SENIOR SECURED REVOLVING CREDIT FACILITY
AGREEMENT 


 


IN THE AMOUNT OF US$3,000,000


 


BY AND AMONG


 


HYPERTENSION DIAGNOSTICS, INC.,

as Borrower,


 


HDI PLASTICS, INC.,

as Guarantor,


 


AND


 


TCA GLOBAL CREDIT MASTER FUND, LP,


as Lender


 


August 31, 2013


 




    	 



    	 



    

 


SENIOR SECURED REVOLVING
CREDIT FACILITY AGREEMENT 


 


This SENIOR SECURED
REVOLVING CREDIT FACILITY AGREEMENT (as amended, restated, modified or supplemented from time to time, this “Agreement”),
dated as of August 31, 2013 and effective as of October 10, 2013 (the “Closing Date”), is executed by
and among (i) HYPERTENSION DIAGNOSTICS, INC., a corporation incorporated under the laws of the State of Minnesota (the “Borrower”),
(ii) HDI PLASTICS, INC., a corporation incorporated under the laws of the State of Texas (the “Guarantor”
and together with the Borrower, the “Credit Parties”), and (iii) 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 revolving credit facility to Borrower of up to Three Million and No/100 United States
Dollars (US$3,000,000) for working capital financing for Borrower and for any other purposes permitted hereunder; and for these
purposes, Lender is willing to make certain loans and extensions of credit 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 Guarantor has, inter alia, agreed to execute a Guaranty Agreement in favor of Lender, whereby the Guarantor
shall guarantee any and all of the Borrower’s Obligations owed under this Agreement and under any other Loan Document and
(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.


 


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


 


1.           DEFINITIONS.


 


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


 


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


 


(b)           “Affiliate”
(a) of Lender shall mean: (i) any entity which, directly or indirectly, controls or is controlled by or is under common control
with Lender; and (ii) any entity administered or managed by Lender, or an Affiliate or investment advisor thereof and which is
engaged in making, purchasing, holding or otherwise investing in commercial loans; and (b) of any Credit Party shall mean any entity
which, directly or indirectly, controls or is controlled by or is under common control with such Credit Party. With respect to
an Affiliate of Lender or a Credit Party, an entity shall be deemed to be “controlled by” another entity if such other
entity possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such entity,
whether by contract, ownership of voting securities, membership interests or otherwise.




    	1



    	 



    

 


(c)            “Agreement”
shall mean this Senior Secured Revolving Credit Facility Agreement by and among the Borrower, the Guarantor and the Lender.


 


(d)            “Asset
Monitoring Fee” shall have the meaning given to it in Section 2.2(a) hereof.


 


(e)            “Borrower”
shall have the meaning given to it in the preamble hereof.


 


(f)             “Borrowing
Base Amount” shall mean, if the Reserve Amount has not been fully collected by Lender as of the date the Borrowing
Base Amount is calculated, then an amount, expressed in Dollars, equal to eighty percent (80%) of the amount of funds then available
in the Lock Box Account as of the date the Borrowing Base Amount is calculated, less the Reserve Amount, less any interest or fees
then due and payable to Lender under this Agreement. If the Reserve Amount has been fully collected by Lender in the Lock Box Account
as of the date the Borrowing Base Amount is calculated, then an amount, expressed in Dollars, equal to one hundred percent (100%)
of the amount of funds then available in the Lock Box Account as of the date the Borrowing Base Amount is calculated, less the
Reserve Amount, less any principal, interest or fees then due and payable to Lender under this Agreement.


 


(g)            “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 New York.


 


(h)            “BSA”
shall have the meaning given to it in Section 13.22 hereof.


 


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


 


(j)             “Capital
Lease” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, by such Person as lessee that is, or should be, in accordance with 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.


 


(k)             “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 any Credit
Party as of the Closing 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 the
Credit Parties as of the Closing Date.


 


(l)             “Closing
Date” shall have the meaning specified in the preamble hereto.


 




    	2



    	 



    

 


(m)           “Collateral”
shall mean “Collateral” as defined in the Security Agreements.


 


(n)            “Common
Stock” shall mean the common stock of the Borrower, par value $0.01 per share.


 


(o)            “Communication”
shall have the meaning given to it in Section 13.17 hereof.


 


(p)           
“Contingent Liability” and “Contingent Liabilities” shall mean, respectively,
each obligation and liability of any Credit Party and all such obligations and liabilities of such Credit Party incurred pursuant
to any agreement, undertaking or arrangement by which such 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) agree to lease property or
to purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness
or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (v) to induce the issuance
of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (vi) undertake or agree
otherwise to assure a creditor against loss. The amount of any Contingent Liability shall (subject to any limitation set forth
herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness,
obligation or other liability guaranteed or supported thereby.


 


(q)            “Control”
or “Controlling” shall mean the possession of the power to direct, or cause the direction of, the management
and policies of a Person by contract, voting of securities, or otherwise.


 


(r)             “Credit
Party(ies)” shall have the meaning given to it in the preamble hereof.


 


(s)             “Customer”
shall mean any Person who is obligated to any Credit Party for any Receipts.


 


(t)              “Default
Rate” shall mean a per annum rate of interest equal to the highest rate permitted by applicable law.


 




    	3



    	 



    

 


(u)            “Depreciation”
shall mean the total amounts added to depreciation, amortization, obsolescence, valuation and other proper reserves, as reflected
on the Credit Parties’ financial statements and determined in accordance with GAAP.


 


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


 


(w)           “EBIDTA”
shall mean, for any period, the sum of the following: (i) Net Income (excluding extraordinary and unusual items and income or loss
attributable to a minority equity position in any affiliated corporation or Subsidiary) for such period; plus (ii) interest
expense; plus (iii) income and franchise taxes payable or accrued; plus (iv) Depreciation for such period; plus
(v) all other non-cash charges; plus (vi) management fees; plus (vii) costs, fees and expenses incurred in connection with,
or otherwise associated with, the closing of the transaction contemplated by this Agreement; minus (viii) that portion of
Net Income arising out of the sale of assets outside of the Ordinary Course of Business (to the extent not previously excluded
under clause (i) of this definition), in each case to the extent included in determining Net Income for such period.


 


(x)             “Employee
Plan” includes any pension, stock bonus, employee stock ownership plan, retirement, disability, medical, dental or
other health plan, life insurance or other death benefit plan, profit sharing, deferred compensation, stock option, bonus or other
incentive plan, vacation benefit plan, severance plan or other employee benefit plan or arrangement, including, without limitation,
those pension, profit-sharing and retirement plans of the Credit Parties described from time to time in the 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 the Credit Parties are a party or may have any liability or
by which is the Credit Parties are bound.


 


(y)            “Environmental
Laws” shall mean all federal, state, district, local and foreign laws, rules, regulations, ordinances, and consent
decrees relating to health, safety, hazardous substances, pollution and environmental matters, as now or at any time hereafter
in effect, applicable to 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, without limitation, ambient air, surface water, land
surface or subsurface strata) or otherwise relating to the generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.


 


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


 


(aa)           “Event
of Default” shall mean any of the events or conditions set forth in Section 11 hereof.


 


(bb)          “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 




    	4



    	 



    

 


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


 


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


 


(ee)           “Guarantor(s)”
shall have the meaning given to it in the preamble hereof.


 


(ff)            “Guaranty
Agreement” shall mean the guaranty agreement executed by the Guarantor in favor of the Lender, the form of which
is attached hereto as Exhibit A.


 


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


 


(hh)           “Interest
Rate” shall mean a fixed rate of interest equal to Sixteen and One Half Percent (16.5%) per annum, calculated on
the actual number of days elapsed over a 360-day year.


 


(ii)             “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, in the form attached hereto as Exhibit B.


 


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


 




    	5



    	 



    

 


(kk)           “Lender
Indemnitee(s)” shall have the meaning given to it in Section 13.19 hereof.


 


(ll)             “Liabilities”
shall mean, at all times, (i) the repayment of all sums due under the Revolving Note (and all extensions, renewals, replacements,
future advances and amendments thereof) and the other Loan Documents; (ii) the performance and observance of all terms, conditions,
covenants, representations and warranties set forth in the Loan Documents; and (iii) all liabilities of the Credit Parties that
would be shown as such on the consolidated balance sheets of the Credit Parties prepared in accordance with GAAP.


 


(mm)         “Lien”
shall mean, with respect to any Person, any mortgage, pledge, hypothecation, judgment lien or similar legal process, title retention
lien, or other lien or security interest granted by such Person or arising by judicial process or otherwise, including, without
limitation, the interest of a vendor under any conditional sale or other title retention agreement and the interest of a lessor
under a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, by
such Person as lessee that is, or should be, a Capital Lease on the balance sheet of such Person prepared in accordance with GAAP.


 


(nn)           “Loan”
or “Loans” shall mean the aggregate of all Revolving Loans made by Lender to Borrower under and pursuant
to this Agreement.


 


(oo)           “Loan
Documents” shall mean those documents listed in Section 3.1 hereof.


 


(pp)           “Lock
Box” shall have the meaning give to it in Section 2.1(e) hereof.


 


(qq)           “Lock
Box Account” shall have the meaning given to it in Section 2.1(e) hereof.


 


(rr)             “Mandatory
Principal Repayment Amount” shall have the meaning given to it in Section 2.1(d)(i).


 


(ss)            “Material
Adverse Effect” shall mean (a) a material adverse change in, or a material adverse effect upon, the assets, business,
prospects, properties, financial condition or results of operations of the Credit Parties taken as a whole, (b) a material impairment
of the ability of the Credit Parties to perform its Obligations under any of the Loan Documents, or (c) a material adverse effect
on (i) any portion of the Collateral, (ii) the legality, validity, binding effect or enforceability against any Credit Party of
any of the Loan Documents, (iii) the perfection or priority (subject to Permitted Liens) of any Lien granted to Lender under any
Loan Document or (iv) the rights or remedies of Lender under any Loan Document, or (d) a material adverse effect or impairment
on the Lender’s ability to sell the Facility Fee Shares or other shares of Borrower’s Common Stock issuable to Lender
under any Loan Documents without limitation or restriction.


 




    	6



    	 



    

 


(tt)           “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 their respective assets are bound and which: (i) involves aggregate payments of Twenty-Five Thousand Dollars ($25,000)
or more to or from any Credit Party; (ii) 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 Dollars ($25,000) or more or is otherwise material to the conduct of any business of any Credit Party’s as now conducted
and as contemplated to be conducted in the future; (iii) involves a Borrower Lease; (iv) imposes any guaranty, surety or indemnification
obligations on any Credit Party; or (v) prohibits any Credit Party from engaging in any business or competing anywhere in the world.


 


(uu)          “Net
Income” shall mean, with respect to any period, the amount shown opposite the caption “Net Income” or
a similar caption on the consolidated financial statements of Borrower, prepared in accordance with GAAP.


 


(vv)         
“Obligations” shall mean, now existing or in the future: (i) all loans, principal, advances and other
financial accommodations (whether primary, contingent or otherwise), (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 fees due to Lender under this Agreement or the other Loan Documents, (iv) any expenses incurred by Lender
under this Agreement or the other Loan Documents, (v) any and all other liabilities and obligations of each of the Credit Parties
to Lender, and (vi) the performance by the Credit Parties of all covenants, agreements and obligations of every nature and kind
on the part of the Credit Parties to be performed under this Agreement and any other Loan Documents.


 


(ww)        “OFAC”
shall have the meaning given to it in Section 13.22 hereof.


 


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


 


(yy)          “Organizational
Identification Number” means, the organizational identification number assigned to any Credit Party, respectively,
by the applicable governmental unit or agency of the jurisdiction of organization of such Credit Party, if any.


 


(zz)           “OTC
Markets” means the OTC Markets Group, Inc.


 


(aaa)         “Payment
Date” shall have the meaning given to it in Section 2.1(c) hereof.


 


(bbb)        “Payment
Processing Companies” shall have the meaning given to it in Section 2.1(e).


