Document:

LICENSE
AND RESEARCH AGREEMENT

BETWEEN 

ANTIGEN
EXPRESS, INC.

(A
WHOLLY-OWNED SUBSIDIARY OF

GENEREX
BIOTECHNOLOGY CORPORATION)

 

AND

 

SHENZHEN
BIOSCIEN PHARMACEUTICALS CO. LTD.

November
29th, 2017

 

 

 

 

 

 

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TABLE
OF CONTENTS

 

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LICENSE
AND RESEARCH AGREEMENT

This
License and Research Agreement (the "Agreement"), effective as of the day of November, 2017 (the "Effective
Date"), is by and between Antigen Express, Inc., a wholly-owned subsidiary of Generex Biotechnology Corporation,
a Delaware corporation, with an address of 4145 North Service Road, Suite 200, Burlington, Ontario, Canada L7L 6A3 (hereinafter
referred as "Licensor"), and Shenzhen BioScien Pharmaceuticals Co., Ltd., located at Room 311, First Building,
Shenzhen Overseas Venture Park (Longgang), Shenzhen 518116, Guangdong, China (hereinafter referred to as "Licensee").
Licensor and Licensee may each be referred to herein individually as a "Party" and collectively

RECITALS

WHEREAS,
Licensor is a publicly-traded biotechnology company (OTCPink:GNBT) managed by an executive management team and governed by
the Board of Directors (the

“Board”);

 

WHEREAS,
the executive management team is responsible for all matters relating to patent administration and technology transfer applicable
to Licensor, and is expressly authorized to negotiate and execute this Agreement;

 

WHEREAS,
Licensor is (or in the future, may be) the owner of certain patent rights, other intellectual property rights, know-how and
other proprietary rights in the Territory relating to Licensed Compounds and/or Research Information (as each of these capitalized
terms is defined herein);

 

WHEREAS,
Licensor desires to grant to Licensee an exclusive license in the Field (as defined below) in the Territory (as defined below)
related to the Licensed Compounds and Research Information;

 

WHEREAS,
Licensee desires to research and develop Licensed Compounds, Research Information and Licensed Products, and to commercialize
Licensed Products, in the Field in the Territory;

 

WHEREAS,
Licensor and Licensee wish to enter into this Agreement to enable Licensee to further develop and commercialize Licensed Products
that incorporate or use one or more compounds within the Licensed Compounds and/or the Research Information, and to enable Licensee
to use and exploit in the Field in the Territory any information, technology or intellectual property that relates to Licensed
Compounds or Research Information, or that covers Research Inventions.

 

NOW
THEREFORE, in consideration of the premises and mutual covenants set forth below and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

1.
DEFINITIONS

For
the purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires: (a) references
to "Articles," "Sections" and other subdivisions, and to "Exhibits," shall refer to articles, sections,
subdivisions and exhibits of this Agreement, unless specified to be referring to another agreement between the Parties; (b) the
use of the term "including" shall mean "including without limitation"; (c) the words "herein," "hereof,"
"hereunder" and other words of similar import refer to this Agreement as a whole, and not to any particular provision;
(d) the use of the phrase "by Licensor," "by Licensee" or "by a Party" shall mean "by such
Party (and/or on behalf of such Party)"; and (e) the following initially capitalized terms in this Agreement, whether used
in the singular or plural, shall have the following meanings:

 

1.1
Affiliate

Any
Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control
with the designated Party, but only for so long as such relationship exists. For the purposes of this definition, "control"
means (a) in the case of corporate entities, ownership of fifty percent (50%) or more of the outstanding shares of stock entitled
to vote for directors of such corporation, or (b) in the case of non-corporate entities, direct or indirect ownership of fifty
percent (50%) or more of the equity interest with the power to direct the management and policies of such non-corporate entities,
or (c) the possession, directly or indirectly, of such other power to direct or cause the direction of the management and policies
of any Person, whether through the ownership of voting securities, by contract, or otherwise.

 

1.3
Approved Sale

The
sale of a Licensed Product for human pharmaceutical use in the Territorys.

 

1.4
AE37

Peptide
name: AE37 (li-Key/HER2/neu776-790)

 

Trade
name: AE37

 

Appearance:
White lyophilized powder 91'1

 

Peptide
sequence: AC-LRMKGVGSPYVSRLLGICL-NH2

 

Molecular
Weight: 1052.6 daltons

 

Peptide
counter ion: Acetate

 

AE37
means the hybrid HER2/neu peptide AE37 (li-Key/HER2/neu776-790), a fifteen amino-acid peptide to which the four amino-acid sequence
LRMK has been added and it is produced by solid-phase peptide synthesis. The AE37 peptide is manufactured, purified by High Performance
Liquid Chromatography (HPLC), and lyophilized in an acetic acid and acetonitrile solution. The drug substance is stored as a lyophilized
powder as per Good Manufacturing Practices (GMP) including in-process, drug substance and finished drug substance testing of AE37;
testing includes appearance, purity by HPLC and mass spectral analysis, identification by amino acid content and sequence, and
quality by bioburden, sterility USP and endotoxin. The peptide is purified to ¥95 0,/0 purity. Residual organic volatiles,
counter ion content, water content and non-peptide content (by AA) are also routinely determined. The drug substance is lyophilized
and frozen at -20 oc and the bulk drug substance is provided as per clinical protocol requirements.

Manufacturer
(Drug Substance and Drug Product) of AE37 AE37 

PolyPeptide
Laboratories San Diego

9395
Cabot Drive

San
Diego, CA 92126 USA

 

1.5
Change of Control

With
respect to a Party, a "Change of Control" of such Party shall mean (a) a sale or conveyance of all or substantially
all of the assets of such Party to which this Agreement relates; (b) a consolidation, merger or reorganization of such Party with
or into any other company, limited liability company or other entity (other than a wholly-owned subsidiary of such Party) or other
transaction or series of transactions in which the stockholders of such Party immediately prior to the transaction fail to own
fifty percent (50%) or more of the voting stock of the surviving company following the transaction (taking into account only stock
of the company held by such stockholders prior to the transaction); or (c) an acquisition of shares from such Party or an Affiliate
or from the stockholders of such Party or an Affiliate immediately prior to such acquisition as a result of which a third party
or group of third parties acquires control, directly or indirectly, of fifty percent (50%) or more of the voting stock of such
Party following such acquisition.

 

1.6
China

 

The
People's Republic of China (PRC), including the Hong Kong Special Administrative Region of the PRC, Taiwan and the Macau Special
Administrative Region of the PRC.

 

1.7
Collaboration

 

Two
or more affiliates (including Licensor and Licensee) work together to realize or achieve the drug development and commercialization
successfully. For example, the collaboration will be established with a major pharmaceutical company to perform the combination
therapeutic clinical trials.

 

1.8
Combination Therapy

 

Two
or more medications combined and used to treat one disease. For example, AE37 combined with a checkpoint inhibitor for the treatment
of prostate cancer.

 

1.9
Confidential Information

 

Any
and all non-public information that is disclosed by a Party (the "Disclosing Party") to the other Party (the "Receiving
Party") is in connection with this Agreement. For the sake of clarity, the Parties acknowledge that a Disclosing Party may
or may not be the c».mer of such disclosed information (for example, if one Party discloses to the other Party any Confidential
Information that is jointly owned hereunder, such disclosure does not render such Confidential Information solely owned by the
Disclosing Party, but such information remains Confidential Information). Disclosures by a Party's Affiliate shall be deemed disclosures
by that Party, and disclosures to a Party's Affiliate shall be deemed disclosures to that Party. Notwithstanding the foregoing,
Confidential Information shall not include any part of such information that:

1.9.1
Was already known to the Receiving Party without access to or use of Confidential Information of the Disclosing Party, as evidenced
by the Receiving Party's written records;

1.9.2
Was generally available to the public or was otherwise part of the public domain at the time of disclosure hereunder to the Receiving
Party;

1.9.3
Became generally available to the public or otherwise becomes part of the public domain after disclosure hereunder to the Receiving
Party, and other than through any act or omission of the Receiving Party in breach of this Agreement;

1.9.4
Was subsequently lawfully disclosed to the Receiving Party by a third party on a non-confidential basis, other than in breach
of a confidentiality obligation of such third party to the Disclosing Party or any other third party; or

1.9.5
Was developed or discovered by the Receiving Party or its Affiliates without access to or use of Confidential Information of the
Disclosing Party, as evidenced by the written records or communications of either Party.

 

1.10
Control(s) or Controlled

 

With
respect to any (a) item of information, including Research Information and Technical Information, or (b) intellectual property
right, the possession (whether by ownership, license or otherwise, but other than pursuant to this Agreement) by a Party of the
lawful and contractual ability to disclose to the other Party, or to grant to the other Party access and/or a license to or under,
such item of information or intellectual property right within the scope of this Agreement, without the obligation to pay' royalties
or other consideration to any third party.

1.11
Dollars

 

United
States Dollars, or the lawful currency of the United States of America.

1.12
Field

 

The
Field is restricted to preventative, palliative and other therapeutic uses and applications of the Licensed Compound, the Research
Information, and the Licensed Product for the immunotherapeutic treatment of prostate cancer.

1.13
Government Authorization

 

Any
consent, license, registration or permit issued, granted, given or otherwise made available by or under the authority of any Governmental
Body or pursuant to any law, regulation, or ordinance.

 

1.14
Governmental Body

 

1.14.1
nation, state, county, city, town, borough, village, district or other jurisdiction;

1.14.2
federal, state, local, municipal, foreign or other government;

1.14.3
governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission, court,
tribunal or other entity exercising governmental or quasi-governmental powers);

 

1.14.4
multi-national organization or body

 

1.14.5
body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory
or taxing authority or power; or

 

1.14.6
official of any of the foregoing

 

1.16
Licensed Compounds

 

AE37
and all its associated compounds in the patent, as immunotherapy for prostate cancer, that are owned or controlled by Licensor.

 

1.17
Licensed Know-How

 

Any
and all know-how, trade secret or other intellectual property rights (including rights in Research Information and Technical Information,
but excluding Licensed Patent Rights and other rights to patents or patent applications) owned or Controlled by Licensor, as of
the Effective Date or at any time during the term of this Agreement, and relating to the use and/or exploitation of Licensed Compounds,
Research Information and/or Licensed Products in the Field; provided that the term "Licensed Know-How" shall expressly
exclude: a) know-how, trade secret and other intellectual property rights related to any active pharmaceutical ingredient in a
Combination Product that is not itself a Licensed Product; b) know-how, trade secret and other intellectual property rights related
to AE37 that are outside the Field.

 

1.18
Licensed Patent Rights

 

(a)
Any and all patents and pro、'isional and non-provisional patent applications set forth in Exhibit A attached hereto; and
(b) any and all other patents and patent applications owned or Controlled by Licensor anywhere in the Territory, as Ofthe Effective
Date or at any time during the term Of this Agreement, containing one or more Claims to, or otherwise covenng, any Licensed Compound
or Research Information; including any and all renewals, divisions, continuations and continuations-in-part Of any Of the foregoing,any
and all patents issumg thereon, and any reissues, reexamination, extensions, substitutions, confirmations, registrations, revalidations,
revisions and additions Of or to such patents, and any and all foreign counterparts anywhere in the TetTitory Of any Of the foregoing.

 

1.19
Licensed Product

 

Any
formulations Of a final Drug Product, as defined by the U•S• FDA, Of AE37 immunotherapy for prostate cancer that is
manufactured under standards established by Regulatory Authorities for commercialsale in the Territory in the Field.

 

1.20
NDA

 

New
Drug Application filed with the Food and Drug Administration Of the United States or any successor agency thereto (“FDA")
and the Chinese Food and Drug Administration (“CFDA').

