Exhibit 10.2


 


SENIOR SECURED
CREDIT FACILITY AGREEMENT


 


IN THE MAXIMUM AMOUNT OF US$6,500,000



 


BY AND AMONG


 


DRONE USA, INC.,


as Borrower,


 


DRONE USA, LLC,


as Guarantor,


 


AND


 


TCA GLOBAL CREDIT MASTER FUND, LP,


as Lender


 


Dated as of May 31, 2016


 


Effective as of September 13, 2016


 




    	 	 	 



     


    

 


SENIOR SECURED CREDIT FACILITY AGREEMENT


 


This SENIOR SECURED
CREDIT FACILITY AGREEMENT (as amended, restated, modified or supplemented from time to time, this “Agreement”),
dated as of May 31, 2016 and made effective as of September 13, 2016 (the “Effective Date”), is executed
by and among: (i) DRONE USA, INC., a corporation incorporated under the laws of the State of Delaware (the “Borrower”);
(ii) DRONE USA, LLC, a limited liability company organized under the laws of the State of Delaware (the “Corporate
Guarantor”) (iii) any Person to hereafter become a Subsidiary of the Borrower pursuant to Section 3.20
hereof, and any Person that from time to time may hereafter become liable for the Obligations, or any part thereof, as joint
and several guarantors (the “Additional Guarantors”) (the Corporate Guarantor and the Additional Guarantors,
together, jointly and severally, the “Guarantors” and together with the Borrower, the “Credit
Parties”); and (iv) TCA GLOBAL CREDIT MASTER FUND, LP, a limited partnership organized and existing under
the laws of the Cayman Islands, as lender (the “Lender”).


 


WHEREAS, Borrower has
requested that Lender extend a senior secured credit facility to Borrower of up to Six Million Five Hundred Thousand and No/100
United States Dollars (US$6,500,000.00) for working capital financing for Borrower and its Subsidiary, and for any other purposes
permitted hereunder; and for these purposes, Lender is willing to make certain loans and extensions of credit available to Borrower
of up to such amount and upon the terms and conditions set forth herein; and


 


WHEREAS, as a material
inducement for Lender to make loans and extensions of credit to Borrower pursuant to the terms and conditions set forth herein:
(i) the Corporate Guarantor has, inter alia, agreed to execute a Guaranty Agreement in favor of Lender, whereby Corporate Guarantor
shall guarantee any and all of the Borrower’s Obligations owed under this Agreement and under any other Loan Documents; (ii)
the Credit Parties have, inter alia, agreed to execute Security Agreements in favor of Lender, whereby each Credit Party shall
grant to the Lender a first priority security interest in and Lien upon all of its existing and after-acquired tangible and intangible
assets, as security for the payment and performance of any and all Obligations owed under this Agreement and under any other Loan
Document; and (iii) the Borrower has agreed to execute a Pledge Agreement in favor of Lender, whereby the Borrower shall pledge
to the Lender all of its right, title and interest in and to, and provide a first priority Lien and security interest on, all of
the issued and outstanding membership interests of the Corporate Guarantor, as security for the payment and performance of any
and all Obligations owed under this Agreement and under any other Loan Documents;


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the
parties hereto agree as follows:


 


		1.	DEFINITIONS.



 


1.1          Defined
Terms. For the purposes of this Agreement, the following capitalized words and phrases shall have the meanings set forth below.


 




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(a)          “Account”
shall mean, individually, and “Accounts” shall mean, collectively, any and all accounts (as such term
is defined in the UCC) of any Credit Party.


 


(b)          “ACH”
shall have the meaning given to it in Section 2.4(c) hereof.


 


(c)          “Additional
Closings” means any closings hereunder after the First Closing, pursuant to which Lender makes Additional Loans
to Borrower under the terms of this Agreement.


 


(d)          “Additional
Guarantors” shall have the meaning given to such term in the preamble hereof.


 


(e)          “Additional
Loans” means each advance, and the aggregate of all such advances, made by Lender to Borrower under and pursuant
to this Agreement or any other Loan Documents after the Initial Loan.


 


(f)           “Advisory
Fee” shall have the meaning given to it in Section 2.5(f) hereof.


 


(g)          “Advisory
Fee Shares” shall have the meaning given to it in Section 2.5(f) hereof.


 


(h)          “Affiliate”
(a) of Lender shall mean: (i) any entity which, directly or indirectly, Controls or is Controlled By or is under common Control
with Lender; and (ii) any entity administered or managed by Lender, or an Affiliate or investment advisor thereof and which is
engaged in making, purchasing, holding or otherwise investing in commercial loans; and (b) of any Credit Party shall mean any
entity which, directly or indirectly, Controls or is Controlled By or is under common Control with any Credit Party.


 


(i)           “Agreement”
shall mean this Senior Secured Credit Facility Agreement by and among the Credit Parties and the Lender.


 


(j)           “Borrower”
shall have the meaning given to such term in the preamble hereof


 


(k)          “Business
Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required
to be closed for the conduct of commercial banking business in the State of Nevada.


 


(1)          “BSA”
shall have the meaning given to it in Section 14.22 hereof.


 


(m)         “Capital
Expenditures” shall mean expenditures (including Capital Lease obligations which should be capitalized under GAAP)
for the acquisition of fixed assets which are required to be capitalized under GAAP.


 




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(n)          “Capital
Lease” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, by such Person as lessee that is, or should be, in accordance with Financial Accounting Standards
Board Statement No. 13, as amended from time to time, or, if such Statement is not then in effect, such statement of GAAP as may
be applicable, recorded as a “capital lease” on the balance sheets of any Credit Party prepared in accordance with
GAAP.


 


(o)          “Change
in Control” shall mean any sale, conveyance, assignment or other transfer, directly or indirectly, of any ownership
interest of any Credit Party, which results in any change in the identity of the individuals or entities in Control of such Credit
Party as of the Effective Date or the grant of a security interest in any ownership interest of any Person, directly or indirectly
Controlling the Credit Parties, which could result in a change in the identity of the individuals or entities in Control of such
Credit Party as of the Effective Date.


 


(p)          “Closings”
means, collectively, the First Closing, and any Additional Closings, if any, under this Agreement.


 


(q)          “Collateral”
“Collateral” shall mean any and all assets and property of each of the Credit Parties, of any kind
or description, tangible or intangible, wheresoever located and whether now existing or hereafter arising or acquired,
including all “Collateral” as defined in the Security Agreements, and if there is more than one Security
Agreement, it shall mean, as the context so requires, the “Collateral” for each individual Credit Party, as such
term is defined in the Security Agreement for such applicable Credit Party, and all of the “Collateral,” in the
aggregate, for all Credit Parties, collectively, under each of the Security Agreements.


 


(r)          “Common
Stock” shall mean the common stock of the Borrower, par value $0.0001 per share.


 


(s)          “Compliance
Certificate” shall mean the covenant compliance certificate, the form of which is attached hereto as Exhibit
“A”.


 


(t)           “Contingent
Liability” and “Contingent Liabilities” shall mean, respectively, each obligation and
liability of the Credit Parties and all such obligations and liabilities of the Credit Parties incurred pursuant to any agreement,
undertaking or arrangement by which any Credit Party either: (i) guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise
to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability
of any other Person in any manner (other than by endorsement of instruments in the course of collection), including without limitation,
any indebtedness, dividend or other obligation which may be issued or incurred at some future time; (ii) guarantees the payment
of dividends or other distributions upon the shares or ownership interest of any other Person; (iii) undertakes or agrees (whether
contingently or otherwise): (A) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any
other Person or any property or assets constituting security therefor; (B) to advance or provide funds for the payment or discharge
of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of
any other Person; or (C) to make payment to any other Person other than for value received; (iv) agrees to lease property or to
purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness
or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (v) to induce the issuance
of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (vi) undertakes or agrees
otherwise to assure or insure a creditor against loss. The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness,
obligation or other liability guaranteed or supported thereby.


 




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(u)          “Control,”
“Controlling,” “Controlled By,” or words of similar import shall mean the possession,
directly or indirectly, of the power to direct, or cause the direction of, the management and policies of a Person by contract,
voting of securities, or otherwise.


 


(v)          “Conversion
Shares” shall have the meaning given to it in Section 2.5(f) hereof.


 


(w)         “Corporate
Guarantor” shall have the meaning given to such term in the preamble hereof.


 


(x)          “Credit
Party(ies)” shall have the meaning given to such term in the preamble hereof.


 


(y)          “Credit
Party Leases” shall have the meaning given to it in Section 7.18 hereof.


 


(z)          “Default
Rate” shall mean a per annum rate of interest equal to the highest non-usurious rate permitted by applicable law,
and if there is no such rate under applicable law, then twenty-five percent (25%) per annum.


 


(aa)        “Dollars”
or “$” means lawful currency of the United States of America.


 


(bb)       “Effective
Date” shall have the meaning given to it in the preamble hereof.


 


(cc)        “Eligible
Accounts” means, as applicable for each Credit Party:


 


(A)         all
sales of the Credit Parties arising from Point-of-Sale Transactions which meet each of the criteria set forth below (any sale that
fails to meet the criteria below can still be deemed an Eligible Account, in Lender’s sole discretion):


 


(i)          are
genuine in all respects and have arisen in the Credit Parties’ Ordinary Course of Business from the sale of goods or performance
of services by Credit Parties, which delivery of goods has occurred or performance of services have been fully performed;


 


(ii)         payment
for the sale has been made in full at the time of the sale, and such sale is not subject to any chargeback, credit, setoff, allowance,
adjustment, repurchase or return agreement or obligation of any kind;


 




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(iii)        the
Person obligated on the sale is not a Subsidiary or a director, officer, employee, agent, parent or Affiliate of any Credit Party;
and


 


(iv)        the
proceeds from the sale are subject to a perfected, first priority Lien in favor of Lender and not subject to any Lien whatsoever,
other than the Lien of Lender and except for Permitted Liens.


 


(B)         all
Accounts of the Credit Parties which meet each of the criteria set forth below (an Account that fails to meet the criteria below
can still be deemed an Eligible Account, in Lender’s sole discretion):


 


(i)          are
genuine in all respects and have arisen in the Credit Parties’ Ordinary Course of Business from the sale of goods or performance
of services by Credit Parties, which delivery of goods has occurred or performance of services have been fully performed;


 


(ii)         are
evidenced by an invoice delivered to the Person obligated under such Account, are due and payable within thirty (30) days after
the date of the invoice, and are not more than ninety (90) days outstanding past the invoice date;


 


(iii)        do
not arise from a “sale on approval”, “sale or return”, “consignment”, “guaranteed sale”
or “bill and hold”, or are subject to any other repurchase or return agreement;


 


(iv)        have
not arisen in connection with a sale to a Person obligated under such Account who is not a resident or citizen of, or an entity
organized in, and is principally located within, the United States of America;


 


(v)         are
not due from a Person obligated under such Account which is a Subsidiary or a director, officer, employee, agent, parent or Affiliate
of any Credit Party;


 


(vi)        do
not arise out of contracts with the United States or any Governmental Authority thereof, unless the a Credit Party has assigned
its right to payment of such Account to Lender pursuant to the Federal Assignment of Claims Act of 1940 (or analogous statute),
and evidence (satisfactory to Lender) of such assignment has been delivered to Lender;


 


(vii)       do
not arise in connection with a sale to a Person obligated under such Account who is located within a state or jurisdiction which
requires any Credit Party, as a precondition to commencing or maintaining an action in the courts of that state or jurisdiction,
either to: (A) receive a certificate of authority to do business and be in good standing in such state or jurisdiction; or (B)
file a notice of business activities or similar report with such state’s or jurisdiction’s taxing authority, unless:
(I) the applicable Credit Party has taken one of the actions described in clauses (A) or (B); (II) the failure to take one of the
actions described in either clause (A) or (B) may be cured retroactively by the applicable Credit Party at its election; or (III)
the applicable Credit Party has proven to the satisfaction of Lender that it is exempt from any such requirements under such state’s
or jurisdiction’s laws;


 




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(viii)      do
not arise out of a contract or order which, by its terms, forbids or makes void or unenforceable the assignment to Lender of the
Account arising with respect thereto and are not assignable to Lender for any other reason;


 


(ix)         are
the valid, legally enforceable and unconditional obligation of the Person obligated under such Account, are not the subject of
any setoff, counterclaim, credit, allowance or adjustment by the Person obligated under such Account, or of any claim by the Person
obligated under such Account denying liability thereunder in whole or in part, and the Person obligated under such Account has
not refused to accept and/or has not returned or offered to return any of the goods or services which are the subject of such Account;


 


(x)          are
subject to a perfected, first priority Lien in favor of Lender and not subject to any Lien whatsoever, other than the Lien of Lender
and except for Permitted Liens;


 


(xi)         no
Proceedings are pending or threatened against the Person obligated under such Account which might result in any material adverse
change in its financial condition or in its ability to pay any Account in full;


 


(xii)        if
the Account is evidenced by chattel paper or an instrument, the originals of such chattel paper or instrument shall have been endorsed
and/or assigned and delivered to Lender or, in the case of electronic chattel paper, shall be in the control of Lender, in each
case in a manner satisfactory to Lender; and


 


(xiii)      there
is no bankruptcy, insolvency or liquidation Proceeding pending by or against the Person obligated under such Account, nor has the
Person obligated under such Account gone out of or suspended business, made a general assignment for the benefit of creditors or
failed to pay its debts generally as they come due, and/or no condition or event has occurred having a Material Adverse Effect
on the Person obligated under such Account which would require the Accounts of such Person to be deemed uncollectible in accordance
with GAAP.


 


A sale or Account
which is an Eligible Account shall cease to be an Eligible Account whenever it ceases to meet any one of the foregoing requirements.
In addition, any sale or Account that otherwise meets each of the criteria above for an Eligible Account, may nonetheless be deemed
not to be an Eligible Account, or may be deemed as an Eligible Account for a discounted value, all in Lender’s sole
and absolute discretion.


 


If Accounts representing
Fifty Percent (50%) or more of the unpaid net amount of all Accounts from any one Person fail to qualify as Eligible Accounts,
including because such Accounts are unpaid more than ninety (90) days after the due date of such Accounts, then all Accounts relating
to such Person shall cease to be Eligible Accounts. If Accounts owed by a single Person exceed Fifty Percent (50%) of all Eligible
Accounts, then all Accounts relating to such Person in excess of such amount shall cease to be Eligible Accounts.


 




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(dd)       “Employee
Plan” includes any pension, stock bonus, employee stock ownership plan, retirement, disability, medical, dental or
other health plan, life insurance or other death benefit plan, profit sharing, deferred compensation, stock option, bonus or other
incentive plan, vacation benefit plan, severance plan or other employee benefit plan or arrangement, including, without limitation,
those pension, profit-sharing and retirement plans of the Credit Parties described from time to time in the consolidated financial
statements of the Credit Parties and any pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA) or any
multi-employer plan, maintained or administered by the Credit Parties or to which is the Credit Parties are a party or may have
any liability or by which the Credit Parties are bound.


 


(ee)        “Environmental
Laws” shall mean all federal, state, district, local and foreign laws, rules, regulations, ordinances, and consent
decrees relating to health, safety, hazardous substances, pollution and environmental matters, as now or at any time hereafter
in effect, applicable to the Credit Parties’ business or facilities owned or operated by the Credit Parties, including laws
relating to emissions, discharges, releases or threatened releases of pollutants, contamination, chemicals, or hazardous, toxic
or dangerous substances, materials or wastes in the environment (including ambient air, surface water, land surface or subsurface
strata) or otherwise relating to the generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials.


 


(ff)         “ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.


 


(gg)       “Event
of Default” shall mean any of the events or conditions set forth in Section 12 hereof.


 


(hh)       “Financial
Statements” shall have the meaning given to it in Section 7.10 hereof.


 


(ii)          “First
Closing means the closing of the Initial Loan hereunder, which shall take place on the Effective Date.


 


(jj)          “Funded
Indebtedness” shall mean, as to any Person, without duplication: (i) all indebtedness for borrowed money of such
Person (including principal, interest and, if not paid when due, fees and charges), whether or not evidenced by bonds, debentures,
notes or similar instruments; (ii) all obligations to pay the deferred purchase price of property or services; (iii) all obligations,
contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’
acceptances and similar obligations issued for the account of such Person (including the Letters of Credit), and all unpaid drawings
in respect of such letters of credit, bankers’ acceptances and similar obligations; and (iv) all indebtedness secured by
any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided, however,
if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to
be in an amount equal to the fair market value of the property subject to such Lien at the time of determination). Notwithstanding
the foregoing, Funded Indebtedness shall not include trade payables and accrued expenses incurred by such Person in accordance
with customary practices and in the Ordinary Course of Business of such Person.


 




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(kk)        “GAAP”
shall mean United States generally accepted accounting principles set forth from time to time in the opinions and pronouncements
of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the date of determination; provided, however,
that interim financial statements or reports shall be deemed in compliance with GAAP despite the absence of footnotes and fiscal
year-end adjustments as required by GAAP.


 


(ll)        “Governmental
Authority” means any foreign, federal, state or local government, or any political subdivision thereof, or any court,
agency or other body, organization, group, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial,
regulatory or administrative function of government.


 


(mm)      “Guarantors”
shall have the meaning given to it in the preamble hereof.


 


(nn)       “Guarantee
Agreement(s)” shall mean the guaranty agreement executed by the Corporate Guarantor in favor of the Lender, pursuant
to which the Corporate Guarantor shall guarantee all of the Obligations of the Borrower, the form of which is attached hereto
as Exhibit “B”.


 


(oo)       “Hazardous
Materials” shall mean any hazardous, toxic or dangerous substance, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants
or contaminants (including, without limitation, materials which include hazardous constituents), sewage, sludge, industrial slag,
solvents and/or any other similar substances, materials or wastes that are or become regulated under any Environmental Law (including
any that are or become classified as hazardous or toxic under any Environmental Law).


 


(pp)       “Income
Projections” shall have the meaning given to it in Section 10.8 hereof.


 


(qq)       “Initial
Loan” means the initial loan contemplated to be made by Lender to the Borrower at the First Closing in the amount
of Three Million Five Hundred Thousand Dollars ($3,500,000).


 


(rr)         “Insurance
Policies” shall have the meaning given to it in Section 7.23 hereof.


 


(ss)        “Interest
Rate” shall mean a fixed rate of interest equal to eighteen percent (18.0%) per annum, calculated on the actual number
of days elapsed over a 360-day year.


 


(tt)         “IP
Rights” shall have the meaning given to it in Section 7.21 hereof.


 


(uu)       “Irrevocable
Transfer Agent Instructions” shall mean the Irrevocable Transfer Agent Instructions to be entered into by and among
the Lender, the Borrower and the Borrower’s Transfer Agent, the form of which is attached hereto as Exhibit “C”.


 




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(vv)       “Lender”
shall have the meaning given to it in the preamble hereof.


 


(ww)      “Lender
Indemnitee(s)” shall have the meaning given to it in Section 14.19 hereof.


 


(xx)        “License
Agreements” shall have the meaning given to it in Section 7.21 hereof.


 


(yy)        “Lien”
shall mean, with respect to any Person, any mortgage, pledge, hypothecation, judgment lien or similar legal process, title retention
lien, or other lien, security interest or encumbrance of any nature or kind granted by such Person or arising by judicial process
or otherwise, including the interest of a vendor under any conditional sale or other title retention agreement and the interest
of a lessor under a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible,
by such Person as lessee that is, or should be, a Capital Lease on the balance sheet of such Person prepared in accordance with
GAAP.


 


(zz)         “Loan”
or “Loans” means, collectively, the Initial Loan, and all Additional Loans, if any, made by Lender to
Borrower from time to time hereunder.


 


(aaa)      “Loan
Documents” shall mean those documents listed in Sections 3.1, 3.2 and 3.3 hereof, and any other documents
or instruments executed in connection with this Agreement or the Loans contemplated hereby, and all renewals, extensions, future
advances, modifications, substitutions, or replacements thereof


 


(bbb)     “Material
Adverse Effect” shall mean: (i) a material adverse change in, or a material adverse effect upon, the assets, business,
prospects, properties, financial condition or results of operations of any Credit Party; (ii) a material impairment of the ability
of any Credit Party to perform any of its Obligations under any of the Loan Documents; or (iii) a material adverse effect on: (A)
any material portion of the Collateral; (B) the legality, validity, binding effect or enforceability against any Credit Party of
any of the Loan Documents; (C) the perfection or priority (subject to Permitted Liens) of any Lien granted to Lender under any
Loan Document; (D) the rights or remedies of Lender under any Loan Document; or (E) the Lender’s ability to sell, without
limitation or restriction, if applicable, any Advisory Fee Shares hereunder or any shares issued to the Lender upon a conversion
pursuant to the Promissory Note. For purposes of determining whether any of the foregoing changes, effects, impairments, or other
events have occurred, such determination shall be made by Lender, in its sole and absolute discretion.


 


(ccc)      “Material
Contract” shall mean any contract or agreement to which any Credit Party is a party or by which any Credit Party
or any of its assets are bound and which: (i) must be disclosed to the SEC, the Principal Trading Market, or any other Governmental
Authority pursuant to the Securities Act, the Exchange Act, the rules and regulations of the SEC, or any other laws, rules or
regulations of any Governmental Authority or the Principal Trading Market; (ii) involves aggregate payments of Twenty-Five Thousand
and No/100 United States Dollars (US$25,000.00) or more to or from any Credit Party; (iii) involves delivery, purchase, licensing
or provision, by or to any Credit Party, of any goods, services, assets or other items having a value (or potential value) over
the term of such contract or agreement of Twenty-Five Thousand and No/100 United States Dollars (US$25,000.00) or more or is otherwise
material to the conduct of the Credit Party’s business as now conducted and as contemplated to be conducted in the future;
(iv) involves a Credit Party Lease; (v) imposes any guaranty, surety or indemnification obligations on any Credit Party; or (vi)
prohibits any Credit Party from engaging in any business or competing anywhere in the world.


 




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(ddd)     “Material
Shareholder” shall have the meaning given to it in Section 7.31 hereof.


 


(eee)      “Maturity
Date” shall mean the earlier of: (i) eighteen (18) months from the Effective Date; (ii) upon prepayment of the Promissory
Note by Borrower (subject to Section 2.4(b)); or (iii) the occurrence of an Event of Default and acceleration of the Promissory
Note pursuant to this Agreement, unless the date in clause (i) shall be extended by Lender pursuant to any modification, extension
or renewal note executed by Borrower and accepted by Lender in its sole and absolute discretion in substitution for the Promissory
Note.


 


(fff)        “Obligations”
shall mean, whether now existing or hereafter arising, created or incurred: (i) all Loans, advances (whether of principal or otherwise)
and other financial accommodations (whether primary, contingent or otherwise) made by Lender to Borrower under any Loan Documents;
(ii) all interest accrued thereon (including interest which would be payable as post-petition in connection with any bankruptcy
or similar Proceeding, whether or not permitted as a claim thereunder); (iii) any and all fees, charges or other amounts due to
Lender under this Agreement or the other Loan Documents; (iv) any and all expenses incurred by Lender under, or in connection with,
this Agreement or the other Loan Documents; (v) any and all other liabilities and obligations of any of the Credit Parties to Lender
under this Agreement and any other Loan Documents; and (vi) the performance by the Credit Parties of all covenants, agreements
and obligations of every nature and kind on the part of any of the Credit Parties to be performed under this Agreement and any
other Loan Documents.


 


(ggg)     “OFAC”
shall have the meaning given to it in Section 14.22 hereof.


 


(hhh)     “Ordinary
Course of Business” means the Ordinary Course of Business of the Person in question consistent with past custom and
practice (including with respect to quantity, quality and frequency).


 


(iii)         “Payment
Account” shall have the meaning given to it in Section 2.4(c) hereof.


 




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(jjj)         “Permitted
Liens” shall mean: (i) Liens for Taxes, assessments or other governmental charges not at the time delinquent or thereafter
payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which adequate reserves
are maintained in accordance with GAAP and in respect of which no Lien has been filed; (ii) Liens of carriers, warehousemen, mechanics
and materialmen arising in the Ordinary Course of Business; (iii) Liens in the form of deposits or pledges incurred in connection
with worker’s compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA
or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue or being contested in
good faith by appropriate Proceedings and not involving any advances or borrowed money or the deferred purchase price of property
or services, which do not in the aggregate materially detract from the value of the property or assets of the Credit Parties taken
as a whole or materially impair the use thereof in the operation of the Credit Parties’ business and, in each case, for which
adequate reserves are maintained in accordance with GAAP and in respect of which no Lien has been filed; (iv) Liens described in
the Financial Statements and acceptable to Lender in its sole and absolute discretion, and the replacement, extension or renewal
of any such Lien upon or in the same property subject thereto arising out of the extension, renewal or replacement of the indebtedness
secured thereby (without increase in the amount thereof and without expansion of such Liens upon any other property); (v) attachments,
appeal bonds, judgments and other similar Liens, for sums not exceeding Fifty Thousand and No/100 United States Dollars (US$50,000.00)
arising in connection with court Proceedings, provided the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good faith and by appropriate Proceedings, and only to the extent
such judgments or awards do not otherwise constitute an Event of Default; (vi) zoning and similar restrictions on the use of property
and easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in
any material respect with the ordinary conduct of the business of the Credit Parties; (vii) Liens arising in connection with Capital
Leases (and attaching only to the property being leased); (viii) Liens that constitute purchase money security interests on any
property securing indebtedness incurred for the purpose of financing all or any part of the cost of acquiring such property, provided
that any such Lien attaches to such property within sixty (60) days of the acquisition thereof and attaches solely to the property
so acquired; (ix) Liens granted to Lender hereunder and under the Loan Documents; (x) any interest or title of a lessor, sublessor,
licensor or sublicensor under any lease or non-exclusive license permitted by this Agreement; (xi) Liens arising from precautionary
uniform commercial code financing statements filed under any lease permitted by this Agreement; and (xii) banker’s Liens
and rights of set-off of financial institutions arising in connection with items deposited in accounts maintained at such financial
institutions and subsequently unpaid and unpaid fees and expenses that are charged to the Credit Parties by such financial institutions
in the Ordinary Course of Business of the maintenance and operation of such accounts.


 


(kkk)      “Permit”
means any license, permit, approval, waiver, order, authorization, right or privilege of any nature whatsoever, granted, issued,
approved or allowed by any Governmental Authority.


 


(lll)         “Person”
shall mean any individual, partnership, limited liability company, limited liability partnership, corporation, trust, joint venture,
joint stock company, association, unincorporated organization, government or agency or political subdivision thereof, or other
entity.


 


(mmm)   “Pledge
Agreement(s)” shall mean the pledge agreements executed by the Borrower in favor of the Lender, pursuant to which
the Borrower grants a first priority lien and security interest in and to all of the shares or membership interests (as applicable)
owned by the Borrower in the Corporate Guarantor, and any other Subsidiaries, to the Lender, the form of which is attached hereto
as Exhibit “D”.


 


(nnn)     “Point-of-Sale
Transactions” means any sale transactions by any Credit Parties whereby the purchase price for the sale transaction
is paid in full by the Person undertaking such sale transaction, at the time of the sale transaction.


 




    	 	11	 



     


    

  


(ooo)     “Preferred
Stock” shall have the meaning given to it in Section 7.4 hereof.


 


(ppp)     “Prepayment
Penalty” shall have the meaning given to it in Section 2.4(b) hereof.


 


(qqq)     “Principal
Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market,
the OTCQX, the OTCQB, the OTC Pink, the NYSE Euronext or the New York Stock Exchange, whichever is at the time the principal trading
exchange or market for the Common Stock.


 


(rrr)        “Proceeding”
means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative hearing, or any other
proceeding of any nature whatsoever.


 


(sss)      “Promissory
Note(s)” means any promissory notes issued by the Borrower to Lender from time to time under this Agreement which
evidence the Initial Loan or any Additional Loans, which promissory notes shall be substantially in the form and substance attached
hereto as Exhibit “E”.


 


(ttt)        “Public
Documents” shall have the meaning given to it in Section 7.11 hereof.


 


(uuu)     “Real
Property” means any real estate, land, building, structure, improvement, fixture or other real property of any nature
whatsoever, including, but not limited to, fee and leasehold interests, and specifically including the real property listed on
Schedule 7.18.


 


(vvv)     “Rule
144” shall mean Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto).


 


(www)   “Rule
144 Certificate” shall have the meaning given to it in Section 10.20 hereof. 10.20 hereof.


 


(xxx)       “Rule
144 Opinion” shall have the meaning given to it in Section 10.20 hereof.


 


(yyy)     “Sale
Reconciliation” shall have the meaning given to it in Section 2.5(f) hereof.


 


(zzz)       “SEC”
shall mean the United States Securities and Exchange Commission.


 


(aaaa)    “Securities
Act” shall mean the Securities Act of 1933, as amended.


 


(bbbb)   “Securities
Being Sold” shall have the meaning given to it in Section 10.20 hereof.


 




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(cccc)    “Security
Agreement(s)” shall mean the security agreements executed by the Credit Parties in favor of Lender, pursuant to
which each of the Credit Parties grant a first priority lien and security interest in and to all of their respective Collateral
as security for the Obligations, the forms of which are attached hereto as Exhibit “F-1” and Exhibit
“F-2”.


 


(dddd)   “Share
Reserve” shall have the meaning given to it in Section 10.21 hereof.


 


(eeee)    “Shell
Company” shall have the meaning given to it in Section 10.20 hereof.


 


(ffff)       “Subsidiary”
and “Subsidiaries” shall mean, respectively, each and all such corporations, partnerships, limited
partnerships, limited liability companies, limited liability partnerships or other entities of which or in which a Person
owns, directly or indirectly, fifty percent (50%) or more of: (i) the combined voting power of all classes of stock having
general voting power under ordinary circumstances to elect a majority of the board of directors of such entity if a
corporation; (ii) the management authority and capital interest or profits interest of such entity, if a partnership, limited
partnership, limited liability company, limited liability partnership, joint venture or similar entity; or (iii) the
beneficial interest of such entity, if a trust, association or other unincorporated organization.


 


(gggg)   “Transfer
Agent” shall have the meaning given to it in Section 2.5(k) hereof.


 


(hhhh)   “UCC”
shall mean the Uniform Commercial Code in effect in Nevada from time to time.


 


(iiii)        “Use
of Proceeds Confirmation” shall have the meaning given to it in Section 9.8 hereof.


 


(jjjj)        “Validity
Certificates” shall mean the Validity Certificates executed by certain officers and directors of the Borrower, the
form of which is attached hereto as Exhibit “G”.


 


(kkkk)    “Valuation
Date” shall have the meaning given to it in Section 2.5(f)


hereof.


 


(1111)    “VWAP”
shall have the meaning given to it in Section 2.5(f)  hereof.


 




    	 	13	 



     


    

  


1.2          Accounting
Terms. Any accounting terms used in this Agreement which are not specifically defined herein shall have the meanings customarily
given them in accordance with GAAP. Calculations and determinations of financial and accounting terms used and not otherwise specifically
defined hereunder and the preparation of financial statements to be furnished to Lender pursuant hereto shall be made and prepared,
both as to classification of items and as to amount, in accordance with GAAP as used in the preparation of the financial statements
of Borrower on the date of this Agreement. If any changes in accounting principles or practices from those used in the preparation
of the financial statements are hereafter occasioned by the promulgation of rules, regulations, pronouncements and opinions by
or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or any successor
thereto or agencies with similar functions), which results in a material change in the method of accounting in the financial statements
required to be furnished to Lender hereunder or in the calculation of financial covenants, standards or terms contained in this
Agreement, the parties hereto agree to enter into good faith negotiations to amend such provisions so as equitably to reflect such
changes to the end that the criteria for evaluating the financial condition and performance of Borrower will be the same after
such changes as they were before such changes; and if the parties fail to agree on the amendment of such provisions, Borrower will
furnish financial statements in accordance with such changes but shall provide calculations for all financial covenants, perform
all financial covenants and otherwise observe all financial standards and terms in accordance with applicable accounting principles
and practices in effect immediately prior to such changes. Calculations with respect to financial covenants required to be stated
in accordance with applicable accounting principles and practices in effect immediately prior to such changes shall be reviewed
and certified by Borrower’s accountants.


 


1.3          Other
Terms Defined in UCC. All other words and phrases used herein and not otherwise specifically defined shall have the respective
meanings assigned to such terms in the UCC, as amended from time to time, to the extent the same are used or defined therein.


 


1.4          Other
Definitional Provisions., Construction. Whenever the context so requires, the neuter gender includes the masculine
and feminine, the single number includes the plural, and vice versa. In addition: (i) the words “hereof’, “herein”
and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and references to Article, Section, Subsection, Annex, Schedule, Exhibit and
like references are references to this Agreement unless otherwise specified; (ii) wherever the word “include,” “includes”
or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation;”
(iii) an Event of Default shall “continue” or be “continuing” until such Event of Default has been cured
in Lender’s sole and absolute discretion, or waived by Lender in accordance with Section 14.3 hereof; (iv) any reference
to the Credit Parties shall mean and refer to all the Credit Parties, collectively, and to each Credit Party, individually, and
accordingly, each representation, warranty, covenant, obligation or other agreement, term or provision in this Agreement or any
other Loan Documents, to the extent applicable to the Credit Parties, shall be deemed to be applicable and effective as to all
Credit Parties, collectively, and to each Credit Party, individually, as the context may so require, regardless of the gender,
singular, plural, or other tense used in the applicable provision; (v) references in this Agreement to any party shall include
such party’s successors and permitted assigns; and (vi) references to any “Section” shall be a reference to such
Section of this Agreement unless otherwise stated. To the extent any of the provisions of the other Loan Documents are inconsistent
with the terms of this Agreement, the provisions of this Agreement shall govern.


 


		2.	LOANS.



 


2.1          Initial
Loan. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, the Lender shall make the Initial
Loan to Borrower at the First Closing.


 




    	 	14	 



     


    

 


2.2          Additional
Loans.


 


(a)          At
any time after the First Closing, but prior to the Maturity Date or earlier termination of this Agreement, the Borrower may request
that Lender make Additional Loans hereunder at Additional Closings by written notice to Lender. Any such Additional Loans shall
be subject to Lender’s prior written approval, and Lender shall have the absolute right to withhold, deny or condition approval
of any such requests for any such Additional Loans in Lender’s sole and absolute discretion, however, at a minimum, the following
conditions must be satisfied, in Lender’s sole and absolute discretion: (i) no Event of Default shall have occurred or be
continuing; (ii) Borrower shall have executed and delivered a new or revised Promissory Note; (iii) after giving effect to such
increase, the amount of the aggregate outstanding principal balance of all Loans shall not be in excess of the maximum amount of
credit available under this Agreement; (iv) Lender shall have reviewed and accepted, in its sole and absolute discretion, the revenues,
income, Collateral, and other financial or other underwriting criteria required for the increase; and (v) Lender shall have received
any and all documents or agreements as it shall require in its sole and absolute discretion. If Lender approves any request for
such Additional Loans, then subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, Lender shall
make such Additional Loans to Borrower in such amounts and at such Additional Closings as Lender and the Borrower may mutually
agree. Borrower may only request Additional Loans if, in Lender’s sole and absolute discretion, no default or “Event
of Default” (as such term is defined in any of the Loan Documents) shall have occurred or be continuing under this Agreement
or any other Loan Documents, and no event shall have occurred that, with the passage of time, the giving of notice, or both, would
constitute a default or an Event of Default hereunder or thereunder.


 


(b)          It
is expressly agreed and acknowledged by each of the Credit Parties that, notwithstanding that this Agreement provides for the opportunity
for Additional Loans as hereby provided: (i) Lender has no obligation of any nature or kind whatsoever to make any such Additional
Loans to the Credit Parties; (ii) the Credit Parties did not enter into this Agreement based on any promise, express or implied,
by Lender or any of its agents or representatives, or based on any expectation by any of the Credit Parties, that Additional Loans
beyond the Initial Loan would be made or provided after the Effective Date; and (iii) each of the Credit Parties hereby fully and
unconditionally waives any and all claims, counterclaims, and defenses any of them may have based on any argument that Lender had
any obligation or otherwise promised to fund or make Additional Loans beyond the Initial Loan, or any argument or implied covenant
of fair dealing and good faith that may in any way imply an obligation upon Lender to make such Additional Loans.


 


2.3          Form
of Payment; Documents Delivered. Each Closing shall be undertaken between the Credit Parties and Lender through the use of
overnight mails and subject to escrow instructions from Lender and its counsel. Any violation or breach of any such escrow instructions,
whether by any Credit Parties or counsel for any Credit Parties, shall constitute an Event of Default hereunder. Subject to such
escrow instructions and the satisfaction (or waiver) of the terms and conditions of this Agreement, at each Closing: (i) the Lender
shall deliver to the Borrower, to a Borrower account designated by the Borrower, the aggregate proceeds of the applicable Loan
being funded at such Closing, minus the fees to be paid directly from the proceeds of such Closing as set forth in this Agreement,
in the form of wire transfers of immediately available Dollars; and (ii) the Credit Parties shall deliver to Lender the Promissory
Note evidencing the Loan made at such Closing (or a consolidated Promissory Note for all Loans, in Lender’s discretion),
as well as all other documents required to be delivered pursuant to this Agreement or otherwise required by Lender and its counsel,
duly executed on behalf of the Credit Parties, as applicable.


 




    	 	15	 



     


    

 


2.4          Payment
of Loans.


 


(a)          Loan
Interest and Payments. Except as otherwise provided in this Section, the outstanding principal balance of the Loans and all
other Obligations shall be repaid on or before the Maturity Date. The principal amount of the Loans outstanding from time to time
shall bear interest at the Interest Rate. All Obligations shall be paid in accordance with the payment terms set forth in this
Agreement and the Promissory Note. Any amount of principal or interest on the Obligations which is not paid when due, whether at
stated maturity, by acceleration or otherwise, shall at Lender’s option bear interest payable on demand at the Default Rate.


 


(b)          Optional
Prepayments. Borrower may from time to time prepay the Loans, in whole or in part, without penalty.


 


(c)          Manner
of Payments.


 


(i)          ACH
Payment. The Credit Parties agree that all payments due and owing under this Agreement or any other Loan Documents shall be
made by wire transfer to an account designated by Lender to Borrower from time to time, or at Lender’s election, shall be
made through automated clearing house (“ACH”) transfers from the Borrower’s designated operating
account (the “Payment Account”) directly to Lender. In this regard, if the Lender elects to receive
payments through ACH, the Borrower hereby agrees to execute and deliver to Lender an authorization agreement for direct payments
whereby, among other things, Lender shall be irrevocably authorized to initiate ACH transfers from the Payment Account to Lender
in the amounts required or permitted under this Agreement and all other Loan Documents, including for scheduled payments of principal
and interest due under the Promissory Note, and payment of all other fees or charges due under this Agreement or any other Loan
Documents. Lender’s authorization for direct ACH transfers as hereby provided shall be irrevocable and such ACH transfers
shall continue until all Obligations are paid in full. For so long as any Obligations remain outstanding, Borrower shall: (i) not
revoke Lender’s authority to initiate ACH transfers as hereby contemplated; (ii) not change, modify, close or otherwise affect
the Payment Account; (iii) deposit all revenues of any nature or kind whatsoever relating to Credit Parties or their business only
into the Payment Account; and (iv) be responsible for all costs, expenses or other fees and charges incurred by Lender as a result
of any failed or returned ACH transfers, whether resulting from insufficient sums being available in the Payment Account, or otherwise.
The Credit Parties hereby agree to undertake any and all required actions, execute any required documents, instruments or agreements,
or to otherwise do any other thing required or requested by Lender in order to effectuate the requirements of this Section 2.4(c).


 




    	 	16	 



     


    

 


(d)          Power
of Attorney. It is intended that all revenues of any nature or kind whatsoever relating to Credit Parties or their business,
and all other checks, drafts, instruments and other items of payment or proceeds of Collateral at any time received, due or owing
to the Credit Parties from any Person, or otherwise, shall be deposited directly into the Payment Account, and if not deposited
directly into the Payment Account, shall be immediately remitted or endorsed by the Credit Parties into the Payment Account, and,
if that remittance or endorsement of any such item shall not be immediately made for any reason, Lender is hereby irrevocably authorized
to remit or endorse the same on Credit Parties’ behalf. For purpose of this Section, the Credit Parties irrevocably hereby
make, constitute and appoint Lender (and all Persons designated by Lender for that purpose) as the Credit Parties’ true and
lawful attorney and agent-in-fact: (A) to endorse the Credit Parties’ name upon items of payment and/or proceeds of Collateral
and upon any chattel paper, document, instrument, invoice or similar document or agreement relating to any revenues of the Credit
Parties; (B) to take control in any manner of any item of payment or proceeds thereof; (C) to have access to the Credit Parties’
operating accounts, through the Credit Parties’ online banking system, or otherwise, to make remittances of any revenues
deposited therein into the Payment Account or otherwise as required hereby; (D) to have access to any lock box or postal box into
which any of the Credit Parties’ mail is deposited, and open and process all mail addressed to the Credit Parties and deposited
therein; and (E) direct and otherwise deal with all Persons to insure that all revenues are remitted to the Payment Account or
as otherwise hereby contemplated.


 


(e)          Rights
Upon Default. Lender may, at any time and from time to time after the occurrence and during the continuance of an Event of
Default, whether before or after the maturity of any of the Obligations: (A) enforce collection of any Accounts or other amounts
owed to the Credit Parties by suit or otherwise; (B) exercise all of the rights and remedies of the Credit Parties with respect
to Proceedings brought to collect any Accounts or other amounts owed to the Credit Parties; (C) surrender, release or exchange
all or any part of any Accounts or other amounts owed to the Credit Parties, or compromise or extend or renew for any period (whether
or not longer than the original period) any indebtedness thereunder; (D) sell or assign any Account of the Credit Parties, or other
amount owed to the Credit Parties, upon such terms, for such amount and at such time or times as Lender deems advisable; (E) prepare,
file and sign any Credit Parties’ name on any proof of claim in bankruptcy or other similar document against any Person obligated
to the Credit Parties; and (F) do all other acts and things which are necessary, in Lender’s sole discretion, to fulfill
the Credit Parties’ obligations under this Agreement and the other Loan Documents and to allow Lender to collect the Accounts,
or other amounts owed to the Credit Parties. In addition to any other provision hereof, Lender may at any time after the occurrence
and during the continuance of an Event of Default, at the Credit Parties’ expense, notify any parties obligated on any of
the Accounts to make payment directly to Lender of any amounts due or to become due thereunder.


 


(f)          Statement.
From time to time, Lender may deliver to Borrower an invoice and or an account statement showing all Loans, charges and payments,
which shall be deemed final, binding and conclusive upon Borrower, unless Borrower notifies Lender in writing, specifying any error
therein, within thirty (30) days of the date such account statement is sent to Borrower and any such notice shall only constitute
an objection to the items specifically identified.


 


(g)          View
Access To Accounts. On the Effective Date, the Credit Parties shall undertake all required actions, including providing Lender
with proper sign-in or log-in credentials, user names, passwords, and other required information, to provide Lender with, and to
allow Lender to have, view-only access, through the Credit Parties’ online banking system or otherwise, to any and all of
the Credit Parties’ bank accounts listed on Schedule 7.28, and any additional bank accounts of the Credit Parties
as may exist from time to time. Credit Parties shall not undertake any action that prevents or impairs Lender’s ability to
have view-only access of all of the bank accounts of the Credit Parties as contemplated by this Section.


 




    	 	17	 



     


    

  


2.5          Fees.


 


(a)          Intentionally
Left Blank.


 


(b)          Transaction
Advisory Fee. In addition to the Advisory Fee contained in Section 2.5(f) herein, the Borrower agrees to pay to Lender
a transaction advisory fee equal to two percent (2.0%) of the amount of the Initial Loan, and one percent (1.0%) on the amount
of any Additional Loan, which shall be due and payable on the First Closing and at each Additional Closing.


 


(c)          Due
Diligence Fees. Borrower agrees to pay a due diligence fee equal to Fifteen Thousand and No/100 United States Dollars (US$15,000.00),
which shall be due and payable in full on the First Closing, or any remaining portion thereof shall be due and payable on the First
Closing if a portion of such fee was paid upon the execution of any term sheet related to this Agreement.


 


(d)          Document
Review and Legal Fees. Borrower agrees to pay a document review and legal fee equal to Twenty Five Thousand and No/100 United
States Dollars (US$25,000.00) which shall be due and payable in full on the First Closing, or any remaining portion thereof shall
be due and payable on the First Closing if a portion of such fee was paid upon the execution of any term sheet related to this
Agreement.


 


(e)          Other
Fees. Borrower also agrees to pay to the Lender (or any designee of the Lender), upon demand, or to otherwise be responsible
for the payment of, any and all other costs, fees and expenses, including the reasonable fees, costs, expenses and disbursements
of counsel for the Lender and of any experts and agents, which the Lender may incur or which may otherwise be due and payable in
connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver, subordination,
or other modification or termination of this Agreement or any other Loan Documents (provided that there shall be no fees for the
preparation and negotiation of this Agreement other than as specifically set forth in the closing or settlement statement executed
by Borrowers and Lender on the First Closing); (ii) any documentary stamp taxes, intangibles taxes, recording fees, filing fees,
or other similar taxes, fees or charges imposed by or due to any Governmental Authority in connection with this Agreement or any
other Loan Documents; (iii) the priority or perfection of any of Lender’s Liens on any Collateral; (iv) the exercise or enforcement
of any of the rights of the Lender under this Agreement or the Loan Documents; or (v) the failure by the Credit Parties to perform
or observe any of the provisions of this Agreement or any of the Loan Documents. Included in the foregoing shall be the amount
of all expenses paid or incurred by Lender in consulting with counsel concerning any of its rights under this Agreement or any
other Loan Document or under applicable law. All such costs and expenses, if not so immediately paid when due or upon demand thereof,
shall bear interest from the date of outlay until paid, at the Default Rate. All of such costs and expenses shall be additional
Obligations of the Credit Parties to Lender secured under the Loan Documents. The provisions of this Subsection shall survive the
termination of this Agreement.


 




    	 	18	 



     


    

 


(f)           Advisory
Fees. The Borrower shall pay to Lender a fee for advisory services provided by the Lender to the Borrower prior to the Effective
Date in the amount of Eight Hundred Fifty Thousand and No/100 United States Dollars (US$850,000.00) (the “Advisory
Fee”) by issuing to Lender one hundred percent (100%) of that number of shares of the Borrower’s Common Stock
equal to the Advisory Fee. For purposes of determining the number of shares issuable to Lender under this Section (the
“Advisory Fee Shares”), the Borrower’s Common Stock shall be valued at price equal to the lowest
volume weighted average price for the Common Stock for the five (5) Business Days immediately prior to the Effective Date (the
“Valuation Date”), as reported by Bloomberg (the “VWAP”). The Lender shall
confirm to the Borrower in writing, the VWAP for the Common Stock as of the Valuation Date, and simultaneously with the closing
of the Initial Loan, the Borrower shall issue to Lender a number of Advisory Fee Shares equal to the lesser of: (A) one hundred
percent (100%) of the Advisory Fee; or (B) 4.99% of the issued and outstanding number of shares of Common Stock (the “Ownership
Threshold”) as of the Effective Date, based on such VWAP as of the Valuation Date. The Borrower shall instruct
its transfer agent (the “Transfer Agent”) to issue certificates representing the Advisory Fee
Shares issuable to the Lender immediately upon the Borrower’s execution of this Agreement, and shall cause its Transfer
Agent to deliver such certificates to Lender within three (3) Business Days from the Effective Date. In the event such certificates
representing the Advisory Fee Shares issuable hereunder shall not be delivered to the Lender within said three (3) Business Day
period, same shall be an immediate default under this Agreement and the other Loan Documents. The Advisory Fee Shares, when issued,
shall be deemed to be validly issued, fully paid, and non-assessable shares of the Borrower’s Common Stock. The Advisory
Fee Shares shall be deemed fully earned as of the Effective Date, regardless of the amount or number of Loans made hereunder.
Subject at all times to the adjustment provision in Section 2.5(f)(i) below, in the event the number of Advisory Fee Shares
issued to Lender under this Section is based on Subsection (B) of this paragraph, then at any time the number of shares of Common
Stock owned by Lender falls below the Ownership Threshold (whether as a result of Lender selling Advisory Fee Shares, or otherwise),
Lender shall have the unconditional right to request that Borrower issue additional Advisory Fee Shares to Lender, up to the Ownership
Threshold, until the Borrower has issued to Lender the number of Advisory Fee Shares required by Subsection (A) of this paragraph,
and in such event, Borrower shall instruct its Transfer Agent to deliver such additional Advisory Fee Shares to Lender in the
same manner as required by this Section..


 




    	 	19	 



     


    

 


(i)          Adjustments.
It is the intention of the Borrower and Lender that the Lender shall be able to sell (if Lender so elects, in Lender’s sole
and absolute discretion) the Advisory Fee Shares, and generate net proceeds (net of all brokerage commissions and other fees or
charges payable by Lender in connection with the sale thereof) from such sale equal to the Advisory Fee. The Lender shall have
the right (but not an obligation) to sell the Advisory Fee Shares in the Principal Trading Market or otherwise, at any time in
accordance with applicable securities laws. At any time the Lender may elect after the sale of any Advisory Fee Shares, if any,
the Lender shall deliver to the Borrower a reconciliation statement showing the net proceeds actually received by the Lender from
the sale of the Advisory Fee Shares (the “Sale Reconciliation”). If, as of the date of the delivery by
Lender of the Sale Reconciliation, the Lender has not realized net proceeds from the sale of such Advisory Fee Shares equal to
at least the Advisory Fee (and there are not a sufficient number of shares remaining with Lender to reasonably expect that their
sale will generate the balance of the Advisory Fee due), as shown on the Sale Reconciliation, then the Borrower shall immediately
take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Lender
in an amount sufficient such that, when sold and the net proceeds thereof are added to the net proceeds from the sale of any of
the previously issued and sold Advisory Fee Shares, the Lender shall have received total net funds equal to the Advisory Fee. If
additional shares of Common Stock are issued pursuant to the immediately preceding sentence, and after the sale of such additional
issued shares of Common Stock, the Lender still has not received net proceeds equal to at least the Advisory Fee, then the Borrower
shall again be required to immediately take all required action necessary or required in order to cause the issuance of additional
shares of Common Stock to the Lender as contemplated above, and such additional issuances shall continue until the Lender has received
net proceeds from the sale of such Common Stock equal to the Advisory Fee. In the event the Lender receives net proceeds from the
sale of Advisory Fee Shares equal to the Advisory Fee, and the Lender still has Advisory Fee Shares remaining to be sold, the Lender
shall return all such remaining Advisory Fee Shares to the Borrower. Similarly, in the event that the net proceeds from the sale
or redemption of Advisory Fee Shares or additional shares, exceed the amount of the Advisory Fee, the difference shall be paid
immediately to the Borrower (along with the return of any remaining Advisory Fee Shares or additional shares that were issued to
Lender). In the event additional Common Stock is required to be issued as outlined above, the Borrower shall instruct its Transfer
Agent to issue certificates representing such additional shares of Common Stock to the Lender immediately subsequent to the Lender’s
notification to the Borrower that additional shares of Common Stock are issuable hereunder, and the Borrower shall in any event
cause its Transfer Agent to deliver such certificates to Lender within ten (10) Business Days following the date Lender notifies
the Borrower that additional shares of Common Stock are to be issued hereunder. In the event such certificates representing such
additional shares of Common Stock issuable hereunder shall not be delivered to the Lender within said ten (10) Business Day period,
same shall be an immediate default under this Agreement and the Loan Documents. Notwithstanding anything contained in this Section
to the contrary, the Borrower shall have the right to redeem any Advisory Fee Shares then in the Lender’s possession for
an amount payable by the Borrower to Lender in cash equal to the Advisory Fee, less any net cash proceeds received by the Lender
from any previous sales of Advisory Fee Shares. Upon Lender’s receipt of such cash payment in accordance with the immediately
preceding sentence, the Lender shall return any then remaining Advisory Fee Shares in its possession back to the Borrower and otherwise
undertake any required actions reasonably requested by Borrower to have such then remaining Advisory Fee Shares returned to Borrower.
The Borrower’s obligation to pay the Advisory Fee contemplated by this Section 2.5(f), whether in cash or thru the sale of
Advisory Fee Shares, shall be an Obligation hereunder, secured by all Loan Documents, and failure by the Borrower to pay such Advisory
Fee in full as required by this Section 2.5(f) shall be an immediate Event of Default hereunder and under the other Loan Documents.
In the event the Lender elects to make Additional Loans as permitted by this Agreement, the Borrower agrees to pay additional advisory
fees to Lender either in cash or in a similar manner as set forth in this Section 2.5(f) through the issuance of additional Advisory
Fee Shares, at Lender’s sole discretion, in an amount to be mutually agreed upon between Lender and Borrower.


 


(ii)         Mandatory
Redemption. Notwithstanding anything contained in this Agreement to the contrary, in the event the Lender has not realized
net proceeds from the sale of Advisory Fee Shares equal to at least the Advisory Fee by the earlier to occur of: (A) the twelve
(12) month anniversary of the Effective Date; (B) the occurrence of an Event of Default; or (C) the Maturity Date, then at any
time thereafter, the Lender shall have the right, upon written notice to the Borrower, to require that the Borrower redeem all
Advisory Fee Shares then in Lender’s possession for cash equal to the Advisory Fee, less any cash proceeds received by the
Lender from any previous sales of Advisory Fee Shares, if any. In the event such redemption notice is given by the Lender, the
Borrower shall redeem the then remaining Advisory Fee Shares in Lender’s possession for an amount of Dollars equal to the
Advisory Fee, less any cash proceeds received by the Lender from any previous sales of Advisory Fee Shares, if any, payable by
wire transfer to an account designated by Lender within five (5) Business Days from the date the Lender delivers such redemption
notice to the Borrower.


 




    	 	20	 



     


    

 


(iii)        Piggyback
Registration Rights. In the event that the Borrower files a registration statement with respect to its Common Stock with the
SEC (other than a registration statement on Form S-4 or S-8 or any successor form thereto) after the Effective Date but before
the Lender sells the Advisory Fee Shares, the Advisory Fee Shares shall be registered pursuant to such registration statement.


 


(g)          Matters
with Respect to Common Stock.


 


(i)          Issuance
of Conversion Shares. The parties hereto acknowledge that pursuant to the terms of the Promissory Note, Lender has the right,
after the occurrence of an Event of Default, to convert amounts due under the Promissory Note into Common Stock in accordance with
the terms of the Promissory Note. In the event, for any reason, the Borrower fails to issue, or cause the Transfer Agent to issue,
any portion of the Common Stock issuable upon conversion of the Promissory Note (the “Conversion Shares”)
to Lender in connection with the exercise by Lender of any of its conversion rights under the Promissory Note, then the parties
hereto acknowledge that Lender shall irrevocably be entitled to deliver to the Transfer Agent, on behalf of itself and the Borrower,
a “Conversion Notice” (as defined in the Promissory Note) requesting the issuance of the Conversion Shares then issuable
in accordance with the terms of the Promissory Note, and the Transfer Agent, provided they are the acting transfer agent for the
Borrower at the time, shall, and the Borrower hereby irrevocably authorizes and directs the Transfer Agent to, without any further
confirmation or instructions from the Borrower, issue the Conversion Shares applicable to the Conversion Notice then being exercised,
and surrender to a nationally recognized overnight courier for delivery to Lender at the address specified in the Conversion Notice,
a certificate of the Common Stock of the Borrower, registered in the name of Lender or its designee, for the number of Conversion
Shares to which Lender shall be then entitled under the Promissory Note, as set forth in the Conversion Notice.


 


(ii)         Issuance
of Additional Common Stock. The parties hereto acknowledge that the Borrower has agreed to issue, simultaneously with the execution
of this Agreement and in the future, certain shares of the Borrower’s Common Stock in accordance with Section 2.5(f) above.
In the event, for any reason, the Borrower fails to issue, or cause its Transfer Agent to issue, any portion of the Common Stock
issuable to Lender hereunder, either now or in the future, then the parties hereto acknowledge that Lender shall irrevocably be
entitled to deliver to the Transfer Agent, on behalf of itself and the Borrower, a written instruction requesting the issuance
of the shares of Common Stock then issuable, and the Transfer Agent, provided they are the acting transfer agent for the Borrower
at the time, shall, and the Borrower hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation
or instructions from the Borrower, issue such shares of the Borrower’s Common Stock as directed by Lender, and surrender
to a nationally recognized overnight courier for delivery to Lender at the address specified in the Lender’s notice, a certificate
of the Common Stock of the Borrower, registered in the name of Lender, for the number of shares of Common Stock issuable to Lender
in accordance herewith.


 




    	 	21	 



     


    

 


(iii)        Removal
of Restrictive Legends. In the event that Lender has any shares of the Borrower’s Common Stock bearing any restrictive
legends, and Lender, through its counsel or other representatives, submits to the Transfer Agent any such shares for the removal
of the restrictive legends thereon, whether in connection with a sale of such shares pursuant to any exemption to the registration
requirements under the Securities Act, or otherwise, and the Borrower and or its counsel refuses or fails for any reason to render
an opinion of counsel or any other documents, certificates or instructions required for the removal of the restrictive legends,
then (except when such share are not eligible under Rule 144): (A) to the extent such legends could be lawfully removed under applicable
laws, Borrower’s failure to provide the required opinion of counsel or any other documents, certificates or instructions
required for the removal of the restrictive legends shall be an immediate Event of Default under this Agreement and all other Loan
Documents (except that were Rule 144 is not available, such refusal made in good faith by Borrower’s counsel shall not constitute
an Event of Default); and (B) the Borrower hereby agrees and acknowledges that, to the extent such legends could be lawfully removed
under applicable laws, Lender is hereby irrevocably and expressly authorized to have counsel to Lender render any and all opinions
and other certificates or instruments which may be required for purposes of removing such restrictive legends, and the Borrower
hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Borrower,
issue any such shares without restrictive legends as instructed by Lender, and surrender to a common carrier for overnight delivery
to the address as specified by Lender, certificates, registered in the name of Lender or its designees, representing the shares
of Common Stock to which Lender is entitled, without any restrictive legends and otherwise freely transferable on the books and
records of the Borrower.


