section 5.5;

 

(e)     the Borrower shall have delivered to the Lender an executed Notice of
Advance, and such Notice of Advance shall constitute the Borrower’s confirmation
that each of the conditions precedent to the Advance set forth in this Section
7.2 shall be correct and satisfied as of the date of the Notice of Advance and
as of the date of the Advance; and

 

(f)     the Borrower is in full and complete compliance with all of the terms,
conditions and provisions of this Agreement and the Loan Documents in all
material respects.

 

7.3     No Advances Required in Event of Default. The Lender shall not be
required to make any Advance hereunder, at the time when the request for such
Advance is made, there exists an Event of Default under this Agreement or the
Loan Documents; provided, however, the Lender may, in its sole discretion, make
Advances notwithstanding the existence of such an Event of Default and any
Advance so made shall be deemed to have been made pursuant to this Agreement and
the Note, but the making of such Advance shall not constitute a waiver of said
Event of Default or any subsequent Event of Default.

 

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Article 8

Events of Default

 

8.1     Events of Default. Each of the following events and occurrences shall
constitute an Event of Default under this Agreement:

 

(a)     default in the payment when due of (i) the principal with respect to the
Loan, (ii) the interest with respect to the Loan and continuance thereof for
five (5) calendar days, or (iii) the payment when due of any other amount
payable by the Borrower hereunder or under any other Loan Document and
continuance thereof for five calendar (5) days;

 

(b)     (i) any default in the payment of principal or interest of any
Indebtedness owed pursuant to the Action Capital Line of Credit which results in
acceleration thereof, or (ii) any other default (excluding any acceleration of
the Euston House Financings as a result of the change of control contemplated in
the Purchase Agreement) in the performance of its respective obligations under
any other Indebtedness of the Borrower or any Subsidiary in excess of $500,000,
which results in the acceleration thereof;

 

(c)     default in the payment when due, or in the performance or observance of,
any material Liability of the Borrower where such default, singly or in the
aggregate with all other such defaults, would reasonably be expected to have a
Material Adverse Effect, and continuance thereof for ten (10) calendar days;

 

(d)     the Borrower shall fail to observe or perform in any material respect
any covenant contained in this Agreement (other than as described in (a), (b) or
(c) above), and if such failure is capable of being cured, such failure shall
continue unremedied for thirty (30) calendar days after Borrower has received
written notice from Lender of such Event of Default;

 

(e)     any representation or warranty made by the Borrower in this Agreement or
any Loan Document, or in any certificate or document delivered pursuant to or in
connection with this Agreement, shall prove to have been false or misleading in
any material respect when made or deemed made;

 

(f)     the Borrower or any Subsidiary shall generally not pay its Indebtedness
as such Indebtedness become due, or shall admit in writing its inability to pay
its Indebtedness generally, or shall make a general assignment for the benefit
of creditors, or any proceeding shall be instituted by or against the Borrower
or the Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of Borrower or Subsidiary or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian, or other similar official for Borrower or
Subsidiary or for any substantial part of the Borrower’s or such Subsidiary’s
property and, in the case of any such proceeding instituted against the Borrower
or such Subsidiary (but not instituted by it), shall remain undismissed or
unstayed for a period of sixty (60) days; or the Borrower or such Subsidiary
shall take any action to authorize any of the actions set forth above in this
paragraph (f); or

 

24

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(g)     a final judgment or order for the payment of money in excess of
$500,000, which is not covered by insurance, shall be rendered against the
Borrower and either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order, or (ii) a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect for any period of thirty (30) consecutive days.

 

8.2     Remedies. During the continuance of any such Event of Default, the
Lender may, by written notice to the Borrower (provided, no such notice shall be
required upon the occurrence of any event described in (f) above), terminate the
Commitment, and (a) declare (i) the principal of and accrued interest on all of
the Loan, under the Note, or hereunder, to be, and the same shall thereupon
forthwith become, due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, and/or (ii) all
other amounts hereunder and under the other Loan Documents to become immediately
due and payable and such amounts shall become immediately due and payable
without presentment, demand, protest or other notice, all of which are hereby
expressly waived, and/or (b) exercise any other remedy or right available to the
Lender hereunder, under the Note, under the other Loan Documents or under any
other document or agreement, or available at law, by statute or in equity.

