Exhibit 10.1


 


 


 


LOAN
AND SECURITY AGREEMENT


 


by
and among


 


THE
HUNTINGTON NATIONAL BANK


(as
Lender)


 


and


 


OURPET’S
COMPANY,


SMP
COMPANY, INCORPORATED,


VIRTU
COMPANY


and


OURPET’S
DISC, INC.


(jointly
and severally as Borrower)


 


November
30, 2017


 




    	 	 	 



    


    


  


Execution
Version


 


LOAN
AND SECURITY AGREEMENT


 


THIS
LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into in Fairport Harbor, Ohio and dated effective
as of November 30, 2017 (the “Effective Date”), by and among OurPet’s Company, a Colorado corporation
(“OurPet’s”), SMP Company, Incorporated, an Ohio corporation (“SMP”), Virtu
Company, an Ohio corporation (“Virtu”), and OurPet’s DISC, Inc., an Ohio corporation (“DISC”;
OurPet’s, SMP, Virtu and DISC are jointly and severally herein referred to as “Borrower”), each
having a principal place of business located at 1300 East Street, Fairport Harbor, Ohio 44077, and The Huntington National
Bank, a national banking association having an office located at 200 Public Square, Suite 600, Cleveland, Ohio 44114 (including
as successor-in-interest by merger to FirstMerit Bank, N.A., “Lender”).


 


WITNESSETH:


 


WHEREAS,
on or about August 24, 2015, OurPet’s, Virtu and SMP jointly and severally received commercial loans and other financial
accommodations from Lender, including but not limited to (a) a revolving
line of credit facility (the “Revolving Loan”) evidenced by a promissory note in the principal amount of $5,000,000.00
(collectively as renewed and replaced from time to time, and including as such promissory note is being amended and restated on
even date herewith in connection with this Agreement, the “Revolving Note”), and (a) a term loan facility (“Term
Loan One”) evidenced by a promissory note in the principal amount of $1,000,000.00 (“Term Note One”);


 


WHEREAS,
in connection with the Revolving Loan, OurPet’s, Virtu and SMP jointly and severally executed and delivered to Lender a certain
Business Loan Agreement (Asset Based) dated August 24, 2015 (the “2015 Loan Agreement”) which set forth the terms
and conditions pursuant to which the commercial loans referenced in the preceding recital were made;


 


WHEREAS,
Borrower and Lender desire (a) to contract for the establishment of a term loan facility in the principal amount of
$1,000,000.00 (“Term Loan Two”), to be evidenced by a term note dated of even date herewith in the
principal amount of $1,000,000.00 (“Term Note Two”), and (b) to modify the Revolving Loan in order to (i)
increase the principal amount available thereunder to $6,000,000.00, subject to the Borrowing Base, (ii) extend the maturity
date thereof to October 31, 2020, (c) have the interest rate charged on the Revolving Loan be based on a performance pricing
grid, and (d) modify the financial covenants governing the hereinafter defined Loans;


 


WHEREAS,
the Revolving Loan, Term Loan One and Term Loan Two are each a “Loan” and collectively the “Loans”
and the Revolving Note, Term Note One and Term Note Two are each a “Note” and collectively the “Notes”;·
and


 


WHEREAS,
Borrower and Lender are entering into this Agreement to set forth the terms and conditions pursuant to which the Loans are being
made and to state the rights of Lender and the duties and obligations of Borrower in relation thereto.


 




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NOW,
THEREFORE, in consideration of the mutual covenants and undertakings herein contained, the receipt and sufficiency of which are
hereby acknowledged by the parties hereto, in order to induce Lender to provide the Loans to Borrower hereunder, it is agreed
that this Agreement hereby reads as follows:


 


SECTION
1. LOAN TERMS.


 


		1.1	The
                                         Loans.



 


		(a)	Revolving
                                         Loan. Subject to the terms and conditions of this Agreement, Lender will make the
                                         Revolving Loan to Borrower in such amount or amounts as Borrower may from time to time
                                         request at any time prior to October 31, 2020 (unless due earlier by reason of acceleration
                                         or otherwise), but with advances not exceeding in aggregate principal amount at any time
                                         outstanding hereunder the lesser of: (a) $6,000,000.00, or (b) the Borrowing Base, all
                                         as determined in Lender’s sole discretion. The Revolving Loan shall hereinafter be evidenced
                                         by the Revolving Note, an amended and restated promissory note having a
                                         maximum principal amount of $6,000,000.000 and dated of
                                         even date herewith.



 


		(b)	Term Loans. Subject to
the terms and conditions of this Agreement, Lender has made or agrees to make term loans (each a “Term Loan”
and collectively the “Term Loans”) to Borrower.



 


		(i)	Term Loan One.
Term Loan One is evidenced by Term Note One, a promissory note
in the original principal amount of $1,000,000.00, dated August 24, 2015. Borrower acknowledges and agrees that Term Note One
remains in full force and effect and hereby reaffirms, ratifies and agrees to keep and perform the provisions, conditions, obligations
and agreements contained in Term Note One as originally written. Unless due earlier by reason of acceleration or otherwise, Term
Loan One will mature on September 1, 2020. Payments or prepayments of Term Loan One may not be reborrowed.



 


		(ii)	Term Loan Two. Term Loan Two
shall be evidenced by Term Note Two, a promissory note in the principal amount of $1,000,000.00 and dated of even date herewith.
The principal amount of Term Loan Two shall amortize in thirty-six (36) consecutive monthly installments of principal plus interest.
Unless due earlier by reason of acceleration or otherwise, Term Loan Two will mature on December 1, 2020. Payments of prepayments
of Term Loan Two may not be reborrowed.



 


		(c)	Joinder. By its execution
of this Agreement and those Notes being executed and delivered in connection herewith, DISC unconditionally and irrevocably acknowledges
and agrees that it (i) is included in the defined term “Borrower” and is directly liable to Lender for repayment in
full of the Loans, and (ii) shall keep and perform the provisions, conditions, obligations and agreements contained any and all
Loan Documents executed and delivered to Lender in connection with the Loans, including any Loan Documents executed prior to the
date of this Agreement.



  




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		(d)	Multiple Borrowers. This
Agreement and those Notes being executed and delivered in connection herewith has been executed by multiple obligors who are referred
to in this Agreement individually, collectively and interchangeably as “Borrower”. Unless specifically stated
to the contrary, the word “Borrower” as used in this Agreement, including without limitation all representations,
warranties and covenants, shall include all Borrowers. All obligations of Borrower under this Agreement shall be joint and several,
and all references to Borrower shall mean each and every Borrower. Each Borrower signing this Agreement below is responsible for
all obligations in this Agreement.



 


		1.2	Purpose. Borrower
shall use the proceeds of advances received under the Revolving Loan is to provide for Borrower’s working capital needs.
Borrower shall apply the proceeds of the advance received under Term Loan Two to fund initial premiums to a captive insurance
company (Series OP) and to finance capital expenditures.



 


		1.3	Maturity.
                                         This Agreement shall be effective as of the Effective Date and shall continue in
                                         full force and effect until the last maturity date set forth in the Notes, as may be
                                         amended from time to time; provided, however, this Agreement and all Loan Documents shall
                                         remain in full force and effect until such time as all of Borrower’s Obligations
                                         have been fully and completely satisfied, including without limitation, principal, interest,
                                         costs, expenses, attorneys’ fees, and other charges; or until such time as the
                                         parties may agree in writing to terminate this Agreement. Notwithstanding any term, provision,
                                         condition or covenant contained herein, while any Event of Default exists, Lender shall
                                         not be required to make, and Borrower shall not be entitled to receive, any Advance under
                                         the Revolving Note.



 


		1.4	Cross-Default
                                         and Cross-Collateralization. Any default under any agreement with Lender shall
                                         constitute an Event of Default hereunder. Likewise, any Event of Default hereunder shall
                                         constitute an Event of Default or default, however defined, under any other loan or financing
                                         arrangement or agreement Borrower may have with Lender (the “Other Agreements”). Any and all other collateral and security interests granted or pledged as security
                                         to Lender in the Other Agreements shall constitute Collateral and security interests
                                         securing all the Notes and Obligations under the Loan Documents, and the Collateral for
                                         the Loan Documents shall serve as collateral for the Other Agreements, it being the intention
                                         of all parties that the Obligations (which term includes the Loans) and the Other Agreements
                                         are cross-collateralized. For purposes of this paragraph and the Events of Default, “Lender”
                                         shall include any affiliate or subsidiary of The Huntington National Bank, including
                                         any predecessor-in-interest by merger.



 


		1.5	Origination Fee. No
Upfront Fee.



 


		1.6	Special Definitions.



 


“Advance”
means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf under the terms and conditions
of this Agreement.


 




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“Affiliate”
shall mean as to any Person, any other Person (excluding any Foreign Subsidiary) which, directly or indirectly, is in control
of, is controlled by, or is under common control with such Person. For purposes of this definition, a Person shall be deemed to
be “controlled by” a Person if such Person possesses, directly or indirectly, power to direct or cause the direction
of the management and policies of such Person through the ability to exercise voting power, by contract or otherwise.


 


“Anti-Terrorism
Laws” means those laws and sanctions relating to terrorism or money laundering, including Executive Order No. 13224,
the USA Patriot Act (Public Law 107-56), the Bank Secrecy Act (Public Law 91-508), the Trading with the Enemy Act (50 U.S.C. App.
Section 1 et. seq.), the International Emergency Economic Powers Act (50 U.S.C. Section 1701 et. seq.), and the sanction regulations
promulgated pursuant thereto by the Office of Foreign Assets Control, as well as laws relating to prevention and detection of
money laundering in 18 U.S.C. Sections 1956 and 1957 (as any of the foregoing may from time to time be amended, renewed, extended
or replaced).