 

1.21
Net sales

 

With
respect to a Licensed product, the aggregate gross invoice prices charged for sales Of such Licensed Product to third parties
by Licensee and its Affiliates and Sub-licensees after deducting, if not previously deducted from the amount invoiced or received
for sales Of Licensed Products:

 

1.21.1
reasonable and customary trade, quantity, and cash discounts actually given, as well as discounts, rebates or governmentally mandated
payments, to the extent actually allowed and taken;

1.21.2
returns, rebates, chargebacks and other allowances actually given; iß*h,

 

1.21.3
retroactive price reductions that are actually granted;

 

1.21.4
to the extent separately stated on the relevant invoices, actual transportation and insurance costs incidental to sales of Licensed
Products; and

 

1.21.5
taxes, tariffs, customs duties and surcharges and other governmental charges (other than income taxes) incurred in connection
with the sale, exportation, or importation of Licensed Products.

In
the event that a Licensed Product is sold in the form of a combination product containing one or more active pharmaceutical ingredients
which are themselves not Licensed Products (a "Combination Product"), the Net Sales attributable to the Licensed Product
portion of such Combination Product, for the purposes of determining royalty payments hereunder, shall be determined by multiplying
the Net Sales of the Combination Product, during the applicable Royalty Reporting Period, by the fraction A/(A+B), where A is
the average sales price of the Licensed Product when sold separately in finished form, and B is the sum of the average sales prices
of each of the other active pharmaceutical ingredients included in the Combination Product when sold separately in finished form,
in each case during the applicable Royalty Reporting Period or, if sales of both the Licensed Product and the other active pharmaceutical
ingredients included in the Combination Product did not occur in such period, then in the most recent Royalty Reporting Period
in which sales of both occurred. In the event that such average sales price cannot be determined for both the Licensed Product
and all other active pharmaceutical ingredients included in the Combination Product, Net Sales attributable to the Licensed Product
portion of such Combination Product for the purposes of determining royalty payments hereunder shall be calculated by multiplying
the Net Sales of the Combination Product by the fraction C/(C+D), where C is the fully absorbed cost of the Licensed Product (exclusive
of royalties, milestone payments or similar costs and payments to a third party(ies)), and D is the sum of the fully absorbed
cost of each other active pharmaceutical ingredient(s)included in the Combination Product (which fully absorbed cost of the other
active pharmaceutical ingredient(s) included in the Combination Product shall exclude any royalties, milestone payments, and similar
costs and payments to a third party(ies)).

 

Sales
Of Licensed Product among Licensee, its Affiliates and Sub-licensees for resale by Licensee, its Affiliate(s) or Sub-licensee(s)
shall not be considered a sale of Licensed product, but the resale by Licensee or such Affiliate(s) or Sub-licensee(s) to a third
party shall be a sale of Licensed Product.

 

Licensee
shall have the right to distribute or make available commercially reasonable quantities Of Licensed Products free of charge for
use in clinical studies, for charitable purposes, and for use as commercial samples.

1.22
Non-Affiliate Acquirer

 

Any
Person that is not an Affiliate of Licensee and that no officer, director or stockholder of Licensee or group thereof Controls
(where "Control" is defined as in the definition of "Affiliate' except that the relevant percentage shall be five
percent(5%)instead of percent(50%).

 

1.23
Person

 

An
individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint、venture or other entity or a Governmental Body.

 

1.24
Phase I Clinical Study 第 I 期临床研宄

 

A
controlled clinical study in humans of a Licensed Product that is conducted in accordance with FDA guidelines for conduct ofa
Phase I clinical study to evaluate the safety (dose range) of the Licensed Product, and to determine the dose range of the Licensed
Product, which clinical study is typically well controlled and closely monitored and intended to obtain statistical significance.

 

1.25
Phase II Clinical Study

 

A
controlled clinical study in humans of a Licensed Product that is conducted in accordance with FDA guidelines for conduct of a
Phase Il clinical study to evaluate the effectiveness of the Licensed Product for a particular indication or indications in patients
with the disease or condition under study, and to determine the common short-term side effects and risks associated with the Licensed
Product, which clinical study is typically well controlled and closely monitored and intended to obtain statistical significance.

1.26
Phase II Clinical Study

 

An
expanded controlled and/or uncontrolled clinical study in humans of a Licensed Product that is performed after preliminary evidence
from Phase Il studies suggesting effectiveness of the Licensed Product has been obtained, which study is intended to gather additional
information about Licensed Product effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of
the Licensed Product, and to provide an adequate basis for physician labeling. Phase Ill Clinical Studies are used to support
an application for Regulatory Approval submitted to a Regulatory Authority in the Territory.

 

1.27
Regulatory Approval

 

The
approval or authorization (including the approval of an NDA, where applicable) by any Regulatory Authority in the Territory that
is necessary for the import, manufacturing, distribution, marketing, promotion, and sale of Licensed Product(s) in the Territory.

 

1.28
Regulatory Authority

 

China
Food and Drug Administration (CFDA).

 

1.29
Research Inormation

 

All
information developed or generated by Licensor in respect of the Licensed Compounds, including Research Inventions, technical
information and data, pre-clinical and clinical information and data, process and product information, formulas, formulations,
compositions, materials (including biological and chemical materials), devices, research information and data, manufacturing information
and data, computer programs, test results, business plans, accounting records, research and development reports, supplier information,
marketing and sales information, other business and financial information, trade secrets and know-how, and any record of the above,
including writings, computer records and programs, photographic films, drawings, illustrations, pictures, video recordings, audio
recordings, models and samples.

 

1.30
Research Inventions

 

Any
inventions or improvements (whether or not patentable) conceived, reduced to practice, made, developed or generated by Licensor
others working under Licensor's direction or control.

 

1.31
Sub-license Agreement

 

An
agreement between Licensee and a Sub-licensee that complies with the provisions and requirements of Section 3.3 below.

1.32
Sub-licensee

 

Any
Person to which Licensee shall have granted a sublicense of the rights granted to Licensee by Licensor hereunder.

 

1.33
Technical Information

 

All
information (including all Confidential Information of Licensor, data, materials, devices, research reagents and results, formulas,
drawings, samples, processes, designs, submitted manuscripts, draft manuscripts, information contained in laboratory notebooks
and records, process information, clinical protocols and results, and other information and know-how) pertaining to the isolation,
identification, synthesis, manufacture or use of a Licensed Compound, a Research Invention and/or a Licensed Product (but expressly
excluding information related to any active pharmaceutical ingredient in a Combination Product that is not itself a Licensed Product)
in the Field (a) that is owned or Controlled by Licensor as of the Effective Date; or (b) that Licensor comes to own or Control
at any time during the term of this Agreeme0nt independent from, and not in connection with or in the course of performing under,
this Agreement. The term "Technical Information" shall expressly exclude Research Information.

 

1.34
Territory

 

China
(including mainland, Taiwan, Hong Kong and Macau.

 

1.35
Additional Definitions

	Defined
    Term	 	Section
    in which Defined
	 	 	 
	 Antigen
    Express	 	 Preamble
	 Agreement	 	 Preamble
	 CDA	 	 5.1
	Combination
    product	 	1.23.5
	Board	 	Recitals
	Common
    Stock	 	 
	Competitive
    Product	 	4.2.4(a)
	Disclosing
    Party	 	1.9
	Effective
    Date	 	Preamble
	 	 	 
	FDA	 	1.22
	Heads	 	14.10.2
	 	 	 
	Licensee	 	Preamble
	Licensee
    Indemnitee	 	10.2
	Licensor	 	Preamble
	Licensor
    Indemnitee	 	10.1
	Losses	 	10.1
	Note	 	 
	Panel	 	14.10.3
	Party/Parties	 	Preamble
	Proposed
    Public Disclosure	 	5.6
	Purchase
    Agreement	 	Recitals
	Receiving
    Party	 	1.9
	Research
    Term	 	 
	Royalty
    Reporting Period	 	4.2.6
	Securities	 	 
	Shortfall
    Payment	 	3.4
	Third-Party
    Claim	 	7.3

 

2.
RIGHTS AND RESPONSIBILITIES

2.1
Licensee

 

The
Licensee and its Sub-licensee have the same rights that are granted by the Licensor described in this Agreement in performing
the research, development, production of the Licensed Compounds for product, product commercialization and distribution in the
Field in the Territory. In order to accelerate the process of drug development, the Licensee and its Sub-licensee can chose the
best suitable country or area outside of the Territory to conduct the clinical trials including establishment of global multi-center
clinic trial. The Licensee will provide 100% of the funding to support the clinical development and commercialization of Licensed
Compounds, alone and in combination therapy, in the Territory, including, without limitation, funding of the Phase I Clinical
Study, the Phase Il Clinical Study and the Phase Ill Clinical Study for the treatment of prostate cancer, which will be conducted
in compliance with ICH guidelines. The Licensee is responsible for obtaining the Regulatory Approval from the Chinese Food and
Drug Administration ("CFDA") for the Licensed Compounds as monotherapy and/or combination therapy for the immunotherapeutic
treatment of prostate cancer in the Territory. The Licensee agrees to provide 100% of the funding required to manufacture, market,
sell, and distribute the Licensed Compounds for the Field in the Territory. The Licensee has the right to file New Drug Applications
(NDA) and to file Marketing Authorization Applications (MAA) with the CFDA and has the right to produce the product in the Territory.

2.2
Licensor

 

Subject
to compliance by the Licensee with its funding and other obligations under this Agreement, the Licensor shall support the research,
development and commercialization of the Licensed Compounds to be performed by Licensee in the Territory. The support from the
Licensor includes, but is not limited to, sharing study data and information and providing various consulting, operational and
management strategies. The Licensor shall ensure compliance by Antigen Express, Inc. with its obligations under the Clinical Trial
Collaboration and Supply Agreement with Merck Sharp & Dohme B.V. dated June 28, 2017 in respect of a combination therapy (AE37+check
point inhibitor) for breast cancer.

  

The
Licensor will provide the Licensee with all documentations, materials, and files to support the applications for certificates
for all clinical trials and New Drug Application (NDA) and to file Marketing Authorization Application (MAA) in the Territory,
all as contemplated by this Agreement. The Licensor shall provide reasonable cooperation to the Licensee in respect of the clinical
studies in the Territory required by this Agreement.

3.
LICENSE AND SUB-LICENSES

3.1
Exclusive License Granted to Licensee

 

Subject
to the terms and conditions of this Agreement, Licensor hereby grants to Licensee, and Licensee accepts, an exclusive (even as
to Licensor and its Affiliates), royalty-bearing license, including the right to grant sub-licenses through multiple tiers of
sub-licensing (subject to Section 3.3 below), under Licensed Know-How and Licensed Patent Rights, to make, have made, use and
import Licensed Compounds, Research Information and Licensed Products, and to produce, distribute, promote, market, sell and offer
for sale Licensed Products, in the Field in the Territory.

 

3.2
Retained Rights of Licensor

 

Notwithstanding
anything to the contrary in Section 3.1, Licensor and its Affiliates retain the right to use and practice the Licensed Know-How
and Licensed Patent Rights: (a) for development and commercialization of Licensed Compounds, Research Information and/or Licensed
Products in the Field, either themselves, or with or for the benefit of a third party, globally, except in the Territory; and
(b) for research, teaching and educational purposes (excluding research and/or development of Licensed Compounds, Research Information
and Licensed Products for use and/or exploitation in the Field in the Territory on behalf of any Person other than Licensee or
its Affiliates). Licensee shall not utilize the Licensed Compounds, Licensed Know-How, Licensed Patent Rights, Research Information,
Research Inventions, or Technical Information for any purpose other than the production, distribution, and sale of Licensed Products
in the Field in the Territory in accordance with this Agreement.

 

3.3
Sub-licenses Granted by Licensee

 

Each
Sub-license Agreement executed by Licensee or any Sub-licensee shall be subject and subordinate to the terms and conditions of
this Agreement, and shall contain terms and conditions consistent with those in this Agreement, sufficient to enable Licensee
to comply with this Agreement and requiring the Sub-licensee to comply with the relevant terms and conditions of this Agreement,
including this Section 3.3 and Sections 4.22, 4.2.5, 4.2.6, 9.1 and 10.5, and Article 5. Subject to Licensor's obligations set
forth in Article 5, Licensee shall provide Licensor with an accurate and complete copy of any Sub-license Agreement within seven
(7) days of entering into such Sub-license Agreement. Unless otherwise agreed in writing by Licensor, any sub-license of the rights
granted under Section 2.1 shall terminate on any termination or expiration of this Agreement.

