LOAN AGREEMENT

This Loan Agreement is made and entered into by and between Z.B., N.A., doing
business as Zions First National Bank, a national association, as Lender,
LifeVantage Corporation, a Colorado corporation, and Lifeline Nutraceuticals
Corporation, a Colorado corporation, as Borrower.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1.Definitions
Terms defined in the singular shall have the same meaning when used in the
plural and vice versa. As used herein, the term:
1.1    “Advance” means a loan disbursement by Lender to Borrower as described in
Section 2.1of this Loan Agreement.
1.2    “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the Equity Interests having ordinary voting
power for the election of members of the Board of Directors of such Person or
(b) direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
1.3    “Banking Business Day” means any day other than a Saturday, Sunday or
other day on which commercial banks in the State of Utah are authorized or
required to close.
1.4    “Borrower” means LifeVantage Corporation, organized and existing under
the laws of the State of Colorado, its successors, and, if permitted, assigns;
and Lifeline Nutraceuticals Corporation, organized and existing under the laws
of the State of Colorado, its successors, and, if permitted, assigns.
1.5     “COF Rate” means the interest rate determined by Lender, in its sole
discretion, from time to time, to be its cost of funds, as such rate may change
from time to time.
1.6    “Capital Expenditure” means all amounts paid by Borrower in connection
with the purchase of plant, machinery or equipment (including vehicles) or other
similar expenditures (including leases of any of the foregoing) which, in
accordance with GAAP, would be required to be capitalized and shown on the
balance sheet of Borrower, but excluding expenditures made in connection with
the replacement, substitution or restoration of assets to the extent financed
(1) from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored or (1) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced.
1.7    “Change of Control” means each occurrence of any of the following:

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(a)    the acquisition, directly or indirectly, by any person or group (within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934) of
beneficial ownership of more than 25% of the aggregate outstanding voting or
economic power of the Equity Interests of LifeVantage Corporation (or its direct
or indirect ultimate parent holding company); or
(b)    the Borrower shall cease to have beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended) of 100% of the
aggregate voting or economic power of the Equity Interests of each of its
Subsidiaries (other than in connection (i) with any transaction permitted
pursuant to Section 6.9), free and clear of all Liens (other than Permitted
Encumbrances) and (ii) with respect to foreign Subsidiaries, Equity Interests
that are required to be owned by an entity or person other than the Borrower or
a Subsidiary I accordance with the local law of such foreign Subsidiary).
1.8    “Collateral” shall have the meaning set forth in Section 3, of this Loan
Agreement.
1.9    “Debt” of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money; (b) all obligations issued, undertaken or
assumed by such Person as the deferred purchase price of property or services
(other than (i) trade payables and current operating liabilities not for
borrowed money, entered into in the ordinary course of business on ordinary
terms that are not more than one hundred twenty (120) days past due, unless
contested in good faith and by appropriate proceedings and (ii) any obligations
of such Person under any of its existing employee bonus or deferred compensation
plans); (c) all obligations of such Person evidenced by notes, bonds, debentures
or similar instruments; (d) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as financing,
in either case with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property); (e) all
obligations of such Person with respect to capital leases; (f) all guaranties of
such Person of any indebtedness of another Person; (g) net mark-to-market
exposure of such Person under interest rate swap, cap, collar, foreign exchange,
or similar hedging arrangements; and (h) the sale, with recourse, of any of such
Person’s accounts.
1.10    “Dollars” and the sign “$” mean lawful money of the United States.
1.11    “EBITDA” means net income (excluding extraordinary gains or losses
realized other than in the normal course of business) plus (i) income tax
expense, plus (ii) interest expense, plus (iii) other income (expense), net
(consisting of non-cash currency gains / (losses) related to currency
remeasurements of indebtedness and currency hedges), plus (iv) depreciation
expense, plus (v) amortization expense, plus (vi) non-cash stock compensation
expense, plus (vii) other non-recurring expenses as reasonably approved by the
Lender, in each case determined on a consolidated basis for the Borrower and its
Subsidiaries in accordance with GAAP.
1.12    “Effective Date” means March 30, 2016.
1.13    “Environmental Condition” means any condition involving or relating to
the Release of Hazardous Materials affecting the Real Property, whether or not
yet discovered, which could or

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does result in any material damage, loss, cost, expense, claim, demand, order,
or liability to or against Borrower or Lender by any third party (including,
without limitation, any government entity).
1.14    “Environmental Health and Safety Law” means any federal, state or local
law, statute or regulation that requires or relates to the use, generation,
storage, transportation, treatment, sale, transfer, Release or cleanup of
Hazardous Materials.
1.15    “Equity Interest” means (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests and (e) any other equity interest or equity participation that confers
on a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
1.16    “Event of Default” is defined in Section 8.1, of this Loan Agreement.
1.17    “Facility 1 Loan Commitment” means the obligation of Lender to make a
revolving loan in an amount not to exceed Two Million Dollars ($2,000,000), as
such amount may be reduced in accordance with Section 2.9 hereof.
1.18    “Facility 1 Note” is defined in Section 2.7 of this Loan Agreement.
1.19    “Facility 2 Loan Commitment” means the obligation of Lender to make a
term loan in an amount equal to Ten Million Dollars ($10,000,000).
1.20    “Facility 2 Note” is defined in Section 2.7 of this Loan Agreement.
1.21    “Fiscal Year” means the Fiscal Year of Borrower which period shall be
the 12-month period ending on June 30 of each year. References to a Fiscal Year
with a number corresponding to any calendar year (e.g., “Fiscal Year 2016”)
refer to the Fiscal Year ending on June 30 of such calendar year.
1.22    “Fiscal Quarter” means a fiscal quarter of a Fiscal Year.
1.23    "Fixed Charge Coverage Ratio" shall be determined for Borrower and its
Subsidiaries on a consolidated basis in accordance with GAAP and shall mean,
with respect to any twelve-month period, the ratio of (i) EBITDA for such period
minus cash taxes, minus unfinanced Capital Expenditures, minus dividends or
distributions paid in cash by the Borrower to its equity interest holders
respectively, over (ii) current portion long term debt and interest expense.
1.24    “GAAP” means GAAP set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of any date of determination.

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1.25    “Hazardous Materials” means (a) “hazardous waste” as defined by the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act of 1976 (42 U.S.C. Section 6901 et seq.), including any future amendments
thereto, and regulations promulgated thereunder, and as the term may be defined
by any contemporary state counterpart to such act; (b) “hazardous substance” as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. Section 9601 et seq.), including any future amendments
thereto, and regulations promulgated thereunder, and as the term may be defined
by any contemporary state counterpart of such act; (c) friable asbestos; (d)
polychlorinated biphenyls; (e) underground or above ground storage tanks,
whether empty or filled or partially filled with any Hazardous Materials; (f)
any substance the presence of which is or becomes listed, regulated or
prohibited by any Environmental Health and Safety Law; and (g) any substance
which under any Environmental Health and Safety Law requires special handling or
notification in its collection, storage, treatment, transportation, use or
disposal.
1.26    “Insolvency Proceeding” means, without respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or other
governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors
(including any proceeding under the United States Bankruptcy Code) or (b) any
general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of such Person’s
creditors generally or any substantial portion of such creditors.
1.27    “LIBOR Rate” means, as of any date of determination, the rate per annum
quoted by Lender as Lender’s LIBOR rate based upon quotes from the London
Interbank Offered Rate from the British Bankers Associates Interest Settlement
Rates, as quoted on each Banking Business Day for U.S. Dollars by Bloomberg or
other comparable pricing services selected by Lender. This definition of
Lender’s LIBOR Rate is to be strictly interpreted and is not intended to serve
any purpose other than providing an index to determine interest rates hereunder.
Lender's LIBOR Rate may not necessarily be the same as the quoted offer side in
the Eurodollar time deposit market by any particular institution or service
applicable to any interest period. It is not the lowest rate at which Lender may
make loans to any of its customers, either now or in the future.
1.28    “Lender” means ZB, N.A., doing business as Zions First National Bank, a
national association.
1.29    “Lien” means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, or any financing lease having
substantially the same economic effect as any of the foregoing, but not
including the interest of a lessor under an operating lease).
1.30    “Loan” means the Facility 1 Loan and the Facility 2 Loan.
1.31    “Loan Agreement” means this agreement, together with any exhibits,
amendments, addendums, and modifications thereto.

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1.32    “Loan Documents” means the Loan Agreement, Note, Security Agreement, all
other agreements and documents contemplated by any of the aforesaid documents,
and all amendments, modifications, addendums, and replacements thereto, whether
presently existing or created in the future.
1.33    “Margin Stock” means “margin stock” as such term is defined in
Regulation T, U and X of the Board of Governors of the Federal Reserve Board.
1.34    “Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise), profits or prospects of Borrower and its Subsidiaries,
taken as a whole; or (b) a material adverse effect upon the legality, validity,
binding effect or enforceability against Borrower of any Loan Document.
1.35    “Maturity Date” means March 30, 2019.
1.36    “Note” means the Facility 1 Note and Facility 2 Note to be executed by
Borrower pursuant to Section 2.7 of this Loan Agreement, and any and all
renewals, extensions, modifications, and replacements thereof.
1.37    “Obligations” means the Loans, the Note and all obligations of Borrower
under the Loan Documents.
1.38    “Organizational Documents” means, in the case of a corporation, its
Articles of Incorporation (or other similar documents) and By-Laws; in the case
of a general partnership, its Articles of Partnership; in the case of a limited
partnership, its Articles of Limited Partnership; in the case of a limited
liability company, its Articles of Organization and Operating Agreement or
Regulations (or other similar documents), if any; in the case of a limited
liability partnership, its Articles of Limited Liability Partnership; and all
amendments, modifications, and changes to any of the foregoing which are
currently in effect.
1.39    “Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. 107-56 (signed into law on October 26, 2001).
1.40    “Permitted Encumbrances”: means Liens permitted by Section 6.5 hereof.
1.41    “Person” means any natural person, corporation, partnership, limited
liability company, trust, association, governmental authority or unit, or any
other entity, whether acting in an individual, fiduciary or other capacity.
1.42    “Real Property” means any and all real property or improvements thereon
now or hereafter owned, leased, occupied or operated by Borrower.
1.43    “Release” means any presence, emission, spill, seepage, leak, escape,
leaching, discharge, injection, pumping, pouring, emptying, dumping, disposal,
migration, or release of Hazardous Materials from any source into or upon the
environment, including the air, soil,

