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Exhibit 10.1
 
CREDIT AGREEMENT
 
DATED AS OF OCTOBER 31, 2013,
 
BUT MADE EFFECTIVE AS OF DECEMBER 2, 2013,
 
BY AND AMONG
 
DR. TATTOFF, INC.,
 
DRTHC I, LLC, AND
 
DRTHC II, LLC,
 
COLLECTIVELY, AS BORROWERS,
 
AND
 
TCA GLOBAL CREDIT MASTER FUND, LP,
 
AS LENDER
 

 

 

 

CREDIT AGREEMENT
 
This CREDIT AGREEMENT (this “Agreement”), dated as of October 31, 2013, but made
effective as of December 2, 2013 (the “Effective Date”), is executed by and
among DR. TATTOFF, INC., a Florida corporation (the “Issuing Borrower”), DRTHC
I, LLC, a Delaware limited liability company, and DRTHC II, LLC, a Delaware
limited liability company (each of the foregoing, including the Issuing
Borrower, hereinafter sometimes individually referred to as a “Borrower” and all
such entities sometimes hereinafter collectively referred to as “Borrowers” or
the “Credit Parties”), and TCA GLOBAL CREDIT MASTER FUND, LP (“Lender”).
 
WHEREAS, Borrowers have requested that Lender extend a revolving credit facility
to Borrowers of up to Seven Million and No/100 Dollars ($7,000,000.00) for the
purposes permitted hereunder; and for these purposes, Lender is willing to make
certain loans and extensions of credit to Borrowers of up to such amount and
upon the terms and conditions set forth herein; and
 
WHEREAS, Borrowers have agreed to secure all of their obligations under the Loan
Documents by granting to Lender a first priority security interest in and Lien
upon all of their existing and after-acquired personal and real property (except
that Lender shall receive a second priority security interest and Lien with
respect to Equipment of the Borrowers); and
 
WHEREAS, in connection with the loans and extensions of credit to be made by
Lender pursuant to this Agreement, certain officers of the Borrowers are willing
to execute Validity Certificates in favor of Lender in connection with the
Borrowers’ obligations under the Loan Documents;
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree as follows:
 

 1. DEFINITIONS.

 
1.1         Defined Terms.  For the purposes of this Agreement, the following
capitalized words and phrases shall have the meanings set forth below.
 
  (a)    “Account” shall mean, individually, and “Accounts” shall mean,
collectively, any and all accounts (as such term is defined in the UCC) of each
of the Borrowers.
 
  (b)    “Affiliate” (a) of Lender shall mean: (i) any entity which, directly or
indirectly, controls or is controlled by or is under common control with Lender;
and (ii) any entity administered or managed by Lender, or an Affiliate or
investment advisor thereof and which is engaged in making, purchasing, holding
or otherwise investing in commercial loans; and (b) of a Borrower shall mean any
entity which, directly or indirectly, controls or is controlled by or is under
common control with any Borrower.  With respect to an Affiliate of Lender or an
Affiliate of Borrowers, an entity shall be deemed to be “controlled by” another
entity if such other entity possesses, directly or indirectly, power to direct
or cause the direction of the management and policies of such entity, whether by
contract, ownership of voting securities, membership interests or otherwise.
 

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  (c)    “Agreement” shall mean this Credit Agreement by and among Borrowers and
Lender.
 
  (d)    “Borrower” and “Borrowers” shall have the meaning given to such terms
in the preamble hereof.
 
  (e)    “Borrowing Base Amount” shall mean an amount, expressed in Dollars,
equal to the then applicable Revolving Loan Commitment.
 
  (f)     “Borrowing Base Certificate” shall mean a certificate delivered by
Lender to Borrowers from time to time in a form acceptable to Lender, pursuant
to which the formula and calculation of the Borrowing Base Amount is made by
Lender.
 
  (g)    “Bridge Financing Loans” shall mean those various unsecured loans from
the Borrower to various lenders with an aggregate outstanding principal amount
of $320,000, and having a maturity date of December 31, 2013.
 
  (h)    “Business Day” shall mean any day other than a Saturday, Sunday or a
legal holiday on which banks are authorized or required to be closed for the
conduct of commercial banking business in the State of Florida.
 
  (i)     “Capital Expenditures” shall mean expenditures (including Capital
Lease obligations which should be capitalized under GAAP) for the acquisition of
fixed assets which are required to be capitalized under GAAP.
 
  (j)     “Capital Lease” shall mean, as to any Person, a lease of any interest
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, by such Person as lessee that is, or should be, in accordance
with GAAP, recorded as a “capital lease” on the balance sheets of any Borrower.
 
  (k)          “Change in Control” shall occur when: (A) any one of the
Borrowers shall: (i) consolidate or merge with or into another Person; or (ii)
sell, assign, transfer, convey or otherwise dispose of all or substantially all
its properties or assets to another Person; or (iii) allow another Person to
make a purchase, tender or exchange offer that is accepted by the holders of
more than 50% of the outstanding voting shares of the applicable Borrower; or
(iv) consummate a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
other similar scheme or arrangement) with another Person, in each case whereby
such other Person or its shareholders acquires more than 50% of the outstanding
voting shares of the applicable Borrower and the holders of a majority of the
voting shares of the applicable Borrower fail to hold a majority of the voting
shares of the resulting or surviving Person, as applicable; or (B) any “person”
or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of
the Exchange Act), other than the holders of a majority of the voting shares of
the applicable Borrower as of the Closing Date,  is or shall become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 50% or more of the aggregate voting power of the applicable
Borrower.
 

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  (l)     “Closing Date” shall mean the date upon which the first Revolving Loan
hereunder is initially funded.
 
      (m)           “Collateral” shall mean, collectively, and whether now
existing or hereafter acquired or arising, all assets which secure the Loans,
including all existing and after-acquired tangible and intangible assets and
property of each of the Borrowers, including real property owned by each of the
Borrowers, with respect to which each of the Borrowers grants to Lender a Lien
under the terms of the Security Agreement and any of the other Loan Documents.
 
  (n)    “Common Stock” shall mean the common stock of the Issuing Borrower, par
value $0.0001 per share.
 
  (o)    “Compliance Certificate” shall mean the covenant compliance certificate
contemplated by Section 10.11 hereof, the form of which is attached hereto as
Exhibit “A”.
 
  (p)    “Contingent Liability” and “Contingent Liabilities” shall mean,
respectively, each obligation and liability of Borrowers and all such
obligations and liabilities of Borrowers incurred pursuant to any agreement,
undertaking or arrangement by which Borrowers, or any one of them, either: (i)
guarantee, endorse or otherwise become or are contingently liable upon (by
direct or indirect agreement, contingent or otherwise, to provide funds for
payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise
to assure a creditor against loss) the indebtedness, dividend, obligation or
other liability of any other Person in any manner (other than by endorsement of
instruments in the course of collection), including without limitation, any
indebtedness, dividend or other obligation which may be issued or incurred at
some future time; (ii) guarantee the payment of dividends or other distributions
upon the shares or ownership interest of any other Person; (iii) undertake or
agree (whether contingently or otherwise): (A) to purchase, repurchase, or
otherwise acquire any indebtedness, obligation or liability of any other Person
or any property or assets constituting security therefor; (B) to advance or
provide funds for the payment or discharge of any indebtedness, obligation or
liability of any other Person (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain solvency, assets,
level of income, working capital or other financial condition of any other
Person; or (C) to make payment to any other Person other than for value
received; (iv) agree to lease property or to purchase securities, property or
services from such other Person with the purpose or intent of assuring the owner
of such indebtedness or obligation of the ability of such other Person to make
payment of the indebtedness or obligation; (v) to induce the issuance of, or in
connection with the issuance of, any letter of credit for the benefit of such
other Person; or (vi) undertake or agree otherwise to assure a creditor against
loss.  The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum
permitted principal amount, if larger) of the indebtedness, obligation or other
liability guaranteed or supported thereby.
 
  (q)    “Control” or “Controlling” shall mean the possession of the power to
direct, or cause the direction of, the management and policies of a Person by
contract, voting of securities, or otherwise.
 
  (r)     “Credit Parties” shall have the meaning given to it in the preamble
hereof.
 

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  (s)    “Customer” shall mean any Person who is obligated to any Borrower for
any Receipts, including any insurance company, Governmental Agency (such as
Medicare), or any other Person obligated to make payments on behalf of a
Customer of any Borrower.
 
  (t)     “Default Rate” shall mean a per annum rate of interest equal to
Eighteen percent (18%).
 
  (u)            “Depreciation” shall mean the total amounts added to
depreciation, amortization, obsolescence, valuation and other proper reserves,
as reflected on any Borrower’s financial statements and determined in accordance
with GAAP.
 
  (v)            “Dollars” or “$” means lawful currency of the United States of
America.
 
  (w)           “Effective Date” shall have the meaning given to it in the
preamble hereof.
 
  (x)     “Employee Plan” includes any pension, stock bonus, employee stock
ownership plan, retirement, disability, medical, dental or other health plan,
life insurance or other death benefit plan, profit sharing, deferred
compensation, stock option, bonus or other incentive plan, vacation benefit
plan, severance plan or other employee benefit plan or arrangement, including,
without limitation, those pension, profit-sharing and retirement plans of
Borrowers described from time to time in the financial statements of each
Borrower and any pension plan, welfare plan, Defined Benefit Pension Plans (as
defined in ERISA) or any multi-employer plan, maintained or administered by any
Borrower or to which any Borrower is a party or may have any liability or by
which any Borrower is bound.
 
  (y)    “Environmental Laws” shall mean all federal, state, district, local and
foreign laws, rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental matters, as
now or at any time hereafter in effect, applicable to Borrowers’ business or
facilities owned or operated by any Borrower, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contamination, chemicals, or hazardous, toxic or dangerous substances, materials
or wastes in the environment (including, without limitation, ambient air,
surface water, land surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
 
  (z)     “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
 
  (aa)   “Event of Default” shall mean any of the events or conditions set forth
in Section 12 hereof.
 
  (bb)      “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
 

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  (cc)          “Funded Indebtedness” shall mean, as to any Person, without
duplication: (i) all indebtedness for borrowed money of such Person (including
principal, interest and, if not paid when due, fees and charges), whether or not
evidenced by bonds, debentures, notes or similar instruments; (ii) all
obligations to pay the deferred purchase price of property or services; (iii)
all obligations, contingent or otherwise, with respect to the maximum face
amount of all letters of credit (whether or not drawn), bankers’ acceptances and
similar obligations issued for the account of such Person (including the Letters
of Credit), and all unpaid drawings in respect of such letters of credit,
bankers’ acceptances and similar obligations; and (iv) all indebtedness secured
by any Lien on any property owned by such Person, whether or not such
indebtedness has been assumed by such Person (provided, however, if such Person
has not assumed or otherwise become liable in respect of such indebtedness, such
indebtedness shall be deemed to be in an amount equal to the fair market value
of the property subject to such Lien at the time of
determination).  Notwithstanding the foregoing, Funded Indebtedness shall not
include trade payables and accrued expenses incurred by such Person in
accordance with customary practices and in the Ordinary Course of Business of
such Person.
 
  (dd)          “GAAP” shall mean United States generally accepted accounting
principles set forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to the
circumstances as of the date of determination; provided, however, that interim
financial statements or reports shall be deemed in compliance with GAAP despite
the absence of footnotes and fiscal year-end adjustments as required by GAAP.
 
  (ee)          “Governmental Authority” means any foreign, federal, state or
local government, or any political subdivision thereof, or any court, agency or
other body, organization, group, stock market or exchange exercising any
executive, legislative, judicial, quasi-judicial, regulatory or administrative
function of government.
 
  (ff)            “Hazardous Materials” shall mean any hazardous, toxic or
dangerous substance, materials and wastes, including, without limitation,
hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation,
radioactive materials, biological substances, polychlorinated biphenyls,
pesticides, herbicides and any other kind and/or type of pollutants or
contaminants (including, without limitation, materials which include hazardous
constituents), sewage, sludge, industrial slag, solvents and/or any other
similar substances, materials or wastes that are or become regulated under any
Environmental Law (including, without limitation, any that are or become
classified as hazardous or toxic under any Environmental Law).
 
  (gg)          “Interest Rate” shall mean a fixed rate of interest equal to Ten
Percent (10.0%) per annum, calculated on the actual number of days elapsed over
a 360-day year.
 
  (hh)          “Lender” shall have the meaning given to it in the preamble
hereof.
 
  (ii)            “Liabilities” shall mean, at all times, all liabilities of
Borrowers that would be shown as such on the balance sheets of each Borrower
prepared in accordance with GAAP.
 

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  (jj)            “Lien” shall mean, with respect to any Person, any mortgage,
pledge, hypothecation, judgment lien or similar legal process, title retention
lien, or other lien, security interest or encumbrance granted by such Person or
arising by judicial process or otherwise, including, without limitation, the
interest of a vendor under any conditional sale or other title retention
agreement and the interest of a lessor under a lease of any interest in any kind
of property or asset, whether real, personal or mixed, or tangible or
intangible, by such Person as lessee that is, or should be, a Capital Lease on
the balance sheet of such Person prepared in accordance with GAAP.
 
  (kk)          “Loan” or “Loans” shall mean the aggregate of all Revolving
Loans made by Lender to Borrower under and pursuant to this Agreement.
 
  (ll)            “Loan Documents” shall mean those documents listed in Sections
3.1, 3.2 and 3.3 hereof, and any other documents or instruments executed in
connection with this Agreement or the Revolving Loans contemplated hereby, and
all renewals, extensions, future advances, modifications, substitutions, or
replacements thereof.
 
  (mm)        “Material Adverse Effect” shall mean: (i) a material adverse
change in, or a material adverse effect upon, the assets, business, prospects,
properties, financial condition or results of operations of all Borrowers,
collectively; (ii) a material impairment of the ability of all Borrowers,
collectively, to perform any of their respective Obligations under any of the
Loan Documents; or (iii) a material adverse effect on: (A) any material portion
of the Collateral; (B) the legality, validity, binding effect or enforceability
against any Borrower of any of the Loan Documents; (C) the perfection or
priority (subject to Permitted Liens) of any Lien granted to Lender under any
Loan Document; or (D) the material rights or remedies of Lender under any Loan
Document.  For purposes of determining whether any of the foregoing changes,
effects, impairments, or other events have occurred, such determination shall be
made by Lender, in its sole, but reasonably exercised, discretion.
 
  (nn)          “Material Contract” shall mean any contract or agreement to
which any Borrower is a party or by which any Borrower or any of their
respective assets are bound and which: (i) must be disclosed to the SEC to the
Exchange Act, the rules and regulations of the SEC, or any other laws, rules or
regulations of any Governmental Authority; (ii) imposes any guaranty, surety or
indemnification obligations on any Borrower, unless guaranteeing the obligations
of another Borrower; or (iii) prohibits any Borrower from engaging in any
business or competing anywhere in the world.
 
  (oo)          “Obligations” shall mean all loans, advances and other financial
accommodations (whether primary, contingent or otherwise), all interest accrued
thereon (including interest which would be payable as post-petition in
connection with any bankruptcy or similar Proceeding, whether or not permitted
as a claim thereunder), and any and all costs, fees or other charges due to
Lender under this Agreement or the other Loan Documents, any expenses incurred
by Lender under this Agreement or the other Loan Documents, and any and all
other liabilities and obligations of each of the Borrowers to Lender, and the
performance by each of the Borrowers of all covenants, agreements and
obligations of every nature and kind on the part of Borrowers to be performed
under this Agreement and any other Loan Documents.
 

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  (pp)          “Ordinary Course of Business” means the ordinary course of
business of the Person in question, consistent with past custom and practice
(including with respect to quantity, quality and frequency).
 
  (qq)          “Payment Date” shall have the meaning given to it in Section
2.1(c) hereof.
 
  (rr)            “Permitted Liens” shall mean: (i) Liens for Taxes, assessments
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 adequate reserves are maintained in accordance with GAAP
and in respect of which no Lien has been filed; (ii) Liens in the form of
deposits or pledges incurred in connection with worker’s compensation,
unemployment compensation and other types of social security (excluding Liens
arising under ERISA or in connection with surety bonds, bids, performance bonds
and similar obligations) for sums not overdue or being contested in good faith
by appropriate proceedings and not involving any advances or borrowed money or
the deferred purchase price of property or services, which do not in the
aggregate materially detract from the value of the property or assets of any
Borrower taken as a whole or materially impair the use thereof in the operation
of any Borrower’s business and, in each case, for which adequate reserves are
maintained in accordance with GAAP and in respect of which no Lien has been
filed; (iii) zoning and similar restrictions on the use of property and
easements, rights of way, restrictions, minor defects or irregularities in title
and other similar Liens not interfering in any material respect with the
ordinary conduct of the business of any Borrower; (iv) Liens granted to Lender
hereunder and under the Loan Documents; (v) banker’s Liens and rights of set-off
of financial institutions arising in connection with items deposited in accounts
maintained at such financial institutions and subsequently unpaid and unpaid
fees and expenses that are charged to any Borrower by such financial
institutions in the Borrowers’ Ordinary Course of Business of the maintenance
and operation of such accounts; (vi) statutory or contractual landlord’s Liens
in connection with any Borrower Leases, to the extent same attach solely to
tangible personal property located within any such Borrower Leases; (vii) Liens
on Equipment of Borrowers acquired in connection with any clinics operated by
Borrowers, provided such Liens attach solely to the Equipment so acquired, and,
with respect to Liens on Equipment of Borrowers incurred after the Closing Date,
subject at all times to the limitations set forth in Section 9 below; and (viii)
Liens in connection with existing convertible debt of the Issuing Borrower which
is secured by the equity membership interests of each of DRTHC I, LLC and DRTHC
II, LLC, which debt is shown on the Financial Statements, so long as such debt
is and at all times remains fully subordinated to the Obligations.
 
  (ss)          “Permit” means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature whatsoever, granted, issued,
approved or allowed by any Governmental Authority.
 
  (tt)            “Person” shall mean any individual, partnership, limited
liability company, limited liability partnership, corporation, trust, joint
venture, joint stock company, association, unincorporated organization,
government or agency or political subdivision thereof, or other entity.
 

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  (uu)          “Principal Trading Market” shall mean the Nasdaq Global Select
Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC Bulletin
Board, the OTC Markets, the NYSE Euronext, the NYSE Market, or any other
nationally recognized trading or exchange market acceptable to Lender, whichever
is at the time the principal trading exchange or market for the Common Stock.
 
  (vv)          “Proceeding” means any demand, claim, suit, action, litigation,
investigation, audit, study, arbitration, administrative hearing, or any other
proceeding of any nature whatsoever.
 
  (ww)        “Real Property” means any real estate, land, building, structure,
improvement, fixture or other real property of any nature whatsoever, including,
but not limited to, fee and leasehold interests.
 
  (xx)           “Receipts” shall mean all revenues, receipts, receivables,
Accounts, collections or any other funds at any time received or receivable by
any Borrower, or otherwise owing to any Borrower, in connection with its
business, operations or from any other source.
 
  (yy)          “Receipts Collection Fee” shall mean a surcharge charged by
Lender to the Borrowers on a monthly basis, and shall be in an amount calculated
by Lender such that, when added together with any monthly interest paid by
Borrowers hereunder, the aggregate amount of the interest and the Receipts
Collection Fee shall not exceed One and One-half percent (1.50%) of the then
outstanding principal balance of all Loans hereunder, per month.
 
  (zz)           “Regulatory Change” shall mean the introduction of, or any
change in any applicable law, treaty, rule, regulation or guideline or in the
interpretation or administration thereof by any Governmental Authority or any
central bank or other fiscal, monetary or other authority having jurisdiction
over Lender or its lending office.
 
  (aaa)        “Reserve Amount” shall mean an amount, expressed in Dollars,
equal to ten percent (10%) of the then applicable Revolving Loan
Commitment.  For purposes of calculating the outstanding principal balance of
all Revolving Loans hereunder from time to time, the Reserve Amount then held by
Lender shall be applied to reduce such outstanding principal balance.
 
  (bbb)       “Revolving Loan” and “Revolving Loans” shall mean, respectively,
each direct advance, and the aggregate of all such direct advances, made by
Lender to Borrowers under and pursuant to Section 2.1 of this Agreement.
 
  (ccc)        “Revolving Loan Availability” shall mean the then applicable
Revolving Loan Commitment.
 
  (ddd)       “Revolving Loan Commitment” shall mean, on the Closing Date, One
Million Three Hundred Thousand and No/100 Dollars ($1,300,000.00), and in the
event Borrowers request and Lender agrees to increase the Revolving Loan
Commitment pursuant to Section 2.1(b), thereafter, shall mean the amount to
which Lender agrees to increase the Revolving Loan Commitment, up to Seven
Million and No/100 Dollars ($7,000,000.00), all as applicable pursuant to
Section 2.1(b).
 

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  (eee)        “Revolving Loan Maturity Date” shall mean the earlier of: (i) six
(6) months from the Closing Date; (ii) upon prepayment of the Revolving Note by
Borrowers (subject to Section 2.1(d)(ii)); or (iii) the occurrence of an Event
of Default and acceleration of the Revolving Note pursuant to this Agreement,
unless the date in clause (i) shall be extended pursuant to Section 2.3 or by
Lender pursuant to any modification, extension or renewal note executed by
Borrowers and accepted by Lender in its sole and absolute discretion in
substitution for the Revolving Note.
 
