LOAN
AND SECURITY AGREEMENT


This
LOAN AND SECURITY AGREEMENT is entered into as of December 9, 2022 by and among PINNACLE BANK, a California corporation (Lender). with
an office located at 18181 Butterfield Blvd., Ste. 135, Morgan Hill, CA 95037, on the one hand, and APPLIED UV, INC., a Delaware
corporation (Applied), STERILUMEN, INC., a New York corporation (Sterilumen), and MUNN
WORKS, LLC, a New York limited liability company (Munn Works; together with Applied and Sterilumen, individually
and collectively, Borrower), with their chief executive office located at 150 N. Macquesten Parkway, Mt. Vernon, NY
10550, on the other hand.


The parties
agree as follows:


1.
DEFINITIONS AND CONSTRUCTION 




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


Accounts means,
in addition to the definition of accounts in the Code, all presently existing and hereafter arising accounts receivable, contract rights,
health-care-insurance receivables, and all other forms of obligations owing to Borrower arising out of the sale, lease, license or assignment
of goods or other property, or the rendition of services by Borrower, whether or not earned by performance, all credit insurance, guaranties,
and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower's Books relating to any of
the foregoing.


Advances
means all loans, advances and other financial accommodations by Lender to or on account of the Borrower, including those under
this Agreement.


Agreement
means collectively this Loan and Security Agreement, any concurrent or subsequent rider to this Loan and Security Agreement,
and any extensions, supplements, amendments, addenda or modifications to or in connection with this Loan and Security Agreement or any
such rider.


Authorized
Officer means any officer or other representative of Borrower authorized in a writing delivered to Lender to transact business
with Lender.


Borrower's
Books means all of Borrower's books and records including all of the following: ledgers; records indicating, summarizing, or
evidencing Borrower's assets or liabilities, or the Collateral; all information relating to Borrower's business operations or financial
condition; and all computer programs, disk or tape files, printouts, runs, or other computer prepared information, and the facilities
containing such information.


Business
Dav means any day which is not a Saturday, Sunday, or other day on which banks in the State of California are authorized or required
to close.


Chattel
Paper shall have the same meaning ascribed to such term in the Code.


Code
means the California Uniform Commercial Code, as amended or revised from time to time.


Collateral
means all assets of the Borrower, whether now owned or existing, or hereafter acquired or arising, and wherever located, including,
without limitation, all of the following assets, properties and interests in property of Borrower: all Accounts; all Equipment; all General
Intangibles; all Chattel Paper; all Inventory; all Negotiable Collateral; all Investment Property; all Financial Assets; all Letter of
Credit Rights; all Supporting Obligations; all Commercial Tort Claims; all Deposit Accounts; all money or any assets of Borrower which
hereafter come into the possession, custody, or control of Lender; all proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the foregoing, and any and all tangible or intangible property
resulting from the sale, lease, license or other disposition of the foregoing, or any portion thereof or interest therein, and all proceeds
thereof, and any other assets of Borrower or any Guarantor which may be subject to a security interest or lien in favor of Lender.



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Commercial
Tort Claim shall have the meaning ascribed to such term in the Code.


Dailv
Balance means the amount of the Obligations owed at the end of a given day.


Deposit
Account shall have the meaning ascribed to such term in the Code.


Documents
shall have the meaning ascribed to such term in the Code.


Eligible
Accounts means those Accounts created by Borrower in the ordinary course of business, which are and at all times shall continue
to be acceptable to Lender in all respects; provided, however, that standards of eligibility may be fixed and revised from time to time
by Lender in Lender's exclusive judgment. In determining such acceptability and standards of eligibility, Lender may, but need not, rely
on agings, reports and schedules of Accounts furnished by Borrower, but reliance by Lender thereon from time to time shall not be deemed
to limit Lender's right to revise standards of eligibility at any time as to both Borrower's present and future Accounts. In general,
an Account shall not be deemed eligible unless: (1) the Account debtor on such Account is and at all times continues to be acceptable
to Lender, and (2) such Account complies in all respects with the representations, covenants and warranties hereinafter set forth. Except
in Lender's sole discretion, Eligible Accounts shall not include any of the following: (a) Accounts which the Account debtor has failed
to pay within ninety (90) days of invoice date, (b) all Accounts owed by any Account debtor that has failed to pay twenty-five percent
(25%) or more of its Accounts owed to Borrower within ninety (90) days of invoice date; (c) Accounts with respect to which goods are
sold on a bill and hold basis or placed on consignment or for a guaranteed sale, or which contain other terms by reason of which payment
by the Account debtor may be conditional; (d) Accounts with respect to which the Account debtor is not a resident of the United States
(including, without limitation, Accounts owing from Account debtors Birkenstock and Cellarius Kereskedohaz) unless the Account is supported
by foreign credit insurance or a letter of credit, in both instances satisfactory to and assigned to Lender; (e) Accounts with respect
to which the Account debtor is the United States or any department, agency or instrumentality of the United States, any State of the
United States or any city, town, municipality or division thereof unless all filings have been made under the Federal Assignment of Claims
Act or comparable state or other statute; (f) Accounts with respect to which the Account debtor is an officer, employee or agent of,
or subsidiary of, related to, affiliated with or has common shareholders, officers or directors with Borrower; (g) 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;
(h) Accounts with respect to an Account debtor whose total obligations to Borrower exceed twenty-five percent (25%) of all Accounts,
to the extent such obligations exceed twenty-five percent; (i) Accounts with respect to which the Account debtor disputes liability or
makes any claim with respect thereto, or is subject to any insolvency proceeding, or becomes insolvent, fails or goes out of business;
G) the Account arises out of a contract or purchase order for which a surety bond was issued on behalf of Borrower; (k) Accounts in which
Lender does not have first priority and exclusive perfected security interest; (I) Accounts where the Account Debtor is in a jurisdiction
for which Borrower is required to file a notice of business activities or similar report and Borrower has not filed such report within
the time period required by applicable law; (m) any Account as to which an invoice has not been issued to the Account debtor; (n) any
Account which represents a progress payment on a contract which has not been fully completed by Borrower unless: (1) milestones are verified
as approved directly from the applicable Account debtor, (2) such Account is otherwise approved by Lender in its sole discretion, and
(3) Lender has received all contracts, statements of work, change orders and similar documentation giving rise to such Account; (o) Accounts
with respect to which Borrower has not performed all things required of Borrower by the terms of all agreements or purchase orders giving
rise to such Accounts, including pre-billed Accounts; (p) Accounts arising from jobs or contracts with respect to which Borrower's entitlement
to payment on such Account is subject to any retention, holdback or other withholding, whether related to any mechanics' or materialmen's
liens or otherwise; (q) Accounts deemed ineligible for Advances by Lender in its sole discretion including, without limitation, Accounts
for which a proof of delivery has not been provided to or made available to Lender or Accounts that are not verified as valid (I) by
the applicable Account debtors following Lender's request for verification, or (2) via Lender's access of an Account debtors' accounts
payable web portal, as applicable; (r) Accounts arising from sales or services rendered to an individual consumer for personal, family
or household purposes; (s) Accounts requiring an approval from the Account debtor prior to payment and where such approval has not been
provided; or (t) Accounts as to which a deposit has been received from the applicable Account debtor, to the extent such deposit reduces
the outstandiiig amount owing on the Accounts of such applicable Account debtor.



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Eligible
Invento,y means Inventory of Borrower Sterilumen consisting of first quality finished goods held for sale in the ordinary course
of Borrower's business and raw materials for such finished goods which are located at Borrower's premises in the United States and acceptable
to Lender in all respects; provided, however, that general criteria for Eligible Inventory may be established and revised from time to
time by Lender in Lender's exclusive judgment. In determining such acceptability and standards of eligibility, Lender may, but need not,
rely on reports and schedules of Inventory furnished to Lender by Borrower, but reliance thereon by Lender from time to time shall not
be deemed to limit Lender's right to revise standards of eligibility at any time. In general, except in Lender's sole discretion, Eligible
Inventory shall not include: raw materials that are proprietary in nature, work in process, components which are not part of finished
goods, spare parts, packaging and shipping materials, materials used or consumed in Borrower's business, goods returned to, repossessed
by, or stopped in transit by Borrower, Inventory which is obsolete or slow moving, Inventory subject to a security interest or lien in
favor of any third party, bill and hold goods, Inventory which is not subject to a perfected security interest in favor of Lender, returned
and/or defective goods, "seconds" and Inventory purchased on consignment, Inventory which contains any labels, trademarks,
trade names or other identifying characteristics which are the properties of third parties unless the use of same by Borrower is under
a valid license, royalty or similar agreement with the owner thereof, in form and substance satisfactory to Lender, and which remains
in full force and effect, and has not been terminated, and such owner thereof has issued in favor of Lender an agreement, in form and
substance satisfactory to Lender, allowing Lender to dispose of said items of Inventory upon the occurrence of an Event of Default, Inventory
in-transit to Borrower, and Inventory located at a leased premises, public or private warehouse or with a bailee or other third party
unless Lender has received a waiver agreement, in form and substance acceptable to Lender, from such landlord, mortgagee, warehouseman,
bailee or other third party. Eligible Inventory shall for the purposes of this Agreement be valued at the lower of cost or wholesale
market value and shall not include tax, delivery, handling and installation charges (the Eligible Inventmy Value).


Eligible
lnventmy Value shall have the meaning ascribed to such term in the definition of Eligible Inventory.


Equipment
means in addition to the definition of equipment in the Code, all of Borrower's present and hereafter acquired equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, motor vehicles, rolling stock, processors, tools, pans, dies, jigs, goods (other
than consumer goods or farm products) and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever located.


ERISA
means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.


ERISA
Affiliate means each trade or business (whether or not incorporated and whether or not foreign) which is or may hereafter become
a member of a group of which Borrower is a member and which is treated as a single employer under ERISA Section 4001(b)(l), or IRC Section
414.


Event
of Default means the events specified in Section 8 below.


Financial
Assets shall have the meaning ascribed to such term in the Code.


General
Intangibles means all of Borrower's present and future general intangibles and other personal property (including choses or things
in action, goodwill, patents, trade names; trademarks, service marks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, infringement claims, computer programs, computer discs, computer tapes, Borrower's
Books, literature, reports, catalogs, deposit accounts, insurance premium rebates, tax refunds, and tax refund claims) other than goods
and Accounts.



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Guarantor
means each person or entity which guarantees the Obligations or issues a validity guaranty relating to the Collateral or pledges
any assets to Lender as additional security for the Obligations.


Insolvencv
Proceeding means any proceeding commenced by or against any person or entity under any provision of the federal Bankruptcy Code,
as amended, or under any other state or federal insolvency law, including assignments for the benefit of creditors, formal or informal
moratoria, compositions, or extensions generally with its creditors.


Instruments
shall have the meaning ascribed to such term in the Code.


Inventory
means, in addition to the definition of inventory in the Code, all present and future inventory in which Borrower has any interest,
including goods held for sale or lease or to be furnished under a contract of service, Borrower's present and future raw materials, work
in process, finished goods, tangible property, stock in trade, wares, and materials used in or consumed in Borrower's business, goods
which have been returned to, repossessed by, or stopped in transit by Borrower, packing and shipping materials, wherever located, any
documents of title representing any of the above, and Borrower's Books relating to any of the foregoing.


Investment
Property shall have the meaning ascribed to such term in the Code.


RC
means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.


