Exhibit 10.2


 


LOAN AND SECURITY AGREEMENT


 


A. D. COMPUTER CORPORATION,


 


PAYROLL TAX FILING SERVICES, INC.


 


AND


 


ALL OTHER PERSONS JOINED HERETO AS A


BORROWER FROM TIME TO TIME, as Borrowers


 


WITH


 


JETPAY CORPORATION and COLLECTORSOLUTIONS,
LLC,

each as a Guarantor


 


AND


 


LHLJ, INC., as Lender


 


Dated as of October 18, 2016


 




     


     


    

 


Table of Contents


 


	 	 	Page
	 	 	 
	SECTION I.	DEFINITIONS AND INTERPRETATION	1
	1.1.	Terms Defined	1
	1.2.	Accounting Principles	13
	1.3.	Construction	13
	 	 	 
	SECTION II.	THE LOAN	13
	2.1.	[Reserved].	13
	2.2.	Term Loan:	13
	2.3.	[Reserved].	13
	2.4.	[Reserved].	13
	2.5.	Interest	13
	2.6.	Additional Interest Provisions	14
	2.7.	Fees and Charges	14
	2.8.	Voluntary and Mandatory Prepayments	15
	2.9.	Use of Proceeds	16
	2.10.	[Reserved].	16
	2.11.	Joint and Several Liability	16
	2.12.	Taxes	17
	 	 	 
	SECTION III.	COLLATERAL	17
	3.1.	Collateral	17
	3.2.	Lien Documents	19
	3.3.	Other Actions	19
	3.4.	Searches, Certificates:	19
	3.5.	Landlord’s and Warehouseman’s Waivers; Access Agreements	20
	3.6.	Filing Security Agreement	20
	3.7.	Power of Attorney	20
	 	 	 
	SECTION IV.	CLOSING AND CONDITIONS PRECEDENT TO ADVANCES	20
	4.1.	Resolutions, Opinions, and Other Documents	20
	4.2.	Absence of Certain Events	21
	4.3.	Warranties and Representations at Closing	22
	4.4.	Compliance with this Agreement	22
	4.5.	Officers’ Certificate	22
	4.6.	Closing	22
	4.7.	Waiver of Rights	22
	 	 	 
	SECTION V.	REPRESENTATIONS AND WARRANTIES	22
	5.1.	Organization and Validity	22
	5.2.	Places of Business	23
	5.3.	Pending Litigation	23
	5.4.	Title to Properties	23
	5.5.	Consent	23
	5.6.	Taxes	23


 




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	5.7.	Financial Statements and Projections	24
	5.8.	Full Disclosure	24
	5.9.	Subsidiaries	25
	5.10.	Investments, Guarantees, Contracts, etc.	25
	5.11.	Government Regulations, ERISA, etc.	25
	5.12.	Business Interruptions	26
	5.13.	Names and Intellectual Property	27
	5.14.	Other Associations	27
	5.15.	Environmental Matters	27
	5.16.	Investment Company Act	28
	5.17.	Capital Stock	28
	5.18.	Solvency	28
	5.19.	Perfection and Priority	28
	5.20.	Commercial Tort Claims	29
	5.21.	Letter of Credit Rights	29
	5.22.	Deposit Accounts	29
	5.23.	Anti-Terrorism Laws	29
	5.24.	[Reserved]	29
	5.25.	Management Agreements	29
	 	 	 
	SECTION VI.	AFFIRMATIVE COVENANTS	30
	6.1.	Payment of Taxes and Claims	30
	6.2.	Maintenance of Properties and Corporate Existence	30
	6.3.	Business Conducted	31
	6.4.	Litigation Notices	31
	6.5.	Issue Taxes	31
	6.6.	Deposit Accounts	31
	6.7.	ERISA Notices	32
	6.8.	Financial Covenants	32
	6.9.	Financial and Business Information	33
	6.10.	Officers’ Certificates	35
	6.11.	Audits and Inspection; Appraisals	35
	6.12.	Material Adverse Developments	36
	6.13.	Places of Business	36
	6.14.	Commercial Tort Claims	36
	6.15.	Letter of Credit Rights	36
	6.16.	Lockbox	36
	 	 	 
	SECTION VII.	NEGATIVE COVENANTS:	36
	7.1.	Merger, Consolidation, Dissolution or Liquidation	36
	7.2.	Acquisitions	37
	7.3.	Liens and Encumbrances	37
	7.4.	Transactions With Affiliates or Subsidiaries	37
	7.5.	Guarantees	37
	7.6.	Other Indebtedness	38
	7.7.	Loans and Investments	38
	7.8.	Use of Lenders’ Name	38
	7.9.	Miscellaneous Covenants	38


 




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	7.10.	Jurisdiction of Organization	38
	7.11.	Distributions	38
	7.12.	[Reserved]	38
	7.13.	Management Arrangements	38
	7.14.	Tax Consolidation	39
	7.15.	Compliance with ERISA	39
	 	 	 
	SECTION VIII.	DEFAULT	40
	8.1.	Events of Default	40
	8.2.	Cure	42
	8.3.	Rights and Remedies on Default	42
	8.4.	Nature of Remedies	44
	8.5.	Set-Off	44
	 	 	 
	SECTION IX.	MISCELLANEOUS	44
	9.1.	Governing Law	44
	9.2.	Integrated Agreement	44
	9.3.	Waiver	44
	9.4.	Indemnity	45
	9.5.	Time	45
	9.6.	Expenses of Lender	45
	9.7.	Brokerage	46
	9.8.	Notices	46
	9.9.	Headings	47
	9.10.	Survival	47
	9.11.	Successors and Assigns	47
	9.12.	Duplicate Originals	48
	9.13.	Modification	48
	9.14.	Signatories	48
	9.15.	Third Parties	48
	9.16.	Discharge of Taxes, Borrower’s Obligations, Etc.	48
	9.17.	Consent to Jurisdiction	48
	9.18.	Additional Documentation	48
	9.19.	Advertisement	49
	9.20.	Waiver of Jury Trial	49
	9.21.	Consequential Damages, etc.	49
	9.22.	Nonliability of Lender	49
	9.23.	Confidentiality	49
	9.24.	Patriot Act Notice	49


 




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LOAN AND SECURITY AGREEMENT


 


This Loan and Security
Agreement (“Agreement”) is dated this 18th day of October, 2016, by and among A. D. COMPUTER CORPORATION,
a Pennsylvania corporation (“ADC”), Payroll Tax Filing Services, Inc.,
a Pennsylvania corporation (“Payroll”), each other Person joined hereto as a borrower from time to time (ADC, Payroll
and each other Person so joined hereto, each a “Borrower” and collectively, “Borrowers”), CollectorSolutions,
LLC, a Delaware limited liability company (“CSI”), JETPAY CORPORATION, a Delaware corporation (“Parent”),
and LHLJ, INC. (“Lender”).


 


BACKGROUND


 


A.           Borrowers
desire to establish financing arrangements with Lender and Lender is willing to make loans and extensions of credit to Borrowers
under the terms and provisions hereinafter set forth.


 


B.            The
parties desire to define the terms and conditions of their relationship in writing.


 


NOW, THEREFORE, the
parties hereto, intending to be legally bound, hereby agree as follows:


 


SECTION
I.           DEFINITIONS AND INTERPRETATION


 


1.1.         Terms
Defined: As used in this Agreement, the following
terms have the following respective meanings:


 


Account –
All of the “accounts” (as that term is defined in the UCC) of each Borrower, whether now existing or hereafter arising.


 


Account Debtor
– Any Person obligated on any Account owing to a Borrower.


 


Accumulated Funding
Deficiency – Any accumulated funding deficiency as defined in Section 302(a) of ERISA.


 


Affiliate –
With respect to any Person, (a) any Person which, directly or indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with, such Person, or (b) any Person who is a director or officer (i) of such Person, (ii) of any
Subsidiary of such Person, or (iii) any Person described in clause (a) above. For purposes of this definition, control of a Person
shall mean the power, direct or indirect, (x) to vote 10% or more of the Capital Stock having ordinary voting power for the election
of directors (or comparable equivalent) of such Person, or (y) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise. Control may be by ownership, contract, or otherwise.


 


Anti-Terrorism Laws
– Any statute, treaty, law (including common law), ordinance, regulation, rule, order, opinion, release, injunction,
writ, decree or award of any Governmental Authority relating to terrorism or money laundering, including Executive Order No. 13224
and the USA Patriot Act.


 



     


     


    

 


Approved Management
Fees – For each Borrower, a payment of a monthly management fee of $30,000 to Parent pursuant to Section 3 of the Management
Agreement in effect as of the Closing; provided, however, that the payment of such Approved Management Fees shall, at all times,
be subject to the terms of the Management Fee Subordination Agreement.


 


Asset Sale –
The sale, transfer, lease, license or other disposition (whether voluntary or involuntary), by Borrower, to any Person other than
a Borrower, of any Property now owned, or hereafter acquired, of any nature whatsoever in any transaction or series of related
transactions. An Asset Sale includes, but is not limited to, a merger, consolidation, division, conversion, dissolution or liquidation.


 


Authorized
Officer – Any officer of any Borrower authorized by specific written resolution of such Borrower to execute
Compliance Certificates.


 


Bankruptcy Code
– Title 11 of the United States Code entitled “Bankruptcy”, as now or hereinafter in effect, or any successor
statute.


 


Blocked
Person – Section 5.23.


 


Borrowing Agent
– ADC.


 


Business Day
– A day other than Saturday, Sunday or national holiday on which banks in the Commonwealth of Pennsylvania are closed for
business.


 


Capital Expenditures
– For any period, the aggregate of all expenditures (including that portion of Capitalized Lease Obligations attributable
to that period) made in respect of the purchase, construction or rehabilitation of fixed or capital assets, determined in accordance
with GAAP.


 


Capital Stock
– Any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation,
any and all other ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any
of the foregoing.


 


Capitalized Lease
Obligations – Any Indebtedness represented by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, consistently applied but excluding lease obligations which would be classified as
operating lease obligations in accordance with GAAP as in effect on the date hereof.


 


Change of Control
– The occurrence of any event which results in Parent ceasing to beneficially own, directly or indirectly, 100% of the
total outstanding Capital Stock of each other Loan Party and their respective Subsidiaries.


 


Closing –
Section 4.6.


 


Closing Date
– Section 4.6.


 



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Closing Date
Indebtedness – Indebtedness of Borrowers due and owing to First National Bank (f/k/a Metro Bank) pursuant to that
certain Loan and Security Agreement, dated December 28, 2012, among Borrowers, Parent, First National Bank, as amended from
time to time.


 


Closing Fee –
Section 2.7(a).


 


COBRA –
The group health plan continuation coverage requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA.


 


Code –
The Internal Revenue Code of 1986, as amended, or its predecessor or successor, as applicable, and any United States Treasury
regulations, revenue rulings or technical information releases issued thereunder.


 


Collateral –
All of the Property and interests in Property described in Section 3.1 of this Agreement and all other Property and interests
in Property that now or hereafter secure payment of the Obligations and satisfaction by Borrowers of all covenants and undertakings
contained in this Agreement and the other Loan Documents.


 


Commodity Exchange
Act – the Commodity Exchange Act (7 U.S.C. § 1 et. seq.), as amended from time to time, and any successor
statute.


 


Compliance
Certificate – Section 6.10.


 


Consolidated Amortization
Expense – For any period, the aggregate consolidated amount of amortization expenses of the Borrowers as determined
in accordance with GAAP.


 


Consolidated Depreciation
Expense – For any period, the aggregate, consolidated amount of depreciation expenses of the Borrowers, as determined
in accordance with GAAP.


 


Consolidated
EBITDA – For any period, Consolidated Net Income (or deficit) plus the sum of the following to the extent deducted
in calculating Consolidated Net Income for such period (i) Consolidated Interest Expense, plus (ii) Consolidated Tax Expense,
plus (iii) Consolidated Depreciation Expense, plus (iv) Consolidated Amortization Expense, plus (v) other non-cash charges
(excluding reserves for future cash charges) of Borrowers for such period minus (vi) non-cash charges previously added
back to Consolidated Net Income in determining Consolidated EBITDA to the extent such non-cash charges have become cash
charges during such period, minus (vii) to the extent included in calculating Consolidated Net Income, any other
non-recurring cash or non-cash gains during such period, all as determined in accordance with GAAP.


 


Consolidated Interest
Expense – For any period (without duplication), the aggregate, consolidated amount of interest expense required to be
paid or accrued during such period on all Indebtedness of the Borrowers outstanding during all or any part of such period, as
determined in accordance with GAAP.


 


Consolidated Net
Income – For any period, aggregate consolidated net income after taxes of the Borrowers (excluding extraordinary losses
and gains and all non-cash income, interest income and tax credits, rebates and other benefits), as determined in accordance with
GAAP.


 



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Consolidated Tax
Expense – For any period, the aggregate consolidated amount of income tax expenses of the Borrowers, as determined in
accordance with GAAP


 


Consolidated Total
Indebtedness – At any time, the aggregate consolidated Indebtedness of the Borrowers, as determined in accordance with
GAAP.


 


“Control Agreement”
– Section 6.6.


 


Debt Coverage
Ratio – For any period, the ratio of (i) the sum of Consolidated Net Income of Borrowers for such period plus
Consolidated Interest Expense for such period plus Consolidated Depreciation Expense for such period plus
Consolidated Amortization Expense for such period to (ii) without duplication, the sum of scheduled principal payments on
account of long term Indebtedness of Borrowers made during such period plus the sum of scheduled lease payments on
account of Capitalized Lease Obligations of Borrowers made during such period plus Consolidated Interest Expense for
such period, all as determined in accordance with GAAP.


 


Default –
Any event, act, condition or occurrence which with notice, or lapse of time or both, would constitute an Event of Default hereunder.


 


Default Rate
– Section 2.6(b).


 


Disqualified
Stock – Any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable for any reason, (ii) is
convertible or exchangeable for Indebtedness or Capital Stock that meets the requirements of clauses (i) and (ii), or (iii)
is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to the date that is
ninety-one (91) days after the Term Loan Maturity Date.


 


Distribution
–


 


a.           Cash
dividends or other cash distributions (including tax distributions) on any now or hereafter outstanding Capital Stock of any Loan
Party;


 


b.           The
redemption, repurchase, defeasance or acquisition of such Capital Stock or of warrants, rights or other options to purchase such
Capital Stock; and


 


c.           Any
loans or advances (other than salaries), to any shareholder or other holder of Capital Stock of any Loan Party.


 


DOL – United
States Department of Labor, or any governmental agency or instrumentality succeeding to the functions thereof.


 


Dollar, Dollars and
U.S. Dollars and the Symbol $ – Lawful money of the United States of America.


 


Earn Out
Payments – Cash payments made by a Borrower pursuant to earn out liabilities incurred in connection with the
acquisition of all or a substantial part of the assets or Capital Stock of a Person.


 



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Employee Pension
Plan – Any Plan which is subject to Part 3 of Subtitle B of the Title 1 of ERISA.


 


Environmental
Laws – Any and all Federal, foreign, state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees and any and all common law requirements, rules and bases of liability regulating, relating to or
imposing liability or standards of conduct concerning pollution, protection of the environment, or the impact of pollutants,
contaminants or toxic or hazardous substances on human health or the environment, as now or may at any time hereafter be in
effect from time to time.


 


ERISA –
The Employee Retirement Income Security Act of 1974, as amended, and any regulations issued thereunder by the DOL or PBGC.


 


ERISA Affiliate
– (i) Any corporation included with any Loan Party in a controlled group of corporations within the meaning of Section 414(b)
of the Code, (ii) any trade or business (whether or not incorporated) which is under common control with any Loan Party within
the meaning of Section 414(c) of the Code; or (iii) any member of an affiliated service group of which any Loan Party is a member
within the meaning of Section 414(m) of the Code.


 


Event of
Default – Section 8.1.


 


Excluded Equity
Issuance – Any issuance of (or capital contribution to any Loan Party in respect of any such issuance)
(i) Capital Stock (other than Disqualified Stock) by a Borrower to management, employees, directors or other service
providers of such Borrower under any employee stock option or stock purchase plan or agreement or other employee benefits
plan (including, without limitation, the repayment of any loan made to such management or employee in connection with such
issuance), or (ii) Capital Stock by a Loan Party to a Loan Party; provided that no issuance of Capital Stock that gives
rise to a Change of Control shall be included in the definition of Excluded Equity Issuance.


 


Excluded
Property – With respect to a Borrower, (i) any “intent-to-use” trademark until such time as such
Borrower begins to use such trademark, (ii) any Property now or hereafter held by such Borrower to the extent (but only
to the extent) such item is subject to an agreement which contains a term or is subject to a rule of law, statute or
regulation that restricts, prohibits, or requires a consent (that has not been obtained) of a Person (other than any Loan
Party) to, the creation, attachment or perfection of the security interest granted herein, and in each case solely to the
extent that such restriction, prohibition and/or requirement of consent is effective and enforceable under applicable law and
is not rendered ineffective by applicable law (including, without limitation, pursuant to Sections 9-406, 9-407, 9-408
or 9-409 of the UCC), and (iii) any Trust Account; provided, however that (x) Excluded Property shall not include any
proceeds of any such item, and (y) any item of Excluded Property that at any time ceases to satisfy the criteria for
Excluded Property (whether as a result of the applicable Loan Party obtaining any necessary consent, any change in any rule
of law, statute or regulation, or otherwise), shall no longer be Excluded Property.