 


“Blocked
Person” means any of the following: (a) a Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224; (b) 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; (c) a Person
with which Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No.
13224; (e) 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 (f) a Person who is affiliated or associated
with a Person listed above.


 


“Borrowing
Base” shall mean the sum of (i) up to eighty percent (80%) of the aggregate amount of Borrower’s Eligible
Accounts, plus (ii) the lesser of (A) $2,500,000.00 or (B) up to forty percent (40%) of the aggregate of
Borrower’s Eligible Inventory, all as determined by Lender from time to time in Lender’s sole discretion. The
Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate theretofore
delivered to Lender.


 


“Business
Day” means any day other than a Saturday, a Sunday, or other day on which Lender is authorized or required to be closed;
and if the applicable Business Day relates to any loan accruing interest based on the LIBO Rate, such day must also be a day for
trading by and between banks in US dollar deposits in the London interbank market.


 


“Collateral”
shall mean all of the following real and personal property owned by Borrower, whether now owned or existing, or hereafter arising
or acquired or received by Borrower, wherever located:


 



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		(a)	all Accounts; all Inventory;
all Equipment and Fixtures; all General Intangibles, Payment Intangibles, and Intellectual Property; all Investment Property and
Subsidiary Interests; all Deposit Accounts and any and all monies credited by or due from any financial institution or any other
depository; all Goods and other personal property, including all merchandise returned or rejected by Account Debtors, relating
to or securing any of the Accounts; all rights as a consignor, a consignee, an unpaid vendor, mechanic, artisan, or other lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation and repurchase; all additional amounts due to Borrower from
any Account Debtors relating to the Accounts; other property, including warranty claims, relating to any Goods; all contract rights,
rights of payment earned under a contract right, Instruments (including promissory notes), Chattel Paper (including electronic
chattel paper), Documents, warehouse receipts, letters of credit, and money; all Commercial Tort Claims (whether now existing
or hereafter arising); all Letter-of-Credit Rights (whether or not such Letter of Credit is evidenced by a writing); all Supporting
Obligations; all real and personal property of third parties in which Borrower has been granted a lien or security interest as
security for the payment or enforcement of Accounts; and any other goods or personal property, if any, in which Borrower may hereafter
in writing grant a security interest to Lender hereunder, or in any amendment or supplement hereto or thereto, or under any other
agreement between Lender and Borrower; and



 


		(b)	Borrower’s ledger sheets,
ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by any of
the Companies or in which it has an interest), computer programs, electronic media, tapes, disks and documents relating to subsection
(a) of this definition of Collateral; and



 


		(c)	all proceeds and products of
subsections (a) through(c) of this definition of Collateral in whatever form, including: cash, deposit accounts (whether or not
comprised solely of proceeds), certificates of deposit, insurance proceeds (including hazard, flood and credit insurance), negotiable
instruments and other instruments for the payment of money, chattel paper, security agreements, documents, eminent domain proceeds,
condemnation proceeds and tort claim proceeds.



 


“Companies”
shall mean, singularly or collectively, as the context may require, OurPet’s, SMP, Virtu and DISC, together with (a) any additional
Borrower that may join this Agreement after closing, and (b) any Person that guaranties all or any portion of the Obligations
pursuant to this Agreement (if any), and, in each case, their respective successors and assigns.


 


“Default
Rate” as to any particular Note shall be the rate of interest for such Note calculated using the “Default Rate
Margin” or “Interest After Default” paragraph for past due amounts as specified in such Note, and for any
other amounts owing under this Agreement or any other Loan Document shall be the highest “Default Rate Margin”
or “Interest After Default” interest rate set forth in a Note executed in connection with this Agreement, subject
to maximum interest rate limitations under applicable law.


 




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“Eligible
Accounts” means, at any time, all of Borrower’s Accounts which contain selling terms and conditions acceptable to Lender.
The net amount of any Eligible Account against which Borrower may borrow shall exclude all returns, discounts, credits, and offsets
of any nature. Unless otherwise agreed to by Lender in writing, Eligible Accounts do not include:


 


		(1)	Accounts with respect to which
the Account Debtor is employee or agent of Borrower.



		(2)	Accounts with respect to which
the Account Debtor is a subsidiary of, or affiliated with Borrower or its shareholders, officers, or directors.



		(3)	Accounts with respect to which
goods are placed on consignment, guaranteed sale, or other terms by reason of which the payment by the Account Debtor may be conditional.



		(4)	Accounts with respect to which
Borrower is or may become liable to the Account Debtor for goods sold or services rendered by the Account Debtor to Borrower.



		(5)	Accounts which are subject to
dispute, counterclaim, or setoff.



		(6)	Accounts with respect to which
the goods have not been shipped or delivered, or the services have not been rendered, to the Account Debtor.



		(7)	Accounts with respect to which
Lender, in its sole discretion, deems the creditworthiness or financial condition of the Account Debtor to be unsatisfactory.



		(8)	Accounts of any Account Debtor
who has filed or has had filed against it a petition in bankruptcy or an application for relief under any provision of any state
or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had appointed a trustee, custodian, or receiver for the
assets of such Account Debtor; or who has made an assignment for the benefit of creditors or has become insolvent or fails generally
to pay its debts (including its payrolls) as such debts become due.



		(9)	Accounts which have not been
paid in full within 90 days from the invoice date. The entire balance of any Account of any single Account Debtor will
be ineligible whenever the portion of the Account which has not been paid within 90 days from the invoice date is in excess
of 25.000% of the total amount outstanding on the Account.



		(10)	Accounts with
respect to which the Account Debtor is the United States government or any department or agency of the United States, without
direct assignment.



		(11)	Foreign Accounts, Bonded Receivables,
Warranty Receivables, Progress Billings and Retainages.



		(12)	Credits over
90 days from the invoice date.



 


“Eligible
Inventory” means, at any time, all of Borrower’s Inventory as defined below, except:


 


		(1)	Inventory which is not owned
by Borrower free and clear of all security interests, liens, encumbrances, and claims of third parties.



		(2)	Inventory which Lender, in its
sole discretion, deems to be obsolete, unsalable, damaged, defective, or unfit for further processing.



 




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		(3)	Work in progress (WIP).



 


“Foreign
Subsidiary” means any Subsidiary that is not organized or incorporated in the United States or any state or territory
thereof.


 


“GAAP”
means Generally Accepted Accounting Principles as promulgated by the United States of America Financial Accounting Standards Board
in the United States of America in effect from time to time. All accounting terms not specifically defined herein shall be defined
in accordance with GAAP. All financial computations to be made under this Agreement and the Loan Documents, unless otherwise specifically
provided, shall be construed in accordance with GAAP. Whenever the term “Borrower” is used in respect of a financial
covenant or a related definition, it shall be understood to mean Borrrower and its Subidiaries on a consolidated basis unless the
context clearly requires otherwise.


 


“Hedging
Contract” means any foreign exchange contract, currency swap agreement, futures contract, commodities hedge agreement,
interest rate protection agreement, interest rate future agreement, interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, option agreement or any other similar hedging agreement or arrangement entered into by a Person
in the ordinary course of business.


 


“Inventory”
means all of Borrower’s raw materials, work in process, finished goods, merchandise, parts and supplies, of every kind and description,
and goods held for sale or lease or furnished under contracts of service in which Borrower now has or hereafter acquires any right,
whether held by Borrower or others, and all documents of title, warehouse receipts, bills of lading, and all other documents of
every type covering all or any part of the foregoing. Inventory includes inventory temporarily out of Borrower’ss custody or possession
and all returns on Accounts.


 


“Laws”
or “Applicable Laws” means all applicable statutes, laws, ordinances, rules, regulations, orders, writs,
injunctions, decisions, opinions or decrees of any applicable governmental entity or regulatory body.


 


“Loan
Documents” means this Agreement, each Note, letter of credit, any guaranties, security agreements, collateral assignments,
pledge agreements, dominion of funds/lockbox agreements, account assignments, control agreements, letter of credit application
and agreement or other reimbursement agreements, any subordination agreements, intercreditor agreements and any and all other
agreements, instruments and documents, including powers of attorney, consents, and all other writings heretofore, now or hereafter
executed by Borrower or Person or delivered to Lender in connection with this Agreement, and any future amendments hereto or restatements
hereof, or pursuant to the terms of any of the other Loan Documents, together with any and all renewals, extensions, and restatements
of, and amendments and modifications to, any of the foregoing.


 




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“Material
Adverse Effect” shall mean any change, event, occurrence, fact, or circumstance which has had or is reasonably expected
to have a material adverse effect or change on (a) the business, operations, properties, assets, performance, profits, prospects
or overall condition (financial or otherwise) of Borrower, (b) the validity or enforceability of this Agreement or any other Loan
Document, or the rights and remedies of Lender hereunder or thereunder, (c) Borrower’s ability to pay any Loan to Lender in accordance
with the terms thereof, (d) the value of the Collateral, or the priority of Lender’s lien on any Collateral, or (e) the ability
of Borrower to perform its obligations under or remain in compliance with the Agreement and all Loan Documents.