Lender
Expenses means all of the following without limitation: (a) costs and expenses paid or incurred by Lender in connection with
the Loan Documents or the Obligations; (b) costs and expenses (whether taxes, assessments, insurance premiums or otherwise) required
to be paid by Borrower under any of the Loan Documents which are paid or advanced by Lender; (c) filing, recording, publication, appraisal
and search fees paid or incurred by Lender in connection with Lender's transactions with Borrower; (d) costs and expenses incurred by
Lender in administering Borrower's loan account and lending relationship with Borrower or in connection with the disbursement or collection
of funds (including without limitation (1) twenty-five dollars ($25.00) for each cashier's check or wire transfer made by Lender to parties
other than Borrower, (2) twenty-five dollars ($25.00) for each overnight delivery made by Lender to, Borrower, anyone designated by Borrower,
or any third party, (3) Seventy Five Dollars ($75.00) per hour (with a 2 hour minimum) for photocopy charges, for reports and items previously
prepared and delivered by Lender and/or for reports and items not regularly prepared and provided by Lender to Borrower, (4) One Hundred
Dollars ($100.00) for each returned or dishonored check received by Lender from Borrower, any Account debtor or any third party, provided,
however, that Lender reserves the right to change the amount of the foregoing specified charges in subsections (1)-(4) with prior written
notice to Borrower, and (5) charges imposed in connection with Borrower's acceptance of merchant credit cards in payment of amounts owed
by Account debtors); (e) a lockbox fee of zero dollars ($0.00) per month or any portion thereof; (f) a web access fee of zero dollars
($0.00) per month or any portion thereof; (g) a mail forwarding fee of five hundred dollars ($500.00) per month for a three (3) month
period following the termination of this Agreement and the repayment of the Obligations; (h) costs and expenses incurred by Lender to
correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing,
shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale
is consummated; (i) costs and expenses incurred by Lender in enforcing or defending the Loan Documents, including, but not limited to,
costs and expenses incurred in connection with any proceeding, suit, enforcement of judgment, or appeal; (j) Lender's reasonable attorneys'
fees and expenses, including allocated fees of in-house counsel, incurred in advising, structuring, drafting, reviewing, administering,
amending, terminating, enforcing, defending, or otherwise representing Lender (including, without limitation, in connection with responding
as a third party to deposition, subpoena and like requests) concerning the Loan Documents or the Obligations; and (k) a loan documentation
fee of Five Hundred Dollars ($500.00) in connection with Lender's in-house documentation of the original Loan Documents prior to the
initial Advance hereunder, together with all fees and costs of Lender's outside counsel relating to, documenting and negotiating such
original Loan Documents prior to the initial Advance hereunder (not to exceed $20,000.00), and the taking of other actions for Lender's
benefit prior to or contemporaneously with the initial Advance hereunder. Lender shall have the right to mark-up any third-party costs
that constitute Lender Expenses by ten percent (10%) to cover Lender's costs of administration of same and to include such additional
I 0% amount in the Lender Expenses.



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Letter
of Credit Rights shall have the meaning ascribed to such term in the Code.


Loan
Documents means, collectively, this Agreement, any Note(s), any security agreements, pledge agreements, mortgages, deeds of trust
or other encumbrances or agreements which secure the Obligations, and any other agreement entered into between Borrower and Lender or
by Borrower or a Guarantor in favor of Lender relating to or in connection with this Agreement or the Obligations, as each of same may
be amended, modified, renewed, extended or substituted from time to time.


Multiemployer
Plan means a multiemployer plan as defined in ERISA Sections 3(37) or 4001(a)(3) or IRC Section 414(£).


Negotiable
Collateral means all of Borrower's present and future letters of credit, notes, drafts, Instruments, Documents, leases, and Chattel
Paper.


Net
Face Amount means with respect to an Account, the gross face amount of such Account less (at Lender's option) all trade discounts,
sales, excise and similar taxes, or other deductions to which the associated Account debtor is entitled.


Note
means any promissory note made by Borrower to the order of Lender concurrently herewith or at any time hereafter.


Obligations
means all loans, Advances, debts, liabilities (including all interest and amounts charged to the Obligations pursuant to any
agreement authorizing Lender to charge the Obligations), obligations, lease payments, guaranties, covenants, and duties owing by Borrower
to Lender of any kind and description (whether pursuant to or evidenced by the Loan Documents or by any other agreement between Lender
and Borrower, and irrespective of whether for the payment of money), whether made or incurred prior to, on, or after the Termination
Date, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, including any debt, liability
or obligation owing from Borrower to others which Lender may obtain by assignment or otherwise, and all interest thereon and all Lender
Expenses.


Plan
means any plan described in ERISA Section 3(2) maintained for employees of Borrower or any ERISA Affiliate, other than a Multiemployer
Plan.


Prime
Rate means the variable rate of interest, per annum, from time to time published in the Wall Street Journal (the Journal)
as the "prime rate." In the event the Journal publishes a range of rates as the "prime rate", Lender's "Prime
Rate" shall be determined by reference to the highest number in the range. In the event that the Prime Rate announced by Lender
is, from time to time hereafter, changed, adjustment in the rate of interest chargeable on Borrower's Obligations under this Agreement
shall be made on the effective date of the change in the Prime Rate. The rate of interest, as adjusted, shall apply until the Prime Rate
is adjusted again.


Revolving
Credit Facility means the revolving credit facility provided for in Section 2.1 hereof.


Subordinating
Creditor means Streeterville Capital, LLC, and any other person or entity to whom Borrower is indebted on a secured or unsecured
basis, and which person or entity is required to sign a Subordination Agreement in favor of Lender.


Subordination
Agreement means a subordination agreement in form and substance acceptable to Lender whereby Subordinating Creditor (if any)
subordinates in favor of Lender: (a) obligations owed to it by Borrower in favor of the Obligations owing by Borrower to Lender; and/or
(b) security interests and liens granted to it by Borrower in favor of security interests and liens granted by Borrower to Lender.


Supporting
Obligation shall have the same meaning ascribed to such term in the Code.


Term
means the period from the date of the initial Advance hereunder through and including the later of (a) the Termination Date and
(b) the payment and performance in full of the Obligations.



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Termination
Date means (a) December 9, 2024 (the period through such date the Initial Term), unless such date is extended
pursuant to Section 3.1 hereof, and if so extended on one or more occasions the last date of the last such extension, or (b)
if earlier terminated by Lender pursuant to Sections 3. l or 9.1 hereof, the date of such termination.


1.2 
Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular and
to the singular include the plural. The words hereof, herein, hereby, hereunder, and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement. Section, subsection, clause and exhibit references are
to this Agreement unless otherwise specified. Words importing a particular gender mean and include every other gender. Paragraphs and
paragraph numbers have been set forth herein for convenience only; unless the contrary is compelled by the context, everything contained
in each paragraph applies equally to all paragraphs herein. "Includes" and "including" are not limiting. "Or''
is not exclusive. "All" includes "any" and "any" includes "all". The term "security interest"
has the inclusive meaning of a "lien".


1.3 
Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting
principles (GAAP) as in effect from time to time. When used herein, the term financial statements shall include the notes and schedules
thereto.


1.4 
Exhibits. All of the exhibits, addenda or riders attached to this Agreement shall be deemed incorporated herein by reference.


1.5 
Code. Any terms used in this Agreement which are defined in the Code shall be construed and defined as set forth in the Code, unless
otherwise defined herein.


2.
ADVANCES AND TERMS OF PAYMENT


 




2.1 
Revolving Advances; Advance Limit. Upon the request of Borrower, made at any time from and after the date hereof until the Termination
Date, and so long as no Event of Default has occurred and is continuing, Lender may, in its sole and absolute discretion, make Advances
in an amount up to (a) eighty-five percent (85%) of the aggregate Net Face Amount of Eligible Accounts, plus (b) the least of (1) the
sum of twenty percent (20%) of the aggregate Eligible Inventory Value of raw materials Eligible Inventory and thirty-five percent (35%)
of the aggregate Eligible Inventory Value of finished goods Eligible Inventory, (2) One Million Dollars ($1,000,000.00), (3) Eighty percent
(80%) of the net orderly liquidation value (NOLV) of raw materials and finished goods Eligible Inventory as determined by an outside
inventory appraisal, or (4) one hundred percent (100%) of the aggregate outstanding principal amount of Advances under Section 2.l(a):
provided, however, that in no event shall the aggregate amount of the outstanding Advances under the Revolving Credit Facility be
greater than, at any time, the amount of Five Million Dollars ($5,000,000.00) (said dollar limit the Advance Limit). Borrower
shall draw all available Advances under subparagraph (a) above prior to drawing any available Advances under subparagraph (b) above.
Lender may create reserves against amounts that would be available for borrowing pursuant to the foregoing or reduce its advance rates
based upon Eligible Accounts and Eligible Inventory without declaring an Event of Default if it determines, in its good faith credit
judgment that such reserves are necessary, including, without limitation: (i) to protect Lender's interest in Collateral; (ii) to protect
Lender against possible non-payment of Accounts for any reason by one or more Account debtors; (iii) in the event the dilution with respect
to the Accounts for any period (based on the ratio of ( l) the aggregate amount of reductions in Accounts other than as a result of payments
in cash to (2) the aggregate amount of total sales) has increased in any material respect or may be reasonably anticipated to increase
in any material respect above historical levels; (iv) in the event the general creditworthiness of one or more Account debtors has declined;
(v) to protect Lender against possible diminution of the value of any Collateral; (vi) to protect Lender against possible non-payment
of any of the Obligations; (vii) for any taxes; (viii) in respect of any state of facts that could constitute an Event of Default; (ix)
in the event the number of days of turnover oflnventory for any period has increased in any material respect; (x) in the event the liquidation
value of Eligible Inventory, or any category thereof, has decreased; (xi) in the event cost or count variances exist or are anticipated
to exist with respect to Inventory; or (xii) in the event the nature or quality of Inventory has deteriorated. Borrower acknowledges
it may have requested that Lender enter into an indemnification agreement in favor of [insert name of existing lender] and agrees that
any sums paid by Lender to [insert name of existing lender] thereunder shall be deemed to be Advances under this Section 2.1.



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2.2
Overadvances; Special Credit Accommodations.


 




A. 
All Advances shall be added to and be deemed part of the Obligations when made. If, at any time and for any reason, without Lender's
prior written consent, the aggregate amount of the outstanding Advances under the Revolving Credit Facility exceed the dollar or percentage
limitations contained in Section 2.1 (an Overadvance), then an Event of Default shall occur as a result thereof
and Borrower shall, without demand by Lender, immediately pay to Lender, in cash, the amount of such Overadvance. Without waiving the
Event of Default resulting from any such Overadvance and without affecting Borrower's obligation to immediately repay to Lender the amount
of any such Overadvance, Borrower shall pay Lender a fee (the Overadvance Fee) in an amount equal to five percent (5.0%)
of the amount of any such Overadvance, but not less than $500 per occurrence of any such Overadvance, plus interest on the Overadvance
amount applicable to any such Overadvance at the Default Rate set forth below so long as any such Overadvance is outstanding.