  (fff)          “Revolving Note” shall mean that certain Revolving Note in the
principal amount of the Revolving Loan Commitment of even date herewith made by
Borrowers in favor of Lender, in form substantially similar to that of Exhibit
“B” attached hereto, and any renewal, extension, future advance, modification,
substitution, or replacement thereof.
 
  (ggg)       “Salary Ratio” means an amount expressed as a percentage equal to
the increase or decrease, on an annual basis, of the Borrowers’ revenue in the
most current 12 month period ending at the time of any change in compensation to
an officer or senior manager is contemplated (such 12 month period referred to
as the “Current Year”), as compared to the Borrowers’ revenue for the 12 month
period immediately preceding the Current Year.
 
  (hhh)       “SEC” shall mean the United States Securities and Exchange
Commission.
 
  (iii)           “Securities Act” shall mean the Securities Act of 1933, as
amended.
 
  (jjj)           “Security Agreement” shall mean a Security Agreement in favor
of Lender, in form substantially similar to that of Exhibit “C” attached hereto.
 
  (kkk)        “Subsidiary” and “Subsidiaries” shall mean, respectively, each
and all such corporations, partnerships, limited partnerships, limited liability
companies, limited liability partnerships or other entities of which or in which
a Person owns, directly or indirectly, fifty percent (50%) or more of: (i) the
combined voting power of all classes of stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of such
entity if a corporation; (ii) the management authority and capital interest or
profits interest of such entity, if a partnership, limited partnership, limited
liability company, limited liability partnership, joint venture or similar
entity; or (iii) the beneficial interest of such entity, if a trust, association
or other unincorporated organization.
 
  (lll)           “UCC” shall mean the Uniform Commercial Code in effect in
Nevada from time to time.
 
  (mmm)     “Validity Certificates” shall mean the Validity Certificates
executed by certain officers of Borrowers, which shall be substantially in the
form of Exhibit “D” attached hereto.
 

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1.2         Accounting Terms.  Any accounting terms used in this Agreement which
are not specifically defined herein shall have the meanings customarily given
them in accordance with GAAP.  Calculations and determinations of financial and
accounting terms used and not otherwise specifically defined hereunder and the
preparation of financial statements to be furnished to Lender pursuant hereto
shall be made and prepared, both as to classification of items and as to amount,
in accordance with GAAP, as used in the preparation of the financial statements
of any Borrower on the date of this Agreement.  If any changes in accounting
principles or practices from those used in the preparation of the financial
statements are hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or any
successor thereto or agencies with similar functions), which results in a
material change in the method of accounting in the financial statements required
to be furnished to Lender hereunder or in the calculation of financial
covenants, standards or terms contained in this Agreement, the parties hereto
agree to enter into good faith negotiations to amend such provisions so as
equitably to reflect such changes to the end that the criteria for evaluating
the financial condition and performance of each Borrower will be the same after
such changes as they were before such changes; and if the parties fail to agree
on the amendment of such provisions, Borrowers will furnish financial statements
in accordance with such changes but shall provide calculations for all financial
covenants, perform all financial covenants and otherwise observe all financial
standards and terms in accordance with applicable accounting principles and
practices in effect immediately prior to such changes.  Calculations with
respect to financial covenants required to be stated in accordance with
applicable accounting principles and practices in effect immediately prior to
such changes shall be reviewed and certified by Borrowers’ accountants.
 
1.3         Other Terms Defined in UCC.  All other words and phrases used herein
and not otherwise specifically defined shall have the respective meanings
assigned to such terms in the UCC, as amended from time to time, to the extent
the same are used or defined therein.
 
1.4         Other Definitional Provisions; Construction.  Whenever the context
so requires, the neuter gender includes the masculine and feminine, the single
number includes the plural, and vice versa.  The words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and references to Article, Section, Subsection, Annex, Schedule,
Exhibit and like references are references to this Agreement unless otherwise
specified.  Wherever the word “include,” “includes” or “including” is used in
this Agreement, it will be deemed to be followed by the words “without
limitation.”  An Event of Default shall “continue” or be “continuing” until such
Event of Default has been waived in accordance with Section 14.3 hereof, or
cured to the Lender’s reasonable satisfaction.  References in this Agreement to
any party shall include such party’s successors and permitted
assigns.  References to any “Section” shall be a reference to such Section of
this Agreement unless otherwise stated.  The term “Borrower” or “Borrowers”
shall refer collectively to the Issuing Borrower and all of its Subsidiaries
from time to time in existence, whether made a part of this Agreement or not,
and to each of them individually, in each case as the context may so require, it
being the intent of the parties under this Agreement that all of the terms,
conditions, provisions and representations hereof shall, to the greatest extent
possible, apply equally to each of them, as if each term, covenant, provision
and representation was separately made herein by each of them, except only with
respect to any terms and provisions that deal directly with the issuance of any
Common Stock of the Issuing Borrower, in which case the term Borrower shall mean
and refer only to the Issuing Borrower.  To the extent any of the provisions of
the other Loan Documents are inconsistent with the terms of this Agreement, the
provisions of this Agreement shall govern.
 

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2.    REVOLVING LOAN FACILITY.
 
2.1         Revolving Loan.
 
  (a)            Revolving Loan Commitment.  Subject to the terms and conditions
of this Agreement and the other Loan Documents, and in reliance upon the
representations and warranties of Borrowers set forth herein and in the other
Loan Documents, Lender agrees to make a Revolving Loan to Borrower on the
Closing Date for an amount equal to the Revolving Loan Commitment in effect as
of the Closing Date, all pursuant to the terms of this Agreement; provided,
however, that the aggregate principal balance of all Revolving Loans outstanding
at any time shall not exceed the Revolving Loan Availability; and further
provided, however, that, notwithstanding anything contained in this Agreement or
any other Loan Documents to the contrary, each Revolving Loan requested by
Borrowers under this Agreement shall be subject to Lender’s approval, which
approval may be given or withheld in Lender’s sole and absolute
discretion.  Revolving Loans made by Lender may be repaid and, subject to the
terms and conditions hereof, borrowed again up to, but not including, the
Revolving Loan Maturity Date, unless the Revolving Loans are otherwise
terminated or extended as provided in this Agreement.  The Revolving Loans shall
be used by Borrower for the specific purposes permitted hereunder and for no
other purpose.
 
  (b)            Increase to Revolving Loan Commitment.  Borrowers may request,
from time to time, that the Revolving Loan Commitment be increased to up to
Seven Million Dollars ($7,000,000); and Lender, in its sole discretion, may make
available Revolving Loan Commitment increases to Borrowers.  Lender’s election
to increase the Revolving Loan Commitment from time to time may be granted or
denied by Lender in its sole and absolute discretion, however, at a minimum, the
following conditions must be satisfied, in Lender’s sole and absolute
discretion:
 
   (i)            no Event of Default shall have occurred and be continuing, or
result from the applicable increase of the Revolving Loan Commitment;
 
   (ii)             Borrowers shall have executed and delivered a new or revised
Revolving Note;
 
   (iii)           After giving effect to such increase, the amount of the
aggregate outstanding principal balance of all Revolving Loans shall not be in
excess of the Revolving Loan Availability; and
 
   (iv)           Lender shall have reviewed and accepted, in its sole and
absolute discretion, the amount and type of current and historical Receipts of
the Borrowers, or other Collateral required for the increase.
 

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  (c)            Revolving Loan Interest and Payments.  Except as otherwise
provided in this Section, the outstanding principal balance of the Revolving
Loans shall be repaid on or before the Revolving Loan Maturity Date.  The
principal amount of the Revolving Loans outstanding from time to time shall bear
interest at the Interest Rate. The Receipts Collection Fee, accrued and unpaid
interest on the unpaid principal balance of all Revolving Loans outstanding from
time to time, and other fees and charges due hereunder, shall be payable from
the Lock Box Account in accordance with Section 2.1(e) below on a weekly basis
on the weekly anniversary date of the Closing Date, or such other date as Lender
and Borrowers may agree upon (provided, however, if no such other agreement is
made or reached, then on the weekly anniversary date of the Closing Date),
commencing on the first such date to occur after the date hereof and on the
Revolving Loan Maturity Date (each a “Payment Date”); provided, however, once
the Reserve Amount has been fully collected by Lender, the Payment Date shall
occur twice per week, on such dates as Lender and Borrowers may agree upon.  Any
amount of principal or interest on the Revolving Loans which is not paid when
due, whether at stated maturity, by acceleration or otherwise, shall at Lender’s
option bear interest payable on demand at the Default Rate.
 
  (d)            Revolving Loan Principal Repayments.
 
   (i)             Mandatory Principal Prepayments; Overadvances.  Following
collection and payment of all items and fees as required by Section
2.1(e)(ii)(1) – (6), inclusive (other than the Mandatory Principal Repayment
Amount), on each Payment Date, an amount equal to two percent (2%) of all
amounts collected into the Lock Box Account since the immediately preceding
Payment Date shall be paid to Lender to reduce the then outstanding principal
balance of all Revolving Loans hereunder (the “Mandatory Principal Repayment
Amount”).  All Revolving Loans hereunder shall be repaid by Borrowers on or
before the Revolving Loan Maturity Date, unless payable sooner pursuant to the
provisions of this Agreement.  In the event the aggregate outstanding principal
balance of all Revolving Loans hereunder at any time exceeds the then applicable
Revolving Loan Availability, Borrowers shall, upon notice or demand from Lender,
immediately make such repayments of the Revolving Loans or take such other
actions as shall be necessary to eliminate such excess (or Lender may
immediately eliminate such excess from sums in the Lock Box Account in
accordance with Section 2.1(e) below).  Lender shall apply funds received into
the Lock Box Account in accordance with Section 2.1(e) below.
 
   (ii)            Optional Prepayments.  Borrowers may, from time to time,
prepay the Revolving Loans, in whole or in part, provided, however, that if
prior to a date that is ninety (90) days after the Closing Date, Borrowers
prepay the entire outstanding amount of the Revolving Loans in full and then
terminate the Revolving Loan Commitment or this Agreement, Borrowers shall pay
to Lender as liquidated damages and compensation for the costs of being prepared
to make funds available hereunder, an amount equal to Two and One-half Percent
(2.5%) of the then applicable Revolving Loan Commitment (the “Prepayment
Penalty”).  The parties agree that the amount payable pursuant to this
subsection (ii) is a reasonable calculation of Lender’s lost profits in view of
the difficulties and impracticality of determining actual damages resulting from
an early termination of the Revolving Loan Commitment or this Agreement.
 
  (e)            Collections; Lock Box.
 
   (i)             Funds Collected.
 
(1)           Wire Transfers.  To the extent any Customers make or pay any
Receipts to any Borrower by a wire transfer or other form of electronic funds
transfer, effective as of the Closing Date, such Borrower shall direct all of
such Customers to make all such wire transfer or electronic fund transfer
payments directly to the Lock Box Account.
 

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(2)           Cash, Checks and Other Payments.  To the extent any Customers make
or pay any Receipts to any Borrower by any other form other than wire transfer
or other form of electronic funds transfer (such as through cash or a check),
then effective as of the Closing Date, such Borrower shall deposit all such cash
or checks directly into the Lock Box Account within twenty-four (24) hours of
receipt thereof.
 
(3)           Funds Payable From Medical Doctor.  With respect to any clinics
operated by any Borrower where, pursuant to applicable laws, payment for
services is to be made to a licensed medical doctor (rather than directly to the
Borrower), and accordingly, relationships exist between any Borrower and such
medical doctor (contractual or otherwise) pursuant to which such medical doctor
receives payments for services, and then pays all or any portion of such
payments received to a Borrower, in such circumstances, Borrowers shall, by a
date that is not later than thirty (30) days after the Closing Date, enter into
a written agreement with any such medical doctor in form and substance
acceptable to Lender which authorizes, directs and otherwise requires such
medical doctor to pay any Receipts directly into the Lock Box Account, rather
than any other bank accounts of Borrowers.  At any time prior to such written
agreement with any such medical doctor being effective and in place, any
Receipts received by any Borrower from any such medical doctor shall be
immediately re-directed and deposited by such Borrower into the Lock Box
Account.
 
(4)           Third Party Financing Companies.  To the extent any Borrower
receives any Receipts from any third party finance company providing financing
to any Customer of any Borrower, any such Receipts shall, immediately upon
receipt thereof, be re-directed and deposited by such Borrower into the Lock Box
Account.
 
(5)           Credit/Debit Card Payments.  The parties recognize that in some
instances, Customers of Borrowers make payments to Borrowers through the use of
a credit or debit card.  In that regard, Borrowers shall modify its agreements
with all credit/debit card payment processing companies with whom they have
agreements or other payment processing relationships (the “Payment Processing
Companies”), so as to authorize, direct and cause: (A) all credit/debit card
payments from any Customers; and (B) any reserves or holdbacks withheld by any
of the Payment Processing Companies, if, as, and when distributed or paid to
Borrowers, to be deposited directly into the Lock Box Account, rather than any
other bank accounts of Borrowers.  In this regard, by a date that is not later
than thirty (30) days after the Closing Date, each of the Payment Processing
Companies shall issue and deliver to Lender an estoppel certificate,
disbursement direction or other similar document in form and substance
acceptable to Lender, confirming and agreeing: (I) to the foregoing payment
directions; (II) that such payment instructions and directions shall not be
changed, amended or terminated, except upon written notice from Lender; and
(III) that copies of all statements, notices and other communications sent by
any Payment Processing Companies to Borrowers, also be delivered to Lender. At
any time prior to such written disbursement direction or other similar document
with any Payment Processing Companies being effective and in place, any Receipts
received by any Borrower from any Payment Processing Companies shall be
immediately re-directed and deposited by such Borrower into the Lock Box
Account.  Borrowers hereby represent and warrant to Lender that the only Payment
Processing Companies with whom the Borrowers have any agreements or other
payment processing relationships as of the Closing Date is Element Payment
Services.  Borrowers shall not enter into any other agreements with any other
Payment Processing Companies, unless prior to or contemporaneously with entering
into such relationships, such Payment Processing Companies execute a
disbursement direction or other similar document as required above in favor of
Lender.
 

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(6)           General Collection Terms.  Borrowers hereby agree to undertake any
and all required actions, execute any required documents, instruments or
agreements, or to otherwise do any other thing required or requested by Lender
in order to effectuate the requirements of this Section 2.1(e)(i).  Lender shall
maintain an account at a financial institution acceptable to Lender in its sole
and absolute discretion (the “Lock Box Account”), which Lock Box Account is and
shall be maintained in Lender’s name, and into which all Receipts, whether
through wires, electronic fund transfers, credit and debit card payments from
any Customers (whether directly or through any Payment Processing Companies),
and all other monies, checks, notes, drafts or other payments or Receipts of any
kind received or receivable by, or due to, the Borrowers shall be deposited.  It
is the intent of the parties that all Receipts, whether through wires,
electronic fund transfers, credit and debit card payments from any Customers
(whether directly or through any Payment Processing Companies), and all other
monies, checks, notes, drafts or other payments or Receipts of any kind received
or receivable by, or due to, the Borrowers, shall be deposited directly into the
Lock Box Account, rather than any other accounts of any Borrower, or if received
into any account of any Borrower, then such Borrower shall immediately re-direct
and deposit same into the Lock Box Account.  In this regard, if Borrowers, any
Affiliate or Subsidiary, any shareholder, officer, director, employee or agent
of Borrowers or any Affiliate or Subsidiary, or any other Person acting for or
in concert with Borrowers, shall receive any monies, checks, notes, drafts or
other payments or Receipts, the Borrowers and each such Person shall receive all
such items in trust for, and as the sole and exclusive property of, Lender, and,
immediately upon receipt thereof, shall remit the same (or cause the same to be
remitted) in kind to the Lock Box Account.
 
(7)           Notwithstanding anything contained in this Agreement to the
contrary, Borrowers and Lender agree and acknowledge that the following items do
not need to be deposited by the Borrowers in the Lock Box Account: (i) proceeds
of any capital raising event permitted by this Agreement (provided that
Borrowers provide notice of such capital raising event to Lender upon the
closing thereof); or (ii) tenant improvement allowances received by any Borrower
from landlords in connection with the build out of clinics of the Borrower in
the Ordinary Course of Business.
 

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   (ii)           Distribution of Funds From Lock Box.  Borrowers and Lender
agree that all payments made to the Lock Box Account, whether in respect of
Receipts, as proceeds of Collateral, or otherwise, will be swept from the Lock
Box Account to Lender on each Payment Date to be applied according to the
following priorities: (1) to unpaid fees and expenses due hereunder including,
without limitation, any recurring fees due pursuant to Section 2.2(b) hereof;
(2) to any custodian/back-up servicer (if applicable); (3) to accrued but unpaid
interest owed under Sections 2.1(c) and 2.4 hereof; (4) to the Receipts
Collection Fee; (5) if at any time the Lender is not holding, in the Lock Box
Account, an amount equal to at least the Reserve Amount, then all Receipts
received into the Lock Box Account shall be withheld and applied by Lender to
amounts required to establish the Reserve Amount, until the Reserve Amount is
reached, which Reserve Amount (or portion thereof) may be kept and maintained in
the Lock Box Account during the duration of this Agreement as additional
security for the Obligations; (6) to amounts payable pursuant to Section 2.1(d),
including the Mandatory Principal Repayment Amounts; and (7) upon the occurrence
of an Event of Default, to Lender (including any Reserve Amount then in the Lock
Box Account), to reduce the outstanding Revolving Loan balance to zero (each of
the foregoing payments, the “Lock Box Payments”).  The amount remaining in the
Lock Box Account following the payment of the Lock Box Payments on each Payment
Date (less any amount in the Lock Box Account withheld and applied by Lender to
the Reserve Amount) shall be referred to herein as the “Net Amount”.  The Lender
agrees that, provided the Borrowers are in good standing under this Agreement
and the other Loan Documents, and provided no Event of Default exists under this
Agreement or any other Loan Document, and provided no event has occurred that,
with the passage of time, or the giving of notice, or both, would constitute an
Event of Default under this Agreement or any other Loan Document, the Net Amount
will be transferred to Borrowers from the Lock Box Account via wire transfer or
electronic funds transfer to an account designated by the Borrowers on the
immediately subsequent Payment Date. Borrowers agree to pay all reasonable fees,
costs and expenses in connection with opening, maintaining and operation of the
Lock Box and the Lock Box Account.  All of such reasonable fees, costs and
expenses, if not paid by Borrowers within five (5) Business Days of Lender’s
written request, may be paid by Lender and in such event all amounts paid by
Lender shall constitute Obligations hereunder, shall be payable to Lender by
Borrowers upon demand, and, until paid, shall bear interest at the Default
Rate.  Notwithstanding anything contained herein to the contrary, in the event
the amounts collected into the Lock Box Account from time to time, whether in
respect of Receipts, as proceeds of Collateral, or otherwise, are at any time
not sufficient to pay the amounts due to Lender on any Payment Date under items
(1) – (7) above of this Section 2.1(e)(ii), then Borrowers shall, without
further notice or demand from Lender, pay any such shortfall amounts to the Lock
Box Account within three (3) Business Days from the Payment Date for which such
amounts were due.
 
   (iii)           Power of Attorney.  It is intended that all Receipts, and all
other checks, drafts, instruments and other items of payment or proceeds of
Collateral at any time received, due or owing to any Borrower from a Customer,
any other Person, or otherwise, shall be deposited directly into the Lock Box
Account, and if not deposited directly into the Lock Box Account, shall be
immediately remitted or endorsed by Borrowers to Lender into the Lock Box
Account, and, if that remittance or endorsement of any such item shall not be
immediately made for any reason, then in such event, Lender is hereby
irrevocably authorized to remit or endorse the same on each Borrower’s
behalf.  For purpose of this Section, and only in such instances in which Lender
is authorized to remit or endorse payment items on behalf of any Borrower
pursuant to the immediately preceding sentence, each Borrower irrevocably hereby
makes, constitutes and appoints Lender (and all Persons designated by Lender for
that purpose) as each Borrower’s true and lawful attorney and agent-in-fact: (A)
to endorse such Borrower’s name upon said Receipts or items of payment and/or
proceeds of Collateral and upon any chattel paper, document, instrument, invoice
or similar document or agreement relating to any Receipts of such Borrower; (B)
to take control in any manner of any item of payment or proceeds thereof; (C) to
have access to such Borrower’s operating accounts, through such Borrower’s
online banking system, or otherwise, to make remittances of any Receipts
deposited therein into the Lock Box Account as required hereby; (D) to have
access to any lock box or postal box into which any of Borrowers’ mail is
deposited, and open and process all mail addressed to any Borrower and deposited
therein; and (E) direct and otherwise deal with all Payment Processing
Companies, third party finance companies, medical doctors or other Persons to
insure that all payments and reserves as hereby contemplated are remitted to the
Lock Box Account.
 