 


Executive Order No.
13224 – The Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced and as may be in effect from time to time.


 



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Expenses –
Section 9.6.


 


GAAP –
Generally accepted accounting principles as in effect on the Closing Date applied in a manner consistent with the most recent
audited financial statements of Borrowers furnished to Lender and described in Section 5.7 herein.


 


General
Intangibles – All “general intangibles” as defined in the UCC, and without limitation of the foregoing,
also all designs, patents, patent rights and applications therefor, trademarks and registrations and applications therefor,
trade names, inventions, copyrights and all registrations and applications therefor, license right, trade secrets, methods,
know how, specifications, customer lists, franchises, tax refunds and unearned insurance premiums.


 


Governmental
Authority – Any federal, state or local government or political subdivision, or any agency, authority, bureau,
central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury, or arbitration.


 


Guarantors –
Collectively, Parent, CSI, and any other Person who may hereafter guaranty, as surety, the Obligations.


 


Hazardous
Substances – Any substances defined or designated as hazardous or toxic waste, hazardous or toxic material,
hazardous or toxic substance or similar term, under any Environmental Law.


 


Hedging
Agreements – Any interest rate protection agreement, foreign currency exchange agreement, commodity purchase or
option agreement, or any other interest rate hedging device or swap agreement (as defined in 11 U.S.C. § 101 et
seq.).


 


Indebtedness
– Of any Person at any date, without duplication, (i) all indebtedness of such Person for borrowed money (including with
respect to Borrowers, the Obligations) or for the deferred purchase price of property or services (other than current trade liabilities
incurred in the ordinary course of business and payable in accordance with customary practices), (ii) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or similar instrument, (iii) all Capitalized Lease Obligations of such
Person, (iv) the face amount of all letters of credit issued for the account of such Person and all drafts drawn thereunder, (v)
all obligations of other Persons which such Person has guaranteed, (vi) Disqualified Stock, (vii) all net obligations of such
Person under Hedging Agreements, (viii) all liabilities secured by any Lien on any property owned by such Person even though such
Person has not assumed or otherwise become liable for the payment thereof and (ix) all obligations to make Earn Out Payments to
the extent such obligation is required to be included as a liability on the balance sheet of such Person in accordance with GAAP.


 


Intellectual
Property – Property constituting under any applicable law a patent, patent application, copyright, trademark,
service mark, trade name, mask work, trade secret or license or other right to use any of the foregoing.


 


Inventory –
All of the “inventory” (as that term is defined in the UCC) of each Borrower, whether now existing or hereafter acquired
or created.


 


IRS –
Internal Revenue Service.


 



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Lender
Affiliate – With respect to Lender, any Person which, directly or indirectly, is in control of, is controlled by,
or is under common control with Lender. For purposes of this definition, control of a Person shall mean the power, direct or
indirect, (x) to vote 25% or more of any class of Capital Stock having ordinary voting power for the election of directors of
such Person or other Persons performing similar functions for any such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by ownership of Capital Stock, contract or otherwise.


 


Lien –
Any interest of any kind or nature in property securing an obligation owed to, or a claim of any kind or nature in property by,
a Person other than the owner of the Property, whether such interest is based on the common law, statute, regulation or contract,
and including, but not limited to, a security interest or lien arising from a mortgage, encumbrance, pledge, conditional sale
or trust receipt, a lease, consignment or bailment for security purposes, a trust, or an assignment. For the purposes of this
Agreement, each Borrower shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person
for security purposes.


 


Liquidity –
The amount of cash on deposit in a Deposit Account with respect to which Lender has a first priority Lien and “control”
as such term is used in the UCC pursuant to a deposit account control agreement entered into pursuant to Sections 6.6 or 6.9(f)
of this Agreement.


 


Loan Parties
– Collectively, Guarantors and Borrowers.


 


Loan Documents
– Collectively, this Agreement, the Term Loan Note, the Surety Agreements, the Perfection Certificate, the Pledge Agreement,
the Trademark Security Agreement and all agreements, instruments and documents executed and/or delivered in connection therewith,
all as may be supplemented, restated, superseded, amended or replaced from time to time.


 


Management
Agreement – That certain Advisory Agreement dated as of December 28, 2012 by and between Parent and ADC.


 


Management Fee Subordination
Agreement – That certain Management Fee Subordination Agreement executed by Parent in favor of Lender, in the form and
substance satisfactory to Lender, on or prior to the Closing Date.


 


Material Adverse
Effect – A material adverse effect with respect to (a) the business, assets, properties, financial condition, stockholders’
equity, contingent liabilities, material agreements or results of operations of Borrowers on a consolidated basis, or (b) Borrowers’
ability (on a consolidated basis) to pay the Obligations in accordance with the terms hereof, or (c) the validity or enforceability
of this Agreement or any of the other Loan Documents or the rights and remedies of Lender hereunder or thereunder or (d) the validity,
perfection, priority or enforceability of the Liens granted to Lender in respect of the Collateral.


 


Multiemployer
Plan – A “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which any Loan Party,
any Loan Party’s Subsidiaries or any ERISA Affiliate is required to contribute.


 



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Net Proceeds
– With respect to (a) an Asset Sale, the cash proceeds of such sale less (i) the reasonable direct cost relating
to such (including sales commissions and legal, accounting and investment banking fees, commissions and expenses and taxes
paid); (b) an issuance of Capital Stock of any Loan Party or a Subsidiary thereof, the aggregate amount received in cash
in connection with such issuance minus the reasonable and customary fees, commissions and other out-of-pocket expenses
incurred by Loan Parties in connection with such issuance; (c) property or casualty insurance proceeds or condemnation award
proceeds, the amount of such proceeds minus the reasonable and customary fees and other out-of-pocket expenses and taxes paid
incurred by the Loan Parties in connection with recovering such proceeds; and (d) the issuance or incurrence of additional
Indebtedness, the aggregate amount received in cash in connection with such issuance or incurrence minus the reasonable and
customary fees, commissions and other out-of-pocket expenses incurred by Loan Parties in connection with such issuance.


 


Note –
The Term Loan Note.


 


Obligations –
All existing and future debts, liabilities and obligations of every kind or nature at any time owing by any Loan Party to Lender
or any other subsidiary of Lender or Lender Affiliate, whether under this Agreement, or any other existing or future instrument,
document or agreement, between a Loan Party and Lender or any other subsidiary of Lender or Lender Affiliate, whether joint or
several, related or unrelated, primary or secondary, matured or contingent, due or to become due (including debts, liabilities
and obligations obtained by assignment), and whether principal, interest, fees, indemnification obligations hereunder or Expenses
(specifically including interest accruing after the commencement of any bankruptcy, insolvency or similar proceeding with respect
to any Loan Party, whether or not a claim for such post-commencement interest is allowed), including, without limitation, debts,
liabilities and obligations in respect of the Term Loan and any extensions, modifications, substitutions, increases and renewals
thereof; the payment of all amounts advanced by Lender or any other subsidiary of Lender or Lender Affiliate to preserve, protect
and enforce rights hereunder and in the Collateral; and all Expenses incurred by Lender or any other subsidiary of Lender or Lender
Affiliate.


 


Organizational
Documents – With respect to any Person (other than an individual) the documents by which such Person was organized
(such as a certificate of incorporation or organization) and which relate to the internal governance of such Person (such as
bylaws, partnership agreement or an operating or limited liability agreement).


 


Parent –
As defined in the recitals.


 


PBGC –
Pension Benefit Guaranty Corporation, or any governmental agency or instrumentality succeeding to the functions thereof.


 


Perfection
Certificate – The Perfection Certificate provided by the Loan Parties to Lender on or prior to the Closing Date in
form and substance satisfactory to Lender.


 


Permitted Closing
Date Distribution – A distribution by ADC to Parent on or following the Closing Date in an amount not to exceed the
difference between (x) the original principal amount of the Term Loan, minus (y) the amount repaid in respect of the Closing Date
Indebtedness, provided that, before and after giving effect to such distribution, (A) Borrowers shall be in compliance with Section
6.8 hereof, and (B) no Default or Event of Default shall have occurred and be continuing or would result therefrom.


 



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Permitted
Distributions – Collectively, (i) the Permitted Closing Date Distribution, (ii) Permitted Tax Distributions, (iii)
Distributions from one Borrower to another Borrower, and (iv) other Distributions from ADC to Parent so long as (A) no
Default or Event of Default shall have occurred and be continuing at the time of, or would occur as a result of, such
Distribution, (B) Borrowers shall demonstrate that Borrowers would have been in compliance with Section 6.8 hereof as of the
end of the immediately preceding fiscal quarter if such Distribution had been made in such fiscal quarter, and (C) Borrowers
shall have Liquidity of not less than $750,000 after giving effect to such Distribution.


 


Permitted
Indebtedness – (i) Indebtedness to Lender in connection with the Term Loan or otherwise pursuant to the Loan
Documents; (ii) Indebtedness under Hedging Agreements entered into for the sole purpose of hedging in the normal course of
business and not for speculative purposes; (iii) purchase money Indebtedness (including Capitalized Lease Obligations)
hereafter incurred by any Borrower to finance the purchase of fixed assets; provided that, (a) such Indebtedness incurred in
any fiscal year shall not exceed in the aggregate $250,000, (b) such Indebtedness shall not exceed the purchase price of the
assets funded and (c) no such Indebtedness may be refinanced for a principal amount in excess of the principal amount
outstanding at the time of such refinancing, (iv) Indebtedness existing on the Closing Date that is identified and
described on Schedule “1.1(a)” attached hereto and made part hereof, including refinancing, replacement and
renewals of such Indebtedness, provided that any refinancing shall not exceed the amount then outstanding, (v) Indebtedness
incurred in the ordinary course of business for surety bonds and performance bonds obtained in connection with workers’
compensation, unemployment insurance and other social security legislation, (vi) Indebtedness representing
deferred compensation or reimbursable expenses owed to officers, directors, employees or agents of any Borrower in the
ordinary course of business, and (vii) other unsecured Indebtedness, of a type not described above, not to exceed $500,000 in
the aggregate at any time outstanding.


 


Permitted
Investments – (i) investments and advances existing on the Closing Date that are disclosed on Schedule
“5.10(a)”; (ii) cash and cash equivalent investments, and Accounts and trade credit created in the ordinary
course of business and payable or dischargeable in accordance with customary trade terms; (iii) bank deposits in the
ordinary courts of business; (iv) investments in securities of Account Debtors received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such Account Debtors or acquired in connection
with the settlement of delinquent Accounts in the ordinary courts of business; (v) deposits, prepayments and other
credits to suppliers and deposits in connection with lease obligations, taxes, insurance and similar items, in each case made
in the ordinary course of business and securing contractual obligations of a Loan Party; (vi) investments in prepaid
expenses, utility and workers’ compensation, performance and other similar deposits, each as entered into in the
ordinary course of business; (vii) hedging agreements entered into for the sole purpose of hedging in the normal course of
business and not for speculative purposes; (viii) obligations issued or guaranteed by the United States of America or
any agency thereof; (ix) commercial paper with maturities of not more than 180 days and a published rating of not less
than A-1 or P-1 (or the equivalent rating) by a nationally recognized investment rating agency; (x) certificates of time
deposit and bankers’ acceptances having maturities of not more than 180 days and repurchase agreements backed by United
States government securities of Lender or another commercial bank if (A) such bank has a combined capital and surplus of at
least $500,000,000, or (B) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not
less than A (or the equivalent rating) by a nationally recognized investment rating agency; (xi) U.S. money market funds
that invest solely in obligations issued or guaranteed by the United States of America or an agency thereof; (xii) loans
and advances to employees not to exceed $100,000 in the aggregate outstanding at any time; (xiii) investments consisting of
loans or advances made to another Loan Party or a Subsidiary thereof in an aggregate amount not to exceed $250,000 in the
aggregate outstanding at any time; and (xiv) other Investments, which together with any investments described in clause (xv)
of this definition, shall not exceed $300,000 in the aggregate outstanding at any time.


 



    	 	9



     


    

 


Permitted Liens
– (i) Liens securing taxes, assessments or governmental charges or levies for amounts that are not yet due and payable,
(ii) Liens of suppliers, carriers, materialmen, warehousemen, workmen or mechanics and other similar Liens, in each case imposed
by law or arising in the ordinary course of business and for amounts that are not yet due and payable; (iii) Liens incurred or
deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance, social
security and other like laws (excluding Liens arising under ERISA); (iv) pledges or cash deposits
made in the ordinary course of business (a) to secure the performance of bids, tenders, leases, sales or other trade contracts
(other than for the repayment of borrowed money or the payment of a deferred purchase price for property or services,)
or (b) made in lieu of, or to secure the performance of, surety, customs, reclamation or performance bonds (in each case not related
to judgments or litigation);  (v) Liens of landlords and mortgagees of landlords (a) with respect to any landlord, solely
arising by statute or, with respect to any mortgagee arising by statute or under any contractual obligations entered into in the
ordinary course of business, (b) on fixtures and movable tangible property located on the real property leased or subleased from
such landlord, (c) for amounts not yet due or that are being contested in good faith by appropriate proceedings diligently conducted
and (d) for which adequate reserves or other appropriate provisions are maintained on the books of such Person in accordance with
GAAP; (vi) non-exclusive Intellectual Property licenses granted in the ordinary course of business; (vii) Liens in favor of collecting
banks arising under Section 4-210 of the UCC and other banker’s liens arising by operation of law; (viii) Liens on fixed
assets securing purchase money Indebtedness permitted under Section 7.6; provided that, (a) such Lien attached to such assets
concurrently, or within 20 days of the acquisition thereof, and only to the assets so acquired, and (b) a description of the asset
acquired is furnished to Lender; (ix) Liens existing on the Closing Date and shown on Schedule “1.1(b)” attached hereto
and made part hereof; and (x) Liens securing appeal bonds and judgments with respect to judgments that do not otherwise result
in or cause an Event of Default.


 


Permitted Tax
Distributions – Distributions from ADC to Parent that meet each of the following conditions: (i) the amount of such
Distributions for each fiscal quarter, and for each fiscal year on an aggregate basis, shall not exceed (without duplication)
the lesser of (A) the aggregate income tax liability for the applicable period of an affiliated, combined, consolidated or
unitary group that includes Parent, ADC or any Subsidiary of ADC (or both ADC and one of more such Subsidiaries) and (B) the
aggregate income tax liability that would be determined for the applicable period if ADC filed tax returns as the common
parent of an affiliated, combined, consolidated or unitary group that included only ADC and its Subsidiaries, provided,
however that reasonable estimates of such amounts in (A) or (B) for each fiscal quarter with respect to estimated income
taxes shall not violate this clause (i), (ii) Borrowers have not made any payment directly to the applicable Government
Authority Person attributable to or in connection with the income tax liability to be paid by the proceeds of such
Distributions, (iii) Parent shall actually use such Distributions to pay the income tax liabilities of an affiliated,
combined, consolidated or unitary group that includes Parent and one or more of the Borrowers within five (5) Business Days
of receipt, and (iv) Parent shall promptly, but in no event more than five (5) Business Days of determining than an excess
exists, refund to ADC the excess of the amount of Distributions made for each such fiscal quarter and fiscal year on
aggregate basis over the income tax liability that would have been determined for each such period it Parent had filed tax
returns as the common parent of an affiliated, combined, consolidated or unitary group that included only Parent
and Borrowers.


 



    	 	10



     


    

 


Person –
An individual, partnership, corporation, trust, limited liability company, limited liability partnership, unincorporated association
or organization, joint venture or any other entity.


 


Plan –
An “Employee Pension Benefit Plan” (as defined in Section 3(2) of ERISA), a “voluntary employees’ beneficiary
association” (within the meaning of Section 501(a)(9) of the Code, or a “welfare benefit fund” (within the meaning
of Section 419 of the Code), which is maintained, or to which contributions are, or are required to be, made, by any Loan Party,
any Loan Party’s Subsidiaries or any ERISA Affiliate, except a Multiemployer Plan.


 


Pledge
Agreement – That certain collateral pledge agreement executed by Parent and ADC in favor of Lender on or prior to
the Closing Date, in form and substance satisfactory to Lender.


 


Prepayment
Premium – For any prepayment of the Term Loan (i) occurring on or before October 18, 2017, an amount equal to five
percent (5%) of the principal amount of such prepayment, (ii) occurring after October 18, 2017, but on or before October 18,
2018, an amount equal to three percent (3%) of the principal amount of such prepayment, (iii) occurring after October 18,
2018, but on or before October 18, 2021, an amount equal to one percent (1%) of the principal amount of such prepayment; provided, however,
(x) that for any prepayment occurring as a result of a refinancing of all or a part of the Term Loan as to which Laurence L.
Stone, acting solely as holder of Capital Stock of Parent (or as a director, officer or principal thereof) has provided his
prior written consent, the applicable prepayment premium shall be reduced by one quarter (1/4) and (y) that the applicable
prepayment premium shall be reduced to zero dollars ($0) with respect to any prepayment occurring as a result of a Change of
Control as to which Laurence L. Stone, acting solely as a holder of Capital Stock of Parent (or as a director, officer or
principal thereof), has provided his prior written consent.