 


(iv)         Authorized
Agent of the Borrower. The Borrower hereby irrevocably appoints the Lender and its counsel and its representatives, each
as the Borrower’s duly authorized agent and attorney-in-fact for the Borrower for the purposes of authorizing and
instructing the Transfer Agent to process issuances, transfers and legend removals upon instructions from Lender, or any
counsel or representatives of Lender, as specifically contemplated herein. The authorization and power of attorney granted
hereby is coupled with an interest and is irrevocable so long as any Obligations of the Borrower under this Agreement or any
other Loan Documents remain outstanding, and so long as the Lender owns or has the right to receive, any shares of the
Borrower’s Common Stock hereunder or under the Promissory Note. In this regard, the Borrower hereby confirms to the
Transfer Agent and the Lender that it can NOT and will NOT give instructions, including stop orders or
otherwise, inconsistent with the terms of this Agreement with regard to the matters contemplated herein, and that the Lender
shall have the absolute right to provide a copy of this Agreement to the Transfer Agent as evidence of the Borrower’s
irrevocable authority for Lender and Transfer Agent to process issuances, transfers and legend removals upon instructions
from Lender, or any counsel or representatives of Lender, as specifically contemplated herein, without any further
instructions, orders or confirmations from the Borrower.


 




    	 	22	 



     


    

 


(v)          Injunction
and Specific Performance. The Borrower specifically acknowledges and agrees that in the event of a breach or threatened breach
by the Borrower of any provision of this Section, the Lender will be irreparably damaged and that damages at law would be
an inadequate remedy if this Agreement were not specifically enforced. Therefore, in the event of a breach or threatened breach
of any provision of this Section by the Borrower, the Lender shall be entitled to obtain, in addition to all other rights
or remedies Lender may have, at law or in equity, an injunction restraining such breach, without being required to show any actual
damage or to post any bond or other security, and/or to a decree for specific performance of the provisions of this Section.


 


(h)          Surviving
Obligations. The Credit Parties agree and acknowledge that notwithstanding the termination of this Agreement, or the payment
in full of all of the Loans or other obligations hereunder or under any other Loan Documents, the Credit Parties’ obligations
and liability under this Agreement and the other Loan Documents, and the Lender’s Lien and security interest on all Collateral,
shall survive, shall remain valid and effective and shall not be released or terminated, until the Lender receives the full amount
of the Advisory Fee in cash, either through the sale of Advisory Fee Shares, or through cash payments from Borrower as contemplated
by Section 2.5(f). All of the Credit Parties’ obligations under Section 2.5(f) and 2.5(g) shall survive termination of this
Agreement.


 


(i)           Right
to Approve Transfer Agent. The Borrower hereby represents and warrants that the Borrower’s current Transfer Agent is
Action Stock Transfer Corporation, whose contact information is as follows: 2469 E. Fort Union Blvd., Suite 214, Salt Lake City,
UT 84121. The Borrower hereby agrees that it shall not change the Transfer Agent, unless the Lender first approves the proposed
new Transfer Agent, such approval to be in Lender’s sole and absolute discretion.


 


(j)           View
Access To Accounts. On the Effective Date, the Credit Parties shall undertake all required actions, including providing Lender
with proper sign-in or log-in credentials, user names, passwords, and other required information, to provide Lender with, and
to allow Lender to have, view-only access, through the Credit Parties’ online banking system or otherwise, to any and all
of the Credit Parties’ bank accounts listed on Schedule 7.28, and any additional bank accounts of the Credit
Parties as may exist from time to time. Credit Parties shall not undertake any action that prevents or impairs Lender’s
ability to have view-only access of all of the bank accounts of the Credit Parties as contemplated by this Section.


 


2.6          Interest
and Fee Computation; Collection of Funds. Interest accrued hereunder shall be payable as set forth in this Agreement and the
Promissory Note. Except as otherwise set forth herein, all interest and fees shall be calculated on the basis of a year consisting
of 360 days and shall be paid for the actual number of days elapsed. Principal payments submitted in funds not immediately available
shall continue to bear interest until collected. If any payment to be made by Borrower hereunder or under the Promissory Note shall
become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension
of time shall be included in computing any interest in respect of such payment. Any Obligations which are not paid when due (subject
to applicable grace periods) shall bear interest at the Default Rate.


 




    	 	23	 



     


    

 


2.7          Automatic
Debit. In order to effectuate the timely payment of any of the Obligations when due, Borrower hereby authorizes and directs
Lender, at Lender’s option, to: (i) debit, or cause or instruct the debit of, the amount of the Obligations to any ordinary
deposit account of Borrower; or (ii) make an Additional Loan hereunder to pay the amount of the Obligations.


 


2.8          Discretionary
Disbursements. Lender, in its sole and absolute discretion, may immediately upon notice to Borrower, disburse any or all proceeds
of the Loans made or available to Borrower pursuant to this Agreement to pay any fees, costs, expenses or other amounts required
to be paid by Borrower hereunder and not so paid. All monies so disbursed shall be a part of the Obligations, payable by Borrower
on demand from Lender.


 


2.9          US
Dollars; Currency Risk. All revenues collected by any Credit Parties and deposited into the Payment Account or any other accounts
of any Credit Parties will be in Dollars. In the event any such revenues are not in Dollars, Borrower shall bear the risk of Lender’s
currency losses, and if Lender suffers a currency loss and the result is to increase the cost to Lender or to reduce the amount
of any sum received or receivable by Lender under this Agreement or under the Promissory Note with respect thereto, then after
demand by Lender (which demand shall be accompanied by a certificate setting forth reasonably detailed calculations of the basis
of such demand), Borrower shall pay to Lender such additional amount or amounts as will compensate Lender for such increased cost
or such reduction.


 


		3.	CONDITIONS OF BORROWING.



 


Notwithstanding any
other provision of this Agreement, the obligation of Lender to disburse or make all or any portion of any Loans is subject to satisfaction
of all of the following conditions precedent (unless a condition is waived in writing by Lender) contained in this Article 3.


 


3.1          Loan
Documents to be Executed by Credit Parties. As a condition precedent to Lender’s disbursal or making of the Loans pursuant
to this Agreement, Credit Parties shall have executed or cause to be executed and delivered to Lender all of the following documents,
each of which must be satisfactory to Lender and Lender’s counsel in form, substance and execution:


 


(a)          Credit
Agreement. An original of this Agreement, duly executed by Borrower and consented and agreed to by the Guarantors;


 


(b)          Promissory
Note. An original Promissory Note, duly executed by Borrower and consented and agreed to by the Guarantors;


 


(c)          Security
Agreement. An original of the Security Agreements, duly executed by the Credit Parties, as applicable;


 


(d)          Guaranty
Agreement. An original of the Guaranty Agreement, duly executed by the Corporate Guarantor;


 


(e)          Validity
Certificates. An original of each Validity Certificate, duly executed by such officers and directors of Borrower as Lender
shall require;


 




    	 	24	 



     


    

 


(f)           ACH
Agreement. An original of the ACH authorization agreement, duly executed by Borrower;


 


(g)          Pledge
Agreements. An original of the Pledge Agreement, duly executed by the Borrower;


 


(h)          Irrevocable
Transfer Agent Instructions. An original of the Irrevocable Transfer Agent Instructions, duly executed by the Borrower and
the Borrower’s Transfer Agent;


 


(i)           Closing
Statement. An original of a closing or settlement statement, duly executed by the Borrower; and


 


(j)           Additional
Documents. Such other agreements, documents, instruments, certificates, financial statements, schedules, resolutions, opinions
of counsel, notes and other items which Lender shall require in connection with this Agreement.


 


3.2          Organizational
and Authorization Documents. A certificate of the corporate secretary, manager, members or other officer, partner, manager
or equivalent authorized Person of each Credit Party certifying and attaching: (i) copies of each Credit Parties’ respective
articles of incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership
agreement, certificate of organization or other applicable formation or governing documents; (ii) resolutions of the board of directors,
managers, members, general partners or other Persons with proper authority to manage the affairs of, and otherwise bind, each Credit
Party, approving and authorizing the execution, delivery and performance of the Loan Documents to which it is party and the transactions
contemplated thereby; (iii) resolution of the Guarantors’ shareholders or members (if applicable), approving and authorizing
the execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; and
(iv) the signatures and incumbency of the officers, managers, members, partners or other authorized Persons of each Credit Party
executing any of the Loan Documents, each of which Borrower hereby certifies to be true and complete, and in full force and effect
without modification, it being understood that Lender may conclusively rely on each such document and certificate until formally
advised by Borrower of any changes therein.


 


3.3          Certificates
of Good Standing. Copies of certificates of good standing with respect to each Credit Party, issued by the Secretary of State
of the state of incorporation of each Credit Party, dated such a date as is reasonably acceptable to Lender, evidencing the good
standing thereof.


 


3.4          Search
Results. Copies of UCC search reports dated such a date as is reasonably acceptable to Lender, listing all effective financing
statements which name each Credit Party, under its present name and any previous names, as debtors, together with copies of such
financing statements.


 


3.5          Insurance.
Within thirty (30) days of the Effective Date, evidence satisfactory to Lender of the existence of insurance required to be maintained
pursuant to this Agreement and the Security Agreement, together with evidence that Lender has been named as additional insured
and lender’s loss payee, as applicable, on all related insurance policies.


 




    	 	25	 



     


    

 


3.6          Use
of Proceeds. A detailed summary of the Borrower’s use of the proceeds being funded hereunder.


 


3.7          Certificates.
Originals of certificates evidencing the shares and/or membership interests, as applicable, to be pledged in connection with the
Pledge Agreement.


 


3.8          Income
Statement / Profit and Loss Statement. An income statement or a profit and loss statement showing the consolidated revenues,
expenses, profits and losses of the Credit Parties for the twelve (12) month period ending the Effective Date, as well as a reasonable
projection of the consolidated revenues, expenses, profits and losses of the Credit Parties for the twelve (12) month period immediately
following the Effective Date.


 


3.9          Opinion
of Counsel. A customary opinion of Borrower’s counsel, in form satisfactory to Lender.


 


3.10        Perfection
of Lien on Collateral. The Credit Parties shall have duly authorized, executed and delivered any other related documentation
necessary or advisable to perfect the Lien on the Collateral in the jurisdiction of incorporation of the Credit Parties, including
such UCC-1 Financing Statements and any and all documents necessary to complete any filings which Lender shall require in connection
with this Agreement.


 


3.11        Payment
of Fees. Borrower shall have paid to Lender all fees, costs and expenses, including due diligence expenses, attorney’s
fees, search fees, title fees, documentation and filing fees (including documentary stamps and taxes payable on the face amount
of the Promissory Note).


 


3.12        Press
Release Authorization. Evidence satisfactory to the Lender that the Borrower has authorized the Lender to publish such press
releases with respect to this Agreement and the instant transaction, including a copy of an e-mail delivered to Marketwire.com
by the Borrower whereby the Borrower authorizes the Lender to use its name and, if applicable, stock symbol, in connection with
current or future press releases.


 


3.13        Event
of Default. No Event of Default, or event which, with notice or lapse of time, or both, would constitute an Event of Default,
shall have occurred and be continuing.


 


3.14        Adverse
Changes. There shall not have occurred any Material Adverse Effect.


 


3.15        Litigation.
No pending claim, investigation, litigation or other Proceeding shall have been instituted against any Credit Party or any of their
respective officers, shareholders, members, managers, partners, or other principals of any Credit Party.


 


3.16        Representations
and Warranties. No representation or warranty of any of the Credit Parties contained herein or in any Loan Documents shall
be untrue or incorrect in any material respect as of the date of any Loans as though made on such date, except to the extent such
representation or warranty expressly relates to an earlier date.


 


3.17        Due
Diligence. The business, legal and collateral due diligence review performed by Lender, including a review of the Credit Parties’
historical performance and financial information, must be acceptable to Lender in its sole discretion. Lender reserves the right
to increase any and all aspects of its due diligence in Lender’s sole discretion.


 




    	 	26	 



     


    

  


3.18        Key
Personnel Investigations. Lender shall be satisfied, in its sole discretion, with results from background investigations conducted
on key members of Borrower’s principals and management teams.


 


3.19        Repayment
of Outstanding Indebtedness. The Credit Parties shall have repaid in full all outstanding indebtedness secured by Collateral,
other than indebtedness giving rise to Permitted Liens.


 


3.20        Loan
Documents to be Executed by any Subsidiary following the Effective Date. Within ten (10) days of any entity becoming a Subsidiary
of any Credit Party, the following documents shall have executed or cause to be executed and delivered to Lender, each of which
must be satisfactory to Lender and Lender’s counsel in form, substance and execution:


 


(a)          Consent
and Agreement. An original of a Consent and Agreement duly executed by such Subsidiary, pursuant to which such Subsidiary consents
and agrees to become a “Credit Party” hereunder and to be bound by the terms and conditions of this Agreement and all
other Loan Documents;


 


(b)          Security
Agreement. An original of a Security Agreement, duly executed by such Subsidiary;


 


(c)          Guaranty
Agreement. An original of a Guaranty Agreement, duly executed by such Subsidiary;


 


(d)          Pledge
Agreement. An original of a Pledge Agreement, duly executed by the parent of the Subsidiary;


 


(e)          Organizational
and Authorization Documents. A certificate of the corporate secretary, manager, members or other officer, partner, manager
or equivalent authorized Person of such Subsidiary certifying and attaching: (i) copies of such Subsidiary’s articles of
incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate
of organization or other applicable formation or governing documents; (ii) resolutions of the board of directors, managers, members,
general partners or other Persons with proper authority to manage the affairs of, and authorizing the execution, delivery and performance
of the Loan Documents to which it is party and the transactions contemplated thereby; (iii) resolution of the Subsidiary’s
shareholders (if applicable), approving and authorizing the execution, delivery and performance of the Loan Documents to which
it is or will become a party and the transactions contemplated thereby; and (iv) the signatures and incumbency of the officers,
managers, members, partners or other authorized Persons of such Subsidiary executing any of the Loan Documents, each of which Borrower
hereby certifies to be true and complete, and in full force and effect without modification, it being understood that Lender may
conclusively rely on each such document and certificate until formally advised by Borrower of any changes therein.


 




    	 	27	 



     


    

 


(f)           Additional
Documents. Such other agreements, documents, instruments, certificates, financial statements, schedules, resolutions, opinions
of counsel, notes and other items which Lender shall require in connection with this Agreement and the other Loan Documents.


 


3.21        Loan
Documents to be Executed by each Credit Party Upon Each Subsequent Advance. As a condition precedent to Lender’s disbursal
or making of additional advances of principal pursuant to this Agreement following the Effective Date, the Credit Parties shall
have executed or caused to be executed and delivered to Lender all of the documents in this Section 3 applicable thereto,
and such documents shall remain in full force and effect as of the date of the subsequent principal advance.


 


3.22        Funding
of Transaction for Acquisition.


 


(a)          The
closing of this Agreement and the funding of the Initial Loan hereunder on the Effective Date, shall be subject to the simultaneous
closing of that certain transaction between Borrower, as buyer, and Paul Charles Joy II, Trustee of the Paul C. Joy and Kathryn
B. Joy Trust — Fund B, dated December 9, 2003, as amended, and Kathryn Blake Joy, Trustee of the Paul C. Joy and Kathryn
B. Joy Trust — Fund C, dated December 9, 2003, as amended (collectively, the “HowCo Shareholder”),
as seller, pursuant to which the Borrower shall purchase 100% of the issued and outstanding stock of HowCo Distributing Corp.,
a Washington corporation (“HowCo”), which issued and outstanding stock is owned by the HowCo
Shareholder (such purchase transaction sometimes hereinafter referred to as the “Acquisition”). In order
to satisfy the foregoing condition of simultaneous closing, the Credit Parties shall cooperate with the Lender in all respects
to close the transactions contemplated by this Agreement in accordance with the terms and provisions of this Section 3.22.


 


(b)          On
the Effective Date, the transactions contemplated by this Agreement, and the funding of the Loan hereunder, and the closing of
the Acquisition, shall be closed simultaneously, and in that regard, a portion of the proceeds of the Initial Loan hereunder in
an amount required to close on the Acquisition, which amount shall be first approved by Lender, shall be funded and disbursed only
as set forth in this Section 3.22 (and subject to all other conditions in this Agreement). In this regard, on the Effective
Date (and subject to all other conditions in this Agreement), the Lender shall fund the Initial Loan hereunder in the amount of
$US3,500,000, which amount shall be paid and disbursed as follows: (i) all fees, costs and other charges payable by the Credit
Parties shall be withheld from the Initial Loan hereunder on the Effective Date and paid to the applicable parties entitled to
such fees in accordance with the Loan Settlement Statement and Joint Disbursement Instructions executed by the Borrower at Closing;
(ii) $US2,600,000 shall be paid and disbursed to the HowCo Shareholder in connection with the Acquisition (subject to Lender’s
receipt of the documentation required hereunder with respect to the Acquisition); and (iii) the remaining amount shall be paid
and disbursed in accordance with the Loan Settlement Statement and Joint Disbursement Instructions executed by the Borrower at
Closing.


 




    	 	28	 



     


    

 


(c)          On
the Effective Date, all of the documents required to be executed by HowCo (post-closing of the Acquisition) in accordance with
Section 3.20 above shall be provided to Borrower, and Lender shall deliver to William Dudley, Esq., Landerhold P.S., 805
Broadway, Suite 1000, Vancouver, WA 98660, counsel for HowCo and the HowCo Shareholder (the “Closing Agent”),
certain additional documents as required below. When the Acquisition is “Ready to Close” (as hereinafter defined),
Closing Agent and/or Borrower or Borrower’s counsel, as applicable, shall deliver to Lender’s counsel: (i) a written
confirmation from the Closing Agent, the HowCo Shareholder, and the Borrower’s counsel, each in form and substance acceptable
to Lender, certifying and confirming that the Acquisition is Ready to Close; (ii) a copy of the final closing statement for the
Acquisition, showing the net amount payable to the HowCo Shareholder (or other Persons payable thereunder); and (iii) copies of
fully executed documents from the Acquisition as may be requested by Lender’s counsel. In addition, Borrower shall deliver
to Lender’s counsel all documents and other items required to be executed, completed and delivered by HowCo in accordance
with Section 3.20 above, so executed and completed by an authorized officer of HowCo (post-Acquisition), in accordance with
the Lender’s closing instructions to the Borrower and Closing Agent. Although the Acquisition and the transactions contemplated
by this Agreement are to be closed simultaneously as contemplated by this Section 3.22, for purposes of this Agreement,
the Acquisition shall be deemed closed immediately prior to the closing of the transactions contemplated by this Agreement, such
that at the time of the closing of the transactions contemplated hereby, and funding of the Initial Loan, HowCo shall be deemed
already acquired by the Borrower, deemed a wholly-owned Subsidiary of the Borrower, and deemed a Corporate Guarantor and Credit
Party hereunder.


 


(d)          For
purposes of this Section 3.22, the term “Ready to Close” shall mean, with respect to the Acquisition,
that all documents relating to the Acquisition have been fully and finally executed and delivered by all applicable parties thereto,
and all other terms and conditions of any nature or kind to closing on the Acquisition have been fully satisfied and performed,
other than payment of the purchase price for such Acquisition to the HowCo Shareholder.


 


		4.	NOTES EVIDENCING LOANS.



 


4.1          Promissory
Note. The Loans shall be evidenced by the Promissory Note (together with any and all renewal, extension, modification or replacement
notes executed by Borrower and delivered to Lender and given in substitution therefor) duly executed by Borrower, and consented
and agreed to by the Guarantors (if applicable), and payable to the order of Lender. At the time of the disbursement of the Initial
Loan and at each time an Additional Loan shall be requested hereunder or a repayment made in whole or in part thereon, an appropriate
notation thereof shall be made on the books and records of Lender. All amounts recorded shall be, absent demonstrable error, conclusive
and binding evidence of: (i) the principal amount of the Loans advanced hereunder; (ii) any unpaid interest owing on the Loans;
and (iii) all amounts repaid on the Loans. The failure to record any such amount or any error in recording such amounts shall
not, however, limit or otherwise adversely affect the obligations of Borrower under the Promissory Note to repay the principal
amount of the Loans, together with all other Obligations.


 




    	 	29	 



     


    

 


		5.	INTENTIONALLY LEFT BLANK.



 


		6.	SECURITY FOR THE OBLIGATIONS.



 


6.1          Security
Agreement. To secure the payment and performance by Borrower of the Obligations hereunder, each of the Credit Parties grants,
under and pursuant to the Security Agreement executed by the Credit Parties dated as of the Effective Date, to Lender, its successors
and assigns, an unconditional, continuing, first-priority, perfected Lien and security interest in, and does hereby assign, transfer,
mortgage, convey, pledge, hypothecate and set over to Lender, its successors and assigns, all of the right, title and interest
of the Credit Parties in and to the Collateral, whether now owned or hereafter acquired, and all proceeds (including all insurance
proceeds) and products of any of the Collateral. At any time upon Lender’s request, the Credit Parties shall execute and
deliver to Lender any other documents, instruments or certificates requested by Lender for the purpose of properly documenting
and perfecting the security interests of Lender in and to the Collateral granted hereunder, including any additional security agreements,
mortgages, control agreements, and financing statements. The Security Agreements executed by the Credit Parties shall terminate
following the full payment and performance of all of the Obligations hereunder and under any Loan Document and upon Lender’s
express written acknowledgement of such full payment and performance being received by the Borrower.


 


6.2          Pledge
Agreement. To secure the payment and performance by Borrower of the Obligations hereunder, the Borrower shall grant, under
and pursuant to the Pledge Agreement executed by the Borrower dated as of the Effective Date, to Lender, its successors and assigns,
a continuing, first-priority security interest in, and assignment, transference, mortgage, conveyance, pledge, hypothecation and
set over to Lender, its successors and assigns, all of the Borrower’s right, title and interest in and to all of the shares
and/or membership interests, as applicable, of the Corporate Guarantor. At any time upon Lender’s request, the Borrower shall
execute and deliver to Lender any other documents, instruments or certificates requested by Lender for the purpose of properly
documenting and perfecting the security interests of Lender in and to the membership interests of the Corporate Guarantor granted
hereunder, including any additional pledge agreements and financing statements. The Pledge Agreement executed by the Borrower shall
terminate following the full payment and performance of all of the Obligations hereunder and under any Loan Document and upon Lender’s
express written acknowledgement of such full payment and performance being received by the Borrower.


 


		7.	REPRESENTATIONS AND WARRANTIES OF THE CREDIT PARTIES.



 


To induce Lender to
make the Loans, the Credit Parties make the following representations and warranties to Lender, each of which shall be true and
correct in all material respects as of the date of the execution and delivery of this Agreement and as of the date of each Loan
made hereunder, except to the extent such representation expressly relates to an earlier date, and which shall survive the execution
and delivery of this Agreement:


 


7.1          Subsidiaries.
A list of all of the Borrower’s Subsidiaries and each of the Corporate Guarantor’s subsidiaries are listed on Schedule
7.1 hereto. All of such Subsidiaries are wholly-owned Subsidiaries of the Borrower, or the Corporate Guarantor, as applicable,
and except for such Subsidiaries as listed on Schedule 7.1, no Borrower or Guarantor has any Control over, any other Person.


 




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7.2          Borrower
Organization and Name. Each Credit Party is a corporation, limited liability company, or other form of legally recognized entity,
as applicable, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has
the full power and authority and all necessary Permits to: (i) enter into and execute this Agreement and the Loan Documents and
to perform all of its obligations hereunder and thereunder; and (ii) own and operate its assets and properties and to conduct and
carry on its business as and to the extent now conducted. Each Credit Party is duly qualified to transact business and is in good
standing as a foreign corporation, company or other entity in each jurisdiction where the character of its business or the ownership
or use and operation of its assets or properties requires such qualification. The exact legal names of each of the Credit Parties
is as set forth in the first paragraph of this Agreement, and the Credit Parties do not currently conduct, nor have the Credit
Parties conducted, during the last five (5) years, business under any other name or trade name.


 


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


 




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7.4          Capitalization.
The authorized capital stock or other capitalization of each Credit Party, as applicable, is as set forth in Schedule
7.4(a) attached hereto. Schedule 7.4(a) shall specify, for each Credit Party, the total number of
authorized shares of capital stock or other securities (or functional equivalents thereof in the applicable jurisdiction),
and of such authorized shares or securities, the number which are designated as Common Stock, the number designated as
preferred stock (the “Preferred Stock”), or any other applicable designations. Schedule
7.4(a) shall also specify, for each Credit Party, as applicable, as of the date hereof, the number of shares of
Common Stock issued and outstanding and the number of shares of Preferred Stock issued and outstanding, or, if applicable,
the number and classes of other securities issued and outstanding, and the names and amounts of such stock other securities
owned by each Person who is a stockholder or owner of other securities in any Credit Party. All of the outstanding shares of
capital stock or other securities of each Credit Party are validly issued, fully paid and non-assessable, have been issued in
compliance with all foreign, federal and state securities laws and none of such outstanding shares or other securities were
issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. As of the date of
this Agreement, no shares of capital stock or other securities of any Credit Party are subject to preemptive rights or any
other similar rights or any Liens suffered or permitted by any Credit Parties. The Common Stock is currently quoted by the
Principal Trading Market on the OTC “Pink” under the trading symbol “DRUS”. The Borrower has received
no notice, either oral or written, with respect to the continued eligibility of the Common Stock for quotation on the
Principal Trading Market, and the Borrower has maintained all requirements on its part for the continuation of such
quotation. Except for the securities to be issued pursuant to this Agreement, and except as set forth in Schedule
7.4(b), as of the date of this Agreement: (i) there are no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of
capital stock or other securities of any Credit Party, or contracts, commitments, understandings or arrangements by which any
Credit Party is or may become bound to issue additional shares of capital stock or other securities of any Credit Party, or
options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock or other securities of any Credit Party; (ii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or other contracts or instruments evidencing Funded
Indebtedness of any Credit Party, or by which any Credit Party is or may become bound; (iii) there are no outstanding
registration statements with respect to any Credit Party or any of its securities and there are no outstanding comment
letters from any Governmental Authority with respect to any securities of any Credit Party; (iv) there are no agreements or
arrangements under which any Credit Party is obligated to register the sale of any of its securities under the Securities Act
or any other laws of any Governmental Authority; (v) there are no financing statements or other security interests or Liens
filed with any Governmental Authority securing any obligations of any Credit Party, or filed in connection with any assets or
properties of any Credit Party; (vi) there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by this Agreement or any related agreement or the consummation of the transactions
described herein or therein; and (vii) there are no outstanding securities or instruments of any Credit Party which contain
any redemption or similar provisions, and there are no contracts or agreements by which any Credit Party is or may become
bound to redeem a security of any Credit Party. Borrower has furnished to the Lender true, complete and correct copies of, as
applicable, each Credit Parties’ respective articles of incorporation (including any certificates of designation, is
applicable), bylaws, operating agreement, partnership agreement, certificate of organization or similar organizational and
governing documents. Except for the documents delivered to Lender in accordance with the immediately preceding sentence,
there are no other shareholder agreements, voting agreements, operating agreements, or other contracts or agreements of any
nature or kind that restrict, limit or in any manner impose obligations, restrictions or limitations on the governance of any
Credit Party.


 




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7.5          No
Conflicts; Consents and Approvals. The execution, delivery and performance of this Agreement and the Loan Documents, and
the consummation of the transactions contemplated hereby and thereby, including the issuance of the Promissory Note, will
not: (i) constitute a violation of or conflict with the any Credit Parties’ respective articles of incorporation
(including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate
of organization or similar governing or organizational documents; (ii) constitute a violation of, or a default or breach
under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, or gives to any other Person any
rights of termination, amendment, acceleration or cancellation of, any provision of any contract or agreement to which any
Credit Party is a party or by which any of its or their assets or properties may be bound; (iii) constitute a violation of,
or a default or breach under (either immediately, upon notice, upon lapse of time, or both), or conflicts with, any order,
writ, injunction, decree, or any other judgment of any nature whatsoever; (iv) constitute a violation of, or conflict with,
any law, rule, ordinance or other regulation (including foreign and United States federal and state securities laws); or (v)
result in the loss or adverse modification of, or the imposition of any fine, penalty or other Lien, claim or encumbrance
with respect to, any Permit granted or issued to, or otherwise held by or for the use of, any Credit Party or any of its
assets. The Credit Parties are not in violation of any Credit Parties’ respective articles of incorporation (including
any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of
organization or similar governing or organizational documents, as applicable, and the Credit Parties are not in default or
breach (and no event has occurred which with notice or lapse of time or both could put any Credit Party in default or breach)
under, and the Credit Parties have not taken any action or failed to take any action that would give to any other Person any
rights of termination, amendment, acceleration or cancellation of, any contract or agreement to which any Credit Party is a
party or by which any property or assets of any Credit Party are bound or affected. No business of any Credit Party is
being conducted, and shall not be conducted, in violation of any law, rule, ordinance or other regulation. Except as
specifically contemplated by this Agreement, the Credit Parties are not required to obtain any consent or approval of, from,
or with any Governmental Authority, or any other Person, in order for it to execute, deliver or perform any of its
obligations under this Agreement or the Loan Documents in accordance with the terms hereof or thereof. All consents and
approvals which any Credit Party is required to obtain pursuant to the immediately preceding sentence have been obtained or
effected on or prior to the Effective Date.


 


7.6          Issuance
of Securities. The Advisory Fee Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be
duly issued, fully paid and non-assessable, and free from all Liens, claims, charges, taxes, or other encumbrances with respect
to the issue thereof (except for the standard 144 legend), and will be issued in compliance with all applicable United States federal
and state securities laws and the laws of any foreign jurisdiction applicable to the issuance thereof. Any shares issuable upon
conversion of the Promissory Note, in accordance with the terms of the Promissory Note, are duly authorized and, upon issuance
in accordance with the terms hereof, shall be duly issued, fully paid and non-assessable, and free from all Liens, claims, charges,
taxes, or other encumbrances with respect to the issue thereof, and will be issued in compliance with all applicable United States
federal and state securities laws and the laws of any foreign jurisdiction applicable to the issuance thereof (including Rule 144).
The issuance of the Promissory Note, any shares issuable pursuant to the Promissory Note and the Advisory Fee Shares are and will
be exempt from: (i) the registration and prospectus delivery requirements of the Securities Act; (ii) the registration and/or qualification
provisions of all applicable state and provincial securities and “blue sky” laws; and (iii) any similar registration
or qualification requirements of any foreign jurisdiction or other Governmental Authority. Such securities will be issued pursuant
to applicable exemptions from registration and will bear the standard Rule 144 restriction.


 


7.7          Compliance
With Laws. The nature and transaction of the Credit Parties’ business and operations and the use of its properties and
assets, including the Collateral or any real estate owned, leased, or occupied by the Credit Parties, do not and during the term
of the Loans shall not, violate or conflict with any applicable law, statute, ordinance, rule, regulation or order of any kind
or nature, including the provisions of the Fair Labor Standards Act or any zoning, land use, building, noise abatement, occupational
health and safety or other laws, any Permit or any condition, grant, easement, covenant, condition or restriction, whether recorded
or not, except to the extent such violation or conflict would not result in a Material Adverse Effect.


 




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7.8          Environmental
Laws and Hazardous Substances. Except to the extent that any of the following would not have a Material Adverse Effect (including
financial reserves, insurance policies and cure periods relating to compliance with applicable laws and Permits) and are used in
such amounts as are customary in the Ordinary Course of Business in compliance with all applicable Environmental Laws, the Credit
Parties represent and warrant to Lender that, to the best knowledge of each of the Credit Parties: (i) the Credit Parties have
not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or
off any of the premises of the Credit Parties (whether or not owned by the Credit Parties) in any manner which at any time violates
any Environmental Law or any Permit, certificate, approval or similar authorization thereunder; (ii) the operations of the Credit
Parties comply in all material respects with all Environmental Laws and all Permits certificates, approvals and similar authorizations
thereunder; (iii) there has been no investigation, Proceeding, complaint, order, directive, claim, citation or notice by any Governmental
Authority or any other Person, nor is any of same pending or, to Credit Parties’ knowledge, threatened; and (iv) the Credit
Parties do not have any liability, contingent or otherwise, in connection with a release, spill or discharge, threatened or actual,
of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal
of any Hazardous Material.


 


7.9          Collateral
Representations. No Person other than the Credit Parties, owns or has other rights in the Collateral, and the Collateral is
valid and genuine Collateral, free from any Lien of any kind, other than the Lien of Lender and Permitted Liens.


 


7.10        Financial
Statements. The Borrower has delivered to the Lender unaudited Balance Sheets for Credit Parties as of March 31, 2016, and
for Howco as of May 31, 2016 and unaudited Statements of Income for Credit Parties and Howco for the twelve months ended May 31,
2016 (collectively, together with any financial statements filed by the Borrower with the SEC, any Principal Trading Market, or
any other Governmental Authority, if applicable, the “Financial Statements”). The Financial Statements
have been prepared in accordance with GAAP, consistently applied, during the periods involved (except: (i) as may be otherwise
indicated in such Financial Statements or the notes thereto; or (ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements), and fairly and accurately present in all material respects
the consolidated financial position of the Credit Parties as of the dates thereof and the consolidated results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
To the best knowledge of the Credit Parties, no other information provided by or on behalf of the Credit Parties to the Lender,
either as a disclosure schedule to this Agreement, or otherwise in connection with Lender’s due diligence investigation of
the Credit Parties, contains any untrue statement of a material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstance under which they are or were made, not misleading.


 






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7.11        Public
Documents. The Common Stock of the Borrower is not registered pursuant to Section 12 of the Exchange Act and the Borrower is
not currently subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. The Borrower has otherwise timely
filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC, the Principal Trading
Market, or any other Governmental Authority, as applicable (all of the foregoing filed within the two (2) years preceding the date
hereof or amended after the date hereof and all exhibits included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the “Public Documents”). The Borrower
is current with its filing obligations with the SEC, the Principal Trading Market, or any other Governmental Authority, as applicable,
and all Public Documents have been filed on a timely basis by the Borrower. The Borrower represents and warrants that true and
complete copies of the Public Documents are available on the SEC website or the Principal Trading Market website, as applicable
(www.sec.gov, or www.otcmarkets.com) at no charge to Lender, and Lender acknowledges that it may retrieve all Public Documents
from such websites and Lender’s access to such Public Documents through such website shall constitute delivery of the Public
Documents to Lender; provided, however, that if Lender is unable to obtain any of such Public Documents from such websites at no
charge, as result of such websites not being available or any other reason beyond Lender’s control, then upon request from
Lender, the Borrower shall deliver to Lender true and complete copies of such Public Documents. The Borrower shall also deliver
to Lender true and complete copies of all draft filings, reports, schedules, statements and other documents required to be filed
with the requirements of the Principal Trading Market that have been prepared but not filed with the Principal Trading Market as
of the date hereof None of the Public Documents, at the time they were filed with the SEC, the Principal Trading Market, or other
Governmental Authority, as applicable, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the statements made in any such Public Documents is, or has been, required to be amended or updated
under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof, which
amendments or updates are also part of the Public Documents). As of their respective dates, the consolidated financial statements
of the Borrower and its Subsidiaries included in the Public Documents complied in all material respects with applicable accounting
requirements and any published rules and regulations of the SEC and Principal Trading Market with respect thereto.


 


7.12        Absence
of Certain Changes. Since the date of the most recent of the Financial Statements, none of the following have occurred:


 


(a)          There
has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to result in,
a Material Adverse Effect; or


 


(b)          Any
transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by the Credit Parties
other than in the Ordinary Course of Business of the Credit Parties.


 


7.13        Litigation
and Taxes. There is no Proceeding pending, or to the best knowledge of the Credit Parties, threatened, against any Credit Party
or its officers, managers, members, shareholders or other principals, or against or affecting any of its assets. In addition, there
is no outstanding judgments, orders, writs, decrees or other similar matters or items against or affecting the Credit Parties,
its business or assets. The Credit Parties have not received any material complaint from any Customer, supplier, vendor or employee.
The Credit Parties have duly filed all applicable income or other tax returns and has paid all income or other taxes when due.
There is no Proceeding, controversy or objection pending or threatened in respect of any tax returns of the Credit Parties.


 




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7.14        Event
of Default. No Event of Default has occurred and is continuing, and no event has occurred and is continuing which, with the
lapse of time, the giving of notice, or both, would constitute such an Event of Default under this Agreement or any of the other
Loan Documents, and the Credit Parties are not in default (without regard to grace or cure periods) under any contract or agreement
to which it is a party or by which any of their respective assets are bound.


 


7.15        ERISA
Obligations. To the best knowledge of each of the Credit Parties, all Employee Plans of the Credit Parties meet the minimum
funding standards of Section 302 of ERISA, where applicable, and each such Employee Plan that is intended to be qualified within
the meaning of Section 401 of the Internal Revenue Code of 1986 is qualified. No withdrawal liability has been incurred under any
such Employee Plans and no “Reportable Event” or “Prohibited Transaction” (as such terms are defined in
ERISA), has occurred with respect to any such Employee Plans, unless approved by the appropriate Governmental Authority. To the
best knowledge of each of the Credit Parties, the Credit Parties have promptly paid and discharged all obligations and liabilities
arising under the ERISA of a character which if unpaid or unperformed might result in the imposition of a Lien against any of its
properties or assets.


 


7.16        Adverse
Circumstances. No condition, circumstance, event, agreement, document, instrument, restriction, litigation or Proceeding (or
threatened litigation or Proceeding or basis therefor) exists which: (i) could adversely affect the validity or priority of the
Liens granted to Lender under the Loan Documents; (ii) could adversely affect the ability of the Credit Parties to perform its
obligations under the Loan Documents; (iii) would constitute a default under any of the Loan Documents; (iv) would constitute such
a default with the giving of notice or lapse of time or both; or (v) would constitute or give rise to a Material Adverse Effect.


 


7.17        Liabilities
and Indebtedness of the Borrower. The Credit Parties do not have any Funded Indebtedness or any liabilities or obligations
of any nature whatsoever, except: (i) as disclosed in the Financial Statements; or (ii) liabilities and obligations incurred in
the Ordinary Course of Business since the date of the last Financial Statements which do not or would not, individually or in the
aggregate, exceed Ten Thousand and No/100 United States Dollars (US$10,000.00) or otherwise have a Material Adverse Effect.


 


7.18        Real
Estate.


 


(a)          Real
Property Ownership. Except for the Credit Party Leases and as otherwise disclosed in Schedule 7.18, Borrower
does not own any Real Property.


 




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(b)          Real
Property Leases. Except for ordinary leases for office space from which the Credit Parties conduct its business (the “Credit
Party Leases”), the Credit Parties do not lease any other Real Property. With respect to each of the Credit Party
Leases: (i) the Credit Parties have been in peaceful possession of the property leased thereunder and neither the Credit Parties
nor the landlord is in default thereunder; (ii) no waiver, indulgence or postponement of any of the obligations thereunder has
been granted by the Credit Parties or landlord thereunder; and (iii) there exists no event, occurrence, condition or act known
to the officers or directors of the Credit Parties which, upon notice or lapse of time or both, would be or could become a default
thereunder or which could result in the termination of the Credit Party Leases, or any of them, or have a Material Adverse Effect.
The Credit Parties have not violated nor breached any provision of any such Credit Party Leases, and all obligations required to
be performed by the Credit Parties under any of such Credit Party Leases have been fully, timely and properly performed. The Credit
Parties have delivered to the Lender true, correct and complete copies of all Credit Party Leases, including all modifications
and amendments thereto, whether in writing or otherwise. The Credit Parties have not received any written or oral notice to the
effect that any of the Credit Party Leases will not be renewed at the termination of the term of such Credit Party Leases, or that
the Credit Party Leases will be renewed only at higher rents.


 


7.19        Material
Contracts. An accurate, current and complete copy of each of the Material Contracts has been furnished to Lender, and each
of the Material Contracts constitutes the entire agreement of the respective parties thereto relating to the subject matter thereof.
There are no outstanding offers, bids, proposals or quotations made by any Credit Party which, if accepted, would create a Material
Contract with any Credit Party. Each of the Material Contracts is in full force and effect and is a valid and binding obligation
of the parties thereto in accordance with the terms and conditions thereof To the best knowledge of each Credit Party, all obligations
required to be performed under the terms of each of the Material Contracts by any party thereto have been fully performed by all
parties thereto, and no party to any Material Contracts is in default with respect to any term or condition thereof, nor has any
event occurred which, through the passage of time or the giving of notice, or both, would constitute a default thereunder or would
cause the acceleration or modification of any obligation of any party thereto or the creation of any Lien, claim, charge or other
encumbrance upon any of the assets or properties of any Credit Party. Further, no Credit Party has received any notice, nor does
any Credit Party have any knowledge, of any pending or contemplated termination of any of the Material Contracts and, no such termination
is proposed or has been threatened, whether in writing or orally.


 


7.20        Title
to Assets. The Credit Parties have good and marketable title to, or a valid leasehold interest in, all of its assets and properties
which are material to its business and operations as presently conducted, free and clear of all Liens, claims, charges or other
encumbrances or restrictions on the transfer or use of same. Except as would not have a Material Adverse Effect, the assets and
properties of each Credit Party are in good operating condition and repair, ordinary wear and tear excepted, and are free of any
latent or patent defects which might impair their usefulness, and are suitable for the purposes for which they are currently used
and for the purposes for which they are proposed to be used.


 




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7.21        Intellectual
Property. The Credit Parties own or possess adequate and legally enforceable rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and all other intellectual property rights necessary to conduct its business as now
conducted (collectively, the “IP Rights”). All IP Rights, and any federal, state, local or foreign patent
and trademark office, or functional equivalent thereof where any such IP Rights may be filed or registered, is set forth in Schedule
7.21. All of the IP Rights are owned by the Credit Parties, except for IP rights licensed by the Credit Parties, which
licensed IP Rights are specifically outlined and described in Schedule 7.21. If any IP Rights are licensed by any
Credit Party, the underlying license agreement or other agreement pursuant to which such IP Rights are licensed (collectively,
the “License Agreements”), permits Lender to encumber such License Agreements without any further consent
or approval of any other Person, including the underlying owner of such IP Rights, such that if there was an Event of Default
and Lender foreclosed on all Collateral, Lender would have the right to use such IP Rights under the License Agreements, subject
only to Lender’s obligation to comply with the terms of such License Agreements. The Credit Parties do not have any knowledge
of any infringement by any Credit Party of any IP Rights of others, and, to the knowledge of the Credit Parties, there is no claim,
demand or Proceeding, or other demand of any nature being made or brought against, or to any Credit Party’s knowledge, being
threatened against, any Credit Party regarding IP Rights or other intellectual property infringement; and is the Credit Parties
are not aware of any facts or circumstances which might give rise to any of the foregoing.


 


7.22        Labor
and Employment Matters. The Credit Parties are not involved in any labor dispute or, to the knowledge of the Credit
Parties, is any such dispute threatened. To the knowledge of the Credit Parties and its officers, none of the employees of
any Credit Party is a member of a union and the Credit Parties believe that its relations with its employees are good. To the
knowledge of the Credit Parties and its officers, the Credit Parties have complied in all material respects with all laws,
rules, ordinances and regulations relating to employment matters, civil rights and equal employment opportunities.


 


7.23        Insurance.
The Credit Parties are each covered by valid, outstanding and enforceable policies of insurance which were issued to it by reputable
insurers of recognized financial responsibility, covering its properties, assets and business against losses and risks normally
insured against by other corporations or entities in the same or similar lines of businesses as the Credit Parties are engaged
and in coverage amounts which are prudent and typically and reasonably carried by such other corporations or entities (the “Insurance
Policies”). Such Insurance Policies are in full force and effect, and all premiums due thereon have been paid. None
of the Insurance Policies will lapse or terminate as a result of the transactions contemplated by this Agreement. The Credit Parties
have complied with the provisions of such Insurance Policies. The Credit Parties have not been refused any insurance coverage sought
or applied for and the Credit Parties do not have any reason to believe that it will not be able to renew its existing Insurance
Policies as and when such Insurance Policies expire or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Credit Parties.


 


7.24        Permits.
The Credit Parties possess all Permits necessary to conduct its business, and the Credit Parties have not received any notice of,
or is otherwise involved in, any Proceedings relating to the revocation or modification of any such Permits. All such Permits are
valid and in full force and effect and the Credit Parties are in full compliance with the respective requirements of all such Permits.


 


7.25        Lending
Relationship. The Credit Parties acknowledge and agree that the relationship hereby created with Lender is and has been conducted
on an open and arm’s length basis in which no fiduciary relationship exists and that Borrower has not relied, nor is relying
on, any such fiduciary relationship in executing this Agreement and in consummating the Loans.


 




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7.26        Compliance
with Regulation U. No portion of the proceeds of the Loans shall be used by Borrower, or any Affiliates of Borrower, either
directly or indirectly, for the purpose of purchasing or carrying any margin stock, within the meaning of Regulation U as adopted
by the Board of Governors of the Federal Reserve System.


 


7.27        Governmental
Regulation. The Credit Parties are not, nor after giving effect to any Loan, will be, subject to regulation under the Public
Utility Holding Borrower Act of 1935, the Federal Power Act or the Investment Company Act of 1940 or to any federal or state statute
or regulation limiting its ability to incur indebtedness for borrowed money.


 


7.28        Bank
Accounts. Schedule 7.28 sets forth, with respect to each account of the Credit Parties with any bank, broker,
or other depository institution: (i) the name and account number of such account; (ii) the name and address of the institution
where such account is held; (iii) the name of any Person(s) holding a power of attorney with respect to such account, if any; and
(iv) the names of all authorized signatories and other Persons authorized to withdraw funds from each such account.


 


7.29        Places
of Business. The principal place of business of each of the Credit Parties is set forth on Schedule 7.29 and
the Credit Parties shall promptly notify Lender of any change in such location. The Credit Parties will not remove or permit the
Collateral to be removed from such locations without the prior written consent of Lender, except for: (i) certain heavy equipment
kept at third party sites when conducting business or maintenance; (ii) vehicles, containers and rolling stock; (iii) Inventory
sold or leased in the Ordinary Course of Business of the Credit Parties; and (iv) temporary removal of Collateral to other locations
for repair or maintenance as may be required from time to time in each instance in the Ordinary Course of Business of the Credit
Parties.


 


7.30        Illegal
Payments. Neither the Credit Parties, nor any director, officer, member, manager, agent, employee or other Person acting on
behalf of the Credit Parties has, in the course of his actions for, or on behalf of, the Credit Parties: (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated
or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.


 




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7.31        Related
Party Transactions. Except for arm’s length transactions pursuant to which the Credit Parties make payments in the Ordinary
Course of Business of the Credit Parties upon terms no less favorable than the Credit Parties could obtain from third parties,
none of the officers, directors, managers, or employees of the Credit Parties, nor any stockholders, members or partners who own,
legally or beneficially, five percent (5%) or more of the ownership interests of the Credit Parties (each a “Material
Shareholder”), is presently a party to any transaction with the Credit Parties (other than for services as employees,
officers and directors), including any contract providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from, any officer, director or such employee or Material
Shareholder or, to the best knowledge of the Credit Parties, any other Person in which any officer, director, or any such employee
or Material Shareholder has a substantial or material interest in or of which any officer, director or employee of Borrower or
Material Shareholder is an officer, director, trustee or partner. There are no claims, demands, disputes or Proceedings of any
nature or kind between the Credit Parties and any officer, director or employee of the Credit Parties or any Material Shareholder,
or between any of them, relating to the Credit Parties.


 


7.32        Internal
Accounting Controls. The Credit Parties maintain a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.


 


7.33        Brokerage
Fees. Except for Wellington Shields & Co., LLC (“Finder”), there is no Person acting on
behalf of any Credit Party who is entitled to or has any claim for any brokerage or finder’s fee or commission in connection
with the execution of this Agreement or the consummation of the transactions contemplated hereby. Credit Parties represent that
Finder is a FINRA registered securities brokerage firm, and Finder shall be paid a finder’s fee by the Credit Parties, at
Closing, in accordance with a separate agreement between the Borrower and Finder; provided, however, such fee shall not exceed
four percent (4%) of the amount of the Initial Loan.


 


7.34        Acknowledgment
Regarding Lender’s Loans. The Credit Parties acknowledge and agree that Lender is acting solely in the capacity of an
arm’s length lender with respect to this Agreement and the transactions contemplated hereby. The Credit Parties further acknowledge
that Lender is not acting as a financial advisor or fiduciary of the Credit Parties (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby and any advice given by Lender or any of its representatives or agents
in connection with this Agreement and the transactions contemplated hereby is merely incidental to the making of the Loans hereunder
by Lender. The Credit Parties further represent to Lender that the Credit Parties’ decision to enter into this Agreement
has been based solely on the independent evaluation by the Credit Parties and its representatives.


 


7.35        Seniority.
No Funded Indebtedness or other equity or debt security of the Credit Parties is senior to the Obligations in right of payment,
whether with respect to interest or upon liquidation or dissolution, or otherwise.


 


7.36        No
General Solicitation. Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or issuance of the Promissory Note.


 






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7.37        No
Integrated Offering. Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of the Promissory Note under the Securities Act or any similar laws of any foreign jurisdiction,
or cause this offering of such securities to be integrated with prior offerings by the Credit Parties for purposes of the Securities
Act or any similar laws of any foreign jurisdiction.


 


7.38        Private
Placement. Assuming the accuracy of the Lender’s representations and warranties set forth in Section 8 below,
no registration under the Securities Act or the laws, rules or regulation of any other Governmental Authority is required for the
issuance of the Promissory Note.


 


7.39        Complete
Information. This Agreement and all financial statements, schedules, certificates, confirmations, agreements, contracts, and
other materials submitted to Lender in connection with or in furtherance of this Agreement by or on behalf of the Credit Parties
fully and fairly states the matters with which they purport to deal, and do not misstate any material fact nor, separately or in
the aggregate, fail to state any material fact necessary to make the statements made not misleading.


 


7.40        Interpretation;
Reliance; Survival. Each warranty and representation made by the Credit Parties in this Agreement or pursuant hereto, or in
any other Loan Documents, is independent of all other warranties and representations made by the Credit Parties in this Agreement
or pursuant hereto, or in any other Loan Documents (whether or not covering identical, related or similar matters) and must be
independently and separately satisfied. Exceptions or qualifications to any such warranty or representation shall not be construed
as exceptions or qualifications to any other warranty or representation. Notwithstanding any investigation made by Lender or any
of its agents or representatives, or any rights to conduct such investigations, and notwithstanding any knowledge of facts determined
or determinable by Lender as a result of such investigation or right of investigation, the Lender has the unqualified right to
rely upon the representations and warranties made by the Credit Parties in this Agreement and in the Schedules attached hereto
or pursuant hereto, or in any other Loan Documents. Each and every representation and warranty of the Credit Parties made herein,
pursuant hereto, or in any other Loan Documents has been relied upon by Lender, and is material to the decision of the Lender to
enter into this Agreement and to make the Loans contemplated herein. All representations and warranties of the Credit Parties made
in this Agreement or pursuant hereto, or in any other Loan Documents, shall survive the Effective Date, the consummation of any
Loans made hereunder, and any investigation, and shall be deemed and construed as continuing representations and warranties.


 


		8.	REPRESENTATIONS AND WARRANTIES OF LENDER.



 


Lender makes the following
representations and warranties to the Borrower, each of which shall be true and correct in all material respects as of the date
of the execution and delivery of this Agreement and as of the date of each Loan made hereunder, except to the extent such representation
expressly relates to an earlier date, and which shall survive the execution and delivery of this Agreement:


 




    	 	41	 



     


    

  


8.1          Investment
Purpose. Lender is acquiring the Promissory Note for its own account, for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the Securities
Act.


 


8.2          Accredited
Investor Status. Lender is an “Accredited Investor” as that term is defined in Rule 501 of Regulation D promulgated
under the Securities Act.


 


8.3          Reliance
on Exemptions. Lender understands that the Promissory Note is being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that Borrower is relying in part upon
the truth and accuracy of, and Lender’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of Lender set forth herein in order to determine the availability of such exemptions and the eligibility of Lender
to acquire such securities.


 


8.4          Information.
Lender has been furnished with all materials it has requested relating to the business, finances and operations of the Credit Parties
and information deemed material by Lender to making an informed investment decision regarding the Promissory Note. Lender has been
afforded the opportunity to ask questions of the Credit Parties and its management. Neither such inquiries nor any other due diligence
investigations conducted by Lender or its representatives shall modify, amend or affect Lender’s right to rely on the Credit
Parties’ representations and warranties contained in Article 7 above or elsewhere in this Agreement or in any other
Loan Documents. Lender understands that its investment in the Promissory Note involves a high degree of risk. Lender is in a position
regarding the Credit Parties, which, based upon economic bargaining power, enabled and enables Lender to obtain information from
the Credit Parties in order to evaluate the merits and risks of this investment. Lender has sought such accounting, legal and tax
advice, as it has considered necessary to make an informed investment decision with respect to the Promissory Note.


 


8.5          No
Governmental Review. Lender understands that no United States federal or state agency or any other Governmental Authority has
passed on or made any recommendation or endorsement of the Promissory Note, or the fairness or suitability of the investment in
the Promissory Note, nor have such authorities passed upon or endorsed the merits of the offering of the Promissory Note.


 


8.6          Transfer
or Resale. Lender understands that: (i) the Promissory Note has not been and is not being registered under the Securities Act
or any other foreign or state securities laws, and may not be offered for sale, sold, assigned or transferred unless: (A) subsequently
registered thereunder; or (B) such securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration requirements; and (ii) neither the Credit Parties nor any other Person is under any obligation
to register such securities under the Securities Act or any foreign or state securities laws or to comply with the terms and conditions
of any exemption thereunder, except as otherwise set forth in this Agreement.


 


8.7          Authorization,
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of Lender and is a valid
and binding agreement of Lender enforceable in accordance with its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.


 




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8.8          Due
Formation of Lender. Lender is an entity that has been formed and validly exists and has not been organized for the specific
purpose of purchasing the Promissory Note and is not prohibited from doing so.


 


8.9          No
Legal Advice from Credit Parties. Lender acknowledges that it had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and investment and tax advisors. Lender is relying solely on such
counsel and advisors and not on any statements or representations of the Credit Parties or any of its representatives or agents
for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities
laws of any jurisdiction; provided, however, the foregoing shall not modify, amend or affect Lender’s right to rely on the
Credit Parties’ representations and warranties contained in Article 7 above or in any other Loan Documents.


 


		9.	NEGATIVE COVENANTS.



 


9.1          Indebtedness.
The Credit Parties shall not, either directly or indirectly, create, assume, incur or have outstanding any Funded Indebtedness
(including purchase money indebtedness), or become liable, whether as endorser, guarantor, surety or otherwise, for any debt or
obligation of any other Person, except:


 


(a)          the
Obligations;


 


(b)          endorsement
for collection or deposit of any commercial paper secured in the Ordinary Course of Business of the Credit Parties;


 


(c)          obligations
for taxes, assessments, municipal or other governmental charges; provided, the same are being contested in good faith by
appropriate Proceedings and are insured against or bonded over to the satisfaction of Lender;


 


(d)          obligations
for accounts payable, including any such obligations for any new Credit Party Leases entered into after the Effective Date, other
than for money borrowed, incurred in the Ordinary Course of Business of the Credit Parties; provided that any fees or other sums,
other than salary accrued in the Credit Parties’ Ordinary Course of Business, payable by the Credit Parties to any officer,
director, member, manager, principal, or Material Shareholder, shall be fully subordinated in right of payment to the prior payment
in full of the Obligations hereunder;


 


(e)          unsecured
intercompany Funded Indebtedness incurred in the Ordinary Course of Business of the Credit Parties;


 


(f)           Funded
Indebtedness existing on the Effective Date and set forth in the Financial Statements, including any extensions or refinancings
of the foregoing, which do not increase the principal amount of such Funded Indebtedness as of the date of such extension or refinancing;
provided such Funded Indebtedness is subordinated to the Obligations owed to Lender pursuant to a subordination agreement, in form
and content acceptable to Lender in its sole discretion, which shall include an indefinite standstill on remedies and payment blockage
rights during any default;


 




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(g)          Funded
Indebtedness consisting of Capital Lease obligations or secured by Permitted Liens of the type described in clause (vii) of the
definition thereof not to exceed Fifty Thousand and No/100 United States Dollars (US$50,000.00) in the aggregate at any time;


 


(h)          Contingent
Liabilities arising with respect to customary indemnification obligations in favor of purchasers in connection with dispositions
permitted hereunder;


 


(i)           Contingent
Liabilities incurred in the Ordinary Course of Business with respect to surety and appeal bonds, performance bonds and other similar
obligations; and


 


(j)           Contingent
Liabilities arising under indemnity agreements to title insurers to cause such title insurers to issue to Lender title insurance
policies.


 


9.2          Encumbrances.
The Credit Parties shall not, either directly or indirectly, create, assume, incur or suffer or permit to exist any Lien or charge
of any kind or character upon any asset of the Credit Parties, whether owned at the date hereof or hereafter acquired, except Permitted
Liens or as otherwise authorized by Lender in writing.


 


9.3          Investments.
The Credit Parties shall not, either directly or indirectly, make or have outstanding any new investments (whether through purchase
of stocks, obligations or otherwise) in, or loans or advances to, any other Person, or acquire all or any substantial part of the
assets, business, stock or other evidence of beneficial ownership of any other Person, except following:


 


(a)          The
stock or other ownership interests in a Subsidiary existing as of the Effective Date;


 


(b)          investments
in direct obligations of the United States or any state in the United States;


 


(c)          trade
credit extended by the Credit Parties in the Ordinary Course of Business of the Credit Parties;


 


(d)          investments
in securities of Customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of such Customers;


 


(e)          investments
existing on the Effective Date and set forth in the Financial Statements;


 


(f)           Contingent
Liabilities permitted pursuant to Section 9.1; or


 


(g)          Capital
Expenditures permitted under Section 9.5.


