Document:

Fourth_Amended_and_Restated_Management_Agreement

FOURTH AMENDED AND RESTATED MANAGEMENT AGREEMENT

among

Preferred Apartment Communities, Inc.,

Preferred Apartment Communities Operating Partnership, L.P.

and

Preferred Apartment Advisors, LLC

Effective as of January 1, 2014

TABLE OF CONTENTS
Page
Section 1.    Definitions.    1
Section 2.    Appointment and Duties of the Manager.    6
Section 3.    Conduct Policies.    12
Section 4.    Additional Activities of the Manager; Non-Solicitation; Restrictions.    12
Section 5.    Bank Accounts.    13
Section 6.    Records; Confidentiality.    14
Section 7.    Compensation.    15
Section 8.    Expenses of the Company.    17
Section 9.    Limits of the Manager’s Responsibility; Indemnification.    19
Section 10.    No Joint Venture.    21
Section 11.    Term; Renewal; Termination Without Cause.    21
Section 12.    Assignments.    22
Section 13.    Termination for Cause.    23
Section 14.    Action Upon Termination.    24
Section 15.    Release of Money or Other Property Upon Written Request.    24
Section 16.    Miscellaneous.    25

This FOURTH AMENDED AND RESTATED MANAGEMENT AGREEMENT effective as of January 1, 2014 is entered into as of January 10, 2014, among Preferred Apartment Communities, Inc., a Maryland corporation (“PAC”), Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”), and Preferred Apartment Advisors, LLC, a Delaware limited liability company (the “Manager”).
W I T N E S S E T H:
WHEREAS, the parties entered into the Management Agreement on November 19, 2010 (the “Original Agreement”) and amended and restated the Original Agreement on January 25, 2011 (the “Amended and Restated Agreement”) and amended and restated the Amended and Restated Agreement on February 28, 2011 (the “Second Amended and Restated Agreement”) and amended and restated the Second Amended and Restated Agreement on May 13, 2011 (the “Third Amended and Restated Agreement”); and
WHEREAS, the parties have agreed to make certain amendments and desire to amend and restate the Third Amended and Restated Agreement in its entirety;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree that the Third Amended and Restated Agreement hereby is amended and restated in its entirety to read as follows:
		
	Section 1.
	Definitions.

(a)    The following terms shall have the respective meanings set forth below in this Section 1(a):
“Above-Market Rates” has the meaning set forth in Section 11(b).
“Acquisition Expenses” means any and all expenses, exclusive of Acquisition Fees, incurred by the Company, the Manager or any of their respective Affiliates in connection with the selection, evaluation, acquisition, origination, making or development of any Investment, whether or not acquired, including legal fees and expenses, travel and communications expenses, property inspection expenses, third party brokerage or finder’s fees, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums and expenses, survey expenses, closing costs and the costs of performing due diligence.
“Acquisition Fee” means the fee payable to the Manager or its assignees pursuant to Section 7(a).
“Affiliate” means, with respect to a specified Person, (i) any Person directly or indirectly controlling, controlled by, or under common control with such specified Person, (ii) any general partner of such specified Person, and (iii) any Person for which such specified Person acts as a 

general partner.  For purposes of this definition, the terms “controlled”, “controlled by”, or “under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise.
“Agreement” means this Third Amended and Restated Management Agreement, as amended or supplemented from time to time.

“Asset Management Fee” means the fee payable to the Manager pursuant to Section 7(b).
“Automatic Renewal Term” has the meaning set forth in Section 11(a).
“Bankruptcy Event” means, with respect to any Person, (i) the filing by such Person of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code or any other U.S. federal or state or foreign insolvency law, or such Person’s filing an answer consenting to or acquiescing in any such petition, (ii) the making by such Person of any assignment for the benefit of its creditors, (iii) the expiration of 60 days after the filing of an involuntary petition under Title 11 of the Unites States Code, an application for the appointment of a receiver for a material portion of the assets of such Person, or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts under any other U.S. federal or state or foreign insolvency law, provided that the same shall not have been vacated, set aside or stayed within such 60-day period, or (iv) the entry against such Person of a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereinafter in effect.
“Board” means the board of directors of PAC.  In every instance herein requiring approval of the Board or referring to policies or directions of the Board, for purposes of this Agreement, the Board shall be deemed to include any duly appointed and constituted committee of the Board with respect to each and every act that under the Governing Instruments or applicable law may be taken with the approval of a duly appointed and constituted committee of the Board, and references herein to the Board shall be deemed to include references to each such committee.
“Business Day” means any day except a Saturday, a Sunday or a day on which banking institutions in New York, New York or in Atlanta, Georgia are not required to be open.
“Cause Termination Notice” has the meaning set forth in Section 13(a).
“Change of Control” of an entity means a change in the direct or indirect (i) beneficial ownership of more than 50% of the combined voting power of such entity’s then outstanding equity interests, or (ii) power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or credit arrangement, as trustee or otherwise.

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“Claim” has the meaning set forth in Section 9(c).
“Closing Date” means the date of closing of the Initial Public Offering.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto.  Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.
“Common Stock” means the Common Stock, par value $0.01 per share, of PAC.
“Company” means, collectively, PAC and the Operating Partnership.
“Company Entities” means, collectively, PAC, the Operating Partnership and each of their respective subsidiaries.
“Company Indemnified Party” has meaning set forth in Section 9(b).
“Conduct Policies” has the meaning set forth in Section 3.
“Confidential Information” has the meaning set forth in Section 6.
“Construction Fee, Development Fee and Landscaping Fee” means the fee payable to the Manager or its assignees pursuant to Section 7(e).
“Contract Sales Price” means the total consideration received by any of the Company Entities for the sale of an Investment, which total consideration shall include the amount of cash received, the fair market value of any property received and the amount of debt assumed by the purchaser to which a Company Entity is relieved of responsibility upon such disposition.
“Director” means a member of the Board.
“Disposition Fee on Sale of Assets” means the fee payable to the Manager or its assignees pursuant to Section 7(d).
“Effective Termination Date” has the meaning set forth in Section 11(b).
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Fees Accrued Upon Termination” means the amounts payable to the Manager or its assignees equal to the aggregate of any earned but unpaid compensation and expense reimbursements accrued as of the date of termination if this Agreement is terminated (i) pursuant to a Change of Control of PAC, (ii) pursuant to a Termination Without Cause, (iii) by the Manager pursuant to Section 13(b), or (iv) based on a liquidation by the Company of all its assets.

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“Financing Transaction” means any transaction with respect to any Investment involving any of the Company Entities incurring any mortgage or other indebtedness, including the entering into any line of credit, transaction involving the creation of any commercial mortgage-backed security and mezzanine financing.
“GAAP” means United States generally accepted accounting principles, consistently applied.
“General and Administrative Expenses Fee” means the fee payable to the Manager or its assignees pursuant to Section 8(b)(ii) in connection with the administration of the day-to-day operations and the performance and supervision of the performance of such other administrative functions necessary to the management of the Company.
“Governing Instruments” means, with regard to any entity, the articles of incorporation or certificate of incorporation and by-laws in the case of a corporation, the partnership agreement in the case of a general or limited partnership, the certificate of formation and operating or limited liability company agreement in the case of a limited liability company, the declaration of trust or other comparable trust instrument in the case of a trust, or similar governing documents in the case of another type of entity, in each case, as the same may be amended from time to time.
“Indemnified Party” has the meaning set forth in Section 9(b).
“Independent Director” means a member of the Board who is “independent” in accordance with PAC’s Governing Instruments and the rules of the NYSE MKT or such other securities exchange on which the shares of Common Stock are listed.
“Initial Public Offering” means PAC’s initial public offering through one or more underwriters pursuant to the IPO Registration Statement.
“Initial Term” has the meaning set forth in Section 11(a).
“Investment” means any investment by any Company Entity, directly or indirectly, in Real Estate Assets, Real Estate Related Loans or any other asset.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
“Investment Guidelines” means the investment guidelines approved by the Board, a copy of which is attached hereto as Exhibit A, as the same may amended, restated, supplemented or waived pursuant to the approval of a majority of the entire Board (which must include a majority of the Independent Directors).
“Investment Transaction” means any purchase, acquisition, exchange, sale or disposition, merger or interest exchange that results in the acquisition or disposition of, or other transaction involving, an Investment.

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“IPO Registration Statement” means PAC’s Registration Statement on Form S-11 (Registration No. 333-168407), as amended from time to time, pursuant to which it conducted the Initial Public Offering.
 “Joint Ventures” means the joint venture or partnership or other similar arrangements (other than between or among any Company Entity) in which a Company Entity is a co-venturer, member, partner or other equity holder, which are established to own Investments.
“Losses” has the meaning set forth in Section 9(a).
“Manager” has the meaning set forth at the head of this Agreement and shall include any successor in interest thereto. 
“Manager Change of Control” means a Change of Control of the Manager; provided, however, that no Manager Change of Control shall result from (i) any public offering of equity interests of the Manager, or (ii) any assignment of this Agreement by the Manager as permitted hereby and in accordance with the terms hereof.
“Manager Indemnified Party” has the meaning set forth in Section 9(a).
“Manager Permitted Disclosure Parties” has the meaning set forth in Section 6(a).
“Notice of Proposal to Negotiate” has the meaning set forth in Section 11(c).
“NYSE MKT” means the NYSE MKT. 
“Operating Partnership” has the meaning at the head of this Agreement.
“PAC” has the meaning at the head of this Agreement.
“Person” or “person” means any natural person, corporation, partnership, association, limited liability company, estate, trust or joint venture, any federal, state, county or municipal government or any bureau, department or agency thereof, or any other legal entity.
“Property Management and Leasing Fee” means the fee payable to the Manager or its assignees pursuant to Section 7(c).
“Real Estate Assets” means any investments by any Company Entity in unimproved or improved Real Property (including fee or leasehold interests, options and leases), directly, through one or more subsidiaries or through a Joint Venture.
“Real Estate Related Loans” means any investments in mortgage loans and other types of real estate related debt obligations, including mezzanine loans, bridge loans, convertible mortgages, wraparound mortgage loans, construction mortgage loans, loans on leasehold interests and participations in such loans, by any Company Entity, directly, through one or more subsidiaries or through a Joint Venture.

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“Real Property” means real property owned from time to time by any Company Entity, directly, through one or more subsidiaries or through a Joint Venture, which consists of (i) land only, (ii) land, including the buildings located thereon, (iii) buildings only, or (iv) such Investments the Board or the Manager designates as Real Property to the extent such Investments could be classified as Real Property.
 “Regulation FD” means Regulation FD as promulgated by the SEC.
“REIT” means a “real estate investment trust” as defined under the Code.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Target Assets” means the types of assets invested in by the Company, subject to, and including any changes in, the Investment Guidelines.
“Termination Notice” has the meaning set forth in Section 11(b).
“Termination Without Cause” has the meaning set forth in Section 11(b).
(b)    As used herein, accounting terms relating to any Company Entity not defined in Section 1(a), and accounting terms partly defined in Section 1(a), to the extent not defined, shall have the respective meanings given to them under GAAP.  
(c)    As used herein, “calendar quarters” shall mean the periods from January 1 to March 31, April 1 to June 30, July 1 to September 30 and October 1 to December 31 of the applicable year.
(d)    The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified.
(e)    The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.  
(f)    The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”
(g)    A reference to any gender shall be deemed to be a reference to all genders.
		
	Section 2.
	Appointment and Duties of the Manager.