 


Prohibited
Transaction – The meaning given to such term in Section 406 of ERISA, Section 4975(c) of the Code and any Treasury
regulations issued thereunder.


 


Property –
Any interest of any Loan Party in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.


 


Related Party
– With respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and
advisors of such Person and such Person’s Affiliates.


 


Reorganization
– Any reorganization as defined in Section 4241(a) of ERISA.


 


Reportable
Event – With respect to any Employee Pension Plan, as event described in Section 4043(c) of ERISA.


 



    	 	11



     


    

 


Requirement of
Law – Collectively, all international, foreign, federal, state and local laws, statutes, treaties, rules,
guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.


 


SEC – The
U.S. Securities and Exchange Commission.


 


Subsidiary –
With respect to any Person at any time, (i) any corporation more than fifty percent (50%) of whose voting stock is legally and
beneficially owned by such Person or owned by a corporation more than fifty percent (50%) of whose voting stock is legally and
beneficially owned by such Person; (ii) any trust of which a majority of the beneficial interest is at such time owned directly
or indirectly, beneficially or of record, by such Person or one or more Subsidiaries of such Person; and (iii) any partnership,
joint venture, limited liability company or other entity of which ownership interests having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions are at such time owned directly or indirectly,
beneficially or of record, by, or which is otherwise controlled directly, indirectly or through one or more intermediaries by,
such Person or one or more Subsidiaries of such Person.


 


Surety Agreement
– That certain surety agreement to be executed by each Guarantor in favor of Lender, in form and substance satisfactory
to Lender, on or prior to the Closing Date.


 


Swap Obligation
– Any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within
the meaning of section 1a(47) of the Commodity Exchange Act.


 


Term Loan –
Section 2.1(a).


 


Term Loan Maturity
Date – October 18, 2021.


 


Term
Loan Note – Section 2.1(b).


 


Total Leverage Ratio
– The ratio of Borrowers’ (i) Consolidated Total Indebtedness as of the date of determination, to (ii) Consolidated
EBITDA for the preceding four (4) fiscal quarters.


 


Trademark Security
Agreement – That certain trademark security agreement to be executed by each Borrower in favor of Lender, in form and
substance satisfactory to Lender, on or prior to the Closing Date.


 


Trust Account
– Those certain accounts established from time to time for the benefit of a Borrowers’ customers for the payment of
payroll tax and other employment tax obligations of such customers.


 


UCC – The
Uniform Commercial Code as adopted in the Commonwealth of Pennsylvania, as in effect from time to time.


 



    	 	12



     


    

 


Withdrawal
Liability – Any withdrawal liability as defined in Section 4201 of ERISA.


 


Other Capitalized
Terms – Any other capitalized terms used without further definition herein shall have the respective meaning set forth
in the UCC.


 


1.2.         Accounting
Principles: Where the character or amount
of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, this shall be done in accordance with GAAP as in effect on the Closing
Date, to the extent applicable, except as otherwise expressly provided in this Agreement. If there are any changes in GAAP after
the Closing Date that would affect the computation of the financial covenants in Section 6.8, such changes shall only be followed,
with respect to such financial covenants, from and after the date this Agreement shall have been amended to take into account
any such changes.


 


1.3.         Construction:
No doctrine of construction of ambiguities in agreements or instruments against the interests of the party controlling the drafting
shall apply to any Loan Documents.


 


SECTION
II.          THE LOAN


 


		2.1.	[Reserved].



 


		2.2.	Term Loan:



 


a.           Lender
hereby agrees to advance to Borrowers, subject to the terms and conditions of this Agreement, the sum of Nine Million Five Hundred
Thousand Dollars ($9,500,000) (“Term Loan”). At Closing, Borrowers shall execute and deliver a promissory note to
Lender in the original principal amount of the Term Loan (“Term Loan Note”). The Term Loan Note shall evidence Borrowers’
joint and several, unconditional obligation to repay to Lender the Term Loan with interest as herein provided. The Term Loan Note
shall be in form and substance reasonably satisfactory to Lender. Borrowers shall pay principal and interest in respect of the
Term Loan in equal, consecutive monthly installments of $128,677.18, commencing on November 30, 2016, and continuing on the last
day of each calendar month thereafter through and including the last day of the calendar month immediately preceding the Term
Loan Maturity Date. A final installment of all unpaid principal and all accrued and unpaid interest outstanding under the Term
Loan shall be due and payable on the Term Loan Maturity Date.


 


		2.3.	[Reserved].



 


		2.4.	[Reserved].



 


		2.5.	Interest:



 


a.           [Reserved].


 


b.           The
unpaid principal balance of the Term Loan shall bear interest, subject to the terms hereof, at eight percent (8.00%) per annum.


 



    	 	13



     


    

 


c.           Interest
shall be payable monthly, in arrears, on the last day of each month beginning on the last day of the first full calendar month
after the Closing Date, and on the Term Loan Maturity Date.


 


		2.6.	Additional Interest Provisions:



 


a.           All
computations of interest on the Loans shall be made on the basis of a three hundred sixty (360) day year and the actual number
of days elapsed.


 


b.           After
the occurrence and during the continuance of an Event of Default hereunder, the per annum effective rate of interest on all outstanding
principal under the Loans, shall at the option of Lender, be increased by five hundred (500) basis points (“Default Rate”).
All such increases may be applied retroactively to the date of the occurrence of the Event of Default. Borrowers agree that the
Default Rate payable to Lender is a reasonable estimate of Lender’s damages and is not a penalty and that interest accruing
at the Default Rate is payable on demand.


 


c.           All
contractual rates of interest chargeable on outstanding principal under the Loans shall continue to accrue and be paid even after
Default, an Event of Default, maturity, acceleration, judgment, bankruptcy, insolvency proceedings of any kind or the happening
of any event or occurrence similar or dissimilar.


 


d.           Borrowers
shall not be obligated to pay and Lender shall not collect interest at a rate higher than the maximum permitted by law or the
maximum that will not subject Lender to any civil or criminal penalties. If, because of the acceleration of maturity the payment
of interest in advance or any other reason, Borrowers are required, under the provisions of any Loan Document or otherwise, to
pay interest at a rate in excess of such maximum rate, the rate of interest under such provisions shall immediately and automatically
be reduced to such maximum rate and any payment made in excess of such maximum rate, together with interest thereon at the rate
provided herein from the date of such payment, shall be immediately and automatically applied to the reduction of the unpaid principal
balance of the Term Loan as of the date on which such excess payment was made. If the amount to be so applied to reduction of
the unpaid principal balance of the Term Loan exceeds the unpaid principal balance, the amount of such excess shall be refunded
by Lender to Borrowers.


 


		2.7.	Fees and Charges:



 


a.           At
Closing, Lender shall have fully earned and Borrowers shall be unconditionally obligated to pay to Lender, a non-refundable fee
(“Closing Fee”) with respect to the Term Loan in the amount of One Hundred Ninety Thousand Dollars ($190,000), due
and payable in full on the Closing Date.


 


b.           Borrowers
shall unconditionally pay to Lender a late charge equal to five percent (5%) of any and all payments of principal or interest
on the Loans that are not paid within fifteen (15) days of the due date. Such late charge shall be due and payable regardless
of whether Lender has accelerated the Obligations. Borrowers agree that any late fee payable to Lender is a reasonable estimate
of Lender’s damages and is not a penalty. The imposition of such late fee shall not be deemed a waiver of any Event of Default.


 



    	 	14



     


    

 


		2.8.	Voluntary and Mandatory Prepayments:



 


a.           [Reserved].


 


b.           Borrowers
may prepay the Term Loan in whole or in part at any time or from time to time, provided that any prepayment shall be accompanied
by: (i) all accrued and unpaid interest; and (ii) the applicable Prepayment Premium. Without limiting the foregoing, each Borrower
hereby agrees that promptly upon demand (and in any event within ten (10) Business Days of such demand) by Lender (which demand
shall be accompanied by a statement setting forth the basis for the amount being claimed), Borrowers will, jointly and severally,
indemnify Lender against any net loss or expense which Lender may sustain or incur as a result of any such prepayment, including
any net loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by Lender to
fund or maintain the Term Loan, as reasonably determined by Lender.


 


c.           Upon
any Asset Sale by any Borrower (other than the sale of Inventory in the ordinary course of business), Borrowers shall prepay the
Term Loan in an amount equal to the Net Proceeds upon any Loan Party’s receipt thereof; provided, however, that no such
prepayment shall be required to be made if (i) no Event of Default exists and the Net Proceeds from such Asset Sale are less than
$100,000 in the aggregate or (ii) (A) no Event of Default then exists, (B) Borrowers reinvest such Net Proceeds prior to the date
that is one hundred and eighty (180) days after the receipt of such Net Proceeds in assets of comparable or superior quality and
value to those sold and used or useful in the business of Borrowers within one hundred and eighty (180) days following the receipt
of such Net Proceeds, and (C) the Net Proceeds from such Asset Sale are less than $100,000 in the aggregate with the Net Proceeds
from all other Asset Sales which were not applied as a prepayment pursuant to this Section 2.8(c) during the applicable fiscal
year of Borrowers. The provisions of this Section 2.8(c) shall not be deemed to be implied consent to any such disposition otherwise
prohibited by the terms and conditions of this Agreement.


 


d.           Upon
the incurrence by any Borrower of any Indebtedness (other than Permitted Indebtedness), Borrowers shall prepay the outstanding
principal amount of the Term Loan in an amount equal to 100% of the Net Proceeds received by such Person in connection with such
incurrence within five (5) Business Days of the date of such receipt. The provisions of this Section 2.88(d) shall not be deemed
to be implied consent to any such incurrence otherwise prohibited by the terms and conditions of this Agreement.


 


e.           If
any Borrower or any Subsidiary thereof issues any Capital Stock (other than Excluded Equity Issuances), Borrowers shall prepay
the Term Loan in an amount equal to the Net Proceeds of such issuance within five (5) Business Days of receipt thereof.


 


f.            Upon
the receipt by any Borrower of any property or casualty insurance proceeds or condemnation award proceeds, Borrowers shall prepay
the Term Loan in an amount equal to the Net Proceeds of such proceeds within five (5) Business Days of receipt; provided, however,
that no such repayment shall be required if, and to the extent that, (i) no Event of Default then exists, and (ii)  Borrowers
reinvest such Net Proceeds for the repair, replacement or restoration of the damaged or condemned property within one hundred
and eighty (180) days following the receipt of such proceeds.


 



    	 	15



     


    

 


g.           [Reserved].


 


h.           [Reserved].


 


i.            Any
prepayments on account of the Loan pursuant to this Section 2.8 shall first be applied to accrued and unpaid interest on the Term
Loan, and then to the principal balance of the Term Loan in the inverse order of maturity.


 


2.9.         Use
of Proceeds: The extensions of credit under
and proceeds of the Term Loan shall be used solely to repay in full the Closing Date Indebtedness, to pay the Permitted Closing
Date Distribution, and for other working capital and general corporate purposes.


 


		2.10.	[Reserved].



 


		2.11.	Joint and Several Liability.



 


a.           Each
Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent and in such capacity to borrow, sign and endorse
notes, and execute and deliver all instruments, documents, writings and further assurances now or hereafter required hereunder,
on behalf of such Borrower or Borrowers, and hereby authorizes Lender to pay over or credit all loan proceeds hereunder in accordance
with the request of Borrowing Agent.


 


b.           The
handling of this credit facility as a co-borrowing facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Lender shall not incur liability to Borrowers as a result thereof.
To induce Lender to do so and in consideration thereof, each Borrower hereby indemnifies Lender and holds Lender harmless from
and against any and all liabilities, expenses, losses, damages and claims of damage or injury asserted against Lender by any Person
arising from or incurred by reason of the handling of the financing arrangements of Borrowers as provided herein, reliance by
Lender on any request or instruction from Borrowing Agent or any other action taken by Lender with respect to this Section 2.11
except due to willful misconduct or gross negligence by the indemnified party (as determined by a court of competent jurisdiction
in a final and non-appealable judgment).


 


c.           All
Obligations shall be joint and several, and each Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower shall in no way be affected by any extensions, renewals
and forbearance granted by Lender to any Borrower, failure of Lender to give any Borrower notice of borrowing or any other notice,
any failure of Lender to pursue or preserve its rights against any Borrower, the release by Lender of any Collateral now or thereafter
acquired from any Borrower, and such agreement by each Borrower to pay upon any notice issued pursuant thereto is unconditional
and unaffected by prior recourse by Lender to the other Borrowers or any Collateral for such Borrower’s Obligations or the
lack thereof. Each Borrower waives all suretyship defenses.


 


d.           Each
Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution of any other
claim which such Borrower may now or hereafter have against the other Borrowers or other Person directly or contingently liable
for the Obligations hereunder, or against or with respect to the other Borrowers’ Property (including, without limitation,
any property which is Collateral for the Obligations), arising from the existence or performance of this Agreement, until termination
of this Agreement and repayment in full of the Obligations.


 



    	 	16



     


    

 


		2.12.	Taxes.



 


a.           All
payments made by Borrowers hereunder or under the Note shall be, except as provided in Section 2.12(b), made free and clear of,
and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges
of whatever nature now or hereafter imposed by any Governmental Authority or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding any tax imposed on or measured by the net income or profits of
Lender (including franchise taxes imposed in lieu thereof) pursuant to the laws of the jurisdiction in which Lender is organized
or the jurisdiction in which the principal office or applicable lending office of Lender is located or any subdivision thereof
or therein and any branch profit taxes imposed by the United States or any similar tax imposed by any jurisdiction described above)
and all interest, penalties or similar liabilities with respect thereto (all such non-excluded taxes, levies, imposts, duties,
fees, assessments or other charges being referred to collectively as “Taxes”). If any Taxes are so levied or
imposed, except as provided in Section 2.12(b), Borrowers agree to pay the full amount of such Taxes, and such additional amounts
as may be necessary so that every payment of all amounts due under this Agreement or under the Note, after withholding or deduction
for or on account of any Taxes, will not be less than the amount provided for herein or in such Note. Borrowers will furnish to
Lender as soon as practicable after the date the payment of any Taxes is due pursuant to any Requirement of Law, certified copies
(to the extent reasonably available and required by any Requirement of Law) of tax receipts evidencing such payment by Borrowers.
Borrowers agree to indemnify and hold harmless Lender, and reimburse Lender upon its written request, for the amount of any Taxes
so levied or imposed and paid by Lender.


 


b.           Lender
agrees to use reasonable efforts to avoid or to minimize any amounts that might otherwise be payable pursuant to this Section
2.12; provided however, that such efforts shall not cause Lender to incur any additional costs or legal or regulatory burdens
deemed by Lender in its reasonable discretion to be material.


 


c.           If
any Borrower pays any additional amount pursuant to this Section 2.12, Lender shall use reasonable efforts to obtain a refund
of tax or credit against its tax liabilities on account of such payment; provided that, Lender shall have no obligation to use
such reasonable efforts if either (i) it is in an excess foreign tax credit position or (ii) it believes in good faith, in its
reasonable discretion, that claiming a refund or credit would cause materially adverse tax consequences to it.


 


d.           The
agreements in this Section 2.12 shall survive the termination of this Agreement and the payment of the Obligations.


 


SECTION
III.         COLLATERAL


 


3.1.          Collateral:
As security for the payment of the Obligations, and satisfaction by each Borrower of all covenants and undertakings contained
in this Agreement and the other Loan Documents:


 



    	 	17



     


    

 


a.           Personal
Property: Each Borrower hereby assigns and grants to Lender, a continuing Lien on and security interest in, upon and to all
assets of such Borrower, including but not limited to the following Property, all whether now owned or hereafter acquired, created
or arising and wherever located:


 


(i)          Accounts
– All Accounts;


 


(ii)         Chattel
Paper – All Chattel Paper;


 


(iii)        Documents
– All Documents;


 


(iv)        Instruments
– All Instruments;


 


(v)         Inventory
– All Inventory;


 


(vi)        General
Intangibles – All General Intangibles;


 


(vii)       Equipment
– All Equipment,


 


(viii)      Fixtures
– All Fixtures;


 


(ix)         Deposit
Accounts – All Deposit Accounts (including any Permitted Investments that constitute Deposit Accounts, but excluding
any Trust Accounts);


 


(x)          Goods
– All Goods;


 


(xi)         Letter
of Credit Rights – All Letter of Credit Rights;


 


(xii)        Supporting
Obligations – All Supporting Obligations;


 


(xiii)       Investment
Property – All Investment Property (including any Permitted Investments that constitute Investment Property);


 


(xiv)      Commercial
Tort Claims – All Commercial Tort Claims identified and described on Schedule “5.20” (as amended or supplemented
from time to time);


 


(xv)       Property
in Lender’s Possession – All Property of such Borrower, now or hereafter in Lender’s possession;


 


(xvi)      Books
and Records – All of Borrower’s present and future business records and information, including, but not limited
to, manual records, computer runs, print outs, tapes, disks, software, programs, source codes and any other computer prepared
information and equipment of any kind; and


 


(xvii)     Proceeds
– All products of and Accessions to any of the foregoing and all Proceeds (including, without limitation, insurance
policies and proceeds), whether cash or non-cash, of all of the foregoing property described in clauses (i) through
(xvi);


 


provided, however, that
the Collateral shall not include any Excluded Property.