 




    	7



    	 



    

 


(ccc)        “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 and other similar Liens imposed by law; (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 referred to in Section 7.10
hereof 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); (v) attachments,
appeal bonds, judgments and other similar Liens, for sums not exceeding Fifty Thousand and 00/100 Dollars ($50,000) 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 to the extent such judgments
or awards do not 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; (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; and (xiii) any Lien existing on any property prior to the acquisition
thereof by the any Credit Party.


 


(ddd)       “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.


 


(eee)        “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.


 


(fff)          “Prepayment
Penalty” shall have the meaning given to it in Section 2.1(d) hereof.


 


(ggg)        “Principal
Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market,
the OTC Bulletin Board, the OTC Markets, the so-called OTC Pink Sheets, the NYSE Euronext or the New York Stock Exchange, whichever
is at the time the principal trading exchange or market for the Common Stock.


 




    	8



    	 



    

 


(hhh)        “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 7.17.


 


(iii)           “Receipts”
shall mean all revenues, receipts, receivables, Accounts, collections or any other funds at any time received or receivable by
the Credit Parties in connection with its business, operations or from any other source.


 


(jjj)           “Receipts
Collection Fee” shall mean a surcharge of 1.5% of all Receipts deposited into the Lock Box Account, provided, however,
that if the aggregate amount of the Receipts deposited into the Lock Box Account exceeds the then applicable Revolving Loan Commitment,
the surcharge shall be not assessed on the Receipts in excess of the Revolving Loan Commitment.


 


(kkk)        “Regulatory
Change” shall mean the introduction of, or any change in any applicable law, treaty, rule, regulation or guideline
or in the interpretation or administration thereof by any governmental authority or any central bank or other fiscal, monetary
or other authority having jurisdiction over Lender or its lending office.


 


(lll)           “Reserve
Amount” shall mean an amount, expressed in Dollars, equal to twenty percent (20%) of the then applicable Revolving
Loan Commitment.


 


(mmm)     “Revolving
Loan” and “Revolving Loans” shall mean, respectively, each direct advance, and the aggregate
of all such direct advances, made by Lender to Borrower under and pursuant to Section 2.1 of this Agreement.


 


(nnn)        “Revolving
Loan Availability” shall mean at any time the lesser of (a) the Revolving Loan Commitment or (b) the Borrowing Base
Amount.


 


(ooo)        “Revolving
Loan Commitment” shall mean, on the Closing Date, Five Hundred Fifty Thousand and No/100 United States Dollars (US$550,000),
and in the event Borrower requests and Lender agrees to increase the Revolving Loan Commitment pursuant to Section 2.1(b),
thereafter, such aggregate additional amount up to Three Million and No/100 United States Dollars (US$3,000,000).


 


(ppp)        “Revolving
Loan Maturity Date” shall mean the earlier of (a) six (6) months following the Closing Date, unless the date
shall be extended pursuant to Section 2.3 hereof or by Lender pursuant to any modification, extension or renewal note executed
by Borrower, consented and agreed to by the Guarantor, and accepted by Lender in its sole and absolute discretion in substitution
for the Revolving Notes, (b) upon sixty (60) days written notice from Lender (the “Early Termination Notice”),
(c) upon prepayment of all of the outstanding Revolving Notes by Borrower (subject to Section 2.1(d)(ii)), or (d) the occurrence
of an Event of Default and acceleration of all of the outstanding Revolving Notes pursuant to this Agreement.


 




    	9



    	 



    

 


(qqq)       “Revolving
Note” shall mean that certain revolving convertible promissory note, or any replacement, substitution or amended
and restated form thereof, in the principal amount of the Revolving Loan Commitment made by Borrower, and consented and agreed
to by the Guarantor, in favor of Lender, the form of which is attached hereto as Exhibit C.


 


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


 


(sss)         “Sale
Reconciliation” shall have the meaning given to it in Section 2.2(h)(ii) hereof.


 


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


 


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


 


(vvv)        “Security
Agreement(s)” shall mean the Security Agreements executed by each of the Credit Parties in favor of Lender, the form
of which is attached hereto as Exhibit D-1 with respect to the Borrower and the form of which is attached hereto
as Exhibit D-2 with respect to the Guarantor.


 


(www)      “Share
Value” shall have the meaning given to it in Section 2.2(h)(ii) hereof.


 


(xxx)         “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.


 


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


 


(zzz)         “Validity
Guaranties” shall mean the validity guaranties executed by such officers and directors of Borrower as Lender shall
require, in Lender’s sole discretion, the form of which is attached hereto as Exhibit E.


 




    	10



    	 



    

 


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 Closing Date. 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 the Credit Parties 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, the
Credit Parties 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 the Credit Parties’ accountants.


 


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


 


1.4           Other
Definitional Provisions; Construction. Whenever the context so requires, the neuter gender includes the masculine and feminine,
the single number includes the plural, and vice versa. The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision
of this Agreement, and references to Article, Section, Subsection, Annex, Schedule, Exhibit and like references are references
to this Agreement unless otherwise specified. Wherever the word “include,” “includes” or “including”
is used in this Agreement, it will be deemed to be followed by the words “without limitation.” An Event of Default
shall “continue” or be “continuing” until such Event of Default has been waived in accordance with Section
13.3 hereof. References in this Agreement to any party shall include such party’s successors and permitted assigns. References
to any “Section” shall be a reference to such Section of this Agreement unless otherwise stated. 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.


 




    	11



    	 



    

 


2.           REVOLVING
LOAN FACILITY.


 


2.1         Revolving
Loan.




 


(a)           Revolving
Loan Commitment. Subject to the terms and conditions of this Agreement and the other Loan Documents, and in reliance upon the
representations and warranties of Borrower set forth herein and in the other Loan Documents, Lender agrees to make such Revolving
Loans at such times as Borrower may from time to time request, pursuant to the terms of this Agreement, until, but not including,
the Revolving Loan Maturity Date, and in such amounts as Borrower may from time to time request up to the Revolving Loan Availability
(and subject at all times to the amounts available to be borrowed in accordance herewith); provided, however, that
the aggregate principal balance of all Revolving Loans outstanding at any time shall not exceed the Revolving Loan Availability;
and further provided, however, that, notwithstanding anything contained in this Agreement or any other Loan Documents
to the contrary, each Revolving Loan requested by Borrower under this Agreement shall be subject to Lender’s approval, which
approval may be given or withheld in Lender’s sole and absolute discretion. Revolving Loans made by Lender may be repaid
and, subject to the terms and conditions hereof, borrowed again up to, but not including, the Revolving Loan Maturity Date, unless
the Revolving Loans are otherwise terminated or extended as provided in this Agreement. The Revolving Loans shall be used by Borrower
solely for ongoing working capital purposes and to fully repay outstanding amounts owed by the Borrower to Charter Capital.


 


(b)           Increase
to Revolving Loan Commitment. Borrower may request and the Lender may, in its sole and absolute discretion (employing substantially
the same analysis and metrics the Lender used when determining to originally extend credit hereunder), agree that on such later
indeterminate dates, Lender further increases the Revolving Loan Commitment; and Lender, in its sole discretion, may, but in any
event, is not required to, make available such additional Revolving Loan Commitment increases to Borrower provided the following
conditions have been satisfied, in Lender’s sole and absolute discretion:


 


(i)            no
Event of Default shall have occurred or be continuing, or result from the applicable increase of the Revolving Loan Commitment;


 


(ii)           Borrower
shall have executed and delivered a new or revised Revolving Note;


 


(iii)          after
giving effect to such increase, the amount of the aggregate outstanding principal balance of all Revolving Loans shall not be in
excess of the Revolving Loan Availability;


 


(iv)          Lender
shall have reviewed and accepted, in its sole and absolute discretion, the amount and type of current and historical Receipts of
the Credit Parties, or other Collateral required for the increase; and


 


(v)           Lender
shall have received any and all additional documents or agreements included in Section 3 hereof as it shall require in its
sole discretion.


 


(c)      Revolving
Loan Interest and Payments. Except as otherwise provided in this Section, the outstanding principal balance of the Revolving
Loans shall be repaid on or before the Revolving Loan Maturity Date. Principal amounts repaid on the Revolving Notes may be re-borrowed.
The principal amount of the Revolving Loans outstanding from time to time shall bear interest at the Interest Rate. The Receipts
Collection Fee and accrued and unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to
time shall be payable on a weekly basis on the weekly anniversary date of the Closing Date, commencing on the first such date to
occur after the Closing Date and on the Revolving Loan Maturity Date (each a “Payment Date”). Any amount
of principal or interest on the Revolving Loans which is not paid when due, whether at stated maturity, by acceleration or otherwise,
shall at Lender’s option bear interest payable on demand at the Default Rate.


 




    	12



    	 



    

 


(d)     Revolving
Loan Principal Repayments.


 


(i)           Mandatory
Principal Repayments; Overadvances. Following the collection of the Reserve Amount, a minimum of ten percent (10%) of all amounts
deposited into the Lock Box Account (in excess of any recurring fees owed under Section 2.2, fees owed to any custodian/back-up
servicer, the Receipts Collection Fee, and interest owed under Sections 2.1(c) and 2.4) shall be held by the Lender and
credited toward the outstanding principal balance of all Revolving Loans hereunder on any Payment Date (the “Mandatory
Principal Repayment Amount”). All Revolving Loans hereunder shall be repaid by Borrower on or before the Revolving
Loan Maturity Date, unless payable sooner pursuant to the provisions of this Agreement. In the event the aggregate outstanding
principal balance of all Revolving Loans hereunder exceed the Revolving Loan Availability, Borrower shall, upon notice or demand
from Lender, immediately make such repayments of the Revolving Loans or take such other actions as shall be necessary to eliminate
such excess.


 


(ii)           Optional
Prepayments. Borrower may from time to time prepay the Revolving Loan, in whole or in part, provided, however,
that if the Borrower prepays more than eighty percent (80%) of the amount of the Revolving Loan Commitment within ninety one (91)
to one hundred eighty (180) days prior to the Revolving Loan Maturity Date, Borrower shall pay to Lender as liquidated damages
and compensation for the costs of being prepared to make funds available hereunder an amount equal to two and 50/100 percent (2.50%)
of the outstanding Revolving Loan Commitment (the “Prepayment Penalty”) except in the case of an Early Termination
Notice. Fees owed pursuant to this Section shall not be applicable with respect to the Mandatory Principal Repayment Amount made
pursuant to Section 2.1(d)(i).


 




    	13



    	 



    

 


(e)     Collections;
Lock Box.