 




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9.4          Transfer;
Merger. The Credit Parties shall not, either directly or indirectly, permit a Change in Control, merge, consolidate, sell,
transfer, license, lease, encumber or otherwise dispose of all or any part of its property or business or all or any substantial
part of its assets, or sell or discount (with or without recourse) any of its Notes (as defined in the UCC), Chattel Paper, Payment
Intangibles or Accounts; provided, however, that the Credit Parties may:


 


(a)          sell
or lease Inventory and Equipment in the Ordinary Course of Business of the Credit Parties;


 


(b)          upon
not less than three (3) Business Days’ prior written notice to Lender, any Subsidiary of Borrower may merge with (so long
as the Borrower remains the surviving entity), or dissolve or liquidate into, or transfer its property to Borrower;


 


(c)          dispose
of used, worn-out or surplus equipment in the Ordinary Course of Business of the Credit Parties;


 


(d)          discount
or write-off overdue Accounts for collection in the Ordinary Course of Business of the Credit Parties;


 


(e)          sell
or otherwise dispose (including cancellation of Funded Indebtedness) of any Investment permitted under Section 9.3 in the
Ordinary Course of Business of the Credit Parties; and


 


(f)           grant
Permitted Liens; and


 


(g)          consummate
the “Spin-Off’ (as hereinafter defined), but only to the extent of the “Spin-Off Assets” (as hereinafter
defined); it being acknowledged by the Credit Parties that no assets of the Borrower or any Guarantors shall be transferred as
part of the Spin-Off, other than the Spin-Off Assets. The Credit Parties shall provide to Lender, prior to consummating the Spin-Off,
copies of all final documents that will evidence the Spin-Off, and subsequent to the consummation of the Spin-Off, true, accurate,
and complete copies of all final, and fully executed documents evidencing the Spin-Off transaction. The Credit Parties have represented
to Lender that, pursuant to an Equity Exchange Agreement dated January 26, 2016 (the “Exchange Agreement”),
Michael Bannon, the then holder of 100% of the issued and outstanding membership interests in the Corporate Guarantor, transferred
such membership interests to Texas Wyoming Drilling, Inc., a Delaware corporation (“TWDI”), and
in exchange, Michael Bannon acquired approximately 90% of the issued and outstanding common stock of TWDI, as well as all of the
issued and outstanding preferred stock of TWDI, and immediately following this exchange, TWDI changed its name to the name of
the Borrower herein, such that, after such exchange, Michael Bannon owns approximately 90% of the issued and outstanding common
stock of Borrower, as well as all of the issued and outstanding preferred stock of Borrower, and Borrower is the owner of 100%
of the issued and outstanding membership interests of the Corporate Guarantor (the foregoing transactions referred to herein as
the “Exchange”). The Credit Parties have further represented to Lender that, as part of the Exchange,
Borrower agreed to spin-off the assets of TWDI, as same existed prior to consummation of the Exchange, which assets are listed
on Schedule 9.4(g) attached hereto (the “Spin-Off Assets”), to a group of shareholders
of TWDI pre-Acquisition (such contemplated spin-off transaction herein referred to as the “Spin-Off”).


 




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9.5          Capital
Expenditures. Without Lender’s prior written consent, the Credit Parties shall not make or incur obligations for any
Capital Expenditures.


 


9.6          Issuance
of Stock. The Credit Parties shall not, either directly or indirectly, issue or distribute any capital stock or other securities
(including any securities convertible or exercisable into capital stock or other securities) of any Credit Party without the prior
written consent of Lender, such consent not to be unreasonably withheld by Lender. The Borrower must send any request for approval
of any transaction pursuant to this Section 9.6 (a “Borrower Request”) to dsilverman@tcaglobalfund.com, bpress@tcaglobalfund.com, erondon@tcaglobalfund.com,
and tfenton@tcaglobalfund.com. If the Lender fails to respond to any Borrower Request pursuant to this Section 9.6 within
two (2) Business Days, such failure to respond shall be deemed to be an approval of such Borrower Request.


 


9.7          Distributions;
Restricted Payments; Change in Management. The Credit Parties shall not: (i) purchase or redeem any shares of its capital stock
or other securities, or declare or pay any dividends or distributions, whether in cash or otherwise, set aside any funds for any
such purpose, or make any distribution of any kind to its shareholders, partners, or members, make any distribution of its property
or assets, or make any loans, advances or extensions of credit to, or investments in, any Persons, including such Credit Parties’
Affiliates, officers, directors, members, managers, principals, Material Shareholders, or employees, without the prior written
consent of Lender; (ii) make any payments of any Funded Indebtedness other than as specifically permitted under the Use of Proceeds
Confirmation and as otherwise permitted hereunder; (iii) increase the annual salary paid to any officers of the Credit Parties
as of the Effective Date, unless any such increase is part of a written employment contract with any such officers entered into
prior to the Effective Date, a copy of which has been delivered to and approved by the Lender; or (iv) add, replace, remove, or
otherwise change any officers, managers, senior management positions or Persons with authority to bind the Borrower from the officers,
managers, senior management positions, or other such Persons existing as of the Effective Date, unless approved by Lender in writing.


 


9.8          Use
of Proceeds. The Credit Parties shall not use any portion of the proceeds of the Loans, either directly or indirectly, for
the purpose of purchasing any securities underwritten by any Affiliate of Lender. In addition, the Credit Parties shall not use
any portion of the proceeds of the Loans, either directly or indirectly, for any of the following purposes: (i) to make any payment
towards any Funded Indebtedness of the Credit Parties or any Affiliates thereof, except as specifically permitted under the Use
of Proceeds Confirmation; (ii) to pay any taxes of any nature or kind that may be due by the Credit Parties or any Affiliates thereof;
(iii) to pay any obligations or liabilities of any nature or kind due or owing to any managers, officers, directors, employees,
members, principals, or Material Shareholders of the Credit Parties or any Affiliates thereof. The Credit Parties shall only use
the proceeds of the Loans (or any portion thereof) for the purposes set forth in a “Use of Proceeds Confirmation”
to be executed by Borrower on the Effective Date, unless Borrower obtains the prior written consent of Lender to use proceeds of
Loans for any other purpose, which consent may be granted or withheld by Lender in its sole and absolute discretion.


  






    	 	46	 



     


    

 


9.9          Business
Activities; Change of Legal Status and Organizational Documents. The Credit Parties shall not: (i) engage in any line of business
other than the businesses engaged in on the date hereof and business reasonably related thereto; (ii) change its name, its type
of organization, its jurisdictions of organization or other legal structure; or (iii) permit its articles of incorporation (including
any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of organization
or similar governing or organizational documents to be amended or modified in any way which could reasonably be expected to have
a Material Adverse Effect.


 


9.10        Transactions
with Affiliates. The Credit Parties shall not enter into any transaction with any of its Affiliates, except in the Ordinary
Course of Business of the Credit Parties and upon fair and reasonable terms that are no less favorable to the Credit Parties than
it would obtain in a comparable arm’s length transaction with a Person not an Affiliate of the Credit Parties.


 


9.11        Bank
Accounts. The Credit Parties shall not maintain any bank, deposit or credit card payment processing accounts with any financial
institution, or any other Person, for the Credit Parties or any Affiliate of the Credit Parties, other than the accounts of the
Credit Parties listed in the attached Schedule 7.28.


 


		10.	AFFIRMATIVE COVENANTS.



 


10.1        Compliance
with Regulatory Requirements. Upon demand by Lender, Borrower shall reimburse Lender for Lender’s additional costs and/or
reductions in the amount of principal or interest received or receivable by Lender if at any time after the date of this Agreement
any law, treaty or regulation or any change in any law, treaty or regulation or the interpretation thereof by any Governmental
Authority charged with the administration thereof or any other authority having jurisdiction over Lender or the Loans, whether
or not having the force of law, shall impose, modify or deem applicable any reserve and/or special deposit requirement against
or in respect of assets held by or deposits in or for the account of the Loans by Lender or impose on Lender any other condition
with respect to this Agreement or the Loans, the result of which is to either increase the cost to Lender of making or maintaining
the Loans or to reduce the amount of principal or interest received or receivable by Lender with respect to such Loans. Said additional
costs and/or reductions will be those which directly result from the imposition of such requirement or condition on the making
or maintaining of such Loans.


 


10.2        Corporate
Existence. The Credit Parties shall at all times preserve and maintain its: (i) existence and good standing in the jurisdiction
of its organization; and (ii) its qualification to do business and good standing in each jurisdiction where the nature of its business
makes such qualification necessary (other than such jurisdictions in which the failure to be qualified or in good standing could
not reasonably be expected to have a Material Adverse Effect), and shall at all times continue as a going concern in the business
which Borrower is presently conducting.


 


10.3        Maintain
Property. The Credit Parties shall at all times maintain, preserve and keep its plants, properties and equipment, including,
but not limited to, any Collateral, in good repair, working order and condition, normal wear and tear excepted, and shall from
time to time, as Borrower deems appropriate in its reasonable judgment, make all needful and proper repairs, renewals, replacements,
and additions thereto so that at all times the efficiency thereof shall be fully preserved and maintained. The Credit Parties shall
permit Lender to examine and inspect such plant, properties and equipment, including any Collateral, at all reasonable times upon
reasonable notice during business hours. During the continuance of any Event of Default, Lender shall, at the Credit Parties’
expense, have the right to make additional inspections without providing advance notice.


 




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10.4        Maintain
Insurance. The Credit Parties’ shall at all times insure and keep insured with insurance companies acceptable to Lender,
all insurable property owned by the Credit Parties which is of a character usually insured by companies similarly situated and
operating like properties, against loss or damage from environmental, fire and such other hazards or risks as are customarily insured
against by companies similarly situated and operating like properties; and shall similarly insure employers’, public and
professional liability risks. Prior to the date of the funding of any Loans under this Agreement, Borrower shall deliver to Lender
a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Section. All such
policies of insurance must be satisfactory to Lender in relation to the amount and term of the Obligations and type and value of
the Collateral and assets of the Credit Parties, shall identify Lender as sole/lender’s loss payee and as an additional insured.
In the event the Credit Parties fail to provide Lender with evidence of the insurance coverage required by this Section or at any
time hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay any premium in whole
or in part relating thereto, then Lender, without waiving or releasing any obligation or default by Borrower hereunder, may at
any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance and pay such premium and
take any other action with respect thereto, which Lender deems advisable. This insurance coverage: (i) may, but need not, protect
the Credit Parties’ interest in such property, including, but not limited to, the Collateral; and (ii) may not pay any claim
made by, or against, the Credit Parties in connection with such property, including, but not limited to, the Collateral. The Credit
Parties may later cancel any such insurance purchased by Lender, but only after providing Lender with evidence that the insurance
coverage required by this Section is in force. The costs of such insurance obtained by Lender, through and including the effective
date such insurance coverage is canceled or expires, shall be payable on demand by the Credit Parties to Lender, together with
interest at the Default Rate on such amounts until repaid and any other charges by Lender in connection with the placement of such
insurance. The costs of such insurance, which may be greater than the cost of insurance which the Credit Parties may be able to
obtain on its own, together with interest thereon at the Default Rate and any other charges by Lender in connection with the placement
of such insurance may be added to the total Obligations due and owing to the extent not paid by the Credit Parties.


 


10.5        Tax
Liabilities.


 


(a)          The
Credit Parties shall at all times pay and discharge all property, income and other taxes, assessments and governmental charges
upon, and all claims (including claims for labor, materials and supplies) against the Credit Parties or any of its properties,
Equipment or Inventory, before the same shall become delinquent and before penalties accrue thereon, unless and to the extent that
the same are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP are
being maintained.


 


(b)          Borrower
shall be solely responsible for the payment of any and all documentary stamps and other taxes in connection with the execution
of the Loan Documents.


 




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10.6         ERISA
Liabilities; Employee Plans. The Credit Parties shall: (i) keep in full force and effect any and all Employee Plans which are
presently in existence or may, from time to time, come into existence under ERISA, and not withdraw from any such Employee Plans,
unless such withdrawal can be effected or such Employee Plans can be terminated without liability to the Credit Parties; (ii) make
contributions to all of such Employee Plans in a timely manner and in a sufficient amount to comply with the standards of ERISA,
including the minimum funding standards of ERISA; (iii) comply with all material requirements of ERISA which relate to such Employee
Plans; (iv) notify Lender immediately upon receipt by the Credit Parties of any notice concerning the imposition of any withdrawal
liability or of the institution of any Proceeding or other action which may result in the termination of any such Employee Plans
or the appointment of a trustee to administer such Employee Plans; (v) promptly advise Lender of the occurrence of any “Reportable
Event” or “Prohibited Transaction” (as such terms are defined in ERISA), with respect to any such Employee Plans;
and (vi) amend any Employee Plan that is intended to be qualified within the meaning of Section 401 of the Internal Revenue Code
of 1986 to the extent necessary to keep the Employee Plan qualified, and to cause the Employee Plan to be administered and operated
in a manner that does not cause the Employee Plan to lose its qualified status.


 


10.7         Financial
Statements. The Credit Parties shall at all times maintain a system of accounting capable of producing its individual and consolidated
financial statements in compliance with GAAP (provided that monthly financial statements shall not be required to have footnote
disclosure, are subject to normal year-end adjustments and need not be consolidated), and shall furnish to Lender or its authorized
representatives such information regarding the business affairs, operations and financial condition of the Credit Parties as Lender
may from time to time request or require, including, but not limited to:


 


(a)          If
the Maturity Date is extended beyond the original term, as soon as available, and in any event, within ninety (90) days after the
close of each fiscal year, a copy of the annual audited consolidated financial statements of each of the Credit Parties, including
balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended, in reasonable
detail, prepared and reviewed by an independent certified public accountant reasonably acceptable to Lender, containing an unqualified
opinion of such accountant;


 


(b)          as
soon as available, and in any event, within thirty (30) days after the close of each fiscal quarter, a copy of the quarterly unaudited
consolidated financial statements of each of the Credit Parties, including balance sheet, statement of income and retained earnings,
statement of cash flows for the fiscal year then ended, in reasonable detail, prepared and certified as accurate in all material
respects by the President, Chief Executive Officer or Chief Financial Officer of the Credit Parties; and


 


(c)          as
soon as available, and in any event, within ten (10) days following the end of each calendar month, a consolidated cash flow report
of the Borrower for the month then ended, in reasonable detail, prepared and certified as accurate in all material respects by
the President, Chief Executive Officer or Chief Financial Officer of Borrower.


 




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No change with respect
to such accounting principles shall be made by the Credit Parties without giving prior notification to Lender. The Credit Parties
represent and warrant to Lender that the financial statements delivered to Lender at or prior to the execution and delivery of
this Agreement and to be delivered at all times thereafter accurately reflect and will accurately reflect the financial condition
of the Credit Parties in all material respects. Lender shall have the right at all times (and on reasonable notice so long as there
then does not exist any Event of Default) during business hours to inspect the books and records of the Credit Parties and make
extracts therefrom.


 


Borrower agrees to advise
Lender immediately, in writing, of the occurrence of any Material Adverse Effect, or the occurrence of any event, circumstance
or other happening that could be reasonably expected to lead to or become a Material Adverse Effect.


 


10.8        Additional
Reporting Requirements. Borrower shall provide the following reports and statements to Lender as follows:


 


(a)          On
or prior to the Effective Date, Borrower shall provide to Lender an income statement or profit and loss statement showing actual
results of the Borrower’s consolidated operations for the prior twelve (12) months, as well as an income statement projection
showing, in reasonable detail, the Borrower’s consolidated income statement projections for the twelve (12) calendar months
following the Effective Date (the “Income Projections”). In addition, on the first (1st)
day of every calendar month after the Effective Date, the Borrower shall provide to Lender a report comparing the Income Projections
to actual results. Any variance in the Income Projections to actual results that is more than ten percent (10%) (either above
or below) will require the Borrower to submit to Lender written explanations as to the nature and circumstances for the variance.


 


(b)          On
the first (1st) day of every calendar month after the Effective Date, the Borrower shall provide to Lender a report
comparing the use of the proceeds of the Loans set forth in the Use of Proceeds Confirmation, with the actual use of such proceeds.
Any variance in the actual use of such proceeds from the amounts set forth in the approved Use of Proceeds Confirmation will require
the Borrower to submit to Lender written explanations as to the nature and circumstances for the variance.


 


(c)          Borrower
shall submit to Lender true and correct copies of all bank statements (and statements from any other depository accounts, brokerage
accounts, or accounts with any Payment Processing Companies) received by the Credit Parties within five (5) days after the Credit
Parties’ receipt thereof from its bank.


 


(d)          Promptly
upon receipt thereof, Borrower shall provide to Lender copies of interim and supplemental reports, if any, submitted to Borrower
by independent accountants in connection with any interim audit or review of the books of the Credit Parties.


 


10.9        Aged
Accounts/Payables Schedules. Upon request of Lender, Borrower shall promptly deliver to Lender an aged schedule of
the Accounts of the Credit Parties, listing the name and amount due from each customer and showing the aggregate amounts due from:
(i) 0-30 days; (ii) 31-60 days; (iii) 61-90 days; (iv) 91-120 days; and (v) more than 120 days, and certified as accurate by the
Chief Financial Officer or the President of Borrower. Upon request by Lender, Borrower shall promptly deliver to Lender an aged
schedule of the accounts payable of the Credit Parties, listing the name and amount due to each creditor and showing the aggregate
amounts due from: (v) 0-30 days; (w) 31-60 days; (x) 61-90 days; (y) 91-120 days; and (z) more than 120 days, and certified as
accurate by the Chief Financial Officer or the President of Borrower.


 




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10.10      Failure
to Provide Reports. If at any time during the term of this Agreement, Borrower shall fail to timely provide any reports required
to be provided by any Credit Party to Lender under this Agreement or any other Loan Document, in addition to all other rights and
remedies that Lender may have under this Agreement and the other Loan Documents, Lender shall have the right to require, at each
instance of any such failure, upon written notice to Borrower, that the Borrower redeem 2.5% of the aggregate amount of the Advisory
Fee then outstanding, which cash redemption payment shall be due and payable by ACH transfer from the Payment Account or by wire
transfer of Dollars to an account designated by Lender, at Lender’s sole discretion within five (5) Business Days from the
date the Lender delivers such redemption notice to the Borrower.


 


10.11      Covenant
Compliance. Borrower shall, within thirty (30) days after the end of each calendar month, deliver to Lender a Compliance Certificate
showing compliance by Borrower with the covenants therein, and certified as accurate by the President or Chief Executive Officer
of the Borrower.


 


10.12      Continued
Due Diligence/Field Audits. Borrower acknowledges that during the term of this Agreement, Lender and its agents and representatives
undertake ongoing and continuing due diligence reviews of the Credit Parties and its business and operations. Such ongoing due
diligence reviews may include, and the Credit Parties do hereby allow Lender, to conduct site visits and field examinations of
the office locations of the Credit Parties and the assets and records of the Credit Parties, the results of which must be satisfactory
to Lender in Lender’s sole and absolute discretion. In this regard, in order to cover Lender’s expenses of the ongoing
due diligence reviews and any site visits or field examinations which Lender may undertake from time to time while this Agreement
is in effect, the Borrower shall pay to Lender, within five (5) Business Days after receipt of an invoice or demand therefor from
Lender, a fee of up to Ten Thousand and No/100 Dollars (US$10,000.00) per year (based on four (4) expected field audits and ongoing
due diligence of Two Thousand Five Hundred and No/100 Dollars (US$2,500.00) per audit) to cover such ongoing expenses. Failure
to pay such fee as and when required shall be deemed an Event of Default under this Agreement and all other Loan Documents. The
foregoing notwithstanding, from and after the occurrence of an Event of Default or any event which with notice, lapse of time or
both, would become an Event of Default, Lender may conduct site visits, field examinations and other ongoing reviews of the Credit
Parties’ records, assets and operations at any time, in its sole discretion, without any limitations in terms of number of
site visits or examinations and without being limited to the fee hereby contemplated, all at the sole expense of Borrower.


 


10.13      Notice
and Other Reports. Borrower shall provide prompt written notice to Lender if at any time the Credit Parties fail to
comply with any of the covenants in Section 11 herein. In addition, Borrower shall, within such period of time as
Lender may reasonably specify, deliver to Lender such other schedules and reports as Lender may reasonably require.


 


10.14      Collateral
Records. The Credit Parties shall keep full and accurate books and records relating to the Collateral and shall mark such books
and records to indicate Lender’s Lien in the Collateral including placing a legend, in form and content reasonably acceptable
to Lender, on all Chattel Paper created by the Credit Parties indicating that Lender has a Lien in such Chattel Paper.


 




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10.15      Notice
of Proceedings. Borrower shall, promptly, but not more than five (5) days after knowledge thereof shall have come to the attention
of any officer of the Credit Parties, give written notice to Lender of all threatened or pending actions, suits, and Proceedings
before any Governmental Agency or other administrative agency, or before or involving any other Person, which may have a Material
Adverse Effect.


 


10.16      Notice
of Default. Borrower shall, promptly, but not more than five (5) days after the commencement thereof, give notice to Lender
in writing of the occurrence of an Event of Default or of any event which, with the lapse of time, the giving of notice or both,
would constitute an Event of Default hereunder.


 


10.17      Environmental
Matters. If any release or threatened release or other disposal of Hazardous Substances shall occur or shall have occurred
on any real property or any other assets of the Credit Parties or any Subsidiary or Affiliate of the Credit Parties, the Credit
Parties shall cause the prompt containment and/or removal of such Hazardous Substances and the remediation and/or operation of
such real property or other assets as necessary to comply with all Environmental Laws and to preserve the value of such real property
or other assets. Without limiting the generality of the foregoing, the Credit Parties shall comply with any Federal or state judicial
or administrative order requiring the performance at any real property of the Credit Parties of activities in response to the release
or threatened release of a Hazardous Substance. To the extent that the transportation of Hazardous Substances is permitted by this
Agreement, Borrower shall dispose of such Hazardous Substances, or of any other wastes, only at licensed disposal facilities operating
in compliance with Environmental Laws.


 


10.18      Subsidiaries.
Any Subsidiary which is formed or acquired or otherwise becomes a Subsidiary of the Credit Parties following the date hereof, within
five (5) Business Days of such event, shall become an additional the Credit Party hereto, and the Borrower shall take any and all
actions necessary or required by Lender to cause said Subsidiary to execute a counterpart to this Agreement and any and all other
documents which the Lender shall require, including causing such party to execute those documents contained in Section 3.12
hereof.


 


10.19      Rule
144. With a view to making available to Lender the benefits of Rule 144 under the Securities Act (“Rule
144”), or any similar rule or regulation of the SEC that may at any time permit Lender to sell the Advisory Fee
Shares or other shares of Common Stock issuable to Lender under any Loan Documents to the public without registration, the Borrower
represents and warrants that: (i) Borrower is not an issuer defined as a “Shell Company” (as hereinafter defined);
and (ii) if Borrower has, at any time, been an issuer defined as a “Shell Company,” Borrower has not been an issuer
defined as a Shell Company for at least twelve (12) months prior to the Effective Date. For the purposes hereof, the term “Shell
Company” shall mean an issuer that meets the description defined under Rule 144. In addition, so long as Lender
owns, legally or beneficially, any securities of Borrower, Borrower shall, at its sole expense:


 




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(a)          Make,
keep and ensure that adequate current public information with respect to Borrower, as required in accordance with Rule 144, is
publicly available;


 


(b)          furnish
to the Lender, promptly upon reasonable request: (A) a written statement by Borrower that it has complied with the reporting requirements
of Rule 144; and (b) such other information as may be reasonably requested by Lender to permit the Lender to sell any of the Advisory
Fee Shares or other shares of Common Stock acquired hereunder or under the Promissory Note pursuant to Rule 144 without limitation
or restriction; and


 


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


 




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10.20      Reporting
Status; Listing. The Borrower shall, within one hundred twenty (120) days from the Closing Date (the “Reporting
Date”), provide to Lender a complete set of audited financial statements of the Borrower and all of its Subsidiaries,
in a form and content as required by the SEC for fully reporting companies. In addition, by the Reporting Date, the Borrower shall
have become a full reporting company required to file periodic reports with the SEC under the Exchange Act, and have its Common
Stock registered with the SEC under Section 12 of the Exchange Act, and provide to Lender evidence acceptable to the Lender of
compliance with each of the foregoing requirements. In addition, immediately after the Reporting Date, the Borrower shall obtain
approval for the listing and quotation of the Common Stock on the OTC Bulletin Board, or another Principal Trading Market more
senior and established than the OTC Pink Sheets and approved by Lender, and to have such Common Stock trading in such Principal
Trading Market. In that regard, the Borrower shall file all required applications, reports, statements and all other documents,
and pay all required fees and costs, necessary or required in order for the Borrower to accomplish the foregoing requirements.
Once the Borrower becomes a fully reporting company with the SEC, then so long as Lender owns, legally or beneficially, or has
the right to receive, any shares of Common Stock, the Borrower shall: (i) file in a timely manner all reports required to be filed
under the Securities Act, the Exchange Act or any securities laws and regulations thereof applicable to the Borrower of any state
of the United States or any foreign jurisdiction, or by the rules and regulations of the Principal Trading Market, and, to provide
a copy thereof to the Lender promptly after such filing; (ii) not terminate its status as an issuer required to file reports under
the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination; (iii)
if required by the rules and regulations of the Principal Trading Market, promptly secure the listing of the Advisory Fee Shares
or any other shares of Common Stock issuable to Lender under any of the Loan Documents upon the Principal Trading Market (subject
to official notice of issuance) and, take all reasonable action under its control to maintain the continued listing, quotation
and trading of its Common Stock (including, without limitation, the Advisory Fee Shares or any other shares of Common Stock issuable
to Lender under any of the Loan Documents) on the Principal Trading Market, and the Borrower shall comply in all respects with
the Borrower’s reporting, filing and other obligations under the bylaws or rules of the Principal Trading Market, the Financial
Industry Regulatory Authority, Inc. and such other Governmental Authorities, as applicable. The Borrower shall promptly provide
to Lender copies of any notices it receives from the SEC or any Principal Trading Market, to the extent any such notices could
in any way have or be reasonably expected to have a Material Adverse Effect.


 




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10.21      Reservation
of Shares. Borrower shall take all action reasonably necessary to at all times have authorized, and reserved for the purpose
of issuance, such number of shares of Common Stock as shall be necessary to effect the full conversion of the Promissory Note in
accordance with its terms (the “Share Reserve”). If at any time the Share Reserve is insufficient to
effect the full conversion of the Promissory Note then outstanding, Borrower shall increase the Share Reserve accordingly. If Borrower
does not have sufficient authorized and unissued shares of Common Stock available to increase the Share Reserve, Borrower shall
call and hold a special meeting of the shareholders within forty-five (45) days of such occurrence, or take action by the written
consent of the holders of a majority of the outstanding shares of Common Stock, if possible, for the sole purpose of increasing
the number of shares authorized. Borrower’s management shall recommend to the shareholders to vote in favor of increasing
the number of shares of Common Stock authorized.


 


10.22      Debt-Exchange.
If at any time: (i) the Borrower is in an “Over-Advance” (as such term is hereinafter defined); (ii) there is an Event
of Default; or (ii) if there is an event which has occurred that, with the passage of time, the giving of notice, or both, would
constitute an Event of Default, the Lender shall have the option to sell the Obligations, or a portion thereof, to a debt buyer
approved by Lender, which debt buyer shall then convert such debt into equity through a debt exchange under Section 3(a)(9) or
3(a)(10) of the Securities Act (the “Debt Exchange”). The Credit Parties agree to enter into the Debt
Exchange upon Lender’s demand, and the Credit Parties shall execute and deliver any and all agreements or documents related
to such Debt Exchange, as may be required by Lender or such debt buyer, and to otherwise cooperate in any other respect to accomplish
the Debt Exchange.


 


		11.	FINANCIAL COVENANTS.



 


11.1        Revenue
Covenant. For each calendar quarter while this Agreement remains in effect, the Credit Parties shall have sales revenues for
such calendar quarter that are not less than seventy-five percent (75%) of the sales revenues shown for the corresponding calendar
quarter on the most recent of the Financial Statements (i.e. comparing third quarter results to the prior years’ third quarter
results).


 




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11.2        Loan
to Value Ratio. The aggregate outstanding principal balance of all Loans hereunder shall never exceed the lesser of: (i) eighty
percent (80%) of the then existing Eligible Accounts; or (ii) eighty percent (80%) of the value of all Collateral, as determined
by Lender in its sole and absolute discretion (the “Loan Availability”). In the event at any time the
aggregate outstanding principal balance of all Loans hereunder exceeds the Loan Availability (an “Over-advance”),
Borrower shall be obligated to eliminate such Over-advance as follows: (A) if the Over-advance exists as of the Effective Date,
then: (I) Lender shall determine the amount of the Over-advance, as well as the estimated amount of a payment (“Estimated
Over-advance Payment”) to be made by Borrower at such payment intervals as Lender may determine, to be applied
against the principal balance of the outstanding Loans, such that the Over-advance would be eliminated over a one hundred twenty
(120) day period from the Effective Date (Lender shall have the right to modify the amount of the Estimated Over-advance Payment
from time to time upon notice to Borrower as necessary to cause the elimination of the Over-advance over the one hundred twenty
(120) day period contemplated hereby); and (II) Lender shall notify Borrower of the amount of the Estimated Over-advance Payment,
and on each payment interval selected by Lender, Borrower shall make the Estimated Over-Advance Payment to Lender; or (B) if an
Over-advance should occur after the Effective Date and during the term of this Agreement, then: (I) Lender shall determine, in
its sole discretion, whether: (1) the Over-advance needs to be paid immediately; or (2) the Over-advance can be cured during a
period of time as determined by Lender, in its sole discretion, and if so, what other conditions Lender may impose in connection
with such cure period. If Lender elects option (1), then Borrower shall, upon notice or demand from Lender, immediately make such
repayments of the Loans or take such other actions as shall be necessary to immediately eliminate such Over-advance in full. If
Lender elects option (2) above, then Lender shall determine the amount of the Over-advance, the cure period available to Borrower
in which to eliminate the Over-advance, and any other conditions to be satisfied by Borrower in connection with the cure period
selected by Lender for elimination of the Over-advance, as well as the Estimated Over-advance Payment to be made by Borrower at
such payment intervals as Lender may determine, to be applied against the principal balance of the outstanding Loans, such that
the Over-advance would be eliminated over whatever cure period shall have been elected by Lender, in its sole discretion (Lender
shall have the right to modify the amount of the Estimated Over-advance Payment from time to time upon notice to Borrower as necessary
to cause the elimination of the Over-advance over the cure period selected by Lender); and (II) Lender shall notify Borrower of
the amount of the Estimated Over-advance Payment, the cure period selected by Lender during which the Over-advance must be eliminated,
and any other conditions applicable thereto, and on each payment interval selected by Lender, Borrower shall make the Estimated
Over-Advance Payment to Lender, such that the Over-advance is eliminated in full in the period of time selected by Lender therefor.
Credit Parties shall also satisfy whatever other conditions may be imposed by Lender as conditions to allowing Credit Parties
a cure period to eliminate the Over-advance.


 


		12.	EVENTS OF DEFAULT.



 


Credit Parties, without
notice or demand of any kind (except as specifically provided in this Agreement), shall be in default under this Agreement upon
the occurrence of any of the following events (each an “Event of Default”):


 


12.1        Nonpayment
of Obligations. Any amount due and owing on the Promissory Note or any of the Obligations, whether by its terms or as otherwise
provided herein, is not paid on the date such amount is due.


 


12.2        Misrepresentation.
Any written warranty, representation, certificate or statement of the Credit Parties in this Agreement, the Loan Documents or any
other agreement with Lender shall be false or misleading in any material respect when made or deemed made.


 


12.3        Nonperformance.
Any failure to perform or default in the performance of any covenant, condition or agreement contained in this Agreement (not otherwise
addressed in this Article 12), which failure to perform or default in performance continues for a period of ten (10) days
after any Credit Party receives notice from Lender of such failure to perform or default in performance (provided that if the failure
to perform or default in performance is not capable of being cured, in Lender’s reasonable discretion, then the cure period
set forth herein shall not be applicable and the failure or default shall be an immediate Event of Default hereunder).


 




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12.4        Default
under Loan Documents. Any failure to perform or default in the performance by any Credit Party that continues after applicable
grace and cure periods under any covenant, condition or agreement contained in any of the other Loan Documents or any other agreement
with Lender, all of which covenants, conditions and agreements are hereby incorporated in this Agreement by express reference.


 


12.5        Default
under Other Obligations. Any default by Borrower in the payment of principal, interest or any other sum for any other obligation
beyond any period of grace provided with respect thereto or in the performance of any, other term, condition or covenant contained
in any agreement (including any capital or operating lease or any agreement in connection with the deferred purchase price of property),
the effect of which default is to cause or permit the holder of such obligation (or the other party to such other agreement) to
cause such obligation or agreement to become due prior to its stated maturity, to terminate such other agreement, or to otherwise
modify or adversely affect such obligation or agreement in a manner that could have a Material Adverse Effect on any Credit Party.


 


12.6        Assignment
for Creditors. Any Credit Party makes an assignment for the benefit of creditors, fails to pay, or admits in writing its inability
to pay its debts as they mature; or if a trustee of any substantial part of the assets of the Credit Parties is applied for or
appointed, and in the case of such trustee being appointed in a Proceeding brought against any of the Credit Parties, the Credit
Parties, by any action or failure to act indicates its approval of, consent to, or acquiescence in such appointment and such appointment
is not vacated, stayed on appeal or otherwise shall not have ceased to continue in effect within sixty (60) days after the date
of such appointment.


 


12.7        Bankruptcy.
Any Proceeding involving any of the Credit Parties, is commenced by or against any of the Credit Parties under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law or statute of the federal government
or any state government, and in the case of any such Proceeding being instituted against any of the Credit Parties: (i) the Credit
Parties, by any action or failure to act, indicates its approval of, consent to or acquiescence therein; or (ii) an order shall
be entered approving the petition in such Proceedings and such order is not vacated, stayed on appeal or otherwise shall not have
ceased to continue in effect within sixty (60) days after the entry thereof.


 


12.8        Judgments.
The entry of any judgment, decree, levy, attachment, garnishment or other process, or the filing of any Lien against the property
of any of the Credit Parties, unless such judgment or other process shall have been, within sixty (60) days from the entry
thereof: (i) bonded over to the satisfaction of Lender and appealed; (ii) vacated; or (iii) discharged.


 


12.9        Material
Adverse Effect. A Material Adverse Effect shall occur.


 


12.10      Change
in Control. Except as permitted under this Agreement, any Change in Control shall occur; provided, however, a Change in Control
shall not constitute an Event of Default if: (i) it arises out of an event or circumstance beyond the reasonable control of the
Credit Parties (for example, but not by way of limitation, a transfer of ownership interest due to death or incapacity); and (ii)
within sixty (60) days after such Change in Control, the Credit Parties provide Lender with information concerning the identity
and qualifications of the individual or individuals who will be in Control, and such individual or individuals shall be acceptable
to Lender, in Lender’s sole discretion.


 




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12.11      Collateral
Impairment. The entry of any judgment, decree, levy, attachment, garnishment or other process, or the filing of any Lien against,
any of the Collateral or any collateral under a separate security agreement securing any of the Obligations, and such judgment
or other process shall not have been, within thirty (30) days from the entry thereof: (i) bonded over to the satisfaction of Lender
and appealed; (ii) vacated; or (iii) discharged, or the loss, theft, destruction, seizure or forfeiture, or the occurrence of any
material deterioration or impairment of any of the Collateral or any of the Collateral under any security agreement securing any
of the Obligations, or any material decline or depreciation in the value or market price thereof (whether actual or reasonably
anticipated), which causes the Collateral, in the sole opinion of Lender acting in good faith, to become unsatisfactory as to value
or character, or which causes Lender to reasonably believe that it is insecure and that the likelihood for repayment of the Obligations
is or will soon be impaired, time being of the essence. The cause of such deterioration, impairment, decline or depreciation shall
include, but is not limited to, the failure by the Credit Parties to do any act deemed reasonably necessary by Lender to preserve
and maintain the value and collectability of the Collateral.


 


12.12      Adverse
Change in Financial Condition. The determination in good faith by Lender that a material adverse change has occurred in the
financial condition or operations of the any of the Credit Parties, or the Collateral, which change could have a Material Adverse
Effect, or otherwise adversely affect the prospect for Lender to fully and punctually realize the full benefits conferred on Lender
by this Agreement, or the prospect of repayment of all Obligations.


 


12.13      Adverse
Change in Value of Collateral. The determination in good faith by Lender that the security for the Obligations is or has become
inadequate.


 


12.14      Prospect
of Payment or Performance. The determination in good faith by Lender that the prospect for payment or performance of any of
the Obligations is impaired for any reason.


 


		13.	REMEDIES.



 


(a)          Upon
the occurrence and during the continuance of an Event of Default, Lender shall have all rights, powers and remedies set forth
in the Loan Documents, in any written agreement or instrument (other than this Agreement or the Loan Documents) relating to any
of the Obligations or any security therefor, or as otherwise provided at law or in equity. Without limiting the generality of
the foregoing, Lender may, at its option, upon the occurrence and during the continuance of an Event of Default, declare its commitments
to Borrower to be terminated and all Obligations to be immediately due and payable; provided, however, that upon
the occurrence of an Event of Default under either Section 12.6, “Assignment for Creditors”, or Section
12.7, “Bankruptcy”, all commitments of Lender to Borrower shall immediately terminate and all Obligations shall
be automatically due and payable, all without demand, notice or further action of any kind required on the part of Lender. The
Credit Parties hereby waive any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in
connection with the enforcement of Lender’s rights under the Loan Documents, and hereby consents to, and waives notice of
release, with or without consideration, of the Credit Parties or of any Collateral, notwithstanding anything contained herein
or in the Loan Documents to the contrary.


 




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(b)          No
Event of Default shall be waived by Lender, except and unless such waiver is in writing and signed by Lender. No failure or delay
on the part of Lender in exercising any right, power or remedy hereunder shall operate as a waiver of the exercise of the same
or any other right at any other time; nor shall any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or remedy hereunder. There shall be no obligation on
the part of Lender to exercise any remedy available to Lender in any order. The remedies provided for herein are cumulative and
not exclusive of any remedies provided at law or in equity. The Credit Parties agree that in the event that Borrower fails to perform,
observe or discharge any of its Obligations or liabilities under this Agreement, the Promissory Note, and other Loan Documents,
or any other agreements with Lender, no remedy of law will provide adequate relief to Lender, and further agrees that Lender shall
be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.


 


		14.	MISCELLANEOUS.



 


14.1        Obligations
Absolute. None of the following shall affect the Obligations of the Credit Parties to Lender under this Agreement or Lender’s
rights with respect to the Collateral:


 


(a)          acceptance
or retention by Lender of other property or any interest in property as security for the Obligations;


 


(b)          release
by Lender of all or any part of the Collateral or of any party liable with respect to the Obligations (other than Borrower);


 


(c)          release,
extension, renewal, modification or substitution by Lender of the Promissory Note, or any note evidencing any of the Obligations;
or


 


(d)          failure
of Lender to resort to any other security or to pursue the Credit Parties or any other obligor liable for any of the Obligations
before resorting to remedies against the Collateral.


 


14.2        Entire
Agreement. This Agreement and the other Loan Documents: (i) are valid, binding and enforceable against the Credit Parties and
Lender in accordance with its provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire agreement
between the parties; and (iii) are the final expression of the intentions of the Credit Parties and Lender. No promises, either
expressed or implied, exist between the Credit Parties and Lender, unless contained herein or in the Loan Documents. This Agreement
and the Loan Documents supersede all negotiations, representations, warranties, commitments, offers, contracts (of any kind or
nature, whether oral or written) prior to or contemporaneous with the execution hereof.


 


14.3        Amendments;
Waivers. No amendment, modification, termination, discharge or waiver of any provision of this Agreement or of the Loan Documents,
or consent to any departure by the Credit Parties therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender, and then such waiver or consent shall be effective only for the specific purpose for which given.


 




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14.4        WAIVER
OF DEFENSES. THE CREDIT PARTIES WAIVE EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE CREDIT
PARTIES MAY HAVE AS OF THE DATE HEREOF TO ANY ACTION BY LENDER IN ENFORCING THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. THE CREDIT
PARTIES WAIVE ANY IMPLIED COVENANT OF GOOD FAITH AND RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO PURSUANT TO THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AS OF THE DATE OF THIS AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING
ANY FINANCIAL ACCOMMODATION TO BORROWER.


 


14.5        WAIVER
OF JURY TRIAL. LENDER AND CREDIT PARTIES, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON,
OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE PROMISSORY NOTE, ANY LOAN DOCUMENT OR ANY OF THE OBLIGATIONS,
THE COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE
OF CONDUCT OR COURSE OF DEALING IN WHICH LENDER AND CREDIT PARTIES ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER.


 


14.6        MANDATORY
FORUM SELECTION. TO INDUCE LENDER TO MAKE THE LOANS, CREDIT PARTIES IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER, RELATING
TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL
TO THIS AGREEMENT ANY OTHER LOAN DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT)
SHALL, EXCEPT AS HEREINAFTER PROVIDED, BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED
IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, LENDER MAY, AT LENDER’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER
JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED
CONSISTENT WITH FLORIDA LAW. BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING
ITS SITUS IN SAID COUNTY (OR TO ANY OTHER JURISDICTION OR VENUE, IF LENDER SO ELECTS), AND WAIVES ANY OBJECTION BASED ON FORUM
NON CONVENIENS. CREDIT PARTIES HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER, AS SET FORTH HEREIN OR IN THE MANNER PROVIDED BY
APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.


 




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14.7        Usury
Savings Clause. Notwithstanding any provision in this Agreement or the other Loan Documents, the total liability for payments
of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums
which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing
this Agreement or any other applicable law. In the event the total liability of payments of interest and payments in the nature
of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest,
shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period
exceeds the limit imposed by the usury laws of the jurisdiction governing this Agreement, all sums in excess of those lawfully
collectible as interest for the period in question shall, without further agreement or notice by, between, or to any party hereto,
be applied to the reduction of the outstanding principal balance of this Agreement immediately upon receipt of such sums by the
Lender, with the same force and effect as though the Borrower had specifically designated such excess sums to be so applied to
the reduction of such outstanding principal balance and the Lender hereof had agreed to accept such sums as a penalty-free payment
of principal; provided, however, that the Lender may, at any time and from time to time, elect, by notice in writing to the Borrower,
to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest rather than accept such
sums as a prepayment of the outstanding principal balance. It is the intention of the parties that the Borrower do not intend or
expect to pay nor does the Lender intend or expect to charge or collect any interest under this Agreement greater than the highest
non-usurious rate of interest which may be charged under applicable law.


 


14.8        Assignability.
Lender may at any time assign Lender’s rights in this Agreement, the Promissory Note, any Loan Documents, the Obligations,
or any part thereof, and transfer Lender’s rights in any or all of the Collateral, all without the Credit Parties’
consent or approval, and Lender thereafter shall be relieved from all liability with respect to such instrument or Collateral so
transferred. In addition, Lender may at any time sell one or more participations in the Loans, all without the Credit Parties’
consent or approval. The Credit Parties may not sell or assign this Agreement, any Loan Document or any other agreement with Lender,
or any portion thereof, either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder or thereunder,
without the prior written consent of Lender, which consent may be withheld in Lender’s sole and absolute discretion. This
Agreement shall be binding upon Lender and the Credit Parties and their respective legal representatives, successors and permitted
assigns. All references herein to a Credit Party shall be deemed to include any successors, whether immediate or remote. In the
case of a joint venture or partnership, the term “Borrower” or “Credit Party” shall be deemed to include
all joint venturers or partners thereof, who shall be jointly and severally liable hereunder.


 


14.9        Confidentiality.
Each of the Credit Parties shall keep confidential any information obtained from Lender (except information publicly available
or in Credit Parties’ domain prior to disclosure of such information from Lender, and except as required by applicable laws)
and shall promptly return to the Lender all schedules, documents, instruments, work papers and other written information without
retaining copies thereof, previously furnished by it as a result of this Agreement or in connection herewith.


 




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14.10      Publicity.
Lender shall have the right to approve, before issuance, any press release or any other public statement with respect to the transactions
contemplated hereby made by the Credit Parties; provided, however, that the Credit Parties shall be entitled, without the prior
approval of Lender, to issue any press release or other public disclosure with respect to such transactions required under applicable
securities or other laws or regulations. Notwithstanding the foregoing, the Credit Parties shall use its best efforts to consult
Lender in connection with any such press release or other public disclosure prior to its release and Lender shall be provided with
a copy thereof upon release thereof. Lender shall have the right to make any press release with respect to the transactions contemplated
hereby without the Credit Parties’ approval. In addition, with respect to any press release to be made by Lender, Borrower
hereby authorizes and grants blanket permission to Lender to include the Borrower’s stock symbol, if any, in any press releases.
Borrower shall, promptly upon request, execute any additional documents of authority or permission as may be requested by Lender
in connection with any such press releases.


 


14.11      Binding
Effect. This Agreement shall become effective upon execution by the Credit Parties and Lender.


 


14.12      Governing
Law. Except in the case of the Mandatory Forum Selection Clause in Section 14.6 above, which clause shall be governed
and interpreted in accordance with Florida law, this Agreement, the Loan Documents and the Promissory Note shall be delivered and
accepted in, and shall be deemed to be contracts made under and governed by, the internal laws of the State of Nevada, and for
all purposes shall be construed in accordance with the laws of the State of Nevada, without giving effect to the choice of law
provisions of such State. The governing law provisions of this Section 14.12 are a material inducement for Lender to enter
into this Agreement, and the Borrower hereby agrees, acknowledges and understands that the Lender would not have entered into this
Agreement, nor made or provided the Loans, without the full agreement and consent of the Credit Parties, with full knowledge and
understanding, that except in the case of the Mandatory Forum Selection Clause in Section 14.6 above, which clause shall
be governed and interpreted in accordance with Florida law, this Agreement, and each of the Loan Documents, shall be governed by
the internal laws of the State of Nevada, and for all purposes shall be construed in accordance with the laws of the State of Nevada,
without giving effect to the choice of law provisions. In this regard, each of the Credit Parties hereby acknowledges that it has
reviewed this Agreement and all Loan Documents, and specifically, this Section 14.12, with competent counsel selected by
the Credit Parties, and in that regard, each of the Credit Parties fully understands the choice of law provisions set forth in
this Section. In addition, each of the Credit Parties agrees, and acknowledges that it has had an opportunity to negotiate the
terms and provisions of this Agreement and the other Loan Documents with and through its counsel, and that the Credit Parties have
sufficient leverage and economic bargaining power, and have used such leverage and economic bargaining power, to fairly and fully
negotiate this Agreement and the other Loan Documents in a manner that is acceptable to the Credit Parties. Moreover, because of
the material nature of this choice of law provision in inducing Lender to enter into this Agreement and to make the Loans to the
Credit Parties, each of the Credit Parties hereby fully and absolutely waives any and all rights to make any claims, counterclaims,
defenses, to raise or make any arguments (including any claims, counterclaims, defenses, or arguments based on grounds of public
policy, unconscionability, or implied covenants of fair dealing and good faith), or to otherwise undertake any litigation strategy
or maneuver of any nature or kind that would result in, or which otherwise seeks to, invalidate this choice of law provision, or
that would otherwise result in or require the application of the laws of any other State other than the State of Nevada in the
interpretation or governance of this Agreement or any other Loan Documents (except for the Mandatory Forum Selection clause in
Section 14.6 hereof). Each of the Credit Parties has carefully considered this Section 14.12 and has carefully reviewed
its application and effect with competent counsel, and in that regard, fully understands and agrees that Lender would not have
entered into this Agreement, nor made the Loans, without the express agreement and acknowledgement of each of the Credit Parties
to this choice of law provision, and the express waivers set forth herein.


 




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14.13      Enforceability.
Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such provision
shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity, without invalidating
the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.


 


14.14      Survival
of Borrower’s Representations. All covenants, agreements, representations and warranties made by the Credit Parties herein
shall, notwithstanding any investigation by Lender, be deemed material and relied upon by Lender and shall survive the making and
execution of this Agreement and the Loan Documents and the issuance of the Promissory Note, and shall be deemed to be continuing
representations and warranties until such time as the Credit Parties have fulfilled all of its Obligations to Lender, and Lender
has been indefeasibly paid in full. Lender, in extending financial accommodations to Borrower, is expressly acting and relying
on the aforesaid representations and warranties.


 


14.15      Extensions
of Lender’s Commitment and the Promissory Note. This Agreement shall secure and govern the terms of any extensions or
renewals of Lender’s commitment hereunder and the Promissory Note pursuant to the execution of any modification, extension
or renewal note executed by Borrower, consented and agreed to by the Guarantors, and accepted by Lender in its sole and absolute
discretion in substitution for the Promissory Note.


 


14.16      Time
of Essence. Time is of the essence in making payments of all amounts due Lender under this Agreement and in the performance
and observance by the Credit Parties of each covenant, agreement, provision and term of this Agreement.


 


14.17      Execution.
This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and
the same Agreement. In the event that any signature of this Agreement or any other Loan Documents is delivered by facsimile transmission
or by e-mail delivery of a “.pdf’ format file or other similar format file, such signature shall be deemed an original
for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as
if such facsimile or “.pdf’ signature page was an original thereof. Notwithstanding the foregoing, Lender shall not
be obligated to accept any document or instrument signed by facsimile transmission or by e-mail delivery of a “.pdf’
format file or other similar format file as an original, and may in any instance require that an original document be submitted
to Lender in lieu of, or in addition to, any such document executed by facsimile transmission or by e-mail delivery of a “.pdf’
format file or other similar format file.


 




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14.18      Notices.
Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must
be in writing and in each case properly addressed to the party to receive the same in accordance with the information below, and
will be deemed to have been delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly
addressed to the address below, then three (3) Business Days after deposit of same in a regularly maintained U.S. Mail receptacle;
or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, overnight delivery, then one
(1) Business Day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered,
then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a Business Day. Any notice hand delivered
after 5:00 p.m., EST, shall be deemed delivered on the following Business Day. Notwithstanding the foregoing, notice, consents,
waivers or other communications referred to in this Agreement may be sent by facsimile, e-mail, or other method of delivery, but
shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written
confirmation) that the notice has been received by the other party. The addresses and facsimile numbers for such communications
shall be as set forth below, unless such address or information is changed by a notice conforming to the requirements hereof. No
notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other
circumstances:


 


	If to any Credit Party:	Drone USA, Inc.
	 	One World Trade Center
	 	285 Fulton Street, Suite 8500
	 	New York, NY 10007





	 	Attention:	Mike Bannon, CEO
	 	E-Mail:	mike@dronelusa.com


 


	With a copy to:	Davisson & Associates, PA
	 	4124 Quebec Avenue North, Suite 306
	 	Minneapolis, MN 55427



	 	Attention: 	Peder Davisson, Esq.
	 	E-mail: 	pederd@davissonpa.com


 


	If to the Lender:	TCA Global Credit Master Fund, LP
	 	3960 Howard Hughes Parkway, Suite 500
	 	Las Vegas, Nevada 89169



	 	Attention: 	Robert Press, Director
	 	E-Mail: 	bpress@tcaglobalfund.com


 


	With a copy to:	TCA Global Credit Master Fund, LP
	 	19950 W. Country Club Dr., First Floor
	 	Aventura, FL 33180



	 	Attention: 	Robert Press, Director
	 	E-Mail: 	bpress@tcaglobalfund.com


 


	With a copy to:	David Kahan, P.A.
	 	6420 Congress Ave., Suite 1800
	 	Boca Raton, FL 33487



	 	Attention: 	David Kahan, Esq.
	 	E-Mail: 	david@dkpalaw.com


 




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14.19      Indemnification.
As a material inducement for Lender to enter into this Agreement, the Credit Parties agree to defend, protect, indemnify and hold
harmless Lender, and its parent companies, Subsidiaries, Affiliates, divisions, and their respective attorneys, officers, directors,
agents, shareholders, members, partners, employees, and representatives, and the predecessors, successors, assigns, personal representatives,
heirs and executors of each of them (including those retained in connection with the transactions contemplated by this Agreement)
(each, a “Lender Indemnitee” and collectively, the “Lender Indemnitees”)
from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, Proceedings, suits, claims,
costs, expenses and distributions of any kind or nature (including the disbursements and the reasonable fees of counsel and paralegals
for each Lender Indemnitee thereto throughout all trial and appellate levels, bankruptcy Proceedings, mediations, arbitrations,
administrative hearings and at all other levels and tribunals), which may be imposed on, incurred by, or asserted against, any
Lender Indemnitee (whether direct, indirect or consequential and whether based on any federal, state or local laws or regulations,
including securities, Environmental Laws and commercial laws and regulations, under common law or in equity, or based on contract,
tort, or otherwise) in any manner relating to or arising out of this Agreement or any of the Loan Documents, or any act, event
or transaction related or attendant thereto, the preparation, execution and delivery of this Agreement and the Loan Documents,
including the making or issuance and management of the Loans, the use or intended use of the proceeds of the Loans, the enforcement
of Lender’s rights and remedies under this Agreement, the Loan Documents, the Promissory Note, any other instruments and
documents delivered hereunder, or under any other agreement between Borrower and Lender. To the extent that the undertaking to
indemnify set forth in the preceding sentence may be unenforceable because it violates any law or public policy, the Credit Parties
shall satisfy such undertaking to the maximum extent permitted by applicable law. Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Lender Indemnitee on demand, and, failing prompt payment, shall,
together with interest thereon at the Default Rate from the date incurred by each Lender Indemnitee until paid by Borrower, be
added to the Obligations of Borrower and be secured by the Collateral. The provisions of this Section shall survive the satisfaction
and payment of the other Obligations and the termination of this Agreement.


 


14.20      Release.
In consideration of the mutual promises and covenants made herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and intending to be legally bound hereby, each Credit Party hereby agrees to fully, finally and
forever release and forever discharge and covenant not to sue the Lender Indemnitees, and each one of them, from any and all debts,
fees, attorneys’ fees, liens, costs, expenses, damages, sums of money, accounts, bonds, bills, covenants, promises, judgments,
charges, demands, claims, causes of action, Proceedings, suits, liabilities, expenses, obligations or contracts of any kind whatsoever,
whether in law or in equity, whether asserted or unasserted, whether known or unknown, fixed or contingent, under statute or otherwise,
from the beginning of time through the Effective Date, including any and all claims relating to or arising out of any financing
transactions, credit facilities, notes, debentures, security agreements, and other agreements, including each of the Loan Documents,
entered into by the Credit Parties with Lender and any and all claims that the Credit Parties do not know or suspect to exist,
whether through ignorance, oversight, error, negligence, or otherwise, and which, if known, would materially affect their decision
to enter into this Agreement or the related Loan Documents. The provisions of this Section shall survive the satisfaction and payment
of the other Obligations and the termination of this Agreement.


 




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14.21      Interpretation.
If any provision in this Agreement requires judicial or similar interpretation, the judicial or other such body interpreting or
construing such provision shall not apply the assumption that the terms hereof shall be more strictly construed against one party
because of the rule that an instrument must be construed more strictly against the party which itself or through its agents prepared
the same. The parties hereby agree that all parties and their agents have participated in the preparation hereof equally.


 


14.22      Compliance
with Federal Law. The Credit Parties shall: (i) ensure that no Person who owns a controlling interest in or otherwise controls
the Credit Parties is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained
by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, included in any Executive
Orders or any other similar lists from any Governmental Authority; (ii) not use or permit the use of the proceeds of the Loans
to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, or
any other similar national or foreign governmental regulations; and (iii) comply with all applicable Lender Secrecy Act (“BSA”)
laws and regulations, as amended. As required by federal law and Lender’s policies and practices, Lender may need to obtain,
verify and record certain customer identification information and documentation in connection with opening or maintaining accounts
or establishing or continuing to provide services.


 


14.23      Consents.
With respect to any provisions of this Agreement or any other Loan Documents which require the consent or approval of Lender, unless
expressly otherwise provided in any such provision, such consent or approval may be granted, conditioned, or withheld by Lender
in its sole and absolute discretion. In any event, when any consent or approval of Lender is required under this Agreement or any
other Loan Documents, the Credit Parties shall not be entitled to make any claim for, and the Credit Parties hereby expressly waives
any claim for, damages incurred by the Credit Parties by reason of Lender’s granting, conditioning or withholding any such
consent or approval, and the Credit Parties’ sole and absolute remedy with respect thereto shall be an action for specific
performance. To the extent any consent or approval is given by Lender under any provision hereunder or under any other Loan Documents,
such consent or approval shall only be applicable to the specific instance to which it relates and shall not be deemed to be a
continuing or future consent or approval, and any such consent or approval shall not impose any liability or warranty obligation
on the Lender.


 


14.24      Non-U.S.
Status. THE LENDER IS A NON-U.S. PERSON AS THAT TERM IS DEFINED IN THE UNITED STATES INTERNAL REVENUE CODE. IT IS HEREBY AGREED
AND UNDERSTOOD THAT THE OBLIGATIONS HEREUNDER MAY BE SOLD OR RESOLD ONLY TO NON-U.S. PERSONS. THE INTEREST PAYABLE HEREUNDER IS
PAYABLE ONLY OUTSIDE THE UNITED STATES. ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAW.


 




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14.25      Escrow
for Auditors Fees.


 


(a)          The
Credit Parties have disclosed to Lender that the Credit Parties have certain anticipated obligations for auditor’s fees due
to Friedman LLP in connection with the completion of 2014 and 2015 audits of Drone USA, Inc. and Howco Distributing Co., in an
anticipated approximate amount of $75,000 (the “Auditor’s Fee Obligations”). In this regard, in
connection with the funding of the Initial Loan hereunder on the Effective Date, the Lender shall fund and disburse the full amount
of the Initial Loan; provided, however, the Escrow Agent shall withhold, from the Initial Loan proceeds, an amount on account of
the Auditor’s Fee Obligations of $75,000 (the “Withheld Amount”). The Withheld Amount shall be
held by David Kahan, P.A., as “Escrow Agent” hereunder, and shall only be released in accordance with
the terms and provisions set forth in this Section 14.25 and Section 14.26 below. The Credit Parties acknowledge
and agree that the Withheld Amount shall be deemed to be disbursed as of the Effective Date and shall thus accrue interest as of
the Effective Date in accordance with this Agreement and the other Loan Documents. The Withheld Amount shall be released if, as,
and when the Credit Parties incur and are billed for the Auditor’s Fee Obligations, or any portion thereof, and the Credit
Parties timely pay any such billing and promptly thereafter provide to Lender and Escrow Agent evidence of payment thereof satisfactory
to Lender. Upon receipt of such evidence of payment acceptable to Lender, so long as no Event of Default under this Agreement or
any other Loan Documents exists, and so long as no event has occurred that, with the passage of time, the giving of notice, or
both, would constitute an Event of Default under this Agreement or any other Loan Documents, Lender shall then direct and authorize
Escrow Agent to release to the Credit Parties, from the then remaining Withheld Amount, the amount paid by the Credit Parties,
and evidenced by the payment evidence provided to Lender hereunder.


