Document:

ex_144941.htm

EXHIBIT 10.2

 

SECOND AMENDED AND RESTATED TERM NOTE

PNC Bank, National Association

 

 

$3,585,175.00                                                                                                                                                                                                                                                 May 15, 2019

Woodbridge, New Jersey

 

 

This Second Amended and Restated Term Note (this “Note”) is executed and delivered under and pursuant to the terms of that certain Revolving Credit, Term Loan and Security Agreement dated as of June 27, 2012 (as amended, supplemented, restated or modified from time to time, the “Loan Agreement”) by and among INTEGRATED BIOPHARMA, INC., a corporation organized under the laws of the State of Delaware (“Integrated”), InB:MANHATTAN DRUG COMPANY, INC., a corporation organized under the laws of the State of New York (”MD ”), AGROLABS, INC., a corporation organized under the laws of the State of New Jersey (“AL”), IHT HEALTH PRODUCTS, INC., a corporation organized under the laws of the State of Delaware (IHT”), VITAMIN FACTORY, INC., a corporation organized under the laws of the State of Delaware (“Vitamin”) and IHT PROPERTIES CORP., a corporation organized under the laws of the State of Delaware (“IHTP) (Integrated, MD, AL, IHT, Vitamin and IHTP each a “Borrower”, and collectively “Borrowers”) and PNC BANK, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America (“PNC”), the various financial institutions named therein or which hereafter become a party thereto (together with PNC collectively, “Lenders”), and PNC as agent for Lenders (in such capacity, “Agent”). Capitalized terms not otherwise defined herein shall have the meanings provided in the Loan Agreement.

 

FOR VALUE RECEIVED, Borrower hereby promise to pay to the order of PNC, at the office of Agent located at PNC Bank Center, Two Tower Center, East Brunswick, New Jersey 08816, or at such other place as Agent may from time to time designate to Borrower in writing:

 

(i) the principal sum of THREE MILLION FIVE HUNDRED EIGHTY-FIVE THOUSAND ONE HUNDRED SEVENTY-FIVE DOLLARS AND 00/100 ($3,585,175.00) shall be paid in eighty-four (84) consecutive monthly principal installments, the first eighty-three (83) of which shall be in the amount of $42,681.00 commencing on the first Business Day of June, 2019, and continuing on the first Business Day of each month thereafter, with a final payment of any unpaid balance of principal and interest payable on the first Business Day of May, 2024, all as more particularly described in the Loan Agreement, and subject to mandatory prepayment and acceleration upon the occurrence of an Event of Default under the Loan Agreement or earlier termination of the Loan Agreement pursuant to the terms thereof; and

 

(ii) interest on the principal amount of this Note from time to time outstanding until such principal amount is paid in full at the Term Loan Rate in accordance with the provisions of the Loan Agreement. In no event, however, shall interest exceed the maximum interest rate permitted by law. Upon and after the occurrence of an Event of Default, and during the continuation thereof, interest shall be payable at the Default Rate in accordance with the Loan Agreement;

 

1

 

 

(iii) notwithstanding anything to the contrary herein, in the Loan Agreement and/or in any Other Document, all outstanding principal and interest hereunder is due and payable on the Termination Date.

 

This Note is a “Term Note” referred to in the Loan Agreement and is secured, inter alia, by the Liens granted pursuant to the Loan Agreement and the Other Documents, is entitled to the benefits of the Loan Agreement and the Other Documents and is subject to all of the agreements, terms and conditions therein contained.

 

This Note is intended to amend, restate and replace a certain Amended and Restated Term Note issued by the Borrowers in favor of the Lenders dated February 19, 2016 in the original principal amount of $3,422,160.

 

This Note is subject to mandatory prepayment, and may be voluntarily prepaid, in whole or in part, in each case on the terms and conditions set forth in the Loan Agreement.

 

If an Event of Default under Section 10.7 or 10.8 of the Loan Agreement shall occur and be continuing, then this Note shall immediately become due and payable, without notice, together with reasonable attorneys’ fees if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof. If any other Event of Default shall occur and be continuing under the Loan Agreement or any of the Other Documents, which is not cured within any applicable grace period, then this Note may, as provided in the Loan Agreement, be declared to be immediately due and payable, without notice, together with reasonable attorneys’ fees, if the collection hereof is placed in the hands of an attorney to obtain or enforce payment hereof.

 

Lenders may at any time pledge or assign all or any portion of their rights under the Loan Agreement or the Other Documents (including any portion of this Note) to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or assignment or enforcement thereof shall release Lenders from their obligations under the Loan Agreement or any of the Other Documents.

 

This Note shall be construed and enforced in accordance with the laws of the State of New York.

 

The Obligations evidenced by this Note are the same Obligations set forth in Section 2.4 of the Loan Agreement.

 

Borrowers expressly waive any presentment, demand, protest, notice of protest, or notice of any kind except as expressly provided in the Loan Agreement.

 

SIGNATURE PAGES TO FOLLOW

2

 

 

 

	ATTEST:            	INTEGRATED BIOPHARMA, INC.
	 	 
	By: /s/ Dina L. Masi 	By:/s/ Christina Kay
	Name: DINA L. MASI     	Name: CHRISTINA KAY
	Title: Secretary      	Title: Co-Chief Executive Officer 
	 	 
	ATTEST:                             	 InB:MANHATTAN DRUG COMPANY, INC.
	 	 
	By: /s/ Dina L. Masi 	By: /s/ Riva Sheppard 
	Name: DINA L. MASI     	Name: RIVA SHEPPARD
	Title: Secretary     	Title: President and Chief Executive Officer 
	 	 
	ATTEST:                           	  AGROLABS, INC.
	 	 
	By: /s/ Dina L. Masi 	By:/s/ Christina Kay
	
			By:/s/ Christina Kay

			Name: DINA L. MASI     	Name: CHRISTINA KAY
	
			By:/s/ Christina Kay

			Title: Secretary     	Title: President and Chief Executive Officer
	 	 
	ATTEST:                            	 IHT HEALTH PRODUCTS, INC.
	 	 
	By: /s/ Dina L. Masi 	By:/s/ Christina Kay
	Name: DINA L. MASI     	Name: CHRISTINA KAY
	
			Name: CHRISTINA KAY

			Title: Secretary     	Title: President and Chief Executive Officer 
	 	 
	ATTEST:                             	VITAMIN FACTORY, INC.
	 	 
	By: /s/ Dina L. Masi 	By:/s/ E. Gerald Kay
	Name: DINA L. MASI     	Name: E. GERALD KAY
	Title: Secretary                             	Title: President and Chief Executive Officer
	 	 
	ATTEST:                                 	IHT PROPERTIES CORP.
	 	 