 



    	 	18



     


    

 


3.2.         Lien
Documents: At Closing and thereafter as Lender
deems necessary, each Loan Party shall execute and/or deliver to Lender, or have executed and delivered (all in form and substance
satisfactory to Lender and its counsel):


 


a.           Financing
statements pursuant to the UCC, which Lender may file in the jurisdiction where such Loan Party is organized and in any other
jurisdiction that Lender deems appropriate;


 


b.           Any
certificates evidencing the Capital Stock pledged to Lender pursuant to the Pledge Agreement, duly indorsed in blank; and


 


c.           Any
other agreements, documents, instruments and writings, including, without limitation, intellectual property security agreements,
required by Lender to evidence, perfect or protect the Liens and security interests in the Collateral or as Lender may reasonably
request from time to time.


 


		3.3.	Other Actions:



 


a.           In
addition to the foregoing, each Borrower shall do anything further that may be reasonably required by Lender to secure Lender
and effectuate the granting and perfection of Liens under this Agreement, including, without limitation, the execution and delivery
of security agreements, contracts and any other documents required hereunder and the delivery of motor titles with Lender’s
lien noted thereon. At Lender’s reasonable request, each Borrower shall also promptly deliver (with execution by such Borrower
of all necessary documents or forms to reflect, implement or enforce the Liens described herein), or cause to be delivered to
Lender all items for which Lender must receive possession to obtain a perfected security interest, including without limitation,
all notes, stock powers, letters of credit, certificates and documents of title, Chattel Paper, Warehouse Receipts, Instruments,
and any other similar instruments constituting Collateral.


 


b.           Lender
is hereby authorized to file financing statements and amendments to financing statements without any Borrower’s signature,
in accordance with the UCC. Each Borrower hereby authorizes Lender to file all such financing statements and amendments to financing
statements describing the Collateral in any filing office as Lender, in its sole discretion may determine, including financing
statements listing “All Assets” in the collateral description therein. Each Borrower agrees to comply with the requests
of Lender in order for Lender to have and maintain a valid and perfected first security interest in the Collateral including,
without limitation, executing and using commercially reasonable efforts to cause any other Person to execute such documents as
Lender may require to obtain Control (as defined in the UCC) over all Deposit Accounts (other than Trust Accounts), Letter of
Credit Rights and Investment Property.


 


		3.4.	Searches, Certificates:



 


a.           Lender
shall, prior to or at Closing, and thereafter as Lender may reasonably determine from time to time, at Borrowers’ expense,
obtain the following searches (the results of which are to be consistent with the warranties made by Loan Parties in this Agreement):


 


(i)          UCC
searches with the Secretary of State and local filing office of each state where each Loan Party is organized, maintains its executive
office, a place of business, or assets; and


 



    	 	19



     


    

 


(ii)         Judgment,
state and federal tax lien and corporate tax lien searches, in all applicable filing offices of each state searched under subparagraph
(i) above.


 


b.           Each
Loan Party shall, prior to or at Closing and at its expense, obtain and deliver to Lender good standing certificates showing such
Loan Party to be in good standing in its state of organization and in each other state in which it is doing and presently intends
to do business for which qualification is required.


 


3.5.          Landlord’s
and Warehouseman’s Waivers; Access Agreements:
Each Borrower will use its commercially reasonable efforts to cause each owner of any premises occupied by such Borrower or to
be occupied by such Borrower and each warehouseman of any warehouse, where, in either case Collateral is held, to execute and
deliver to Lender an instrument, in form and substance satisfactory to Lender, under which such owner(s) or warehouseman subordinates
its/his/their interests in and waives its/his/their right to distrain on or foreclose against the Collateral and agrees to allow
Lender to enter into and remain on such premises to dispose of or deal with any Collateral located thereon.


 


3.6.          Filing
Security Agreement: A carbon, photographic
or other reproduction or other copy of this Agreement or of a financing statement is sufficient as and may be filed in lieu of
a financing statement.


 


3.7.          Power
of Attorney: Each of the officers of Lender
is hereby irrevocably made, constituted and appointed the true and lawful attorney for each Borrower (without requiring any of
them to act as such) with full power of substitution to do the following: (a) endorse the name of such Borrower upon any and all
checks, drafts, money orders and other instruments for the payment of monies that are payable to such Borrower and constitute
collections on such Borrower’s Accounts or proceeds of other Collateral; (b) execute and/or file in the name of each Borrower
any financing statements, schedules, assignments, instruments, documents and statements that such Borrower is obligated to give
Lender hereunder or is necessary to perfect (or continue or evidence the perfection of such security interest or Lien) Lender’s
security interest or Lien in the Collateral including without limitation, the notification of Account Debtors of Lender’s
security interest in any such Collateral; and (c) upon the occurrence of an Event of Default which is continuing do such
other and further acts and deeds in the name of each Borrower that Lender may reasonably deem necessary or desirable to enforce
any Account or other Collateral.


 


SECTION
IV.          CLOSING AND CONDITIONS PRECEDENT TO ADVANCES


 


Closing under this
Agreement is subject to the following conditions precedent (all instruments, documents and agreements to be in form and substance
satisfactory to Lender and Lender’s counsel):


 


4.1.         Resolutions,
Opinions, and Other Documents: Each Loan Party
shall have delivered, or caused to be delivered to Lender the following:


 


a.           this
Agreement, the Term Loan Note and each of the other Loan Documents to be executed and/or delivered by each Borrower or any other
Person pursuant to this Agreement, all properly executed;


 



    	 	20



     


    

 


b.           financing
statements, certificates evidencing the Capital Stock pledged to Lender under the Pledge Agreement, duly indorsed in blank, and
each of the other Loan Documents;


 


c.           the
landlord’s and warehouseman’s waivers required under Section 3.5;


 


d.           certified
copies of (i) resolutions of each Loan Party’s board of directors, authorizing the execution, delivery and performance of
this Agreement, the Term Loan Note to be issued hereunder and each of the other Loan Documents required to be delivered by any
Section hereof and (ii) each Loan Party’s Organizational Documents (certified by the applicable secretary of state), as
applicable;


 


e.           an
incumbency certificate for each Loan Party identifying all Authorized Officers, with specimen signatures;


 


f.            a
written opinion of each Loan Party’s independent counsel addressed to Lender and opinions of such other counsel as Lender
deems reasonably necessary;


 


g.           such
financial statements, reports, certifications and other operational information as Lender may reasonably require, satisfactory
in all respects to Lender;


 


h.           certification
by an Authorized Officer of the Borrowers that there has not occurred any material adverse change in the operations and condition
(financial or otherwise) of the Borrowers, taken as a whole, since December 31, 2015;


 


i.            certification
by an Authorized Officer of Parent that there has not occurred any material adverse change in the operations and condition (financial
or otherwise) of Parent since December 31, 2015;


 


j.            payment
by Borrowers of all fees including, without limitation, the Closing Fee and all Expenses associated with the Term Loan required
to be paid hereunder;


 


k.          searches
and certificates required under Section 3.4;


 


l.            insurance
certificates and policies as required under Section 6.2;


 


m.           copies
of Borrowers’ material contracts with their Affiliates, which Lender shall have reviewed to its satisfaction;


 


n.           the
Management Fee Subordination Agreement, duly executed by all parties thereto; and


 


o.           such
other documents reasonably required by Lender.


 


4.2.         Absence
of Certain Events: At the Closing Date, no
Default or Event of Default hereunder shall have occurred and be continuing.


 



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4.3.         Warranties
and Representations at Closing: The warranties
and representations contained in Section 5 as well as any other Section of this Agreement shall be true and correct in all respects
on the Closing Date with the same effect as though made on and as of that date, except to the extent such warranties and representations
relate to an earlier date, in which case such warranties and representations shall be true and correct in all respects as of such
earlier date. No Loan Party shall have taken any action or permitted any condition to exist which would have been prohibited by
any Section hereof.


 


4.4.         Compliance
with this Agreement: Each Loan Party shall
have performed and complied with all agreements, covenants and conditions contained herein including, without limitation, the
provisions of Sections 6 and 7 hereof, which are required to be performed or complied with by the Loan Parties before or at the
Closing Date.


 


4.5.         Officers’
Certificate: Lender shall have received a
certificate dated the Closing Date and signed by the chief financial officer of each Loan Party certifying that all of the conditions
specified in this Section 4 have been fulfilled.


 


4.6.         Closing:
Subject to the conditions of this Section, the Term Loan shall be made available on such date (the “Closing Date”)
and at such time as may be mutually agreeable to the parties contemporaneously with the execution hereof (“Closing”)
at such place as may be mutually agreeable to the parties.


 


4.7.         Waiver
of Rights: By completing the Closing hereunder,
Lender does not thereby waive a breach of any warranty or representation made by any Loan Party hereunder or under any agreement,
document, or instrument delivered to Lender or otherwise referred to herein, and any claims and rights of Lender resulting from
any breach or misrepresentation by any Loan Party are specifically reserved by Lender.


 


SECTION
V.        REPRESENTATIONS AND WARRANTIES


 


To induce Lender to
complete the Closing and make the Term Loan to Borrowers, each Loan Party warrants and represents to Lender that:


 


5.1.         Organization
and Validity:


 


a.           Each
Loan Party (i) is a corporation or limited liability company, as applicable, duly organized and validly existing under the laws
of the state of its organization, (ii) has the appropriate power and authority to operate its business and to own its Property
and (iii) is duly qualified, is validly existing and in good standing and has lawful power and authority to engage in the business
it conducts in each state where the nature and extent of its business requires qualification, except where the failure to so qualify
does not and could not have a Material Adverse Effect. A list of all states and other jurisdictions where each Loan Party is qualified
to do business on the Closing Date is shown on Schedule “5.1” attached hereto and made part hereof.


 


b.           The
making and performance of this Agreement and the other Loan Documents will not (i) violate any Requirement of Law or decree, award,
injunction, judgment by which such Loan Party is bound, (ii) violate the Organizational Documents of any Loan Party, (iii) cause
or result in the imposition or creation of any lien upon any property of any Loan Party, (iv) or violate or result in a default
or breach (immediately or with the passage of time) under any contract, agreement, indenture or instrument to which such Loan
Party is a party, or by which such Loan Party is bound, including the Material Agreements. No Loan Party is in violation of any
term of any contract, agreement, indenture or instrument to which it is a party or by which it may be bound which violation has
or could have a Material Adverse Effect, or of its Organizational Documents.


 



    	 	22



     


    

 


c.           Each
Loan Party has all requisite power and authority to enter into and perform this Agreement and each other Loan Document to which
it is party and to incur the obligations herein and therein provided for, and has taken all proper and necessary action to authorize
the execution, delivery and performance of this Agreement, and the other Loan Documents as applicable.


 


d.           This
Agreement, the Term Loan Note to be issued hereunder, and all of the other Loan Documents, when delivered, will be valid and binding
upon each Loan Party, as applicable, and enforceable in accordance with their respective terms except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’
rights generally and by general equitable principles.


 


5.2.         Places
of Business: The only places of business of
each Borrower, and the places where such Borrower keeps and intends to keep its Property as of the Closing Date, are at the addresses
shown on Schedule “5.2” attached hereto and made part hereof.


 


5.3.         Pending
Litigation: Other than as set forth
on Schedule 5.3 hereto or otherwise disclosed in Parent’s filings with the SEC, there are no suits, claims, judgments or
judicial or administrative orders or proceedings pending, or to the knowledge of any Loan Party, threatened, against any Loan
Party in any court or before any Governmental Authority which (i) individually or in the aggregate could reasonably be expected
to result in a Material Adverse Effect, or (ii) allege the invalidity of or dispute any of the terms of this Agreement or any
Loan Document. No Loan Party is in violation of any order, writ, injunction or decree of any Governmental Authority. To the knowledge
of each Loan Party, there are no investigations (civil or criminal) pending or threatened against such Loan Party in any court
or before any Governmental Authority.


 


5.4.         Title
to Properties: Each Borrower has good and
marketable title in fee simple (or its equivalent under applicable law) to all the Property it purports to own, free from Liens
and free from the claims of any other Person, except for Permitted Liens.


 


5.5.         Consent:
No consent, approval, license or authorization of any Person, or recording, registration or filing with any Person is required
by any Requirement of Law or any agreement in connection with any Loan Party’s execution, delivery and performance of this
Agreement or any other Loan Documents, other than (a) the filings and other actions required to be taken by the terms of the Loan
Documents to perfect the Liens created by the Loan Documents, and (b) the filings to be made by Parent with the SEC to applicable
securities laws.


 


5.6.         Taxes:
All tax returns required to be filed by any Loan Party in any jurisdiction have been filed. All taxes, assessments, fees and other
governmental charges upon any Loan Party, or upon any of its Property, income or franchises, which are shown to be due and payable
on such returns have been paid, except for those taxes being contested in good faith with due diligence by appropriate proceedings
for which appropriate reserves have been maintained under GAAP and as to which no Lien has been entered. As of the Closing Date,
no Loan Party is aware of any proposed additional tax assessment or tax to be assessed against or applicable to any Loan Party.


 



    	 	23



     


    

 


		5.7.	Financial Statements and Projections:



 


a.           The annual audited
consolidated financial statements of Parent, which include the financial statements of the Borrowers, from Parent’s independent
certified public accountants (complete copies of which have been delivered to Lender), and the interim reviewed balance sheet
of each Borrower as of June 30, 2016, and the related statements of profit and loss, stockholder’s equity and cash flow
as of such date have been prepared in accordance with GAAP and present fairly the financial position of each Borrower as of such
date and the results of its operations for such periods, subject to lack of footnotes and year-end adjustments for interim financial
statements.


 


b.           The
annual audited balance sheet of Parent as of December 31, 2015, and the related statements of profit and loss, stockholder’s
equity and cash flow as of such date accompanied by reports thereon from Parent’s independent certified public accountants
(complete copies of which have been delivered to Lender), and the interim internally prepared balance sheet of Parent as of June
30, 2016, and the related statements of profit and loss, stockholder’s equity and cash flow as of such date have been prepared
in accordance with GAAP and present fairly the financial position of Parent as of such date and the results of its operations
for such periods, subject to lack of footnotes and year-end adjustments for interim financial statements.


 


c.           The
fiscal year for each Loan Party currently ends on December 31. Each Loan Party’s federal tax identification number
and each Borrower’s state organizational identification number for UCC purposes are as shown on Schedule “5.7”
attached hereto and made part hereof.


 


d.           As
of the Closing Date, no Loan Party has any material liabilities, contingent or otherwise, other than as disclosed in the financial
statements referred to in Section 5.7(a)and (b) or set forth on Schedule “5.7” and there are not now and not anticipated
any material unrealized losses of any Loan Party.


 


e.           The
operating projections that have been previously submitted to Lender and that will be submitted to Lender pursuant to Section 6.9,
present, to each Loan Party’s knowledge and belief based on the assumptions set forth in such projections, the expected
results of operations and sources and uses of cash of Borrowers for the periods covered by such projections (it being recognized
by Lender that any projections and forecasts provided by the Loan Parties are based on estimates and assumptions believed by the
Loan Parties to be reasonable as of the date of the projections or assumptions and that actual results during the period or periods
covered by any such projections and forecasts may differ from projected or forecasted results).


 


5.8.         Full
Disclosure: The financial statements referred
to in Section 5.7 of this Agreement do not, nor does any other written statement of any Loan Party to Lender in connection with
the negotiation of the Term Loan, contain any untrue statement of a material fact in light of the circumstances under which such
statements were made as of the time when such statements were made. Such statements, taken as a whole, do not omit a material
fact, the omission of which would make the statements contained therein misleading in light of the circumstances under which such
statements were made as of the time when such statements were made. As of the Closing Date, there is no fact known to any Loan
Party which has not been disclosed in writing to Lender which has or could have a Material Adverse Effect.


 



    	 	24



     


    

 


5.9.         Subsidiaries:
As of the Closing Date, no Borrower has any Subsidiaries, except as shown on Schedule “5.9” attached hereto and made
part hereof, which Schedule shows such Subsidiary’s or Affiliate’s name, jurisdiction of organization, classes of
Capital Stock and the holders of such Capital Stock.


 


		5.10.	Investments, Guarantees, Contracts, etc.:



 


a.           As
of the Closing Date, no Loan Party owns or holds equity or long term debt investments in, or has any outstanding advances to,
any other Person, except as shown on Schedule “5.10(a),” attached hereto and made part hereof.


 


b.           As
of the Closing Date, no Borrower has entered into any leases for real or personal Property (whether as landlord or tenant or lessor
or lessee), except as shown on Schedule “5.10(b),” attached hereto and made part hereof.


 


c.            As
of the Closing Date, no Loan Party is a party to any contract or agreement, or subject to any restriction under any Organizational
Document, which, assuming compliance with such contract, agreement or restriction, has or could reasonably be expected to have
a Material Adverse Effect.


 


d.            Except
as otherwise specifically provided in this Agreement, no Loan Party has agreed or consented to, or is party to any agreement,
restricting, directly or indirectly, the granting of a Lien with respect to any Loan Party’s Property.