3.4
Diligence Obligations

 

During
the term of this Agreement, Licensee shall use commercially reasonable efforts to develop and commercialize Licensed Products
in the Territory, either itself or through its Affiliates and Sub-licensees. To that end, Licensee agrees to provide Licensor
with a detailed time & events schedule (the "Timeline") for the commercial development of the Licensed Products
in the Field in the Territory. Licensor reserves the right to review and approve the Timeline to ensure the global regulatory
and commercial integrity of the development program. Without limiting the generality of the foregoing, beginning eighteen (18)
months from the Effective Date, Licensee (itself or through its Affiliates and/or Sub-licensees) shall initiate the Phase Il Clinical
Study in the Field. Licensee agrees to expend a minimum of Five Hundred Thousand United States Dollars ($500,000 USD) during this
18 month period to complete the regulatory requirements for chemistry, manufacturing & control (CMC), toxicology, and a Phase
I Clinical Study necessary to initiate the Phase Il Clinical Study. From the initiation of a Phase Il Clinical Study, and for
three (3) years thereafter, Licensee agrees to expend a minimum of Five Hundred Thousand United States Dollars ($500,000 USD)
annually toward the clinical development of the Licensed Products in the Field in the Territory, with an understanding that a
Phase Ill Clinical Study will be initiated at the end of this 3-year period. Thereafter, and until the commercial launch of Licensed
Products in the Field in the Territory, Licensee agrees to expend a minimum of One Million United States Dollars ($1,000,000 USD)
annually to complete the Phase Ill Clinical Study, regulatory submissions, and other product development activities required by
the CFDA for regulatory approval and commercialization of the Licensed Products in the Field in the Territory.

 

Each
six (6) months, Licensee shall provide Licensor with a comprehensive and detailed written report summarizing its efforts under
this Section 3.4 in the prior six (6) month period, comprising of a listing of research and development activities. The report
will include a progress report, with any updates to the Timeline for key events in the research and development of Licensed Products
in the Field in the Territory.

 

Licensee
agrees to share all clinical data and reports with Licensor to support the submission of global regulatory filings regarding the
safety and efficacy of the Licensed Products.

 

In
the event that Licensee fails to expend the monetary amount set forth in this Section 3.4 in any given 12-month period, Licensee
may cure such default by paying to Licensee the difference between the agreed-upon amount, and the amount actually expended by
Licensee in that 12-month period ("Shortfall Payment"); provided that such Shortfall Payment shall be delivered within
thirty (30) days after Licensee is required to deliver the WTitten report evidencing such default. If Licensee fails to cure such
default by making such Shortfall Payment, Licensor shall have the right to either terminate this Agreement, including the licenses
granted hereunder, or convert the exclusive licenses granted in Section 3.1 to non-exclusive licenses, by written notice to Licensee.
In the event that any dispute arises under this Section

3.4,
such dispute shall be resolved in accordance with Section 14.10.

 

3.5
Reservation of Rights

 

Licensor
reserves all rights not expressly granted in this Agreement, and no rights or licenses are granted in this Agreement except as
expressly set forth herein, whether by implication, estoppel or otherwise.

4.
PAYMENTS, ROYALTIES AND STOCK

In
consideration for the license rights and other rights granted by Licensor to Licensee under this Agreement, on the date of execution
of this Agreement, Licensee shall pay to Licensor a non-refundable, non-creditable upfront payment of Seven Hundred Thousand United
States Dollars ($700,000 USD), by wire transfer to the Licensor account designated in Exhibit B annexed hereto. In addition, in
consideration for the license rights and other rights granted by Licensor to Licensee under this Agreement, Licensee shall pay
the following milestone payments to Licensor, upon achievement of the corresponding milestone events:

4.1
Milestone Payments

 

4.1.1
Upon achievement of the recited milestone events by the Licensee, Licensee shall pay the following milestone payments to Licensor:

(a)
One Million United States Dollars ($1,000,000) USD, upon completion of the Phase Il Clinical Study of a Licensed Product in the
Territory as defined by locking of the applicable clinical study database;

 

(b)
One Million United States Dollars ($1,000,000 USD), upon completion of the Phase Ill Clinical Study of a Licensed Product in the
Territory as defined by locking of the applicable clinical study database;

 

(c)
Two Million United States Dollars ($2,000,000 USD), upon first NDA or MAA (or equivalent) approval in the Territory in respect
of a Licensed Product.

 

4.1.2
Licensor shall be notified by the Licensee promptly upon achievement any of the above-specified milestone events, and Licensee
shall pay Licensor the specified corresponding milestone payment within thirty (30) days after achieving the applicable milestone
event.

4.2
Royalties

 

4.2.
I Subject to Sections 4.2.2, 4.2.3 and 4.2.4, as further consideration for the license rights granted to Licensee under this Agreement,
and in addition to any milestone payments payable to Licensor pursuant to Section 4.1, during the term of this Agreement Licensee
shall pay to Licensor an intellectual property royalty payment in an amount equal to Ten Percent (10%) of Net Sales within the
Territory of Licensed Products. The Parties acknowledge and agree that the royalty rates and structure set forth in this Section
4.2 (including the reduction in royalty rates provided for herein) (a) have been adopted after good faith negotiation and for
the convenience of the Parties; and (b) are payable whether or not a Licensed Product is covered by Licensed Patent Rights.

4.2.2
Notwithstanding anything to the contrary in this Section 4.2, Licensee shall have no obligation to pay royalties to Licensor on
sales of Licensed Products between Licensee and its Affiliates or Sub-licensees, where such Licensed Products will be resold to
an unrelated third party; provided that, in such instances, the obligation to pay royalties hereunder shall arise upon the sale
(or resale) of Licensed Products by Licensee's Affiliate or Sub-licensee to unrelated third parties. If, however, Licensee's Affiliate
or Sub-licensee is the commercial end user of such Licensed Products (for uses other than research, development or testing purposes),
then royalties shall be due hereunder on the greater of (a) Licensee's Net Sales resulting from Licensee's sale of such Licensed
Products to such

Affiliate
or Sub-licensee, and (b) Net Sales determined using the average sales price of Licensed Products in arms' length sales to unrelated
third parties during the current Royalty Reporting Period or, if there were no such sales during such Royalty Reporting Period,
during the most recent Royalty Reporting Period when there were such sales.

 

4.2.3
In the event that Licensee is obligated to pay a royalty under one or more third-party license agreements with respect to a Licensed
Compound component of a Licensed Product, then Licensee may reduce the royalty rate payable to Licensor (as set forth in Section
4.2.1) by an amount equal to one-half the total royalties payable to such third-party licensors; provided, however, that application
of this Section 4.2.3 shall not reduce the royalty rate payable by Licensee to less than Four Percent (4.0%).

 

4.2.4
Upon:

 

(a)     
the date of first Approved Sale in the Territory of a Competitive Product (wherein the term "Competitive Product" is
defined as any product containing as an active pharmaceutical ingredient one or more Licensed Compounds, which product is has
the same pharmaceutical purpose as a Licensed Product) or a generic version of a Licensed Product, if a Licensed Product was covered
by Licensed Patent Rights in the Territory at or prior to the time of such Competitive Product Approved Sale, but is no longer
covered by Licensed Patent Rights (whether due to expiration, abandonment, a final, Lin-appealable adjudication of invalidity
or otherwise); or

(b)    
the date of first Approved Sale of a Competitive Product in the Territory, if a Licensed Product was not covered by Licensed Patent
Rights in such country at or prior to the time of such sale;

 

the
royalty rate payable by Licensee with respect to such Licensed Product shall be reduced to Four Percent (4.0%), unless and until
such Licensed Product shall subsequently be covered by Licensed Patent Rights in the Territory.

4.2.5
Licensee shall keep, and shall obligate each of its Affiliates and Sub-licensees, if any, to keep, full and accurate books of
account containing all particulars that are reasonably necessary for the purpose of calculating the royalties and other amounts
payable by Licensee to Licensor hereunder. Without limiting the foregoing sentence, Licensee shall keep full and accurate records
of gross sales revenues from and Net Sales of Licensed Products. Such books, records and pertinent supporting data of Licensee,
its Affiliates and Sub-licensees that are necessary to verify the payment of royalties and other amounts in compliance with this
Agreement shall be available for inspection by Licensor during normal business hours of Licensee, for three (3) years following
the end of the calendar half year to which they pertain (but Licensor may not perform such inspection more than once per twelve
(12)-month period). Any such inspection shall be performed by an independent certified public accountant retained by Licensor
(and reasonably acceptable to Licensee) for the sole purpose of verifying reports and payments by Licensee hereunder.

4.2.6
Within six (6) months after the first day of January and July of each year during the term of this Agreement (including the first
day of the half year following the expiration or termination of this Agreement), and beginning after the first commercial sale
of a Licensed Product in the Territory, Licensee shall deliver to Licensor a true and accurate reports of any royalty amounts
payable to Licensor under this Agreement in relation to Net Sales made by or reported to Licensee in the preceding calendar half
year (the "Royalty Reporting Period"), as well as other information that is pertinent to calculation of such royalties
(e.g., a report due on May 31 shall pertain to the preceding period January I through March 31). Licensee shall require its Affiliates
and Sub-licensee to report to Licensee information as reasonably necessary to comply with Licensee's obligations under this Agreement.
These reports shall include at least the following:

(a)     
the calendar half year period covered by the report;

 

(b)    
a description of each Licensed Product sold by Licensee, and each Licensed Product sale reported to Licensee by its Affiliates
and Sub-licensees, during such calendar half year;

 

(c)     
the total quantity of each Licensed Product sold by Licensee, and each Licensed Product sale reported to Licensee by its Affiliates
and Sub-licensees, during such calendar half year, by country (or by region, but only if regional reporting is consistent with
the Net Sales information kept by Licensee in its normal course of business);

(d)    
gross sales revenues, deductions from gross sales and Net Sales made or reported during such calendar half year, by Licensed Product
and by country (or by region, but only if regional reporting is consistent with the Net Sales information kept by Licensee in
its normal course of business);

(e)     
names and addresses of all Affiliates and Sub-licensees of Licensee involved in the distribution or sale of Licensed Products
in such calendar half year, if Licensee has not previously provided such information to Licensor; and

(f)      
total royalties payable to Licensor for such calendar half year.

4.2.7
Simultaneously with the delivery of each half year royalty report, Licensee shall pay to Licensor the royalty calculated for the
Royalty Reporting Period covered by such report. If no royalties are due, it shall be so reported by Licensee. Each such royalty
payment shall be made in Dollars by wire transfer of immediately available funds to the Licensor account designated Exhibit B
annexed hereto (or such other account as may be designed in writing by the Licensor from time-to-time). In the event that conversion
from any foreign currency shall be required, such conversion shall be at the average rate of exchange published in The Wall Street
Journal for the calendar half year to which the payment pertains. Any amount not paid when due hereunder shall accrue interest
at the lesser of one and one-half percent (l .5%) or the maximum rate allowed by law.

4.3
Withholding of Taxes

 

Each
Party shall comply with applicable tax authority guidelines regarding filing and reporting for income tax purposes. Neither Party
shall treat their relationship under this Agreement as a partnership or as a pass-through entity for tax purposes. Licensee shall
be responsible for and shall collect all governmental and regulatory sales and other taxes, charges, duties and fees that are
due and owing upon sales of Licensed Products by Licensee and its Affiliates and Sub-licensees to third parties, excluding taxes
on Licensor's net income. Any withholding taxes shall be paid by Licensee at the rate(s) required by applicable law, and shall
be paid to the appropriate fiscal or tax authorities on behalf of Licensor. Licensee shall promptly provide to Licensor receipts
from the government or taxing authority evidencing payment of such taxes, if available, or other proof of payment if official
receipts are not available, and shall provide reasonable assistance to Licensor to obtain tax credits therefor. To the extent
Licensor actually uses any such tax credits for withholding taxes, as determined by it in its reasonable discretion, Licensor
shall refund to Licensee the amount of such credits used; provided that Licensor shall not be required to refund any payment of
such withholding tax to Licensee to the extent such payment would result in Licensor being in a worse after-tax economic position
(as determined by Licensor in its reasonable judgment) than if such withholding tax had never been imposed.