B. 
In the event Lender, in its sole and absolute discretion, from time to time: (a) consents to an Overadvance; (b) provides an Advance
to Borrower that involves a variance from the terms or conditions of the Loan Agreement (including, without limitation, the making of
an Advance: (1) against Accounts that are ineligible as a result of the cross-aging or concentration limitations set forth in subsections
(b) or (h), respectively, of the definition of Eligible Accounts, or (2) after the then effective Termination Date); or (c) provides
an Advance to Borrower that involves a variance from Lender's standard customs, practices or procedures (the foregoing, each, a Special
Credit Accommodation), then Borrower, upon demand by Lender, shall immediately pay to Lender, in cash, the amount of such Special
Credit Accommodation. At Lender's option, each Special Credit Accommodation may be evidenced by a writing, in form and substance satisfactory
to Lender, but the failure to prepare such a writing shall not affect the existence of such Special Credit Accommodation. Without affecting
Borrower's obligation to repay to Lender upon demand the amount of any Special Credit Accommodation, Borrower shall pay Lender a fee
(the Special Credit Accommodation Fee) in an amount equal to five percent (5.0%) of the amount of any such Special Credit
Accommodation, but not less than $500 per occurrence of any such Special Credit Accommodation, plus interest on the Special Credit Accommodation
amount applicable to any such Special Credit Accommodation at the Default Rate set forth below so long as any such Special Credit Accommodation
is outstanding.


2.3 
Authorization to Make Advances. Lender is hereby authorized to make the Advances based upon telephonic or other instructions received
from anyone reasonably purporting to be an Authorized Officer, or, at the discretion of Lender, if such Advances are necessary to satisfy
any Obligations. All requests for Advances shall specify the date on which such Advance is to be made (which day shall be a Business
Day) and the amount of such Advance. Requests received after 10:30 a.m. Pacific time on any day shall be deemed to have been made as
of the opening of business on the immediately following Business Day. All Advances made under this Agreement shall be conclusively presumed
to have been made to, at the request of, and for the benefit of Borrower when deposited to the credit of Borrower or otherwise disbursed
in accordance with the instructions of Borrower or in accordance with the terms and conditions of this Agreement. Unless otherwise requested
by Borrower, all Advances shall be made by a wire transfer to the deposit account of Borrower designated on Schedule 2.3 annexed
hereto, or such other account as Borrower shall notify Lender in writing. Borrower shall pay to Lender a funds transfer fee of $25.00
for each Advance. Said fees shall be payable on the first day of each month of the Tenn for all Advances made during the preceding month.


2.4
Interest.


 




A. 
Except where specified to the contrary in the Loan Documents interest shall accrue on the Daily Balance at the per annum rate of one
and one-ha}( percentage points (1.50%) (the Interest Margin) above the greater of: (a) the Prime Rate, or (b) four percent
per annum (4.00%) (the Deemed Prime Rate), but with the Interest Margin with respect to that portion of the Daily Balance
consisting of 'Advances against Eligible Inventory to be the per annum rate of two percentage points (2.00%) (respectively, as applicable,
the Interest Rate). Without prejudicing or waiving Lender's right to assess and impose interest at the Default Rate (as
defined below) as a result of the occurrence of any of the following events, and without waiving Lender's ability to declare an Event
of Default at any time as a result thereof, if Borrower fails to perform any covenant, term or provision of this Agreement or any of
the Loan Documents (including, without limitation, the timely delivery of any financial statements, reports, documents, or certificates
required by this Agreement), then (at Lender's discretion and with respect to any such event) interest shall accrue on the Daily Balance
at the per annum rate of six percentage points (6.0%) above the Interest Rate or above such other interest rate applicable to such portion
of the Daily Balance (the Alternative Interest Rate), with Borrower to be granted a five (5) day cure period, from the
date of Lender's notice of its intent to invoke the Alternative Interest Rate, in which to perform such failed covenant, term or provision
prior to the Alternative Interest Rate taking effect, and if not cured, the Alternative Interest Rate shall take effect upon the expiration
of such cure period and shall remain in effect until such failed covenant, term or provision is performed. The Daily Balance shall, at
the option of Lender, from and after the occurrence of an Event of Default, and without constituting a waiver of any such Event of Default,
and if the Obligations are not paid in full by the Termination Date, and without waiving the maturity of the Obligations on the Termination
Date, bear interest at the per annum rate of eighteen percentage points (18.0%) above the Interest Rate or above such other interest
rate applicable to such portion of the Daily Balance (the Default Rate). All interest payable under the Loan Documents
shall be computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed on the Daily Balance. Interest
as provided for herein shall continue to accrue until the Obligations are paid in full.



    	 	7	 



     


    




B. 
In the event the Deemed Prime Rate is inapplicable, the interest rate payable by Borrower under the terms of this Agreement shall be
adjusted in accordance with any change in the Prime Rate from time to time on the date of any such change. All interest payable by Borrower
shall be due and payable on the first day of each calendar month during the Term. Lender may, at its option, add such interest and all
Lender Expenses to the Obligations, and such amount shall thereafter accrue interest at the rate then applicable under this Agreement.
Notwithstanding anything to the contrary contained in the Loan Documents, the minimum interest payable by Borrower on the Advances shall
be Four Thousand Dollars ($4,000.00) per month (the Minimum Monthly Interest Payment).


C. 
In no event shall interest on the Obligations exceed the highest lawful rate in effect from time to time. It is not the intention of
the parties hereto to make an agreement which violates any applicable state or federal usury laws. In no event shall Borrower pay or
Lender accept or charge any interest which, together with any other charges upon the principal or any portion thereof, exceeds the maximum
lawful rate of interest allowable under any applicable state or federal usury laws. Should any provision of this Agreement or any existing
or future Notes or Loan Documents between the parties be construed to require the payment of interest or any other fees or charges which
could be construed as interest which, together with any other charges upon the principal or any portion thereof and any other fees or
charges which could be construed as interest, exceeds the maximum lawful rate of interest, then any such excess shall be applied to the
remaining principal balance of the Obligations, if any, and the remainder refunded to Borrower.


D. 
Notwithstanding the foregoing, for purposes of this Agreement, it is the intention of Borrower and Lender that "interest" shall
mean, and be limited to, any payment to Lender which compensates it for extending credit to Borrower, for making available to Borrower
a revolving credit facility during the term of this Agreement and for any default or breach by Borrower of a condition upon which credit
was extended. Borrower and Lender agree that, for the sole purpose of calculating the "interest" paid by Borrower to Lender,
it is the intention of Borrower and Lender that interest shall mean and include, and be expressly limited to, any interest accrued on
the aggregate outstanding balance of the Obligations during the term hereof pursuant to Sections 2.4(A) and 2.4(B); and any Overadvance
Fee, Special Credit Accommodation Fee, Facility Fee, and late payment fees charged to Borrower during the term hereof. Borrower and Lender
further agree that it is their intention that the following fees shall not constitute "interest": any Administration Fees,
Unused Line Fees, Early Termination Fees, any Field Examination Fees, Late Reporting Fees, Misdirected Payment Fees, any attorney fees
incurred by Lender, any premiums or commissions attributable to insurance guaranteeing repayment, finders' fees, credit report fees,
appraisal fees, fees included in the Lender Expenses or fees for document preparation or notarization. To the extent, however, that California
law excludes from the calculation of "interest" any fees defined herein as interest, or includes as interest any fees or other
sums which are intended not to constitute interest California law shall supersede and prevail and all such interest shall be subject
to paragraph 2.4(C) above.


2.5 
Collection of Accounts; Misdirected Payment Fee. Following an Event of Default that has not been cured pursuant to any applicable
cure period for same (if any), Lender or a Lender designee may, at any time, with or without notice to Borrower, notify customers and
Account debtors and other obligors that the Accounts and other Collateral have been assigned to Lender, and that Lender has a security
interest in them and collect the Accounts and other Collateral directly, and add the collection costs and expenses to the Obligations,
but, unless and until Lender does so or gives Borrower other written instructions, Borrower shall notify all Account debtors and other
obligors to remit payments on Accounts and other Collateral to a lockbox and/or blocked deposit account to be designated by Lender. All
such payments remitted to the lockbox and/or blocked deposit account shall be credited to a deposit account of Lender and into which
account remittances from account debtors or obligors of other clients of Lender may be credited. If notwithstanding said notice Borrower
obtains payment on any Account or other Collateral, Borrower shall receive all payments on Accounts and other Collateral and other proceeds,
including cash, of Collateral in trust for Lender and immediately deliver said payments to Lender's designated bank account, in their
original form as received from the Account debtor or other obligor, together with any necessary endorsements. In the event that: (a)
any payment on any Account is inadvertently collected or received by Borrower through no fault or interference by Borrower and not delivered
in kind to Lender within one (1) business day of receipt thereof, (b) Borrower interferes with, hinders, or delays any payment with respect
to any Account, or (c) any payment on any Account is collected or received directly by Borrower from an Account debtor (unless permitted
by this Agreement) as a result of Borrower's intentional interference with direct payment thereof to the Lender {each of the foregoing,
a Misdirected Pavment); then Borrower shall pay to Lender a misdirected payment fee for each Misdirected Payment in an
amount equal to the greater of (1) ten percent (10%) of the amount of such Misdirected Payment, or (2) Five Hundred Dollars ($500.00)
(the Misdirected Payment Fee). Lender's receipt of such Misdirected Payment Fee in connection with a Misdirected Payment
shall not constitute a waiver of any Event of Default occasioned by such Misdirected Payment.



    	 	8	 



     


    




2.6 
Crediting Payments. The receipt of any item of payment by Lender shall, for the sole purpose of determining availability under the
revolving credit facility provided for herein, subject to final payment of such item, be provisionally applied to reduce Obligations
on the date of receipt of such item by Lender, but the receipt of such an item of payment shall for all other purposes in determining
the Daily Balance, including without limitation for the purpose of calculation of interest on the Obligations and the calculation of
the Administration Fee and Unused Line Fee, not be deemed to have been paid to Lender until three (3) Business Days after the date of
Lender's actual receipt of such item of payment. Notwithstanding anything to the contrary contained herein, payments received by Lender
after 11:00 a.m. Pacific time shall be deemed to have been received by Lender as of the opening of business on the immediately following
Business Day, provided, that Lender in its sole discretion may, from time to time, make exceptions and apply payments received after
such deadline on the same Business Day but with such exceptions not to establish a course of conduct or course of dealing.


2.7 
Facility Fee. In consideration of Lender's entering into this Agreement, Borrower shall pay Lender a facility fee (the Facility
Fee) in an amount equal to (a) two percent (2.00%) of the sum of the Advance Limit plus the original principal balance of
any term loans and Advances other than under the Revolving Credit Facility, fo!', /-p.e yearly period commencing from the initial
Advance hereunder (the Initial Advance) through December 9, 2023, plus (b) one and one-half percent (1.50%) of the sum
of the Advance Limit plus the original principal balance of any term loss and Advances other than under the Revolving Credit
Facility, for the yearly period commencing December 9, 2023 through the initial Termination Date of December 9, 2024, with all such
amounts being fully earned upon the Initial Advance and payable in advance of each year, unless earlier payable pursuant to the
terms hereof. In the event the Termination Date is thereafter extended, on one or more occasions, beyond such initial Termination
Date, Borrower shall pay Lender a Facility Fee for each yearly period of any extension in an amount equal to one and one-half
percent (1.50%) of the sum of Advance Limit (in effect at the time of the extension) plus the then outstanding principal balance of
any term loans and Advances other than under the Revolving Credit Facility, with all such amounts being fully earned upon the
occurrence of any such extension, and payable in advance of each year, unless earlier payable pursuant to the terms
hereof


2.8 
Unused Line Fee. Borrower shall pay Lender a fee (the Unused Line Fee) in an amount equal to Zero percent (0.00%) of
the daily average difference between the Advance Limit and the Daily Balance during each month payable on or before the first (1st)
day of each calendar month for the preceding calendar month, during the Tenn, including the Renewal Term, or so long as the Obligations
are outstanding.


2.9 
Administration Fee. Borrower shall pay Lender a fee (the Administration Fee) in an amount equal to one-tenth of one
percent (.10%) of the daily average outstanding balance of the Advances during each month payable on or before the first (1st) day of
each calendar montli in respect of Lender's services for the preceding calendar month, during the Tenn, including each Renewal Tenn,
or so long as the Obligations are outstanding.