(a)    PAC and the Operating Partnership hereby appoint the Manager to manage and administer the Investments and day‐to-day operations of the Company Entities, subject at all times to the further terms and conditions set forth in this Agreement and to the oversight of, and 

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such further limitations or parameters consistent with this Agreement as may be imposed from time to time by, the Board.  The Manager will use commercially reasonable efforts to perform each of its duties set forth herein, provided that funds are made available by the Company for such purposes as set forth in Section 8.  The Company shall not appoint any other Person except the Manager to perform the duties and carry out the responsibilities of the Manager described herein, except as may otherwise be permitted by this Agreement and except to the extent that the Manager elects, in its sole and absolute discretion, subject to the terms of this Agreement, to cause the duties of the Manager as set forth herein to be provided by third parties.
(b)    The Manager, in its capacity as manager of the Investments and the day-to-day operations of the Company Entities, at all times will be subject to the oversight and direction of the Board, will act in a manner that is compliant with the provisions of the Governing Instruments of each Company Entity, will use commercially reasonable efforts to present to the Company potential investment opportunities and will perform its duties hereunder, including managing the Company’s business affairs in conformity with the Investment Guidelines and other policies that are determined and adopted by the Board.  PAC, the Operating Partnership and the Manager hereby acknowledge the adoption by the Board of the Investment Guidelines, including the Company’s investment strategy with respect to Target Assets.  PAC, the Operating Partnership and the Manager hereby acknowledge and agree that, during the term of this Agreement, any proposed changes to the Company’s investment strategy that would modify or expand the Target Assets shall require a change in, or supplement to, the Investment Guidelines.  The Company shall notify the Manager promptly of any amended, restated, supplemented or waived Investment Guidelines, including any modification or revocation of the Manager’s authority set forth in the Investment Guidelines; provided, however, that such modification or revocation shall not be applicable to investment transactions to which the Manager has committed any Company Entity prior to the date of receipt by the Manager of such notification.
(c)    The Manager will be responsible for the day-to-day operations of the Company Entities (which, for purposes of the Manager’s responsibilities in this Agreement, includes their respective subsidiaries) and will perform (or cause to be performed), subject to the Board’s oversight, such services and activities relating to the Investments and the day-to-day operations of the Company Entities as may be appropriate, which may include:
(i)    (A) proposing modifications to the Investment Guidelines to the Board, (B) periodically reviewing the Company’s Investment portfolio for compliance with the Investment Guidelines and reporting its findings to the Board, (C) periodically reviewing and reporting to the Board regarding the diversification of the Company’s Investment portfolio and the financing strategies, and (D) conducting or overseeing the provision of the services and activities set forth in this Section 2;
(ii)    investigating, analyzing, selecting, conducting due diligence with respect to, negotiating the terms and conditions of (including negotiating the forms of definitive agreements), arranging financing for and recommending to the Board in accordance with procedures adopted by the Board possible Investment Transactions consistent with the Investment Guidelines;

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(iii)    with respect to prospective Investment Transactions and Financing Transactions, conducting negotiations (including negotiation of definitive agreements) with sellers, purchasers, prospective merger partners, lenders and other financing sources and brokers and, if applicable, their respective agents and representatives and closing Investment Transactions and Financing Transactions on behalf of the Company;
(iv)    effecting any private placement of interests in the Operating Partnership, tenancy-in-common or other interests in Investments as may be approved by the Board;
(v)    delivering to, or maintaining on behalf of, the Company copies of all appraisals obtained in connection with the Investments in any Real Estate Assets as may be required to be obtained by the Board;
(vi)    negotiating and causing the Company to enter into, within the discretionary limits and authority granted by the Board, repurchase agreements, interest rate swap agreements, agreements relating to borrowings under programs established by the U.S. Government and other agreements and instruments required to conduct the business of the Company;
(vii)    engaging and supervising, at the expense of the Company, independent contractors that provide investment banking, securities brokerage, mortgage brokerage, real estate brokerage services, other financial services, due diligence services, underwriting review services, legal and accounting services, and all other services (including transfer agent and registrar services) as may be required relating to the Company’s operations, Investments, Investment Transactions or Financing Transactions;
(viii)    advising the Company on, preparing, negotiating and entering into, on behalf of the Company, applications and agreements relating to programs established by the U.S. Government;
(ix)    coordinating and managing operations of any joint venture or co-investment interests held by the Company and conducting all matters with the joint venture or co‐investment partners;
(x)    providing executive and administrative personnel, office space and office services required in rendering services to the Company;
(xi)    entering into on behalf of the Company leases and service contracts in connection with the Investments and administering the day-to-day operations and performing and supervising the performance of such other administrative functions necessary to the Company’s management under oversight by the Board, including the collection of revenues and the payment of the Company’s debts and obligations and maintenance of appropriate computer services to perform such administrative functions; 
(xii)    communicating on the Company’s behalf with the holders of any equity or debt securities of PAC or the Operating Partnership as required to satisfy the reporting 

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and other requirements of any governmental body or agency or trading market and to maintain effective relations with such holders;
(xiii)    evaluating and recommending to the Board hedging strategies and engaging on the Company’s behalf in hedging activities within the discretionary limits and authority as granted by the Board, consistent with the Company’s qualification as a REIT and with the Investment Guidelines;
(xiv)    counseling the Board and the Company regarding the maintenance of PAC’s qualification as a REIT and monitoring compliance with the various REIT qualification tests and other rules set out in the Code and Treasury Regulations thereunder and using commercially reasonable efforts to cause PAC to qualify for taxation as a REIT;
(xv)    counseling the Board and the Company regarding the maintenance of PAC’s exemption from the status of an investment company required to register under the Investment Company Act, monitoring compliance with the requirements for maintaining such exemption and using commercially reasonable efforts to cause PAC to maintain such exemption from such status;
(xvi)    furnishing reports and statistical and economic research to the Board regarding the activities and services performed for the Company by the Manager, including reports with respect to potential conflicts of interest involving the Manager or any of its Affiliates;
(xvii)    monitoring the performance of the Investments and providing periodic reports with respect thereto to the Board, including comparative information with respect to such operating performance and budgeted or projected operating results;
(xviii)    investing and reinvesting any moneys and securities of the Company within the discretionary limits and authority as granted by the Board (including investing in short-term investments pending investment in other Investments, payment of fees, costs and expenses) and advising the Company with respect to its equity and debt capitalization and its financing strategies, and the payments of dividends or distributions to PAC’s stockholders and the Operating Partnership’s partners;
(xix)    causing the Company to retain qualified accountants and legal counsel, as applicable, to assist in developing appropriate accounting procedures and systems, internal controls and other compliance procedures and testing systems with respect to financial reporting obligations and compliance with the provisions of the Code applicable to REITs and, if applicable, taxable REIT subsidiaries, and to conduct quarterly compliance reviews with respect thereto;
(xx)    assisting the Company in qualifying to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses;

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(xxi)    assisting the Company in complying with all laws and regulatory requirements applicable to the Company’s business activities, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports and documents, if any, required under the Exchange Act, the Securities Act, state or foreign securities laws or by the NYSE MKT;
(xxii)    assisting the Company in taking all necessary action to enable the Company to make required tax filings and reports, including soliciting information from stockholders to the extent required by the provisions of the Code applicable to REITs;
(xxiii)    handling and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company may be involved or to which the Company or the Company’s properties or assets may be subject arising out of the Company’s day-to-day operations (other than with the Manager or its Affiliates), subject to such limitations or parameters as may be imposed from time to time by the Board;
(xxiv)    using commercially reasonable efforts to cause expenses incurred on behalf of the Company to be commercially reasonable or commercially customary and within any budgeted parameters or expense guidelines proposed by the Manager and approved by the Board from time to time;
(xxv)    advising the Board regarding the Company’s equity and debt financings, hedging activities and joint venture arrangements including (A) advising the Board on the appropriateness of the Company’s leverage ratio, levels of preferred and common equity financing, pricing of equity offerings, derivative positions and strategies and off-balance sheet arrangements, and (B) seeking to execute on the Company’s behalf Financing Transactions, equity offerings, hedging transactions and joint ventures and off-balance sheet transactions consistent with the Board’s directions and the Company’s financing policies as approved by the Board;
(xxvi)    providing portfolio management services to the Company;
(xxvii)    arranging marketing materials, advertising, industry group activities (such as conference participations and industry organization memberships) and other promotional efforts designed to promote the Company’s business; and
(xxviii)    performing such other services as may be required from time to time for management and other activities relating to the Company’s assets and business as the Board shall reasonably request or the Manager shall deem appropriate under the particular circumstances.
(d)    The Manager may retain, for and on behalf, and at the sole cost and expense, of the Company, such services of the Persons referred to in Section 8 as the Manager deems necessary or advisable in connection with the management and operations of the Company.  In performing its duties under this Section 2, the Manager shall be entitled to rely reasonably on 

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qualified experts and professionals (including accountants, legal counsel and other professional service providers) hired by the Manager at the Company’s sole cost and expense.
(e)    The Manager shall refrain from any action that, in its sole judgment made in good faith, (i) is not in compliance with the Investment Guidelines, (ii) would adversely and materially affect the qualification of PAC as a REIT or the Operating Partnership as a partnership under the Code or the Company’s status as an entity excluded from investment company status under the Investment Company Act, or (iii) would conflict with or violate (A) any law, rule or regulation of any governmental body or agency having jurisdiction over any Company Entity, (B) any rule of any exchange on which the securities of the Company may be listed, or (C) any applicable Governing Instruments.  The Manager may proceed with taking an action described above if further instructed to do so by the Board.  If the Manager is ordered to take any action by the Board, the Manager promptly shall notify the Board if it is the Manager’s judgment that such action would adversely and materially affect such qualification or status or conflict with or violate any such law, rule or regulation or Governing Instruments.  Notwithstanding the foregoing, neither the Manager nor any of its Affiliates shall be liable to any Company Entity, the Board, any of the stockholders, partners, members or other holders of equity interests of any Company Entity for any act or omission by the Manager or any of its Affiliates, except as provided in Section 9.
(f)    The Manager shall notify the Board of all Investment Transactions within 30 days following completion of the transaction.  The Manager shall seek and obtain Board approval of any Investment Transaction that does not meet the Investment Guidelines.  Subject to this Section 2(f), the Manager may execute without Board approval any Investment Transaction that fits within the Investment Guidelines.  If any transaction requires approval by the Independent Directors, the Manager will deliver to the Independent Directors all documents and other information reasonably required by them to evaluate properly the proposed transaction.  With respect to Investment Transactions for which Board approval is not required, the Manager shall provide to the Board a summary of its investment analysis with respect to the proposed Investment Transaction.  The Board may, at any time upon the giving of notice to the Manager, modify or revoke the authority set forth in this Section 2(f); provided, however, that such modification or revocation shall be effective upon receipt by the Manager and shall not be applicable to Investment Transactions to which the Manager has committed the Company prior to the date of receipt by the Manager of such notification.
(g)    The Company will take all actions reasonably required to permit and enable the Manager to carry out its duties and obligations under this Agreement, including all steps reasonably necessary to allow the Manager to file any registration statement or other filing required to be made under the Securities Act, Exchange Act, the NYSE MKT’s Company Guide, the Code or other applicable law, rule or regulation on behalf of the Company in a timely manner.  The Company will use commercially reasonable efforts to make available to the Manager all resources, information and materials reasonably requested by the Manager to enable the Manager to satisfy its obligations hereunder, including its obligations to deliver financial statements and any other information or reports with respect to the Company.