 


		5.11.	Government Regulations, ERISA, etc.:



 


a.            The
use of the proceeds of the Term Loan will not directly or indirectly violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto, including, without limitation, Regulations U,
T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. No Borrower owns or intends to carry
or purchase any “margin stock” within the meaning of said Regulation U.


 


b.            Each
Loan Party has obtained all licenses, permits, franchises or other governmental authorizations necessary for the ownership of
its Property and for the conduct of its business.


 


c.            (i)          No
Loan Party, no Subsidiary of any Loan Party and no ERISA Affiliate maintains or contributes to any Employee Pension Plan or Multiemployer
Plan, except as disclosed on Schedule 5.11(c) attached hereto.


 


(ii)         Each
Plan, which is intended to be qualified within the meaning of Section 401(a) of the Code, has received a favorable determination,
opinion or advisory letter from the IRS with respect to all plan document qualification requirements for which the remedial amendment
period under Section 401(b) of the Code has closed, any plan document amendments required by such determination letter were made
as and when required by such determination letter, and nothing has occurred, whether by action or failure to act, since the date
of such letter which would reasonably be expected to prevent any such plan from remaining so qualified.


 



    	 	25



     


    

 


(iii)        Each
Plan has been operated in all material respects in compliance with the requirements of the Code and ERISA and the terms of each
Plan.


 


(iv)        Except
as specifically disclosed on Schedule 5.11(c): (a) with respect to any Plan, there has been no transaction in connection with
which any Loan Party, its Subsidiaries or their respective ERISA Affiliates could be subject to either a material civil penalty
assessed pursuant to Section 502(i) of ERISA or a material tax penalty imposed pursuant to Section 4975 of the Code; (b) there
has been no failure by any Employee Pension Plan to satisfy the Minimum Funding Standards applicable to such Employee Pension
Plan, whether or not waived, or an unfulfilled obligation to contribute to any Multiemployer Plan; (c) no liability to the PBGC
has been or is reasonably expected to be incurred with respect to any Employee Pension Plan except for required premium payments
to the PBGC; (d) there has been (1) no Reportable Event with respect to any Employee Pension Plan, and (2) no event or condition
which presents a material risk of termination of any Employee Pension Plan by the PBGC, in either case involving conditions which
could result in any liability to the PBGC; (e) neither any Loan Party, its Subsidiaries nor any ERISA Affiliate (1) has incurred
or reasonably expects to incur Withdrawal Liability with respect to any Multiemployer Plan, (2) has received any notification
that a Multiemployer Plan is in Reorganization, or (3) reasonably expects any Multiemployer Plan to be in Reorganization; (f)
there is no material liability, and no circumstances exist pursuant to which any such material liability could reasonably be imposed
on any Loan Party, any of its Subsidiaries or any ERISA Affiliate under Sections 4980B, 4980D or 5000 of the Code or Sections
409 and 502(l) of ERISA, with respect to any Plan; (g) there is no Plan (that is an “employee welfare benefit plan,”
as defined in Section 3(1) of ERISA) (1) providing for retiree health and/or life insurance or death benefits, other than
for continuation coverage described under COBRA (or similar state law) or (2) having unfunded liabilities; (h) neither any
Loan Party, its Subsidiaries nor any ERISA Affiliate is subject to the Early Warning Program of the PBGC (as described in PBGC
Technical Update 00-3) or has been contacted by the PBGC in connection with the PBGC’s Early Warning Program; and (i) there
is no outstanding material liability attributable to any Employee Pension Plan subject to Title IV of ERISA or any Multiemployer
Plan which was previously maintained by or to which contributions were made or required to be made by any Loan Party, any of its
Subsidiaries or any ERISA Affiliate, or any entity that heretofore was an ERISA Affiliate.


 


d.           No
Loan Party is in violation of, or in receipt of written notice that it is in violation of, any Requirement of Law (including,
without limitation, Environmental Laws), a violation of which causes or could reasonably be expected to cause a Material Adverse
Effect.


 


5.12.        Business
Interruptions: Within five (5) years prior
to the date hereof, none of the business, Property or operations of any Borrower has been materially and adversely affected in
any way by any casualty, strike, lockout, combination of workers, order of the United States of America, or any state or local
government, or any political subdivision or agency thereof, directed against such Borrower. There are no pending or, to any Loan
Party’s knowledge, threatened labor disputes, strikes, lockouts or similar occurrences or grievances affecting any Borrower.
No labor contract of any Borrower is scheduled to expire prior to the Term Loan Maturity Date.


 



    	 	26



     


    

 


		5.13.	Names and Intellectual Property:



 


a.           Within
five (5) years prior to the Closing Date, no Borrower has conducted business under or used any other name (whether corporate or
assumed) except for the names shown on Schedule “5.13(a)” attached hereto and made part hereof. Each Borrower is the
sole owner of all names listed on such Schedule “5.13(a)” and any and all business done and all invoices issued in
such trade names are such Borrower’s sales, business and invoices. Each trade name of each Borrower represents a division
or trading style of such Borrower and not a separate Subsidiary or Affiliate or independent entity.


 


b.           All
trademarks, service marks, patents or copyrights which each Borrower uses, plans to use or has a right to use as of the Closing
Date are shown on Schedule “5.13(b)” attached hereto and made part hereof and such Borrower is the sole owner of such
Property except to the extent any other Person has claims or rights in such Property, as such claims and rights are shown on Schedule
“5.13(b)”. All material copyrights have been registered with the United States Copyright Office. No Borrower is in
violation of any rights of any other Person with respect to such Property.


 


c.           Except
as shown on Schedule “5.13(c)” attached hereto and made part hereof, (i) no Borrower requires any copyrights, patents,
trademarks or other intellectual property, or any license(s) to use any patents, trademarks or other intellectual property in
order to provide services to its customers in the ordinary course of business; and (ii) Lender will not require any copyrights,
patents, trademarks or other intellectual property or any licenses to use the same in order to provide such services after the
occurrence of an Event of Default.


 


5.14.        Other
Associations: As of the Closing Date, no Loan
Party is engaged and has any interest in any joint venture or partnership with any other Person except as shown on Schedule “5.14,”
attached hereto and made part hereof.


 


		5.15.	Environmental Matters:
Except as shown on Schedule “5.15,” attached hereto and made part hereof:



 


a.           To
the best of each Loan Party’s knowledge after due inquiry, no Property presently owned, leased or operated by any Borrower
contains, or has previously contained, any Hazardous Substances in amounts or concentrations which (i) constitute or constituted
a violation of, or (ii) could give rise to liability under, any Environmental Law.


 


b.           To
the best of each Loan Party’s knowledge after due inquiry, each Loan Party is in compliance, and, for the duration of all
applicable statutes of limitations periods, has been in compliance with all applicable Environmental Laws, and there is no contamination
at, under or about any properties presently owned, leased, or operated by any Borrower or violation of any Environmental Law with
respect to such properties which could reasonably be expected to interfere with any of their continued operations or reasonably
be expected to impair the fair saleable value thereof.


 


c.           No
Loan Party has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance assessment with Environmental Laws and no Loan Party has any knowledge that any such notice
will be received or is being threatened.


 



    	 	27



     


    

 


d.           Hazardous
Substances have not been transported or disposed of in a manner or to a location which are reasonably likely to give rise to liability
of any Borrower under any Environmental Law.


 


e.           No
judicial proceeding or governmental or administrative action is pending, or to the knowledge of any Loan Party, threatened under
any Environmental Law to which any Borrower is, or to any Loan Party’s knowledge will be, named as a party, nor are there
any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial
requirements outstanding, the implementation of which is reasonably likely to have a Material Adverse Effect on any natural resources
or on any Borrower’s business, financial condition, Property or prospects under any Environmental Law.


 


5.16.        Investment
Company Act: No Loan Party is an “investment
company” or a company “controlled by an investment company” within the meaning of the Investment Company Act
of 1940.


 


5.17.        Capital
Stock: The authorized and outstanding Capital
Stock of each Borrower as of the Closing Date is as shown on Schedule “5.17” attached hereto and made part hereof.
All of the Capital Stock of each Loan Party has been duly and validly authorized and issued and is fully paid and non-assessable
and has been sold and delivered to the holders thereof in compliance with, or under valid exemption from, all Federal and state
laws and the rules and regulations of all Governmental Authorities governing the sale and delivery of securities. There are no
subscriptions, warrants, options, calls, commitments, rights or agreements by which any Borrower or any of the shareholders of
any Borrower is bound relating to the issuance, transfer, voting or redemption of shares of its Capital Stock or any pre-emptive
rights held by any Person with respect to the shares of Capital Stock of such Loan Party. No Borrower has issued any securities
convertible into or exchangeable for shares of its Capital Stock or any options, warrants or other rights to acquire such shares
or securities convertible into or exchangeable for such shares.


 


5.18.        Solvency:
After giving effect to the transactions contemplated under this Agreement, each Loan Party is solvent, is able to pay its debts
as they become due, and has capital sufficient to carry on its business and all businesses in which it is about to engage, and
now owns Property having a value both at fair valuation and at present fair salable value greater than the amount required to
pay such Loan Party’s debts. No Loan Party will be rendered insolvent by the execution and delivery of this Agreement or
any of the other Loan Documents executed in connection with this Agreement or by the transactions contemplated hereunder or thereunder.


 


5.19.        Perfection
and Priority: This Agreement and the other
Loan Documents are effective to create in favor of Lender legal, valid and enforceable Liens in all right, title and interest
of each Loan Party in the Collateral, and when financing statements have been filed in the offices of the jurisdictions shown
on Schedule “5.19,” attached hereto and made part hereof under such Loan Party’s name and control is taken with
respect to such Collateral where control is necessary to perfect such security interest, such Loan Party will have granted to
Lender, and Lender will have perfected first priority Liens (subject to Permitted Liens) in the Collateral, to the extent a security
interest therein can be perfected by filing a financing statement or obtaining control, superior in right to any and all other
Liens, existing or future other than Permitted Liens.


 



    	 	28



     


    

 


5.20.       Commercial
Tort Claims: As of the Closing Date, no Borrower
is a party to any Commercial Tort Claims, except as shown on Schedule “5.20” attached hereto and made part hereof.


 


5.21.       Letter
of Credit Rights: As of the Closing Date,
no Borrower has any Letter of Credit Rights, except as shown on Schedule “5.21,” attached hereto and made part hereof.


 


5.22.       Deposit
Accounts: As of the Closing Date, all Deposit
Accounts (excluding all Trust Accounts) of each Borrower are shown on Schedule “5.22,” attached hereto and made part
hereof.


 


5.23.       Anti-Terrorism
Laws:


 


a.           General.
No Loan Party nor any Subsidiary of a Loan Party is in violation of any Anti-Terrorism Law or engages in or conspires to engage
in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law.


 


b.           Executive
Order No. 13224. Neither any Loan Party nor any Subsidiary of a Loan Party, or to any Loan Party’s knowledge, any of
its respective agents acting or benefiting in any capacity in connection with the Term Loan or other transactions hereunder, is
any of the following (each a “Blocked Person”):


 


(i)          a
Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;


 


(ii)         a
Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order No. 13224;


 


(iii)        a
Person with which Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;


 


(iv)        a
Person that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No.
13224;


 


(v)         a
Person that is named as a “specially designated national” on the most current list published by the U.S. Treasury
Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication
of such list; or


 


(vi)        a
Person who is affiliated with a Person listed above.


 


		5.24.	[Reserved].



 


5.25.        Management
Agreements: Except for the Management Agreement,
no Borrower is a party to any management, employment, consulting or other similar agreement or arrangement (whether oral or written)
respecting the management of their respective businesses except for usual and customary employment agreements.


 



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SECTION
VI.          AFFIRMATIVE COVENANTS


 


Each Loan Party covenants
that until all of the Obligations are paid and satisfied in full (excluding contingent indemnification and expense reimbursement
obligations to the extent no claim giving rise thereto has been asserted), that:


 


6.1.          Payment
of Taxes and Claims: Each Loan Party shall
pay, before they become delinquent, all federal and other material taxes, assessments and governmental charges, or levies imposed
upon it, or upon such Loan Party’s Property, and all claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other Persons, entitled to the benefit of statutory or common law Liens which, in any case, if unpaid, would result
in the imposition of a Lien upon its Property; provided however, that each Loan Party shall not be required to pay any such tax,
assessment, charge, levy, claim or demand if the amount, applicability or validity thereof, shall at the time, be contested in
good faith and by appropriate proceedings by such Loan Party, and if such Loan Party shall have set aside on its books adequate
reserves in respect thereof, if so required in accordance with GAAP; which deferment of payment is permissible so long as no Lien
other than a Permitted Lien has been entered and such Loan Party’s title to, and its right to use, its Property are not
materially adversely affected thereby.


 


		6.2.	Maintenance of Properties and Corporate Existence:



 


a.           Property
– Each Borrower shall maintain its Property in good condition (normal wear and tear excepted), make all necessary
renewals, replacements, additions, betterments and improvements thereto and will pay and discharge when due the cost of
repairs and maintenance to its Property, and will pay all rentals when due for all real estate leased by such Loan Party.


 


b.           Property
Insurance, Public and Products Liability Insurance – Each Borrower shall maintain insurance (i) on all insurable tangible
Property against fire, flood, casualty and such other hazards (including, without limitation, extended coverage, workmen’s
compensation, boiler and machinery, with inflation coverage by endorsement) and (ii) against public liability, product liability
and business interruption, in each case in such amounts, with such deductibles and with such insurers as are customarily used
by companies operating in the same industry as such Loan Party. At or prior to Closing, each Borrower shall furnish Lender with
duplicate original policies of insurance or such other evidence of insurance as Lender may require, and any certificates of insurance
shall be issued on Acord Form 25 or 27 (or 28), as applicable. In the event any Borrower fails to procure or cause to be procured
any such insurance or to timely pay or cause to be paid the premium(s) on any such insurance, Lender may do so for such Borrower
but such Borrower shall continue to be liable for the same. The policies of all such casualty insurance shall contain standard
Lender’s Loss Payable Clauses (and, with respect to liability and interruption insurance, additional insured clauses) issued
in favor of Lender under which all losses thereunder shall be paid to Lender as Lender’s interest may appear. Such policies
shall expressly provide that the requisite insurance cannot be altered or canceled without thirty (30) days prior written notice
to Lender and shall insure Lender notwithstanding the act or neglect of any Loan Party. Each Borrower hereby appoints Lender as
such Borrower’s attorney-in-fact, exercisable at Lender’s option to endorse any check which may be payable to such
Borrower in order to collect the proceeds of such insurance and any amount or amounts collected by Lender pursuant to the provisions
of this Section may be applied by Lender, in its sole discretion, to any Obligations or to repair, reconstruct or replace the
loss of or damage to Collateral as Lender in its discretion may from time to time determine; provided that so long as no Event
of Default shall have occurred and be continuing, Borrower’s consent shall be required prior to any repair, reconstruction
or replacement by Lender. Each Borrower further covenants that all insurance premiums owing under its current policies have been
paid. Each Borrower shall notify Lender, immediately, upon such Loan Party’s receipt of a notice of termination, cancellation,
or non-renewal from its insurance company of any such policy.


 



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c.           Financial
Records – Each Loan Party shall keep current and accurate books of records and accounts in which full and correct entries
will be made of all of its business transactions, and will reflect in its financial statements adequate accruals and appropriations
to reserves, all in accordance with GAAP. No Loan Party shall change its fiscal year end date without the prior written consent
of Lender.


 


d.           Corporate
Existence and Rights – Each Loan Party shall do (or cause to be done) all things necessary to preserve and keep in full
force and effect its existence, good standing, rights and franchises. Each Loan Party shall obtain and maintain any and all licenses,
permits, franchises or other governmental authorizations necessary to the ownership of its Property or the conduct of its businesses.


 


e.           Compliance
with Laws – Each Loan Party shall be in compliance in all material respects with any and all Requirements of Law to
which it is subject, including without limitation, Environmental Laws. Each Loan Party shall timely satisfy all assessments, fines,
costs and penalties imposed (after exhaustion of all appeals, provided a stay has been put in effect during such appeal) by any
Governmental Authority against Loan Party or any Property of such Loan Party.


 


6.3.          Business
Conducted: Each Borrower shall continue in
the business presently operated by it using its commercially reasonable efforts to maintain its customers and goodwill. No Borrower
shall engage, directly or indirectly, in any material respect in any line of business substantially different from the businesses
conducted by such Borrower immediately prior to the Closing Date. Parent shall not engage, directly or indirectly, in any material
respect in any line of business that is not either related, ancillary or complementary to the business of Parent as of the Closing
Date, or to the businesses conducted by Borrowers.


 


6.4.          Litigation
Notices: Each Loan Party shall give prompt
notice to Lender of any litigation claiming in excess of One Hundred Thousand Dollars ($100,000) from such Loan Party, or which
may otherwise have a Material Adverse Effect.


 


6.5.          Issue
Taxes: Each Loan Party shall pay all taxes
(other than taxes based upon or measured by any Lender’s income or revenues or any personal property tax), if any, in connection
with the issuance of the Note and the recording of any lien documents. The obligations of each Loan Party hereunder shall survive
the payment of Loan Party’s Obligations hereunder and the termination of this Agreement.