 


14.26      Matters
Relating to Escrow Agent.


 


(a)          The
Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no implied duties or obligations
shall be read into this Agreement against the Escrow Agent. Escrow Agent agrees to hold the Withheld Amount (the
“Escrowed Property”) in a non-interest bearing account and to release same only in
accordance with the terms and conditions set forth in this Agreement and only upon a written direction from Lender.


 


(b)          The
Escrow Agent may act in reliance upon any writing or instrument (including e-mail) or signature which it, in good faith, believes
to be genuine, may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and
may assume that any Person purporting to give any writing, notice, advice or instructions in connection with the provisions hereof
has been duly authorized to do so. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to
form, manner, and execution, or validity of any instrument deposited in this escrow or given to Escrow Agent under this Agreement,
nor as to the identity, authority, or right of any Person executing the same; and its duties hereunder shall be limited to the
safekeeping of the Escrowed Property, and for the disposition of the same in accordance with this Agreement. Escrow Agent shall
not be deemed to have knowledge of any matter or thing unless and until Escrow Agent has actually received written notice of such
matter or thing and Escrow Agent shall not be charged with any constructive notice whatsoever.


 


(c)          Escrow
Agent shall hold in escrow, pursuant to this Agreement, the Escrowed Property actually delivered and received by Escrow Agent hereunder,
and Escrow Agent shall not be obligated to ascertain the existence of (or initiate recovery of) any other property other than property
actually received by Escrow Agent. If all or any portion of the Escrowed Property is in the form of a check or in any other form
other than cash, Escrow Agent shall deposit same as required but shall not be liable for the nonpayment thereof, nor responsible
to enforce collection thereof. Escrow Agent shall not be liable for failure of any financial institution where the Escrowed Property
is deposited.


 




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(d)          In
the event instructions from Lender, any Credit Parties, or any other Person would require Escrow Agent to expend any monies or
to incur any cost, Escrow Agent shall be entitled to refrain from taking any action until it receives payment for such costs. It
is agreed that the duties of Escrow Agent are purely ministerial in nature and shall be expressly limited to the safekeeping of
the Escrowed Property and for the disposition of same in accordance with this Agreement. The Credit Parties and Lender, jointly
and severally, each hereby indemnifies Escrow Agent and holds it harmless from and against any and all claims, actions, liabilities,
costs and other expenses of any nature or kind, which it may incur or with which it may be threatened, directly or indirectly,
including all attorneys’ fees and costs of litigation, arising from or in any way connected with this Agreement or which
may result from Escrow Agent’s following of instructions from Lender in accordance with this Agreement, except those arising
as a result of Escrow Agent’s gross negligence or willful misconduct. Escrow Agent shall be vested with a lien on all Escrowed
Property under the terms of this Agreement, for indemnification, attorneys’ fees, court costs and all other costs and expenses
arising from any such claims or expenses, interpleader or otherwise, or other expenses, fees or charges of any character or nature,
which may be incurred by Escrow Agent by reason of disputes arising between the Lender and the Credit Parties, or any other Person,
as to the correct interpretation of this Agreement, and instructions given to Escrow Agent hereunder, or otherwise, with the right
of Escrow Agent, regardless of the instruments aforesaid and without the necessity of instituting any proceeding, to hold any property
hereunder until and unless said additional expenses, fees and charges shall be fully paid. Any fees and costs charged by the Escrow
Agent for serving hereunder shall be paid by the Credit Parties.


 


(e)          In
the event Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands
from Lender, the Credit Parties or from any other Person with respect to the Escrowed Property, which, in Escrow Agent’s
sole opinion, are in conflict with each other or with any provision of this Agreement, Escrow Agent shall be entitled to refrain
from taking any action until it shall be directed otherwise in writing by Lender and the Credit Parties and said other Persons,
if any, or by a final order or judgment of a court of competent jurisdiction. If any of the parties shall be in disagreement about
the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by the Escrow
Agent hereunder, the Escrow Agent may, at its sole discretion, deposit the Escrowed Property with a court having jurisdiction over
this Agreement, and, upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall fully
cease and terminate. The Escrow Agent shall be indemnified by the Lender and the Credit Parties for all costs, including reasonable
attorneys’ fees, in connection with the aforesaid proceeding, and shall be fully protected in suspending all or a part of
its activities under this Agreement until a final decision or other settlement in the proceeding is received. In the event Escrow
Agent is joined as a party to a lawsuit by virtue of the fact that it is holding the Escrowed Property, Escrow Agent shall, at
its sole option, either: (i) tender the Escrowed Property in its possession to the registry of the appropriate court; or (ii) disburse
the Escrowed Property in its possession in accordance with the court’s ultimate disposition of the case, and Lender and the
Credit Parties hereby, jointly and severally, indemnify and hold Escrow Agent harmless from and against any damages or losses in
connection therewith including, but not limited to, reasonable attorneys’ fees and court costs at all trial and appellate
levels.


 




    	 	68	 



     


    

  


(f)           The
Escrow Agent may consult with counsel of its own choice (and the costs of such counsel shall be paid by the Credit Parties and
Lender) and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good
faith and in accordance with the opinion of such counsel. The Escrow Agent shall not be liable for any mistakes of fact or error
of judgment, or for any actions or omissions of any kind, unless caused by its willful misconduct or gross negligence.


 


(g)          The
Escrow Agent may resign upon ten (10) days’ written notice to the parties in this Agreement. If a successor Escrow Agent
is not appointed by the Lender and Credit Parties within this ten (10) day period, the Escrow Agent may petition a court of competent
jurisdiction to name a successor.


 


(h)          Conflict
Waiver. The Credit Parties hereby acknowledge that the Escrow Agent is counsel to the Lender in connection with the transactions
contemplated and referred herein. The Credit Parties agree that in the event of any dispute arising in connection with this Agreement
or otherwise in connection with any transaction or agreement contemplated and referred herein, the Escrow Agent shall be permitted
to continue to represent the Lender and the Credit Parties will not seek to disqualify such counsel and waives any objection the
Credit Parties might have with respect to the Escrow Agent acting as the Escrow Agent pursuant to this Agreement. The Lender and
the Credit Parties acknowledge and agree that nothing in this Agreement shall prohibit Escrow Agent from: (i) serving in a similar
capacity on behalf of others; or (ii) acting in the capacity of attorneys for one or more of the parties hereto in connection with
any matter.


 


[REMAINDER OF PAGE LEFT BLANK, SIGNATURE
PAGE FOLLOWS]


 




    	 	69	 



     


    

 


IN WITNESS WHEREOF,
Borrower and Lender have executed this Credit Agreement as of date first above written.


 


BORROWER:


 


DRONE USA, INC., a Delaware corporation


 


	By:	/s/ Michael Bannon	 
	Name:	Michael Bannon	 
	Title:	CEO	 


 


	STATE OF CONNECTICUT	)
	 	SS.
	COUNTY OF NEW HAVEN	)


 


The foregoing instrument
was acknowledged before me this 9 day of September, 2016 by Michael Bannon, who is the CEO of Drone USA, Inc., a Delaware corporation,
on behalf of such entity. He/She is personally known to me or has produced Drivers license as identification.


 


My Commission Expires: 01/31/21


 


	 	/s/ Nadia Sarmiento
	 	Notary Public


 


	 	Nadia Sarmiento
	 	Name of Notary typed or printed


 





	LENDER:	 	 	
	 	 	 
	TCA GLOBAL CREDIT MASTER FUND, LP	 
	 	 	 
	By:	TCA Global Credit Master Fund, LP	 
	Its:	General Partner	 




  


	By:	/s/ Robert Press	 
	Name:	Robert Press	 
	Title:	Director	 


 




    	 	70	 



     


    

 


CONSENT AND AGREEMENT


 


The undersigned, referred to in the foregoing
senior secured credit facility agreement as a guarantor, hereby consents and agrees to said senior secured credit facility agreement
and to the payment of the amounts contemplated therein, documents contemplated thereby, representations and warranties made therein,
and to the provisions contained therein relating to conditions to be fulfilled and obligations to be performed by it pursuant to
or in connection with said senior secured credit facility agreement to the same extent as if the undersigned were a party to said
senior secured credit facility agreement.


 


GUARANTOR:


 


DRONE USA, LLC, a Delaware


limited liability company


 


	By:	/s/ Michael Bannon	 
	Name:	Michael Bannon	 
	Title:	CEO	 


 


	STATE OF CONNECTICUT	)
	 	SS.
	COUNTY OF NEW HAVEN	)


 


The
foregoing instrument was acknowledged before me this 9 day of September, 2016 by Michael Bannon, who is the CEO of Drone USA,
LLC, a Delaware limited liability company, on behalf of such entity. He/She is personally known to me or has produced
Driver’s license as identification.


 


My Commission Expires: 01/31/2021


 


	 	/s/ Nadia Sarmiento
	 	Notary Public


 


	 	Nadia Sarmiento
	 	Name of Notary typed or printed


 





 




    	 	71	 



     


    

 


INDEX OF EXHIBITS


 


	Exhibit A	 	Form of Compliance Certificate
	Exhibit B	 	Form of Guarantee Agreement
	Exhibit C	 	Form of Irrevocable Transfer Agent Instructions
	Exhibit D	 	Form of Pledge Agreements
	Exhibit E	 	Form of Promissory Note
	Exhibit F-1	 	Form of Security Agreement (Borrower)
	Exhibit F-2	 	Form of Security Agreement (Corporate Guarantor)
	Exhibit G 	 	Form of Validity Certificate


 


INDEX OF SCHEDULES


 


	Schedule 7.1	 	Subsidiaries
	Schedule 7.4	 	Capitalization
	Schedule 7.18	 	Real Property
	Schedule 7.21	 	IP Rights
	Schedule 7.28	 	Bank Accounts and Deposit Accounts
	Schedule 7.29	 	Places of Business


 




    	 	72	 



     


    

  


Exhibit A


 


Form of Compliance Certificate


 




    	 	73	 



     


    

 


FORM OF COMPLIANCE CERTIFICATE


 


TCA Global Credit Master Fund, LP


19950 West Country Club Drive, 1st Floor


Aventura, FL 33180


Attention: Bob Press


Facsimile: 786-323-1651


 


Re:   DRONE USA, INC., a Delaware
corporation (the “Borrower”) Covenant Compliance Certificate for the Period Ending on                                    ,
2016 (the “Reporting Date”)


Dear Bob:


 


Reference is made to
that certain Credit Agreement, dated as of May 31, 2016, but made effective as of September 13, 2016 (the “Credit Agreement”),
by and among Borrower, the Guarantors, and TCA Global Credit Master Fund, LP (“Lender”). Capitalized
terms used, but not defined, herein shall have the respective meanings assigned to such terms in the Credit Agreement.


 


Pursuant to Section
10.11 of the Credit Agreement, the undersigned, the President or other chief executive of the Borrower, hereby certifies to
Lender that: (a) all representations and warranties in Section 7 of the Credit Agreement are true and correct as of the
Reporting Date; (b) the undersigned has no knowledge of any default or Event of Default under the Credit Agreement or any other
Loan Documents that has not been cured or waived, except as set forth on Schedule 1 attached hereto; (c) the Credit
Parties are in compliance with the financial covenants contained in Section 11 of the Credit Agreement; (d) to the best
of the undersigned’s knowledge, the Credit Parties have, in all material respects, observed and performed all of their other
covenants and other agreements, and have satisfied every condition contained in the Credit Agreement and the other Loan Documents
to be observed, performed or satisfied by the Credit Parties during the calendar month ending on the Reporting Date; (e) no changes,
effects, impairments, or other events have occurred as of the Reporting Date that could be deemed a Material Adverse Effect; and
(f) attached hereto as Schedule 2 are the computations necessary to determine that Credit Parties are in compliance
with Section 11 of the Credit Agreement as of the Reporting Date referenced above.


 


[THE NEXT PAGE IS THE SIGNATURE PAGE]


 




     


     


    

 


IN WITNESS WHEREOF,
the undersigned President, Manager or other chief executive of each of the Credit Parties hereby certifies to the above as of the
Reporting Date.


 


CREDIT PARTIES:


 


	DRONE USA, INC., a Delaware corporation	 	DRONE USA, LLC, a Delaware limited liability company
	 	 	 	 	 
	By:	 	 	By:	 
	Name:	 	 	Name:	 
	Title:	 	 	Title:	 


 




     


     


    

  


Schedule 1 to Compliance Certificate


 


Events of Default


 




     


     


    

  


Schedule 2 to Compliance Certificate


 


		1.	Revenue Covenant (Section 11.1):



 


As of the Reporting Date:


 


		(a)	For each calendar quarter while this Agreement remains
in effect, Credit Parties shall have sales revenues for such calendar quarter that are not less than seventy-five percent (75%)
of the sales revenues shown on the most recent Financial Statements.



 


		(b)	Credit Parties hereby certify that as of the Reporting
Date, Credit Parties’ sales revenues are $_________, and based on such numbers and expected revenue through the end of the quarter,
Credit Parties [expect/do not expect] to be in compliance with the revenue covenant set forth in Section 11.1 of the Credit
Agreement as of the end of the next upcoming calendar quarter.



 


Please provide calculations below or on an attached
sheet.


 




     


     


    

 


Exhibit B


 


Form of Guarantee Agreement


 




    	 	74	 



     


    

  


GUARANTY AGREEMENT 


(Corporate)


 


This GUARANTY AGREEMENT
is dated as of May 31, 2016, but made effective as of September 13, 2016 (as amended, restated or modified from time to time, the
“Guaranty”), and is made by DRONE USA, LLC, a Delaware limited liability company and HOWCO
DISTRIBUTING CO., a Washington corporation (each of the foregoing parties hereinafter referred to separately as a “Guarantor”
and collectively as the “Guarantors”), in favor of TCA GLOBAL CREDIT MASTER FUND, LP, a limited
partnership organized and existing under the laws of the Cayman Islands (the “Lender”).


 


WHEREAS, pursuant
to a Credit Agreement dated of even date herewith (the “Credit Agreement”) by and between DRONE USA,
INC., a Delaware corporation (the “Borrower”), certain additional Credit Parties, and the Lender,
the Borrower desires to borrow funds and obtain financial accommodations from Lender (such financial accommodations hereinafter
referred to as the “Loan”); and


 


WHEREAS, in order to
induce Lender to enter into the Loan with the Borrower, and with full knowledge that Lender would not enter into this Loan without
this Guaranty, Guarantors, jointly and severally), have agreed to execute and deliver this Guaranty to Lender, for the benefit
of Lender, as security for the Obligations; and


 


WHEREAS, Guarantors
will significantly benefit from the Borrower obtaining the Loan from the Lender;


 


NOW, THEREFORE, in
consideration of the mutual covenants and agreements of the parties hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties each intending to be legally bound, hereby do agree as
follows:


 


		1.	OBLIGATIONS GUARANTEED



 


Guarantors, jointly
and severally, hereby guarantee and become surety to Lender for the full, prompt and unconditional payment of the Obligations,
when and as the same shall become due, whether at the stated maturity date, by acceleration or otherwise, and the full, prompt
and unconditional performance of each term and condition to be performed by Borrower under the Credit Agreement and other Loan
Documents. This Guaranty is a primary obligation of Guarantors and shall be a continuing inexhaustible Guaranty. This is a guaranty
of payment and not of collection. Lender may require Guarantors to pay and perform their liabilities and obligations under this
Guaranty and may proceed immediately against Guarantors without being required to bring any proceeding or take any action against
Borrower or any other Person prior thereto; the liability of Guarantors hereunder being independent of and separate from the liability
of Borrower, any other guarantor, any other Person, and the availability of other Collateral security for the Loan and the other
Loan Documents.


 




    	 	1	 



     


    

 


		2.	DEFINITIONS



 


All capitalized terms
used in this Guaranty that are defined in the Credit Agreement shall have the meanings assigned to them in the Credit Agreement,
unless the context of this Guaranty requires otherwise.


 


		3.	REPRESENTATIONS AND WARRANTIES. Each Guarantor represents
and warrants to Lender as follows:



 


3.1.         Organization,
Powers. Each Guarantor is duly incorporated or organized and validly exists and is in good standing under their respective
jurisdiction of organization. Each Guarantor has the power and authority to own its properties and assets and to carry on its business
as now being conducted and as now contemplated and has the power and authority to execute, deliver and perform and by all necessary
action has authorized the execution, delivery and performance of, all of its obligations under this Guaranty and any other Loan
Documents to which it is a party.


 


3.2.         Execution of
Guaranty. This Guaranty, and each of the other Loan Documents to which any Guarantor is a party, have been duly executed and
delivered by each Guarantor. Execution, delivery and performance of this Guaranty and each of the other Loan Documents to which
each Guarantor is a party, will not: (i) violate any provision of any law, rule or regulation, any judgment, order, writ, decree
or other instrument of any Governmental Authority, or any provision of any contract or other instrument to which the Guarantor
is a party or by which the Guarantor or any of its properties or assets are bound; (ii) result in the creation or imposition of
any Lien, claim or other encumbrance of any nature or kind, other than the Liens created by the Loan Documents; and (iii) require
any consent from, exemption of, or filing or registration with, any Governmental Authority or any other Person, other than any
filings in connection with the Liens created by the Loan Documents.


 


3.3.         Obligations
of Guarantors. This Guaranty and all other Loan Documents to which any Guarantor is a party, are the legal, valid and binding
obligations of each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms, except as the
same may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting the enforcement of creditors’
rights generally or by equitable principles which may affect the availability of specific performance and other equitable remedies.
The Loan made by Lender and the assumption by Guarantors of their obligations hereunder and under any other Loan Documents to which
a Guarantor is a party will result in material benefits to the Guarantors. This Guaranty was entered into by Guarantors for commercial
purposes.


 


3.4.         Litigation.
There is no demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative hearing, or any other
Proceeding of any nature whatsoever at law or in equity or by or before any Governmental Authority now pending or, to the knowledge
of any Guarantor, threatened, against or affecting any Guarantor or any of their properties, assets or rights which, if adversely
determined, would materially impair or affect: (i) the value of any Collateral securing the Obligations; (ii) any Guarantor’s
right to carry on its business substantially as now conducted (and as now contemplated); (iii) any Guarantor’s financial
condition; (iv) any Guarantor’s capacity to consummate and perform its obligations under this Guaranty or any other Loan
Documents to which any Guarantor is a party; or (v) that would otherwise result in a Material Adverse Effect.


 




    	 	2	 



     


    

 


3.5.         No
Defaults. No Guarantor is in default beyond the expiration of any applicable grace or cure periods, in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained herein or in any contract or other instrument to which
any Guarantor is a party or by which any Guarantor or any of their properties or assets are bound.


 


3.6.         No
Untrue Statements. To the knowledge of each Guarantor, no Loan Documents or other document, certificate or statement furnished
to Lender by or on behalf of Borrower or Guarantors contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not misleading. Each Guarantor acknowledges that all
such statements, representations and warranties shall be deemed to have been relied upon by Lender as an inducement in providing
the Loan.


 


		4.	NO LIMITATION OF LIABILITY



 


4.1.         Each
Guarantor acknowledges that the obligations undertaken herein involve the guaranty of obligations of a Person other than Guarantors
and, in full recognition of that fact, each Guarantor consents and agrees that Lender may, at any time and from time to time, without
notice or demand, and without affecting the enforceability or continuing effectiveness of this Guaranty: (i) change the manner,
place or terms of payment of (including, without limitation, any increase or decrease in the principal amount of the Obligations
or the interest rate), and/or change or extend the time for payment of, or renew, supplement or modify, any of the Obligations,
any security therefor, or any of the Loan Documents evidencing same, and the Guaranty herein made shall apply to the Obligations
and the Loan Documents as so changed, extended, renewed, supplemented or modified; (ii) sell, exchange, release, surrender, realize
upon or otherwise deal with in any manner and in any order, any property securing the Obligations; (iii) supplement, modify, amend
or waive, or enter into or give any agreement, approval, waiver or consent with respect to, any of the Obligations, or any part
thereof, or any of the Loan Documents, or any additional security or guaranties, or any condition, covenant, default, remedy, right,
representation or term thereof or thereunder; (iv) exercise or refrain from exercising any rights against Borrower or other Persons
(including Guarantors) or against any security for the Obligations; (v) accept new or additional instruments, documents or agreements
in exchange for or relative to any of the Loan Documents or the Obligations, or any part thereof; (vi) accept partial payments
on the Obligations; (vii) receive and hold additional security or guaranties for the Obligations, or any part thereof; (viii) release,
reconvey, terminate, waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer and/or enforce any security or
guaranties, and apply any security and direct the order or manner of sale thereof as Lender, in its sole and absolute discretion,
may determine; (ix) add, release, settle, modify or discharge the obligation of any maker, endorser, guarantor, surety, obligor
or any other Person who is in any way obligated for any of the Obligations, or any part thereof; (x) settle or compromise any Obligation,
whether in a Proceeding or not, and whether voluntarily or involuntarily, dispose of any security therefor (with or without consideration
and in whatever manner Lender deems appropriate), and subordinate the payment of any of the Obligations, whether or not due, to
the payment of liabilities owing to creditors of Borrower other than Lender and Guarantors; (xi) consent to the merger, change
or any other restructuring or termination of the corporate existence of Borrower or any other Person, and correspondingly restructure
the Obligations, and any such merger, change, restructuring or termination shall not affect the liability of Guarantors or the
continuing effectiveness hereof, or the enforceability hereof with respect to all or any part of the Obligations; (xii) apply any
sums it receives, by whomever paid or however realized, to any of the Obligations and/or (xiii) take any other action which might
constitute a defense available to, or a discharge of, Borrower or any other Person (including Guarantors) in respect of the Obligations.


 




    	 	3	 



     


    

 


4.2.         The
invalidity, irregularity or unenforceability of all or any part of the Obligations or any Loan Documents, or the impairment or
loss of any security therefor, whether caused by any action or inaction of Lender, or otherwise, shall not affect, impair or be
a defense to any of the Guarantors’ obligations under this Guaranty.


 


4.3.         Upon
the occurrence of any Event of Default, Lender may enforce this Guaranty independently of any other remedy, guaranty or security
Lender at any time may have or hold in connection with the Obligations, and it shall not be necessary for Lender to marshal assets
in favor of Borrower, any other guarantor of the Obligations or any other Person or to proceed upon or against and/or exhaust any
security or remedy before proceeding to enforce this Guaranty. Each Guarantor expressly waives any right to require Lender to marshal
assets in favor of Borrower or any other Person, or to proceed against Borrower or any other guarantor of the Obligations or any
Collateral provided by any Person, and agrees that Lender may proceed against any obligor (including each Guarantor) and/or the
Collateral in such order as Lender shall determine in its sole and absolute discretion. Lender may file a separate action or actions
against any Guarantor, whether action is brought or prosecuted with respect to any security or against any other Person, or whether
any other Person is joined in any such action or actions. Each Guarantor agrees that Lender and Borrower may deal with each other
in connection with the Obligations or otherwise, or alter any contracts or agreements now or hereafter existing between them, in
any manner whatsoever, all without in any way altering or affecting the security of this Guaranty.


 




    	 	4	 



     


    

 


4.4.         Each
Guarantor expressly waives, to the fullest extent permitted by applicable law, any and all defenses which each Guarantor shall
or may have as of the date hereof arising or asserted by reason of: (i) any disability or other defense of Borrower, or any other
guarantor for the Obligations, with respect to the Obligations; (ii) the unenforceability or invalidity of any security for or
guaranty of the Obligations or the lack of perfection or continuing perfection or failure of priority of any security for the Obligations;
(iii) the cessation for any cause whatsoever of the liability of Borrower, or any other guarantor of the Obligations (other than
by reason of the full payment and performance of all Obligations (other than contingent indemnification obligations)); (iv) any
failure of Lender to marshal assets in favor of Borrower or any other Person; (v) any failure of Lender to give notice of sale
or other disposition of Collateral to Borrower or any other Person or any defect in any notice that may be given in connection
with any sale or disposition of Collateral; (vi) any failure of Lender to comply with applicable laws in connection with the sale
or other disposition of any Collateral or other security for any Obligations, including, without limitation, any failure of Lender
to conduct a commercially reasonable sale or other disposition of any Collateral or other security for any Obligations; (vii) any
act or omission of Lender or others that directly or indirectly results in or aids the discharge or release of Borrower or any
other guarantor of the Obligations, or of any security or guaranty therefor by operation of law or otherwise; (viii) any law which
provides that the obligation of a surety or guarantor must neither be larger in amount or in other respects more burdensome than
that of the principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation;
(ix) any failure of Lender to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person; (x) the
election by Lender, in any bankruptcy proceeding of any Person, of the application or non-application of Section 1111(b)(2) of
the United States Bankruptcy Code; (xi) any extension of credit or the grant of any lien under Section 364 of the United States
Bankruptcy Code; (xii) any use of Collateral under Section 363 of the United States Bankruptcy Code; (xiii) any agreement or stipulation
with respect to the provision of adequate protection in any bankruptcy proceeding of any Person; (xiv) the avoidance of any lien
or security interest in favor of Lender for any reason; (xv) any bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, liquidation or dissolution proceeding commenced by or against any Person, including without limitation any discharge of,
or bar or stay against collecting, all or any of the Obligations (or any interest thereon) in or as a result of any such proceeding;
or (xvi) any action taken by Lender that is authorized by this Section or any other provision of any Loan Documents. Each Guarantor
expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment
or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever
with respect to the Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of
new or additional Obligations.


 


4.5.         This
is a continuing guaranty and shall remain in full force and effect as to all of the Obligations until such date (the “Termination
Date”) as all Obligations owing by the Credit Parties to Lender shall have been indefeasibly paid in full
and for cash and all obligations of Borrower with respect to any of the Obligations shall have terminated or expired (other than
contingent indemnification obligations).


 


		5.	LIMITATION ON SUBROGATION



 


Until the Termination
Date, each Guarantor waives any present or future right to which Guarantors are or may become entitled to be subrogated to Lender’s
rights against Borrower or to seek contribution, reimbursement, indemnification, payment or the like, or participation in any claim,
right or remedy of Lender against Borrower or any security which Lender now has or hereafter acquires, whether or not such claim,
right or remedy arises under contract, in equity, by statute, under common law or otherwise. If, notwithstanding such waiver, any
funds or property shall be paid or transferred to any Guarantor on account of such subrogation, contribution, reimbursement, or
indemnification at any time when all of the Obligations have not been paid in full, the Guarantors shall hold such funds or property
in trust for Lender and shall forthwith pay over to Lender such funds and/or property to be applied by Lender to the Obligations.


 




    	 	5	 



     


    

 


		6.	COVENANTS



 


6.1.         Financial
Statements; Compliance Certificate. No later than ten (10) days after written request therefore from Lender, each Guarantor
shall deliver to Lender: (a) financial statements disclosing all of Guarantor’s assets, liabilities, net worth, income and
contingent liabilities, all in reasonable detail and in form acceptable to Lender, signed by the Guarantor, and certified by the
Guarantor to Lender to be true, correct and complete in all material respects; (b) complete copies of federal tax returns, including
all schedules, each of which shall be signed and certified by each Guarantor to be true and complete copies of such returns; and
(c) such other information respecting the Guarantor as Lender may from time to time reasonably request.


 


6.2.         Subordination
of Other Debts. Each Guarantor hereby: (a) subordinates the obligations now or hereafter owed by Borrower to the Guarantors
(“Subordinated Debt”) to any and all Obligations of Borrower to Lender now or hereafter
existing while this Guaranty is in effect, and hereby agree that the Guarantors will not request or accept payment of or any security
for any part of the Subordinated Debt, and any proceeds of the Subordinated Debt paid to the Guarantors, through error or otherwise,
shall immediately be forwarded to Lender by the Guarantors, properly endorsed to the order of Lender, to apply to the Obligations.


 


6.3.         Security
for Guaranty. All of Guarantors’ obligations and liabilities evidenced by this Guaranty are also secured by all of the
Collateral of the Guarantors pursuant to that certain Security Agreement by and between the Guarantors and Lender made of even
date herewith (the “Security Agreement”). All of the agreements, conditions, covenants, provisions, representations,
warranties and stipulations contained in the Security Agreement or any other Loan Documents to which Guarantors are a party which
are to be kept and performed by the Guarantors are hereby made a part of this Guaranty to the same extent and with the same force
and effect as if they were fully set forth herein, and the Guarantors covenant and agree to keep and perform them, or cause them
to be kept or performed, strictly in accordance with their terms.


 


6.4.         No
Material Changes. Until the Termination Date, Guarantors shall not: (i) transfer, assign, convey, hypothecate, pledge or otherwise
transfer or encumber any material portion of their assets, whether or not disclosed by Guarantors to Lender in the financial statements
of Guarantors provided to Lender and accepted by Lender prior to the execution hereof; (ii) incur or become liable for, whether
directly or indirectly, any material liabilities or obligations not already disclosed by Guarantors to Lender in the financial
statements of Guarantors provided to Lender and accepted by Lender prior to the execution hereof, including any contingent liabilities;
and (iii) enter into any transaction or become bound by any agreement or obligation that could have a material adverse effect on
the financial condition of the Guarantors.


 


		7.	EVENTS OF DEFAULT



 


Each of the following shall constitute a default (each,
an “Event of Default”) hereunder:


 


7.1.         The
occurrence of any “Event of Default” (as defined in the Credit Agreement) under the Credit Agreement or any other Loan
Documents, whether by Borrower, Guarantors or any other Credit Parties;


 




    	 	6	 



     


    

 


7.2.         A
breach by any Guarantor of any term, covenant, condition, obligation or agreement under this Guaranty; and


 


7.3.         Any
representation or warranty made by any Guarantor in this Guaranty shall prove to be false, incorrect or misleading in any material
respect as of the date when made.


 


		8.	REMEDIES.



 


8.1.         Upon
the occurrence of an Event of Default, all liabilities and obligations of each Guarantor hereunder shall become immediately due
and payable without demand or notice and, in addition to any other remedies provided by law or in equity, Lender may:


 


8.1.1.      Enforce
the obligations of Guarantors under this Guaranty.


 


8.1.2.      To
the extent not prohibited by and in addition to any other remedy provided by law or equity, setoff against any of the Obligations
any sum owed by Lender in any capacity to Guarantors whether due or not.


 


8.1.3.      Perform
any covenant or agreement of Guarantors in default hereunder (but without obligation to do so) and in that regard pay such money
as may be required or as Lender may reasonably deem expedient. Any costs, expenses or fees, including reasonable attorneys’
fees and costs, incurred by Lender in connection with the foregoing shall be included in the Obligations guaranteed hereby, and
shall be due and payable on demand, together with interest at the highest non-usurious rate permitted by applicable law, such interest
to be calculated from the date of such advance to the date of repayment thereof. Any such action by Lender shall not be deemed
to be a waiver or release of Guarantors hereunder and shall be without prejudice to any other right or remedy of Lender.


 


8.2.         Settlement
of any claim by Lender against Borrower, whether in any Proceeding or not, and whether voluntary or involuntary, shall not reduce
the amount due under the terms of this Guaranty, except to the extent of the amount actually paid by Borrower or any other obligated
Person and legally retained by Lender in connection with the settlement (unless otherwise provided for herein).


 


		9.	MISCELLANEOUS.



 


9.1.         Disclosure
of Financial Information. Lender is hereby authorized to disclose any financial or other information about any Guarantor to
any Governmental Authority having jurisdiction over Lender or to any present, future or prospective participant or successor in
interest in the Loan. The information provided may include, without limitation, amounts, terms, balances, payment history, return
item history and any financial or other information about any Guarantor.


 


9.2.         Remedies
Cumulative. The rights and remedies of Lender, as provided herein and in any other Loan Documents, shall be cumulative and
concurrent, may be pursued separately, successively or together, may be exercised as often as occasion therefor shall arise, and
shall be in addition to any other rights or remedies conferred upon Lender at law or in equity. The failure, at any one or more
times, of Lender to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. Lender shall
have the right to take any action it deems appropriate without the necessity of resorting to any Collateral securing this Guaranty.


 




    	 	7	 



     


    




 


9.3.         Integration.
This Guaranty and the other Loan Documents constitute the sole agreement of the parties with respect to the transactions contemplated
hereby and thereby and supersede all oral negotiations and prior writings with respect thereto.


 


9.4.         Attorneys’
Fees and Expenses. If Lender retains the services of counsel by reason of a claim of an Event of Default hereunder or under
any of the other Loan Documents, or on account of any matter involving this Guaranty, or for examination of matters subject to
Lender’s approval under the Loan Documents, all costs of suit and all reasonable attorneys’ fees and such other reasonable
expenses so incurred by Lender shall forthwith, on demand, become due and payable and shall be guaranteed hereby.


 


9.5.         No
Implied Waiver. Lender shall not be deemed to have modified or waived any of its rights or remedies hereunder unless such modification
or waiver is in writing and signed by Lender, and then only to the extent specifically set forth therein. A waiver in one event
shall not be construed as continuing or as a waiver of or bar to such right or remedy on a subsequent event.


 


9.6.         Waiver.
Except as otherwise provided herein or in any of the Loan Documents, each Guarantor waives notice of acceptance of this Guaranty
and notice of the Obligations and waives notice of default, non-payment, partial payment, presentment, demand, protest, notice
of protest or dishonor, and all other notices to which the Guarantor might otherwise be entitled or which might be required by
law to be given by Lender. Each Guarantor waives the right to any stay of execution and the benefit of all exemption laws, to the
extent permitted by law, and any other protection granted by law to guarantors, now or hereafter in effect with respect to any
action or proceeding brought by Lender against it. Each Guarantor irrevocably waives all claims of waiver, release, surrender,
alteration or compromise and the right to assert against Lender any defenses, set-offs, counterclaims, or claims that the Guarantor
may have at any time against Borrower or any other party liable to Lender.


 


9.7.         No
Third Party Beneficiary. Except as otherwise provided herein, Guarantors and Lender do not intend the benefits of this Guaranty
to inure to any third party and no third party (including Borrower) shall have any status, right or entitlement under this Guaranty.


 


9.8.         Partial
Invalidity. The invalidity or unenforceability of any one or more provisions of this Guaranty shall not render any other provision
invalid or unenforceable. In lieu of any invalid or unenforceable provision, there shall be added automatically a valid and enforceable
provision as similar in terms to such invalid or unenforceable provision as may be possible.


 




    	 	8	 



     


    

 


9.9.         Binding
Effect. The covenants, conditions, waivers, releases and agreements contained in this Guaranty shall bind, and the benefits
thereof shall inure to, the parties hereto and their respective heirs, executors, administrators, successors and permitted assigns;
provided, however, that this Guaranty cannot be assigned by any Guarantor without the prior written consent of Lender, and any
such assignment or attempted assignment by the Guarantor shall be void and of no effect with respect to the Lender.


 


9.10        Modifications.
This Guaranty may not be supplemented, extended, modified or terminated except by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification or discharge is sought.


 


9.11.       Sales
or Participations. Lender may from time to time sell or assign the Loan, in whole or in part, or grant participations in the
Loan and/or the obligations evidenced thereby without the consent of Borrower or Guarantors (other than as provided in the Credit
Agreement). The holder of any such sale, assignment or participation, if the applicable agreement between Lender and such holder
so provides, shall be: (a) entitled to all of the rights, obligations and benefits of Lender (to the extent of such holder’s
interest or participation); and (b) deemed to hold and may exercise the rights of setoff or banker’s lien with respect to
any and all obligations of such holder to Guarantors (to the extent of such holder’s interest or participation), in each
case as fully as though Guarantors were directly indebted to such holder. Lender may in its discretion give notice to Guarantors
of such sale, assignment or participation; however, the failure to give such notice shall not affect any of Lender’s or such
holder’s rights hereunder.


 


9.12.       MANDATORY
FORUM SELECTION. TO INDUCE LENDER TO MAKE THE LOAN, GUARANTORS IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER, RELATING TO,
OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO
THIS AGREEMENT ANY OTHER LOAN DOCUMENTS, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT)
SHALL, EXCEPT AS HEREINAFTER PROVIDED, BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED
IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, LENDER MAY, AT LENDER’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER
JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED
CONSISTENT WITH FLORIDA LAW. GUARANTORS HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING
ITS SITUS IN SAID COUNTY (OR TO ANY OTHER JURISDICTION OR VENUE, IF LENDER SO ELECTS), AND WAIVES ANY OBJECTION BASED ON FORUM
NON CONVENIENS. GUARANTORS HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENT THAT ALL SUCH SERVICE OF PROCESS MAY
BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO GUARANTORS, AS SET FORTH HEREIN OR IN THE MANNER PROVIDED BY APPLICABLE
STATUTE, LAW, RULE OF COURT OR OTHERWISE.


 


9.13.       Notices.
All notices, requests and demands to or upon Lender or Guarantors, to be effective, shall be delivered in the manner and addressed
at the applicable address set forth in the Credit Agreement. Each of the Guarantors agrees and acknowledges that notice to each
of them may be sent and delivered to the Borrower, as required under the Credit Agreement, and such notice to the Borrower shall
be deemed valid and effective notice to Guarantors hereunder.


 




    	 	9	 



     


    

  


9.14.       Governing
Law. Except in the case of the Mandatory Forum Selection clause set forth in Section 9.12 hereof, this Guaranty shall
be governed by and construed in accordance with the substantive laws of the State of Nevada without reference to conflict of laws
principles.


 


9.15.       Joint
and Several Liability. The word “Guarantor” or “Guarantors” shall mean all of the undersigned Persons,
if more than one, and their liability shall be joint and several. The liability of Guarantors shall also be joint and several with
the liability of any other guarantor or obligor of the Obligations, under any other guaranty or other Loan Documents.


 


9.16.       Continuing
Enforcement. If, after receipt of any payment of all or any part of the Obligations, Lender is compelled or reasonably agrees,
for settlement purposes, to surrender such payment to any person or entity for any reason (including, without limitation, a determination
that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust
funds), then this Guaranty shall continue in full force and effect or be reinstated, as the case may be, and Guarantors shall be
liable for, and shall indemnify, defend and hold harmless Lender with respect to the full amount so surrendered. The provisions
of this Section shall survive the termination of this Guaranty and shall remain effective notwithstanding the payment of the Obligations,
the cancellation or conversion of the Loan, this Guaranty or any other Loan Document, the release of any security interest, lien
or encumbrance securing the Obligations or any other action which Lender may have taken in reliance upon its receipt of such payment.
Any cancellation, release or other such action shall be deemed to have been conditioned upon any payment of the Obligations having
become final and irrevocable.


 


9.17.       WAIVER
OF JURY TRIAL. GUARANTORS AGREE THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM
OR COUNTERCLAIM, BROUGHT BY LENDER OR GUARANTORS ON OR WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS
OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. LENDER AND GUARANTORS HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF THEIR RESPECTIVE COUNSEL, WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, LENDER AND GUARANTORS WAIVE ANY RIGHT
THEY MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. GUARANTORS ACKNOWLEDGE AND AGREE THAT THIS SECTION IS A SPECIFIC AND MATERIAL
ASPECT OF THIS GUARANTY AND THAT LENDER WOULD NOT HAVE MADE THIS LOAN IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART
OF THIS GUARANTY.


 




    	 	10	 



     


    

  


9.18.       Increase
in Obligations. This Guaranty shall secure payment of the Obligations, as the amount of such Obligations may increase from
time to time in accordance with the terms and provisions of the Loan Documents, and all of the Obligations, as so increased from
time to time, shall be and are guaranteed hereby.


 


[Signature page follows]


 




    	 	11	 



     


    

  


IN WITNESS WHEREOF, Guarantors, intending
to be legally bound, have duly executed and delivered this Guaranty Agreement as of the day and year first above written.


 


	DRONE USA, LLC, a Delaware limited liability company	 	HOWCO DISTRIBUTING CO., a Washington corporation
	 	 	 	 	 
	By:	 	 	By:	 
	Name:	 	 	Name:	 
	Title:	 	 	Title:	 


 


	STATE OF _____________	)
	 	SS.
	COUNTY OF ____________	)


 


The foregoing
instrument was acknowledged before me this       day of                ,
2016 by                        ,
who is the                               
of the two above named entities, on behalf of such entities. He/She is personally known to me
or has produced                                                 
as identification.


 


My Commission Expires:


	 	 
	 	Notary Public


 


	 	 
	 	Name of Notary typed or printed


 




    	 	12	 



     


    

 


Exhibit C


 


Form of Irrevocable Transfer Agent Agreement


 




    	 	75	 



     


    

 


IRREVOCABLE TRANSFER AGENT INSTRUCTIONS


AND


TRANSFER AGENT ACKNOWLEDGEMENT AND
AGREEMENT


 


THESE IRREVOCABLE TRANSFER
AGENT INSTRUCTIONS AND TRANSFER AGENT ACKNOWLEDGEMENT AND AGREEMENT (the “Agreement”) is made
and entered into as of this         day of                  ,
2016, by and between DRONE USA, INC., a Delaware corporation (the “Borrower”), ACTION STOCK
TRANSFER COMPANY (the “Transfer Agent”), and TCA GLOBAL CREDIT MASTER FUND, LP, a Cayman Islands
limited partnership (the “Lender” or “TCA”).


 


RECITALS


 


WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the Borrower and the Lender are executing and delivering a Credit Agreement
dated as of May 31, 2016, but made effective as of September 13, 2016 (as amended, supplemented, renewed, or modified from time
to time, the “Credit Agreement”) pursuant to which the Lender has agreed to make certain financial
accommodations to and for the benefit of Borrower, all in accordance with the terms of the Credit Agreement; and


 


WHEREAS, in
connection with the Credit Agreement, the Borrower is issuing to the Lender, and may in the future be required to issue to Lender,
a certain number of shares of the Borrower’s common stock, which is no par value stock (the “Common Stock”);
and


 


WHEREAS, the
parties hereto desire to enter into certain agreements with respect to the shares of Common Stock issued or issuable to Lender
under the Credit Agreement, all in accordance with the terms of this Agreement;


 


NOW, THEREFORE,
in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:


 


1.            Recitals;
Definitions. The recitations set forth in the preamble of this Agreement are true and correct and incorporated herein by this
reference. Capitalized terms used herein and not otherwise defined in this Agreement shall have the same meaning ascribed to such
terms in the Credit Agreement.


 


2.            Stock
Issued Under Credit Agreement.


 


(a)          Issuance
of Advisory Fee Shares. The parties hereto acknowledge that pursuant to the terms of the Credit Agreement, the Borrower has
issued and has agreed to possibly issue in the future, to Lender, certain shares of the Borrower’s Common Stock. In the event,
for any reason, the Borrower fails to deliver, or to cause the Transfer Agent to deliver, to Lender any portion of the shares of
Common Stock issuable to Lender at such times when such shares are to be issued and delivered to Lender in accordance with the
Credit Agreement, then the parties hereto acknowledge and agree that the Lender shall irrevocably be entitled to deliver to the
Transfer Agent, on behalf of itself and the Borrower, a notice requesting the issuance of the shares of Common Stock then issuable
in accordance with the terms of the Credit Agreement (the “Issuance Notice”). Upon the Transfer Agent’s
receipt of an Issuance Notice from the Lender, the Transfer Agent, provided they are the acting transfer agent for the Borrower
at the time, shall, without any further confirmation, approval, instructions or other action from the Borrower, and within three
(3) business days from Transfer Agent’s receipt of the Issuance Notice, issue and surrender
to a nationally recognized overnight courier for delivery to Lender at the address specified in the Issuance Notice, a certificate
of the Common Stock of the Borrower, as applicable and as set forth in the Issuance Notice, registered in the name of the Lender,
for the number of shares to which the Lender shall be then entitled under the Credit Agreement, as set forth in the Issuance Notice.


 




    	 	1	 



     


    

  


(b)          Issuance
of Conversion Shares. The parties hereto acknowledge that pursuant to the terms of the Note, Lender has the right, in certain
circumstances, to convert amounts due under the Note into Common Stock in accordance with the terms of the Note. In the event,
for any reason, the Borrower fails to issue or cause the Transfer Agent to issue to Lender any portion of the shares of Common
Stock issuable upon conversion of the Note in connection with the exercise by Lender of any of its conversion rights under the
Note, then the parties hereto acknowledge that Lender shall irrevocably be entitled to deliver to the Transfer Agent, on behalf
of itself and the Borrower, a “Conversion Notice” (as defined in the Note) requesting the issuance of the shares of
Common Stock then issuable in accordance with the terms of the Note. Upon the Transfer Agent’s receipt of an executed Conversion
Notice from Lender, the Transfer Agent, provided they are the acting transfer agent for the Company at the time, shall, without
any further confirmation, approval, instructions or other action from the Borrower, and within three (3) business days from Transfer
Agent’s receipt of the Conversion Notice, issue and surrender to a nationally recognized overnight courier for delivery to
Lender at the address specified in the Conversion Notice, a certificate of the Common Stock of the Borrower, registered in the
name of Lender or its designee, for the number of shares of Common Stock to which Lender shall be then entitled under the Note,
as set forth in the Conversion Notice.


 


(c)          Restrictive
Legends. Unless the Lender can provide to the Transfer Agent appropriate and customary documentation that any shares of Common
Stock issuable to Lender under the Credit Agreement can be issued without restriction under the Securities Act of 1933, as amended
(the “Securities Act”), the certificates representing the Common Stock issuable to Lender under the Credit
Agreement, when issued by the Transfer Agent, shall bear the following legend, or its equivalent:


 


“THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE BORROWER, THAT REGITRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”


 


(d)          Removal
of Restrictive Legends. In the event that the Lender, through its counsel or other representatives, submits to the Transfer
Agent any shares of Common Stock (or certificates representing same) previously issued to Lender for the removal of the restrictive
legends thereon in connection with a sale of such shares pursuant to any exemption to the registration requirements
under the Securities Act, or otherwise, and the Borrower and or its counsel refuses or fails for any reason to render an opinion
of counsel required for the removal of the restrictive legends, then the Borrower hereby agrees and acknowledges that the Lender
is hereby irrevocably and expressly authorized to have counsel to the Lender render any and all opinions which may be required
for purposes of removing such restrictive legends, and in the event the Lender submits an opinion of counsel from its own counsel
as hereby contemplated, the Transfer Agent hereby acknowledges and agrees that, provided the opinions and other documentation delivered
to Transfer Agent comply with customary legal requirements permitting or allowing for the removal of restrictive legends,
Transfer Agent will rely on and accept such opinion of counsel and all documentation submitted in connection therewith, and without
any confirmation, approval, instructions or other action from the Borrower, issue such shares of Common Stock, as the case may
be, without restrictive legends as instructed by the Lender, and within three (3) business days of receipt of the required request
and opinions from the Lender, its agent or counsel, issue and surrender to a common carrier for overnight delivery to the address
as specified by the Lender, certificates, registered in the name of the Lender or its designees, representing the shares of Common
Stock to which the Lender is entitled, without any restrictive legends and otherwise freely transferable on the books and records
of the Borrower.


 




    	 	2	 



     


    

  


3.            Authorized
Agent of the Borrower. The Borrower hereby irrevocably appoints the Lender and its counsel and its representatives, each as
the Borrower’s duly authorized agent and attorney-in-fact for the Borrower for the purposes of authorizing and instructing
the Transfer Agent to process issuances and transfers upon instructions from Lender, or any counsel or representatives of Lender,
as specifically contemplated herein. The authorization and power of attorney granted hereby is coupled with an interest and is
irrevocable so long as any obligations of the Borrower under the Credit Agreement remain outstanding, and so long as the Lender
owns or has the right to receive, any shares of the Borrower’s Common Stock thereunder. hi this regard, the Transfer Agent
agrees as follows:


 


(a)          The
Transfer Agent shall accept and rely exclusively on any Issuance Notice or Conversion Notice submitted by the Lender and shall
not seek confirmation, approval, instructions or other action from the Borrower to process any Issuance Notice or Conversion Notice,
or any other instruction or order from the Lender that, pursuant to the terms hereof, does not require confirmation, approval,
instruction or other action from the Borrower.


 


(b)          The
Transfer Agent shall, provided the opinions of counsel and other documentation delivered to Transfer Agent comply with customary
legal requirements permitting or allowing for the removal of restrictive legends, accept and rely exclusively on the opinions of
counsel and other documentation submitted by the Lender for the removal of any restrictive legends as contemplated by this Agreement,
and Transfer Agent shall not seek confirmation, approval, instructions or other action from the Borrower to process such submissions
by the Lender.


 


(c)          The
Transfer Agent shall have no liability to the Borrower hereunder for relying or acting on instructions from the Lender as hereby
contemplated. Any Issuance Notice, Conversion Notice, or other instruction or request made by Lender hereunder, for removal of
restrictive legends or otherwise, together with any supporting documentation delivered hereunder, shall constitute an irrevocable
instruction to the Transfer Agent to process such notice or instruction in accordance with the terms thereof, and the Borrower
hereby indemnifies and holds the Transfer Agent forever harmless of and from any action taken by the Transfer Agent in reliance
upon instructions of the Lender as hereby provided. Any notices, instructions, opinions or other documents required hereunder may
be transmitted by the Lender to the Transfer Agent by facsimile, e-mail or any other commercially reasonable method.


 


(d)          The
Borrower hereby confirms to the Transfer Agent and the Lender that it can NOT and will NOT give instructions, including
stop orders or otherwise, inconsistent with the terms of this Agreement with regard to the matters contemplated herein, and Transfer
Agent agrees and acknowledges that, even if the Borrower gives any such inconsistent instructions or orders, Transfer Agent shall
disregard such instructions or orders and will not abide by any such instructions or orders, and Transfer Agent will act in accordance
with the Lender’s instructions as hereby contemplated and permitted.


 




    	 	3	 



     


    

  


(e)          The
Borrower shall not be entitled to, nor will the Transfer Agent grant a suspension or delay in undertaking of its obligations hereunder
for any time period in order for the Borrower to review any matters contemplated herein with its counsel, to obtain a court order
or its equivalent in order to prevent the Transfer Agent from acting hereunder, or to otherwise allow the Borrower, through any
tactic, maneuver, or strategy, to impair, hinder, delay or prevent Transfer Agent from timely acting in accordance with the Lender’s
instructions as hereby contemplated and permitted within the time periods herein provided.


 


(f)           The
Borrower and the Transfer Agent hereby acknowledge and confirm that Transfer Agent’s compliance with the terms of this Agreement
does not and will not in any way prohibit the Transfer Agent from satisfying any and all responsibilities and duties it may owe
to the Borrower.


 


(g)          The
Transfer Agent, within one (1) business day after request of the Lender, and without instruction, approval, confirmation or other
action by the Borrower, will provide to the Lender the total number of authorized shares of the Borrower’s Common Stock,
as well as the current outstanding shares of the Borrower’s Common Stock as of the date of the request.


 


(h)          Any
issuance of Borrower’s Common Stock required or permitted hereunder, or under the terms of the Credit Agreement and other
Loan Documents, may be issued to Lender, or to Lender’s designee or nominee, and to the extent Lender elects to have such
issuance to Lender’s nominee or designee, Transfer Agent agrees to issue any such shares of Borrower’s Common Stock
to Lender’s nominee or designee, only upon a written instruction from Lender, and without the need for stock powers, or any
medallion guaranty signatures or other requirements other than Lender’s written instruction to issue the shares to Lender’s
nominee or designee.


 


(i)           Borrower
and Transfer Agent hereby confirm that a share reserve of Borrower’s Common Stock has been established by Transfer Agent
of 7,000,000 shares of Borrower’s Common Stock for the purpose of issuance in connection with any of the transactions contemplated
by Sections 2(a) and 2(b) above. If at any time the Lender reasonably believes that such share reserve is insufficient to effect
the issuances contemplated by Sections 2(a) and 2(b) above, then the Lender shall have the right to require that such share reserve
be increased, upon written notice to Borrower and Transfer Agent.


 


4.            Replacement
of Transfer Agent. The Borrower hereby agrees that it shall not replace the Transfer Agent as the Borrower’s transfer
agent without the prior written consent of the Lender. The Borrower agrees that, in the event the Transfer Agent resigns as the
Borrower’s transfer agent, the Borrower will engage a suitable replacement transfer agent that has agreed to serve as transfer
agent and to be bound by the terms and conditions of this Agreement within ten (10) business days of the resignation of the Transfer
Agent. The Borrower’s obligation to obtain a suitable replacement transfer agent shall not affect the current Transfer Agent’s
ability to resign.


 


5.            Miscellaneous.


 


(a)          Material
Inducement. The Borrower acknowledges that the Lender is relying on the representations and covenants made by the Borrower
and the Transfer Agent hereunder and such representations and covenants are a material inducement to the Lender entering into the
Credit Agreement. The Borrower further acknowledges that without such representations and covenants of the Borrower and Transfer
Agent made hereunder, the Lender would not enter into the Credit Agreement.


 




    	 	4	 



     


    

  


(b)          Injunction
and Specific Performance. The Borrower and Transfer Agent each specifically acknowledges and agrees that in the event of a
breach or threatened breach by either the Borrower or the Transfer Agent of any provision hereof, the Lender will be irreparably
damaged and that damages at law would be an inadequate remedy if this Agreement were not specifically enforced. Therefore, in the
event of a breach or threatened breach of any provision of this Agreement by the Borrower or the Transfer Agent, including, without
limitation, the attempted termination of the agency relationship created by this instrument, the Lender shall be entitled to obtain,
in addition to all other rights or remedies Lender may have, at law or in equity, an injunction restraining such breach, without
being required to show any actual damage or to post any bond or other security, and/or to a decree for specific performance of
the provisions of this Agreement.


 


(c)          Notices.
All notices of request, demand and other communications hereunder shall be addressed to the parties as follows:


 


	If to the Borrower:	
        Drone USA, Inc.

        One World Trade Center

        285 Fulton Street, Suite 8500

        New York, NY 10007

        Attention: Michael Bannon, CEO

        E-Mail: mike@dronelusa.com

	 	 
	If to the Lender:	
        TCA Global Credit Master Fund, LP

        3960 Howard Hughes Parkway, Suite 500

        Las Vegas, Nevada 89169

        Attention: Robert Press, Director

        E-Mail: bpress@tcaglobalfund.com

	 	 
	With a copy to:	
        TCA Global Credit Master Fund, LP

        19950 W. Country Club Dr., First Floor

        Aventura, FL 33180

        Attention: Robert Press, Director

        E-Mail: bpress@tcaglobalfund.com

	 	 
	With a copy to:	
        David Kahan, P.A.

        6420 Congress Ave., Suite 1800

        Boca Raton, FL 33487

        Attn: David Kahan, Esq.

        Telephone: (561) 672-8330

        Facsimile: (561) 672-8301

        E-Mail: david@dkpalaw.com

	 	 
	If to the Transfer Agent:	
        Action Stock Transfer Corporation

        2469 E. Fort Union Blvd, Suite 214

        Salt Lake City, UT 84121

        Attn: Justeene Blankenship

        Telephone: (801) 274-1088



 




    	 	5	 



     


    

 


unless the address is changed by the party
by like notice given to the other parties. Notice shall be in writing and shall be deemed received: (i) if mailed by certified
mail, return receipt requested, postage prepaid and properly addressed to the address above, then three (3) business days after
deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized
overnight courier service, next business morning delivery, then one (1) business day after deposit
of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof
to the address indicated on or prior to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00 p.m., EST, shall
be deemed delivered on the following business day. Notwithstanding the foregoing, notice, requests or demands or other communications
referred to in this Agreement may be sent by facsimile, by e-mail or other method of delivery, but shall be deemed to have been
given only when the sending party has confirmed (by reply e-mail or some other form of written confirmation from the receiving
party) that the receiving party has received such notice.


 


(d)          Applicable
Law and Consent to Jurisdiction. The Borrower and Transfer Agent irrevocably agree that any dispute arising under, relating
to, or in connection with, directly or indirectly, this Agreement, or related to any matter which is the subject of or incidental
to this Agreement (whether or not such claim is based upon breach of contract or tort) shall be subject to the exclusive jurisdiction
and venue of the state and/or federal courts located in Broward County, Florida. This provision is intended to be a “mandatory”
forum selection clause and governed by and interpreted consistent with Florida law. Borrower and Transfer Agent hereby consent
to the exclusive jurisdiction and venue of any state or federal court having its situs in said county, and each waives any objection
based on forum non conveniens. Borrower and Transfer Agent hereby waive personal service of any and all process and consent that
all such service of process may be made by certified mail, return receipt requested, directed to a borrower, as applicable, as
set forth herein in the manner provided by applicable statute, law, rule of court or otherwise. Except for the foregoing mandatory
forum selection clause, all terms and provisions hereof and the rights and obligations of the parties hereunder shall be governed,
construed and interpreted in accordance with the laws of the State of Nevada, without reference to conflict of laws principles.


 


(e)          Severability.
If any term, provision or condition, or any part thereof, of this Agreement shall for any reason be found or held invalid or unenforceable
by any court or governmental authority of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder
of such term, provision or condition nor any other term, provision or condition, and this Agreement shall survive and be construed
as if such invalid or unenforceable term, provision or condition had not been contained therein.


 


(f)           Execution.
This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and
the same Agreement. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf’
format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid
and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf’ signature
page was an original thereof.


 


(g)          Headings.
The headings and sub-headings contained in the titling of this Agreement are intended to be used for convenience only and shall
not be used or deemed to limit or diminish any of the provisions hereof.


 


(h)          Gender
and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the party or parties or their personal representatives, successors and assigns may require.


 


(i)           Prevailing
Party. If any legal action or other proceeding is brought for the enforcement of this Agreement or any other Loan Documents,
or because of an alleged dispute, breach, default or misrepresentation in connection with any provisions of this Agreement or any
other Loan Documents, the successful or prevailing party or parties shall be entitled to recover from the non-prevailing party,
reasonable attorneys’ fees, court costs and all expenses, even if not taxable as court costs (including, without limitation,
all such fees, costs and expenses incident to appeals), incurred in that action or proceeding, in addition to any other relief
to which such party or parties may be entitled.


 


[Signatures on the following page]


 




    	 	6	 



     


    

  


IN WITNESS WHEREOF,
the parties hereto have duly executed this Amendment as of the day and year first above written.