    	 	9	 



     


    




2.10 
Field Examination Fee; Appraisal Fees. Borrower shall pay Lender a fee (the Field Examination Fee) in an amount equal
to One Thousand Dollars {$1,000.00) per day per examiner, plus cmt-of pocket expenses for each examination of Borrower's Books or the
other Collateral performed by Lender or its designee. While any: (a) funds are available to Borrower for borrowing against the value
of Eligible Inventory under Section 2.1; or (b) Advances against the value of Eligible Inventory under Section 2.1 are
outstanding to Lender, Borrower shall pay on demand any fees and expenses incurred in connection with periodic Inventory appraisals and
monitoring required by Lender in sole discretion or, at Lender's option, all of same may be added to the Obligations.


2.11 
Late Reporting Fee. Borrower shall pay to Lender a fee in an amount equal to Fifty Dollars ($50.00) per document per day for each
Business Day any report, financial statement or schedule required by this Agreement to be delivered to Lender is past due.


2.12 
Monthly Statements. Lender may render monthly or other periodic statements to Borrower or provide other information to Borrower from
time to time, whether in writing or through Lender's website, including statements or other information concerning all Obligations, all
principal, interest and Lender Expenses, and Borrower shall have fully and irrevocably waived all objections to such statements (and
the contents thereof) and other information unless, within thirty (30) days after receipt or the posting of same on Lender's website,
as applicable, Borrower shall deliver to Lender, by registered, certified or overnight mail as set forth in Section 12 hereof,
written objection to such statement or other information specifying the error or errors, if any, contained therein.


2.13
Intentionally Omitted.


 




3.
TERM


 




3.1 
Term and Renewal Date. This Agreement shall become effective upon the Initial Advance and continue in full force through the Initial
Term and from year to year thereafter (a Renewal Term) for a one (I) year term from the then Termination Date, provided
that neither Borrower nor Lender has exercised its termination right in accordance with this Section 3.1. Borrower and Lender
may terminate the Term on the then Termination Date by giving the other at least sixty (60) days prior written notice pursuant to the
notice provisions of Section 12 hereof. In addition, Lender shall have the right to terminate this Agreement: (a) at any time
in its sole discretion (including in the absence of an Event of Default) upon sixty (60) days prior written notice; and (b) immediately
at any time upon the occurrence of an Event of Default. No such termination shall relieve or discharge Borrower of its duties, Obligations
and covenants hereunder until all Obligations have been paid and performed in full, and Lender's continuing security interest in the
Collateral shall remain in effect until the Obligations have been fully and irrevocably paid and satisfied in cash or cash equivalent.
On the Termination Date of this Agreement, the Obligations shall be immediately due and payable in full. Expressly in addition to all
rights and remedies available to Lender, if the term of this Agreement is not renewed and the Obligations are not paid in full by the
Termination Date, then Borrower shall also pay to Lender, as part of the Obligations, a fee of one and one-half percent (1.50%) of the
Advance Limit plus the then outstanding principal balance of any term loans and Advances other than under the Revolving Credit Facility
provided for in Section 2.1 hereof


3.2 
Early Termination Fee. If the Term is terminated by Lender upon the occurrence of an Event of Default, or is terminated by Borrower
except as provided in Section 3.1, in view of the impracticability and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's lost profits as a result thereof, Borrower shall pay Lender
upon the effective date of such termination a fee in an amount equal to: the Monthly Minimum Interest times the number of months remaining
until the stated Termination Date of the then applicable Term, provided, that any such termination fee shall be waived if Borrower qualifies
for and obtains conventional bank financing with Pinnacle Bank to replace the facility hereunder. Such fee shall be presumed to be the
amount of damages sustained by Lender as the result of an early termination and Borrower acknowledges that it is reasonable under the
circumstances currently existing. The fee provided for in this Section 3.2 shall be deemed included in the Obligations.



    	 	10	 



     


    




4.
CREATION OF CONTINUING SECURITY INTEREST


 




4.1 
Grant of Continuing Security Interest. Borrower hereby grants to Lender a continuing security interest in all presently existing
and hereafter acquired or arising Collateral in order to secure prompt repayment of the Obligations and in order to secure prompt performance
by Borrower of each and all of its covenants and Obligations under the Loan Documents and otherwise. Lender's continuing security interest
in the Collateral shall attach to all Collateral without further act on the part of Lender or Borrower.


4.2 
Negotiable Collateral. In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral,
Borrower shall notify Lender and upon the request of Lender, immediately endorse and assign such Negotiable Collateral to Lender and
deliver physical possession of such Negotiable Collateral to Lender.


4.3 
Delivery of Additional Documentation Required. Borrower shall execute and deliver to Lender concurrently with Borrower's execution
and delivery of this Agreement and at any time thereafter at the request of Lender, all financing statements, continuation financing
statements, fixture filings, security agreements, chattel mortgages, pledges, assignments, endorsements of certificates of title, applications
for title, affidavits, reports, notices, schedules of accounts, letters of authority, and all other documents that Lender may request,
in form satisfactory to Lender, to perfect and maintain perfected Lender's continuing security interests in the Collateral and in order
to fully consummate all of the transactions contemplated under the Loan Documents and Borrower hereby authorizes Lender to file and/or
record such financing statements and other documents as Lender deems necessary to perfect and maintain Lender's continuing security interest
in the Collateral, and agrees any such financing statement may contain an "all asset" or "all property'' description of
the Collateral, and Borrower hereby ratifies any such financing statement or other document heretofore filed by Lender.


4.4 
Power of Attorney. Borrower hereby irrevocably makes, constitutes and appoints Lender (and any person designated by Lender) as Borrower's
true and lawful attorney-in-fact with power to sign the name of Borrower on any of the above-described documents or on any other similar
documents to be executed, recorded or filed in order to perfect or continue perfected Lender's continuing security interest in the Collateral.
In addition, Borrower hereby appoints Lender (and any person designated by Lender) as Borrower's attorney-in-fact with power to: (a)
sign Borrower's name on verifications of Accounts and other Collateral, and on notices to Account debtors; (b) send requests for verification
of Accounts and other Collateral; (c) endorse Borrower's name on any checks, notes, acceptances, money orders, drafts or other forms
of payment or security that may come into Lender's possession; (d) notify the post office authorities to change the address for delivery
of Borrower's mail to an address designated by Lender, to receive and open all mail addressed to Borrower, and to retain all mail relating
to the Collateral and forward all other mail to Borrower; (e) make, settle and adjust all claims under Borrower's policies of insurance,
endorse the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies of insurance
and make all determinations and decisions with respect to such policies of insurance. The appointment of Lender as Borrower's attorney-in-fact
and each and every one of Lender's rights and powers, being coupled with an interest, is irrevocable so long as any Accounts in which
Lender has a continuing security interest remain unpaid and until all of the Obligations have been fully repaid and performed.


4.5 
Right To Inspect. At Borrower's expense (including, without limitation, reimbursement of travel expenses), Lender or Lender's designee
shall have the right at any time or times hereafter during Borrower's usual business hours, or during the usual business hours of any
third-party having control over Borrower's Books, to inspect Borrower's Books in order to verify the amount or condition of, or any other
matter relating to, the Collateral or Borrower's financial condition. At Borrower's expense (including, without limitation, reimbursement
of travel expenses), Lender or Lender's designee, also shall have the right at any time or times hereafter during Borrower's usual business
hours to inspect, examine and appraise the Inventory, the Equipment and other Collateral and to check and test the same as to quality,
quantity, value and condition. At Lender's option, all of the above expenses shall be reimbursed by Borrower to Lender on demand or such
expenses may be added to the Obligations.



    	 	11	 



     


    




5.
REPRESENTATIONS AND WARRANTIES 


Borrower
represents, warrants and covenants to Lender the following (and acknowledges and agrees that such representations, warranties and covenants
shall be automatically deemed repeated and reaffirmed with each Advance and shall be conclusively presumed to have been relied on by
Lender regardless of any investigation made, or information possessed by Lender):


5.1 
No Prior Encumbrances; Security Interests. Borrower has good and marketable title to the Collateral, free and clear of liens, claims,
security interests or encumbrances, except for the security interests to be satisfied from the proceeds of the first Advances hereunder,
the continuing security interests granted to Lender by Borrower, and those disclosed on Schedule 5.1 annexed hereto. Other than
those expressly permitted by this Agreement, Borrower will not create or permit to be created any security interest, lien, pledge, mortgage
or encumbrance on any Collateral or any of its other assets.


5.2 
Bona Fide Accounts; Eligible Accounts. All Accounts represent bona fide sales or leases of goods and/or services for which Borrower
has an unconditional right to payment and as to which the goods have been delivered to the customer and/or the services rendered, as
applicable. None of the Accounts are subject to any rights of offset, counterclaim, cancellation or contractual rights of return. All
Accounts reported to Lender as Eligible Accounts shall conform to the requirements of Eligible Accounts.


5.3 
Merchantable Inventory; Eligible Inventory. All Inventory is now and at aU times hereafter shaU be of good and merchantable quality,
free from defects. All Inventory reported to Lender as Eligible Inventory shaU confonn to the requirements of Eligible Inventory.


5.4 
Location of Inventory, Equipment and Collateral. The Inventory and Equipment is not now and shall not at any time or times hereafter
be stored with a bailee, warehouseman, processor, or similar party. Borrower shaU keep the Inventory and Equipment only at its address
set forth on the first page hereof and at the following locations: (Corporate Headquarters) 150 N. MacQuesten Pkwy, St. Vernon,
NY 10550; (Main Dist. Warehouse), 3625 Kennesaw N. Ind Pkwy, Kennesaw, GA 30144; (Overflow Warehouse) 3240 Heritage Drive, Suite A, Kennesaw,
GA 30144; (3PL Fulfillment Facility) 596 E. Andrew Way, Ogden, UT 84404; (Scanfil Contract Manufacturer) 4345 Hamilton Mill Rd.,
Suite 400, Buford, GA 30518; (Gator Stamping-Contract Manufacturer) 6610 33rd Street E, Sarasota, FL 32243; (Realogistics - Third Party
Warehouse) 84-92 Chai Wan Kok St., Tsuen Wan, Hong Kong. If Inventory, Equipment or other CoUateral is located at a leased premises,
public or private warehouse, with a bailee or other third party, Borrower shaU cause the applicable landlord, mortgagee, warehouseman,
bailee or third party to provide Lender with a waiver agreement, in form and substance acceptable to Lender.


5.5 
Inventory Records. Borrower now keeps and hereafter at all times shaU keep correct and accurate records itemizing and describing
the kind, type, quality and quantity of the Inventory and Borrower's cost of said items and none of Borrower's Inventory contains any
labels, trademarks, tradenames or other identifying characteristics which are the properties of third parties.


5.6 
Retail Accounts. No Accounts arise from the sale of goods or rendition of services for personal, family or household purposes.


5.7 
Relocation of Chief Executive Office and Other Locations. The chief executive office of Borrower and the location of all books and
records of Borrower relating to the Collateral is at the address indicated on the first page of this Agreement, and Borrower's other
locations are as set forth in Section 5.4, and Borrower will not, without thirty (30) days' prior written notice to Lender and
compliance with Section 4.3 hereof, relocate such office or other locations.


5.8 
Due Incorporation and Qualification. Borrower is, and shall at aU times hereafter, be a corporation or limited liability company,
as applicable, duly organized and existing under the laws of the state of its formation as set forth on the first page hereof, and is
qualified and licensed to do business and is in good standing in any state in which the conduct of its business or its ownership of assets
requires that it be so qualified.