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(h)    As frequently as the Manager may deem necessary or advisable, or at the direction of the Board, the Manager shall prepare (or, at the sole cost and expense of the Company, cause to be prepared) reports and other information relating to any proposed or consummated Investment.
(i)    The Manager shall prepare (or, at the sole cost and expense of the Company, cause to be prepared) all reports, financial or otherwise, reasonably required by the Board in order for the Company Entities to comply with their respective Governing Instruments or as otherwise reasonably requested by the Board, including an annual audit of PAC’s consolidated financial statements by a nationally recognized independent accounting firm.
(j)    The Manager shall prepare (or, at the sole cost and expense to the Company, cause to be prepared) regular reports for the Board to enable the Board to review the Company’s acquisitions, Investment portfolio composition and characteristics, credit quality, performance and compliance with the Investment Guidelines and policies approved by the Board.
(k)    Officers, employees and agents of the Manager and its Affiliates may serve as directors, officers, agents, nominees or signatories for any Company Entity, to the extent permitted by their respective Governing Instruments, by any resolutions duly adopted by the Board, the Operating Partnership or such subsidiary.  When executing documents or otherwise acting in such capacities for any Company Entity, such Persons shall indicate in what capacity they are executing on behalf of such Company Entity.  Without limiting the foregoing, while this Agreement is in effect, the Manager will establish a management team, including a chief executive officer and president or similar positions, along with appropriate support personnel, to provide the management services to be provided by the Manager to the Company Entities hereunder, who shall devote such of their time to the management of the Investments and consideration of the Investment Guidelines and policies as necessary and appropriate, commensurate with the level of activity of the Company from time to time.
(l)    The Manager, at its sole cost and expense, shall maintain reasonable and customary “errors and omissions” insurance coverage and other customary insurance coverage in respect to its obligations and activities under, or pursuant to, this Agreement, naming PAC and the Operating Partnership as additional insureds.
(m)    The Manager, at its sole cost and expense, shall provide such internal audit, compliance and control services as may be required for the Company to comply with applicable law (including the Securities Act and Exchange Act), regulation (including SEC regulations) and the rules and requirements of the NYSE MKT and as otherwise reasonably requested by the Company or the Board from time to time.
(n)    The Manager, at its sole cost and expense, shall maintain any required registration of the Manager or any Affiliate with the SEC under the Investment Advisers Act of 1940, as amended, or with any state securities authority in any state in which the Manager or its Affiliate is required to be registered as an investment advisor under applicable state securities laws.
		
	Section 3.
	Conduct Policies.

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The Manager acknowledges receipt of the Company’s Code of Business Conduct and Ethics and the Company’s Policy on Insider Trading (collectively, the “Conduct Policies”) and will use commercially reasonable efforts to require the Persons who provide services to the Company to comply with the Conduct Policies in the performance of such services hereunder or such comparable policies as shall in substance hold such Persons to at least the standards of conduct set forth in the Conduct Policies.
		
	Section 4.
	Additional Activities of the Manager; Non-Solicitation; Restrictions.

(a)    Subject to Section 4(c) and except as may be provided in the Investment Guidelines, nothing in this Agreement shall:  (i) prevent the Manager, any of its Affiliates or any of their respective officers, directors or employees, from engaging in other businesses or from rendering services of any kind to any other Person, whether or not the investment objectives or policies of any such other Person are similar to those of the Company; provided, however, that the Manager devotes sufficient resources to the Company’s business to discharge its obligations to the Company under this Agreement; or (ii) in any way bind or restrict the Manager, any of its Affiliates or any of their respective officers, directors or employees from buying, selling or trading any securities or commodities for their own accounts or for the account of others for whom the Manager, any of its Affiliates or any of their respective officers, directors or employees may be acting.  
(b)    While information and recommendations supplied to the Company shall, in the Manager’s good faith judgment, be appropriate under the circumstances and in light of the investment objectives and policies of the Company, they may be different from the information and recommendations supplied by the Manager or any Affiliate of the Manager to others.  The Company shall be entitled to equitable treatment under the circumstances in receiving information, recommendations and any other services, but the Company recognizes that the Company is not entitled to receive preferential treatment as compared with the treatment given by the Manager or any Affiliate of the Manager to others.  
(c)    The Manager shall report to the Board any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or could create a conflict of interest between the Manager’s obligations to the Company and its obligations to or its interest in any other Person.  If the Manager or any of its Affiliates sponsored any other investment program with similar investment objectives to the Company that has investment funds available at the same time as the Company, the Manager shall inform the Board of the method to be applied by the Manager in allocating investment opportunities among the Company and competing investment entities and shall provide regular updates to the Board of the investment opportunities provided by the Manager to competing programs in order for the Board (including the Independent Directors) to evaluate that the Manager is allocating such opportunities in accordance with such method.
(d)    In the event of a Termination Without Cause of this Agreement by the Company pursuant to Section 11(b), for a period of two years from and after the date of such termination of this Agreement, the Company shall not (and shall cause each of the Company Entities to not), without the consent of the Manager, employ or otherwise retain (directly or indirectly any 

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Company Entity) any Person who was employed as an executive by the Manager or any of its Affiliates on the date of such termination or any Person who shall have been employed as an executive by the Manager or any of its Affiliates at any time within the two-year period immediately preceding the date on which such Person is scheduled to commence employment with or otherwise be retained by the Company or any other Company Entity.  The Company acknowledges and agrees that, in addition to any damages, the Manager shall be entitled to equitable relief for any violation of this Section 4(d) by PAC or the Operating Partnership (directly or indirectly through any of their respective subsidiaries), including injunctive relief.
		
	Section 5.
	Bank Accounts.

At the direction of the Board, the Manager may establish and maintain one or more bank accounts in the name of any Company Entity, and may collect and deposit into any such account or accounts, and disburse funds from any such account or accounts, under such policies, terms and conditions as the Company may establish and the Board may approve, provided that no funds shall be commingled with the funds of the Manager or its Affiliates.  The Manager shall from time to time render appropriate accountings of such collections and payments to the Board and, upon request, shall provide information regarding such account to the Company’s auditors.
		
	Section 6.
	Records; Confidentiality.

(a)    The Manager shall maintain appropriate books of accounts and records relating to services performed hereunder, and such books of account and records shall be accessible for inspection by representatives of the Company Entities at any time during normal business hours.  The Manager shall keep confidential any and all non-public information, written or oral, obtained by it in connection with the services rendered hereunder (“Confidential Information”) and shall not use Confidential Information except in furtherance of its duties under this Agreement or disclose Confidential Information, in whole or in part, to any Person other than (i) to its Affiliates and the officers, directors, employees, agents, representatives or advisors of the Manager or any of its Affiliates who need to know such Confidential Information for the purpose of rendering services hereunder, (ii) to appraisers, financing sources and others in the ordinary course of the Company’s business ((i) and (ii) collectively, “Manager Permitted Disclosure Parties”), (iii) in connection with any governmental or regulatory filings of the Company, or filings with the NYSE MKT or other applicable securities exchange or market, (iv) in presentations or other disclosures to the Company’s investors (subject to compliance with Regulation FD), (iv) to governmental officials having jurisdiction over the Company, (v) as required by law or legal process to which the Manager or any Person to whom disclosure is permitted hereunder is a party, or (vi) with the consent of the Company.  The Manager will inform each of its Manager Permitted Disclosure Parties of the non-public nature of the Confidential Information and to obtain agreement from such Persons to treat such Confidential Information in accordance with the terms hereof.  
(b)    Nothing herein shall prevent any Manager Permitted Disclosure Party from disclosing Confidential Information (i) upon the order of any court or administrative agency, (ii) upon the request or demand of, or pursuant to any law or regulation to, any regulatory agency or authority, (iii) to the extent reasonably required in connection with the exercise of any remedy 

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hereunder, or (iv) to its legal counsel or independent auditors; provided, however, that with respect to clauses (i) and (ii), it is agreed that, so long as not legally prohibited, the Manager will provide PAC with prompt written notice of such order, request or demand so that PAC may seek, at its sole expense, an appropriate protective order and/or waive any Manager Permitted Disclosure Party’s compliance with the provisions of this Agreement.  If, failing the entry of a protective order or the receipt of a waiver hereunder, the Manager is required to disclose Confidential Information, the Manager Permitted Disclosure Party may disclose only that portion of such information that is legally required without liability hereunder; provided, however, that the Manager Permitted Disclosure Party agrees to exercise commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information.  
(c)    Notwithstanding anything herein to the contrary, the following types of Confidential Information shall be deemed to be excluded from provisions hereof:  (i) any Confidential Information that is available to the public from a source other than the Manager or its Affiliates, (ii) any Confidential Information that is released in writing by any of the Company Entities to the public (except to the extent exempt under, and in compliance with, Regulation FD) or to persons who are not under similar obligation of confidentiality to any of the Company Entities; and (iii) any Confidential Information that is obtained by the Manager from a third party which, to the Manager’s knowledge, does not constitute a breach by such third party of an obligation of confidence with respect to the Confidential Information disclosed.  
(d)    The provisions of this Section 6 shall survive the expiration or earlier termination of this Agreement for a period of two years thereafter, provided that the parties will maintain trade secrets of the other party identified in writing as trade secrets, and which in fact constitute trade secrets, for a period of no longer than five years thereafter.
		
	Section 7.
	Compensation.

(a)    Acquisition Fee.  The Company shall pay an Acquisition Fee to the Manager or its assignees as compensation for services rendered in connection with the investigation, selection and acquisition (by purchase, investment or exchange) of Investments.  The total Acquisition Fee payable to the Manager or its assignees shall equal 1.0% of the purchase price of Real Estate Assets and 1.0% of the amount advanced for Real Estate Related Loans or other Investments (other than Real Estate Assets), along with reimbursement of Acquisition Expenses actually incurred by the Manager or any of its Affiliates; provided, however, that no Acquisition Fee will be payable until the Closing Date, although it may accrue before the Closing Date.  The purchase price of Real Estate Assets shall equal the amount paid or allocated to the acquisition (by purchase, investment or exchange) of the Real Estate Assets inclusive of expenses related thereto and the amount of debt assumed in connection with such Investment or to which such Investment may be subject following such acquisition, but exclusive of Acquisition Fees.  The purchase price allocable for an Investment held through a Joint Venture shall equal the product of (i) the purchase price of, or the amount advanced for, the Investment, as applicable, determined as stated above, and (ii) the direct or indirect ownership percentage in the Joint Venture held directly or indirectly by any Company Entity.  For purposes of this paragraph, “ownership percentage” shall be the percentage of capital stock, membership interests, partnership interests 

15

or other equity interests held by any Company Entity, without regard to classification of such equity interests.  The Company shall pay to the Manager or its assignees the Acquisition Fee promptly upon the closing of the Investment, subject to the proviso set forth above.  
(b)    Asset Management Fee.  The Company shall pay a monthly Asset Management Fee to the Manager or its assignees as compensation for services rendered in connection with the management of the Investments.  The Asset Management Fee shall be payable monthly in cash or shares of PAC’s Common Stock, at the option of the Manager, and shall be equal to one-twelfth of 0.50% of the total value of the Company’s assets (including cash or cash equivalents) held as of the last day of the immediately preceding month, based on the adjusted cost of the Company’s assets before reduction for depreciation, amortization, impairment charges and cumulative acquisition costs charged to expense in accordance with GAAP (adjusted cost of Real Estate Assets and Real Estate Related Loans will include the purchase price, Acquisition Expenses, capital expenditures and other customarily capitalized costs) and as adjusted for appropriate closing dates for individual asset acquisitions.  The Asset Management Fee will be appropriately pro rated for any partial month.
(c)    Property Management and Leasing Fee.  The Company shall pay a Property Management and Leasing Fee to the Manager or its assignees as compensation for services rendered in connection with the rental, leasing, operation and management of the Company’s Real Estate Assets and the supervision of any non-Affiliates that are engaged by the Manager to provide such services in an amount equal to 4.0% of the gross revenues of properties managed per month.  The Manager may subcontract the performance of its property management and leasing services duties to third parties (including its Affiliates) and pay all or a portion of the Property Management and Leasing Fee to such persons with whom it contracts for these services. The Manager will be responsible for all fees payable to third parties (including its Affiliates) in connection with subcontracted property management and leasing duties. The Property Management and Leasing Fee will be payable monthly in arrears, based on the actual gross revenues for the prior month.
(d)    Disposition Fee on Sale of Assets.  In connection with a sale or other disposition (other than a roll-over of an existing Investment into another Investment related to substantially the same underlying asset) of an Investment (except for such Investments that are traded on a national securities exchange and short-term investments pending investment in other Investments) the Company shall pay to the Manager or its assignees a Disposition Fee on Sale of Assets 1.0% of the Contract Sales Price of such Investment.  If the sale or disposition involves the receipt of publicly traded securities or operating partnership units that may be redeemed for or converted into publicly traded securities, then the Disposition Fee on Sale of Assets shall be receivable upon the receipt of such consideration, notwithstanding the fact that such consideration may at that time be publicly traded or valued by reference to a publicly traded security.
(e)    Construction Fee, Development Fee and Landscaping Fee.  The Company shall pay a Construction Fee, Development Fee and/or Landscaping Fee to the Manager or its assignees as compensation for services rendered in connection with the construction, 