 


	 	BORROWER:
	 	 
	 	DRONE USA, INC.
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	Date:	 


 


	 	LENDER:
	 	 
	 	TCA GLOBAL CREDIT MASTER FUND, LP
	 	 
	 	By: TCA Global Credit Fund GP, Ltd., its general partner


 


	 	By:	 
	 	 	Robert Press, Director
	 	 	 
	 	Date:	 


 


	 	TRANSFER AGENT:
	 	 
	 	ACTION STOCK TRANSFER CORPORATION
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	Date:	 


 




    	 	7	 



     


    

  


Exhibit D


 


Form of Pledge Agreement


 








    	 	76	 



     


    

  


PLEDGE AND ESCROW AGREEMENT


 


THIS PLEDGE AND
ESCROW AGREEMENT (“Agreement”) is made and entered into as of May 31, 2016, but made effective as
of September 13, 2016, by and between DRONE USA, INC., a Delaware corporation (the
“Pledgor”), and TCA GLOBAL CREDIT MASTER FUND, LP, a Cayman Islands limited partnership (the
“Secured Party”), with the joinder of DAVID KAHAN, P.A. (“Escrow
Agent”).


 


RECITALS


 


WHEREAS, the
Secured Party has made certain financial accommodations for the benefit of the Pledgor pursuant to that certain Credit Agreement
of even date herewith among the Pledgor and Secured Party, among others (the “Credit Agreement”); and


 


WHEREAS, in
order to secure the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all of
the Pledgor’s Obligations to the Secured Party, or any successor to the Secured Party, under the Credit Agreement and all
other Loan Documents, Pledgor has agreed to irrevocably pledge to the Secured Party 100% of the issued and outstanding shares
of the capital stock and/or membership interests, as applicable, of DRONE USA, LLC, a Delaware limited liability company
(the “Company”) (such shares of stock and/or membership interests in the Company hereinafter referred
to as the “Pledged Securities”);


 


NOW, THEREFORE,
in consideration of the mutual covenants, agreements, warranties, and representations herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:


 


1.           Recitals,
Construction and Defined Terms. The recitations set forth in the preamble of this Agreement are true and correct and incorporated
herein by this reference. In this Agreement, unless the express context otherwise requires: (i) the words “herein,”
“hereof” and “hereunder” and words of similar import refer to this Agreement as a whole and not to any
particular provision of this Agreement; (ii) references to the words “Section” or “Subsection” refer to
the respective Sections and Subsections of this Agreement, and references to “Exhibit” or “Schedule” refer
to the respective Exhibits and Schedules attached hereto; and (iii) wherever the word “include,” “includes,”
“including” or words of similar import are used in this Agreement, such words will be deemed to be followed by the
words “without limitation.” All capitalized terms used in this Agreement that are defined in the Credit Agreement shall
have the meanings assigned to them in the Credit Agreement, unless the context of this Agreement requires otherwise (provided that
if a capitalized term used herein is defined in the Credit Agreement and separately defined in this Agreement, the meaning of such
term as defined in this Agreement shall control for purposes of this Agreement).


 


2.           Pledge.
In order to secure the full and timely payment and performance of all of the Pledgor’s Obligations to the Secured Party under
the Loan Documents, the Pledgor hereby transfers, pledges, assigns, sets over, delivers and grants to the Secured Party a continuing
lien and security interest in and to all of the following property of Pledgor, both now owned and existing and hereafter created,
acquired and arising (all being collectively hereinafter referred to as the “Collateral”) and all right,
title and interest of Pledgor in and to the Collateral, to-wit:


 


(a)          the
Pledged Securities owned by Pledgor;


 


(b)          any
certificates representing or evidencing the Pledged Securities, if any;


 




    	 	1	 



     


    

 


(c)          any
and all distributions thereon, and cash and non-cash proceeds and products thereof, including all dividends, cash, distributions,
income, profits, instruments, securities, stock dividends, distributions of capital stock or other securities of the Company and
all other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon conversion
of the Pledged Securities, whether in connection with stock splits, recapitalizations, merger, conversions, combinations, reclassifications,
exchanges of securities or otherwise; and


 


(d)          any
and all voting, management, and other rights, powers and privileges accruing or incidental to an owner of the Pledged Securities
and the other property referred to in subsections 2(a) through 2(c) above.


 


3.           Transfer
of Pledged Securities. Simultaneously with the execution of this Agreement, Pledgor shall deliver to the Escrow Agent: (i)
if the Pledged Securities are evidenced by physical certificates, then all original certificates representing or evidencing the
Pledged Securities, together with undated, irrevocable and duly executed assignments or stock powers thereof in form and substance
acceptable to Secured Party (together with medallion guaranteed signatures, if required by Secured Party), executed in blank by
Pledgor; (ii) if the Pledged Securities are not represented by physical certificates, then undated, irrevocable and duly executed
assignment instruments in form and substance acceptable to Secured Party, executed in blank by Pledgor; and (iii) all other property,
instruments, documents and papers comprising, representing or evidencing the Collateral, or any part thereof, together with proper
instruments of assignment or endorsement, as Secured Party may request or require, duly executed by Pledgor (collectively, the
“Transfer Documents”). The Pledged Securities and other Transfer Documents (collectively, the “Pledged
Materials”) shall be held by the Escrow Agent pursuant to this Agreement until the full payment and performance of
all of the Obligations, the termination or expiration of this Agreement, or delivery of the Pledged Materials in accordance with
this Agreement. In addition, all non-cash dividends, dividends paid or payable in cash or otherwise in connection with a partial
or total liquidation or dissolution of the Company, instruments, securities and any other distributions, whether paid or payable
in cash or otherwise, made on or in respect of the Pledged Securities, whether resulting from a subdivision, combination, or reclassification
of the outstanding capital stock or other securities of the Company, or received in exchange for the Pledged Securities or any
part thereof, or in redemption thereof, as a result of any merger, consolidation, acquisition, or other exchange of assets to which
the Company may be a party or otherwise, or any other property that constitutes part of the Collateral from time to time, including
any additional certificates representing any portion of the Collateral hereafter acquired by the Pledgor, shall be immediately
delivered or cause to be delivered by Pledgor to the Escrow Agent in the same form as so received, together with proper instruments
of assignment or endorsement duly executed by Pledgor.


 


4.           Security
Interest Only. The security interests in the Collateral granted to Secured Party hereunder are granted as security only and
shall not subject the Secured Party to, or transfer or in any way affect or modify, any obligation or liability of the Pledgor
with respect to any of the Collateral or any transaction in connection therewith.


 


5.           Record
Owner of Collateral. Until an “Event of Default” (as hereinafter defined) under this Agreement shall occur, the
Pledged Securities shall remain registered in the name of the Pledgor. Pledgor will promptly give to the Secured Party copies of
any notices or other communications received by it and with respect to Collateral registered in the name of Pledgor.


 


6.           Rights
Related to Pledged Securities. Subject to the terms of this Agreement, unless and until an Event of Default under this Agreement
shall occur:


 




    	 	2	 



     


    

 


(a)          Pledgor
shall be entitled to exercise any and all voting, management, and other rights, powers and privileges accruing to an owner of the
Pledged Securities, or any part thereof, for any purpose consistent with the terms of this Agreement; provided, however, such action
would not materially and adversely affect the rights inuring to Secured Party under any of the Loan Documents, or adversely affect
the remedies of the Secured Party under any of the Loan Documents, or the ability of the Secured Party to exercise same.


 


(b)          Upon
the occurrence of an Event of Default, all rights of the Pledgor in and to the Pledged Securities and all other Collateral shall
cease and all such rights shall immediately vest in Secured Party, as may be determined by Secured Party, although Secured Party
shall not have any duty to exercise such rights or be required to sell or to otherwise realize upon the Collateral, as hereinafter
authorized, or to preserve the same, and Secured Party shall not be responsible for any failure to do so or delay in doing so.
To effectuate the foregoing, Pledgor hereby grants to Secured Party a proxy to vote the Pledged Securities for and on behalf of
Pledgor, which proxy is irrevocable and coupled with an interest and which proxy shall be effective upon the occurrence of any
Event of Default. Such proxy shall remain in effect so long as the Obligations remain outstanding. The Company hereby agrees that
any vote by Pledgor in violation of this Section 6 shall be null, void and of no force or effect. Furthermore, all dividends or
other distributions received by the Pledgor shall be subject to delivery to Escrow Agent in accordance with Section 3 above, and
until such delivery, any of such dividends and other distributions shall be received in trust for the benefit of the Secured Party,
shall be segregated from other property or funds of the Pledgor and shall be forthwith delivered to Escrow Agent in accordance
with Section 3 above.


 


7.           Release
of Pledged Securities. Upon the timely payment in full of all of the Obligations in accordance with the terms thereof, Secured
Party shall notify the Escrow Agent in writing to such effect. Upon receipt of such written notice, the Escrow Agent shall return
all of the Pledged Materials in Escrow Agent’s possession to the Pledgor, whereupon any and all rights of Secured Party in
and to the Pledged Materials and all other Collateral shall be terminated.


 


8.           Representations,
Warranties, and Covenants of the Pledgor and the Company. The Pledgor and the Company each hereby covenant, warrant and represent,
for the benefit of the Secured Party, as follows (the following representations and warranties shall be made as of the date of
this Agreement and as of each date when Pledged Securities are delivered to Escrow Agent hereunder, as applicable):


 


(a)          The
Pledged Securities are free and clear of any and all Liens, other than as created by this Agreement.


 


(b)          The
Pledged Securities have been duly authorized and are validly issued, fully paid and non-assessable, and are subject to no options
to purchase, or any similar rights or to any restrictions on transferability.


 


(c)          Each
certificate or document of title constituting the Pledged Securities is genuine in all respects and represents what it purports
to be.


 


(d)          By
virtue of the execution and delivery of this Agreement and upon delivery to Escrow Agent of the Pledged Securities in accordance
with this Agreement, Secured Party will have a valid and perfected, first priority security interest in the Collateral, subject
to no prior or other Liens of any nature whatsoever.


 




    	 	3	 



     


    

 


(e)          Pledgor
covenants, that for so long as this Agreement is in effect, Pledgor will defend the Collateral and the priority of Secured Party’s
security interests therein, at its sole cost and expense, against the claims and demands of all Persons at anytime claiming the
same or any interest therein.


 


(f)          At
its option, Secured Party may pay, for Pledgor’s account, any taxes (including documentary stamp taxes), Liens, security
interests, or other encumbrances at any time levied or placed on the Collateral. Pledgor agrees to reimburse Secured Party on demand
for any payment made or expense incurred by Secured Party pursuant to the foregoing authorization. Any such amount, if not promptly
paid upon demand therefor, shall accrue interest at the highest non-usurious rate permitted by applicable law from the date of
outlay, until paid, and shall constitute an Obligation secured hereby.


 


(g)          The
Pledgor and the Company acknowledge, represent and warrant that Secured Party is not an “affiliate” of the Pledgor
or the Company, as such term is used and defined under Rule 144 of the federal securities laws.


 


(h)          The
Pledged Securities constitute all of the securities owned, legally or beneficially, by the Pledgor, and such securities represent
100% of the issued and outstanding capital stock or other securities, on a fully diluted basis, of the Company. At all times while
this Agreement remains in effect, the Pledged Securities shall constitute and represent 100% of the issued and outstanding shares
of the capital stock or other securities of the Company, on a fully-diluted basis.


 


(i)          The
Company and the Pledgor hereby authorize Secured Party to prepare and file such financing statements, amendments and other documents
and do such acts as Secured Party deems necessary in order to establish and maintain valid, attached and perfected, first priority
security interests in the Collateral in favor of Secured Party, for its own benefit and as agent for its Affiliates, free and clear
of all Liens and claims and rights of third parties whatsoever. The Company and Pledgor hereby irrevocably authorize Secured Party
at any time, and from time to time, to file in any jurisdiction any initial financing statements, amendments, continuations and
other documents in furtherance of the foregoing.


 


9.           Events
of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default”
hereunder:


 


(a)          Default.
The occurrence of any breach, default or “Event of Default” (as such term may be defined in any Loan Documents), after
applicable notice and cure periods, under any of the Loan Documents.


 


(b)          Covenants
and Agreements. The failure of Pledgor or the Company to perform, observe or comply with any and all of the covenants, promises
and agreements of the Pledgor and the Company in this Agreement, which such failure is not cured by the Pledgor or the Company
within ten (10) days after receipt of written notice thereof from Secured Party, except that there shall be no notice or cure period
with respect to any failure to pay any sums due under or as part of the Obligations (provided that if the failure to perform or
default in performance is not capable of being cured, in Secured Party’s sole discretion, then the cure period set forth
herein shall not be applicable and the failure or default shall be an immediate Event of Default hereunder).


 


(c)          Information,
Representations and Warranties. If any representation or warranty made herein or in any other Loan Documents, or if any information
contained in any financial statement, application, schedule, report or any other document given by the Company to Secured Party
in connection with the Obligations, with the Collateral, or with the Loan Documents, is not in all material respects true, accurate
and complete, or if the Pledgor or the Company omitted to state any material fact or any fact necessary to make such information
not misleading.


 




    	 	4	 



     


    

 


10.         Rights
and Remedies. Subject at all times to the Uniform Commercial Code as then in effect in the State governing this Agreement,
the Secured Party shall have the following rights and remedies upon the occurrence and continuation of an Event of Default:


 


(a)          Upon
and anytime after the occurrence and continuation of an Event of Default, the Secured Party shall have the right to acquire the
Pledged Securities and all other Collateral in accordance with the following procedure: (i) the Secured Party shall provide written
notice of such Event of Default (the “Default Notice”) to the Escrow Agent, with a copy to the Pledgor
and the Company; (ii) as soon as practicable after receipt of a Default Notice, the Escrow Agent shall deliver the Pledged Securities
and all other Collateral, along with the applicable Transfer Documents, to the Secured Party.


 


(b)          Upon
receipt of the Pledged Securities and other Collateral issued to the Secured Party, the Secured Party shall have the right to,
without notice or demand to Pledgor or the Company: (i) sell the Collateral and to apply the proceeds of such sales, net of any
selling commissions, to the Obligations owed to the Secured Party by the Company under the Loan Documents, including outstanding
principal, interest, legal fees, and any other amounts owed to the Secured Party; and (ii) exercise in any jurisdiction in which
enforcement hereof is sought, any rights and remedies available to Secured Party under the provisions of any of the Loan Documents,
the rights and remedies of a secured party under the Uniform Commercial Code as then in effect in the State governing this Agreement,
and all other rights and remedies available to the Secured Party, under equity or applicable law, all such rights and remedies
being cumulative and enforceable alternatively, successively or concurrently. In furtherance of the foregoing rights and remedies:


 


(i)          Secured
Party may sell the Pledged Securities, or any part thereof, or any other portion of the Collateral, in one or more sales, at public
or private sale, conducted by any agent of, or auctioneer or attorney for Secured Party, at Secured Party’s place of business
or elsewhere, or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery, and at
such price or prices, all as Secured Party may deem appropriate. Secured Party may be a purchaser at any such sale of any or all
of the Collateral so sold. In the event Secured Party is a purchaser at any such sale, Secured Party may apply to such purchase
all or any portion of the sums then due and owing by the Company to Secured Party under any of the Loan Documents or otherwise,
and the Secured Party may, upon compliance with the terms of the sale, hold, retain and dispose of such property without further
accountability to the Pledgor or the Company therefore. Secured Party is authorized, in its absolute discretion, to restrict the
prospective bidders or purchasers of any of the Collateral at any public or private sale as to their number, nature of business
and investment intention, including the restricting of bidders or purchasers to one or more persons who represent and agree, to
the satisfaction of Secured Party, that they are purchasing the Collateral, or any part thereof, for their own account, for investment,
and not with a view to the distribution or resale of any of such Collateral.


 


(ii)         Upon
any such sale, Secured Party shall have the right to deliver, assign and transfer to each purchaser thereof the Collateral so sold
to such purchaser. Each purchaser (including Secured Party) at any such sale shall, to the full extent permitted by law, hold the
Collateral so purchased absolutely free from any claim or right whatsoever, including, without limitation, any equity or right
of redemption of the Pledgor, who, to the full extent that it may lawfully do so, hereby specifically waives all rights of redemption,
stay, valuation or appraisal which she now has or may have under any rule of law or statute now existing or hereafter adopted.


 




    	 	5	 



     


    

 


(iii)        At
any such sale, the Collateral may be sold in one lot as an entirety, in separate blocks or individually as Secured Party may determine,
in its sole and absolute discretion. Secured Party shall not be obligated to make any sale of any Collateral if it shall determine
in its sole and absolute discretion, not to do so, regardless of the fact that notice of sale of such Collateral shall have been
given. Secured Party may, without notice or publication, adjourn any public or private sale from time to time by announcement at
the time and place fixed for such sale, or any adjournment thereof, and any such sale may be made at any time or place to which
the same may be so adjourned without further notice or publication.


 


(iv)         The
Pledgor and the Company acknowledge that compliance with applicable federal and state securities laws (including, without limitation,
the Securities Act of 1933, as amended, blue sky or other state securities laws or similar laws now or hereafter existing analogous
in purpose or effect) might very strictly limit or restrict the course of conduct of Secured Party if Secured Party were to attempt
to sell or otherwise dispose of all or any part of the Collateral, and might also limit or restrict the extent to which or the
manner in which any subsequent transferee of any such securities could sell or dispose of the same. The Pledgor and the Company
further acknowledge that under applicable laws, Secured Party may be held to have certain general duties and obligations to the
Pledgor, as pledgors of the Collateral, or the Company, to make some effort toward obtaining a fair price for the Collateral even
though the obligations of the Pledgor and the Company may be discharged or reduced by the proceeds of sale at a lesser price. The
Pledgor and the Company understand and agree that, to the extent allowable under applicable law, Secured Party is not to have any
such general duty or obligation to the Pledgor or the Company, and neither the Pledgor nor the Company will attempt to hold Secured
Party responsible for selling all or any part of the Collateral at an inadequate price even if Secured Party shall accept the first
offer received or does not approach more than one possible purchaser. Without limiting their generality, the foregoing provisions
would apply if, for example, Secured Party were to place all or any part of such securities for private placement by an investment
banking firm, or if such investment banking firm purchased all or any part of such securities for its own account, or if Secured
Party placed all or any part of such securities privately with a purchaser or purchasers.


 


(c)          To
the extent that the net proceeds received by the Secured Party are insufficient to satisfy the Obligations in full, the Secured
Party shall be entitled to a deficiency judgment against the Company and any other Person obligated for the Obligations for such
deficiency amount. The Secured Party shall have the absolute right to sell or dispose of the Collateral, or any part thereof, in
any manner it sees fit and shall have no liability to the Pledgor, the Company, or any other party for selling or disposing of
such Collateral even if other methods of sales or dispositions would or allegedly would result in greater proceeds than the method
actually used. The Company and any other Person obligated for the Obligations shall remain liable for all deficiencies and shortfalls,
if any, that may exist after the Secured Party has exhausted all remedies hereunder.


 


(d)          Each
right, power and remedy of the Secured Party provided for in this Agreement or any other Transaction Document shall be cumulative
and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by
the Secured Party of any one or more of the rights, powers or remedies provided for in this Agreement or any other Loan Documents,
or now or hereafter existing at law or in equity or by statute or otherwise, shall not preclude the simultaneous or later exercise
by the Secured Party of all such other rights, powers or remedies, and no failure or delay on the part of the Secured Party to
exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on the Pledgor in any case shall
entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights
of the Secured Party to any other further action in any circumstances without demand or notice. The Secured Party shall have the
full power to enforce or to assign or contract its rights under this Agreement to a third party.


 




    	 	6	 



     


    

 


(e)          In
addition to all other remedies available to the Secured Party, upon the issuance of the Pledged Securities to the Secured Party
after an Event of Default, Pledgor and the Company each agree to: (i) take such action and prepare, distribute and/or file such
documents and papers, as are required or advisable in the opinion of Secured Party and/or its counsel, to permit the sale of the
Pledged Securities, whether at public sale, private sale or otherwise, including, without limitation, issuing, or causing its counsel
to issue, any opinion of counsel for Pledgor or the Company required to allow the Secured Party to sell the Pledged Securities
or any other Collateral under Rule 144; (ii) to bear all costs and expenses of carrying out its obligations under this Section
8(e), which shall be a part of the Obligations secured hereby; and (iv) that there is no adequate remedy at law for the failure
by the Pledgor and the Company to comply with the provisions of this Section 8(e) and that such failure would not be adequately
compensable in damages, and therefore agrees that its agreements contained in this subsection may be specifically enforced.


 


11.         Concerning
the Escrow Agent.


 


(a)          The
Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no implied duties or obligations shall
be read into this Agreement against the Escrow Agent. Escrow Agent agrees to release any property held by it hereunder (the “Escrowed
Property”) in accordance with the terms and conditions set forth in this Agreement.


 


(b)          The
Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, may
assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and may assume that any
person purporting to give any writing, notice, advice or instructions in connection with the provisions hereof has been duly authorized
to do so. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner, and execution,
or validity of any instrument deposited in this escrow, nor as to the identity, authority, or right of any person executing the
same; and its duties hereunder shall be limited to the safekeeping of the Escrowed Property, and for the disposition of the same
in accordance with this Agreement. Escrow Agent shall not be deemed to have knowledge of any matter or thing unless and until Escrow
Agent has actually received written notice of such matter or thing and Escrow Agent shall not be charged with any constructive
notice whatsoever.


 


(c)          Escrow
Agent shall hold in escrow, pursuant to this Agreement, the Escrowed Property actually delivered and received by Escrow Agent hereunder,
but Escrow Agent shall not be obligated to ascertain the existence of (or initiate recovery of) any other property that may be
part or portion of the Collateral, or to become or remain informed with respect to the possibility or probability of additional
Collateral being realized upon or collected at any time in the future, or to inform any parties to this Agreement or any third
party with respect to the nature and extent of any Collateral realized and received by Escrow Agent (except upon the written request
of such party), or to monitor current market values of the Collateral. Further, Escrow Agent shall not be obligated to proceed
with any action or inaction based on information with respect to market values of the Collateral which Escrow Agent may in any
manner learn, nor shall Escrow Agent be obligated to inform the parties hereto or any third party with respect to market values
of any of the Collateral at any time, Escrow Agent having no duties with respect to investment management or information, all parties
hereto understanding and intending that Escrow Agent’s responsibilities are purely ministerial in nature. Any reduction in
the market value or other value of the Collateral while deposited with Escrow Agent shall be at the sole risk of Pledgor and Secured
Party. If all or any portion of the Escrowed Property is in the form of a check or in any other form other than cash, Escrow Agent
shall deposit same as required but shall not be liable for the nonpayment thereof, nor responsible to enforce collection thereof.


 




    	 	7	 



     


    

 


(d)          In
the event instructions from Secured Party, Pledgor, or any other Person would require Escrow Agent to expend any monies or to incur
any cost, Escrow Agent shall be entitled to refrain from taking any action until it receives payment for such costs. It is agreed
that the duties of Escrow Agent are purely ministerial in nature and shall be expressly limited to the safekeeping of the Escrowed
Property and for the disposition of same in accordance with this Agreement. Secured Party, Pledgor and the Company, jointly and
severally, each hereby indemnifies Escrow Agent and holds it harmless from and against any and all claims, liabilities, damages,
costs, penalties, losses, actions, suits or proceedings at law or in equity, or any other expenses, fees or charges of any character
or nature (collectively, the “Claims”), which it may incur or with which it may be threatened, directly or indirectly,
arising from or in any way connected with this Agreement or which may result from Escrow Agent’s following of instructions
from Secured Party, Pledgor or the Company, and in connection therewith, indemnifies Escrow Agent against any and all expenses,
including attorneys’ fees and the cost of defending any action, suit, or proceeding or resisting any Claim, whether or not
litigation is instituted, unless any such Claims arise as a result of Escrow Agent’s gross negligence or willful misconduct.
Escrow Agent shall be vested with a lien on all Escrowed Property under the terms of this Agreement, for indemnification, attorneys’
fees, court costs and all other costs and expenses arising from any suit, interpleader or otherwise, or other expenses, fees or
charges of any character or nature, which may be incurred by Escrow Agent by reason of disputes arising between Pledgor, the Company,
Secured Party, or any third party as to the correct interpretation of this Agreement, and instructions given to Escrow Agent hereunder,
or otherwise, with the right of Escrow Agent, regardless of the instruments aforesaid and without the necessity of instituting
any action, suit or proceeding, to hold any property hereunder until and unless said additional expenses, fees and charges shall
be fully paid. Any fees and costs charged by the Escrow Agent for serving hereunder shall be paid by the Pledgor and the Company,
jointly and severally.


 


(e)          In
the event Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands
from Secured Party, the Company, Pledgor or from third persons with respect to the Escrowed Property, which, in Escrow Agent’s
sole opinion, are in conflict with each other or with any provision of this Agreement, Escrow Agent shall be entitled to refrain
from taking any action until it shall be directed otherwise in writing by Pledgor, the Company and Secured Party and said third
persons, if any, or by a final order or judgment of a court of competent jurisdiction. If any of the parties shall be in disagreement
about the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by
the Escrow Agent hereunder, the Escrow Agent may, at its sole discretion, deposit the Escrowed Property with a court having jurisdiction
over this Agreement, and, upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall
fully cease and terminate. The Escrow Agent shall be indemnified by the Pledgor, the Company and Secured Party for all costs, including
reasonable attorneys’ fees, in connection with the aforesaid proceeding, and shall be fully protected in suspending all or
a part of its activities under this Agreement until a final decision or other settlement in the proceeding is received. In the
event Escrow Agent is joined as a party to a lawsuit by virtue of the fact that it is holding the Escrowed Property, Escrow Agent
shall, at its sole option, either: (i) tender the Collateral in its possession to the registry of the appropriate court; or (ii)
disburse the Collateral in its possession in accordance with the court’s ultimate disposition of the case, and Secured Party,
the Company and Pledgor hereby, jointly and severally, indemnify and hold Escrow Agent harmless from and against any damages or
losses in connection therewith including, but not limited to, reasonable attorneys’ fees and court costs at all trial and
appellate levels.


 




    	 	8	 



     


    

 


(f)          The
Escrow Agent may consult with counsel of its own choice (and the costs of such counsel shall be paid by the Pledgor, the Company
and Secured Party, jointly and severally) and shall have full and complete authorization and protection for any action taken or
suffered by it hereunder in good faith and in accordance with the opinion of such counsel. The Escrow Agent shall not be liable
for any mistakes of fact or error of judgment, or for any actions or omissions of any kind, unless caused by its willful misconduct
or gross negligence.


 


(g)          The
Escrow Agent may resign upon ten (10) days’ written notice to the parties in this Agreement. If a successor Escrow Agent
is not appointed by Secured Party and Pledgor within this ten (10) day period, the Escrow Agent may petition a court of competent
jurisdiction to name a successor.


 


(h)          Conflict
Waiver. The Pledgor and the Company hereby acknowledges that the Escrow Agent is counsel to the Secured Party in connection
with the transactions contemplated and referred herein. The Pledgor and the Company agree that in the event of any dispute arising
in connection with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein,
the Escrow Agent shall be permitted to continue to represent the Secured Party and neither the Pledgor, nor the Company, will seek
to disqualify such counsel and each of them waives any objection Pledgor or the Company might have with respect to the Escrow Agent
acting as the Escrow Agent pursuant to this Agreement. Pledgor, the Company and Secured Party acknowledge and agree that nothing
in this Agreement shall prohibit Escrow Agent from: (i) serving in a similar capacity on behalf of others; or (ii) acting in the
capacity of attorneys for one or more of the parties hereto in connection with any matter.


 


12.          Increase
in Obligations. It is the intent of the parties to secure payment of the Obligations, as the amount of such Obligations may
increase from time to time in accordance with the terms and provisions of the Loan Documents, and all of the Obligations, as so
increased from time to time, shall be and are secured hereby. Upon the execution hereof, Pledgor and the Company shall pay any
and all documentary stamp taxes and/or other charges required to be paid in connection with the execution and enforcement of the
Loan Documents, and if, as and to the extent the Obligations are increased from time to time in accordance with the terms and provisions
of the Loan Documents, then Pledgor and the Company shall immediately pay any additional documentary stamp taxes or other charges
in connection therewith.


 


13.          Irrevocable
Authorization and Instruction. If applicable, Pledgor and the Company hereby authorize and instruct the transfer agent for
the Company (or transfer agents if there is more than one) to comply with any instruction received by it from Secured Party in
writing that: (i) states that an Event of Default hereunder exists or has occurred; and (b) is otherwise in accordance with the
terms of this Agreement, without any other or further instructions from Pledgor or the Company, and Pledgor and the Company agree
that such transfer agents shall be fully protected in so complying with any such instruction from Secured Party.


 


14.          Appointment
as Attorney-in-Fact. The Company and Pledgor hereby irrevocably constitutes and appoints Secured Party and any officer or agent
of Secured Party, with full power of substitution, as its true and lawful attorney-in-fact, with full irrevocable power and authority
in the place and stead of Pledgor or the Company, as applicable, and in the name of Pledgor, the Company, or in the name of Secured
Party, as applicable, from time to time in the discretion of Secured Party, so long as an Event of Default hereunder exists, for
the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, including any financing statements,
endorsements, assignments or other instruments of transfer. Pledgor and the Company each hereby ratify all that said attorneys
shall lawfully do or cause to be done pursuant to the power of attorney granted in this Section 14. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are irrevocable until the Obligations are paid and performed
in full.


 




    	 	9	 



     


    

 


15.          Continuing
Obligation of Pledgor and the Company. The obligations, covenants, agreements and duties of the Pledgor and the Company under
this Agreement shall in no way be affected or impaired by: (i) the modification or amendment (whether material or otherwise) of
any of the obligations of the Pledgor or the Company or any other Person, as applicable; (ii) the voluntary or involuntary bankruptcy,
assignment for the benefit of creditors, reorganization, or other similar proceedings affecting the Company, Pledgor or any other
Person, as applicable; (iii) the release of the Company, Pledgor or any other Person from the performance or observance of any
of the agreements, covenants, terms or conditions contained in any Loan Documents, by the operation of law or otherwise, including
the release of the Company’s or Pledgor’s obligation to pay interest or attorney’s fees.


 


Pledgor and the Company
further agree that Secured Party may take other guaranties or collateral or security to further secure the Obligations, and consent
that any of the terms, covenants and conditions contained in any of the Loan Documents may be renewed, altered, extended, changed
or modified by Secured Party or may be released by Secured Party, without in any manner affecting this Agreement or releasing Pledgor
herefrom, and Pledgor shall continue to be liable hereunder to pay and perform pursuant hereto, notwithstanding any such release
or the taking of such other guaranties, collateral or security. This Agreement is additional and supplemental to any and all other
guarantees, security agreements or collateral heretofore and hereafter executed by Pledgor and the Company for the benefit of Secured
Party, whether relating to the indebtedness evidenced by any of the Loan Documents or not, and shall not supersede or be superseded
by any other document or guaranty executed by Pledgor, the Company or any other Person for any purpose. Pledgor and the Company
hereby agree that Pledgor, the Company, and any additional parties who may become liable for repayment of the sums due under the
Loan Documents, may hereafter be released from their liability hereunder and thereunder; and Secured Party may take, or delay in
taking or refuse to take, any and all action with reference to any of the Loan Documents (regardless of whether same might vary
the risk or alter the rights, remedies or recourses of Pledgor), including specifically the settlement or compromise of any amount
allegedly due thereunder, all without notice to, consideration to or the consent of the Pledgor, and without in any way releasing,
diminishing or affecting in any way the absolute nature of Pledgor’s obligations and liabilities hereunder.


 


No delay on the part
of the Secured Party in exercising any rights hereunder or failure to exercise the same shall operate as a waiver of such rights.
Pledgor and the Company hereby waives any and all legal requirements, statutory or otherwise, that Secured Party shall institute
any action or proceeding at law or in equity or exhaust its rights, remedies and recourses against Pledgor, any Company or anyone
else with respect to the Loan Documents, as a condition precedent to bringing an action against Pledgor or the Company upon this
Agreement or as a condition precedent to Secured Party’s rights to sell the Pledged Securities or any other Collateral. Pledgor
and the Company agree that Secured Party may simultaneously maintain an action upon this Agreement and an action or proceeding
upon the Loan Documents. All remedies afforded by reason of this Agreement are separate and cumulative remedies and may be exercised
serially, simultaneously and in any order, and the exercise of any of such remedies shall not be deemed an exclusion of the other
remedies and shall in no way limit or prejudice any other contractual, legal, equitable or statutory remedies which Secured Party
may have in the Pledged Securities, any other Collateral, or under the Loan Documents. Until the Obligations, and all extensions,
renewals and modifications thereof, are paid in full, and until each and all of the terms, covenants and conditions of this Agreement
are fully performed, Pledgor shall not be released by any act or thing which might, but for this provision of this Agreement, be
deemed a legal or equitable discharge of a surety, or by reason of any waiver, extension, modification, forbearance or delay of
Secured Party or any obligation or agreement between the Company or its successors or assigns, and the then holder of the Loan
Documents, relating to the payment of any sums evidenced or secured thereby or to any of the other terms, covenants and conditions
contained therein, and Pledgor hereby expressly waive and surrender any defense to liability hereunder based upon any of the foregoing
acts, things, agreements or waivers, or any of them. Pledgor and Company also waives any defense arising by virtue of any disability,
insolvency, bankruptcy, lack of authority or power or dissolution of Pledgor or Company, even though rendering the Loan Documents
void, unenforceable or otherwise uncollectible, it being agreed that Pledgor and the Company shall remain liable hereunder, regardless
of any claim which Pledgor or the Company might otherwise have against Secured Party by virtue of Secured Party’s invocation
of any right, remedy or recourse given to it hereunder or under the Loan Documents. In addition, Pledgor waives and renounces any
right of subrogation, reimbursement or indemnity whatsoever, and any right of recourse to security for the Obligations of the Company
to Secured Party, unless and until all of said Obligations have been paid in full to Secured Party.


 




    	 	10	 



     


    

 


16.         Miscellaneous.


 


(a)          Performance
for Pledgor or the Company. The Pledgor and the Company agree and hereby acknowledge that Secured Party may, in Secured Party’s
sole discretion, but Secured Party shall not be obligated to, whether or not an Event of Default shall have occurred, advance funds
on behalf of the Company or Pledgor, without prior notice to the Pledgor or the Company, in order to insure the Company’s
and Pledgor’s compliance with any covenant, warranty, representation or agreement of the Pledgor or the Company made in or
pursuant to this Agreement or the other Loan Documents, to continue or complete, or cause to be continued or completed, performance
of the Pledgor’s and the Company’s obligations under any contracts of the Pledgor or the Company, or to preserve or
protect any right or interest of Secured Party in the Collateral or under or pursuant to this Agreement or the other Loan Documents;
provided, however, that the making of any such advance by Secured Party shall not constitute a waiver by Secured Party of any Event
of Default with respect to which such advance is made, nor relieve the Pledgor or the Company of any such Event of Default. The
Pledgor and the Company, respectively and as applicable, shall pay to Secured Party upon demand all such advances made by Secured
Party with interest thereon at the highest rate permitted by applicable law. All such advances shall be deemed to be included in
the Obligations and secured by the security interest granted Secured Party hereunder; provided, however, that the provisions of
this Subsection shall survive the termination of this Agreement and Secured Party’s security interest hereunder and the payment
of all other Obligations.


 


(b)          Applications
of Payments and Collateral. Except as may be otherwise specifically provided in this Agreement or the other Loan Documents,
all Collateral and proceeds of Collateral coming into Secured Party’s possession may be applied by Secured Party (after payment
of any costs, fees and other amounts incurred by Secured Party in connection therewith) to any of the Obligations, whether matured
or unmatured, as Secured Party shall determine in its sole discretion. Any surplus held by the Secured Party and remaining after
the indefeasible payment in full in cash of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled
to receive the same or as a court of competent jurisdiction shall direct. In the event that the proceeds of any such sale, collection
or realization are insufficient to pay all amounts to which the Secured Party is legally entitled, the Company shall be liable
for the deficiency, together with interest thereon at the highest rate permitted by applicable law, together with the costs of
collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Secured Party to
collect such deficiency.


 




    	 	11	 



     


    

 


(c)          Waivers
by Pledgor and the Company. The Company and the Pledgor hereby waives, to the extent the same may be waived under applicable
law: (i) notice of acceptance of this Agreement; (ii) all claims and rights of the Pledgor and the Company against Secured Party
on account of actions taken or not taken by Secured Party in the exercise of Secured Party’s rights or remedies hereunder,
under any other Loan Documents or under applicable law; (iii) all claims of the Pledgor and the Company for failure of Secured
Party to comply with any requirement of applicable law relating to enforcement of Secured Party’s rights or remedies hereunder,
under the other Loan Documents or under applicable law; (iv) all rights of redemption of the Pledgor with respect to the Collateral;
(v) in the event Secured Party seeks to repossess any or all of the Collateral by judicial proceedings, any bond(s) or demand(s)
for possession which otherwise may be necessary or required; (vi) presentment, demand for payment, protest and notice of non-payment
and all exemptions applicable to any of the Collateral or the Pledgor or the Company; (vii) any and all other notices or demands
which by applicable law must be given to or made upon the Pledgor or the Company by Secured Party; (viii) settlement, compromise
or release of the obligations of any person or entity primarily or secondarily liable upon any of the Obligations; (ix) all rights
of the Pledgor or the Company to demand that Secured Party release account debtors or other persons or entities liable on any of
the Collateral from further obligation to Secured Party; and (x) substitution, impairment, exchange or release of any Collateral
for any of the Obligations. The Pledgor and the Company agree that Secured Party may exercise any or all of its rights and/or remedies
hereunder and under any other Loan Documents and under applicable law without resorting to and without regard to any Collateral
or sources of liability with respect to any of the Obligations.


 


(d)          Waivers
by Secured Party. No failure or any delay on the part of Secured Party in exercising any right, power or remedy hereunder or
under any other Loan Documents or under applicable law, shall operate as a waiver thereof


 


(e)          Secured
Party’s Setoff. Secured Party shall have the right, in addition to all other rights and remedies available to it, following
an Event of Default, to set off against any Obligations due Secured Party, any debt owing to the Pledgor or the Company by Secured
Party.


 


(f)          Modifications,
Waivers and Consents. No modifications or waiver of any provision of this Agreement or any other Loan Documents, and no consent
by Secured Party to any departure by the Pledgor or the Company therefrom, shall in any event be effective unless the same shall
be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given,
and any single or partial written waiver by Secured Party of any term, provision or right of Secured Party hereunder shall only
be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future waiver of any other
right, power or remedy. No notice to or demand upon the Pledgor or the Company in any case shall entitle Pledgor or the Company
to any other or further notice or demand in the same, similar or other circumstances.


 


(g)          Notices.
All notices of request, demand and other communications hereunder shall be addressed, sent and deemed delivered in accordance with
the Credit Agreement, including delivery of any such notices or communications to the Pledgor on behalf of the Company, which the
Company hereby agrees and acknowledges shall be valid and effective notice to the Company hereunder.


 


(h)          Applicable
Law and Consent to Jurisdiction. The Pledgor, the Company and the Secured Party each irrevocably agrees that any dispute arising
under, relating to, or in connection with, directly or indirectly, this Agreement or related to any matter which is the subject
of or incidental to this Agreement (whether or not such claim is based upon breach of contract or tort) shall be subject to the
exclusive jurisdiction and venue of the state and/or federal courts located in Broward County, Florida; provided, however, Secured
Party may, at Secured Party’s sole option, elect to bring any action in any other jurisdiction. This provision is intended
to be a “mandatory” forum selection clause and governed by and interpreted consistent with Florida law. The Pledgor,
the Company and Secured Party each hereby consents to the exclusive jurisdiction and venue of any state or federal court having
its situs in said county (or to any other jurisdiction or venue, if Secured Party so elects), and each waives any objection based
on forum non conveniens. The Pledgor and the Company each hereby waives personal service of any and all process and consent that
all such service of process may be made by certified mail, return receipt requested, directed to the Pledgor or the Company, as
applicable, as set forth herein and in the manner provided by applicable statute, law, rule of court or otherwise. Except for the
foregoing mandatory forum selection clause, this Agreement shall be construed in accordance with the laws of the State of Nevada,
without regard to the principles of conflicts of laws.


 




    	 	12	 



     


    

 


(i)          Survival:
Successors and Assigns. All covenants, agreements, representations and warranties made herein shall survive the execution and
delivery hereof, and shall continue in full force and effect until all Obligations have been paid in full, there exists no commitment
by Secured Party which could give rise to any Obligations. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such party. In the event that Secured Party assigns this
Agreement and/or its security interest in the Collateral, such assignment shall be binding upon and recognized by the Pledgor.
All covenants, agreements, representations and warranties by or on behalf of the Pledgor or the Company which are contained in
this Agreement shall inure to the benefit of Secured Party, its successors and assigns. Neither the Pledgor, nor the Company, may
assign this Agreement or delegate any of their respective rights or obligations hereunder, without the prior written consent of
Secured Party, which consent may be withheld in Secured Party’s sole and absolute discretion.


 


(j)          Severability.
If any term, provision or condition, or any part thereof, of this Agreement shall for any reason be found or held invalid or unenforceable
by any court or governmental authority of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder
of such term, provision or condition nor any other term, provision or condition, and this Agreement shall survive and be construed
as if such invalid or unenforceable term, provision or condition had not been contained therein.


 


(k)          Merger
and Integration. This Agreement and the other Loan Documents contain the entire agreement of the parties hereto with respect
to the matters covered and the transactions contemplated hereby, and no other agreement, statement or promise made by any party
hereto, or by any employee, officer, agent or attorney of any party hereto, which is not contained herein shall be valid or binding.


 


(1)         WAIVER
OF JURY TRIAL. THE PLEDGOR AND THE COMPANY EACH HEREBY: (i) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY A JURY; AND (ii) WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE PLEDGORS, THE COMPANY AND SECURED
PARTY MAY BE PARTIES, ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO THIS AGREEMENT, AND/OR ANY TRANSACTIONS, OCCURRENCES,
COMMUNICATIONS, OR UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING IN ANY WAY TO DEBTOR-CREDITOR RELATIONSHIP BETWEEN
THE PARTIES. IT IS UNDERSTOOD AND AGREED THAT TIHS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES
TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER OF JURY TRIAL
IS SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE PLEDGORS AND THE COMPANY AND THE PLEDGOR AND THE COMPANY
HEREBY AGREE THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. SECURED PARTY IS HEREBY AUTHORIZED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PLEDGORS, THE COMPANY AND SECURED PARTY, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF
SUCH WAIVER OF RIGHT TO TRIAL BY JURY. THE PLEDGORS AND THE COMPANY REPRESENT AND WARRANT THAT EACH OF THEM HAS BEEN REPRESENTED
IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL,
AND/OR THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.


 




    	 	13	 



     


    

 


(m)          Execution.
This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and
the same Agreement. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf’
format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid
and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf’ signature
page was an original thereof.


 


(n)          Headings.
The headings and sub-headings contained in the titling of this Agreement are intended to be used for convenience only and shall
not be used or deemed to limit or diminish any of the provisions hereof.


 


(o)          Gender
and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the party or parties or their personal representatives, successors and assigns may require. The word “Company”
or “Companies” shall mean all of the undersigned Persons.


 


(p)          Further
Assurances. The parties hereto will execute and deliver such further instruments and do such further acts and things as may
be reasonably required to carry out the intent and purposes of this Agreement, including the execution and filing of UCC-1 Financing
Statements in any jurisdiction as Secured Party may require.


 


(q)          Time
is of the Essence. The parties hereby agree that time is of the essence with respect to performance of each of the parties’
obligations under this Agreement. The parties agree that in the event that any date on which performance is to occur falls on a
Saturday, Sunday or state or national holiday, then the time for such performance shall be extended until the next business day
thereafter occurring.


 


(r)          Joint
Preparation. The preparation of this Agreement has been a joint effort of the parties and the resulting documents shall not,
solely as a matter of judicial construction, be construed more severely against one of the parties than the other.


 


(s)          Prevailing
Party. If any legal action or other proceeding is brought for the enforcement of this Agreement or any other Loan Documents,
or because of an alleged dispute, breach, default or misrepresentation in connection with any provisions of this Agreement or any
other Loan Documents, the successful or prevailing party or parties shall be entitled to recover from the non-prevailing party,
reasonable attorneys’ fees, court costs and all expenses, even if not taxable as court costs (including, without limitation,
all such fees, costs and expenses incident to appeals), incurred in that action or proceeding, in addition to any other relief
to which such party or parties may be entitled.


 




    	 	14	 



     


    

 


(t)          Costs
and Expenses. The Pledgor and the Company, jointly and severally, agree to pay to the Secured Party, upon demand, the amount
of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Secured
Party and of any experts and agents, which the Secured Party may incur in connection with: (i) the preparation, negotiation, execution,
delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement; (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral; (iii) the exercise
or enforcement of any of the rights of the Secured Party hereunder; or (iv) the failure by the Pledgor or the Company to perform
or observe any of the provisions hereof. Included in the foregoing shall be the amount of all expenses paid or incurred by Secured
Party in consulting with counsel concerning any of its rights hereunder, under any Loan Documents or under applicable law, as well
as such portion of Secured Party’s overhead as Secured Party shall allocate to collection and enforcement of the Obligations
in Secured Party’s sole but reasonable discretion. All such costs and expenses shall bear interest from the date of outlay
until paid, at the highest rate allowed by law. The provisions of this Subsection shall survive the termination of this Agreement
and Secured Party’s security interest hereunder and the payment of all Obligations.


 


(u)          Joint
and Several Liability. The liability of Pledgor shall be joint and several with the liability of the Company and any other
Person liable for the Obligations.


 


[Signatures on the following
page]


 




    	 	15	 



     


    

 


IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the day and year first above written.


 


	PLEDGOR:	 
	 	 
	DRONE USA, INC., a Delaware
    corporation	 
	 	 	 
	By: 	 	 
	Name:	 	 
	Title:	 	 


 


	STATE OF _________________	)
	 	SS.
	COUNTY OF _________________	)


 


The foregoing instrument was acknowledged
before me this __ day of ________, 2016 by ____________, who is the CEO of DRONE USA, INC., a Delaware corporation, on behalf of
such entity. He/She is personally known to me or has produced ______________ as identification.


 


My Commission Expires:


 


	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed


 




    	 	16	 



     


    

 


IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the day and year first above written.


 


COMPANY:


 


DRONE USA, LLC, a Delaware


limited liability company


 


	By: 	 	 
	Name:	 	 
	Title:	 	 


 


	STATE OF ________________	)
	 	SS.
	COUNTY OF  ________________	)


 


The foregoing instrument was acknowledged
before me this __ day of _______, 2016 by ___________, who is the _____________ of Drone USA, LLC, a Delaware limited liability
company. He/She is personally known to me or has produced ______________ as identification.


 


My Commission Expires:


 


	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed


 




    	 	17	 



     


    

 


IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the day and year first above written.


 


SECURED PARTY: 


 


TCA GLOBAL CREDIT MASTER FUND, LP


 


		By:	TCA Global Credit Fund GP, Ltd.






		Its:	General Partner 



 


	By:	 	 
	 	Robert Press, Director	 


 




    	 	18	 



     


    

 


PLEDGE AND ESCROW AGREEMENT


 


THIS PLEDGE AND ESCROW
AGREEMENT (“Agreement”) is made and entered into as of May 31, 2016, but made effective as of September
13, 2016, by and between DRONE USA, LLC, a Delaware limited liability company (the “Pledgor”),
and TCA GLOBAL CREDIT MASTER FUND, LP, a Cayman Islands limited partnership (the “Secured Party”),
with the joinder of DAVID KAHAN, P.A. (“Escrow Agent”).


 


RECITALS


 


WHEREAS, the
Secured Party has made certain financial accommodations for the benefit of the Pledgor pursuant to that certain Credit Agreement
of even date herewith among the Pledgor and Secured Party, among others (the “Credit Agreement”); and


 


WHEREAS, in
order to secure the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all
of the Pledgor’s Obligations to the Secured Party, or any successor to the Secured Party, under the Credit Agreement
and all other Loan Documents, Pledgor has agreed to irrevocably pledge to the Secured Party 100% of the issued and
outstanding shares of the capital stock and/or membership interests, as applicable, of HOWCO DISTRIBUTING CO., a
Washington corporation (the “Company”) (such shares of stock and/or membership interests in the
Company hereinafter referred to as the “Pledged Securities”);


 


NOW, THEREFORE,
in consideration of the mutual covenants, agreements, warranties, and representations herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:


 


1.           Recitals,
Construction and Defined Terms. The recitations set forth in the preamble of this Agreement are true and correct and incorporated
herein by this reference. In this Agreement, unless the express context otherwise requires: (i) the words “herein,”
“hereof’ and “hereunder” and words of similar import refer to this Agreement as a whole and not to any
particular provision of this Agreement; (ii) references to the words “Section” or “Subsection” refer to
the respective Sections and Subsections of this Agreement, and references to “Exhibit” or “Schedule” refer
to the respective Exhibits and Schedules attached hereto; and (iii) wherever the word “include,” “includes,”
“including” or words of similar import are used in this Agreement, such words will be deemed to be followed by the
words “without limitation.” All capitalized terms used in this Agreement that are defined in the Credit Agreement shall
have the meanings assigned to them in the Credit Agreement, unless the context of this Agreement requires otherwise (provided that
if a capitalized term used herein is defined in the Credit Agreement and separately defined in this Agreement, the meaning of such
term as defined in this Agreement shall control for purposes of this Agreement).


 


2.           Pledge.
In order to secure the full and timely payment and performance of all of the Pledgor’s Obligations to the Secured Party under
the Loan Documents, the Pledgor hereby transfers, pledges, assigns, sets over, delivers and grants to the Secured Party a continuing
lien and security interest in and to all of the following property of Pledgor, both now owned and existing and hereafter created,
acquired and arising (all being collectively hereinafter referred to as the “Collateral”) and all right,
title and interest of Pledgor in and to the Collateral, to-wit:


 


(a)          the
Pledged Securities owned by Pledgor;


 


(b)          any
certificates representing or evidencing the Pledged Securities, if any; 


 




    	 	1	 



     


    

 


(c)          any
and all distributions thereon, and cash and non-cash proceeds and products thereof, including all dividends, cash, distributions,
income, profits, instruments, securities, stock dividends, distributions of capital stock or other securities of the Company and
all other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon conversion
of the Pledged Securities, whether in connection with stock splits, recapitalizations, merger, conversions, combinations, reclassifications,
exchanges of securities or otherwise; and


 


(d)          any
and all voting, management, and other rights, powers and privileges accruing or incidental to an owner of the Pledged Securities
and the other property referred to in subsections 2(a) through 2(c) above.


 


3.           Transfer
of Pledged Securities. Simultaneously with the execution of this Agreement, Pledgor shall deliver to the Escrow Agent: (i)
if the Pledged Securities are evidenced by physical certificates, then all original certificates representing or evidencing the
Pledged Securities, together with undated, irrevocable and duly executed assignments or stock powers thereof in form and substance
acceptable to Secured Party (together with medallion guaranteed signatures, if required by Secured Party), executed in blank by
Pledgor; (ii) if the Pledged Securities are not represented by physical certificates, then undated, irrevocable and duly executed
assignment instruments in form and substance acceptable to Secured Party, executed in blank by Pledgor; and (iii) all other property,
instruments, documents and papers comprising, representing or evidencing the Collateral, or any part thereof, together with proper
instruments of assignment or endorsement, as Secured Party may request or require, duly executed by Pledgor (collectively, the
“Transfer Documents”). The Pledged Securities and other Transfer Documents (collectively, the “Pledged
Materials”) shall be held by the Escrow Agent pursuant to this Agreement until the full payment and performance of
all of the Obligations, the termination or expiration of this Agreement, or delivery of the Pledged Materials in accordance with
this Agreement. In addition, all non-cash dividends, dividends paid or payable in cash or otherwise in connection with a partial
or total liquidation or dissolution of the Company, instruments, securities and any other distributions, whether paid or payable
in cash or otherwise, made on or in respect of the Pledged Securities, whether resulting from a subdivision, combination, or reclassification
of the outstanding capital stock or other securities of the Company, or received in exchange for the Pledged Securities or any
part thereof, or in redemption thereof, as a result of any merger, consolidation, acquisition, or other exchange of assets to which
the Company may be a party or otherwise, or any other property that constitutes part of the Collateral from time to time, including
any additional certificates representing any portion of the Collateral hereafter acquired by the Pledgor, shall be immediately
delivered or cause to be delivered by Pledgor to the Escrow Agent in the same form as so received, together with proper instruments
of assignment or endorsement duly executed by Pledgor.


 


4.           Security
Interest Only. The security interests in the Collateral granted to Secured Party hereunder are granted as security only and
shall not subject the Secured Party to, or transfer or in any way affect or modify, any obligation or liability of the Pledgor
with respect to any of the Collateral or any transaction in connection therewith.


 


5.           Record
Owner of Collateral. Until an “Event of Default” (as hereinafter defined) under this Agreement shall occur, the
Pledged Securities shall remain registered in the name of the Pledgor. Pledgor will promptly give to the Secured Party copies of
any notices or other communications received by it and with respect to Collateral registered in the name of Pledgor.


 


6.           Rights
Related to Pledged Securities. Subject to the terms of this Agreement, unless and until an Event of Default under this Agreement
shall occur:


 




    	 	2	 



     


    

 


(a)          Pledgor
shall be entitled to exercise any and all voting, management, and other rights, powers and privileges accruing to an owner of the
Pledged Securities, or any part thereof, for any purpose consistent with the terms of this Agreement; provided, however, such action
would not materially and adversely affect the rights inuring to Secured Party under any of the Loan Documents, or adversely affect
the remedies of the Secured Party under any of the Loan Documents, or the ability of the Secured Party to exercise same.


 


(b)          Upon
the occurrence of an Event of Default, all rights of the Pledgor in and to the Pledged Securities and all other Collateral shall
cease and all such rights shall immediately vest in Secured Party, as may be determined by Secured Party, although Secured Party
shall not have any duty to exercise such rights or be required to sell or to otherwise realize upon the Collateral, as hereinafter
authorized, or to preserve the same, and Secured Party shall not be responsible for any failure to do so or delay in doing so.
To effectuate the foregoing, Pledgor hereby grants to Secured Party a proxy to vote the Pledged Securities for and on behalf of
Pledgor, which proxy is irrevocable and coupled with an interest and which proxy shall be effective upon the occurrence of any
Event of Default. Such proxy shall remain in effect so long as the Obligations remain outstanding. The Company hereby agrees that
any vote by Pledgor in violation of this Section 6 shall be null, void and of no force or effect. Furthermore, all dividends or
other distributions received by the Pledgor shall be subject to delivery to Escrow Agent in accordance with Section 3 above, and
until such delivery, any of such dividends and other distributions shall be received in trust for the benefit of the Secured Party,
shall be segregated from other property or funds of the Pledgor and shall be forthwith delivered to Escrow Agent in accordance
with Section 3 above.


 


7.           Release
of Pledged Securities. Upon the timely payment in full of all of the Obligations in accordance with the terms thereof, Secured
Party shall notify the Escrow Agent in writing to such effect. Upon receipt of such written notice, the Escrow Agent shall return
all of the Pledged Materials in Escrow Agent’s possession to the Pledgor, whereupon any and all rights of Secured Party in
and to the Pledged Materials and all other Collateral shall be terminated.


 


8.           Representations.
Warranties, and Covenants of the Pledgor and the Company. The Pledgor and the Company each hereby covenant, warrant and represent,
for the benefit of the Secured Party, as follows (the following representations and warranties shall be made as of the date of
this Agreement and as of each date when Pledged Securities are delivered to Escrow Agent hereunder, as applicable):


 


(a)          The
Pledged Securities are free and clear of any and all Liens, other than as created by this Agreement.


 


(b)          The
Pledged Securities have been duly authorized and are validly issued, fully paid and non-assessable, and are subject to no options
to purchase, or any similar rights or to any restrictions on transferability.


 


(c)          Each
certificate or document of title constituting the Pledged Securities is genuine in all respects and represents what it purports
to be.


 


(d)          By
virtue of the execution and delivery of this Agreement and upon delivery to Escrow Agent of the Pledged Securities in accordance
with this Agreement, Secured Party will have a valid and perfected, first priority security interest in the Collateral, subject
to no prior or other Liens of any nature whatsoever.


 




    	 	3	 



     


    

 


(e)          Pledgor
covenants, that for so long as this Agreement is in effect, Pledgor will defend the Collateral and the priority of Secured Party’s
security interests therein, at its sole cost and expense, against the claims and demands of all Persons at anytime claiming the
same or any interest therein.


 


(f)          At
its option, Secured Party may pay, for Pledgor’s account, any taxes (including documentary stamp taxes), Liens, security
interests, or other encumbrances at any time levied or placed on the Collateral. Pledgor agrees to reimburse Secured Party on demand
for any payment made or expense incurred by Secured Party pursuant to the foregoing authorization. Any such amount, if not promptly
paid upon demand therefor, shall accrue interest at the highest non-usurious rate permitted by applicable law from the date of
outlay, until paid, and shall constitute an Obligation secured hereby.


 


(g)          The
Pledgor and the Company acknowledge, represent and warrant that Secured Party is not an “affiliate” of the Pledgor
or the Company, as such term is used and defined under Rule 144 of the federal securities laws.


 


(h)          The
Pledged Securities constitute all of the securities owned, legally or beneficially, by the Pledgor, and such securities represent
100% of the issued and outstanding capital stock or other securities, on a fully diluted basis, of the Company. At all times while
this Agreement remains in effect, the Pledged Securities shall constitute and represent 100% of the issued and outstanding shares
of the capital stock or other securities of the Company, on a fully-diluted basis.


 


(i)          The
Company and the Pledgor hereby authorize Secured Party to prepare and file such financing statements, amendments and other documents
and do such acts as Secured Party deems necessary in order to establish and maintain valid, attached and perfected, first priority
security interests in the Collateral in favor of Secured Party, for its own benefit and as agent for its Affiliates, free and clear
of all Liens and claims and rights of third parties whatsoever. The Company and Pledgor hereby irrevocably authorize Secured Party
at any time, and from time to time, to file in any jurisdiction any initial financing statements, amendments, continuations and
other documents in furtherance of the foregoing.


 


9.           Events
of Default. The occurrence of any one or more of the following events shall constitute an “Event of
Default” hereunder:


 


(a)          Default.
The occurrence of any breach, default or “Event of Default” (as such term may be defined in any Loan Documents), after
applicable notice and cure periods, under any of the Loan Documents.