 


“Obligations”
means all present and future, whether payment or performance, indebtedness, obligations and liabilities, and all renewals
and extensions thereof, or any part thereof, now or hereafter owed to Lender by Borrower, jointly or severally, arising
pursuant to this Agreement, or the Loan Documents, and all interest accruing thereon and costs, expenses, prepayment fees or
penalties, cancellation fees or penalties, and reasonable attorneys’ fees incurred in the enforcement or collection
thereof regardless of whether such indebtedness, obligations, and liabilities are direct, indirect, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several, including, but not limited to, the indebtedness, obligations,
and liabilities evidenced, secured, or arising pursuant to any of the Loan Documents, and all renewals and extensions
thereof, or any part thereof, and all present and future amendments thereto. For purposes of clarification only and not in
limitation, Obligations shall also include any and all obligations, contingent or otherwise, whether now existing or
hereafter arising, of Borrower to Lender arising under or in connection with Hedging Contracts.


 


“Person”
shall mean any individual, sole proprietorship, partnership, corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public benefit corporation, joint venture, entity or governmental
body.


 


“Potential
Default” means any event or occurrence or failure which with the giving of notice and or the passage of time would constitute
an Event of Default under any Loan Document.


 


“Subsidiary”
means a corporation or other entity of whose shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority
of the directors of such corporation, are owned, directly or indirectly, by any Borrower.


 


“Subsidiary
Interests” shall mean all of the issued and outstanding equity interests of any Subsidiary owned by any Borrower.


 


“UCC”
shall mean the Uniform Commercial Code in effect in the State of Ohio. All capitalized terms used herein with reference to the
Collateral and defined in the UCC shall have the meaning given therein unless otherwise defined herein. To the extent the definition
of any category or type of Collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, such
expanded definition will apply automatically as of the effective date of such amendment, modification or revision.


 




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SECTION
2. PAYMENT TERMS.


 


Interest
shall accrue and principal plus interest shall be payable monthly as set forth in each Note, with the rate at which interest accrues
under the Revolving Note and Term Note Two being based on a performance pricing grid set forth in those Notes. Prepayment including
any applicable prepayment premium shall be as provided for in each applicable Note. Each Note shall have its own respective maturity
date. This Agreement, all applicable Loan Documents and the security interest granted as to the Collateral herein shall remain
enforceable and run for the benefit of Lender until all Obligations have been indefeasibly performed and paid in full.


 


SECTION
3. GRANT OF SECURITY INTEREST AND LENDER LIENS; COLLATERAL MAINTENANCE


 


		3.1	Security Interest.
To secure the full and complete payment and performance of the Obligations, Borrower hereby
agrees that this Agreement creates a security agreement and Borrower hereby grants, conveys, pledges and creates to Lender liens
and continuing security interests (“Lender Liens”) in, to and on all of Borrower’s right, title, and
interest in and to (but none of Borrower’s obligations with respect to) the Collateral and, without limiting the definition
of Collateral herein, all renewals, replacements, substitutions, additions, and proceeds thereof, each of which Lender Liens shall
be first and prior liens and security interests. Lender shall and is hereby authorized to file one or more UCC financing statements,
liens on certificates of title, and such other lien instruments as Lender deems appropriate, in a form satisfactory to Lender
to perfect against the Collateral. Borrower shall pay the cost of filing the same in all public offices wherever filing is deemed
by Lender to be necessary or desirable. At the request of Lender, Borrower will authorize and cause to be executed any and all
documents which Lender shall reasonably require in order to effect any of the foregoing or other purposes set forth in the Loan
Documents.



 


		3.2	Repairs and Maintenance.
Borrower agrees to keep and maintain, and to cause others to keep and maintain, the Collateral
in good order, repair and condition at all times while this Agreement remains in effect. Borrower further agrees to pay when due
all claims for work done on, or services rendered or material furnished in connection with the Collateral so that no lien or encumbrance
may ever attach to or be filed against the Collateral. If Borrower has failed to timely pay any taxes or other amounts due in
connection with the Collateral, or other amounts are needed for maintenance, repair or other protection of the Collateral, and
Borrower has not paid such sums within fifteen (15) day’s notice from Lender, Lender may, but is not required to fund such
sums, and any such funds expended shall bear interest at the Default Rate.



 


		3.3	Taxes, Assessments and
Liens. Borrower will pay when due all taxes, assessments and liens upon the Collateral, its
use or operation, upon this Agreement, upon any note or Notes evidencing the Obligations, or upon any of the other Loan Documents.
If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Borrower shall deposit with Lender
cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge
of the lien plus any interest, costs, attorneys’ fees or other charges that could accrue as a result of foreclosure or sale
of the Collateral. In any contest Borrower shall defend itself and Lender and shall satisfy any final adverse judgment before
enforcement against the Collateral. Borrower shall name Lender as an additional obligee under any surety bond furnished in the
contest proceedings. Borrower further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and
other charges have been paid in full and in a timely manner. Borrower may withhold any such payment or may elect to contest any
lien if Borrower is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender’s
interest in the Collateral is not jeopardized in Lender’s sole opinion.



 




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		3.4	Compliance with Governmental
Requirements. Borrower shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities,
now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral. Borrower may contest
in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals,
so long as Lender’s interest in the Collateral, in Lender’s sole opinion, is not jeopardized.



 


		3.5	Hazardous
                                         Substances. Borrower represents and warrants that the Collateral never has been,
                                         and never will be so long as this Agreement remains a lien on the Collateral, used in
                                         violation of any Environmental Laws or for the generation, manufacture, storage, transportation,
                                         treatment, disposal, release or threatened release of any Hazardous Substance in violation
                                         of any Environmental Laws. The representations and warranties contained herein are based
                                         on Borrower’s due diligence in investigating the Collateral for Hazardous Substances.
                                         Borrower hereby (i) releases and waives any future claims against Lender for indemnity
                                         or contribution in the event any Borrower becomes liable for cleanup or other costs under
                                         any Environmental Laws, and (ii) agree to indemnify and hold harmless Lender against
                                         any and all claims and losses resulting from a breach of this provision of this Agreement.
                                         This obligation to indemnify shall survive the payment of the Obligations and the satisfaction
                                         of this Agreement. For purposes of this Agreement, “Environmental Law”
                                         shall mean any present or future federal, foreign, state or local law, ordinance, order,
                                         rule or regulation and all judicial, administrative and regulatory decrees, judgments
                                         and orders, pertaining to health, industrial hygiene, the use, disposal or transportation
                                         of Hazardous Substances, environmental contamination or pertaining to the protection
                                         of the environment as these laws have been or may be amended or supplemented, and any
                                         successor thereto, and any analogous foreign, state or local statutes, and the rules,
                                         regulations and orders promulgated pursuant thereto; and “Hazardous Substances”
                                         shall mean and include hazardous substances as defined by Environmental Law, oil of any
                                         kind, petroleum products and their by-products, including, but not limited to, sludge
                                         or residue; asbestos containing materials; polychlorinated biphenyls; any and all other
                                         hazardous or toxic substances; hazardous waste; medical waste; infectious waste; explosives;
                                         radioactive materials; and all other pollutants, contaminants and other substances regulated
                                         or controlled by the Environmental Laws and any other substance that requires special
                                         handling in its collection, storage, treatment or disposal under the Environmental Laws.



 


SECTION
4. WARRANTIES AND REPRESENTATIONS.


 


Borrower warrants
and represents to Lender that, as of the date hereof, and each subsequent advance date:


 




    	 	 	 Page | 10



    


    

  


		4.1	Organization
                                         and Authority. Borrower: (i) is duly organized, validly existing, and in good
                                         standing under and by virtue of the laws of the State of Ohio, except OurPet’s Company
                                         is duly organized, validly existing, and in good standing under and by virtue of the
                                         laws of the State of Colorado; (ii) has and possesses all requisite right, power and
                                         authority and all necessary licenses and permits to own and operate its properties, to
                                         carry on its business as now conducted and as presently proposed to be conducted, and
                                         to enter into the Loan Documents and to perform its obligations thereunder; (iii) has
                                         taken the necessary action to authorize the execution and delivery of the Loan Documents
                                         and the borrowings thereunder; (iv) is duly qualified and in good standing under the
                                         laws of each jurisdiction where its ownership, lease or operation of property or the
                                         conduct of its business requires such qualification; and (v) is in compliance with all
                                         material applicable federal, state and local laws, rules and regulations.



 


		4.2	Financial Statements.
Together with any and all now existing financial reporting requirements required of Borrower, jointly or severally, under
any due to Lender under any now existing Loan Document, Borrower shall furnish Lender, until satisfaction in full of the Obligations
and the termination of this Agreement:



 


		(a)	Within 120 days after the end
of each fiscal year of the Companies, audited financial statements of the Companies on a consolidated and consolidating basis
including statements of income and stockholders’ equity and cash flow from the beginning of the current fiscal year to the
end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAP applied
on a basis consistent with prior practices, and in reasonable detail and reported upon without qualification by an independent
certified public accounting firm selected by the Companies and satisfactory to Lender. The annual report shall be accompanied
by a Compliance Certificate;



 


		(b)	Within 45 days after the end
of each fiscal quarter,



 


		(i)	an unaudited balance sheet of
the Companies on a consolidated and consolidating basis and unaudited statements of income and stockholders’ equity and
cash flow of the Companies on a consolidated and consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such quarter, and for such quarter, prepared on a basis consistent with prior practices and complete
and correct in all material respects, subject to normal and recurring year-end adjustments that individually and in the aggregate
are not material to the business of the Companies; and



 