	By: /s/ Dina L. Masi 	By: /s/ Riva Sheppard 
	Name: DINA L. MASI    	Name: RIVA SHEPPARD
	Title: Secretary     	Title: President and Chief Executive Officer 
	 	 

                  

 

 

3Blueprint

  Exhibit 10.1

 

 

 

 

LOAN AGREEMENT

 

 

 

 

 

Between

 

 

 

 

 

DLORAH, INC.

 

 

 

 

 

And

 

 

 

 

 

CENTER FOR EXCELLENCE IN

 

 

HIGHER EDUCATION, INC.

 

 

 

 

 

 

 

 

Dated May 10, 2019

 

 

 

 

LOAN AGREEMENT

 

This
Loan Agreement (“Agreement”)
is dated May 10, 2019, and is by and between DLORAH, INC. d/b/a NATIONAL AMERICAN
UNIVERSITY, a South Dakota corporation (“Borrower”),
and CENTER FOR EXCELLENCE IN HIGHER
EDUCATION, INC., an Indiana non-profit corporation
(“Lender”).

 

WITNESSETH:

 

WHEREAS, as of the date hereof, Borrower
has requested from Lender a term loan in an original principal
amount not to exceed Eight Million Five Hundred Thousand and No/100
Dollars ($8,500,000.00) (the “Loan”);

 

WHEREAS, Lender is willing to make the
Loan to Borrower upon the following terms and conditions;
and

 

NOW, THEREFORE, in consideration of the
mutual covenants and agreements contained herein, and other good
and valuable consideration, the receipt and sufficiency of which is
hereby expressly acknowledged by the parties, the parties hereto
hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

The
terms defined in this Article I (except as otherwise expressly
provided elsewhere in this Agreement) shall have the following
meanings for purposes of this Agreement:

 

Account Control Agreement. The
term “Account Control
Agreement” shall mean the Account Control Agreement
between Borrower and Lender date May 10, 2019, executed to grant a
perfected security interest in the Letter of Credit Collateral
Account, to secure the repayment of the Indebtedness.

 

Aircraft and Engine
Security Agreement. The term “Aircraft and Engine
Security Agreement” shall mean the Aircraft and Engine
Security Agreement between Borrower and Lender made May 10, 2019,
executed to grant a perfected security interest in two Eclipse 500s
aircraft with FAA Registry numbers N61DT and N55BX, to secure the
repayment of the Indebtedness.

 

Bank. The term
“Bank” shall
mean Black Hills Community Bank, N.A., or such other bank that
issues the Letter of Credit.

 

Business Day. The term
“Business
Day” shall mean any day other than a Saturday, Sunday,
legal holiday or other day upon which banks in the State of South
Dakota are closed to business generally.

 

Change in Control. The term
“Change in
Control” shall mean any change (by way of transfers of
stock) in any shareholder that directly or indirectly controls the
day to day operations and management of Borrower or owns a
controlling interest in Borrower, provided, any transfers for
internal organizational or personal tax or estate purpose will be
permitted as long as Borrower gives Lender prior written notice of
same.

 

 

 

1

 

Closing Date. The term
“Closing
Date” means the effective date of this Agreement, the
Note, the Account Control Agreement, and other documents evidencing
the Loan and the real estate subject to the mortgage.

 

Collateral. The term
“Collateral”
shall mean collectively each and every item of security for the
payment of the Indebtedness to Lender whether now or at any time
granted or delivered, whether real or personal, as described in the
Account Control Agreement, the Aircraft and Engine Security
Agreement, and the Partnership Security Agreement. At no time will
the Collateral include any accounts containing federal student
financial aid funds of the U.S. Department of Education, or any
other student financial aid funds advanced to Borrower by any other
federal or state governmental entity, in each case where such funds
are possessed by Borrower solely in a fiduciary capacity pending
subsequent disbursement to Borrower or to eligible students in
accordance with applicable law.

 

Default. The term
“Default”
shall mean any event, which together with any lapse of time or
giving of any notice, or both, would constitute an Event of
Default.

 

Default Rate. The term
“Default
Rate” shall mean the rate of interest equal to ten
percent per annum (10%).

 

Dougherty. The term
“Dougherty”
means Dougherty Mortgage LLC, a Delaware limited liability
company.

 

Event of Default. The term
“Event of
Default” shall mean the occurrence of any of the
events specified in Section 7.1 of this Agreement.

 

Financial Statements. The term
“Financial
Statements” shall mean such balance sheets, profit and
loss statements, reconciliations of capital and surplus, changes in
financial condition, schedules of sources and application of funds,
and other financial information of Borrower as shall be reasonably
required by Lender, from time to time, which statements, if
reasonably required by Lender, shall be certified to by an
independent certified public accountant.

 

Financing Statements. The term
“Financing
Statements” shall mean the Form UCC-1 or nonconforming
financial statements prepared to perfect security interests to
secure the Loan to be filed with the appropriate offices for the
perfection of a security interest in any personalty or fixtures
pledge to secure the Loan.

 

GAAP. The term
“GAAP”
shall mean generally accepted accounting principles applied on a
consistent basis as set forth in the opinions of the Accounting
Principles Board of American Institute of Certified Public
Accountants and/or statements of the Financial Accounting Standards
Board and/or in such other statements by such other entity as
Lender may approve.

 

Indebtedness. The term
“Indebtedness”
shall mean and include any and all: (i) indebtedness, obligations
and liabilities of Borrower to Lender now in existence and which
may be incurred or purportedly incurred hereafter under or pursuant
to the terms of this Agreement, including such amounts as may be
evidenced by the Note and all lawful interest and other charges and
all court costs, reasonable attorney’s fees and other
collection costs incurred with respect thereto; (ii) costs and
expenses paid or incurred by Lender in enforcing or attempting to
enforce collection of the foregoing and in enforcing or realizing
upon or attempting to enforce or realize upon any Collateral or
security therefor, including interest on all sums so expended by
Lender from the date of such expenditure at an annual rate equal to
the Default Rate; and (iii) sums expended by Lender in curing any
Event of Default under the terms of this Agreement or any security
agreement or other writing evidencing or securing the payment of
the Note or other debt secured hereby together with interest on the
amount of each such expenditure from the date thereof at an annual
rate equal to the Default Rate.

 

 

2

 

Interest
Rate. The term
“Interest
Rate” shall
mean:

 

(1) 

7%
per annum, until the scheduled Maturity Date.

 

(2) 

on
and after Maturity Date, the Default Rate.

 

Intercreditor Agreement. The
term “Intercreditor
Agreement” shall mean that certain Intercreditor
Agreement entered into by and between Borrower, Lender, and Bank,
which agreement memorializes the agreements among the parties that
the Lender have a Lien on the Letter of Credit Collateral Account
but such Lien shall be subordinate in all respects to the Letter of
Credit Obligations and all other indebtedness of Borrower with
Bank.

 

Interest Expense. The term
“Interest
Expense” means, for any period and as to any Person,
the Person’s interest expense determined in conformity with
GAAP.

 

Laws. The term
“Laws”
shall mean all statutes, laws, ordinances, regulations, orders,
writs, injunctions, decrees of the United States, any state or
commonwealth, any municipality, any foreign country, any territory
or possession, or any Tribunal.

 

Letter of Credit. The term
“Letter of
Credit” shall mean a letter of credit issued for the
benefit of the United States Department of Education in the amount
of Seven Million Three Hundred Thirty Thousand Five Hundred
Fifty-Seven Dollars ($7,330,557.00).

 

Letter of Credit Obligations.
The term “Letter of Credit
Obligations” shall mean the obligation of the Borrower
to Bank pursuant to the business loan agreement and related
documents executed by the Borrower to obtain the Letter of
Credit.

 

Letter of Credit Collateral
Account. The term “Letter of Credit
Collateral Account” shall mean CD Account Number
210294 with Bank with an approximate balance of $7,375,000 or cash
equivalent proceeds deposited by Borrower, upon which Lender
maintains a valid security interest or control.

 

        
     Lien. The term
“Lien”
shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind including any agreement to give any of
the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement or other similar form of
public notice under the Laws of any jurisdiction.

 

Loan. The term
“Loan”
is defined in the recitals of this Agreement.

 

Loan Documents. The term
“Loan
Documents” shall mean this Agreement, the Note, the
Account Control Agreement, the Mortgage, the Absolute Assignment of
Leases and Rents, Aircraft and Engine Security Agreement,
Partnership Security Agreement, the Financing Statement, the
Intercreditor Agreement, and all other documents, instruments and
certificates to be executed by Borrower evidencing or securing the
Indebtedness pursuant to the terms of this Agreement.

 

 

 

3

 

 

Material Adverse Effect. The
term “Material Adverse
Effect” shall mean any set of circumstances or events
which (i) prevents or will prevent Borrower from materially
performing its obligations (including, without limitation, payment
obligations hereunder) under the Loan Documents; or (ii) will cause
an Event of Default.

 

Maturity Date. The term
“Maturity
Date” shall mean May 31, 2020.

 

Mortgage. The term
“Mortgage”
shall mean the Real Estate Mortgage – 180 Day Redemption of
even date herewith by Borrower, as mortgagor, to Lender, as
mortgagee, recorded or to be recorded in the official real estate
records of Pennington County, South Dakota.

 

Mortgage Proceeds Account. The
term “Mortgage Proceeds
Account” shall mean the total net cash proceeds of a
loan made to Borrower or a wholly owned Subsidiary by Dougherty
secured by certain real estate of Borrower, on which Mortgage
Proceeds Account Lender shall have a first priority Lien to secure
the repayment of the Indebtedness.

 

Note. The term
“Note”
shall mean the Promissory Note of even date herewith, by Borrower
to Lender, as further described in Section 2.2 of this Agreement,
together with each and every extension, renewal, modification,
substitution, replacement and change in form thereof which may be
made from time to time.

 

 Obligations.
The term “Obligations”
shall mean the Loan and all other indebtedness, obligations and
other liabilities of the Borrower of any kind and description owing
to the Lender pursuant to the provisions of this Agreement, the
Note, or any of the other Loan Documents, howsoever evidenced or
acquired, whether now existing or hereafter arising, due or not
due, absolute or contingent, liquidated or unliquidated, direct or
indirect, express or implied, whether old individually or jointly
with others, together with all renewals, extensions, modifications
or refinancings thereof.

 

Partnership Security Agreement.
The term “Partnership
Security Agreement” shall mean the
Partnership Security Agreement between Borrower and Lender made May
10, 2019, executed to grant a perfected security interest in the
Partnership Interest, to secure the repayment of the
Indebtedness.

 

Partnership Interest. The term
“Partnership
Interest” shall have the meaning set for in Section
4.22.

 

 Permitted
Distributions. The term “Permitted
Distributions” means for any period, all
distributions, dividends or other payments (including payments in
the nature of fees, commissions, salary, bonuses or other
compensation) actually paid to any shareholder of the Borrower to
provide funds to such shareholder to pay taxes that are incurred
because of such shareholder’s ownership interest in the
Borrower or to pay shareholder’s expenses that are incurred
related to shareholder’s status as a publicly traded
company.

 

 

4

 

 

Person. The term
“Person”
shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization,
and a government or any department, agency or political subdivision
thereof.

 

Plan. The term
“Plan”
shall mean an employee pension benefit plan covered by Title IV of
ERISA, including any multiple employer plan as defined in Section
4001(a)(3) of ERISA.

 

Subsidiary. The term
“Subsidiary”
shall mean, as to any Person (1) a corporation, limited liability
company or other entity of which shares of stock or other ownership
interest having ordinary voting power (other than stock having such
power only by reason of the occurrence of a contingency) to elect a
majority of the Board of Directors or other managers thereof are at
the time owned, for the management of which is otherwise
controlled, directly or indirectly, through one or more
intermediaries, or both, by such person, or (2) a partnership in
which such person is a general partner or the management of which
is otherwise controlled, directly or indirectly, through one or
more intermediaries or both, by such Person.

 

Taxes. The term
“Taxes”
shall mean all taxes, assessments, fees, or other charges or
levies, including any penalties and interest, from time to time or
at any time imposed by any Laws.

 

Tribunal. The term
“Tribunal”
shall mean any municipal, state, commonwealth, federal, foreign,
territorial or other sovereign, governmental entity, governmental
department, court, commission, board, bureau, agency or
instrumentality.

 

ARTICLE II

TERMS AND CONDITIONS OF LOAN

 

2.1           Loan.
Lender agrees to make the Loan to Borrower in accordance with the
terms and conditions of this Agreement. The purpose of the Loan is
to provide a source of cash collateral to Borrower to obtain the
Letter of Credit and discharge a judgement lien on real estate
owned by Borrower.

 

2.2           Note.
On the Closing Date, Borrower shall execute and deliver to Lender
the Note, which shall be in the principal amount of the Loan, shall
bear interest at the Interest Rate, shall be payable in consecutive
monthly payments of interest only as set forth in the Note, and
shall mature on the Maturity Date.

 

2.3           Method
of Payment. Borrower shall make each payment under this
Agreement and under the Note not later than 11:00 a.m. (mountain
time) on the date when due in lawful money of the United States of
America to the Lender at 4021 South 700 East, Suite 400, Salt Lake
City, UT 84107 in immediately available funds. Whenever any payment
to be made under this Agreement or under the Note shall be stated
to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of the
payment of interest.

 

2.4           Conditions
Precedent to Loan. The obligation of Lender to make the Loan
is subject to satisfaction by Borrower, at Borrower’s
expense, of the following conditions on or before the Closing Date,
unless the date for the satisfaction of such conditions is
expressly extended by Lender:

 

 

 

5

 

 

(a)

Loan Origination Fee. Borrower
shall have made, and Lender shall have received payment in
immediately available funds: a) in the amount of Two Hundred Fifty
Thousand Dollars ($250,000.00) for the loan origination fee; and b)
an amount equal to Lender’s attorney’s fees reasonably
incurred in connection with the Loan as of the Closing
Date.

 

(b)

No Default. There shall exist
no Event of Default on the Closing Date.

 

(c)

Representations and Warranties.
The representations, warranties and covenants set forth in the Loan
Documents shall be true and correct on and as of the Closing
Date.

 

(d)

Loan Documents. Borrower shall
have delivered the Note and the other Loan Documents to Lender
dated as of the Closing Date, properly executed with all blanks
properly completed and, where appropriate, acknowledged by a Notary
Public.

 

(e)

UCC Search. Borrower shall have
provided to Lender, prior to the Closing Date the results of a
Uniform Commercial Code search request under Borrower’s
names.

 

(f)

Insurance. Borrower shall
provide or cause to be provided to Lender copies of all insurance
policies in effect for Borrower, and such insurance policies shall
be deemed acceptable by Lender. Should Lender request, Borrower
shall deliver to Lender such documentation as Lender may require
evidencing that such insurance policies are in full force and
effect. Such insurance policies shall not be canceled without
thirty (30) days written notice to Lender.

 

(g)

Financial Statements. Borrower
shall have delivered to Lender Financial Statements from Borrower
dated within thirty (30) days of the Closing Date which will be
true, correct, and complete in all material respects and will fully
and accurately present the financial condition of Borrower as of
the dates specified therein. Such financial condition, as reported
therein, will be substantially equal to the financial condition of
Borrower as evidenced by any and all Financial Statements submitted
to Lender on or about the time Borrower made application for the
Loan.

 

(h)

Other Documents and Assurances.
Borrower’s execution and delivery of the Aircraft and Engine
Security Agreement.

 

2.5           Credit
Investigation. Borrower represents and warrants to Lender
that all information supplied to Lender is accurate and complete in
all material respects. Borrower hereby authorizes Lender to review
its creditworthiness and agrees to provide information to Lender
for this purpose during the term of the Loan and after the Loan is
closed so long as funds are due Lender. Borrower hereby agrees to
notify Lender immediately in writing of any Material Adverse Effect
during the term of this Loan.

 

2.6           Application
of Funds. Borrower shall produce, upon Lender’s
request, documentary evidence reflecting expenditures of the
proceeds of the Loan.

 

 

6

 

 

2.7           Payment
- Application to Loan. All amounts payable to Lender for the
credit of Borrower shall be applied first in payment of accrued
interest with the balance to be applied against
principal.

 

ARTICLE III

DISBURSEMENT OF FUNDS

 

3.1           Disbursements.
Upon Lender being satisfied that all security interests granted
pursuant to the Loan Documents have been properly approved,
executed, assigned and perfected, and Borrower’s compliance
with the terms herein, Lender shall disburse Loan proceeds upon a
request for advance from Borrower.

 

3.2           Defense
Costs. Lender shall have the right to commence, appear in or
defend any action or legal proceeding purported to affect the
rights, duties or liabilities of the parties hereto, and may incur
reasonable costs or expenses in connection therewith, including by
way of illustration, but not limitation, reasonable
attorney’s fees, reasonable engineer’s,
surveyor’s and architect’s fees, fees of expert
witnesses, deposition and trial transcript copies and costs of
court. Borrower shall pay such expenses incurred by
Lender.

 

 

ARTICLE IV

AFFIRMATIVE COVENANTS

 

Borrower covenants
and agrees with Lender that until payment in full of all
Indebtedness and the performance of all other obligations of
Borrower:

 

4.1           Payment
of Taxes. Borrower will pay and discharge or cause to be
paid and discharged all lawful Taxes imposed upon Borrower or the
Collateral before the same shall be in default; provided, however,
Borrower will not be required to pay and discharge or to cause to
be paid or discharged any such Taxes, so long as the validity
thereof shall be contested in good faith by appropriate
proceedings, and adequate book reserves shall be established with
respect thereto.

 

4.2.           Maintenance
of Existence. Borrower will do all things necessary to
preserve and keep in full force and effect Borrower’s rights
and franchises, and to keep Borrower in good standing as a
corporation, with the South Dakota Secretary of State, and continue
to conduct and operate Borrower’s businesses substantially as
conducted and operated during the present and preceding fiscal
years subject only to changes in the ordinary course of business,
and no liquidating distributions shall be made until payment in
full of the Indebtedness.

 

4.3           Preservation
of Property. Borrower will maintain, preserve and protect
and keep all properties which are material to the conduct of its
business in good repair and operating condition and will from time
to time make all needful and proper repairs, renewals,
replacements, betterments and improvements thereto so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times in all material
respects.

 

 

7

 

 

4.7           Insurance.

 

(a)           Borrower
will maintain, with financially sound and reputable insurance
companies, such policies of insurance (including property/casualty,
liability, professional liability and business interruption
coverages) with respect to its assets, properties and business,
against such risks, hazards and liabilities, of such types and in
such amounts, and with such deductibles or self-insured retentions,
as are customarily maintained by entities in the same or similar
businesses similarly situated.

 

(b)           Borrower
shall furnish to Lender at any time upon Lender’s reasonable
written request, (1) full information as to such insurance carried,
including the amounts of all self-insurance reserves of the
Borrower, and (2) certificates of insurance from the insurance
companies and certified copies of such insurance
policies.

 

4.8           Compliance
with Applicable Laws. Borrower will comply with the
requirements of all applicable Laws and orders of any Tribunal and
obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or to
the conduct of its business, in each case to the extent necessary
to avoid a Material Adverse Effect.

 

4.9           Financial
Statements and Reports. Borrower shall maintain a standard
system of accounting in accordance with GAAP. And:

 

(a)           Borrower
shall provide to Lender annually, within one hundred twenty (120)
days following the end of each fiscal year, audited Financial
Statements.

 

(b)           Borrower
shall provide to Lender monthly, within sixty (60) days following
the end of each month, internally prepared interim Financial
Statements.

 

(c)           Borrower
shall provide, within thirty (30) days of filing, true, correct,
and complete copies of all tax returns.

 

4.10           Notice
of Default. Immediately upon the happening of an Event of
Default, or any default under any other material loan or financing
or security agreement, Borrower will give Lender written notice
specifying the nature and period of existence and what action
Borrower is taking and proposes to take.

 

4.11           Notice
of Litigation. Immediately upon becoming aware of the
existence of any action, suit or proceeding at law or in equity
before any Tribunal, an adverse outcome in which would materially
impair the right of Borrower to carry on its business substantially
as now conducted, or would materially and adversely affect
Borrower’s condition (financial or otherwise), to pay the
Note, Borrower will give Lender a written notice specifying the
nature and what action Borrower is taking and proposes to
take.

 

4.12           Requested
Information. With reasonable promptness, but no more than
ten (10) days after requested by Lender, Borrower will give Lender
such information as from time to time may be reasonably requested
by Lender.

 

 

8

 

 

4.13           Inspection.
Borrower will permit any representative of Lender to visit and
inspect any of the properties of Borrower, to examine all books of
account, records, reports and other papers relating to the
Collateral, to make copies and extracts thereof, and to discuss
their business affairs, finances and accounts with its officers and
employees at all reasonable times and as often as may be reasonably
requested to, among other things, enable Lender to conduct annual
field audits of Borrower. The scope and nature of any such
inspection must in each instance be reasonable.

 

4.14           Other
Liens. Other than the Lien of the Bank on the Letter of
Credit Collateral Account, Borrower will incur no obligation which
would be a Lien on the Collateral in addition to the Lien of the
Account Control Agreement, and Borrower will pay and discharge all
other Liens against the Collateral either from proceeds of the Loan
or from Borrower’s own funds, provided that Borrower may
contest in good faith any Lien if Lender is adequately secured by
security in an amount and form acceptable to Lender.

 

4.15           INTENTIONALLY
LEFT BLANK

 

4.16           Cross
Collateralization. All parties hereto hereby expressly
acknowledge and agree that Liens on the Collateral created by the
Loan Documents shall also secure any and all extensions, renewals,
modifications, replacements, substitutions or rearrangements of or
for the Note, and any and all other future, additional or other
indebtedness of Borrower to Lender whatsoever, whether now existing
or hereafter arising at any time prior to the satisfaction of
record of the Lien created by the Loan Documents, and whether or
not represented by any note or notes, or any guaranty, endorsement
or contract of suretyship, or secured by any other security, and
whether or not such additional or other indebtedness is for
purposes related or unrelated to the purposes for which the Loan
evidenced by the Note is made, and whether Borrower’s
obligations and/or indebtedness to Lender be as a maker, principal,
endorser, surety, guarantor, or otherwise, joint or several, due or
to become due, absolute or contingent, direct or indirect,
liquidated or unliquidated, and whether created or arising by way
of a loan, future advance, acceptance, overdraft, open account or
any other extension of credit of whatsoever kind or nature,
including without limitation, all amounts owing by such prior,
concurrent and additional indebtedness of any of
Borrower:

 

4.17           Mortgage
Loan. If Borrower obtains a loan from Dougherty secured by
all or a portion of the real estate subject to the Mortgage (the
“Subsequent Mortgage
Loan”), Lender will promptly release the Mortgage or
subordinate the Mortgage to the Lien of Dougherty’s mortgage,
upon Borrower’s satisfaction of the following conditions on
or before the closing date of the Subsequent Mortgage
Loan:

 

(a)

There shall exist
no Event of Default on the Subsequent Mortgage Loan closing
date.

 

(b)

The proceeds of the
Subsequent Mortgage Loan are deposited into the Mortgage Proceeds
Account upon which Lender has a valid perfected security interest
or control.

 

 

9

 

 

(c)

Borrower has
executed and delivered any documents Lender reasonably deems
necessary for Lender to have a first priority security interest on
the Subsequent Mortgage Loan proceeds including, but not limited
to, an account control agreement.

 

(d)

Borrower has
delivered to Lender and obtained Lender’s approval of a plan,
which approval will not be unreasonably withheld, conditioned, or
delayed, for the sale of real estate owned by Borrower. The plan
must provide for the closing of real estate sale transactions of
not less than $7,500,000 on or before May 31, 2020.

 

(e)

For the avoidance
of doubt, nothing in this Section 4.17 prohibits or otherwise
restricts Borrower from using the proceeds of the Subsequent
Mortgage Loan to pay the Obligations.

 

4.18
          Costs and Expenses. Borrower
agrees to pay (i) all out-of-pocket expenses of Lender in
connection with the preparation of this Agreement and all other
Loan Documents, (ii) all recording, filing, and UCC lien search
fees incurred in connection with this Agreement, Mortgages, and the
other Loan Documents, (iii) all out-of-pocket expenses of Lender in
connection with the preparation of any waiver or consent hereunder
or any amendment or any Event of Default or alleged Event of
Default hereunder, including fees and disbursements of counsel for
Lender, and (iv) if an Event of Default occurs, all out-of-pocket
expenses incurred by Lender, including reasonable fees and
disbursements of counsel, in connection with such Event of Default
in collection and other enforcement proceedings resulting
therefrom.

 

4.19           No
Change in Control. Borrower shall not permit a Change in
Control without the prior written consent of Lender.

 

4.20           No
Material Change in Business. Borrower shall not permit a
material change in the primary purpose of the business of Borrower
without the prior written consent of Lender.

 

4.21
          Permitted Distributions.
Borrower shall make no material cash distributions to its
shareholders other than Permitted Distributions.

 

4.22        
Partnership Interest
Pledge. Borrowers agree to grant Lender a security interest
in the Partnership Interest and execute and deliver the Partnership
Security Agreement and any other documents required to perfect the
Lender’s security interest in the Partnership Interest within
3 business days of the date of this Agreement. The term
“Partnership
Interest” shall mean all rights, title and interests
of the Borrower as a general partner in the Partnership that
Borrower can grant Lender an enforceable and perfected security
interest under applicable law or to the extent that Borrower cannot
grant a security interest in all of Borrower’s rights, title
and interests in the Partnership pursuant to the terms of the
Partnership Agreement and applicable law, “Partnership
Interest” shall mean the Borrower’s rights title and
interests to the extent such can be pledged to the Lender as
collateral security for the payment of the
Obligations.

 

 

10

 

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

 

To
induce Lender to enter into this Agreement and in consideration
thereof, Borrower represents and warrants as follows:

 

5.1           Financial
Statements. Each Financial Statement furnished to Lender
pursuant to this Agreement is complete and correct and fairly
presents the respective financial condition as of the dates
indicated and for the periods involved and respectively shows all
material liabilities, direct and contingent, of the respective
parties. Since the date of the latest of the Financial Statements,
there has been no Material Adverse Effect.

 

5.2           Litigation.
Except as otherwise disclosed by Borrower, there is no action,
suit, investigation or proceeding pending or, to the knowledge of
Borrower, threatened against or affecting Borrower, or any
properties or rights of Borrower or before any Tribunal, which
involves the possibility of any final judgment or liability which
may result in a Material Adverse Effect. Borrower is not in default
with respect to any judgment, order, writ, injunction, decree, rule
or regulation of any Tribunal.

 

5.3           Title
to Properties; Authority. Borrower has full power, authority
and legal right to own and operate the properties which it now
owns, and to carry on its present lines of business and has good
and marketable title to its properties and assets, subject to no
Lien prohibited by this Agreement; and Borrower has full power,
authority and legal right to execute and deliver and to perform and
observe the provisions of this Agreement and all Loan
Documents.

 

5.4           Conflicting
Agreements and Other Matters. Except as otherwise disclosed
by Borrower, Borrower knows of no material default in the
performance of any obligation, covenant or condition in any
agreement to which Borrower is a party or by which it is bound.
Except as otherwise disclosed by Borrower, Borrower is not a party
to any contract or agreement or subject to any charter or other
corporate or partnership restriction which have a Material Adverse
Effect. Borrower is not a party to or otherwise subject to any
contract or agreement which restricts or otherwise affects the
right or ability of Borrower to execute this Agreement and the Loan
Documents or the performance of any of their respective terms.
Neither the execution or delivery of this Agreement or any of the
Loan Documents, nor fulfillment or compliance with their respective
terms and provisions will conflict with, or result in a breach of
the terms, conditions or provisions of, or constitute a default
under, or result in any violation of any agreement, instrument or
Law, or result in the creation of any Lien upon any of the assets
of Borrower (other than as provided in the Loan Documents) or
require any consent, approval, or other action by or any notice to
or filing with any Tribunal.

 

5.5           Compliance
with Applicable Laws. To the best of its knowledge and
belief, Borrower is in compliance with all applicable Laws in
jurisdictions in which Borrower may be doing business and will at
all times maintain such compliance in the future, in each case in
all material respects; provided, however, Borrower reserves the
right to contest in good faith the applicability of its compliance
(or non-compliance) with such Laws to the extent such contest does
not create a Material Adverse Effect.

 

 

11

 

 

5.6           Taxes.
Borrower has filed all tax returns (federal, state and local)
required to be filed and has paid all Taxes.

 

5.7           Enforceability.
The Loan Documents have been duly authorized, executed and
delivered by Borrower and each party thereto and, assuming due
authorization, execution and delivery by Lender, are valid and
binding agreements of them and each is enforceable in accordance
with its terms, except as rights to indemnity and contribution
hereunder may be limited by public policy or applicable Laws and
except as enforceability may be limited by application of
bankruptcy, insolvency, moratorium, or similar laws affecting the
rights of creditors generally or judicial limits upon the right of
specific performance. This Agreement is not in violation of any
applicable usury law or any other law that may limit the amount of
interest to be charged hereunder.

 

5.8           Hazardous
Material. Borrower hereby represents and warrants that to
the best knowledge of the Borrower, no other person has ever caused
or permitted any Hazardous Material to be placed, held, located or
disposed of, on, under or at any premises where Borrower conducts
its operations, and neither the Collateral, or any part thereof has
ever been used (whether by Borrower or, to the best knowledge of
Borrower, by any other person) as a dump site or storage (whether
permanent or temporary) site for any Hazardous Material. Borrower
shall not cause or permit any Hazardous Material to be placed,
held, located or disposed of, on, under or at any premises where
Borrower conducts its operations or any part thereof, except as
necessary in the ordinary conduct of its business, in such amounts
that would not be likely to have a Material Adverse Effect. For the
purposes hereof “Hazardous
Material” means and includes any hazardous, toxic or
dangerous waste, substance or material defined as such in (or for
purposes of) the Comprehensive Environmental Response,
Compensation, and Liability Act, any so-called
“Superfund” or “Superlien” law, or any
other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing
liability or standards of conduct concerning, any hazardous, toxic
or dangerous waste, substance or material, as now or any time
hereinafter in effect. Borrower further represents and warrants
that Borrower, to the best knowledge of Borrower, no other Person,
has ever caused or permitted any asbestos to be located on any of
the property owned or leased by Borrower. Lender shall have the
right but not the obligation to join and participate in, as a party
if it so elects, any legal proceedings or actions initiated in
connection with any Hazardous Materials claims and to have its
reasonable attorney’s and consultant’s fees in
connection therewith paid by Borrower upon demand.

 

 

 

12

 

 

Borrower shall be
solely responsible for, and shall indemnify and hold harmless
Lender, its directors, officers, employees, agents, successors and
assigns from and against, any loss, damage, cost, expense or
liability arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, disposal, or
presence (whether prior to or during the term of the Loan) of
Hazardous Materials on, under or about the any property owned or
leased by Borrower (whether by Borrower or a predecessor in title
or any employees, agents, contractors or subcontractors of Borrower
or any predecessor in title or any third persons at any time
occupying or present on such property), including, without
limitation: (a) all foreseeable consequential damages; (b) all
asbestos abatement costs; (c) the costs of any required or
necessary repair, cleanup or detoxification of property, including
the soil and ground water thereof, and the preparation and
implementation of any closure, remedial or other required plans;
(d) damage to any natural resources; and (e) all reasonable costs
and expenses incurred by Lender in connection with clauses (a),
(b), (c) and (d), including but not limited to reasonable
attorney’s and consultant’s fees.

 

Any
costs or expenses incurred by Lender for which Borrower is
responsible or for which Borrower has indemnified Lender shall be
paid to Lender within ten (10) days after demand, and failing
prompt reimbursement, shall be added to the Indebtedness secured by
the Collateral and earn interest at the Default Rate until paid in
full.

 

The
provisions of this paragraph shall survive (i) the repayment of the
Note and the termination of Lender’s security interests of
record; and (ii) any sale of the Collateral or Borrower’s
other properties.

 

5.13           Employee
Benefit Plans. With respect to any Plan that is subject to
the requirements of ERISA: (i) the Borrower hereby represents and
warrants that no fact that might constitute grounds for the
involuntary termination of the Plan, or for the appointment by the
appropriate United States District Court of a trustee to administer
the Plan, exists at the time of execution of this Agreement, (ii)
the Borrower hereby represents and covenants that throughout the
existence of the Plan, such contributions under the Plan have met
and will meet the minimum funding standards required by ERISA and
the Borrower has not and will not institute a distress termination
of the Plan, (iii) the Borrower hereby represents and covenants
that the Plan’s annual financial and actuarial statements and
the Plan’s annual Form 5500 information return have been and
will be timely filed with the Internal Revenue Service, and (iv)
the Borrower represents and covenants that it will send to Lender a
copy of any notice of a reportable event (as defined in ERISA)
required by ERISA to be filed with the Labor Department or the
PBGC, at the time that such notice is so filed.

 

 

 

13

 

 

ARTICLE VI

COLLATERAL AND SECURITY FOR INDEBTEDNESS

 

6.1           Creation
of Continuing Security Interest. To secure the payment of
all Indebtedness, as and when the same shall become due and payable
(whether by extension, renewal, acceleration or otherwise),
Borrower shall deliver, grant and pledge to Lender a security
interest in the Collateral, and in all property, rights, and
replacements now or hereafter affiliated therewith, more fully
described in the Mortgage, Absolute Assignment of Leases and Rents,
and Account Control Agreement to be delivered to
Lender.

 

6.2           Additional
Documents or Instruments. Borrower will from time to time
and as often as Lender may request execute and deliver to Lender
such additional and supplemental security agreements and other
reports, certificates, data and writings as Lender may request to
evidence, perfect, more fully perfect or evidence or evaluate
Lender’s continuing security interest in the Collateral and
security referred to herein. Without limiting the generality of the
foregoing, Borrower will use commercially reasonable efforts to
obtain from third parties such consents, confirmations,
subordinations, estoppel certificates and supplemental documents as
are reasonably acceptable to Lender or its legal counsel to confirm
the existence and good standing of any contracts, accounts or
payments pledged or assigned to Lender as collateral for the Loan,
including the undertaking of such parties to make payment to Lender
of any accounts or contract payments when due.

 

ARTICLE VII

EVENTS OF DEFAULT

 

7.1           Events
of Default. Occurrence of any of the following events with
respect to Borrower shall, at the option of Lender and at any time
without regard to any previous knowledge on the part of Lender,
constitute an Event of Default under this Agreement and all Loan
Documents:

 

(a)           The
failure of Borrower to make any payment hereunder within three days
of when such payment is due;

 

(b)           Breach,
default or failure of any term, condition, covenant or warranty
undertaken under this Agreement or any Loan Document;
or

 

(c)           Filing
against Borrower of a judgment or federal or state tax lien in an
amount in excess of Five Hundred Thousand and No/100 Dollars
($500,000.00) with respect to: (i) U.S. ex rel. Brian Gravely v.
National American University, et al., Case No. 5:17-cv-05032-JLV;
(ii) Shayanne Bowman and Jackquelynn Mortenson v. Dlorah, Inc.,
d/b/a National American University, et al., Case No. 1816-cv30104;
or (iii) any litigation naming Borrower as a defendant and alleging
claims that Borrower violated the Federal False Claims Act (31
U.S.C. § 3729 et seq.).

 

(d)           Material
injury or destruction, by fire or otherwise, of any Collateral not
adequately covered by insurance; or

 

 

14

 

 

(e)           Any
conveyance, transfer or further encumbrance, whether voluntarily or
involuntarily, of the Collateral in any way without the prior
written consent of Lender or as otherwise permitted by this
Agreement; or

 

(f)           Filing
or having filed against it a petition in bankruptcy, or having a
receiver or trustee appointed of its property, or filing a petition
for arrangement under provisions of the Bankruptcy Code or any
other Law, or making an assignment for the benefit of creditors, or
being adjudicated insolvent by a Tribunal (provided Borrower shall
have thirty (30) days in which to have any involuntary bankruptcy
proceeding dismissed, which dismissal will reinstate the Note and
Loan without further action if Borrower is not otherwise in
default); or

 

(g)           Default
in the payment of principal or of interest on any material
obligation for money borrowed beyond any grace period provided with
respect thereto; or

 

(h)           Failure
to make timely payment or deposit of any material amount of tax
required to be withheld by it and paid to the United States of
America pursuant to the provisions of the Internal Revenue Code of
1986, as amended; or

 

(i) 

Occurrence of a
Material Adverse Effect; or

 

(j)           Application
of any proceeds of the Loan other than exclusively as provided
herein or as otherwise expressly authorized by Lender in writing;
or

 

(k)           The
occurrence of any default under any existing or future swap
agreement (as defined in 11 U.S.C. § 101, as in effect from
time to time) between Borrower and Lender (or any of their
affiliates).

 

7.2           Lender’s
Right to Terminate Funding. Upon the occurrence of any Event
of Default and Borrower’s failure to cure such default within
the period provided for in Section 7.4
hereof, Lender may, at its option, without prior notice, terminate
any obligation to lend or make further advances on the Loan;
provided that Lender shall give subsequent written notice of such
termination. The failure to give such notice to Borrower shall not
affect or limit the exercise of Lender’s rights
hereunder.

 

7.3           Lender’s
Right to Accelerate Note. Upon the occurrence of any Event
of Default, Lender may, at its option, after giving notice as
provided herein and after the expiration of the applicable cure
period, if any, declare the principal of and interest on all
Indebtedness to be immediately due and payable, without
presentment, demand, protest, notice of protest, or other notice of
any kind, all of which are hereby expressly waived by Borrower,
except as provided herein.

 

7.4           Notice
of Default and Opportunity to Cure. In the case of any Event
of Default not involving the payment of money or not involving
defaults under Sections 7.1(d), (e), or (f), Lender shall give
written notice specifying the Event of Default and Borrower may
cure the default within thirty (30) days thereof, provided Borrower
is capable of curing the Event of Default and upon notice
immediately begins to prosecute all actions necessary to cure the
default, all to the reasonable satisfaction of Lender. If Lender in
good faith believes Borrower is not capable of curing such default
or is not reasonably satisfied Borrower is prosecuting all actions
necessary to cure the default, the cure period provided above shall
terminate immediately. If Borrower timely and fully cures each
default within the applicable cure period, Lender agrees this
Agreement, all of the Loan Documents, and the Loan will be
automatically reinstated without further action by Lender or
Borrower. In the event that the Loan has matured by virtue of the
Maturity Date, no notice or opportunity to cure shall be
required.

 

 

15

 

 

7.5           Remedies.
If any one or more Events of Default shall occur and be continuing,
Lender may, subject to the provisions of Section 7.4, proceed to
protect and enforce all or any of its rights contained in this
Agreement or any Loan Documents, or may proceed to enforce payment
of Indebtedness due or enforce any other legal or equitable rights
or exercise any other legal or equitable remedies, or cure or
remedy any default by Borrower for the purpose of preserving its
assets and properties. All rights, remedies or powers conferred
upon Lender shall be cumulative and not exclusive of any other
rights, remedies or powers available. No delay or omission to
exercise any right, remedy or power, shall impair any such right,
remedy or power or shall be construed to be a waiver of any Event
of Default or an acquiescence therein. Any such right, remedy or
power may be exercised from time to time, independently or
concurrently, and as often as shall be deemed expedient. No waiver
of any Event of Default shall extend to any subsequent Event of
Default. No single or partial exercise of any right, remedy or
power shall preclude other or further exercise thereof. Borrower
covenants that if an Event of Default shall happen and be
continuing, it will pay costs of court and other out-of-pocket
expenses paid or incurred by Lender in collecting the amounts due
pursuant to this Agreement, including reasonable attorney’s
fees and costs, together with interest on amounts so expended from
the respective dates of each expenditure at an annual rate equal to
the Default Rate.

 

7.6           Interest
After Default. All past due obligations of Borrower to
Lender, whether principal, costs, expenses or other sums (except
interest), shall bear interest at the Default Rate.

 

ARTICLE VIII

MISCELLANEOUS

 

8.1           Notices.
Unless otherwise provided herein, all notices, requests, consents
and demands shall be in writing and shall be mailed, postage
prepaid. All notices, requests, consents and demands will be
effective when delivered personally, or when mailed by certified or
registered mail, postage prepaid, or when deposited with an
overnight delivery service at the addresses set forth
below:

 

If to
Borrower:                                           
If to Lender:

Dlorah,
Inc.                                                
Center for Excellence in Higher Education

Attn:
Dr. Ronald Shape,
CEO                    
Attn: Eric Juhlin, CEO

5301
Mount Rushmore
Road                     
4021 South 770 East

Rapid
City, SD
57701                                
Suite 400

                                                                   
Salt Lake City, UT 84107

 

With a
copy
to:                                          
With a copy to:

 

Dlorah,
Inc.                                               
C. Robby Camp, Esq.

Attn:
General
Counsel                              
Stephen T. Chema, Esq.

5301
Mount Rushmore
Road                   
Gombos Leyton, PC

Rapid
City, SD
57701                              
1350 Random Hills Road

                                                                                 
Suite
400

                                                                                 
Fairfax, VA
22030

 

 

16

 

 

8.2           Reserved.

 

8.3           Waivers
and Consents. Borrower may take any action prohibited in
this Agreement, or omit to perform any act required herein to be
performed by it, upon receipt by Lender of the written request of
Borrower, and receipt by Borrower of the subsequent written consent
thereto by Lender.

 

8.4           Survival
of Agreements. All covenants and agreements, made herein
shall survive the execution and the delivery of this Agreement and
the Loan Documents. All statements contained in any certificate or
other instrument delivered by Borrower hereunder shall be deemed to
constitute representations and warranties made by
Borrower.

 

8.5           Parties
In Interest. All covenants and agreements contained in this
Agreement and Loan Documents shall bind and inure to the benefit of
the respective successors and assigns of the parties.

 

8.6           Governing
Law. This Agreement shall be
governed by and construed in accordance with the internal laws of
the State of South Dakota. THE LOAN SECURED HEREBY HAS
BEEN APPROVED IN THE STATE OF SOUTH DAKOTA OR IN ACCORDANCE WITH
STANDARDS DEVELOPED IN THE STATE OF SOUTH DAKOTA.

 

8.7           WAIVER
OF JURY TRIAL. BORROWER AND LENDER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY
HAVE TO TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS, (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY. BORROWER
ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL
INDUCEMENT TO LENDER IN EXTENDING CREDIT TO BORROWER, THAT LENDER
WOULD NOT HAVE EXTENDED SUCH CREDIT WITHOUT THIS JURY TRIAL WAIVER,
AND THAT BORROWER HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN
OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS
JURY TRIAL WAIVER AND UNDERSTANDS THE LEGAL EFFECT OF THIS
WAIVER.

 

Any
dispute arising out of or related to the Loan shall be determined
by binding arbitration in accordance with the Federal Arbitration
Act. Any such arbitration proceeding shall be conducted through the
American Arbitration Association in accordance with its Commercial
Arbitration rules.

 

 

17

 

 

8.8           Legal
Interest Rate. All Loan Documents between Lender and
Borrower are expressly limited so that under no contingency or
event whatsoever shall the use, forbearance or detention of the
money advanced, or to be advanced hereunder, exceed the lawful
highest rate permissible under the prevailing law. If fulfillment
of any provision of any Loan Document, at the time performance of
such provisions shall be due, shall involve transcending the limit
of validity prescribed by statute or which a court of competent
jurisdiction may deem applicable, then ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if
from any circumstances the holder of the Note shall ever receive as
interest an amount which would exceed the highest lawful rate, such
amount which would otherwise be excessive interest shall be applied
to the reduction of the unpaid principal balance due under the Note
and not to the payment of interest. This provision shall control
every other provision of all agreements between Lender and Borrower
with respect to the payment of interest or other charge for the
use, forbearance or detention of money advanced or to be advanced
hereunder.

 

8.9           No
Reliance on Lender. The Lender is not and shall not be under
obligation to Borrower, to verify the truth or accuracy of any
information contained in this Agreement or any document or
information provided to Lender in connection with the Loan, Lender
is under no duty to disclose any information to any party regarding
the suitability of borrowing the Loan. Borrower has not relied on
any information provided by the Lender for any investment or
borrowing decision, and Lender shall not be liable for any failure
to advise, disclose or provide information to Borrower. Borrower
hereby agrees to indemnify and hold Lender harmless against all
claims and any loss which might arise out of claims made against
Lender on account of the foregoing, including all costs and
attorneys’ fees.

 

8.10           Headings.
The headings in this Agreement are for convenience of reference
only and shall not constitute a part of the text hereof nor alter
or otherwise affect the meaning hereof.

 

8.11           Severability.
The unenforceability or invalidity as determined by a Tribunal of
competent jurisdiction or any arbitrator duly appointed by the
parties pursuant to Section 8.7 of this Agreement, of any provision
or provisions of this Agreement shall not render unenforceable or
invalid any other provision or provisions hereof, provided,
however, if Lender determines that the finding of unenforceability
or invalidity adversely affects the basic consideration of this
Agreement, Lender may, at its option, terminate this
Agreement.

 

8.12           Construction.
In the event of a conflict between the terms, covenants and
conditions of this Agreement and Note, the terms, covenants and
conditions of the document which shall enlarge the interest of the
Lender in the Collateral, afford the Lender greater financial
security in the Collateral and/or assure payment of the
Indebtedness in full, shall control.

 

8.13           Entire
Agreement. This Agreement and the Loan Documents contain the
entire agreement between the parties with respect to the Loan
transaction contemplated herein and supersede all prior agreements
or understandings between the parties relating to their subject
matter. This Agreement and the Loan Documents may not be modified
or amended except in writing signed by all parties.

 

 

18

 

 

8.14           Counterparts.
This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same
instrument.

 

ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO
EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER) AND US (LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT,
ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS
WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE
AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN A WRITING
SIGNED BY US TO MODIFY IT.

 

8.15           U.S.
Patriot Act Notification. The following notification is
provided to the Borrower pursuant to Section 326 of the USA Patriot
Act of 2001, 31 U.S.C. Section 5318: IMPORTANT INFORMATION ABOUT
PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight
the funding of terrorism and money laundering activities, Federal
law requires all financial institutions to obtain, verify, and
record information that identifies each person or entity that opens
an account, including any deposit account, treasury management
account, loan, other extension of credit, or other financial
services product. When the Borrower opens an account, Lender will
ask for Borrower’s name, taxpayer identification number,
address, and other information that will allow the identification
of the Borrower the Lender may also require Borrower’s legal
organizational documents or other identifying
documents.

 

(Signatures on Following Page)

 

 

 

 

 

 

19

 

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be
delivered as of the day and year first above written.

 

BORROWER:

 

DLORAH, INC., a South Dakota
corporation

 

 

By:           /s/
Ronald Shape 

Dr.
Ronald Shape, Chief Executive Officer

 

 

LENDER:

 

CENTER FOR EXCELLENCE IN HIGHER EDUCATION,
INC., an Indiana non-profit corporation

 

By:           /s/
Eric Juhlin 

Eric
Juhlin, Chief Executive Officer

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