 


(i)           To
the extent any Customers make or pay any Receipts to the Credit Parties by a wire transfer, the Credit Parties shall direct all
of such Customers to make all such wire transfer payments directly to the Lock Box Account. To the extent any Customers make or
pay any Receipts to the Credit Parties by any other form other than wire transfer (such as through a check), then each Credit Party
shall direct all of its Customers to make all such payments and Receipts directly to a post office box designated by, and under
the exclusive control of, Lender (such post office box is referred to herein as the “Lock Box”). The
parties recognize that in many instances, Customers of the Borrower and its Subsidiaries make payments to the Borrower and its
Subsidiaries through the use of a credit or debit card. In that regard, the Borrower and its Subsidiaries shall, prior to the Closing
Date, modify its agreements with all credit/debit card payment processing companies with whom it has agreements or other payment
processing relationships (the “Payment Processing Companies”), so as to authorize, direct and cause:
(A) all credit/debit card payments from any Customers; and (B) any reserves or holdbacks withheld by any of the Payment Processing
Companies, if, as an when distributed or paid to the Borrower and its Subsidiaries, to be deposited directly into the Lock Box
Account, rather than any other bank accounts of the Credit Parties. It shall be a condition precedent to the making of any Revolving
Loans hereunder that each of the Payment Processing Companies issue and deliver to Lender an estoppel certificate, disbursement
direction or other similar document confirming and agreeing: (I) to the foregoing payment directions; (II) that such payment instructions
and directions shall not be changed, amended or terminated, except upon written notice from Lender; and (III) that copies of all
statements, notices and other communications sent by any Payment Processing Companies to the Credit Parties, also be delivered
to Lender. 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 foregoing. Lender
shall maintain an account at a financial institution acceptable to Lender in its sole and absolute discretion (the “Lock
Box Account”), which Lock Box Account is (as of the Closing Date) and shall be maintained in Lender’s name,
and into which all Receipts, whether through wires, credit and debit card payments from any Customers (whether directly or through
any Payment Processing Companies), and all other monies, checks, notes, drafts or other payments of any kind received by the Credit
Parties shall be deposited, in the identical form in which such payments were received, whether by cash, check, direct deposit,
or otherwise. If the Credit Parties, any Affiliate, any shareholder, officer, director, employee or agent of the Credit Parties
or any Affiliate, or any other Person acting for or in concert with the Credit Parties, shall receive any monies, checks, notes,
drafts or other payments or Receipts, the Credit Parties and each such Person shall receive all such items in trust for, and as
the sole and exclusive property of, Lender, and, immediately upon receipt thereof, shall remit the same (or cause the same to be
remitted) in kind to the Lock Box Account. The Credit Parties and Lender agree that all payments made to such Lock Box Account,
whether in respect of Receipts, as proceeds of other collateral, or otherwise (except for proceeds of Collateral which are required
to be delivered to the holder of a Permitted Lien which is prior in right of payment), will be swept from the Lock Box Account
to Lender on each Payment Date to be applied according to the following priorities: (1) to unpaid fees and expenses due hereunder
including, without limitation, any recurring fees due pursuant to Section 2.2 hereof; (2) to any custodian/back-up servicer
(if applicable); (3) to accrued but unpaid interest owed under Sections 2.1(c) and 2.4 hereof; (4) to any accrued but unpaid
Receipts Collection Fee; (5) if at any time the Lender is not holding, in the Lock Box Account, an amount equal to at least the
Reserve Amount, then twenty percent (20%) of all Receipts received into the Lock Box Account shall be withheld and applied by Lender
to amounts required to establish the Reserve Amount, until the Reserve Amount is reached during the duration of this Agreement,
as additional security for the Obligations; (6) to amounts payable pursuant to Section 2.1(d), including, but not limited
to, the Mandatory Principal Repayment Amount; (7) to amounts payable pursuant to 2.2(g) and (8) upon the occurrence of an Event
of Default, to Lender (including any Reserve Amount then in the Lock Box Account), to reduce the outstanding Revolving Loan balance
to zero (each of the foregoing payments, the “Lock Box Payments”). The amount remaining following the payment
of the Lock Box Payments on each Payment Date shall be referred to herein as the “Net Amount”. The Credit Parties
and the Lender agree that one hundred percent (100%) of the Net Amount will be transferred to Borrower from the Lock Box Account
via wire transfer or electronic funds transfer to an account designated by the Borrower on the immediately subsequent Payment Date.
Borrower agrees to pay all reasonable fees, costs and expenses in connection with opening and maintaining of the Lock Box, the
Lock Box Account, or of creating, administering or switching any payment accounts with any of the Payment Processing Companies.
All of such reasonable fees, costs and expenses, if not paid by Borrower within five (5) business days of Lender’s written
request, may be paid by Lender and in such event all amounts paid by Lender shall constitute Obligations hereunder, shall be payable
to Lender by Borrower upon demand, and, until paid, shall bear interest at the lowest rate then applicable to Loans hereunder.
It is intended that all Receipts, and all other checks, drafts, instruments and other items of payment or proceeds of Collateral
at any time received, due or owing to the Borrower and its Subsidiaries shall be deposited into the Lock Box Account, and if not
deposited into the Lock Box Account, shall be remitted or endorsed by the applicable Credit Party to Lender to be deposited into
the Lock Box Account, and, if that remittance or endorsement of any such item shall not be made for any reason, Lender is hereby
irrevocably authorized to remit or endorse the same on the applicable Credit Party’s behalf. For purpose of this Section,
each Credit Party irrevocably hereby makes, constitutes and appoints Lender (and all Persons designated by Lender for that purpose)
as each Credit Party’s true and lawful attorney and agent-in-fact: (A) to endorse the applicable Credit Party’s name
upon said items of payment and/or proceeds of Collateral and upon any chattel paper, document, instrument, invoice or similar document
or agreement relating to any Receipts of the Credit Parties; (B) to take control in any manner of any item of payment or proceeds
thereof; (C) to have access to the applicable Credit Party’s operating accounts, through the Credit Party’s online
banking system, or otherwise, to make remittances of any Receipts deposited therein into the Lock Box Account as required hereby;
and (D) to have access to any lock box or postal box into which any of the Credit Party’s mail is deposited, and open and
process all mail addressed to the Credit Parties and deposited therein.


 




    	14



    	 



    

 


(ii)           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 notification to any Customer and whether before or after the maturity of any of the Obligations: (A) enforce collection
of any of the Accounts of any Credit Party or other amounts owed to any Credit Party by suit or otherwise; (B) exercise all of
the rights and remedies of any Credit Party 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 any Credit Party,
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 any Credit Party 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 Party’s name on any proof of claim
in bankruptcy or other similar document against any Customer or other Person obligated to any Credit Party; and (F) do all other
acts and things which are necessary, in Lender’s sole discretion, to fulfill any Credit Party’s obligations under this
Agreement and the other Loan Documents and to allow Lender to collect the Accounts or other amounts owed to any Credit Party. 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 Borrower’s 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.


 


(iii)           On
a monthly basis, Lender shall deliver to Borrower an invoice and an account statement showing all Loans, charges and payments,
which shall be deemed final, binding and conclusive upon Borrower, unless Borrower notify 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.




 




    	15



    	 



    

 


2.2         Fees.


 


(a)           Asset
Monitoring Fee. Borrower agrees to pay to Lender an asset monitoring fee (“Asset Monitoring Fee”)
equal to One Thousand Five-Hundred and No/100 United States Dollars (US$1,500.00), which shall be due and payable on the Closing
Date, and thereafter on the first day of each calendar quarter during the term of the Revolving Loan Facility. The Asset Monitoring
Fee shall be increased in increments of Five Hundred and No/100 Dollars ($500.00) each time the Revolving Loan Commitment amount
is increased pursuant to Section 2.1(b); provided that the Asset Monitoring Fee shall never exceed Two Thousand Five Hundred
and No/100 Dollars (US$2,500.00).


 


(b)           Commitment
Fee. Borrower agrees to pay to Lender a commitment fee equal to four percent (4%) of the Revolving Loan Commitment and two
percent (2%) of the amount of any increase thereof pursuant to Section 2.1(b), which shall be due and payable on the Closing
Date and on the date of any increase to the Revolving Loan Commitment pursuant to Section 2.1(b).


 


(c)           Due
Diligence Fees. Borrower agrees to pay a due diligence fee equal to Five Thousand and No/100 United States Dollars (US$5,000.00),
which shall be due and payable in full on the Closing Date, or any remaining portion thereof shall be due and payable on the Closing
Date if a portion of such fee was paid upon the execution of any term sheet related to this Agreement.


 


(d)           Banking
Services Fee. Borrower agrees to hereafter pay a banking services fee equal to eighteen percent (18%) of the amount of any
increase of the Revolving Loan Commitment pursuant to Section 2.1(b), such fee to be assessed at the time of any subsequent
increase of the Revolving Loan Commitment.


 


(e)           Document
Review and Legal Fees. Borrower agrees to pay a document review and legal fee equal to Twelve Thousand Five Hundred and No/100
United States Dollars (US$12,500) which shall be due and payable in full on the Closing Date, or any remaining portion thereof
shall be due and payable on the Closing Date if a portion of such fee was paid upon the execution of any term sheet related to
this Agreement.


 


(f)            Other
Fees and Expenses. 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 or other modification or termination of this Agreement or any other Loan Documents; (ii) any documentary stamp taxes,
intangibles taxes, recording fees, filing fees, or other similar taxes, fees or charges imposed by or due to any governmental authority
in connection with this Agreement or any other Loan Documents; (iii) the exercise or enforcement of any of the rights of the
Lender under this Agreement or the Loan Documents; or (iv) the failure by any Credit Party 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.


 




    	16



    	 



    

 


(g)         Minimum
Monthly Fee. It is the intention of the parties hereto that, prior to an Event of Default, the aggregate sum of all recurring
monthly fees and interest payable by Borrower hereunder to Lender for each calendar month during the term hereof shall not be less
than one and one-half percent (1.5%) of the then applicable Revolving Loan Commitment (the “Minimum Fees”).
In the event during any calendar month during the term of this Agreement, the recurring monthly fees and interest payable by Borrower
to Lender hereunder are less than the Minimum Fees, then in addition to all such recurring monthly fees and interest payable, the
Borrower shall pay to Lender, on the next Payment Date, an amount determined by Lender such that when added to the recurring monthly
fees and interest payable to Lender each calendar month hereunder, such amount shall never be less than the Minimum Fees.


 


(h)         Investment
Banking Fee.


 


(i)           Share
Issuance. The Borrower shall pay to Lender a fee for investment banking and advisory services provided by the Lender to the
Borrower prior to the Closing Date by issuing to Lender two hundred percent (200%) of that number of shares of the Borrower’s
Common Stock (or, in the event of a Warrant issuance pursuant to Section 2.2(h)(iii) herein, Warrants permitting the issuance of
such number of shares of Borrower’s Common Stock,) equal to a dollar amount of One Hundred Fifty Thousand United States Dollars
(US$150,000) (the “Share Value”). For purposes of determining the number of shares issuable to Lender
under this Section 2.2(h) or shares issuable pursuant to Warrants under Section 2.2(h)(iii) (such number of shares issued pursuant
hereto or issuable in connection with Warrants, the “Facility Fee Shares”), the Borrower’s Common
Stock shall be valued at price equal to eighty-five percent (85%) of the lowest volume weighted average price for the Common Stock
for the five (5) Business Days immediately prior to the Closing 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 the corresponding number of Facility Fee Shares issuable to the Lender based on such price.
The Borrower shall instruct its transfer agent to issue certificates representing the Facility Fee Shares issuable to the Lender
immediately upon the Borrower’s execution of this Agreement, and shall cause its transfer agent (the “Transfer
Agent”) to deliver such certificates to Lender within three (3) Business Days from the Closing Date. In the event
such certificates representing the Facility 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 Facility Fee
Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of the Borrower’s Common
Stock. The Facility Fee Shares shall be deemed fully earned as of the Closing Date, regardless of the amount or number of Revolving
Loans made hereunder. 


 




    	17



    	 



    

 


(ii)           Adjustments.
It is the intention of the Borrower and Lender that by a date that is twelve (12) months after the Valuation Date (the “Twelve
Month Valuation Date”) the Lender shall have generated net proceeds from the sale of the Facility Fee Shares (including
sale of Facility Fee Shares following exercise of any Warrants) equal to the Share Value. The Lender shall have the right to sell
the Facility 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 Twelve Month Valuation Date (or prior to such Twelve Month Valuation Date, if Lender
has sold all Facility Fee Shares prior to such Twelve Month Valuation Date), the Lender may deliver to the Borrower a reconciliation
statement showing the net proceeds actually received by the Lender from the sale of the Facility 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 Facility Fee Shares equal to at least the Share Value, 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 Facility Fee Shares, the Lender shall have received total net
funds equal to the Share Value. 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 Share Value, 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 Share Value. In the event
the Lender receives net proceeds from the sale of Facility Fee Shares equal to the Share Value, and the Lender still has Facility
Fee Shares remaining to be sold, the Lender shall return all such remaining Facility Fee Shares to the Borrower. 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 three (3) 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 three (3) Business Day period, same shall be an immediate
default under this Agreement and the Loan Documents. Notwithstanding anything contained in this Section 2.2(h) to the contrary,
at any time on or prior to the Twelve Month Valuation Date, but not thereafter (unless agreed to by the Lender), the Borrower shall
have the right, at any time during such period, to redeem any Facility Fee Shares then in the Lender’s possession for an
amount payable by the Borrower to Lender in cash equal to the Share Value, less any net cash proceeds received by the Lender from
any previous sales of Facility Fee Shares. Upon Lender’s receipt of such cash payment in accordance with the immediately
preceding sentence, the Lender shall return any then remaining Facility Fee Shares in its possession back to the Borrower and otherwise
undertake any required actions reasonably requested by Borrower to have such then remaining Facility Fee Shares returned to Borrower.