		(ii)	a compliance certificate (each
a “Compliance Certificate”) signed by Borrower’s president, chief financial officer or other officer
or person acceptable to Lender, setting forth results of the financial covenants required under this Agreement. The Compliance
Certificate shall be accompanied by a schedule of the calculations used in determining, as of the end of such fiscal quarter,
whether Borrower was in compliance with the financial covenants set forth in this Agreement, which shall be in form reasonably
satisfactory to Lender. Each Compliance Certificate should also include a statement certifying that to the best of Borrower’s
knowledge, (a) no Event of Default or Potential Default has occurred under this Agreement or any of the Loan Documents (or if
an Event of Default or Potential Default has occurred, statements specifying in detail the nature of such Event of Default or
Potential Default and the actions taken to effect a cure of such Event of Default or Potential Default; (b) Borrower has fully
complied with all Laws of any and all governmental entities applying to the operation and use of Borrower and the Collateral;
(c) each covenant specified in this Agreement is being performed and remains fully satisfied; and (d) the representations and
warranties set forth in this Agreement and each Loan Document are true and correct as of the date of the certificate.;





    	 	 	 Page | 11



    


    

  


		(c)	Within 20 days after the end
of each fiscal month,



 


		(i)	a report signed by Borrower’s president, chief financial
                                                                                                                   officer or other officer or person acceptable to Lender setting forth the number and dollar total of all Accounts, the
                                                                                                                   number and dollar total past due for not more than 30 days, the number and dollar total past due for not more than 60 days,
                                                                                                                   the number and dollar total past due for not more than 90 days, and the number and dollar total past due for more than 90
                                                                                                                   days (each such report being a “Receivable Aging”);



 


		(ii)	a report
signed by Borrower’s president, chief financial officer or other officer or person acceptable to Lender setting forth the
number and dollar total of all accounts payable, the number and dollar total past due for not more than 30 days, the number and
dollar total past due for not more than 60 days, the number and dollar total past due for not more than 90 days, and the number
and dollar total past due for more than 90 days (each such report being a “Payable Aging”);



 


		(iii)	a summary
of Inventory by location and type, in each case accompanied by such supporting detail and documentation as shall be requested
by Lender in its discretion (each such summary being an “Inventory Report”);



 


		(iv)	a borrowing base certificate
(each a “Borrowing Base Certificate”) signed by Borrower’s president, chief financial officer or other
officer or person acceptable to Lender demonstrating that the aggregate amount of Eligible Accounts and Eligible Inventory is
sufficient in value and amount to support the Advances made under the Revolving Loan. The Borrowing Base Certificate shall be
calculated as of the last day of the prior calendar month and which shall not be binding upon the Lender or restrictive of the
Lender’s rights under this Agreement); and



 


		(v)	promptly upon Lender’s
request, such financial and other information as reasonably requested by Lender.





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		4.3	Full Disclosure. The financial statements referred
                                                                                                                          to herein do not, nor does this Agreement or any written exhibit or schedule thereto or any other written statement furnished
                                                                                                                          by Borrower to Lender in connection with obtaining the Loan, contain any untrue statement of a material fact or omit a
                                                                                                                          material fact necessary to make the statements contained therein or herein misleading. There is no material fact known to
                                                                                                                          Borrower as to Borrower’s financial condition or business operations which Borrower has not disclosed to Lender nor any
                                                                                                                          fact or occurrence which has had, or may reasonably be expected to cause a Material Adverse Effect on Borrower or
                                                                                                                          any Subsidiary or Affiliate of Borrower.



 


		4.4	Borrowing is Legal and
Authorized. The undersigned has been duly authorized and the execution and delivery of this Agreement, each Note, the
Loan Documents and all other documents contemplated herein and executed in connection with this Agreement and will constitute
legal, valid and binding obligations of Borrower enforceable in accordance with their terms, except as enforcement is subject
to equitable and other limitations applied by courts, and debtor’s rights generally. The execution, delivery and performance
of this Agreement, the Notes and the Loan Documents and the compliance by Borrower with all the provisions of this Agreement,
the Notes and the Loan Documents applicable to Borrower: (i) are within the powers of Borrower; (ii) are legal and will not conflict
with, result in any breach in any of the provisions of, constitute a default under, or result in the creation of any lien or encumbrance
other than as created by this Agreement and the other Loan Documents executed in connection with the Loan; and (iii) do not violate,
contravene, or cause a breach or a default under any applicable laws, rules or regulations, or any agreement, contract or instrument
to which Borrower is a party. Borrower is not a party to any contract or agreement which restricts the right or ability of Borrower
to incur the Obligations.



 


		4.5	No Defaults. There
is no current Event of Default or Potential Default to this Agreement. No event has occurred and is continuing which has had or
may reasonably be expected to have a material change on the condition (financial or otherwise) of Borrower (specifically including,
but not limited to a Material Adverse Effect). Borrower is not in violation in any material respect of any term of any agreement,
charter instrument, articles of organization, operating agreement or other instrument to which Borrower is a party or by which
Borrower may be bound.



 


		4.6	Compliance With Law. Borrower: (a) is not in
                                                                                                                          material violation of any laws, ordinances, governmental rules or regulations to which Borrower, jointly or severally, is
                                                                                                                          subject; and (b) has not failed to obtain any material licenses, permits, franchises or other governmental
                                                                                                                          authorizations necessary to conduct Borrower’s business.



 


		4.7	Insolvency. Borrower
is not insolvent within the meaning of that term as defined in the Federal Bankruptcy Code.



 


		4.8	Anti-Terrorism Laws.
Borrower is not in violation of any Anti-Terrorism Law or engaged in nor has it conspired 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. No Borrower (i) conducts any business or engages in making or receiving any contribution of funds, goods or
services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Order No. 13224.





    	 	 	 Page | 13



    


    

 


		4.9	Ratification of Existing
Loan Documents. Borrower hereby acknowledges and confirms the validity, priority and perfection of all security interests
and other liens previously granted or created in favor of Lender, and except as expressly modified herein, all terms, provisions,
conditions and agreements set forth in any existing Loan Document are hereby confirmed and ratified and shall remain in full force
and effect.



 


SECTION
5. CONDITIONS TO ADVANCE.


 


The
obligation of Lender to make the initial Advance under this Agreement shall be conditioned upon and subject to the satisfaction
of all of the following conditions:


 


		5.1	Compliance With This Agreement.
Borrower shall have executed and delivered to Lender this Agreement and any Loan Documents required in connection herewith,
including but not limited to the Revolving Note and Term Note Two. Borrower shall have performed and complied with all agreements
and conditions contained in any Loan Document and contemplated herewith which are required to be performed or complied with by
Borrower before or at closing. No Event of Default shall have occurred and no Potential Default shall then exist.



 


		5.2	Representations and Warranties.
The representations and warranties set forth in this Agreement, in the Loan Documents, and in any document or certificate
delivered to Lender under this Agreement are true and correct.



 


		5.3	No Change in Financial
Condition. There shall be no material change (specifically including but not limited to a Material Adverse Effect) as
to the financial condition of Borrower reflected in the financial statements furnished to Lender concurrently herewith or as may
be required to be furnished hereafter.



 


		5.4	Invoices, Proof of Payment
and Lien Releases. If applicable, Borrower shall have provided or caused to be provided such invoices, proof of payment
or direction to pay, and lien release as Lender shall require in its sole discretion.



 


		5.5	Appraisals and Inspections.
If applicable, Borrower shall have provided or caused to be provided or Lender has obtained such inspections of the Collateral
acceptable to Lender in its sole discretion, such reports and inspections at the cost of Borrower.



 


		5.6	Authorization Documents.
Borrower shall have provided, in form and substance satisfactory to Lender, all properly certified resolutions duly authorizing
the execution of this Agreement and the Loan Documents being executed in connection herewith as Lender or its counsel may require.



 


		5.7	All Other Matters.
All other matters related to the Advance are reasonably satisfactory to Lender and its counsel. If requested by Lender, Borrower
shall deliver to Lender evidence substantiating any of the matters contained in this Agreement which are necessary to enable Borrower
to qualify for the Advance. Additionally, Lender will not be obligated to make the Advance if the making of such Advance is prohibited
by Law. Lender, at its election, may make the Advance, without having received all items to be delivered, or continue to be a
condition precedent thereto, but such action by Lender shall not be deemed to be a waiver of the requirement that each such item
be delivered.





    	 	 	 Page | 14



    


    

  


SECTION
6. BORROWER’S COVENANTS.


 


Together
with any and all now existing covenants required of Borrower, jointly or severally, under any and all now existing Loan Documents,
Borrower jointly and severally agrees and covenants that on and after the date of this Agreement, so long as any of the Obligations
provided for herein remains unpaid:


 


		6.1	Sale of Assets, Accounts
or Merger.



 


		(a)	Sale of Assets. Borrower
will not, except in the ordinary course of business, sell, lease, transfer or otherwise dispose of, any material part of Borrower’s
assets or properties or any of its accounts or notes receivables, except for the sale of Inventory in the ordinary course of business.



 


		(b)	Merger and Consolidation.
Borrower will not, without the prior written consent of Lender (i) consolidate with or merge into any other entity, or permit
any other entity to consolidate with or merge into any of them; or (ii) sell, pledge, lease, transfer, convey or otherwise dispose
of all or substantially all of its assets or stock to any other person or entity in which Borrower is not the surviving entity.



 


		6.2	Change
of Control. Borrower will not allow any sale, conveyance, assignment or other transfer, directly or indirectly, of any
ownership interest of Borrower, which results in any change in the identity of the individuals or entities previously in control
of Borrower or the grant of a security interest in any ownership interest of any Person, directly or indirectly controlling Borrower,
which could result in a change in the identity of the individuals or entities previously in control of Borrower. Notwithstanding
the preceding sentence, it shall not be a change of control under this Section 6.2 unless
Dr. Steven Tsengas or Konstantine S. Tsengas shall cease to own, free and clear of all liens
or encumbrances, at least 20% of the outstanding voting ownership interest of Borrower, on a fully diluted basis. For the purpose
hereof, the terms “control” or “controlling” shall mean the possession of the power to direct, or cause
the direction of, the management and policies of Borrower by contract or voting of securities.