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improvements, surface water, groundwater, the sewer, septic system, storm drain,
publicly owned treatment works, or waste treatment, storage, or disposal
systems.
1.44    “Security Documents” means all security agreements, collateral
assignments, pledge agreements and financing statements which create or evidence
any security interest in personal property favor of Lender to secure any or all
of the Obligations, and all amendments, modifications, addendums, and
replacements, whether presently existing or created in the future.
1.45    “Subsidiary” of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than 50% of the voting stock, membership interests or other equity
interests is owned or controlled directly or indirectly by such Person, or by
one or more of the Subsidiaries of such Person, or by a combination thereof.
Unless the context otherwise clearly requires, references herein to a
“Subsidiary” refer to a Subsidiary of Borrower.
1.46     “Unmatured Event of Default” means any event which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
1.47    “Zions Bank” means Z.B., N.A., doing business as Zions First National
Bank, a national association.
2.    Loan Description
2.1    Commitment.
(a)    Revolving Loan. Subject to the terms and conditions of this Loan
Agreement, Lender agrees to make Advances to Borrower on a revolving basis
(collectively the “Facility 1 Loan”), as Borrower may request, from time to time
before the Maturity Date, in amounts not to exceed, in the aggregate, at any one
time outstanding, the amount of the Facility 1 Loan Commitment. Borrower may
borrow, repay and reborrow Facility 1 Loan Advances from time to time before the
Maturity Date in accordance with the provisions of this Loan Agreement. If, at
any time prior to the Maturity Date there shall be a zero balance owing under
the Facility 1 Loan, the Facility 1 Loan Commitment shall not be deemed
terminated but shall remain in full force and effect for future Facility 1 Loan
Advances unless terminated upon other grounds.
(b)    Term Loan. Subject to the terms and conditions of this Loan Agreement,
Lender agrees to, on the Effective Date, make an Advance to Borrower on a term
basis (the “Facility 2 Loan”) in an amount equal to the amount of the Facility 2
Loan Commitment. Amounts repaid under the Facility 2 Loan may not be reborrowed.
2.2    Borrowing Procedures. Borrower shall have access to the proceeds of the
Loan pursuant to such procedures as shall be agreed upon by Borrower and Lender
from time to time. At the election of Borrower, the Facility 1 Note may be
linked to a sweep account (the “Sweep Account”) pursuant to a Sweep Account
Agreement between Lender and Borrower. Borrower may

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unilaterally terminate the Sweep Account at any time. Except as expressly
modified hereby, the terms and conditions of the Sweep Account Agreement shall
remain in full force and effect. All references in the Sweep Account Agreement
to the “Commercial Loan Line with Zions Bank” are amended to refer to this Loan
Agreement. If such election is made, (a) Lender is authorized and directed to
disburse funds under the Facility 1 Note for deposit into the Sweep Account on
each Banking Business Day as needed to cover all checks and other charges
against the Sweep Account; (b) disbursements shall be made up to the maximum
available advance amount; (c) upon occurrence of an Event of Default or
Unmatured Event of Default, Lender may, in its sole discretion, cease all
disbursements under the Facility 1 Note into the Sweep Account; and (d) Lender
is authorized and directed to disburse all collected funds in the Sweep Account
on each Banking Business Day to Lender to be applied on the Facility 1 Note. It
is acknowledged that posting of credits and debits to and from the Sweep Account
are made one Banking Business Day after the transactions occur and backdated to
the prior Banking Business Day.
2.3    Loan Payments
(a)    Payments on the Facility 1 Loan. Interest on the Facility 1 Loan shall be
payable quarterly, in arrears, on the last day of each Fiscal Quarter commencing
June 30, 2016. All unpaid principal and unpaid interest upon the Facility 1 Loan
shall be paid in full on the Maturity Date.
(b)    Rest Period. Borrower agrees that, prior to the Facility 1 Maturity Date,
Borrower shall reduce the outstanding balance of the Facility 1 Note to a zero
$0.00 balance and shall maintain such zero $0.00 balance for a period of thirty
(30) consecutive days.
(c)    Payments on the Facility 2 Loan. Payments of principal on the Facility 2
Loan in the amount of Five Hundred Thousand Dollars ($500,000) plus accrued
interest upon the Facility 2 Loan shall be payable quarterly, in arrears, on the
last day of each Fiscal Quarter commencing on June 30, 2016. All unpaid
principal and unpaid interest upon the Facility 2 Loan shall be paid in full on
the Maturity Date.
2.4    Interest. Interest on the Loan shall accrue from the date of disbursement
of the principal amount or portion thereof until paid, both before and after
judgment, in accordance with the terms set forth herein, and shall be computed
on the basis of a three hundred sixty (360) day year.
(a)    Interest Rates.
(i)    Interest Rate on Facility 1 Loan. With respect to the Facility 1 Loan,
interest shall accrue at a variable rate equal to the 30 Day LIBOR Rate (which
shall be recalculated monthly on the last Banking Business Day of each month)
plus 3.50%.
(ii)    Interest Rate on Facility 2 Loan. With respect to the Facility 2 Loan,
interest shall accrue at a fixed rate of 4.93%.

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(iii)    Suspension or Termination of LIBOR Pricing. Notwithstanding anything to
the contrary herein, if Lender reasonably determines (which determination shall
be conclusive absent manifest error) that quotations of interest rates are not
being provided for purposes of determining the LIBOR Rate, or the LIBOR Rate
does not accurately cover the cost to Lender of making or maintaining advances
based on the LIBOR Rate, then Lender may give notice thereof to Borrower,
whereupon until Lender notifies Borrower that the circumstances giving rise to
such suspension no longer exist, then (1) interest pricing based on the LIBOR
Rate shall be suspended; and (2) the COF Rate shall replace the LIBOR Rate.
Notwithstanding anything to the contrary herein, if the adoption of any
applicable law, rule, or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank, or comparable agency charged with the interpretation or administration
thereof, or compliance by the Lender with any request or directive (whether or
not having the force of law) of any such authority, central bank, or comparable
agency, shall make it unlawful or impossible for the Lender to maintain balances
based on the LIBOR Rate, then upon notice to Borrower by the Lender, the
outstanding principal amount of the applicable balances based on the LIBOR Rate,
together with interest accrued thereon, (a) shall be repaid immediately upon
demand of the Lender if such change or compliance with such request, in the
reasonable judgment of the Lender, requires immediate repayment or, (b) if such
repayment is not required in the judgment of the Lender, shall be converted to
balances based on the applicable COF Rate.
2.5    Fees. Upon execution and delivery of this Loan Agreement, Borrower shall
pay Lender a commitment fee (the “Commitment Fee”) in the total amount of Ten
Thousand Dollars ($10,000) for the Facility 1 Loan and Fifty Thousand Dollars
($50,000) for the Facility 2 Loan. No portion of such fee shall be refunded in
the event of early termination of this Loan Agreement or any termination or
reduction of the right of Borrower to request advances under this Loan
Agreement. Lender is authorized, upon execution of this Loan Agreement and
fulfillment of all conditions precedent hereunder, to disburse a sufficient
amount of the Loan proceeds to pay the Commitment Fee in full.
2.6    Capital Adequacy. If the Lender shall reasonably determine that the
application or adoption of any law, rule, regulation, directive, interpretation,
treaty or guideline regarding capital adequacy, or any change therein or in the
interpretation or administration thereof, whether or not having the force of
law, increases the amount of capital required or expected to be maintained by
the Lender or any Person controlling the Lender, and such increase is based upon
the existence of the Lender’s obligations hereunder and other commitments of
this type, then from time to time, within ten days after demand from the Lender,
Borrower shall pay to the Lender such amount or amounts as will compensate the
Lender or such controlling Person, as the case may be, for such increased
capital requirement. The determination of any amount to be paid by Borrower
under this Section shall take into consideration the policies of the Lender or
any Person controlling the Lender with respect to capital adequacy and shall be
based upon any reasonable averaging, attribution and allocation methods. A
certificate of the Lender setting forth in reasonable detail the amount or

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amounts (and the basis for the calculation of such amounts) as shall be
necessary to compensate the Lender as specified in this Section 2.6 shall be
delivered to Borrower and shall be conclusive in the absence of manifest error.
Failure or delay on the part of the Lender to demand compensation pursuant to
this Section shall not constitute a waiver of the Lender’s right to demand such
compensation; provided that the Borrower shall not be required to compensate the
Lender pursuant to this Section for any increased costs incurred or reductions
suffered more than 180 days prior to the date that the Lender notifies the
Borrower of the change in law giving rise to such increased costs or reductions,
and of the Lender’s intention to claim compensation therefor.
2.7    Note or Notes
(a)    The Facility 1 Loan shall be evidenced by one or more promissory notes
(as amended or otherwise modified from time to time, and together with any
substitutions therefor or renewals thereof, the “Facility 1 Note”), dated
Effective Date, payable to the order of Lender, in accordance with the terms
hereto, on the Maturity Date, in the principal amount of the original Facility 1
Loan Commitment, or, if less, the aggregate unpaid principal amount of all
Facility 1 Loan Advances. The Facility 2 Loan shall be evidenced by one or more
promissory notes (as amended or otherwise modified from time to time, and
together with any substitutions therefor or renewals thereof, the “Facility 2
Note”), dated Effective Date, payable to the order of Lender, in accordance with
the terms hereto, on the Maturity Date, in the principal amount of the original
Facility 2 Loan Commitment, or, if less, the aggregate unpaid principal amount
of all Facility 2 Loan Advances. The date and amount of each Loan made by Lender
and of each repayment of principal thereon received by Lender shall be recorded
by Lender in its records. The aggregate unpaid principal amount so recorded
shall be rebuttable presumptive evidence of the principal amount owing and
unpaid. The failure so to record any such amount or any error in so recording
any such amount shall not, however, limit or otherwise affect the obligations of
Borrower to repay the actual outstanding principal amount of the Loans together
with all interest accruing thereon.
2.8    Due Date Extension. The Note shall provide for the payment of default
interest. If any payment of principal or interest under the Loan or the Note (or
of any other amount payable hereunder) falls due on a day which is not a Banking
Business Day, then such due date shall be extended to the next following Banking
Business Day and additional interest shall accrue and be payable for the period
of such extension.
2.9    Voluntary Reduction or Termination of the Commitment. Borrower may from
time to time, on at least three Banking Business Days’ prior written notice
received by Lender, permanently reduce the amount of the Facility 1 Loan
Commitment to an amount not less than the aggregate unpaid principal amount of
the Facility 1 Loans. Borrower may at any time on like notice terminate the
Facility 1 Loan Commitment upon payment in full of all Loans and all other
obligations of Borrower hereunder.
2.10    Prepayment
(a)    Mandatory Prepayment. Borrower agrees that if at any time the aggregate
outstanding principal amount of all Facility 1 Loans shall exceed the amount of
the Facility

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1 Loan Commitment, Borrower shall make a prepayment of the Facility 1 Loans in
an amount equal to such excess.
(b)    Optional Prepayments. Borrower may from time to time, on at least one
Banking Business Day’s prior written or telephonic notice received by Lender,
prepay all or any portion of any Loan at any time without premium or penalty.
(c)    Prepayment Procedures Any prepayment received by Lender after 2:00 p.m.
mountain standard or daylight time (whichever is in effect on the date the
prepayment is received) shall be deemed received on the following Banking
Business Day.
2.11    Automatic Debit of Borrower’s Account. Lender is authorized and directed
to establish automatic debits to Borrower’s account with Lender for payment of
interest on the Note and for payment of fees owing to Lender, if any.
2.12    Letter of Credit. Subject to the terms of this Loan Agreement, Lender
may, at the request of Lender, issue letters of credit for the account of
Borrower (each a "Letter of Credit") . At no time, however, shall the total face
amount of all Letters of Credit outstanding, less any partial draws paid under
the Letters of Credit, plus Advances upon the Facility 1 Loans outstanding,
exceed the principal commitment amount of the Facility 1 Loan Commitment. The
amount available under the Facility 1 Loan Commitment shall be automatically
reduced by the undrawn amount of any outstanding Letters of Credit issued for or
on account of Borrower. Any draws paid by Lender in accordance with any such
Letters of Credit shall be repaid by Borrower to Lender by Advances under the
Facility 1 Loan Commitment.
(a)    Should the Facility 1 Loan Commitment not be renewed by Lender, on the
Maturity Date, Advances under the Facility 1 Loan Commitment in an amount
sufficient to fund all the outstanding Letters of Credit issued by Lender for or
on account of Borrower will be disbursed to Lender and held as cash collateral
for repayment of the outstanding Letters of Credit and Lender shall apply such
cash collateral to drawings upon such the applicable Letters of Credit. As each
Letter of Credit expires, Lender shall release to Borrower the corresponding
funds held for that Letter of Credit.
(b)    Upon Lender's request, Borrower promptly shall pay to Lender issuance
fees and such other fees, commissions, costs, and any out-of-pocket expenses
charged or incurred by Lender with respect to any Letter of Credit, in each case
in accordance with Lender’s standard fee schedules.
(c)    The commitment by Lender to issue Letters of Credit shall, unless earlier
terminated in accordance with the terms of the Loan Agreement, automatically
terminates on the Maturity Date and no Letter of Credit shall expire on a date
which is more than three hundred sixty-five (365) days after the Maturity Date.
(d)    Each Letter of Credit shall be in form and substance satisfactory to
Lender and in favor of beneficiaries satisfactory to Lender, provided that
Lender may refuse to issue a Letter of Credit due to the nature of the
transaction or its terms or in connection with any