 




    	18



    	 



    

 


(iii)           Warrant
Issuance. In the event that a share issuance pursuant to Section 2.2(h)(i) would result in the Lender receiving shares of the
Borrower’s Common Stock which, following such issuance, would give the Lender ownership of the Borrower’s Common Stock
in excess of 9.99% of the current issued and outstanding shares of the Borrower’s Common Stock, the Borrower shall (a) issue
Facility Fee Shares equal to 9.99% of the current issued and outstanding shares of the Borrower’s Common Stock to Lender
on the Closing Date and (b) shall issue three (3) Common Stock purchase warrants (in the form attached hereto as Exhibit F,
the “Warrants”) which, in the aggregate, permit the Lender to receive shares of the Borrower’s
Common Stock equal to the Share Value minus the value of the Facility Fee Shares issued to the Lender on the Closing Date.
The Warrants shall carry a standard blocker provision. The Warrants shall be deemed fully earned as of the Closing Date, regardless
of the amount or number of Revolving Loans made hereunder. 


 


(iv)           Mandatory
Redemption. Notwithstanding anything contained in this Agreement to the contrary, upon the Revolving Loan Maturity Date and
thereafter, the Lender shall have the right, upon written notice to the Borrower, to require that the Borrower redeem all Facility
Fee Shares and Warrants then in Lender’s possession for cash equal to the Share Value, less any cash proceeds received by
the Lender from any previous sales of Facility Fee Shares, if any.  In the event such redemption notice is given by the Lender,
the Borrower shall redeem the then remaining Facility Fee Shares and Warrants in Lender’s possession for an amount of
Dollars equal to the Share Value, less any cash proceeds received by the Lender from any previous sales of Facility Fee Shares
or Warrants, 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.  Provided, however, if an Early Termination Notice is provided by
Lender, the Lender's rights hereunder to require the redemption of the Facility Fee Shares and Warrants shall not become effective
until six (6) months following the Closing Date.  In the event that the Warrants have not been exercised prior to such date,
on each of the six (6), nine (9) and twelve (12) month anniversaries of the Closing Date, the Borrower agrees, at the sole discretion
of the Lender, to redeem one (1) Warrant for an amount payable by the Borrower to Lender in cash equal to one-third (1/3) of the
Share Value, less one-third (1/3) of any net cash proceeds received by the Lender from any previous sales of Facility Fee Shares
(such sum, the “Redemption Amount”), provided, however, that redemption of the Warrants pursuant
to this sentence shall not otherwise adversely affect Lender’s rights to receive full redemption of the Facility Fee Shares
and Warrants upon the Revolving Loan Maturity Date in the aggregate amount of the Share Value, less any cash proceeds received
by the Lender from any previous sales of Facility Fee Shares.


 


(v)           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 Closing Date but before the
Lender sells the Facility Fee Shares, the Facility Fee Shares shall be registered pursuant to such registration statement.


 


(vi)           Limitations.
The Borrower shall not affect any issuance of shares of Common Stock in connection with any Loan Document, and the Lender shall
not have the right to receive shares of Common Stock to the extent that after giving effect to issuance, the Lender (together with
its Affiliates and any Persons acting as a group together with the Lender or any of the its Affiliates) would beneficially own
shares of Common Stock in excess of 9.99% of the number of issued and outstanding shares of Common Stock. The restriction described
in this Section may be waived, in whole or in part, upon sixty-one (61) days’ prior notice from the Lender to the Borrower
to increase such percentage.


 




    	19



    	 



    

 


(i)           Matters
with Respect to Common Stock.


 


(i)           Issuance
of Conversion Shares. The parties hereto acknowledge that pursuant to the terms of the Revolving Notes, Lender has the right,
at its discretion, to convert amounts due under the Revolving Notes into Common Stock in accordance with the terms of the Revolving
Notes. 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 Revolving Notes (the “Conversion Shares”) to Lender in connection
with the exercise by Lender of any of its conversion rights under the Revolving Notes, 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 Revolving Note) requesting the issuance of the Conversion Shares then issuable in accordance with
the terms of the Revolving Notes, 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 Revolving Notes, as set forth in the Conversion Notice.


 


(ii)           Issuance
of Additional Common Stock Under Section 2.2(h). The parties hereto acknowledge that pursuant to Section 2.2(h) above, 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 the terms of Section 2.2(h) 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 under Section 2.2(h), 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 in accordance
with Section 2.2(h) above, 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 with Section 2.2(h).


 




    	20



    	 



    

 


(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: (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; 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 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 Revolving Notes. 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.


 


(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 2.2(j), the Lender will be irreparably damaged and that damages at law would be
an inadequate remedy if this Agreement were not specifically enforced.  Therefore, in the event of a breach or threatened
breach of any provision of this Section 2.2(j) 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 2.2(j).


 




    	21



    	 



    

 


2.3           Renewal
of Revolving Loans; Non-Renewal of Revolving Loans; Fees. On the Revolving Loan Maturity Date, so long as no Event of Default
exists, and so long as no event has occurred that, with the passage of time, the giving of notice, or both, would constitute an
Event of Default, Borrower shall have the option to request a renewal of the Revolving Loan Commitment and extension of the Revolving
Loan Maturity Date for one (1) additional six (6) month period. To make such request, Borrower shall give written notice to Lender
of Borrower’s request to renew the Revolving Loan Commitment and extend the Revolving Loan Maturity Date for an additional
six (6) month period on or before the Revolving Loan Maturity Date. Lender may elect to accept or reject Borrower’s request
for a renewal of the Revolving Loan Commitment and extension of the Revolving Loan Maturity Date in its sole and absolute discretion.
In the event Lender shall accept Borrower’s request for renewal and extension, Borrower shall, immediately upon demand from
Lender and as a condition to the renewal and extension, deliver a renewal fee to Lender equal to two percent (2%) of the then outstanding
Revolving Loan Commitment.


 


2.4           Interest
and Fee Computation; Collection of Funds. Interest accrued hereunder shall be payable as set forth in Section 2.1 hereof.
Except as otherwise set forth herein, all interest and fees shall be calculated on the basis of a year consisting of 360 days and
shall be paid for the actual number of days elapsed. Principal payments submitted in funds not immediately available shall continue
to bear interest until collected. If any payment to be made by Borrower hereunder or under the Revolving Notes shall become due
on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall
be included in computing any interest in respect of such payment. Any Obligations which are not paid when due (subject to applicable
grace periods) shall bear interest at the Default Rate.


 


2.5           Automatic
Debit. In order to effectuate the timely payment of any of the Obligations when due, 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 a Revolving Loan hereunder to pay the amount of the Obligations.


 


2.6           Discretionary
Disbursements. Lender, in its sole and absolute discretion, may immediately upon notice to Borrower, disburse any or all proceeds
of the Revolving 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.


 


2.7           US
Dollars; Currency Risk. All Receipts will be in Dollars. In the event Receipts 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 Revolving Notes 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. Borrower hereby authorizes Lender to advance or cause an advance of Revolving Loans to pay for
the increased costs or reductions associated with any such currency losses.




    	22



    	 



    

 


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 Borrower on the Closing Date. As a condition precedent to Lender’s disbursal or making of
the Revolving Loans pursuant to this Agreement on the Closing Date, the applicable Credit Party shall have executed or cause to
be executed and delivered to Lender the following documents, each of which must be satisfactory to Lender and Lender’s counsel
in form, substance and execution:


 


(a)           Credit
Agreement. Two originals of this Agreement duly executed by Borrower and consented and agreed to by the Guarantor;


 


(b)           Revolving
Note. An original Revolving Note duly executed by Borrower and consented and agreed to by the Guarantor;


 


(c)           Security
Agreement. Two originals of the applicable Security Agreements dated as of the Closing Date, duly executed by each Credit Party;


 


(d)           Guaranty
Agreement. Two originals of the Guaranty Agreement dated as of the Closing Date, duly executed by the Guarantor;


 


(e)           Validity
Guaranty. Two originals of the Validity Guaranty dated as of the Closing Date, duly executed by the executive officers and
directors of the Borrower as requested by the Lender.


 


(f)           Irrevocable
Transfer Agent Instructions. Two originals of the Irrevocable Transfer Agent Instructions dated as of the Closing Date, duly
executed by the Borrower and the Borrower’s transfer agent;


 


(g)           Lock
Box Deposit Confirmation. Two originals of the Lock Box Deposit Confirmation, dated as of the Closing Date, duly executed by
the Borrower;


 


(h)           Closing
Statement. Two originals of the Closing Statement, dated as of the Closing Date, duly executed by the Borrower; 


 


(i)           Warrants.
Two originals of each of the Warrants, dated as of the Closing Date, duly executed by the Borrower;


 




    	23



    	 



    

 


3.2           Organizational
and Authorization Documents to be Delivered by the Credit Parties on the Closing Date. As a condition precedent to Lender’s
disbursal or making of the Loans pursuant to this Agreement on the Closing Date, the Credit Parties shall have executed or cause
to be executed and delivered a certificate of an officer of each of the Credit Parties certifying and attaching (i) copies of each
Credit Parties’ respective articles of incorporation, bylaws or similar documents; (ii) resolutions of each Credit Parties’
respective board of directors, 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 Guarantor’s shareholders, approving and authorizing
the execution, delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; (iv)
the signatures and incumbency of the officers of the Credit Parties executing any of the Loan Documents, each of which the Credit
Parties hereby certify 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 any Credit Party of any changes therein;
and (v) good standing certificate in the state of organization of each Credit Party and in each other state requested by Lender.


 


3.3           Additional
Documents to be Delivered by the Credit Parties on the Closing Date. As a condition precedent to Lender’s disbursal or
making of the Loans pursuant to this Agreement on the Closing Date, the Credit Parties shall have delivered or cause to be 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)           Use
of Proceeds. A detailed summary of the Borrower’s use of the proceeds being funded hereunder, including, but not limited
to, reference to approximately Two Hundred Fifty Thousand and No/100 United States Dollars (US$250,000) to be used for purposes
of repaying the existing indebtedness owed to Charter Capital, which such amount the Borrower hereby authorizes the Lender to pay
directly on the Closing Date and offset from the Revolving Loan proceeds;


 


(b)           Customer
Payment Redirection. Evidence satisfactory to the Lender that the Credit Parties have irrevocably instructed its Customers
to redirect all payments to the Lock Box Account.


 


(c)           Credit
Card Payment Redirection.


 


(i)           Evidence
satisfactory to the Lender that the Credit Parties have irrevocably instructed the Payment Processing Companies to redirect all
payments to the Lock Box Account.


 


(ii)           Within
ten (10) Business Days of the Closing Date, evidence that all Credit Parties have modified their respective agreements with all
Payment Processing Companies with whom they have agreements or other payment processing relationships so as to authorize, direct
and cause: (A) all credit/debit card payments from any Customers; and (B) any reserves or holdbacks withheld by any of the Payment
Processing Companies, if, as an when distributed or paid to the Credit Parties, to be deposited directly into the Lock Box Account.


 


(iii)           Within
ten (10) Business Days of the Closing Date, an estoppel certificate, disbursement direction or other similar document confirming
and agreeing: (I) payment directions to the Lock Box Account; (II) that such payment instructions and directions shall not be changed,
amended or terminated, except upon written notice from Lender; and (III) that copies of all statements, notices and other communications
sent by any Payment Processing Companies to the Credit Parties, also be delivered to Lender.