5.
CONFIDENTIALITY; PUBLICATION

Licensee
shall ensure that its employees and those of its Affiliates and Sub-licensees who have access to any Technical Information of
Licensor agree in writing to be bound by appropriate confidentiality and non-use obligations which are no less stringent than
those imposed on Licensee hereunder.

5.1
Confidential Information

 

Except
to the extent expressly authorized by this Agreement or otherwise agreed by the Parties in writing, each Party shall treat Confidential
Information of the other Party in accordance with that certain Confidential Disclosure Agreement by and among the Parties (the
"CDA") dated as of the I st day of September, 2016.

 

5.2
Permitted Disclosures

 

Notwithstanding
the foregoing Section 5.1, the Receiving Party may disclose Confidential Information of the Disclosing Party, and Licensee may
disclose Technical Information to the extent such disclosure is reasonably necessary to:

5.2.1
file or prosecute patent applications, or in connection with patent interferences or patent oppositions, as contemplated by this
Agreement;

 

5.2.2
prosecute or defend litigation, as contemplated by this Agreement;

 

5.2.3
file documents required by applicable law, including filings with the U.S. Securities and Exchange Commission and comparable governmental
agencies applicable to the Parties, with tax authorities, and with Regulatory Authorities as contemplated by this Agreement;

 

5.2.4
exercise rights granted hereunder to the Receiving Party and perform obligations of the Receiving Party hereunder; and

 

5.2.5
otherwise comply with applicable governmental laws and regulations, court orders and legal requirements.

 

5.3
Obligations of the Receiving Party

 

In
the event that a Receiving Party is required to, or shall deem it necessary to, disclose Confidential Information of the Disclosing
Party pursuant to Section 5.2, then except as otherwise expressly set forth herein, the Receiving Party (a) shall, to the extent
practicable, give reasonable advance notice to the Disclosing Party of such disclosure, and (b) if requested by the Disclosing
Party, use reasonable efforts to cooperate with the Disclosing Party's efforts to secure confidential treatment of such information.
In any event, Licensee and Licensor shall take all reasonable precautions to avoid any unauthorized use or disclosure of Confidential
Information or materials of the other Party, and Research Information, Licensed Know-How or confidential Licensed Patent Rights.

 

5.4
Permitted Disclosure by Licensee

 

Notwithstanding
the foregoing Sections 5.2 and 5.3, Licensee may disclose the existence (if not publicly disclosed previously in accordance with
this Article 5 or Section 14.5) and/or the terms of this Agreement (a) in confidence, to its lenders, investment bankers, investors
and potential investors, attorneys, financial advisors and other financial institutions of its choice for purposes of financing
the business operations of Licensee, and (b) subject to appropriate written obligations of confidentiality and non-use, to a potential
acquirer of all or substantially all of the assets of Licensee related to the subject matter of this Agreement. Notwithstanding
the foregoing Sections 5.2 and 5.3, Licensee may disclose any and all Licensed Know-How and Licensed Patent Rights (y) to Licensee's
Affiliates; its actual and potential Sublicensees; and its actual and potential business partners (and any of the directors, officers,
employees, advisors, consultants, distributors and agents of the foregoing recipients set forth in this clause (y)); provided,
however, that Licensee shall impose upon such recipients described in clause (y) appropriate written obligations of confidentiality
and non-use; and (z) to Regulatory Authorities in the Territory. Licensee may publicize and/or disclose the execution of this
Agreement and further information and developments regarding this Agreement (including in a press release(s)), subject to Section
14.5.

5.5
Survival

 

The
foregoing restrictions and obligations imposed by this Section 5 shall survive expiration or termination of this Agreement for
whatever reason.

5.6
Publication

 

Licensor
and Licensee recognize the importance to scientists of the ability to publish and present clinical trial results, and agree that
subject to the terms of this Section 5.6, Licensee shall have the right to do so. Licensor and Licensee also recognize that patent
rights in and outside the Territory can be jeopardized by submission of a manuscript or by public disclosure (including a presentation
at a scientific conference) in or outside of the Territory prior to the filing of suitable patent applications. Therefore, Licensee
agrees that, before submission to a publisher or disclosure to any other third party (including a presentation at a scientific
conference), each proposed publication or public presentation containing any Licensed Know-How pertaining to Licensed Compounds,
Research Information and/or Licensed Products (a "Proposed Public Disclosure") shall be submitted to Licensor for review
in connection with preservation of patent rights, to ensure (a) that none of Licensor's Confidential Information or Research Information
is included in the Proposed Public Disclosure, and (b) that such Proposed Public Disclosures and submissions to publishers containing
such Licensed Know-How are consistent with Licensor's intellectual property, development and commercialization plans and objectives
in the Territory. Licensor shall have sixty (60) days from receipt of such Proposed Public Disclosure to review it, which review
period may be extended for an additional thirty (30) days in the event that Licensee provides substantial and reasonable need
for such extension. During such period, as extended, Licensor may request the removal of any of its Confidential Information or
any Research Information that is contained in the Proposed Public Disclosure and, in the event Licensor determines a need to delay
the Proposed Public Disclosure to protect or preserve patent rights, Licensor shall request such delay in writing within such
review period (as extended), and Licensee will delay such Proposed Public Disclosure for an additional period of up to one hundred
twenty (120) days to permit Licensor to file a patent application(s). If requested by Licensor, Licensee shall remove from such
Proposed Public Disclosure any of Licensor's Confidential Information and/or or Research Information (as applicable). Scientists
employed by Licensor or Licensee will be expected to treat matters of authorship in a proper, collaborative spirit, giving credit
where it is due and proceeding in a manner that complies with this Section 5.6 and fosters cooperation and communication.

6.
INTELLECTUAL PROPERTY RIGHTS; OWNERSHIP

6.1
Ownership

 

Licensor
owns all patents and other intellectual properties licensed to Licensee pursuant to this Agreement. Any extant intellectual property
rights in respect of the Licensed Compounds, Research Information, the Licensed Know-How, the Licensed Patent Rights, and any
intellectual property rights that may be discovered, identified, developed, generated, modified, obtained or derived by Licensor
or Licensee in future activities pertaining to the Licensed Compounds, Research Information, the Licensed Know-How, the Licensed
Patent Rights and Licensed Products will be solely and exclusively owned by Licensor.

6.2
Patent Prosecution

 

Licensee
shall have the full right and authority to, and shall use commercially reasonable efforts to, prepare, file, prosecute and maintain
all Licensed Patent Rights in the Field in the Territory (which Licensed Patent Rights shall, for greater certainty, be the sole
and exclusive property of Licensor), in consultation with Licensor, using counsel of its choice reasonably acceptable to Licensor.
To the extent practicable, Licensee shall provide Licensor with drafts of substantive prosecution papers to be submitted to patent
offices in the Territory (with reasonable advance notice, so that Licensor may have an opportunity to comment in a timely fashion),
and Licensee shall give suggestions from Licensor reasonable consideration (but without any obligation to incorporate or accept
such suggestions). Licensee shall provide Licensor with copies of all substantive prosecution papers submitted to or received
from patent offices in the Territory, including patent applications and amendments thereto, relating to the Licensed Patent Rights.
Licensor shall cooperate with and assist Licensee in connection with such preparation, filing, prosecution and maintenance of
Licensed Patent Rights, at no charge to Licensee for the time of Licensor's employees; provided that Licensee shall reimburse
Licensor for its reasonable out-of-pocket expenses incurred in connection therewith. Licensee shall not abandon or discontinue
prosecution of any patent application or patent within the Licensed Patent Rights without giving Licensor at least ninety (90)
days' written notice prior to any applicable deadline; provided, however, Licensee may take ministerial and non-material procedural
actions regarding the Licensed Patent Rights without providing prior written notice to Licensor. If Licensee provides such notice,
Licensor may continue prosecution and/or maintenance of such abandoned or discontinued patent application or patent within the
Licensed Patent Rights at its sole discretion and expense, and such thereafter such patent application or patent within the Licensed
Patent Rights shall no longer be included in the Licensed Patent Rights hereunder.

 

6.3
Expenses

 

6.3.1
Patent Expenses. All costs incurred by Licensee for patent and patent application preparation, filing, prosecution, issuance and
maintenance in connection with patent applications and patents within the Licensed Patent Rights in the Territory shall be borne
solely by Licensee.

 

6.3.2
Technology Transfer Expenses. To the extent that members of the Licensor's executive management team, including, without limitation,
Dr. Eric von Hofe, PhD, the President of Antigen Express, Inc., are required to travel to the Territory from time-to-time in order
to facilitate the performance of this Agreement by the Parties, the Licensee shall reimburse the Licensor for any and all customary
and reasonable travel expenses incurred in that respect.

7.
INTELLECTUAL PROPERTY PROTECTION

7.1
Notice of Suspected Infringement of Licensed Patent Rights

Each
Party shall inform the other Party of any threatened or suspected infringement of any Licensed Patent Right in the Field in the
Territory coming to its attention, or of the institution of any third-party action or proceeding that may adversely impact any
Licensed Patent Right in the Field in the Territory.

7.2
Control of Infringement Actions

 

7.2.1
Licensee shall have the first right, but not the obligation, at its sole expense, to take action in its own name, and in Licensor's
name as a nominal party if reasonably necessary, against any such alleged infringer, or in any such third-party action or proceeding.
In such event, after each Party has recovered all of its costs and expenses from such action or proceeding, Licensee shall be
entitled to all remaining recoveries in any such action or proceeding; provided that any such remaining recoveries shall be deemed
to be Net Sales, and Licensee shall pay Licensor royalties on such Net Sales at the rates provided in this Agreement. Licensor
will assist Licensee, at Licensee's expense, in such actions or proceedings, if reasonably requested by Licensee or required by
law. Licensor shall have the right to participate and to be represented in any such action or proceeding by its own counsel, at
its own expense. In the event that any Licensed Patent Rights that are the subject of such action or proceeding have been sublicensed
by Licensee hereunder, any such Sub-licensee shall also have the right to participate in such prosecution or defense. Licensee
shall not settle any such action or proceeding without Licensor's written consent, not to be unreasonably withheld or delayed,
if such settlement would, in Licensor's reasonable judgment, adversely affect the scope or validity of the Licensed Patent Rights.

7.2.2
If Licensee, its Affiliate or Sub-licensee elects not to take action within six (6) months after being informed of such alleged
infringement or such third-party action or proceeding (or, if shorter, within thirty (30) days before any applicable deadline),
Licensor may take action, at its sole expense, and shall be entitled to all damages assessed in any such action or proceeding.

7.2.3
The Party undertaking action under either Section 7.2.1 or 7.22 shall keep the other Party informed of the status of the matter
on an ongoing basis.

 

7.3
Notice of a Claim of Infringement by a Third Party

 

In
the event that a third party at any time threatens to or brings suit against Licensee, Licensor, or Licensee's Affiliate(s) or
Sub-licensee(s) alleging infringement of any third-party patent or other intellectual property right due to the research, development,
manufacture, use, sale, offer for sale or importation of any Licensed Compound or Licensed Product in the Field in the Territory
(a "Third-Party Claim"), the Party receiving notification of the Third-Party Claim shall promptly notify the other Party,
enclosing a copy of all pleadings served, if any.

 

7.4
Defense of a Third-Party Claim

 

Licensee
shall have the right, in its discretion, to control the defense of such Third-Party Claim in its own name (and in Licensor's name
as a nominal party, if reasonably necessary), provided that Licensee shall not settle such matter in any way that imposes an unreimbursed
obligation on Licensor without Licensor's consent, not to be unreasonably withheld or delayed, and such defense, including settlement
of the matter (which settlement may, in Licensee's discretion, include obtaining a license from such third party), shall be at
Licensee's own expense and under its direction and control. Licensor, at Licensee's expense, will reasonably assist Licensee in
such defense, if so requested. In addition, Licensor shall have the right to participate and be represented in any defense of
such Third-Party Claim by its own counsel, at its own expense. Any judgments, settlements or damages payable with respect to a
Third-Party Claim shall be paid by Licensee, subject to any claims against the other Party for breach of or for indemnification
under this Agreement, or any other remedies that are otherwise available at law or in equity.