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transaction where Lender, due to the beneficiary or the nationality or residence
of the beneficiary, would be prohibited by any applicable law, regulation, or
order from issuing such Letter of Credit. Under no circumstances, however, will
a Letter of Credit exceed 365 days from the issue date.
(e)    Prior to the issuance of each Letter of Credit, and in all events prior
to any daily cutoff time Lender may have established for purposes thereof prior
to such issuance, Borrower shall deliver to Lender a duly executed form of
Lender's standard form of application for issuance of letter of credit with
proper insertions.
(f)    Borrower hereby indemnifies and holds Lender harmless from and against
any and all claims, damages, losses, liabilities, costs or expenses, which
Lender may incur or which may be claimed against Lender by any person or entity
by reason of, or in connection with, the execution and delivery or transfer of,
or payment or failure to make lawful payment under, the Letter of Credit;
provided, however, that Borrower shall not be required to indemnify Lender
pursuant to this Section 2.12(e) for any claims, damages, losses, liabilities,
costs or expenses caused by (i) the willful misconduct or gross negligence of
Lender in determining whether a draft or documents presented under the Letter of
Credit complied with the terms of the Letter of Credit, or (ii) Lender’s willful
failure to make lawful payment under the Letter of Credit after the presentation
to Lender of a draft and documents strictly complying with the terms and
conditions of the Letter of Credit. The indemnities and obligations of Borrower
contained in this Section 2.12(e) shall survive the payment in full of amounts
payable pursuant to this Loan Agreement and the termination of the Letters of
Credit.
(g)    Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of the Letters of Credit with respect to its use of the Letters of
Credit. Neither Lender nor any of its officers, employees or directors shall be
liable or responsible for: (i) the use which may be made of the Letter of Credit
or any acts or omissions by any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (iii) payment by Lender
against presentation of documents which do not comply with the terms of the
Letter of Credit, including failure of any document to bear any reference or
adequate reference to the Letter of Credit; or (iv) any other circumstances
whatsoever in making or failing to make payment under the Letter of Credit,
except that, notwithstanding anything to the contrary, Borrower shall have a
claim against Lender, and Lender shall be liable to Borrower, to the extent of
any direct, as opposed to consequential, damages suffered by Borrower which
Borrower proves were caused by either the willful misconduct or gross negligence
of Lender in determining whether a draft or documents presented under the Letter
of Credit complied with the terms of the Letter of Credit or Lender’s willful
failure to make lawful payment under the Letter of Credit after the presentation
to Lender of a draft and documents strictly complying with the terms and
conditions of the Letter of Credit. In furtherance of and not in limitation of
the foregoing, Lender may, if acting in good faith, accept documents that

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appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
3.    Security for Obligations. The Obligations shall be secured by such
collateral as is provided in the Security Documents (the “Collateral”), which
shall constitute a security interest in personal property of the Borrower
(subject to any limitations set forth in the Security Documents).
4.    Conditions to Loan Disbursements. The obligation of Lender to make the
Loans is subject to the following conditions precedent:
4.1    Initial Loan. The obligation of Lender to make the initial Loans is
subject to (i) the conditions specified in this Section 4 of this Loan Agreement
having been satisfied; (ii) Borrower having delivered to Lender the commitment
fee described in Section 2.4(a)5, Fees, of this Loan Agreement; and (iii) Lender
having received all of the following, each duly executed and dated the Effective
Date (or such earlier date shall be satisfactory to Lender), in form and
substance reasonably satisfactory to Lender.
(a)    The Note.
(b)    Copies of resolutions of Borrower.
(c)    Copies of the Organizational Documents of Borrower.
(d)    The Security Documents.
(e)    Terminations of all security interests covering the Collateral (other
than Permitted Encumbrances), including without limitation, such UCC-3
termination statements as Lender may request.
(f)    Such UCC-1 financing statements covering the Collateral as Lender may
request.
(g)    Any other information required by Section 326 of the Patriot Act or
necessary for the Lender to verify the identity of the Borrower, as required by
Section 326 of the Patriot Act.
(h)    Such other information and documents as Lender may reasonably request.
All conditions precedent set forth in this Loan Agreement and any of the Loan
Documents are for the sole benefit of Lender and may only be waived by Lender.
4.2    All Loans. The obligation of Lender to make each Loan is subject to the
following further conditions precedent that (a) no Event of Default or Unmatured
Event of Default has occurred and is continuing or will result from the making
of such Loan, and (b) the warranties of Borrower contained in the Loan Documents
are true and correct in all material respects as of the date of such requested
Loan, with the same effect as though made on the date of such Loan (except to
the extent such warranties are expressly made as of a specific date, in which
case such warranties are true and

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correct in all material respects as of such date) (and each request by Borrower
for a Loan shall be deemed to be a certification by Borrower to Lender that the
conditions precedent set forth in clauses (a) and (b) of this Section 4.2 have
been satisfied).
5.    Representations and Warranties
5.1    Organization and Qualification. Borrower represents and warrants to
Lender that (a) it is a corporation duly organized and existing in good standing
under the laws of the State of Colorado, (b) it is qualified and in good
standing to do business in the State of Colorado, (c) it is duly qualified to do
business in each jurisdiction where the conduct of its business requires
qualification, except where the failure to be so qualified could not reasonably
be expected to have Material Adverse Effect (d) it has the full power and
authority to own its properties and to conduct the business in which it engages
and to enter into and perform its obligations under the Loan Documents, and (e)
it has delivered to Lender or it’s counsel accurate and complete copies of
Borrower's Organizational Documents which are operative and in effect as of the
Effective Date.
5.2    Authorization. Borrower represents and warrants to Lender that the
execution, delivery, and performance by Borrower of the Loan Documents have been
duly authorized by all necessary action on the part of Borrower and do not
contravene the Borrower's Organizational Documents, do not contravene any
provision of, or constitute a default under, any material indenture, mortgage,
contract, or other instrument to which Borrower is a party or by which it is
bound, and that upon execution and delivery thereof, the Loan Documents will
constitute legal, valid, and binding agreements and obligations of Borrower,
enforceable in accordance with their respective terms.
5.3    No Governmental Approval Necessary. Borrower represents and warrants to
Lender that no consent by, approval of, giving of notice to, registration with,
or taking of any other action with respect to or by any federal, state, or local
governmental authority or organization is required for Borrower’s execution,
delivery, or performance of the Loan Documents.
5.4    Accuracy of Financial Statements. Borrower represents and warrants to
Lender that all of its audited financial statements heretofore delivered to
Lender have been prepared in accordance with GAAP consistently applied and fully
and fairly represent Borrower’s and its Subsidiary’s consolidated financial
condition and results operations for the period or periods covered thereby.
Borrower represents and warrants to Lender that all of its unaudited financial
statements heretofore delivered to Lender fully and fairly represent Borrower’s
and its Subsidiary’s consolidated financial condition and the results operations
for the period or periods covered thereby and, except as disclosed therein, are
prepared in a consistent manner with other financial statements previously
delivered to by Borrower to Lender.
5.5    No Pending or Threatened Litigation. Borrower represents and warrants to
Lender that, except as set forth on Schedule 5.5 (as such schedule may be
updated from time to time upon notice by Borrower to Lender), there are no
actions, suits, or proceedings pending or, to Borrower’s knowledge, threatened
against or affecting Borrower in any court or before any governmental
commission, board, or authority which, if adversely determined, would have a
Material Adverse Effect.

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5.6    Full and Accurate Disclosure. Borrower represents and warrants to Lender
that the financial statements referred to in Section 6.2, any loan application
submitted to Lender, and all other statements furnished by Borrower to Lender in
connection herewith contain no untrue statement of a material fact and omit no
material fact necessary to make the statements contained therein or herein not
misleading. Borrower represents and warrants to Lender that it has not failed to
disclose in writing to Lender any fact that could reasonably be expected have a
Material Adverse Effect.
5.7    Compliance with ERISA. Borrower represents and warrants to Lender that
Borrower and each ERISA Affiliate, as defined below, is in compliance in all
material respects with all applicable provisions of the Employee Retirement
Income Security Act of 1974 (“ERISA”), as amended, and the regulations
thereunder, and that they have performed all of their obligations under each
Plan. Each Plan that is intended to qualify under Section 401(a) of the Internal
Revenue Code is so qualified. Neither a Reportable Event as set forth in Section
4043 of ERISA or the regulations thereunder (“Reportable Event”) nor a
prohibited transaction as set forth in Section 406 of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended, has occurred and is continuing
with respect to any employee benefit plan established, maintained, or to which
contributions have been made by Borrower or any trade or business (whether or
not incorporated) which together with Borrower would be treated as a single
employer under Section 4001 of ERISA (“ERISA Affiliate”) for its employees which
is covered by Title I or Title IV of ERISA (“Plan”); no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated which is
subject to Title IV of ERISA; no circumstances exist that constitute grounds
under Section 4042 of ERISA entitling the Pension Benefit Guaranty Corporation
(“PBGC”) to institute proceedings to terminate, or appoint a trustee to
administer a Plan, nor has the PBGC instituted any such proceedings; neither
Borrower nor any ERISA Affiliate has completely or partially withdrawn under
Section 4201 or 4204 of ERISA from any Plan described in Section 4001(a)(3) of
ERISA which covers employees of Borrower or any ERISA Affiliate (“Multi-employer
Plan”); Borrower and each ERISA Affiliate has met any minimum funding
requirements under ERISA with respect to all of its Plans and the present fair
market value of all Plan assets equals or exceeds the present value of all
vested benefits under or all claims reasonably anticipated against each Plan, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA and the regulations thereunder and the applicable
statements of the Financial Accounting Standards Board (“FASB”) for calculating
the potential liability of Borrower or any ERISA Affiliate under any Plan;
neither Borrower nor any ERISA Affiliate has incurred any liability to the PBGC
(except payment of premiums, which is current) under ERISA; and no material
claim (other than routine claims for benefits) has been asserted against any of
the Plans or against the Borrower or its ERISA Affiliates in connection with the
Plans; and no lien pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or pursuant to ERISA has been imposed with respect to any Plan.
Borrower represents and warrants to Lender that Borrower, each ERISA Affiliate
and each group health plan (as defined in ERISA Section 733) sponsored by
Borrower and each ERISA Affiliate, or in which Borrower or any ERISA Affiliate
is a participating employer, are in compliance with, have satisfied and continue
to satisfy (to the extent applicable) all requirements for continuation of group
health coverage under Section 4980B of the Internal Revenue Code and Sections
601 et seq. of ERISA, and are in compliance with, have satisfied and continue to
satisfy Part 7 (Sections 701