 


6.6.          Deposit
Accounts: Except as set forth in Section 6.17,
Borrowers shall negotiate and execute deposit account control agreements, in form and content satisfactory to Lender, among the
applicable Borrower, Lender and the institution with which the applicable Deposit Account is maintained (“Control Agreements”),
in respect of each of the Deposit Accounts identified on Schedule “5.22” within ninety (90) days after Closing. No
Borrower shall open and maintain any Deposit Accounts other than (a) as maintained on the date hereof and set forth on Schedule
“5.22” attached hereto or (b) a Deposit Account as to which such Borrower has complied with the terms and conditions
set forth in Section 6.9(f) hereof.


 



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6.7.          ERISA
Notices: Each Loan Party shall deliver to
Lender (i) promptly, and in any event within ten (10) Business Days, after the receipt thereof, copies of all reports and notices
which any Loan Party, any of its Subsidiaries or any ERISA Affiliate receives from PBGC, IRS or the DOL, and at the request of
Lender, copies of all annual reports for Employee Pension Plans filed with the DOL or IRS, and (ii) as soon as possible and in
any event within ten (10) Business Days after any Loan Party knows or has reason to know that (A) any Reportable Event has occurred
or is reasonably expected to occur with respect to any Employee Pension Plan, (B) an Accumulated Funding Deficiency has been incurred
or an application has been made to the Secretary of the United States Treasury for a waiver or modification of the minimum funding
standard or an extension of any amortization period under Section 412 of the Code with respect to an Employee Pension Plan, (C)
proceedings have been instituted or are reasonably expected to be instituted under Title IV of ERISA to terminate any Employee
Pension Plan, (D) any Withdrawal Liability from a Multiemployer Plan has been or will be incurred by any Loan Party, any of its
Subsidiaries or any ERISA Affiliate, (E) any Multiemployer Plan is or is reasonably expected to be in Reorganization, terminated,
partitioned or declared insolvent, (F) an action has been instituted pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Multiemployer Plan, (G) any event, transaction or condition has occurred or will occur that could reasonably
be expected to result in the imposition of a lien under Part 3 of Subtitle B of Title I of ERISA or Title IV of ERISA, (H) any
Prohibited Transaction or other transaction, event or condition has occurred or will occur with respect to a Plan that could reasonably
be expected to result in any Loan Party, any of its Subsidiaries or any ERISA Affiliate incurring a material liability or becoming
subject to a material penalty or excise tax, or (I) the PBGC has contacted any Loan Party, any of its Subsidiaries or any ERISA
Affiliate with respect to the PBGC’s Early Warning Program, a certificate of an Authorized Officer of Borrowing Agent setting
forth the details as to such event, transaction or condition and the action any Loan Party has taken, is taking or proposes to
take with respect thereto and with respect to (A) and (B) above, with copies of any notices and applications.


 


6.8.         Financial
Covenants: Loan Parties shall maintain and
comply with, and cause to be maintained and complied with, the following financial covenants:


 


a.           Debt
Coverage Ratio – Borrowers shall maintain a Debt Coverage Ratio of not less than (i) 1.20 to 1.00 as of the end of each
fiscal quarter through and including the fiscal quarter ending September 30, 2017, and (ii) 1.30 to 1.00 as of the end of each
fiscal quarter thereafter, measured on a trailing four fiscal quarter basis.


 



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b.           Total
Leverage Ratio – Borrowers shall maintain a Total Leverage Ratio of not more than the following amounts as of the end
of the following fiscal quarters, measured on a trailing four fiscal quarter basis:


 


	Total Leverage Ratio	 	Fiscal Quarters Ending
	 	 	 
	4.50 to 1:00	 	December 31, 2016, and March 31, June 30, and September 30, 2017
	 	 	 
	4.25 to 1.00	 	December 31, 2017, and March 31, June 30, and September 30, 2018
	 	 	 
	3.55 to 1.00	 	December 31, 2018, and March 31, June 30, and September 30, 2019
	 	 	 
	3.25 to 1.00	 	December 31, 2019, and March 31, June 30, and September 30, 2020
	 	 	 
	2.75 to 1.00	 	December 31, 2020, and March 31, June 30, and September 30, 2021
	 	 	 
	2.25 to 1.00	 	Measured as of December 31, 2021, and as of the last day of each fiscal quarter thereafter




 


6.9.         Financial
and Business Information: Each Loan
Party shall deliver or cause to be delivered to Lender the following:


 


a.           Financial
Statements and Collateral Reports: such data, reports, statements and information, financial or otherwise, as Lender may reasonably
request, including, without limitation:


 


(i)          within
thirty (30) days after the end of each calendar month of Borrowers, the consolidated and consolidating income and cash flow statements
of each Borrower and its Subsidiaries for such month and for the expired portion of the fiscal year ending with the end of such
month prepared in accordance with GAAP (without footnotes and subject to year-end adjustments and setting forth in comparative
form the corresponding figures for the corresponding periods of the previous fiscal year, and the consolidated and consolidating
balance sheet of each Borrower and its Subsidiaries as at the end of such month, setting forth in comparative form the corresponding
figures as at the end of the corresponding periods of the previous fiscal year, all prepared in accordance with GAAP (without
footnotes and subject to year-end adjustments) and in reasonable detail and certified by Borrowing Agent’s chief financial
officer to have been prepared from the books and records of Borrowers;


 


(ii)         within
sixty (60) days after the end of each fiscal quarter of Borrowers, the consolidated and consolidating income and cash flow statements
of each Borrower and its Subsidiaries for such quarter and for the expired portion of the fiscal year ending with the end of such
quarter, prepared in accordance with GAAP (without footnotes and subject to year-end adjustments and setting forth in comparative
form the corresponding figures for the corresponding periods of the previous fiscal year, and the consolidated and consolidating
balance sheet of each Borrower and its Subsidiaries as at the end of such quarter, setting forth in comparative form the corresponding
figures as at the end of the corresponding periods of the previous fiscal year, all prepared in accordance with GAAP (without
footnotes and subject to year-end adjustments) and in reasonable detail and certified by Borrowing Agent’s chief financial
officer to have been prepared from the books and records of Borrowers;


 



    	 	33



     


    

 


(iii)        within
sixty (60) days after the end of each fiscal quarter of Parent (excluding the last fiscal quarter of such calendar year), the
consolidated and consolidating income and cash flow statements of Parent and its Subsidiaries for such quarter and for the expired
portion of the fiscal year ending with the end of such quarter, prepared in accordance with GAAP (without footnotes and subject
to year-end adjustments and setting forth in comparative form the corresponding figures for the corresponding periods of the previous
fiscal year), and the consolidated and consolidating balance sheet of Parent and its Subsidiaries as at the end of such quarter,
setting forth in comparative form the corresponding figures as at the end of the corresponding periods of the previous fiscal
year, all prepared in accordance with GAAP (without footnotes and subject to year-end adjustments) and in reasonable detail and
certified by Parent’s chief financial officer to have been prepared from the books and records of Parent and its subsidiaries;


 


(iv)        within
one hundred twenty (120) days after the end of each fiscal year of Parent, the consolidated and consolidating income and cash
flow statements of Parent and its Subsidiaries (including each Borrower) for such year, and the consolidated and consolidating
(if applicable) balance sheet of Parent and its Subsidiaries (including each Borrower) as at the end of such fiscal year, setting
forth in each case in comparative form the corresponding figures as at the end of and for the previous fiscal year, all in reasonable
detail, including all supporting schedules, and audited by Marcum LLP or another independent public accounting firm reasonably
acceptable to Lender, and unqualifiedly certified to have been prepared in accordance with GAAP, together with copies of any management
letters provided by such accountants to management of Parent and all regular schedulers to be provided by such independent public
accountants as part of the audit of Parent;


 


(v)         no
later than sixty (60) days after the commencement of each fiscal year, Borrowers’ annual consolidated and consolidating
financial statement projections for the upcoming fiscal year and including, without limitation, a balance sheet, income statement
and cash flow statement, all shown on a fiscal quarter basis. Such projections shall be consistent in format with the historical
financial statements and shall include disclosure of all significant assumptions used in preparing the projections; and


 


(vi)        within
thirty (30) days after filing with the Internal Revenue Service, the federal income tax returns of the Loan Parties.


 


b.           Notice
of Event of Default – promptly upon becoming aware of the existence of any condition or event which constitutes a Default
or an Event of Default under this Agreement, a written notice specifying the nature and period of existence thereof and what action
Loan Parties are taking (and propose to take) with respect thereto.


 


c.           Notice
of Claimed Default – promptly upon receipt by any Loan Party, notice of default, oral or written, given to any Loan
Party by any creditor for Indebtedness of any Borrower in excess of One Hundred Thousand Dollars ($100,000).


 


d.           [Reserved].


 


e.           Notice
of Breach of Governmental Order – promptly upon any Loan Party’s violation of any order, writ, injunction or decree
of any Governmental Authority applicable to it, a written notice specifying the nature thereof and what action Loan Parties are
taking (and propose to take) with respect thereto.


 



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f.            Notice
of Deposit Account. Notice of any Borrower’s establishment of a new Deposit Account (other than a Trust Account), to
be delivered not later than ten (10) Business Days prior to establishment of such Deposit Account. A Borrower shall negotiate
and execute a Control Agreement for any new Deposit Account promptly after the establishment of any new Deposit Account (other
than a Trust Account).


 


6.10.       Officers’
Certificates:


 


a.           Along
with the set of financial statements delivered to Lender at the end of each fiscal quarter pursuant to Section 6.9(a)(ii) hereof
and the annual financial statements delivered pursuant to Section 6.9(a)(iv) hereof, Borrowers shall deliver to Lender a certificate
(“Compliance Certificate”) (in the form of Exhibit “A,” attached hereto and made part hereof) from the
chief financial officer, chief executive officer or president of Borrowing Agent certifying:


 


(i)          Event
of Default – that the signer has reviewed the relevant terms of this Agreement, and has made (or caused to be made under
his/her supervision) a review of the transactions and conditions of each Borrower from the beginning of the accounting period
covered by the financial statements being delivered therewith to the date of the certificate, and that such review has not disclosed
the existence during such period of any condition or event which constitutes a Default or an Event of Default or, if any such
condition or event exists, specifying the nature and period of existence thereof and what action Borrowers have taken or propose
to take with respect thereto.


 


(ii)         Covenant
Compliance – the information (including detailed calculations) required in order to establish that Borrowers are in
compliance with the requirements of Section 6.8(a) and (b) of this Agreement, as of the end of the period covered by the financial
statements delivered.


 


b.           [Reserved].


 


c.           Covenant
Compliance – the information (including detailed calculations) required in order to establish that Borrowers are in
compliance with the requirements of Section 6.8(a) and (b) of this Agreement, as of the end of the period covered by the financial
statements delivered.


 


6.11.       Audits
and Inspection; Appraisals: Loan Parties shall
permit any of Lender’s officers or other representatives to visit and inspect upon reasonable notice during business hours
any of the locations of Borrowers (provided that, while an Event of Default exists, Lender may make such visits and inspections
at any time without prior notice) to examine and audit all of Borrowers’ Collateral, books of account, records, reports
and other papers, to make copies and extracts therefrom and to discuss its affairs, finances and accounts with its officers, employees
and independent certified public accountants. Lender may also conduct, at Borrowers’ expense for Lender’s reasonable
out-of-pocket expenses (all of which amounts shall be Expenses), field examinations with respect to the Collateral; provided that,
Lender shall not, unless an Event of Default occurs, conduct more than two (2) field examinations per year.


 



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6.12.        Material
Adverse Developments: Each Loan Party agrees
that promptly upon becoming aware of any development or other information outside the ordinary course of business and excluding
matters of a general economic, financial or political nature which would reasonably be expected to have a Material Adverse Effect
it shall give to Lender telephonic notice specifying the nature of such development or information and such anticipated effect.
In addition, such verbal communication shall be confirmed by written notice thereof to Lender on the same day such verbal communication
is made or the next Business Day thereafter.


 


6.13.        Places
of Business: Each Borrower shall give thirty
(30) days prior written notice to Lender of any changes in the location of any of its respective places of business, of the places
where records concerning its Accounts or where its Inventory are kept, or the establishment of any new, or the discontinuance
of any existing place of business; provided that no Borrower may establish any place of business outside of the United States.


 


6.14.        Commercial
Tort Claims: Each Borrower will promptly notify
Lender in writing in the event that any Borrower becomes a party to or obtains any rights with respect to any Commercial Tort
Claim. Such notification shall include information sufficient to describe such Commercial Tort Claim, including, but not limited
to, the parties to the claim, the court in which the claim was commenced, the docket number assigned to such claim, if any, and
a detailed explanation of the events that gave rise to the claim. Each Borrower shall execute and deliver to Lender all documents
and/or agreements necessary to grant Lender a security interest in such Commercial Tort Claim to secure the Obligations. Each
Borrower authorizes Lender to file (without such Borrower’s signature) initial financing statements or amendments, as Lender
deems necessary to perfect its security interest in the Commercial Tort Claim.


 


6.15.        Letter
of Credit Rights: Each Borrower shall provide
Lender with written notice of any letters of credit for which such Borrower is the beneficiary. Each Borrower shall execute and
deliver (or cause to be executed or delivered) to Lender, all documents and agreements as Lender may require in order to obtain
and perfect its security interest in such Letter of Credit Rights.


 


6.16.        Lockbox:
Upon Lender’s request at any time after the occurrence and during the continuance of an Event of Default, each Borrower
shall establish a lockbox through which each Borrower shall instruct all Account Debtors to make payment on Accounts. Each Borrower
shall execute such agreements as Lender may require to establish the lockbox.


 


6.17.        Liquidity:
Commencing on a date no more than sixty (60) days after Closing, Borrowers shall maintain not less than $375,000 in a Deposit
Account that is subject to a Control Agreement in favor of Lender.


 


SECTION
VII.         NEGATIVE COVENANTS:


 


Each Loan Party covenants
that until all of the Obligations are paid and satisfied in full (excluding contingent indemnification and expense reimbursement
obligations to the extent no claim giving rise thereto has been asserted), that:


 


7.1.          Merger,
Consolidation, Dissolution or Liquidation:


 


a.           No
Borrower shall engage in any Asset Sale other than (i) the sale of Inventory in the ordinary course of business, (ii) equipment
that is replaced by other equipment of comparable or superior quality and value within ninety (90) days of such Asset Sale, (iii) licenses,
sublicenses, leases or subleases of Property granted to third parties in the ordinary course of business and not interfering with
the business of the Loan Parties; (iv) sales, forgiveness or discounting, on a non-recourse basis and in the ordinary course
of business, of past due accounts in connection with the collection or compromise thereof or the settlement of delinquent accounts
or in connection with the bankruptcy or reorganization of suppliers or customers; (v) disposition of obsolete equipment;
(vi) disposition of cash and cash equivalents; (vii) dispositions to another Borrower; (viii) issuances of capital stock
to Parent; and (ix) dispositions resulting from any casualty events, provided the proceeds thereof are applied in accordance with
the terms of this Agreement.


 



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b.           No
Loan Party shall merge or consolidate with any other Person or commence a dissolution or liquidation, other than (i) the merger
of a Subsidiary of a Borrower into such Borrower (where such Borrower is the surviving Person) or (ii) the merger of one Borrower
with another.


 


7.2.          Acquisitions:
No Borrower shall acquire all or a material portion of the Capital Stock or assets of any Person in any transaction or in any
series of related transactions or enter into any sale and leaseback transaction.


 


7.3.          Liens
and Encumbrances: No Borrower shall: (i) execute
a negative pledge agreement with any Person covering any of its Property other than property subject to purchase money indebtedness
permitted hereunder, or (ii) cause or permit or agree or consent to cause or permit in the future (upon the happening of a contingency
or otherwise), its Property (including, without limitation, the Collateral), whether now owned or hereafter acquired, to be subject
to a Lien except for Permitted Liens.


 


7.4.          Transactions
With Affiliates or Subsidiaries:


 


a.           No
Borrower shall enter into any transaction with any Subsidiary or other Affiliate, including, without limitation, the purchase,
sale, or exchange of Property, or the loaning or giving of funds to any Affiliate or any Subsidiary unless: (i) the transaction
is in the ordinary course of and pursuant to the reasonable requirements of such Loan Party’s business and upon terms substantially
the same and no less favorable to such Loan Party as it would obtain in a comparable arm’s length transactions with any
Person not an Affiliate or a Subsidiary, and so long as such transaction is not prohibited hereunder; (ii) such transaction is
intended for incidental administrative purposes; or (iii) pursuant to the Management Agreement.


 


b.           No
Borrower shall create any Subsidiary unless (i) such Subsidiary becomes a borrower party to this Agreement and the Loan Documents
pursuant to documents in form and substance satisfactory to Lender, including the granting by such Subsidiary of security interests
in all of its assets, subject to no Lien other than Permitted Liens, (ii) the Capital Stock of such Subsidiary is pledged to Lender
and (iii) copies of such Subsidiary’s Organizational Documents are delivered to Lender together with such other proof as
to the incumbency of officers and corporate actions as Lender may reasonably require.