 

Article 9

Miscellaneous

 

9.1     Termination. This Agreement shall terminate, except as otherwise
provided herein, upon the earlier of (a) the Maturity Date, and (b) after
Advances aggregating the full amount of the Commitment have been made, the date
of the conversion of the aggregate outstanding balance of the Loan into
Conversion Shares and the payment in full of all accrued interest on the Loan.

 

9.2     Entire Agreement; No Assignment. This Agreement, the Note, the Loan
Documents and the documents referred to herein constitute the entire agreement
of the parties hereto with respect to the subject matter hereof and shall
supersede any prior expressions of intent or understandings with respect to this
transaction. Neither party may assign its rights or obligations under this
Agreement without the prior written consent of the other party, except that the
Lender may transfer Conversion Shares as permitted by this Agreement or under
the Securities Act. This Agreement is for the sole benefit of the parties hereto
and their respective successors and permitted assigns, and nothing herein,
express or implied, is intended to or will confer upon any other person or
entity any legal or equitable right, benefit or remedy of any nature whatsoever
or under or by reason of this Agreement.

 

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9.3     Amendment; Waiver; Cumulative Rights. The written consent of both the
Lender and the Borrower shall be required for all amendments and modifications
to this Agreement or any other Loan Document; the written consent of the Lender
shall be required for all waivers of the terms hereof and thereof. The failure
or delay of the Lender to require performance by the Borrower of any provision
of this Agreement or any other Loan Document shall not affect its right to
require performance of such provision unless and until such performance has been
waived in writing by the Lender in accordance with the terms hereof. Each and
every right or remedy granted to the Lender hereunder or under any other
document or instrument delivered hereunder or in connection herewith, or allowed
to the Lender at law or in equity or by statute, shall be cumulative and may be
exercised from time to time, it being the intention of the parties hereto that
no right or remedy hereunder is exclusive of any other right or remedy or
remedies, and that each and every such right or remedy shall be in addition to
any other right or remedy given hereunder under the Loan Documents or now or
hereafter existing at law or in equity by statute.

 

9.4     Governing Law. This Agreement shall in all respects be construed in
accordance with and governed by the laws of the State of New York, without
regard to the conflicts of laws provisions therein. The parties hereto further
agree and consent that jurisdiction and venue for any action brought related to
or arising out of this Agreement shall be the state courts or the federal courts
located in the State of New York (each party herby agreeing not to challenge the
jurisdiction of the state courts or the federal courts located in the State of
New York or appropriateness of such venue).

 

9.5     WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

9.6     Notices. All notices, consents and other communications given under this
Agreement shall be in writing and shall be given by personal delivery, United
States first class mail with postage prepaid, facsimile or recognized overnight
courier, and shall be deemed delivered upon receipt at the address or facsimile
number for such party set forth on the signature page hereof, or to such other
address or facsimile number as may be furnished by such Party by notice in the
manner provided herein.

 

9.7     Severability and Savings Clause. If any provision of this Agreement is
held to be invalid or unenforceable by any court or tribunal of competent
jurisdiction, the remainder of this Agreement shall not be affected thereby, and
such provision shall be carried out as nearly as possible according to its
original terms and intent to eliminate such invalidity or unenforceability.

 

9.8     Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. The Parties may deliver this Agreement
and the other documents contemplated hereby by facsimile or in .pdf format sent
by electronic mail, and such documents shall be deemed, for all purposes, to be
original documents.

 

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9.9     Indemnity. The Borrower hereby agrees to defend, indemnify and hold the
Lender, and each of its officers, agents, directors, employees, “controlling
persons” (as controlling persons is defined under applicable security laws) or
Affiliates (each an “Indemnified Party”) harmless from and against any and all
claims, damages, judgments, penalties, costs and expenses (including, without
limitation, reasonable attorney fees and court costs now or hereafter arising
from the aforesaid enforcement of this clause) arising directly or indirectly
from or with respect to any investigation, subpoena, litigation or proceeding
related to or arising out of this Agreement or any other document to be
delivered hereunder or in connection herewith or any transaction contemplated
hereby or thereby (but in any case excluding any such claims, damages, losses,
liabilities, costs or expenses incurred by reason of the gross negligence or
willful misconduct of the Indemnified Party). The obligations of the Borrower
under this Section 9.8 shall survive the payment in full of the Loan.