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development or landscaping of the Real Estate Assets and the supervision of any non-Affiliates that are engaged by then Manager to provide such services in an amount equal to the customary and competitive market rates in light of the size, type and location of the Real Estate Assets.
(f)    Exclusion of Certain Transactions.  If any Company Entity shall propose to enter into any transaction in which the Manager, any Affiliate of the Manager or any of the Manager’s directors or officers has a direct or indirect interest, then such transaction shall be approved by a majority of the Board not otherwise interested in such transaction, including a majority of the Independent Directors.
(g)    Limitation on Total Asset Management Fees, Property Management and Leasing Fees and General and Administrative Expenses Fee.  The total amount of the Asset Management Fees, Property Management and Leasing Fees and General and Administrative Expenses Fee payable in connection with the Company’s investments paid or reimbursed to the Manager shall not exceed 1.50% per annum of the total value of the Company’s assets (including cash and cash equivalents) based on the adjusted cost of the Company’s assets before reduction for depreciation, amortization, impairment charges and cumulative acquisition costs charged to expense in accordance with GAAP (adjusted cost will include the gross contract purchase price, Acquisition Expenses, capital expenditures and other customarily capitalized costs).
(h)    General and Administrative Expenses Fee.  The Company shall pay a General and Administrative Expenses Fee in an amount equal to 2.0% of the gross revenues of the Company per month.
		
	Section 8.
	Expenses of the Company.

(a)    The Manager shall be responsible for the expenses related to any and all personnel of the Manager and its Affiliates who provide services to the Company pursuant to this Agreement (including each of the officers and directors of the Company who are also directors, officers, employees or agents of the Manager or any of its Affiliates), including salaries, bonus and other wages, payroll taxes, the cost of employee benefit plans of such personnel, and costs of insurance with respect to such personnel.  For the avoidance of doubt, any equity incentive plan of PAC or the Operating Partnership in which any person referred to above participates shall be excluded from the operation of this Section 8(a).
(b)    The Company shall pay (or cause to be paid) all the costs and expenses of each Company Entity and shall reimburse the Manager or its Affiliates for expenses of the Manager and its Affiliates incurred on behalf of any Company Entity, excepting only those expenses that are specifically the responsibility of the Manager pursuant to Section 8(a) and subject to Section 7(g).  Without limiting the generality of the foregoing, it is specifically agreed that the following costs and expenses of the Company Entities shall be paid (or caused to be paid) by the Company and shall not be paid by the Manager or Affiliates of the Manager:
(i)    Acquisition Expenses incurred in connection with the selection and acquisition of Investments;

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(ii)    General and Administrative Expenses Fee;
(iii)    expenses in connection with the issuance of securities of the Company, any Financing Transaction and other costs incident to the acquisition, disposition and financing of the Investments;
(iv)    costs of legal, tax, accounting, consulting, auditing and other similar services rendered to the Company by providers retained by the Manager and approved by PAC, or, if provided by the Manager’s personnel, in amounts which are no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis;
(v)    the compensation and expenses of the Directors and the cost of liability insurance to indemnify the Company and its officers and the Directors;
(vi)    expenses connected with communications to holders of the securities of any Company Entity and other bookkeeping and clerical work necessary in maintaining relations with holders of such securities and in complying with the continuous reporting and other requirements of governmental bodies or agencies, including all costs of preparing and filing required reports with the SEC, the costs payable by the Company to any transfer agent and registrar in connection with the listing and/or trading of the Company’s securities on any exchange, the fees payable by the Company to any such exchange in connection with its listing, costs of preparing, printing and mailing PAC’s annual report to its stockholders or the Operating Partnership’s partners, as applicable, and proxy materials with respect to any meeting of PAC’s stockholders or the Operating Partnership’s partners, as applicable;
(vii)    costs associated with any computer software or hardware, electronic equipment or purchased information technology services from third-party vendors that is used for the Company Entities;
(viii)    expenses incurred by managers, officers, personnel and agents of the Manager for travel on the Company’s behalf and other out-of-pocket expenses incurred by managers, officers, personnel and agents of the Manager in connection with the purchase, financing, refinancing, sale or other disposition of an Investment or in connection with any Financing Transaction;
(ix)    costs and expenses incurred with respect to market information systems and publications, research publications and materials, and settlement, clearing and custodial fees and expenses;
(x)    the costs of maintaining compliance with all federal, state and local rules and regulations or any other regulatory agency;
(xi)    all taxes and license fees;

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(xii)    all insurance costs incurred in connection with the operation of the Company’s business except for the costs attributable to the insurance that the Manager elects to carry for itself and its personnel;
(xiii)    costs and expenses incurred in contracting with third parties;
(xiv)    all other costs and expenses relating to the Company’s business and investment operations, including the costs and expenses of owning, protecting, maintaining, developing and disposing of Investments, including appraisal, reporting, audit and legal fees;
(xv)    expenses relating to any office(s) or office facilities, including disaster backup recovery sites and facilities, maintained for the Company Entities or the Investments of the Company separate from the office or offices of the Manager;
(xvi)    expenses connected with the payments of interest, dividends or distributions in cash or any other form authorized or caused to be made by the Board, the Operating Partnership or other governing body to or on account of holders of the securities of any Company Entity, including in connection with any dividend reinvestment plan;
(xvii)    any judgment or settlement of pending or threatened proceedings (whether civil, criminal or otherwise) against any Company Entity, or against any trustee, director, partner, member or officer of such Company Entity in his capacity as such for which such Company Entity is required to indemnify such trustee, director, partner, member or officer pursuant to the applicable Governing Instruments or any agreement or other instrument or by any court or governmental agency; and
(xviii)    all other expenses actually incurred by the Manager (except as otherwise specified herein) which are reasonably necessary or advisable for the performance by the Manager of its duties and functions under this Agreement.
(c)    Costs and expenses incurred by the Manager on behalf of the Company shall be reimbursed monthly to the Manager.  The Manager shall prepare a written statement in reasonable detail documenting the costs and expenses of the Company and those incurred by the Manager on behalf of the Company during each month, and shall deliver such written statement to the Company within 30 days after the end of each month.  The Company shall pay all amounts payable to the Manager pursuant to this Section 8(c) within five Business Days after the receipt of the written statement without demand, deduction, offset or delay.  Cost and expense reimbursement to the Manager shall be subject to adjustment at the end of each calendar year in connection with the annual audit of the Company.  The provisions of this Section 8 shall survive the expiration or earlier termination of this Agreement to the extent such expenses have previously been incurred or are incurred in connection with such expiration or termination.
		
	Section 9.
	Limits of the Manager’s Responsibility; Indemnification.

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(a)    The Manager, its Affiliates and their respective directors, officers, employees, partners, members, stockholders, other equity holders agents and representatives (each, a “Manager Indemnified Party”), will not be liable to any Company Entity or any of the stockholders, partners, members or other holders equity interests of any Company Entity for any acts or omissions by any Manager Indemnified Party performed in accordance with and pursuant to this Agreement, except by reason of any act or omission constituting bad faith, willful misconduct or gross negligence on the part of such Manager Indemnified Party.  The Company shall, to the fullest lawful extent, reimburse, indemnify and hold harmless each Manager Indemnified Party, of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including reasonable attorneys’ fees and costs of investigation) (collectively “Losses”) in respect of or arising from any acts or omissions of such Manager Indemnified Party performed in good faith under this Agreement and not constituting bad faith, willful misconduct or gross negligence on the part of such Manager Indemnified Party.  In addition, the Company shall advance funds to a Manager Indemnified Party for legal fees and other costs and expenses incurred as a result of any claim, suit, action or proceeding for which indemnification is being sought, provided that such Manager Indemnified Party undertakes to repay the advanced funds to the Company, together with the applicable legal rate of interest thereon, in cases in which such Manager Indemnified Party is found pursuant to a final and non-appealable order or judgment to not be entitled to indemnification. 
(b)    The Manager shall, to the fullest lawful extent, reimburse, indemnify and hold harmless the Company (each, a “Company Indemnified Party”) of and from any and all Losses in respect of or arising from (i) any acts or omissions of the Manager constituting bad faith, willful misconduct or gross negligence on the part of the Manager, or (ii) any claims by the Manager’s employees relating to the terms and conditions of their employment by the Manager.  The Manager assumes no responsibility under this Agreement other than to render in good faith the services specifically designated as to be provided by the Manager hereunder and shall not be responsible for any action of the Board in following or declining to follow any advice or recommendations of the Manager, including as set forth in the Investment Guidelines.  A Manager Indemnified Party and a Company Indemnified Party are each sometimes hereinafter referred to as an “Indemnified Party.”
(c)    In case any such claim, suit, action or proceeding (a “Claim”) is brought against any Indemnified Party in respect of which indemnification may be sought by such Indemnified Party pursuant hereto, the Indemnified Party shall give prompt written notice thereof to the indemnifying party, which notice shall include all documents and information in the possession of or under the control of such Indemnified Party reasonably necessary for the evaluation and/or defense of such Claim and shall specifically state that indemnification for such Claim is being sought under this Section 9; provided, however, that the failure of the Indemnified Party to so notify the indemnifying party shall not limit or affect such Indemnified Party’s rights except to the extent that the indemnifying party is actually prejudiced thereby.  Upon receipt of such notice of Claim (together with such documents and information from such Indemnified Party), the indemnifying party shall, at its sole cost and expense, in good faith defend any such Claim with counsel reasonably satisfactory to such Indemnified Party, which counsel may, without limiting the rights of such Indemnified Party pursuant to the next succeeding sentence of this Section, 

20

also represent the indemnifying party in such investigation, action or proceeding.  In the alternative, such Indemnified Party may elect to conduct the defense of the Claim, if (i) such Indemnified Party reasonably determines that the conduct of its defense by the indemnifying party could be materially prejudicial to its interests, (ii) the indemnifying party refuses to assume such defense (or fails to give written notice to the Indemnified Party within ten days of receipt of a notice of Claim that the indemnifying party assumes such defense), or (iii) the indemnifying party shall have failed, in such Indemnified Party’s reasonable judgment, to defend the Claim in good faith.  The indemnifying party may settle any Claim against such Indemnified Party without such Indemnified Party’s consent, provided (A) such settlement is without any Losses whatsoever to such Indemnified Party, (B) the settlement does not include or require any admission of liability or culpability by such Indemnified Party, (C) the indemnifying party obtains an effective written release of liability for such Indemnified Party from the party to the Claim with whom such settlement is being made, which release must be reasonably acceptable to such Indemnified Party, and a dismissal with prejudice with respect to all claims made by the party against such Indemnified Party in connection with such Claim, and (D) such settlement does not provide for any equitable relief.  The applicable Indemnified Party shall reasonably cooperate with the indemnifying party, at the indemnifying party’s sole cost and expense, in connection with the defense or settlement of any Claim in accordance with the terms hereof.  If such Indemnified Party is entitled pursuant to this Section 9 to elect to defend such Claim by counsel of its own choosing and so elects, then the indemnifying party shall be responsible for any good faith settlement of such Claim entered into by such Indemnified Party.  Except as provided in the immediately preceding sentence, no Indemnified Party may pay or settle any Claim and seek reimbursement therefor under this Section 9.
(d)    The provisions of this Section 9 shall survive the expiration or earlier termination of this Agreement.
		