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et seq., Sections 711, 712 and 731 et seq.) of ERISA and all corresponding and
similar state laws not preempted by federal law relating to portability, access
and renewability of group health benefits and other requirements included in
Part 7.
5.8    Compliance with All Other Applicable Law. Borrower represents and
warrants to Lender that it has complied with all applicable statutes, rules,
regulations, orders, and restrictions of any domestic or foreign government, or
any instrumentality or agency thereof having jurisdiction over the conduct of
Borrower’s business or the ownership of its properties, the failure to comply
with which would reasonably be expected to have a Material Adverse Effect.
5.9    Environmental Representations and Warranties. Borrower represents and
warrants to Lender that no material amount of Hazardous Materials are now
located on, in, or under the Real Property, nor is there any Environmental
Condition on, in, or under the Real Property and neither Borrower nor, to
Borrower’s knowledge, any other person has ever caused or permitted any material
amount of Hazardous Materials to be placed, held, used, stored, released,
generated, located or disposed of on, in or under the Real Property, or any part
thereof, nor caused or allowed an Environmental Condition to exist on, in or
under the Real Property, except in the ordinary course of Borrower’s business
under conditions that are generally recognized to be appropriate and safe and
that are in compliance in all material respects with all applicable
Environmental Health and Safety Laws.
Borrower further represents and warrants to Lender that (i) no investigation,
administrative order, consent order and agreement, claim, governmental
information request, litigation or settlement with respect to Environmental
Health and Safety Laws, Hazardous Materials and/or an Environmental Condition
has been made, or threatened, in writing against Borrower with respect to the
Real Property, (ii) Borrower is in material compliance with all Environmental
Health and Safety Laws, (iii) Borrower maintains and has materially complied
with all governmental permits, licenses, variances, clearances and all other
necessary approvals required under the Environmental Health and safety Laws for
use of the Real Property and the operation and conduct of its business as
currently conducted, (iv) each such permit is in full force and effect has not
expired or been suspended, denied or revoked, and is not under challenge by any
person, and Borrower has received no notice that any such permit will be
suspended, denied or revoked, (v) there are no underground storage tanks, used
currently or in the past by Borrower for management of Hazardous Materials, at
the Real Property, and neither the Real Property nor the improvements thereon
contain PCBs, or friable asbestos, except in the ordinary course of Borrower’s
business under conditions that are generally recognized to be appropriate and
safe and that are in strict compliance with all applicable Environmental Health
and Safety Laws, and (vi) Borrower has no knowledge of the existence of any
report, document, or other evidence of the Release of any Hazardous Materials or
Environmental Condition which would require remediation under Environmental
Health and Safety Laws with respect to the Real Property.
5.10    Operation of Business. Borrower represents and warrants to Lender that
Borrower possesses all licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be conducted, and
Borrower is not in violation of any valid rights of others with respect to any
of

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the foregoing, except as could not be reasonably be expected to result in a
Material Adverse Effect. Borrower represents and warrants to Lender that neither
Borrower nor any Subsidiary is in default in the performance, observation or
fulfillment of any of the obligations, covenants, or conditions contained in any
agreement to which it is a party, which default, individually or in the
aggregate, could have a Material Adverse Effect. Borrower represents and
warrants to Lender that immediately after the consummation of the transaction
contemplated herein, as well as following the making of each Loan or extension
of credit hereunder, Borrower will be able to pay its debts and satisfy its
liabilities as they mature, in accordance with their terms. Borrower will not
allow any of its Subsidiaries to incur debts beyond the ability of that
Subsidiary to pay such debts as they mature.
5.11    Payment of Taxes. Borrower represents and warrants to Lender that
Borrower has filed all federal and material state and local tax returns required
to be filed and has paid all taxes, assessments, and governmental charges and
levies, including interest and penalties, shown on such returns on Borrower’s
assets, business and income, except such as are being contested in good faith by
proper proceedings and as to which adequate reserves are maintained.
5.12    No Material Adverse Change. Since the date of the most current audited
financial statements of Borrower, which were delivered to Lender, no event or
events have occurred which, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect.
5.13    Subsidiaries. Except as set forth on Schedule 5.13 (as such schedule may
be updated from time to time upon notice by Borrower to Lender), Borrower has no
Subsidiaries.
5.14    Investment Company Act. Neither Borrower nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.
5.15    Regulation U. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
5.16    No Immunity. Borrower represents and warrants to Lender that, in any
proceedings in connection with any of the Loan Documents to which the Borrower
or any Subsidiary is a party, neither the Borrower nor any such Subsidiary will
be entitled for itself or any of its assets to sovereign immunity from suit,
execution, attachment or other legal process.
5.17    Intellectual Property. Borrower hereby represents to Lender that (1)
Borrower owns or holds valid license rights to use all patents, trademarks,
service marks and copyrights (“Intellectual Property Rights”) necessary for
Borrower to conduct its business as now conducted and presently proposed to be
conducted, except as could not be reasonably be expected to result in a Material
Adverse Effect; and (2) Borrower has no knowledge of (i) any material
infringement or any claim or notice alleging any material infringement by
Borrower of another Persons’ Intellectual Property Rights, nor of any basis for
any such claim; or (ii) any material infringement or any material claim or
notice alleging any infringement by third parties of Borrower’s Intellectual
Property Rights, nor of any basis for any such claim.

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6.    Borrower’s Covenants
Borrower makes the following agreements and covenants, which shall continue so
long as this any obligation of the Lender to extend financial accommodations to
the Borrower under this Agreement remains in effect and so long as Borrower is
indebted to Lender for the Obligations (other than contingent indemnification
obligations for which no demand has been made), unless otherwise agreed in
writing by Lender and Borrower.
6.1    Use of Proceeds. Borrower shall use the proceeds of the Loans solely for
general business purposes. Borrower shall not, directly or indirectly, use any
of the proceeds of the Loans for the purpose of purchasing or carrying any
Margin Stock, or to extend credit to any person or entity for the purpose of
purchasing or carrying any such Margin Stock or for any purpose which violates,
or is inconsistent with, Regulation X of said Board of Governors, or for any
other purpose not permitted by Section 7 of the Securities Exchange Act of 1934,
as amended, or by any of the rules and regulations respecting the extension of
credit promulgated thereunder.
6.2    Financial Statements and Reports. Borrower shall provide Lender with such
financial statements and reports regarding the Borrower and its Subsidiaries as
Lender may reasonably request. Audited financial statements and reports shall be
prepared in accordance with GAAP and shall fully and fairly represent Borrower’s
and its Subsidiaries’ consolidated financial condition and results of operations
for the period or periods covered thereby. Unaudited financial statements and
reports shall fully and fairly represent Borrower’s and its Subsidiaries’
consolidated financial condition and results of operations for the period or
periods covered thereby and shall be prepared in accordance with GAAP in a
manner consistent with other unaudited financial statements previously delivered
to Lender (except as may be required by GAAP). Until requested otherwise by
Lender, Borrower shall provide the following financial statements and reports to
Lender:
(a)    Annual consolidated financial statements of the Borrowers and its
Subsidiaries for each Fiscal Year of Borrower, to be delivered within one
hundred twenty (120) days of the end of Borrower’s Fiscal Year, and to be
accompanied by an unqualified (except for qualifications relating to changes in
accounting principles or practices reflecting changes in GAAP) audit report,
with no going concern qualifier, certified by independent certified public
accountants reasonably acceptable to Lender.
(b)    Quarterly consolidated financial statements of the Borrowers and its
Subsidiaries for each Fiscal Quarter of Borrower , to be delivered within forty
five (45) days of the end of each Fiscal Quarter.
Any financial statement required to be furnished pursuant to Section 6.2 shall
be deemed to have been furnished on the date on which the Lender receives notice
that the Borrower has filed such financial statement with the U.S. Securities
and Exchange Commission and is available on the EDGAR website on the Internet at
www.sec.gov or any successor government website that is freely and readily
available to the Lender without charge; provided that the Borrower shall give
notice of any such filing to the Lender. Notwithstanding the foregoing, the
Borrower shall deliver paper or electronic copies of any such financial
statement to the Lender if the Lender requests the

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Borrower to furnish such paper or electronic copies until written notice to
cease delivering such paper or electronic copies is given by the Lender.
6.3    Financial Covenants
(a)    Fixed Charge Coverage Ratio. Borrower shall maintain a Fixed Charge
Coverage Ratio of not less than 1.50:1, to be measured quarterly on the last day
of each Fiscal Quarter on a trailing twelve months basis.
(b)    Minimum Working Capital. Borrower shall maintain a minimum working
capital each Fiscal Quarter of not less than Five Million Dollars ($5,000,000),
measured quarterly on the last day of each Fiscal Quarter. For purposes of this
Section, working capital shall be defined as current assets minus current
liabilities, in each case calculated on a consolidated basis for the Borrower
and its Subsidiaries.
(c)    Debt to EBITDA. Borrower shall maintain a ratio of funded debt to EBITDA
of not greater than 2.00:1, to be measured quarterly on the last day of each
Fiscal Quarter on a trailing twelve month basis. For purposes of this Section,
funded debt is defined as interest bearing debt, in each case calculated on a
consolidated basis for the Borrower and its Subsidiaries.
(d)    Minimum Tangible Net Worth. Borrower shall increase its tangible net
worth to not less than Four Million Dollars ($4,000,000) by the end of its 2016
Fiscal Year (June 30, 2016), and shall thereafter maintain a total net worth
thereafter of not less than Four Million Dollars ($4,000,000), measured annually
at Fiscal Year-end. For purposes of this Section, tangible net worth shall be
defined, as of any date of determination, the sum of the amounts set forth on
the consolidated balance sheet of the Borrower and its Subsidiaries as the sum
of the common stock, preferred stock, additional paid in capital and retained
earnings of the Borrower and its Subsidiaries (excluding treasury stock), less
the book value of all intangible assets of the Borrower and its Subsidiaries.
Except as otherwise provided herein, each of the accounting terms and accounting
determinations used or provided for in this Agreement shall have the meanings
used in or determined in accordance with GAAP consistent with those used in
preparation of the financial statements of Borrower submitted to Lender (except
for changes required by GAAP). To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Agreement,
such computation or determination shall be made as if such change in GAAP had
not occurred unless the Borrowers and the Lender agree in writing on an
adjustment to such computation or determination to account for such change in
GAAP.
6.4    Limitations on Debt. Borrower shall not create, incur, assume or allow to
exist any additional Debt in excess of Five Hundred Thousand Dollars ($500,000)
without Lender’s written consent, measured annually at Fiscal Year-end, except
(a) Debt of the Borrower owing to any Subsidiary and of any Subsidiary owing to
the Borrower or any other Subsidiary, (b) Debt to Lender or its Affiliates and
(c) Debt under currency and foreign exchange hedging arrangements entered into
in the ordinary course of business and not for speculative purposes.