 

9.10     Further Assurances. The Lender and the Borrower shall, from time to
time, execute, acknowledge and deliver, or cause to be executed, acknowledged
and delivered, such supplements hereto and such further instruments as may
reasonably be required for carrying out the intention of or facilitating the
performance of this Agreement and the other Loan Documents or any other
documents, agreements, certificates and instruments to which the Borrower is a
party or by which the Borrower is bound in connection with this Agreement.

 

[The rest of this page is intentionally left blank]

 

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

 

BORROWER:

 

Address:

 

13650 Dulles Technology Drive
Herndon, VA 20171

LEARNING TREE INTERNATIONAL, INC.

 

By /s/ RICHARD SPIRES 

  Richard Spires

  Chief Executive Officer

           

LENDER:

 

To such address as the Lender shall

have notified the Borrower in writing

THE KEVIN ROSS GRUNEICH LEGACY TRUST

 

By /s/ DONNA GRUNEICH

  Donna Gruneich, Trustee

 

 

Signature Page to Line of Credit

 

 

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EXHIBIT A

 

PROMISSORY NOTE

 

$5,000,000.00

Dated: June      , 2018

 

 

For value received, LEARNING TREE INTERNATIONAL, INC., a Delaware corporation
(the “Borrower”), hereby promises to pay to the order of THE KEVIN ROSS GRUNEICH
LEGACY TRUST (the “Lender”), pursuant to the Line of Credit Agreement, dated as
of the date hereof (as it may be amended, the “Agreement”), , between the
Borrower and the Lender, the principal amount of FIVE MILLION DOLLARS
($5,000,000.00), or such lesser amount as shall represent the unpaid principal
amount of the Loan made by the Lender to the Borrower pursuant to the Agreement.
The Borrower shall pay interest on the unpaid principal amount of the Loan at a
rate per annum determined from time to time pursuant to the Agreement, and to
pay all other amounts due or which may become due from time to time pursuant to
the terms of such Agreement. Interest shall be payable on the last day of each
fiscal quarter of the Borrower, on each date that principal payments are paid,
and on the Maturity Date. All such payments of principal, interest and other
amounts shall be made in lawful money of United States of America as provided in
the Agreement in Federal or other funds immediately available to the account of
the set forth in said Agreement.

 

This Promissory Note (the “Note”) is the Note referred to in the Agreement. This
Note shall mature and become due and payable on the tenth anniversary of the
date of issuance hereof (the “Maturity Date”), or on such earlier date upon
which this Note shall be accelerated in accordance with the Agreement.

 

The outstanding balance of this Note is convertible, at the option of the Lender
in its sole discretion at any time prior to the Maturity Date, into shares of
Common Stock, par value $.01 per share, of the Company, at the Conversion Price
(as adjusted from time to time) set forth in the Agreement.

 

The Borrower hereby waives presentment for payment, demand, diligence, protest
or notice of protest and notice of dishonor and all other formalities
whatsoever.

 

The terms and provisions of the Agreement are hereby incorporated into this Note
and made a part hereof by reference as if set forth herein. Reference is made to
such Agreement for provisions regarding the Loan, the interest rates applicable
thereto, principal repayments or prepayments on the Loan, other amounts due, and
circumstances pursuant to which this Note and the amounts due hereunder may be
accelerated, among others. Additionally, reference is made to the Agreement
regarding waivers of defenses, consent to jurisdiction, defaults and remedies
with respect to the obligations hereunder, and related matters.

 

This Note may not be changed or terminated orally but may be amended only by a
writing signed by the Lender and Borrower. This Note shall bind the legal
representatives, successors and assigns of the undersigned and shall inure to
the benefit of the holder hereof and its successors and assigns.