	Section 10.
	No Joint Venture.

The parties to this Agreement are not partners or joint venturers with each other and nothing herein shall be construed to make them partners or joint venturers or impose any liability as such on either of them.
		
	Section 11.
	Term; Renewal; Termination Without Cause.

(a)    This Agreement shall become effective on the Closing Date and shall continue in operation, unless terminated in accordance with the terms hereof, until the fifth anniversary of the Closing Date (the “Initial Term”).  After the Initial Term, this Agreement shall be deemed renewed automatically each year for an additional one-year period (an “Automatic Renewal Term”), unless the Company or the Manager elects not to renew this Agreement in accordance with Section 11(b) or Section 11(d), respectively.
(b)    Notwithstanding any other provision of this Agreement to the contrary, upon written notice provided to the Manager no later than 180 days prior to the expiration of the Initial Term or any Automatic Renewal Term (the “Termination Notice”), the Company may, without cause, in connection with the expiration of the Initial Term or the then current Automatic 

21

Renewal Term, decline to renew this Agreement (any such nonrenewal, a “Termination Without Cause”) upon the affirmative vote of at least 75% of the Independent Directors that includes a finding by such 75% majority either that (i) there has been unsatisfactory performance by the Manager that is materially detrimental to the Company Entities, taken as a whole, or (ii) the fees payable to the Manager under Section 7 are not, taken as a whole, in accordance with then-current market rates charged by asset management companies rendering services similar to those rendered by the Manager (“Above-Market Rates”), subject to Section 11(c), and only after reasonable investigation by the Independent Directors as to the market rates charged by similarly situated managers.  In the event of a Termination Without Cause, the Company shall pay the Manager the Fees Accrued Upon Termination before or on the last day of the Initial Term or such Automatic Renewal Term, as the case may be (the “Effective Termination Date”).  The Company may terminate this Agreement for cause pursuant to Section 13 even after a Termination Notice and, in such case, no Fees Accrued Upon Termination shall be payable.
(c)    Notwithstanding the provisions of Section 11(b), if the reason for nonrenewal specified in the Company’s Termination Notice is that 75% of the Independent Directors have determined that the fees payable to the Manager under Section 7 are, taken as a whole, at Above-Market Rates, then the Company shall not have the foregoing nonrenewal right if the Manager agrees that it will continue to perform its duties hereunder during the Automatic Renewal Term that would commence upon the expiration of the Initial Term or then current Automatic Renewal Term at rates that at least 75% of the Independent Directors determine to be at or below market rates, taken as a whole; provided, however, that if the Independent Directors have made such a determination, the Manager shall have the right to renegotiate the rate of fees payable to the Manager under Section 7 as so determined by the Independent Directors, by delivering to the Company, not less than 120 days prior to the pending Effective Termination Date, written notice (a “Notice of Proposal to Negotiate”) of its intention to renegotiate the fees payable to the Manager under Section 7.  Thereupon, the Company and the Manager shall endeavor to negotiate the fees payable to the Manager under Section 7 in good faith.  Provided that the Company and the Manager agree to a revised fee structure under Section 7 within 60 days following the Company’s receipt of the Notice of Proposal to Negotiate, the Termination Notice from the Company shall be deemed of no force and effect, and this Agreement shall continue in full force and effect on the terms stated herein, except that the compensation structure shall be the revised compensation structure as then agreed upon by the Company and the Manager.  The Company and the Manager agree to execute and deliver an amendment of this Agreement setting forth such revised fee structure promptly upon reaching an agreement regarding same.  If the Company and the Manager are unable to agree to a revised compensation structure during such 60-day period, this Agreement shall terminate on the Effective Termination Date and the Company shall be obligated to pay the Manager the Fees Accrued Upon Termination upon the Effective Termination Date.
(d)    No later than 180 days prior to the expiration of the Initial Term or the then current Automatic Renewal Term, the Manager may deliver written notice to the Company informing the Company of the Manager’s intention to discontinue performance of services pursuant to this Agreement as of the upcoming expiration date, whereupon this Agreement shall not be renewed and extended and this Agreement shall terminate effective on the anniversary 

22

date of this Agreement next following the delivery of such notice.  The Company shall not be required to pay to the Manager the Fees Accrued Upon Termination if the Manager terminates this Agreement pursuant to this Section 11(d).
(e)    Except as set forth in this Section 11, a non-renewal of this Agreement pursuant to this Section 11 shall be without any further liability or obligation of any party to the others, except as provided in Sections 6, 8, 9 and 15.
(f)    The Manager shall cooperate with the Company in executing an orderly transition of the management of PAC’s consolidated assets to a new manager.
		
	Section 12.
	Assignments.

(a)    Assignments by the Manager.  This Agreement shall terminate automatically without payment of the Fees Accrued Upon Termination in the event of its assignment, in whole or in part, by the Manager, unless such assignment has been consented to in writing by (i) the Company with the consent of a majority of the Independent Directors, and (ii) the Operating Partnership.  Any such permitted assignment shall bind the assignee under this Agreement in the same manner as the Manager is bound, and the Manager shall be liable to the Company for all acts or omissions of the assignee under any such assignment to the same extent had such delegation not occurred.  In addition, the assignee shall execute and deliver to the Company a counterpart of this Agreement naming such assignee as the Manager.  Notwithstanding the foregoing, the Manager may, without the approval of the Company’s Independent Directors, (A) assign this Agreement to an Affiliate of the Manager, and (B) delegate to one or more of its Affiliates the performance of any of its responsibilities hereunder so long as it remains liable for any such Affiliate’s performance to the same extent had such delegation not occurred, in each case so long as assignment or delegation does not require the Company’s approval under the Investment Company Act (but if such approval is required, the Company shall not unreasonably withhold, condition or delay its consent).  Nothing contained in this Agreement shall preclude any pledge, hypothecation, assignment or other transfer of any amounts payable to the Manager under this Agreement.
(b)    Assignments by the Company.  This Agreement shall not be assigned by the Company without the prior written consent of the Manager, except in the case of assignment by the Company to another REIT or other organization which is a successor (by merger, consolidation, purchase of assets, or other transaction) to the Company, in which case such successor organization shall be bound under this Agreement and by the terms of such assignment in the same manner as the Company is bound under this Agreement.
		
	Section 13.
	Termination for Cause.

(a)    The Company may terminate this Agreement for cause effective upon 30 days’ prior written notice of termination from the Company to the Manager (a “Cause Termination Notice”), without payment of any Fees Accrued Upon Termination, upon the occurrence of: 

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(i)    a breach by the Manager, its agents or its assignees of any material provision of this Agreement and such breach shall continue for a period of 60 days after written notice thereof specifying such breach and requesting that the same be remedied in such 60-day period (or 90 days after written notice of such breach if the Manager takes steps to cure such breach within 60 days of the written notice);
(ii)    a Bankruptcy Event with respect to the Manager,
(iii)    a Manager Change of Control which a majority of the Independent Directors has determined to be materially detrimental to the Company Entities, taken as a whole;
(iv)    the dissolution of the Manager; or
(v)    (A) a final determination by a court that the Manager has committed fraud against the Company, the Manager has embezzled funds of the Company or the Manager has otherwise acted, or failed to act, in a manner constituting bad faith, willful misconduct, gross negligence or reckless disregard in the performance of its duties under this Agreement, (B) which act of fraud, embezzlement or other act or failure to act described in clause (v)(A) above has had a material adverse effect on the consolidated business, operations and financial condition of the Company, and (C) where a majority of the Independent Directors of PAC has voted affirmatively to terminate this Agreement for cause as a result of such fraud, embezzlement or other act or failure to act, which vote shall have occurred within 30 days following the final determination referred to in clause (v)(A) above; provided, however, if such fraud, embezzlement or other act or failure to act was committed by a person other than an executive officer of the Manager, then the Manager can cure the same by terminating the employment of such person on or prior to the 30th day following such final determination, in which event the Company shall cease to have the right to terminate this Agreement for cause pursuant to this Section 13(a) and any Cause Termination Notice previously given in reliance on this clause (v) automatically shall be deemed to have been rescinded and nugatory.
(b)    The Manager may terminate this Agreement effective upon 60 days’ prior written notice of termination to the Company if the Company shall default in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of 60 days after written notice thereof specifying such default and requesting that the same be remedied in such 60-day period.  The Company shall be required to pay to the Manager the Fees Accrued Upon Termination if the termination of this Agreement is made pursuant to this Section 13(b).
(c)    The Manager may terminate this Agreement if the Company becomes required to register as an investment company under the Investment Company Act, with such termination deemed to occur immediately before such event, in which case the Manager shall not be entitled to payment of the Fees Accrued Upon Termination.
		
	Section 14.
	Action Upon Termination.

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From and after the effective date of termination of this Agreement pursuant to Section 11, 12 or 13, the Manager shall not be entitled to compensation for further services hereunder.  If the Manager is terminated pursuant to Sections 11(b) or 13(b), it shall be paid all Fees Accrued Upon Termination.  Upon any such termination, the Manager shall forthwith:
(a)    after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled, pay over to each Company Entity all money collected and held for the account of such Company Entity pursuant to this Agreement;
(b)    deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board with respect to the Company Entities; 
(c)    deliver to the Board all property and documents of the Company Entities then in the custody of the Manager; and
(d)    cooperate with the Company Entities to provide an orderly management transition.
		
	Section 15.
	Release of Money or Other Property Upon Written Request.

The Manager agrees that any money or other property of the Company (which, for the purposes of this Section 15, shall be deemed to include any and all of their respective subsidiaries, if any) held by the Manager shall be held by the Manager as custodian for the Company, and the Manager’s records shall be appropriately and clearly marked to reflect the ownership of such money or other property by the Company.  Upon the receipt by the Manager of a written request signed by a duly authorized officer of the Company requesting the Manager to release to the Company any money or other property then held by the Manager for the account of the Company under this Agreement, the Manager shall release such money or other property to the Company or within a reasonable period of time, but in no event later than 60 days following such request.  Upon delivery of such money or other property to the Company, the Manager shall not be liable to the Company, the Board, PAC’s stockholders, the Operating Partnership’s partners or any of the directors or equity holders of any subsidiary of the Company for any acts or omissions by the Company in connection with the money or other property released to the Company in accordance with this Section 15.  The Company shall indemnify the Manager Indemnified Parties against any and all Losses which arise in connection with the Manager’s proper release of such money or other property to the Company in accordance with the terms of this Section 15.  Indemnification pursuant to this provision shall be in addition to any right of the Manager Indemnified Parties to indemnification under Section 9.
		
	Section 16.
	Miscellaneous.