 


(b)          Covenants
and Agreements. The failure of Pledgor or the Company to perform, observe or comply with any and all of the covenants, promises
and agreements of the Pledgor and the Company in this Agreement, which such failure is not cured by the Pledgor or the Company
within ten (10) days after receipt of written notice thereof from Secured Party, except that there shall be no notice or cure period
with respect to any failure to pay any sums due under or as part of the Obligations (provided that if the failure to perform or
default in performance is not capable of being cured, in Secured Party’s sole discretion, then the cure period set forth
herein shall not be applicable and the failure or default shall be an immediate Event of Default hereunder).


 


(c)          Information,
Representations and Warranties. If any representation or warranty made herein or in any other Loan Documents, or if any information
contained in any financial statement, application, schedule, report or any other document given by the Company to Secured Party
in connection with the Obligations, with the Collateral, or with the Loan Documents, is not in all material respects true, accurate
and complete, or if the Pledgor or the Company omitted to state any material fact or any fact necessary to make such information
not misleading.


 




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10.         Rights
and Remedies. Subject at all times to the Uniform Commercial Code as then in effect in the State governing this Agreement,
the Secured Party shall have the following rights and remedies upon the occurrence and continuation of an Event of Default:


 


(a)          Upon
and anytime after the occurrence and continuation of an Event of Default, the Secured Party shall have the right to acquire the
Pledged Securities and all other Collateral in accordance with the following procedure: (i) the Secured Party shall provide written
notice of such Event of Default (the “Default Notice”) to the Escrow Agent, with a copy to the Pledgor
and the Company; (ii) as soon as practicable after receipt of a Default Notice, the Escrow Agent shall deliver the Pledged Securities
and all other Collateral, along with the applicable Transfer Documents, to the Secured Party.


 


(b)          Upon
receipt of the Pledged Securities and other Collateral issued to the Secured Party, the Secured Party shall have the right to,
without notice or demand to Pledgor or the Company: (i) sell the Collateral and to apply the proceeds of such sales, net of any
selling commissions, to the Obligations owed to the Secured Party by the Company under the Loan Documents, including outstanding
principal, interest, legal fees, and any other amounts owed to the Secured Party; and (ii) exercise in any jurisdiction in which
enforcement hereof is sought, any rights and remedies available to Secured Party under the provisions of any of the Loan Documents,
the rights and remedies of a secured party under the Uniform Commercial Code as then in effect in the State governing this Agreement,
and all other rights and remedies available to the Secured Party, under equity or applicable law, all such rights and remedies
being cumulative and enforceable alternatively, successively or concurrently. In furtherance of the foregoing rights and remedies:


 


(i)          Secured
Party may sell the Pledged Securities, or any part thereof, or any other portion of the Collateral, in one or more sales, at public
or private sale, conducted by any agent of, or auctioneer or attorney for Secured Party, at Secured Party’s place of business
or elsewhere, or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery, and at
such price or prices, all as Secured Party may deem appropriate. Secured Party may be a purchaser at any such sale of any or all
of the Collateral so sold. In the event Secured Party is a purchaser at any such sale, Secured Party may apply to such purchase
all or any portion of the sums then due and owing by the Company to Secured Party under any of the Loan Documents or otherwise,
and the Secured Party may, upon compliance with the terms of the sale, hold, retain and dispose of such property without further
accountability to the Pledgor or the Company therefore. Secured Party is authorized, in its absolute discretion, to restrict the
prospective bidders or purchasers of any of the Collateral at any public or private sale as to their number, nature of business
and investment intention, including the restricting of bidders or purchasers to one or more persons who represent and agree, to
the satisfaction of Secured Party, that they are purchasing the Collateral, or any part thereof, for their own account, for investment,
and not with a view to the distribution or resale of any of such Collateral.


 


(ii)         Upon
any such sale, Secured Party shall have the right to deliver, assign and transfer to each purchaser thereof the Collateral so sold
to such purchaser. Each purchaser (including Secured Party) at any such sale shall, to the full extent permitted by law, hold the
Collateral so purchased absolutely free from any claim or right whatsoever, including, without limitation, any equity or right
of redemption of the Pledgor, who, to the full extent that it may lawfully do so, hereby specifically waives all rights of redemption,
stay, valuation or appraisal which she now has or may have under any rule of law or statute now existing or hereafter adopted.


 




    	 	5	 



     


    

 


(iii)        At
any such sale, the Collateral may be sold in one lot as an entirety, in separate blocks or individually as Secured Party may determine,
in its sole and absolute discretion. Secured Party shall not be obligated to make any sale of any Collateral if it shall determine
in its sole and absolute discretion, not to do so, regardless of the fact that notice of sale of such Collateral shall have been
given. Secured Party may, without notice or publication, adjourn any public or private sale from time to time by announcement at
the time and place fixed for such sale, or any adjournment thereof, and any such sale may be made at any time or place to which
the same may be so adjourned without further notice or publication.


 


(iv)         The
Pledgor and the Company acknowledge that compliance with applicable federal and state securities laws (including, without limitation,
the Securities Act of 1933, as amended, blue sky or other state securities laws or similar laws now or hereafter existing analogous
in purpose or effect) might very strictly limit or restrict the course of conduct of Secured Party if Secured Party were to attempt
to sell or otherwise dispose of all or any part of the Collateral, and might also limit or restrict the extent to which or the
manner in which any subsequent transferee of any such securities could sell or dispose of the same. The Pledgor and the Company
further acknowledge that under applicable laws, Secured Party may be held to have certain general duties and obligations to the
Pledgor, as pledgors of the Collateral, or the Company, to make some effort toward obtaining a fair price for the Collateral even
though the obligations of the Pledgor and the Company may be discharged or reduced by the proceeds of sale at a lesser price. The
Pledgor and the Company understand and agree that, to the extent allowable under applicable law, Secured Party is not to have any
such general duty or obligation to the Pledgor or the Company, and neither the Pledgor nor the Company will attempt to hold Secured
Party responsible for selling all or any part of the Collateral at an inadequate price even if Secured Party shall accept the first
offer received or does not approach more than one possible purchaser. Without limiting their generality, the foregoing provisions
would apply if, for example, Secured Party were to place all or any part of such securities for private placement by an investment
banking firm, or if such investment banking firm purchased all or any part of such securities for its own account, or if Secured
Party placed all or any part of such securities privately with a purchaser or purchasers.


 


(c)          To
the extent that the net proceeds received by the Secured Party are insufficient to satisfy the Obligations in full, the Secured
Party shall be entitled to a deficiency judgment against the Company and any other Person obligated for the Obligations for such
deficiency amount. The Secured Party shall have the absolute right to sell or dispose of the Collateral, or any part thereof, in
any manner it sees fit and shall have no liability to the Pledgor, the Company, or any other party for selling or disposing of
such Collateral even if other methods of sales or dispositions would or allegedly would result in greater proceeds than the method
actually used. The Company and any other Person obligated for the Obligations shall remain liable for all deficiencies and shortfalls,
if any, that may exist after the Secured Party has exhausted all remedies hereunder.


 


(d)          Each
right, power and remedy of the Secured Party provided for in this Agreement or any other Transaction Document shall be cumulative
and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by
the Secured Party of any one or more of the rights, powers or remedies provided for in this Agreement or any other Loan Documents,
or now or hereafter existing at law or in equity or by statute or otherwise, shall not preclude the simultaneous or later exercise
by the Secured Party of all such other rights, powers or remedies, and no failure or delay on the part of the Secured Party to
exercise any such right, power or remedy shall operate as a waiver thereof. No notice to or demand on the Pledgor in any case shall
entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights
of the Secured Party to any other further action in any circumstances without demand or notice. The Secured Party shall have the
full power to enforce or to assign or contract its rights under this Agreement to a third party.


 




    	 	6	 



     


    

 


(e)          In
addition to all other remedies available to the Secured Party, upon the issuance of the Pledged Securities to the Secured Party
after an Event of Default, Pledgor and the Company each agree to: (i) take such action and prepare, distribute and/or file such
documents and papers, as are required or advisable in the opinion of Secured Party and/or its counsel, to permit the sale of the
Pledged Securities, whether at public sale, private sale or otherwise, including, without limitation, issuing, or causing its counsel
to issue, any opinion of counsel for Pledgor or the Company required to allow the Secured Party to sell the Pledged Securities
or any other Collateral under Rule 144; (ii) to bear all costs and expenses of carrying out its obligations under this Section
8(e), which shall be a part of the Obligations secured hereby; and (iv) that there is no adequate remedy at law for the failure
by the Pledgor and the Company to comply with the provisions of this Section 8(e) and that such failure would not be adequately
compensable in damages, and therefore agrees that its agreements contained in this subsection may be specifically enforced.


 


11.         Concerning
the Escrow Agent.


 


(a)          The
Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no implied duties or obligations shall
be read into this Agreement against the Escrow Agent. Escrow Agent agrees to release any property held by it hereunder (the “Escrowed
Property”) in accordance with the terms and conditions set forth in this Agreement.


 


(b)          The
Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, may
assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and may assume that any
person purporting to give any writing, notice, advice or instructions in connection with the provisions hereof has been duly authorized
to do so. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner, and execution,
or validity of any instrument deposited in this escrow, nor as to the identity, authority, or right of any person executing the
same; and its duties hereunder shall be limited to the safekeeping of the Escrowed Property, and for the disposition of the same
in accordance with this Agreement. Escrow Agent shall not be deemed to have knowledge of any matter or thing unless and until Escrow
Agent has actually received written notice of such matter or thing and Escrow Agent shall not be charged with any constructive
notice whatsoever.


 


(c)          Escrow
Agent shall hold in escrow, pursuant to this Agreement, the Escrowed Property actually delivered and received by Escrow Agent hereunder,
but Escrow Agent shall not be obligated to ascertain the existence of (or initiate recovery of) any other property that may be
part or portion of the Collateral, or to become or remain informed with respect to the possibility or probability of additional
Collateral being realized upon or collected at any time in the future, or to inform any parties to this Agreement or any third
party with respect to the nature and extent of any Collateral realized and received by Escrow Agent (except upon the written request
of such party), or to monitor current market values of the Collateral. Further, Escrow Agent shall not be obligated to proceed
with any action or inaction based on information with respect to market values of the Collateral which Escrow Agent may in any
manner learn, nor shall Escrow Agent be obligated to inform the parties hereto or any third party with respect to market values
of any of the Collateral at any time, Escrow Agent having no duties with respect to investment management or information, all parties
hereto understanding and intending that Escrow Agent’s responsibilities are purely ministerial in nature. Any reduction in
the market value or other value of the Collateral while deposited with Escrow Agent shall be at the sole risk of Pledgor and Secured
Party. If all or any portion of the Escrowed Property is in the form of a check or in any other form other than cash, Escrow Agent
shall deposit same as required but shall not be liable for the nonpayment thereof, nor responsible to enforce collection thereof.


 




    	 	7	 



     


    

 


(d)          In
the event instructions from Secured Party, Pledgor, or any other Person would require Escrow Agent to expend any monies or to incur
any cost, Escrow Agent shall be entitled to refrain from taking any action until it receives payment for such costs. It is agreed
that the duties of Escrow Agent are purely ministerial in nature and shall be expressly limited to the safekeeping of the Escrowed
Property and for the disposition of same in accordance with this Agreement. Secured Party, Pledgor and the Company, jointly and
severally, each hereby indemnifies Escrow Agent and holds it harmless from and against any and all claims, liabilities, damages,
costs, penalties, losses, actions, suits or proceedings at law or in equity, or any other expenses, fees or charges of any character
or nature (collectively, the “Claims”), which it may incur or with which it may be threatened, directly
or indirectly, arising from or in any way connected with this Agreement or which may result from Escrow Agent’s following
of instructions from Secured Party, Pledgor or the Company, and in connection therewith, indemnifies Escrow Agent against any and
all expenses, including attorneys’ fees and the cost of defending any action, suit, or proceeding or resisting any Claim,
whether or not litigation is instituted, unless any such Claims arise as a result of Escrow Agent’s gross negligence or willful
misconduct. Escrow Agent shall be vested with a lien on all Escrowed Property under the terms of this Agreement, for indemnification,
attorneys’ fees, court costs and all other costs and expenses arising from any suit, interpleader or otherwise, or other
expenses, fees or charges of any character or nature, which may be incurred by Escrow Agent by reason of disputes arising between
Pledgor, the Company, Secured Party, or any third party as to the correct interpretation of this Agreement, and instructions given
to Escrow Agent hereunder, or otherwise, with the right of Escrow Agent, regardless of the instruments aforesaid and without the
necessity of instituting any action, suit or proceeding, to hold any property hereunder until and unless said additional expenses,
fees and charges shall be fully paid. Any fees and costs charged by the Escrow Agent for serving hereunder shall be paid by the
Pledgor and the Company, jointly and severally.


 


(e)          In
the event Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands
from Secured Party, the Company, Pledgor or from third persons with respect to the Escrowed Property, which, in Escrow Agent’s
sole opinion, are in conflict with each other or with any provision of this Agreement, Escrow Agent shall be entitled to refrain
from taking any action until it shall be directed otherwise in writing by Pledgor, the Company and Secured Party and said third
persons, if any, or by a final order or judgment of a court of competent jurisdiction. If any of the parties shall be in disagreement
about the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by
the Escrow Agent hereunder, the Escrow Agent may, at its sole discretion, deposit the Escrowed Property with a court having jurisdiction
over this Agreement, and, upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall
fully cease and terminate. The Escrow Agent shall be indemnified by the Pledgor, the Company and Secured Party for all costs, including
reasonable attorneys’ fees, in connection with the aforesaid proceeding, and shall be fully protected in suspending all or
a part of its activities under this Agreement until a final decision or other settlement in the proceeding is received. In the
event Escrow Agent is joined as a party to a lawsuit by virtue of the fact that it is holding the Escrowed Property, Escrow Agent
shall, at its sole option, either: (i) tender the Collateral in its possession to the registry of the appropriate court; or (ii)
disburse the Collateral in its possession in accordance with the court’s ultimate disposition of the case, and Secured Party,
the Company and Pledgor hereby, jointly and severally, indemnify and hold Escrow Agent harmless from and against any damages or
losses in connection therewith including, but not limited to, reasonable attorneys’ fees and court costs at all trial and
appellate levels.


 




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(f)          The
Escrow Agent may consult with counsel of its own choice (and the costs of such counsel shall be paid by the Pledgor, the Company
and Secured Party, jointly and severally) and shall have full and complete authorization and protection for any action taken or
suffered by it hereunder in good faith and in accordance with the opinion of such counsel. The Escrow Agent shall not be liable
for any mistakes of fact or error of judgment, or for any actions or omissions of any kind, unless caused by its willful misconduct
or gross negligence.


 


(g)          The
Escrow Agent may resign upon ten (10) days’ written notice to the parties in this Agreement. If a successor Escrow Agent
is not appointed by Secured Party and Pledgor within this ten (10) day period, the Escrow Agent may petition a court of competent
jurisdiction to name a successor.


 


(h)          Conflict
Waiver. The Pledgor and the Company hereby acknowledges that the Escrow Agent is counsel to the Secured Party in connection
with the transactions contemplated and referred herein. The Pledgor and the Company agree that in the event of any dispute arising
in connection with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein,
the Escrow Agent shall be permitted to continue to represent the Secured Party and neither the Pledgor, nor the Company, will seek
to disqualify such counsel and each of them waives any objection Pledgor or the Company might have with respect to the Escrow Agent
acting as the Escrow Agent pursuant to this Agreement. Pledgor, the Company and Secured Party acknowledge and agree that nothing
in this Agreement shall prohibit Escrow Agent from: (i) serving in a similar capacity on behalf of others; or (ii) acting in the
capacity of attorneys for one or more of the parties hereto in connection with any matter.


 


12.         Increase
in Obligations. It is the intent of the parties to secure payment of the Obligations, as the amount of such Obligations may
increase from time to time in accordance with the terms and provisions of the Loan Documents, and all of the Obligations, as so
increased from time to time, shall be and are secured hereby. Upon the execution hereof, Pledgor and the Company shall pay any
and all documentary stamp taxes and/or other charges required to be paid in connection with the execution and enforcement of the
Loan Documents, and if, as and to the extent the Obligations are increased from time to time in accordance with the terms and provisions
of the Loan Documents, then Pledgor and the Company shall immediately pay any additional documentary stamp taxes or other charges
in connection therewith.


 


13.         Irrevocable
Authorization and Instruction. If applicable, Pledgor and the Company hereby authorize and instruct the transfer agent for
the Company (or transfer agents if there is more than one) to comply with any instruction received by it from Secured Party in
writing that: (i) states that an Event of Default hereunder exists or has occurred; and (b) is otherwise in accordance with the
terms of this Agreement, without any other or further instructions from Pledgor or the Company, and Pledgor and the Company agree
that such transfer agents shall be fully protected in so complying with any such instruction from Secured Party.


 


14.         Appointment
as Attorney-in-Fact. The Company and Pledgor hereby irrevocably constitutes and appoints Secured Party and any officer or agent
of Secured Party, with full power of substitution, as its true and lawful attorney-in-fact, with full irrevocable power and authority
in the place and stead of Pledgor or the Company, as applicable, and in the name of Pledgor, the Company, or in the name of Secured
Party, as applicable, from time to time in the discretion of Secured Party, so long as an Event of Default hereunder exists, for
the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, including any financing statements,
endorsements, assignments or other instruments of transfer. Pledgor and the Company each hereby ratify all that said attorneys
shall lawfully do or cause to be done pursuant to the power of attorney granted in this Section 14. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are irrevocable until the Obligations are paid and performed
in full.


 




    	 	9	 



     


    

 


15.         Continuing
Obligation of Pledgor and the Company. The obligations, covenants, agreements and duties of the Pledgor and the Company under
this Agreement shall in no way be affected or impaired by: (i) the modification or amendment (whether material or otherwise) of
any of the obligations of the Pledgor or the Company or any other Person, as applicable; (ii) the voluntary or involuntary bankruptcy,
assignment for the benefit of creditors, reorganization, or other similar proceedings affecting the Company, Pledgor or any other
Person, as applicable; (iii) the release of the Company, Pledgor or any other Person from the performance or observance of any
of the agreements, covenants, terms or conditions contained in any Loan Documents, by the operation of law or otherwise, including
the release of the Company’s or Pledgor’s obligation to pay interest or attorney’s fees.


 


Pledgor and the Company
further agree that Secured Party may take other guaranties or collateral or security to further secure the Obligations, and consent
that any of the terms, covenants and conditions contained in any of the Loan Documents may be renewed, altered, extended, changed
or modified by Secured Party or may be released by Secured Party, without in any manner affecting this Agreement or releasing Pledgor
herefrom, and Pledgor shall continue to be liable hereunder to pay and perform pursuant hereto, notwithstanding any such release
or the taking of such other guaranties, collateral or security. This Agreement is additional and supplemental to any and all other
guarantees, security agreements or collateral heretofore and hereafter executed by Pledgor and the Company for the benefit of Secured
Party, whether relating to the indebtedness evidenced by any of the Loan Documents or not, and shall not supersede or be superseded
by any other document or guaranty executed by Pledgor, the Company or any other Person for any purpose. Pledgor and the Company
hereby agree that Pledgor, the Company, and any additional parties who may become liable for repayment of the sums due under the
Loan Documents, may hereafter be released from their liability hereunder and thereunder; and Secured Party may take, or delay in
taking or refuse to take, any and all action with reference to any of the Loan Documents (regardless of whether same might vary
the risk or alter the rights, remedies or recourses of Pledgor), including specifically the settlement or compromise of any amount
allegedly due thereunder, all without notice to, consideration to or the consent of the Pledgor, and without in any way releasing,
diminishing or affecting in any way the absolute nature of Pledgor’s obligations and liabilities hereunder.


 


No delay on the part
of the Secured Party in exercising any rights hereunder or failure to exercise the same shall operate as a waiver of such rights.
Pledgor and the Company hereby waives any and all legal requirements, statutory or otherwise, that Secured Party shall institute
any action or proceeding at law or in equity or exhaust its rights, remedies and recourses against Pledgor, any Company or anyone
else with respect to the Loan Documents, as a condition precedent to bringing an action against Pledgor or the Company upon this
Agreement or as a condition precedent to Secured Party’s rights to sell the Pledged Securities or any other Collateral. Pledgor
and the Company agree that Secured Party may simultaneously maintain an action upon this Agreement and an action or proceeding
upon the Loan Documents. All remedies afforded by reason of this Agreement are separate and cumulative remedies and may be exercised
serially, simultaneously and in any order, and the exercise of any of such remedies shall not be deemed an exclusion of the other
remedies and shall in no way limit or prejudice any other contractual, legal, equitable or statutory remedies which Secured Party
may have in the Pledged Securities, any other Collateral, or under the Loan Documents. Until the Obligations, and all extensions,
renewals and modifications thereof, are paid in full, and until each and all of the terms, covenants and conditions of this Agreement
are fully performed, Pledgor shall not be released by any act or thing which might, but for this provision of this Agreement, be
deemed a legal or equitable discharge of a surety, or by reason of any waiver, extension, modification, forbearance or delay of
Secured Party or any obligation or agreement between the Company or its successors or assigns, and the then holder of the Loan
Documents, relating to the payment of any sums evidenced or secured thereby or to any of the other terms, covenants and conditions
contained therein, and Pledgor hereby expressly waive and surrender any defense to liability hereunder based upon any of the foregoing
acts, things, agreements or waivers, or any of them. Pledgor and Company also waives any defense arising by virtue of any disability,
insolvency, bankruptcy, lack of authority or power or dissolution of Pledgor or Company, even though rendering the Loan Documents
void, unenforceable or otherwise uncollectible, it being agreed that Pledgor and the Company shall remain liable hereunder, regardless
of any claim which Pledgor or the Company might otherwise have against Secured Party by virtue of Secured Party’s invocation
of any right, remedy or recourse given to it hereunder or under the Loan Documents. In addition, Pledgor waives and renounces any
right of subrogation, reimbursement or indemnity whatsoever, and any right of recourse to security for the Obligations of the Company
to Secured Party, unless and until all of said Obligations have been paid in full to Secured Party.


 




    	 	10	 



     


    

 


16.         Miscellaneous.


 


(a)          Performance
for Pledgor or the Company. The Pledgor and the Company agree and hereby acknowledge that Secured Party may, in Secured Party’s
sole discretion, but Secured Party shall not be obligated to, whether or not an Event of Default shall have occurred, advance funds
on behalf of the Company or Pledgor, without prior notice to the Pledgor or the Company, in order to insure the Company’s
and Pledgor’s compliance with any covenant, warranty, representation or agreement of the Pledgor or the Company made in or
pursuant to this Agreement or the other Loan Documents, to continue or complete, or cause to be continued or completed, performance
of the Pledgor’s and the Company’s obligations under any contracts of the Pledgor or the Company, or to preserve or
protect any right or interest of Secured Party in the Collateral or under or pursuant to this Agreement or the other Loan Documents;
provided, however, that the making of any such advance by Secured Party shall not constitute a waiver by Secured Party of any Event
of Default with respect to which such advance is made, nor relieve the Pledgor or the Company of any such Event of Default. The
Pledgor and the Company, respectively and as applicable, shall pay to Secured Party upon demand all such advances made by Secured
Party with interest thereon at the highest rate permitted by applicable law. All such advances shall be deemed to be included in
the Obligations and secured by the security interest granted Secured Party hereunder; provided, however, that the provisions of
this Subsection shall survive the termination of this Agreement and Secured Party’s security interest hereunder and the payment
of all other Obligations.


 


(b)          Applications
of Payments and Collateral. Except as may be otherwise specifically provided in this Agreement or the other Loan Documents,
all Collateral and proceeds of Collateral coming into Secured Party’s possession may be applied by Secured Party (after payment
of any costs, fees and other amounts incurred by Secured Party in connection therewith) to any of the Obligations, whether matured
or unmatured, as Secured Party shall determine in its sole discretion. Any surplus held by the Secured Party and remaining after
the indefeasible payment in full in cash of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled
to receive the same or as a court of competent jurisdiction shall direct. In the event that the proceeds of any such sale, collection
or realization are insufficient to pay all amounts to which the Secured Party is legally entitled, the Company shall be liable
for the deficiency, together with interest thereon at the highest rate permitted by applicable law, together with the costs of
collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Secured Party to
collect such deficiency.


 




    	 	11	 



     


    

 


(c)          Waivers
by Pledgor and the Company. The Company and the Pledgor hereby waives, to the extent the same may be waived under applicable
law: (i) notice of acceptance of this Agreement; (ii) all claims and rights of the Pledgor and the Company against Secured Party
on account of actions taken or not taken by Secured Party in the exercise of Secured Party’s rights or remedies hereunder,
under any other Loan Documents or under applicable law; (iii) all claims of the Pledgor and the Company for failure of Secured
Party to comply with any requirement of applicable law relating to enforcement of Secured Party’s rights or remedies hereunder,
under the other Loan Documents or under applicable law; (iv) all rights of redemption of the Pledgor with respect to the Collateral;
(v) in the event Secured Party seeks to repossess any or all of the Collateral by judicial proceedings, any bond(s) or demand(s)
for possession which otherwise may be necessary or required; (vi) presentment, demand for payment, protest and notice of non-payment
and all exemptions applicable to any of the Collateral or the Pledgor or the Company; (vii) any and all other notices or demands
which by applicable law must be given to or made upon the Pledgor or the Company by Secured Party; (viii) settlement, compromise
or release of the obligations of any person or entity primarily or secondarily liable upon any of the Obligations; (ix) all rights
of the Pledgor or the Company to demand that Secured Party release account debtors or other persons or entities liable on any of
the Collateral from further obligation to Secured Party; and (x) substitution, impairment, exchange or release of any Collateral
for any of the Obligations. The Pledgor and the Company agree that Secured Party may exercise any or all of its rights and/or remedies
hereunder and under any other Loan Documents and under applicable law without resorting to and without regard to any Collateral
or sources of liability with respect to any of the Obligations.


 


(d)          Waivers
by Secured Party. No failure or any delay on the part of Secured Party in exercising any right, power or remedy hereunder or
under any other Loan Documents or under applicable law, shall operate as a waiver thereof.


 


(e)          Secured
Party’s Setoff. Secured Party shall have the right, in addition to all other rights and remedies available to it, following
an Event of Default, to set off against any Obligations due Secured Party, any debt owing to the Pledgor or the Company by Secured
Party.


 


(f)          Modifications,
Waivers and Consents. No modifications or waiver of any provision of this Agreement or any other Loan Documents, and no consent
by Secured Party to any departure by the Pledgor or the Company therefrom, shall in any event be effective unless the same shall
be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given,
and any single or partial written waiver by Secured Party of any term, provision or right of Secured Party hereunder shall only
be applicable to the specific instance to which it relates and shall not be deemed to be a continuing or future waiver of any other
right, power or remedy. No notice to or demand upon the Pledgor or the Company in any case shall entitle Pledgor or the Company
to any other or further notice or demand in the same, similar or other circumstances.


 


(g)          Notices.
All notices of request, demand and other communications hereunder shall be addressed, sent and deemed delivered in accordance with
the Credit Agreement, including delivery of any such notices or communications to the Pledgor on behalf of the Company, which the
Company hereby agrees and acknowledges shall be valid and effective notice to the Company hereunder.


 




    	 	12	 



     


    

 


(h)          Applicable
Law and Consent to Jurisdiction. The Pledgor, the Company and the Secured Party each irrevocably agrees that any dispute
arising under, relating to, or in connection with, directly or indirectly, this Agreement or related to any matter which is the
subject of or incidental to this Agreement (whether or not such claim is based upon breach of contract or tort) shall be subject
to the exclusive jurisdiction and venue of the state and/or federal courts located in Broward County, Florida; provided, however,
Secured Party may, at Secured Party’s sole option, elect to bring any action in any other jurisdiction. This provision is
intended to be a “mandatory” forum selection clause and governed by and interpreted consistent with Florida law. The
Pledgor, the Company and Secured Party each hereby consents to the exclusive jurisdiction and venue of any state or federal court
having its situs in said county (or to any other jurisdiction or venue, if Secured Party so elects), and each waives any objection
based on forum non conveniens. The Pledgor and the Company each hereby waives personal service of any and all process and consent
that all such service of process may be made by certified mail, return receipt requested, directed to the Pledgor or the Company,
as applicable, as set forth herein and in the manner provided by applicable statute, law, rule of court or otherwise. Except for
the foregoing mandatory forum selection clause, this Agreement shall be construed in accordance with the laws of the State of Nevada,
without regard to the principles of conflicts of laws.


 


(i)          Survival:
Successors and Assigns. All covenants, agreements, representations and warranties made herein shall survive the execution and
delivery hereof, and shall continue in full force and effect until all Obligations have been paid in full, there exists no commitment
by Secured Party which could give rise to any Obligations. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such party. In the event that Secured Party assigns this
Agreement and/or its security interest in the Collateral, such assignment shall be binding upon and recognized by the Pledgor.
All covenants, agreements, representations and warranties by or on behalf of the Pledgor or the Company which are contained in
this Agreement shall inure to the benefit of Secured Party, its successors and assigns. Neither the Pledgor, nor the Company, may
assign this Agreement or delegate any of their respective rights or obligations hereunder, without the prior written consent of
Secured Party, which consent may be withheld in Secured Party’s sole and absolute discretion.


 


(j)          Severability.
If any term, provision or condition, or any part thereof, of this Agreement shall for any reason be found or held invalid or unenforceable
by any court or governmental authority of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder
of such term, provision or condition nor any other term, provision or condition, and this Agreement shall survive and be construed
as if such invalid or unenforceable term, provision or condition had not been contained therein.


 


(k)          Merger
and Integration. This Agreement and the other Loan Documents contain the entire agreement of the parties hereto with respect
to the matters covered and the transactions contemplated hereby, and no other agreement, statement or promise made by any party
hereto, or by any employee, officer, agent or attorney of any party hereto, which is not contained herein shall be valid or binding.


 


(1)         WAIVER
OF JURY TRIAL. THE PLEDGOR AND THE COMPANY EACH HEREBY: (i) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY A JURY; AND (ii) WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE PLEDGORS, THE COMPANY AND SECURED
PARTY MAY BE PARTIES, ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO THIS AGREEMENT, AND/OR ANY TRANSACTIONS, OCCURRENCES,
COMMUNICATIONS, OR UNDERSTANDINGS (OR THE LACK OF ANY OF THE FOREGOING) RELATING IN ANY WAY TO DEBTOR-CREDITOR RELATIONSHIP BETWEEN
THE PARTIES. IT IS UNDERSTOOD AND AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES
TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS AGREEMENT. THIS WAIVER OF JURY TRIAL
IS SEPARATELY GIVEN, KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE PLEDGORS AND THE COMPANY AND THE PLEDGOR AND THE COMPANY
HEREBY AGREE THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. SECURED PARTY IS HEREBY AUTHORIZED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PLEDGORS, THE COMPANY AND SECURED PARTY, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF
SUCH WAIVER OF RIGHT TO TRIAL BY JURY. THE PLEDGORS AND THE COMPANY REPRESENT AND WARRANT THAT EACH OF THEM HAS BEEN REPRESENTED
IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL,
AND/OR THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.


 




    	 	13	 



     


    

 


(m)          Execution.
This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and
the same Agreement. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf’
format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid
and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf’ signature
page was an original thereof.


 


(n)          Headings.
The headings and sub-headings contained in the titling of this Agreement are intended to be used for convenience only and shall
not be used or deemed to limit or diminish any of the provisions hereof.


 


(o)          Gender
and Use of Singular and Plural. All pronouns shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the party or parties or their personal representatives, successors and assigns may require. The word “Company”
or “Companies” shall mean all of the undersigned Persons.


 


(p)          Further
Assurances. The parties hereto will execute and deliver such further instruments and do such further acts and things as may
be reasonably required to carry out the intent and purposes of this Agreement, including the execution and filing of UCC-1 Financing
Statements in any jurisdiction as Secured Party may require.


 


(q)          Time
is of the Essence. The parties hereby agree that time is of the essence with respect to performance of each of the parties’
obligations under this Agreement. The parties agree that in the event that any date on which performance is to occur falls on a
Saturday, Sunday or state or national holiday, then the time for such performance shall be extended until the next business day
thereafter occurring.


 


(r)          Joint
Preparation. The preparation of this Agreement has been a joint effort of the parties and the resulting documents shall not,
solely as a matter of judicial construction, be construed more severely against one of the parties than the other.


 


(s)          Prevailing
Party. If any legal action or other proceeding is brought for the enforcement of this Agreement or any other Loan Documents,
or because of an alleged dispute, breach, default or misrepresentation in connection with any provisions of this Agreement or any
other Loan Documents, the successful or prevailing party or parties shall be entitled to recover from the non-prevailing party,
reasonable attorneys’ fees, court costs and all expenses, even if not taxable as court costs (including, without limitation,
all such fees, costs and expenses incident to appeals), incurred in that action or proceeding, in addition to any other relief
to which such party or parties may be entitled.


 




    	 	14	 



     


    

 


(t)          Costs
and Expenses. The Pledgor and the Company, jointly and severally, agree to pay to the Secured Party, upon demand, the amount
of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Secured
Party and of any experts and agents, which the Secured Party may incur in connection with: (i) the preparation, negotiation, execution,
delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement; (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral; (iii) the exercise
or enforcement of any of the rights of the Secured Party hereunder; or (iv) the failure by the Pledgor or the Company to perform
or observe any of the provisions hereof. Included in the foregoing shall be the amount of all expenses paid or incurred by Secured
Party in consulting with counsel concerning any of its rights hereunder, under any Loan Documents or under applicable law, as well
as such portion of Secured Party’s overhead as Secured Party shall allocate to collection and enforcement of the Obligations
in Secured Party’s sole but reasonable discretion. All such costs and expenses shall bear interest from the date of outlay
until paid, at the highest rate allowed by law. The provisions of this Subsection shall survive the termination of this Agreement
and Secured Party’s security interest hereunder and the payment of all Obligations.


 


(u)          Joint
and Several Liability. The liability of Pledgor shall be joint and several with the liability of the Company and any other
Person liable for the Obligations.


 


[Signatures on the following
page]


 




    	 	15	 



     


    

 


IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the day and year first above written.


 


PLEDGOR:


 


DRONE USA, LLC, a Delaware

limited liability company


 


	By: 	 	 
	Name:	 	 
	Title:	 	 


 


	STATE OF ______________	)
	 	SS.
	COUNTY OF _______________	)


 


The foregoing instrument was acknowledged
before me this __ day of __________, 2016 by _______________, who is the _________ of Drone USA, LLC, a Delaware limited liability
company. He/She is personally known to me or has produced __________________ as identification.


 


My Commission Expires:


 


	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed


 




    	 	16	 



     


    

 


IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the day and year first above written.


 


COMPANY: 


 


HOWCO DISTRIBUTING CO., a

Washington corporation


 


	By: 	 	 
	Name:	 	 
	Title:	 	 


 


	STATE OF ______________	)
	 	SS.
	COUNTY OF _______________	)


 


The foregoing instrument was acknowledged
before me this __ day of ____________, 2016 by ___________, who is the ____________ of Howco Distributing Co., a Washington corporation.
He/She is personally known to me or has produced ______________ as identification.


 


My Commission Expires:


 


	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed


 




    	 	17	 



     


    

 


IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the day and year first above written.


 


SECURED PARTY: 


 


TCA GLOBAL CREDIT MASTER FUND, LP


 


		By:	TCA Global Credit Fund GP, Ltd.






		Its:	General Partner



 


	By:	 	 
	 	Robert Press, Director	 


 




    	 	18	 



     


    

 


Exhibit E


 


Form of Promissory Note


 




    	 	77	 



     


    

 


NEITHER THIS NOTE NOR THE SECURITIES
THAT ARE ISSUABLE TO THE HOLDER UPON CONVERSION HEREOF (COLLECTIVELY, THE “SECURITIES”) HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION. NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED: (I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933
ACT OR APPLICABLE STATE SECURITIES LAWS; OR (II) IN THE ABSENCE OF AN OPINION OF COUNSEL IN CUSTOMARY FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT OR; (HI) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144
OR ANY EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.


 


BY ACCEPTING THIS OBLIGATION, THE HOLDER
REPRESENTS AND WARRANTS THAT IT IS NOT A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SEC 6049(B)(4)
OF THE INTERNAL REVENUE CODE AND REGULATIONS THEREUNDER) AND THAT IT IS NOT ACTING FOR OR ON BEHALF OF A UNITED STATES PERSON
(OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SEC. 6049(B)(4) OF THE INTERNAL REVENUE CODE AND THE REGULATIONS
THEREUNDER).


 


CONVERTIBLE PROMISSORY NOTE


 


Issuance Date: As of May 31, 2016


Effective Date: As of September 13, 2016


 


$3,500,000.00


 


FOR VALUE RECEIVED, DRONE USA, INC.,
a Delaware corporation (“Borrower”), whose address is One World Trade Center, 285 Fulton Street,
Suite 8500, New York, NY 10007, hereby promises to pay to the order of TCA Global Credit Master Fund, LP, a Cayman Islands
limited partnership, with an office located at 3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169, and its successors
or assigns (collectively, the “Holder”), on or before the Maturity Date (as defined in the Credit
Agreement): (i) the principal amount of Three Million Five Hundred Thousand and No/100 Dollars ($3,500,000.00); together with
(ii) interest on the unpaid principal balance hereof at the rate of eighteen percent (18%) per annum commencing as of the effective
date hereof; together with (iii) all other Obligations due, owing and payable under the terms of the Credit Agreement and all
other Loan Documents, all in accordance with the terms hereof and the terms and provisions of that certain Credit Agreement between
the Borrower and the Holder dated as of May 31, 2016, but made effective as of September 12, 2016 (such Credit Agreement, as amended,
supplemented, renewed, or modified from time to time, the “Credit Agreement”). This Promissory Note
(this note, and all modifications, extensions, future advances, supplements, and renewals thereof, and any substitutions therefor,
hereinafter referred to as the “Note”) shall be payable in accordance with the terms of the Credit
Agreement and the specific terms set forth below. Capitalized words and phrases not otherwise defined herein shall have the meanings
assigned thereto in the Credit Agreement.


 


1.           Payments.


 


(a)          Monthly
Payments. The Borrower shall make monthly payments of principal and interest, as applicable, to the Holder, commencing on
the thirteenth (13th) day of October, 2016 and on the thirteenth (13th) day of each consecutive calendar
month thereafter while this Note is outstanding, until the Maturity Date, based on the payment and amortization schedule attached
hereto as Exhibit “A”. In the event the thirteenth (13th) day of any calendar month on which
a payment is due hereunder is not a Business Day, then said payment shall be due on the first Business Day thereafter occurring.


 




    	 	1	 



     


    

 


(b)          Prepayment
Prior to Maturity. The Borrower, at its option, shall have the right to prepay this Note in full and for cash, at any time
prior to the Maturity Date, with three (3) Business Days advance written notice (the “Prepayment Notice”)
to the Holder. The amount required to prepay this Note in full pursuant to this Section 1(c) shall be equal to: (i) the aggregate
principal amount then outstanding under this Note; plus (ii) all accrued and unpaid interest due under this Note as of the prepayment
date; plus (iii) all other costs, fees, charges, and all other Obligations due and payable hereunder or under any other “Loan
Documents” (as hereinafter defined) (collectively, the “Prepayment Amount”). The Borrower shall
deliver the Prepayment Amount to the Holder on the third (3rd) Business Day after the date of the Prepayment Notice.


 


(c)          Payment
at Maturity. The principal amount of this Note, together with all accrued and unpaid interest, and all other sums due and payable
hereunder and/or under any other Loan Documents, are and shall be due and payable in full to the Holder by no later than 2:00 P.M.,
EST, on the Maturity Date.


 


(d)          Payment
of Default Interest. Any amount of principal, interest, or other sums due on this Note or any other Loan Documents which are
not paid when due shall bear interest from the date due until such past due amount is paid in full at the Default Rate.


 


(e)          Late
Fee. If all or any portion of the payments of principal, interest, or other charges due hereunder are not received by the Holder
within five (5) days of the date such payment is due, then the Borrower shall pay to the Holder a late charge (in addition to any
other remedies that Holder may have) equal to five percent (5%) of each such unpaid payment or sum. Any payments returned to Holder
for any reason must be covered by wire transfer of immediately available funds to an account designated by Holder, plus a $100.00
administrative fee charge. Holder shall have no responsibility or liability for payments purportedly made hereunder but not actually
received by Holder, and the Borrower shall not be discharged from the obligation to make such payments due to loss of same in the
mails or due to any other excuse or justification ultimately involving facts where such payments were not actually received by
Holder.


 


(f)          General
Payment Provisions. Interest shall be calculated on the basis of a 360-day year, and shall accrue daily on the outstanding
principal amount outstanding from time to time for the actual number of days elapsed, commencing as of the effective date hereof
until payment in full of the outstanding principal, together with all accrued and unpaid interest, and other amounts which may
become due hereunder or under any Loan Documents, has been received and cleared to the Holder. All payments received and actually
collected by Holder hereunder shall be applied first to any costs, fees and expenses due or incurred hereunder or under any other
Loan Documents, second to accrued and unpaid interest hereunder, and last to reduce the outstanding principal balance of this Note.
All payments on this Note shall be made in lawful money of the United States of America in the manner required by the Credit Agreement.


 


2.           Secured
Nature of Note. This Note is being issued in connection with the Credit Agreement. The indebtedness evidenced by this Note
is also secured by all of the Collateral of the Borrower and various other instruments and documents referred to in the Credit
Agreement as the “Loan Documents” (which term shall have the same meaning in this Note as such term
is given in the Credit Agreement). All of the agreements, conditions, covenants, provisions, representations, warranties and stipulations
contained in any of the Loan Documents which are to be kept and performed by the Borrower are hereby made a part of this Note
to the same extent and with the same force and effect as if they were fully set forth herein, and the Borrower covenants and agrees
to keep and perform them, or cause them to be kept or performed, strictly in accordance with their terms.


 




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3.           Defaults
and Remedies.


 


(a)          Events
of Default. The occurrence of any of the following events shall constitute an “Event of Default”
hereunder: (i) the Borrower shall fail to pay any installment of interest, principal, or other sums due under this Note or any
other Loan Documents when any such payment shall be due and payable; (ii) the Borrower or any of its Subsidiaries makes an assignment
for the benefit of creditors; (iii) any order or decree is rendered by a court which appoints or requires the appointment of a
receiver, liquidator or trustee for the Borrower or any of its Subsidiaries, and the order or decree is not vacated within thirty
(30) days from the date of entry thereof; (iv) any order or decree is rendered by a court adjudicating the Borrower or any of its
Subsidiaries, insolvent, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (v) the
Borrower or any of its Subsidiaries files a petition in bankruptcy under the provisions of any bankruptcy law or any insolvency
act; (vi) the Borrower or any of its Subsidiaries admits, in writing, its inability to pay its debts as they become due; (vii)
a proceeding or petition in bankruptcy is filed against the Borrower or any of its Subsidiaries, and such proceeding or petition
is not dismissed within thirty (30) days from the date it is filed; (viii) the Borrower or any of its Subsidiaries files a petition
or answer seeking reorganization or arrangement under the bankruptcy laws or any law or statute of the United States or any other
foreign country or state; (ix) the occurrence of any breach, default or “Event of Default” (as such term may be defined
in any of the other Loan Documents) under the Credit Agreement or any other Loan Documents; or (x) the Borrower shall fail to perform,
comply with or abide by any of the material stipulations, agreements, conditions and/or covenants contained in this Note or any
other Loan Documents on the part of the Borrower to be performed, complied with, or abided by, and such failure is not cured within
ten (10) days after written notice of such failure is delivered by Holder to the Borrower (provided that if the failure to perform
or default in performance is not capable of being cured, in Holder’s sole discretion, then the cure period set forth herein
shall not be applicable and the failure or default shall be an immediate Event of Default hereunder).


 


(b)          Remedies.
Upon the occurrence of an Event of Default, the interest on this Note shall immediately accrue at the Default Rate, and, in addition
to all other rights or remedies the Holder may have, at law or in equity, the Holder may, in its sole discretion, accelerate full
repayment of all principal amounts outstanding hereunder, together with accrued interest thereon, together with all other fees,
charges and amounts due under any Loan Documents, together with all attorneys’ fees, paralegals’ fees and costs and
expenses incurred by the Holder in collecting or enforcing payment hereof (whether such fees, costs or expenses are incurred in
negotiations, all trial and appellate levels, administrative proceedings, bankruptcy proceedings or otherwise), and together with
all other Obligations due by the Borrower hereunder and under the Loan Documents, and all such amounts shall thereafter accrue
interest at the Default Rate, all without any relief whatsoever from any valuation or appraisement laws, and payment thereof may
be enforced and recovered in whole or in part at any time by one or more of the remedies provided to the Holder at law, in equity,
or under this Note or any of the other Loan Documents. In connection with the Holder’s rights hereunder upon an Event of
Default, the Holder need not provide, and the Borrower hereby waives, any presentment, demand, protest or other notice of any kind,
and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it
in equity or under applicable law.


 


(c)          Exercise
of Remedies. The remedies of the Holder as provided herein and in any of the other Loan Documents shall be cumulative and concurrent
and may be pursued singly, successively or together, at the sole discretion of the Holder, and may be exercised as often as occasion
therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release
thereof.


 




    	 	3	 



     


    

 


4.           Lost
or Stolen Note. Upon notice to the Borrower of the loss, theft, destruction or mutilation of this Note, and, in the case of
loss, theft or destruction, of an indemnification undertaking by the Holder to the Borrower in a form reasonably acceptable to
the Borrower and customary for similar circumstances in commercial lender/borrower circumstances, and, in the case of mutilation,
upon surrender and cancellation of the mutilated Note, the Borrower shall promptly execute and deliver a new Note of like tenor
and date and in substantially the same form as this Note.


 


5.           Cancellation.
After all principal, accrued interest, and all other Obligations at any time owed on this Note or any other Loan Documents have
been indefeasibly paid in full, and there are no existing or outstanding commitments for Holder to make any loans or other advances
of credit to Borrower under the Credit Agreement or otherwise, this Note shall be canceled by Holder.


 


6.           Waivers.
Borrower hereby waives and releases all benefit that might accrue to the Borrower by virtue of any present or future laws exempting
any property that may serve as security for this Note, or any other property or Collateral, real or personal, or any part of the
proceeds arising from any sale of any such property or Collateral, from attachment, levy, or sale under execution, exemption from
civil process, or extension of time for payment, including, without limitation, any and all homestead exemption rights of the Borrower;
and the Borrower agrees that any property that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ
of execution issued thereon, may be sold upon any such writ in whole or in part in any order or manner desired by Holder. In addition,
the Borrower and all others who are, or may become liable for the payment hereof: (i) severally waive presentment for payment,
demand, notice of nonpayment or dishonor, protest and notice of protest of this Note or the other Loan Documents, and all other
notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note or the other
Loan Documents; (ii) expressly consent to all extensions of time, renewals or postponements of time of payment of this Note or
the other Loan Documents from time to time prior to or after the maturity of this Note without notice, consent or further consideration
to any of the foregoing; (iii) expressly agree that the Holder shall not be required first to institute any suit, or to exhaust
its remedies against the Borrower, or any other Person or party to become liable hereunder or against any Collateral that may secure
this Note in order to enforce the payment of this Note; and (iv) expressly agree that, notwithstanding the occurrence of any of
the foregoing (except the express written release by the Holder of any such Person), the undersigned shall be and remain, directly
and primarily liable for all sums due under this Note.


 


7.           Governing
Law; Venue. The Borrower irrevocably agrees that any dispute arising under, relating to, or in connection with, directly or
indirectly, this Note or related to any matter which is the subject of or incidental to this Note (whether or not such claim is
based upon breach of contract or tort) shall be subject to the exclusive jurisdiction and venue of the state and/or federal courts
located in Broward County, Florida. This provision is intended to be a “mandatory” forum selection clause and governed
by and interpreted consistent with Florida law. Borrower hereby consents to the exclusive jurisdiction and venue of any state or
federal court having its situs in said county (or to any other jurisdiction or venue, if Holder so elects), and waives any objection
based on forum non conveniens. Borrower hereby waives personal service of any and all process and consents that all such service
of process may be made by certified mail, return receipt requested, directed to Borrower, as applicable, as set forth herein or
in the manner provided by applicable statute, law, rule of court or otherwise. Except for the foregoing mandatory forum selection
clause, all terms and provisions hereof and the rights and obligations of the Borrower and Holder hereunder shall be governed,
construed and interpreted in accordance with the laws of the State of Nevada, without reference to conflict of laws principles.


 




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8.           Expenses.
The Borrower agrees to pay and reimburse the Holder upon demand for all costs and expenses (including, without limitation, attorneys’
fees and expenses) that the Holder may incur in connection with (i) the exercise or enforcement of any rights or remedies (including,
but not limited to, collection) granted hereunder or otherwise available to it (whether at law, in equity or otherwise); or (ii)
the failure by the Borrower to perform or observe any of the provisions hereof. The provisions of this Section 8 shall survive
the execution and delivery of this Note, the repayment of any or all of the Obligations, and the termination of this Note.


 


9.           Waiver
of Jury Trail. THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY
WITH RESPECT TO ANY LITIGATION BASED ON THIS NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS NOTE OR ANY OTHER LOAN
DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF OR BETWEEN ANY PARTY
HERETO, AND THE BORROWER AGREES AND CONSENTS TO THE GRANTING TO HOLDER OF RELIEF FROM ANY STAY ORDER WHICH MIGHT BE ENTERED BY
ANY COURT AGAINST HOLDER AND TO ASSIST HOLDER IN OBTAINING SUCH RELIEF. THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER ACCEPTING
THIS NOTE FROM THE BORROWER. THE BORROWER’S REASONABLE RELIANCE UPON SUCH INDUCEMENT IS HEREBY ACKNOWLEDGED.


 


10.         Specific
Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general
provision contained herein. This Note shall be deemed to be jointly drafted by the Borrower and the Holder and shall not be construed
against any person as the drafter hereof.


 


11.         Failure
or Indulgence Not Waiver. Holder shall not be deemed, by any act of omission or commission, to have waived any of its rights
or remedies hereunder or under any Loan Documents, unless such waiver is in writing and signed by Holder, and then only to the
extent specifically set forth in the writing. A waiver on one event shall not be construed as continuing or as a bar to or waiver
of any right or remedy to a subsequent event.


 


12.         Notice.
Notice shall be given to each party at the address for such party set forth in the Credit Agreement, and such notice shall be deemed
properly given in accordance with the notice provisions set forth in the Credit Agreement.


 


13.         Usury
Savings Clause. Notwithstanding any provision in this Note or the other Loan Documents, the total liability for payments of
interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums which
may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing this
Note or any other applicable law. In the event the total liability of payments of interest and payments in the nature of interest,
including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall,
for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period exceeds
the limit imposed by the usury laws of the jurisdiction governing this Note, all sums in excess of those lawfully collectible as
interest for the period in question shall, without further agreement or notice by, between, or to any party hereto, be applied
to the reduction of the outstanding principal balance of this Note immediately upon receipt of such sums by the Holder hereof,
with the same force and effect as though the Borrower had specifically designated such excess sums to be so applied to the reduction
of such outstanding principal balance and the Holder hereof had agreed to accept such sums as a penalty-free payment of principal;
provided, however, that the Holder of this Note may, at any time and from time to time, elect, by notice in writing to the Borrower,
to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest rather than accept such
sums as a prepayment of the outstanding principal balance. It is the intention of the parties that the Borrower do not intend or
expect to pay nor does the Holder intend or expect to charge or collect any interest under this Note greater than the highest non-usurious
rate of interest which may be charged under applicable law.


 




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14.         Binding
Effect. This Note shall be binding upon the Borrower and the successors and assigns of the Borrower and shall inure to the
benefit of Holder and the successors and assigns of Holder.


 


15.         Severability.
In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal, or unenforceable,
in whole or in part, in any respect, or in the event that any one or more of the provisions of this Note operates or would prospectively
operate to invalidate this Note, then and in any of those events, only such provision or provisions shall be deemed null and void
and shall not affect any other provision of this Note. The remaining provisions of this Note shall remain operative and in full
force and effect and shall in no way be affected, prejudiced, or disturbed thereby.


 


16.         Participations.
Holder may from time to time sell or assign, in whole or in part, or grant participations in this Note and/or the obligations evidenced
hereby, without any requirement to obtain the Borrower’s written consent or approval. The holder of any such sale, assignment
or participation, if the applicable agreement between Holder and such holder so provides, shall be: (a) entitled to all of the
rights, obligations and benefits of Holder (to the extent of such holder’s interest or participation); and (b) deemed to
hold and may exercise the rights of setoff or banker’s lien with respect to any and all obligations of such holder to the
Borrower (to the extent of such holder’s interest or participation), in each case as fully as though the Borrower was directly
indebted to such holder. Holder may in its discretion give notice to the Borrower of such sale, assignment or participation; however,
the failure to give such notice shall not affect any of Holder’s or such holder’s rights hereunder.


 


17.         Amendments.
The provisions of this Note may be changed only by a written agreement executed by the Borrower and Holder.


 


18.         Conversion
of Note. At any time and from time to time while this Note is outstanding, but only upon: (i) the occurrence of an Event of
Default under any of the Loan Documents; or (ii) mutual agreement between the Borrower and the Holder, this Note may be, at the
sole option of the Holder, convertible into shares of the common stock, par value $0.0001 per share (the “Common Stock”)
of the Borrower, in accordance with the terms and conditions set forth below.


 


(a)          Voluntary
Conversion. At any time while this Note is outstanding, but only upon: (i) the occurrence of an Event of Default under any
of the Loan Documents; or (ii) mutual agreement between the Borrower and the Holder, the Holder may convert all or any portion
of the outstanding principal, accrued and unpaid interest, Premium, if applicable, and any other sums due and payable hereunder
or under any other Loan Documents (such total amount, the “Conversion Amount”) into shares
of Common Stock of the Borrower (the “Conversion Shares”) at a price equal to: (i) the Conversion Amount
(the numerator); divided by (ii) eighty-five percent (85%) of the lowest of the daily volume weighted average price of
the Borrower’s Common Stock during the five (5) Business Days immediately prior to the Conversion Date, which price shall
be indicated in the conversion notice (in the form attached hereto as Exhibit “B”,
the “Conversion Notice”) (the denominator) (the “Conversion Price”). The
Holder shall submit a Conversion Notice indicating the Conversion Amount, the number of Conversion Shares issuable upon such conversion,
and where the Conversion Shares should be delivered.


 




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(b)          The
Holder’s Conversion Limitations. The Borrower shall not effect any conversion of this Note, and the Holder shall not
have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the Conversion
Notice submitted by the Holder, the Holder (together with the Holder’s Affiliates and any Persons acting as a group together
with the Holder or any of the Holder’s Affiliates) would beneficially own shares of Common Stock in excess of the Beneficial
Ownership Limitation (as defined herein). To ensure compliance with this restriction, prior to delivery of any Conversion Notice,
the Holder shall have the right to request that the Borrower provide to the Holder a written statement of the percentage ownership
of the Borrower’s Common Stock that would be beneficially owned by the Holder and its Affiliates in the Borrower if the Holder
converted such portion of this Note then intended to be converted by Holder. The Borrower shall, within two (2) Business Days of
such request, provide Holder with the requested information in a written statement, and the Holder shall be entitled to rely on
such written statement from the Borrower in issuing its Conversion Notice and ensuring that its ownership of the Borrower’s
Common Stock is not in excess of the Beneficial Ownership Limitation. The restriction described in this Section may be waived by
Holder, in whole or in part, upon notice not less than sixty-one (61) days prior written notice from the Holder to the Borrower
to increase such percentage.


 


For purposes of this
Note, the “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note. The limitations
contained in this Section shall apply to a successor holder of this Note.


 


(c)          Mechanics
of Conversion. The conversion of this Note shall be conducted in the following manner:


 


(i)          To
convert this Note into shares of Common Stock on any date set forth in the Conversion Notice by the Holder (the “Conversion
Date”), the Holder shall transmit by facsimile or electronic mail (or otherwise deliver) a copy of the fully executed
Conversion Notice to the Borrower (or, under certain circumstances as set forth below, by delivery of the Conversion Notice to
the Borrower’s transfer agent).


 


(ii)         Borrower’s
Response. Upon receipt by the Borrower of a copy of a Conversion Notice, the Borrower shall as soon as practicable, but in
no event later than two (2) Business Days after receipt of such Conversion Notice, send, via facsimile or electronic mail (or
otherwise deliver) a confirmation of receipt of such Conversion Notice (the “Conversion Confirmation”)
to the Holder indicating that the Borrower will process such Conversion Notice in accordance with the terms herein. In the event
the Borrower fails to issue its Conversion Confirmation within said two (2) Business Day time period, the Holder shall have the
absolute and irrevocable right and authority to deliver the fully executed Conversion Notice to the Borrower’s transfer
agent, and pursuant to the terms of the Loan Documents, the Borrower’s transfer agent shall issue the applicable Conversion
Shares to Holder as hereby provided. Within five (5) Business Days after the date of the Conversion Confirmation (or the date
of the Conversion Notice, if the Borrower fails to issue the Conversion Confirmation), provided that the Borrower’s transfer
agent is participating in the Depository Trust Borrower (“DTC”) Fast Automated Securities Transfer
(“FAST”) program, the Borrower shall cause the transfer agent to (or, if for any reason the Borrower
fails to instruct or cause its transfer agent to so act, then pursuant to the Loan Documents, the Holder may request and require
the Borrower’s transfer agent to) electronically transmit the applicable Conversion Shares to which the Holder shall be
entitled by crediting the account of the Holder’s prime broker with DTC through its Deposit Withdrawal Agent Commission
(“DWAC”) system, and provide proof satisfactory to the Holder of such delivery. In the event
that the Borrower’s transfer agent is not participating in the DTC FAST program and is not otherwise DWAC eligible, within
five (5) Business Days after the date of the Conversion Confirmation (or the date of the Conversion Notice, if the Borrower fails
to issue the Conversion Confirmation), the Borrower shall instruct and cause its transfer agent to (or, if for any reason the
Borrower fails to instruct or cause its transfer agent to so act, then pursuant to the Loan Documents, the Holder may request
and require the Borrower’s transfer agent to) issue and surrender to a nationally recognized overnight courier for delivery
to the address specified in the Conversion Notice, a certificate, registered in the name of the Holder, or its designees, for
the number of Conversion Shares to which the Holder shall be entitled. To effect conversions hereunder, the Holder shall not be
required to physically surrender this Note to the Borrower unless the entire principal amount of this Note, plus all accrued and
unpaid interest, Premium, if applicable, and other sums due hereunder, has been so converted. Subject to the make-whole rights
below, conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal
to the applicable conversion. The Holder and the Borrower shall maintain records showing the principal amount(s) converted and
the date of such conversion(s). The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason
of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount
of this Note may be less than the amount stated on the face hereof.