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6.5    Liens. Borrower shall not create or permit to exist any Lien on any of
its real or personal properties, assets or rights of whatsoever nature (whether
now owned or hereafter acquired), except (a) Liens created pursuant to this Loan
Agreement or the Security Documents; (b) Liens existing on the date of this
Agreement and disclosed on Schedule 6.5, (c) Liens for taxes or other
governmental charges not at the time delinquent or thereafter payable without
penalty or being contested in good faith by appropriate proceedings and, in each
case, for which it maintains adequate reserves; (d) Liens arising in the
ordinary course of business (such as Liens of landlords, carriers, warehousemen,
mechanics and materialmen and other similar Liens imposed by law for sums not
overdue or being contested in good faith by appropriate proceedings and not
involving any deposits or advances for borrowed money or the deferred purchase
price of property or services, and, in each case, for which it maintains
adequate reserves; (e) 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 Borrower; (f) Liens arising
out of pledges or deposits under worker’s compensation laws, unemployment
insurance, old age pensions, or other social security or retirement benefits, or
similar legislation; (g) Liens arising solely by virtue of any statutory or
common law provision relating to bankers’ liens, rights of set-off or similar
rights and remedies as to deposit accounts, securities accounts or other funds
maintained with a creditor depository institution; provided that (i) such
account is not a dedicated cash collateral account and is not subject to
restriction against access by the Borrower in excess of those set forth by
regulations promulgated by the Board of Governors of the Federal Reserve, and
(ii) such account is not intended by the Borrower to provide collateral to the
depository institution; (h) Deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business; (i) judgment and attachment liens not giving rise to an
Event of Default or Liens created by or existing from any litigation or legal
proceeding that are currently being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves are
being maintained in accordance with GAAP; (j) the interest or title of a lessor,
sublessor or owner under any lease of real estate, equipment or facilities
(including fiber optic cable) not prohibited by this Agreement (but not Liens,
encumbrances or other exceptions to title encumbering such interest or title,
except as otherwise provided in this definition); (k) licenses of trademarks and
other intellectual property rights granted by the Borrower in the ordinary
course of business and not interfering in any respect with the ordinary conduct
of the business of the Borrower; (l) security deposits given to landlords under
real estate leases in favor of any Borrower, in an amount not exceeding $250,000
outstanding at any time; and (m) purchase money Liens and capitalized leases
upon or in any fixed or capital assets to secure the purchase price or the cost
of construction or improvement of such fixed or capital assets or to secure Debt
incurred solely for the purpose of financing the acquisition, construction or
improvement of such fixed or capital assets (including Liens securing any
capitalized lease obligations); provided that (i) such Lien secures Debt
permitted by Section 6.4, (ii) such Lien attaches to such asset concurrently or
within 90 days after the acquisition or the completion of the construction or
improvements thereof, (iii) such Lien does not extend to any other asset, and
(iv) the Debt secured thereby does not exceed the cost of acquiring,
constructing or improving such fixed or capital assets.
6.6    Exclusive Negative Pledge. Borrower shall not enter into or allow to
exist any agreement with any other party that in any way limits Borrower’s
ability to grant or allow to exist

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security interests or liens in or on any of Borrower’s assets, except for
agreements evidencing purchase money Liens and capitalized leases that may
restrict ability to grant Liens on the subject assets and that are permitted by
Section 6.5.
6.7    Investments. Borrower shall not make or suffer to exist any investments,
without Lender’s prior written consent, except (a) short term obligations of, or
fully guaranteed by, the United States of America, commercial paper rated A-2 or
better by Standard Poor’s Rating Services or P-2 or better by Moody’s Investor
Services, demand deposit accounts maintained in the ordinary course of business,
certificates of deposit issued by and time deposits with domestic commercial
banks having capital and surplus in excess of $100,000,000 and other readily
marketable investments in debt securities which are reasonably acceptable to the
Lender; (b) travel advances to management personel and employees in the ordinary
course of business; (c) the establishment or creation of, and capitalization of,
Subsidiaries by the Borrower if the Borrower and Subsidiaries have complied with
the provisions of Section 6.10 in respect thereof and no Unmatured Event of
Default or Event of Default exists or otherwise would arise or result therefrom,
provided that contributions to capital of, or loans to, foreign Subsidiaries
after the Effective Date (excluding the reinvestment in any foreign Subsidiary
of any return of capital or dividends received from any foreign Subsidiary)
shall not exceed $2,000,000 in the aggregate during any Fiscal Year; and (d)
other investments if the aggregate consideration therefor does not exceed
$500,000.
6.8    Restricted Payments. Borrower shall not (a) declare or pay any dividends
or distributions on any Equity Interests in Borrower, (b) purchase or redeem any
such Equity Interests or any warrants, options or other rights in respect of
such Equity Interests, (c) make any other distribution to holders of such Equity
Interests (other than the issuance of such Equity Interests, or options in
respect thereof, as reasonable compensation to directors, officers, managers or
employees), (d) prepay, purchase or redeem any Subordinated Debt or other
subordinated Debt, except if permitted under the terms of an agreement executed
by Lender, or set aside funds for any of the foregoing. Notwithstanding the
forgoing, (a) Borrower may redeem or repurchase in the ordinary course of
business Equity Interests held by members of the Borrower’s management after the
termination of their employment, so long as (i) no Unmatured Event of Default or
Event of Default is in existence at the time of such redemption or repurchase or
would be caused thereby and (ii) the amount thereof does not exceed $500,000 in
any calendar year or $1,000,000 in the aggregate during the term of this
Agreement and (b) for the avoidance of doubt, any Subsidiary may pay dividends
and distributions to the Borrower or to any other Subsidiary.
6.9    Mergers, Consolidations, Sales. Borrower shall not wind up, liquidate, or
dissolve itself, be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any stock of any
class of, or any partnership or joint venture interest in, any other Person,
except that any Subsidiary may be merged with and into the Borrower or another
Subsidiary, so long as the Borrower or such other Subsidiary is the surviving
entity. Borrower shall not, sell, transfer, convey or lease all or any
substantial part of its assets, or sell or assign with or without recourse any
receivables, except for (a) dispositions in the ordinary course of its business
and (b) other dispositions of property in any Fiscal Year during the term of
this Agreement for which the net book value in the aggregate does not exceed 10%
of the Borrower’s total consolidated assets as shown on the balance sheet for
the most recent prior Fiscal Year.

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6.10    Subsidiaries. After the date of this Agreement, Borrower shall not
create any Subsidiary without the prior written consent of Lender, except that,
Borrower may create any Subsidiary, so long as, as to any domestic Subsidiary
(1) such Subsidiary shall join the Security Documents as a grantor or otherwise
grant to the Lender a security interest (and permit the Lender to perfect such
interest) in the personal property of such Subsidiary, such security interest to
be a security interest (subject to Permitted Encumbrances), (2) such Subsidiary
shall provide a guaranty of the Obligations or join this Agreement and the Notes
as a co-borrower, and (3) the Borrower or the applicable Subsidiary shall, at
the Borrower’s reasonable cost and expense, execute and deliver to the Lender
such documents and instruments reasonably deemed necessary by the Lender to
effect the matters specified above. Notwithstanding the foregoing, the Borrower
shall not be required to furnish any such guaranties, security interests or
related documents or instruments with respect to a foreign Subsidiary.
6.11    Insurance. Borrower shall maintain insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or a similar
business and similarly situated or are otherwise reasonably acceptable to
Lender, which insurance may provide for reasonable deductibility from coverage
thereof and which shall name Lender as a loss payee. Borrower shall provide
Lender, annually upon the request of Lender, with a certificate executed by an
authorized officer of Borrower, certifying the existence and adequacy of the
property and casualty insurance program carried by Borrower with respect to
itself and its Subsidiaries, and that a written summary of said program has been
delivered to the Lender identifying the name of each insurer, the number of each
policy and expiration date of each policy, the amounts and types of each
coverage, and a list of exclusions and deductibles for each policy.
6.12    Inspection. Borrower shall at any reasonable time and from time to time
permit Lender or any representative of Lender to examine and make copies of and
abstracts from the records and books of account of, and visit and inspect the
properties and assets of, Borrower, and to discuss the affairs, finances, and
accounts of Borrower with any of Borrower’s officers and directors and with
Borrower’s independent accountants. If no Unmatured Event of Default or Event of
Default has occurred and is continuing, up to one such visit, examination,
discussion and set of copies per annum may be made and shall be at Borrower’s
expense. If an Unmatured Event of Default or Event of Default has occurred as is
continuing, Lender may conduct as many examinations or appraisals as it
reasonably deems necessary, and Borrower shall be responsible to pay for all
such visits, examinations and discussions and copies.
6.13    Collateral Examination. Borrower shall permit Lender and its agents or
designees at any reasonable time during Borrower’s regular business hours to
examine and evaluate the Collateral, to audit the Collateral perfection
procedures, and to conduct an appraisal of such Collateral, which appraisal
shall be conducted by an appraiser acceptable to Lender, and to inspect, audit
and make copies of and extracts from all records and all other papers related to
the Collateral in the possession of Borrower. If no Unmatured Event of Default
or Event of Default has occurred and is continuing, up to one such examinations
or appraisals per annum may be made and shall be at Borrower’s expense. If an
Unmatured Event of Default or Event of Default has occurred as is

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continuing, Lender may conduct as many examinations or appraisals as it
reasonably deems necessary, and Borrower shall be responsible to pay for all
such examinations or appraisals.
6.14    Operation of Business. Borrower shall maintain all licenses, permits,
franchises, patents, copyrights, trademarks, and trade names, or rights thereto,
necessary or advisable to conduct its business and Borrower shall not violate
any valid rights of others with respect to any of the foregoing, except as could
not reasonably be expected to result in a Material Adverse Effect. Borrower
shall continue to engage in a business of the same general type as now conducted
and businesses reasonably related or incidental thereto.
6.15    Maintenance of Records and Properties. Borrower shall keep adequate
records and books of account in which complete entries (in all material
respects) will be made in accordance with GAAP consistently applied. Borrower
shall maintain, keep and preserve all of its properties (tangible and
intangible) necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear and obsolescence excepted.
6.16    Notice of Default, Litigation. Borrower shall promptly notify Lender in
writing of all actions, suits or proceedings filed or threatened against or
affecting Borrower in any court or before any governmental commission, board, or
authority (or any material adverse development which occurs in any such action,
suit or proceeding) which, if adversely determined, would have a Material
Adverse Effect. Borrower shall promptly notify Lender in writing of the
occurrence of an Event of Default or an Unmatured Event of Default.
6.17    Payment of Taxes and Obligations. Borrower shall pay when due all taxes,
assessments, and governmental charges and levies on Borrower’s assets, business,
and income, and all material obligations of Borrower of whatever nature, except
such as are being contested in good faith by proper proceedings and as to which
adequate reserves are maintained.
6.18    Environmental Covenants. Borrower covenants that it will:
(a)    Not permit the presence, use, disposal, storage or Release of any
material amount of Hazardous Materials on, in, or under the Real Property,
except in the ordinary course of Borrower’s business under conditions that are
generally recognized to be appropriate and safe and that are in compliance in
all material respects with all applicable Environmental Health and Safety Laws.
(b)    Comply with the provisions of all Environmental Health and Safety Laws in
all material respects.
(c)    Notify Lender promptly of any (i) Release of Hazardous Materials by
Borrower which is in violation of applicable Environmental Health and Safety
Laws, and requires reporting by Borrower to any governmental agency under
Environmental Health and Safety Laws, (ii) any Environmental Condition caused by
Borrower which requires reporting by Borrower to any governmental agency under
Environmental Health and Safety Law, (iii) any complaint or notice received in
writing from any governmental agency or any