8.
REPRESENTATIONS AND WARRANTIES

8.1
Representations and Warranties of Licensee

 

Licensee
hereby represents and warrants to Licensor, as of the Effective Date, that:

8.1.1
It has the right, power and authority to enter into this Agreement and to perform its obligations hereunder.

8.1.2
This Agreement has been duly executed and delivered by Licensee, and is a legal, valid and binding obligation enforceable against
Licensee in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, arrangement, moratorium and
other laws relating to or affecting creditors' rights generally and equitable principles.

8.1.3
The execution, delivery and performance of this Agreement, and the rights and licenses granted hereunder, do not conflict with,
violate or breach any agreement to which Licensee is a party, and there are no agreements, assignments or encumbrances of Licensee
that are inconsistent with the provisions of this Agreement.

8.1.4
The execution and delivery by Licensee of this Agreement and the performance by Licensee of the obligations under this Agreement
require no governmental or regulatory approvals to be obtained on the part of Licensee, or, if required, Licensee has obtained
or will have obtained such approvals.

8.2
Representations, Warranties and Covenants of Licensor

Licensor
hereby represents, warrants and covenants to Licensee, as of the Effective Date, that:

8.2.1
The Board has granted Licensor all requisite right, power and authority to enter into this Agreement and to perform Licensor's
obligations hereunder and Licensor is fully and lawfully empowered to grant the rights and licenses granted to Licensee herein.

8.2.2
This Agreement has been duly executed and delivered by Licensor, and is a legal, valid and binding obligation enforceable against
Licensor in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, arrangement, moratorium and
other laws relating to or affecting creditors' rights generally and equitable principles.

8.2.3
The execution, delivery and performance of this Agreement, and the rights and licenses granted to Licensee hereunder, do not conflict
with, violate or breach any agreement to which Licensor is a party, and there are no agreements, assignments or encumbrances in
existence to which Licensor is a party that are inconsistent with the provisions of this Agreement. Licensor has not granted,
and will not grant, any license or other right in any of the Licensed Compounds, Licensed Patent Rights, Research Inventions,
or Licensed Know-How that conflicts with any of the licenses or rights granted to Licensee under this Agreement.

8.2.4
Exhibit A sets forth a true and complete list of all patents and patent applications filed on or before the Effective Date
in the Territory that are Licensed Patent Rights, and all such patents and patent applications are owned and Controlled by Licensor.

 

8.2.5
To the best of the Licensor' s knowledge, Information, and belief, no patents within the Licensed Patent Rights are being infringed
by a third party.

 

8.2.6
The Licensor has not recei、red any written notice from any third party, including any Governmental Body, claiming any ownership
interest in the Licensed patent Rights or the Licensed Compounds (whether by inventorship, assignment or otherwise).

 

8.2.7
(a) No lawsuit has been filed against Licensor, nor has any third party threatened writing to file a lawsuit against Licensor,
with respect to the Licensed Compounds, Licensed Products or Licensed Patent Rights; and (b) no patent or patent application within
the Licensed Patent Rights is or has been involved in any reissue, reexamination, interference, opposition or equivalent or similar
proceeding to which Licensor is a party and (c) the Licensed Patent Rights are not subject to any judgments or settlements against
or owed by Licensor.

 

8.2.8
The execution and delivery by Licensor of this Agreement, and the performance by Licensor Of the obligations under this Agreement,
require no governmental or regulatory approvals to be obtained on the part Of Licensor, or, if required, Licensor has obtained
or will obtain such approvals.

 

8.2.9
Licensor has not knowingly failed to disclose to Licensee any material adverse facts regarding (a) communications to or from any
pertinent Regulatory Authority with respect to the Licensed Compounds or Licensed Products; and/or (b) any adverse events or product
recalls or withdrawals with respect to the Licensed Compounds or Licensed Products.

 

8.3
Disclaimer ofWarranties

 

Except
as otherwise expressly set forth in this Article 8, and without affecting either party's obligations under this agreement, neither
licensor nor licensee makes any representation or extends any warranty of any kind, either express or implied, to the other party
with respect to any patent rights, know-how, materials, rights, clinical data or any other subject matter of this agreement, and
each party hereby disclaims all implied warranties, including implied warranties of merchantability, fitness for a particular
purpose and non-infringement, with respect to any and all of the foregoing. Each party hereby disclaims any representation or
warranty that the development, manufacture of commercialization of any licensed product pursuant to this agreement will be successful
or that any particular sales level with respect to the licensed products will be achieved.

9.
REGULATORY MATTERS    

9.1
Export Controls

 

Licensee
and its Affiliates and Sub-licensees shall comply with all applicable laws, rules and regulations of any relevant Governmental
Body in the Territory in the exercise of their rights and discharge of their responsibilities under this Agreement, including
export laws, restrictions and regulations of any United States or foreign agency or authority in the Territory, and will not export
or re-export, or allow or authorize the export or re-export, of any Licensed Compound, Licensed Products, Technical Information,
material, technology or other information it obtains or learns pursuant to this Agreement in violation of this Agreement or of
any such laws, restrictions or regulations in the Territory.

10.
INDEMNIFICATION, INSURANCE AND LIMITATION OF LIABILITY

10.1
Indemnification by Licensee

 

Licensee
shall indemnify, defend and hold harmless Licensor and its Affiliates, and each of their respective employees, officers, directors,
and agents (each, a "Licensor Indemnitee") from and against any and all liability, loss, damage, penalty, expense (including
reasonable attorneys' fees and expenses) and cost (collectively, "Losses") resulting from, arising out of, or relating
to:

 

10.1.1
Licensee's failure to perform its obligations under this Agreement or Licensee's or its Affiliates' or Sub-licensees' negligence
or willful misconduct in the course of such performance;

10.1.2
any and all claims arising from the research, development, use, manufacture, sale, offer for sale, importation, distribution,
marketing and promotion of the Licensed Products in the Territory by Licensee or any of its Affiliates or Sub-licensees; or

10.1.3
a breach by Licensee of its representations and warranties under this Agreement;

provided
that Licensee's obligations under this Section 10.1 shall not apply to the extent such claims, actions or suits result from the
gross negligence or willful misconduct of any Licensor Indemnitee.

10.2
Indemnification by Licensor

 

Licensor
shall indemnify, defend and hold harmless Licensee and its Affiliates and Sub-licensees, and each of their respective employees,
members, officers, directors and agents (each, a "Licensee Indemnitee") from and against any and all Losses resulting
from, arising out of, or relating to:

10.2.1
claims for death of or injury to any person(s) resulting directly from Licensor's negligence or willful misconduct;

 

or

 

10.2.3
a breach by Licensor of its representations and warranties under this Agreement;

provided
that Licensor's obligations under this Section 10.2 shall not apply to the extent such claims, actions or suits result from the
gross negligence or willful misconduct of any Licensee Indemnitee.

10.3
Other Remedies

 

The
foregoing indemnification provisions shall not be exclusive, and shall be in addition to any other remedies available to the Parties
hereunder.

 

10.4
Insurance

 

On
a date that is no later than Licensee's initiation of the first human clinical study of a Licensed Product in the Field in the
Territory, Licensee shall, at its own cost, obtain and carry in full force and effect, during the remainder of the term of this
Agreement and thereafter as provided below, insurance, including comprehensive commercial general liability insurance (including
contractual liability and product liability insurance), in amounts and subject to deductibles customary in the pharmaceutical
industry and sufficient to cover its obligations under this Agreement. Upon the request of Licensor, Licensee shall provide Licensor
with Certificates of Insurance evidencing compliance with this Section 10.4.Licensee shall continue to maintain such insurance
for so long as it, or any Affiliate or Sub-licensee, continues to develop, manufacture or sell Licensed Products in the Field
in the Territory, and thereafter as may be required to cover manufacture or sales of distributed Licensed Products in the Field
in the Territory.

 

10.5
Limitation of Liability

 

In
no event will Licensor or any Licensor Indemintees be liable to any Licensee Indemnitees for any indirect, incidental, special,
exemplary of consequential damages, including lost profits or revenues, arising out of or in connection with this agreement or
any breach thereof whether based in contract, tort (including negligence and strict liability) or otherwise, to the maximum extent
allowed by law.

11.
TERM AND TERMINATION

11.1
Term

 

Unless
sooner terminated in accordance with this Agreement, the term of this Agreement shall commence on the Effective Date and shall
continue, in the territory, until the later of: (a) expiration of the last-to-expire patent within the Licensed Patent Rights
in such country, or (b) the fifteenth (15th) anniversary of the first Approved Sale of a Licensed Product in such country. Following
such expiration, Licensee shall have a fully paid-up license that corresponds to the license granted to Licensee in Section 3.1.

11.2
Termination

 

11.2.1
In the event that Licensee or Licensor breaches a material undertaking or obligation hereunder, the other Party shall have the
right, without limitation of any other right it has under this Agreement on account of such breach, to terminate this Agreement
on ninety (90) days (or, in the case of breach of an obligation to pay money, thirty (30) days) prior written notice specifying
such breach and demanding its cure; provided, however, that if the alleged breaching Party shall cure such breach during such
ninety (90)-day (or thirty (30)-day, if applicable) period, then such notice of termination shall be null and void; otherwise,
this Agreement shall be terminated on and after the expiration of said ninety (90)-day (or thirty (30)-day, if applicable) period.

11.2.2
This Agreement may be terminated at any time by a Party upon the filing or institution of bankruptcy, reorganization, liquidation
or receivership proceedings by or against the other Party, or upon an assignment of a substantial portion of its assets for the
benefit of creditors by such other Party; provided, however, that in the event of any involuntary bankruptcy or receivership proceeding,
such right to terminate shall only become effective if the proceeding is not dismissed within sixty (60) days after the filing
thereof.

11.2.3
At any time after eighteen (18) months following the Effective Date, this Agreement may be terminated in Licensee's sole discretion
on sixty (60) days prior written notice to Licensor.

 

11.3
Effect of Termination or Expiration

 

11.3.1
Termination of this Agreement under any provision herein shall not affect the obligation of Licensee to pay Licensor any royalty
or other payments which have accrued and are unpaid as of the date of termination, nor shall the same prejudice any other accrued
right of Licensor or Licensee under this Agreement. For the sake of clarity, if a payment obligation has not accrued as of the
effective date of termination of this Agreement, then, except as expressly set forth herein, any subsequent event or achievement
that would have resulted in accrual of such payment obligation — if the Agreement had not been terminated — shall
have no effect on any payment(s) hereunder. Within ninety (90) days after termination, Licensee shall render to Licensor a written
statement of the kind required by Section 4.2.6 hereof with respect to any due and unpaid royalties, and shall accompany such
a statement with payment to cover same.

11.3.2
In the event of termination of this Agreement, other than a termination of this Agreement by Licensee pursuant to Section 11.2.3
or a termination of this Agreement by Licensor pursuant to Section 11.2.1 or Section 11.2.2, Licensee, its Affiliates and Sublicensees
shall be entitled, for a period of twelve (12) months thereafter, to sell Licensed Products existing or being manufactured on
the date of termination; provided that Net Sales from sales of such Licensed Products shall be subject to royalty payments under
Section

4.2.

11.3.3
If either party has a right to terminate this Agreement pursuant to Section I I .2.1 or 11.2.2, then such party may elect (in
its sole discretion) to do one of the following: (a) terminate this Agreement and retain its right to pursue any and all remedies
permitted at law or in equity (including contract damage remedies), or (b) continue the Agreement while simultaneously pursuing
any and all remedies permitted at law or in equity (including contract damage remedies). Maybe we could suspend payments until
adjudication.