 




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(iii)        Record
Holder. The Person(s) entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated
for all purposes as the record holder(s) of such shares of Common Stock as of the Conversion Date.


 


(iv)         Failure
to Deliver Certificates. If in the case of any Conversion Notice, the certificate or certificates are not delivered to or as
directed by the Holder by the date required hereby, the Holder shall be entitled to elect by written notice to the Borrower at
any time on or before its receipt of such certificate or certificates, to rescind such Conversion Notice, in which event the Borrower
shall promptly return to the Holder any original Note delivered to the Borrower and the Holder shall promptly return to the Borrower
the Common Stock certificates representing the principal amount of this Note unsuccessfully tendered for conversion to the Borrower.


 


(v)          Obligation
Absolute; Partial Liquidated Damages. The Borrower’s obligations to issue and deliver the Conversion Shares upon conversion
of this Note in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
person or entity or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to the Borrower or any violation or alleged violation
of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation
of the Borrower to the Holder in connection with the issuance of such Conversion Shares; provided, however, that such
delivery shall not operate as a waiver by the Borrower of any such action the Borrower may have against the Holder. In the event
the Holder of this Note shall elect to convert any or all of the outstanding principal amount hereof and accrued but unpaid interest
and Premium, if applicable, thereon in accordance with the terms of this Note, the Borrower may not refuse conversion based on
any claim that the Holder or anyone associated or affiliated with the Holder has been engaged in any violation of law, agreement
or for any other reason, unless an injunction from a court, on notice to Holder, restraining and or enjoining conversion of all
or part of this Note shall have been sought and obtained, and the Borrower posts a surety bond for the benefit of the Holder in
the amount of 150% of the outstanding principal amount of this Note, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable
to such Holder to the extent it obtains judgment. In the absence of such injunction, the Borrower shall issue Conversion Shares
upon a properly noticed conversion. If the Borrower fails for any reason to deliver to the Holder such certificate or certificates
representing Conversion Shares pursuant to timing and delivery requirements of this Note, the Borrower shall pay to such Holder,
in cash, as liquidated damages and not as a penalty, for each $1,000 of principal amount being converted, $1.00 per day for each
day after the date by which such certificates should have been delivered until such certificates are delivered. Nothing herein
shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to this Note, the other Loan
Documents, or any agreement securing the indebtedness under this Note for the Borrower’s failure to deliver Conversion Shares
within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law
or in equity, including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such
rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable
law. Nothing herein shall prevent the Holder from having the Conversion Shares issued directly by the Borrower’s transfer
agent in accordance with the Loan Documents, in the event for any reason the Borrower fails to issue or deliver, or cause its
transfer agent to issue and deliver, the Conversion Shares to the Holder upon exercise of Holder’s conversion rights hereunder.


 




    	 	8	 



     


    

 


(vi)         Transfer
Taxes. The issuance of certificates for shares of the Common Stock on conversion of this Note shall be made without charge
to the Holder hereof for any documentary stamp or similar taxes, or any other issuance or transfer fees of any nature or kind that
may be payable in respect of the issue or delivery of such certificates, any such taxes or fees, if payable, to be paid by the
Borrower.


 


(d)          Make-Whole
Rights. Upon liquidation by the Holder of Conversion Shares issued pursuant to a Conversion Notice, provided that the
Holder realizes a net amount from such liquidation equal to less than the Conversion Amount specified in the relevant Conversion
Notice (such net realized amount, the “Realized Amount”), the Borrower shall issue to the Holder additional
shares of the Borrower’s Common Stock equal to: (i) the Conversion Amount specified in the relevant Conversion Notice; minus
(ii) the Realized Amount, as evidenced by a reconciliation statement from the Holder (a “Sale Reconciliation”)
showing the Realized Amount from the sale of the Conversion Shares; divided by (iii) the average volume weighted average
price of the Borrower’s Common Stock during the five (5) Business Days immediately prior to the date upon which the Holder
delivers notice (the “Make-Whole Notice”) to the Borrower that such additional shares are requested
by the Holder (the “Make-Whole Stock Price”) (such number of additional shares to be issued, the “Make-Whole
Shares”). Upon receiving the Make-Whole Notice and Sale Reconciliation evidencing the number of Make-Whole Shares
requested, the Borrower shall instruct its transfer agent to issue certificates representing the Make-Whole Shares, which Make
Whole Shares shall be issued and delivered in the same manner and within the same time frames as set forth in Subsection (c)(ii)
above. Subsections (c)(iii), (c)(iv), (c)(v) and (c)(vi) above shall be applicable to the issuance of the Make-Whole Shares. The
Make-Whole Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of the Borrower’s
Common Stock. Following the sale of the Make-Whole Shares by the Holder: (i) in the event that the Holder receives net proceeds
from such sale which, when added to the Realized Amount from the prior relevant Conversion Notice, is less than the Conversion
Amount specified in the relevant Conversion Notice, the Holder shall deliver an additional Make-Whole Notice to the Borrower following
the procedures provided previously in this paragraph, and such procedures and the delivery of Make-Whole Notices shall continue
until the Conversion Amount has been fully satisfied; (ii) in the event that the Holder received net proceeds from the sale of
Make-Whole Shares in excess of the Conversion Amount specified in the relevant Conversion Notice, such excess amount shall be applied
to satisfy any and all amounts owed hereunder in excess of the Conversion Amount specified in the relevant Conversion Notice.


 


(e)          Adjustments
to Conversion Price. The adjustments set forth in Sections (e)(i) and (e)(ii) below shall be applicable only to the extent
the Conversion Price of the Common Stock does not already reflect an adjustment for any of such events.


 




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(i)          Stock
Dividends and Stock Splits. If the Borrower, at any time while this Note is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions payable in shares of Common Stock on outstanding shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of Common
Stock, any shares of capital stock of the Borrower, then the Conversion Price shall be multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock (excluding any treasury shares of the Borrower) outstanding immediately
before such event, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date
in the case of a subdivision, combination, or re-classification.


 


(ii)         Fundamental
Transaction. If, at any time while this Note is outstanding: (i) the Borrower effects any merger or consolidation of the Borrower
with or into another Person, (ii) the Borrower effects any sale of all or substantially all of its assets in one transaction or
a series of related transactions, (iii) any tender offer or exchange offer (whether by the Borrower or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property,
or (iv) the Borrower effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental
Transaction”), then upon any subsequent conversion of this Note, the Holder shall have the right to receive, for
each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental
Transaction, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of one (1) share
of Common Stock (the “Alternate Consideration”). For purposes of any such conversion, the determination
of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Borrower shall apportion
the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any conversion of this Note following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions,
any successor to the Borrower or surviving entity in such Fundamental Transaction shall issue to the Holder a new note consistent
with the foregoing provisions and evidencing the Holder’s right to convert such note into Alternate Consideration. The terms
of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving
entity to comply with the provisions of this Section and insuring that this Note (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental Transaction.


 


(iii)        Adjustment
to Conversion Price. Whenever the Conversion Price is adjusted pursuant to any provision of this Note, the Borrower shall promptly
deliver to Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.


 




    	 	10	 



     


    

 


(iv)         Notice
to Allow Conversion by Holder. If: (A) the Borrower shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Borrower shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C)
the Borrower shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Borrower shall be required
in connection with any reclassification of the Common Stock, any consolidation or merger to which the Borrower is a party, any
sale or transfer of all or substantially all of the assets of the Borrower, of any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property, or (E) the Borrower shall authorize the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Borrower, then, in each case, the Borrower shall cause to be filed at each office
or agency maintained for the purpose of conversion of this Note, and shall cause to be delivered to the Holder at its last address
as it shall appear upon the Borrower’s records, at least twenty (20) calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating: (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record
to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date
as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such notice. The Holder is entitled to convert this Note during the
10-day period commencing on the date of such notice through the effective date of the event triggering such notice.


 


19.         Non-U.S.
Status. THE HOLDER IS A NON-U.S. PERSON AS THAT TERM IS DEFINED IN THE UNITED STATES INTERNAL REVENUE CODE. IT IS HEREBY AGREED
AND UNDERSTOOD THAT THE OBLIGATIONS HEREUNDER MAY BE SOLD OR RESOLD ONLY TO NON-U.S. PERSONS. THE INTEREST PAYABLE HEREUNDER IS
PAYABLE ONLY OUTSIDE THE UNITED STATES. ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAW. BY ACCEPTING THIS OBLIGATION, THE HOLDER REPRESENTS AND WARRANTS THAT IT IS NOT A UNITED STATES PERSON (OTHER
THAN AN EXEMPT RECIPIENT DESCRIBED IN SEC 6049(B)(4) OF THE INTERNAL REVENUE CODE AND REGULATIONS THEREUNDER) AND THAT IT IS NOT
ACTING FOR OR ON BEHALF OF A UNITED STATES PERSON (OTHER THAN AN EXEMPT RECIPIENT DESCRIBED IN SEC. 6049(B)(4) OF THE INTERNAL
REVENUE CODE AND THE REGULATIONS THEREUNDER).


 


[Signature page follows]


 




    	 	11	 



     


    

 


IN WITNESS WHEREOF, the Borrower
has caused this Note to be executed as of the Effective Date set forth above.


 


BORROWER:


 


DRONE USA, INC., a Delaware


corporation


 


	By:	 	 
	Name: 	 	 
	Title:	 	 


 


	STATE OF ______________	)
	 	SS.
	COUNTY OF _______________	)


 


The foregoing instrument
was acknowledged before me this __ day of ___________, 2016 by __________, who is the ______________ of Drone USA, Inc., a Delaware
corporation, on behalf of said corporation. He/She is personally known to me or has produced ________________ as identification.


 


My Commission Expires:


 


	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed


 


[Signature page to Promissory Note]


 




    	 	12	 



     


    

 


Exhibit “A”


 


PAYMENT SCHEDULE


 


	Payment 
 Date	 	 	Payment 

No.	 	 	Interest 
 Payment	 	 	Prin. Payment	 	 	Total 
 Payable	 	 	Balance 
 Outstanding	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10/13/16	 	 	1	 	 	$	52,500.00	 	 	 	-	 	 	$	52,500.00	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	11/13/16	 	 	2	 	 	$	52,500.00	 	 	 	-	 	 	$	52,500.00	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12/13/16	 	 	3	 	 	$	52,500.00	 	 	 	-	 	 	$	52,500.00	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1/13/17	 	 	4	 	 	$	52,500.00	 	 	 	-	 	 	$	52,500.00	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2/13/17	 	 	5	 	 	$	52,500.00	 	 	 	-	 	 	$	52,500.00	 	 	$	3,500,000.00	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3/13/17	 	 	6	 	 	$	52,500.00	 	 	$	245,841.25	 	 	$	298,341.25	 	 	$	3,254,158.75	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4/13/17	 	 	7	 	 	$	48,812.38	 	 	$	249,528.87	 	 	$	298,341.25	 	 	$	3,004,629.88	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5/13/17	 	 	8	 	 	$	45,069.45	 	 	$	253,271.80	 	 	$	298,341.25	 	 	$	2,751,358.08	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6/13/17	 	 	9	 	 	$	41,270.37	 	 	$	257,070.88	 	 	$	298,341.25	 	 	$	2,494,287.20	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7/13/17	 	 	10	 	 	$	37,414.31	 	 	$	260,926.94	 	 	$	298,341.25	 	 	$	2,233,360.25	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8/13/17	 	 	11	 	 	$	33,500.40	 	 	$	264,840.85	 	 	$	298,341.25	 	 	$	1,968,519.41	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	9/13/17	 	 	12	 	 	$	29,527.79	 	 	$	268,813.46	 	 	$	298,341.25	 	 	$	1,699,705.95	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10/13/17	 	 	13	 	 	$	25,495.59	 	 	$	272,845.66	 	 	$	298,341.25	 	 	$	1,426,860.28	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	11/13/17	 	 	14	 	 	$	21,402.90	 	 	$	276,938.35	 	 	$	298,341.25	 	 	$	1,149,921.94	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12/13/17	 	 	15	 	 	$	17,248.83	 	 	$	281,092.42	 	 	$	298,341.25	 	 	$	868,829.52	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1/13/18	 	 	16	 	 	$	13,032.44	 	 	$	285,308.81	 	 	$	298,341.25	 	 	$	583,520.71	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2/13/18	 	 	17	 	 	$	8,752.81	 	 	$	289,588.44	 	 	$	298,341.25	 	 	$	293,932.27	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3/13/18	 	 	18	 	 	$	4,408.98	 	 	$	293,932.27	 	 	$	298,341.25	 	 	$	0	 



 


	 	BORROWER INITIALS ____


 




    	 	13	 



     


    

 


Exhibit “B”


 


NOTICE OF CONVERSION


 


The undersigned hereby
elects to convert principal, interest, Premium, if applicable, and/or other sums due under the Convertible Promissory Note (the
“Note”) of DRONE USA, INC., a Delaware corporation (the “Company”),
into shares of common stock, par value $0.0001 per share (the “Common Shares”), of the Company
in accordance with the conditions of the Note, as of the date written below.


 


Based solely on information
provided by the Company to Holder, the undersigned represents and warrants to the Company that its ownership of the Common Shares
does not exceed the Beneficial Ownership Limitation determined in accordance with Section 13(d) of the Exchange Act of 1934, as
amended, as specified under the Note.


 


Conversion calculations 


	Effective Date of Conversion:	 
	Principal Amount, Interest, Premium, if applicable, and other Sums to be Converted:	 
	Number of Common Shares to be Issued:	 


 


[HOLDER]


 


	By:	 	 
	 	 	 
	Name:	 	 
	 	 	 
	Title:	 	 
	 	 	 
	Address:	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 


 




    	 	14	 



     


    

 


Exhibit F-1


 


Form of Security Agreement (Borrower)


 




    	 	78	 



     


    

 


SECURITY AGREEMENT


 


This SECURITY AGREEMENT
(the “Security Agreement”) dated as of May 31, 2016, but made effective as of September 13, 2016,
is executed by DRONE USA, INC., a Delaware corporation (the “Debtor”), with its chief
executive offices located at One World Trade Center, 285 Fulton Street, Suite 8500, New York, NY 10007, and TCA Global Credit
Master Fund, LP (the “Secured Party”).


 


RECITALS:


 


WHEREAS, Debtor desires
to borrow funds and obtain financial accommodations from Secured Party pursuant to that certain Credit Agreement of even date herewith
among Debtor, additional Credit Parties, and Secured Party (as amended, renewed, supplemented or modified from time to time, the
“Credit Agreement”).


 


NOW, THEREFORE, in
consideration of the credit extended now and in the future by Secured Party to the Debtor and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Debtor and Secured Party hereby agree as follows:


 


AGREEMENTS: 


 


		1	DEFINITIONS.



 


1.1           Defined
Terms. Capitalized terms used but not otherwise defined in this Security Agreement (including the Recitals) shall have the
meanings ascribed to them in the Credit Agreement. For the purposes of this Security Agreement, the following capitalized words
and phrases shall have the meanings set forth below.


 


(a)          “Capital
Securities” shall mean, with respect to any Person, all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the
date hereof, including common shares, preferred shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership or any other equivalent of such ownership interest.


 


(b)          “Collateral”
shall have the meaning set forth in Section 2.1 hereof.


 


(c)          “Obligor”
shall mean Debtor, or any other party liable with respect to the Obligations.


 


(d)          “Organizational
Identification Number” means, with respect to Debtor, the organizational identification number assigned to Debtor
by the applicable governmental unit or agency of the jurisdiction of organization of Debtor, if any.


 




    	 	1	 



     


    

 


(e)          “Taxes”
shall mean any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and
any and all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing.


 


(f)          “Unmatured
Event of Default” shall mean any event which, with the giving of notice, the passage of time or both, would
constitute an Event of Default.


 


1.2         Other
Terms Defined in UCC. All other capitalized words and phrases used herein and not otherwise specifically defined herein or
in the Credit Agreement shall have the respective meanings assigned to such terms in the UCC, to the extent the same are used or
defined therein.


 


1.3         Other
Interpretive Provisions.


 


(a)          The
meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. Whenever the context so
requires, the neutral gender includes the masculine and feminine, the single number includes the plural, and vice versa, and in
particular the word “Debtor” shall be so construed.


 


(b)          Section
and Schedule references are to this Security Agreement unless otherwise specified. The words “hereof’, “herein”
and “hereunder” and words of similar import when used in this Security Agreement shall refer to this Security Agreement
as a whole and not to any particular provision of this Security Agreement


 


(c)          The
term “including” (or words of similar import) is not limiting, and means “including, without limitation”.


 


(d)          In
the computation of periods of time from a specified date to a later specified date, the word “from” means “from
and including”; the words “to” and “until” each mean “to but excluding”, and the word
“through” means “to and including”.


 


(e)          Unless
otherwise expressly provided herein: (i) references to agreements (including this Security Agreement and the other Loan Documents)
and other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications
thereto, but only to the extent such amendments, restatements, supplements and other modifications are not prohibited by the terms
of any Loan Document; and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory
provisions amending, replacing, supplementing or interpreting such statute or regulation.


 


(f)          To
the extent any of the provisions of the other Loan Documents are inconsistent with the terms of this Security Agreement, the provisions
of this Security Agreement shall govern.


 


(g)          This
Security Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same
or similar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with
its terms.


 




    	 	2	 



     


    

 


		2	SECURITY FOR THE OBLIGATIONS.



 


2.1         Security
for Obligations. As security for the payment and performance of the Obligations, Debtor does hereby pledge, assign, transfer,
deliver and grant to Secured Party, for its own benefit and as agent for its Affiliates, a continuing and unconditional first
priority security interest in and to any and all property of Debtor, of any kind or description, tangible or intangible, wheresoever
located and whether now existing or hereafter arising or acquired, including the following (all of which property for Debtor,
along with the products and proceeds therefrom, are individually and collectively referred to as the “Collateral”):



 


(a)          all
property of, or for the account of, Debtor now or hereafter coming into the possession, control or custody of, or in transit to,
Secured Party or any agent or bailee for Secured Party or any parent, affiliate or subsidiary of Secured Party or any participant
with Secured Party in the Obligations (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise),
including all cash, earnings, dividends, interest, or other rights in connection therewith and the products and proceeds therefrom,
including the proceeds of insurance thereon; and


 


(b)          the
additional property of Debtor, whether now existing or hereafter arising or acquired, and wherever now or hereafter located, together
with all additions and accessions thereto, substitutions, betterments and replacements therefor, products and Proceeds therefrom,
and all of Debtor’s books and records and recorded data relating thereto (regardless of the medium of recording or storage),
together with all of Debtor’s right, title and interest in and to all computer software required to utilize, create, maintain
and process any such records or data on electronic media, identified and set forth as follows:


 


(i)          All
Accounts and all goods whose sale, lease or other disposition by Debtor has given rise to Accounts and have been returned to, or
repossessed or stopped in transit by, Debtor, or rejected or refused by a Customer;


 


(ii)         All
Inventory, including raw materials, work-in-process and finished goods;


 


(iii)        All
goods (other than Inventory), including embedded software, Equipment, vehicles, furniture and Fixtures;


 


(iv)         All
Software and computer programs;


 


(v)          All
Securities, Investment Property, Financial Assets and Deposit Accounts, specifically including the Lock Box Account, and all funds
at any time deposited therewith, and all funds and amounts reserved or held back by any Payment Processing Companies;


 




    	 	3	 



     


    

 


(vi)         All
As-Extracted Collateral, Commodity Accounts, Commodity Contracts, and Farm Products;


 


(vii)        All
Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of Credit Rights, all proceeds of letters of credit, Health-Care-Insurance
Receivables, Supporting Obligations, notes secured by real estate, Commercial Tort Claims and General Intangibles, including Payment
Intangibles; and


 


(viii)      All
real estate property owned by Debtor and the interest of Debtor in fixtures related to such real property;


 


(ix)         All
Proceeds (whether Cash Proceeds or Non-cash Proceeds) of the foregoing property, including all insurance policies and proceeds
of insurance payable by reason of loss or damage to the foregoing property, including unearned premiums, and of eminent domain
or condemnation awards.


 


2.2         Possession
and Transfer of Collateral. Until an Event of Default has occurred, but subject to Secured Party’s rights under the
Credit Agreement (specifically with respect to Secured Party’s rights to use and apply money in the Lock Box Account), Debtor
shall be entitled to possession and use of the Collateral (other than Instruments or Documents (including Tangible Chattel Paper
and Investment Property consisting of certificated securities) and other Collateral required to be delivered to Secured Party
pursuant to this Section 2). The cancellation or surrender of any promissory note evidencing an Obligation, upon payment
or otherwise, shall not affect the right of Secured Party to retain the Collateral for any other of the Obligations, except upon
payment in full of the Obligations. Debtor shall not sell, assign (by operation of law or otherwise), license, lease or otherwise
dispose of, or grant any option with respect to any of the Collateral, except as permitted pursuant to the Credit Agreement.


 


2.3         Financing
Statements. Debtor authorizes Secured Party to prepare and file such financing statements, amendments and other documents and
do such acts as Secured Party deems necessary in order to establish and maintain valid, attached and perfected, first priority
security interests in the Collateral in favor of Secured Party, for its own benefit and as agent for its Affiliates, free and clear
of all Liens and claims and rights of third parties whatsoever, except Permitted Liens. Debtor hereby irrevocably authorizes Secured
Party at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto that:
(a) indicate the Collateral: (i) is comprised of all assets of Debtor (or words of similar effect), regardless of whether any particular
asset comprising a part of the Collateral falls within the scope of Article 9 of the UCC of the jurisdiction wherein such financing
statement or amendment is filed; or (ii) as being of an equal or lesser scope or within greater detail as the grant of the security
interest set forth herein; and (b) contain any other information required by Section 5 of Article 9 of the UCC of the jurisdiction
wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance of any financing statement
or amendment, including: (A) whether Debtor is an organization, the type of organization and any Organizational Identification
Number issued to Debtor; and (B) in the case of a financing statement filed as a fixture filing or indicating Collateral as as-extracted
collateral or timber to be cut, a sufficient description of the real property to which the Collateral relates. Debtor agrees to
furnish any such information to Secured Party promptly upon request. In addition, Debtor shall make appropriate entries on its
books and records disclosing the security interests of Secured Party, for its own benefit and as agent for its Affiliates, in the
Collateral. Debtor hereby agrees that a photogenic or other reproduction of this Security Agreement is sufficient for filing as
a financing statement and Debtor authorizes Secured Party to file this Security Agreement as a financing statement in any jurisdiction.


 




    	 	4	 



     


    

 


2.4         Preservation
of the Collateral. Secured Party may, but is not required to, take such actions from time to time as Secured Party deems appropriate
to maintain or protect the Collateral. Secured Party shall have exercised reasonable care in the custody and preservation of the
Collateral if Secured Party takes such action as Debtor shall reasonably request in writing which is not inconsistent with Secured
Party’s status as a secured party, but the failure of Secured Party to comply with any such request shall not be deemed a
failure to exercise reasonable care; provided, however, Secured Party’s responsibility for the safekeeping of the
Collateral shall: (i) be deemed reasonable if such Collateral is accorded treatment substantially equal to that which Secured Party
accords its own property; and (ii) not extend to matters beyond the control of Secured Party, including acts of God, war, insurrection,
riot or governmental actions. In addition, any failure of Secured Party to preserve or protect any rights with respect to the Collateral
against prior or third parties, or to do any act with respect to preservation of the Collateral, not so requested by Debtor, shall
not be deemed a failure to exercise reasonable care in the custody or preservation of the Collateral. Debtor shall have the sole
responsibility for taking such action as may be necessary, from time to time, to preserve all rights of Debtor and Secured Party
in the applicable Collateral against prior or third parties. Without limiting the generality of the foregoing, where Collateral
consists, in whole or in part, of Capital Securities, Debtor represents to, and covenants with, Secured Party that Debtor has made
arrangements for keeping informed of changes or potential changes affecting the Capital Securities (including rights to convert
or subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights), and Debtor agrees that
Secured Party shall have no responsibility or liability for informing Debtor of any such or other changes or potential changes
or for taking any action or omitting to take any action with respect thereto.


 


2.5         Other
Actions as to any and all Collateral. Debtor further agrees to take any other action reasonably requested by Secured Party
to ensure the attachment, perfection and first priority of, and the ability of Secured Party to enforce, the security interest
of Secured Party, for its own benefit and as agent for its Affiliates, in any and all of the Collateral, including: (i) causing
Secured Party’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition
to attachment, perfection or priority of, or ability of the bank to enforce, the security interest of Secured Party, for its own
benefit and as agent for its Affiliates, in such Collateral; (ii) complying with any provision of any statute, regulation or treaty
of the United States as to any material portion of the Collateral as soon as possible but not more than forty-five (45) days after
such request if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Secured Party
to enforce, the security interest of Secured Party, for its own benefit and as agent for its Affiliates, in such Collateral; (iii)
obtaining governmental and other third party consents and approvals, including, without limitation, any consent of any licensor,
lessor or other Person with authority or control over or an interest in any material portion of the Collateral as soon as possible
but not more than forty-five (45) days after such request; (iv) obtaining waivers from mortgagees and landlords in form and substance
reasonably satisfactory to Secured Party which affect any material portion of the Collateral as soon as possible but not more than
forty-five (45) days after such request; and (v) taking all actions required by the UCC in effect from time to time or by other
law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction. Debtor further
agrees to indemnify and hold Secured Party harmless against claims of any Persons not a party to this Security Agreement concerning
disputes arising over the Collateral, except to the extent resulting from the gross negligence or willful misconduct of Secured
Party or its Affiliates.


 




    	 	5	 



     


    

 


2.6         Collateral
in the Possession of a Warehouseman or Bailee. If any material portion of the Collateral at any time is in the possession of
a warehouseman or bailee, Debtor shall promptly notify Secured Party thereof, and, as soon as possible, but not more than forty-five
(45) days later, shall obtain a Collateral Access Agreement in form and substance reasonably satisfactory to Secured Party from
such warehouseman or bailee.


 


2.7         Letter-of-Credit
Rights. If Debtor at any time is a beneficiary under a letter of credit now or hereafter issued in favor of Debtor, Debtor
shall promptly notify Secured Party thereof and, at the request and option of Secured Party, Debtor shall, pursuant to an agreement
in form and substance reasonably satisfactory to Secured Party, either: (i) arrange for the issuer and any confirmer of such letter
of credit to consent to an assignment to Secured Party, for its own benefit and as agent for its Affiliates, of the proceeds of
any drawing under the letter of credit; or (ii) arrange for Secured Party, for its own benefit and as agent for its Affiliates,
to become the transferee beneficiary of the letter of credit, with Secured Party agreeing, in each case, that the proceeds of any
drawing under the letter to credit are to be applied as provided in the Credit Agreement.


 


2.8         Commercial
Tort Claims. If Debtor shall at any time hold or acquire a Commercial Tort Claim, Debtor shall promptly notify Secured Party
in writing signed by Debtor of the details thereof and grant to Secured Party, for its own benefit and as agent for its Affiliates,
in such written notice or other written instrument, a security interest therein and in the proceeds thereof, all upon the terms
of this Security Agreement, in each case in form and substance reasonably satisfactory to Secured Party, and shall execute any
amendments hereto deemed reasonably necessary by Secured Party to perfect the security interest of Secured Party, for its own benefit
and as agent for its Affiliates, in such Commercial Tort Claim.


 


2.9         Electronic
Chattel Paper and Transferable Records. If Debtor at any time holds or acquires an interest in any electronic chattel paper
or any “transferable record”, as that term is defined in Section 201 of the federal Electronic Signatures in Global
and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,
Debtor shall promptly notify Secured Party thereof and, at the request of Secured Party, shall take such action as Secured Party
may reasonably request to vest in Secured Party control under Section 9-105 of the UCC of such electronic chattel paper or control
under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of
the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. Secured Party agrees
with Debtor that Secured Party will arrange, pursuant to procedures reasonably satisfactory to Secured Party and so long as such
procedures will not result in Secured Party’s loss of control, for Debtor to make alterations to the electronic chattel paper
or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the federal Electronic Signatures
in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act, for a party in control to make without
loss of control.


 




    	 	6	 



     


    

 


2.10       Additional
Requirements on Collateral. Debtor shall fully cooperate with Secured Party to obtain and keep in effect one or more control
agreements in Deposit Accounts, Electronic Chattel Paper, Investment Property and Letter-of-Credit Rights Collateral. Such control
agreements shall only be required if, in the reasonable discretion of the Secured Party, the nature of the Collateral requires
any such control agreements in order for the Secured Party to perfect its security interests in any Collateral as granted hereunder,
and in such event, Debtor shall promptly provide any such control agreements upon request from the Secured Party. In addition,
Debtor, at the Debtor’s expense, shall promptly: (A) execute all notices of security interest for each relevant type of Software
and other General Intangibles in forms suitable for filing with any United States or foreign office handling the registration or
filing of patents, trademarks, copyrights and other intellectual property and any successor office or agency thereto; and (B) take
all commercially reasonable steps in any hearing, suit, action, or other proceeding before any such office or any similar office
or agency in any other country or any political subdivision thereof, to diligently prosecute or maintain, as applicable, each application
and registration of any Software, General Intangibles or any other intellectual property rights and assets that are part of the
Collateral, including filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation
proceedings.


 


		3	REPRESENTATIONS AND WARRANTIES.



 


Debtor makes the following representations
and warranties to Secured Party:


 


3.1         Debtor
Organization and Name. Debtor is a corporation, duly organized, existing and in good standing under the laws of its State of
organization, with full and adequate power to carry on and conduct its business as presently conducted. Debtor is duly licensed
or qualified in all foreign jurisdictions wherein the nature of its activities requires such qualification or licensing. Debtor’s
Organizational Identification Number, if applicable, is set forth in the Credit Agreement. The exact legal name of Debtor is as
set forth in the first paragraph of this Security Agreement, and Debtor currently does not conduct, nor has it during the last
five (5) years conducted, business under any other name or trade name.


 


3.2         Authorization.
Debtor has full right, power and authority to enter into this Security Agreement and to perform all of its duties and obligations
under this Security Agreement. The execution and delivery of this Security Agreement and the other Loan Documents will not, nor
will the observance or performance of any of the matters and things herein or therein set forth, violate or contravene any provision
of law or of the articles of incorporation, bylaws, operating agreement, or other governing documents of Debtor. All necessary
and appropriate action has been taken on the part of Debtor to authorize the execution and delivery of this Security Agreement.


 




    	 	7	 



     


    

 


3.3           Validity
and Binding Nature. This Security Agreement is the legal, valid and binding obligation of Debtor, enforceable against Debtor
in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’
rights generally and to general principles of equity.


 


3.4           Consent;
Absence of Breach. The execution, delivery and performance of this Security Agreement and any other documents or instruments
to be executed and delivered by Debtor in connection herewith, do not and will not: (a) require any consent, approval, authorization,
or filings with, notice to or other act by or in respect of, any governmental authority or any other Person (other than filings
or notices pursuant to federal or state securities laws or other than any consent or approval which has been obtained and is in
full force and effect); (b) conflict with: (i) any provision of law or any applicable regulation, order, writ, injunction or decree
of any court or governmental authority; (ii) the articles of incorporation, bylaws, or other organic or governance document of
Debtor; or (iii) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon
Debtor or any of its properties or assets; or (c) require, or result in, the creation or imposition of any Lien on any asset of
Debtor, other than Liens in favor of Secured Party created pursuant to this Security Agreement and Permitted Liens.


 


3.5           Ownership
of Collateral; Liens. Debtor is the sole owner of all the Collateral, free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, service marks, copyrights and other intellectual property rights), other
than Permitted Liens.


 


3.6           Adverse
Circumstances. No condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding (or
threatened litigation or proceeding or basis therefor) exists which: (i) would have a Material Adverse Effect upon Debtor; or (ii)
would constitute an Event of Default or an Unmatured Event of Default.


 


3.7           Security
Interest. This Security Agreement creates a valid security interest in favor of Secured Party in the Collateral and, when properly
perfected by filing in the appropriate jurisdictions, or by possession or control of such Collateral by Secured Party or delivery
of such Collateral to Secured Party, shall constitute a valid, perfected, first-priority security interest in such Collateral.


 


3.8           Place
of Business. The principal place of business and books and records of Debtor is set forth in the preamble to this Security
Agreement, and the location of all Collateral, if other than at such principal place of business, is as set forth on Schedule
3.8 attached hereto and made a part hereof, and Debtor shall promptly notify Secured Party of any change in such locations.
Debtor will not remove or permit the Collateral to be removed from such locations without the prior written consent of Secured
Party, except as permitted pursuant to the Credit Agreement.


 




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3.9         Complete
Information. This Security Agreement and all financial statements, schedules, certificates, confirmations, agreements, contracts,
and other materials and information heretofore or contemporaneously herewith furnished in writing by Debtor to Secured Party for
purposes of, or in connection with, this Security Agreement and the transactions contemplated hereby is, and all written information
hereafter furnished by or on behalf of Debtor to Secured Party pursuant hereto or in connection herewith will be, true and accurate
in every material respect on the date as of which such information is dated or certified, and none of such information is or will
be incomplete by omitting to state any material fact necessary to make such information not misleading in light of the circumstances
under which made (it being recognized by Secured Party that any projections and forecasts provided by Debtor are based on good
faith estimates and assumptions believed by Debtor to be reasonable as of the date of the applicable projections or assumptions
and that actual results during the period or periods covered by any such projections and forecasts may differ from projected or
forecasted results).


 


		4	REMEDIES.



 


Upon the occurrence
of any default in the payment or performance of any of the covenants, conditions and agreements contained in this Security Agreement
or any other Event of Default, Secured Party shall have all rights, powers and remedies set forth in this Security Agreement or
the other Loan Documents or in any other written agreement or instrument relating to any of the Obligations or any security therefor,
as a secured party under the UCC or as otherwise provided at law or in equity. Without limiting the generality of the foregoing,
Secured Party may, at its option upon the occurrence of an Event of Default, declare its commitments to Debtor to be terminated
and all Obligations to be immediately due and payable, or, if provided in the Loan Documents, all commitments of Secured Party
to Debtor shall immediately terminate and all Obligations shall be automatically due and payable, all without demand, notice or
further action of any kind required on the part of Secured Party. Debtor hereby waives any and all presentment, demand, notice
of dishonor, protest, and all other notices and demands in connection with the enforcement of Secured Party’s rights under
the Loan Documents, and hereby consents to, and waives notice of release, with or without consideration, of any Collateral, notwithstanding
anything contained herein or in the Loan Documents to the contrary. In addition to the foregoing:


 


4.1         Possession
and Assembly of Collateral. Secured Party may, without notice, demand or the initiation of legal process of any kind, take
possession of any or all of the Collateral (in addition to Collateral of which Secured Party already has possession), wherever
it may be found, and for that purpose may pursue the same wherever it may be found, and may at any time enter into any of Debtor’s
premises where any of the Collateral may be or is supposed to be, and search for, take possession of, remove, keep and store any
of the Collateral until the same shall be sold or otherwise disposed of and Secured Party shall have the right to store and conduct
a sale of the same in any of Debtor’s premises without cost to Secured Party. At Secured Party’s request, Debtor will,
at Debtor’s sole expense, assemble the Collateral and make it available to Secured Party at a place or places to be designated
by Secured Party which is reasonably convenient to Secured Party and Debtor.


 




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4.2         Sale
of Collateral. Secured Party may sell any or all of the Collateral at public or private sale, upon such terms and conditions
as Secured Party may deem proper, and Secured Party may purchase any or all of the Collateral at any such sale. Debtor acknowledges
that Secured Party may be unable to effect a public sale of all or any portion of the Collateral because of certain legal and/or
practical restrictions and provisions which may be applicable to the Collateral and, therefore, may be compelled to resort to one
or more private sales to a restricted group of offerees and purchasers. Debtor consents to any such private sale so made even though
at places and upon terms less favorable than if the Collateral were sold at public sale. Secured Party shall have no obligation
to clean-up or otherwise prepare the Collateral for sale. Secured Party may apply the net proceeds, after deducting all costs,
expenses, attorneys’ and paralegals’ fees incurred or paid at any time in the collection, protection and sale of the
Collateral and the Obligations, to the payment of the Obligations, returning the excess proceeds, if any, to Debtor. Debtor shall
remain liable for any amount remaining unpaid after such application, with interest at the Default Rate. Any notification of intended
disposition of the Collateral required by law shall be conclusively deemed reasonably and properly given if given by Secured Party
at least ten (10) calendar days before the date of such disposition. Debtor hereby confirms, approves and ratifies all acts and
deeds of Secured Party relating to the foregoing, and each part thereof, and expressly waives any and all claims of any nature,
kind or description which it has or may hereafter have against Secured Party or its representatives, by reason of taking, selling
or collecting any portion of the Collateral. Debtor consents to releases of the Collateral at any time (including prior to default)
and to sales of the Collateral in groups, parcels or portions, or as an entirety, as Secured Party shall deem appropriate. Debtor
expressly absolves Secured Party from any loss or decline in market value of any Collateral by reason of delay in the enforcement
or assertion or non-enforcement of any rights or remedies under this Security Agreement.


 


4.3         Standards
for Exercising Remedies. To the extent that applicable law imposes duties on Secured Party to exercise remedies in a commercially
reasonable manner, Debtor acknowledges and agrees that it is not commercially unreasonable for Secured Party: (i) to incur expenses
deemed necessary by Secured Party to prepare Collateral for disposition or otherwise to complete raw material or work-in-process
into finished goods or other finished products for disposition; (ii) to fail to obtain third party consents for access to Collateral
to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of; (iii) to fail to exercise collection remedies against Customers
or other Persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral; (iv) to
exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists; (v) to advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature; (vi) to contact other Persons, whether or not in the same
business as Debtor, for expressions of interest in acquiring all or any portion of the Collateral; (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature; (viii) to dispose
of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that
have the reasonable capability of doing so, or that match buyers and sellers of assets; (ix) to dispose of assets in wholesale
rather than retail markets; (x) to disclaim disposition warranties, including any warranties of title; (xi) to purchase insurance
or credit enhancements to insure Secured Party against risks of loss, collection or disposition of Collateral or to provide to
Secured Party a guaranteed return from the collection or disposition of Collateral; or (xii) to the extent deemed appropriate by
Secured Party, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Secured
Party in the collection or disposition of any of the Collateral. Debtor acknowledges that the purpose of this section is to provide
non-exhaustive indications of what actions or omissions by Secured Party would not be commercially unreasonable in Secured Party’s
exercise of remedies against the Collateral and that other actions or omissions by Secured Party shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without limitation upon the foregoing, nothing contained
in this Section shall be construed to grant any rights to Debtor or to impose any duties on Secured Party that would not have been
granted or imposed by this Security Agreement or by applicable law in the absence of this Section.


 




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4.4         UCC
and Offset Rights. Secured Party may exercise, from time to time, any and all rights and remedies available to it under the
UCC or under any other applicable law in addition to, and not in lieu of, any rights and remedies expressly granted in this Security
Agreement or in any other agreements between any Obligor and Secured Party, and may, without demand or notice of any kind, appropriate
and apply toward the payment of such of the Obligations, whether matured or unmatured, including costs of collection and attorneys’
and paralegals’ fees and costs, and in such order of application as Secured Party may, from time to time, elect, any indebtedness
of Secured Party to any Obligor, however created or arising, including balances, credits, deposits, accounts or moneys of such
Obligor in the possession, control or custody of, or in transit to Secured Party. Debtor, on behalf of itself and any Obligor,
hereby waives the benefit of any law that would otherwise restrict or limit Secured Party in the exercise of its right, which is
hereby acknowledged, to appropriate at any time hereafter any such indebtedness owing from Secured Party to any Obligor.


 


4.5         Additional
Remedies. Upon the occurrence of an Event of Default, Secured Party shall have the right and power to:


 


(a)          instruct
Debtor, at its own expense, to notify any parties obligated on any of the Collateral, including any Customers and Payment Processing
Companies, to make payment directly to Secured Party of any amounts due or to become due thereunder, or Secured Party may directly
notify such obligors of the security interest of Secured Party, and/or of the assignment to Secured Party of the Collateral and
direct such obligors to make payment to Secured Party of any amounts due or to become due with respect thereto, and thereafter,
collect any such amounts due on the Collateral directly from such Persons obligated thereon;


 


(b)          enforce
collection of any of the Collateral, including any Accounts, by suit or otherwise, or make any compromise or settlement with respect
to any of the Collateral, or surrender, release or exchange all or any part thereof, or compromise, extend or renew for any period
(whether or not longer than the original period) any indebtedness thereunder;


 


(c)          take
possession or control of any proceeds and products of any of the Collateral, including the proceeds of insurance thereon;


 


(d)          extend,
renew or modify for one or more periods (whether or not longer than the original period) the Obligations or any obligation of any
nature of any other obligor with respect to the Obligations;


 




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(e)          grant
releases, compromises or indulgences with respect to the Obligations, any extension or renewal of any of the Obligations, any security
therefor, or to any other obligor with respect to the Obligations;


 


(f)          transfer
the whole or any part of Capital Securities which may constitute Collateral into the name of Secured Party or Secured Party’s
nominee without disclosing, if Secured Party so desires, that such Capital Securities so transferred are subject to the security
interest of Secured Party, and any corporation, association, or any of the managers or trustees of any trust issuing any of such
Capital Securities, or any transfer agent, shall not be bound to inquire, in the event that Secured Party or such nominee makes
any further transfer of such Capital Securities, or any portion thereof, as to whether Secured Party or such nominee has the right
to make such further transfer, and shall not be liable for transferring the same;


 


(g)          vote
the Collateral;


 


(h)          make
an election with respect to the Collateral under Section 1111 of the Bankruptcy Code or take action under Section 364 or any other
section of Bankruptcy Code; provided, however, that any such action of Secured Party as set forth herein shall not, in any
manner whatsoever, impair or affect the liability of Debtor hereunder, nor prejudice, waive, nor be construed to impair, affect,
prejudice or waive Secured Party’s rights and remedies at law, in equity or by statute, nor release, discharge, nor be construed
to release or discharge, Debtor, any guarantor or other Person liable to Secured Party for the Obligations; and


 


(i)          at
any time, and from time to time, accept additions to, releases, reductions, exchanges or substitution of the Collateral, without
in any way altering, impairing, diminishing or affecting the provisions of this Security Agreement, the Loan Documents, or any
of the other Obligations, or Secured Party’s rights hereunder, under the Obligations.


 


Debtor hereby ratifies
and confirms whatever Secured Party may do with respect to the Collateral and agrees that Secured Party shall not be liable for
any error of judgment or mistakes of fact or law with respect to actions taken in connection with the Collateral.


 


4.6         Attorney-in-Fact.
Debtor hereby irrevocably makes, constitutes and appoints Secured Party (and any officer of Secured Party or any Person designated
by Secured Party for that purpose) as Debtor’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in Debtor’s
name, place and stead, with full power of substitution, to: (i) take such actions as are permitted in this Security Agreement;
(ii) execute such financing statements and other documents and to do such other acts as Secured Party may require to perfect and
preserve Secured Party’s security interest in, and to enforce such interests in the Collateral; and (iii) upon the occurrence
of an Event of Default, carry out any remedy provided for in this Security Agreement, the Credit Agreement, or otherwise at law
or in equity, including endorsing Debtor’s name to checks, drafts, instruments and other items of payment, and proceeds of
the Collateral, executing change of address forms with the postmaster of the United States Post Office serving the address of Debtor,
changing the address of Debtor to that of Secured Party, opening all envelopes addressed to Debtor and applying any payments contained
therein to the Obligations, and changing any merchant accounts or instructions to Payment Processing Companies regarding any credit/debit
card payments from Customers. Debtor hereby acknowledges that the constitution and appointment of such proxy and attorney-in-fact
are coupled with an interest and are irrevocable. Debtor hereby ratifies and confirms all that such attorney-in-fact may do or
cause to be done by virtue of any provision of this Security Agreement.


 




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4.7         No
Marshaling. Secured Party shall not be required to marshal any present or future collateral security (including this Security
Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order. To the extent that it lawfully may, Debtor hereby agrees that
it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of Secured
Party’s rights under this Security Agreement or under any other instrument creating or evidencing any of the Obligations
or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, Debtor hereby irrevocably waives the benefits of all such laws.


 


4.8         No
Waiver. No Event of Default shall be waived by Secured Party except in writing. No failure or delay on the part of Secured
Party in exercising any right, power or remedy hereunder shall operate as a waiver of the exercise of the same or any other right
at any other time; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. There shall be no obligation on the part of Secured Party
to exercise any remedy available to Secured Party in any order. The remedies provided for herein are cumulative and not exclusive
of any remedies provided at law or in equity. Debtor agrees that in the event that Debtor fails to perform, observe or discharge
any of its Obligations or liabilities under this Security Agreement or any other agreements with Secured Party, no remedy of law
will provide adequate relief to Secured Party, and further agrees that Secured Party shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual damages.


 


4.9         Application
of Proceeds. Secured Party will, within three (3) Business Days after receipt of cash or solvent credits from collection of
items of payment, proceeds of Collateral or any other source, apply the whole or any part thereof against the Obligations secured
hereby. Secured Party shall further have the exclusive right to determine how, when and what application of such payments and such
credits shall be made on the Obligations, and such determination shall be conclusive upon Debtor. Any proceeds of any disposition
by Secured Party of all or any part of the Collateral may be first applied by Secured Party to the payment of expenses incurred
by Secured Party in connection with the Collateral, including reasonable attorneys’ fees and legal expenses and costs as
provided for in Section 5.13 hereof.


 


		5	MISCELLANEOUS.



 


5.1         Entire
Agreement. This Security Agreement and the other Loan Documents: (i) are valid, binding and enforceable against Debtor and
Secured Party in accordance with their respective provisions and no conditions exist as to their legal effectiveness; (ii) constitute
the entire agreement between the parties with respect to the subject matter hereof and thereof; and (iii) are the final expression
of the intentions of Debtor and Secured Party. No promises, either expressed or implied, exist between Debtor and Secured Party,
unless contained herein or therein. This Security Agreement, together with the other Loan Documents, supersedes all negotiations,
representations, warranties, commitments, term sheets, discussions, negotiations, offers or contracts (of any kind or nature, whether
oral or written) prior to or contemporaneous with the execution hereof with respect to any matter, directly or indirectly related
to the terms of this Security Agreement and the other Loan Documents. This Security Agreement and the other Loan Documents are
the result of negotiations between Secured Party and Debtor and have been reviewed (or have had the opportunity to be reviewed)
by counsel to all such parties, and are the products of all parties. Accordingly, this Security Agreement and the other Loan Documents
shall not be construed more strictly against Secured Party merely because of Secured Party’s involvement in their preparation.


 




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5.2         Amendments;
Waivers. No delay on the part of Secured Party in the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by Secured Party of any right, power or remedy preclude other or further exercise thereof,
or the exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision
of this Security Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and
acknowledged by Secured Party, and then any such amendment, modification, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.


 


5.3         WAIVER
OF DEFENSES. DEBTOR WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH DEBTOR MAY NOW HAVE
OR HEREAFTER MAY HAVE TO ANY ACTION BY SECURED PARTY IN ENFORCING THIS SECURITY AGREEMENT. PROVIDED SECURED PARTY ACTS IN GOOD
FAITH, DEBTOR RATIFIES AND CONFIRMS WHATEVER SECURED PARTY MAY DO PURSUANT TO THE TERMS OF THIS SECURITY AGREEMENT. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR SECURED PARTY GRANTING ANY FINANCIAL ACCOMMODATION TO DEBTOR.


 


5.4         MANDATORY
FORUM SELECTION. TO INDUCE SECURED PARTY TO MAKE CERTAIN FINANCIAL ACCOMODATIONS TO DEBTOR, DEBTOR IRREVOCABLY AGREES THAT
ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER
WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER LOAN DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS
BASED UPON BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, SECURED PARTY MAY, AT SECURED PARTY’S SOLE OPTION, ELECT TO BRING
ANY ACTION IN ANY OTHER JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED
BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. DEBTOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR
FEDERAL COURT HAVING ITS SITUS IN SAID COUNTY (OR TO ANY OTHER JURISDICTION OR VENUE, IF SECURED PARTY SO ELECTS), AND WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS. DEBTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO DEBTOR, AS APPLICABLE, AS SET FORTH HEREIN
IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.


 




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5.5         WAIVER
OF JURY TRIAL. DEBTOR AND SECURED PARTY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS SECURITY AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH
OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF
DEALING IN WHICH SECURED PARTY AND DEBTOR ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY GRANTING ANY FINANCIAL ACCOMMODATION
TO DEBTOR.


 


5.6         Assignability.
Secured Party, without consent from or notice to anyone, may at any time assign Secured Party’s rights in this Security Agreement,
the other Loan Documents, the Obligations, or any part thereof and transfer Secured Party’s rights in any or all of the Collateral,
and Secured Party thereafter shall be relieved from all liability with respect to such Collateral. This Security Agreement shall
be binding upon Secured Party and Debtor and its respective legal representatives and successors. All references herein to Debtor
shall be deemed to include any successors, whether immediate or remote. In the case of a joint venture or partnership, the term
“Debtor” shall be deemed to include all joint venturers or partners thereof, who shall be jointly and severally liable
hereunder.


 


5.7         Binding
Effect. This Security Agreement shall become effective upon execution by Debtor and Secured Party, and shall bind the Debtor
and Secured Party, and their respective successors and permitted assigns.


 


5.8         Governing
Law. Except in the case of the Mandatory Forum Selection Clause in Section 5.4 above, which clause shall be governed and interpreted
in accordance with Florida law, this Agreement shall be delivered and accepted in and shall be deemed to be a contract made under
and governed by the internal laws of the State of Nevada, and for all purposes shall be construed in accordance with the laws of
such State, without giving effect to the choice of law provisions of such State.


 


5.9         Enforceability.
Wherever possible, each provision of this Security Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction,
such provision shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.


 




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5.10       Time
of Essence. Time is of the essence in making payments of all amounts due Secured Party under the Loan Documents and in the
performance and observance by Debtor of each covenant, agreement, provision and term of this Security Agreement and the other Loan
Documents.


 


5.11       Counterparts;
Facsimile Signatures. This Security Agreement may be executed in any number of counterparts and by the different parties hereto
on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same Security Agreement. Receipt of an executed signature page to this Security Agreement by facsimile
or other electronic transmission shall constitute effective delivery thereof. Electronic records of executed Loan Documents maintained
by Secured Party shall be deemed to be originals thereof


 


5.12       Notices.
Except as otherwise provided herein, Debtor waives all notices and demands in connection with the enforcement of Secured Party’s
rights hereunder. All notices, requests, demands and other communications provided for hereunder shall be made in accordance with
the terms of the Credit Agreement.


 


5.13      Costs, Fees
and Expenses. Debtor shall pay or reimburse Secured Party for all reasonable costs, fees and expenses incurred by Secured Party
or for which Secured Party becomes obligated in connection with the enforcement of this Security Agreement, including search fees,
costs and expenses and attorneys’ fees, costs and time charges of counsel to Secured Party and all taxes payable in connection
with this Security Agreement. In furtherance of the foregoing, Debtor shall pay any and all stamp and other taxes, UCC search fees,
filing fees and other costs and expenses in connection with the execution and delivery of this Security Agreement and the other
Loan Documents to be delivered hereunder, and agrees to save and hold Secured Party harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such costs and expenses. That portion of the Obligations
consisting of costs, expenses or advances to be reimbursed by Debtor to Secured Party pursuant to this Security Agreement or the
other Loan Documents which are not paid on or prior to the date hereof shall be payable by Debtor to Secured Party on demand. If
at any time or times hereafter Secured Party: (a) employs counsel for advice or other representation: (i) with respect to this
Security Agreement or the other Loan Documents; (ii) to represent Secured Party in any litigation, contest, dispute, suit or proceeding
or to commence, defend, or intervene or to take any other action in or with respect to any litigation, contest, dispute, suit,
or proceeding (whether instituted by Secured Party, Debtor, or any other Person) in any way or respect relating to this Security
Agreement; or (iii) to enforce any rights of Secured Party against Debtor or any other Person under of this Security Agreement;
(b) takes any action to protect, collect, sell, liquidate, or otherwise dispose of any of the Collateral; and/or (c) attempts to
or enforces any of Secured Party’s rights or remedies under this Security Agreement, the costs and expenses incurred by Secured
Party in any manner or way with respect to the foregoing, shall be part of the Obligations, payable by Debtor to Secured Party
on demand.


 




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5.14       Termination.
This Security Agreement and the Liens and security interests granted hereunder shall not terminate until the termination of the
Credit Agreement and the commitments to make Loans thereunder and the full and complete performance and satisfaction and payment
in full of all the Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has
been asserted). Upon termination of this Security Agreement, Secured Party shall also deliver to Debtor (at the sole expense of
Debtor) such UCC termination statements, certificates for terminating the liens on the Motor Vehicles (if any) and such other documentation,
without recourse, warranty or representation whatsoever, as shall be reasonably requested by Debtor to effect the termination and
release of the Liens and security interests in favor of Secured Party affecting the Collateral; provided, however, to the extent
any such terminations or releases require Secured Party to expend any sums in terminating or releasing any such Liens, Secured
Party may refrain from terminating or releasing such Liens unless and until Debtor pays to Secured Party the estimated cost, as
reasonably determined by Secured Party, of effectuating such terminations or releases.


 


5.15       Reinstatement.
This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against
Debtor for liquidation or reorganization, should Debtor become insolvent or make an assignment for the benefit of any creditor
or creditors or should a receiver or trustee be appointed for all or any significant part of Debtor’s assets, and shall continue
to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.


 


5.16       Increase
in Obligations. It is the intent of the parties to secure payment of the Obligations, as the amount of such Obligations may
increase from time to time in accordance with the terms and provisions of the Loan Documents, and all of the Obligations, as so
increased from time to time, shall be and are secured hereby. Upon the execution hereof, Debtor shall pay any and all documentary
stamp taxes and/or other charges required to be paid in connection with the execution and enforcement of the Loan Documents, and
if, as and to the extent the Obligations are increased from time to time in accordance with the terms and provisions of the Loan
Documents, then Debtor shall immediately pay any additional documentary stamp taxes or other charges in connection therewith.


 


[SIGNATURE PAGE FOLLOWS]


 




    	 	17	 



     


    

 


IN WITNESS WHEREOF, Debtor and Secured Party
have executed this Security Agreement as of the date first above written.


 


Debtor: 


 


DRONE USA, INC., a Delaware

corporation


 


	By:	 	 
	Name: 	 	 
	Title:	 	 


 


	STATE OF ____________	)
	 	SS.
	COUNTY OF ____________	)


 


The foregoing instrument was acknowledged
before me this __ day of _____________, 2016 by ____________, who is the ___________ of Drone USA, Inc., a Delaware corporation,
on behalf of said corporation. He/She is personally known to me or has produced _________________ as identification.


 


My Commission Expires:


 


	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed


 




    	 	18	 



     


    

 


IN WITNESS WHEREOF, Debtor and Secured Party
have executed this Security Agreement as of the date first above written.


 


	 	Agreed and accepted:
	 	 
	 	Secured Party:
	 	 
	 	TCA GLOBAL CREDIT MASTER FUND, LP
	 	 	 
	 	 	By:	TCA Global Credit Fund GP, Ltd.
	 	 	Its:	General Partner
	 	 	 	 
	 	 	By:	 
	 	 	 	Robert Press, Director


 




    	 	19	 



     


    

 


Schedule 3.8


 


Collateral Locations/Places of Business


 


One World Trade Center, 285 Fulton Street,
Suite 8500, New York, NY 10007


 




     


     


    

 


Exhibit F-2


 


Form of Security Agreement (Corporate
Guarantor)


 




    	 	79	 



     


    

 


SECURITY AGREEMENT


 


This SECURITY AGREEMENT
(the “Security Agreement”) dated as of May 31, 2016, but made effective as of September 13, 2016,
is executed by and among DRONE USA, LLC, a Delaware limited liability company and HOWCO DISTRIBUTING CO., a Washington
corporation (each of the foregoing sometimes individually referred to as a “Debtor” and all such
entities sometimes hereinafter collectively referred to as “Debtors”), with their chief executive offices
located at One World Trade Center, 285 Fulton Street, Suite 8500, New York, NY 10007, and TCA Global Credit Master Fund, LP
(the “Secured Party”).


 


RECITALS:


 


WHEREAS, pursuant
to a Credit Agreement dated of even date herewith (the “Credit Agreement”) by and between DRONE USA,
INC., a Delaware corporation (the “Company”), additional Credit Parties, and the Secured
Party, the Company desires to borrow funds and obtain financial accommodations from Secured Party (such financial accommodations
hereinafter referred to as the “Loan”); and


 


WHEREAS, in order
to induce Secured Party to enter into the Loan with the Company, each of the Debtors, each being a wholly-owned Subsidiary of
the Company or one of the Company’s subsidiaries, has entered into and executed a Guaranty Agreement dated of even date
herewith in favor of Secured Party (the “Guaranty Agreement”); and


 


WHEREAS, in order to
induce the Secured Party make the Loan, and to secure each Debtor’s liabilities and obligations under the Guaranty Agreement,
each Debtor has agreed to execute and deliver to the Secured Party this Agreement for the benefit of the Secured Party;


 


NOW, THEREFORE, in
consideration of the credit extended now and in the future by Secured Party to the Company and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Debtors and Secured Party hereby agree as follows:


 


AGREEMENTS: 


 


		1	DEFINITIONS.



 


1.1         Defined
Terms. Capitalized terms used but not otherwise defined in this Security Agreement (including the Recitals) shall have the
meanings ascribed to them in the Credit Agreement. For the purposes of this Security Agreement, the following capitalized words
and phrases shall have the meanings set forth below.


 


(a)          “Capital
Securities” shall mean, with respect to any Person, all shares, interests, participations or other equivalents (however
designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued or acquired after the
date hereof, including common shares, preferred shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership or any other equivalent of such ownership interest.


 




    	 	1	 



     


    

 


(b)          “Collateral”
shall have the meaning set forth in Section 2.1 hereof.


 


(c)          “Obligor”
shall mean, collectively, each of the Debtors, or any other party liable with respect to the Obligations.