 




    	24



    	 



    

 


(d)           Income
Statement / Profit and Loss Statement. An Income Statement and a Profit and Loss Statement of the Borrower for the twelve (12)
month period ending the Closing Date as well as a reasonable projection of income, profits and losses for the twelve (12) month
period immediately following the Closing Date.


 


(e)           Insurance.
Within thirty (30) days of the Closing Date, evidence satisfactory to Lender of the existence of insurance required to be maintained
pursuant to Section 9.4, together with evidence that Lender has been named as additional insured and lender’s loss
payee, as applicable, on all related insurance policies;


 


(f)           Search
Results. Copies of UCC search reports, 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, listing all effective financing statements which name the Credit Parties,
under their present name and any previous names, as debtors, together with copies of such financing statements;


 


(g)           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;


 


(h)           Opinion
of Counsel. A customary opinion of Credit Parties’ counsel, in form reasonably satisfactory to Lender;


 


(i)           Due
Diligence. Such due diligence documents and information as is requested by the Lender, including, but not limited to, historical
performance and financial information, detailed description use of the proceeds, monthly income statement including the results
of operations of the Borrower and its Subsidiaries for the previous twelve (12) months and future twelve (12) month projections;


 


(j)           Perfection
of Lien on Collateral. Borrower 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 Borrower, including, but not limited
to, such UCC-1 Financing Statements and any and all documents necessary to complete any filings which Lender shall require in connection
with this Agreement.


 


(k)           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, but not limited to, a copy of an email 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;


 


(l)           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.


 




    	25



    	 



    

 


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


 


(a)           Consent
and Agreement. Two originals 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;


 


(b)           Revolving
Note. Two originals of a Consent and Agreement duly executed by such Subsidiary, pursuant to which such Subsidiary consents
and agrees to be bound by the terms and conditions of the Revolving Note;


 


(c)           Security
Agreement. Two originals of a Security Agreement, duly executed by such Subsidiary;


 


(d)           Guaranty
Agreement. Two originals of a Guaranty Agreement, duly executed by such Subsidiary;


 


(e)           Organizational
and Authorization Documents. A certificate of an officer of the Subsidiary certifying and attaching (i) copies of the Subsidiary’s
respective articles of incorporation, bylaws, operating agreement, certificate of organization or similar documents; (ii) resolutions
of its respective board of directors or managers, approving and authorizing the execution, delivery and performance of the Loan
Documents to which it will become a party and the transactions contemplated thereby; and (iii) the signatures and incumbency of
the officers of the Subsidiary executing any of the Loan Documents;


 


(f)           Search
Results. Copies of UCC search reports, issued by the Secretary of State of the state of incorporation of the Subsidiary, dated
such a date as is reasonably acceptable to Lender, listing all effective financing statements which name the Subsidiary, under
their present name and any previous names, as debtors, together with copies of such financing statements;


 


(g)           Certificates
of Good Standing. Copies of certificates of good standing with respect to the Subsidiary, issued by the Secretary of State
of the state of incorporation of the Subsidiary, dated such a date as is reasonably acceptable to Lender, evidencing the good standing
thereof; and


 


(h)           Due
Diligence. Such due diligence documents and information as is requested by the Lender.


 


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


 




    	26



    	 



    

 


3.5         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 Closing Date, the Credit Parties shall have
executed or caused to be executed and delivered to Lender (i) all of the documents in Section 2.1(b), Section 3.1,
Section 3.2, Section 3.3 and Section 3.4, applicable thereto, and such documents shall remain in full force
and effect as of the date of the subsequent principal advance, and (ii) an additional original Revolving Note in the principal
amount of the advance being then made, duly executed by each Credit Party, satisfactory to Lender and Lender’s counsel in
form, substance and execution.


 


3.6         Payment
of Fees. Borrower shall have paid to Lender all fees, costs and expenses, including, but not limited to, due diligence expenses,
attorney’s fees, search fees, title fees, documentation and filing fees (including documentary stamps and taxes payable on
the face amount of the applicable Revolving Note).


 


3.7         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.


 


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


 


3.9         Litigation.
No pending claim, investigation, litigation or governmental proceeding shall have been instituted against any Credit Party or any
of their respective officers or shareholders.


 


3.10       Representations
and Warranties. No representation or warranty of any Credit Party 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.


 


3.11       Due
Diligence. The business, legal and collateral due diligence review performed by Lender, including, but not limited to, 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.


 


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


 


3.13       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.


 




    	27



    	 



    

 


4.           NOTES
EVIDENCING LOANS.


 


The Revolving Loans
shall be evidenced by the Revolving Notes (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 Guarantor, and payable to the order of Lender. At the time of the initial disbursement of a Revolving Loan and at each time
an additional Revolving Loan shall be requested hereunder or a repayment made in whole or in part thereon, an appropriate notation
thereof shall be made on the books and records of Lender. All amounts recorded shall be, absent demonstrable error, conclusive
and binding evidence of: (i) the principal amount of the Revolving Loans advanced hereunder; (ii) any unpaid interest owing on
the Revolving Loans; and (iii) all amounts repaid on the Revolving Loans. The failure to record any such amount or any error in
recording such amounts shall not, however, limit or otherwise affect the obligations of Borrower under the Revolving Notes to repay
the principal amount of the Revolving Loans, together with all interest accruing thereon.


 


5.           MANNER
OF BORROWING.


 


5.1           Loan
Requests. Subject to Section 2.1(a) and Article 3 hereof, the Loans shall be made available to Borrower upon
Borrower’s request, from any Person whose authority to so act has not been revoked by Borrower in writing previously received
by Lender. Borrower may make requests for borrowing no more than one time every two weeks up to the then applicable Revolving Loan
Commitment; provided, however, that, notwithstanding anything contained in this Agreement or any other Loan Documents
to the contrary, each Revolving Loan requested by Borrower under this Agreement shall be subject to Lender’s approval, which
approval may be given or withheld in Lender’s sole and absolute discretion. A request for a Loan may only be made if no default
or Event of Default shall have occurred or be continuing and shall be subject to: (i) borrowing availability under the Revolving
Loan Commitment; and (ii) Receipts deposited into the Lock Box Account and other Collateral being acceptable to Lender. In addition,
a request for a Loan must be received by no later than 11:00 a.m. eastern time the day it is to be funded and be in a minimum amount
equal to Fifty Thousand Dollars and No/100 ($50,000.00).


 


5.2           Communications.
Lender is authorized to rely on any written, verbal, electronic, telephonic or telecopy loan requests which Lender believes in
its good faith judgment to emanate from the President or Chief Executive Officer, or any other authorized representative of Borrower.
Borrower hereby irrevocably confirms, ratifies and approves all such advances by Lender and hereby indemnifies Lender against losses
and expenses (including court costs, attorneys’ and paralegals’ fees) and shall hold Lender harmless with respect thereto.


 


6.           SECURITY
FOR THE OBLIGATIONS.


 


To secure the payment
and performance by Borrower of the Obligations hereunder, the Credit Parties shall grant, under and pursuant to the Security Agreements
executed by the Credit Parties dated as of the Closing Date, to Lender, its successors and assigns, a continuing, first-priority
security interest in, and assignment, transference, mortgage, conveyanyce, pledge, hypothecation and set over to Lender, its successors
and assigns, all of the Credit Parties’ right, title and interest in and to the Collateral, whether now owned or hereafter
acquired, and all proceeds (including, without limitation, 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 Credit Parties.


 




    	28



    	 



    

 


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 Closing Date 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 is set forth in Schedule 7.1 hereto. The Guarantor has no Subsidiaries.


 


7.2           Borrower
Organization and Name. Each Credit Party is a corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, with full and adequate powers to carry on and conduct its business as presently conducted.
Each Credit Party is duly licensed or qualified in all foreign jurisdictions wherein the nature of its activities require such
qualification or licensing or in which any Collateral is located, except for those foreign jurisdictions in which the failure to
be so qualified or licensed would not cause a Material Adverse Effect. The exact legal name of each Credit Party is as set forth
in the first paragraph of this Agreement, and each Credit Party does not currently conduct, nor has any Credit Party, during the
last five (5) years, conducted business under any other names or trade names.


 


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 any Credit Party, its board of directors, stockholders, or any other
Person is necessary or required by any Credit Party to execute this Agreement and the Loan Documents, consummate the transactions
contemplated herein and therein, and perform all of its obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Loan Documents will not, nor will the observance or performance of any of the matters and things herein or therein
set forth, violate or contravene any provision of law or of any Credit Party’s Articles of Incorporation, Bylaws or other
governing documents. All necessary and appropriate corporate action has been taken on the part of each Credit Party to authorize
the execution and delivery of this Agreement and the Loan Documents and the issuance of the Revolving Notes and the Facility Fee
Shares. This Agreement and the Loan Documents are valid and binding agreements and contracts of each Credit Party, enforceable
against each Credit Party in accordance with their respective terms, except to the extent that enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium and other laws enacted for the relief of debtors generally and other similar
laws affecting the enforcement of creditors’ rights generally or by equitable principles which may affect the availability
of specific performance and other equitable remedies. No Credit Party knows of any reason why any Credit Party cannot perform any
of its obligations under this Agreement, the Loan Documents or any related agreements.


 




    	29



    	 



    

 


7.4           Capitalization.
The authorized capital stock of Borrower consists of One Hundred Fifty-Five Million (155,000,000) shares, of which One Hundred
Fifty Million (150,000,000) shares are designated as common stock, par value $0.01 per share (“Common Stock”)
and Five Million (5,000,000) shares are designated as preferred stock. As of the Closing Date, Borrower has Fifty-Two Million
Three Hundred Eighty-Eight Thousand Seven Hundred Fifty (52,388,750) shares of Common Stock issued and outstanding and Six Hundred
Eleven Thousand Three Hundred Ninety (611,390) shares of preferred stock issued and outstanding. All of the outstanding shares
of capital stock of Borrower are validly issued, fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws and none of such outstanding shares were issued in violation of any preemptive rights or similar rights
to subscribe for or purchase securities. As of the Closing Date, no shares of Borrower’s capital stock are subject to preemptive
rights or any other similar rights or any liens, claims or encumbrances suffered or permitted by Borrower. The Common Stock is
currently quoted by the OTC Markets under the trading symbol “HDII”. 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
as set forth in Schedule 7.4 attached hereto and except for the securities to be issued pursuant to this Agreement,
as of the Closing Date: (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 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 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 of any Credit Party; (ii) there are
no outstanding debt securities, notes, credit agreements, credit facilities or other contracts or instruments evidencing indebtedness
of the Borrower and its Subsidiaries, or by which the Borrower and its Subsidiaries is or may become bound; (iii) there are no
financing statements filed with any governmental authority securing any obligations of the Borrower and its Subsidiaries, or filed
in connection with any assets or properties of the Borrower and its Subsidiaries; (iii) there are no outstanding registration
statements with respect to Borrower or any of its securities and there are no outstanding comment letters from the SEC, the Principal
Trading Market, or any other 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; (v) there are no financing statements 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 (except pursuant to this Agreement). Each Credit Party has furnished to the Lender
true, complete and correct copies of such Credit Party’s Certificate of Incorporation, as amended and as in effect on the
Closing Date and Credit Party’s Bylaws, as in effect on the Closing Date, and any other governing or organizational documents,
as applicable. Except for the documents delivered to Lender in accordance with the immediately preceding sentence, there are no
other shareholder agreements, voting agreements, operating agreements, or other contracts or agreements of any nature or kind that
restrict, limit or in any manner impose obligations, restrictions or limitations on the governance of each Credit Party.