 

11.4
Survival

 

Expiration
or termination of this Agreement, whether in whole or in part, shall not relieve the Parties of any obligation accruing prior
to such expiration or termination. Any expiration or termination of this Agreement shall be without prejudice to the rights and
the legal and equitable remedies of the Parties accrued or accruing under this Agreement prior to expiration or termination, subject
to the terms and conditions of this Agreement (including, for the avoidance of doubt, the right to enforce the terms and conditions
set forth herein without terminating this Agreement, and further including any obligations of a Party that are expressly identified
in this Agreement as surviving, or that by their nature or context logically survive, termination, relinquishment or expiration
of this Agreement). Without limiting the foregoing sentence, the provisions of Article 1 (to the extent definitions are embodied
in the following listed Articles and Sections of this Agreement) and Articles 5, 10 and 13, and Sections 6.1, 11.3, 14.5, 14.6,
14.9, 14.10 shall survive any expiration or termination of this Agreement. Except as set forth in this Article I l, upon termination
or expiration of this Agreement all other rights, licenses and obligations of the Parties shall cease.

12.
ASSIGNMENT

Neither
Party shall have any right or ability to assign or transfer this Agreement or any obligations or benefit under this Agreement
(whether by operation of law or otherwise) without the written consent of the other Party (and any unauthorized purported assignment
will be void). Any Change of Control of Licensee shall be deemed an assignment of this Agreement for purposes of this Section.
Notwithstanding the foregoing Licensee may assign this Agreement, without the consent of Licensor, to an Non-Afflliate Acquirer
in connection with the transfer or sale of all or substantially all of its assets or business to which this Agreement relates
to such Non-Affiliate Acquirer, or in the event of its merger or consolidation with, acquisition by, or sale to such a Non-Affiliate
Acquirer; provided that such Non-Affiliate Acquirer (a) agrees in writing to be bound by the terms and conditions of this Agreement;
and (b) has the financial and other resources to perform its obligations under this Agreement. Subject to the foregoing, this
Agreement will be binding upon and inure to the benefit of the Parties and the successors and permitted assigns of Licensee and/or
Licensor.

13.
NOTICES AND ADDRESSES

13.1
Delivery of Notices

 

Any
written communication, notice, report or payment shall be deemed to be sufficiently given when delivered in person, or sent by
confirmed facsimile, or two (2) days after being sent by internationally recognized overnight courier (e.g., FedEx, DHL, etc.),
if addressed and sent to a Party at its address set forth below.

 

	 	If
    to Licensor:	 
	 	Generex
    Biotechnology Corporation	 
	 	4145
    North Service Road	 
	 	Suite
    200	 
	 	Burlington,
    Ontario, Canada L7L 6A3	 
	 	Attentions	Mark
    A. Fletcher	 
	 	 	Executive
    Vice-President & General Counsel	 
	 	 	mfletcher@generex.com	 
	 	 

                    
	 
	 	If
    to Licensee:	 
	 	Shenzhen
    BioScien Pharmaceuticals CO. LTD.	 
	 	 	 
	 	NAME
    ADDRESS: Room 311, First Building, Shenzhen Overseas Venture Park (Longgang), Shenzhen 518116, China
	 	Email:	2575962704@qq.com

 

13.2
Change of Address

 

Either
Party may change its mailing address for the purpose of this Agreement by giving the other Party notice of such change in accordance
with Section 13.1 at least fifteen (15) days prior to the date upon which the change is to become effective.

 

14.
MISCELLANEOUS

Agreement
 

 

14.1
Entire Agreement

 

This
Agreement constitutes the entire understanding between the Parties with respect to the subject matter hereof, and except for the
CDA, which shall continue in full force and effect with respect to any disclosures by a Party made prior to the Effective Date,
the Option Agreement, and the Purchase Agreement, this Agreement shall supersede and replace all prior agreements, understandings,
writings and discussions between the Parties relating to said subject matter.

 

14.2
Amendment; Waiver

 

This
Agreement may be amended, and any of its terms or conditions may be waived, only by a written instrument executed by Licensor
and Licensee or, in the case of a waiver, by the Party waiving compliance. The failure of either Licensor or Licensee at any time
or times to require performance of any provision hereof shall in no manner affect its rights to enforce the same at a later time.
No waiver by either Party of any condition or term in any one or more instances shall be construed as a further or continuing
waiver of such condition or term or any other condition or term.

14.3
Titles; Captions

 

All
titles and captions in this Agreement are for convenience only, and shall not be interpreted as having any substantive meaning.

 

14.4
Independent Contractors

 

Except
as set forth in Article 8, nothing in this Agreement authorizes Licensee or Licensor to act as agent for the other Party as to
any matter. Licensee and Licensor are not Affiliates of one another; and their relationship is that of independent contractors.
Nothing in this Agreement will be deemed to create an agency, joint venture, amalgamation, partnership, employment, franchise,
fiduciary of similar relationship between them.

14.5
Publicity and Disclosure

 

Except
as set forth in Article 5, neither Licensor nor any of its Affiliates shall use the name of Licensee or any Affiliate or Sub-licensee
of Licensee, or any director, employee, officer, or representative of Licensee, in any advertising, press release, promotion or
sales literature without the prior written approval of Licensee, which shall not be unreasonably withheld or delayed. Except as
set forth in Article 5, neither Licensee nor any of its Affiliates or Sub-licensees shall use the name of Licensor or any Affiliate
of Licensor, or any director, employee, officer, or representative of Licensor, in any advertising, press release, promotion or
sales literature without the prior written approval of Licensor, which shall not be unreasonably withheld or delayed.

14.6
Use of Trademarks

 

Licensee
and its Affiliates and Sub-licensees may use any trademark(s) owned or Controlled by Licensee or any of its Affiliates or Sub-licensees
in connection with the Licensed Products to be made, used, sold, offered for sale, imported or distributed in the Territory. Licensor
shall have no ownership or other right in or to such trademark(s) of Licensee, its Affiliates or its Sub-licensees.

14.7
Marking

 

All
Licensed Products shall be marked with the patent numbers of issued patents within the Licensed Patent Rights that cover such
Licensed Products, to the extent practicable and permitted by law in countries in which such markings have notice value against
infringers of patents.

 

14.8
Severability

 

If
any provision of this Agreement is or becomes invalid, is ruled illegal by any court of competent jurisdiction or is deemed unenforceable
under the current applicable law from time to time in effect during the term hereof, it is the intention of the Parties that the
remainder of this Agreement shall not be affected thereby. It is further the intention of the Parties that, in lieu of each such
provision, there shall be substituted or added as part of this Agreement a provision which shall be as similar as possible in
economic business objectives, as intended by the Parties, to such invalid, illegal or unenforceable provision, but which shall
be valid, legal and enforceable.

14.9
Governing Law & Language

 

The
construction and performance of this Agreement shall be governed by the laws of the State of New York, USA without regard to conflicts
of laws principles that would require the application of any other law. In the event of any discrepancies between the English
language version of this Agreement and any other version, the English language version shall be the original and shall control
in the event of any question concerning the meaning or import of its terms. The English language shall be the official language
of all correspondence, meetings and arbitration between the Parties.

 

14.10
Dispute Resolution

14.10.1
Disputes. The Parties recognize that disputes as to certain matters may arise from time-to-time during the term of the Agreement.
It is the objective of the Parties to establish procedures to facilitate the resolution of disputes arising under this Agreement
in an expedient manner and without resort to litigation. The Parties shall attempt to settle any such dispute through good faith
negotiations in the spirit of mutual cooperation between business executives with authority to resolve the dispute. To accomplish
this objective, and with respect to all disputes hereunder, the Parties agree to follow the procedures set forth in this Section
14.10 if and when a dispute between the Parties arises under this Agreement.

14.10.2
Escalation. Prior to taking action as provided in Section 14.10.3 of this Agreement, the Parties shall first submit such dispute
to Licensee's Chief Executive Officer and to the President & Chief Executive Officer of Licensor (the Heads" ) for resolution.
The Heads to whom any dispute is submitted shall attempt to resolve the dispute through good faith negotiations over a reasonable
period, not to exceed forty-five (45) calendar days following one Party's receipt of a notice of dispute from the other Party,
unless the Heads mutually agree in writing to extend such period of negotiation. Such 45-day period shall be deemed to commence
on the date the dispute was submitted to the Heads. All negotiations pursuant to this Section 14.10.2 shall be confidential, "without
prejudice", and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.

14.10.3
Arbitration. Any dispute that is not resolved by negotiation and/or escalation pursuant to Sections 14.10.1 and/or 14.10.2 shall,
upon the submission of a written request of either Party to the other Party, be submitted to China International Economic and
Trade Arbitration Commission (CIETAC) for arbitration in Beijing, China, which shall be conducted in accordance with CIETAC's
arbitration rules in effect at the time of applying for arbitration. The presiding arbitrator shall not be a Chinese national
or a citizen of the United States. The arbitral award is final and binding upon both Parties, shall be the sole and exclusive
remedy of the Parties, and shall be enforceable in any court of competent jurisdiction. The English language shall be used throughout
the arbitral proceedings. Relevant documents in other languages shall be translated into English if the arbitrators so direct.
The Parties agree that they shall share equally the cost of the arbitration filing and hearing fees. Each Party shall bear its
own attorneys' and expert fees and all associated costs and expenses.

 

14.11
Counterparts

 

This
Agreement may be executed by original or facsimile signature in several counterparts, all of which shall be deemed to be originals,
and all of which shall constitute one and the same Agreement. Notwithstanding the foregoing, the parties shall deliver original
execution copies of this Agreement to one another as soon as practicable following execution thereof.

[The
remainder of this page intentionally left blank.]

 

 

 

    	 	5	 

     

    

 

IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement by and through their duly authorized representatives as of the
Effective Date.

	 	 	Antigen
    Express, Inc.
	 	 	by
    its parent company,
	 	 	Generex
    Biotechnology Corporation
	 	 	 
	 	By:	/s/
    Joseph Moscato
	 	Name:	 
	 	Title:	 
	 	Date:	November
    13th, 2017
	 	 	 
	 	 	Shenzhen
    BioScien Pharmaceuticals Co., Ltd.
	 		
	 	By:	 
	 	Title:	 
	 		I
    am a legal representative of the Licensee and have authority to legally bind the Licensee.
	 	Date:	November
    29th, 2017
	 	 	 

    	 	6	 

     

    

 

Exhibit
A

LICENSED
PATENT RIGHTS

Hybrid
Peptides Modulate the Immune Response

REH-2007
PCT Granted 00812837.5 25-Aug-2000

China
(People's Republic) ZL 00 8 12837.5 11-Nov-2009

 

    	 	7ttlo_Ex_102

		
			Exhibit 10.2
		

		
			 
		

		
			 
		

		
			BUSINESS LOAN AGREEMENT (ASSET BASED)
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Borrower:

					
					
						    

					
					
						TOROTEL PRODUCTS, INC.

					
					
						    

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						520 N Rogers Road

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Olathe, KS 660621276

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Lender:

					
					
						 

					
					
						Commerce Bank, N.A.

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Lenexa Banking Center

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						8700 Monrovia, Ste 206

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Lenexa, KS 66215

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						Principal Amount:   $850,000.00

					
					
						    

					
					
						 

				
	
					
						Date of Loan:  August 15, 2017

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated August 15, 2017, is made and executed between TOROTEL PRODUCTS, INC. ("Borrower") and Commerce Bank ("Lender") on the following terms and conditions.  Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement.  Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement.
		

		
			TERM.  This Agreement shall be effective as of August 15, 2017, and shall continue in full force and effect until such time as all of Borrower's Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees and charges, or until such time as the parties may agree in writing to terminate this Agreement.
		

		
			ADVANCE AUTHORITY.  The following person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of such authority: Dale H. Sizemore, Jr, CEO and President of TOROTEL PRODUCTS, INC.; and Heath Hancock, CFO and Assistant Secretary of TOROTEL PRODUCTS, INC.
		