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other party alleging any liability of Borrower or with respect to the Real
Property under any Environmental Health and Safety Laws.
(d)    Upon any Release of Hazardous Materials in violation of applicable
Environmental Health and Safety Laws or upon the occurrence of any Environmental
Condition, caused by Borrower, initiate actions to contain and remediate the
same to the extent required in under applicable Environmental Health and Safety
Laws, and as necessary to promptly pay any fine or penalty assessed in
connection therewith (subject to any defenses thereto), and promptly notify
Lender of such events.
(e)    Permit Lender to inspect the Real Property for Hazardous Materials and
Environmental Conditions, to conduct tests thereon, and to inspect all books,
correspondence, and records pertaining thereto.
(f)    Immediately advise Lender of any additional, supplemental, new, or other
information concerning any Hazardous Materials or Environmental Conditions
relating to the Real Property.
6.19    Continued Compliance with ERISA. With respect to all Plans (as defined
in Section 5.7, of this Loan Agreement) which Borrower or any ERISA Affiliate
currently maintains, participates in, or contributes to, or to which Borrower or
any ERISA Affiliate is a sponsoring or participating employer, fiduciary, party
in interest or disqualified person or which Borrower or any ERISA Affiliate may
hereafter adopt, participate in, or contribute to, Borrower shall continue to
comply and shall require each ERISA Affiliate to continue to comply with all
applicable provisions of the Internal Revenue Code and ERISA and all
regulations, and with all representations made in Section 5.7, Compliance With
ERISA, for purposes of this Loan Agreement, includes, without limitation,
conformance, in all material respects with all notice and reporting
requirements, funding standards, prohibited transaction rules, multi-employer
plan rules, necessary reserve requirements, and health care continuation,
coverage and portability requirements.
6.20    Continued Compliance with Applicable Law. Borrower shall conduct its
business in a lawful manner and in material compliance with all applicable
federal, state, and local laws, ordinances, rules, regulations, and orders;
shall maintain in good standing all material licenses and organizational or
other qualifications necessary to its business and existence, and shall not
engage in any business not authorized by and not in accordance with its
Organizational Documents and other governing documents.
6.21    Prior Consent for Amendment or Change. Borrower shall not modify, amend,
or otherwise alter its Organizational Documents or other governing documents in
any manner that could reasonably be expected to materially and adversely affect
the interests of the Lender, without Lender's prior written consent. Borrower
shall not, without Lender's prior written consent, waive or fail to enforce its
Organizational Documents or other governing documents if doing so would cause a
Material Adverse Effect. Borrower shall not change its name or convert to a
different form of legal entity without Lender's prior written consent.

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6.22    Maintenance of Existence, etc. Borrower shall maintain and preserve (a)
its existence and good standing in the jurisdiction of its organization, and (b)
its qualification and good standing in each jurisdiction where the nature of its
business makes such qualification necessary, except where failure to do so could
not be reasonably be expected to result in a Material Adverse Effect.
6.23    Patriot Act. Borrower shall not, and shall not permit any Subsidiary to,
(a) be or become subject at any time to any law, rule, regulation or list of any
governmental agency (including, without limitation, the U.S. Office of Foreign
Asset Control list) that prohibits or limits any Lender from making any advance
or extension of credit to the Borrower or from otherwise conducting business
with the Borrower, or (b) fail to provide documentary and other evidence of the
Borrower’s identity as may be requested by the Lender at any time to enable the
Lender to verify the Borrower’s identity or to comply with any applicable law,
rule or regulation, including, without limitation, Section 326 of the Patriot
Act.
6.24    Further Assurances. Borrower shall take such actions as Lender may
reasonably request from time to time (including, without limitation, the
execution and delivery of security agreements, pledge agreements, financing
statements and other documents, the filing or recording of any of the foregoing,
and the delivery of stock certificates and other collateral with respect to
which perfection is obtained by possession) to ensure that the obligations of
Borrower hereunder and under the other Loan Documents are secured by the
Collateral.
6.25    Landlord Waivers. Borrower shall undertake reasonable efforts to deliver
to Lender landlord waivers in a form reasonably acceptable to Lender within
ninety (90) days of the Effective Date for any leasehold property which holds
Collateral having a value exceeding $100,000.
7.    Default
7.1    Events of Default. Time is of the essence of this Loan Agreement. The
occurrence of any of the following events shall constitute a default under this
Loan Agreement and under the Loan Documents and shall be termed an “Event of
Default”:
(a)    Default in the payment when due of the principal of or interest on any
Loan, or any other amount payable by Borrower hereunder or under the Loan
Documents, and, in the case of any default in payment of interest or fees, such
default shall continue for 5 days.
(b)    Any representation, warranty, certificate, or other information or
statement (financial or otherwise) made by or on behalf of Borrower in any of
the Loan Documents, or any document contemplated by the Loan Documents, is
materially false, incomplete or materially misleading in any material respect
when made or furnished.
(c)    Any default shall occur under the terms applicable to any Debt of
Borrower in an aggregate amount (for all Debt so affected) exceeding Two Hundred
Fifty Thousand and no/100 dollars ($250,000.00) and such default shall (i)
consist of the failure to pay such Debt when due (subject to any applicable
grace period), whether by acceleration or otherwise, or (ii) accelerate the
maturity of such Debt or permit the holder or holders thereof, or any

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trustee or agent for such holder or holders, to cause such Debt to become due
and payable prior to its expressed maturity.
(d)    Default in the payment when due, or in the performance or observance of,
any material obligation of, or condition agreed to by, Borrower with respect to
any material contract of Borrower and such default shall beyond the longer of
(i) any grace period set forth in such contract or (ii) 30 calendar days after
notice of such default is given to Borrower by Lender
(e)    Borrower (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due; (ii)
voluntarily ceases to conduct its business in the ordinary course for more than
10 days; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) authorizes any of the foregoing.
(f)    (i)    Any involuntary Insolvency Proceeding is commenced or filed
against Borrower, or any writ, judgment, warrant of attachment, warrant of
execution or similar process is issued or levied against a part of Borrower’s
properties having a value exceeding $250,000, and such proceeding or petition
shall not be dismissed, or such writ, judgment, warrant of attachment, warrant
of execution or similar process shall not be released, vacated or fully bonded
within thirty (30) days (or, in the case of any involuntary Insolvency
Proceeding, sixty (60) days) after commencement, filing or levy; (ii) Borrower
admits the material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under non-U.S. law) is
ordered in any Insolvency Proceeding; or (iii) Borrower acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor) or other similar Person for itself
or a substantial portion of its property or business.
(g)    One or more non-interlocutory judgments, non-interlocutory orders,
decrees or arbitration awards is entered against Borrower involving in the
aggregate a liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage), as to any single
or related series of transactions, incidents or conditions, of Five Hundred
Thousand and no/100 dollars ($500,000.00) or more, and the same shall remain
unvacated and unstayed pending appeal for a period of thirty (30) days after the
entry thereof.
(h)    Any non-monetary judgment, order or decree is entered against Borrower
which has or would reasonably be expected to have a Material Adverse Effect, and
there shall be any period of thirty (30) consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect.
(i)    The Security Documents shall cease to be in full force and effect; or
Borrower or any Person by, through or on behalf of Borrower, shall contest the
validity or enforceability of any Security Document.
(j)    A Change of Control occurs.

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(k)    Failure by Borrower to comply with or to perform any provision of this
Loan Agreement or any of the Loan Documents that is not specifically listed
above as an Event of Default, with such failure continuing unremedied for a
period of thirty (30) days after notice of such failure is given to Borrower by
Lender.
7.2    No Waiver of Event of Default. No course of dealing or delay or failure
to assert any Event of Default or Unmatured Event of Default shall constitute a
waiver of that Event of Default or Unmatured Event of Default or of any prior or
subsequent Event of Default or Unmatured Event of Default.
8.    Remedies
8.1    Remedies upon Event of Default. If any Event of Default occurs, Lender
may do any or all of the following:
(a)    declare the commitment of Lender to make Loans to be terminated,
whereupon such commitment shall be terminated;
(b)    declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by Borrower; and
(c)    exercise all rights and remedies available to Lender under the Loan
Documents or applicable law; provided, however, that upon the occurrence of any
Event of Default specified in subsection 7.1 (e) or (f) of this Loan Agreement,
the obligation of Lender to make Loans shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of Lender.
8.2    Rights and Remedies Cumulative. The rights and remedies herein conferred
are cumulative and not exclusive of any other rights or remedies and shall be in
addition to every other right, power, and remedy that Lender may have, whether
specifically granted herein or hereafter existing at law, in equity, or by
statute. Any and all such rights and remedies may be exercised from time to time
and as often and in such order as Lender may deem expedient.
8.3    No Waiver of Rights. No delay or omission in the exercise or pursuance by
Lender of any right, power, or remedy shall impair any such right, power, or
remedy or shall be construed to be a waiver thereof.
8.4    Offset. In addition to, and without limitation of, any rights of Lender
under any Loan Document or applicable law, if any Event of Default occurs and
during the continuance thereof, all deposits (including all account balances,
whether provisional or final and whether or not collected or available) and all
other Debt at any time held or owing by the Lender or any Affiliate of the
Lender to or for the credit or account of the Borrower may, without prior notice
to the Borrower,

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be offset and applied toward the payment of the Obligations owing to the Lender,
whether or not the Obligations, or any part thereof, shall then be due. This
right of setoff may be enforced or exercised by the Lender regardless of whether
the Lender has made any demand on Borrower. Any delay, neglect or conduct by the
Lender in exercising its rights under this subsection shall not be deemed to be
a waiver of the right to exercise this right of setoff. To secure the payment of
the Obligations, Borrower hereby grants to Lender a continuing lien on and
security interest in any balances, credits, deposits, accounts and monies of
Borrower with the Lender. Any offsetting Lender shall give Borrower prompt
written notice of the exercise of its offset rights upon said exercise.
9.    General Provisions
9.1    Assignment. Notwithstanding anything set forth in this Loan Agreement to
the contrary, Lender may at any time encumber, assign, grant participations in,
or grant a security interest in all or any portion of its rights under the Loan
Documents, with the prior written consent of the Borrower (which consent shall
not be unreasonably withheld or delayed and which consent shall not be required
(a) if an Event of Default is continuing and (ii) in the case of any assignment
or granting of a security interest to secure the Lender’s obligations to a
Federal Reserve Bank or a Federal Home Loan Bank), provided that any grant of
participations or security interests shall not release such party from any of
its obligations hereunder, and shall not substitute any assignee or secured
party grantee as a party hereto.
9.2    Governing Agreement. In the event of conflict or inconsistency between
this Loan Agreement and the other Loan Documents, excluding the Note, the terms,
provisions and intent of this Loan Agreement shall govern.
9.3    Borrower’s Obligations Cumulative. Every obligation, covenant, condition,
provision, warranty, agreement, liability, and undertaking of Borrower contained
in the Loan Documents shall be deemed cumulative and not in derogation or
substitution of any of the other obligations, covenants, conditions, provisions,
warranties, agreements, liabilities, or undertakings of Borrower contained
herein or therein.
9.4    Payment of Expenses and Attorney’s Fees. Borrower shall pay all
reasonable out-of-pocket expenses of Lender relating to the negotiation,
drafting of documents, documentation of the Loan, and administration and
supervision of the Loan, including, without limitation, title insurance,
recording fees, filing fees, and reasonable attorney's fees and legal expenses,
whether incurred in making the Loan, in future amendments or modifications to
the Loan Documents, or in ongoing administration and supervision of the Loan.
Upon occurrence of an Event of Default, Borrower agrees to pay all reasonable
out-of-pocket costs and expenses, including reasonable attorney fees and legal
expenses, incurred by Lender in enforcing, or exercising any remedies under, the
Loan Documents, and any other rights and remedies. Borrower agrees to pay all
reasonable out-of-pocket expenses, including reasonable attorney fees and legal
expenses, incurred by Lender in any Insolvency Proceeding of any type involving
Borrower, the Loan Documents, or the Collateral, including, without limitation,
reasonable out-of-pocket expenses incurred in modifying or lifting the automatic
stay, determining adequate protection, use of cash collateral or relating to any
plan of reorganization.