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   (iv)          Rights Upon Default.  Lender may, at any time and from time
during the existence and continuance of an Event of Default, whether before or
after notification to any Customer and whether before or after the maturity of
any of the Obligations: (A) enforce collection of any of the Accounts and
Receipts of any Borrower or other amounts owed to any Borrower by suit or
otherwise; (B) exercise all of the rights and remedies of each Borrower with
respect to Proceedings brought to collect any Accounts, Receipts, or other
amounts owed to each Borrower; (C) surrender, release or exchange all or any
part of any Accounts, Receipts, or other amounts owed to each Borrower, or
compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder; (D) sell or assign any Account or
Receipts of any Borrower, or other amount owed to any Borrower, upon such terms,
for such amount and at such time or times as Lender deems advisable; (E)
prepare, file and sign any Borrower’s name on any proof of claim in bankruptcy
or other similar document against any Customer or other Person obligated to any
Borrower; and (F) do all other acts and things which are necessary, in Lender’s
sole discretion, to fulfill each Borrower’s obligations under this Agreement and
the other Loan Documents and to allow Lender to collect the Accounts, Receipts,
or other amounts owed to each Borrower.  In addition to any other provision
hereof, Lender may at any time after the occurrence and during the continuance
of an Event of Default, at Borrowers’ expense, notify any parties obligated on
any of the Accounts and Receipts to make payment directly to Lender of any
amounts due or to become due thereunder.
 
   (v)           Monthly Statement.  On a monthly basis, Lender shall deliver to
Borrowers an account statement showing all Loans, charges and payments, which
shall be deemed final, binding and conclusive upon Borrowers, unless Borrowers
notify Lender in writing, specifying any error therein, within thirty (30) days
of the date such account statement is sent to Borrowers and any such notice
shall only constitute an objection to the items specifically identified;
provided, however, failure of Lender to deliver any such monthly account
statement shall not in any way impair, limit, restrict, prejudice, or adversely
affect any of Lender’s rights and remedies hereunder and under all other Loan
Documents.
 
2.2         Fees.
 
  (a)            Intentionally Left Blank.
 
  (b)           Asset Monitoring Fee. Borrowers agree to pay to Lender an asset
monitoring fee (“Asset Monitoring Fee”) equal to One Thousand Five-Hundred and
No/100 Dollars ($1,500.00), which shall be due and payable on the Closing Date,
and thereafter on the first day of each third (3rd) calendar month during the
term of this Agreement.  The Asset Monitoring Fee shall be increased in
increments of Five Hundred and No/100 Dollars ($500.00) each time the Revolving
Loan Commitment amount is increased pursuant to Section 2.1(b); provided that
the Asset Monitoring Fee shall never exceed Two Thousand Five Hundred and No/100
Dollars ($2,500.00).
 

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  (c)            Transaction Advisory Fee. Borrowers agree to pay to Lender, on
the Closing Date, a transaction advisory fee equal to four percent (4.0%) of the
Revolving Loan Commitment as of the Closing Date.  Borrowers agree to pay to
Lender a transaction advisory fee equal to two percent (2.0%) on the amount of
any increase of the Revolving Loan Commitment pursuant to Section 2.1(b), which
shall be due and payable on the date of any increase to the Revolving Loan
Commitment pursuant to Section 2.1(b).
 
  (d)            Due Diligence Fees.  Borrowers agree to pay a due diligence fee
equal to Twelve Thousand Five Hundred and No/100 Dollars ($12,500.00), which
shall be due and payable in full on the Closing Date, or any remaining portion
thereof shall be due and payable on the Closing Date if a portion of such fee
was paid upon the execution of any term sheet related to this Agreement.
 
  (e)            Document Review and Legal Fees.  Borrowers agree to pay a
document review and legal fee equal to Fifteen Thousand and No/100 Dollars
($15,000.00) which shall be due and payable in full on the Closing Date, or any
remaining portion thereof shall be due and payable on the Closing Date if a
portion of such fee was paid upon the execution of any term sheet related to
this Agreement.
 
  (f)             Other Fees.  Each of the Borrowers also agrees to pay to the
Lender (or any designee of the Lender), upon demand, or to otherwise be
responsible for the payment of, any and all other costs, fees and expenses,
including the reasonable fees, costs, expenses and disbursements of counsel for
the Lender and of any experts and agents, which the Lender may incur or which
may otherwise be due and payable in connection with: (i) the preparation,
negotiation, execution, delivery, recordation, administration, amendment,
waiver, subordination, or other modification or termination of this Agreement or
any other Loan Documents (provided that there shall be no fees for the
preparation and negotiation of this Agreement other than as specifically set
forth in the closing or settlement statement executed by Borrowers and Lender
on  the Closing Date); (ii) any documentary stamp taxes, intangibles taxes,
recording fees, filing fees, or other similar taxes, fees or charges imposed by
or due to any Governmental Authority in connection with this Agreement or any
other Loan Documents; (iii) the exercise or enforcement of any of the rights of
the Lender under this Agreement or the Loan Documents; or (iv) the failure by
any Borrower to perform or observe any of the provisions of this Agreement or
any of the Loan Documents.  Included in the foregoing shall be the amount of all
expenses paid or incurred by Lender in consulting with counsel concerning any of
its rights under this Agreement or any other Loan Document or under applicable
law.  All such costs and expenses, if not so immediately paid when due or upon
demand thereof, shall bear interest from the date of outlay until paid, at the
Default Rate.  All of such costs and expenses shall be additional Obligations of
the Borrowers to Lender secured under the Loan Documents.  The provisions of
this Subsection shall survive the termination of this Agreement.
 

17

 

 

 
  (g)            Advisory Fee.
 
   (i)             Share Issuance.  In consideration of advisory services
provided by Lender to Issuing Borrower prior to the Closing Date, the Issuing
Borrower shall pay to Lender a fee equal to $125,000.00 (the “Advisory
Fee”).  The Advisory Fee shall be initially paid by the issuance to Lender of
restricted shares of the Issuing Borrower’s Common Stock (the “Advisory Fee
Shares”) in accordance with the terms and provisions of this Section.  For
purposes of determining the number of shares issuable to Lender under this
Section 2.2(g), the Issuing Borrower’s Common Stock shall be valued at $1.00 per
share.  On the Closing Date, the Issuing Borrower shall issue to Lender 125,000
Advisory Fee Shares.  On the Closing Date, the Issuing Borrower shall instruct
its transfer agent (the “Transfer Agent”) to issue certificates representing the
Advisory Fee Shares issuable to the Lender hereunder, and shall cause its
Transfer Agent to deliver such certificates to Lender within five (5) Business
Days from the Closing Date.  In the event such certificates representing the
Advisory Fee Shares issuable hereunder shall not be delivered to the Lender
within said five (5) Business Day period, same shall be an immediate default
under this Agreement and the other Loan Documents.  The Advisory Fee Shares,
when issued, shall be deemed to be validly issued, fully paid, and
non-assessable shares of the Issuing Borrower’s Common Stock. The Advisory Fee
Shares shall be deemed fully earned as of the date the Borrowers execute this
Agreement, regardless of the amount or number of Revolving Loans made
hereunder. 
 
   (ii)           Make-Whole Adjustments.  It is the intention of the Issuing
Borrower and Lender that the Lender shall be able to sell the Advisory Fee
Shares and generate net proceeds (net of all brokerage commissions and other
fees or charges payable by Lender in connection with the sale thereof) from such
sale equal to the Advisory Fee.  In this regard, the Lender shall have the right
to sell the Advisory Fee Shares in the Principal Trading Market, or otherwise,
at any time in accordance with applicable securities laws (provided, however, if
the Lender shall sell any Advisory Fee Shares other than through the Principal
Trading Market, any such sale shall be an arms-length sale to an unrelated
purchaser, and at fair market value).  Upon: (A) the sale of all Advisory Fee
Shares; (B) Lender receiving net proceeds from the sale of the Advisory Fee
Shares equal to the Advisory Fee; or (C) at any time Lender may elect, the
Lender shall deliver to the Issuing Borrower a reconciliation statement showing
the net proceeds actually received by the Lender from the sale of the Advisory
Fee Shares (the “Sale Reconciliation”).  If, as of the date of the delivery by
Lender of the Sale Reconciliation, the Lender has not realized and received net
proceeds from the sale of the Advisory Fee Shares equal to at least the Advisory
Fee, as shown on the Sale Reconciliation, then the Issuing Borrower shall
immediately take all required action necessary or required in order to cause the
issuance of additional shares of Common Stock to the Lender in an amount
determined by Lender sufficient such that, if such shares were to be sold at the
market price of such shares at such time, and the net proceeds thereof are added
to the net proceeds from the sale of any of the previously issued and sold
Advisory Fee Shares, the Lender shall have received total net funds equal to the
Advisory Fee.  If additional shares of Common Stock are issued pursuant to the
immediately preceding sentence, and after the sale of such additional issued
shares of Common Stock, the Lender still has not received net proceeds equal to
at least the Advisory Fee, then the Issuing Borrower shall again be required to
immediately take all required action necessary or required in order to cause the
issuance of additional shares of Common Stock to the Lender as contemplated
above, and such additional issuances shall continue until the Lender has
received net proceeds from the sale of such Common Stock equal to the Advisory
Fee.  In the event the Lender receives net proceeds from the sale of Advisory
Fee Shares equal to the Advisory Fee before Lender has sold all Advisory Fee
Shares issued to Lender hereunder, then the Lender shall return all such
remaining Advisory Fee Shares to the Issuing Borrower.  In the event additional
Common Stock is required to be issued as outlined above, the Issuing Borrower
shall instruct its Transfer Agent to issue certificates representing such
additional shares of Common Stock to the Lender immediately subsequent to the
Lender’s notification to the Issuing Borrower that additional shares of Common
Stock are issuable hereunder, and the Issuing Borrower shall in any event cause
its Transfer Agent to deliver such certificates to Lender within five (5)
Business Days following the date Lender notifies the Issuing Borrower that
additional shares of Common Stock are to be issued hereunder.  In the event such
certificates representing such additional shares of Common Stock issuable
hereunder shall not be delivered to the Lender within said five (5) Business Day
period, same shall be an immediate default under this Agreement and the Loan
Documents.  Notwithstanding anything contained in this Section 2.2(g) to the
contrary, at any time on or prior to the Revolving Loan Maturity Date, the
Issuing Borrower shall have the right, at any time during such period, to redeem
any Advisory Fee Shares then in the Lender’s possession for an amount payable by
the Issuing Borrower to Lender in Dollars equal to the Advisory Fee, less any
net proceeds received by the Lender from any previous sales of Advisory Fee
Shares.  Upon Lender’s receipt of such cash payment in accordance with the
immediately preceding sentence, the Lender shall return any then remaining
Advisory Fee Shares in its possession back to the Issuing Borrower.  In the
event the Lender elects to increase the Revolving Loan Commitment as permitted
by this Agreement, the Borrowers agree to pay additional advisory fees to Lender
either in cash or in a similar manner as set forth in this Section 2.2(g)
through the issuance of additional Advisory Fee Shares, at Lender’s sole
discretion, in an amount to be mutually agreed upon between Borrowers and
Lender.
 

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   (iii)           Mandatory Redemption.  Notwithstanding anything contained in
this Agreement to the contrary, in the event the Lender has not realized net
proceeds from the sale of Advisory Fee Shares equal to at least the Advisory Fee
by a date that is twelve (12) months from the Closing Date, then at any time
thereafter, the Lender shall have the right, upon written notice to the Issuing
Borrower, to require that the Issuing Borrower redeem all Advisory Fee Shares
then in Lender’s possession for Dollars equal to the Advisory Fee, less any net
proceeds received by the Lender from any previous sales of Advisory Fee Shares,
if any.  In the event such redemption notice is given by the Lender, the Issuing
Borrower shall redeem the then remaining Advisory Fee Shares in Lender’s
possession for an amount of Dollars equal to the Advisory Fee, less any net
proceeds received by the Lender from any previous sales of Advisory Fee Shares,
if any, payable by wire transfer to an account designated by Lender within five
(5) Business Days from the date the Lender delivers such redemption notice to
the Issuing Borrower.  Notwithstanding the foregoing to the contrary, if the
Common Stock of the Issuing Borrower is not quoted and actively traded in the
Principal Trading Market by a date that is nine (9) months from the Closing
Date, then: (A) on the date that is nine (9) months after the Closing Date, the
Issuing Borrower shall redeem one third (1/3) of the Advisory Fee Shares for an
amount of Dollars equal to one third (1/3) of the Advisory Fee, payable by wire
transfer to an account designated by Lender on such date; and (B) on the date
that is twelve (12) months after the Closing Date, the Issuing Borrower shall
redeem the remaining two thirds (2/3) of the Advisory Fee Shares for an amount
of Dollars equal to the remaining two thirds (2/3) of the Advisory Fee, payable
by wire transfer to an account designated by Lender on such date.
 
   (iv)           Surviving Obligations.  The Borrowers agree and acknowledge
that notwithstanding the termination of this Agreement, or the payment in full
of all of the Borrowers’ Obligations hereunder or under any other Loan
Documents, the Issuing Borrower’s obligations and liability under this Agreement
and the other Loan Documents, and the Lender’s Lien and security interest on all
Collateral, shall survive, shall remain valid and effective and shall not be
released or terminated, until the Issuing Borrower has fully complied with all
of its obligations with respect to payment of the Advisory Fee, and Lender has
generated and received net proceeds from the sale of the Advisory Fee Shares (or
otherwise received equivalent payment thereof in Dollars as permitted hereunder)
equal to the Advisory Fee.
 

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   (v)            Leak-Out Covenant.  Notwithstanding anything contained in this
Agreement to the contrary, so long as no Event of Default exists and is
continuing, and so long as no event has occurred that, with the passage of time,
the giving of notice, or both, would constitute an Event of Default, the Lender
agrees that it shall not, during any given calendar week, sell Advisory Fee
Shares in excess of twenty percent (20%) of the average weekly volume of the
Common Stock traded on the Principal Trading Market over the immediately
preceding calendar week, as reported by Bloomberg.
 
  (h)            Matters with Respect to Common Stock.
 
   (i)             Issuance of Conversion Shares.  The parties hereto
acknowledge that pursuant to the terms of the Revolving Note, Lender has the
right, at its discretion, to convert amounts due under the Revolving Note into
Common Stock in accordance with the terms of the Revolving Note.  In the event,
for any reason, the Issuing Borrower fails to issue, or cause the Transfer Agent
to issue, any portion of the Common Stock issuable upon conversion of the
Revolving Note (the “Conversion Shares”) to Lender in connection with the
exercise by Lender of any of its conversion rights under the Revolving Note,
then the parties hereto acknowledge that Lender shall irrevocably be entitled to
deliver to the Transfer Agent, on behalf of itself and the Issuing Borrower, a
“Conversion Notice” (as defined in the Revolving Note) requesting the issuance
of the Conversion Shares then issuable in accordance with the terms of the
Revolving Note, and the Transfer Agent, provided they are the acting transfer
agent for the Issuing Borrower at the time, shall, and the Issuing Borrower
hereby irrevocably authorizes and directs the Transfer Agent to, without any
further confirmation or instructions from the Issuing Borrower, issue the
Conversion Shares applicable to the Conversion Notice then being exercised, and
surrender to a nationally recognized overnight courier for delivery to Lender at
the address specified in the Conversion Notice, a certificate of the Common
Stock of the Issuing Borrower, registered in the name of Lender or its designee,
for the number of Conversion Shares to which Lender shall be then entitled under
the Revolving Note, as set forth in the Conversion Notice.
 
   (ii)            Issuance of Additional Common Stock Under Section
2.2(g).  The parties hereto acknowledge that pursuant to Section 2.2(g) above,
the Issuing Borrower has agreed to issue, simultaneously with the execution of
this Agreement and in the future, certain shares of the Issuing Borrower’s
Common Stock in accordance with the terms of Section 2.2(g) above.  In the
event, for any reason, the Issuing Borrower fails to issue, or cause its
Transfer Agent to issue, any portion of the Common Stock issuable to Lender
under Section 2.2(g), either now or in the future, then the parties hereto
acknowledge that Lender shall irrevocably be entitled to deliver to the Transfer
Agent, on behalf of itself and the Issuing Borrower, a written instruction
requesting the issuance of the shares of Common Stock then issuable in
accordance with Section 2.2(g) above, and the Transfer Agent, provided they are
the acting transfer agent for the Issuing Borrower at the time, shall, and the
Issuing Borrower hereby irrevocably authorizes and directs the Transfer Agent
to, without any further confirmation or instructions from the Issuing Borrower,
issue such shares of the Issuing Borrower’s Common Stock as directed by Lender,
and surrender to a nationally recognized overnight courier for delivery to
Lender at the address specified in the Lender’s notice, a certificate of the
Common Stock of the Issuing Borrower, registered in the name of Lender or its
designee, for the number of shares of Common Stock issuable to Lender in
accordance with Section 2.2(g).
 

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   (iii)           Removal of Restrictive Legends.  In the event that Lender has
any shares of the Issuing Borrower’s Common Stock bearing any restrictive
legends, and Lender, through its counsel or other representatives, submits to
the Transfer Agent any such shares for the removal of the restrictive legends
thereon, whether in connection with a sale of such shares pursuant to any
exemption to the registration requirements under the Securities Act, or
otherwise, and the Issuing Borrower and or its counsel refuses or fails for any
reason to render an opinion of counsel or any other documents, certificates or
instructions required for the removal of the restrictive legends, then: (A) to
the extent such legends could be lawfully removed under applicable laws, Issuing
Borrower’s failure to provide the required opinion of counsel or any other
documents, certificates or instructions required for the removal of the
restrictive legends shall be an immediate Event of Default under this Agreement
and all other Loan Documents; and (B) the Issuing Borrower hereby agrees and
acknowledges that Lender is hereby irrevocably and expressly authorized to have
counsel to Lender render any and all opinions and other certificates or
instruments which may be required for purposes of removing such restrictive
legends, and the Issuing Borrower hereby irrevocably authorizes and directs the
Transfer Agent to, without any further confirmation or instructions from the
Issuing Borrower, issue any such shares without restrictive legends as
instructed by Lender, and surrender to a common carrier for overnight delivery
to the address as specified by Lender, certificates, registered in the name of
Lender or its designees, representing the shares of Common Stock to which Lender
is entitled, without any restrictive legends and otherwise freely transferable
on the books and records of the Issuing Borrower.
 
   (iv)          Authorized Agent of the Issuing Borrower.  The Issuing Borrower
hereby irrevocably appoints the Lender and its counsel and its representatives,
each as the Issuing Borrower’s duly authorized agent and attorney-in-fact for
the Issuing Borrower for the purposes of authorizing and instructing the
Transfer Agent to process issuances, transfers and legend removals upon
instructions from Lender, or any counsel or representatives of Lender, as
specifically contemplated herein.  The authorization and power of attorney
granted hereby is coupled with an interest and is irrevocable so long as any
Obligations of the Borrowers under this Agreement or any other Loan Documents
remain outstanding, and so long as the Lender owns or has the right to receive,
any shares of the Issuing Borrower’s Common Stock hereunder or under the
Revolving Note.  In this regard, the Issuing Borrower hereby confirms to the
Transfer Agent and the Lender that it can NOT and will NOT give instructions,
including stop orders or otherwise, inconsistent with the terms of this
Agreement with regard to the matters contemplated herein, and that the Lender
shall have the absolute right to provide a copy of this Agreement to the
Transfer Agent as evidence of the Issuing Borrower’s irrevocable authority for
Lender and Transfer Agent to process issuances, transfers and legend removals
upon instructions from Lender, or any counsel or representatives of Lender, as
specifically contemplated herein, without any further instructions, orders or
confirmations from the Issuing Borrower.
 

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   (v)            Injunction and Specific Performance.  The Issuing Borrower
specifically acknowledges and agrees that in the event of a breach or threatened
breach by the Issuing Borrower of any provision of this Section 2.2(h), the
Lender will be irreparably damaged and that damages at law would be an
inadequate remedy if this Agreement were not specifically enforced.  Therefore,
in the event of a breach or threatened breach of any provision of this Section
2.2(h) by the Issuing Borrower, the Lender shall be entitled to obtain, in
addition to all other rights or remedies Lender may have, at law or in equity,
an injunction restraining such breach, without being required to show any actual
damage or to post any bond or other security, and/or to a decree for specific
performance of the provisions of this Section 2.2(h).
 
   (vi)           Right to Approve Transfer Agent.  The Borrowers hereby
represent and warrant that the Issuing Borrower’s current Transfer Agent is
Corporate Stock Transfer, Inc., whose contact information is as follows: 3200
Cherry Creek South Drive, Suite 430, Denver, CO 80209, Attn: Caroline Bell, Tel:
(303) 282-4800.  The Issuing Borrower hereby agrees that it shall not change the
Transfer Agent, unless the Lender first approves the proposed new Transfer
Agent, such approval to be in Lender’s sole and absolute discretion.
 
2.3         Renewal of Revolving Loans; Non-Renewal of Revolving Loans.  So long
as no Event of Default exists, and so long as no event has occurred that, with
the passage of time, the giving of notice, or both, would constitute an Event of
Default, and so long as the Borrower does not otherwise terminate this Agreement
on or prior to the then applicable Revolving Loan Maturity Date, the Revolving
Loan Maturity Date shall be automatically extended for no more than two (2)
extensions, each of such extensions for an additional six (6) month period.
 