		
			LINE OF CREDIT.    Lender agrees to make Advances to Borrower from time to time from the date of this Agreement to the Expiration Date, provided the aggregate amount of such Advances outstanding at any time does not exceed the Borrowing Base. Within the foregoing limits, Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as follows:
		

		
			Conditions Precedent to Each Advance.  Lender's obligation to make any Advance to or for the account of Borrower under this Agreement is subject to the following conditions precedent, with all document, instruments, opinions, reports, and other items required under this Agreement to be in form and substance satisfactory to Lender:
		

			
	
			
				 (1)
			

			
	
			
			Lender shall have received evidence that this Agreement and all Related Documents have been duly authorized, executed, and delivered by Borrower to Lender.

			
	
			
				 (2)
			

			
	
			
			Lender shall have received such opinions of counsel, supplemental opinions, and documents as Lender may request.

			
	
			
				 (3)
			

			
	
			
			The security interests in the Collateral shall have been duly authorized, created, and perfected with first lien priority and shall be in full force and effect.

			
	
			
				 (4)
			

			
	
			
			All guaranties required by Lender for the credit facility(ies) shall have been executed by each Guarantor, delivered to Lender, and be in full force and effect.

			
	
			
				 (5)
			

			
	
			
			Lender, at its option and for its sole benefit, shall have conducted an audit of Borrower's Accounts, books, records, and operations, and Lender shall be satisfied as to their condition.

			
	
			
				 (6)
			

			
	
			
			Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are then due and payable.

			
	
			
				 (7)
			

			
	
			
			There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement, and Borrower shall have delivered to Lender the compliance certificate called for in the paragraph below titled " Compliance Certificate."

		
			Making Loan Advances.  Advances under this credit facility, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by authorized persons. Lender may, but need not, require that all 

		 

 

oral requests be confirmed in writing. Each Advance shall be conclusively deemed to have been made at the request of and for the benefit of Borrower (1) when credited to any deposit account of Borrower maintained with Lender or (2) when advanced in accordance with the instructions of an authorized person. Lender, at its option, may set a cutoff time, after which all requests for Advances will be treated as having been requested on the next succeeding Business Day.
		

		
			Mandatory Loan Repayments.  If at any time the aggregate principal amount of the outstanding Advances shall exceed the applicable Borrowing Base, Borrower, immediately upon written or oral notice from Lender, shall pay to Lender an amount equal to the difference between the outstanding principal balance of the Advances and the Borrowing Base. On the Expiration Date, Borrower shall pay to Lender in full the aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid interest, together with all other applicable fees, costs and charges, if any, not yet paid.
		

		
			Loan Account.  Lender shall maintain on its books a record of account in which Lender shall make entries for each Advance and such other debits and credits as shall be appropriate in connection with the credit facility. Lender shall provide Borrower with periodic statements of Borrower's account, which statements shall be considered to be correct and conclusively binding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) days after Borrower's receipt of any such statement which Borrower deems to be incorrect.
		

		
			COLLATERAL.  To secure payment of the Primary Credit Facility and performance of all other Loans, obligations and duties owed by Borrower to Lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may require. Lender's Security Interests in the Collateral shall be continuing liens and shall include the proceeds and products of the Collateral, including without limitation the proceeds of any insurance. With respect to the Collateral, Borrower agrees and represents and warrants to Lender:
		

		
			Perfection of Security Interests.  Borrower agrees to execute all documents perfecting Lender's Security Interest and to take whatever actions are requested by Lender to perfect and continue Lender's Security Interests in the Collateral. Upon request of Lender, Borrower will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Borrower will note Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. Contemporaneous with the execution of this Agreement, Borrower will execute one or more UCC financing statements and any similar statements as may be required by applicable law, and Lender will file such financing statements and all such similar statements in the appropriate location or locations. Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue any Security Interest. Lender may at any time, and without further authorization from Borrower, file a carbon, photograph, facsimile, or other reproduction of any financing statement for use as a financing statement. Borrower will reimburse Lender for all expenses for the perfection, termination, and the continuation of the perfection of Lender's security interest in the Collateral. Borrower promptly will notify Lender before any change in Borrower's name including any change to the assumed business names of Borrower. Borrower also promptly will notify Lender before any change in Borrower's Social Security Number or Employer Identification Number. Borrower further agrees to notify Lender in writing prior to any change in address or location of Borrower's principal governance office or should Borrower merge or consolidate with any other entity.
		

		
			Collateral Records.  Borrower does now, and at all times hereafter shall, keep correct and accurate records of the Collateral, all of which records shall  be available to Lender or Lender's representative upon demand for inspection and copying at any reasonable time. With respect to the Accounts, Borrower agrees to keep and maintain such records as Lender may require, including without limitation information concerning Eligible Accounts and Account balances and agings. Records related to Accounts (Receivables) are or will be located at 520 N. Rogers Road, Olathe, KS 66062. The above is an accurate and complete list of all locations at which Borrower keeps or maintains business records concerning Borrower's collateral.
		

		
			Collateral Schedules.  Concurrently with the execution and delivery of this Agreement, Borrower shall execute  and deliver to Lender schedules of Accounts and schedules of Eligible Accounts in form and substance satisfactory to the Lender. Thereafter supplemental schedules shall be delivered according to the following schedule: With respect to Eligible Accounts, schedules shall be delivered within 30 days after the end of each month for which there is an outstanding principal balance on Loan and with each Loan request made without an existing balance. Borrower shall also provide accounts receivable agings at the same time in form and substance satisfactory to the Lender.
		

		
			 
		

		
			Representations and Warranties Concerning Accounts.  With respect to the Accounts, Borrower represents and warrants to Lender: (1) Each Account represented by Borrower to be an Eligible Account for purposes of this Agreement conforms to the requirements of the definition of an Eligible Account; (2) All Account information listed on schedules delivered to Lender will be true and correct, subject to immaterial variance; and (3) Lender, its assigns, or agents shall have the right at any time and at Borrower's expense to inspect, examine, and audit Borrower's records and to confirm with Account Debtors the accuracy of such accounts.
		

		
			 
		

		
			CONDITIONS PRECEDENT TO EACH ADVANCE.  Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.
		

		
			Loan Documents.  Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security interests in the Collateral: (3) financing statements and all other documents perfecting Lender's Security Interests: (4) evidence of insurance as required below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and 

		 

 

substance satisfactory to Lender and Lender's counsel.
		

		
			Borrower' s Authorization.  Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.
		

		
			Fees and Expenses Under This Agreement.  Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are then due and payable.
		

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

		
			No Event of Default.  There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement or under any Related Document.
		

		
			REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:
		

		
			Organization.  Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Missouri. Borrower is duly authorized to transact business in all other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 520 N Rogers Road, Olathe, KS 66062. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower's state of organization or any change in Borrower's name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower's business activities.
		

		
			Assumed Business Names.  Borrower has filed or recorded all documents or filings required by law relating to all assumed business names used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None.
		

		
			Authorization.  Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.
		

		
			Financial Information.  Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements.
		

		
			Legal Effect.  This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.
		

		
			Properties.  Except as contemplated by this Agreement or as previously disclosed in Borrower' s financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used or filed a financing statement under any other name for at least the last five (5) years.
		

		
			Hazardous Substances.  Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower's ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance by any person on, under. about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall 

		 

 

not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws. and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities. damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal. release or threatened release of a hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.
		

		
			Litigation and Claims.  No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events. if any, that have been disclosed to and acknowledged by Lender in writing.
		

		
			Taxes.  To the best of Borrower's knowledge, all of Borrower's tax returns and reports that  are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.
		

		
			Lien Priority.  Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral.
		

		
			Binding Effect.  This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms.
		

		
			AFFIRMATIVE COVENANTS.  Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:
		

		
			Notices of Claims and Litigation.  Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.
		

		
			Financial Records.  Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times.
		

		
			Financial Statements.  Furnish Lender with the following
		

		
			 
		

		
			Annual Statements.  As soon as available, but in no event later than one-hundred-twenty (120) days after the end of each fiscal year, Borrower's balance sheet and income statement for the year ended, audited by a certified public accountant satisfactory to Lender.
		

		
			Interim Statements.  As soon as available, but in no event later than 45 days after the end of each fiscal quarter, Borrower's balance sheet and profit and loss statement for the period ended, prepared by Borrower.
		

		
			All financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct.
		

		
			Additional Information.  Furnish such additional information and statements, as Lender may request from time to time.
		

		
			Insurance.  Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable or other endorsements as Lender may require.
		

		
			Insurance Reports.  Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid 

		 

 

by Borrower.
		

		
			Guaranties.  Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the guarantor named below, on Lender's forms, and in the amount and under the conditions set forth in those guaranties.
		

		
			Name of Guarantor
		

		
			TOROTEL, INC.
		

		
			 
		

		
			Amount
		

		
			Unlimited
		

		
			 
		

		
			Other Agreements.  Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements.
		

		
			Loan Proceeds.  Use all Loan proceeds solely for the following specific purposes: Working Capital.
		

		
			Taxes, Charges and Liens.  Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1 ) the legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower's books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with GAAP.
		

		
			Performance.    Perform and comply, in a timely manner, with all terms, conditions, and provisions set fort h in this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement.
		

		
			Operations.    Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner.
		

		
			Environmental Studies.  Promptly conduct and complete, at Borrower' s expense, all such investigations, studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower.
		

		
			Compliance with Governmental Requirements.  Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower' s properties, businesses and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender's sole opinion, Lender's interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender' s interest.
		

		
			Inspection.  Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any lime hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense.
		

		
			Compliance Certificates.  Unless waived in writing by Lender, provide Lender within thirty (30) days after the end of each fiscal year, with a certificate executed by Borrower's chief financial officer, or other officer or person acceptable to Lender certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying that, as of the date of the certificate, no Event of Default exists under this Agreement.
		

		
			Environmental Compliance and Reports.  Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower's part in 

		 

 

connection with any environmental activity whether or not there is damage to the environment and/or other natural resources.
		

		
			Additional Assurances.  Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests.
		

		
			Collateral Audits.  In connection with any inspections made under the section of this Agreement entitled " Inspection," including without limitation any collateral audits, reimburse Lender for all out-of-pocket fees, costs, and expenses of such inspections, whether conducted by employees or agents of Lender. Without limiting the foregoing, when inspections (including without limitation collateral audits) shall be conducted by employees of Lender, Borrower shall, in addition to reimbursing out-of-pocket expenses incurred in connection with such inspections (e.g. travel, mileage, and lodging), compensate Lender for the time of Lender's employees spent in such inspections and related services, which compensation shall be based upon Lender's fee policy in effect from time to time. Lender shall, upon Borrower' s request, provide Borrower the current fee policy.
		

		
			RECOVERY OF ADDITIONAL COSTS.  If the imposition of or any change in any law, rule, regulation, guideline, or generally accepted accounting principle, or the interpretation or application of any thereof by any court, administrative or governmental authority, or standard-setting organization (including any request or policy not having the force of law) shall impose, modify or make applicable any taxes (except federal, state or local income or franchise taxes imposed on Lender), reserve requirements, capital adequacy requirements or other obligations which would (A) increase the cost to Lender for extending or maintaining the credit facilities to which this Agreement relates, (B) reduce the amounts payable to Lender under this Agreement or the Related Documents, or (C) reduce the rate of return on Lender' s capital as a consequence of Lender' s obligations with respect to the credit facilities to which this Agreement relates, then Borrower agrees to pay Lender such additional amounts as will compensate Lender therefor, within five (5) days after Lender' s written demand for such payment, which demand shall be accompanied by an explanation of such imposition or charge and a calculation in reasonable detail of the additional amounts payable by Borrower, which explanation and calculations shall be conclusive in the absence of manifest error.
		

		
			LENDERS EXPENDITURES.  If any action or proceeding is commenced that would materially affect Lender' s interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender, on borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or  paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and,  at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity.
		

		
			NEGATIVE COVENANTS.    Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower  shall not, without the prior written consent of Lender:
		

		
			Indebtedness and Liens.  (1) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets (except as allowed as Permitted Liens), or (3) sell with recourse any of Borrower's accounts, except to Lender 
		

		
			Continuity of Operations.  (1) Engage in any business activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of Borrower's stock, or purchase or retire any of Borrower' s outstanding shares or alter or amend Borrower' s capital structure.
		