 


		6.3	Liens and Encumbrances.
Borrower represents and warrants to Lender that Borrower holds good and marketable title to the Collateral owned by it, free
and clear of all liens and encumbrances except for the lien of this Agreement and liens in favor of Lender. No financing statement
covering any of the Collateral is on file in any public office other than (i) those which reflect the security interest created
by this Agreement; (ii) those in favor of Lender; (iii) those to which Borrower has specifically obtained, on behalf of Lender,
a release as to the Collateral (if any); or (iv) those to which Lender has specifically consented. Borrower shall defend Lender’s
rights in the Collateral against the claims and demands of all other persons. Borrower will not cause or permit or agree or consent
to cause or permit in the future any of the Collateral, whether now owned or hereafter acquired, to be subject to a lien or encumbrance
except liens in favor of Lender. Except for trade debt incurred in the ordinary course of business and indebtedness to Lender
contemplated by this Agreement, without the prior written consent of Lender, Borrower shall not create, incur, or assume indebtedness
for borrowed money, including capital leases. Without the prior written consent of Lender, Borrower shall not sell, transfer,
mortgage, assign, pledge, lease grant a security interest in, or encumber any of Borrower’s assets, nor sell with recourse
any of Borrower’s Accounts, except to Lender.



 




    	 	 	 Page | 15



    


    




 






 


		6.4	Change
                                         Name, Place or Nature of Business. Borrower
                                         will not, without the prior written consent of Lender, change its name or its principal
                                         place of business or locations of the Collateral as disclosed to Lender on each Advance.
                                         Borrower will not change the nature of Borrower’s current business.



 


		6.5	Inspection
                                         and Audits. Upon Lender’s request, Lender,
                                         by or through any of its officers, agents, attorneys or accountants, shall have the right
                                         to examine, audit, make extracts, and conduct inspections, verifications (of accounts
                                         and otherwise), appraisals, and field examinations of the Collateral and Borrower’s books
                                         and records, and to make abstracts or reproductions thereof (each a “Field Exam”).
                                         Any Field Exam will be conducted at Borrower’s cost and expense, and Borrower shall promptly
                                         reimburse Lender for any fees, costs or expenses incurred by third party vendors in making
                                         such inspection or audit, and will, when billed pay such amount as established by Lender
                                         from time to time at its internal costs, or the costs of any of its affiliates, for services
                                         and expenses incurred in making any such inspection or audit.



 


		6.6	Loans,
                                         Acquisitions and Guaranties. Without the prior
                                         written consent of Lender, Borrower shall not (a) loan, invest in or advance money or
                                         assets to any other person, enterprise or entity, (b) purchase, create or acquire any
                                         interest in any other enterprise or entity, or (c) incur any obligation as surety or
                                         guarantor, other than in the ordinary course of business.



 


		6.7	No
                                         Change in Ownership of Borrower. Without the
                                         prior written consent of Lender, Dr. Steven Tsengas or Konstantine S. Tsengas shall not
                                         cease to own, free and clear of all liens or encumbrances, at least 20% of the outstanding
                                         voting ownership interest of Borrower, on a fully diluted basis.



 


		6.8	No
                                         Change to Borrower’s Organizational Documents. Without
                                         Lender’s prior written consent, Borrower will not amend or modify its Articles of Incorportion,
                                         Code of Regulations, by-laws or other similar ownership organizational document.



 


		6.9	Financial
                                         Covenants. The Companies shall, until satisfaction
                                         in full of the Obligations and termination of this Agreement:



 


		(a)	Fixed
                                         Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio of not less than 1.15
                                         to 1.00, calculated quarterly as of the last day of each fiscal quarter for the twelve
                                         (12) month period ending on such date, commencing as of December 31, 2017.



 


As
used herein, “Fixed Charge Coverage Ratio” shall mean the ratio of (a) Available Cash Flow to (b) Fixed Charges,
all as determined for any fiscal period for the immediately preceding twelve-month period ending on such date.


 







    	 	 	 Page | 16



    


    




  


As
used herein, “Available Cash Flow” means, for any fiscal period, the Companies’ EBITDA, minus the sum
of Capital Expenditures (other than Capital Expenditures that were funded by purchase money indebtedness or from stock issuance),
as determined as of the last day of any fiscal period for the immediately preceding twelve (12) months ending on said days.


 


As
used herein, “EBITDA” means, for any fiscal period, the Companies’ net income (or loss) plus (to the
extent deducted in determining such net income (or loss)) the sum of (i) all interest expense, including the interest
component of any capital lease, (ii) any provision for federal, state, local and foreign income taxes, and (iii) depreciation
and amortization expense, minus the sum (y) extraordinary non-operating income, and (z) any gain from non-recurring
transactions, as determined as of the last day of any fiscal period for the immediately preceding twelve (12) months ending
on said days.


 


As
used herein, “Capital Expenditures” means, for any fiscal period, any expenditure in respect of the purchase
or other acquisition of any fixed or capital asset.


 


As
used herein, “Fixed Charges” means, for any fiscal period, the sum of (I) interest
expense, including the interest component of any capital lease, (II) Current
Maturities, (III) dividends
and distributions to shareholders, and (IV) income
taxes paid, all as determined as of the last day of any fiscal period for the immediately preceding twelve (12) months
ending on said days.


 


As
used herein, “Current Maturities” shall mean scheduled principal payments made on Indebtedness.


 


As
used herein, “Indebtedness” means all liabilities, obligations, and indebtedness of the Companies, whether now
or hereafter owing, arising, due or payable, including but not limited to (a) indebtedness in the nature of loans, overdrafts,
letters of credit, capital leases, obligations under derivative contracts (including interest rate swaps) and guarantees of the
obligations of third parties, and (b) all liabilities of any person secured by a lien on
any of the Companies’ property.


 


		(b)	Senior Funded
Debt Ratio. Maintain a combined Senior Funded Debt Ratio (i) of not more than 2.75 to 1.00, calculated quarterly as of the
last day of each fiscal quarter for the twelve (12) month period ending on (A) December 31, 2017, (B) March 31, 2018, and (C)
June 30, 2018, and (ii) of not more than 2.50 to 1.00, calculated quarterly as of the last day of each fiscal quarter for the
twelve (12) month period ending on (Y) September
30, 2018 and (Z) each
fiscal quarter thereafter.



 


As
used herein, “Senior Funded Debt Ratio” means the ratio of Indebtedness (less subordinated debt) to EBITDA, as
determined for any fiscal period for the immediately preceding twelve-month period.


 







    	 	 	 Page | 17



    


    

 


		6.10	Anti-Terrorism
                                         Laws. Borrower
                                         shall not, at any time, (a) directly or through any Affiliates and agents, conduct any
                                         business or engage in any transaction or dealing with any Blocked Person, including the
                                         making or receiving of any contribution of funds, goods or services to or for the benefit
                                         of any Blocked Person, (b) directly or through any Affiliates and agents, deal in, or
                                         otherwise engage in any transaction relating to, any property or interests in property
                                         blocked pursuant to the Executive Order No. 13224; (c) directly or through any Affliates
                                         and agents, engage in or conspire 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, or (d) fail to
                                         deliver to Lender any certification or other evidence requested from time to time by
                                         Lender in its sole discretion, confirming the compliance of Borrower with this section.



 


		6.11	Advances
                                         Not to Exceed Borrowing Base. Borrower shall
                                         not, at any time, allow the aggregate principal amount outstanding under the Revolving
                                         Note to exceed the maximum amount of principal available under the Borrowing Base. If,
                                         at any time, the aggregate principal amount outstanding under the Revolving Loan
                                         exceeds the maximum amount available to be advanced under the Borrowing Base, then Borrower
                                         shall immediately (and in no event later than the next Business Day) and without the
                                         necessity of any demand by Lender, pay to Lender an amount not less than the amount by
                                         which the principal balance outstanding exceeds the amount of borrowing available under
                                         the Borrowing Base.



 


SECTION
7. EVENTS OF DEFAULT.


 


An “Event
of Default” shall exist if any of the following occurs:


 


		(a)	Borrower fails to make any payment
of the Obligations when due;



 


		(b)	Borrower
                                         fails to comply with or to perform any other term, obligation, covenant or condition
                                         contained in this Agreement or in any Loan Document or to comply with or to perform any
                                         term, obligation, covenant or condition contained in any other agreement between Lender
                                         and Borrower;



 


		(c)	Borrower
                                         defaults under any loan, extension of credit, security agreement, purchase or sales agreement,
                                         or any other agreement, in favor of any other creditor or person that may materially
                                         affect any of Borrower’s property or Borrower’s ability to repay any of the Loans or
                                         perform its obligations under this Agreement or any Loan Document;



 


		(d)	Any
                                         warranty, representation or other statement made or furnished to Lender by Borrower or
                                         on Borrower’s behalf under this Agreement or any Loan Document (or in any instrument
                                         furnished in compliance with or in reference to this Agreement) is false or misleading
                                         in any material respect, either now or at the time made or furnished or becomes false
                                         or misleading at any time hereafter;



 


		(e)	The
                                         dissolution or termination of Borrower’s existence as a going business, the insolvency
                                         of Borrower, the appointment of a receiver for any
                                         part of Borrower’s property, any assignment for the benefit of
                                         creditors, any type of creditor workout, or the commencement of any bankruptcy,
                                         reorganization, insolvency or liquidation laws by or against Borrower;



 




    	 	 	 Page | 18



    


    




 


		(f)	This Agreement or any Loan Document
ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest
or lien) at ant time or for any reason;



 


		(g)	Commencement
                                         of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
                                         repossession or any other method, by any creditor of Borrower or by any governmental
                                         agency against any collateral securing the Loan, including a garnishment of any of Borrower’s
                                         accounts, including deposit accounts, with Lender;



 


		(h)	Lender
                                         for any reason in good faith deems itself insecure with respect to the repayment or performance
                                         of the Obligations provided for herein;



 


		(i)	Any
                                         change in ownership that causes Dr. Steven Tsengas or Konstantine S. Tsengas to cease
                                         to own, free and clear of all liens or encumbrances, at least 20% of the outstanding
                                         voting ownership interest of Borrower, on a fully diluted basis;



 


		(j)	Any
                                         Borrower sells, transfers or disposes of all or substantially all of its assets or property
                                         or a material portion thereof, or merges with any other entity and is not the surviving
                                         entity in the merger, or engages in any form of corporate reorganization or recapitalization
                                         without the prior written consent of Lender;



 


		(k)	The
                                         occurrence of a Material Adverse Effect, or Lender believes the prospect of payment or
                                         performance of the Obligations is impaired.