 




    	30



    	 



    

 


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 Facility Fee Shares, will not:
(i) constitute a violation of or conflict with the Articles of Incorporation, Bylaws or any other organizational or governing documents
of the Credit Parties; (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 United States federal and state securities
laws and the rules and regulations of any market or exchange on which the Common Stock is quoted); 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 their respective assets. No Credit Party
is in violation of its Articles of Incorporation, Bylaws or other organizational or governing documents, as applicable, and no
Credit Party is 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 no Credit Party has taken any action or failed to take any action that would give to any
other Person any rights of termination, amendment, acceleration or cancellation of, any contract or agreement to which any 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, no Credit Party is required to obtain any consent or approval of, from, or with any governmental
authority, or any other Person, in order for it to execute, deliver or perform any of its obligations under this Agreement or the
Loan Documents in accordance with the terms hereof or thereof, or to issue the Facility Fee Shares in accordance with the terms
hereof. 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 Closing Date.


 


7.6           Issuance
of Securities. The Facility Fee Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be
duly issued, fully paid and non-assessable, and free from all liens, claims, charges, taxes, or other encumbrances with respect
to the issue thereof, and will be issued in compliance with all applicable United States federal and state securities laws and
the laws of any foreign jurisdiction applicable to the issuance thereof. Any shares issuable upon conversion of the Revolving
Notes, in accordance with the terms of the Revolving Notes, 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. The issuance of the
Facility Fee Shares and any shares issuable upon conversion of the Revolving Notes is and will be exempt from: (i) the registration
and prospectus delivery requirements of the Securities Act; (ii) the registration and/or qualification provisions of all applicable
state and provincial securities and “blue sky” laws; and (iii) any similar registration or qualification requirements
of any foreign jurisdiction or other governmental authority. 


 




    	31



    	 



    

 


7.7           Compliance
With Laws. The nature and transaction of each Credit Party’s business and operations and the use of its properties and
assets, including, but not limited to, the Collateral or any real estate owned, leased, or occupied by each Credit Party, do not
and during the term of the Loans shall not, violate or conflict with any applicable law, statute, ordinance, rule, regulation or
order of any kind or nature, including, without limitation, the provisions of the Fair Labor Standards Act or any zoning, land
use, building, noise abatement, occupational health and safety or other laws, any Permit or any condition, grant, easement, covenant,
condition or restriction, whether recorded or not, except to the extent such violation or conflict would not result in a Material
Adverse Effect.


 


7.8           Environmental
Laws and Hazardous Substances. Except to the extent that any of the following would not have a Material Adverse Effect (including
financial reserves, insurance policies and cure periods relating to compliance with applicable laws and Permits) and are used in
such amounts as are customary in the Ordinary Course of Business in compliance with all applicable Environmental Laws, each Credit
Party represents and warrants to Lender that, to the knowledge of each Credit Party’s officers and directors: (i) no Credit
Party has generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials,
on or off any of the premises of any Credit Party (whether or not owned by any Credit Party) in any manner which at any time violates
any Environmental Law or any Permit, certificate, approval or similar authorization thereunder; (ii) the operations of each Credit
Party comply in all material respects with all Environmental Laws and all Permits certificates, approvals and similar authorizations
thereunder; (iii) there has been no investigation, Proceeding, complaint, order, directive, claim, citation or notice by any governmental
authority or any other Person, nor is any pending or, to any Credit Party’s officers’ and directors’ knowledge,
threatened against any Credit Party under any Environmental Law; and (iv) no Credit Party has 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
free from any Lien of any kind, other than the Lien of Lender and Permitted Liens.


 




    	32



    	 



    

 


7.10        SEC
Documents; Financial Statements. Except for the Company's annual report on Form 10-K for the fiscal year ending June 30, 2013,
the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the
SEC or any governmental authority (all of the foregoing filed within the two (2) years preceding the date hereof or amended after
the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to as the “SEC Documents”). The Borrower is current with
its filing obligations under the Exchange Act and all SEC Documents have been filed on a timely basis by the Borrower. The Borrower
represents and warrants that true and complete copies of the SEC Documents are available on the SEC website (www.sec.gov) at no
charge to Lender, and Lender acknowledges that it may retrieve all SEC Documents from such website and Lender’s access to
such SEC Documents through such website shall constitute delivery of the SEC Documents to Lender; provided, however, that if Lender
is unable to obtain any of such SEC Documents from such website at no charge, as result of such website not being available or
any other reason beyond Lender’s control, then upon request from Lender, the Borrower shall deliver to Lender true and complete
copies of such SEC Documents. The Borrower shall make available 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 Exchange Act that have been prepared
but not filed with the SEC as of the date hereof. None of the SEC Documents, at the time they were filed with the SEC, contained
any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements
made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements
as have been amended or updated in subsequent filings prior the date hereof, which amendments or updates are also part of the SEC
Documents). As of their respective dates, the consolidated financial statements of the Borrower and its Subsidiaries included in
the SEC Documents (the “Financial Statements”) complied in all material respects with applicable accounting
requirements and any published rules and regulations of the SEC with respect thereto. All of the Financial Statements have been
prepared in accordance with GAAP, consistently applied, during the periods involved (except: (i) as may be otherwise indicated
in such Financial Statements or the notes thereto; or (ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements), and fairly present in all material respects the consolidated financial
position of the Borrower and all of its Subsidiaries as of the dates thereof and the consolidated results of its operations and
cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). To
the knowledge of Borrower and its officers, no other information provided by or on behalf of Borrower to the Lender which is not
included in the SEC Documents contains any untrue statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading.


 


7.11        Absence
of Certain Changes. Since the date the last of the SEC Documents was filed with the SEC, none of the following have occurred:


 


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


 


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


 


7.12        Litigation
and Taxes. There is no Proceeding pending, or to any Credit Party’s officers’ and directors’ knowledge, threatened,
against any Credit Party or their respective officers, managers, members or shareholders, or against or affecting any of their
respective assets. In addition, there are no outstanding judgments, orders, writs, decrees or other similar matters or items against
or affecting any Credit Party, their respective business or assets. No Credit Party has received any material complaint from any
Customer, supplier, vendor or employee. Each Credit Party has 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 any Credit Party.


 




    	33



    	 



    

 


7.13         Event
of Default. No Event of Default has occurred and is continuing, and no event has occurred and is continuing which, with the
lapse of time, the giving of notice, or both, would constitute such an Event of Default under this Agreement or any of the other
Loan Documents, and neither Borrower nor its Subsidiaries is in default (without regard to grace or cure periods) under any contract
or agreement to which it is a party or by which any of their respective assets are bound.


 


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


 


7.15         Adverse
Circumstances. No condition, circumstance, event, agreement, document, instrument, restriction, litigation or Proceeding (or
to any Credit Party’s officers’ and directors’ knowledge, threatened litigation or Proceeding or basis therefor)
exists which: (i) could adversely affect the validity or priority of the Liens granted to Lender under the Loan Documents; (ii)
could adversely affect the ability of any 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.


 


7.16         Liabilities
and Indebtedness of the Borrower. No Credit Party has any Funded Indebtedness or any liabilities or obligations of any nature
whatsoever, except: (i) as disclosed in the financial statements delivered to the Lender as of the Closing Date; or (ii) liabilities
and obligations incurred in the Ordinary Course of Business of any Credit Party since the date of the financial statements delivered
to Lender as of the Closing Date, which do not or would not, individually or in the aggregate, exceed Ten Thousand Dollars ($10,000)
or otherwise have a Material Adverse Effect.


 


7.17         Real
Estate.


 


(a)           Real
Property Ownership. Except for the Borrower Leases and as set forth on Schedule 7.17, the Credit Parties do not
own any Real Property.


 




    	34



    	 



    

 


(b)           Real
Property Leases. Except for ordinary office leases (the “Borrower Leases”), no Credit Party leases
other Real Property. With respect to the Borrower Leases: (i) each Credit Party has 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 any Credit Party or landlord thereunder; and (iii) there exists no event,
occurrence, condition or act known to any Credit Party which, upon notice or lapse of time or both, would be or could become a
default thereunder or which could result in the termination of the Borrower Leases, or any of them, or have a Material Adverse
Effect. No Credit Party has violated nor breached any provision of any such Borrower Leases, and all obligations required to be
performed by any Credit Party under any of such Borrower Leases have been fully, timely and properly performed. Each Credit Party
has delivered to the Lender true, correct and complete copies of all Borrower Leases, including all modifications and amendments
thereto, whether in writing or otherwise. No Credit Party has received any written or oral notice to the effect that any of the
Borrower Leases will not be renewed at the termination of the term of such Borrower Leases, or that the Borrower Leases will be
renewed only at higher rents.


 


7.18           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 such 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 knowledge of each Credit Party and its officers
and directors, 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’s
officers and directors have received any notice, nor does any Credit Party’s officers and directors have any knowledge, of
any pending or contemplated termination of any of the Material Contracts and, no such termination is proposed or has been threatened,
whether in writing or orally.


 


7.19           Title
to Assets. Each Credit Party has good and marketable title to, or a valid leasehold interest in, all of its assets and properties
which are material to its business and operations as presently conducted, free and clear of all liens, claims, charges or other
encumbrances or restrictions on the transfer or use of same. Except 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.


 


7.20           Intellectual
Property. Each Credit Party owns or possesses adequate and legally enforceable rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and all other intellectual property rights necessary to conduct its business as now
conducted. No Credit Party’s officers and directors have any knowledge of any infringement by any Credit Party of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations,
trade secret or other intellectual property rights of others, and, to the knowledge of each Credit Party’s officers and directors,
there is no claim, demand or Proceeding, or other demand of any nature being made or brought against, or to each Credit Party’s
officers and directors knowledge, being threatened against, any Credit Party regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service mark registrations, trade secret or other intellectual property
infringement; and no Credit Party is aware of any facts or circumstances which might give rise to any of the foregoing.


 




    	35



    	 



    

 


7.21           Labor
and Employment Matters. The Credit Parties are not involved in any labor dispute or, to the knowledge of the officers and
directors of each Credit Party, is any such dispute threatened. To the knowledge of the Credit Parties and their officers and
directors, none of the employees of the 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 their officers and directors, 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.


 


7.22           Insurance.
The Credit Parties are 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. Credit Parties
have complied with the provisions of such Insurance Policies. No Credit Party has been refused any insurance coverage sought or
applied for and no Credit Party has any reason to believe that it will not be able to renew its existing Insurance Policies as
and when such Insurance Policies expire or to obtain similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business
or operations of any Credit Party.


 


7.23           Permits.
The Credit Parties possess all Permits necessary to conduct its business, and no Credit Party has received any notice of, or is
otherwise involved in, any Proceedings relating to the revocation or modification of any such Permits. All such Permits are valid
and in full force and effect and each Credit Party is in full compliance with the respective requirements of all such Permits.


 


7.24           Lending
Relationship. Borrower acknowledges and agrees that the relationship hereby created with Lender is and has been conducted on
an open and arm’s length basis in which no fiduciary relationship exists and that Borrower has not relied, nor is relying
on, any such fiduciary relationship in executing this Agreement and in consummating the Loans. Lender represents that it will receive
the Revolving Notes payable to its order as evidence of the Loans.


 


7.25           Compliance
with Regulation U. No portion of the proceeds of the Loans shall be used by 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.



 




    	36



    	 



    

 


7.26           Governmental
Regulation. Borrower is not, or after giving effect to any Loan, will not 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.


 


7.27           Bank
Accounts. Schedule 7.27 sets forth, with respect to each account of each Credit Party with any bank, broker,
merchant processor, or other depository institution: (i) the name and account number of such account; (ii) the name and address
of the institution where such account is held; (iii) the name of any Person(s) holding a power of attorney with respect to such
account, if any; and (iv) the names of all authorized signatories and other Persons authorized to withdraw funds from each such
account.


 


7.28           Places
of Business. The principal place of business of each Credit Party is set forth on Schedule 7.28 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; 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 Borrower.


 


7.29           Illegal
Payments. No Credit Party, nor any director, officer, member, manager, agent, employee or other Person acting on behalf of
any Credit Party has, in the course of his actions for, or on behalf of, any Credit Party: (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.


 


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


 




    	37



    	 



    




 


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


 


7.32           Brokerage
Fees. There is no Person acting on behalf of Borrower who is entitled to or has any claim for any brokerage or finder’s
fee or commission in connection with the execution of this Agreement or the consummation of the transactions contemplated hereby.