(a)    Notices.  All notices, requests, communications and demands (each a “Notice”) to, with or upon any of the respective parties shall be in writing and sent by (i) personal delivery, (ii) reputable overnight courier, (iii) facsimile transmission with telephonic confirmation (provided that such Notice also is sent contemporaneously by another method provided for in this 

25

Section 16(a)), or (iv) registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below (or to such other address as may be hereafter notified by the respective parties hereto in accordance with this Section 16(a)):
	
		
	PAC:
	Preferred Apartment Communities, Inc. 
3625 Cumberland Boulevard, Suite 1150 
Atlanta, Georgia 30339 
Attention:  Leonard A. Silverstein, Esq. 
Attention:  Jeffrey R. Sprain, Esq. 
Fax:  (770) 818-4105

	with a copy to:
	Proskauer Rose LLP 
1585 Broadway 
New York, New York 10036 
Attention:  Peter M. Fass, Esq. 
Attention:  James P. Gerkis, Esq. 
Fax:  (212) 969-2900

	The Operating Partnership:
	Preferred Apartment Communities, Inc. 
3625 Cumberland Boulevard, Suite 1150 
Atlanta, Georgia 30339 
Attention:  Leonard A. Silverstein, Esq. 
Attention:  Jeffrey R. Sprain, Esq. 
Fax:  (770) 818-4105

	with a copy to:
	Proskauer Rose LLP 
1585 Broadway 
New York, New York 10036 
Attention:  Peter M. Fass, Esq. 
Attention:  James P. Gerkis, Esq. 
Fax:  (212) 969-2900

	The Manager:
	Preferred Apartment Advisors, LLC 
3625 Cumberland Boulevard, Suite 1150 
Atlanta, Georgia 30339 
Attention:  Leonard A. Silverstein, Esq. 
Attention:  Jeffrey R. Sprain, Esq. 
Fax:  (770) 818-4105

	with a copy to:
	Bass, Berry & Sims PLC 
100 Peabody Place, Suite 900 
Memphis, Tennessee 38103 
Attention:  John A. Good, Esq. 
Fax:  (901) 543-5901

Any Notice sent as aforesaid shall be deemed given and effective upon actual receipt (or refusal of receipt).
(b)    Binding Nature of Agreement; Successors and Assigns; No Third Party Beneficiaries.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.  Except 

26

as provided in this Agreement with respect to indemnification of Indemnified Parties hereunder, nothing in this Agreement shall confer any rights upon any Person other than the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.
(c)    Integration.  This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.  The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.
(d)    Amendments.  This Agreement, nor any terms hereof, may not be amended or supplemented except in an instrument in writing executed by the parties hereto.
(e)    GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF DELAWARE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.  EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND THE UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN SUCH COURT.
(f)    WAIVER OF JURY TRIAL.  EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
(g)    No Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of a party hereto, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
(h)    Costs and Expenses.  Each party hereto shall bear its own costs and expenses (including the fees and disbursements of counsel and accountants) incurred in connection with the negotiations and preparation of this Agreement, and all matters incident thereto.  If any party hereto initiates any legal action arising out of or in connection with this Agreement, the 

27

prevailing party shall be entitled to recover from the other party all reasonable attorneys’ fees, expert witness fees and expenses incurred by the prevailing party in connection therewith.
(i)    Section Headings.  The section and subsection headings in this Agreement are for convenience in reference only and shall not be deemed to alter or affect the interpretation of any provisions hereof.
(j)    Counterparts.  This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in any number of separate counterparts, and all of which taken together shall be deemed to constitute one and the same instrument.
(k)    Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

28

IN WITNESS WHEREOF, each of the parties hereto has executed this Third Amended and Restated Management Agreement as of the date first written above.
PREFERRED APARTMENT COMMUNITIES, INC.
		
	By:
	_/s/ John A. Williams______________________ 
Name:  John A. Williams 
Title: President and Chief Executive Officer

PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.
		
	By:
	Preferred Apartment Communities, Inc. 
its General Partner

		
	By:
	_/s/ John A. Williams __________________ 
Name: John A. Williams 
Title: President and Chief Executive Officer

PREFERRED APARTMENT ADVISORS, LLC
		
	By:
	NELL Partners, Inc. 
its Managing Member

		
	By:
	_/s/ John A. Williams__________________ 
Name: John A. Williams 
Title: President and Chief Executive Officer

[Signature Page to Fourth Amended and Restated Management Agreement]

Exhibit A
Investment Guidelines
		
	1.
	No Investment shall be made by the Manager that would cause PAC to fail to qualify as a REIT under the Code.

		
	2.
	No Investment shall be made by the Manager that would cause either PAC or the Operating Partnership to be regulated as an investment company under the Investment Company Act.

		
	3.
	The Manager may invest the proceeds of the Initial Public Offering, any future offerings of PAC’s or the Operating Partnership’s securities for cash, and cash from operations and capital transactions in interest-bearing, short-term, investment-grade investments, subject to the requirements for PAC’s qualification as a REIT under the Code.

		
	4.
	Investment Deployment Quantitative Limits:

		
	(a)
	Other than for short-term investments made for cash management purposes, the Manager may not invest (net of any debt placed at closing or assumed with the transaction) more than 15% of the Company’s total assets (as determined for the Asset Management Fee) in any one single asset or transaction.  By way of example, if

	
		
	Total assets before proposed transaction:
	$100 million

	Proposed transaction asset value value:
	$40 million

	Total assets after proposed transaction:
	$140 million

	15% of total assets after proposed transaction:
	$21 million

        
then the Manager would be allowed to invest up to $21 million in the proposed transaction.

		
	(b)
	No more than 25% of the Company’s total assets may be invested by the Manager in any metropolitan statistical area (“MSA”).

		
	(c)
	The Company’s aggregate borrowings (secured and unsecured) will not exceed 75% of the cost of its tangible assets at the time of any new borrowing.

		
	5.
	Investment Deployment Qualitative Guidelines:

		
	(a)
	Multifamily related assets where the associated real property asset is located in top submarkets of an MSA with an aggregate population in excess of approximately 1,000,000.

		
	(b)
	Multifamily related assets where the associated real property asset has at least 100 units.

		
	(c)
	Multifamily related assets where the associated real property was built or substantially renovated after January 1, 1990 and, to the knowledge of the Manager, does not possess any material design flaws and is not functionally obsolete.

		
	(d)
	Target five-year portfolio average cash-on-cash returns of approximately 8.5% to 10%, net of fees and expenses.

		
	(e) 
	Seek to acquire assets primarily for income, and secondarily for possible capital gain.

		
	(f)
	The Manager may enter into forward purchase contracts and purchase option agreements for multifamily properties and, in connection therewith, enter into deposit arrangements, mezzanine loans or other performance assurances, as may be necessary or appropriate. 

2Exhibit 10.1

 

SALE
OF ACCOUNTS AND SECURITY AGREEMENT

 

Date:
January ___, 2013

 

MamaMancini’s
Inc., a Delaware corporation, with its principal offices at 25 Branca
Road, East Rutherford NJ 07073, (collectively, the “Seller”) and FAUNUS GROUP INTERNATIONAL, INC., a Delaware
corporation (“FGI”), hereby agree, intending to be legally bound, to the terms and conditions set forth in
this Sale of Accounts and Security Agreement (“Agreement”).

 

Section
1.1 Definitions. For the purposes of this Agreement and unless defined otherwise herein, all terms used shall have the
meanings assigned to them in this Section 1.1:

 

“Account(s)”
has the definition contained in the UCC and which shall include a
right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold,
leased, licensed, assigned, or otherwise disposed of or (ii) for services rendered or to be rendered.

 

“Account
Debtor” has the definition contained in the UCC and which includes any Person who is obligated on an Account, Chattel
Paper or General Intangible.

 

“Advance”
means amounts advanced by FGI to the Seller under this Agreement.

 

“Agreement”
means this Agreement, including the Exhibits and any Schedules hereto, and all amendments, modifications and supplements hereto
and thereto and restatements hereof and thereof.

 

“Application”
means each application made by Seller in connection with this Agreement.

 

“Avoidance
Claim” means any claim that any payment received by FGI from or for the account of an Account Debtor is avoidable under
the Bankruptcy Code or any other debtor relief statute.

 

“Chattel
Paper” has the definition contained in the UCC and which includes a record
or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific
goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease
of specific goods, or a lease of specific goods and license of software used in the goods.

 

“Collateral”
means and includes all of the Sellers’ right, title and interest in and to each of the following, wherever located and whether
now or hereafter existing or now owned or hereafter acquired or arising: (a) all Accounts, (b) Chattel Paper, (c) Commercial Tort
Claims, (d) Deposit Accounts, (e) Documents, (f) Equipment, (g) General Intangibles, (h) Goods (including but not limited to all
files, correspondence, computer programs, tapes, disks and related data processing software which contain information identifying
or pertaining to any of the Collateral or any Account Debtor or showing the amounts thereof or payments thereon or otherwise necessary
or helpful in the realization thereon or the collection thereof, (i) Inventory, (j) Instruments, (k) Investment Property, (l)
Letters of Credit and Letter of Credit rights, (m) all Supporting Obligations and (n) all cash and non-cash proceeds of the foregoing,
including insurance proceeds.

 

“Commercial
Tort Claim” has the definition contained in the UCC.

 

“Date
of Collection” means the date a check, draft or other item representing payment on an invoice is received by FGI plus
four (4) business days.

 

“Deficiency
Assessment” means charges as set forth in Section 3 of
this Agreement applied to the difference between the minimum monthly net funds employed and the actual net funds employed for
the month and shall be chargeable to Reserve Account, or at FGI’s option, payable by Seller on FGI’s demand.

 

“Default”
means any of the events specified in Section 10 of this Agreement that, with the passage of time or giving of notice or both,
would constitute an Event of Default.

 

    	 

    	 

    

 

“Deposit
Account” has the definition contained in the UCC and which includes any demand, time, savings, passbook or like account
maintained with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a
certificate of deposit that is an instrument under the UCC.

 

“Dispute
or Disputed Account” means any claim, whether or not provable,
bona fide, or with or without support, made by an Account Debtor as a basis for refusing to pay a Purchased Account, either in
whole or in part, including, but not limited to, any contract dispute, charge back, credit, right to return Goods, or other matter
which diminishes or may diminish the dollar amount or timely collection of such Account.

 

“Documents”
means a document of title or a receipt of the type described in UCC 7-201(2).

 

“Equipment”
has the definition contained in the UCC.

 

“Event
of Default” means any of the events specified in Section 10 of this Agreement.

 

“Facility
Amount” means $1,500,000; provided FGI may from time to time and at any time increase or decrease such amount in its
sole and absolute discretion.

 

“Financing
Statement” means each Uniform Commercial Code financing statement naming FGI as purchaser/secured party and the Seller
as Seller/debtor, in connection with this Agreement.

 

“GAAP”
means generally accepted accounting principles consistently applied and maintained throughout the period indicated and consistent
with the prior financial practice of the Person referred to.

 

“General
Intangible” has the definition contained in the UCC.

 

“Goods”
has the definition contained in the UCC.

 

“Instrument”
has the definition contained in the UCC and which includes a negotiable instrument or any other writing that evidences a right
to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course
of business is transferred by delivery with any necessary endorsement or assignment.

 

“Inventory”
has the definition contained in the UCC.

 

“Investment
Property” has the definition contained in the UCC.

 

“Letter
of Credit Right” has the definition contained in the UCC.

 

“Lien”
means, as applied to the property of any Person, the filing of, or any agreement to give, any financing statement under the UCC
or its equivalent in any jurisdiction.

 

“Misdirected
Payment Fee” means 15% of the amount of any payment on account of a Purchased Account which has been received by Seller
and not delivered in kind to FGI within two (2) business days following the date of receipt by Seller.

 

“Net
Invoice Amount” means the invoice amount of the Purchased
Account, less returns (whenever made), all selling discounts (at FGI’s sole option, calculated on shortest terms), and credit
or deductions of any kind allowed or granted to or taken by the Account Debtor at any time.

 

“Obligations”
means all present and future obligations owing by Seller to FGI in connection with this Agreement, whether or not for the payment
of money, whether or not evidenced by any note or other instrument, whether direct or indirect, absolute or contingent, due or
to become due, joint or several, primary or secondary, liquidated or unliquidated, secured or unsecured, original or renewed or
extended, whether arising before, during or after the commencement of any Bankruptcy Case in which Seller is a debtor (specifically
including interest accruing after the commencement of any bankruptcy, insolvency or similar proceeding with respect to Seller,
whether or not a claim for such post-commencement interest is allowed).