2.4         Interest and Fee Computation; Collection of Funds.  Interest accrued
hereunder shall be payable as set forth in Section 2.1(d) hereof.  Except as
otherwise set forth herein, all interest and fees shall be calculated on the
basis of a year consisting of 360 days and shall be paid for the actual number
of days elapsed.  Principal payments submitted in funds not immediately
available shall continue to bear interest until collected.  If any payment to be
made by Borrowers hereunder or under the Revolving Note shall become due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in computing any
interest in respect of such payment.  Any Obligations which are not paid when
due (subject to applicable grace periods) shall bear interest at the Default
Rate.
 
2.5         Automatic Debit.  In order to effectuate the timely payment of any
of the Obligations when due, each Borrower hereby authorizes and directs Lender,
at Lender’s option, to: (i) debit, or cause or instruct the debit of, the amount
of the Obligations to any ordinary deposit account of any Borrower; or (ii) make
a Revolving Loan hereunder to pay the amount of the Obligations.
 
2.6         Discretionary Disbursements.  Lender, in its sole and absolute
discretion, may immediately upon notice to Borrowers, disburse any or all
proceeds of the Revolving Loans made or available to Borrowers pursuant to this
Agreement to pay any fees, costs, expenses or other amounts required to be paid
by Borrowers hereunder and not so paid.  All monies so disbursed shall be a part
of the Obligations, payable by Borrowers on demand from Lender.
 

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2.7         US Dollars; Currency Risk.  All Receipts will be in Dollars.  In the
event Receipts are not in Dollars, Borrowers shall bear the risk of Lender’s
currency losses, and if Lender suffers a currency loss and the result is to
increase the cost to Lender or to reduce the amount of any sum received or
receivable by Lender under this Agreement or under the Revolving Note with
respect thereto, then after demand by Lender (which demand shall be accompanied
by a certificate setting forth reasonably detailed calculations of the basis of
such demand), Borrowers shall pay to Lender such additional amount or amounts as
will compensate Lender for such increased cost or such reduction.  Borrowers
hereby authorize Lender to advance or cause an advance of Revolving Loans to pay
for the increased costs or reductions associated with any such currency losses.
 
2.8         Funds Withheld at Closing.  On the Closing Date, Four Hundred Fifty
Thousand and No/100 Dollars ($450,000.00) shall be withheld from the initial
Revolving Loan made hereunder, and be used and applied as follows:
 
  (a)            Repayment of Loan.  One Hundred Thirty Thousand and No/100
Dollars ($130,000.00) shall be repaid to the Lock Box Account immediately after
the Closing Date, and be used and applied by Lender to satisfy the Reserve
Amount; and
 
  (b)            Funds to Lock Box for Bridge Financing Loan Extensions.  Three
Hundred Twenty Thousand and No/100 Dollars ($320,000.00) (the “Bridge Loan
Funds”) shall be repaid to the Lock Box Account immediately after the Closing
Date, and such Bridge Loan Funds shall remain in the Lock Box Account and be
used as follows:
 
   (i)             Immediately after the Closing Date, the Issuing Borrower
shall use its good faith efforts to extend the maturity date of as many of the
Bridge Financing Loans as possible.  Upon the Issuing Borrower securing an
extension of a Bridge Financing Loan, Issuing Borrower shall provide to Lender a
copy of the executed extension for such Bridge Financing Loan, and within three
(3) Business Days of receiving such executed extension, the Lender shall
disburse to Issuing Borrower, from the Bridge Loan Funds withheld in the Lock
Box Account, the corresponding principal amount outstanding on the Bridge
Financing Loan so extended.  Each time a disbursement is made to the Issuing
Borrower under this Section 2.8(b)(i), the Issuing Borrower shall deliver to
Lender an updated Use of Proceeds Confirmation, showing the proposed use of
proceeds for the Bridge Loan Funds so disbursed to Issuing Borrower hereunder.
 
   (ii)            On December 27, 2013, Issuing Borrower shall deliver to
Lender a schedule of all Bridge Financing Loans that were not able to be
extended, together with the aggregate principal amount of all such Bridge
Financing Loans not so extended, and by no later than December 30, 2013, Lender
shall disburse the remaining amount of the Bridge Loan Funds in the Lock Box
Account to the Issuing Borrower (to the extent not previously disbursed to
Issuing Borrower in accordance with Section 2.8(b)(i) above), and Issuing
Borrower shall use such disbursed funds to fully repay the Bridge Financing
Loans not so extended prior to the maturity date thereof.
 
3.             CONDITIONS OF BORROWING.
 
Notwithstanding any other provision of this Agreement, the obligation of Lender
to disburse or make all or any portion of any Loans is subject to satisfaction
of all of the following conditions precedent (unless a condition is waived in
writing by Lender) contained in this Article 3.
 

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3.1         Intentionally Left Blank.
 
3.2         Loan Documents to be Executed by Borrowers.  As a condition
precedent to Lender’s disbursal or making of the Loans pursuant to this
Agreement, Borrowers shall have executed or cause to be executed and delivered
to Lender all of the following documents, each of which must be satisfactory to
Lender and Lender’s counsel in form, substance and execution:
 
  (a)            Credit Agreement.  One (1) original of this Agreement duly
executed by Borrowers;
 
  (b)            Revolving Note.  One (1) original Revolving Note duly executed
by Borrowers;
 
  (c)            Security Agreement.  One (1) original of the Security Agreement
dated as of the date of this Agreement, executed by Borrowers;
 
  (d)            Validity Certificates. Validity Certificates duly executed by
such officers of Borrowers as Lender shall require;
 
  (e)            Search Results.  Copies of UCC search reports dated such a date
as is reasonably acceptable to Lender, listing all effective financing
statements which name any Borrower, under its present name and any previous
names, as debtors, together with copies of such financing statements;
 
  (f)             Organizational and Authorization Documents.  A certificate of
the corporate secretary or other officer, partner or manager of each Borrower
certifying and attaching: (i) copies of its articles of incorporation, bylaws,
articles of organization, operating agreement, partnership agreement or other
applicable formation and governing documents; (ii) resolutions of the board of
directors, managers, general partners or other Persons with proper authority to
manage the affairs of such Borrower, approving and authorizing such Borrower’s
issuance of the Revolving Note and Advisory Fee Shares, and the execution,
delivery and performance of the Loan Documents to which it is party and the
transactions contemplated thereby; (iii) the signatures and incumbency of the
officers, managers, partners or other Persons of such Borrower executing any of
the Loan Documents, each of which such Borrower hereby certifies to be true and
complete, and in full force and effect without modification, it being understood
that Lender may conclusively rely on each such document and certificate until
formally advised by such Borrower of any changes therein; and (iv) good standing
certificate in the state of incorporation of such Borrower and in each other
state requested by Lender;
 
  (g)            Insurance.  Evidence satisfactory to Lender of the existence of
insurance required to be maintained pursuant to Section 10.4, together with
evidence that Lender has been named as additional insured and lender’s loss
payee, as applicable, on all related insurance policies;
 

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  (h)            Opinion of Counsel.  A customary opinion of Borrowers’ counsel,
in form reasonably satisfactory to Lender; and
 
  (i)             Additional Documents.  Such other agreements, documents,
instruments, certificates, financial statements, schedules, resolutions,
opinions of counsel, notes and other items which Lender shall require in
connection with this Agreement.
 
3.3         Issuance of Stock.  The Issuing Borrower shall have issued and
delivered to Lender an irrevocable issuance instruction letter and board
resolution in form and substance acceptable to Lender, irrevocably authorizing
the issuance of the Advisory Fee Shares and irrevocably directing its Transfer
Agent to issue and deliver the Advisory Fee Shares to Lender or its designee.
 
3.4         Payment of Fees.  Borrowers shall have paid to Lender all fees,
costs and expenses, including, but not limited to, due diligence expenses,
attorney’s fees, search fees, title fees, documentation and filing fees
(including documentary stamps and taxes payable on the face amount of the
Revolving Note).
 
3.5         Event of Default.  No Event of Default, or event which, with notice
or lapse of time, or both, would constitute an Event of Default, shall have
occurred and be continuing.
 
3.6         Adverse Changes.  There shall not have occurred any Material Adverse
Effect.
 
3.7         Litigation.  No pending claim, investigation, litigation or
governmental Proceeding shall have been instituted against any Borrower or any
of their respective Subsidiaries or any of their respective officers or
shareholders.
 
3.8         Representations and Warranties.  No representation or warranty of
Borrowers contained herein or in any Loan Documents shall be untrue or incorrect
in any material respect as of the date of any Loans as though made on such date,
except to the extent such representation or warranty expressly relates to an
earlier date.
 
3.9         Due Diligence.  The business, legal and collateral due diligence
review performed by Lender, including, but not limited to, a review of
Borrowers’ historical performance and financial information, must be acceptable
to Lender in its sole discretion.  Lender reserves the right to increase any and
all aspects of its due diligence in Lender’s sole discretion.
 
3.10       Key Personnel Investigations.  Lender shall be satisfied, in its sole
discretion, with results from background investigations conducted on key members
of Borrowers’ principals and management teams.
 
3.11       Repayment of Outstanding Indebtedness.  Borrowers shall have repaid
in full all outstanding indebtedness secured by Collateral, other than
indebtedness giving rise to Permitted Liens.
 

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3.12       Loan Documents to be Executed by any Subsidiary following the Closing
Date.  Within ten (10) days of any entity becoming a Subsidiary of any Borrower,
such Subsidiary shall have executed or cause to be executed and delivered to
Lender all of the following documents, each of which must be satisfactory to
Lender and Lender’s counsel in form, substance and execution:
 
  (a)            Consent and Agreement.  One (1) original of a Consent and
Agreement duly executed by such Subsidiary, pursuant to which such Subsidiary
consents and agrees to become a “Borrower” hereunder and to be bound by the
terms and conditions of this Agreement and all other Loan Documents;
 
  (b)            Organizational and Authorization Documents. A certificate of an
officer of the Subsidiary certifying and attaching: (i) copies of the
Subsidiary’s articles of incorporation, bylaws, operating agreement, certificate
of organization or other formation, organizational or governing documents; (ii)
resolutions of its respective board of directors or managers, approving and
authorizing the execution, delivery and performance of the Loan Documents to
which it will become a party and the transactions contemplated thereby; and
(iii) the signatures and incumbency of the officers of the Subsidiary executing
any of the Loan Documents;
 
  (c)             Additional Documents.  Such other agreements, documents,
instruments, certificates, financial statements, schedules, resolutions,
opinions of counsel, notes and other items which Lender shall require in
connection with this Agreement and the other Loan Documents.
 
4.             NOTES EVIDENCING LOANS.
 
The Revolving Loans shall be evidenced by the Revolving Note (together with any
and all renewal, extension, modification or replacement notes executed by
Borrowers and delivered to Lender and given in substitution therefor) duly
executed by Borrowers and payable to the order of Lender.  At the time of the
initial disbursement of a Revolving Loan and at each time an additional
Revolving Loan shall be requested hereunder or a repayment made in whole or in
part thereon, an appropriate notation thereof shall be made on the books and
records of Lender.  All amounts recorded shall be, absent demonstrable error,
conclusive and binding evidence of: (i) the principal amount of the Revolving
Loans advanced hereunder; (ii) any unpaid interest owing on the Revolving Loans;
and (iii) all amounts repaid on the Revolving Loans.  The failure to record any
such amount or any error in recording such amounts shall not, however, limit or
otherwise affect the obligations of Borrowers under the Revolving Note to repay
the principal amount of the Revolving Loans, together with all interest accruing
thereon.
 
5.             MANNER OF BORROWING.
 
5.1         Loan Requests.  Subject to Section 2.1(a) and Article 3 hereof, the
initial Revolving Loan hereunder shall be made available to Borrowers on the
Closing Date. Notwithstanding anything contained in this Agreement to the
contrary, any additional Revolving Loans requested by Borrowers under this
Agreement shall be subject to Lender’s approval, which approval may be given or
withheld in Lender’s sole and absolute discretion.  A request for an additional
Revolving Loan may only be made if no default or Event of Default shall then
exist and be continuing and shall be subject to: (i) Lender’s preparation of a
Borrowing Base Certificate, showing that there is borrowing availability under
the Revolving Loan Availability; (ii) Receipts deposited into the Lock Box
Account and other Collateral being acceptable to Lender; and (iii) Lender’s
discretionary approval as required hereby.
 

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5.2         Communications. Lender is authorized to rely on any written,
electronic, or telecopy loan requests which Lender believes in its good faith
judgment to emanate from the President or Chief Executive Officer, or any other
authorized representative of Borrowers.  Each Borrower hereby irrevocably
confirms, ratifies and approves all such advances by Lender and each of such
Borrowers hereby indemnifies Lender against losses and expenses (including court
costs, attorneys’ and paralegals’ fees) and shall hold Lender harmless with
respect thereto.
 
6.             SECURITY FOR THE OBLIGATIONS.
 
To secure the payment and performance by Borrowers of the Obligations hereunder,
each Borrower grants, under and pursuant to the Security Agreement executed by
Borrowers dated as of the date hereof, to Lender, its successors and assigns, an
unconditional, continuing, first-priority security interest in, and does hereby
assign, transfer, mortgage, convey, pledge, hypothecate and set over to Lender,
its successors and assigns, all of the right, title and interest of each
Borrower in and to the Collateral, whether now owned or hereafter acquired or
arising, and all proceeds (including, without limitation, all insurance
proceeds) and products of any of the Collateral; provided, however, Lender shall
receive a second priority security interest and Lien with respect to Equipment
of the Borrowers.  At any time upon Lender’s request, Borrowers shall execute
and deliver to Lender any other documents, instruments or certificates requested
by Lender for the purpose of properly documenting and perfecting the security
interests of Lender in and to the Collateral granted hereunder, including any
additional security agreements, mortgages, control agreements, and financing
statements.
 
7.             REPRESENTATIONS AND WARRANTIES OF BORROWERS.
 
To induce Lender to make the Loans, each Borrower makes the following
representations and warranties to Lender, each of which shall be true and
correct in all material respects as of the date of the execution and delivery of
this Agreement and as of the date of each Loan made hereunder, except to the
extent such representation expressly relates to an earlier date, and which shall
survive the execution and delivery of this Agreement:
 
7.1         Subsidiaries.  Other than DRTHC I, LLC, a Delaware limited liability
company, and DRTHC II, LLC, a Delaware limited liability company, both of which
are wholly-owned Subsidiaries of the Issuing Borrower, no Borrower owns,
directly or indirectly, any outstanding voting securities of or other interests
in, or have any Control over, any other Person.
 
7.2         Borrower Organization and Name.  Each Borrower is a corporation,
limited liability company, limited partnership or other entity, respectively and
as applicable, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and has the full power and authority
and all necessary Permits to: (i) enter into and execute this Agreement and the
Loan Documents and to perform all of its obligations hereunder and thereunder;
and (ii) own and operate its assets and properties and to conduct and carry on
its business as and to the extent now conducted.  Each Borrower is duly
qualified to transact business and is in good standing as a foreign entity in
each jurisdiction where the character of its business or the ownership or use
and operation of its assets or properties requires such qualification.  The
exact legal name of each Borrower is as set forth in the first paragraph of this
Agreement, and no Borrower currently conducts, nor has any Borrower, during the
last five (5) years conducted, business under any other name or trade name,
except that all Borrowers conduct business under the fictitious name “Dr.
Tattoff.”
 

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7.3         Authorization; Validity.  Each Borrower has full right, power and
authority to enter into this Agreement, to make the borrowings and execute and
deliver the Loan Documents as provided herein and to perform all of its duties
and obligations under this Agreement and the Loan Documents and no other action
or consent on the part of any Borrower, its board of directors, stockholders,
members, managers, partners, or any other Person is necessary or required by any
Borrower to execute this Agreement and the Loan Documents, consummate the
transactions contemplated herein and therein, and perform all of its obligations
hereunder and thereunder.  The execution and delivery of this Agreement and the
Loan Documents will not, nor will the observance or performance of any of the
matters and things herein or therein set forth, violate or contravene any
provision of law or of any Borrower’s Articles of Incorporation or Bylaws,
articles of organization or operating agreements, partnership agreements, or any
other organizational or governing documents.  All necessary and appropriate
corporate, partnership or company action has been taken on the part of each
Borrower to authorize the execution and delivery of this Agreement and the Loan
Documents and the issuance of the Revolving Note and the Advisory Fee
Shares.  This Agreement and the Loan Documents are valid and binding agreements
and contracts of each Borrower, enforceable against each Borrower in accordance
with their respective terms, except to the extent that enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium and other laws
enacted for the relief of debtors generally and other similar laws affecting the
enforcement of creditors’ rights generally or by equitable principles which may
affect the availability of specific performance and other equitable
remedies.  No Borrower knows of any reason why any Borrower cannot perform any
of its Obligations under this Agreement, the Loan Documents or any related
agreements.
 

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7.4         The authorized capital stock or other capitalization of each
Borrower, as applicable, is as set forth in Schedule 7.4(a) attached
hereto.  Schedule 7.4(a) shall specify, for each Borrower, the total number of
authorized shares of capital stock or other securities, and of such authorized
shares or securities, the number which are designated as Common Stock, the
number designated as preferred stock, or any other applicable
designations.  Schedule 7.4(a) shall also specify, for each Borrower, as
applicable, as of the date hereof, the number of shares of Common Stock issued
and outstanding and the number of shares of preferred stock issued and
outstanding, or, if applicable, the classes of other securities issued and
outstanding. All of the outstanding shares of capital stock or other securities
of each Borrower are validly issued, fully paid and non-assessable, have been
issued in compliance with all foreign, federal and state securities laws and
none of such outstanding shares or securities were issued in violation of any
preemptive rights or similar rights to subscribe for or purchase securities.  As
of the date of this Agreement, no shares of any Borrower’s capital stock or
other securities of any Borrower are subject to preemptive rights or any other
similar rights or any Liens suffered or permitted by any Borrower.  Except for
the securities to be issued pursuant to this Agreement, and except as otherwise
set forth in Schedule 7.4(b), as of the date of this Agreement: (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock or other securities of Issuing
Borrower or any of its Subsidiaries, or contracts, commitments, understandings
or arrangements by which Issuing Borrower or any of its Subsidiaries is or may
become bound to issue additional shares of capital stock or other securities of
the Issuing Borrower or any of its Subsidiaries, or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock or securities of the Issuing Borrower or any of its Subsidiaries; (ii)
there are no outstanding debt securities, notes, credit agreements, credit
facilities or other contracts or instruments evidencing indebtedness of Issuing
Borrower or any of its Subsidiaries, or by which Issuing Borrower or any of its
Subsidiaries is or may become bound; (iii) there are no outstanding registration
statements with respect to Issuing Borrower or any of its securities and there
are no outstanding comment letters from the SEC, any Principal Trading Market,
or any other Governmental Authority with respect to any securities of the
Issuing Borrower or any of its Subsidiaries; (iv) there are no agreements or
arrangements under which Issuing Borrower or any of its Subsidiaries is
obligated to register the sale of any of its securities under the Securities
Act; (v) there are no financing statements filed with any Governmental Authority
securing any obligations of Issuing Borrower or any of its Subsidiaries, or
filed in connection with any assets or properties of Issuing Borrower or any of
its Subsidiaries, except for financing statements filed in connection with
Permitted Liens; (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by this Agreement or
any related agreement or the consummation of the transactions described herein
or therein; and (vii) there are no outstanding securities or instruments of any
Borrower which contain any redemption or similar provisions, and there are no
contracts or agreements by which such Borrower is or may become bound to redeem
a security of such Borrower (except pursuant to this Agreement).  Each Borrower
has furnished to the Lender true, complete and correct copies of, as applicable:
(I) if a Borrower is a corporation, such Borrower’s articles of incorporation,
as amended and as in effect on the date hereof and Borrower’s bylaws, as in
effect on the date hereof, and any other governing or organizational documents,
as applicable; (II) if a Borrower is another form of entity, such Borrower’s
governing or organizational documents, as applicable for such an entity.  Except
for the documents delivered to Lender in accordance with the immediately
preceding sentence, there are no other shareholder agreements, voting
agreements, operating agreements, or other contracts or agreements of any nature
or kind that restrict, limit or in any manner impose obligations, restrictions
or limitations on the governance of each Borrower.
 