    	 	12	 



     


    

 


5.9 
Actual and Fictitious Name. Borrower's exact name is set forth on the first page hereof, and Borrower has not changed its name within
the last five (5) years. Borrower is conducting its business under the


following
trade or fictitious name(s) and no others: [ ). Borrower has complied with the fictitious name laws of


all jurisdictions
in which compliance is required in connection with its use of such name(s).


5.10 
Permits and Licenses. Borrower holds all licenses, permits, franchises, approvals and consents required for the conduct of its business
and the ownership and operation of its assets.


5.11 
Due Authorization; Enforceability. Borrower has the right and power and is duly authorized to enter into the Loan Documents to which
it is a party; all necessary action to authorize the execution and delivery of the Loan Documents has been properly taken; and Borrower
is and will continue to be duly authorized to borrow under this Agreement and to perform all of the other terms and provisions of the
Loan Documents throughout the Term. The Loan Documents, when executed and delivered by Borrower, will constitute the legal, valid and
binding obligations of Borrower enforceable in accordance with their terms.


5.12 
Compliance with Articles; Organizational Documents. The execution by Borrower of the Loan Documents to which it is a party and the
performance of the terms thereof do not constitute a breach of any provision contained in Borrower's Certificate or Articles of Incorporation,
Formation or Organization (or similar incorporation document), as applicable or its Bylaws, Operating Agreement, Partnership Agreement
(or similar organizational document), as applicable, nor does it constitute an event of default under any material agreement to which
Borrower is now or may hereafter become a party.


5.13 
Litigation. Except as set forth in Schedule 5.13, there are no actions, proceedings or claims pending by or against Borrower,
whether or not before any court or administrative agency and Borrower has no knowledge or notice of any pending, threatened or imminent
litigation, governmental investigations, or claims, complaints, actions, or prosecutions involving Borrower, except for ongoing collection
matters in which Borrower is the plaintiff. If any such actions, proceedings or claims presently exist or arise during the Term, Borrower
shall promptly notify Lender in writing and shall, from time to time, notify Lender of all materials events relating thereto.


5.14 
Accuracy of Information and No Material Adverse Change in Financial Statements. All infonnation furnished by Borrower to Lender and
all statements made by Borrower to Lender, including, without limitation, information set forth in a loan application, is true, accurate
and complete in all respects and does not contain any misstatement of fact or omit to state any facts necessary to make the statements
or information contained therein not misleading. All financial statements relating to Borrower which have been or may hereafter be delivered
to Lender (i) have been prepared in accordance with GAAP; (ii) fairly present Borrower's financial condition as of the date thereof and
Borrower's results of operations for the period then ended; and (iii) disclose all contingent obligations of Borrower. In addition. no
material adverse change in the financial condition of Borrower has occurred since the date of the most recent of such financial statements.


5.15 
Solvency. Borrower is now, and shall be at all times through the Term, solvent and able to pay its debts (including trade debts)
as they mature.


5.16 
ERISA. Neither Borrower or any ERISA Affiliate, nor any Plan is or has been in violation of any of the provisions of ERISA, any of
the qualification requirements ofIRC Section 401(a), or any of the published interpretations thereof. No lien upon the assets of Borrower
has arisen with respect to any Plan. No prohibited transaction within the meaning ofERISA Section 406 or IRC Section 4975(c) has
occurred with respect to any Plan. Neither Borrower nor any BRISA Affiliate has incurred any withdrawal liability with respect to any
Multiemployer Plan. Borrower and each BRISA Affiliate have made all contributions required to be made by them to any Plan or Multiemployer
Plan when due. There is no accumulated funding deficiency in any Plan, whether or not waived.


5.17 
Environmental Laws and Hazardous Materials. Borrower has complied, and at all times through the Tenn will comply, with all Environmental
Laws. Borrower has not and will not cause or permit any Hazardous Materials to be located, incorporated, generated, stored, manufactured,
transported to or from, released, disposed of, or used at, upon, under, or within any premises at which Borrower conducts its business,
or in connection with Borrower's business. To the best of Borrower's knowledge, no prior owner or operator of any premises at which Borrower
conducts its business has caused or permitted any of the above to occur at, upon, under, or within any of the premises. Borrower will
not permit any lien to be filed against the Collateral or any part thereof under any Environmental Law, and will promptly notify Lender
of any proceeding, inquiry or claim relating to any alleged violation of any Environmental Law, or any alleged loss, damage or injury
resulting from any Hazardous Material. Lender shall have the right to join and participate in, as a party if it so elects, any legal
or administrative proceeding initiated with respect to any Hazardous Material or in connection with any Environmental Law. Hazardous
Material includes without limitation any substance, material, emission, or waste which is or hereafter becomes regulated or classified
as a hazardous substance, hazardous material, toxic substance or solid waste under any Environmental Law, asbestos, petroleum products,
urea formaldehyde, polychlorinated biphenyls (PCBs), radon, and any other hazardous or toxic substance, material, emission or waste.
Environmental Law means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, the Resource Conservation
and Recovery Act of 1976, the Hazardous Materials Transportation Act, the Toxic Substances Control Act, the regulations pertaining to
such statutes, and any other safety, health or environmental statutes, laws, regulations or ordinances of the United States or of any
state, county or municipality in which Borrower conducts its business or the Collateral is located.



    	 	13	 



     


    




5.18 
Tax Compliance. Borrower has filed all tax returns required to be filed by it and has paid all taxes due and payable on said returns
and on any assessment made against it or its assets.


5.19 
Reliance by Lender; Cumulative. Each warranty, representation and agreement contained in this Agreement shall be automatically deemed
repeated by Borrower with each request for an Advance and shall be conclusively presumed to have been relied on by Lender regardless
of any investigation made or information possessed by Lender. The warranties, representations and agreements set forth herein shall be
cumulative and in addition to any and all other warranties, representations and agreements which Borrower shall now or hereafter give,
or cause to be given, to Lender.


5.20 
Use of Proceeds. The proceeds of the initial Advance will be used by Borrower for the purposes set forth on Schedule 5.20
annexed hereto.


5.21 
Motor Vehicles and Intellectual Property. Borrower has informed Lender of all motor vehicles, patents, patent applications, copyrights,
trademarks, tradenames and other intellectual property, registered or unregistered, owned by Borrower. Borrower will promptly notify
Lender of all motor vehicles or intellectual property hereafter owned by Borrower, and the status of all patent and trademark applications
and the issuance of patents and trademarks, and all copyrights registrations, and in accordance with Section 4.3, will cooperate
with Lender in taking all actions required by Lender to have a perfected security interest or lien on such motor vehicles and intellectual
property.


5.22 
Commercial Tort Claims. Borrower does not, as of the date hereof, have any Commercial Tort Claims against any third parties. If Borrower
does hereafter have any such Commercial Tort Claims, Borrower shall furnish Lender with prompt written notice thereof, and in accordance
with Article 4 hereof, shall execute and deliver such supplemental documents and cooperate with Lender in taking all action as
required by Lender to have a perfected security interest or lien on such Commercial Tort Claims.


6.
AFFIRMATIVE COVENANTS


 




Borrower
covenants and acknowledges that during the Term Borrower shall comply with all of the following:


6.1 
Collateral and Other Reports. Borrower shall on each Business Day report to Lender all sales and Accounts arising since its most
recent report to Lender and shall provide copies of all invoices, together with supporting shipping documentation acceptable to Lender.
Borrower shall also cause Lender to be provided with ongoing access to any Account debtor accounts payable web portals, as required by
Lender, but if such access is not possible, Borrower will provide screenshots from any Account debtor portals, as requested by Lender.
Borrower shall execute and deliver to Lender, no later than the tenth (10th) day of each month during the Term, a detailed aging of the
Accounts, a reconciliation statement and a summary aging, by vendor, of all accounts payable of Borrower and any book overdraft. Borrower
shall deliver to Lender, as Lender may from time to time require, collection reports, sales journals, invoices, original delivery receipts,
customers' purchase orders, shipping instructions, bills of lading and other docwnentation respecting shipment arrangements. Absent such
a request by Lender, copies of all such documentation shall be held by Borrower as custodian for Lender. Borrower shall provide Lender
with immediate notice of any pending or threatened litigation, governmental investigations, claims, complaints or prosecutions involving
Borrower or any Guarantor. Promptly upon Lender's request, Borrower shall provide Lender with copies of Borrower's statements relating
to its bank, brokerage or similar accounts.



    	 	14	 



     


    




6.2 
Returns. Returns and allowances, if any, as between Borrower and any Account debtors, shall be permitted on the same basis and in
accordance with the usual customary practices of Borrower as they exist at the date of the execution and delivery of this Agreement.
If at any time prior to the occurrence of an Event of Default any Account debtor returns any Inventory to Borrower or rejects or seeks
an allowance as to services rendered, Borrower shall promptly determine the reason for such return, rejection or request for allowance
and, if Borrower accepts such return, rejection or allowance, issue a credit memorandum (with a copy to be sent to Lender) in the appropriate
amount to such Account debtor. Borrower shall promptly notify Lender of all returns and recoveries, rejections, allowances, and of all
disputes and claims.


6.3 
Designation of Inventory. Borrower shall contemporaneously with the execution hereof and from time to time hereafter, but not less
frequently than monthly by the I 0th day of each month, execute and deliver to Lender a designation of Inventory specifying
the cost and the wholesale market value of Borrower's raw materials, work in process and finished goods, and further specifying such
other information as Lender may reasonably request. Borrower shall promptly, in writing, notify Lender if any of Borrower's Inventory
contains any labels, trademarks, tradenames or other identifying characteristics which are the properties of third parties.


6.4 
Financial Statements, Reports, Certificates. Borrower shall deliver to Lender: (a) as soon as available, but in any event within
thirty (30) days after the end of each of Borrower's fiscal month-ending periods during the Term, a balance sheet and profit and loss
statement prepared by Borrower covering Borrower's operations during such period; and (b) as soon as available, but in any event within
the earlier of (i) ninety (90) days after the end of each of Borrower's fiscal years, or (ii) any filing deadline imposed by the Securities
and Exchange Commission, financial statements of Borrower for each such fiscal period, audited by independent certified public accountants
acceptable to Lender. Such financial statements shall include a balance sheet and profit and loss statement, and the accountants' management
letter, if any, and shall be prepared in accordance with GAAP. Together with the above, Borrower shall also deliver Borrower's Form 10-Qs,
10-Ks or 8-Ks, if any, as soon as the same become available, and any other report reasonably requested by Lender relating to the Collateral
and the financial condition of Borrower and a certificate signed by its chief financial officer to the effect that all reports, statements
or computer prepared information of any kind or nature delivered or caused to be delivered to Lender under this Section 6.4 fairly
present its financial condition and that there exists on the date of delivery of such certificate to Lender no condition or event which
constitutes an Event of Default. Borrower will also furnish to Lender by no later than ninety (90) days in advance of each fiscal year,
Borrower's fiscal year projections on a monthly basis of the balance sheet, profit and loss, cash flow and borrowing availability for
the upcoming fiscal year, with such projections to be in form and detail satisfactory to Lender.


6.5 
Tax Returns, Receipts. Borrower shall deliver to Lender copies of each of its future federal income tax returns, and any amendments
thereto as soon as same are available and in any event within thirty


(30) days
after same are required to be filed by law. Borrower further shall promptly deliver to Lender, upon request, satisfactory evidence of
Borrower's payment of all withholding and other taxes required to be paid by it.