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9.5    Right to Perform for Borrower. Lender may, in its sole discretion and
without any duty to do so, discharge taxes, tax liens, security interests, or
any other encumbrance upon the Collateral or any other property of Borrower, pay
any filing, recording, or other charges payable by Borrower, and perform any
other obligation of Borrower under the Loan Documents.
9.6    Assignability. Borrower may not assign or transfer any of the Loan
Documents and any such purported assignment or transfer is void.
9.7    Third Party Beneficiaries. The Loan Documents are made for the sole and
exclusive benefit of Borrower and Lender and are not intended to benefit any
other third party. No third party may claim any right or benefit or seek to
enforce any term or provision of the Loan Documents.
9.8    Governing Law. The Loan Documents shall be governed by and construed in
accordance with the internal laws of the State of Utah, except to the extent
that any such document expressly provides otherwise.
9.9    Severability. The illegality or unenforceability of any provision of this
Loan Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Loan Agreement or such instrument or agreement.
9.10    Interpretation of Loan Agreement. The article and section headings in
this Loan Agreement are inserted for convenience only and shall not be
considered part of the Loan Agreement nor be used in its interpretation. All
references in this Loan Agreement to the singular shall be deemed to include the
plural when the context so requires, and vice versa. References in the
collective or conjunctive shall also include the disjunctive unless the context
otherwise clearly requires a different interpretation.
9.11    Survival and Binding Effect of Representations, Warranties, and
Covenants. All agreements, representations, warranties, and covenants made
herein by Borrower shall survive the execution and delivery of this Loan
Agreement and shall continue in effect so long as any obligation to Lender
contemplated by this Loan Agreement is outstanding and unpaid, notwithstanding
any termination of this Loan Agreement. All agreements, representations,
warranties, and covenants made herein by Borrower shall survive any Insolvency
Proceeding involving Borrower. All agreements, representations, warranties, and
covenants in this Loan Agreement shall bind the party making the same, its
successors and, in Lender’s case, assigns, and all rights and remedies in this
Loan Agreement shall inure to the benefit of and be enforceable by each party
for whom made, their respective successors and, in Lender’s case, assigns.
9.12    Indemnification. Borrower shall indemnify Lender and its officers,
directors, shareholders, employees, and agents against any and all claims,
liabilities, and damages which may be awarded or incurred by Lender and Lender
indemnify Lender against an pay Lender for all reasonable attorney fees, legal
expenses, amounts advanced in performance of obligations of Borrower, and other
out-of-pocket expenses incurred in defending such claims or, arising from or
related in any manner to the negotiation, execution, or performance by Lender of
any of the Credit

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Documents (but excluding any such claims and expenses based upon or resulting
from breach or default by Lender or gross negligence or willful misconduct of
Lender.
9.13    Environmental Indemnification. Borrower shall indemnify Lender for any
and all claims and liabilities, and for damages which may be awarded against or
incurred by Lender, and for all reasonable attorney fees, legal expenses, and
other out-of-pocket expenses arising from or related in any manner, directly or
indirectly, to (a) Release of Hazardous Materials by Borrower located on, in, or
under the Real Property; (b) any Environmental Condition caused by Borrower on,
in, or under the Real Property; (c) Borrower’s violation of or non-compliance
with any Environmental Health and Safety Law; and (d) any breach or violation of
Section 5.9, and/or Section 6.18, of this Loan Agreement. The indemnification
obligations of Borrower under this Section shall survive any reconveyance,
release, or foreclosure of the Real Property and any transfer in lieu of
foreclosure.
9.14    Interest on Expenses and Indemnification, Collateral, Order of
Application. All reasonable out-of-pocket expenses, costs, attorney’s fees and
legal expenses, amounts advanced in performance of obligations of Borrower, and
indemnification amounts owing by Borrower to Lender under or pursuant to this
Loan Agreement, the Note, and/or any Security Documents shall be due and payable
upon demand. If not paid upon demand, all such obligations shall bear interest
at the default rate provided in the Loan Documents from the date of disbursement
until paid to Lender both before and after judgment. Lender is authorized to
disburse funds under the Note for payment of all such obligations. Payment of
all such obligations shall be secured by the Collateral and by the Security
Documents. All payments and recoveries shall be applied to payment of the
foregoing obligations, the Note, and all other amounts owing to Lender by
Borrower in such order and priority as determined by Lender. Unless provided
otherwise in the Note, payments on the Note shall be applied first to accrued
interest and the remainder, if any, to principal.
9.15    Limitation of Consequential Damages. Lender and Lender's officers,
directors, employees, representatives, agents, and attorneys, shall not be
liable to Borrower for consequential damages arising from or relating to any
breach of contract, tort, or other wrong in connection with the negotiation,
documentation, administration or collection of the Loans.
9.16    Waiver and Release of Claims. Borrower (a) represents that, as of the
date hereof, it has no defenses to or setoffs against any indebtedness or other
obligations owing to Lender or Lender’s Affiliates (the “Liabilities”), nor
claims against Lender or Lender’s Affiliates for any matter whatsoever, related
or unrelated to the Liabilities, and (b) releases Lender and Lender’s Affiliates
from all claims, causes of action, and costs, in law or equity, existing as of
the date of this Loan Agreement, which Borrower has or may have by reason of any
matter of any conceivable kind or character whatsoever, related or unrelated to
the Liabilities, including the subject matter of this Loan Agreement. This
provision shall not apply to claims for performance of express contractual
obligations owing to Borrower by Lender or its Affiliates.
9.17    Revival Clause. If the incurring of any debt by Borrower or the payment
of any money or transfer of property to Lender by or on behalf of Borrower
should for any reason subsequently be determined to be “voidable” or “avoidable”
in whole or in part within the meaning of any state or federal law (collectively
“voidable transfers”), including, without limitation,

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fraudulent conveyances or preferential transfers under the United States
Bankruptcy Code or any other federal or state law, and Lender is required to
repay or restore any voidable transfers or the amount or any portion thereof, or
upon the advice of Lender’s counsel is advised to do so, then, as to any such
amount or property repaid or restored, including all reasonable costs, expenses,
and attorney’s fees of Lender related thereto, the liability of Borrower shall
automatically be revived, reinstated and restored and shall exist as though the
voidable transfers had never been made.
9.18    Jury Trial and Class Action Waivers; Arbitration
(a)    Jury Trial and Class Action Waivers. As permitted by applicable law,
Borrower and Lender each waive their respective rights to a trial before a jury
in connection with any Dispute (as “Dispute” is hereinafter defined), and
Disputes shall be resolved by a judge sitting without a jury. If a court
determines that this provision is not enforceable for any reason and at any time
prior to trial of the Dispute, but not later than 30 days after entry of the
order determining this provision is unenforceable, any party shall be entitled
to move the court for an order compelling arbitration and staying or dismissing
such litigation pending arbitration (“Arbitration Order”). If permitted by
applicable law, Borrower and Lender also waive the right to litigate in court or
an arbitration proceeding any Dispute as a class action, either as a member of a
class or as a representative, or to act as a private attorney general.
(b)    Arbitration. If a claim, dispute, or controversy arises between any of
the parties with respect to this Agreement, related agreements, (all of the
foregoing, a “Dispute”), and only if a jury trial waiver is not permitted
by applicable law or ruling by a court, any party may require that the Dispute
be resolved by binding arbitration before a single arbitrator at the request of
any party. By agreeing to arbitrate a Dispute, each party is giving up any right
it may have to a jury trial, as well as other rights it would have in court that
are not available or are more limited in arbitration, such as the rights to
discovery and to appeal.
Arbitration shall be commenced by filing a petition with, and in accordance with
the applicable arbitration rules of, JAMS or National Arbitration Forum
(“Administrator”) as selected by the initiating party. If the parties agree,
arbitration may be commenced by appointment of a licensed attorney who is
selected by the parties and who agrees to conduct the arbitration without an
Administrator. Disputes include matters (i) relating to a deposit account,
application for or denial of credit, enforcement of any of the obligations the
parties have to each other, compliance with applicable laws and/or regulations,
performance or services provided under any agreement by any party, (ii) based on
or arising from an alleged tort or (iii) involving either parties’ employees,
agents, affiliates, or assigns of a party. However, Disputes do not include the
validity, enforceability, meaning, or scope of this arbitration provision, and
such matters may be determined only by a court. If a third party is a party to a
Dispute, the parties each will consent to including the third party in the
arbitration proceeding for resolving the Dispute with the third party. Unless
otherwise agreed by the parties, venue for the arbitration proceeding shall be
in Salt Lake City, Utah.
After entry of an Arbitration Order, either party may commence arbitration. The
moving party shall be under no obligation to commence arbitration and shall not
in any way be

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adversely prejudiced by electing not to commence arbitration. The arbitrator (i)
will hear and rule on appropriate dispositive motions for judgment on the
pleadings, for failure to state a claim, or for full or partial summary
judgment, (ii) will render a decision and any award applying applicable law,
(iii) will give effect to any limitations period in determining any Dispute or
defense, (iv) shall enforce the doctrines of compulsory counterclaim, res
judicata, and collateral estoppel, if applicable, (v) with regard to motions and
the arbitration hearing, shall apply rules of evidence governing civil cases,
and (vi) will apply the law of the state specified in the agreement giving rise
to the Dispute. Filing of a petition for arbitration shall not prevent any party
from (i) seeking and obtaining from a court of competent jurisdiction
(notwithstanding ongoing arbitration) provisional or ancillary remedies
including but not limited to injunctive relief, property preservation orders,
foreclosure, eviction, attachment, replevin, garnishment, and/or the appointment
of a receiver, (ii) pursuing non-judicial foreclosure, or (iii) availing itself
of any self-help remedies such as setoff and repossession. The exercise of such
rights shall not constitute a waiver of the right to submit any Dispute to
arbitration.    
Judgment upon an arbitration award may be entered in any court having
jurisdiction except that, if the arbitration award exceeds $4,000,000, any party
shall be entitled to a de novo appeal of the award before a panel of three
arbitrators. To allow for such appeal, if the award (including Administrator,
arbitrator, and attorney’s fees and costs) exceeds $4,000,000, the arbitrator
will issue a written, reasoned decision supporting the award, including a
statement of authority and its application to the Dispute. A request for de novo
appeal must be filed with the arbitrator within 30 days following the date of
the arbitration award; if such a request is not made within that time period,
the arbitration decision shall become final and binding. On appeal, the
arbitrators shall review the award de novo based on the record of the original
arbitration, meaning that they shall reach their own findings of fact and
conclusions of law based on the evidence offered in the original arbitration
(including evidence offered, but excluded by the original arbitrator) rather
than deferring in any manner to the original arbitrator. Appeal of an
arbitration award shall be pursuant to the rules of the Administrator or, if the
88Administrator has no such rules, then the JAMS arbitration appellate rules
shall apply.
Arbitration under this provision concerns a transaction involving interstate
commerce and shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et
seq. This arbitration provision shall survive any termination, amendment, or
expiration of this Agreement. If the terms of this provision vary from the
Administrator’s rules, this arbitration provision shall control.
(c)    Reliance. Each party (i) certifies that no one has represented to such
party that the other party would not seek to enforce jury and class action
waivers in the event of suit, and (ii) acknowledges that it and the other party
have been induced to enter into this Agreement by, among other things, the
mutual waivers, agreements, and certifications in this section.