 

    	2

    	 

    

 

“Original
Term” means the term of this Agreement as reflected in Section 13 and “Term” means the Original Term
and any extensions thereof.

 

“Person”
means an individual, corporation, partnership, limited liability company, association, trust or unincorporated organization or
a government or any agency or political subdivision thereof.

 

“Purchase
Price” means the price that FGI pays Seller for each Purchased Account which price shall equal the Net Invoice Amount
less FGI’s fees.

 

“Purchased
Account(s)” means an Account which is deemed acceptable
for purchase as determined by FGI in the exercise of its reasonable sole credit or business judgment and for which FGI has made
payment of the sum specified in Section 3 constituting FGI’s acceptance of an Account.

 

“Reserve
Account” means (a) a bookkeeping account on the books of FGI and/or (b) an account of FGI in which FGI deposits the
Required Reserve Amount from time to time, in either case representing an unpaid portion of the Purchase Price, maintained by
FGI to ensure Seller’s performance with the provisions hereof.

 

“Reserve
Percentage” means 30% of the face amount of the Purchased Accounts and as such percent may change in accordance herewith.

 

“Reserve
Shortfall” means the amount by which the Reserve Account is less than the Required Reserve Amount.

 

“Required
Reserve Amount” means the Reserve Percentage multiplied by the unpaid balance of all Purchased Accounts and as such
amount may change in accordance herewith.

 

“Schedule
of Accounts” means a schedule of Accounts in a form supplied by FGI from time to time wherein Seller lists all the existing
Accounts of Seller, which Seller is required to offer for sale to FGI under the terms of this Agreement.

 

“Security
Interest” means the Liens of FGI on and in the Collateral affected hereby or pursuant to the terms hereof or thereof.

 

“Supporting
Obligation” has the definition contained in the UCC.

 

“Termination
Fee” means a fee payable to FGI in the event Seller terminates this Agreement prior to maturity of the Original Term
or Term of this Agreement.

 

“UCC”
means the Uniform Commercial Code as in effect from time to time in the State of New York.

 

Section
1.2 Other Referential Provisions.

 

(a)
Except as otherwise expressly provided herein, all accounting terms not specifically defined or specified herein shall have the
meanings generally attributed to such terms under GAAP including, without limitation, applicable statements and interpretations
issued by the Financial Accounting Standards Board and bulletins, opinions, interpretations and statements issued by the American
Institute of Certified Public Accountants or its committees.

 

(b)
All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall include the singular.

 

(c)
The words “hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provisions of this Agreement.

 

    	3

    	 

    

 

(d)
Titles of Articles and Sections in this Agreement are for convenience only, do not constitute part of this Agreement and neither
limit nor amplify the provisions of this Agreement, and all references in this Agreement to Articles, Sections, Subsections, paragraphs,
clauses, sub clauses, Schedules or Exhibits shall refer to the corresponding Article, Section, Subsection, paragraph, clause or
sub clause of, or Schedule or Exhibit attached to, this Agreement, unless specific reference is made to the articles, sections
or other subdivisions or divisions of, or to schedules or exhibits to, another document or instrument.

 

(e)
Each definition of a document in this Agreement shall include such document as amended, modified, supplemented or restated from
time to time in accordance with the terms of this Agreement.

 

Section
1.3 Exhibits and Schedules. All Exhibits and Schedules attached hereto are by reference made a part hereof.

 

Section
2. Purchase & Sale of Accounts.

 

(a)
Seller hereby offers to sell, assign, transfer, convey and deliver to FGI, as absolute owner, in accordance with the procedure
detailed herein, all of Seller’s right, title and interest in and to Seller’s Accounts; provided at no time shall
the maximum aggregate amount paid by FGI for Accounts purchased from Seller outstanding on FGI’s books exceed the Facility
Amount.

 

(b)
All Accounts shall be submitted to FGI on a Schedule of Accounts listing each Account separately. The Schedule of Accounts shall
be in the form attached hereto as Schedule 1 or in such other form as required by FGI, and shall be signed by a person
acting or purporting to act on behalf of Seller. At the time the Schedule of Accounts is presented, Seller shall also deliver
to FGI one copy of a sales contract, purchase order, and invoice for each Account together with evidence of shipment, furnishing
and/or delivery of the Goods or rendition of service(s).

 

(c)
Any and all Purchased Accounts shall be purchased with full recourse. Seller agrees that any payments or credits applying to any
Account owing by such Account Debtor will be applied: first, to any Purchased Accounts outstanding on FGI’s books;
and second, to any Accounts outstanding on Seller’s books. This order of payment applies regardless of the respective
dates the sales occurred and regardless of any notations on payment items.

 

Section
3. Purchase Price and Fees.

 

(a)
The purchase price that FGI shall pay to Seller for each Purchased Account shall equal the Net Invoice Amount thereof less FGI’s
fees, as specified below. No discount, credit, allowance or deduction with respect to any Purchased Account, unless shown on the
face of an invoice, shall be granted or approved by Seller to any Account Debtor without FGI’s prior written consent.

 

(b)
The purchase price (as computed above), less (i) any Required Reserve Amount or credit balance that FGI, in FGI’s sole and
absolute discretion, determines to hold, (ii) moneys remitted, paid, or otherwise advanced by FGI to or on behalf of Seller (including
any amounts which FGI reasonably determines that Seller may be obligated to pay in the future), and (iii) any other charges provided
for by this Agreement, shall be payable by FGI to Seller on the Date of Collection.

 

(c)
FGI shall be entitled, in its sole and absolute discretion, to withhold the Required Reserve Amount, and may increase or decrease
the Required Reserve Amount or Reserve Percentage at any time and from time to time if FGI deems it necessary to do so in order
to protect FGI’s interests. In no event shall Seller permit a Reserve Shortfall to occur. FGI may charge against the Reserve
Account any amount for which Seller may be obligated to FGI at any time, whether under the terms of this Agreement, or otherwise,
including but not limited to the repayment of any Advance, the amount of any Purchased Account aged ninety (90) days or more past
invoice date, any monetary out of pocket damages suffered by FGI as a result of Seller’s breach of any representation or
warranty herein or of any other provision hereof (whether intentional or unintentional), any adjustments due and any reasonable
attorneys’ fees, costs and disbursements due. Seller recognizes that the Reserve Account may, in FGI’s sole discretion,
represent bookkeeping entries only and not cash funds. It is further agreed that with respect to the balance in the Reserve Account,
FGI is authorized to withhold, without giving prior notice to Seller, such payments

 

    	4

    	 

    

 

and
credits otherwise due to Seller under the terms of this Agreement for reasonably anticipated claims or to adequately satisfy reasonably
anticipated obligation(s) Seller may owe FGI. Upon the occurrence of an Event of Default, or, in the event Seller shall cease
selling Accounts to FGI, FGI shall be under no obligation to pay the amount maintained in the Reserve Account until all Accounts
listed on all Schedules of Accounts have been collected or FGI has determined, in its sole and absolute discretion, that it will
make no further efforts to collect any Accounts and all sums due FGI hereunder have been paid. Notwithstanding anything set forth
herein to the contrary, upon an Event of Default, Seller understands and agrees that the Termination Fee described Section 13
hereof shall be due and payable by Seller in the event that FGI terminates this Agreement following an Event of Default.

 

(d)
In FGI’s sole and absolute discretion, in accordance with the terms of this Agreement, FGI may from time to time, upon receipt
of a written request by the Seller, advance to Seller against the purchase price of Purchased Accounts purchased by FGI hereunder,
sums up to 70% of the aggregate purchase price of Purchased Accounts outstanding at the time any such advance is made, less: (i)
any such Purchased Accounts that are in dispute by an Account Debtor; (ii) any such Purchased Accounts that are not credit approved;
(iii); any such Purchased Accounts aged ninety (90) days or more past invoice date; and (iv) any fees, actual or estimated, that
are chargeable to the Reserve Account. Any advance shall be payable on demand and shall bear interest at the rate set forth in
subsection (e) below from the date such advance is made until the date FGI would otherwise be obligated hereunder to pay the purchase
price of the Purchased Account(s) against which such advance was made.

 

(e)
Interest upon the daily total outstanding balance of any Purchased Account shall be charged to Seller’s Reserve Account
at a rate equal to the greater of 6.75% per annum or 2.5% above the rate of interest designated by FGI as its selected “Prime
Rate” or “Base Rate’, as the case may be (which as of the date hereof is based upon the Wall Street Journal,
Money Rates Section which is subject to change) on the last day of each month on the net daily balance of all outstanding Purchased
Accounts or otherwise charged to the Reserve Account. In the event that the Wall Street Journal ceases to publish a Prime Rate,
then the Prime Rate shall be the average of the three largest U.S. money center commercial banks, as determined by FGI. All such
interest shall be computed for the actual number of days elapsed on the basis of a year consisting of three hundred sixty (360)
days. Any adjustment in FGI’s interest rate, whether downward or upward will become effective on the day in which the prime
rate of interest is decreased or increased.

 

(f)
Seller shall unconditionally pay and FGI shall be entitled to receive a one-time non-refundable facility fee in an amount equal
to 1.00% of the Facility Amount payable upon closing of the Facility.

 

(g)
Seller shall unconditionally pay and FGI shall be entitled to receive a non-refundable monthly collateral management fee equal
to 0.42% of the average monthly balance of Purchased Accounts; with such fee charged monthly to Seller’s Reserve Account
or if funds are not available therein, payable by Seller on demand.

 

(h)
The minimum monthly net funds employed during each contract year hereof shall be $500,000; any deficiency will be subject to a
Deficiency Assessment.

 

(i)
IT IS THE INTENTION OF THE PARTIES HERETO THAT AS TO ALL PURCHASED ACCOUNTS, THE TRANSACTIONS CONTEMPLATED HEREBY SHALL CONSTITUTE
A TRUE PURCHASE AND SALE OF ACCOUNT(S) UNDER § 9-318 OF THE UCC AND AS SUCH, THE SELLER SHALL HAVE NO LEGAL OR EQUITABLE
INTEREST IN THE ACCOUNTS SOLD. NEVERTHELESS, IN THE EVENT ALL OR ANY PORTION OF THIS TRANSACTION IS CHARACTERIZED AS A LOAN, THE
PARTIES HERETO INTEND TO CONTRACT IN STRICT COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME TO TIME IN EFFECT. IN FURTHERANCE THEREOF
SUCH PARTIES STIPULATE AND AGREE THAT NONE OF THE TERMS AND PROVISIONS CONTAINED IN THIS AGREEMENT SHALL EVER BE CONSTRUED TO
CREATE A CONTRACT TO PAY, FOR THE USE, FORBEARANCE OR DETENTION OF MONEY, INTEREST IN EXCESS OF THE MAXIMUM RATE (AS HEREINAFTER
DEFINED) FROM TIME TO TIME IN EFFECT. NEITHER SELLER, ANY PRESENT OR FUTURE GUARANTOR OR ANY OTHER PERSON HEREAFTER BECOMING LIABLE
FOR THE PAYMENT OF THE ADVANCES, SHALL EVER BE LIABLE FOR ANY OBLIGATION THAT MAY BE

 

    	5

    	 

    

 