 


If
any default, other than a default in payment on any Obligations, is curable and if Borrower
has not been given a notice of a similar default within the preceding twelve (12) months, it may be cured if
Borrower, after receiving written notice from Lender demanding cure of such curable default: (1) cures the default within
fifteen (15) days, or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in
Lender’s sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.


 


SECTION
8. REMEDIES.


 


Together
with any and all other rights and remedies set forth in any and all now existing Loan Documents, if
an Event of Default exists, Lender may, at its sole option, immediately:


 


		(a)	declare
                                         the Obligations including without limitation the entire principal and all interest accrued
                                         on the Notes then outstanding to be accelerated and due and payable, without any presentment,
                                         demand, protest or other notice of any kind, all of which are hereby expressly waived
                                         by Borrower, except as otherwise required by this Agreement or any Loan Document;



 







    	 	 	 Page | 19



    


    

  


		(b)	take
                                         possession of the Collateral and remove same from its existing location(s) without further
                                         notice to or consent of Borrower; and store and/or dispose (by public sale or otherwise)
                                         of the Collateral at its then existing location(s) at no charge to Lender;



 


		(c)	implement
                                         the Default Rate Margin and institute the Default Rate of interest as the applicable
                                         interest rate payable under the Notes and Loan Documents;



 


		(d)	collect
                                         from Borrower all expenses associated with enforcing remedies hereunder including but
                                         not limited to reasonable attorneys’ fees, repossession, transportation, storage and
                                         remarketing expenses; or



 


		(e)	assert
                                         any other remedies available to Lender at law or in equity (including, without limitation,
                                         any rights and remedies under the UCC).



 


No
course of dealing on the part of Lender or Borrower, nor any delay or failure on the part of Lender or Borrower, to exercise any
right shall operate as a waiver of such right or otherwise prejudice Lender’s rights, powers and remedies. Each and every right
and remedy of Lender set forth in this Agreement, the Loan Documents and under law shall be cumulative. The exercise of any right
or remedy shall not thereafter prevent the exercise of any other right or remedy in connection with the same or another Event
of Default or the subsequent exercise of the same right or remedy in connection with any other Event of Default. No delay or omission
of Lender to exercise any power or right under this Agreement or any Loan Document shall impair such power or right or be construed
to be a waiver of any Event of Default or an acquiescence therein, and any single or partial exercise of any powers or right shall
not preclude other or further exercise of any other power or right.


 


SECTION
9. INSURANCE.


 


		9.1	Required Insurance.



 


		(a)	Borrower shall maintain at all
times on the Collateral, at Borrower’s expense, the following insurance coverages as shall be satisfactory to Lender (together,
“Required Insurance”): (i) property insurance and/or equivalent vehicle physical damage insurance protecting
the Collateral for its full replacement value, naming Lender as a loss payee on a “Lender’s Loss Payable” endorsement;
(ii) general liability insurance and/ or equivalent vehicle liability insurance in amounts acceptable to Lender, naming Lender
as an additional insured; and (iii) such other insurance coverages as Lender shall require in such amounts and against such risks
as shall be satisfactory to Lender. Borrower further agrees that the property insurer must have an A.M. Best’s Key Rating
of at least “B+”. Required Insurance may be available through an affiliate or agent of Lender, but Borrower shall
not be required to use an affiliate or agent of Lender.



 


		(b)	Required
                                         Insurance shall not have a deductible amount in excess of Ten Thousand Dollars ($10,000.00)
                                         or other policy limitations unsatisfactory to Lender without the express written consent
                                         of Lender. Borrower shall give Lender written notice of any alteration, cancellation,
                                         or other modification of the insurance policy for any Required Insurance within thirty
                                         (30) days after Borrower becomes aware of the same. Within five (5) days after
the commencement date of this Agreement or of any subsequent written request from Lender, Borrower shall provide to Lender a certificate
or other evidence satisfactory to Lender that Required Insurance coverage is in effect; provided, however that Lender shall be
under no duty to ascertain as to the existence or adequacy of such insurance. The Required Insurance maintained by Borrower shall
be primary without any right of contribution from insurance which may be maintained by Lender.



 




    	 	 	 Page | 20



    


    







 


		(c)	Lender
                                         shall have the exclusive right, and Borrower hereby appoints Lender as Borrower’s attorney-in-fact
                                         (coupled with an interest), to make and settle any claims under, receive any payments
                                         on, and execute and endorse any documents, checks or drafts respecting to any Required
                                         Insurance (and proceeds therefrom) regarding the Collateral. In the event any proceeds
                                         of Required Insurance are paid or payable with respect to any unit of Collateral, such
                                         insurance proceeds shall be applied (at Lender’s option) toward: (i) the replacement,
                                         restoration or repair of such Collateral; or (ii) satisfaction
                                         of Borrower’s obligations hereunder.



 


		(d)	Borrower
                                         agrees to give written notice to Lender within five (5) days as to any damage to, or
                                         loss of, the Collateral or material damage or personal injury caused by the Collateral.
                                         Borrower shall, at its own expense and cost, have the duty and responsibility to make
                                         all proofs of loss and take all other steps necessary to effect collections from underwriters
                                         for any loss under any of the Required Insurance policies. If
                                         the Collateral is to be subleased or used by others (subject to Lender’s
                                         prior written approval), a special insurance endorsement may be required by Lender to
                                         permit such use. If Borrower does not maintain Required
                                         Insurance, Lender may, in its sole discretion, but is not required to, obtain insurance
                                         from an insurer of Lender’s choosing in such forms and amounts as Lender deems
                                         reasonable to protect Lender’s interests after giving Borrower any notice required
                                         by applicable law. Such insurance may cover some or all of the risks required to be covered
                                         by Required Insurance as Lender shall determine, and Lender may elect to cover only itself
                                         and its insurable interests with respect to the Collateral and not name Borrower as insured
                                         or otherwise cover Borrower’s interests. Such insurance will not give Borrower
                                         any liability insurance coverage, will not meet the requirements of a state’s financial
                                         responsibility law, and may not separately insure Borrower’s interest in the Collateral.
                                         Borrower agrees to pay Lender periodic charges for such insurance (“Insurance
                                         Charges”) that include the following: a premium that may be higher than if
                                         Borrower maintained Required Insurance; interest up to 1.5% per month on any premium
                                         advances made by Lender or Lender’s agents or affiliates; and billing, servicing
                                         and processing fees of Lender or Lender’s agents or affiliates. Each of the Insurance
                                         Charges may generate a profit to Lender and Lender’s agents or affiliates. If
                                         Borrower fails to pay billed Insurance Charges within 30 days of their due date,
                                         Lender may, in its sole discretion, (i) pay the Insurance Charges by adding them to the
                                         balance of the Note, or by applying funds paid under the Note or debiting Borrower’s
                                         account under any previously authorized automatic payment or other authorization or (ii)
                                         cancel such insurance. Lender shall discontinue billing Insurance Charges upon receipt
                                         of evidence satisfactory to Lender of Required Insurance. Borrower agrees to arbitrate
                                         any dispute with Lender or Lender’s agents or affiliates regarding Required Insurance,
                                         insurance provided by Lender or Lender’s agents or Insurance Charges under the
                                         rules of the American Arbitration Association in Columbus, Ohio; provided however, such
                                         agreement does not authorize class arbitration.



 




    	 	 	 Page | 21



    


    

 


		9.2	Application of Insurance
Proceeds. Borrower shall promptly notify Lender of any loss or damage to the Collateral
owned by them. Lender may make proof of loss if Borrower fails to do so within fifteen (15) days of the casualty. All proceeds
of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral.
If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall,
upon satisfactory proof of expenditure, pay or reimburse Borrower from the proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds
to pay all of the Obligations, and shall pay the balance to Borrower. Any proceeds which have not been disbursed within six
(6) months after their receipt and which Borrower has not committed to the repair or restoration
of the Collateral shall be used to prepay the Obligations.



 


		9.3	Insurance Reports.
Borrower, upon request of Lender, shall furnish to Lender reports or certificates on each existing
policy of insurance showing such information as Lender may reasonably request including the following: (i) the name of the insurer;
(ii) the risks insured; (iii) the amount of the policy; (iv) the property insured; (v) the then current value on the basis
of which insurance has been obtained and the manner of determining that value; and (vi) the expiration date of the policy. In
addition, Borrower shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory
to Lender determine, as applicable, the cash value or replacement cost of the Collateral.