6.6 
Guarantor Reports. Borrower agrees to cause each Guarantor to deliver: (a) its annual financial statements upon the earlier to occur
of (i) delivery of copies of its federal income tax returns as required below, or (ii) one year from the date of delivery of its prior
financial statements to Lender; and (b) and copies of all federal income tax returns as soon as the same are available and in any event
no later than thirty (30) days after the same are required to be filed by law.


6.7 
Title to Equipment. Upon Lender's request, Borrower shall immediately deliver to Lender, properly endorsed, any and all evidences
of ownership of, certificates of title, or applications for title to any items of Equipment.



    	 	15	 



     


    




6.8 
Maintenance of Equipment. Borrower shall keep and maintain the Equipment in good operating condition and repair, and shall make all
necessary replacements thereto so that its value and operating efficiency shall at all times be maintained and preserved. Borrower shall
not permit any item of Equipment to become a fixture to real estate or an accession to other property, and the Equipment is now and shall
at all times remain Borrower's personal property.


6.9 
Taxes. All Federal, state and local assessments and taxes, whether real, personal or otherwise, due or payable by, or imposed, levied
or assessed against Borrower or any of its assets or in connection with Borrower's business shall hereafter be paid in full, before they
become delinquent or before the expiration of any extension period. Borrower shall make due and timely payment or deposit of all federal,
state and local taxes, assessments or contributions required of it by law, and will execute and deliver to Lender, on demand, appropriate
certificates attesting to the payment or deposit thereof.


6.10 
Insurance. Borrower, at its expense, shall keep and maintain insurance to protect the Collateral against all risk of loss covered
under a Special property form (If any of the tangible Collateral is located in a flood zone, Borrower must also have flood insurance.
Borrowers with Collateral in California must also insure against the peril of earthquakes.) The coverage shall be written on a replacement
cost basis. The property limit(s) shall be no less than those necessary to satisfy the coinsurance requirement contained in the insurance
policy. The Borrower, at its expense, shall keep and maintain Business Income Coverage. The Business Income Coverage shall insure against
loss covered under a Special policy form. The limit must contemplate a benefit period of no less than twelve months and meet the minimum
limit needed to satisfy the coinsurance requirement contained in the policy. The Business Income coverage can be written on an agreed
amount basis, or with a coinsurance percentage from 80% to 100%. All policies of insurance covering business personal property and business
income shall contain a Lender's Loss Payable endorsement in a form satisfactory to Lender. All policies insuring real property on which
Lender has a mortgage or other lien shall contain a Mortgagee endorsement in form satisfactory to Lender. Either, or both, form(s) shall
contain a waiver of warranties. All proceeds payable under such policies shall be payable to Lender and applied to the Obligations. Borrower
shall cause to be delivered to Lender a properly executed Evidence of Property Insurance form along with a copy of the Lender's Loss
Payable and/or Mortgagee endorsement(s) as applicable, in advance of the loan closing date and thereafter at least thirty (30) days prior
to the expiration date(s) of the policy(ies). All Mortgagee and Lender's Loss Payable endorsements shall contain the following address
for notification purposes, or such other address as Lender may, from time to time, notify Borrower:


Pinnacle
Bank


18181
Butterfield Blvd, Ste. 135


Morgan
Hill, CA 95037


Attn:
Kevin O'Hare


 


Borrower,
at its expense, shall keep and maintain Commercial General Liability Coverage insuring against all risks relating to or arising from
Borrower's ownership and use of the Collateral and its other assets, its products, and its operations. Lender, its directors, officers
and employees shall be named as additional insureds for Commercial General Liability on Borrower's policy. Borrower shall cause to be
delivered to Lender a properly executed Certificate of Insurance, containing the required additional insured wording, before the loan
closing and thereafter at least thirty (30) days prior the expiration date of the policy. Along with the Certificate of Insurance, Borrower
shall also deliver a copy of the General Liability endorsement whereby Lender, et. al., are added to the policy as additional insureds.


All
required policies shall be in such form, with such companies and in such amounts as may be satisfactory to Lender. All policies shall
contain a 30-day notice for cancellation or non-renewal. Lender reserves the right to change insurance specifications at any time.


6.11 
Lender Expenses. Borrower shall immediately and without demand reimburse Lender for all Lender Expenses and Borrower hereby authorizes
the payment of such Lender Expenses.


6.12 
Compliance With Law. Borrower shall comply, in all material respects, with the requirements of all applicable laws, rules, regulations
and orders of governmental authorities relating to Borrower and the conduct of its business.



    	 	16	 



     


    




6.13 
Accounting System. Borrower at all times hereafter shall maintain a standard and modern system of accounting in accordance with GAAP
with ledger and account cards or computer tapes,,disks, printouts and records pertaining to the Collateral containing such information
as may from time to time be requested by Lender.


6.14 
Minimum Available Cash. As determined as of the end of each calendar month, Borrower shall maintain minimum available cash of One
Million Dollars ($1,000,000.00) (the "Cash Requirement"). Within ten (10) days of the end of each calendar month, Borrower
shall provide satisfactory evidence to Lender that it has fulfilled the Cash Requirement together with providing satisfactory
evidence of equity, sub-debt or other capital availability to fulfill the Cash Requirement in the future. In the event Borrower's available
cash is below the Cash Requirement as of the end of a calendar month, Borrower agrees that it will draw upon its ATM/Shelf equity funds,
sub-debt or other capital sources within fifteen (15) days of the end of such calendar month to fulfill the Cash Requirement and shall
provide satisfactory evidence of same to Lender. For avoidance of doubt, Borrower acknowledges and agrees that the proceeds of Advances
hereunder shall not be used to satisfy the Cash Requirement.


7.
NEGATIVE COVENANTS


 




Borrower
covenants and acknowledges that during the Term Borrower shall not undertake any of the following:


7.1 
Extraordinary Transactions and Disposal of Assets. Enter into any transaction not in the ordinary and usual course of its business
as conducted on the date hereof, including but not limited to the sale, lease, disposal, movement, relocation or transfer, whether by
sale or otherwise, of any of its assets other than sales of Inventory in the ordinary and usual course of its business as presently conducted;
incur any indebtedness for borrowed money in excess of Ten Thousand Dollars ($10,000.00) for any individual transaction or where the
aggregate amount of such transactions in any fiscal year exceeds Twenty-Five Thousand Dollars ($25,000.00), or other indebtedness outside
the ordinary and usual course of its business as conducted on the date hereof, except for renewals or extensions of existing debts permitted
by Lender; make any advance or loan to any third party; or grant a lien on any of its assets except (a) in favor of Lender, or (b) the
continuing security interests, if any, set forth on Schedule 5.1.


7.2 
Change Name, etc. Change its name, business structure, jurisdiction of incorporation or formation as applicable, or identity, or
add any new fictitious name.


7.3
Merge, Acquire. Merge, acquire, or consolidate with or into any other business organization.


 


7.4 
Guaranty. Guaranty or otherwise become in any way liable with respect to the obligations of any third party, except by endorsement
of instruments or items of payment for deposit to the account of Borrower for negotiation and delivery to Lender.


7.5
Restructure. Make any change in its financial structure or business operations.


 







7.6
Prepayments. Prepay any existing indebtedness owing to any third party other than trade payables.


 


7.7 
Change of Ownership. Cause, permit or suffer any change, direct or indirect, in the ownership of the capital stock of Borrower that
gives another person or entity that is not a party to this Agreement voting control over the management or affairs of Borrower, or enter
into any agreement with any person or entity that provides for a payment to such person or entity based upon the income of Borrower.


7.8
Intentionally Omitted.






    	 	17	 



     


    

 


7.9 
Loans and Advances. Make any loans, advances or extensions of credit to any officer, director, executive employee or shareholder
of Borrower (or any relative of any of the foregoing), or to any, entity which is a subsidiary of, related to, affiliated with or has
common shareholders, officers or directors with Borrower.


7.10 
Capital Expenditures. Make any plant or fixed capital expenditure, or any commitment therefor, or purchase or lease any real or personal
assets or replacement Equipment in excess of Ten Thousand Dollars ($10,000.00) for any individual transaction or where the aggregate
amount of such transactions in any fiscal year exceeds Twenty-Five Thousand Dollars ($25,000.00).


7.11 
Consignments of Inventory. Consign any Inventory to any third party or obtain any Inventory on a consignment basis from any third
party.


7.12 
Distributions. · Make any distribution or declare or pay any dividends (in cash or in stock) on, or purchase, acquire, redeem
or retire, any of its capital stock, of any class, whether now or hereafter outstanding.


7.13 
Accounting Methods. Modify or change its method of accounting or enter into, modify or terminate any agreement presently existing
or at any time hereafter entered into with any third party for the preparation or storage of Borrower's records of Accounts and financial
condition without said party agreeing to provide Lender with information regarding the Collateral or Borrower's financial condition.
Borrower waives the right to assert a confidential relationship, if any, it may have with any such third party in connection with any
information requested by Lender hereunder, and agrees that Lender may contact any such party directly in order to obtain such information.


7.14
Business Suspension. Suspend or go out of business.


 




8.
EVENTS OF DEFAULT


 




The occurrence
of any one or more of the following events shall constitute an Event of Default by Borrower hereunder:


8.1 
Failure to Pay. Borrower's failure to pay when due and payable, or when declared due and payable, any portion of the Obligations
(whether principal, interest, taxes, Lender Expenses, or otherwise);


8.2 
Failure to Perform. Borrower's or a Guarantor's failure to perform, keep or observe any term, provision, condition, representation,
warranty, covenant or agreement contained in this Agreement, in any of the Loan Documents or in any other present or future agreement
between Borrower, and/or a Guarantor and Lender;


8.3 
Misrepresentation. Any misstatement or misrepresentation now or hereafter exists in any warranty, representation, statement, aging
or report made to Lender by, Borrower and/or a Guarantor or any officer, employee, agent or director thereof, or if any such warranty,
representation, statement, aging or report is withdrawn by such person;


8.4 
Material Adverse Change. There is a material adverse change in Borrower's, or a Guarantor's, business or financial condition;


8.5 
Material Impairment. There is a material impairment of the prospect of repayment of the Obligations or a material impairment of Lender's
continuing security interests in the Collateral;


8.6 
Levy or Attachment. Any material portion of Borrower's assets is attached, seized, subjected to a writ or distress warrant or is
levied upon, or comes into the possession of any judicial officer or assignee;


8.7 
Insolvency by Borrower or Guarantor. An Insolvency Proceeding is commenced by Borrower or by any Guarantor;



    	 	18	 



     


    




8.8 
Insolvency Against Borrower or Guarantor. An Insolvency Proceeding is commenced against Borrower or any Guarantor;


8.9 
Injunction Against Borrower. Borrower is enjoined, restrained or in any way prevented by court order from continuing to conduct all
or any material part of its business;


8.10 
Government Lien. A notice of lien, levy or assessment is filed of record with respect to any of Borrower's or a Guarantor's assets
by the United States Government, or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental
agency, or any taxes or debts owing at any time hereafter to any one or more of such entities becomes a lien, whether choate or otherwise,
upon any of Borrower's or a Guarantor's assets and the same is not paid on the payment date thereof;


8.11
Judgment. A judgment is entered against Borrower or a Guarantor;


 




8.12 
Default to Third Party. There is a default in any material agreement to which Borrower or a Guarantor is a party or by which binds
Borrower or a Guarantor or any of their assets;