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7.5         No Conflicts; Consents and Approvals.  The execution, delivery  and
performance of this Agreement and the Loan Documents, and the consummation of
the transactions contemplated hereby and thereby, including the issuance of the
Advisory Fee Shares, will not: (i) constitute a violation of or conflict with
the Certificate of Incorporation, Bylaws, or any other organizational or
governing documents of any Borrower; (ii) constitute a violation of, or a
default or breach under (either immediately, upon notice, upon lapse of time, or
both), or conflicts with, or gives to any other Person any rights of
termination, amendment, acceleration or cancellation of, any provision of any
contract or agreement to which any Borrower is a party or by which any of its or
their assets or properties may be bound; (iii) constitute a violation of, or a
default or breach under (either immediately, upon notice, upon lapse of time, or
both), or conflicts with, any order, writ, injunction, decree, or any other
judgment of any nature whatsoever; (iv) constitute a violation of, or conflict
with, any law, rule, ordinance or other regulation (including foreign and United
States federal and state securities laws), except to the extent any such
violation would not result in a Material Adverse Effect; or (v) result in the
loss or adverse modification of, or the imposition of any fine, penalty or other
Lien, claim or encumbrance with respect to, any Permit granted or issued to, or
otherwise held by or for the use of, any Borrower or any of their respective
assets.  No Borrower is in violation of its Certificate of Incorporation,
Bylaws, or other organizational or governing documents, as applicable, and no
Borrower is in default or breach (and no event has occurred which with notice or
lapse of time or both could put any Borrower in default or breach) under, and no
Borrower has taken any action or failed to take any action that would give to
any other Person any rights of termination, amendment, acceleration or
cancellation of, any contract or agreement to which any Borrower is a party or
by which any property or assets of any Borrower are bound or affected. No
business of any Borrower is being conducted, and shall not be conducted, in
violation of any law, rule, ordinance or other regulation, provided that any
such violative conduct shall not constitute a breach hereof if such conduct
would not result in a Material Adverse Effect, and such conduct is corrected to
become compliant with applicable law promptly after knowledge thereof is
obtained by any Borrower. Except as specifically contemplated by this Agreement,
no Borrower is required to obtain any consent or approval of, from, or with any
Governmental Authority, or any other Person, in order for it to execute, deliver
or perform any of its obligations under this Agreement or the Loan Documents in
accordance with the terms hereof or thereof, or to issue the Advisory Fee Shares
in accordance with the terms hereof.  All consents and approvals which any
Borrower is required to obtain pursuant to the immediately preceding sentence
have been obtained or effected on or prior to the date hereof.
 
7.6         Issuance of Securities. The Advisory Fee Shares are duly authorized
and, upon issuance in accordance with the terms hereof, shall be duly issued,
fully paid and non-assessable, and free from all Liens, claims, charges, taxes,
or other encumbrances with respect to the issue thereof, and will be issued in
compliance with all applicable United States federal and state securities laws
and the laws of any foreign jurisdiction applicable to the issuance
thereof.  Any shares issuable upon conversion of the Revolving Note, in
accordance with the terms of the Revolving Note, are duly authorized and, upon
issuance in accordance with the terms hereof, shall be duly issued, fully paid
and non-assessable, and free from all Liens, claims, charges, taxes, or other
encumbrances with respect to the issue thereof, and will be issued in compliance
with all applicable United States federal and state securities laws and the laws
of any foreign jurisdiction applicable to the issuance thereof. Assuming the
accuracy of the Lender’s representations under Section 8 hereof, the issuance of
the Revolving Note, Advisory Fee Shares and any shares issuable upon conversion
of the Revolving Note is and will be exempt from: (i) the registration and
prospectus delivery requirements of the Securities Act; (ii) the registration
and/or qualification provisions of all applicable state and provincial
securities and “blue sky” laws; and (iii) any similar registration or
qualification requirements of any foreign jurisdiction or other Governmental
Authority.
 
7.7         Compliance With Laws.  The nature and transaction of each Borrower’s
business and operations and the use of its properties and assets, including, but
not limited to, the Collateral or any real estate owned, leased, or occupied by
each Borrower, do not and during the term of the Loans shall not, violate or
conflict with any applicable law, statute, ordinance, rule, regulation or order
of any kind or nature, including, without limitation, the provisions of the Fair
Labor Standards Act or any zoning, land use, building, noise abatement,
occupational health and safety or other laws, any Permit or any condition,
grant, easement, covenant, condition or restriction, whether recorded or not,
except to the extent such violation or conflict would not result in a Material
Adverse Effect.
 

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7.8         Environmental Laws and Hazardous Substances.  Except to the extent
that any of the following would not have a Material Adverse Effect (including
financial reserves, insurance policies and cure periods relating to compliance
with applicable laws and Permits) and are used in such amounts as are customary
in the Ordinary Course of Business in compliance with all applicable
Environmental Laws, each Borrower represents and warrants to Lender that, to its
knowledge: (i) no Borrower has generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off any of the premises of any Borrower (whether or not owned by any Borrower)
in any manner which at any time violates any Environmental Law or any Permit,
certificate, approval or similar authorization thereunder; (ii) the operations
of each Borrower comply in all material respects with all Environmental Laws and
all Permits certificates, approvals and similar authorizations thereunder; (iii)
there has been no investigation, Proceeding, complaint, order, directive, claim,
citation or notice by any Governmental Authority or any other Person, nor is any
pending or, to any Borrower’s knowledge, threatened; and (iv) no Borrower has
any liability, contingent or otherwise, in connection with a release, spill or
discharge, threatened or actual, of any Hazardous Materials or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Material.
 
7.9         Collateral Representations.  No Person other than each Borrower,
owns or has other rights in the Collateral, and the Collateral is free from any
Lien of any kind, other than the Lien of Lender and Permitted Liens.
 
7.10       SEC Documents; Financial Statements. The Common Stock of the Issuing
Borrower is not registered pursuant to Section 12 of the Exchange Act, but the
Issuing Borrower is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act, and the Issuing Borrower has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC (all of the foregoing filed within the two (2) years preceding the date
hereof or amended after the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to as the “SEC Documents”). The
Issuing Borrower is current with its filing obligations under the Exchange Act,
and all SEC Documents have been filed on a timely basis or the Issuing Borrower
has received a valid extension of such time of filing and has filed any such SEC
Document prior to the expiration of any such extension. The Issuing Borrower
represents and warrants that true and complete copies of the SEC Documents are
available on the SEC’s website (www.sec.gov) at no charge to Lender, and Lender
acknowledges that it may retrieve all SEC Documents from such website and
Lender’s access to such SEC Documents through such website shall constitute
delivery of the SEC Documents to Lender; provided, however, that if Lender is
unable to obtain any of such SEC Documents from such website at no charge, as
result of such website not being available or any other reason beyond Lender’s
control, then upon request from Lender, the Issuing Borrower shall deliver to
Lender true and complete copies of such SEC Documents.  As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act, and none of the SEC Documents, at the time they were filed
with the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  None of the statements made in any such SEC Documents is,
or has been, required to be amended or updated under applicable law (except for
such statements as have been amended or updated in subsequent filings prior the
date hereof, which amendments or updates are also part of the SEC
Documents).  As of their respective dates, the consolidated financial statements
of the Issuing Borrower and its Subsidiaries included in the SEC Documents (the
“Financial Statements”) complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. All of the Financial Statements have been prepared in
accordance with GAAP, consistently applied, during the periods involved (except:
(i) as may be otherwise indicated in such Financial Statements or the notes
thereto; or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements), and fairly
present in all material respects the consolidated financial position of the
Issuing Borrower and all of its Subsidiaries as of the dates thereof and the
consolidated results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).  To the knowledge of the Issuing Borrower and its officers, no
other information provided by or on behalf of Borrowers to the Lender which is
not included in the SEC Documents contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading.
 

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7.11       Absence of Certain Changes.  Since the date of the most recent
Financial Statements filed as part of the SEC Documents, none of the following
have occurred:
 
  (a)             There has been no event or circumstance of any nature
whatsoever that has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect; or
 
  (b)            Any transaction, event, action, development, payment, or any
other matter of any nature whatsoever entered into by any Borrower other than in
the Ordinary Course of Business.
 
7.12       Litigation and Taxes.  There is no Proceeding pending, or to each
Borrower’s knowledge, threatened, against any Borrower or their respective
officers, managers, members or shareholders, or against or affecting any of
their respective assets.  In addition, there is no outstanding judgments,
orders, writs, decrees or other similar matters or items against or affecting
any Borrower, its business or assets.  No Borrower has received any material
complaint from any Customer, supplier, vendor or employee.  Each Borrower has
duly filed all applicable foreign and U.S. income or other tax returns and has
paid all foreign and U.S. income or other taxes when due.  There is no
Proceeding, controversy or objection pending or threatened in respect of any tax
returns of any Borrower.
 
7.13       Event of Default.  No Event of Default has occurred and is
continuing, and no event has occurred and is continuing which, with the lapse of
time, the giving of notice, or both, would constitute such an Event of Default
under this Agreement or any of the other Loan Documents, and except as set forth
in Schedule 7.13, no Borrower is in default (without regard to grace or cure
periods) under any contract or agreement to which it is a party or by which any
of their respective assets are bound.
 

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7.14       ERISA Obligations.  To the knowledge of each Borrower, all Employee
Plans of each Borrower meet the minimum funding standards of Section 302 of
ERISA, where applicable, and each such Employee Plan that is intended to be
qualified within the meaning of Section 401 of the Internal Revenue Code of 1986
is qualified.  No withdrawal liability has been incurred under any such Employee
Plans and no “Reportable Event” or “Prohibited Transaction” (as such terms are
defined in ERISA), has occurred with respect to any such Employee Plans, unless
approved by the appropriate governmental agencies.  To the knowledge of each
Borrower, each Borrower has promptly paid and discharged all obligations and
liabilities arising under the ERISA of a character which if unpaid or
unperformed might result in the imposition of a Lien against any of its
properties or assets.
 
7.15       Adverse Circumstances.  No condition, circumstance, event, agreement,
document, instrument, restriction, litigation or Proceeding (or threatened
litigation or Proceeding or basis therefor) exists which: (i) could adversely
affect the validity or priority of the Liens granted to Lender under the Loan
Documents; (ii) could adversely affect the ability of any Borrower to perform
its obligations under the Loan Documents; (iii) would constitute a default under
any of the Loan Documents; (iv) would constitute such a default with the giving
of notice or lapse of time or both; or (v) would constitute or give rise to a
Material Adverse Effect.
 
7.16       Liabilities and Indebtedness of the Borrower.  No Borrower has any
Funded Indebtedness or any liabilities or obligations of any nature whatsoever,
except: (i) as disclosed in the Financial Statements or the SEC Documents; or
(ii) liabilities and obligations incurred in the Ordinary Course of Business of
each Borrower since the date of the most recent Financial Statements which do
not or would not, individually or in the aggregate, exceed One Hundred Thousand
Dollars ($100,000) or otherwise have a Material Adverse Effect.
 
7.17       Real Estate.
 
  (a)            Real Property Ownership.  Except for the Borrower Leases,
Borrower does not own any Real Property.
 
  (b)            Real Property Leases.  Except for ordinary leases for office
space and clinics from which Borrowers operate their business as disclosed in
the SEC Documents (the “Borrower Leases”), no Borrower leases any other Real
Property.  With respect to each of the Borrower Leases: (i) each Borrower has
been in peaceful possession of the property leased thereunder and neither
Borrower nor the landlord is in default thereunder; (ii) no waiver, indulgence
or postponement of any of the obligations thereunder has been granted by any
Borrower or landlord thereunder; and (iii) there exists no event, occurrence,
condition or act known to any Borrower which, upon notice or lapse of time or
both, would be or could become a default thereunder or which could result in the
termination of the Borrower Leases, or any of them, or have a Material Adverse
Effect.  No Borrower has violated nor breached any provision of any such
Borrower Leases, and all obligations required to be performed by any Borrower
under any of such Borrower Leases have been fully, timely and properly
performed.  Upon request by Lender, each Borrower will deliver to the Lender
true, correct and complete copies of all Borrower Leases, including all
modifications and amendments thereto, whether in writing or otherwise.  No
Borrower has received any written or oral notice to the effect that any of the
Borrower Leases will not be renewed at the termination of the term of such
Borrower Leases, or that the Borrower Leases will be renewed only at higher
rents.
 

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7.18       Material Contracts.  An accurate, current and complete copy of each
of the Material Contracts has been furnished to Lender and/or is readily
available as part of the SEC Documents, and each of the Material Contracts
constitutes the entire agreement of the respective parties thereto relating to
the subject matter thereof.  There are no outstanding offers, bids, proposals or
quotations made by any Borrower which, if accepted, would create a Material
Contract with such Borrower.  Each of the Material Contracts is in full force
and effect and is a valid and binding obligation of the parties thereto in
accordance with the terms and conditions thereof.  To the knowledge of each
Borrower and its officers, all obligations required to be performed under the
terms of each of the Material Contracts by any party thereto have been fully
performed by all parties thereto, and no party to any Material Contracts is in
default with respect to any term or condition thereof, nor has any event
occurred which, through the passage of time or the giving of notice, or both,
would constitute a default thereunder or would cause the acceleration or
modification of any obligation of any party thereto or the creation of any lien,
claim, charge or other encumbrance upon any of the assets or properties of any
Borrower.  Further, no Borrower has received any notice, nor does any Borrower
have any knowledge, of any pending or contemplated termination of any of the
Material Contracts and, no such termination is proposed or has been threatened,
whether in writing or orally.
 
7.19       Title to Assets.  Each Borrower has good and marketable title to, or
a valid leasehold interest in, all of its assets and properties which are
material to its business and operations as presently conducted, free and clear
of all Liens, claims, charges or other encumbrances or restrictions on the
transfer or use of same, except for Permitted Liens.  Except as would not have a
Material Adverse Effect, the assets and properties of each Borrower are in good
operating condition and repair, ordinary wear and tear excepted, and are free of
any latent or patent defects which might impair their usefulness, and are
suitable for the purposes for which they are currently used and for the purposes
for which they are proposed to be used.
 
7.20       Intellectual Property. Each Borrower owns or possesses adequate and
legally enforceable  rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and all other intellectual property rights
necessary to conduct its business as now conducted. No Borrower has any
knowledge of any infringement by any Borrower of trademark, trade name rights,
patents, patent rights, copyrights, inventions, licenses, service names, service
marks, service mark registrations, trade secret or other intellectual property
rights of others, and, to the knowledge of each Borrower, there is no claim,
demand or Proceeding, or other demand of any nature being made or brought
against, or to each Borrowers’ knowledge, being threatened against, any Borrower
regarding trademark, trade name, patents, patent rights, invention, copyright,
license, service names, service marks, service mark registrations, trade secret
or other intellectual property infringement; and no Borrower is aware of any
facts or circumstances which might give rise to any of the foregoing, except to
the extent any infringement or claims or demands thereof as outlined above would
not result in a Material Adverse Effect.
 

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7.21           Labor and Employment Matters.  No Borrower is involved in any
labor dispute or, to the knowledge of any Borrower, is any such dispute
threatened. To the knowledge of each Borrower and its officers, none of the
employees of any Borrower is a member of a union and each Borrower believes that
its relations with its employees are good.  To the knowledge of each Borrower
and its officers, each Borrower has complied in all material respects with all
laws, rules, ordinances and regulations relating to employment matters, civil
rights and equal employment opportunities.
 
7.22           Insurance.  Each Borrower is covered by valid, outstanding and
enforceable policies of insurance which were issued to it by reputable insurers
of recognized financial responsibility, covering its properties, assets and
business against losses and risks normally insured against by other corporations
or entities in the same or similar lines of businesses as the Borrowers are
engaged and in coverage amounts which are prudent and typically and reasonably
carried by such other corporations or entities (the “Insurance Policies”).  Such
Insurance Policies are in full force and effect, and all premiums due thereon
have been paid.  None of the Insurance Policies will lapse or terminate as a
result of the transactions contemplated by this Agreement.  Each Borrower has
complied with the provisions of such Insurance Policies.  No Borrower has been
refused any insurance coverage sought or applied for and no Borrower has any
reason to believe that it will not be able to renew its existing Insurance
Policies as and when such Insurance Policies expire or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that would not materially and adversely affect the condition, financial or
otherwise, or the earnings, business or operations of any Borrower.
 
7.23           Permits.  Each Borrower possesses all Permits necessary to
conduct its business, and no Borrower has received any notice of, or is
otherwise involved in, any Proceedings relating to the revocation or
modification of any such Permits.  All such Permits are valid and in full force
and effect and each Borrower is in full compliance with the respective
requirements of all such Permits.
 
7.24           Lending Relationship.  Each Borrower acknowledges and agrees that
the relationship hereby created with Lender is and has been conducted on an open
and arm’s length basis in which no fiduciary relationship exists and that no
Borrower has relied, nor is relying on, any such fiduciary relationship in
executing this Agreement and in consummating the Loans. Lender represents that
it will receive the Revolving Note payable to its order as evidence of the
Loans.
 
7.25           Compliance with Regulation U.  No portion of the proceeds of the
Loans shall be used by any Borrower, or any Affiliates of Borrower, either
directly or indirectly, for the purpose of purchasing or carrying any margin
stock, within the meaning of Regulation U as adopted by the Board of Governors
of the Federal Reserve System.
 
7.26           Governmental Regulation.  No Borrower is, nor after giving effect
to any Loan, will be, subject to regulation under the Public Utility Holding
Borrower Act of 1935, the Federal Power Act or the Investment Company Act of
1940 or to any foreign, federal or state statute or regulation limiting its
ability to incur indebtedness for borrowed money.
 

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7.27           Bank Accounts.  Schedule 7.27 sets forth, with respect to each
account of each Borrower with any bank, broker, merchant processor, Payment
Processing Company, or other depository institution: (i) the name and account
number of such account; (ii) the name and address of the institution where such
account is held; (iii) the name of any Person(s) holding a power of attorney
with respect to such account, if any; and (iv) the names of all authorized
signatories and other Persons authorized to withdraw funds from each such
account.
 
7.28           Places of Business.  The principal places of business of each
Borrower is set forth on Schedule 7.28 and each Borrower shall promptly notify
Lender of any change in such location.  No Borrower will remove or permit the
Collateral to be removed from such locations without the prior written consent
of Lender, except for: (i) certain heavy equipment kept at third party sites
when conducting business or maintenance; (ii) vehicles, containers and rolling
stock; (iii) Inventory sold or leased in the Ordinary Course of Business; and
(iv) temporary removal of Collateral to other locations for repair or
maintenance as may be required from time to time in each instance in the
Ordinary Course of Business of each Borrower.
 
7.29           Illegal Payments.  No Borrower, nor any director, officer,
member, manager,  agent, employee or other Person acting on behalf of any
Borrower has, in the course of his actions for, or on behalf of, any Borrower:
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any
similar foreign law or regulation; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
 
7.30           Related Party Transactions.  Except for arm’s length transactions
pursuant to which any Borrower makes payments in the Ordinary Course of Business
upon terms no less favorable than such Borrower could obtain from third parties,
none of the officers, directors, managers, or employees of any Borrower, nor any
stockholders, members or partners who own, legally or beneficially, five percent
(5%) or more of the ownership interests of any Borrower (each a “Material
Shareholder”), is presently a party to any transaction with any Borrower (other
than for services as employees, officers and directors), including any contract
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from, any
officer, director or such employee or Material Shareholder or, to the best
knowledge of each Borrower, any other Person in which any officer, director, or
any such employee or Material Shareholder has a substantial or material interest
in or of which any officer, director or employee of any Borrower or Material
Shareholder is an officer, director, trustee or partner.  There are no claims,
demands, disputes or Proceedings of any nature or kind between any Borrower and
any officer, director or employee of any Borrower or any Material Shareholder,
or between any of them, relating to any Borrower.
 
7.31           Internal Accounting Controls.  Each Borrower maintains a system
of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
 

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7.32           Brokerage Fees.  Except for Meyers Associates, LP (“Finder”),
there is no Person acting on behalf of any Borrower who is entitled to or has
any claim for any brokerage or finder’s fee or commission in connection with the
execution of this Agreement or the consummation of the transactions contemplated
hereby.  Finder, a FINRA registered securities brokerage firm, shall be paid a
finder’s fee by the Borrowers, at Closing, in accordance with a separate
agreement between the Borrowers and Finder.
 
7.33           No General Solicitation.  No Borrower, nor any of their
respective Affiliates, nor any Person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning
of Regulation D under the Securities Act) in connection with the offer or
issuance of the Revolving Note, the Advisory Fee Shares or the shares issuable
upon conversion of the Revolving Note.
 
7.34           No Integrated Offering.  No Borrower, nor any of their respective
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
Revolving Note, the Advisory Fee Shares or any securities issuable upon
conversion of the Revolving Note under the Securities Act or any other law of
any applicable Governmental Authority, or cause this offering of such securities
to be integrated with prior offerings by any Borrower for purposes of the
Securities Act or any other law of any applicable Governmental Authority.
 
7.35          Private Placement.  Assuming the accuracy of the Lender’s
representations and warranties set forth in Section 8 below, no registration
under the Securities Act or the laws, rules or regulations of any other
Governmental Authority is required for the issuance of the Revolving Note, the
Advisory Fee Shares or the shares issuable upon conversion of the Revolving Note
as contemplated hereby.
 
7.36           Complete Information.  This Agreement and all financial
statements, schedules, certificates, confirmations, agreements, contracts, and
other materials submitted to Lender in connection with or in furtherance of this
Agreement by or on behalf of any Borrower fully and fairly states the matters
with which they purport to deal, and do not misstate any material fact nor,
separately or in the aggregate, fail to state any material fact necessary to
make the statements made not misleading.
 

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8.           REPRESENTATIONS AND WARRANTIES OF LENDER.
 
Lender makes the following representations and warranties to the Borrowers, each
of which shall be true and correct in all material respects as of the date of
the execution and delivery of this Agreement and as of the date of each Loan
made hereunder, except to the extent such representation expressly relates to an
earlier date, and which shall survive the execution and delivery of this
Agreement:
 
8.1           Investment Purpose. Lender is acquiring the Revolving Note, the
Advisory Fee Shares or the shares issuable upon conversion of the Revolving
Note, for its own account, for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the Securities Act.
 
8.2           Accredited Investor Status. Lender is an “Accredited Investor” as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.
 