 

 

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This Note shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to principles of conflicts of laws.

 

 

LEARNING TREE INTERNATIONAL, INC.

 

By  ________________________________

Richard Spires
Chief Executive Officer

 

 

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[LEGEND FOR BACK OF NOTE]

 

 

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR UPON RECEIPT BY THE COMPANY OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
UNDER THE ACT.

 

 

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PROMISSORY NOTE GRID

 

Date of

Transaction

Amount of

Advance

Amount

Converted

Total Outstanding

Balance

Notation

Made By

                                                                               
                             

 

Promissory Note

 

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EXHIBIT B

 

NOTICE OF ADVANCE

 

THE KEVIN ROSS GRUNEICH LEGACY TRUST
Attention: Donna Gruneich, Trustee

 

Ladies and Gentlemen:

 

LEARNING TREE INTERNATIONAL, INC., a Delaware corporation (the “Borrower”)
refers to the Line of Credit Agreement, dated as of June 29, 2018 (as it may be
amended from time to time, the “Agreement”; capitalized terms used herein shall
have the same respective meanings as in the Agreement), by and between the
Borrower and the Lender hereby gives you notice, irrevocably, pursuant to
Sections 2.1 and 7.2 of the Agreement that the undersigned hereby requests an
Advance under the Agreement, and in that connection sets forth below the
information relating to such Advance (the “Proposed Advance”) as required by
Sections 2.1 and 7.2 of the Agreement:

 

(A)     The Business Day of the Proposed Advance is _______________, ______.

 

(B)     The aggregate amount of the Proposed Advance is $____________.

 

(C)     Funding Instructions:

 

 

 

 

 

The Borrower hereby affirms to the Lender that:

 

(1)     the Borrower’s representations and warranties as set forth in the Loan
Agreement are true and correct in all material respects as of the date of this
Notice of Advance, and after giving effect to the Proposed Advance, will be true
and correct on the date the Advance is made;

 

(2)     the conditions to making the Advance set forth in Section 7.2 of the
Agreement are satisfied;

 

(3)     No Event of Default, or event which with notice or lapse of time or both
would become an Event of Default, has occurred and is continuing or would result
from the making of the Proposed Advance;

 

(4)     before and after giving effect to the Proposed Advance, the aggregate
principal amount of all Advances made under the Agreement does not exceed the
Commitment; and

 

(5)     the Borrower is in full and complete compliance with all of the terms,
conditions and provisions of the Agreement.

 

Dated: __________________________

LEARNING TREE INTERNATIONAL, INC.

 

By  ________________________________

Name:

Title: 

 

 

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EXHIBIT C

 

NOTICE OF CONVERSION

 

Learning Tree International, Inc.

13650 Dulles Technology Drive

Herndon, VA 20171

Attention: Chief Financial Officer

 

 

Reference is made hereby to that certain Line of Credit Agreement, dated as of
June 29, 2018 (as it may be amended from time to time, the “Credit Agreement”),
between Learning Tree International, Inc. and The Kevin Ross Gruneich Legacy
Trust. All capitalized terms used herein shall have the same respective meanings
as in the Credit Agreement.

 

Pursuant to Section 2.3(b) of the Credit Agreement, the Lender hereby notifies
the Borrower as follows:

 

(a)     the current outstanding principal balance of the Loan is
$__________________;

 

(b)     the Lender hereby converts $______________ out of said principal balance
into ________________Conversion Shares, at the current Conversion Price of
__$____________; the Conversion Shares shall be registered in the name of the
Lender:

 

____     in certificated form

 

___       in book entry form to the following account of the Lender:

 

 

 

(c)     after giving effect to the conversion, the outstanding principal balance
of the Loan is $_______________________;

 

(d)     the accrued interest on the converted portion of the Loan is
$______________, which shall be paid to the Lender upon such conversion;

 

(e)     the representations and warranties of the Lender in Article 4 of the
Credit Agreement are true and correct in all material respects as of the date of
this Notice.

 

 

 

Date:

THE KEVIN ROSS GRUNEICH LEGACY TRUST

 

By _________________________________