8.13 
Subordinated Debt. (a) Borrower or any Subordinating Creditor (i) fails to perform or observe any of such Subordinating Creditor's
obligations under any Subordination Agreement; or (ii) notifies Lender of Subordinating Creditor's intention to rescind, modify, terminate
or revoke any Subordination Agreement; (b) the occurrence of a default or event of default under any subordinated indebtedness; (c) any
Subordination Agreement ceases to be in full force and effect for any reason whatsoever; or (d) Borrower makes any payment on account
of indebtedness which has now or hereafter been subordinated to the Obligations, except to the extent such payment is allowed under any
subordination agreement entered into with Lender;


8.14
Termination of Guarantor. A Guarantor dies or terminates its guaranty;


 




8.15 
Change in Management. If Max Munn cease(s) to be actively engaged in the management of Borrower;


8.16 
ERISA Violation. A prohibited transaction within the meaning of ERISA Section 406 or IRC Section 1975(c) shall occur with
respect to a Plan which could have a material adverse effect on the financial condition of Borrower; any lien upon the assets of Borrower
in connection with any Plan shall arise; Borrower or any ERISA Affiliate shall completely or partially withdraw from a Multiemployer
Plan and such withdrawal could, in the opinion of Lender, have a material adverse effect on the financial condition of Borrower. Borrower
or any of its ERISA Affiliates shall fail to make full payment when due of all amounts which Borrower or any of its ERISA Affiliates
may be required to pay to any Plan or any Multiemployer Plan as one or more contributions thereto; Borrower or any of its ERISA Affiliates
creates or permits the creation of any accumulated funding deficiency, whether or not waived; the voluntary or involuntary termination
of any Plan which termination could, in the opinion of Lender, have a material adverse effect on the financial condition of Borrower
or Borrower shall fail to notify Lender promptly and in any event within ten (10) days of the occurrence of an event which constitutes
an Event of Default under this clause or would constitute an Event of Default upon the exercise of Lender's judgment; or


8.17 
Loss of License, etc. If any license, permit, distributor, franchise or similar agreement, necessary for the continued operation
of Borrower's ordinary course of business is revoked, suspended or terminated.


Notwithstanding
anything contained in this Section 8 to the contrary, Lender shall refrain from exercising its rights and remedies and an Event
of Default shall not be deemed to have occurred by reason of the occurrence of any of the events set forth in Sections 8.6, 8.8, 8.10
or 8.11 hereof if, within ten (IO) days from the date thereof, the same is released, discharged, dismissed, bonded against
or satisfied; provided, however, Lender shall not be obligated to make Advances to Borrower during such period.



    	 	19	 



     


    




9.
LENDER'S RIGHTS AND REMEDIES


 




9.1 
Rights and Remedies. Upon the occurrence of an Event of Default, Lender may, at its election, without notice of such election and
without demand, do any one or more of the following:


(a) 
Declare all Obligations, whether evidenced by the Loan Documents or otherwise, immediately due and payable in full:


(b) 
Cease advancing money or extending credit to or for the benefit of Borrower under the Loan Documents or under any other agreement between
Borrower and Lender;


(c) 
Terminate this Agreement as to any future liability or obligation of Lender, but without affecting Lender's rights and security interest
in the Collateral and without affecting the Obligations;


(d) 
Settle or adjust disputes and claims directly with Account debtors for amounts and upon terms which Lender considers advisable and, in
such cases, Lender will credit the Obligations with the net amounts received by Lender in payment of such disputed Accounts, after deducting
all Lender Expenses;


(e) 
Cause Borrower to hold all returned Inventory in trust for Lender, segregate all returned Inventory from all other property of Borrower
or in Borrower's possession and conspicuously label said returned Inventory as the property of Lender;


(t)
Without notice to or demand upon Borrower or a Guarantor, make such payments and do such acts as Lender considers necessary or reasonable
to protect its security interest in the Collateral. Borrower shall assemble the Collateral if Lender so requires and deliver or make
the Collateral available to Lender at a place designated by Lender. Borrower authorizes Lender to enter any premises where the Collateral
is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest or compromise any encwnbrance,
charge or lien which in Lender's determination appears to be prior or superior to its security interest and to pay all expenses incurred
in connection therewith;


(g) 
Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, lease, license or other disposition, advertise for sale, lease,
license or other disposition, and sell, lease, license or otherwise dispose (in the manner provided for herein or in the Code) the Collateral.
Lender is hereby granted an irrevocable license or other right to use, without charge, Borrower's labels, patents, copyrights, rights
of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any asset of a similar nature,
pertaining to the Collateral, in completing the production of, advertising for sale, lease, license or other disposition, and sale, lease,
license or other disposition of the Collateral. Borrower's rights under all licenses and all franchise agreements shall inure to Lender's
benefit. With respect to any of Borrower's owned or leased premises, Borrower hereby grants Lender an irrevocable license to enter into
possession of such premises and to occupy the same, without charge, for a period to be determined by Lender in its sole discretion in
order to exercise any of Lender's rights or remedies provided herein or in any of the other Loan Documents, at law, in equity, or otherwise;


(h) 
Sell, lease, license or otherwise dispose of the Collateral at either a public or private proceeding, or both, by way of one or more
contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as Lender determines
is commercially reasonable. ft is not necessary that the Collateral be present at any such sale;


(i)
Lender shall give notice of the disposition of the Collateral as follows:


 




(1) 
To Borrower and each holder of a security interest in
the Collateral who has filed with Lender a written request for notice, a notice in writing of the time and place of public sale or other
disposition or, if the sale or other disposition is a private sale or some other disposition other than a public sale is to be made,
then the time on or after which the private sale or other disposition is to be made;



    	 	20	 



     


    




(2) 
The notice hereunder shall be personally delivered or mailed, postage prepaid, to Borrower as provided in Section 12 hereof, at
least ten (10) calendar days before the date fixed for the sale or other disposition, or at least ten (10) calendar days before the date
on or after which the private sale or other disposition is to be made, unless the Collateral is perishable or threatens to decline speedily
in value. Notice to persons other than Borrower claiming an interest in the Collateral shall be sent to such addresses as they have furnished
to Lender;


(j)
Lender may credit bid and purchase at any public sale:


 




(k) 
Any deficiency that exists after disposition of the Collateral, as provided herein, shall be immediately paid by Borrower. Any excess
will be remitted without interest by Lender to the party or parties legally entitled to such excess; and


(I)
In addition to the foregoing, Lender shall have all rights and remedies provided by law (including those set forth in the Code) and any
rights and remedies contained in any Loan Documents and all such rights and remedies shall be cumulative.


9.2 
No Waiver. No delay on the part of Lender in exercising any right, power or privilege under any Loan Document shall operate as a
waiver, nor shall any single or partial exercise of any right, power or privilege under such Loan Documents or otherwise, preclude other
or further exercise of any such right, power or privilege.


10.
TAXES AND EXPENSES REGARDING THE COLLATERAL


 




If
Borrower fails to pay any monies (whether taxes, assessments, insurance premiums or otherwise) due to third persons or entities, or fails
to make any deposits or furnish any required proof of payment or deposit, or fails to perform any of Borrower's other covenants under
any of the Loan Documents, then in its discretion and without prior notice to Borrower, Lender may do any or all of the following: (a)
make any payment which Borrower has failed to pay or any part thereof; (b) set up such reserves in Borrower's loan account as Lender
deems necessary to protect Lender from the exposure created by such failure; (c) obtain and maintain insurance policies of the type described
in Section 6.10 hereof and take any action with respect to such policies as Lender deems prudent; or (d) take any other action
deemed necessary to preserve and protect its interests and rights under the Loan Documents. Any payments made by Lender shall not constitute:
(a) an agreement by Lender to make similar payments in the future or (b) a waiver by Lender of any Event of Default. Lender need not
inquire as to, or contest the validity of, any such expense, tax, security interest, encumbrance or lien and the receipt of notice for
the payment thereof shall be conclusive evidence that the same was validly due and owing.


11.
WAIVERS


 




11.1 
Demand, Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, and notice of nonpayment at maturity and acknowledges that Lender may compromise, settle or release, without notice
to Borrower, any Collateral and/or guaranties at any time held by Lender. Borrower hereby consents to any extensions of time of payment
or partial payment at, before or after the Termination Date.


11.2 
No Marshaling. Borrower, on its own behalf and on behalf of its successors and assigns hereby expressly waives all rights, if any,
to require a marshaling of assets by Lender or to require that Lender first resort to some portion(s) of the Collateral before foreclosing
upon, selling or otherwise realizing on any other portion thereof.


11.3 
Lender's Non-Liability for Inventory or Equipment or for Protection of Rights. So long as Lender complies with its obligations, if
any, under Section 9-207 of the Code, Lender shall not in any way or manner be liable or responsible for: (a) the safekeeping of the
Inventory or Equipment; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution
in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency or other person whomsoever. All
risk of loss, damage or destruction of the Inventory or Equipment shall be borne by Borrower. Lender shall have no obligation to protect
any rights of Borrower against any person obligated on any Collateral.



    	 	21	 



     


    




11.4 
Limitation of Damages. In any action or other proceeding against Lender under this Agreement or relating to the transactions between
Lender and Borrower, Borrower waives the right to seek any: (a) lost profits or other special or consequential damages; or (b) punitive
damages.


11.5 
Statute of Limitations. To the maximum extent permitted by law, Borrower waives the pleading of any statute of limitations with respect
to any and all actions in connection herewith. To the extent that Borrower may now or in the future have any claim against Lender, arising
out of this agreement or the transaction contemplated herein whether in contract or tort or otherwise, Borrower must assert such claim
within one year of it accruing. Failure to assert such claim by Borrower within one year shall constitute of waiver thereof. Borrower
agrees that such period is reasonable and sufficient for it to investigate and act upon the claim. This Section shall survive any termination
of this agreement.


12.
NOTICES


 




Unless
otherwise provided herein, all consents, waivers, notices or demands by any party relating to the Loan Documents shall be in writing
and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall
be telecopied (followed up by a mailing), personally delivered or sent by registered or certified mail, postage prepaid, return receipt
requested, or by receipted overnight delivery service to Borrower or to Lender, as the case may be, at their addresses set forth below


If to Borrower: 


Applied
UV, Inc.


Sterilumen,
Inc.


Munn
Works, LLC


150
N. Macquesten Parkway


Mt.
Vernon, NY 10550


Attn:
Mike Riccio


Fax#


If to Lender: Pinnacle
Bank


1818
Butterfield Blvd, Ste. 135


Morgan
Hill, CA 95037


Attn:
Kevin O'Hare


Fax#
(408) 904-7425


 


Any
party may change the address at which it is to receive notices hereunder by notice in writing in the foregoing manner given to the other.
All notices or demands sent in accordance with this Section 12 shall be deemed received on the earlier of the date of actual receipt
or five (5) calendar days after the deposit thereof in the mail or on the date telecommunicated if telecopied.


13.
DESTRUCTION OF BORROWER'S DOCUMENTS


 




All
documents, schedules, invoices, agings or other papers delivered to Lender may be destroyed or otherwise disposed of by Lender four (4)
months after they are delivered to or received by Lender, unless Borrower requests, in writing, the return of the said documents, schedules,
invoices or other papers (but with Lender entitled to retain a copy for record retention purposes or as otherwise required by law) and
makes arrangements, at Borrower's expense, for their return.


14.
GENERAL PROVISIONS


 




14.1 
Effectiveness. This Agreement shall be binding and deemed effective upon the making of initial Advance hererunder.



    	 	22	 



     


    




14.2 
Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the
parties; provided, however, that Borrower may not assign this Agreement or any rights hereunder and any prohibited assignment shall be
absolutely void. No consent to an assignment by Lender shall release Borrower from its Obligations. Without notice to or the consent
of Borrower, Lender may assign this Agreement and its rights and duties hereunder and Lender reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in Lender's rights and benefits hereunder. In connection therewith,
Lender may disclose all documents and information which Lender now or hereafter may have relating to Borrower or Borrower's business.
Borrower and Lender do not intend any of the benefits of the Loan Documents to inure to any third party, and no third party shall be
a third party beneficiary hereof or thereof.