 


(d)          “Organizational
Identification Number” means, with respect to each Debtor, the organizational identification number assigned to such
Debtor by the applicable governmental unit or agency of the jurisdiction of organization of such Debtor, if any.


 


(e)          “Taxes”
shall mean any and all present and future taxes, duties, levies, imposts, deductions, assessments, charges or withholdings, and
any and all liabilities (including interest and penalties and other additions to taxes) with respect to the foregoing.


 


(f)          “Unmatured
Event of Default” shall mean any event which, with the giving of notice, the passage of time or both, would constitute
an Event of Default.


 


1.2        Other
Terms Defined in UCC. All other capitalized words and phrases used herein and not otherwise specifically defined herein or
in the Credit Agreement shall have the respective meanings assigned to such terms in the UCC, to the extent the same are used or
defined therein.


 


1.3       Other
Interpretive Provisions.


 


(a)          The
meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. Whenever the context so
requires, the neuter gender includes the masculine and feminine, the single number includes the plural, and vice versa, and in
particular the word “Debtor” or “Debtors” shall be so construed.


 


(b)          Section
and Schedule references are to this Security Agreement unless otherwise specified. The words “hereof’, “herein”
and “hereunder” and words of similar import when used in this Security Agreement shall refer to this Security Agreement
as a whole and not to any particular provision of this Security Agreement


 


(c)          The
term “including” (or words of similar import) is not limiting, and means “including, without limitation”.


 


(d)          In
the computation of periods of time from a specified date to a later specified date, the word “from” means “from
and including”; the words “to” and “until” each mean “to but excluding”, and the word
“through” means “to and including”.


 


(e)          Unless
otherwise expressly provided herein: (i) references to agreements (including this Security Agreement and the other Loan Documents)
and other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications
thereto, but only to the extent such amendments, restatements, supplements and other modifications are not prohibited by the terms
of any Loan Document; and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory
provisions amending, replacing, supplementing or interpreting such statute or regulation.


 




    	 	2	 



     


    

 


(f)          To
the extent any of the provisions of the other Loan Documents are inconsistent with the terms of this Security Agreement, the provisions
of this Security Agreement shall govern.


 


(g)          This
Security Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same
or similar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with
its terms.


 


(h)          The
term “Debtor” or “Debtors” shall refer to each Debtor individually, and to all Debtors, collectively, in
each case as the context may so require, it being the intent of the parties under this Agreement that all of the terms, conditions,
provisions and representations hereof shall, to the greatest extent possible, apply equally to each Debtor, as if each term, covenant,
provision and representation was separately made herein by each Debtor.


 


		2	SECURITY FOR THE OBLIGATIONS.



 


2.1         Security
for Obligations. As security for the payment and performance of the Obligations, each Debtor does hereby pledge, assign, transfer,
deliver and grant to Secured Party, for its own benefit and as agent for its Affiliates, a continuing and unconditional first
priority security interest in and to any and all property of each such Debtor, of any kind or description, tangible or intangible,
wheresoever located and whether now existing or hereafter arising or acquired, including the following (all of which property
for each Debtor, along with the products and proceeds therefrom, are individually and collectively referred to as the “Collateral”):



 


(a)          all
property of, or for the account of, each Debtor now or hereafter coming into the possession, control or custody of, or in transit
to, Secured Party or any agent or bailee for Secured Party or any parent, affiliate or subsidiary of Secured Party or any participant
with Secured Party in the Obligations (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise),
including all cash, earnings, dividends, interest, or other rights in connection therewith and the products and proceeds therefrom,
including the proceeds of insurance thereon; and


 


(b)          the
additional property of each Debtor, whether now existing or hereafter arising or acquired, and wherever now or hereafter located,
together with all additions and accessions thereto, substitutions, betterments and replacements therefor, products and Proceeds
therefrom, and all of each Debtor’s books and records and recorded data relating thereto (regardless of the medium of recording
or storage), together with all of each Debtor’s right, title and interest in and to all computer software required to utilize,
create, maintain and process any such records or data on electronic media, identified and set forth as follows:


 


(i)          All
Accounts and all goods whose sale, lease or other disposition by each Debtor has given rise to Accounts and have been returned
to, or repossessed or stopped in transit by, each Debtor, or rejected or refused by any Customer;


 




    	 	3	 



     


    

 


(ii)         All
Inventory, including raw materials, work-in-process and finished goods;


 


(iii)        All
goods (other than Inventory), including embedded software, Equipment, vehicles, furniture and Fixtures;


 


(iv)         All
Software and computer programs;


 


(v)          All
Securities, Investment Property, Financial Assets and Deposit Accounts, specifically including the Lock Box Account, and all funds
at any time deposited therewith, and all funds and amounts reserved or held back by any Payment Processing Companies;


 


(vi)         All
As-Extracted Collateral, Commodity Accounts, Commodity Contracts, and Farm Products;


 


(vii)        All
Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of Credit Rights, all proceeds of letters of credit, Health-Care-Insurance
Receivables, Supporting Obligations, notes secured by real estate, Commercial Tort Claims and General Intangibles, including Payment
Intangibles; and


 


(viii)      All
real estate property owned by each Debtor and the interest of each Debtor in fixtures related to such real property;


 


(ix)         All
Proceeds (whether Cash Proceeds or Non-cash Proceeds) of the foregoing property, including all insurance policies and proceeds
of insurance payable by reason of loss or damage to the foregoing property, including unearned premiums, and of eminent domain
or condemnation awards.


 


2.2         Possession
and Transfer of Collateral. Until an Event of Default has occurred, but subject to Secured Party’s rights under the
Credit Agreement (specifically with respect to Secured Party’s rights to use and apply money in the Lock Box Account)
each Debtor shall be entitled to possession and use of the Collateral (other than Instruments or Documents (including
Tangible Chattel Paper and Investment Property consisting of certificated securities) and other Collateral required to be
delivered to Secured Party pursuant to this Section 2). The cancellation or surrender of any promissory note
evidencing an Obligation, upon payment or otherwise, shall not affect the right of Secured Party to retain the Collateral for
any other of the Obligations, except upon payment in full of the Obligations. No Debtor shall sell, assign (by operation of
law or otherwise), license, lease or otherwise dispose of, or grant any option with respect to any of the Collateral, except
as permitted pursuant to the Credit Agreement.


 




    	 	4	 



     


    

 


2.3         Financing
Statements. Each Debtor authorizes Secured Party to prepare and file such financing statements, amendments and other documents
and do such acts as Secured Party deems necessary in order to establish and maintain valid, attached and perfected, first priority
security interests in the Collateral in favor of Secured Party, for its own benefit and as agent for its Affiliates, free and clear
of all Liens and claims and rights of third parties whatsoever, except Permitted Liens. Each Debtor hereby irrevocably authorizes
Secured Party at any time, and from time to time, to file in any jurisdiction any initial financing statements and amendments thereto
that: (a) indicate the Collateral: (i) is comprised of all assets of such Debtor (or words of similar effect), regardless of whether
any particular asset comprising a part of the Collateral falls within the scope of Article 9 of the UCC of the jurisdiction wherein
such financing statement or amendment is filed; or (ii) as being of an equal or lesser scope or within greater detail as the grant
of the security interest set forth herein; and (b) contain any other information required by Section 5 of Article 9 of the UCC
of the jurisdiction wherein such financing statement or amendment is filed regarding the sufficiency or filing office acceptance
of any financing statement or amendment, including: (A) whether each Debtor is an organization, the type of organization and any
Organizational Identification Number issued to each Debtor; and (B) in the case of a financing statement filed as a fixture filing
or indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of the real property to which
the Collateral relates. Each Debtor agrees to furnish any such information to Secured Party promptly upon request. In addition,
each Debtor shall make appropriate entries on its books and records disclosing the security interests of Secured Party, for its
own benefit and as agent for its Affiliates, in the Collateral. Each Debtor hereby agrees that a photogenic or other reproduction
of this Security Agreement is sufficient for filing as a financing statement and each Debtor authorizes Secured Party to file this
Security Agreement as a financing statement in any jurisdiction.


 


2.4         Preservation
of the Collateral. Secured Party may, but is not required to, take such actions from time to time as Secured Party deems appropriate
to maintain or protect the Collateral. Secured Party shall have exercised reasonable care in the custody and preservation of the
Collateral if Secured Party takes such action as any Debtor shall reasonably request in writing which is not inconsistent with
Secured Party’s status as a secured party, but the failure of Secured Party to comply with any such request shall not be
deemed a failure to exercise reasonable care; provided, however, Secured Party’s responsibility for the safekeeping
of the Collateral shall: (i) be deemed reasonable if such Collateral is accorded treatment substantially equal to that which Secured
Party accords its own property; and (ii) not extend to matters beyond the control of Secured Party, including acts of God, war,
insurrection, riot or governmental actions. In addition, any failure of Secured Party to preserve or protect any rights with respect
to the Collateral against prior or third parties, or to do any act with respect to preservation of the Collateral, not so requested
by a Debtor, shall not be deemed a failure to exercise reasonable care in the custody or preservation of the Collateral. Each Debtor
shall have the sole responsibility for taking such action as may be necessary, from time to time, to preserve all rights of each
Debtor and Secured Party in the applicable Collateral against prior or third parties. Without limiting the generality of the foregoing,
where Collateral consists, in whole or in part, of Capital Securities, each Debtor represents to, and covenants with, Secured Party
that each Debtor has made arrangements for keeping informed of changes or potential changes affecting the Capital Securities (including
rights to convert or subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights), and
each Debtor agrees that Secured Party shall have no responsibility or liability for informing any Debtor of any such or other changes
or potential changes or for taking any action or omitting to take any action with respect thereto.


 




    	 	5	 



     


    

 


2.5         Other
Actions as to any and all Collateral. Each Debtor further agrees to take any other action reasonably requested by Secured Party
to ensure the attachment, perfection and first priority of, and the ability of Secured Party to enforce, the security interest
of Secured Party, for its own benefit and as agent for its Affiliates, in any and all of the Collateral, including: (i) causing
Secured Party’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition
to attachment, perfection or priority of, or ability of the bank to enforce, the security interest of Secured Party, for its own
benefit and as agent for its Affiliates, in such Collateral; (ii) complying with any provision of any statute, regulation or treaty
of the United States as to any material portion of the Collateral as soon as possible but not more than forty-five (45) days after
such request if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Secured Party
to enforce, the security interest of Secured Party, for its own benefit and as agent for its Affiliates, in such Collateral; (iii)
obtaining governmental and other third party consents and approvals, including, without limitation, any consent of any licensor,
lessor or other Person with authority or control over or an interest in any material portion of the Collateral as soon as possible
but not more than forty-five (45) days after such request; (iv) obtaining waivers from mortgagees and landlords in form and substance
reasonably satisfactory to Secured Party which affect any material portion of the Collateral as soon as possible but not more than
forty-five (45) days after such request; and (v) taking all actions required by the UCC in effect from time to time or by other
law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction. Each Debtor further
agrees to indemnify and hold Secured Party harmless against claims of any Persons not a party to this Security Agreement concerning
disputes arising over the Collateral, except to the extent resulting from the gross negligence or willful misconduct of Secured
Party or its Affiliates.


 


2.6         Collateral
in the Possession of a Warehouseman or Bailee. If any material portion of the Collateral at any time is in the possession of
a warehouseman or bailee, each Debtor shall promptly notify Secured Party thereof, and, as soon as possible, but not more than
forty-five (45) days later, shall obtain a Collateral Access Agreement in form and substance reasonably satisfactory to Secured
Party from such warehouseman or bailee.


 


2.7         Letter-of-Credit
Rights. If any Debtor at any time is a beneficiary under a letter of credit now or hereafter issued in favor of such Debtor,
such Debtor shall promptly notify Secured Party thereof and, at the request and option of Secured Party, such Debtor shall, pursuant
to an agreement in form and substance reasonably satisfactory to Secured Party, either: (i) arrange for the issuer and any confirmer
of such letter of credit to consent to an assignment to Secured Party, for its own benefit and as agent for its Affiliates, of
the proceeds of any drawing under the letter of credit; or (ii) arrange for Secured Party, for its own benefit and as agent for
its Affiliates, to become the transferee beneficiary of the letter of credit, with Secured Party agreeing, in each case, that the
proceeds of any drawing under the letter to credit are to be applied as provided in the Credit Agreement.


 


2.8         Commercial
Tort Claims. If any Debtor shall at any time hold or acquire a Commercial Tort Claim, such Debtor shall promptly notify Secured
Party in writing signed by such Debtor of the details thereof and grant to Secured Party, for its own benefit and as agent for
its Affiliates, in such written notice or other written instrument, a security interest therein and in the proceeds thereof, all
upon the terms of this Security Agreement, in each case in form and substance reasonably satisfactory to Secured Party, and shall
execute any amendments hereto deemed reasonably necessary by Secured Party to perfect the security interest of Secured Party, for
its own benefit and as agent for its Affiliates, in such Commercial Tort Claim.


 




    	 	6	 



     


    

 


2.9         Electronic
Chattel Paper and Transferable Records. If any Debtor at any time holds or acquires an interest in any electronic chattel paper
or any “transferable record”, as that term is defined in Section 201 of the federal Electronic Signatures in Global
and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction,
such Debtor shall promptly notify Secured Party thereof and, at the request of Secured Party, shall take such action as Secured
Party may reasonably request to vest in Secured Party control under Section 9-105 of the UCC of such electronic chattel paper or
control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section
16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record. Secured Party
agrees with each Debtor that Secured Party will arrange, pursuant to procedures reasonably satisfactory to Secured Party and so
long as such procedures will not result in Secured Party’s loss of control, for such Debtor to make alterations to the electronic
chattel paper or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the federal
Electronic Signatures in Global and National Commerce Act or Section 16 of the Uniform Electronic Transactions Act, for a party
in control to make without loss of control.


 


2.10       Additional
Requirements on Collateral. Each Debtor shall fully cooperate with Secured Party to obtain and keep in effect one or more control
agreements in Deposit Accounts, Electronic Chattel Paper, Investment Property and Letter-of-Credit Rights Collateral. Such control
agreements shall only be required if, in the reasonable discretion of the Secured Party, the nature of the Collateral requires
any such control agreements in order for the Secured Party to perfect its security interests in any Collateral as granted hereunder,
and in such event, each Debtor shall promptly provide any such control agreements upon request from the Secured Party. In addition,
each Debtor, at the Debtor’s expense, shall promptly: (A) execute all notices of security interest for each relevant type
of Software and other General Intangibles in forms suitable for filing with any United States or foreign office handling the registration
or filing of patents, trademarks, copyrights and other intellectual property and any successor office or agency thereto; and (B)
take all commercially reasonable steps in any hearing, suit, action, or other proceeding before any such office or any similar
office or agency in any other country or any political subdivision thereof, to diligently prosecute or maintain, as applicable,
each application and registration of any Software, General Intangibles or any other intellectual property rights and assets that
are part of the Collateral, including filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference
and cancellation proceedings.


 


		3	REPRESENTATIONS AND WARRANTIES.



 


Each Debtor makes the
following representations and warranties to Secured Party:


 


3.1         Debtor
Organization and Name. Each Debtor is a corporation, limited liability company, or other legally recognized form of entity,
as applicable, duly organized, existing and in good standing under the laws of its State of organization, with full and adequate
power to carry on and conduct its business as presently conducted. Each Debtor is duly licensed or qualified in all foreign jurisdictions
wherein the nature of its activities requires such qualification or licensing. Each Debtor’s Organizational Identification
Number is set forth in the Credit Agreement. The exact legal name of each Debtor is as set forth in the first paragraph of this
Security Agreement, and no Debtor currently conducts, nor has it during the last five (5) years conducted, business under any other
name or trade name.


 




    	 	7	 



     


    

 


3.2         Authorization.
Each Debtor has full right, power and authority to enter into this Security Agreement and to perform all of its duties and obligations
under this Security Agreement. The execution and delivery of this Security Agreement and the other Loan Documents will not, nor
will the observance or performance of any of the matters and things herein or therein set forth, violate or contravene any provision
of law or of the articles of incorporation, by-laws, operating agreement or other governing documents, as applicable, of each Debtor.
All necessary and appropriate action has been taken on the part of each Debtor to authorize the execution and delivery of this
Security Agreement.


 


3.3         Validity
and Binding Nature. This Security Agreement is the legal, valid and binding obligation of each Debtor, enforceable against
each Debtor in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’
rights generally and to general principles of equity.


 


3.4         Consent;
Absence of Breach. The execution, delivery and performance of this Security Agreement and any other documents or instruments
to be executed and delivered by each Debtor in connection herewith, do not and will not: (a) require any consent, approval, authorization,
or filings with, notice to or other act by or in respect of, any governmental authority or any other Person (other than filings
or notices pursuant to federal or state securities laws or other than any consent or approval which has been obtained and is in
full force and effect); (b) conflict with: (i) any provision of law or any applicable regulation, order, writ, injunction or decree
of any court or governmental authority; (ii) the articles of incorporation, bylaws, operating agreement, or other organic or governance
document applicable to each Debtor; or (iii) any agreement, indenture, instrument or other document, or any judgment, order or
decree, which is binding upon each applicable Debtor or any of its properties or assets; or (c) require, or result in, the creation
or imposition of any Lien on any asset of any Debtor, other than Liens in favor of Secured Party created pursuant to this Security
Agreement and Permitted Liens.


 


3.5         Ownership
of Collateral; Liens. Each Debtor is the sole owner of all the Collateral applicable to such Debtor, free and clear of all
Liens, charges and claims (including infringement claims with respect to patents, trademarks, service marks, copyrights and other
intellectual property rights), other than Permitted Liens.


 


3.6         Adverse
Circumstances. No condition, circumstance, event, agreement, document, instrument, restriction, litigation or proceeding (or
threatened litigation or proceeding or basis therefor) exists which: (i) would have a Material Adverse Effect upon any Debtor;
or (ii) would constitute an Event of Default or an Unmatured Event of Default.


 


3.7         Security
Interest. This Security Agreement creates a valid security interest in favor of Secured Party in the Collateral and, when properly
perfected by filing in the appropriate jurisdictions, or by possession or control of such Collateral by Secured Party or delivery
of such Collateral to Secured Party, shall constitute a valid, perfected, first-priority security interest in such Collateral.


 




    	 	8	 



     


    

 


3.8         Place
of Business. The principal place of business and books and records of each Debtor is set forth in the preamble to this Security
Agreement, and the location of all Collateral, if other than at such principal place of business, is as set forth on Schedule
3.8 attached hereto and made a part hereof, and each Debtor shall promptly notify Secured Party of any change in such locations.
No Debtor will remove or permit the Collateral to be removed from such locations without the prior written consent of Secured Party,
except as permitted pursuant to the Credit Agreement.


 


3.9         Complete
Information. This Security Agreement and all financial statements, schedules, certificates, confirmations, agreements, contracts,
and other materials and information heretofore or contemporaneously herewith furnished in writing by any Debtor to Secured Party
for purposes of, or in connection with, this Security Agreement and the transactions contemplated hereby is, and all written information
hereafter furnished by or on behalf of any Debtor to Secured Party pursuant hereto or in connection herewith will be, true and
accurate in every material respect on the date as of which such information is dated or certified, and none of such information
is or will be incomplete by omitting to state any material fact necessary to make such information not misleading in light of the
circumstances under which made (it being recognized by Secured Party that any projections and forecasts provided by any Debtor
are based on good faith estimates and assumptions believed by Debtors to be reasonable as of the date of the applicable projections
or assumptions and that actual results during the period or periods covered by any such projections and forecasts may differ from
projected or forecasted results).


 


		4	REMEDIES.



 


Upon the occurrence
of any default in the payment or performance of any of the covenants, conditions and agreements contained in this Security Agreement
or any other Event of Default, including any Event of Default under the Guaranty Agreement, Secured Party shall have all rights,
powers and remedies set forth in this Security Agreement or the other Loan Documents or in any other written agreement or instrument
relating to any of the Obligations or any security therefor, as a secured party under the UCC or as otherwise provided at law or
in equity. Without limiting the generality of the foregoing, Secured Party may, at its option upon the occurrence of an Event of
Default, declare its commitments to the Company to be terminated and all Obligations to be immediately due and payable, or, if
provided in the Loan Documents, all commitments of Secured Party to Debtors shall immediately terminate and all Obligations shall
be automatically due and payable, all without demand, notice or further action of any kind required on the part of Secured Party.
Each Debtor hereby waives any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in connection
with the enforcement of Secured Party’s rights under the Loan Documents, and hereby consents to, and waives notice of release,
with or without consideration, of any Collateral, notwithstanding anything contained herein or in the Loan Documents to the contrary.
In addition to the foregoing:


 




    	 	9	 



     


    

 


4.1         Possession
and Assembly of Collateral. Secured Party may, without notice, demand or the initiation of legal process of any kind, take
possession of any or all of the Collateral (in addition to Collateral of which Secured Party already has possession), wherever
it may be found, and for that purpose may pursue the same wherever it may be found, and may at any time enter into any of Debtors’
premises where any of the Collateral may be or is supposed to be, and search for, take possession of, remove, keep and store any
of the Collateral until the same shall be sold or otherwise disposed of and Secured Party shall have the right to store and conduct
a sale of the same in any of Debtors’ premises without cost to Secured Party. At Secured Party’s request, each Debtor
will, at such Debtor’s sole expense, assemble the Collateral and make it available to Secured Party at a place or places
to be designated by Secured Party which is reasonably convenient to Secured Party and Debtors.


 


4.2         Sale
of Collateral. Secured Party may sell any or all of the Collateral at public or private sale, upon such terms and conditions
as Secured Party may deem proper, and Secured Party may purchase any or all of the Collateral at any such sale. Each Debtor acknowledges
that Secured Party may be unable to effect a public sale of all or any portion of the Collateral because of certain legal and/or
practical restrictions and provisions which may be applicable to the Collateral and, therefore, may be compelled to resort to one
or more private sales to a restricted group of offerees and purchasers. Each Debtor consents to any such private sale so made even
though at places and upon terms less favorable than if the Collateral were sold at public sale. Secured Party shall have no obligation
to clean-up or otherwise prepare the Collateral for sale. Secured Party may apply the net proceeds, after deducting all costs,
expenses, attorneys’ and paralegals’ fees incurred or paid at any time in the collection, protection and sale of the
Collateral and the Obligations, to the payment of the Obligations, returning the excess proceeds, if any, to Debtors. Debtors shall
remain liable for any amount remaining unpaid after such application, with interest at the Default Rate. Any notification of intended
disposition of the Collateral required by law shall be conclusively deemed reasonably and properly given if given by Secured Party
at least ten (10) calendar days before the date of such disposition. Each Debtor hereby confirms, approves and ratifies all acts
and deeds of Secured Party relating to the foregoing, and each part thereof, and expressly waives any and all claims of any nature,
kind or description which it has or may hereafter have against Secured Party or its representatives, by reason of taking, selling
or collecting any portion of the Collateral. Each Debtor consents to releases of the Collateral at any time (including prior to
default) and to sales of the Collateral in groups, parcels or portions, or as an entirety, as Secured Party shall deem appropriate.
Each Debtor expressly absolves Secured Party from any loss or decline in market value of any Collateral by reason of delay in the
enforcement or assertion or non-enforcement of any rights or remedies under this Security Agreement.


 




    	 	10	 



     


    

 


4.3         Standards
for Exercising Remedies. To the extent that applicable law imposes duties on Secured Party to exercise remedies in a commercially
reasonable manner, each Debtor acknowledges and agrees that it is not commercially unreasonable for Secured Party: (i) to incur
expenses deemed necessary by Secured Party to prepare Collateral for disposition or otherwise to complete raw material or work-in-process
into finished goods or other finished products for disposition; (ii) to fail to obtain third party consents for access to Collateral
to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of; (iii) to fail to exercise collection remedies against Customers
or other Persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral; (iv) to
exercise collection remedies against Customers and other Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists; (v) to advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature; (vi) to contact other Persons, whether or not in the same
business as Debtors, for expressions of interest in acquiring all or any portion of the Collateral; (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature; (viii) to dispose
of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that
have the reasonable capability of doing so, or that match buyers and sellers of assets; (ix) to dispose of assets in wholesale
rather than retail markets; (x) to disclaim disposition warranties, including any warranties of title; (xi) to purchase insurance
or credit enhancements to insure Secured Party against risks of loss, collection or disposition of Collateral or to provide to
Secured Party a guaranteed return from the collection or disposition of Collateral; or (xii) to the extent deemed appropriate by
Secured Party, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Secured
Party in the collection or disposition of any of the Collateral. Each Debtor acknowledges that the purpose of this section is to
provide non-exhaustive indications of what actions or omissions by Secured Party would not be commercially unreasonable in Secured
Party’s exercise of remedies against the Collateral and that other actions or omissions by Secured Party shall not be deemed
commercially unreasonable solely on account of not being indicated in this Section. Without limitation upon the foregoing, nothing
contained in this Section shall be construed to grant any rights to Debtors or to impose any duties on Secured Party that would
not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section.


 


4.4         UCC
and Offset Rights. Secured Party may exercise, from time to time, any and all rights and remedies available to it under the
UCC or under any other applicable law in addition to, and not in lieu of, any rights and remedies expressly granted in this Security
Agreement or in any other agreements between any Obligor and Secured Party, and may, without demand or notice of any kind, appropriate
and apply toward the payment of such of the Obligations, whether matured or unmatured, including costs of collection and attorneys’
and paralegals’ fees and costs, and in such order of application as Secured Party may, from time to time, elect, any indebtedness
of Secured Party to any Obligor, however created or arising, including balances, credits, deposits, accounts or moneys of such
Obligor in the possession, control or custody of, or in transit to Secured Party. Each Debtor, on behalf of itself and any Obligor,
hereby waives the benefit of any law that would otherwise restrict or limit Secured Party in the exercise of its right, which is
hereby acknowledged, to appropriate at any time hereafter any such indebtedness owing from Secured Party to any Obligor.


 


4.5         Additional
Remedies. Upon the occurrence of an Event of Default, Secured Party shall have the right and power to:


 


(a)          instruct
any Debtor, at its own expense, to notify any parties obligated on any of the Collateral, including any Customers and Payment Processing
Companies, to make payment directly to Secured Party of any amounts due or to become due thereunder, or Secured Party may directly
notify such obligors of the security interest of Secured Party, and/or of the assignment to Secured Party of the Collateral and
direct such obligors to make payment to Secured Party of any amounts due or to become due with respect thereto, and thereafter,
collect any such amounts due on the Collateral directly from such Persons obligated thereon;


 




    	 	11	 



     


    

 


(b)          enforce
collection of any of the Collateral, including any Accounts, by suit or otherwise, or make any compromise or settlement with respect
to any of the Collateral, or surrender, release or exchange all or any part thereof, or compromise, extend or renew for any period
(whether or not longer than the original period) any indebtedness thereunder;


 


(c)          take
possession or control of any proceeds and products of any of the Collateral, including the proceeds of insurance thereon;


 


(d)          extend,
renew or modify for one or more periods (whether or not longer than the original period) the Obligations or any obligation of any
nature of any other obligor with respect to the Obligations;


 


(e)          grant
releases, compromises or indulgences with respect to the Obligations, any extension or renewal of any of the Obligations, any security
therefor, or to any other obligor with respect to the Obligations;


 


(f)          transfer
the whole or any part of Capital Securities which may constitute Collateral into the name of Secured Party or Secured Party’s
nominee without disclosing, if Secured Party so desires, that such Capital Securities so transferred are subject to the security
interest of Secured Party, and any corporation, association, or any of the managers or trustees of any trust issuing any of such
Capital Securities, or any transfer agent, shall not be bound to inquire, in the event that Secured Party or such nominee makes
any further transfer of such Capital Securities, or any portion thereof, as to whether Secured Party or such nominee has the right
to make such further transfer, and shall not be liable for transferring the same;


 


(g)          vote
the Collateral;


 


(h)          make
an election with respect to the Collateral under Section 1111 of the Bankruptcy Code or take action under Section 364 or any other
section of Bankruptcy Code; provided, however, that any such action of Secured Party as set forth herein shall not, in
any manner whatsoever, impair or affect the liability of Debtors hereunder, nor prejudice, waive, nor be construed to impair,
affect, prejudice or waive Secured Party’s rights and remedies at law, in equity or by statute, nor release, discharge,
nor be construed to release or discharge, Debtors, any Debtor or other Person liable to Secured Party for the Obligations; and


 


(i)          at
any time, and from time to time, accept additions to, releases, reductions, exchanges or substitution of the Collateral, without
in any way altering, impairing, diminishing or affecting the provisions of this Security Agreement, the Loan Documents, or any
of the other Obligations, or Secured Party’s rights hereunder, under the Obligations.


 


Each Debtor hereby ratifies
and confirms whatever Secured Party may do with respect to the Collateral and agrees that Secured Party shall not be liable for
any error of judgment or mistakes of fact or law with respect to actions taken in connection with the Collateral.


 


4.6         Attorney-in-Fact.
Each Debtor hereby irrevocably makes, constitutes and appoints Secured Party (and any officer of Secured Party or any Person designated
by Secured Party for that purpose) as such Debtor’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in Debtor’s
name, place and stead, with full power of substitution, to: (i) take such actions as are permitted in this Security Agreement;
(ii) execute such financing statements and other documents and to do such other acts as Secured Party may require to perfect and
preserve Secured Party’s security interest in, and to enforce such interests in the Collateral; and (iii) upon the occurrence
of an Event of Default, carry out any remedy provided for in this Security Agreement, the Credit Agreement or through law or equity,
including endorsing such Debtor’s name to checks, drafts, instruments and other items of payment, and proceeds of the Collateral,
executing change of address forms with the postmaster of the United States Post Office serving the address of such Debtor, changing
the address of such Debtor to that of Secured Party, opening all envelopes addressed to such Debtor and applying any payments contained
therein to the Obligations, and changing any merchant accounts or instructions to Payment Processing Companies regarding any credit/debit
card payments from Customers. Each Debtor hereby acknowledges that the constitution and appointment of such proxy and attorney-in-fact
are coupled with an interest and are irrevocable. Each Debtor hereby ratifies and confirms all that such attorney-in-fact may do
or cause to be done by virtue of any provision of this Security Agreement.


 




    	 	12	 



     


    

 


4.7           No
Marshaling. Secured Party shall not be required to marshal any present or future collateral security (including this Security
Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order. To the extent that it lawfully may, each Debtor hereby agrees
that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of
Secured Party’s rights under this Security Agreement or under any other instrument creating or evidencing any of the Obligations
or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise
assured, and, to the extent that it lawfully may, each Debtor hereby irrevocably waives the benefits of all such laws.


 


4.8           No
Waiver. No Event of Default shall be waived by Secured Party except in writing. No failure or delay on the part of Secured
Party in exercising any right, power or remedy hereunder shall operate as a waiver of the exercise of the same or any other right
at any other time; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. There shall be no obligation on the part of Secured Party
to exercise any remedy available to Secured Party in any order. The remedies provided for herein are cumulative and not exclusive
of any remedies provided at law or in equity. Each Debtor agrees that in the event that such Debtor fails to perform, observe or
discharge any of its Obligations or liabilities under this Security Agreement or any other agreements with Secured Party, no remedy
of law will provide adequate relief to Secured Party, and further agrees that Secured Party shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving actual damages.


 


4.9           Application
of Proceeds. Secured Party will, within three (3) Business Days after receipt of cash or solvent credits from collection of
items of payment, proceeds of Collateral or any other source, apply the whole or any part thereof against the Obligations secured
hereby. Secured Party shall further have the exclusive right to determine how, when and what application of such payments and such
credits shall be made on the Obligations, and such determination shall be conclusive upon Debtors. Any proceeds of any disposition
by Secured Party of all or any part of the Collateral may be first applied by Secured Party to the payment of expenses incurred
by Secured Party in connection with the Collateral, including reasonable attorneys’ fees and legal expenses and costs as
provided for in Section 5.13 hereof.


 




    	 	13	 



     


    

 


		5	MISCELLANEOUS.



 


5.1           Entire
Agreement. This Security Agreement and the other Loan Documents: (i) are valid, binding and enforceable against Debtors and
Secured Party in accordance with their respective provisions and no conditions exist as to their legal effectiveness; (ii) constitute
the entire agreement between the parties with respect to the subject matter hereof and thereof; and (iii) are the final expression
of the intentions of Debtors, the Company and Secured Party. No promises, either expressed or implied, exist between any Debtor
and Secured Party, unless contained herein or therein. This Security Agreement, together with the other Loan Documents, supersedes
all negotiations, representations, warranties, commitments, term sheets, discussions, negotiations, offers or contracts (of any
kind or nature, whether oral or written) prior to or contemporaneous with the execution hereof with respect to any matter, directly
or indirectly related to the terms of this Security Agreement and the other Loan Documents. This Security Agreement and the other
Loan Documents are the result of negotiations between Secured Party and Debtors and have been reviewed (or have had the opportunity
to be reviewed) by counsel to all such parties, and are the products of all parties. Accordingly, this Security Agreement and the
other Loan Documents shall not be construed more strictly against Secured Party merely because of Secured Party’s involvement
in their preparation.


 


5.2           Amendments;
Waivers. No delay on the part of Secured Party in the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by Secured Party of any right, power or remedy preclude other or further exercise thereof,
or the exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision
of this Security Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and
acknowledged by Secured Party, and then any such amendment, modification, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.


 


5.3           WAIVER
OF DEFENSES. EACH DEBTOR WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH SUCH DEBTOR
MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY SECURED PARTY IN ENFORCING THIS SECURITY AGREEMENT. PROVIDED SECURED PARTY
ACTS IN GOOD FAITH, EACH DEBTOR RATIFIES AND CONFIRMS WHATEVER SECURED PARTY MAY DO PURSUANT TO THE TERMS OF THIS SECURITY AGREEMENT.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY GRANTING ANY FINANCIAL ACCOMMODATION TO DEBTORS.


 




    	 	14	 



     


    

 


5.4           MANDATORY
FORUM SELECTION. TO INDUCE SECURED PARTY TO MAKE CERTAIN FINANCIAL ACCOMODATIONS TO DEBTORS, EACH DEBTOR IRREVOCABLY AGREES
THAT ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER
WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT ANY OTHER LOAN DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS
BASED UPON BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS
LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, SECURED PARTY MAY, AT SECURED PARTY’S SOLE OPTION, ELECT TO BRING
ANY ACTION IN ANY OTHER JURISDICTION. THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED
BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. EACH DEBTOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE
OR FEDERAL COURT HAVING ITS SITUS IN SAID COUNTY (OR TO ANY OTHER JURISDICTION OR VENUE, IF SECURED PARTY SO ELECTS), AND EACH
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. EACH DEBTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENT
THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO A DEBTOR, AS APPLICABLE,
AS SET FORTH HEREIN IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.


 


5.5           WAIVER
OF JURY TRIAL. EACH DEBTOR AND SECURED PARTY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE
OR DEFEND ANY RIGHTS UNDER THIS SECURITY AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL,
OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR
COURSE OF DEALING IN WHICH SECURED PARTY AND ANY DEBTOR ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY GRANTING ANY FINANCIAL
ACCOMMODATION TO DEBTORS.


 


5.6           Assignability.
Secured Party, without consent from or notice to anyone, may at any time assign Secured Party’s rights in this Security Agreement,
the other Loan Documents, the Obligations, or any part thereof and transfer Secured Party’s rights in any or all of the Collateral,
and Secured Party thereafter shall be relieved from all liability with respect to such Collateral. This Security Agreement shall
be binding upon Secured Party and Debtors and their respective legal representatives and successors. All references herein to any
Debtor shall be deemed to include any successors, whether immediate or remote. In the case of a joint venture or partnership, the
term “Debtor” or “Debtors” shall be deemed to include all joint venturers or partners thereof, who shall
be jointly and severally liable hereunder.


 




    	 	15	 



     


    

 


5.7           Binding
Effect. This Security Agreement shall become effective upon execution by Debtors and Secured Party, and shall bind the Debtors
and Secured Party, and their respective successors and permitted assigns.


 


5.8           Governing
Law. Except in the case of the Mandatory Forum Selection Clause in Section 5.4 above, which clause shall be governed and interpreted
in accordance with Florida law, this Agreement shall be delivered and accepted in and shall be deemed to be a contract made under
and governed by the internal laws of the State of Nevada, and for all purposes shall be construed in accordance with the laws of
such State, without giving effect to the choice of law provisions of such State.


 


5.9           Enforceability.
Wherever possible, each provision of this Security Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction,
such provision shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity,
without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.


 


5.10         Time
of Essence. Time is of the essence in making payments of all amounts due Secured Party under the Loan Documents and in the
performance and observance by Debtors of each covenant, agreement, provision and term of this Security Agreement and the other
Loan Documents.


 


5.11         Counterparts;
Facsimile Signatures. This Security Agreement may be executed in any number of counterparts and by the different parties hereto
on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same Security Agreement. Receipt of an executed signature page to this Security Agreement by facsimile
or other electronic transmission shall constitute effective delivery thereof. Electronic records of executed Loan Documents maintained
by Secured Party shall be deemed to be originals thereof.


 


5.12         Notices.
Except as otherwise provided herein, each Debtor waives all notices and demands in connection with the enforcement of Secured Party’s
rights hereunder. All notices, requests, demands and other communications provided for hereunder shall be made in accordance with
the terms of the Credit Agreement, and each of the Debtors agrees and acknowledges that notice to each of them may be sent and
delivered to the Company, as required under the Credit Agreement, and such notice to the Company shall be deemed valid and effective
notice to Debtors hereunder.


 




    	 	16	 



     


    

 


5.13         Costs,
Fees and Expenses. Debtors shall pay or reimburse Secured Party for all reasonable costs, fees and expenses incurred by Secured
Party or for which Secured Party becomes obligated in connection with the enforcement of this Security Agreement, including search
fees, costs and expenses and attorneys’ fees, costs and time charges of counsel to Secured Party and all taxes payable in
connection with this Security Agreement. In furtherance of the foregoing, Debtors shall pay any and all stamp and other taxes,
UCC search fees, filing fees and other costs and expenses in connection with the execution and delivery of this Security Agreement
and the other Loan Documents to be delivered hereunder, and agrees to save and hold Secured Party harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or omission to pay such costs and expenses. That portion
of the Obligations consisting of costs, expenses or advances to be reimbursed by Debtors to Secured Party pursuant to this Security
Agreement or the other Loan Documents which are not paid on or prior to the date hereof shall be payable by Debtors to Secured
Party on demand. If at any time or times hereafter Secured Party: (a) employs counsel for advice or other representation: (i) with
respect to this Security Agreement or the other Loan Documents; (ii) to represent Secured Party in any litigation, contest, dispute,
suit or proceeding or to commence, defend, or intervene or to take any other action in or with respect to any litigation, contest,
dispute, suit, or proceeding (whether instituted by Secured Party, any Debtor, or any other Person) in any way or respect relating
to this Security Agreement; or (iii) to enforce any rights of Secured Party against any Debtor or any other Person under of this
Security Agreement; (b) takes any action to protect, collect, sell, liquidate, or otherwise dispose of any of the Collateral; and/or
(c) attempts to or enforces any of Secured Party’s rights or remedies under this Security Agreement, the costs and expenses
incurred by Secured Party in any manner or way with respect to the foregoing, shall be part of the Obligations, payable by Debtors
to Secured Party on demand.


 


5.14         Termination.
This Security Agreement and the Liens and security interests granted hereunder shall not terminate until the termination of the
Credit Agreement and the commitments to make Loans thereunder and the full and complete performance and satisfaction and payment
in full of all the Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has
been asserted). Upon termination of this Security Agreement, Secured Party shall also deliver to Debtors (at the sole expense of
Debtors) such UCC termination statements, certificates for terminating the liens on the Motor Vehicles (if any) and such other
documentation, without recourse, warranty or representation whatsoever, as shall be reasonably requested by Debtors to effect the
termination and release of the Liens and security interests in favor of Secured Party affecting the Collateral; provided, however,
to the extent any such terminations or releases require Secured Party to expend any sums in terminating or releasing any such Liens,
Secured Party may refrain from terminating or releasing such Liens unless and until Debtors pay to Secured Party the estimated
cost, as reasonably determined by Secured Party, of effectuating such terminations or releases.


 


5.15         Reinstatement.
This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against
any Debtor for liquidation or reorganization, should any Debtor become insolvent or make an assignment for the benefit of any creditor
or creditors or should a receiver or trustee be appointed for all or any significant part of any Debtor’s assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise,
all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.


 




    	 	17	 



     


    

 


5.16         Increase
in Obligations. It is the intent of the parties to secure payment of the Obligations, as the amount of such Obligations may
increase from time to time in accordance with the terms and provisions of the Loan Documents, and all of the Obligations, as so
increased from time to time, shall be and are secured hereby. Upon the execution hereof, Debtors shall pay any and all documentary
stamp taxes and/or other charges required to be paid in connection with the execution and enforcement of the Loan Documents, and
if, as and to the extent the Obligations are increased from time to time in accordance with the terms and provisions of the Loan
Documents, then Debtors shall immediately pay any additional documentary stamp taxes or other charges in connection therewith.


 


5.17         Joint
and Several Liability. The liability of all Debtors hereunder for the Obligations, or for the performance of any other term,
condition, covenant or agreement of any Debtor hereunder, shall be joint and several as between all Debtors.


 


[Signatures on the following page]


 




    	 	18	 



     


    

 


IN WITNESS WHEREOF, Debtors and Secured
Party have executed this Security Agreement as of the date first above written.


 


Debtors:


 


	DRONE USA, LLC, a Delaware	 	HOWCO DISTRIBUTING CO., a
	limited liability company	 	Washington corporation
	 	 	 	 	 
	By:	 	 	By:	 
	Name:	 	 	Name:	 
	Title:	 	 	Title:	 


 


	STATE OF _____________	)
	 	SS.
	COUNTY OF _______________	)


 


The foregoing instrument was acknowledged
before me this __ day of _____________, 2016 by _______________, who is the _________________ of the two above named entities,
on behalf of such entity. He/She is personally known to me or has produced ______________ as identification.


 


My Commission Expires:


 


	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed


 




    	 	19	 



     


    

 


IN WITNESS WHEREOF, Debtors and Secured
Party have executed this Security Agreement as of the date first above written.


 


	 	Agreed and accepted:
	 	 
	 	Secured Party:
	 	 
	 	TCA GLOBAL CREDIT MASTER FUND, LP
	 	 	 
	 	By:	TCA Global Credit Fund GP, Ltd.
	 	Its:	General Partner
	 	 	 
	 	By:	 
	 	 	Robert Press, Director


 




    	 	20	 



     


    

 


Schedule 3.8


 


Collateral Locations/Places of Business


 


One World Trade Center, 285 Fulton Street,
Suite 8500, New York, NY 10007


 




     


     


    

 


Exhibit G


 


Form of Validity Certificate


 




    	 	80	 



     


    

 


VALIDITY CERTIFICATE


 


This Validity Certificate,
dated as of May 31, 2016, but made effective as of September 13, 2016 (the “Validity Certificate”), is
made by MICHAEL BANNON, an individual, and DENNIS ANTONELOS, an individual (collectively, the “Undersigned”),
for the benefit of TCA Global Credit Master Fund, LP (the “Lender”). 


 


RECITALS


 


A.          Lender,
DRONE USA, INC., a Delaware corporation (the “Borrower”), and additional Credit Parties are parties
to that certain Credit Agreement dated as of the date hereof (the “Credit Agreement”) pursuant to which
Lender agreed to extend credit and make certain financial accommodations to Borrower.


 


B.           Each
of the Undersigned is an officer or director of the Borrower and/or other Credit Parties.


 


C.          As
a condition to entering into the Credit Agreement and extending such financial accommodations to Borrower, Lender has required
the execution and delivery of this Validity Certificate by the Undersigned.


 


NOW THEREFORE, the
Undersigned, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, hereby agrees as follows:


 


1.          Definitions.
Capitalized terms used in this Validity Certificate shall have the meanings given to them in the Credit Agreement, unless
otherwise defined herein.


 


2.          Guaranty.
The Undersigned, jointly and severally if more than one, do hereby absolutely and unconditionally, represent, warrant and
guarantee to Lender that:


 


(a)          All
reports, schedules, certificates, and other information from time to time delivered or otherwise reported to Lender by Borrower,
including, without limitation, all financial statements, tax returns, and all supporting information or documentation delivered
in connection therewith, shall be bona fide, complete, correct, and accurate in all material respects and shall accurately and
completely report all matters purported to be covered or reported thereby.


 


(b)          All
representations and warranties made by the Borrower in the Credit Agreement, and any other documents or instruments executed in
connection with the Credit Agreement, are complete, correct, and accurate in all material respects and do not contain any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading.


 


(c)          The
Undersigned may, from time to time, sign and deliver reports (including, without limitation, those specifically mentioned above)
or otherwise deliver any such information to Lender as Lender may request, and the Undersigned confirm that each of them is duly
authorized to deliver same to Lender on behalf of Borrower.


 




    	 	1	 



     


    

 


(d)          All
Collateral: (i) is valid and genuine; (ii) is owned by Borrower and will be possessed by Borrower or its agent; (iii) will not
be subject to any Lien or security interest, except for Permitted Liens and as otherwise permitted by Lender; and (iv) will be
maintained only at the locations designated in the Credit Agreement or Security Agreement, unless Borrower obtains Lender’s
prior written consent.


 


(e)          All
proceeds of the Loans will only be used in strict accordance with the terms of the Credit Agreement.


 


3.          Consideration
for Guaranty. The Undersigned acknowledge and agree with Lender that, but for the execution and delivery of this Validity
Certificate by the Undersigned, Lender would not have entered into the Credit Agreement. The Undersigned acknowledge and agree
that the loans and other extensions of credit made to Borrower by Lender under the Credit Agreement will result in significant
benefits to the Undersigned.


 


4.          Indemnification.
The Undersigned, jointly and severally if more than one, hereby agree and undertake to indemnify, defend, and save Lender
free and harmless of and from any damage, loss, and expense of any nature or kind (including, without limitation, reasonable attorneys’
fees and costs) which Lender may sustain or incur, directly or indirectly, as a result of any breach, default or material inaccuracy
of any of the representations, warranties, covenants, and agreements contained herein. Each of the Undersigned’s liability
hereunder is direct and unconditional. Upon the occurrence of a breach or default of any of the representations, warranties or
covenants in Section 2 above, the Lender may enforce this Validity Certificate independently of any other remedy or security Lender
at any time may have or hold under the Credit Agreement or other Loan Documents, and it shall not be necessary for Lender to proceed
upon or against and/or exhaust any security or remedy before proceeding to enforce this Validity Certificate.


 


5.          Cumulative
Remedies. Lender’s rights and remedies hereunder are cumulative of all other rights and remedies which Lender may
now or hereafter have with respect to the Undersigned, Borrower, or any other Person.


 


6.          Borrower’s
Financial Condition. Each of the Undersigned acknowledges that he has reviewed and is familiar with the Loan Documents
and is familiar with the operations and financial condition of Borrower, and agrees that Lender shall not have any duty or obligation
to communicate to the Undersigned any information regarding Borrower’s financial condition or affairs.


 


7.          Assignability.
This Validity Certificate shall be binding upon the Undersigned and shall inure to the benefit of Lender and its successors
or assigns. Lender may at any time assign Lender’s rights in this Validity Certificate.


 


8.          Continuing
Rights. The obligations and covenants of the Undersigned hereunder are continuing and shall remain in full force and effect
as to all of the Obligations until such date as all amounts owing by Borrower to Lender shall have been paid in full in cash and
all commitments of Lender to lend under the Credit Agreement have terminated or expired and all obligations of Lender with respect
to any of the Obligations shall have terminated or expired.


 




    	 	2	 



     


    

 


9.          Further
Assurances. So long as any Obligations remain outstanding, each of the Undersigned agrees that he will cooperate with
Lender at all times in connection with any actions taken by Lender pursuant to the Credit Agreement to monitor, administer, enforce,
or collect the Collateral. In the event the Borrower should cease or discontinue operating as a going concern in the ordinary
course of business, then for so long as any Obligations remain outstanding, each of the Undersigned agrees that he shall assist
Lender in connection with any such action, as Lender may reasonably request.


 


10.         Choice
Of Law and Venue Selection. Each of the Undersigned irrevocably agrees that any dispute arising under, relating to, or
in connection with, directly or indirectly, this Validity Certificate or related to any matter which is the subject of or incidental
to this Validity Certificate (whether or not such claim is based upon breach of contract or tort) shall be subject to the exclusive
jurisdiction and venue of the state and/or federal courts located in Broward County, Florida; provided, however, Lender may, at
Lender’s sole option, elect to bring any action in any other jurisdiction. This provision is intended to be a “mandatory”
forum selection clause and governed by and interpreted consistent with Florida law. Each of the Undersigned hereby consents to
the exclusive jurisdiction and venue of any state or federal court having its situs in said county (or to any other jurisdiction
or venue, if Lender so elects), and each waives any objection based on forum non conveniens. Each of the Undersigned hereby waives
personal service of any and all process and consent that all such service of process may be made by certified mail, return receipt
requested, directed to a borrower, as applicable, as set forth herein in the manner provided by applicable statute, law, rule
of court or otherwise. Except for the foregoing mandatory forum selection clause, all terms and provisions hereof and the rights
and obligations of the Undersigned and Lender hereunder shall be governed, construed and interpreted in accordance with the laws
of the State of Nevada, without reference to conflict of laws principles.


 


11.         WAIVER
OF JURY TRIAL. THE UNDERSIGNED AND LENDER HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN THE UNDERSIGNED
AND LENDER OR AMONG BORROWER, THE UNDERSIGNED, AND LENDER AND/OR LENDER’S AFFILIATES ARISING OUT OF OR IN ANY WAY RELATED
TO THIS VALIDITY CERTIFICATE, ANY OTHER LOAN DOCUMENT OR ANY RELATIONSHIP AMONG LENDER, THE UNDERSIGNED, BORROWER, AND/OR ANY
AFFILIATE OF LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED IN THE CREDIT AGREEMENT.


 


12.         ADVICE
OF COUNSEL. THE UNDERSIGNED ACKNOWLEDGE THAT EACH OF THEM HAS EITHER OBTAINED THE ADVICE OF COUNSEL OR HAS HAD THE OPPORTUNITY
TO OBTAIN SUCH ADVICE IN CONNECTION WITH THE TERMS AND PROVISIONS OF THIS VALIDITY CERTIFICATE.


 




    	 	3	 



     


    

 


13.         Electronic
Signatures. Lender is hereby authorized to rely upon and accept as an original this Validity Certificate which is sent
to Lender via facsimile, .pdf, or other electronic transmission.


 


[Signatures on the following page]


 




    	 	4	 



     


    

 


The Undersigned has executed this Validity
Certificate as of the date first above written.


 


	 	By:	 
	 	 	MICHAEL BANNON
	 	 	 
	 	By:	 
	 	 	DENNIS ANTONELOS


 


	STATE OF _____________	)
	 	SS.
	COUNTY OF ______________	)


 


The foregoing instrument was acknowledged
before me this __ day of ______________, 2016 by Michael Bannon and Dennis Antonelos, who are personally known to me or have produced
____________________ as identification.


 


My Commission Expires:


 


	 	 
	 	Notary Public
	 	 
	 	Name of Notary typed or printed


 


Validity Certificate Signature Page


 




    	 	5	 



     


    

 


Schedule 7.1 Subsidiaries


 





 




     


     


    

 


Schedule 7.2 Borrower Organization and
Name


 


Notwithstanding Section 7.2, Drone USA Inc. has done business
as Drone USA, Inc since 2016. From 2008 to 2016, businesses was conducted as Texas Wyoming Drilling, Inc under different ownership
and control.


 


Drone USA LLC was founded in 2015 and
acquired by Texas Wyoming Drilling in 2016 as part of a reverse merger / equity exchange agreement. The officers and
directors of Texas Wyoming Drilling immediately resigned and Drone USA LLC gained control of the entity. The name of Texas
Wyoming Drilling, Inc was subsequently changed to Drone USA Inc in 2016.


 




     


     


    

 


Schedule 7.4(a) Capitalization
of each company


 


Drone USA, LLC


 


100% Wholly-owned by Drone USA, Inc.


 


Drone USA, Inc.


 


	 	 	Authorized	 	 	Issued & Outstanding	 
	Common Stock	 	 	200,000,000	 	 	 	41,150,288	 
	Preferred Stock	 	 	5,000,000	 	 	 	0	 
	Series A Preferred Stock (Voting)	 	 	250	 	 	 	250	 
	Options, Warrants & Convertibles	 	 	 	 	 	 	Up to 32,000,000	 
	 	 	 	 	 	 	 	 	 
	Fully diluted issued & outstanding	 	 	 	 	 	 	73,150,538	 



 




     


     


    

 


Schedule 7.4(b) Obligations
to issue stock


 


		1.)	Under the Employee Stock Option Plan created on June 8, 2016 & Warrants, issued and planned to be issued for key
                                                            employees and directors, and Convertibles notes there is an obligation to issue up to 28,000,000 shares of common stock.



 




     


     


    

 


Schedule 7.10 Financial Statements


 


For Drone USA, Inc. the following was made available to the
Lender:


 


Unaudited Balance Sheets as of 03/31/16


 


Unaudited State of Income as of 03/31/16


 


Material changes have occurred since the date of these statements
and will be disclosed in the following Schedules.


 




     


     


    

 


Schedule 7.11 Public Documents


 


The Borrower, under current control, began its reporting
obligation to the OTC markets in January 2016. The Borrower is not current with its reporting requirements with the OTC
markets however intends to be soon after the signing of this agreement.


 


There are material disclosures that will
be made in the Borrower’s filings with the OTC markets, as well as amendments to the disclosures it made in its quarter 1
report. They are described below:


 


Amendments to Quarter 1:


 


A conversion of $389,255 into common stock
at $3 per share will be reversed and added back into the line of credit balance from a related entity to the CEO. The shares have
not been issued.


 


Summary Financial Position, Subsequent
events and disclosures to be included in Q2 report with OTC Markets:


 


Drone USA, Inc.


 


		·	cash
balance of approximately $10,000



		·	security
deposit balance of approximately $12,000



		·	net
PPE balance of approximately $6,000



		·	Inventory
balance is approximately $25,000



		o	total asset balance of approximately $53,000



		·	convertible
line of credit with a related entity of approximately $700,000



		·	convertible
line of credit to principal shareholder of approximately $100,000



		·	bank
line of credit for $50,000



		·	approximately
$35,000 in valid trade receivables



		·	approximately
$28,000 in credit card debt



		·	approximately
$105,000 in other convertible notes



		o	total liabilities balance of approximately $1,068,000



		o	total shareholder’s equity of approximately ($1,015,000)



 


Additional Disclosures


 


The Company has agreed to lease additional space at one world
trade center


 


		·	from
7/1/16 for a 1 year term at $2,500 per month, with 4 months free.



		·	From
9/1/16 for a 1 year term at $3,500 per month with 2 months free.



 


The Company has created an Employee Stock Option plan effective
June 8, 2016


 


The Company has a $800,000 convertible note payable
(the “Note”) with an entity controlled by the Company’s CEO. The Note bares interest of 7% with a maturity date
of January 1, 2019, at which time all unpaid principal and interest was due. The holder of the Note has the option to convert the
outstanding principal and accrued interest, in whole or in part, into shares of common stock at the conversion price of $1.00 per
share. As of September 12, 2016 the balance is approximately $700,000 and the holder has elected not to convert, however, the holder
intends to convert the entire balance of the note and is in the process of doing so.


 




     


     


    

 


The Company has a $117,000 convertible note payable
with the Company’s CEO. The Note bares interest of 7% with a maturity date of January 1, 2019, at which time all unpaid principal
and interest was due. The holder of the Note has the option to convert the outstanding principal and accrued interest, in whole
or in part, into shares of common stock at the conversion price of $1.00 per share. As of September 12, 2016 the balance of the
note is approximately $100,000 and the holder has not elected to convert.


 


In August 2016, The Company has a convertible note payable with
Rockwell Capital Partners for approximately $105,000. Rockwell has agreed to pay select liabilities on behalf of the company in
exchange for the option to convert at a 35% discount to the average price of the previous 10 trading days. Rockwell is limited
to receiving 4.99% of the issued and outstanding shares listed on the OTC markets at the time of signing. The Company has the option
to prepay the outstanding liability at any time for no charge. As of September 12, 2016, Rockwell has elected to convert a portion
of this note into 40,000 shares of common stock.


 


Share issuances:


 


		·	The Company has issued approximately 11,200 common shares to various
brokerage accounts for rounding



The Company has issued approximately 270,000 common
shares linked to a private placement


		·	The Company has issued approximately 40,000 common shares towards
conversion of notes.



 




     


     


    

 


Schedule 7.17 Liabilities and Indebtedness
of the Borrower


 


Please see Schedule 7.11 Public
Documents for liability and indebtedness disclosure


 




     


     


    

 


Schedule
7.18 Real Property


 


Nothing
further to disclose


 




     


     


    

 


Schedule 7.21 IP Rights


 


There are no further IP Rights or IP Rights
Licensing Agreements to disclose


 




     


     


    

 


Schedule 7.28 Bank Accounts


 


	Institution Name	 	Account Name	 	Account #	 	Power of 

Attorney	 	Authorized Signatories
	First Niagara Bank	 	Texas Wyoming 

Drilling- BIZ200 

Checking	 	2223704404591000192490	 	N/A	 	Mike Bannon
	34 Old Tavern Rd, Orange, CT 06477	 	 	 	 	 	 	 	 
	First Niagara Bank	 	Texas Wyoming 

Drilling-Credit 

Line	 	4600210621	 	N/A	 	Mike Bannon
	34 Old Tavern Rd, Orange, CT 06477	 	 	 	 	 	 	 	 
	Merrill Lynch	 	Drone USA, Inc. 

WCMA	 	812-02433 /
    041127210996	 	N/A	 	Mike Bannon; Dennis Antonelos
	157 CHURCH STREET, NEW HAVEN, CT 06510	 	 	 	 	 	 	 	 


 




     


     


    

 


Schedule 7.29 Principle Place
of Business-Address(es)


 


Drone USA, Inc.


 


One World Trade Center


285 Fulton Street


Suite 8500


New York, NY 10007 USA


 


Drone USA, LLC


 


One World Trade Center


285 Fulton Street


Suite 8500


New York, NY 10007 USA


 




     


     


    

 


Schedule 7.31 Related Party Transactions


 


None other than those disclosed in Schedule
7.11