		
			Loans, Acquisitions and Guaranties.  (1) Loan, invest in or advance money or assets to any other person, enterprise or entity, (2) purchase, create or acquire any interest in any other enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the ordinary course of business.
		

		
			Agreements.  Enter into any agreement containing any provisions which would be violated or breached by the performance of Borrower' s obligations under this Agreement or in connection herewith.
		

		
			CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower , whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent , files a petition in bankruptcy or similar proceedings, or is adjudged a 

		 

 

bankrupt ; (C) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred.
		

		
			RIGHT OF SETOFF.    To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower' s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts.
		

		
			DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:
		

		
			 
		

		
			Payment Default.  Borrower fails to make any payment when due under the Loan.
		

		
			Other Defaults.  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in  any  other agreement between Lender and Borrower.
		

		
			Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or  sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents .
		

		
			False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.
		

		
			Insolvency.  The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.
		

		
			Defective Collateralization.  This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
		

		
			Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment of any of Borrower' s accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
		

		
			Events Affecting Guarantor.  Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.
		

		
			Change in Ownership.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.
		

		
			Adverse Change.  A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Loan is impaired.
		

		
			Insecurity.  Lender in good faith believes itself insecure.
		

		
			EFFECT OF AN EVENT OF DEFAULT.  If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents , all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender' s option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender' s rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender' s right to declare a default and to exercise its rights and remedies.
		

		
			ELECTRONIC RECORDS.  The undersigned agrees that this document and all paper records related to the transaction with which this document is a part and whether or not the paper records were submitted in advance of, contemporaneously with or subsequent to, the execution of this document may, at the option of the Lender, be converted by any digital or electronic method or process to an electronic record or subsequently further converted or migrated to another electronic record format or electronic storage medium. The undersigned further agrees that upon conversion to an electronic record as authorized herein such electronic record shall be the record of the transaction and the electronic record shall have the same legal force and effect as the paper documents from which it was converted. The undersigned waives any legal requirement that any documents 

		 

 

digitally or electronically converted be embodied, stored, or reproduced in a tangible media. The undersigned further agrees that a printed or digitally reproduced copy of the electronic record shall be given the same legal force and effect as a signed writing. In addition, the undersigned authorizes and agrees to destruction of the paper documents by the Lender upon conversion of the paper documents to a digital or electronic record.
		

		
			ADDITIONAL EVENT OF DEFAULT.   It shall be an additional Event of Default if guarantor, Torotel, Inc., fails to maintain any one of the following covenants: EBITDA to Fixed Charge Coverage Ratio. Maintain a ratio of EBITDA to Fixed Charges in excess of 1.10 to 1.00. " Fixed Charge Coverage Ratio" means (a) EBITDA divided by (b) Fixed Charges. "EBITDA" means, for the period in question, the sum of (a) the after tax net income during such period, plus (b) to the extent deducted in determining such net income, the sum of (i) interest expense during such period including the interest portion of all capitalized lease expense, plus (ii) all provisions for any Federal, state, local and/or foreign income, value added and similar taxes made during such period (whether paid or deferred), plus (iii) all depreciation and amortization expenses during such period, plus (iv) any extraordinary losses during such period, plus (v) any losses from the sale or other disposition of property other than in the ordinary course of business during such period, minus (c) to the extent added in determining  such net income, the sum of (i) any extraordinary gains during such period plus (ii) any gains from the sale or other disposition of property other than in the ordinary course of business during such period, all determined on a consolidated basis and in accordance with GAAP. "Fixed Charges" means, for the period in question, the sum of (a) the aggregate amount of all principal payments required to be made on all Funded Debt during such period (but excluding principal payments on revolving lines of credit), plus (b) interest expense during such period, plus (c) all provisions for any Federal, state, local and/or foreign income taxes incurred during such period (whether paid or deferred), plus (d) all dividends or distributions paid on or with respect to any of its capital stock or membership, partnership or other ownership interests during such period, all determined on a consolidated basis and in accordance with GAAP. "Funded Debt" means, as of the date of determination thereof, the sum of (a) all indebtedness for borrowed money or which has been incurred in connection with the purchase or other acquisition of property (other than unsecured trade accounts payable incurred in the ordinary course of business), plus (b) all obligations under or in respect of capital leases plus (c) all contingent reimbursement obligations with respect to the aggregate undrawn face amount of all letters of credit together with all unreimbursed drawings with respect thereto, plus (d) all guarantees of Funded Debt of others, all determined on a consolidated basis and in accordance with GAAP. This coverage ratio will be evaluated as of each four (4) consecutive fiscal quarter period of Borrower commencing with the four (4) consecutive fiscal quarter period of Borrower ending next after the date of this Agreement. Tangible Net Worth: Guarantor shall maintain at all times a minimum Tangible Net Worth of not less than $1,750,000.00 commencing with the date of this Agreement. "Tangible Net Worth" means Guarantor's total assets excluding all intangible assets (i.e., goodwill, trademarks, patents, copyrights, organizational expense, and similar intangible items, but including leaseholds and leasehold improvements) less total debt, determined in accordance with GAAP.
		

		
			MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of this Agreement:
		

		
			Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
		

		
			Attorneys' Fees. Expenses. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include all reasonable costs incurred in the collection of the Loan, including but not limited to, court costs, attorneys' fees and collection agency fees, except that such costs of collection shall not include recovery of both attorneys' fees and collection agency fees.
		

		
			Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
		

		
			Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower 's obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.
		

		
			Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Kansas without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Kansas.
		

		
			No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender' s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of 

		 

 

Lender's rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
		

		
			Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid,  directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.
		

		
			Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality , invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
		

		
			Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate , including without limitation any representation, warranty or covenant, the word "Borrower" as used in this Agreement shall include all of Borrower's subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.
		

		
			Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender.
		

		
			Survival of Representations and Warranties. Borrower understand s and agrees that in extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.
		

		
			Time is of the Essence. Time is of the essence in the performance of this Agreement.
		

		
			Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party.
		

		
			DEFINITIONS.  The following capitalized words and terms shall have the following meanings when used in  this Agreement. Unless specifically  stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement:
		

		
			Account.  The word "Account" means a trade account, account receivable, other receivable, or other right to payment for goods sold or services rendered owing to Borrower (or to a third-party grantor acceptable to Lender).
		

		
			Account Debtor.  The words "Account Debtor" mean the person or entity obligated upon an Account.
		

		
			Advance.  The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower' s behalf under the terms and conditions of this Agreement.
		

		
			Agreement.  The word "Agreement" means this Business Loan Agreement (Asset Based), as this Business Loan Agreement (Asset Based) may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement (Asset Based) from time to time.
		

		
			Borrower.  The word "Borrower" means TOROTEL PRODUCTS, INC.  and includes all co-signers and co-makers signing the Note and all their successors and assigns.
		

		
			Borrowing Base.  The words "Borrowing Base" mean, as determined by Lender from time to time, the lesser of (1) $850,000.00 or (2) 75.000% of the aggregate amount of Eligible Accounts.
		

		
			Business Day.  The words "Business Day" mean a day on which commercial banks are open in the State of Kansas.
		

		
			

		 

 

		

		
			Collateral.  The word "Collateral" means all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a  security interest, mortgage, collateral mortgage, deed of trust , assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust , conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. The word Collateral also includes without limitation all collateral described in the Collateral section of this Agreement.
		

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

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

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

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

			
	
			
				 (4)
			Accounts with respect to which the Account Debtor is not a resident of the United States, except to the extent such Accounts are supported by insurance, bonds or other assurances satisfactory to Lender.

			
	
			
				 (5)
			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.

			
	
			
				 (6)
			Accounts which are subject to dispute, counterclaim, or setoff.

			
	
			
				 (7)
			Accounts with respect to which the goods have not been shipped or delivered. or the services have not been rendered to the Account Debtor.

			
	
			
				 (8)
			Accounts with respect to which Lender, in its sole discretion, deems the creditworthiness or financial condition of the Account Debtor to be unsatisfactory.

			
	
			
				 (9)
			Accounts of any Account Debtor who has filed or has had filed against it a petition in bankruptcy or an application for relief under any provision of any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had appointed a trustee, custodian, or receiver for the assets of such Account Debtor; or who has made an assignment for the benefit of creditors or has become insolvent or fails generally to pay its debts (including its payrolls) as such debts become due.

			
	
			
				 (10)
			Accounts with respect to which the Account Debtor is the United States government or any department or agency of the United States.

			
	
			
				 (11)
			Accounts which have not been paid in full within 90 days from the invoice date. The entire balance of any Account of any single Account Debtor will be ineligible whenever the portion of the Account which has not been paid within 90 days from the invoice date is in excess of 20.000% of the total amount outstanding on the Account.

		
			Environmental Laws.  The words "Environmental Laws" mean any and all state, federal and local statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 , et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 , et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto.
		

		
			Event of Default.  The words "Event of Default" mean any of the events of default set forth in this Agreement in the default section of this Agreement.
		

		
			Expiration Date.    The words "Expiration Date" mean the date of termination of Lender' s commitment to lend under this Agreement. 
		

		
			GAAP.  The word "GAAP'' means generally accepted accounting principles.
		

		
			Grantor.  The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.
		

		
			Guarantor.  The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan.
		

		
			Guaranty.  The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note.
		

		
			Hazardous Substances.  The words "Hazardous  Substances" mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as 

		 

 

defined by or listed under the Environmental Laws. The term" Hazardous Substances " also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
		

		
			Indebtedness.    The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.
		

		
			Lender.  The word "Lender" means Commerce Bank, its successors and assigns.
		

		
			Loan.  The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and how ever evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time.
		

		
			Note.  The word "Note" means the promissory note dated October 27, 2016, in the original principal amount of $850,000 .00 from Borrower to Lender, together with all renewals of, extensions of, modifications of, refinancing of, consolidations of, and substitutions for the promissory note or agreement.
		

		
			Permitted Liens.  The words "Permitted Liens" mean (1) liens and security interests securing Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges either not yet due or being contested in good faith; (3) liens of materialmen, mechanics, warehousemen, or carriers, or other like liens arising in the ordinary course of business and securing obligations which are not yet delinquent; (4) purchase money liens or purchase money security interests upon or in any property acquired or held by Borrower in the ordinary course of business to secure indebtedness out standing on the date of this Agreement or permitted to be incurred under the paragraph of this Agreement titled "Indebtedness and Liens"; (5) liens and security interests which, as of the date of this Agreement, have been disclosed to and approved by the Lender in writing; and (6) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of Borrower' s assets.
		

		
			Primary Credit Facility.  The words " Primary Credit Facility" mean the credit facility described in the Line of Credit section of this Agreement.
		

		
			Related Documents.  The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Loan.
		

		
			Security Agreement.  The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest.
		

		
			Security Interest.  The words "Security Interest" mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise.
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						Borrower’s Initials

					
					
						    

					
					
						NO ORAL AGREEMENTS. This written agreement is the final expression of the agreement between Lender and Borrower and may not be contradicted by evidence of any prior oral agreement or of a contemporaneous oral agreement between Lender and Borrower.

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						NONSTANDARD TERMS. The following space contains all nonstandard terms, including all previous oral agreements, if any, between Lender and Borrower:

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						Lender’s Initials

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By initialing the boxes to the left, Lender and Borrower affirm that no unwritten oral agreement exists between them.

				

		
			 
		

		
			BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS.  THIS BUSINESS LOAN AGREEMENT (ASSET BASED) IS DATED AUGUST 15, 2017.
		

		
			 
		

		
			BORROWER:
		

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						TOROTEL PRODUCTS, INC.

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						 /S/

					
					
						 

					
					
						By:

					
					
						 /S/

				

		 

 

	
					
						

					
						 

					
					
						Dale H. Sizemore, Jr, CEO and President of TOROTEL PRODUCTS, INC.

					
					
						 

					
					
						 

					
					
						Heath Hancock, CFO and Assistant Secretary of TOROTEL PRODUCTS, INC.

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