 


SECTION
10. MISCELLANEOUS.


 


		10.1	Notices.
                                         All communications under this Agreement, the Notes
                                         or any of the Loan Documents executed pursuant hereto shall be in writing and shall be
                                         (i) delivered in person, (ii) mailed, postage prepaid, either by registered or certified
                                         mail, return receipt requested, or (iii) by overnight express carrier, addressed to the
                                         addresses for each party contained herein or communicated hereafter in writing (using
                                         the address used for Borrower used for invoicing shall be deemed sufficient). Any notice
                                         given by Lender to any Borrower is deemed to be notice given to all Borrowers.



 


		10.2	Survival.
                                         All warranties, representations, and covenants made
                                         by Borrower herein, any Loan Document or on any certificate or other instrument delivered
                                         by Borrower or on Borrower’s behalf under this Agreement shall be considered to have
                                         been relied upon by Lender and shall survive the closing of the Loan regardless of any
                                         investigation made by Lender on its behalf. All statements in any such certificate or
                                         other instrument shall constitute warranties and representations by Borrower.



 






    	 	 	 Page | 22



    


    

 


		10.3	Assignment. This
Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the parties hereto (whether
by operation of law or by agreement) except as provided for herein. Any or all of Lender’s rights and obligations under
this Agreement (or any part thereof) and/or any or all of Lender’s rights and interest in the Collateral (or any part thereof),
may be sold, assigned or pledged to a third party (“Assignee”) without notice to or the consent of Borrower,
and Borrower agrees that any Assignee may enforce its rights independent of the rights of Lender or any other Assignee under this
Agreement and the applicable Note. Borrower acknowledges that any such sale, assignment, or pledge of any or all of Lender’s
rights and/or obligations hereunder and/or rights and interests in the Collateral shall not be deemed to materially change Borrower’s
duties or obligations hereunder nor increase the burdens or risks imposed on Borrower for purposes of the UCC. No breach or default
by Lender hereunder shall excuse the full and timely performance by Borrower of its obligations under this Agreement or any Note
to Assignee of Lender. Borrower agrees to execute a written acknowledgment of the matters set forth herein in favor of (and to
the satisfaction of such successor or assignee) upon request. BORROWER SHALL NOT, JOINTLY OR SEVERALLY, ASSIGN, TRANSFER, OR PLEDGE
ANY RIGHT, INTEREST OR OBLIGATION UNDER THIS AGREEMENT (OR ANY PART THEREOF) OR ANY RIGHT OR INTEREST IN THE COLLATERAL (OR ANY
PART THEREOF), NOR PERMIT THE COLLATERAL (OR ANY NOTE) TO BE SUBLEASED OR USED BY ANY PARTY OTHER THAN BORROWER AND ITS RESPECTIVE
EMPLOYEES. ANY SUCH ASSIGNMENT, TRANSFER, PLEDGE, OR USE SHALL BE DEEMED A DEFAULT HEREUNDER. TO THE EXTENT THIS AGREEMENT OR
ANY NOTE IS ASSIGNABLE OR ASSUMABLE BY OPERATION OF LAW WITHOUT THE CONSENT OF LENDER, IT IS AGREED THAT THIS AGREEMENT AND ALL
NOTES MUST BE ASSIGNED AND ASSUMED TOGETHER IN THEIR ENTIRETY. For purposes of this Agreement, a change of control of the
ownership of Borrower for any reason shall be considered an assignment of this Agreement (except that, pursuant to Section 6.2
above, it shall not be a change of control unless Dr. Steven Tsengas or Konstantine S. Tsengas
shall cease to own, free and clear of all liens or encumbrances, at least 20% of the outstanding voting ownership interest of
Borrower, on a fully diluted basis). At Lender’s sole discretion (and without notice to or consent of Borrower), Lender
may sell a participation in this Agreement and any Note and may distribute information regarding Borrower and this Agreement to
potential participants.



 


		10.4	Amendment
                                         and Waiver. The Loan Documents may be amended, and the observance of any term
                                         of this Agreement may be waived, with (and only with) the written consent of Lender.



 


		10.5	Counterparts:
                                         Interpretation, Effectiveness; Duplicate Originals. This Agreement and the Loan
                                         Documents constitute the entire agreement between the parties relating to the subject
                                         matter hereof and supersede any and all previous agreements and understandings, oral
                                         or written, relating to the subject matter hereof including any proposal. Delivery of
                                         an executed counterpart of a signature page of this Agreement and the Loan Documents
                                         by telecopy, facsimile or any other electronic format (e.g., .pdf) shall be effective
                                         as delivery of a manually
                                         executed counterpart of this Agreement and the Loan Documents. Two or more duplicate
                                         originals of this Agreement and the Loan Documents may be signed by the parties, each
                                         of which shall be an original, but all of which together shall constitute one and the
                                         same instrument. Borrower hereby authorizes Lender to insert any missing factually correct
                                         information as necessary to complete this Agreement and the Loan Documents including,
                                         without limitation, the Effective Date of this Agreement and payment dates.



 







    	 	 	 Page | 23



    


    

 


		10.6	Governing
                                         Law. This Agreement shall be governed by and construed in accordance with the
                                         laws of the State of Ohio without regards to its conflict of laws and further except to
                                         the extent any law, rule or regulation of the federal government of the United States
                                         of America may be applicable hereto, in which event such federal law, rule or regulation
                                         shall govern and control.



 


		10.7	Lender’s
                                         Appointment as Attorney-in-Fact. Borrower hereby irrevocably constitutes and
                                         appoints Lender and any officer or agent thereof, with full power of substitution, as
                                         Borrower’s true and lawful attorney-in-fact with full irrevocable power and authority
                                         in its place and stead and in its name or in Lender’s own name, from time to time in
                                         Lender’s discretion, for the purpose of carrying out the terms of this Agreement, to
                                         take any and all appropriate action and to execute any and all documents and instruments
                                         that may be necessary or desirable to accomplish the purposes of this Agreement. For
                                         purposes of filing liens against certificates of title, Borrower shall execute such additional
                                         Powers of Attorney as Lender may request.



 


		10.8	Waiver
                                         of Jury
                                         Trial.
                                         The parties hereto acknowledge
                                         and agree that there may be a constitutional right to a jury trial in connection with
                                         any claim, dispute or lawsuit arising between or among them, but that such right may
                                         be waived. Accordingly, the parties agree that, notwithstanding such constitutional right,
                                         in this commercial matter the parties believe and agree that it shall in their best interests
                                         to waive such right, and, accordingly, hereby waive such right to a jury trial, and further
                                         agree that the best forum for hearing any claim, dispute, or lawsuit, if any, arising
                                         in connection with this Agreement, the Loan Documents, or the relationship among the
                                         parties hereto, in each case whether now existing or hereafter arising, or whether sounding
                                         in contract or tort or otherwise, shall be a court of competent jurisdiction sitting
                                         without a jury.



 


		10.9	Fees
                                         and Expenses. Upon Lender’s demand, Borrower agrees to pay all costs, expenses
                                         (including reasonable attorneys’ fees), and disbursements incurred by Lender on Borrower’s
                                         behalf (a) in all efforts made to enforce this Agreement, (b) in connection with preparing,
                                         modifying or amending this Agreement and the Loan Documents prepared in connection herewith,
                                         (c) in enforcing and foreclosing on Lender’s security interest in any Collateral or possession
                                         of any premises containing any Collateral, whether through judicial proceedings or otherwise,
                                         (d) in defending or prosecuting any actions or proceedings arising out of or relating
                                         to Lender’s transactions with Borrower, or (e) in connection with any advice given to
                                         Lender with respect to its rights and obligations under this Agreement, any Loan Document
                                         and all related agreements. Expenses being reimbursed by Borrower under this section
                                         include costs and expenses incurred in connection with: (t) appraisals and insurance
                                         reviews; (u) environmental examinations and reports; (v) Field Exams and the preparation
                                         of reports based thereon; (w) the fees charged by a third party retained by Lender or
                                         the internally allocated fees for each Person employed by Lender with respect to each
                                         Field Exam; (x)
                                         taxes, fees and other charges for
                                         (i) lien and title searches and (ii) the
                                         recording of any mortgages, filing of any financing statements and continuations, and
                                         other actions to perfect, protect, and continue Lender’s security interests; (z) sums
                                         paid or incurred to take any action required of any Borrower under the Loan Documents
                                         that Borrower fails to pay or take; and (aa) forwarding loan proceeds, collecting checks
                                         and other items of payment, and costs and expenses of preserving and protecting the Collateral.



 







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		10.10	Consent
                                         to Jurisdiction. The parties hereto, to the extent that they may lawfully do
                                         so, hereby consent to the jurisdiction of the courts of the State of Ohio and the United
                                         States Court for the Northern District of the State of Ohio, as well as to the jurisdiction
                                         of all courts from which an appeal may be taken from such courts, for the purpose of
                                         any suit, action or other proceeding arising out of any of its obligations arising hereunder
                                         or under any other Loan Document or with respect to the transactions contemplated hereby
                                         or thereby, and expressly waive any and all objections they may have as to venue in any
                                         such courts. Borrower agrees that service shall be deemed given to Borrower if service
                                         is sent in accordance with and to the address disclosed herein.



 


		10.11	Severability.
                                         Any provision of this Agreement, any Note or of any other Loan Document which is
                                         prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
                                         to the extent of such prohibition or unenforceability without invalidating the remaining
                                         provisions hereof or thereof or affecting the validity or enforceability of such provision
                                         in any other jurisdiction.