8.3           Reliance on Exemptions. Lender understands that the Revolving
Note, the Advisory Fee Shares or the shares issuable upon conversion of the
Revolving Note, are each being offered and sold to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws, and that Borrowers are relying in part upon the truth and
accuracy of, and Lender’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Lender set forth herein in
order to determine the availability of such exemptions and the eligibility of
Lender to acquire such securities.
 
8.4           Information. Lender has been furnished with all materials it has
requested relating to the business, finances and operations of Borrowers and
information deemed material by Lender to making an informed investment decision
regarding the Revolving Note. Lender has been afforded the opportunity to ask
questions of Borrowers and their management.  Neither such inquiries nor any
other due diligence investigations conducted by Lender or its representatives
shall modify, amend or affect Lender’s right to rely on Borrowers’
representations and warranties contained in Article 7 above or elsewhere in this
Agreement or in any other Loan Documents. Lender understands that its investment
in the Revolving Note involves a high degree of risk. Lender is in a position
regarding Borrowers, which, based upon economic bargaining power, enabled and
enables Lender to obtain information from Borrowers in order to evaluate the
merits and risks of this investment. Lender has sought such accounting, legal
and tax advice, as it has considered necessary to make an informed investment
decision with respect to the Revolving Note.
 
8.5           No Governmental Review. Lender understands that no United States
federal or state agency or any other Governmental Authority has passed on or
made any recommendation or endorsement of the Revolving Note, or the fairness or
suitability of the investment in the Revolving Note, nor have such authorities
passed upon or endorsed the merits of the offering of the Revolving Note.
 
8.6           Transfer or Resale.  Lender understands that: (i) the Revolving
Note, the Advisory Fee Shares and the shares issuable upon conversion of the
Revolving Note, have not been and are not being registered under the Securities
Act or any other state securities laws, and may not be offered for sale, sold,
assigned or transferred unless: (A) subsequently registered thereunder; or (B)
Lender shall have delivered to Issuing Borrower an opinion of counsel, in a
generally acceptable form, to the effect that such securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration requirements; and (ii) neither Borrower nor any
other Person is under any obligation to register such securities under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder, except as otherwise set forth in this
Agreement.
 

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8.7           Intentionally Left Blank.
 
8.8          Authorization, Enforcement.  This Agreement has been duly and
validly authorized, executed and delivered on behalf of Lender and is a valid
and binding agreement of Lender enforceable in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
 
8.9           Intentionally Left Blank.
 
8.10         Due Formation of Lender. Lender is an entity that has been formed
and validly exists and has not been organized for the specific purpose of
purchasing the Revolving Note and is not prohibited from doing so.
 
8.11         No Legal Advice from Borrower. Lender acknowledges that it had the
opportunity to review this Agreement and the transactions contemplated by this
Agreement with his or its own legal counsel and investment and tax advisors.
Lender is relying solely on such counsel and advisors and not on any statements
or representations of Borrowers or any of their representatives or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction; provided, however, the foregoing shall not modify, amend or affect
Lender’s right to rely on Borrowers’ representations and warranties contained in
Article 7 above or in any other Loan Documents.
 
9.            NEGATIVE COVENANTS.
 
9.1           Indebtedness.  Except as may otherwise be approved by Lender in
writing, no Borrower shall, nor shall any Borrower permit any of its
Subsidiaries to, either directly or indirectly, create, assume, incur or have
outstanding any Funded Indebtedness (including purchase money indebtedness), or
become liable, whether as endorser, guarantor, surety or otherwise, for any debt
or obligation of any other Person, except:
 
(a)           the Obligations;
 
(b)           endorsement for collection or deposit of any commercial paper
secured in the Ordinary Course of Business;
 
(c)           obligations for taxes, assessments, municipal or other
governmental charges; provided, the same are being contested in good faith by
appropriate proceedings and are insured against or bonded over to the
satisfaction of Lender;
 
(d)          obligations for accounts payable, other than for money borrowed,
incurred in the Ordinary Course of Business;
 
(e)           unsecured intercompany Funded Indebtedness incurred in the
Ordinary Course of Business;
 

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(f)            Funded Indebtedness existing on the Closing Date and set forth in
the Financial Statements or disclosed in Schedule 7.4(b), including any
extensions or refinancings of the foregoing, which do not increase the principal
amount of such Funded Indebtedness as of the date of such extension or
refinancing, and Funded Indebtedness incurred in connection with the financing
of insurance premiums in the Ordinary Course of Business; provided such Funded
Indebtedness is, if required by Lender, subordinated to the Obligations owed to
Lender pursuant to a subordination agreement, in form and content acceptable to
Lender in its sole discretion, which shall include an indefinite standstill on
remedies and payment blockage rights during any default;
 
(g)           Contingent Liabilities arising with respect to customary
indemnification obligations in favor of purchasers in connection with
dispositions permitted hereunder;
 
(h)           Contingent Liabilities incurred in the Ordinary Course of Business
with respect to surety and appeal bonds, performance bonds and other similar
obligations;
 
(i)            Contingent Liabilities arising under indemnity agreements to
title insurers to cause such title insurers to issue to Lender title insurance
policies;
 
(j)            Funded Indebtedness incurred under and pursuant to that certain
offering evidenced by Private Placement Memorandum of the Issuing Borrower dated
as of September 15, 2013 for a maximum of $2,000,000 in unsecured convertible
notes (the “PPM”), provided such convertible notes are issued strictly in
accordance with the terms of the PPM.  The Borrowers hereby represent and
warrant that the PPM previously delivered to Lender is a true, correct and
complete copy thereof, and same shall not be modified or amended in any respect
without Lender’s prior written consent; and
 
(k)           Funded Indebtedness incurred in connection with the purchase of
new Equipment for new clinics opened in connection with the growth or expansion
of Borrowers and their business in the Ordinary Course of Business, provided
such Funded Indebtedness shall not exceed $150,000 per new clinic.
 
9.2           Encumbrances.  No Borrower shall, nor shall any Borrower permit
any of its Subsidiaries to, either directly or indirectly, create, assume, incur
or suffer or permit to exist any Lien or charge of any kind or character upon
any asset of any Borrower or their Subsidiaries; whether owned at the date
hereof or hereafter acquired, except Permitted Liens or as otherwise authorized
by Lender in writing.
 
9.3           Investments.  No Borrower shall, nor shall any Borrower permit any
of its Subsidiaries to, either directly or indirectly, make or have outstanding
any new investments (whether through purchase of stocks, obligations or
otherwise) in, or loans or advances to, any other Person, or acquire all or any
substantial part of the assets, business, stock or other evidence of beneficial
ownership of any other Person except following:
 
(a)           The stock or other ownership interests in a Subsidiary existing as
of the Closing Date;
 

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(b)           investments in direct obligations of the United States or any
state in the United States;
 
(c)           trade credit extended by any Borrower in the Ordinary Course of
Business;
 
(d)           investments in securities of Customers received pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of such Customers;
 
(e)           investments existing on the Closing Date and set forth in the
Financial Statements;
 
(f)            Contingent Liabilities permitted pursuant to Section 9.1; or
 
(g)           Capital Expenditures permitted under Section 9.5.
 
9.4           Transfer; Merger.  No Borrower shall, nor shall any Borrower
permit any of its Subsidiaries to, either directly or indirectly, permit a
Change in Control, merge, consolidate, sell, transfer, license, lease, encumber
or otherwise dispose of all or any part of its property or business or all or
any substantial part of its assets, or sell or discount (with or without
recourse) any of its Notes (as defined in the UCC), Chattel Paper, Payment
Intangibles or Accounts; provided, however, that any Borrower may:
 
(a)           sell or lease Inventory and Equipment in the Ordinary Course of
Business;
 
(b)          upon not less than three (3) Business Days’ prior written notice to
Lender, any Subsidiary of any Borrower may merge with (so long as the applicable
Borrower remains the surviving entity), or dissolve or liquidate into, or
transfer its property to any Borrower;
 
(c)           dispose of used, worn-out or surplus equipment in the Ordinary
Course of Business;
 
(d)          discount or write-off overdue Accounts for collection in the
Ordinary Course of Business;
 
(e)          sell or otherwise dispose (including cancellation of Funded
Indebtedness) of any Investment permitted under Section 9.3 in the Ordinary
Course of Business; and
 
(f)           grant Permitted Liens.
 
9.5           Capital Expenditures.  Without Lender’s prior written consent, no
Borrower shall, nor shall any Borrower permit any of its Subsidiaries to, make
or incur obligations for any Capital Expenditures in any fiscal year; provided,
however, Borrowers may incur obligations for Capital Expenditures without
Lender’s approval, to the extent such Capital Expenditures are incurred with
respect to new clinics opened in connection with the growth or expansion of
Borrowers and their business in the Ordinary Course of Business, and provided
such Capital Expenditures do not exceed $300,000 for any new clinic (and new
Equipment purchases for any such new clinics shall not exceed $150,000 per new
clinic).
 

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9.6           Issuance of Stock.  Unless first approved in writing by Lender, no
Borrower shall, nor shall any Borrower permit any of its Subsidiaries to, either
directly or indirectly, issue or distribute any additional capital stock or
other securities of any such Borrower or their Subsidiaries, except that the
Issuing Borrower may issue its capital stock or other securities of such Issuing
Borrower without Lender’s approval (but subject to notice to Lender): (i) to
holders of convertible notes under the PPM in connection with conversion rights
thereunder in accordance with the terms of the PPM; (ii) as compensation to
members of the Issuing Borrower’s board of directors or medical advisory board,
but only if a majority of such members are disinterested and independent, and
only if such compensation is determined by an independent compensation committee
of the board of directors comprised solely of disinterested and independent
members; (iii) as payment to arms-length, independent third party service
providers, but only in amounts not to exceed $50,000, and only if the capital
stock is valued at then prevailing market prices; (iv) in connection with a
public offering of the Issuing Borrower’s Common Stock registered with the SEC,
but only if the Common Stock is then trading (or will be trading as a result of
such public offering) in the NASDAQ, NYSE, AMEX, or the OTC Markets Bulletin
Board; (v) upon the exercise of any warrants or stock options: (A) issued by the
Issuing Borrower prior to the Closing Date and disclosed on the Financial
Statements or Schedule 7.4(a); or (B) issued by the Issuing Borrower after the
Closing Date with Lender’s prior written approval; and (vi) options or other
securities issued in connection with any employee stock option plan approved by
an independent compensation committee of the board of directors comprised solely
of disinterested and independent members.
 
9.7           Distributions; Restricted Payments; Change in Management.  No
Borrower shall, nor shall any Borrower permit any of its Subsidiaries to: (i)
purchase or redeem any shares of its stock or other securities, or declare or
pay any dividends or distributions, whether in cash or otherwise, or set aside
any funds for any such purpose, or make any distribution to its shareholders, or
members, or make any distribution of its property or assets, or make any loans,
advances or extensions of credit to, or investments in, any Persons, including,
such Borrower’s Affiliates, officers, partners or employees, without the prior
written consent of Lender; (ii) make any payments of any Funded Indebtedness
other than Payments of Funded Indebtedness permitted under Section 9.1 above;
(iii) increase the annual salary paid to any officers or senior managers of any
Borrower as of the Closing Date, unless: (A) any such increase is part of a
written employment contract with any such officers or senior managers entered
into prior to the Closing Date, a copy of which has been delivered to and
approved by the Lender; or (B) such increase is approved by an independent
compensation committee of the board of directors of the Issuing Borrower
comprised solely of disinterested and independent members; and provided that any
such increase shall not cause the Salary Ratio to be exceeded; or (iv) add,
replace, remove, or otherwise change the CEO or COO of any Borrower, unless
approved by Lender in writing.
 
9.8           Use of Proceeds.  No Borrower, nor any of their Subsidiaries or
Affiliates, shall use any portion of the proceeds of the Loans, either directly
or indirectly, for the purpose of purchasing any securities underwritten by any
Affiliate of Lender.  In addition, except as may be set forth in the Use of
Proceeds Confirmation approved by Lender, no Borrower, nor any of their
Subsidiaries or Affiliates, shall use any portion of the proceeds of the Loans,
either directly or indirectly, for any of the following purposes: (i) to make
any payment towards any Funded Indebtedness of any Borrower or any Subsidiaries
or Affiliates thereof; (ii) to pay any taxes of any nature or kind that may be
due by any Borrower or any Subsidiaries or Affiliates thereof; (iii) to pay any
obligations or liabilities of any nature or kind due or owing to any officers,
directors, managers, members, employees, or Material Shareholders of any
Borrower or any Subsidiaries or Affiliates thereof.  Borrowers shall only use
the proceeds of the Loans (or any portion thereof) for the purposes set forth in
a “Use of Proceeds Confirmation” to be executed by Borrowers on the Closing
Date, unless Borrowers obtain the prior written consent of Lender to use
proceeds of Loans for any other purpose, which consent may be granted or
withheld by Lender in its sole and absolute discretion.
 

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9.9           Business Activities; Change of Legal Status and Organizational
Documents.  No Borrower shall, nor shall any Borrower permit any of its
Subsidiaries to: (i) engage in any line of business other than the businesses
engaged in on the date hereof and business reasonably related thereto; (ii)
change its name, its type of organization, its jurisdictions of organization or
other legal structure; or (iii) permit its Articles of Incorporation, Bylaws, or
other organizational or governing documents to be amended or modified in any way
which could reasonably be expected to have a Material Adverse Effect.
 
9.10         Transactions with Affiliates.  No Borrower shall, nor shall any
Borrower permit any of its Subsidiaries to, enter into any transaction with any
of its Affiliates, except in the Ordinary Course of Business and upon fair and
reasonable terms that are no less favorable to such Borrower than it would
obtain in a comparable arm’s length transaction with a Person not an Affiliate
of such Borrower.
 
9.11         Bank Accounts.  No Borrower shall, nor shall any Borrower permit
any of its Subsidiaries to, maintain any bank, deposit, credit card payment
processing accounts, or other accounts with any financial institution, or any
other Person, for any Borrower or any Subsidiary or Affiliate of any Borrower,
other than Borrowers’ respective accounts listed in the attached Schedule 7.27,
and other than the Lock Box Account established pursuant to this
Agreement.  Specifically, no Borrower may change, modify, close or otherwise
affect the Lock Box Account, or any of the other accounts listed in Schedule
7.27, unless prior written notice of such change is provided to Lender no less
than fifteen (15) days prior to the effectiveness of such change.
 
10.           AFFIRMATIVE COVENANTS.
 
10.1         Compliance with Regulatory Requirements.  Upon demand by Lender,
Borrowers shall reimburse Lender for Lender’s additional costs and/or reductions
in the amount of principal or interest received or receivable by Lender if at
any time after the date of this Agreement any law, treaty or regulation or any
change in any law, treaty or regulation or the interpretation thereof by any
Governmental Authority charged with the administration thereof or any other
authority having jurisdiction over Lender or the Loans, whether or not having
the force of law, shall impose, modify or deem applicable any reserve and/or
special deposit requirement against or in respect of assets held by or deposits
in or for the account of the Loans by Lender or impose on Lender any other
condition with respect to this Agreement or the Loans, the result of which is to
either increase the cost to Lender of making or maintaining the Loans or to
reduce the amount of principal or interest received or receivable by Lender with
respect to such Loans.  Said additional costs and/or reductions will be those
which directly result from the imposition of such requirement or condition on
the making or maintaining of such Loans.
 

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10.2         Corporate Existence.  Each Borrower shall, and each Borrower shall
cause any of its Subsidiaries to, at all times preserve and maintain its: (i)
existence and good standing in the jurisdiction of its organization; and (ii)
its qualification to do business and good standing in each jurisdiction where
the nature of its business makes such qualification necessary (other than such
jurisdictions in which the failure to be qualified or in good standing could not
reasonably be expected to have a Material Adverse Effect), and shall at all
times continue as a going concern in the business which such Borrower is
presently conducting.
 
10.3         Maintain Property.  Each Borrower shall, and each Borrower shall
cause any of its Subsidiaries to, at all times maintain, preserve and keep its
plants, properties and equipment, including, but not limited to, any Collateral,
in good repair, working order and condition, normal wear and tear excepted, and
shall from time to time, as each Borrower deems appropriate in its reasonable
judgment, make all needful and proper repairs, renewals, replacements, and
additions thereto so that at all times the efficiency thereof shall be fully
preserved and maintained.  Each Borrower shall permit Lender to examine and
inspect such plant, properties and equipment, including, but not limited to, any
Collateral, at all reasonable times upon reasonable notice during business
hours.  During the continuance of any Event of Default, Lender shall, at
Borrowers’ expense, have the right to make additional inspections without
providing advance notice.
 
10.4         Maintain Insurance.  Each Borrower shall, and each Borrower shall
cause any of its Subsidiaries to, at all times insure and keep insured with
insurance companies reasonably acceptable to Lender, all insurable property
owned by each Borrower which is of a character usually insured by companies
similarly situated and operating like properties, against loss or damage from
environmental, fire and such other hazards or risks as are customarily insured
against by companies similarly situated and operating like properties; and shall
similarly insure employers’, public and professional liability risks.  Prior to
the date of the funding of any Loans under this Agreement, each Borrower shall
deliver to Lender a certificate setting forth in summary form the nature and
extent of the insurance maintained pursuant to this Section.  All such policies
of insurance must be satisfactory to Lender in relation to the amount and term
of the Obligations and type and value of the Collateral and assets of each
Borrower, shall identify Lender as lender’s loss payee and as an additional
insured.  In the event any Borrower fail to provide Lender with evidence of the
insurance coverage required by this Section or at any time hereafter shall fail
to obtain or maintain any of the policies of insurance required above, or to pay
any premium in whole or in part relating thereto, then Lender, without waiving
or releasing any obligation or default by any Borrower hereunder, may at any
time (but shall be under no obligation to so act), obtain and maintain such
policies of insurance and pay such premium and take any other action with
respect thereto, which Lender deems advisable.  This insurance coverage: (i)
may, but need not, protect any Borrower’s interest in such property, including,
but not limited to, the Collateral; and (ii) may not pay any claim made by, or
against, any Borrower in connection with such property, including, but not
limited to, the Collateral.  Any Borrower may later cancel any such insurance
purchased by Lender, but only after providing Lender with evidence that the
insurance coverage required by this Section is in force.  The costs of such
insurance obtained by Lender, through and including the effective date such
insurance coverage is canceled or expires, shall be payable on demand by
Borrowers to Lender, together with interest at the Default Rate on such amounts
until repaid and any other charges by Lender in connection with the placement of
such insurance.  The costs of such insurance, which may be greater than the cost
of insurance which any Borrower may be able to obtain on its own, together with
interest thereon at the Default Rate and any other charges by Lender in
connection with the placement of such insurance may be added to the total
Obligations due and owing to the extent not paid by any applicable Borrower.
 

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10.5          Tax Liabilities.
 
(a)           Each Borrower shall, and each Borrower shall cause any of its
Subsidiaries to, at all times pay and discharge all property, income and other
taxes, assessments and governmental charges upon, and all claims (including
claims for labor, materials and supplies) against such Borrower or any of its
properties, Equipment or Inventory, before the same shall become delinquent and
before penalties accrue thereon, unless and to the extent that the same are
being contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP are being maintained.
 
(b)          Each Borrower shall be solely responsible for the payment of any
and all documentary stamps and other taxes imposed by the State of Florida or
any other Governmental Agency in connection with the execution of this
Agreement, the Security Agreement and the Revolving Note.
 
10.6         ERISA Liabilities; Employee Plans.  Each Borrower shall, and each
Borrower shall cause any of its Subsidiaries to: (i) keep in full force and
effect any and all Employee Plans which are presently in existence or may, from
time to time, come into existence under ERISA, and not withdraw from any such
Employee Plans, unless such withdrawal can be effected or such Employee Plans
can be terminated without liability to such Borrower; (ii) make contributions to
all of such Employee Plans in a timely manner and in a sufficient amount to
comply with the standards of ERISA, including the minimum funding standards of
ERISA; (iii) comply with all material requirements of ERISA which relate to such
Employee Plans; (iv) notify Lender immediately upon receipt by such Borrower of
any notice concerning the imposition of any withdrawal liability or of the
institution of any Proceeding or other action which may result in the
termination of any such Employee Plans or the appointment of a trustee to
administer such Employee Plans; (v) promptly advise Lender of the occurrence of
any “Reportable Event” or “Prohibited Transaction” (as such terms are defined in
ERISA), with respect to any such Employee Plans; and (vi) amend any Employee
Plan that is intended to be qualified within the meaning of Section 401 of the
Internal Revenue Code of 1986 to the extent necessary to keep the Employee Plan
qualified, and to cause the Employee Plan to be administered and operated in a
manner that does not cause the Employee Plan to lose its qualified status.
 