 


7.5.          Guarantees:
Excepting the endorsement in the ordinary course of business of negotiable instruments for deposit or collection, no Borrower
shall become or be liable, directly or indirectly, primary or secondary, matured or contingent, in any manner, whether as guarantor,
surety, accommodation maker, or otherwise, for the existing or future Indebtedness of any kind of any Person, except for Permitted
Indebtedness of another Borrower.


 



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7.6.          Other
Indebtedness: No Borrower shall: (a) hereafter
incur, become liable for, or permit to exist any Indebtedness other than Permitted Indebtedness; or (b) make any prepayments on
any existing or future Indebtedness (other than the Obligations).


 


7.7.          Loans
and Investments: No Borrower shall make or
have outstanding loans, advances, extensions of credit or capital contributions to, or investments in, any Person other than Permitted
Investments.


 


7.8.          Use
of Lenders’ Name: No Loan Party shall
use Lender’s name in connection with any of its business operations. Nothing contained in this Agreement is intended to
permit or authorize any Loan Party to make any contract on behalf of Lender.


 


7.9.          Miscellaneous
Covenants:


 


a.           No
Loan Party shall become or be a party to any contract or agreement which at the time of becoming a party to such contract or agreement
materially impairs such Loan Party’s ability to perform under this Agreement.


 


b.           No
Loan Party shall carry or purchase any “margin stock” within the meaning of Regulations U, T or X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II.


 


7.10.        Jurisdiction
of Organization: No Loan Party shall change
its jurisdiction of organization or, without fifteen (15) days prior written notice to Lender, change its name; provided, however,
that no advance notice will be required to effectuate the name changes described on Schedule “7.10” hereto. No Loan
Party shall amend its Organizational Documents in a manner adverse to Lender.


 


7.11.        Distributions:


 


a.           No
Borrower shall declare, pay or make, any Distributions other than Permitted Distributions.


 


b.           No
Borrower shall declare or pay any bonus compensation to its officers if an Event of Default exists or would result from the payment
thereof. 


 


7.12.        Parent/CSI
Contracts: Neither Parent nor CSI will amend,
modify, restate, replace or otherwise supplement any agreement (including, without limitation, any processing agreement) between
those parties in a manner which would affect any of the payment terms thereof, or forgive or waive any of such payment terms,
or redirect, assign or otherwise transfer such payments or any rights with respect thereto to any other Person, without the prior
written consent of Lender.


 


7.13.        Management
Arrangements:


 


a.           No
Loan Party shall amend or modify the terms of the Management Agreement in a manner that would be adverse to Lender.


 


b.           No
Borrower shall pay any management, monitoring, consulting, advisory fees or other similar fees except for Approved Management
Fees.


 



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c.           No
Borrower shall enter into or remain bound by any management, employment or consulting agreement with any Person that gives such
Person the right to manage its business, except for the Management Agreement and usual and customary employment agreements and
consulting agreements consistent with past practice.


 


7.14.        Tax
Consolidation:


 


a.           Other
than as required by Requirements of Law, no Loan Party shall elect to file any income tax return on behalf of an affiliated, combined,
consolidated or unitary group that includes a Borrower, except that Parent may elect to file a consolidated federal income tax
return that includes the Borrowers.


 


b.           No
Loan Party shall, and will not permit any of its Subsidiaries to, enter into any agreement with any Person which would cause any
Borrower or any of Borrowers’ Subsidiaries to bear more than the amount of taxes to which such Person would have been subject
had it separately filed (or filed as part of an affiliated, combined, consolidated or unitary tax return solely among Borrowers
and their eligible Subsidiaries under federal, state or local law), except for agreements entered into in the ordinary course
of business with Persons that are not Affiliates that include provisions relating to the underlying transaction for the sharing
or allocation of taxes that are not based on the net income or net profits of either party to the agreement. If any Borrower enters
into any tax sharing or tax allocation agreement, Loan Parties shall promptly deliver a copy of such agreement to Lender.


 


c.           If
the IRS seeks to collect any taxes or otherwise impose any tax liability on any Borrower as a result of the Loan Parties’
filing affiliated, combined, consolidated or unitary income tax returns with such Borrower in excess of the income tax liability
that such Borrower would have if it had filed tax returns as the common parent of an affiliated, combined, consolidated or unitary
group that included only such Borrower and its Subsidiaries (an “Excess Tax Liability”), Parent shall use reasonable
good faith efforts to contest such collection or imposition and cause such Excess Tax Liability to be paid by Parent or by a Subsidiary
of Parent that is not a Loan Party. In any case, Parent shall, and cause its Subsidiaries that are not Loan Parties to defend,
indemnify and hold harmless each Borrower for the full amount of any such Excess Tax Liability. Further, in the event that any
Borrower ceases to be a member of the consolidated federal income tax group with respect to which collection of an Excess Tax
Liability is being sought, Parent (or its successor in interest) shall cooperate with such Borrower in requesting the IRS to exercise
its discretion under Treasury Regulation Section 1.1502-6(b) to assess and collect from the Borrower only such Borrower’s
allocable portion of any federal income tax deficiency that is imposed on the consolidated federal income tax group; provided,
that the requirements of this sentence shall expire upon the payment of the Obligations.


 


7.15.        Compliance
with ERISA: Each Loan Party shall not, and
shall not permit any of its Subsidiaries or any of its ERISA Affiliates to, take, or fail to take, any of the following actions
or permit any of the following events to occur if such action or event individually or together with all other actions or events
would subject any Loan Party, any of its Subsidiaries or any of its ERISA Affiliates to any material tax, penalty, or other liabilities:


 


a.           engage
in or knowingly consent to any “party in interest” or any “disqualified person,” as such terms are defined
in Section 3(14) of ERISA and Section 4975(e)(2) of the Code respectively, engaging in any Prohibited Transaction in connection
with which any Loan Party, any of its Subsidiaries or any ERISA Affiliate could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code;


 



    	 	39



     


    

 


b.           terminate
any Employee Pension Plan in a manner, or take any other action, which could result in any material liability of any Loan Party,
any of its Subsidiaries or any ERISA Affiliate to the PBGC;


 


c.           fail
to make full payment when due of all amounts which, under the provisions of any Plan or any Multiemployer Plan, any Loan Party,
any of its Subsidiaries or any ERISA Affiliate is required to pay as contributions thereto, or fail to satisfy the Minimum Funding
Standards, whether or not waived, with respect to any Employee Pension Plan or fail to pay PBGC premiums when due;


 


d.           permit
the current value of all vested accrued benefits under all Employee Pension Plans which are subject to Title IV of ERISA to exceed
the current value of the assets of such plans allocable to such vested accrued benefits, except as may be permitted under actuarial
funding standards adopted in accordance with Section 412 of the Code;


 


e.           withdraw
from any Multiemployer Plan, if such withdrawal would result in the imposition of Withdrawal Liability;


 


f.            fail
to comply in all material respects with the requirements of COBRA regarding continued health coverage, of the Health Insurance
Portability and Accountability Act of 1996, and of Section 1862(b) of the Social Security Act, with respect to any Plans subject
to the requirements thereof; or


 


g.           fail
to comply in all other material respects with the provisions of ERISA and the Code with respect to any Plan.


 


As used in this Section
7.15, the term “accrued benefit” has the meaning specified in Section 3(23) of ERISA and the term “current value”
has the meaning specified in Section 4001(a)(18)(B) of ERISA.


 


SECTION
VIII.         DEFAULT


 


8.1.          Events
of Default: Each of the following events shall
constitute an event of default (“Event of Default”):


 


a.           Payments
– if any Borrower fails to make any payment of principal or interest under the Obligations on the date such payment is
due and payable; or


 


b.           Other
Charges – if any Borrower fails to pay any other charges, fees, Expenses or other monetary obligations owing to Lender
arising out of or incurred in connection with this Agreement within five (5) days of the date such payment is due and payable;
or


 


c.           Particular
Covenant Defaults – if any Loan Party fails to perform, comply with or observe any covenant or undertaking contained
in this Agreement and (other than with respect to the covenants contained in Sections 6.2(b), 6.2(d) (solely with regard to existence),
6.8, 6.9, 6.10, 6.11, 6.18 and 6.19, and Section 7 for which no cure period shall exist), such failure continues for thirty (30)
days after the occurrence thereof; or


 



    	 	40



     


    

 


d.           Financial
Information – if any statement, report, financial statement, or certificate made or delivered by any Loan Party or any
of its officers, employees or agents, to Lender is not true and correct, in all material respects, when made; or


 


e.           Uninsured
Loss – if there shall occur any uninsured damage to or loss, theft, or destruction in excess of Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate with respect to any portion of any Property of any Borrower; or


 


f.            Warranties
or Representations – if any warranty, representation or other statement by or on behalf of any Loan Party contained
in or pursuant to this Agreement, the other Loan Documents or in any certificate, document, agreement or instrument furnished
in compliance with, relating to, or in reference to this Agreement, is false, erroneous, or misleading in any material respect
when made; or


 


g.           Agreements
with Others – (i) if any Loan Party shall default beyond any grace period in the payment of principal or interest of
any Indebtedness of any Loan Party in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate; or (ii) if any
Loan Party otherwise defaults under the terms of any such Indebtedness if the effect of such default is to enable the holder of
such Indebtedness to accelerate the payment of any Loan Party’s obligations, which are the subject thereof, prior to the
maturity date or prior to the regularly scheduled date of payment;


 


h.           Other
Agreements with Lender – if any Loan Party breaches or violates the terms of, or if a default (and expiration of any
applicable cure period), or an Event of Default, occurs under any other existing or future agreement (related or unrelated) (including,
without limitation, the other Loan Documents) between any Loan Party and Lender; or


 


i.            Judgments
– if any final judgment for the payment of money in excess of Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate (i) which is not fully and unconditionally covered by insurance or (ii) for which any Loan Party has not
established a cash or cash equivalent reserve in the full amount of such judgment, shall be rendered by a court of record
against any Loan Party and such judgment shall continue unsatisfied and in effect for a period of thirty (30) consecutive
days without being vacated, discharged, satisfied or bonded pending appeal; or


 


j.            Assignment
for Benefit of Creditors, etc. – if any Loan Party makes or proposes in writing, an assignment for the benefit of creditors
generally, offers a composition or extension to creditors, or makes or sends notice of an intended bulk sale of any business or
assets now or hereafter owned or conducted by any Loan Party; or


 


k.          Bankruptcy,
Dissolution, etc. – upon the commencement of any action for the dissolution or liquidation of any Loan Party, or the
commencement of any proceeding to avoid any transaction entered into by any Loan Party, or the commencement of any case or proceeding
for reorganization or liquidation of any Loan Party’s debts under the Bankruptcy Code or any other state or federal law,
now or hereafter enacted for the relief of debtors, whether instituted by or against any Loan Party; provided however, that any
Loan Party shall have thirty (30) days to obtain the dismissal or discharge of involuntary proceedings filed against it, it being
understood that during such thirty (30) day period, Lender may seek adequate protection in any bankruptcy proceeding; or


 



    	 	41



     


    

 


l.            Receiver
– upon the appointment of a receiver, liquidator, custodian, trustee or similar official or fiduciary for any Loan
Party or for any Loan Party’s Property; or


 


m.           Execution
Process, etc. – the issuance of any execution or distraint process against any Property of any Loan Party; or


 


n.           Termination
of Business – if any Loan Party ceases any material portion of its business operations as presently conducted; or


 


o.           Pension
Benefits, etc. – if any Loan Party fails to comply with ERISA so that proceedings are commenced to appoint a trustee
under ERISA to administer any Loan Party’s employee plans or the PBGC institutes proceedings to appoint a trustee to administer
such plan(s), or a Lien is entered to secure any deficiency or claim under Sections 303(k) or 4068 of ERISA, or a Reportable Event
occurs (where such event could reasonably be expected to result in a loss to Loan Parties in excess of $100,000); or


 


p.           Investigations
– any evidence is received by Lender that Lender reasonably determines in good faith is evidence that any Loan Party
may have directly or indirectly been engaged in any type of activity which would be reasonably likely to result in the
forfeiture of any material property of any Loan Party to any Governmental Authority; or


 


q.           Change
of Control – if there shall occur a Change of Control; or


 


r.            Surety
Agreement – if any breach or default occurs under any Surety Agreement, or if any Surety Agreement, or any obligation
to perform thereunder, is terminated; or


 


s.           Liens
– if any Lien in favor of Lender shall cease to be valid, enforceable and perfected and prior to all other Liens other
than Permitted Liens (except solely as a result of any action or inaction of Lender) or if any Loan Party or any Governmental
Authority shall assert any of the foregoing; or


 


t.            Material
Adverse Effect – if there is any change in any Borrower's financial condition which, in Lender's reasonable opinion,
has or would be reasonably likely to have a Material Adverse Effect, or


 


u.           Other
Loan Documents – if any other Person (other than Lender) party to a Loan Document, breaches or violates any term, provision
or condition of such Loan Document.


 


8.2.          Cure:
Nothing contained in this Agreement or the Loan Documents shall be deemed to compel Lender to accept a cure of any Event of
Default hereunder.


 


8.3.          Rights
and Remedies on Default:


 


a.           [Reserved].


 



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b.           In
addition to all other rights, options and remedies granted or available to Lender under this Agreement or the Loan Documents (each
of which is also then exercisable by Lender), or otherwise available at law or in equity, upon or at any time after the occurrence
and during the continuance of an Event of Default Lender may, in its discretion, declare the Obligations immediately due and payable,
all without demand, notice, presentment or protest or further action of any kind (it also being understood that the occurrence
of any of the events or conditions set forth in Sections 8.1(j),(k) or (l) shall automatically cause an acceleration of the Obligations.


 


c.           In
addition to all other rights, options and remedies granted or available to Lender under this Agreement or the Loan Documents (each
of which is also then exercisable by Lender), or otherwise available at law or in equity, upon or at any time after the acceleration
of the Obligations following the occurrence of an Event of Default (other than the rights with respect to clause (iv) below which
Lender may exercise at any time after an Event of Default and regardless of whether there is an acceleration), Lender may, in
its discretion, exercise all rights under the UCC and any other applicable law or in equity, and under all Loan Documents permitted
to be exercised after the occurrence of an Event of Default, including the following rights and remedies (which list is given
by way of example and is not intended to be an exhaustive list of all such rights and remedies):


 


(i)          The
right to take possession of, send notices regarding and collect directly the Collateral, with or without judicial process (including
without limitation the right to notify the United States postal authorities to redirect mail addressed to any Borrower to an address
designated by Lender); or


 


(ii)         By
its own means or with judicial assistance, enter any Borrower’s premises and take possession of the Collateral, or render
it unusable, or dispose of the Collateral on such premises in compliance with subsection (e) below, without any liability for
rent, storage, utilities or other sums, and such Borrower shall not resist or interfere with such action; or


 


(iii)        Require
each Borrower at such Borrower’s expense to assemble all or any part of the Collateral (other than real estate or fixtures)
and make it available to Lender at any place designated by Lender; or


 


(iv)        The
right to enjoin any violation of Section 7.1, it being agreed that Lender’s remedies at law are inadequate.


 


d.           Each
Borrower hereby agrees that a notice received by it at least seven (7) days before the time of any intended public sale or of
the time after which any private sale or other disposition of the Collateral is to be made, shall be deemed to be reasonable notice
of such sale or other disposition. If permitted by applicable law, any perishable inventory or Collateral which threatens to speedily
decline in value or which is sold on a recognized market may be sold immediately by Lender without prior notice to such Borrower.
Each Loan Party covenants and agrees not to interfere with or impose any obstacle to Lender’s exercise of its rights and
remedies with respect to the Collateral, after the occurrence of an Event of Default hereunder. Lender shall have no obligation
to clean up or prepare the Collateral for sale. If Lender sells any of the Collateral upon credit, each Loan Party will only be
credited with payments actually made by the purchaser thereof, that are received by Lender. Lender may, in connection with any
sale of the Collateral specifically disclaim any warranties of title or the like.


 



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8.4.          Nature
of Remedies: All rights and remedies granted
Lender hereunder and under the Loan Documents, or otherwise available at law or in equity, shall be deemed concurrent and cumulative,
and not alternative remedies, and Lender may proceed with any number of remedies at the same time until all Obligations are satisfied
in full. The exercise of any one right or remedy shall not be deemed a waiver or release of any other right or remedy, and Lender,
upon or at any time after the occurrence and during the continuance of an Event of Default, may proceed against each Loan Party,
at any time, under any agreement, with any available remedy and in any order.


 


8.5.          Set-Off:
In addition to all other rights, options and remedies granted or available to Lender under this Agreement or the Loan Documents
(each of which is also then exercisable by Lender), upon or at any time after the occurrence and during the continuance of an
Event of Default, Lender (and any participant) shall have and be deemed to have, without notice to any Loan Party, the immediate
right of set-off against any bank account of any Loan Party with Lender, or of any Borrower with any other subsidiary of Lender
or Lender Affiliate or any participant and may apply the funds or amount thus set-off against any Obligations hereunder. Each
Loan Party specifically waives any right to require Lender to exercise other rights, options and remedies prior to exercising
any such set-off rights. If any bank account of any Loan Party with Lender, any other subsidiary of Lender or Lender Affiliate
or any participant is attached or otherwise liened or levied upon by any third party, Lender (and such participant) shall have
and be deemed to have, without notice to any Loan Party, the immediate right of set-off and may apply the funds or amount thus
set-off against any Obligations hereunder.