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9.19    Consent to Utah Jurisdiction and Exclusive Jurisdiction of Utah Courts.
Borrower acknowledges that by execution and delivery of the Loan Documents
Borrower has transacted business in the State of Utah and Borrower voluntarily
submits to, consents to, and waives any defense to the jurisdiction of courts
located in the State of Utah as to all matters relating to or arising from the
Loan Documents and/or the transactions contemplated thereby. EXCEPT AS EXPRESSLY
AGREED IN WRITING BY LENDER AND EXCEPT AS PROVIDED IN THE ARBITRATION PROVISIONS
ABOVE, THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE
AND EXCLUSIVE JURISDICTION OF ANY AND ALL CLAIMS, DISPUTES, AND CONTROVERSIES,
ARISING UNDER OR RELATING TO THE LOAN DOCUMENTS AND/OR THE TRANSACTIONS
CONTEMPLATED THEREBY. NO LAWSUIT, PROCEEDING, OR ANY OTHER ACTION RELATING TO OR
ARISING UNDER THE LOAN DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED THEREBY
MAY BE COMMENCED OR PROSECUTED IN ANY OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN
WRITING BY LENDER.
9.20    Joint and Several Liability. Each Person included in the definition of
“Borrower” shall be jointly and severally liable for all obligations and
liabilities arising under the Loan Documents.
9.21    Notices. All notices or demands by any party to this Loan Agreement
shall, except as otherwise provided herein, be in writing and shall be deemed to
have been sufficiently given when personally delivered, deposited in the United
States mail, by registered or certified mail, or deposited with a reputable
overnight mail carrier which provides delivery of such mail to be traced,
addressed as follows:
If to Lender:
Zions First National Bank
1 South Main, Suite 300
Salt Lake City, UT 84111
Attn: Scott Bramhall
With a copy to:
Callister Nebeker & McCullough
10 E South Temple, Ste. 900
Salt Lake City UT 84133
Attn: Nathan Scharton
 
 
If to Borrower:
 

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LifeVantage Corporation
9785 S. Monroe St. #300
Sandy, UT 84070
Attn:

9.22    Counterparts. This Loan Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of which taken together shall constitute but one and the same
instrument.
9.23    Disclosure of Financial and Other Information. Borrower hereby consents
to Lender disclosing to any other lender who may participate in the Loan in
accordance with this Agreement any and all information, knowledge, reports, and
records, including, without limitation, financial statements, relating in any
manner whatsoever to the Loan and Borrower.
9.24    USA Patriot Act Notification. The Lender hereby notifies Borrower that,
pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies Borrower, which information
includes the name and address of Borrower and other information that will allow
the Lender to identify Borrower in accordance with the Patriot Act.
9.25    Integrated Agreement and Subsequent Amendment. The Loan Documents
constitute the entire agreement between the parties and may not be altered or
amended except by written agreement signed by the applicable parties. PURSUANT
TO UTAH CODE SECTION 25-5-4, BORROWER IS NOTIFIED THAT THESE AGREEMENTS ARE A
FINAL EXPRESSION OF THE AGREEMENT BETWEEN LENDER and BORROWER AND THESE
AGREEMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED ORAL AGREEMENT.
9.26    Miscellaneous. Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. 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. All prior and
contemporaneous agreements, arrangements and understandings between the parties
hereto as to the subject matter hereof are, except as otherwise expressly
provided herein, rescinded.
9.27    Confidentiality of Information The Lender shall use reasonable efforts
to assure that information about the Borrower and its Subsidiaries and their
operations, affairs and financial condition, not generally disclosed to the
public or to trade and other creditors, that is furnished to the Lender pursuant
to the provisions hereof is used only for the purposes of this Agreement and any
other relationship between such Lender and the Borrower and shall not be
divulged to any Person other than the Lender, its Affiliates and their
respective officers, directors, employees and agents, except: (a) to their
attorneys and accountants; (b) in connection with the enforcement of the rights
of the Lender hereunder and under the Loan Documents or otherwise in connection
with applicable litigation; (c) in connection with assignments and
participations and the solicitation of prospective assignees and participants
referred to in Section 9.1; (d) if such information is generally available to
the public other than as a result of disclosure by the Lender; (e) to any direct
or indirect contractual counterparty in any hedging arrangement or such
contractual counterparty’s professional advisor; (f) to any nationally
recognized rating agency that requires information about the Lender’s investment
portfolio in connection with ratings issued with respect to the Lender; and (g)
as may

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otherwise be required or requested by any regulatory authority having
jurisdiction over the Lender or by any applicable law, rule, regulation or
judicial process, the opinion of the Lender’s counsel concerning the making of
such disclosure to be binding on the parties hereto. Lender shall not incur any
liability to the Borrower by reason of any disclosure permitted by this Section.
Signature Page(s) Follow

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Dated as of the Effective Date.
 
LENDER:
ZB, N.A., doing business as Zions First National Bank

By: /s/ Scott Bramhall, Senior Vice President
 

BORROWER:
LifeVantage Corporation,
a Colorado corporation

By: /s/ Mark Jaggi, Chief Financial Officer

Lifeline Nutraceuticals Corporation,
a Colorado corporation

By: /s/ Mark Jaggi, Director

--------------------------------------------------------------------------------

DISCLOSURE SCHEDULE
TO
LOAN AGREEMENT
by and among
Z.B., N.A., dba ZIONS FIRST NATIONAL BANK
and
LIFEVANTAGE CORPORATION
    
March 30, 2016

This Disclosure Schedule is delivered to the Lender (as defined herein) in
connection with the execution of that certain Loan Agreement (the “Agreement”)
dated March 30, 2016 by and between Z.B., N.A., dba Zions First National Bank
(“Lender”), LifeVantage Corporation, a Colorado corporation (“LifeVantage”) and
Lifeline Neutraceuticals Corporation, a Colorado corporation (collectively with
LifeVantage, “Borrower” or the “Company”). Capitalized terms not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Agreement.
This Disclosure Schedule shall be deemed incorporated into the Agreement to the
same extent as though fully set forth in the Agreement. Certain information set
forth in this Disclosure Schedule is included solely for informational purposes
and may not be required to be disclosed pursuant to the Agreement. The
disclosure of any information shall not be deemed to constitute an
acknowledgment that such information is required to be disclosed in connection
with the representations and warranties made by the Company in the Agreement or
that such information is material, nor shall such information be deemed to
establish a standard of materiality, nor shall it be deemed an admission of any
liability of, or concession as to any defense to any third party, as applicable.
The section number headings in this Disclosure Schedule correspond to the
section numbers in the Agreement and any information disclosed in any section of
this Disclosure Schedule shall be deemed to be disclosed and incorporated into
any other section of this Disclosure Schedule where the relevance of such
disclosure is reasonably apparent on the face of such disclosure.
Any attachments or annexes delivered in connection with this Disclosure Schedule
are incorporated by reference in and constitute a part of the Disclosure
Schedule and the Disclosure Schedule is qualified in its entirety by reference
to such attachments and annexes.

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Schedule 5.5
Pending or Threatened Litigation.
Lifevantage Inc v. NuVerus International, Inc., District Court, Dallas County,
298th District, Civil No. DC-14-07370. The complaint alleges tortious
interference of business relationships, tortious interference with business
contracts and conspiracy to breach contracts. Trial was scheduled for November
and has been rescheduled to April.  

Mommies Work From Home v. Lifevantage, US District Court, District of Utah,
Central Division, Civil No. 2:15-cv-00049-CW-BCW. The lawsuit alleges that
LifeVantage breached and improperly terminated its distributor agreement with
Mommies Work From Home, LLC (“MWFH”) and tortuously interfered with MWFH’s
contractual relationship by withholding permission for MWFH to sell its
distributorship. The LifeVantage has proposed a settlement arrangement which
MWFH is now considering.

Lifevantage v. Domingo et al, US District Court, District of Utah, Central
Division, Civil No. 2:13-cv-01037-JNP-PMW. The suit claims breach of contract,
misappropriation of trade secrets, and temporary and permanent injunctive
relief.   The suit alleges that Mr. Domingo used his influence and position as
LiveVantage’s master distributor to entice other LifeVantage distributors to
leave LifeVantage, disparage LifeVantage, and that he disclosed and misused the
company’s confidential information.  LifeVantage is seeking monetary damages,
injunctive relief, exemplary damages, costs and attorney’s fees. LifeVantage
submitted a summary judgment motion in this matter.  The judge has vacated the
trial date, scheduled to begin in May 2016, and is awaiting a decision on the
Motion and new trial dates. 

Backbone Worldwide Inc, et al v. Lifevantage Corporation, et al., District
Court, Salt Lake, 3rd District, No. 110918426. Mr. Hedges initially claimed that
he is entitled to all the monies he would have earned if his distributorship had
not been terminated in 2010. LifeVantagemade a settlement offer which was never
accepted and it expired per the rule. This matter is currently in discovery. 
Mr. Hedges recently obtained new counsel and the discovery deadlines are being
adjusted. 
 
Jeunesse Global, LLC v. Jensen, US District Court, Middle District of Florida,
Orlando Division, Civil No. 6:16-cv-00162-GAP-DAB. The complaint alleges breach
of employment agreement, breach of separation agreement, misappropriation of
trade secrets, and conversion.  LifeVantage believes that this matter is
designed to be a distraction and that it has no merit.  This matter will go to
mediation on June 28, 2016.  LifeVantage moved to have the matter moved into
Federal Court.  Jeunesse has contested this motion and the parties are waiting
the Federal Courts decision.

0

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2.

Schedule 5.13
Subsidiaries

Name
State or Country of Incorporation
1.    LifeLine Nutraceuticals Corporation
Colorado
2.    LifeVantage Asia Pte. Ltd.
Singapore
3.    LifeVantage Japan KK
Japan
4.    LifeVantage Australia Pty. Ltd.
Australia
5.    LifeVantage Hong Kong Limited
Hong Kong
6.    Importadora LifeVantage
Mexico
7.    LifeVantage de Mexico
Mexico
8.    Servicios Administrativos para la importacion de Productos Body & Skin,
S.C.
Mexico
9.    LifeVantage Canada Ltd.
Canada
10.    LifeVantage Commission Services Limited
Hong Kong
11.    LifeVantage Philippines Corporation
Philippines
12.    LifeVantage Singapore Pte. Ltd.
Singapore
13.    lifeVantage (Thailand) Company Limited
Thailand

 

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Schedule 6.5
Liens for LifeVantage Corporation
File No.
Date
Secured Party
Title
2009F020787
03/09/2009
Continuation filed: 12/06/2013
DELL FINANCIAL SERVICES L.L.C.
UCC Financing Statement
20132090755
10/17/2013
TCW Special Situations, LLC as Collateral Agent
UCC Financing Statement*
Lien of TCW Special Situations, LLC as Collateral Agent in the Expense Deposit
Cash Collateral (as defined in the payoff letter dated concurrently herewith
between the Borrowers, TCW Special Situations, LLC, and certain other parties
thereto).

Liens for Lifeline Nutraceuticals Corporation
File No.
Date
Secured Party
Title
20132090754
10/17/2013
TCW Special Situations, LLC as Collateral Agent
UCC Financing Statement*
Lien of TCW Special Situations, LLC as Collateral Agent in the Expense Deposit
Cash Collateral (as defined in the payoff letter dated concurrently herewith
between the Borrowers, TCW Special Situations, LLC, and certain other parties
thereto).

*To be paid off at closing.

2