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10.7         Financial Statements.  Each Borrower shall, and each Borrower shall
cause any of its Subsidiaries to, at all times maintain a system of accounting
capable of producing its individual and consolidated financial statements in
compliance with GAAP (provided that monthly financial statements shall not be
required to have footnote disclosure, are subject to normal year end adjustments
and need not be consolidated), and shall furnish to Lender or its authorized
representatives such information regarding the business affairs, operations and
financial condition of such Borrower as Lender may from time to time reasonably
request or require, including, but not limited to:
 
(a)           If the Revolving Loan Maturity Date is extended beyond the
original term, as soon as available, and in any event, within ninety (90) days
after the close of each fiscal year, a copy of the annual audited financial
statements of each Borrower, including balance sheet, statement of income and
retained earnings, statement of cash flows for the fiscal year then ended, in
reasonable detail, prepared and reviewed by an independent certified public
accountant reasonably acceptable to Lender, containing an unqualified opinion of
such accountant; provided, however, if Issuing Borrower timely files its 10-K
with the SEC, then such filing shall be deemed to satisfy the foregoing
requirement;
 
(b)           as soon as available, and in any event, within sixty (60) days
after the close of each fiscal quarter, a copy of the quarterly financial
statements of each Borrower, including balance sheet, statement of income and
retained earnings, statement of cash flows for the fiscal year then ended, in
reasonable detail, prepared and certified as accurate in all material respects
by the Chief Executive Officer or Chief Financial Officer of each Borrower;
provided, however, if Issuing Borrower timely files its 10-Q with the SEC, then
such filing shall be deemed to satisfy the foregoing requirement;
 
(c)           as soon as available, and in any event, within thirty (30) days
following the end of each calendar month, a consolidated cash flow report of the
Borrowers for the month then ended, in reasonable detail, prepared and certified
as accurate in all material respects by the Chief Executive Officer or Chief
Financial Officer of Borrowers.
 
No change with respect to such accounting principles shall be made by any
Borrower without giving prior notification to Lender. Each Borrower represents
and warrants to Lender that the financial statements delivered to Lender at or
prior to the execution and delivery of this Agreement and to be delivered at all
times thereafter accurately reflect and will accurately reflect the financial
condition of each Borrower in all material respects. Lender shall have the right
at all times (and on reasonable notice so long as there then does not exist any
Event of Default) during business hours to inspect the books and records of each
Borrower and make extracts therefrom.  Each Borrower shall at all times comply
with all reporting requirements of the SEC and the Principal Trading Market to
the extent applicable, and immediately notify the Lender upon making any filings
with the SEC or the Principal Trading Market (and to the extent Lender cannot
get copies of such filings online, then Borrowers shall provide copies of such
filings to Lender upon request).
 
Each Borrower agrees to advise Lender immediately, in writing, of the occurrence
of any Material Adverse Effect, or the occurrence of any event, circumstance or
other happening that could be reasonably expected to lead to or become a
Material Adverse Effect.
 
10.8           Additional Reporting Requirements. Each Borrower shall provide
the following reports and statements to Lender as follows:
 
(a)           On or prior to the Closing Date, Borrowers shall provide to Lender
an income statement or profit and loss statement showing actual results of the
Borrowers’ consolidated operations for the prior twelve (12) months, as well as
an income statement projection showing, in reasonable detail, the Borrowers’
income statement projections for the twelve (12) calendar months following the
Closing Date (the “Income Projections”).  In addition, on or before the
twentieth (20th) day of every calendar month after the Closing Date, the
Borrowers shall provide to Lender a report comparing the Income Projections to
actual results.  Any variance in the Income Projections to actual results that
is more than ten percent (10%) (either above or below) will require the
Borrowers to submit to Lender written explanations as to the nature and
circumstances for the variance.
 

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(b)           On or before the twentieth (20th) day of every calendar month
after the Closing Date, the Borrowers shall provide to Lender a report comparing
the use of the proceeds of the Revolving Loans set forth in the Use of Proceeds
Confirmation, with the actual use of such proceeds.  Any variance in the actual
use of such proceeds from the amounts set forth in the approved Use of proceeds
Confirmation will require the Borrowers to submit to Lender written explanations
as to the nature and circumstances for the variance.
 
(c)           Borrowers shall submit to Lender true and correct copies of all
bank statements received by any Borrower within five (5) days after such
Borrower’s receipt thereof from its bank.
 
10.9         Aged Payables Schedules.  Each Borrower shall, within five (5) days
after the end of each calendar month, deliver to Lender an aged schedule of the
accounts payable of each Borrower, listing the name and amount due to each
creditor and showing the aggregate amounts due from: (v) 0-30 days; (w) 31-60
days; (x) 61-90 days;  (y) 91-120 days; and (z) more than 120 days, and
certified as accurate by the Chief Financial Officer or the Chief Executive
Officer of each Borrower.
 
10.10        Failure to Provide Reports.  If at any time during the term of this
Agreement, Borrowers shall fail to timely provide any reports required to be
provided by Borrowers to Lender under this Agreement or any other Loan Document,
in addition to all other rights and remedies that Lender may have under this
Agreement and the other Loan Documents, Lender shall have the right to require,
at each instance of any such failure, upon written notice to Borrowers, that the
Borrowers redeem Advisory Fee Shares, for Dollars, in an amount equal to 8.33%
of the Advisory Fee, which cash redemption payment shall be due and payable by
wire transfer to an account designated by Lender within five (5) Business Days
from the date the Lender delivers such redemption notice to the Borrowers.
 
10.11        Covenant Compliance. Borrowers shall, within thirty (30) days after
the end of each calendar month, deliver to Lender a Compliance Certificate
showing compliance by Borrowers with the covenants therein, and certified as
accurate by the Chief Executive Officer or Chief Financial Officer of Borrowers.
 
10.12        Continued Due Diligence/Field Audits.  Borrowers acknowledge that
during the term of this Agreement, Lender and its agents and representatives
undertake ongoing and continuing due diligence reviews of Borrowers and their
business and operations.  Such ongoing due diligence reviews may include, and
each Borrower does hereby allow Lender, to conduct site visits and field
examinations of the office locations of each Borrower and the assets and records
of each Borrower, the results of which must be satisfactory to Lender in
Lender’s sole and absolute discretion.  In this regard, in order to cover
Lender’s expenses of the ongoing due diligence reviews and any site visits or
field examinations which Lender may undertake from time to time while this
Agreement is in effect, the Borrowers shall pay to Lender, within five (5)
Business Days after receipt of an invoice or demand therefor from Lender, a fee
of up to $3,000 per year (based on two (2) expected filed audits and ongoing due
diligence of $1,500 per audit) to cover such ongoing expenses.  Failure to pay
such fee as and when required shall be deemed an Event of Default under this
Agreement and all other Loan Documents.  The foregoing notwithstanding, if an
Event of Default exists and is continuing, or upon the occurrence of any event
which with notice, lapse of time or both, would become an Event of Default,
Lender may conduct site visits, field examinations and other ongoing reviews of
each Borrower’s records, assets and operations at any time, in its sole
discretion, without any limitations in terms of number of site visits or
examinations and without being limited to the fee hereby contemplated, all at
the sole expense of Borrowers.
 

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10.13         Notice and Other Reports. Borrowers shall provide prompt written
notice to Lender if at any time any Borrower fails to comply with any of the
covenants in Section 11 herein.  In addition, Borrowers shall, within such
period of time as Lender may reasonably specify, deliver to Lender such other
schedules and reports as Lender may reasonably require.
 
10.14         Collateral Records. Each Borrower shall, and each Borrower shall
cause any of its Subsidiaries to, keep full and accurate books and records
relating to the Collateral and shall mark such books and records to indicate
Lender’s Lien in the Collateral including, without limitation, placing a legend,
in form and content reasonably acceptable to Lender, on all Chattel Paper
created by Borrowers indicating that Lender has a Lien in such Chattel Paper.
 
10.15         Notice of Proceedings.  Each Borrower shall, promptly, but not
more than five (5) days after knowledge thereof shall have come to the attention
of any officer of such Borrower, give written notice to Lender of all threatened
or pending actions, suits, and Proceedings before any court or governmental
department, commission, board or other administrative agency, or before
or  involving any other Person, which may have a Material Adverse Effect.
 
10.16         Notice of Default.  Each Borrower shall, promptly, but not more
than five (5) days after the commencement thereof, give notice to Lender in
writing of the occurrence of an Event of Default or of any event which, with the
lapse of time, the giving of notice or both, would constitute an Event of
Default hereunder.
 
10.17          Environmental Matters.  If any release or threatened release or
other disposal of Hazardous Substances shall occur or shall have occurred on any
real property or any other assets of any Borrower or any Subsidiary or Affiliate
of any Borrower, such Borrower shall cause the prompt containment and/or removal
of such Hazardous Substances and the remediation and/or operation of such real
property or other assets as necessary to comply with all Environmental Laws and
to preserve the value of such real property or other assets.  Without limiting
the generality of the foregoing, each Borrower shall comply with any Federal or
state judicial or administrative order requiring the performance at any real
property of any Borrower of activities in response to the release or threatened
release of a Hazardous Substance.  To the extent that the transportation of
Hazardous Substances is permitted by this Agreement, Borrowers shall dispose of
such Hazardous Substances, or of any other wastes, only at licensed disposal
facilities operating in compliance with Environmental Laws.
 

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10.18         Reporting Status; Listing.  So long as this Agreement remains in
effect, and for so long as Lender owns, legally or beneficially, any of the
Advisory Fee Shares or other shares of Common Stock, or has the right to receive
any additional shares of Common Stock, the Issuing Borrower shall: (i) file in a
timely manner all reports required to be filed under the Securities Act, the
Exchange Act or any securities laws and regulations thereof applicable to
Issuing Borrower of any state of the United States, and to notify Lender
immediately after such filing; (ii) not terminate its status as an issuer
required to file reports under the Exchange Act, even if the Exchange Act and
the rules and regulations thereunder would otherwise permit such termination;
and (iii) if and when the Issuing Borrower’s Common Stock is quoted and traded
on a Principal Trading Market, if required by the rules and regulations of the
Principal Trading Market or any other Governmental Authority, promptly secure
the listing of the Advisory Fee Shares and any other shares of the Issuing
Borrower’s Common Stock issuable to Lender under any Loan Documents upon the
Principal Trading Market (subject to official notice of issuance)(for avoidance
of doubt, securing such listing on the Principal Trading Market shall mean
compliance with any such listing requirements of the Principal Trading Market,
and not registration rights with the SEC) and, take all reasonable action under
its control to maintain the continued listing, quotation and trading of its
Common Stock on the Principal Trading Market, and the Issuing Borrower shall, at
such time, comply in all respects with the Issuing Borrower’s reporting, filing
and other obligations under the bylaws or rules of the Principal Trading Market,
the Financial Industry Regulatory Authority, Inc. and such other Governmental
Authorities, as applicable. The Issuing Borrower shall promptly provide to
Lender copies of any notices it receives from the SEC, any Principal Trading
Market, or any other Governmental Authority, to the extent any such notices
could in any way have or be reasonably expected to have a Material Adverse
Effect.
 
10.19        Developing a Trading Market.  Issuing Borrower shall use its good
faith efforts to have its Common Stock quoted and listed upon a Principal
Trading Market within six (6) months from the Closing Date.
 
10.20        Rule 144.  With a view to making available to Lender the benefits
of Rule 144 under the Securities Act (“Rule 144”), or any similar rule or
regulation of the SEC that may at any time permit Lender to sell the Advisory
Fee Shares or other shares of Common Stock issuable to Lender under any Loan
Documents to the public without registration, the Issuing Borrower represents
and warrants that: (i) the Issuing Borrower is, and has been for a period of at
least ninety (90) days immediately preceding the date hereof, subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act; (ii) the
Issuing Borrower has filed all required reports under Section 13 or 15(d) of the
Exchange Act during the twelve (12) months preceding the Closing Date (or for
such shorter period that the Issuing Borrower was required to file such
reports); and (iii) the Issuing Borrower is not an issuer defined as a “Shell
Company” (as hereinafter defined).  For the purposes hereof, the term “Shell
Company” shall mean an issuer that meets that description as defined under Rule
144.  In addition, so long as Lender owns, legally or beneficially, any
securities of the Issuing Borrower, the Issuing Borrower shall, at its sole
expense:
 
(a)           Make, keep and ensure that adequate current public information
with respect to the Issuing Borrower and its Subsidiaries, as required in
accordance with Rule 144, is publicly available;
 

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(b)           furnish to the Lender, promptly upon reasonable request: (A) a
written statement by the Issuing Borrower that it has complied with the
reporting requirements of Rule 144, the Securities Act, and the Exchange Act;
and (b) such other information as may be reasonably requested by Lender to
permit the Lender to sell any of the Advisory Fee Shares or other shares of
Common Stock acquired hereunder or under the Revolving Note pursuant to Rule
144, without limitation or restriction; and
 
(c)           promptly at the request of Lender, give the Issuing Borrower’s
Transfer Agent instructions to the effect that, upon the Transfer Agent’s
receipt from Lender of a certificate (a “Rule 144 Certificate”) certifying that
Lender’s holding period (as determined in accordance with the provisions of Rule
144) for any portion of the Advisory Fee Shares or shares of Common Stock
issuable upon conversion of the Revolving Note which Lender proposes to sell (or
any portion of such shares which Lender is not presently selling, but for which
Lender desires to remove any restrictive legends applicable thereto) (the
“Securities Being Sold”) is not less than six (6) months, and receipt by the
Transfer Agent of the “Rule 144 Opinion” (as hereinafter defined) from the
Issuing Borrower or its counsel (or from Lender and its counsel as permitted
below), the Transfer Agent is to effect the transfer (or issuance of a new
certificate without restrictive legends, if applicable) of the Securities Being
Sold and issue to Lender or transferee(s) thereof one or more stock certificates
representing the transferred (or re-issued) Securities Being Sold without any
restrictive legend and without recording any restrictions on the transferability
of such shares on the Transfer Agent’s books and records.  In this regard, upon
Lender’s request, the Issuing Borrower shall have an affirmative obligation to
cause its counsel to promptly issue to the Transfer Agent a legal opinion
providing that, based on the Rule 144 Certificate, the Securities Being Sold may
be sold pursuant to the provisions of Rule 144, even in the absence of an
effective registration statement, or re-issued without any restrictive legends
pursuant to the provisions of Rule 144, even in the absence of an effective
registration statement (the “Rule 144 Opinion”). If the Transfer Agent requires
any additional documentation in connection with any proposed transfer (or
re-issuance) by Lender of any Securities Being Sold, the Issuing Borrower shall
promptly deliver or cause to be delivered to the Transfer Agent or to any other
Person, all such additional documentation as may be necessary to effectuate the
transfer (or re-issuance) of the Securities Being Sold and the issuance of an
unlegended certificate to any such Lender or any transferee thereof, all at the
Borrowers’ expense.  Any and all fees, charges or expenses, including, without
limitation, reasonable attorneys’ fees and costs, incurred by Lender in
connection with issuance of any such shares, or the removal of any restrictive
legends thereon, or the transfer of any such shares to any assignee of Lender,
shall be paid by the Borrowers, and if not paid by the Borrowers, the Lender
may, but shall not be required to, pay any such fees, charges or expenses, and
the amount thereof, together with interest thereon at the highest non-usurious
rate permitted by law, from the date of outlay, until paid in full, shall be due
and payable by the Borrowers to Lender immediately upon demand therefor, and all
such amounts advanced by the Lender shall be additional Obligations due under
this Agreement and the Revolving Note and secured under the Loan Documents.  In
the event that the Issuing Borrower and/or its counsel refuses or fails for any
reason to render the Rule 144 Opinion or any other documents, certificates or
instructions required to effectuate the transfer (or re-issuance) of the
Securities Being Sold and the issuance of an unlegended certificate to any such
Lender or any transferee thereof, then: (A) to the extent the Securities Being
Sold could be lawfully transferred (or re-issued) without restrictions under
applicable laws, Issuing Borrower’s failure to promptly provide the Rule 144
Opinion or any other documents, certificates or instructions required to
effectuate the transfer (or re-issuance) of the Securities Being Sold and the
issuance of an unlegended certificate to any such Lender or any transferee
thereof shall be an immediate Event of Default under this Agreement and all
other Loan Documents; and (B) the Issuing Borrower hereby agrees and
acknowledges that Lender is hereby irrevocably and expressly authorized to have
counsel to Lender render any and all opinions and other certificates or
instruments which may be required for purposes of effectuating the transfer (or
re-issuance) of the Securities Being Sold and the issuance of an unlegended
certificate to any such Lender or any transferee thereof, and the Issuing
Borrower hereby irrevocably authorizes and directs the Transfer Agent to,
without any further confirmation or instructions from the Issuing Borrower,
transfer or re-issue any such Securities Being Sold as instructed by Lender and
its counsel.
 

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10.21       Reservation of Shares.  The Issuing Borrower shall take all action
reasonably necessary to at all times have authorized, and reserved for the
purpose of issuance, such number of shares of Common Stock as shall be necessary
to effect the full conversion of the Revolving Note in accordance with its
terms, or the issuance of Common Stock under the terms of this Agreement from
time to time (the “Share Reserve”).  If at any time the Share Reserve is
insufficient to effect the full conversion of the Revolving Note then
outstanding, or to issue Common Stock under the terms of this Agreement from
time to time, the Issuing Borrower shall increase the Share Reserve
accordingly.  If the Issuing Borrower does not have sufficient authorized and
unissued shares of Common Stock available to increase the Share Reserve, the
Issuing Borrower shall call and hold a special meeting of the shareholders
within forty-five (45) days of such occurrence, or take action by the written
consent of the holders of a majority of the outstanding shares of Common Stock,
if possible, for the sole purpose of increasing the number of shares
authorized.  Issuing Borrower’s management shall recommend to the shareholders
to vote in favor of increasing the number of shares of Common Stock authorized.
 
10.22       Subsidiaries.  Any Subsidiary which is formed or acquired or
otherwise becomes a Subsidiary of the Issuing Borrower following the date
hereof, within five (5) Business Days of such event, shall become an additional
Borrower hereto, and the Borrowers shall take any and all actions necessary or
required by Lender to cause said Subsidiary to execute a counterpart to this
Agreement and any and all other documents which the Lender shall require,
including causing such party to execute those documents contained in Section
3.12 hereof.
 
11.           FINANCIAL COVENANTS.
 
11.1         Intentionally Left Blank.
 
11.2         Revenue Covenant.  Beginning with the first quarter of 2014, for
each calendar quarter while this Agreement remains in effect, Borrowers shall
have sales revenues for such calendar quarter that are not less than
seventy-five percent (75%) of the sales revenues shown for the corresponding
calendar quarter on the most recent of the Financial Statements (i.e. comparing
third quarter results to the prior years’ third quarter results).
 

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12.           EVENTS OF DEFAULT.
 
Borrowers, without notice or demand of any kind, shall be in default under this
Agreement upon the occurrence of any of the following events (each an “Event of
Default”):
 
12.1         Nonpayment of Obligations.  Any amount due and owing on the
Revolving Note or any of the Obligations, whether by its terms or as otherwise
provided herein, is not paid on the date such amount is due.
 
12.2         Misrepresentation.  Any warranty, representation, certificate or
statement of any Borrower in this Agreement, the Loan Documents or any other
agreement with Lender shall be false or misleading in any material respect when
made or deemed made.
 
12.3         Nonperformance.  Any failure to perform or default in the
performance of any covenant, condition or agreement contained in this Agreement
(not otherwise addressed in this Article 12), which failure to perform or
default in performance continues for a period of fifteen (15) days after
Borrowers receive notice or knowledge from any source of such failure to perform
or default in performance, provided, however, if the failure or default cannot
be reasonably cured within such fifteen (15) day period, then such time period
shall be extended to no more than thirty (30) days from the date of the original
default notice, so long as the Borrowers commence such cure within the initial
fifteen (15) day period and diligently pursue same to completion (provided that
if the failure to perform or default in performance is not capable of being
cured, in Lender’s sole discretion, then the cure period set forth herein shall
not be applicable and the failure or default shall be an immediate Event of
Default hereunder).
 
12.4         Default under Loan Documents.  Any failure to perform or default in
the performance by any Borrower that continues after applicable grace and cure
periods under any covenant, condition or agreement contained in any of the other
Loan Documents or any other agreement with Lender, all of which covenants,
conditions and agreements are hereby incorporated in this Agreement by express
reference.
 
12.5          Default under Other Obligations.  Any default by any Borrower in
the payment of principal, interest or any other sum for any other obligation
beyond any period of grace provided with respect thereto or in the performance
of any, other term, condition or covenant contained in any agreement (including,
but not limited to, any capital or operating lease or any agreement in
connection with the deferred purchase price of property), the effect of which
default is to cause or permit the holder of such obligation (or the other party
to such other agreement) to cause such obligation or agreement to become due
prior to its stated maturity, to terminate such other agreement, or to otherwise
modify or adversely affect such obligation or agreement in a manner that could
have a Material Adverse Effect on Borrowers, collectively.
 
12.6          Assignment for Creditors.  Any Borrower makes an assignment for
the benefit of creditors, fails to pay, or admits in writing its inability to
pay its debts as they mature; or if a trustee of any substantial part of the
assets of any Borrower is applied for or appointed, and in the case of such
trustee being appointed in a Proceeding brought against such Borrower, such
Borrower, by any action or failure to act indicates its approval of, consent to,
or acquiescence in such appointment and such appointment is not vacated, stayed
on appeal or otherwise shall not have ceased to continue in effect within sixty
(60) days after the date of such appointment.
 
12.7          Bankruptcy.  Any Proceeding involving any Borrower, is commenced
by or against any Borrower under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law or statute of
the federal government or any state government, and in the case of any such
Proceeding being instituted against any Borrower: (i) such Borrower, by any
action or failure to act, indicates its approval of, consent to or acquiescence
therein; or (ii) an order shall be entered approving the petition in such
Proceedings and such order is not vacated, stayed on appeal or otherwise shall
not have ceased to continue in effect within sixty (60) days after the entry
thereof.
 