 


SECTION
IX.          MISCELLANEOUS


 


9.1.          Governing
Law: THIS AGREEMENT, AND ALL MATTERS ARISING
OUT OF OR RELATING TO THIS AGREEMENT, AND ALL RELATED AGREEMENTS AND DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE SUBSTANTIVE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. THE PROVISIONS OF THIS AGREEMENT AND ALL OTHER AGREEMENTS AND DOCUMENTS
REFERRED TO HEREIN ARE TO BE DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION SHALL NOT AFFECT OR IMPAIR
THE REMAINING PROVISIONS WHICH SHALL CONTINUE IN FULL FORCE AND EFFECT.


 


9.2.          Integrated
Agreement: The Notes, the other Loan Documents,
all related agreements, and this Agreement shall be construed as integrated and complementary of each other, and as augmenting
and not restricting Lender’s rights and remedies. If, after applying the foregoing, an inconsistency still exists, the provisions
of this Agreement shall constitute an amendment thereto and shall control.


 


9.3.          Waiver:
No omission or delay by Lender in exercising any right or power under this Agreement or any related agreements and documents will
impair such right or power or be construed to be a waiver of any Default, or Event of Default or an acquiescence therein, and
any single or partial exercise of any such right or power will not preclude other or further exercise thereof or the exercise
of any other right, and as to any Loan Party no waiver will be valid unless in writing and signed by Lender and then only to the
extent specified.


 



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9.4.          Indemnity:


 


a.           Each
Loan Party releases and shall indemnify, defend and hold harmless Lender and each Related Party of Lender (each, an “Indemnitee”)
of and from any and all claims, demands, liabilities, losses, damages and costs and expenses (including, without limitation, reasonable
legal fees), penalties and fines resulting from (i) the execution, delivery and performance of this Agreement or any other Loan
Document or any acts or conduct of any Loan Party under, pursuant or related to this Agreement and the other Loan Documents, (ii)
any Loan Party’s breach or violation of any representation, warranty, covenant or undertaking contained in this Agreement
or the other Loan Documents, (iii) any Loan Party’s failure to comply with any Requirement of Law (including, without limitation,
Environmental Laws), and (iv) any claim by any other creditor of any Loan Party against Lender arising out of any transaction
whether hereunder or in any way related to the Loan Documents; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such claims, demands, liabilities, losses, damages, costs, expenses, penalties and fines are determined
by a court of competent jurisdiction by final nonappealable judgment to have resulted from acts or conduct of such Indemnitee
constituting willful misconduct or gross negligence.


 


b.           Promptly
after receipt by an Indemnitee under subsection (a) above of notice of the commencement of any action by a third party, such Indemnitee
shall, if a claim in respect thereof is to be made against the applicable Loan Party or Loan Parties under such subsection, notify
the applicable Loan Party or Loan Parties in writing of the commencement thereof. The omission so to notify the applicable Loan
Party or Loan Parties shall relieve the applicable Loan Party or Loan Parties from any liability which it may have to any Indemnitee
under such subsection only if the applicable Loan Party or Loan Parties is unable to defend such actions as a result of such failure
to so notify. In case any such action shall be brought against any Indemnitee and it shall notify the applicable Loan Party or
Loan Parties of the commencement thereof, the applicable Loan Party or Loan Parties shall be entitled to participate therein and,
to the extent that it shall wish, jointly with any other applicable Loan Party or Loan Parties similarly notified, to assume the
defense thereof, with counsel satisfactory to such Indemnitee (who shall not, except with the consent of the Indemnitee, be counsel
to the Indemnitee), and, after notice from the applicable Loan Party or Loan Parties to such Indemnitee of its election so to
assume the defense thereof, the applicable Loan Party or Loan Parties shall not be liable to such Indemnitee under such subsection
for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such Indemnitee, in connection
with the defense thereof other than reasonable costs of investigation.


 


9.5.          Time:
Whenever any Loan Party shall be required to make any payment, or perform any act, on a day which is not a Business Day, such
payment may be made, or such act may be performed, on the next succeeding Business Day. Time is of the essence in each Loan Party’s
performance under all provisions of this Agreement and all related agreements and documents.


 


9.6.          Expenses
of Lender: At Closing and from time to time
thereafter, each Loan Party will pay upon demand of Lender all reasonable and documented out-of-pocket costs, fees and expenses
of Lender in connection with (i) the analysis, negotiation, preparation, execution, administration, delivery and termination of
this Agreement, and other Loan Documents and the documents and instruments referred to herein and therein, and any amendment,
amendment and restatement, supplement, waiver or consent relating hereto or thereto, whether or not any such amendment, amendment
and restatement, supplement, waiver or consent is executed or becomes effective, search costs, the reasonable and documented out-of-pocket
fees, expenses and disbursements of outside counsel for Lender, any reasonable and documented out-of-pocket fees or expenses incurred
by Lender under Section 6.11 for which each Loan Party is obligated thereunder, and reasonable charges of any expert consultant
to Lender, (ii) the enforcement of Lender’s rights hereunder, or the collection of any payments owing from, each Loan Party
under this Agreement and/or the other Loan Documents or the protection, preservation or defense of the rights of Lender hereunder
and under the other Loan Documents, and (iii) any refinancing or restructuring of the credit arrangements provided under this
Agreement and other Loan Documents in the nature of a “work-out” or of any insolvency or bankruptcy proceedings, or
otherwise (including in all cases the reasonable fees and disbursements of counsel for Lender and reasonable allocated costs of
internal counsel) (collectively, the “Expenses”).


 



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9.7.          Brokerage:
Each Loan Party represents that it has not committed Lender to the payment of any brokerage fee, commission or charge in connection
with this transaction. If any such claim is made on Lender by any broker, finder or agent or other person, each Loan Party hereby
indemnifies, defends and saves such party harmless against such claim and further will defend, with counsel satisfactory to Lender,
any action or actions to recover on such claim, at such Loan Party’s own cost and expense, including such party’s
reasonable counsel fees. Loan Party further agrees that until any such claim or demand is adjudicated in such party’s favor,
the amount demanded shall be deemed an Obligation of each Loan Party under this Agreement.


 


9.8.          Notices:


 


a.           Any
notices or consents required or permitted by this Agreement shall be in writing and shall be deemed given if delivered in person
to the person listed below or if sent by first class mail, telecopy or by nationally recognized overnight courier, as follows,
unless such address is changed by written notice hereunder:


 


	If to Lender to:	LHLJ, Inc.
	 	725 Eagle Farm Road
	 	Villanova, PA 19085
	 	Attention: Laurence L. Stone
	 	 
	With copies to:	Stradley Ronon Stevens & Young,
    LLP
	 	2600 One Commerce Square
	 	Philadelphia, PA  19103
	 	Attention: Richard Zucker
	 	Telecopy No.:  215-564-8120
	 	 
	If to any Loan Party to:	A. D. Computer Corporation
	 	3939 West Drive 
	 	Center Valley, PA 18034
	 	Attention:  Gregory M. Krzemien
	 	Telecopy No.:  610-797-9520



 



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	With copies to:	Dechert LLP
	 	Cira Center
	 	2929 Arch Street 
	 	Philadelphia, PA 19104
	 	Attention:  James A. Lebovitz
	 	Telecopy No.:  (215) 994-4000
	 	 
	 	JetPay Corporation
	 	1175 Lancaster Avenue, Suite 200 
	 	Berwyn, PA 19312
	 	Attention:  Chief Executive
    Officer
	 	Telecopy No.:  484-318-8370


 


b.           Any
notice sent by Lender, or any Loan Party by any of the above methods shall be deemed to be given when so received.


 


c.           Lender
shall be fully entitled to rely upon any telecopy or electronic mail transmission or other writing purported to be sent by any
Authorized Officer as being genuine and authorized.


 


9.9.          Headings:
The headings of any paragraph or Section of this Agreement are for convenience only and shall not be used to interpret any provision
of this Agreement.


 


9.10.         Survival:
All warranties, representations, and covenants made by any Loan Party herein, or in any agreement referred to herein or on any
certificate, document or other instrument delivered by it or on its behalf under this Agreement, shall be considered to have been
relied upon by Lender, and shall survive the delivery to Lender of the Notes, regardless of any investigation made by Lender or
on its behalf. All statements in any such certificate or other instrument prepared and/or delivered for the benefit of Lender
shall constitute warranties and representations by any Loan Party hereunder. Except as otherwise expressly provided herein, all
covenants made by any Loan Party hereunder or under any other agreement or instrument shall be deemed continuing until all Obligations
are satisfied in full. All indemnification obligations under this Agreement, including under Section 2.12, 6.5, 9.4 and 9.7, shall
survive the termination of this Agreement and payment of the Obligations for a period of two (2) years.


 


9.11.         Successors
and Assigns: This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties.
No Loan Party may transfer, assign or delegate any of its duties or obligations hereunder. Each Loan Party acknowledges and agrees
that Lender may at any time, and from time to time, (a) sell participating interests in the Loan, and Lender’s rights hereunder
to other financial institutions, and (b) sell, transfer, or assign the Loan and Lender’s rights hereunder, subject (as to
Lender’s rights under this clause (b)) to each Loan Party’s written consent, which consent shall not be unreasonably
withheld; provided that, no consent under this clause (b) shall be required if an Event of Default exists at the time of such
sale, transfer or assignment; provided, that in effecting any sale, transfer or assignment hereunder, the Lender shall maintain
the status of the Term Loan and Term Loan Note as an obligation in “registered form” with the meaning of Sections
163(f), 871(h)(2) and 881(e)(2) of the Code. Subject to Section 9.23, Lender may divulge to any participant, assignee or co-lender
or prospective participant, assignee or co-lender it may obtain in any Loan or any portion thereof, all information, and furnish
to such Person copies of any reports, financial statements, certificates, and documents obtained under any provision of this Agreement,
or related agreements and documents.


 



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9.12.         Duplicate
Originals: Two or more duplicate originals of this
Agreement may be signed by the parties, including in counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument.


 


9.13.         Modification:
No modification hereof or any agreement referred to herein shall be binding or enforceable unless in writing and signed by each
Loan Party party thereto and Lender.


 


9.14.         Signatories:
Each individual signatory hereto represents and warrants that he is duly authorized to execute this Agreement on behalf of his
principal and that he executes the Agreement in such capacity and not as a party.


 


9.15.         Third
Parties: No rights are intended to be created hereunder,
or under any related agreements or documents for the benefit of any third party donee, creditor or incidental beneficiary of any
Loan Party. Nothing contained in this Agreement shall be construed as a delegation to Lender of any Loan Party’s duty of
performance, including, without limitation, any Loan Party’s duties under any account or contract with any other Person.


 


9.16.         Discharge
of Taxes, Borrower’s Obligations, Etc.: Lender,
in its sole discretion, shall have the right at any time, and from time to time, with at least ten (10) days prior notice to Borrowing
Agent if any Borrower fails to do so, to: (a) pay for the performance of any Borrower’s obligations hereunder, and (b) discharge
taxes or Liens, at any time levied or placed on any Borrower’s Property in violation of this Agreement unless such Borrower
is in good faith with due diligence by appropriate proceedings contesting such taxes or Liens and maintaining proper reserves
therefor in accordance with GAAP. Expenses and advances shall bear interest at the rate applicable hereunder, until reimbursed
to Lender. Such payments and advances made by Lender shall not be construed as a waiver by Lender of a Default or Event of Default
under this Agreement.


 


9.17.         Consent
to Jurisdiction: Each Loan Party and Lender each
hereby irrevocably consent to the non-exclusive jurisdiction of the Courts of the Commonwealth of Pennsylvania or the United States
District Court for the Eastern District of Pennsylvania in any and all actions and proceedings whether arising hereunder or under
any other agreement or undertaking. Each Loan Party waives any objection which such Loan Party may have based upon lack of personal
jurisdiction, improper venue or forum non conveniens. Each Loan Party irrevocably agrees to service of process by certified
mail, return receipt requested to the address of the appropriate party set forth herein.


 


9.18.         Additional
Documentation: Each Loan Party shall execute and/or
re-execute, and cause any other Person party to any Loan Document, to execute and/or re-execute and to deliver to Lender or Lender’s
counsel, as may be deemed appropriate, any document or instrument signed in connection with this Agreement which was incorrectly
drafted and/or signed, as well as any document or instrument which should have been signed at or prior to the Closing, but which
was not so signed and delivered. Each Loan Party agrees to comply with any written request by Lender within ten (10) days after
receipt by such Loan Party of such request.


 



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9.19.         Advertisement:
Lender, in its sole discretion, shall have the right to announce and publicize the financing established hereunder, as it deems
appropriate, by means and media selected by Lender.


 


9.20.         Waiver
of Jury Trial: EACH LOAN PARTY AND LENDER EACH HEREBY
WAIVE ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING OR COUNTERCLAIM ARISING WITH
RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO OR UNDER THE LOAN DOCUMENTS OR WITH RESPECT TO ANY CLAIMS ARISING OUT
OF ANY DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS INVOLVING OR RELATED TO ANY PROPOSED RENEWAL, EXTENSION, AMENDMENT, MODIFICATION,
RESTRUCTURE, FORBEARANCE, WORKOUT, OR ENFORCEMENT OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS.


 


9.21.         Consequential
Damages, etc.: Neither Lender nor agent or attorney of Lender, shall be liable for any special, indirect, exemplary, punitive
or consequential damages arising from any breach of contract, tort or other wrong relating to the establishment, administration
or collection of the Obligations.


 


9.22.         Nonliability
of Lender: The relationship between Borrowers on
the one hand and Lender on the other hand shall be solely that of borrower and lender. Lender shall have no fiduciary relationship
with, or fiduciary responsibility to, any Loan Party.


 


9.23.         Confidentiality:
Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed
(a) to Lender’s and Lender’s Affiliates’ directors, officers, employees and agents, including accountants, legal
counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory
authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) with
the consent of Borrowing Agent or (f) to the extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to Lender or any of Lender’s respective Affiliates on a nonconfidential
basis from a source other than a Loan Party. Notwithstanding the foregoing, Lender may disclose Information, without notice to
a Loan Party, to Governmental Authorities in connection with any regulatory examination of Lender or in accordance with Lender’s
regulatory compliance policy. For purposes of this Section 9.23, “Information” means all information received
from any Loan Party relating to any Loan Party or any Loan Party’s respective businesses, other than any such information
that is available to Lender on a non-confidential basis prior to disclosure by any Loan Party. Any Person required to maintain
the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do
so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.


 


9.24.         Patriot
Act Notice: To help fight the funding of terrorism
and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that
identifies each Person who opens an account. For purposes of this Section 9.24, account shall be understood to include loan accounts.


 


[SIGNATURES TO FOLLOW ON SEPARATE
PAGE]


 




    	 	49



     


    

 


WITNESS the
due execution of this Agreement as a document under seal as of the date first written above.


 


	 	A. D. COMPUTER CORPORATION
	 	 	 
	 	By:	/s/ Gregory M. Krzemien
	 	Name: Gregory M. Krzemien
	 	Title:   Treasurer
	 	 
	 	PAYROLL TAX FILING SERVICES, INC.
	 	 	 
	 	By:	/s/ Gregory M. Krzemien
	 	Name: Gregory M. Krzemien
	 	Title:   Treasurer
	 	 
	 	COLLECTORSOLUTIONS, LLC
	 	 	 
	 	By:	/s/ Gregory M. Krzemien
	 	Name: Gregory M. Krzemien
	 	Title:   Treasurer
	 	 
	 	JETPAY CORPORATION
	 	 	 
	 	By:	/s/ Gregory M. Krzemien
	 	Name: Gregory M. Krzemien
	 	Title:   Chief Financial Officer
	 	 
	 	LHLJ, INC.
	 	 	 
	 	By:	/s/ Laurence L. Stone
	 	Name: Laurence L. Stone
	 	Title:   President


 


(Signature Page
to Loan and Security Agreement) 


 




     


     


    

 


EXHIBIT “A”


 


COMPLIANCE CERTIFICATE


 





	LHLJ, Inc.	_____________, 201__




725 Eagle Farm Road


Villanova, PA 19085


Attention: Laurence L. Stone


 


The undersigned, the
_______ of ______ and _______ (collectively “Borrowers”), gives this certificate to LHLJ, Inc. (“Lender”),
in accordance with the requirements of Section 6.10 of that certain Loan and Security Agreement, dated as of October 18,
2016, by and among Borrowers, Guarantors, and Lender (“Loan Agreement”). Capitalized terms used in this Certificate,
unless otherwise defined herein, shall have the meanings ascribed to them in the Loan Agreement.


 


1.          Based
upon my review of the consolidated balance sheets and statements of income of Borrowers / Parent for the fiscal quarter ending
_________________ ____, 20__, copies of which are attached hereto, I hereby certify that:


 


a.           The
Debt Coverage Ratio is _________________.


 


b.           The
Total Leverage Ratio is __________________.


 


Attached as Schedule
“A” are the details underlying such financial covenant calculations.


 


2.          No
Default exists on the date hereof, other than: ____________________ [if none, so state]; and


 


3.          No
Event of Default exists on the date hereof, other than: __________________ [if none, so state].


 


	 	Very truly yours,
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title: