Document:

Exhibit 10.1

 

EXECUTION

 

LOAN AND SECURITY
AGREEMENT

 

by and between

 

MORIAH EDUCATION MANAGEMENT
LLC

 

as Lender,

 

and

 

GREENWOOD HALL, INC.,

 

and

 

PCS LINK, INC.

 

jointly and severally,

 

as Borrower

 

Dated: October __,
2016

 

     

     

    

 

EXECUTION

 

LOAN AND SECURITY AGREEMENT

 

LOAN AND SECURITY AGREEMENT,
dated as of October 14, 2016, by and among GREENWOOD HALL, INC., a Nevada corporation with a principal place of
business at 12424 Wilshire Boulevard, Suite 1030, Los Angeles, CA 90025 (“Greenwood”), PCS LINK, INC.,
a California corporation with a principal place
of business at 12424 Wilshire Boulevard, Suite 1030, Los Angeles, CA 90025 (“PCS” and, together with Greenwood,
jointly and severally, “Borrower”), and MORIAH EDUCATION MANAGEMENT LLC, a Delaware limited liability
company with offices at 1 University Plaza, Hackensack, NJ 07601 (together with its successors and assigns, the “Lender”).

 

RECITALS:

 

WHEREAS, Borrower
desires to enter into a secured revolving loan credit facility with Lender; and

 

WHEREAS, Lender
is willing to establish such credit facility on the terms and conditions hereinafter set forth;

 

NOW, THEREFORE,
in consideration of the foregoing, the mutual covenants and agreements herein contained and other good and valuable consideration,
Lender and Borrower mutually covenant, warrant and agree as follows:

 

SECTION
1. DEFINITIONS AND RULES OF INTERPRETATION AND CONSTRUCTION

 

Specific Terms Defined.
Capitalized terms used herein and not otherwise defined have the following meanings:

 

1.1           “Account
Debtor” or
“account debtor” has the meaning ascribed to such term in the UCC.

 

1.2           “Accounts”
or “accounts” means “accounts” as defined in the UCC, and, in addition, any and all
obligations of any kind at any time due and/or owing to Borrower, whether now existing or hereafter arising, and all rights of
Borrower to receive payment or any other consideration including, without limitation, pursuant to invoices, contract rights, leases,
accounts receivable, general intangibles, choses-in-action, notes, drafts, acceptances, instruments and all other debts, obligations
and liabilities in whatever form owing to Borrower from any Person, including, without limitation, all of Borrower’s rights
to receive payments for goods sold (whether delivered, undelivered, in transit or returned) or assets leased or services rendered,
which may be represented thereby, or with respect thereto, and all property pledged as collateral security for any of the foregoing,
and all rights as an unpaid vendor (including stoppage in transit, replevin or reclamation), and all additional amounts due from
any Account Debtor, whether or not invoiced, together with all Proceeds and products of any and all of the foregoing.

 

1.3           “Advance”
has the meaning as set forth in Section 2.1(b)
hereof.

 

     

     

    

 

1.4           “Affiliate”
means, with respect to any Person, (a) any other Person that, directly or indirectly, controls, is controlled by, or is under
common control with such Person, including any Subsidiary, or (b) any other Person who is a director, manager or officer (i) of
such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above. For the purposes of this
definition, control of a Person means the power (direct or indirect) to direct or cause the direction of the management or the
policies of such Person, whether through the ownership of any voting securities, by contract or otherwise.

 

1.5           “Agreement”
means this Loan and Security Agreement (including all Exhibits annexed hereto and the Borrower’s Disclosure Schedule)
as originally executed or, if amended, modified, supplemented, renewed, extended or replaced from time to time, as so amended,
modified, supplemented, renewed, extended or replaced.

 

1.6           “Availability”
means, as of any date of determination, the lesser of (i) the Borrowing Base (as set forth in
the most recently delivered Borrowing Certificate), and (ii) Three Million Five Hundred Thousand Dollars ($3,500,000.00).

 

1.7           “Balance
Sheet Date” means May 31, 2016.

 

1.8           “Borrower”
has the meaning set forth in the introductory paragraph hereof.

 

1.9           “Borrower’s
Disclosure Schedule” means the disclosure schedule prepared by Borrower that is being delivered to Lender concurrently
herewith.

 

1.10         “Borrower’s
Premises” means the properties leased by the Borrower located at12424 Wilshire Blvd, Suite
1030, Los Angeles, CA 90025, 2504 Kent Street, Bryan, TX 77802 and 2550 West Union Hills Drive, Suite 201, Phoenix, AZ 85027.

 

1.11         “Borrowing
Base” shall be calculated at any time as the product of the following: (a) revenues scheduled
to be generated to Borrower within three hundred sixty five (365) days from the date of the determination of the Borrowing Base
under the terms of Recurring Revenue Contracts deemed satisfactory to Lender in Lender’s sole and absolute discretion, multiplied
by (b) forty percent (40%). 

 

1.12         “Borrowing
Certificate” has the meaning as set forth in Section 2.1(f) hereof.

 

1.13         “Business”
means the provision of education management services to university-level educational institutions.

 

1.14         “Business
Day” means any day other than a Saturday, Sunday or any other day on which banks located in the State of New
York are authorized or required to close under applicable banking laws.

 

1.15         “Change
of Control” has the meaning as set forth in Section
10.1 hereof.

 

1.16        
“Chattel Paper” has the meaning ascribed
to such term in the UCC.

 

1.17        
“Closing
Date” means the date of this Agreement.

 

1.18        
“Closing Fee” has
the meaning as set forth in Section 3.2 hereof.

 

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1.19        
“Collateral”
has the meaning as set forth in Section 5.1 hereof.

 

1.20        
“Collection
Account” has the meaning set forth in Section
2.1(g) hereof.

 

1.21        
“Collection
Days” means
a period equal to the greater of (i) two (2) Business Days after the deposit of Collections into the Collection Account, or (ii)
such longer period as may be required by the financial institution with whom the Collection Account is maintained, in either event
for which interest may be charged on the aggregate amount of such deposits at the Interest Rate or, if applicable, the Default
Interest Rate.

 

1.22         “Collections”
means with respect to any Account, all cash collections on such Account.

 

1.23         “Commercial
Tort Claims” has the meaning ascribed to such term in
the UCC.

 

1.24         “Default
Interest Rate” has the meaning set forth in Section
3.1(b).

 

1.25         “Deposit
Accounts” has the meaning ascribed to such term in the
UCC.

 

1.26         “Document”
or “document”
has the meaning ascribed to such term in the UCC.

 

1.27         “Domain
Name, URL and IP Address Assignment” means the Domain Name, URL and IP Address Assignment in form and substance
acceptable to Lender as originally executed or, if amended, modified, supplemented, renewed, extended or replaced from time to
time, as so amended, modified, supplemented, renewed, extended or replaced.

 

1.28        
“EBITDA” means, for any period with respect to the Borrower, earnings before deduction for interest charges,
taxes, depreciation and amortization and other non-cash charges, and excluding stock-based compensation and charges.

 

1.29         “Electronic
Chattel Paper” has the meaning ascribed to such term in the UCC.

 

1.30         “Environment”
means all air, surface water, groundwater or land, including, without limitation, land surface or subsurface, including, without
limitation, all fish, wildlife, biota and all other natural resources.

 

1.31         “Environmental
Law” or “Environmental Laws”
means all federal, state and local laws, statutes, ordinances and regulations now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment relating to the regulation and protection of human health, safety, the environment
and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation).

 

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1.32         “Environmental
Liabilities and Costs” means, as to any Person, all liabilities, obligations, responsibilities, remedial actions,
losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all fees, disbursements
and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions
and interest incurred as a result of any claim or demand by any other Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any Environmental Law, permit, order or agreement with any Governmental
Authority or other Person, and which arise from any environmental, health or safety conditions, or a Release or conditions that
are reasonably likely to result in a Release, and result from the past, present or future operations of such Person or any of
its Affiliates.

 

1.33         “Environmental
Lien” means any Lien in favor of any Governmental Authority
for Environmental Liabilities and Costs.

 

1.34         “ERISA”
means the Employee Retirement Income Security Act of 1974, as the same now exists or may from time to time hereafter
be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related
thereto.

 

1.35         “Equipment”
means “equipment”, as such term is defined in the UCC, now owned or hereafter acquired by Borrower,
wherever located, and shall include, without limitation, the machinery and equipment set forth on Section 5.4(j) of the Borrower’s
Disclosure Schedule and all other equipment, machinery, furniture, Fixtures, computer equipment, telephone equipment, molds,
tools, dies, partitions, tooling, transportation equipment, all other tangible assets used in connection with the manufacture,
sale or lease of goods or rendition of services, and Borrower’s interests in any leased equipment, and all repairs, modifications,
alterations, additions, controls and operating accessories thereof or thereto, and all substitutions and replacements therefor.

 

1.36         “Equity
Interests” means, with respect to any Person, any and all shares, rights to purchase, options, warrants, general,
limited or limited liability partnership interests, membership interests, units, participations or other equivalents of or interest
in (regardless of how designated) equity of such Person, whether voting or nonvoting, including common stock, preferred stock,
convertible securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC (or any successor thereto) under the 1934 Act).

 

1.37         “Event
of Default” means the occurrence or existence
of any event or condition described in Section 11 of this Agreement.

 

1.38         “Existing
Insurance Policies” has the meaning set forth in Section 5.4(q) hereof.

 

1.39         “Financial
Statements” has the meaning as set forth in Section
8.9 hereof.

 

1.40         “Financing
Statements” means the Uniform Commercial Code UCC-1
Financing Statements and Uniform Commercial Code UCC Financing Statement Amendments to be filed with applicable Governmental Authorities
of each State or Commonwealth or political subdivisions thereof pursuant to which Lender shall perfect its security interest in
the Collateral.

 

1.41         “Fiscal
Year” means the twelve (12) month period ending on August 31.

 

1.42         “Fixtures”
has the meaning ascribed to such term in the UCC.

 

1.43         “GAAP”
means generally accepted accounting principles in effect in the United States of America at the time of any determination,
and which are applied on a consistent basis. All accounting terms used in this Agreement which are not expressly defined in this
Agreement shall have the meanings given to those terms by GAAP, unless the context of this Agreement otherwise requires.

 

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1.44         “General
Intangibles” has the meaning ascribed to such term in
the UCC.

 

1.45         “Goods”
has the meaning ascribed to such term in the UCC.

 

1.46         “Governmental
Authority”
or “Governmental
Authorities” means any federal, state, county or municipal governmental agency, court, tribunal, department,
instrumentality, board, commission, officer, official or entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, the FDA.

 

1.47         “Guarantee
means the Guarantee of the Guarantor as originally executed or, if amended, modified, supplemented, renewed, extended or replaced
from time to time, as so amended, modified, supplemented, renewed, extended or replaced.

 

1.48         “Guarantor”
means John Robert Hall, an individual. 

 

1.49         “Hazardous
Substances” means (a) substances that are defined or listed in, or otherwise classified
pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous
wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity,” (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling
fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas,
or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form
or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of
50 parts per million.

 

1.50         “Indebtedness”
means, with respect to any Person, all of the obligations of such Person which, in accordance with GAAP, should be
classified upon such Person’s balance sheet as liabilities, or to which reference should be made by footnotes thereto, including
without limitation, with respect to Borrower, in any event and whether or not so classified, including the following:

 

(a)          all
debt and similar monetary obligations of a Person, whether direct or indirect;

 

(b)          all
obligations of a Person arising or incurred under or in respect of any guaranties (whether direct or indirect) of such Person
with respect to the Indebtedness of any other Person; and

 

(c)          all
obligations of a Person arising or incurred under or in respect of any Lien upon or in any property owned by Borrower that secures
Indebtedness of another Person, even though such Person has not assumed or become liable for the payment of such indebtedness.

 

1.51        
“Instruments” has the meaning ascribed to such term in the UCC.

 

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1.52         “Intellectual
Property” means all of the following intellectual property used in the conduct of Borrower’s Business: (a) inventions,
processes, techniques, discoveries, developments and related improvements, whether or not patentable; (b) United States patents,
patent applications, divisionals, continuations, reissues, renewals, registrations, confirmations, re-examinations, extensions
and any provisional applications, of any such patents or patent applications, and any foreign or international equivalent of any
of the foregoing; (c) unregistered , United States registered or pending trademark, trade dress, service mark, service name, trade
name, brand name, logo, domain name, or business symbol and any foreign or international equivalent of any of the foregoing; (d)
work specifications, software (including object and source code listing) and artwork; (e) technical, scientific and other know-how
and information, trade secrets, methods, processes, practices, formulas, designs, assembly procedures, specifications owned or
used by Borrower; (f) copyrights; (g) work for hire; (h) customer and mailing lists; (i) any and all rights of the Borrower to
its trade names, including, without limitation, the names “Greenwood Hall” and “Greenwood & Hall”
or any derivations thereof, and Borrower’s entire customer list and database and all assets used or useful by Borrower in
the conduct of its Business over the internet or in any electronic medium, including any websites, URLs or domain names owned
by Borrower; and (j) all goodwill associated with the items described in clauses (a) through (i).

 

1.53         “Interest
Rate” means the Revolver Interest Rate.

 

1.54         “Inventory”
has the meaning ascribed to such term in the UCC, now owned or hereafter acquired by Borrower, wherever located.

 

1.55         “Investment
Property” has the meaning ascribed to such term in the UCC.

 

1.56        
[INTENTIONALLY OMITTED]

 

1.57         “Lender”
has the meaning set forth in the introductory paragraph hereof.

 

1.58         “Letter-of-Credit
Rights” means “letter-of-credit rights” as such term is defined in the UCC, including rights to payment
or performance under a letter of credit, whether or not the beneficiary thereof has demanded or is entitled to demand payment
or performance.

 

1.59         “Lien”
or “lien”
means any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, lien (statutory or other,
including, without limitation, liens imposed by any Governmental Authority), claim, charge or other encumbrance of any kind or
nature whatsoever (including, without limitation, pursuant to any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the
UCC or comparable law of any jurisdiction to evidence any of the foregoing) on personal or real property or fixtures.

 

1.60         “Loans”
means the aggregate principal amounts advanced to, made available to, or paid for the benefit of, Borrower as set forth in this
Agreement and the other Loan Documents.

 

1.61         “Loan
Documents” means this Agreement, the Revolving Loan Note, the Guarantee, the Subordination Agreements, the Patent
and Trademark Security Agreement, the Stock Pledge Agreement, the Lockbox Agreement, the Warrants and any and all other
agreements, notes, documents, mortgages, financing statements, guaranties, intercreditor agreements, subordination agreements,
certificates and such other documents and instruments executed and/or delivered at any time by Borrower or any other Person to
Lender pursuant to and in connection with the Loans and this Agreement, as the same may be amended, modified, supplemented, renewed
or extended from time to time.

 

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1.62         “Lockbox”
shall have the meaning assigned to such term in the Lockbox Agreement.

 

1.63         “Lockbox
Agent” means the person serving from time to time as the Lockbox Agent under the Lockbox Agreement.

 

1.64         “Lockbox
Agreement” means that certain Lockbox Agreement dated as of the date hereof, among Lender, the Borrower and the Lockbox
Agent.

 

1.65         “LTM
EBITDA” of Borrower means, as of any date of measurement, Borrower’s consolidated EBITDA for the prior twelve
(12) consecutive whole calendar months ending on the last day of the whole calendar month preceding such date of measurement,
as certified by a Responsible Officer of Borrower. 

 

1.66         “Material
Adverse Effect” means a material adverse effect on (a) the Business, assets, liabilities, financial condition,
results of operations or business prospects of any Borrower, (b) the ability of any Borrower or any Guarantor to perform
its obligations under any Loan Document to which it is a party, (c) the value of the Collateral or the rights of Lender therein,
(d) the validity or enforceability of any of the Loan Documents, (e) the rights and remedies of Lender under any of such
Loan Documents, or (f) the timely payment of the principal of or interest on the Loans or other amounts payable in connection
therewith. All determinations of materiality shall be made by the Lender in its sole and absolute judgment.

 

1.67         “Material
Contract” means any contract or other arrangement (including Loan Documents), including, without limitation,
the Recurring Revenue Contracts, whether written or oral, to which Borrower is a party as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto could have a Material Adverse Effect or could result in a liability to Borrower
in excess of $130,000.

 

1.68         “Maturity
Date” means the earlier of (i) October 14, 2018 and (ii) the date Lender may exercise any of its remedies pursuant
to the terms hereof.

 

1.69         “Maximum
Credit” shall mean, subject to Availability, Three Million Five Hundred Thousand Dollars ($3,500,000) as of the
date hereof, which Maximum Credit shall automatically be reduced by $29,166.67 per month, commencing April 1, 2017.

 

1.70         “1934
Act” means the Securities Exchange Act of 1934, as amended.

 

1.71         “Obligations”
means all obligations, liabilities and indebtedness of every kind, nature and description owing by Borrower to Lender
pursuant to the Loan Documents, including, without limitation, principal, interest, repurchase obligations (including the Put
Option), charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise,
whether now existing or hereafter arising, whether arising before, during or after the Term or after the commencement of any case
with respect to Borrower under the United States Bankruptcy Code or any similar statute (including, without limitation, the payment
of interest and other amounts which would accrue and become due but for the commencement of such case), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured.

 

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1.72         “Organizational
Documents” means, in the case of a corporation, its Articles of Incorporation, Certificate
of Incorporation and By-Laws; in the case of a general partnership, its Articles of Partnership and any partnership agreement;
in the case of a limited partnership, its Articles of Limited Partnership and any partnership agreement; in the case of a limited
liability company, its Articles of Organization and Operating Agreement or Regulations, if any; in the case of a limited liability
partnership, its Articles of Limited Liability Partnership; or alternatively, in each case, the legal equivalent thereof in the
jurisdiction of its organization, together with all other formation or governing documents, schedules, exhibits, amendments, addendums,
modifications, replacements, additions, or restatements of the foregoing, which are in effect.

 

1.73         “Overadvance”
has the meaning as set forth in Section 2.1(d) hereof.

 

1.74         “Patent
and Trademark Security Agreement” means the Patent and Trademark Security Agreement as originally executed or, if amended,
modified, supplemented, renewed, extended or replaced from time to time, as so amended, modified, supplemented, renewed, extended
or replaced, and all documents executed in connection with the Patent and Trademark Security Agreement.

 

1.75         “Payment
Intangibles” has the meaning ascribed to such term in the UCC.

 

1.76         “Permitted
Actions” means any or all of the following with respect to the Collateral: inspect;
assemble; appraise; display, sever; remove; maintain; use or operate; prepare for sale or lease; process or repair; and/or lease,
transfer and/or sell any or all of the Collateral by private sale or public disposition from any of the locations where any Collateral
may be located.

 

1.77         “Permitted
Encumbrances” means Liens granted to Lender or Lender’s Affiliates.

 

1.78         “Permitted
Indebtedness” means, except with respect to those certain trade accounts payable listed in Section 9.3 of Borrower’s
Disclosure Schedule, (i) the unsecured Indebtedness consisting of accounts payable or trade payables of the Borrower incurred
in the ordinary course of Business and repayable in accordance with customary trade practices, and (ii) Indebtedness secured by
Permitted Encumbrances.

 

1.79         “Person”
or “person” means, as applicable,
any individual, sole proprietorship, partnership, corporation, limited liability company, limited liability partnership, business
trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any Governmental Authority.

 

1.80         “Proceeds”
has the meaning ascribed to such term in the UCC and shall also include, but not be limited to, (a) any and all proceeds
of any and all insurance policies (including, without limitation, life insurance, casualty insurance, business interruption insurance
and credit insurance), indemnity, warranty or guaranty payable to Borrower from time to time with respect to any of the Collateral
or otherwise, (b) any and all payments (in any form whatsoever) made or due and payable to Borrower from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any governmental
body, authority, bureau or agency or any other Person (whether or not acting under color of Governmental Authority) and (c) any
and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

 

1.81         “Promissory
Note” has the meaning ascribed to such term in the UCC.

 

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1.82         “Put
Option” has the meaning set forth in the Seven-Year Warrant, of even
date herewith, issued by the Borrower to Lender, for the purchase of 8,125,000 shares of Borrower’s capital stock described
therein.

 

1.83         “Recurring
Revenue Contracts” means written contracts between Borrower and unaffiliated third parties generating scheduled revenue
streams to Borrower described in detail therein in consideration for Borrower’s ongoing rendition of services to such third
parties, which contracts shall be utilized in the determination of the Borrowing Base.

 

1.84         “Release”
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing
of a Hazardous Substance into the Environment.

 

1.85         “Reserves”
means, as of any date of determination, such amounts as Lender may from time to time establish and revise in good faith
reducing the amount of the Revolving Loan Commitment (a) to reflect events, conditions, contingencies or risks which, as determined
by Lender in good faith, do or may materially and adversely affect either (i) the Collateral or any other property which is security
for the Obligations or its value, (ii) the assets, Business or prospects of Borrower, (iii) the security interests and other rights
of Lender in the Collateral (including the enforceability, perfection and priority thereof), or (iv) Borrower’s ability
to perform its Obligations under the Loan Documents; or (b) in respect of any state of facts which Lender determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default.

 

1.86         “Responsible
Officer” means the Chief Executive Officer or Chief Financial Officer of Greenwood.

 

1.87         “Revolver
Interest Rate” has the meaning set forth in Section 3.1(a).

 

1.88         “Revolving
Loan Commitment” means, at any given time, the difference between (i) Availability and
(ii) the sum of the Reserves plus outstanding Obligations.

 

1.89         “Revolving
Loan Note” means the “Secured Promissory Note (Revolving Loans)” delivered
by Borrower to Lender, of even date herewith, as may be amended, restated, modified or supplemented from time to time .

 

1.90         “Revolving
Loan Prepayment Fee” has the meaning set forth
in Section 4.2(c) hereof.

 

1.91         “Revolving
Loans” has the meaning as set forth in Section
2.1(a) hereof.

 

1.92         “SEC”
means the United States Securities and Exchange Commission.

 

1.93         “SEC
Reports” means all periodic and other reports filed by the Borrower with the SEC pursuant
to the 1934 Act prior to and after the Closing Date and including the information and documents (other than exhibits) incorporated
therein by reference.

 

1.94         “Securities”
has the meaning ascribed to such term in the UCC.

 

1.95         “Software”
has the meaning ascribed to such term in the UCC.

 

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1.96         “Stock
Pledge Agreement” mean the Stock Pledge Agreement between Lender and Greenwood with respect
to 100% of the capital stock of PCS, as originally executed or, if amended, modified, supplemented, renewed, extended or replaced
from time to time, as so amended, modified, supplemented, renewed, extended or replaced.

 

1.97         “Subordination
Agreements” means the agreements, in form and substance acceptable to Lender, between
Lender and each of Colgan Financial Group, Lincoln Park Capital, Redwood Fund LP and First Fire Global whereby each such entity,
among other matters, subordinates its Lien in the Collateral and certain rights to payment to the Lien and rights of payment in
favor of Lender.

 

1.98         “Subsidiary”
means, as to any Person, a corporation, limited liability company or other entity with respect to which more than fifty
(50%) percent of the outstanding Equity Interests of each class having voting power is at the time owned by such Person or by
one or more Subsidiaries of such Person or by such Person.

 

1.99         “Tangible
Chattel Paper” has the meaning ascribed to such term
in the UCC.

 

1.100      “Tax”
has the meaning set forth in Section 8.12(c).

 

1.101      “Tax
Deduction” has the meaning set forth in Section 8.12(c).

 

1.102      “Term”
has the meaning set forth in Section 4.1.

 

1.103      “UCC”
means the Uniform Commercial Code as presently enacted in
New York (or any successor legislation thereto), and as the same may be amended from time to time, and the state counterparts
thereof as may be enacted in such states or jurisdictions where any of the Collateral is located or held.

 

1.104      “United
States Bankruptcy Code” means Title 11 of the United States Code, as the same may be amended from time to time, and
any successor statute.

 

1.105      “Warrants”
means (i) a Five-Year Warrant, of even date herewith, issued by the Borrower to Lender, for the purchase of 8,125,000 shares
of Borrower’s capital stock described therein, at an exercise price of $0.14 per share, and (ii) a Seven-Year Warrant, of
even date herewith, issued by the Borrower to Lender, for the purchase of 3,500,000 shares of Borrower’s capital stock described
therein, at an exercise price of $0.12 per share.

 

1.106      Rules
of Interpretation and Construction. In this Agreement unless
the context otherwise requires:

 

(a)          All
terms used herein which are defined in the UCC shall have the meanings given therein unless otherwise defined in this Agreement;

 

(b)          Sections
mentioned by number only are the respective Sections of this Agreement as so numbered;

 

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(c)          Words
importing a particular gender shall mean and include the other gender and words importing the singular number mean and include
the plural number and vice versa;

 

(d)          Words
importing persons shall mean and include firms, associations, partnerships (including limited partnerships), societies, trusts,
corporations, limited liability companies or other legal entities, including public or governmental bodies, as well as natural
persons;

 

(e)          Each
reference in this Agreement to a particular person shall be deemed to include a reference to such person's successors and permitted
assigns;

 

(f)          Any
headings preceding the texts of any Section of this Agreement, and any table of contents or marginal notes appended to copies
hereof are intended, solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect
its meaning, construction or effect;

 

(g)          If
any clause, provision or section of this Agreement shall be ruled invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any of the remaining provisions thereof;

 

(h)          The
terms “herein”, “hereunder”, “hereby”, “hereto”, and any similar terms as used
in this Agreement refer to this Agreement; the term “heretofore” means before the date of execution of this Agreement;
and the term “hereafter” shall mean after the date of execution of this Agreement;

 

(i)          If
any clause, provision or section of this Agreement shall be determined to be apparently contrary to or conflicting with any other
clause, provision or section of this Agreement, then the clause, provision or section containing the more specific provisions
shall control and govern with respect to such apparent conflict;

 

(j)          Unless
otherwise specified, (i) all accounting terms used herein or in any Loan Document shall be interpreted in accordance with GAAP,
(ii) all accounting determinations and computations hereunder or thereunder shall be made in accordance with GAAP and (iii) all
financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with GAAP;

 

(k)          An
Event of Default that occurs shall exist or continue or be continuing unless such Event of Default is waived by Lender or cured
in accordance with the terms of this Agreement;

 

(l)          The
word “and” when used from time to time herein shall mean “or” or “and/or” if such meaning
is expansive of the rights or interests of Lender in the given context.

 

(m)          All
references herein and in the other Loan Documents to times of day shall refer to New York City time, unless otherwise specified
to the contrary; and

 

(n)          No
provision of this Agreement shall be construed against or interpreted to the disadvantage of any party hereto by reason of such
party or his or its counsel having, or being deemed to have, structured or drafted such provision.

 

    	 	11

     

    

 

SECTION
2. LOANS

 

2.1          Revolving
Loans.

 

(a)          Lender
may, subject to the terms and conditions contained herein and the satisfaction of the closing and funding conditions set forth
herein, make revolving loans to Borrower (“Revolving Loans”) prior to the Maturity Date in amounts requested
by Borrower from time to time, but not more than two times each month, provided that the requested Revolving Loan would not cause
the outstanding Revolving Loans to exceed the Revolving Loan Commitment existing immediately prior to the making of the requested
Revolving Loan. Subject to the terms and conditions hereof, Borrower may borrow, repay and reborrow Revolving Loans, as set forth
in this Agreement.

 

(b)          Revolving
Loans may be drawn in tranches of not less than Five Hundred Thousand Dollars ($500,000) (each drawing, an “Advance”
and collectively, the “Advances”). The obligation of Borrower to repay the Revolving Loans shall be evidenced
by the Revolving Loan Note.

 

(c)          The
principal amount of the Revolving Loans shall be payable in accordance with the terms of the Revolving Loan Note.

 

(d)          Notwithstanding
any provision herein to the contrary, Borrower shall repay the Revolving Loans immediately at any time and from time to time in
an amount by which the outstanding balance of the Revolving Loans exceeds the Revolving Loan Commitment, as determined by Lender
(an “Overadvance”).

 

(e)          Borrower
may voluntarily prepay the entire unpaid principal sum of the Revolving Loans without premium or penalty, except as set forth
in Section 4.2 hereof.

 

(f)          Whenever
Borrower desires an Advance, Borrower will notify Lender by delivery of a borrowing certificate certified by a Responsible Officer
(“Borrowing Certificate”) no later than two (2) Business Days prior to the date of the proposed Advance, setting
forth in reasonable detail, as of the date set forth on the Borrowing Certificate, (A) a calculation of Borrower’s year-to-date
EBITDA or LTM EBITDA, as applicable, and (B) an accounts receivable aging report and a report of the schedule of payments due
and owing under each Recurring Revenue Contract, in form and substance acceptable to Lender, which Borrowing Certificate shall
in all respects be subject to Lender’s review and approval. In addition, Borrower shall furnish Lender with a Borrowing
Certificate weekly on each Tuesday during the Term setting forth such information, irrespective of whether Borrower has then requested
an Advance. Lender shall be entitled to rely on any facsimile or electronic transmission of a Borrowing Certificate given by a
person who Lender reasonably believes to be a Responsible Officer, and Borrower shall indemnify and hold Lender harmless for any
damages or loss suffered by Lender as a result of such reliance. The funding of each Advance shall be made in accordance with
the applicable Borrowing Certificate as approved by Lender.

 

    	 	12

     

    

 

(g)          All
Proceeds of Borrower’s sales and all other proceeds of Accounts and other Collateral shall be deposited by Account Debtors
in accordance with Borrower’s irrevocable payment instruction approved by Lender in writing, in the Lockbox account designated
by and/or maintained in the name of Borrower pursuant to the Lockbox Agreement or pursuant to such other deposit account control
agreement(s) that have been approved in writing by Lender in Lender’s sole discretion directed to Lender and deposited in
an account at a financial institution selected by Lender (such account referred to as the “Collection Account”).
Once instituted, such Lockbox system shall remain in effect unless Lender directs otherwise. Borrower shall bear all risk of loss
of any funds deposited into such account except to the extent such loss is caused by the gross negligence or the willful misconduct
of Lender. In connection therewith, Borrower shall execute the Lockbox Agreement and such other lockbox and/or bank account agreements
as Lender shall reasonably specify from time to time. Any collections or other Collateral proceeds received by Borrower from any
source whatsoever shall be held in trust for the benefit of Lender and immediately remitted to Lender in kind.

 

(h)          In
the event that Borrower receives any Collections that should have been sent to the Collection Account, Borrower shall, promptly
upon receipt and in any event within one Business Day of receipt, forward such Collections directly to Lender or otherwise in
accordance with Lender’s instruction, in the form received, and promptly notify Lender of such event. Until so forwarded,
such Collections shall be held in trust for the benefit of Lender.

 

(i)          Subject
to charges for Collection Days, all amounts deposited into the Collection Account will, for the purposes of calculating the Borrowing
Base and interest, be credited to the aggregate outstanding amount of the Revolving Loans on the date of deposit in the Collection
Account. No checks, drafts or other instruments received by Lender shall constitute final payment to Lender unless and until such
instruments have actually been collected.         

 

(j)          All
payments of principal, interest, fees, costs, expenses and other charges provided for in this Agreement or any other Loan Document
that have not been paid to Lender on the due dates thereof, shall be added to the principal amount of the Revolving Loans, and
shall bear interest at the Default Interest Rate.

 

(k)          Application
of Collections and Proceeds of Collateral:

 

1.          So
long as no Event of Default shall have occurred and remain outstanding, Lender agrees to apply all Collections, if any, as follows:
first, to Overadvances; second, to all fees, costs and expenses; third, to accrued and unpaid interest; fourth, to matured and
unpaid Obligations; and fifth, the principal amount of the Revolving Loans.

 

2.          If
an Event of Default shall have occurred and be continuing, Lender may apply Collections, any other proceeds of Collateral and
all other payments received by Lender to the payment of the Obligations in such manner and in such order as Lender may elect in
its sole discretion.

 

2.2           Maximum
Credit. The aggregate principal amount of the Revolving Loans shall not exceed the amount of the Maximum Credit, as reduced
on a monthly basis in accordance with the definition of “Maximum Credit” set forth herein.

 

2.3           Reserves.
Without limiting any other rights and remedies of Lender hereunder or under the other Loan Documents, the Availability shall be
subject to Lender's continuing right, in its sole discretion in good faith, from time to time, to withhold a Reserve from Availability
to reflect, among other things, conditions, contingencies or risks that may affect the Collateral or the financial condition of
the Borrower.

 

    	 	13

     

    

 

2.4           Use
of Proceeds. Borrower shall use the proceeds of the Loans solely for (a) payment in full of any other Indebtedness secured
by the Collateral and the payment of other indebtedness set forth on Exhibit 2.4 annexed hereto, (b) payment of the fees
set forth in Section 3.2, (c) outstanding closing expenses, and (d) ordinary course working capital purposes in its Business.

 

2.5           
Repayment. Borrower shall repay the Loans and other Obligations in accordance with the Revolving Loan Note and this Agreement.

 

2.6           ACH.
In order to satisfy Borrower’s payment of amounts due under the Loans and all fees, expenses and charges with respect thereto
that are due and payable under this Agreement or any other Loan Document, Borrower hereby irrevocably authorizes the Lender to
initiate manual and automatic electronic (debit and credit) entries through the Automated Clearing House or other appropriate
electronic payment system (“ACH”) to all deposit accounts maintained by Borrower, wherever located. At the
request of the Lender, Borrower shall complete, execute and deliver to the institution set forth below (with a copy to the Lender)
any ACH agreement, voided check, information and/or direction letter reasonably necessary to so instruct Borrower’s depository
institution. Borrower (i) shall maintain in all respects this ACH arrangement; (ii) shall not change depository institutions
without Lender’s prior written consent, and if consent is received, shall immediately execute similar ACH instruction(s),
and (iii) waives any and all claims for loss or damage arising out of debits or credits to/from the depository institution,
whether made properly or in error. Borrower has so communicated with and instructed the following institution(s):

 

Bank Name: Union Bank

Address: 2001 Wilshire
Blvd. Santa Monica, CA 90403

ABA#: 122000496

Account #: 0071125413

Swift Code: BOFCUS33MPK

Contact: Shreekal Singh

Phone: 310-453-5397

Fax: 323-453-6113

 

SECTION
3.  INTEREST, FEES AND CHARGES

 

3.1           Interest.

 

(a)          Interest
on the unpaid principal balance of Revolving Loans (the “Revolver Interest Rate”) shall be computed on the
basis of the actual number of days elapsed and a year of 360 (360) days and shall accrue on the outstanding principal balance
of Advances at an annual rate equal to the greater of (i) the sum of (A) the “Prime Rate” as reported in the
“Money Rates” column of The Wall Street Journal, adjusted as and when such Prime Rate changes, plus (B) Seven
and Three Quarters Percent (7.75%), or (ii) Ten Percent (10.0%), but in no event in excess of Fourteen Percent (14%) per annum
unless an Event of Default has occurred and is continuing. All accrued interest on the Revolving Loans, including interest charges
for Collection Days, if any, shall be due and payable in arrears (x) prior to the Maturity Date, monthly on the first Business
Day of each month, (y) in full on the Maturity Date and (z) on demand after the Maturity Date.

 

    	 	14

     

    

 

(b)          Following
and during the continuation of an Event of Default, interest on the unpaid principal balance of the Revolving Loans shall accrue
at a rate equal to Five Percent (5%) in excess of the Revolver Interest Rate, adjusted as and when such Revolver Interest Rate
changes (the “Default Interest Rate”).

 

3.2           Closing
Fee. Borrower shall pay Lender, or Lender’s designee, a closing fee equal to One Hundred Thirty Four Thousand Seven
Hundred Fifty Dollars ($134,750) (“Closing Fee”). Such Closing Fee shall be deemed fully earned on the date
hereof, shall be paid on the Closing Date from Loan proceeds, and shall not be subject to rebate or proration for any reason.

 

3.3           Other
Fees and Expenses. Borrower shall pay, on Lender's demand, all costs, expenses, filing fees and taxes payable in connection
with the preparation, execution, delivery, recording, administration, collection, liquidation, defense and enforcement of the
Loan Documents, Lender's rights in the Collateral, and all other existing and future agreements or documents contemplated herein
or related hereto, including any amendments, waivers, supplements or consents which may now or hereafter be made or entered into
in respect hereof, or in any way involving claims or defenses asserted by Lender or claims or defenses against Lender asserted
by Borrower or any third party directly or indirectly arising out of or related to the relationship between Borrower and Lender,
including, but not limited to the following, whether incurred before, during or after the Term or after the commencement of any
case with respect to Borrower under the United States Bankruptcy Code or any similar or successor statute: (a) all costs and expenses
of filing or recording (including UCC Financing Statement and, if applicable, mortgage filing fees); (b) all title insurance and
other insurance premiums, appraisal fees, fees incurred in connection with any environmental report and audit, survey and search
fees and charges; (c) all costs and expenses of onsite visits by Lender and its representatives, including travel and lodging
expenses, (d) all fees relating to the wire transfer of loan proceeds and other funds and fees for returned checks; and (e) all
costs, fees and disbursements of counsel to Lender. If any fees, costs or charges payable to Lender hereunder are not paid when
due, such amounts shall be added to the principal amount of the Obligations and accrue interest at the Default Interest Rate until
paid.

 

3.4           Savings
Clause. It is intended that the Interest Rate, the Convertible Interest Rate and the Default Interest Rate shall never exceed
the maximum rate, if any, which may be legally charged in the State of New York for loans made to corporations (the “Maximum
Rate”). If the provisions for interest contained in the Revolving Loan Note would result in a rate higher than the Maximum
Rate, the interest shall nevertheless be limited to the Maximum Rate and any amounts which may be paid toward interest in excess
of the Maximum Rate shall be applied to the reduction of principal, or, at the option of Lender, returned to the Borrower.

 

SECTION
4. TERM.

 

4.1           Term.
This Agreement shall continue until all Obligations shall have been indefeasibly paid in full (the “Term”).

 

4.2           Early
Termination; Loan Prepayment Fees.

 

(a)          Lender
shall have the right to accelerate payment of the Obligations at any time upon or after the occurrence of an Event of Default.

 

    	 	15

     

    

 

(b)          Except
as set forth in Section 4.2(c) hereof, the Loans shall be voluntarily prepayable by Borrower without premium or penalty.

 

(c)          Borrower
may voluntarily prepay the entire unpaid principal sum of the Revolving Loans on not less than fifteen (15) days prior written
notice to Lender, provided, however, that, (i) such prepayment is no less than the amount of the then-outstanding aggregate principal
sum of all Revolving Loans and all accrued and unpaid interest thereon, (ii) as part of such prepayment, Borrower shall pay Lender
all other amounts due to Lender pursuant to the Revolving Loan Note, this Agreement and other Loan Documents, and (iii) in the
event Borrower makes such prepayment on or before April 30, 2017, then Borrower shall pay to Lender an amount equal to the Revolving
Loan Prepayment Fee. “Revolving Loan Prepayment Fee” shall be an amount equal to three percent (3%) of the
then-outstanding principal sum of all Revolving Loans. The Revolving Loan Prepayment Fee is intended to compensate Lender for
committing and deploying funds for Borrower’s Loans pursuant to the Agreement and for Lender’s loss of investment
of such funds in connection with such early termination, and is not intended as a penalty.

 

(d)          The
Revolving Loan Prepayment Fee also shall be due and payable by Borrower to Lender if Lender accelerates the payment of the Obligations
on or before April 30, 2017 due to the occurrence of an Event of Default.

 

SECTION
5. COLLATERAL.

 

5.1           Security
Interests in Borrower’s Assets. As collateral security for the payment and performance of the Obligations, Borrower
hereby grants and conveys to Lender a first priority continuing security interest in and Lien upon all now owned and hereafter
acquired property and assets of Borrower and the Proceeds and products thereof including, without limitation, property described
in this Section 5.1 and all property of Borrower now or hereafter held or possessed by Lender (which property, assets and Proceeds,
together with all other collateral security for the Obligations now or hereafter granted to or otherwise acquired by Lender, are
referred to herein collectively as the “Collateral”):

 

(a)          Accounts;

 

(b)         Chattel
Paper;

 

(c)          Commercial
Tort Claims;

 

(d)          Deposit
Accounts;

 

(e)          Documents;

 

(f)          Domain
names;

 

(g)          Electronic
Chattel Paper;

 

(h)          Equipment;

 

(i)          Fixtures;

 

    	 	16

     

    

 

(j)           General
Intangibles (including, without limitation http://www.greenwoodhall.com);

 

(k)          Goods;

 

(l)           Instruments;

 

(m)         Inventory;

 

(n)          Investment
Property;

 

(o)          Letter-of-Credit
Rights;

 

(p)          Payment
Intangibles;

 

(q)          Promissory
Notes;

 

(r)           Software;

 

(s)          Tangible
Chattel Paper;

 

(t)           Securities
(whether certificated or uncertificated);

 

(u)          warehouse
receipts;

 

(v)          cash
monies;

 

(w)         Tax
and duty refunds;

 

(x)           Intellectual
Property;

 

(y)          All
present and future books and records relating to any of the above including, without limitation, all present and future books
of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to the Collateral or any Account Debtor, together
with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which
the foregoing are stored (including any rights of Borrower with respect to any of the foregoing maintained with or by any other
Person); and

 

(z)          Any
and all products and Proceeds of the foregoing in any form including, without limitation, all insurance claims, warranty claims
and Proceeds and claims against third parties for loss or destruction of or damage to any or the foregoing.

 

    	 	17

     

    

 

5.2           Financing
Statements. Borrower hereby authorizes Lender to prepare and file Financing Statements with respect to the Collateral in form
acceptable to Lender and its counsel, and hereby ratifies any actions taken by Lender prior to or after the date hereof in respect
of the preparation and filing of such Financing Statements. Borrower shall, at all times, do, make, execute, deliver and record,
register or file all Financing Statements and other instruments, acts, pledges, leasehold or other mortgages, amendments, modifications,
assignments and transfers (or cause the same to be done), and will deliver to Lender such instruments and/or documentation evidencing
items of Collateral, as may be requested by Lender to better secure or perfect Lender's security interest in the Collateral or
any Lien with respect thereto. Borrower acknowledges that it is not authorized to file any Financing Statement or amendment or
termination statement with respect to any Financing Statement in favor of Lender without the prior written consent of Lender and
agrees that it will not do so without the prior written consent of Lender. In addition, Borrower hereby authorizes Lender to record
the Liens in favor of the Lender in the U.S. Patent and Trademark Office and the U.S. Copyright Office, as applicable, and the
taking of any actions required under the laws of jurisdictions outside the United States with respect to Intellectual Property
included in the Collateral.

 

5.3           License
Grant. Borrower hereby grants to Lender an irrevocable, non-exclusive, worldwide license without payment of royalty or other
compensation to Borrower, upon the occurrence and during the continuance of an Event of Default, to use or otherwise exploit in
any manner as to which authorization of the holder of such Intellectual Property would be required, and to license or sublicense
such rights in to and under, any Intellectual Property now or hereafter owned by or licensed to Borrower, and wherever the same
may be located, including in such license access to all media in which any of such Intellectual Property may be recorded or stored
and to all software and hardware used for the compilation or printout thereof, and represents, warrants and agrees that any such
license or sublicense is not and will not be in conflict with the contractual, proprietary or commercial rights of any third Person
and subject, in the case of trademarks and service marks, to sufficient rights to quality control and inspection in favor of Borrower
to avoid the risk of invalidation of said trademarks and service marks. The foregoing license will terminate on the indefeasible
payment in full of all Obligations; provided, however, that any license, sublicense, or other rights granted by
Lender pursuant to such license during its term shall remain in effect in accordance with its terms.

 

5.4           Representations,
Warranties and Covenants Concerning the Collateral. Borrower covenants, represents and warrants (each of which such covenants,
representations and warranties shall survive execution and delivery of this Agreement and shall be deemed repeated upon the making
of each request for a Revolving Loan and made as of the time of each and every Revolving Loan hereunder) as follows:

 

(a)          (i)
Borrower owns all of the Collateral free and clear of all Liens (including any claim of infringement) except those in Lender’s
favor and Permitted Encumbrances and (ii) none of the Collateral is subject to any agreement prohibiting the granting of a Lien
or requiring notice of or consent to the granting of a Lien, except as set forth in Section 5.4(a) of the Borrower’s
Disclosure Schedule.

 

(b)          It
shall not encumber, mortgage, pledge, assign or grant any Lien upon any Collateral or any other assets to anyone other than the
Lender and except for Permitted Encumbrances.

 

(c)          The
Liens granted pursuant to this Agreement, upon the filing of Financing Statements in respect of Borrower in favor of the Lender
in the applicable filing office of the state of organization of Borrower, the recording of the Liens in favor of the Lender in
the U.S. Patent and Trademark Office and the U.S. Copyright Office, as applicable, and the taking of any actions required under
the laws of jurisdictions outside the United States with respect to Intellectual Property included in the Collateral which is
created under such laws, constitute valid perfected first priority security interests in all of the Collateral in favor of the
Lender, as security for the prompt and complete payment and performance of the Obligations, enforceable in accordance with the
terms hereof.

 

    	 	18

     

    

 

(d)          No
security agreement, mortgage, deed of trust, financing statement, equivalent security or Lien instrument or continuation statement
covering all or any part of the Collateral is or will be on file or of record in any public office, except those relating to Permitted
Encumbrances.

 

(e)          It
shall not dispose of any of the Collateral whether by sale, lease or otherwise except for the disposition or transfer in the ordinary
course of business of worn out or obsolete Equipment if consented to in advance in writing by Lender, in Lender’s sole and
absolute discretion, and then only to the extent that the proceeds of any such disposition are used to acquire replacement Equipment
which is subject to the Lender’s security interest or are used to repay the Obligations, as determined by Lender in its
sole and absolute discretion.

 

(f)          It
shall defend the right, title and interest of the Lender in and to the Collateral against the claims and demands of all Persons
whomsoever, and take such actions, including (i) all actions necessary to grant the Lender “control” of any Investment
Property, Deposit Accounts, Letter-of-Credit Rights or Electronic Chattel Paper owned by it, with any agreements establishing
control to be in form and substance satisfactory to the Lender, (ii) the prompt (but in no event later than two (2) Business Days
following the Lender’s request therefor) delivery to the Lender of all original Instruments, Chattel Paper, negotiable Documents
and certificated Securities owned by it (in each case, accompanied by stock powers, allonges or other instruments of transfer
executed in blank), (iii) notification to third parties of the Lender’s interest in Collateral at the Lender’s request,
and (iv) the institution of litigation against third parties as shall be prudent in order to protect and preserve its and/or the
Lender’s interests in the Collateral.

 

(g)          It
shall promptly, and in any event within three (3) Business Days after the same is acquired by it, notify the Lender of any Commercial
Tort Claim in excess of $100,000 acquired by it and shall execute and deliver to the Lender such documents as Lender shall request
to perfect, preserve or protect the Liens, rights and remedies of the Lender with respect to any such Commercial Tort Claim

 

(h)          It
shall perform in a reasonable time all other steps requested by the Lender to create and maintain in the Lender’s favor
a valid perfected first Lien in all Collateral.

 

(i)          It
shall notify the Lender promptly, and in any event within one (1) Business Days after obtaining knowledge thereof, of any loss,
damage or destruction of any of the Collateral.

 

(j)          Section
5.4(j) of the Borrower’s Disclosure Schedule contains a true and complete list of all Equipment owned by Borrower as
of the Closing Date and the location of such Equipment. Borrower shall not permit any Equipment to become a fixture to real estate
or accessions to other personal property. Borrower owns no Equipment other than as set forth in such Section 5.4(j). It shall
keep and maintain its Equipment in good operating condition, except for ordinary wear and tear, and shall make all necessary repairs
and replacements thereof so that the value and operating efficiency shall at all times be maintained and preserved.

 

(k)          Borrower
shall maintain and keep all of its books and records concerning the Collateral at its executive offices listed in Section 5.4(m)
of the Borrower’s Disclosure Schedule.

 

    	 	19

     

    

 

(l)          Section
5.4(l) of the Borrower’s Disclosure Schedule lists all banks and other financial institutions at which it maintains
deposits and/or other accounts, and such Section 5.4(l) correctly identifies the name, address and telephone number of each such
depository, the name in which the account is held, a description of the purpose of the account, and the complete account number.
Borrower shall not establish any depository or other bank account with any financial institution (other than the accounts set
forth on Section 5.4(l) of the Borrower’s Disclosure Schedule) without Lender’s prior approval in Lender’s
sole and absolute discretion.

 

(m)          On
the date hereof, Borrower’s exact legal name (as indicated in the public record of its jurisdiction of organization), jurisdiction
of organization, organizational identification number, if any, from the jurisdiction of organization, and the location of its
chief executive office and all other offices or locations out of which it conducts business or operations, are specified on Section
5.4(m) of the Borrower’s Disclosure Schedule. It has furnished to the Lender its Organizational Documents and long-form
good standing certificate as of a date which is within thirty (30) days of the date hereof. It is organized solely under the law
of the jurisdiction so specified and has not filed any certificates of domestication, transfer or continuance in any other jurisdiction.
Except as otherwise indicated on Section 5.4(m) of the Borrower’s Disclosure Schedule, the jurisdiction of its organization
of formation is required to maintain a public record showing it to have been organized or formed. Except as specified on Section
5.4(m) of the Borrower’s Disclosure Schedule, it has not changed its name, jurisdiction of organization, chief executive
office or sole place of business or its corporate or company structure in any way (e.g., by merger, consolidation, change in form
or otherwise) within the last five years and has not within the last five years become bound (whether as a result of merger or
otherwise) as a grantor under a security agreement entered into by another Person, which has not heretofore been terminated.

 

(n)          It
will not, except with Lender’s prior written consent and upon delivery to the Lender of all additional Financing Statements
and other documents and legal opinions requested by the Lender to maintain the validity, perfection and priority of the security
interests provided for herein: (i) change its jurisdiction of organization or the location of its chief executive office from
that referred to in Section 5.4(m) of the Borrower’s Disclosure Schedule; or (ii) change its name, identity or organizational
structure.

 

(o)          Except
pursuant to the terms of this Agreement, none of the Collateral is subject to any prohibition against encumbering, pledging, hypothecating
or assigning the same or requires notice or consent to Borrower’s doing of the same.

 

(p)          [RESERVED]

 

(q)          A
complete and accurate list of all policies of insurance currently held by Borrower on the date hereof (collectively, “Existing
Insurance Policies”) is set forth in Section 5.4(q) of the Borrower’s Disclosure Schedule.

 

    	 	20

     

    

 

SECTION
6. CONDITIONS TO MAKING INITIAL LOANS.

 

The obligation of Lender
to make the initial Loan shall be subject to the satisfaction or waiver by Lender, prior thereto or concurrently therewith, of
each of the following conditions precedent:

 

6.1           Loan
Documents. Each of the Loan Documents shall have been duly and properly authorized, executed and delivered by Borrower and
the other parties thereto and shall be in full force and effect as of the date hereof.

 

6.2           Representations
and Warranties. Each of the representations and warranties made by or on behalf of Borrower to Lender in this Agreement and
in other Loan Documents shall be true and correct in all material respects as of the date hereof, provided that any such representation
or warranty that is qualified by materiality shall be true and correct in all respects as of the date hereof.

 

6.3           Certified
Copies of Formation Documents. Lender shall have received from Borrower, certified by a duly authorized officer to be true
and complete on and as of a date which is not more than ten (10) Business Days prior to the date hereof, a copy of each of the
Organizational Documents of Borrower in effect on such date of certification.

 

6.4           Proof
of Action. Lender shall have received from Borrower a copy, certified by a duly authorized officer to be true and complete
on and as of the date hereof, of the records of all corporate or limited liability company action, as the case may be, taken by
Borrower to authorize (a) its execution and delivery of each of the Loan Documents to which it is or is to become a party as contemplated
or required by this Agreement, (b) its performance of all of its agreements and obligations under each of such documents, and
(c) the incurring of the Obligations contemplated by this Agreement.

 

6.5           Legal
Opinion. Lender shall have received a written legal opinion, addressed to Lender, dated the date hereof, from counsel for
Borrower. Such legal opinion shall be acceptable to Lender and its counsel.

 

6.6           Collateral.
Lender shall have obtained a first priority, perfected security interest in the Collateral.

 

6.7           Insurance.
Lender shall have received evidence of insurance, additional insured and loss payee endorsements required hereunder and under
the other Loan Documents, in form and substance satisfactory to Lender, and certificates of insurance policies and/or endorsements
naming Lender as additional insured and loss payee under such of the Existing Insurance Policies or other insurance policies as
may be required by Lender under Section 9.8 or otherwise.

 

6.8           Validity
of Collateral Representation. Lender shall have received a statement by the appropriate officers of Borrower which shall represent
and certify the validity of the Collateral.

 

6.9           IRS
Form 4506 and 8821. Lender shall have received from Borrower an executed Form 4506 and an executed Form 8821 to be submitted
to the Internal Revenue Service which shall grant Lender access to Borrower’s Tax information.

 

    	 	21

     

    

 

6.10         IRS
Form W-9. Lender shall have received from Borrower an executed Form W-9 to be submitted to the Internal Revenue Service which
shall allow Lender to verify Borrower’s tax identification number(s).

 

6.11         Pay
Proceeds Letter. Borrower shall have delivered to Lender a pay proceeds letter with respect to the disbursement of the proceeds
of the initial Loans in form and substance satisfactory to Lender, which letter shall provide for, among other things, the payment
or reimbursement of all costs and expenses incurred by Lender in connection with this Agreement and the other Loan Documents including,
without limitation, Lender’s due diligence expenses and legal fees.

 

6.12         No
Event of Default. No event shall have occurred on or prior to the date of each initial Loan by Lender hereunder and be continuing
on the date of each such initial Loan by Lender hereunder, and no condition shall exist on the date of each Loan by Lender hereunder,
which constitutes an Event of Default or which would, with notice or the lapse of time, or both, constitute an Event of Default
under this Agreement or any other Loan Document; and, Lender shall have received a certification from a Responsible Officer with
respect to the foregoing in form and substance satisfactory to Lender.

 

6.13         Payoff
Letters. Borrower shall have delivered to Lender payoff letters in form and substance satisfactory to Lender from each of
California United Bank and Opus Bank.

 

6.14         Payment
of Certain Existing Subordinated Debt. On or before the Closing, Borrower shall have paid off certain Indebtedness of Borrower
to Redwood Fund LP, Colgan Financial Group and First Fire Global, to the extent set forth on Exhibit 6.14 annexed hereto,
as evidenced by documentation in form and substance satisfactory to Lender.

 

6.15         ACH
Agreement. Lender shall have received from Borrower an agreement executed by Borrower which irrevocably authorizes Lender
to initiate manual and automatic electronic (debit and credit) entries through the Automated Clearing House or other appropriate
electronic payment system to all deposit accounts maintained by Borrower, wherever located.

 

6.16         Capital
Infusion. No later than December 31, 2016, Borrower shall have received an infusion of equity, or subordinated debt
securities convertible into equity, for aggregate proceeds equal to no less than Two Hundred Thousand Dollars ($200,000) in form
and substance satisfactory to Lender in its sole and absolute discretion.

 

6.17         Additional
Deliveries. Borrower shall have delivered to Lender such other instruments, documents and certificates reasonably requested
by Lender.

 

SECTION
7. CONDITIONS TO MAKING ALL LOANS.

 

The obligations of Lender
to make all Loans hereunder shall be subject to the satisfaction or waiver by Lender, prior thereto or concurrently therewith,
of each of the conditions set forth in Section 6 and, in addition, the following conditions precedent:

 

7.1           Applications
and Compliance. The application for such Loans shall have been made by Borrower to Lender in accordance with the applicable
provisions of this Agreement and in compliance with all provisions of this Agreement.

 

    	 	22

     

    

 

7.2           Representations
and Warranties. Each of the representations and warranties made by or on behalf of Borrower to Lender in this Agreement or
in other Loan Documents shall have been true and correct in all material respects when made (provided that any such representation
or warranty that is qualified as to materiality shall be true and correct in all respects), shall, for all purposes of this Agreement,
be deemed to be repeated on and as of the date of each Loan by Lender hereunder and shall be true and correct in all respects
on and as of each such date, except to the extent that any of such representations and warranties relate, by the express terms
thereof, solely to a date prior to the date of each Loan by Lender hereunder, and Lender shall have received a certification from
a Responsible Officer of Borrower with respect to the foregoing in form and substance satisfactory to Lender.

 

7.3           Performance,
etc. Borrower shall have duly and properly performed, complied with and observed each of its covenants, agreements and obligations
contained in this Agreement and in any other Loan Documents on the date of each Loan by Lender hereunder, and Lender shall have
received a certification from a Responsible Officer with respect to the foregoing in form and substance satisfactory to Lender.
No event shall have occurred on or prior to the date of each Loan by Lender hereunder and be continuing on the date of each Loan
by Lender hereunder, and no condition shall exist on the date of each Loan by Lender hereunder, which constitutes an Event of
Default or which would, with notice or the lapse of time, or both, constitute an Event of Default under this Agreement or any
other Loan Document, and Lender shall have received a certification from a Responsible Officer with respect to the foregoing in
form and substance satisfactory to Lender.

 

SECTION
8. REPRESENTATIONS AND WARRANTIES.

 

Borrower hereby represents
and warrants to Lender, knowing and intending that Lender shall rely thereon in making the Loans contemplated hereby (each of
which representations and warranties shall be continuing unless expressly made in relation only to a specific date), that:

 

8.1           Existence:

 

(a)          Each
Borrower (i) is a corporation or limited liability company duly organized or formed, validly existing and in good standing under
the laws of the jurisdiction of its organization or formation, (ii) is in good standing in all other jurisdictions in which it
is required to be qualified to do business as a foreign corporation or limited liability company, (iii) has all requisite corporate
or limited liability company power and authority and full legal right to own or to hold under lease its properties and to carry
on the business as presently engaged and (iv)
has been issued all required federal, state and local licenses, certificates or permits necessary, required or appropriate to
the operation of its business.

 

(b)          Each
Borrower has corporate or limited liability company power and authority and has full legal rights to enter into each of the Loan
Documents to which it is a party, and to perform, observe and comply with all of its agreements and obligations under each of
such documents.

 

8.2           No
Violation, etc. The execution and delivery by Borrower of the Loan Documents to which Borrower is a party, the performance
by Borrower of all of its agreements and obligations under each of such documents, and the incurring by Borrower of all of the
Obligations contemplated by this Agreement, have been duly authorized by all necessary corporate or limited liability company
actions on the part of Borrower and, if required, its shareholders, and do not and will not (a) contravene any provision of Borrower’s
Organizational Documents or this Agreement (each as from time to time in effect), (b) conflict with, or result in a breach of
the terms, conditions, or provisions of, or constitute a default under, or result in the creation of any Lien upon any of the
property of Borrower under, any agreement, mortgage or other instrument to which Borrower is or may become a party, (c) violate
or contravene any provision of any law, regulation, order, ruling or interpretation thereunder or any decree, order or judgment
or any court or governmental or regulatory authority, bureau, agency or official (all as from time to time in effect and applicable
to such entity), (d) other than waivers required from Borrower’s landlords require any waivers, consents or approvals by
any third party, including any creditors or trustees for creditors of Borrower, or (e) require any approval, consent, order, authorization,
or license by, or giving notice to, or taking any other action with respect to, any Governmental Authority.

 

    	 	23

     

    

 

8.3           Binding
Effect of Documents, etc. Borrower has duly executed and delivered each of the Loan Documents to which Borrower is a party,
and each of the Loan Documents is valid, binding and in full force and effect. The agreements and obligations of Borrower as contained
in each of the Loan Documents constitute, or upon execution and delivery thereof will constitute, legal, valid and binding obligations
of Borrower, enforceable against Borrower in accordance with their respective terms, subject, as to the enforcement of remedies
only, to limitations imposed by federal and state laws regarding bankruptcy, insolvency, reorganization, moratorium and other
laws affecting creditors' rights and remedies generally, and by general principles of law and equity.

 

8.4           No
Events of Default.

 

(a)          No
Event of Default has occurred and is continuing and no event has occurred and is continuing and no condition exists that would,
with notice or the lapse of time, or both, constitute an Event of Default.

 

(b)          Borrower
is not in default under any Material Contract to which Borrower is a party or by which Borrower or any property of Borrower is
bound.

 

(c)          Borrower’s
execution, delivery and performance of and compliance with this Agreement and the other Loan Documents will not, with or without
the passage of time or giving of notice, result in any violation of law, or be in conflict with or constitute a default under
any term or provision, or result in the creation of any Lien upon any of Borrower’s properties or assets or the suspension,
revocation, impairment, forfeiture or nonrenewal, of any permit, license, authorization or approval applicable to Borrower, or
any of its businesses or operations or any of its assets or properties.

 

8.5           No
Governmental Consent Necessary. No consent or approval of, giving of notice to, registration with or taking of any other action
in respect of, any Governmental Authority is required with respect to the execution, delivery and performance by Borrower of this
Agreement and the other Loan Documents to which it is a party.

 

8.6           No
Proceedings. Except as disclosed in Borrower’s Form 10-Q for the quarter ended May 31, 2016, as filed with the SEC,
there are no material actions, suits, or proceedings pending or, to the best of Borrower’s knowledge, threatened against
or affecting Borrower in any court or before any Governmental Authority.

 

    	 	24

     

    

 

8.7           No
Violations of Laws; Licenses and Permits. Borrower has conducted, and is conducting, its Business, so as to comply in all
material respects with all applicable federal, state, county and municipal statutes and regulations. Neither Borrower nor any
officer, director, manager, member or shareholder of Borrower is or has been charged with, or so far as is known by Borrower,
is under investigation with respect to, any violation of any such statutes, regulations or orders, which could have a Material
Adverse Effect. Borrower has been issued all required federal, state and local licenses, certificates or permits required for
the operation of its business.

 

8.8           Use
of Proceeds of the Loans. Proceeds from the Loans shall be used only for those purposes set forth in this Agreement. No part
of the proceeds of the Loans shall be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock
or for the purpose of purchasing or carrying or trading in any stock under such circumstances as to involve Borrower in a violation
of any statute or regulation. In particular, without limitation of the foregoing, no part of the proceeds from the Loans is intended
to be used to acquire any publicly-held stock of any kind.

 

8.9           Financial
Statements; Indebtedness.

 

(a)          The
consolidated balance sheet of Borrower as of August 31, 2015, and the related consolidated]statement of operations, stockholders’
equity and cash flows (together with the related notes) for the year ended August 31, 2015, and the consolidated balance sheet
of Borrower as of May 31, 2016 and the related consolidated statement of operations, stockholders’ or members’ equity
and cash flows (together with the related notes) for the six-month period ended May 31, 2016 (in each case, as set forth in the
SEC Reports) (collectively, the “Financial Statements”) (x) fairly present, as of the dates thereof, the financial
position of Borrower, and the results of its operations, cash flows and stockholders’ equity in all material aspects, and
(y) except for the fact that the unaudited financial statements omit notes to such statements and year-end adjustments thereto,
have been prepared in accordance with GAAP.

 

(b)          Except
as shown on the most recent Financial Statements, (i) Borrower has no other Indebtedness as of the date hereof, and (ii) Borrower
has no liabilities, contingent or otherwise, except those which, individually or in the aggregate, are not material to the financial
condition or operating results of Borrower.

 

8.10         Changes
in Financial Condition. Since the Balance Sheet Date, there has been no material adverse change and no material adverse development
in the business, properties, operations, condition (financial or otherwise), results of operations or prospects of any Borrower.
Since the Balance Sheet Date, Borrower has not (i) declared or paid any dividends or distributions, (ii) sold any assets, individually
or in the aggregate, outside of the ordinary course of business, (iii) had capital expenditures outside of the ordinary course
of business, (iv) engaged in any transaction with any Affiliate except as set forth in Section 10.9 of Borrower’s Disclosure
Schedule or (v) engaged in any other transaction outside of the ordinary course of business.

 

8.11         Equipment.
Borrower shall keep and maintain its Equipment in good order and repair, and in running and marketable condition, ordinary wear
and tear excepted.

 

    	 	25

     

    

 

8.12         Taxes
and Assessments.

 

(a)          Borrower
has paid and discharged when due all taxes, assessments and other governmental charges which may lawfully be levied or assessed
upon its income and profits, or upon all or any portion of any property belonging to it, whether real, personal or mixed, to the
extent that such taxes, assessment and other charges have become due. Borrower has filed all tax returns, federal, state and local,
and all related information, required to be filed by it.

 

(b)          Borrower
shall make all payments to be made by it hereunder without any Tax Deduction (as defined below), unless a Tax Deduction is required
by law. If Borrower is aware that it must make a Tax Deduction (or that there is a change in the rate or the basis of a Tax Deduction),
it shall promptly notify Lender. If a Tax Deduction is required by law to be made by Borrower, the amount of the payment due from
Borrower shall be increased to an amount which (after making the Tax Deduction) leaves an amount equal to the payment which would
have been due if no Tax Deduction had been required. If Borrower is required to make a Tax Deduction, Borrower shall make the
minimum Tax Deduction allowed by law and shall make any payment required in connection with that Tax Deduction within the time
allowed by law. Within thirty (30) days of making either a Tax Deduction or a payment required in connection with a Tax Deduction,
Borrower shall deliver to Lender evidence satisfactory to Lender that the Tax Deduction has been made or (as applicable) the appropriate
payment has been paid to the relevant taxing authority.

 

(c)          “Tax
Deduction” means a deduction or withholding for or on account of Tax from a payment under a Loan Document. “Tax”
means any tax, levy, impost, duty or other charge or withholding of a similar nature, including any income, franchise, stamp,
documentary, excise or property tax, charge or levy (in each case, including any related penalty or interest).

 

8.13         ERISA.
Borrower is in compliance in all material respects with the applicable provisions of ERISA and all regulations issued thereunder
by the United States Treasury Department, the Department of Labor and the Pension Benefit Guaranty Corporation.

 

8.14         Environmental
Matters.

 

(a)          Borrower
has duly complied with, and its facilities, assets, property, leaseholds and equipment are in compliance in all respects with,
the provisions of all Environmental Laws.

 

(b)          Borrower
has been issued all required federal, state and local licenses, certificates or permits required under Environmental Laws for
the operation of its Business.

 

8.15         United
States Anti-Terrorism Laws; Holding Company Status.

 

(a)          In
this Section 8.15:

 

“Anti-Terrorism
Law” means each of: (i) Executive Order No. 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten To Commit, or Support Terrorism (the “Executive Order”); (ii) the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law
107-56 (commonly known as the USA Patriot Act); (iii) the Money Laundering Control Act of 1986, Public Law 99-570; and (iv) any
similar law enacted in the United States of America subsequent to December 31, 2004.

 

    	 	26

     

    

 

“holding company”
has the meaning given to it in the United States Public Utility Holding Company Act of 1935, and any successor legislation and
rules and regulations promulgated thereunder.

 

“investment company”
has the meaning given to it in the United States Investment Company Act of 1940.

 

“public utility”
has the meaning given to it in the United States Federal Power Act of 1920.

 

“Restricted Party”
means any person listed: (i) in the Annex to the Executive Order; (ii) on the Specially Designated Nationals and Blocked Persons
list maintained by the Office of Foreign Assets Control of the United States Department of the Treasury; or (iii) in any successor
list to either of the foregoing.

 

(b)          Borrower
is not (i) a holding company or subject to regulation under the United States Public Utility Holding Company Act of 1935; (ii)
a public utility or subject to regulation under the United States Federal Power Act of 1920; (iii) required to be registered as
an investment company or subject to regulation under the United States Investment Company Act of 1940; or (iv) subject to regulation
under any United States Federal or State law or regulation that limits its ability to incur or guarantee indebtedness.

 

(c)          To
the best of Borrower’s knowledge, Borrower (i) is not, and is not controlled by, a Restricted Party; (ii) has not received
funds or other property from a Restricted Party; and (iii) is not in breach of and is not the subject of any action or investigation
under any Anti-Terrorism Law.

 

(d)          Borrower
has taken reasonable measures to ensure compliance with the Anti-Terrorism Laws.

 

8.16         Customers
and Vendors. There are no disputes with any customers, suppliers, manufacturers, vendors and independent contractors of Borrower
in excess of $10,000 in the aggregate with any such party.

 

8.17         Representations,
Warranties and Covenants Concerning the Collateral. The representations, warranties and covenants of Borrower set forth in
Section 5.4 hereof are incorporated in this Section 8.17 by reference.

 

8.18         Books
and Records. Borrower maintains its chief executive office and its books and records related to its Accounts and all other
Collateral at its address set forth in Section 5.4(m) of Borrower’s Disclosure Schedule.

 

8.19         SEC
Reports.         The SEC Reports do not and shall not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading.

 

8.20         Changes.
Since the Balance Sheet Date, except as disclosed in Section 8.20 of Borrower’s Disclosure Schedule, with respect
to Borrower, there has not been:

 

    	 	27

     

    

 

(a)          any
change in its business, assets, liabilities, condition (financial or otherwise), properties, operations or prospects, which, individually
or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect;

 

(b)          any
resignation or termination of any of its officers, key employees or groups of employees;

 

(c)          any
change, except in the ordinary course of business, in its contingent obligations by way of guaranty, endorsement, indemnity, warranty
or otherwise;

 

(d)          any
damage, destruction or loss, whether or not covered by insurance, which has had, or could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect;

 

(e)          any
waiver by it of a valuable right or of a material debt owed to it;

 

(f)          any
direct or indirect loans made by it to any of its stockholders, managers, members, employees, managers, officers or directors,
other than advances made in the ordinary course of business;

 

(g)          any
material change in any compensation arrangement or agreement with any employee, officer, manager, director or equity holder;

 

(h)          any
declaration or payment of any dividend or other distribution of its assets;

 

(i)          any
labor organization activity related to it;

 

(j)          any
debt, obligation or liability incurred, assumed or guaranteed by it, except those for immaterial amounts and for current liabilities
incurred in the ordinary course of business;

 

(k)          any
sale, assignment, transfer, abandonment or other disposition of any Collateral;

 

(l)          any
change in any Material Contract to which it is a party or by which it is bound which, either individually or in the aggregate,
has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(m)          any
other event or condition of any character that, either individually or in the aggregate, has had, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect; or

 

(n)          any
arrangement or commitment by it to do any of the acts described in subsection (a) through (m) of this Section 8.20.

 

    	 	28

     

    

 

8.21         Intellectual
Property.

 

(a)          (1)
Borrower holds all Intellectual Property that it owns free and clear of all Liens and restrictions on use or transfer, whether
or not recorded, and has sole title to and ownership of or has the full, exclusive (subject to the rights of its licensees) right
to use in its field of business such Intellectual Property; and Borrower holds all Intellectual Property that it uses but does
not own under valid licenses or sub-licenses from others; (2) the use of the Intellectual Property by Borrower does not violate
or infringe on the rights of any other Person; (3) Borrower has not received any notice of any conflict between the asserted rights
of others and Borrower with respect to any Intellectual Property; (4) Borrower has used its commercially reasonable best efforts
to protect its rights in and to all Intellectual Property; (5) Borrower is in compliance with all material terms and conditions
of its agreements relating to the Intellectual Property; (6) Borrower is not, and since the Balance Sheet Date has not been, a
defendant in any action, suit, investigation or proceeding relating to infringement or misappropriation by Borrower of any Intellectual
Property nor has Borrower been notified of any alleged claim of infringement or misappropriation by Borrower of any Intellectual
Property; (7) to the knowledge of Borrower, none of the products or services Borrower is researching, developing, proposes to
research and develop, make, have made, use, or sell, infringes or misappropriates any Intellectual Property right of any third
party; and (8) to Borrower’s knowledge, none of the material processes and formulae, research and development results and
other know-how relating to Borrower's business, the value of which to Borrower is contingent upon maintenance of the confidentiality
thereof, has been disclosed to any Person other than Persons bound by written confidentiality agreements.

 

(b)          Section
8.21 of Borrower’s Disclosure Schedule sets forth a true and complete list of (i) all Intellectual Property owned or
claimed by Borrower, together with any and all registration or application numbers for any Intellectual Property filed or issued
by any Intellectual Property registry (and, in the case of any and all domain names registered by or on behalf of Borrower, the
names of the registrar(s) thereof) and (ii) all Intellectual Property licenses which are material to the Business of Borrower,
including licenses for standard software having a replacement value of more than $5,000.

 

8.22         Employees.
Borrower has no collective bargaining agreements with any of its employees. There is no labor union organizing activity pending
or, to Borrower’s knowledge, threatened with respect to Borrower. Except as set forth in Section 8.22 of Borrower’s
Disclosure Schedule, Borrower is not a party to or bound by any currently effective deferred compensation arrangement, bonus
plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement. To Borrower’s
knowledge, no employee of Borrower, nor any consultant with whom Borrower has contracted, is in violation of any material term
of any employment contract or any other contract relating to the right of any such individual to be employed by, or to contract
with, Borrower or to receive any benefits; and, to Borrower’s knowledge, the continued employment by Borrower of its present
employees, and the performance of Borrower’s contracts with its independent contractors, will not result in any such violation.
Except for employees who have a current effective employment agreement with Borrower, as set forth in Section 8.22 of Borrower’s
Disclosure Schedule, no employee of Borrower has been granted the right to continued employment by Borrower or to any material
compensation following termination of employment with Borrower. Borrower is not aware that any officer, director, manager, partner,
key employee or group of employees intends to terminate his, her or their employment with Borrower, nor does Borrower have a present
intention to terminate any of the same.

 

    	 	29

     

    

 

8.23         Tax
Status. Borrower (i) has made or filed all federal and state income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are shown
or determined to be due on such returns, reports and declarations, except those being contested in good faith and for which it
has set aside on its books a provision in the amount of such taxes being contested in good faith and (iii) has set aside on its
books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply. There are no unpaid taxes payable by Borrower claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Borrower know of no basis for any such claim.

 

8.24         Representations
and Warranties: True, Accurate and Complete. None of the representations, certificates, reports, warranties or statements
now or hereafter made or delivered to Lender pursuant hereto or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby contains or will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances in
which they are made, not misleading.

 

8.25         Fees;
Brokers; Finders. There are no fees, commissions or other compensation due to any third party acting on behalf of or at the
direction of Borrower in connection with the Loan Documents except as set forth on Section 8.25 of the Borrower’s Disclosure
Schedule. All negotiations relative to the Loan Documents, and the transactions contemplated thereby, have been carried on
by the Borrower with the Lender without the intervention of any other person or entity acting on behalf of the Borrower, and in
such manner as not to give rise to any claim against the Borrower or the Lender for any finder's fee, brokerage commission or
like payment due to any third party acting on behalf of or at the direction of Borrower, and if any such fee, commission or payment
is payable, it shall be the sole responsibility of the Borrower and the Borrower shall pay, and indemnify the Lender for, the
same.

 

8.26         Internal
Accounting Controls. The Borrower maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 under
the 1934 Act) that are effective, subject to the disclosure contained in the SEC Reports, in ensuring that information required
to be disclosed by the Borrower in the reports that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the Borrower in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the Borrower's management, including its principal executive officer or
officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure.

 

8.27         Sarbanes-Oxley
Act. To the Borrower’s knowledge, the Borrower is in compliance with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC
thereunder that are effective as of the date hereof.

 

SECTION
9. AFFIRMATIVE COVENANTS.

 

Until the indefeasible
payment and satisfaction in full of all Obligations and the termination of this Agreement, Borrower hereby covenants and agrees
as follows:

 

9.1           Notify
Lender. Borrower shall promptly, and in any event within three (3) Business Days of determining of any of the following, inform
Lender (a) if any one or more of the representations and warranties made by Borrower in this Agreement or in any document related
hereto shall no longer be entirely true, accurate and complete in any material respect, (b) of any Equipment which is not in good
order and repair, and in running and marketable condition, ordinary wear and tear excepted, or of any Equipment that is removed
or missing from Borrower’s Premises; (d) of all material adverse information relating to the financial condition of Borrower;
(e) of any material return of goods; (f) of any loss, damage or destruction of any of the Collateral, and (g) the occurrence of
an Event of Default or a Material Adverse Effect.

 

    	 	30

     

    

 

9.2           Change
in Directors, Managers or Officers. Borrower shall promptly notify Lender of any changes in Borrower’s directors and/or
executive officers.

 

9.3           Pay
Taxes and Liabilities; Comply with Agreement. Except with respect to those certain trade accounts payable listed in Section
9.3 of Borrower’s Disclosure Schedule, Borrower shall pay, when due, and within agreed upon terms as disclosed in writing
by Borrower to Lender and agreed by Lender, or otherwise discharge, all Indebtedness, sums and liabilities of any kind now or
hereafter owing by Borrower to its employees as wages or salaries or to Lender, Governmental Authorities or any other party, however
created, incurred, evidenced, acquired, arising or payable, including, without limitation, the Obligations, income taxes, excise
taxes, sales and use taxes, license or franchise fees, and all other taxes with respect to any of the Collateral, or any wages
or salaries paid by Borrower or otherwise, unless the validity of which are being contested in good faith by Borrower by appropriate
proceedings, provided that Borrower shall have maintained reasonably adequate reserves and accrued the estimated liability on
Borrower’s balance sheet for the payment of same.

 

9.4           Observe
Covenants, etc. Borrower shall observe, perform and comply with the covenants, terms and conditions of this Agreement and
the other Loan Documents.

 

9.5           Maintain
Corporate Existence and Qualifications. Borrower shall maintain and preserve in full force and effect, its corporate existence
and rights, franchises, licenses and qualifications necessary to continue its business, and comply with all applicable statutes,
rules and regulations pertaining to the operation, conduct and maintenance of its existence and business including, without limitation,
all federal, state and local laws relating to benefit plans, environmental safety, or health matters, and hazardous or liquid
waste or chemicals or other liquids (including use, sale, transport and disposal thereof).

 

9.6           Financial
Reports and other Information and Documents to be Furnished to Lender. Borrower shall deliver or cause to be delivered to
Lender unless such information has been timely filed with the SEC:

 

(a)          Annual
Financial Statements. Annual financial statements of Borrower, certified by the Chief Financial Officer of each and audited
by an outside accounting firm acceptable to Lender, as soon as available, but in any event within ninety (90) days after the end
of Borrower’s Fiscal Year during the Term. Such financial statements shall (x) fairly present the financial position of
Borrower as of the dates thereof and the results of its operations, cash flows and stockholders’ equity for each of the
periods then ended in all material aspects; and (y) be prepared in accordance with GAAP.

 

(b)          Quarterly
Financial Statements. Quarterly financial statements of the Borrower, as soon as available but in any event no later than
forty-five (45) days after the close of each calendar quarter, consisting of the unaudited balance sheet and the related statement
of income of the Borrower, prepared in accordance with GAAP, subject to year-end audit adjustments, together with such other information
with respect to the business of Borrower as Lender may request.

 

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(c)          Monthly
Financial Statements. Not later than eighteen (18) days after the end of the first three (3) calendar months ending after
the date hereof, and thereafter not later than fifteen (15) days after the end of each subsequent calendar month, the unaudited
balance sheets and the related statements of income of Borrower, certified by the Chief Financial Officer of Borrower, subject
to year-end audit adjustments, with an aging schedule for all accounts receivable and accounts payable and a calculation of LTM
EBITDA as of the date of such financial statements, together with such other information with respect to the business of Borrower
as Lender may request.

 

(d)          Bi-Monthly
Accounts Receivable and Accounts Payable Aging Reports. Twice a month, not later than the 15th day and the last
day of each calendar month, respectively, an aging schedule for all accounts receivable and accounts payable, in form and substance
satisfactory to Lender.

 

(d)          Borrowing
Certificates. Weekly, and more frequently if so requested by Lender, a Borrowing Certificate in accordance with Section 2.1(f)
hereof.

 

(e)          Securities
Filings. Within five (5) days of filing, copies of all periodic and other reports, proxy statements and other materials filed
by Borrower with the SEC, any Governmental Authority succeeding to any or all of the functions of the SEC, or distributed to its
shareholders, as the case may be. Documents required to be delivered pursuant to the terms hereof (to the extent any such documents
are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower’s website
on the Internet at Borrower’s website address or on EDGAR; provided, however, Borrower shall promptly notify Lender in writing
(which may be by electronic mail) of the posting of any such documents;

 

(f)          Notice
of Litigation, Judgments, Environmental, Health or Safety Complaints.

 

(i)          Within
five (5) Business Days after commencement or receipt by Borrower, written notice to Lender of all litigation and of all proceedings
involving the Borrower or any of its assets with respect to claims or contingent liabilities exceeding $50,000, together with
a copy of all pleadings and demands;

 

(ii)         Within
five (5) Business Days thereafter, written notice to Lender of (1) the institution of any lawsuit or of other legal or equitable
proceedings or the assertion of any crossclaim or counterclaim seeking monetary damages from Borrower, in each case with respect
to claims in excess of $50,000, or (2) the entry of any judgment; and

 

(iii)        Within
five (5) Business Days thereafter, notice or copies if written of all claims, complaints, orders, citations or notices, whether
formal or informal, written or oral, from a governmental body or private person or entity, relating to air emissions, water discharge,
noise emission, solid or liquid waste disposal, hazardous waste or materials, or any other environmental, health or safety matter,
which adversely affect Borrower. Such notices shall include, among other information, the name of the party who filed the claim,
the potential amount of the claim, and the nature of the claim.

 

(g)          Other
Information. Upon demand,

 

    	 	32

     

    

 

(i)          Certificates
of insurance for all policies of insurance to be maintained by Borrower pursuant hereto;

 

(ii)         All
information received by Borrower affecting the financial status or condition of any Account Debtor or the payment of any Account,
including but not limited to, invoices, original orders, shipping and delivery receipts; and

 

(iii)        An
estoppel certificate executed by an authorized officer of Borrower indicating that there then exists no Event of Default and no
event which, with the giving of notice or lapse of time, or both, would constitute an Event of Default.

 

(h)          Additional
Information. From time to time, such other information as Lender may reasonably request, including financial projections and
cash flow analysis.

 

9.7           Comply
with Laws. Borrower shall comply with the requirements of all applicable laws, rules, regulations and orders of any Governmental
Authority, compliance with which is necessary to maintain its corporate existence or the conduct of its business or non-compliance
with which would adversely affect in any respect its ability to perform its obligations or any security given to secure its obligations.

 

9.8           Insurance
Required.

 

(a)          Borrower
shall cause to be maintained, in full force and effect on all property of Borrower insurance in such amounts against such risks
as is reasonably satisfactory to Lender, including, but without limitation, product liability, business interruption, liability,
casualty, fire, boiler, theft, burglary, pilferage, vandalism, malicious mischief, loss in transit, and hazard insurance and,
if as of the date hereof, any of the leased real property of Borrower is in an area that has been identified by the Secretary
of Housing and Urban Development as having special flood or mudslide hazards, and on which the sale of flood insurance has been
made available under the National Flood Insurance Act of 1968, then Borrower shall maintain flood insurance. Said policy or policies
shall:

 

(i)          Be
in a form and with insurers which are satisfactory to Lender;

 

(ii)         Be
for such risks, and for such insured values as Lender or its assigns may reasonably require in order to replace the property in
the event of actual or constructive total loss;

 

(iii)        Designate
Lender as additional insured and loss payee as Lender’s interest may from time to time appear;

 

(iv)        Contain
a “breach of warranty clause” whereby the insurer agrees that a breach of the insuring conditions or any negligence
by Borrower or any other person shall not invalidate the insurance as to Lender and its assignee;

 

(v)         Provide
that they may not be canceled or altered without thirty (30) days prior written notice to Lender; and

 

    	 	33

     

    

 

(vi)        Upon
demand, be delivered to Lender.

 

(b)          Borrower
shall obtain such additional insurance as Lender may reasonably require.

 

(c)          Borrower
shall, in the event of loss or damage, forthwith notify Lender and file proofs of loss with the appropriate insurer. Borrower
hereby authorizes Lender to endorse any checks or drafts constituting insurance proceeds.

 

(d)          Borrower
shall forthwith upon receipt of insurance proceeds endorse and deliver the same to Lender.

 

(e)          In
no event shall Lender be required either to (i) ascertain the existence of or examine any insurance policy or (ii) advise Borrower
in the event such insurance coverage shall not comply with the requirements of this Agreement.

 

9.9           Condition
of Collateral; No Liens. Borrower shall maintain all Collateral in good condition and repair at all times, and preserve it
against any loss, damage, or destruction of any nature whatsoever, and keep said Collateral free and clear of any Liens, except
for the Permitted Encumbrances, and shall not permit Collateral to become a fixture to real estate or accessions to other personal
property.

 

9.10         Payment
of Proceeds. Borrower shall forthwith upon receipt of all Proceeds of Collateral, pay such Proceeds (insurance or otherwise)
up to the amount of the then-outstanding Obligations over to Lender for application against the Obligations in such order and
manner as Lender may elect.

 

9.11         Records.
Borrower shall at all times keep accurate and complete records of its operations, of the Collateral and the status of each Account,
which records shall be maintained at its executive offices as set forth on Section 5.4(m) of Borrower’s Disclosure Schedule.

 

9.12         Pay
Obligations. Except with respect to those certain trade accounts payable listed in Section 9.3 of Borrower’s Disclosure
Schedule, Borrower shall promptly and timely pay all Obligations when due in accordance with the Loan Documents.

 

9.13         Delivery
of Documents. If any Proceeds of Accounts shall include, or any of the Accounts shall be evidenced by, notes, trade acceptances
or instruments or documents, whether or not negotiable, then Borrower waives protest regardless of the form of the endorsement.
If Borrower fails to endorse any instrument or document, Lender is authorized to endorse it on Borrower’s behalf.

 

9.14         SEC
Reporting Status. Borrower shall timely file all reports required to be filed with the SEC pursuant to Section 13 or 15(d)
of the 1934 Act.

 

    	 	34

     

    

 

9.15         Further
Assurances. Borrower shall at any time or from time to time upon request of Lender take such steps and execute and deliver
such Financing Statements and other documents (including, without limitation, original title certificates of motor vehicles included
in the Collateral and certificates of title with respect to any other Collateral, subject in each case to certificate of title
statutes in the United States) all in the form and substance satisfactory to Lender relating to the creation, validity or perfection
of the security interests provided for herein, under the UCC or which are reasonably necessary to effectuate the purposes and
provisions of this Agreement. Borrower shall defend the right, title and interest of Lender in and to the Collateral against the
claims and demands of all Persons whomsoever, and take such actions, including (i) all actions necessary to grant Lender “control”
of any Investment Property, Deposit Accounts, Letter-of-Credit Rights or Electronic Chattel Paper owned by it, with any agreements
establishing control to be in form and substance satisfactory to Lender, (ii) the prompt (but in no event later than two (2) Business
Days following Lender’s request therefor) delivery to Lender of all original Instruments, Chattel Paper, negotiable Documents
and certificated Securities owned by it (in each case, accompanied by stock powers, allonges or other instruments of transfer
executed in blank), (iii) notification of Lender’s interest in Collateral at Lender’s request, and (iv) the institution
of litigation against third parties as shall be prudent in order to protect and preserve Borrower’s and/or Lender’s
respective and several interests in the Collateral.

 

9.16         Indemnification.
Borrower shall indemnify, protect, defend and hold Lender, and Lender’s members, managers, directors, officers, employees,
agents, attorneys, and representatives (each, an “Indemnified Party”) harmless from and against any and all
claims, demands, suits, judgments, losses, damages, liabilities, expenses, costs and fees (including reasonable attorneys’
fees) and liabilities of any kind or nature relating to, resulting from, arising out of or in connection with the Loan Documents
and the transactions contemplated by the Loan Documents. If a claim or action shall be brought against an Indemnified Party based
upon any of the above, the Indemnified Party shall select counsel to defend such claim or action. Borrower shall be responsible
for payment of all costs and expenses of such counsel selected by the Indemnified Party and all costs and expenses incurred by
the Indemnified Party. The Indemnified Party and counsel selected by the Indemnified Party shall defend, compromise, settle or
purse such claim or action at Borrower’s expense. The provisions of this Section shall survive the termination of this Agreement
and the final repayment of the Obligations.

 

9.17         Name
Changes; Location Changes.

 

(a)          Subject
to Section 10.11 (“Change of Business or Name”), Borrower shall promptly notify Lender of any changes in the name
of Borrower or if Borrower is known by or conducting business under any names other than those set forth in this Agreement.

 

(b)          Borrower
shall deliver not less than thirty (30) days prior written notice to Lender if Borrower intends to conduct any of its Business
or operations at or out of offices or locations other than those set forth in Section 5.4(m) of the Borrower’s Disclosure
Schedule, or if it changes the location of its chief executive office or the address at which it maintains its books and records.

 

9.18         Borrower
Financial Covenants.

 

(a)          Adjusted
Gross Revenues. Borrower will maintain (i) minimum monthly gross revenues of not less than eighty percent (80%) of the projected
monthly plan provided by Borrower to Lender prior to the date hereof and annexed hereto as Exhibit 9.18(a), as measured
monthly as of the last day of each month during the Term, and (ii) minimum quarterly gross revenues of not less than eighty-five
percent (85%) of the projected quarterly plan provided by Borrower to Lender prior to the date hereof and annexed hereto as Exhibit
9.18(a), as measured quarterly as of the last day of each fiscal quarter during the Term .

 

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(b)          EBITDA.
Borrower will maintain minimum quarterly EBITDA of not less than eighty-five percent (85%) of the projected quarterly plan provided
by Borrower to Lender prior to the date hereof and annexed hereto as Exhibit 9.18(b), as measured quarterly as of the last
day of each fiscal quarter during the Term.

 

SECTION
10. NEGATIVE COVENANTS.

 

Until
payment and satisfaction in full of all Obligations and the termination of this Agreement, Borrower hereby covenants and agrees
as follows:

 

10.1         Change
of Control; No Creation of Subsidiaries. Borrower will not consolidate with, merge with, or acquire the stock or a material
portion of the assets of any person, firm, joint venture, partnership, corporation, or other entity, whether by merger, consolidation,
purchase of stock or otherwise if any such action results in a Change of Control (as defined below). Borrower will not create
or permit to exist any Subsidiary unless such new Subsidiary is a wholly-owned Subsidiary and is designated by Lender as either
a co-borrower or guarantor hereunder and such Subsidiary shall have entered into all such documentation required by Lender, including,
without limitation, to grant to Lender a first priority perfected security interest in substantially all of such Subsidiary’s
assets to secure the Obligations. In addition, Borrower will not acquire a material portion of the assets of any entity in a manner
that is not addressed by the foregoing provisions of this Section 10.1 if such action would impair Lender’s rights hereunder
or in the Collateral.

 

A “Change of Control” shall
be deemed to have occurred if:

 

(i)          any
“Person,” which shall mean a “person” as such term is used in Sections 13(d) and 14(d) of the 1934 Act,
or group of Persons, other than Persons that are holders of voting securities of the Borrower as of the date of the execution
of this Agreement, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of securities of Borrower representing 50% or more of the combined voting power of Borrower’s then outstanding
voting securities;

 

(ii)         individuals,
who at the Closing Date constitute the Board of Directors or the managers of Borrower, and any new director or manager whose election
by the Board of Directors or managers of Borrower, or whose nomination for election by Borrower’s equity holders, was approved
by a vote of at least one-half (1/2) of the directors or managers then in office (other than in connection with a contested election),
cease for any reason to constitute at least a majority of the Board of Directors or managers of Borrower;

 

(iii)        the
stockholders or members of Borrower approve (I) a plan of complete liquidation of Borrower or (II) the sale or other disposition
by Borrower of all or substantially all of Borrower’s assets; or

 

(iv)        a
merger or consolidation of Borrower with any other entity is consummated, other than:

 

    	 	36

     

    

 

(A)  a
merger or consolidation which results in the voting securities of Borrower outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50%
of the combined voting power of the surviving entity's outstanding voting securities immediately after such merger or consolidation;
or

 

(B)   a
merger or consolidation which would result in the directors or managers of Borrower (who were directors or managers immediately
prior thereto) continuing to constitute more than 50% of all directors or managers of the surviving entity immediately after such
merger or consolidation.

 

In this paragraph (iv), “surviving
entity” shall mean only an entity in which all of Borrower’s equity holders immediately before such merger or consolidation
(determined without taking into account any equity holders properly exercising appraisal or similar rights) become stockholders
by the terms of such merger or consolidation, and the phrase “directors or managers of Borrower (who were directors or managers
immediately prior thereto)” shall include only individuals who were directors or managers of Borrower at the Closing Date.

 

10.2         Disposition
of Assets or Collateral. Borrower will not sell, lease, transfer, convey, or otherwise dispose of any or all of its assets
or Collateral, other than the sale of Equipment in accordance with Lender’s prior written consent under Section 5.4(e) hereof.

 

10.3         Other
Liens. Borrower will not incur, create or permit to exist any Lien on any of its property or assets, whether now owned or
hereafter acquired, except for (a) those Liens in favor of Lender created by this Agreement and the other Loan Documents
and (b) the Permitted Encumbrances.

 

10.4         Other
Liabilities. Borrower will not incur, create, assume, or permit to exist, any Indebtedness or liability on account of either
borrowed money or the deferred purchase price of property, except (i) Obligations to Lender, (ii) debt expressly subordinated
to Borrower’s Obligations to Lender pursuant to a subordination agreement in form and substance satisfactory to Lender or
(iii) Permitted Indebtedness.

 

10.5         Loans.
Borrower will not make any loans to any Person, other than advances to employees of Borrower in the ordinary course of business,
with outstanding advances to any employee not to exceed $5,000 at any time.

 

10.6         Guaranties.
Borrower will not assume, guaranty, endorse, contingently agree to purchase or otherwise become liable upon the obligation of
any Person, except by the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary
course of business.

 

10.7         Transfers
of Notes or Accounts. Borrower will not sell, assign, transfer, discount or otherwise dispose of any Accounts or any promissory
note payable to Borrower, with or without recourse.

 

    	 	37

     

    

 

10.8         Dividends.
Borrower will not declare or pay any cash dividend, make any distribution on, redeem, retire or otherwise acquire directly or
indirectly, any shares of its stock or other Equity Interests without the prior written consent of Lender.

 

10.9         Payments
to Affiliates. Except as set forth in Section 10.9 of the Borrower’s Disclosure Schedule, or as otherwise approved
by Lender in writing in advance, Borrower shall not make any payments of cash or other property to any Affiliate.

 

10.10         Modification
of Documents. Borrower will not change, alter or modify, or permit any change, alteration or modification of its Organizational
Documents in any manner that might adversely affect Lender’s rights hereunder as a secured lender or its Collateral without
Lender's prior written consent.

 

10.11         Change
Business or Name. Borrower will not engage in any business other than the Business, or change its name as it appears in the
official filings of its state of organization.

 

10.12         Settlements.
Other than in the ordinary course of its business, Borrower will not compromise, settle or adjust any claims in any amount relating
to any of the Collateral, without the prior written consent of Lender.

 

SECTION
11. EVENTS OF DEFAULT.

 

The occurrence of any
of the following shall constitute an event of default (hereinafter referred to as an “Event of Default”):

 

11.1         Failure
to Pay. The failure by Borrower to pay, when due, (a) any payment of principal, interest, fees or other charges due and owing
to Lender pursuant to any obligations of Borrower to Lender including, without limitation, those Obligations arising pursuant
to this Agreement or any Loan Document, or under any other agreement for the payment of monies then due and payable to Lender,
where such failure to pay continues for a period of more than three (3) calendar days, or (b) any taxes due to any Governmental
Authority where such failure to pay continues for a period of more than ten (10) calendar days.

 

11.2         Failure
of Insurance. Failure of one or more of the insurance policies required hereunder to remain in full force and effect; failure
on the part of Borrower to pay or cause to be paid all premiums when due on the insurance policies pursuant to this Agreement;
failure on the part of Borrower to take such other action as may be requested by Lender in order to keep said policies of insurance
in full force and effect until all Obligations have been indefeasibly paid in full; and failure on the part of Borrower to execute
any and all documentation required by the insurance companies issuing said policies, in each case, which failure continues for
a period of more than ten (10) Business Days.

 

11.3         Failure
to Perform. Borrower’s failure to perform or observe any material covenant, term or condition of this Agreement or in
any other Loan Document.

 

11.4         Cross
Default. Borrower’s breach of (a) any obligation of Borrower to Colgan Financial Group, Lincoln Park Capital
or Redwood Fund LP, if such breach, if uncured or unwaived, would trigger acceleration of the obligations of Borrower thereunder
and continues for a period of more than ten (10) calendar days, or (b) any Recurring Revenue Contract, which breach continues
for a period of more than ten (10) calendar days, or (c) any Material Contract other than a Recurring Revenue Contract, if such
breach, if uncured or unwaived, would trigger termination of such Material Contract and such breach continues for a period of
more than ten (10) calendar days

 

    	 	38

     

    

 

11.5         False
Representation or Warranty. Borrower shall have made any statement, representation or warranty in this Agreement or in any
other Loan Document to which Borrower is a party or in a certificate executed by Borrower incident to this Agreement, which is
at any time found to have been false in any material respect at the time such representation or warranty was made.

 

11.6         Liquidation,
Voluntary Bankruptcy, Dissolution, Assignment to Creditors. Any resolution shall be passed or any action (including a meeting
of creditors) shall be taken by Borrower for the termination, winding up, liquidation or dissolution of Borrower, or Borrower
shall make an assignment for the benefit of creditors, or Borrower shall file a petition in voluntary liquidation or bankruptcy,
or Borrower shall file a petition or answer or consent seeking, or consenting to, the reorganization of Borrower or the readjustment
of any of the indebtedness of Borrower under any applicable insolvency or bankruptcy laws now or hereafter existing (including
the United States Bankruptcy Code), or Borrower shall consent to the appointment of any receiver, administrator, liquidator, custodian
or trustee of all or any part of the property or assets of Borrower or any corporate or limited liability company action shall
be taken by Borrower for the purposes of effecting any of the foregoing.

 

11.7         Involuntary
Petition Against Borrower. Any petition or application for any relief is filed against Borrower under applicable insolvency
or bankruptcy laws now or hereafter existing (including the United States Bankruptcy Code) or under any insolvency, reorganization,
receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether
at law or in equity), and is not dismissed or stayed within thirty (30) days of the filing thereof.

 

11.8         Judgments;
Levies. Judgments or attachments aggregating in excess of $10,000 at any given time are obtained against Borrower which remain
unstayed or unsatisfied for a period of ten (10) days or are enforced.

 

11.9         Change
in Condition. There occurs any event or a change in the condition or affairs, financial or otherwise, of Borrower which, in
the reasonable opinion of Lender, impairs Lender's security or the ability of Borrower to discharge its obligations hereunder
or any other Loan Document or which impairs the rights of Lender in the Collateral.

 

11.10      Environmental
Claims. Lender determines that any Environmental Liabilities and Costs or Environmental Lien with respect to Borrower will
have a potentially adverse effect on the financial condition of Borrower or on the Collateral.

 

11.11      Failure
to Notify. If at any time Borrower fails to provide Lender within ten (10) Business Days of Borrower’s receipt thereof
with notice or copies, if written, of all complaints, orders, citations or notices with respect to environmental, health or safety
complaints.

 

11.12      Failure
to Deliver Documentation. Borrower shall fail to obtain and deliver to Lender within ten (10) Business Days of Lender’s
request any other documentation required to be signed or obtained as part of this Agreement, or shall have failed to take any
reasonable action requested by Lender to perfect, protect, preserve and maintain the security interests and Lien on the Collateral
provided for herein.

 

    	 	39

     

    

 

11.13      Change
of Control. Borrower undergoes a Change of Control.

 

11.14      [RESERVED]

 

11.15      Dissolution;
Maintenance of Existence. Borrower is dissolved, or Borrower fails to maintain its corporate existence in good standing, or
the usual business of Borrower ceases or is suspended in any respect.

 

11.16      Indictment.
The indictment of Borrower or any director or Responsible Officer of Borrower under any criminal statute, or commencement of criminal
or civil proceedings against Borrower, pursuant to which statute or proceedings the penalties or remedies sought or available
include forfeiture of any material portion of the property of Borrower.

 

11.17      Tax
Liens. The filing of a Lien for any unpaid taxes filed by any Governmental Authority against Borrower or any of its assets
if uncured or unwaived for a period of more than ten (10) calendar days.

 

11.18      Challenge
to Validity of Loan Documents. Borrower attempts to terminate, or challenges the validity of, or its liability under, this
Agreement or any other Loan Document, or any proceeding shall be brought to challenge the validity, binding effect of any Loan
Document, or any Loan Document ceases to be a valid, binding and enforceable obligation of Borrower.

 

11.19      Claims
Against Lender. Any claims asserted by the Borrower seeking to challenge the Loan Documents or Lender’s Liens in the
Collateral, or otherwise commencing any cause of action against the Lender.

 

11.20      Termination
of Guarantee. The Guarantee shall have terminated.

 

    	 	40

     

    

 

SECTION
12. REMEDIES.

 

12.1        Acceleration;
Other Remedies. Upon the occurrence and during the continuation of an Event of Default:

 

(a)          Lender
shall have all rights and remedies provided in this Agreement, any of the other Loan Documents, the UCC or other applicable law,
all of which rights and remedies may be exercised without notice to Borrower, all such notices being hereby waived, except such
notice as is expressly provided for hereunder or is not waivable under applicable law. All rights and remedies of Lender are cumulative
and not exclusive and are enforceable, in Lender's discretion, alternatively, successively, or concurrently on any one or more
occasions and in any order Lender may determine. Without limiting the foregoing, Lender may (i) accelerate the payment of all
Obligations and demand immediate payment thereof to Lender, (ii) with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral, (iii) require Borrower, at Borrower’s
expense, to assemble and make available to Lender any part or all of the Collateral at any place and time designated by Lender,
(iv) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (v) notify Account Debtors or other
obligors to make payment directly to Lender, or notify bailees as to the disposition of Collateral, (vi) extend the time of payment
of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any and all Accounts or other
Collateral which includes a monetary obligation and discharge or release the Account Debtor or other obligor, without affecting
any of the Obligations, and (vii) sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including,
without limitation, entering into contracts with respect thereto, by public or private sales at any exchange, broker's board,
any office of Lender or elsewhere) at such prices or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with Lender having the right to purchase the whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of Borrower, which right or equity of redemption is hereby expressly
waived and released by Borrower. If any of the Collateral or other security for the Obligations is sold or leased by Lender upon
credit terms or for future delivery, the Obligations shall not be reduced as a result thereof until payment therefor is finally
collected by Lender. If notice of disposition of Collateral is required by law, ten (10) days prior notice by Lender to Borrower
designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral
is to be made, shall be deemed to be reasonable notice thereof and Borrower waives any other notice. In the event Lender institutes
an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, Borrower waives the posting
of any bond which might otherwise be required. In addition to the foregoing and without limitation to any other provision hereof,
Borrower hereby grants Lender its assignee or any of its representatives and also grants to any purchasers of any Collateral at
any public or private sale conducted by Lender, the right and license, for a period of up to ninety (90) days commencing on the
date of the conclusion of such public or private sale conducted by Lender, to use all of the Borrower’s names, trade names,
business names and trademarks, to enter upon and use the premises where the Collateral is located and to do with the Collateral
so purchased, any or all of the Permitted Actions at no cost to Lender and at no cost to any purchaser of any Collateral at a
public or private sale conducted by Lender or by any purchaser of any Collateral. Borrower acknowledges and agrees that the foregoing
rights of Lender and any purchasers of Collateral pursuant to a public or private sale conducted by Lender shall survive the Term.

 

(b)          Lender
may apply the Proceeds of Collateral actually received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of any of the Obligations, in whole or in part (including attorneys' fees and legal expenses incurred by
Lender with respect thereto or otherwise chargeable to Borrower) and in such order as Lender may elect, whether or not then due.
Borrower shall remain liable to Lender for the payment on demand of any deficiency together with interest at the Default Interest
Rate and all costs and expenses of collection or enforcement, including reasonable attorneys' fees and legal expenses.

 

(c)          Lender
may, at its option, cure any default by Borrower under any agreement with a third party or pay or bond on appeal any judgment
entered against Borrower, discharge taxes and Liens at any time levied on or existing with respect to the Collateral, and pay
any amount, incur any expense or perform any act which, in Lender's sole and absolute judgment, is necessary or appropriate to
preserve, protect, insure, maintain, or realize upon the Collateral. Such amounts paid by Lender shall be repayable by Borrower
on demand and added to the Obligations, with interest payable thereon at the Default Interest Rate. Lender shall be under no obligation
to effect such cure, payment, bonding or discharge, and shall not, by doing so, be deemed to have assumed any obligation or liability
of Borrower.

 

    	 	41

     

    

 

(d)          Lender
and Lender’s agents shall have the right to utilize any of Borrower’s customer lists, registered names, trade names
or trademarks to publicly advertise, sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral and
Borrower will be deemed to have waived and voided any confidentiality agreements by and between Borrower and Lender.

 

12.2         Set-off.
Lender shall have the right, immediately and without notice of other action, to set-off against any of Borrower’s liabilities
to Lender any money or other liability owed by Lender or any Affiliate of Lender (and such Affiliate of Lender is hereby authorized
to effect such set-off) in any capacity to Borrower, whether or not due, and Lender or such Affiliate shall be deemed to have
exercised such right of set-off and to have made a charge against any such money or other liability immediately upon the occurrence
of such Event of Default even though the actual book entries may be made at a time subsequent thereto. The right of set-off granted
hereunder shall be effective irrespective of whether Lender shall have made demand under or in connection with the Loans. None
of the rights of Lender described in this Section are intended to diminish or limit in any way Lender's or Affiliates of Lender's
common-law set-off rights.

 

12.3         Costs
and Expenses. Borrower shall be liable for all costs, charges and expenses, including attorney's fees and disbursements, incurred
by Lender by reason of the occurrence of any Event of Default or the exercise of Lender's remedies with respect thereto, each
of which shall be repayable by Borrower on demand with interest at the Default Interest Rate, and added to the Obligations.

 

12.4         No
Marshalling. Lender shall be under no obligation whatsoever to proceed first against any of the Collateral or other property
which is security for the Obligations before proceeding against any other of the Collateral. It is expressly understood and agreed
that all of the Collateral or other property which is security for the Obligations stands as equal security for all Obligations,
and that Lender shall have the right to proceed against any or all of the Collateral or other property which is security for the
Obligations in any order, or simultaneously, as in its sole and absolute discretion it shall determine. It is further understood
and agreed that Lender shall have the right to sell any or all of the Collateral or other property which is security for the Obligations
in any order or simultaneously, as Lender shall determine in its sole and absolute discretion.

 

12.5         No
Implied Waivers; Rights Cumulative. No delay on the part of Lender in exercising any right, remedy, power or privilege hereunder
or under any other Loan Document or provided by statute or at law or in equity or otherwise shall impair, prejudice or constitute
a waiver of any such right, remedy, power or privilege or be construed as a waiver of any Event of Default or as an acquiescence
therein. No right, remedy, power or privilege conferred on or reserved to Lender hereunder or under any other Loan Document or
otherwise is intended to be exclusive of any other right, remedy, power or privilege. Each and every right, remedy, power or privilege
conferred on or reserved to Lender under this Agreement or under any of the other Loan Documents or otherwise shall be cumulative
and in addition to each and every other right, remedy, power or privilege so conferred on or reserved to Lender and may be exercised
by Lender at such time or times and in such order and manner as Lender shall (in its sole and absolute discretion) deem expedient.

 

    	 	42

     

    

 

SECTION
13.OTHER RIGHTS OF LENDER.

 

13.1        Collections.
Borrower hereby authorizes Lender to, and Lender shall make such arrangements as it shall deem necessary or appropriate to, collect
the Accounts and any other monetary obligations included in, or Proceeds of, the Collateral at any time whether or not an Event
of Default has occurred. Borrower shall, at Borrower’s expense and in the manner requested by Lender from time to time,
direct that remittances and all other Proceeds of accounts and other Collateral up to the amount of the then-current Obligations
shall be (a) remitted in kind to Lender, (b) sent to a post office box designated by and/or in the name of Lender, or in the name
of Borrower, but as to which access is limited to Lender and/or (c) deposited into a bank account maintained in the name
of Lender and/or a blocked bank account under arrangements with the depository bank under which all funds deposited to such blocked
bank account are required to be transferred solely to Lender. In connection therewith, Borrower shall execute such post office
box and/or blocked bank account agreements as Lender shall specify.

 

13.2        Repayment
of Obligations. All Obligations shall be payable at Lender's office set forth below or at a bank or such other place as Lender
may expressly designate from time to time for purposes of this Section. Lender shall apply all payments received from Borrower
and all Proceeds of Accounts or other Collateral received by Lender and all other payments in respect of the Obligations to the
Loans whether or not then due or to any other Obligations then due, in whatever order or manner Lender shall determine.

 

13.3        Lender
Appointed Attorney-in-Fact.

 

(a)          Borrower
hereby irrevocably constitutes and appoints Lender, with full power of substitution, as its true and lawful attorney-in-fact,
with full irrevocable power and authority in its place and stead and in its name or otherwise, from time to time in Lender's discretion,
at Borrower’s sole cost and expense, until the Obligations are indefeasibly paid in full, to take any and all appropriate
action and to execute and deliver any and all documents and instruments which Lender may deem reasonably necessary or advisable
to accomplish the purposes of this Agreement, including, without limiting the generality of the foregoing, (i) at any time any
of the Obligations are outstanding, (A) to transmit to Account Debtors, other obligors or any bailees notice of the interest of
Lender in the Collateral or request from Account Debtors or such other obligors or bailees at any time, in the name of Borrower
or Lender or any designee of Lender, information concerning the Collateral and any amounts owing with respect thereto; (B) to
execute in the name of Borrower and file against Borrower in favor of Lender Financing Statements or amendments with respect to
the Collateral, or record a copy or an excerpt hereof in the United States Copyright Office or the United States Patent and Trademark
Office and to take all other steps as are necessary in the reasonable opinion of Lender under applicable law to perfect the security
interests granted herein; and (C) to pay or discharge Taxes, Liens, security interests or other encumbrances levied or placed
on or threatened against the Collateral; and (ii) after and during the continuation of an Event of Default, (A) to receive, take,
endorse, assign, deliver, accept and deposit, in the name of Lender or Borrower, any and all cash, checks, commercial paper, drafts,
remittances and other instruments and documents relating to the Collateral or the Proceeds thereof, (B) to notify Account Debtors
or other obligors to make payment directly to Lender, or notify bailees as to the disposition of Collateral, (C) to change the
address for delivery of mail to Borrower and to receive and open mail addressed to Borrower, (D) take or bring, in the name of
Lender or Borrower, all steps, actions, suits or proceedings deemed by Lender necessary or desirable to effect collection of or
other realization upon the Collateral; (E) to obtain and adjust insurance required pursuant to this Agreement and to pay all or
any part of the premiums therefor and the costs thereof, (F) to assemble, market and/or sell any Collateral, (G) to take any and
all action and to execute and deliver any and all documents and instruments which Lender may deem reasonably necessary or advisable
to (a) accomplish the purposes of perfecting, continuing and preserving, a continuing first priority security interest in any
of the Collateral in favor of Lender, and (b) effect a transfer of any of the Collateral to Lender or to Lender’s designees,
and (H) to extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or
conditions, any and all Accounts or other Collateral which includes a monetary obligation and discharge or release the Account
Debtor or other obligor, without affecting any of the Obligations.

 

    	 	43

     

    

 

(b)          Borrower
hereby ratifies, to the extent permitted by law, all that Lender shall lawfully and in good faith do or cause to be done by virtue
of and in compliance with this Agreement. The powers of attorney granted pursuant to this Agreement are each a power coupled with
an interest and shall be irrevocable until the Obligations are paid indefeasibly in full. Borrower shall promptly comply with
Lender’s requests, including, without limitation, any request to provide Lender with access to Borrower’s premises,
to enable Lender to exercise its remedies in accordance with Section 13.3(a).

 

13.4        Release
of Lender. Borrower hereby releases and exculpates Lender, its officers, partners, members, directors, employees, agents,
representatives and designees, from any liability arising from any acts or occurrences under this Agreement or in furtherance
thereof, whether as attorney-in-fact or otherwise, whether of omission or commission, and whether based upon any error of judgment
or mistake of law or fact, except for gross negligence or willful misconduct as determined by a final and non-appealable order
from a court of competent jurisdiction. In no event will Lender have any liability to Borrower for lost profits or other special
or consequential damages.

 

13.5        Uniform
Commercial Code. At all times prior and subsequent to an Event of Default hereinafter, Lender shall be entitled to all the
rights and remedies of a secured party under the UCC with respect to all Collateral.

 

13.6        Preservation
of Collateral. At all times prior and subsequent to an Event of Default hereinafter, Lender may (but without any obligation
to do so) take any and all action which in its sole and absolute discretion is necessary and proper to preserve its interest in
the Collateral, including without limitation the payment of debts of Borrower which might, in Lender's sole and absolute discretion,
impair the Collateral or Lender's security interest therein, and the sums so expended by Lender shall be secured by the Collateral,
shall be added to the amount of the Obligations due Lender and shall be payable on demand with interest at the rate applicable
to the Revolving Loan set forth in Section 3.1 hereof from the date expended by Lender until repaid by Borrower. After written
notice by Lender to Borrower and automatically, without notice, after an Event of Default, Borrower shall not, without the prior
written consent of Lender in each instance, (a) grant any extension of time of payment of any Accounts, (b) compromise
or settle any Accounts for less than the full amount thereof, (c) release in whole or in part any Account Debtor or other person
liable for the payment of any of the Accounts or any such other Collateral, or (d) grant any credits, discounts, allowances,
deductions, return authorizations or the like with respect to any of the Accounts.

 

    	 	44

     

    

 

13.7        Lender's
Right to Cure. In the event Borrower shall fail to perform any of its Obligations hereunder or under any other Loan Document,
then Lender, in addition to all of its rights and remedies hereunder, may perform the same, but shall not be obligated to do so,
at the cost and expense of Borrower. Such costs and expenses shall be added to the amount of the Obligations due Lender, and Borrower
shall promptly reimburse Lender for such amounts together with interest at the Default Interest Rate from the date such sums are
expended until repaid by Borrower.

 

13.8        Inspection
of Collateral; Access to Records. From time to time as requested by Lender, Lender or its designee shall have access, (a)
prior to an Event of Default, at the sole expense of Borrower, during reasonable business hours to all of the premises where Collateral
is located for the purpose of inspecting the Collateral and to all of Borrower’s Collateral, and all books and records of
Borrower, and Borrower shall permit Lender or Lender’s designees to make copies of such books and records or extracts therefrom
as Lender may request, and (b) on or after an Event of Default, at the sole expense of Borrower, at any time, to all of the premises
where Collateral is located for the purposes of inspecting, disposing and realizing upon the Collateral, and all Borrower’s
books and records, and Borrower shall permit Lender or its designee to make such copies of such books and records or extracts
therefrom as Lender may request. Without expense to Lender, Lender may use such of Borrower’s personnel, equipment, including
computer equipment, programs, printed output and computer readable media, supplies and premises for the realization on Collateral
as Lender, in its reasonable discretion prior to an Event of Default and in its sole and absolute discretion after an Event of
Default has occurred and is continuing, deems appropriate. Borrower hereby irrevocably authorizes all accountants and third parties
to disclose and deliver to Lender at Borrower’s expense all financial information, books and records, work papers, management
reports and other information in its possession regarding Borrower.

 

SECTION
14. PROVISIONS OF GENERAL APPLICATION.

 

14.1        Waivers.
Borrower waives demand, presentment, notice of dishonor or protest and notice of protest of any instrument of Borrower or others
which may be included in the Collateral.

 

14.2        Survival.
All covenants, agreements, representations and warranties made by Borrower herein or in any other Loan Document or in any certificate,
report or instrument contemplated hereby shall survive any independent investigation made by Lender and the execution and delivery
of this Agreement, and such certificates, reports or instruments and shall continue so long as any Obligations are outstanding
and unsatisfied, applicable statutes of limitations to the contrary notwithstanding.

 

14.3        Notices.
All notices, requests and demands to or upon the respective parties hereto shall be in writing and either (a) delivered by registered
or certified mail, (b) delivered by hand, or (c) delivered by national overnight courier service with next Business Day delivery,
and shall be deemed to have been duly given or made (i) upon the earlier of actual receipt and three (3) Business Days after deposit
in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid, (ii) one (1) Business
Day after deposit with a national overnight courier with all charges prepaid, or (iii) when hand-delivered. All notices, requests
and demands are to be given or made to the respective parties at the following addresses (or to such other addresses as either
party may designate by notice in accordance with the provisions of this paragraph):

 

    	 	45

     

    

 

If to Borrower:

 

Greenwood Hall, Inc.

12424 Wilshire Boulevard

Suite 1030, Los Angeles, CA 90025

Attention: Dr. John Hall

 

With a copy to:

 

Drinker Biddle & Reath LLP

1800 Century Park East

Suite 1500

Los Angeles, CA 90067

Attention: Alan A. Lanis, Jr., Esq.

 

If to Lender:

 

Moriah Education Management LLC

1 University Plaza

Suite 407

Hackensack, NJ 07601

Attention: Greg Zilberstein

 

With a copy to:

 

Cohen Tauber Spievack & Wagner P.C.

420 Lexington Avenue, Suite 2400

New York, New York 10170

Attention: Adam Stein

 

Notwithstanding the foregoing, that parties
expressly acknowledge and agree that foregoing provisions of notice by Lender to Borrower’s counsel is an accommodation
only, and that Lender shall have fulfilled its notice obligation hereunder if notice shall have been received by Borrower at the
address set forth above, irrespective of whether such notice is received by Borrower’s counsel.

 

14.4         Amendments;
Waiver of Defaults. The terms of this Agreement shall not be amended, waived, altered, modified, supplemented or terminated
in any manner whatsoever except by a written instrument signed by Lender and Borrower. Any default or Event of Default by Borrower
may only be waived by a written instrument specifically describing such default or Event of Default and signed by the Lender.

 

    	 	46

     

    

 

14.5         Binding
on Successors.

 

(a)          This
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided,
however, that Borrower may not assign any of its rights or obligations under this Agreement or the other Loan Documents to any
Person without the prior written consent of Lender.

 

(b)          Lender
may assign any or all of the Obligations together with any or all of the security therefor to any Person and any such assignee
shall succeed to all of Lender’s rights with respect thereto. Lender shall notify Borrower of any such assignment. Upon
such assignment, Lender shall have no further obligations under the Loan Documents. Lender may from time to time sell or otherwise
grant participations in any of the Obligations and the holder of any such participation shall, subject to the terms of any agreement
between Lender and such holder, be entitled to the same benefits as Lender with respect to any security for the Obligations in
which such holder is a participant.

 

14.6         Invalidity.
Any provision of this Agreement which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.

 

14.7         Publicity.
Borrower hereby authorizes Lender to make appropriate announcements of the financial arrangement entered into by and between Borrower
and Lender, including, without limitation, announcements which are commonly known as tombstones, in such publications and to such
selected parties as Lender shall in its sole and absolute discretion deem appropriate, or as required by applicable law. Lender
hereby authorizes Borrower to disclose the material terms of this Agreement, including, but not limited to the name of Lender,
in Borrower’s SEC filings, subject to Lender’s prior review and approval of the sections thereof relating to this
Agreement, and to file the material Loan Documents as exhibits thereto to the extent required under applicable law.

 

14.8         Section
or Paragraph Headings. Section and paragraph headings are for convenience only and shall not be construed as part of this
Agreement.

 

14.9         APPLICABLE
LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
THE LAWS OF WHICH THE BORROWER HEREBY EXPRESSLY ELECTS TO APPLY TO THIS AGREEMENT, WITHOUT GIVING EFFECT TO PROVISIONS FOR CHOICE
OF LAW THEREUNDER. THE BORROWER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF THIS AGREEMENT SHALL
BE COMMENCED IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT.

 

    	 	47

     

    

 

14.10      WAIVER
OF JURY TRIAL. BORROWER HEREBY WAIVES ANY AND ALL RIGHTS THAT IT MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE UNITED STATES
OF AMERICA OR ANY STATE TO A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING
BETWEEN BORROWER AND LENDER OR THEIR SUCCESSORS AND ASSIGNS, OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, THE OBLIGATIONS AND/OR THE COLLATERAL. IT IS INTENDED THAT SAID WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS,
AND/OR COUNTERCLAIMS IN ANY ACTION OR PROCEEDINGS BETWEEN BORROWER AND LENDER. BORROWER WAIVES ALL RIGHTS TO INTERPOSE ANY CLAIMS,
DEDUCTIONS, SETOFFS OR COUNTERCLAIMS OF ANY KIND, NATURE OR DESCRIPTION IN ANY ACTION OR PROCEEDING INSTITUTED BY LENDER WITH
RESPECT TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS, THE COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING
THERETO, EXCEPT COMPULSORY COUNTERCLAIMS.

 

14.11      CONSENT
TO JURISDICTION. BORROWER HEREBY (a) IRREVOCABLY SUBMITS AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN THE STATE OF NEW YORK, NEW YORK COUNTY WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS AND/OR THE COLLATERAL OR ANY MATTER ARISING THEREFROM OR RELATING THERETO, AND (b) WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT THERETO. IN ANY SUCH ACTION OR
PROCEEDING, BORROWER WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER PROCESS AND PAPERS THEREIN AND AGREES THAT
THE SERVICE THEREOF MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT ITS OFFICES SET FORTH HEREIN
OR OTHER ADDRESS THEREOF OF WHICH LENDER HAS RECEIVED NOTICE AS PROVIDED IN THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, BORROWER
CONSENTS TO THE COMMENCEMENT BY LENDER OF ANY SUIT, ACTION OR PROCEEDING IN ANY OTHER JURISDICTION TO ENFORCE LENDER’S RIGHTS
AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING.

 

14.12       Entire
Agreement. This Agreement, the other Loan Documents, any supplements or amendments hereto or thereto, and any instruments
or documents delivered or to be delivered in connection herewith or therewith contains the entire agreement and understanding
concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject
matter hereof, whether oral or written. In the event of any inconsistency between the terms of this Agreement and any schedule
or exhibit hereto, the terms of this Agreement shall govern.

 

14.13      Counterparts.
This Agreement may be executed in counterparts and by facsimile or other electronic signatures, each of which when so executed,
shall be deemed an original, but all of which shall constitute but one and the same instrument.

 

14.14      Joint
and Several Obligations. If more than one Person is a Borrower hereunder, the following shall apply:

 

    	 	48

     

    

 

(a)          All
Obligations, covenants and liabilities of Borrower hereunder shall be the joint and several Obligations, covenants and liabilities
of each Borrower. All representations and warranties of Borrower hereunder shall be deemed made by each Borrower with respect
to such Borrower. The Borrower shall make payment upon the maturity of the Obligations by acceleration or otherwise, and such
obligation and liability on the part of the Borrower shall in no way be affected by the failure of Lender to pursue or preserve
its rights against any Borrower or the release by Lender of any Collateral now or thereafter acquired from any Borrower.

 

(b)          Each
Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other
claim which such Borrower may now or hereafter have against any other Borrower or against any other Person directly or contingently
liable for the Obligations until all Obligations have been indefeasibly paid in full as determined by Lender.

 

(c)          Each
Borrower represents and warrants to Lender that (i) the Borrowers have one or more common or affiliated shareholders, directors
and officers, (ii) the businesses and corporate activities of each Borrower are closely related to, and substantially benefit,
the business and corporate activities of the other, (iii) each Borrower will receive a substantial economic benefit from entering
into this Agreement and will receive a substantial economic benefit from the application of the Loan hereunder, in each case,
whether or not such amount is used directly by such Borrower and (iv) the Loans made hereunder are for the exclusive and indivisible
benefit of the Borrower as though, for purposes of this Agreement, the Borrowers constituted a single entity.]

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

    	 	49

     

    

 

EXECUTION

 

IN WITNESS WHEREOF,
this Loan and Security Agreement has been duly executed as of the day and year first above written.

 

	 	BORROWERS:
	 	 
	 	GREENWOOD HALL, INC.
	 	 
	 	By: 	/s/
    John Hall
	 	Name: John R. Hall
	 	Title: Chief Executive Officer
	 	 
	 	 
	 	PCS LINK, INC.
	 	 
	 	By: 	/s/ John
    Hall
	 	Name: John R. Hall
	 	Title: Chief Executive Officer
	 	 
	 	 
	 	LENDER:
	 	 
	 	MORIAH EDUCATION MANAGEMENT LLC
	 	 
	 	By:  	/s/ Greg Zilberstein
	 	Name: Greg Zilberstein
	 	Title: Managing Partner

 

[SIGNATURE PAGE - LOAN AND SECURITY AGREEMENT]

 

     

     

    

 

Exhibit 2.4

 

Use of Proceeds – Payment of Indebtedness

 

 

	Opus Bank	 	 	 	 
	Payoff Amount	 	$	1,200,000.00	 
	California United Bank	 	 	 	 
	Payoff Amount	 	$	175,000.00	 
	Colgan Financial Group, Inc.	 	 	 	 
	Partial Payoff	 	$	150,000.00	 
	John R. Hall	 	 	 	 
	Repayment of Loan	 	$	56,925	 

 

     

     

    

 

Exhibit 6.14

 

Payment of Existing Subordinated Debt

 

	Creditor	 	Amount to be

remitted	 
	Redwood Fund LP	 	$	187,256.53	 
	Colgan Financial Group, Inc.	 	$	150,000	 
	FirstFire Global Opportunities Fund, LLC	 	$	305,000	 

 

Exhibit 9.18(a) and (b)

 

Minimum Gross Revenues and Minimum EBDTA

 

[ATTACHED]Form of 2.442% Senior Notes due 2021

 Exhibit 4.1 

[FORM OF 2.442% SENIOR NOTES DUE 2021] 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERENCED AND REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM IN ACCORDANCE WITH THE PROVISIONS OF THE INDENTURE AND THE TERMS OF THIS SECURITY, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE TO
NOMINEES OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE. TRANSFER OF A PORTION OF THIS SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE. IN THE EVENT THAT THIS GLOBAL SECURITY IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, ALL SUCH INDIVIDUAL SECURITIES IN THE FORM OF DEFINITIVE CERTIFICATES SHALL CONTAIN
THE BELOW LEGEND WITH RESPECT TO JAPANESE TAXATION. 
 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO
SUMITOMO MITSUI FINANCIAL GROUP, INC. (THE “ISSUER”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE OR ANY PORTION HEREOF IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

INTEREST PAYMENTS ON THE SECURITIES WILL BE SUBJECT TO JAPANESE WITHHOLDING TAX UNLESS IT IS ESTABLISHED THAT THIS SECURITY IS HELD BY OR FOR
THE ACCOUNT OF A BENEFICIAL OWNER THAT IS (I) FOR JAPANESE TAX PURPOSES, NEITHER AN INDIVIDUAL RESIDENT OF JAPAN OR A JAPANESE CORPORATION, NOR AN INDIVIDUAL NON-RESIDENT OF JAPAN OR A NON-JAPANESE CORPORATION THAT IN EITHER CASE IS A PERSON HAVING
A SPECIAL RELATIONSHIP WITH THE ISSUER AS DESCRIBED IN ARTICLE 6, PARAGRAPH (4) OF THE ACT ON SPECIAL MEASURES CONCERNING TAXATION OF JAPAN (ACT NO. 26 OF 1957, AS AMENDED) (THE “SPECIAL TAXATION MEASURES ACT” AND, EACH SUCH PERSON,
A “SPECIALLY-RELATED PERSON OF THE ISSUER”), (II) A JAPANESE FINANCIAL INSTITUTION DESIGNATED IN ARTICLE 6, PARAGRAPH (9) OF THE SPECIAL TAXATION MEASURES ACT WHICH COMPLIES WITH THE REQUIREMENT FOR TAX EXEMPTION UNDER THAT
PARAGRAPH OR (III) A JAPANESE PUBLIC CORPORATION, FINANCIAL INSTITUTION OR FINANCIAL INSTRUMENTS BUSINESS OPERATOR DESCRIBED IN ARTICLE 3-3, PARAGRAPH (6) OF THE SPECIAL TAXATION MEASURES ACT WHICH COMPLIES WITH THE REQUIREMENT FOR TAX EXEMPTION
UNDER THAT PARAGRAPH. 
 INTEREST PAYMENTS ON THIS SECURITY TO AN INDIVIDUAL RESIDENT OF JAPAN, TO A JAPANESE CORPORATION (EXCEPT AS
DESCRIBED IN THE PRECEDING PARAGRAPH), OR TO AN INDIVIDUAL NON-RESIDENT OF JAPAN OR A NON-JAPANESE CORPORATION THAT IN EITHER CASE IS A SPECIALLY-RELATED PERSON OF THE ISSUER WILL BE SUBJECT TO DEDUCTION IN RESPECT OF JAPANESE INCOME TAX AT A RATE
OF 15.315% OF THE AMOUNT OF SUCH INTEREST. 

 SUMITOMO MITSUI FINANCIAL GROUP, INC. 

GLOBAL SECURITY 
 2.442% Senior
Notes due 2021 
  

			
	No. [    ]	  	    U.S.$[            ]
	CUSIP No. 86562M AH3	  	
	ISIN No. US86562MAH34	  	
	Common Code 150429331	  	

 Sumitomo Mitsui Financial Group, Inc., a joint stock company (kabushiki kaisha) incorporated under the
laws of Japan (the “Issuer”, which term includes any successor under the Indenture referred to on the reverse of this Security) for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum
of [        ] U.S. Dollars on October 19, 2021 and to pay interest thereon from October 19, 2016 or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually
in arrears on April 19 and October 19 in each year (each, an “Interest Payment Date”) commencing April 19, 2017 at the rate per annum of 2.442%, until the principal hereof is paid or made available for payment, all
subject to and in accordance with the terms of the Indenture. The semiannual interest to be paid on the Securities will amount to $12.21 per each $1,000 in nominal amount of the Securities. 

For the purposes of this Security, the term “Business Day” means any day which is not a day on which banking institutions in
The City of New York, London or Tokyo are authorized or required by law, regulation or executive order to close. 
 The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the person in whose name this Security is registered as of the close of business on the fifteenth day before the Interest Payment
Date (whether or not a Business Day). If and to the extent the Issuer shall default in the payment of the interest due on such Interest Payment Date, such defaulted interest shall be paid to the person in whose name this Security is registered at
the close of business on a subsequent record date (which date shall not be less than five Business Days prior to the date of payment of such defaulted interest), established by notice given by mail by or on behalf of the Issuer to the Holder of this
Security not less than 15 days preceding such subsequent record date. Interest on this Security will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed
on the basis of a 360-day year consisting of twelve 30-day months. If any payment is due on the Securities on a day that is not a Business Day, payment will be made on the day that is the next succeeding Business Day without any additional interest
as a result of such delay. Payments postponed to the next Business Day in this situation will be treated under the Indenture as if they were made on the original due date. Postponement of this kind will not result in a default under the Securities
or the Indenture, and no interest will accrue on the postponed amount from the original due date to the next succeeding day that is a Business Day. 

  
 1 

 The principal of, and interest and Additional Amounts on, the Securities will be payable in U.S.
dollars. The Issuer will cause the Trustee, or the paying agent, if any, to pay such amounts, on the dates payment is to be made, directly to The Depository Trust Company (“DTC”). 

The Issuer will pay the Holder hereof Additional Amounts with respect to withholding taxes as are provided for, and subject to the conditions
stated, on the reverse of this Security. 
 This Security is being deposited with DTC acting as depository, and registered in the name of
Cede & Co., a nominee of DTC. As Holder of record of this Security, Cede & Co. shall be entitled to receive payments of principal and interest. Payments of principal and interest, including any Additional Amounts, on this Security shall be
made in the manner specified on the reverse hereof and, to the extent not inconsistent with the provisions set forth herein, in the Indenture referred herein. 

The Securities constitute the direct, unconditional, unsecured and unsubordinated general obligations of the Issuer and shall at all times
rank pari passu without any preference among themselves and with all other unsecured obligations of the Issuer, other than subordinated obligations of the Issuer and except for statutorily preferred obligations. The Securities are not
redeemable prior to maturity, except as set forth on the reverse of this Security and will not be subject to any sinking fund. 
 Reference
is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. 

Unless the certificate of authentication hereon has been manually executed by or on behalf of the Trustee under the Indenture, this Security
shall not be entitled to any benefits under the Indenture or be valid or obligatory for any purpose. 

  
 2 

 IN WITNESS WHEREOF, the Issuer has caused this Security to be duly executed. 

Date: October     , 2016 
  

			
	 SUMITOMO MITSUI FINANCIAL
GROUP, INC.

		
	 By:
	 	  

		 	Name:  [                    ]
		 	Title:    [                    ]

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture. 

Date: October     , 2016 
  

			
	The Bank of New York Mellon, as Trustee
		
	By:	 	  

		 	 Authorized Signatory

 [REVERSE OF SECURITY] 

Sumitomo Mitsui Financial Group, Inc. 

2.442% Senior Notes due 2021 

This Security is one of a duly authorized issue of unsecured bonds, debentures, notes or other evidences of indebtedness of Sumitomo Mitsui
Financial Group, Inc., a joint stock company (kabushiki kaisha) organized under the laws of Japan (herein called the “Issuer”, which term includes any successor person under the Indenture hereinafter referred) designated as
its 2.442% Senior Notes due 2021 (herein called the “Securities”), issued under and pursuant to a senior indenture dated as of March 9, 2016 (hereinafter called the “Indenture”), between the Issuer and The Bank of
New York Mellon, as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and any other indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee and any agent of the Trustee, any paying agent, the Issuer and the Holders of the Securities and of the terms upon which the Securities are
issued and are to be authenticated and delivered. 
 This Security is one of the series designated on the face hereof. By the terms of the
Indenture, additional Securities of this series and of other separate series, which may vary as to denomination, date, amount, stated maturity (if any), interest rate or method of calculating the interest rate and in other respects as therein
provided, may be issued in an unlimited amount. 
 The principal of and interest (and any Additional Amounts) on the Securities shall be
payable in U.S. Dollars or in such other coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts. So long as any of the Securities are held in global form, payments of
principal and interest on such Securities shall be made by wire transfer in immediately available funds in U.S. Dollars to a bank account in The City of New York designated by the Holder of this Registered Global Security. Otherwise, (i) the
principal amount of the Securities will be payable by check, drawn on a bank in The City of New York, upon the presentation and surrender of the Securities at the Corporate Trust Office of the Trustee or at any office or agency maintained by the
Issuer for such purpose and (ii) interest on the Securities will be payable by check, drawn on a bank in The City of New York, mailed to the persons in whose names the Securities are registered as of the close of business on the record date
immediately preceding the applicable Interest Payment Date (or the subsequent record date in the case of a defaulted interest payment) at the addresses of such persons as shall appear in the Security register of the Issuer; provided, however, that
at the option of a Holder in whose name at least U.S.$1,000,000 principal amount of Securities are registered, all payments in respect of the Securities may be received by wire transfer in immediately available funds to a bank account in The City of
New York designated by such Holder in a written notice received by the Trustee (a) in the case of an interest payment, prior to the record date immediately preceding the Interest Payment Date on which such payment is due and (b) in the case of
payment of principal, prior to the record date immediately preceding the date of redemption or maturity, as the case may be; provided, however, that in the case of such a payment of principal, the Securities shall have been surrendered to the
Trustee at the Corporate Trust Office of the Trustee or at any office or agency maintained by the Issuer for such purpose for payment together with such notice. 

  
 1 

 All payments of principal and interest in respect of the Securities will be made by the Issuer
without withholding or deduction for or on account of any present or future taxes, duties, assessments or other governmental charges of whatever nature imposed or levied by or on behalf of Japan, or any authority thereof or therein having power to
tax (“Taxes”) unless such withholding or deduction is required by law. In such event, the Issuer shall pay to a Holder such additional amounts (“Additional Amounts”) as will result in the receipt by the Holder of
such amounts as would have been received by it had no such withholding or deduction been required, except that no such Additional Amounts shall be payable with respect to any Securities under any of the following circumstances: 

 

	 	(i)	the Holder or beneficial owner of the Securities is an individual non-resident of Japan or a non-Japanese corporation and is liable for such Taxes in respect of such Securities by reason of its (A) having some
connection with Japan other than the mere holding of such Securities or (B) being a person having a special relationship with the Issuer as described in Article 6, paragraph (4) of the Act on Special Measures Concerning Taxation of Japan (Act No. 26
of 1957, as amended) (the “Special Taxation Measures Act” and, each such person, a “specially-related person of the Issuer”); 

  

	 	(ii)	the Holder or beneficial owner of the Securities would otherwise be exempt from any such withholding or deduction but fails to comply with any applicable requirement to provide Interest Recipient Information (as defined
below) or to submit a Tax Exemption Application (as defined below) to the relevant paying agent to whom the relevant Securities are presented (where presentation is required), or whose Interest Recipient Information is not duly communicated through
the relevant Participant (as defined below) and the relevant international Clearing Organization to such paying agent; 

  

	 	(iii)	the Holder or beneficial owner of the Securities is for Japanese tax purposes treated as an individual resident of Japan or a Japanese corporation (except for (A) a Designated Financial Institution (as defined below)
that complies with the requirement to provide Interest Recipient Information or to submit a Tax Exemption Application and (B) an individual resident of Japan or a Japanese corporation that duly notifies (directly or through the relevant Participant
or otherwise) the relevant paying agent of its status as not being subject to withholding or deduction by the Issuer by reason of receipt by such individual resident of Japan or Japanese corporation of interest on the relevant Securities through a
payment handling agent in Japan appointed by it); 

  
 2 

	 	(iv)	the withholding or deduction is imposed on a payment pursuant to the European Council Directive 2003/48/EC or any other directive amending, supplementing or implementing such Directive, or any law implementing such
directive; 

  

	 	(v)	the Securities are presented for payment (where presentation is required) more than 30 days after the day on which such payment on the Securities became due or after the full payment was provided for, whichever occurs
later, except to the extent that the Holder thereof would have been entitled to Additional Amounts on presenting the same for payment on the last day of such period of 30 days;

 

	 	(vi)	the withholding or deduction is imposed on a Holder or beneficial owner who could have avoided such withholding or deduction by presenting its Securities (where presentation is required) to another paying agent
maintained by the Issuer;

  

	 	(vii)	the Holder is a fiduciary or partnership or is not the sole beneficial owner of the payment of the principal of, or any interest on, any Security, and Japanese law requires the payment to be included for tax purposes in
the income of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner, in each case, who would not have been entitled to such Additional Amounts had it been the beneficial owner of such Security;
or

  

	 	(viii)	any combination of the above. 

 No Additional Amounts will be payable for or on account of any
deduction or withholding imposed pursuant to Sections 1471-1474 of the U.S. Internal Revenue Code and the U.S. Treasury regulations thereunder (“FATCA”), any intergovernmental agreement
entered into with respect to FATCA, or any law, regulation or other official guidance enacted or published in any jurisdiction implementing, or relating to, FATCA or any intergovernmental agreement. 

Where Securities are held through a participant of an international Clearing Organization or a financial intermediary (each, a
“Participant”), in order to receive payments free of withholding or deduction by the Issuer for or on account of Taxes, if the relevant beneficial owner is (A) an individual non-resident of Japan or a non-Japanese corporation (other
than a specially-related person of the Issuer) or (B) a Japanese financial institution falling under certain categories prescribed by the Special Taxation Measures Act (a “Designated Financial Institution”), each such beneficial
owner shall, at the time of entrusting a Participant with the custody of the relevant Securities, provide certain information prescribed by the Special Taxation Measures Act to enable the Participant to establish that such beneficial owner is
exempted from the requirement for withholding or deduction of such Taxes (“Interest Recipient Information”), and advise the Participant if the beneficial owner ceases to be so exempted (including the case in which a beneficial owner
who is an individual non-resident of Japan or a non-Japanese corporation becomes a specially-related person of the Issuer). 

  
 3 

 Where Securities are not held through a Participant, in order to receive payments free of
withholding or deduction by the Issuer for, or on account of, Taxes, if the relevant beneficial owner is (A) an individual non-resident of Japan or a non-Japanese corporation (other than a specially-related person of the Issuer) or (B) a Designated
Financial Institution, each such beneficial owner shall, prior to each time at which it receives interest, submit to the relevant paying agent a written application for tax exemption (hikazei tekiyo shinkokusho) (a “Tax Exemption
Application”), in a form obtainable from the paying agent stating, inter alia, the name and address (and, if applicable, the Japanese individual or corporation ID number) of the beneficial owner, the title of the Securities, the
relevant Interest Payment Date, the amount of interest and the fact that the beneficial owner is qualified to submit the Tax Exemption Application, together with documentary evidence regarding its identity and residence. 

By subscribing to the Securities as part of the distribution by the underwriters under the applicable underwriting agreement, a Holder shall
be deemed to have represented that it is a beneficial owner who is, (i) for Japanese tax purposes, neither an individual resident of Japan or a Japanese corporation, nor an individual non-resident of Japan or a non-Japanese corporation that in
either case is a specially-related person of the Issuer or (ii) a Japanese financial institution, designated in Article 6, Paragraph (9) of the Special Taxation Measures Act. 

The Issuer shall make any required withholding or deduction and remit the full amount withheld or deducted to the Japanese taxing authority in
accordance with applicable law. The Issuer shall use reasonable efforts to obtain certified copies of tax receipts evidencing the payment of any tax, duty, assessment, fee or other governmental charge so withheld or deducted from the Japanese taxing
authority imposing such tax, duty, assessment or other governmental charge, and if certified copies are not available, the Issuer shall use reasonable efforts to obtain other evidence satisfactory to the Trustee, and the Trustee shall make such
certified copies or other evidence available to the Holders upon reasonable request to the Trustee. 
 If (i) subsequent to making a payment
on this Security without withholding or deduction of Japanese taxes the Issuer is required to remit to the Japanese taxing authority any amount in respect of Japanese taxes that should have been withheld or deducted from such payment (together with
any interest and penalties) due to the failure of the beneficial owner to provide accurate Interest Recipient Information or to otherwise properly claim an exemption from Japanese taxes imposed with respect to such payment, and (ii) such beneficial
owner would not have been entitled to receive Additional Amounts with respect to such payment had Japanese taxes been withheld from the payment when it was made, such beneficial owner (but not any subsequent beneficial owner of such Security) shall
be required to reimburse the Issuer, in Japanese yen, for the amount remitted by the Issuer to the Japanese taxing authority. 

  
 4 

 The obligation to pay Additional Amounts with respect to any taxes, duties, assessments or other
governmental charges shall not apply to (A) any estate, inheritance, gift, sales, transfer, personal property or any similar tax, duty, assessment, fee or other governmental charge or (B) any tax, duty, assessment, fee or other governmental charge
which is payable otherwise than by withholding or deduction from payments of principal of or interest on this Security; provided that, except as otherwise set forth herein and in the Indenture, the Issuer shall pay all stamp, court or documentary
taxes or any excise or property taxes, charges or similar levies and other duties, if any, which may be imposed by Japan, the United States or any political subdivision or any taxing authority thereof or therein, with respect to the execution and
enforcement of the Indenture or as a consequence of the initial issuance, execution, delivery or registration of this Security. 
 The
Securities may be redeemed at the option of the Issuer, in whole, but not in part, subject to prior confirmation of the FSA, if such confirmation is required under applicable Japanese laws or regulations then in effect, at any time, on giving not
less than 30 nor more than 60 days’ notice of redemption to the Holders of the series to be redeemed (which notice shall be irrevocable and shall conform to all requirements with respect to such notice as set forth in the Indenture) at a
redemption price equal to 100% of the principal amount of the Securities together with any accrued and unpaid interest (including Additional Amounts with respect thereto, if any) to (but excluding) the date fixed for redemption, if the Issuer is or
will be obliged to pay Additional Amounts as a result of any change in, or amendment to, the laws or regulations of Japan or any political subdivision or any authority thereof or therein having power to tax, or any change in application or official
interpretation of such laws or regulations, which change or amendment becomes effective on or after the date of the issuance of the relevant series of Securities and such obligation cannot be avoided by the Issuer through the taking of reasonable
measures available to the Issuer; provided, that no such notice of redemption shall be given sooner than 90 days prior to the earliest date on which the Issuer would be obliged to pay such Additional Amounts were a payment then due in respect of the
relevant Securities. 
 Notwithstanding anything to the contrary in the Indenture or the Securities, each Holder and the Trustee
acknowledge, consent and agree (a) for a period of 30 days from and including the date upon which the Prime Minister of Japan confirms that Specified Item 2 Measures (tokutei dai nigo sochi) should be applied to the Issuer, not to initiate
any action to attach any of the Issuer’s assets, the attachment of which has been prohibited by designation of the Prime Minister of Japan pursuant to Article 126-16 of the Deposit Insurance Act, and (b) to any transfer of the Issuer’s
assets (including shares of the Issuer’s subsidiaries) or liabilities, or any portions thereof, with permission of a Japanese court in accordance with Article 126-13 of the Deposit Insurance Act, including any such transfer made pursuant to the
authority of the Deposit Insurance Corporation of Japan to represent and manage and dispose of the Issuer’s assets under Article 126-5 of the Deposit Insurance Act, and that any such transfer shall not constitute a sale or disposal of the
Issuer’s properties or assets for the purpose of Article 8 of the Indenture. 

  
 5 

 The Issuer shall, as soon as practicable after the Prime Minister of Japan has confirmed that
Specified Item 2 Measures (tokutei dai nigo sochi) should be applied to the Issuer or a Japanese court has publicly announced that it has granted permission to a transfer of the Issuer’s assets (including shares of the Issuer’s
subsidiaries) or liabilities, or any portions thereof, in accordance with Article 126-13 of the Deposit Insurance Act, deliver a written notice of such event to the Holders and beneficial owners of the Securities through DTC and to the Trustee. Any
failure or delay by the Issuer to provide such written notice shall not change or delay the effect of the acknowledgement, consent and agreement described in the preceding paragraph. 

A Holder of Securities issued in definitive form may transfer or exchange Securities in accordance with the Indenture. As described in the
legend on the face of this global Security, interest payments on such Securities issued in definitive form will be subject to Japanese income taxation unless the Holder establishes the matters set forth therein. Such legend concerning Japanese
taxation shall also be included on the face of any Securities issued in definitive form. The security registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents, and to pay any
taxes and fees required by law or permitted by the Indenture. The Issuer will treat the registered Holder of a Security as the owner of that Security for all purposes, except as described above. 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations
of the Issuer and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Issuer and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of
the Securities at the time Outstanding of all series to be affected (voting as one class). The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities of each series at the
time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security. 
 As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable, upon surrender of this Security for registration of transfer at the office or agency of the Issuer in any place where the principal of and interest on this Security are payable, duly endorsed
by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer and the security registrar duly executed by, the Holder hereof or his attorney duly authorized in writing and thereupon one or more new Securities of this
series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. 

  
 6 

 The Securities of this series are issuable only in registered form without coupons in
denominations of U.S.$2,000 and integral multiples of U.S.$1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. 

No service charge shall be made for any such registration of transfer or exchange; provided, however, the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. 
 Prior to due presentment of this
Security for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the person in whose name this Security is registered upon the Security register as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Issuer nor the Trustee nor any such agent shall be affected by notice to the contrary. 

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, as herein prescribed. 

This Security is governed by and shall be construed in accordance with the laws of the State of New York. 

All capitalized terms used and not defined herein shall have the meanings assigned to them in the Indenture. 

  
 7

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