 


7.33           No
General Solicitation. Neither Borrower, 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 Revolving Notes, the Facility Fee Shares or the shares issuable upon conversion of the Revolving
Notes.


 


7.34           No
Integrated Offering. Neither Borrower, 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 Revolving Notes, the Facility Fee Shares or any securities issuable upon conversion of the Revolving
Notes under the Securities Act or cause this offering of such securities to be integrated with prior offerings by Borrower for
purposes of the Securities Act.


 


7.35           Private
Placement. No registration under the Securities Act or the laws, rules or regulation of any other governmental authority is
required for the issuance of the Revolving Notes, the Facility Fee Shares or the shares issuable upon conversion of the Revolving
Notes as contemplated hereby.


 


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


 


8.           NEGATIVE
COVENANTS.


 


8.1           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:


 





    	38



    	 



    

 


(a)           the
Obligations;


 


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


 


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


 


(d)           obligations
for accounts payable, other than for money borrowed, incurred in the Ordinary Course of Business; provided that, any management
or similar fees payable by the Credit Parties shall be fully subordinated in right of payment to the prior payment in full of the
Loans made hereunder;


 


(e)           obligations
existing on the Closing Date which are disclosed on the financial statements referred to in Section 7.10;


 


(f)           unsecured
intercompany Funded Indebtedness incurred in the Ordinary Course of Business;


 


(g)           Funded
Indebtedness existing on the Closing 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;


 


(h)           Funded
Indebtedness consisting of Capital Lease obligations or secured by Permitted Liens of the type described in clause (g) of the definition
thereof not to exceed $250,000 in the aggregate at any time;


 


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


 


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


 


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


 


8.2           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 Closing Date or hereafter acquired, except
Permitted Liens or as otherwise authorized by Lender in writing.


 




    	39



    	 



    

 


8.3          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 Closing 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;


 


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


 


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


 


(f)           Contingent
Liabilities permitted pursuant to Section 8.1; or


 


(g)           Capital
Expenditures permitted under Section 8.5.


 


8.4          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;


 


(b)           upon
not less than three (3) Business Days’ prior written notice to Lender, any Subsidiary of Borrower may merge with (so long
as 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;


 


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


 


(e)           sell
or otherwise dispose (including cancellation of Funded Indebtedness) of any Investment permitted under Section 8.3 in the
Ordinary Course of Business; and


 


(f)           grant
Permitted Liens.


 


8.5          Capital
Expenditures. Without Lender’s prior consent, the Credit Parties shall not make or incur obligations for any Capital
Expenditures in any fiscal year.



 




    	40



    	 



    

 


8.6           Issuance
of Stock. The Credit Parties shall not, either directly or indirectly, issue or distribute any additional capital stock, membership
interest or other securities of the Credit Parties without the prior written consent of Lender.


 


8.7           Distributions;
Restricted Payments. The Credit Parties shall not: (i) purchase or redeem any shares of its stock or membership interests 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 to its shareholders, make any distribution of its property or assets or make any loans, advances or extensions of
credit to, or investments in, any Persons, including, without limitation, such Borrower’s Affiliates, officers, partners
or employees, without the prior written consent of Lender; (ii) make any payments of any Funded Indebtedness other than as permitted
hereunder; or (iii) increase the annual salary paid to any officers of the Credit Parties as of the Closing Date.


 


8.8           Use
of Proceeds. Neither the Credit Parties nor any of their Affiliates, shall use any portion of the proceeds of the Loans, either
directly or indirectly, for the purpose of purchasing any securities underwritten by any Affiliate of Lender.


 


8.9           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 Closing Date and business reasonably related thereto; (ii) change its name, Organizational
Identification Number, its type of organization, its jurisdictions of organization or other legal structure; or (iii) permit their
Articles of Incorporation, Bylaws, or other organizational documents to be amended or modified in any way which could reasonably
be expected to adversely affect the interests of Lender.


 


8.10          Transactions
with Affiliates. The Credit Parties shall not enter into any transaction with any of their Affiliates, except in the Ordinary
Course of Business 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.


 


8.11         Bank
Accounts. The Credit Parties shall not maintain any bank, deposit or credit card payment processing accounts with any financial
institution, Payment Processing Companies, or any other Person, for the Credit Parties or any Affiliate of the Credit Parties,
other than the Credit Parties’ respective accounts listed in the attached Schedule 7.27, and other than the
Lock Box Account established pursuant to this Agreement. Specifically, no Credit Party may change, modify, close or otherwise affect
the Lock Box Account or any of the other accounts listed in Schedule 7.27, without Lender’s prior written approval,
which approval may be withheld or conditioned in Lender’s sole and absolute discretion.


 




    	41



    	 



    

 


9.           AFFIRMATIVE
COVENANTS.


 


9.1           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 Closing Date 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.


 


9.2           Corporate
Existence. Each Credit Party 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 each Credit Party are presently conducting.


 


9.3           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 the Credit Parties deem appropriate in their 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, but not limited to, any Collateral,
at all reasonable times upon reasonable notice during business hours. During the continuance of any Event of Default, Lender shall,
at Borrower’s expense, have the right to make additional inspections without providing advance notice.


 


9.4           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, each Credit Party 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 the Credit Parties 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 Borrower’s and its Subsidiaries’ 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 Borrower
may be able to obtain on their 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.


 




    	42



    	 



    

 


9.5           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 their 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)           The
Credit Parties 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.


 


9.6           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; (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.


 


9.7           Financial
Statements. Borrower 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:


 




    	43



    	 



    

 


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


 


(b)           as
soon as available, and in any event, within sixty (60) days after the close of each fiscal quarter, a copy of the quarterly financial
statements of Borrower, including balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal
year then ended, in reasonable detail, prepared and certified as accurate in all material respects by the President or Chief Financial
Officer of Borrower;


 


(c)           as
soon as available, and in any event, within thirty (30) days following the end of each calendar month, a copy of the financial
statements of Borrower regarding such month, including balance sheet, statement of income and retained earnings, statement of cash
flows for the month then ended, in reasonable detail, prepared and certified as accurate in all material respects by the President
or Chief Financial Officer of Borrower;


 


(d)           within
three (3) days of receipt by any Credit Party, a copy of any and all bank statements of such Credit Party for the month then ended;


 


(e)           as
soon as available, and in any event, within thirty (30) days following the end of each calendar month, a copy of a variance report
which shall compare the intended use of the loan proceeds submitted at Closing pursuant to Section 3.3(e) with the actual
use of the loan proceeds set forth on the report delivered to the Lender as of the Closing Date, including explanations for variances
over or under ten percent (10%), in reasonable detail, prepared and certified as accurate in all material respects by the President
or Chief Financial Officer of Borrower.


 


No change with respect
to such accounting principles shall be made by Borrower without giving prior notification to Lender. The Borrower represents and
warrants to Lender that the financial statements delivered to Lender at or prior to the execution and delivery of this Agreement
and to be delivered at all times thereafter accurately reflect and will accurately reflect the financial condition of 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 Borrower and make extracts therefrom.
Borrower shall at all times comply with all reporting requirements of the SEC to the extent applicable.


 


The 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.




 




    	44



    	 



    

  


In addition to any remedies
which may be available hereunder, upon each occurrence of Borrower’s failure to timely comply with the reporting requirements
contained in this Section, to the extent that the Facility Fee Shares have not yet been redeemed or sold by the Lender (including
any additional Facility Fee Shares to be delivered hereunder) for an amount equal to the Share Value, Borrower agrees to redeem
in cash a portion of the Facility Fee Shares equal to eight and thirty-three one hundredths of one percent (8.33%) of the Share
Value remaining unpaid to Lender.


 


9.8           Supplemental
Financial Statements. Borrower shall promptly upon receipt thereof, 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 Borrower.


 


9.9           Aged
Accounts/Payables Schedules. The Credit Parties shall within twenty (20) days after the end of each calendar month, 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 an officer of the Credit Parties. The Credit Parties shall within twenty (20) days after the end of
each calendar month, 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 an officer of the Credit Parties.


 


9.10         Field
Audits. The Credit Parties shall allow Lender, at Borrower’s sole expense (no more than four (4) times a year at Five
Hundred and No/100 United States Dollars (US$500) per visit or audit, so long as no Event of Default has occurred and is continuing),
to conduct a field examination of the assets and records of the Borrower and its Subsidiaries, the results of which must be satisfactory
to Lender in Lender’s sole and absolute discretion. The foregoing notwithstanding, (i) from and after the occurrence and
during the continuation of an Event of Default or any event which with notice, lapse of time or both would become an Event of Default,
or (ii) in the event that the Borrower’s cash flow indicates more than a fifteen percent (15%) reduction from the previous
month pursuant to the monthly financial statements, Lender may conduct field examinations in its sole discretion and such costs
shall be at the sole expense of Borrower.


 


9.11         Negative
EBIDTA Notice and Other Reports. Borrower shall provide prompt written notice to Lender if the Borrower fails to comply with
Sections 10.1 and 10.2 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.


 


9.12         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, without limitation, placing a legend, in form and content
reasonably acceptable to Lender, on all Chattel Paper created by each Credit Parties indicating that Lender has a Lien in such
Chattel Paper.


 




    	45



    	 



    

 


9.13           Notice
of Proceedings. The Credit Parties shall, promptly, but not more than five (5) days after knowledge thereof shall have come
to the attention of any officer or director of the Credit Parties, give written notice to Lender of all threatened or pending actions,
suits, and proceedings before any court or governmental department, commission, board or other administrative agency which may
have a Material Adverse Effect.


 


9.14           Notice
of Default. The Credit Parties 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.


 


9.15           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 Affiliate, 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, 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, the Credit Parties shall dispose
of such Hazardous Substances, or of any other wastes, only at licensed disposal facilities operating in compliance with Environmental
Laws.


 


9.16           Subsidiaries.
Any Subsidiary which is formed or acquired or otherwise becomes a Subsidiary of the Credit Parties following the Closing Date,
within ten (10) Business Days of such event, shall become an additional Credit Party hereto, and the Credit Parties shall take
any and all actions necessary or advisable to cause said Subsidiary to execute a counterpart to this Agreement and any and all
other documents which the Lender shall require, including, but not limited to, causing such party to execute those documents contained
in Section 3.4 hereof.


 


9.17           Reporting
Status; Listing. So long as this Agreement remains in effect, and for so long as Lender owns, legally or beneficially, any
of the Facility Fee Shares or other 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 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 Facility Fee Shares and any other shares of the Borrower’s Common Stock issuable to Lender under any 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 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.


 




    	46



    	 



    

 


9.18         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 Facility 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 six (6) months prior to the Closing 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:


 


(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, the Securities Act and the Exchange Act; and (b) such other information as may be reasonably requested by Lender to
permit the Lender to sell any of the Facility Fee Shares or other shares of Common Stock acquired hereunder or under the Revolving
Notes pursuant to Rule 144 without limitation or restriction; and


 


(c)           promptly
at the request of Lender, give Borrower’s transfer agent (the “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 Facility Fee Shares or shares of Common Stock issuable upon conversion of the Revolving Notes
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, 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 Revolving Notes and secured under the Loan Documents.


 




    	47



    	 



    

 


9.19         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 Revolving Notes in
accordance with its terms (the “Share Reserve”). If at any time the Share Reserve is insufficient to
effect the full conversion of the Revolving Notes 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 sixty (60) 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.           FINANCIAL
COVENANTS.


 


10.1           Positive
EBITDA. Borrower shall at all times cause a positive EBITDA to be maintained.


 


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


 


10.3           Loan
to Value Ratio. At all times, the ratio of the Revolving Loan Commitment to the value of the Collateral, such value to be based
on the financial information and documentation delivered by the Borrower to the Lender from time to time and to be determined by
the Lender in its sole discretion, shall be no more than 1.00 to 2.00.