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12.8          Judgments.  The entry of any judgment, decree, levy, attachment,
garnishment or other process, or the filing of any Lien against the property of
any Borrower for an amount in excess of $150,000 and which is not fully covered
by insurance and such judgment or other process would have a Material Adverse
Effect on the ability of such Borrower to perform under this Agreement or under
Loan Documents, as determined by Lender in its sole discretion, unless such
judgment or other process shall have been, within sixty (60) days from the entry
thereof: (i) bonded over to the satisfaction of Lender and appealed; (ii)
vacated; or (iii) discharged.
 
12.9          Material Adverse Effect.  A Material Adverse Effect shall occur.
 
12.10        Change in Control.  Except as permitted under this Agreement, any
Change in Control shall occur; provided, however, a Change in Control shall not
constitute an Event of Default if: (i) it arises out of an event or circumstance
beyond the reasonable control of any Borrower (for example, but not by way of
limitation, a transfer of ownership interest due to death or incapacity); and
(ii) within sixty (60) days after such Change in Control, such Borrower provides
Lender with information concerning the identity and qualifications of the
individual or individuals who will be in Control, and such individual or
individuals shall be acceptable to Lender, in Lender’s sole discretion.
 
12.11        Collateral Impairment.  The entry of any judgment, decree, levy,
attachment, garnishment or other process, or the filing of any Lien against, any
of the Collateral or any collateral under a separate security agreement securing
any of the Obligations, and such judgment or other process shall not have been,
within thirty (30) days from the entry thereof: (i) bonded over to the
satisfaction of Lender and appealed; (ii) vacated; or (iii) discharged, or the
loss, theft, destruction, seizure or forfeiture, or the occurrence of any
material deterioration or impairment of any of the Collateral or any of the
Collateral under any security agreement securing any of the Obligations, or any
material decline or depreciation in the value or market price thereof (whether
actual or reasonably anticipated), which causes the Collateral, in the sole
opinion of Lender acting in good faith, to become unsatisfactory as to value or
character, or which causes Lender to reasonably believe that it is insecure and
that the likelihood for repayment of the Obligations is or will soon be
impaired, time being of the essence.  The cause of such deterioration,
impairment, decline or depreciation shall include, but is not limited to, the
failure by any Borrower to do any act deemed reasonably necessary by Lender to
preserve and maintain the value and collectability of the Collateral.
 
13.           REMEDIES.
 
(a)           Upon the occurrence and during the continuance of an Event of
Default, Lender shall have all rights, powers and remedies set forth in the Loan
Documents, in any written agreement or instrument (other than this Agreement or
the Loan Documents) relating to any of the Obligations or any security therefor,
or as otherwise provided at law or in equity.  Without limiting the generality
of the foregoing, Lender may, at its option, upon the occurrence and during the
continuance of an Event of Default, declare its commitments to Borrowers to be
terminated and all Obligations to be immediately due and payable; provided,
however, that upon the occurrence of an Event of Default under either Section
12.6, “Assignment for Creditors”, or Section 12.7, “Bankruptcy”, all commitments
of Lender to Borrowers shall immediately terminate and all Obligations shall be
automatically due and payable, all without demand, notice or further action of
any kind required on the part of Lender.  The Borrowers hereby waive any and all
presentment, demand, notice of dishonor, protest, and all other notices and
demands in connection with the enforcement of Lender’s rights under the Loan
Documents, and hereby consent to, and waive notice of release, with or without
consideration, of the Borrowers or of any Collateral, notwithstanding anything
contained herein or in the Loan Documents to the contrary.
 

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(b)           No Event of Default shall be waived by Lender, except and unless
such waiver is in writing and signed by Lender.  No failure or delay on the part
of Lender in exercising any right, power or remedy hereunder shall operate as a
waiver of the exercise of the same or any other right at any other time; nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder.  There shall be no obligation on the part of Lender to
exercise any remedy available to Lender in any order. The remedies provided for
herein are cumulative and not exclusive of any remedies provided at law or in
equity.  Each Borrower agrees that in the event that any Borrower fails to
perform, observe or discharge any of its Obligations or liabilities under this
Agreement, the Revolving Note, and other Loan Documents, or any other agreements
with Lender, no remedy of law will provide adequate relief to Lender, and
further agrees that Lender shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
 
14.           MISCELLANEOUS.
 
14.1           Obligations Absolute.  None of the following shall affect the
Obligations of any Borrower to Lender under this Agreement or Lender’s rights
with respect to the Collateral:
 
(a)           acceptance or retention by Lender of other property or any
interest in property as security for the Obligations;
 
(b)           release by Lender of all or any part of the Collateral or of any
party liable with respect to the Obligations (other than Borrowers);
 
(c)           release, extension, renewal, modification or substitution by
Lender of the Revolving Note, or any note evidencing any of the Obligations; or
 
(d)           failure of Lender to resort to any other security or to pursue
Borrowers or any other obligor liable for any of the Obligations before
resorting to remedies against the Collateral.
 
14.2           Entire Agreement.  This Agreement and the other Loan Documents:
(i) are valid, binding and enforceable against the each of the Borrowers and
Lender in accordance with its provisions and no conditions exist as to their
legal effectiveness; (ii) constitute the entire agreement between the parties;
and (iii) are the final expression of the intentions of the Borrowers and
Lender.  No promises, either expressed or implied, exist between the Borrowers
and Lender, unless contained herein or in the Loan Documents.  This Agreement
and the Loan Documents supersede all negotiations, representations, warranties,
commitments, offers, contracts (of any kind or nature, whether oral or written)
prior to or contemporaneous with the execution hereof.
 

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14.3           Amendments; Waivers.  No amendment, modification, termination,
discharge or waiver of any provision of this Agreement or of the Loan Documents,
or consent to any departure therefrom, shall in any event be effective unless
the same shall be in writing and signed by Lender and Borrowers, and then such
waiver or consent shall be effective only for the specific purpose for which
given.
 
14.4          WAIVER OF DEFENSES. THE CREDIT PARTIES WAIVE EVERY PRESENT AND
FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE CREDIT PARTIES
MAY HAVE AS OF THE DATE HEREOF TO ANY ACTION BY LENDER IN ENFORCING THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.  THE CREDIT PARTIES WAIVE ANY IMPLIED
COVENANT OF GOOD FAITH AND RATIFY AND CONFIRM WHATEVER LENDER MAY DO PURSUANT TO
THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AS OF THE DATE OF THIS
AGREEMENT.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING ANY
FINANCIAL ACCOMMODATION TO BORROWERS.
 
14.5          WAIVER OF JURY TRIAL. LENDER AND EACH OF THE CREDIT PARTIES, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING NOTE, ANY LOAN DOCUMENT OR ANY
OF THE OBLIGATIONS, THE COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF
CONDUCT OR COURSE OF DEALING IN WHICH LENDER AND BORROWER ARE ADVERSE
PARTIES.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING ANY
FINANCIAL ACCOMMODATION TO BORROWERS.
 
14.6          MANDATORY FORUM SELECTION.  TO INDUCE LENDER TO MAKE THE LOANS,
EACH BORROWER IRREVOCABLY AGREES THAT ANY DISPUTE ARISING UNDER, RELATING TO, OR
IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY
MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER LOAN
DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF
CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF
THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA.  THIS
PROVISION  IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED
BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. EACH BORROWER HEREBY CONSENTS TO
THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS
SITUS IN SAID COUNTY, AND EACH WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
AND CONSENT THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, DIRECTED TO A BORROWER, AS APPLICABLE, AS SET FORTH
HEREIN IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR
OTHERWISE.
 

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14.7          Assignability. Lender may at any time assign Lender’s rights in
this Agreement, the Revolving Note, any Loan Document, the Obligations, or any
part thereof, and transfer Lender’s rights in any or all of the Collateral, all
without any notice, consent or approval from Borrowers or any other Person, and
Lender thereafter shall be relieved from all liability with respect to such
Collateral.  In addition, Lender may at any time sell one or more participations
in the Loans. The Credit Parties may not sell or assign this Agreement, any Loan
Document or any other agreement with Lender, or any portion thereof, either
voluntarily or by operation of law, nor delegate any of its duties of
obligations hereunder or thereunder, without the prior written consent of
Lender, which consent may be withheld in Lender’s sole and absolute
discretion.  This Agreement shall be binding upon Lender and the Credit Parties
and their respective legal representatives, successors and permitted
assigns.  All references herein to a Borrower shall be deemed to include any
successors, whether immediate or remote.  In the case of a joint venture or
partnership, the term “Borrower” shall be deemed to include all joint venturers
or partners thereof, who shall be jointly and severally liable hereunder.
 
14.8          Confidentiality. Each of the parties hereto shall keep
confidential any information obtained from the other party (except information
publicly available or in such party’s domain prior to disclosure of such
information from the other party hereto, and except as required by applicable
laws) and shall promptly return to the other party all schedules, documents,
instruments, work papers and other written information without retaining copies
thereof, previously furnished by it as a result of this Agreement or in
connection herewith.
 
14.9          Publicity.  Each party shall have the right to approve, before
issuance, any press release or any other public statement with respect to the
transactions contemplated hereby made by the other party; provided, however,
that Borrowers shall be entitled, without the prior approval of Lender, to issue
any press release or other public disclosure with respect to such transactions
required under applicable securities or other laws or
regulations.  Notwithstanding the foregoing, Borrowers shall use their best
efforts to consult Lender in connection with any such press release or other
public disclosure prior to its release and Lender shall be provided with a copy
thereof upon release thereof.  In addition, with respect to any press release to
be made by Lender, Borrowers hereby authorize and grant blanket permission to
Lender to include the Issuing Borrower’s stock symbol, if any, in any press
releases.  Borrowers shall, promptly upon request, execute any additional
documents of authority or permission as may be requested by Lender in connection
with any such press releases.
 
14.10        Binding Effect.  This Agreement shall become effective upon
execution by Borrowers and Lender.
 

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14.11        Governing Law.  Except in the case of the Mandatory Forum Selection
Clause in Section 14.6 above, which clause shall be governed and interpreted in
accordance with Florida law, this Agreement, the Loan Documents and the
Revolving Note shall be delivered and accepted in and shall be deemed to be
contracts made under and governed by the internal laws of the State of Nevada,
and for all purposes shall be construed in accordance with the laws of such
State, without giving effect to the choice of law provisions.  The governing law
provisions of this Section 14.11 are a material inducement for Lender to enter
into this Agreement, and the Borrowers hereby agree, acknowledge and understand
that the Lender would not have entered into this Agreement, nor made or provided
the Loans, without the Borrowers’ full agreement and consent, with full
knowledge and understanding, that except in the case of the Mandatory Forum
Selection Clause in Section 14.6 above, which clause shall be governed and
interpreted in accordance with Florida law, this Agreement, and each of the Loan
Documents, shall be governed by the internal laws of the State of Nevada, and
for all purposes shall be construed in accordance with the laws of such State,
without giving effect to the choice of law provisions.
 
14.12        Enforceability.  Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by,
unenforceable or invalid under any jurisdiction, such provision shall as to such
jurisdiction, be severable and be ineffective to the extent of such prohibition
or invalidity, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
 
14.13        Survival of Borrower’s Representations.  All covenants, agreements,
representations and warranties made by any Borrower herein shall,
notwithstanding any investigation by Lender, be deemed material and relied upon
by Lender and shall survive the making and execution of this Agreement and the
Loan Documents and the issuance of the Revolving Note, and shall be deemed to be
continuing representations and warranties until such time as each Borrower has
fulfilled all of its Obligations to Lender, and Lender has been paid in full.
Lender, in extending financial accommodations to Borrowers, is expressly acting
and relying on the aforesaid representations and warranties.
 
14.14        Extensions of Lender’s Commitment and the Revolving Note.  This
Agreement shall secure and govern the terms of any extensions or renewals of
Lender’s commitment hereunder and the Revolving Note pursuant to the execution
of any modification, extension or renewal note executed by Borrowers and
accepted by Lender in its sole and absolute discretion in substitution for the
Revolving Note.
 
14.15        Time of Essence.  Time is of the essence in making payments of all
amounts due Lender under this Agreement and in the performance and observance by
each Borrower of each covenant, agreement, provision and term of this Agreement.
 
14.16        Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument.
 

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14.17        Electronic Signatures. Lender is hereby authorized to rely upon and
accept as an original any Loan Documents or other communication which is sent to
Lender by facsimile, telegraphic or other electronic transmission (each, a
“Communication”) which Lender in good faith believes has been signed by a
Borrower and has been delivered to Lender by a properly authorized
representative of a Borrower, whether or not that is in fact the
case.  Notwithstanding the foregoing, Lender shall not be obligated to accept
any such Communication as an original and may in any instance require that an
original document be submitted to Lender in lieu of, or in addition to, any such
Communication.
 
14.18        Notices.  Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and in each case properly addressed to the party to receive the same in
accordance with the information below, and will be deemed to have been
delivered: (i) if mailed by certified mail, return receipt requested, postage
prepaid and properly addressed to the address below, then three (3) business
days after deposit of same in a regularly maintained U.S. Mail receptacle; or
(ii) if mailed by Federal Express, UPS or other nationally recognized overnight
courier service, next business morning delivery, then one (1) business day after
deposit of same in a regularly maintained receptacle of such overnight courier;
or (iii) if hand delivered, then upon hand delivery thereof to the address
indicated on or prior to 5:00 p.m., EST, on a Business Day.  Any notice hand
delivered after 5:00 p.m., EST, shall be deemed delivered on the following
Business Day.  Notwithstanding the foregoing, notice, consents, waivers or other
communications referred to in this Agreement may be sent by facsimile, e-mail,
or other method of delivery, but shall be deemed to have been delivered only
when the sending party has confirmed (by reply e-mail or some other form of
written confirmation) that the notice has been received by the other party.  The
addresses and facsimile numbers for such communications shall be as set forth
below, unless such address or information is changed by a notice conforming to
the requirements hereof.  No notice to or demand on Borrower in any case shall
entitle Borrower to any other or further notice or demand in similar or other
circumstances:
 
If to any Borrower:
Dr. Tattoff, Inc.
     
8500 Wilshire Blvd., Suite 105
 
Beverly Hills, CA 90211
 
Attention:
Mr. John Keefe, CEO
 
E-Mail:
jkeefe@drtattoff.com
   
With a copy to:
Harry Zimmerman, Esq.
 
2628 Barton Hills Dr.
 
Austin, TX 78704
 
hzimmerman@drtattoff.com
   
If to the Lender:
TCA Global Credit Master Fund, LP
 
1404 Rodman Street
 
Hollywood, Florida 33020
 
Attention:
Robert Press, Director
 
Telephone:
(786) 323-1650
 
Facsimile:
(786) 323-1651
 
E-Mail:
bpress@tcaglobalfund.com

 

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With a Copy to:
David Kahan, P.A.
 
6420 Congress Ave., Suite 1800
 
Boca Raton, Florida 33487
 
Telephone:
(561) 672-8330
 
Facsimile:
(561) 672-8301
 
E-Mail:
david@dkpalaw.com

 
 
14.19        Indemnification.  Each Borrower agrees to defend, protect,
indemnify and hold harmless Lender and all of its officers, directors, employees
and agents (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (each, a “Lender Indemnitee” and
collectively, the “Lender Indemnitees”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, Proceedings,
judgments, suits, claims, costs, expenses and distributions of any kind or
nature (including, without limitation, the disbursements and the reasonable fees
of counsel for each Lender Indemnitee thereto), which may be imposed on,
incurred by, or asserted against, any Lender Indemnitee (whether direct,
indirect or consequential and whether based on any federal, state or local laws
or regulations, including, without limitation, securities, Environmental Laws
and commercial laws and regulations, under common law or in equity, or based on
contract or otherwise) in any manner relating to or arising out of this
Agreement or any of the Loan Documents, or any act, event or transaction related
or attendant thereto, the preparation, execution and delivery of this Agreement
and the Loan Documents, including, but not limited to, the making or issuance
and management of the Loans, the use or intended use of the proceeds of the
Loans, the enforcement of Lender’s rights and remedies under this Agreement, the
Loan Documents, the Revolving Note, any other instruments and documents
delivered hereunder, or under any other agreement between Borrowers and Lender;
provided, however, that Borrowers shall not have any obligations hereunder to
any Lender Indemnitee with respect to matters caused by or resulting from the
willful misconduct or gross negligence of such Lender Indemnitee.  To the extent
that the undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrowers shall
satisfy such undertaking to the maximum extent permitted by applicable law.  Any
liability, obligation, loss, damage, penalty, cost or expense covered by this
indemnity shall be paid to each Lender Indemnitee on demand, and, failing prompt
payment, shall, together with interest thereon at the Default Rate from the date
incurred by each Lender Indemnitee until paid by Borrowers, be added to the
Obligations of Borrowers and be secured by the Collateral.  The provisions of
this Section shall survive the satisfaction and payment of the other Obligations
and the termination of this Agreement.
 
14.20        Release.  In consideration of the mutual promises and covenants
made herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, each Borrower hereby agrees to fully, finally and forever release and
forever discharge and covenant not to sue Lender, and/or and its parent
companies, subsidiaries, affiliates, divisions, and their respective attorneys,
officers, directors, agents, shareholders, members, employees, predecessors,
successors, assigns, personal representatives, partners, heirs and executors
from any and all debts, fees, attorneys’ fees, liens, costs, expenses, damages,
sums of money, accounts, bonds, bills, covenants, promises, judgments, charges,
demands, claims, causes of action, suits, Proceedings, liabilities, expenses,
obligations or contracts of any kind whatsoever, whether in law or in equity,
whether asserted or unasserted, whether known or unknown, fixed or contingent,
under statute or otherwise, from the beginning of time through the Closing Date,
including, without  limiting the generality of the foregoing, any and all claims
relating to or arising out of any financing transactions, credit facilities,
debentures, security agreements, and other agreements including, without
limitation, each of the Loan Documents, entered into by any Borrower with Lender
and any and all claims that any Borrower does not know or suspect to exist,
whether through ignorance, oversight, error, negligence, or otherwise, and
which, if known, would materially affect their decision to enter into this
Agreement or the related Loan Documents. The provisions of this Section shall
survive the satisfaction and payment of the other Obligations and the
termination of this Agreement.
 

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14.21        Interpretation.  If any provision in this Agreement requires
judicial or similar interpretation, the judicial or other such body interpreting
or construing such provision shall not apply the assumption that the terms
hereof shall be more strictly construed against one party because of the rule
that an instrument must be construed more strictly against the party which
itself or through its agents prepared the same.  The parties hereby agree that
all parties and their agents have participated in the preparation hereof
equally.
 
14.22         Compliance with Federal Law.  The Credit Parties shall: (i) ensure
that no Person who owns a controlling interest in or otherwise controls a Credit
Party is or shall be listed on the Specially Designated Nationals and Blocked
Person List or other similar lists maintained by the Office of Foreign Assets
Control (“OFAC”), the Department of the Treasury, included in any Executive
Orders or any other similar lists from any Governmental Authority, foreign or
national; (ii) not use or permit the use of the proceeds of the Loans to violate
any of the foreign asset control regulations of OFAC or any enabling statute or
Executive Order relating thereto, or any other similar national or foreign
governmental regulations; and (iii) comply, and cause each of such Credit
Party’s Subsidiaries to comply, with all applicable Lender Secrecy Act (“BSA”)
laws and regulations, as amended.  As required by federal law and Lender’s
policies and practices, Lender may need to obtain, verify and record certain
customer identification information and documentation in connection with opening
or maintaining accounts or establishing or continuing to provide services.
 
14.23         Joint and Several Liability.  The liability of all Borrowers
hereunder for the Obligations, or for the performance of any other term,
condition, covenant or agreement of any Borrower hereunder, shall be joint and
several.
 
[REMAINDER OF PAGE LEFT BLANK, SIGNATURE PAGE FOLLOWS.]
 

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IN WITNESS WHEREOF, Borrowers and Lender have executed this Credit Agreement as
of the date first above written.
 
BORROWERS:

              DR. TATTOFF, INC.,     DRTHC I, LLC,   a Florida corporation    
a Delaware limited liability company
               
By: 
/s/ Harry Zimmerman    
By: 
  /s/ Harry Zimmerman  
Name:
Harry Zimmerman    
Name: 
Harry Zimmerman  
Title: 
EVP - COO    
Title:
EVP - COO  

 

      DRTHC II, LLC,  
a Delaware limited liability company
       
By: 
  /s/ Harry Zimmerman  
Name: 
Harry Zimmerman  
Title:
EVP - COO  

 
LENDER:
 
TCA GLOBAL CREDIT MASTER FUND, LP
 

By:  TCA Global Credit Fund GP, Ltd.   Its:  General Partner         By:  /s/
Robert Press    
Robert Press, Director
 

 

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Exhibit A
 
Form of Covenant Compliance Certificate
 

62

 

 

 
Exhibit B
 
Form of Revolving Note
 

63

 

 

 
Exhibit C
 
Form of Security Agreement
 

64

 

 

 
Exhibit D
 
Form of Validity Certificates
 

65