 


		10.12	Headings;
                                         Rules of Construction. Any Article and Section headings in this Agreement or
                                         in any other Loan Document are included herein and therein for convenience of reference
                                         only and shall not constitute a part of this Agreement or of any other Loan Document
                                         and shall not affect the construction of, or be taken into consideration in the interpretation
                                         of this Agreement or any other Loan Document. No common law or other interpretation that
                                         documents are to be construed against the drafting party shall be applicable to the Loan
                                         Documents.



 


		10.13	Waiver
                                         of Notice. Borrower hereby waives notice of non-payment, demand, presentment,
                                         protest and notice thereof with respect to any and all instruments, notice of acceptance
                                         hereof, notice of loans or advances made, credit extended, collateral received or delivered,
                                         or any other action taken in reliance hereon, and all other demands and notices of any
                                         description, except such as are expressly provided for herein.



 


		10.14	Delay.
                                         No delay or omission on Lender’s part in exercising any right, remedy or option shall
                                         operate as a waiver of such or any other right, remedy or option or of any Event of Default.



 


		10.15	Miscellaneous. Whenever
the context so requires, reference herein or in any other Loan Document to the masculine gender shall include the feminine gender
or in either case the neuter and vice versa; and the singular shall include the plural and vice versa. Upon the occurrence of
an Event of Default, Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to
setoff and apply any and all deposits (general or special, time or demand, provisional or final), except in dedicated payroll
accounts, at any time held and other obligations at any time owing by Lender to or for the credit or the account of Borrower against
any of and all of the Obligations of Borrower now or hereafter existing under any Note, this Agreement or otherwise held by Lender,
irrespective of whether or not Lender shall have made any demand under any Note or this Agreement, but only to the extent such
Obligations are then due and payable. The rights of Lender under this Section are in addition to other rights and remedies (including
other rights of setoff) which Lender may have at law or under other Loan Documents. To the extent permitted by applicable law,
Borrower shall not assert, and hereby waive, any claim against Lender, on any theory of liability, for special, indirect, consequential
or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement
or any agreement or instrument contemplated hereby, including, without limitation, any Loan Document, the Loan or the use of the
proceeds thereof. Without limiting any other waivers set forth in the Loan Documents, all sums due under the Loan, the Loan Documents
and hereunder shall be without notice of acceptance, presentment, notice of dishonor, protest, notice of protest and relief from
valuation and appraisement laws.



 






    	 	 	 Page | 25



    


    

 


		10.16	Interest
                                         Limitation. All Notes and all Loan Documents between Borrower and Lender are
                                         hereby expressly limited so that in no contingency or event whatsoever, whether by reason
                                         of acceleration of maturity of the Obligations evidenced hereby, the Notes or otherwise,
                                         shall the amount paid or agreed to be paid to Lender for the use, forbearance, loaning
                                         or detention of the Obligations evidenced hereby, the Notes or otherwise exceed the maximum
                                         permissible under applicable law. This provision shall control every other provision
                                         of all agreements between Borrower and Lender and shall be binding upon and available
                                         to any subsequent holder of the Notes.



 


		10.17	INDEMNIFICATION
                                         OF LENDER. BORROWER SHALL INDEMNIFY LENDER AND HOLD LENDER HARMLESS AGAINST ANY AND
                                         ALL LIABILITIES (INCLUDING ANY AND ALL TAXES AND SPECIAL ASSESSMENTS LEVIED AGAINST THE
                                         COLLATERAL, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS,
                                         ATTORNEYS’ FEES, COSTS, EXPENSES, AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER
                                         WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST LENDER, IN ANY WAY RELATING
                                         TO, OR ARISING OUT OF, THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
                                         OR THE OWNERSHIP AND/OR OPERATION OF THE COLLATERAL (INCLUDING, BUT IN NO WAY LIMITED
                                         TO, ENVIRONMENTAL PROTECTION AGENCY OR STATE ENVIRONMENTAL AGENCY ACTIONS AND/OR ACTIONS
                                         UNDER CERCLA AND/OR ANY OTHER TYPE OF ENVIRONMENTAL ACTION OF ANY KIND WHATSOEVER BY
                                         ANY PERSON OR GOVERNMENTAL ENTITY RELATED TO THE COLLATERAL, TO THE EXTENT THAT ANY SUCH
                                         INDEMNIFIED LIABILITIES RESULT, DIRECTLY OR INDIRECTLY, FROM ANY CLAIMS MADE OR ACTIONS,
                                         SUITS, OR PROCEEDINGS COMMENCED BY OR ON BEHALF OF ANY PERSON OTHER THAN LENDER; PROVIDED
                                         THAT LENDER SHALL NOT HAVE THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR ITS OWN INTENTIONAL
                                         OR WILLFUL MISCONDUCT, GROSS NEGLIGENCE OR BAD FAITH. IN THIS CONNECTION, LENDER AGREES
                                         TO NOTIFY BORROWER OF ANY SUCH LEGAL ACTIONS, SUITS, OR PROCEEDINGS AND TO PERMIT BORROWER
                                         TO PARTICIPATE IN THE DEFENSE THEREOF IF BORROWER PROVIDES ADEQUATE SECURITY, IN LENDER’S
                                         JUDGMENT, FOR BORROWER’S INDEMNIFICATION OBLIGATIONS. THE RIGHTS OF LENDER UNDER
                                         THIS SECTION AND ALL OTHER INDEMNITIES RUNNING FOR THE BENEFIT OF LENDER IN THE LOAN
                                         DOCUMENTS SHALL SURVIVE THE REPAYMENT AND PERFORMANCE OF THE OBLIGATIONSFOR THE MAXIMUM
                                         PERIOD PERMITTED BY LAW.



 




    	 	 	 Page | 26



    


    




 


		10.18	BORROWER
IDENTIFICATION - USA PATRIOT ACT NOTICE; OFAC AND BANK SECRECY ACT. Lender hereby notifies Borrower
that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the
“Act”) and the Lender’s policies and practices, the Lender is required to obtain, verify and record certain
information and documentation that identifies Borrower, which information includes the name and address of Borrower such other
information that will allow the Lender to identify Borrower in accordance with the Act. In addition, Borrower shall (i) ensure
that no Person who owns a controlling interest or otherwise controls Borrower or any Subsidiary of Borrower is or shall be listed
on the Specially Designated Nationals and Blocked Person List or other similar list maintained by the Office of Foreign Assets
Control (“OFAC”), the Department of Treasury or included in any Executive Orders, (ii) not use or permit the
use of the proceeds of the Loan to violate any of the foreign asset control regulations of OFAC or any enabling statute of Executive
Order relating thereto, and (iii) comply,
and cause any of its subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”) laws and regulations
as amended.



 


		10.19	CONFESSION OF JUDGMENT.
BORROWER AUTHORIZES ANY ATTORNEY AT LAW TO APPEAR IN ANY COURT OF RECORD IN THE STATE OF OHIO OR IN ANY OTHER STATE OR TERRITORY
OF THE UNITED STATES OF AMERICA AFTER THE LOAN EVIDENCED BY THIS AGREEMENT BECOMES DUE, WHETHER BY ACCELERATION OR OTHERWISE,
TO WAIVE THE ISSUING AND SERVICE OF PROCESS, AND TO CONFESS JUDGMENT AGAINST BORROWER IN FAVOR OF LENDER FOR THE AMOUNT THEN APPEARING
DUE ON THIS AGREEMENT, TOGETHER WITH COSTS OF SUIT, AND THEREUPON TO WAIVE ALL ERRORS AND ALL RIGHTS OF APPEAL AND STAYS OF EXECUTION.
BORROWER WAIVES ANY CONFLICT OF INTEREST THAT AN ATTORNEY HIRED BY LENDER MAY HAVE IN ACTING ON BORROWER’S BEHALF IN CONFESSING
JUDGMENT AGAINST BORROWER WHILE SUCH ATTORNEY IS RETAINED BY LENDER. BORROWER EXPRESSLY CONSENTS TO SUCH ATTORNEY ACTING FOR BORROWER
IN CONFESSING JUDGMENT AND TO SUCH ATTORNEYS’ FEE BEING PAID BY LENDER OR DEDUCTED FROM THE PROCEEDS OF COLLECTION OF THE
NOTES OR COLLATERAL SECURITY THEREFOR.



 


[The remainder
of this page intentionally left blank.]


 







    	 	 	 Page | 27



    


    

  


IN
WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be executed by their duly authorized officers as of the date
first written above.


 





	 	LENDER:
	 	 
	 	THE HUNTINGTON NATIONAL BANK,
	 	a national banking association
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 




 


[The
remainder of this page intentionally left blank]


 






    	 	 	 Page | 28



    


    

 




WARNING-BY
SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE
AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.





 


	 	OurPct’s Company, a Colorado corporation
	 	 	 
	 	By:	/s/ Steven Tsengas
	 	 	Steven Tsengas, its President


 




WARNING-BY
SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE
AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.





 


	 	Virtu Company, an Ohio corporation
	 	 	 
	 	By:	/s/ Steven Tsengas
	 	 	Steven Tsengas, its President


 


[Signatures
continue on following page]


 







    	 	 	 Page | 29



    


    

 




WARNING-BY
SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE
AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER
CAUSE.





 


	 	SMP Company, Incorporated, an Ohio corporation
	 	 	 
	 	By:	/s/ Steven Tsengas
	 	 	Steven Tsengas, its President


 







WARNING-BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE
AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS
OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS,
FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.










 


	 	OurPet’s DISC,  Inc.,  an Ohio
    corporation
	 	 	 
	 	By:	/s/ Steven Tsengas
	 	 	Steven Tsengas, its President





 




    	 	 	 Page | 30