 


11.           EVENTS
OF DEFAULT.


 


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


 


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


 




    	48



    	 



    

  


11.2           Misrepresentation.
Any written warranty, representation, certificate or statement of any Credit Party 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.


 


11.3           Nonperformance.
Any failure by a Credit Party to perform or default in the performance of any covenant, condition or agreement contained in this
Agreement (not otherwise addressed in this Article 11), which failure to perform or default in performance continues for
a period of thirty (30) days after Borrower’s officers or directors receive notice or knowledge from any source 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 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).


 


11.4           Default
under Loan Documents. Any failure to perform or default in the performance by a 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.


 


11.5           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, but not limited to, any capital or operating lease or any agreement in connection with the deferred
purchase price of property), the effect of which default is to cause or permit the holder of such obligation (or the other party
to such other agreement) to cause such obligation or agreement to become due prior to its stated maturity, to terminate such other
agreement, or to otherwise modify or adversely affect such obligation or agreement in a manner that could have a Material Adverse
Effect on Borrower.


 


11.6           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 such Credit Party is applied for or appointed,
and in the case of such trustee being appointed in a proceeding brought against such Credit Party, such Credit Party, 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.


 


11.7           Bankruptcy.
Any proceeding involving a Credit Party, is commenced by or against a Credit Party 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 a Credit Party: (i) the Credit Party, 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.


 




    	49



    	 



    

 


11.8           Judgments.
The entry of any judgment, decree, levy, attachment, garnishment or other process, or the filing of any Lien against the property
of a Credit Party for an amount in excess of $25,000 and which is not fully covered by insurance and such judgment or other process
would have a Material Adverse Effect on the ability of the Credit Party to perform under this Agreement or under Loan Documents,
as determined by Lender in its sole discretion, unless such judgment or other process shall have been, within sixty (60)
days from the entry thereof: (i) bonded over to the satisfaction of Lender and appealed; (ii) vacated; or (iii) discharged.


 


11.9           Material
Adverse Effect. A Material Adverse Effect shall occur.


 


11.10         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 Borrower
(for example, but not by way of limitation, a transfer of ownership interest due to death or incapacity); and (ii) within sixty
(60) days after such Change in Control, Borrower provides Lender with information concerning the identity and qualifications of
the individual or individuals who will be in Control, and such individual or individuals shall be acceptable to Lender, in Lender’s
sole discretion.


 


11.11         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.


 


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


 


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


 


11.14         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.


 




    	50



    	 



    

 


12.           REMEDIES.


 


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 11.6, “Assignment for Creditors”, or Section 11.7, “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 consent to, and waive 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.


 


No Event of Default
shall be waived by Lender, except and unless such waiver is in writing and signed by Lender. No failure or delay on the part of
Lender in exercising any right, power or remedy hereunder shall operate as a waiver of the exercise of the same or any other right
at any other time; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. There shall be no obligation on the part of Lender to exercise
any remedy available to Lender in any order. The remedies provided for herein are cumulative and not exclusive of any remedies
provided at law or in equity. Each Credit Party agrees that in the event that a Credit Party fails to perform, observe or discharge
any of its Obligations or liabilities under this Agreement, the Revolving Notes, 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.


 


13.           MISCELLANEOUS.


 


13.1         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 Revolving Notes, or any note evidencing any of the Obligations;
or


 




    	51



    	 



    

 


(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.


 


13.2         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.


 


13.3         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.


 


13.4         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 CLOSING DATE TO ANY ACTION BY LENDER IN ENFORCING THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. THE CREDIT
PARTIES WAIVE ANY IMPLIED COVENANT OF GOOD FAITH AND RATIFY AND CONFIRM WHATEVER LENDER MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS AS OF THE CLOSING DATE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER GRANTING ANY FINANCIAL
ACCOMMODATION TO BORROWER.


 


13.5         WAIVER
OF JURY TRIAL. LENDER AND EACH OF THE CREDIT PARTIES, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE REVOLVING NOTES, 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 THE CREDIT PARTIES ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER.


 




    	52



    	 



    

 


13.6           MANDATORY
FORUM SELECTION. Any dispute arising under, relating to, or in connection with the
Agreement or related to any matter which is the subject of or incidental to the 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.


 


13.7           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.


 


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


 


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


 




    	53



    	 



    

 


13.10           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; provided, however, that Borrower 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, Borrower shall use their best efforts to consult Lender in connection with any such press release
or other public disclosure prior to its release and Lender shall be provided with a copy thereof upon release thereof.


 


13.11           Binding
Effect. This Agreement shall become effective upon execution by Borrower, the Guarantor and Lender.


 


13.12           Governing
Law. Except in the case of the Mandatory Forum Selection clause set forth in Section 13.6 hereof, this Agreement, the
Loan Documents and the Revolving Notes 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.


 


13.13           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.


 


13.14           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 Revolving Notes and the Facility Fee Shares, 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 paid in full. Lender, in extending financial accommodations to Borrower, is expressly acting and
relying on the aforesaid representations and warranties.


 


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


 


13.16           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.


 




    	54



    	 



    

 


13.17           Counterparts.
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and
the same instrument.


 


13.18           Electronic
Signatures. Lender is hereby authorized to rely upon and accept as an original any Loan Documents or other communication which
is sent to Lender by facsimile, telegraphic or other electronic transmission (each, a “Communication”)
which Lender in good faith believes has been signed by the Credit Parties and has been delivered to Lender by a properly authorized
representative of the Credit Parties, whether or not that is in fact the case. Notwithstanding the foregoing, Lender shall not
be obligated to accept any such Communication as an original and may in any instance require that an original document be submitted
to Lender in lieu of, or in addition to, any such Communication.


 


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


 


	 	If to the Credit Parties:	2915 Waters Road, Suite 108
	 	 	Eagan, MN 55121
	 	 	Attention:  Kenneth Brimmer
	 	 	Facsimile: (952) 545-2795
	 	 	 
	 	With a copy to:	Maslon Edelman Borman & Brand, LLP
	 	(which shall not constitute notice)	3300 Wells Fargo Center
	 	 	90 South Seventh Street
	 	 	Minneapolis, MN 55402
	 	 	Attention: Doug Holod
	 	 	Facsimile: (612) 642-8313



 



    	55



    	 



    

 


	 	If to Lender:	TCA Global Credit Master Fund, LP
	 	 	1404 Rodman Street
	 	 	Hollywood, FL 33020
	 	 	Attention: Robert Press
	 	 	Facsimile: (786) 323-1651


 


	 	With a copy to:	Lucosky Brookman LLP
	 	(which shall not constitute notice)	101 Wood Avenue South, 5th Floor
	 	 	Woodbridge, NJ 08830
	 	 	Attention: Seth A. Brookman, Esq.
	 	 	Facsimile: (732) 395-4401


 


13.20           Indemnification.
Each Credit Party agrees to defend, protect, indemnify and hold harmless Lender and all of its officers, directors, employees and
agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (each,
a “Lender Indemnitee” and collectively, the “Lender Indemnitees”) from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and
distributions of any kind or nature (including, without limitation, the disbursements and the reasonable fees of counsel for each
Lender Indemnitee thereto), which may be imposed on, incurred by, or asserted against, any Lender Indemnitee (whether direct, indirect
or consequential and whether based on any federal, state or local laws or regulations, including, without limitation, securities,
Environmental Laws and commercial laws and regulations, under common law or in equity, or based on contract or otherwise) in any
manner relating to or arising out of this Agreement or any of the Loan Documents, or any act, event or transaction related or attendant
thereto, the preparation, execution and delivery of this Agreement and the Loan Documents, including, but not limited to, the making
or issuance and management of the Loans, the use or intended use of the proceeds of the Loans, the enforcement of Lender’s
rights and remedies under this Agreement, the Loan Documents, the Revolving Notes, any other instruments and documents delivered
hereunder, or under any other agreement between any Credit Party and Lender; provided, however, that the Credit Parties
shall not have any obligations hereunder to any Lender Indemnitee with respect to matters caused by or resulting from the willful
misconduct or gross negligence of such Lender Indemnitee. To the extent that the undertaking to indemnify set forth in the preceding
sentence may be unenforceable because it violates any law or public policy, 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 the
Credit Parties 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.


 




    	56



    	 



    

 


13.21           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, the Credit Parties hereby agree to fully, finally and
forever release and forever discharge and covenant not to sue Lender, and/or and its parent companies, subsidiaries, affiliates,
divisions, and their respective attorneys, officers, directors, agents, shareholders, members, employees, predecessors, successors,
assigns, personal representatives, partners, heirs and executors from any and all debts, fees, attorneys’ fees, liens, costs,
expenses, damages, sums of money, accounts, bonds, bills, covenants, promises, judgments, charges, demands, claims, causes of action,
suits, liabilities, expenses, obligations or contracts of any kind whatsoever, whether in law or in equity, whether asserted or
unasserted, whether known or unknown, fixed or contingent, under statute or otherwise, from the beginning of time through the Closing
Date, including, without  limiting the generality of the foregoing, any and all claims relating to or arising out of any financing
transactions, credit facilities, debentures, security agreements, and other agreements including, without limitation, each of the
Loan Documents, entered into by the Credit Parties with Lender and any and all claims that the Credit Parties does not
know or suspect to exist, whether through ignorance, oversight, error, negligence, or otherwise, and which, if known, would materially
affect their decision to enter into this Agreement or the related Loan Documents.


 


13.22           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.


 


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


 


13.24           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.


 


[ signature page follows ]


 




    	57



    	 



    

 


IN WITNESS WHEREOF,
the Borrower and the Lender have executed this Credit Agreement as of the Closing Date.


 


	BORROWER:	 
	 	 
	HYPERTENSION DIAGNOSTICS, INC.	 
	 	 	 
	By:	/s/ Kenneth Brimmer	 
	Name:	Kenneth Brimmer	 
	Title:	Chief Executive Officer	 
	 	 	 
	LENDER:	 
	 	 
	TCA GLOBAL CREDIT MASTER FUND, LP	 
	 	 
	By:	TCA Global Credit Fund GP, Ltd.	 
	Its:	General Partner	 
	 	 	 
	By:	/s/ Robert Press	 
	Name:	Robert Press	 
	Title:	Director	 


 


[ signature page 1 of 2 ]


 




    	58



    	 



    

 


CONSENT AND AGREEMENT


 


The undersigned, referred to in the foregoing
senior secured revolving credit facility agreement as a guarantor, hereby consents and agrees to said senior secured revolving
credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated thereby 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 revolving credit facility agreement to the same extent as if the undersigned were a party to said senior secured
revolving credit facility agreement.


 


GUARANTOR:


 


HDI PLASTICS, INC.


 


	By:	/s/ Kenneth Brimmer	 
	Name:	Kenneth Brimmer	 
	Title:	Chief Executive Officer	 


 


[ signature page 2 of 2 ]


 




    	59



    	 



    

 


Pursuant to Item 601(b)(2) of Regulation S-K, certain Exhibits
and Schedules have been omitted from this Agreement. The Registrant will furnish a copy of any omitted Exhibit or Schedule to the
Commission upon request.


 


	Exhibit B	 	Form of Irrevocable Transfer Agent Instructions
	Exhibit E	 	Form of Validity Guaranty
	 	 	 
	Schedule 7.1	 	Subsidiaries
	Schedule 7.4	 	Outstanding Securities
	Schedule 7.10	 	Real Property
	Schedule 7.27	 	Bank Accounts and Deposit Accounts
	Schedule 7.28	 	Places of Business


 


The following Exhibits have been omitted, but are filed as a
separate exhibits to this Form 8-K:


 


	Exhibit A	 	Form of Guaranty filed as Exhibit 10.5
	Exhibit C	 	Form of Revolving Note filed as Exhibit 10.2
	Exhibit D-1	 	Form of Security Agreement (Borrower) filed as Exhibit 10.3
	Exhibit D-2	 	Form of Security Agreement (Subsidiary/Guarantor) filed as Exhibit 10.4
	Exhibit F	 	Form of Warrant filed as Exhibit 10.6


 




    	60