14.3
Section Headings. Headings and numbers have been set forth herein for convenience only.


 


14.4 
Integration; Interpretation. This Agreement supersedes all other agreements and understandings between the parties hereto, verbal
or written, express or implied, relating to the subject matter hereof. No promises of any kind have been made by Lender or any third
party to induce Borrower to execute this Agreement. No course of dealing, course of performance or trade usage, and no parole evidence
of any nature, shall be used to supplement or modify any terms of this Agreement. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against Lender or Borrower, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by each party and shall be construed and interpreted according to the ordinary meaning of the words
used so as to fairly accomplish the purposes and intentions of the parties hereto. The parties waive the provisions of California Civil
Code §1654 or similar provision.


14.5 
Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of such provision.


14.6 
Amendments in Writing. This Agreement cannot be changed or terminated orally. This Agreement is the entire agreement between the
parties with respect to the matters contained herein. This Agreement supersedes all prior agreements, understandings and negotiations,
if any, all of which are merged into this Agreement.


14.7 
Counterparts. This Agreement may be executed in any number of counterparts each of which, when executed and delivered, shall be deemed
to be an original and all of which, when taken together, shall constitute but one and the same Agreement.


14.8 
Indemnification. Borrower hereby indemnifies, protects, defends and saves harmless Lender and any member, officer, director, official,
agent, employee and attorney of Lender, and their respective heirs, successors and assigns (collectively, the Indemnified Parties),
from and against any and all losses, damages, expenses or liabilities of any kind or nature and from any suits, claims or demands,
including reasonable counsel fees incurred in investigating or defending such claim, suffered by any of them and caused by, relating
to, arising out of, resulting from, or in any way connected with the Loan Documents and the transactions contemplated therein or the
Collateral (unless caused by the gross negligence or willful misconduct of the Indemnified Parties) including, without limitation: (a)
losses, damages, expenses or liabilities sustained by Lender in connection with any environmental cleanup or other remedy required or
mandated by any Environmental Law; (b) any untrue statement of a material fact contained in information submitted to Lender by Borrower
or a Guarantor or the omission of any material fact necessary to be stated therein in order to make such statement not misleading or
incomplete; (c) the failure of Borrower or a Guarantor to perform any obligations required to be performed by Borrower or a Guarantor
under the Loan Documents; and (d) the ownership, construction, occupancy, operations, use and maintenance of any of Borrower's or a Guarantor's
assets. The provisions of this paragraph 14.8 shall survive termination of this Agreement and the other Loan Documents.


14.9 
Joint and Several Obligations; Dealings with Multiple Borrowers. If more than one person or entity is named as Borrower hereunder,
all Obligations, representations, warranties, covenants and indemnities set forth in the Loan Documents to which such person or entity
is a party shall be joint and several.



    	 	23	 



     


    




Lender
shall have the right to deal with any individual of any Borrower with regard to all matters concerning the rights and obligations of
Lender and Borrower hereunder and pursuant to applicable law with regard to the transactions contemplated under the Loan Documents. All
actions or inactions of the officers, managers, members and/or agents of any Borrower with regard to the transactions contemplated under
the Loan Documents shall be deemed with full authority and binding upon all Borrowers hereunder. Each Borrower hereby appoints each other
Borrower as its true and lawful attorney-in-fact, with full right and power, for purposes of exercising all rights of such person hereunder
and under applicable law with regard to the transactions contemplated under the Loan Documents. The foregoing is a material inducement
to the agreement of Lender to enter into this Agreement and to consummate the transactions contemplated hereby. The Borrowers represent
they are operated as part of one consolidated business entity and are directly dependent upon each other for and in connection with their
respective business activities financial resources. Each Borrower will receive a direct economic and financial benefit from the Obligations
incurred under this Agreement and the incurrence of such Obligations is in the best interests of each Borrower.


14.10 
Revival of Obligations. If the incurrence or payment of the Obligations by Borrower or any Guarantor or the transfer by either or
both of such parties to Lender of any property of either or both such parties should for any reason subsequently be declared to be void
or voidable under any state or federal law relating to creditor's rights, including provisions of the United States Bankruptcy Code (11
U.S.C. §101 . as amended, and any successor statute relating to fraudulent conveyances, preferences, and other voidable or recoverable
payments or money or transfers or property (collectively, a Voidable Transfer), and if Lender is required to repay or restore,
in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer or the amount thereof that Lender is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys'
fees of Lender related thereto, the liability of Borrower or such Guarantor automatically shall be revived, reinstated, and restored
and shall exist as though such Voidable Transfer had never been made.


14.11 
Setoff. Borrower hereby grants to Lender a lien, security interest and right of setoff as security for all Obligations to Lender
upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control
of Lender, or any entity under the control of Lender, or its parent entity(ies), or in transit to any of them. At any time, without demand
or notice, Lender may set off the same or any part thereof and apply the same to the Obligations of Borrower, even though unmatured and
regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS
OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHTS OF SETOFF WITH RESPECT
TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.


14.12
Releases.


 




(A) 
Borrower hereby releases, exculpates, and forever discharges Lender, its officers, employees, agents, affiliates, subsidiaries, holding
companies, designees, attorneys, and accountants (the Lender Parties) of and from any and all claims, demands, damages,
debts, liabilities, accounts, actions and causes of action, of every kind and nature whatsoever (each a Claim, and collectively,
Claims) (including, without limitation, any arising from any acts under this Agreement, in furtherance hereof, and/or based
upon the administration of the credit facilities), whether of omission or commission, whether based upon any error of judgment or mistake
of law or fact, whether now known or unknown, suspected or unsuspected, which Borrower ever had or now has directly or indirectly against
any of the Lender Parties on any contract (express or implied in fact or implied in law), tort, or on any supposed liability, thing or
act, undertaken, done or omitted to be done, at any time prior to the date hereof.


Borrower
acknowledges that it has been infonned and is aware of the provisions of Section l 542 of the Civil Code of the State of California,
and does expressly waive and relinquish all rights and benefits which it has or may have had under said section, which reads as follows:


"A
general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor
at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the
debtor or released party."



    	 	24	 



     


    




Borrower
acknowledges that it is aware that it may hereafter discover facts different from or in addition to those they now know or believe to
be true with respect to the matters herein released and they agree that this release shall be and remain in effect in all respects as
a complete and general release as to the matters released, notwithstanding any such different or additional facts.


(B) 
In recognition of Lender's right to have all its attorneys' fees and other expenses incurred in connection with this Agreement secured
by the Collateral, notwithstanding payment in full of all Obligations by Borrower, Lender shall not be required to record any terminations
or satisfactions of any of its liens on the Collateral or to turnover any excess proceeds of Collateral held by Lender, unless and until
Lender has received an original counterpart of a general release in a form prepared by and reasonably acceptable to Lender (each a Release),
fully executed and (if requested) acknowledged by each of the following (the Releasing Parties): (i) Borrower (and
each of them, if there is more than one); (ii) if Borrower is a corporation, partnership, limited liability company, or other legal entity,
then by such officers, directors, shareholders, partners, members, or other owners of Borrower as Lender may designate or require; (iii)
any Subordinating Creditors; (iv) any Guarantors; and (v) such other persons or entities that Lender may designate, wherein (among other
things) the Releasing Parties (and each of them) release the Lender Parties of and from any and all Claims, and wherein such Releasing
Parties waive their rights under California Civil Code Section 1542. Borrower understands that this provision constitutes a waiver of
its rights under the UCC (including, without limitation, the provisions ofUCC Section 9-513).


15.
CHOICE OF LAW, VENUE, JURY TRIAL WAIVER AND REFERENCE PROCEEDING.


 




THE
VALIDITY OF THE LOAN DOCUMENTS, THEIR CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED
UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THE LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE COURTS LOCATED IN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, THE FEDERAL COURTS WHOSE VENUE INCLUDES THE STATE
OF CALIFORNIA, OR AT THE SOLE OPTION OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND
WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. BORROWER AND LENDER EACH WAIVES, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING UNDER THE LOAN DOCUMENTS OR RELATING TO THE DEALINGS OF BORROWER AND
LENDER AND ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF "FORUM NON CONVENIENS" OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 15.


WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES' AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY, if the above waiver of the
right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between
them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree,
by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure
§638 as such section may be amended and/or re-numbered from time to time (or pursuant to comparable provisions of federal law if
the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California;
and the parties hereby submit to the jurisdiction of such court. The reference proceeding shall be conducted pursuant to and in accordance
with the provisions of California Code of Civil Procedure §§638 through 645.1 inclusive, as such sections may be amended and/or
re numbered from time to time. No provision of this Section shall limit the right of any party (a) to exercise self-help remedies (including
setoft), (b) to foreclose against or sell any collateral, by power of sale or otherwise, or (c) to obtain or oppose provisional or anci11ary
remedies from a court of competent jurisdiction before, after or during the pendency of a reference. The exercise of, or opposition to,
any such remedy does not waive the right of any party to reference pursuant to this Section. Subject to the referee's power to award
costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial. In the event of
any challenge to the legality or enforceability of this Section, the prevailing party shall be entitled to recover the costs and expenses,
including reasonable attorneys' fees, incurred by it in connection therewith.


[Remainder
of Page Intentionally Left Blank; Signatures on Next Page]






    	 	25	 



     


    

 


Borrower
and Lender have executed and delivered this Agreement at Lender's place of business in Morgan Hill, California as of the date first above
written.


	 	 	BORROWER:
	 	 	 
	 	 	APPLIED
  UV, INC.,
	 	 	a
  Delaware corporation
	 	 	 
	 		Signed
  by: /s/ Max Mun
	 		Print
  Name: Max Munn
	 	 	Title/Capacity:
  President
	 	 	 
	 	 	STERILUMEN,
  INC.,
	 	 	a
  New York corporation
	 	 	 
	 	 	Signed
  by: /s/ Max Munn
	 	 	Print
                                            Name: Max Munn

      

	 	 	Title/Capacity:
  President
	 	 	 
	 	 	MUNN
  WORKS, LLC,
	 	 	a
  New York limited Liability company
	 	 	 
	 	 	Signed
  by: /s/ Max Munn
	 	 	Print
  Name: Max Munn
	 	 	Title/Capacity:
  President
	 	 	 
	 	 	LENDER:
	 	 	 
	 	 	PINNACLE
  BANK,
	 	 	a
  California corporation
	 	 	 
	 	 	Signed
  by: /s/ Kevin O’Hare
	 	 	Print
  Name: Kevin O’Hare
	 	 	Title/Capacity:
  President, Pinnacle Capital Finance







    	 	26	 



     


    




Schedule
2.3


Deposit
Account of Borrower for Advances


Account
#NIA


Bank
Name and Wire Transfer Instructions:


N/A






    	 	27	 



     


    

 


Schedule
5.1


EXISTING
LIENS WHICH ARE TO CONTINUE


[NONE]






    	 	28	 



     


    

 


Schedule
5.13


LITIGATION


[NONE]


 


 



    	 	29	 



     


    

 


Schedule
5.20


USE
OF PROCEEDS OF INITIAL ADVANCE


For working
capital purposes and for the uses set forth in Section 3G) of that certain Conditions Precedent/Subsequent Rider to Loan and Security
Agreement being entered into concurrently herewith.


 






    	 	30