CHARACTERIZED
AS UNEARNED INTEREST THEREON OR SHALL EVER BE REQUIRED TO PAY ANY OBLIGATION THAT MAY BE CHARACTERIZED AS INTEREST THEREON IN
EXCESS OF THE MAXIMUM AMOUNT THAT MAY BE LAWFULLY CHARGED UNDER APPLICABLE LAW FROM TIME TO TIME IN EFFECT, AND THE PROVISIONS
OF THIS SECTION SHALL CONTROL OVER ALL OTHER PROVISIONS OF THIS AGREEMENT WHICH MAY BE IN CONFLICT THEREWITH. IF ANY INDEBTEDNESS
OR OBLIGATION OWED BY SELLER HEREUNDER IS DETERMINED TO BE IN EXCESS OF THE LEGAL MAXIMUM, OR FGI SHALL OTHERWISE COLLECT MONEYS
WHICH ARE DETERMINED TO CONSTITUTE INTEREST WHICH WOULD OTHERWISE INCREASE THE INTEREST ON ALL OR ANY PART OF SUCH OBLIGATIONS
TO AN AMOUNT IN EXCESS OF THAT PERMITTED TO BE CHARGED BY APPLICABLE LAW THEN IN EFFECT, THEN ALL SUCH SUMS DETERMINED TO CONSTITUTE
INTEREST IN EXCESS OF SUCH LEGAL LIMIT SHALL, WITHOUT PENALTY, BE PROMPTLY APPLIED TO REDUCE THE THEN OUTSTANDING OBLIGATIONS
OR, AT FGI’S OPTION, RETURNED TO SELLER OR THE OTHER PAYOR THEREOF UPON SUCH DETERMINATION. IF AT ANY TIME THE RATE AT WHICH
INTEREST IS PAYABLE HEREUNDER EXCEEDS THE MAXIMUM RATE, THE AMOUNT OUTSTANDING HEREUNDER SHALL CEASE BEARING INTEREST UNTIL SUCH
TIME AS THE TOTAL AMOUNT OF INTEREST ACCRUED HEREUNDER EQUALS (BUT DOES NOT EXCEED) THE MAXIMUM RATE APPLICABLE HERETO. AS USED
IN THIS SECTION, THE TERM “APPLICABLE LAW” MEANS THE LAWS OF THE STATE OF NEW YORK OR, IF DIFFERENT, THE LAWS OF THE
STATE OR TERRITORY IN WHICH THE SELLER RESIDES, WHICHEVER LAW ALLOWS THE GREATER RATE OF INTEREST, AS SUCH LAWS NOW EXIST OR MAY
BE CHANGED OR AMENDED OR COME INTO EFFECT IN THE FUTURE AND THE TERM “MAXIMUM RATE” MEANS THE MAXIMUM NON-USURIOUS
RATE OF INTEREST THAT FGI IS PERMITTED UNDER APPLICABLE LAW TO CONTRACT FOR, TAKE, CHARGE OR RECEIVE WITH RESPECT TO THE ADVANCES.

 

(j)
Upon FGI’s acceptance of each Purchased Account, FGI shall be the sole owner and holder of such Purchased Account. Seller
hereby sells, transfers, conveys and assigns to FGI all of its right, title and interest in and to each Purchased Account effective
at the time of acceptance thereof by FGI. Seller agrees to execute and deliver to each Account Debtor obligated under an Account
and/or a Purchased Account such written notice of sale of the Purchased Account as FGI may request in the form attached hereto
as Schedule 2 or in such form as required by FGI.

 

(k)
FGI shall provide Seller online access via a secured website to information on the Purchased Accounts and a reconciliation of
the relationship relating to billing, collection and account maintenance such as aging, posting, error resolution and mailing
of statements in the ordinary course of FGI’s business. All of the foregoing shall be in a format and in such detail, as
FGI, in its sole and absolute discretion, deems appropriate. Furthermore, FGI’s books and records shall be admissible in
evidence without objection as prima facie evidence of the status of the Purchased and non-purchased Accounts and Reserve Account
between FGI and Seller. Each statement, report, or accounting rendered or issued by FGI to Seller, if any, and all online information
shall be deemed conclusively accurate and binding on Seller unless within fifteen (15) days after the date of issuance or posting
Seller notifies FGI in writing to the contrary, setting forth with specificity the reasons why Seller believes such statement,
report, or accounting is inaccurate, as well as what Seller believes to be correct amount(s) therefore. FGI’s failure to
provide or Seller’s failure to receive such online access shall not relieve Seller of Seller’s obligations under this
Agreement or the responsibility of Seller to request such statement and Seller’s failure to do so shall nonetheless bind
Seller to whatever FGI’s records would have reported.

 

Section
4. Seller’s Representations and Covenants. Seller represents, warrants and covenants to FGI that:

 

(a)
Seller is either a corporation, limited liability company, limited partnership or other form of registered Person, is duly organized,
validly existing and in good standing under the laws of the State of Delaware and is qualified and authorized to do business and
is in good standing in all states in which such qualification and good standing are necessary or desirable.

 

(b)
The execution, delivery and performance by Seller of this Agreement does not and will not constitute a violation of any applicable
law, violation of Seller’s articles of incorporation, articles of organization, bylaws, operating agreement, partnership
agreement or other organizational documents and does not and will not constitute any material breach of any other document, agreement
or instrument to which Seller is a party or by which Seller is bound.

 

    	6

    	 

    

 

(c)
Seller has all requisite power and authority to enter into and perform this Agreement, and has taken all proper and necessary
action to authorize the execution, delivery and performance of this Agreement and other documents, instruments and agreements
executed in connection herewith. This Agreement is a legal, valid and binding obligation of Seller enforceable against it in accordance
with its terms.

 

(d)
Immediately prior to the execution and at the time of delivery of each Schedule of Account, Seller is the sole owner and holder
of each of the Account described thereon and that upon FGI’s acceptance of each Purchased Account; FGI shall become the
sole owner and holder of such Purchased Account(s).

 

(e)
No Purchased Account shall have been previously sold or transferred or be subject to any lien, encumbrance, security interest
or other claim of any kind of nature. Seller will not factor, sell, transfer, pledge or give a security interest in any of its
Accounts to anyone other than FGI. There are no financing statements now on file in any public office covering any Collateral
of Seller of any kind, real or personal, in which Seller is named in or has signed as the debtor, except the financing statement
or statements filed or to be filed in respect of this Agreement or those statements now on file specifically listed on Schedule
4(e) attached hereto. Seller will not execute any security agreement or authorize the filing of any financing statement in
favor of any other Person, except FGI, during the Term of this Agreement.

 

(f)
The amount of each Purchased Account is due and owing to Seller and represents an accurate statement of a bona fide sale, delivery
and acceptance of Goods or performance of service by Seller to or for an Account Debtor. The terms for payment of Purchased Accounts
are no greater than sixty (60) days from date of invoice and the payment of such Purchased Accounts is not contingent upon the
fulfillment by Seller of any further performance of any nature whatsoever. Each Account Debtor’s business is solvent to
the best of Seller’s knowledge.

 

(g)
There are and shall be no set-offs, allowances, discounts, deductions, counterclaims, or disputes with respect to any Purchased
Account, either at the time it is accepted by FGI for FGI or prior to the date it is to be paid. Seller shall inform FGI, in writing,
immediately upon learning that there exists any Account, which is subject to a Dispute. Seller shall accept no returns and shall
grant no allowance or credit to any Account Debtor without the prior written consent of FGI. On the first business day of each
calendar week, Seller shall provide to FGI for each Account Debtor who is indebted on a Purchased Account that has been purchased,
a weekly report in a form and substance satisfactory to FGI itemizing all such returns and allowances made during the previous
week with respect such Purchased Accounts and at FGI’s option a check (or wire transfer) payable to FGI for the amount thereof
or in FGI’s sole and exclusive discretion, FGI may accept the issuance of a Credit Memo and apply same to the Reserve Account.

 

(h)
Seller’s address, as set forth in any Application submitted to FGI, is Seller’s mailing address, its chief executive
office, principal place of business and the office where all of the books and records concerning the Purchased Accounts are maintained
which shall not be changed without giving thirty (30) days prior written notice to FGI.

 

(i)
Seller shall maintain its books and records in accordance with GAAP which, to the knowledge of Seller, permits the Seller to reflect
the Purchased Accounts as an asset following the purchase contemplated hereby. Seller shall furnish FGI, upon request, such information
and statements, as FGI shall request from time to time and at any time regarding Seller’s business affairs, financial condition
and results of its operations. Without limiting the generality of the foregoing, Seller shall provide FGI, on or prior to the
thirtieth (30th) day of each month, unaudited financial statements with respect to the prior month and, within one
hundred five (105) days after the end of each of Seller’s fiscal years, annual financial statements and such certificates
relating to the foregoing as FGI may request including, without limitation, a monthly certificate from the Chief Executive Officer
and chief financial officer of Seller stating that no Event of Default exists or if an Event of Default has occurred stating in
detail the nature of the Event(s) of Default. Seller will furnish to FGI upon request a current listing of all open and unpaid
accounts payable and Accounts, and such other items of information that FGI may deem necessary or appropriate from time to time.
Unless otherwise expressly provided herein or unless FGI otherwise consents, all financial statements and reports furnished to
FGI hereunder shall be prepared and all financial computations and determinations pursuant hereto shall be made in accordance
with GAAP, consistently applied.

 

    	7

    	 

    

 

(j)
Seller has and will file all tax returns required to be filed in any jurisdiction where Seller conducts business and Seller has
paid and will pay all taxes and governmental charges (including taxes and charges imposed with respect to sale of Goods or provision
of services) and furnish to FGI upon request satisfactory proof of payment and compliance with all federal, state and local tax
requirements.

 

(k)
With the exception of those lawsuits disclosed to FGI in writing prior to the date hereof, there are no existing lawsuits against
Seller involving amounts greater than $10,000 and Seller will promptly notify FGI of (i) the filing of any lawsuit against Seller
involving amounts greater than $50,000, and (ii) any attachment or any other legal process levied against Seller.

 

(l)
The Application made or delivered by or on behalf of Seller in connection with this Agreement, and the statements made therein
are true and correct at the time that this Agreement is executed. To the actual knowledge of Seller, there is no fact which Seller
has not disclosed to FGI in writing which could materially adversely affect the properties, business, financial condition or prospects
of Seller, or any of the Purchased Accounts or Collateral, or which is necessary to disclose in order to keep the foregoing representations
and warranties from being misleading.

 

(m)
In no event shall the funds paid to Seller hereunder be used directly or indirectly for personal, family, household or agricultural
purposes.

 

(n)
Seller does business under no trade or assumed names other than specifically listed on Schedule 4(n) attached hereto.

 

(o)
Any invoice or written communication that is issued by Seller to FGI by facsimile transmission is a duplicate of the original.

 

(p)
Any electronic communication of data, whether by e-mail, tape, disk, or otherwise, Seller remits or causes to be remitted to FGI
shall be authentic and genuine.

 

(q)
Seller has obtained all licenses, permits, franchises or other governmental authorizations necessary for the ownership of its
Property and for the conduct of its business.

 

(r)
After giving effect to the transactions contemplated under this Agreement, Seller is solvent, is able to pay its debts as they
become due, and has capital sufficient to carry on its business and all businesses in which it is about to engage, and now owns
property having a value both at fair valuation and at present fair salable value greater than the amount required to pay Seller’s
debts. Seller will not be rendered insolvent by the execution and delivery of this Agreement or by the transactions contemplated
hereunder or thereunder.

 

(s)
Seller shall continue in the business presently operated by it using its best efforts to maintain its customers and goodwill.

 

(t)
Seller shall deliver written notice to FGI promptly upon becoming aware of the existence of (i) any condition or event which constitutes
an Event of Default under this Agreement, specifying the nature and period of existence thereof and what action Seller is taking
(and proposes to take) with respect thereto or (ii) notice of default, oral or written, given to Seller by any creditor for indebtedness
for borrowed money in excess of $50,000.

 

(u)
Seller shall permit any of FGI’s officers or other representatives to visit and inspect upon reasonable notice during business
hours any of the locations of Seller, to examine and audit all of Seller’s books of account, records, reports and other
papers, to make copies and extracts therefrom and to discuss its affairs, finances and accounts with its officers, employees and
independent certified public accountants all at Seller’s expense at the standard rates charged by FGI for such activities,
plus FGI’s reasonable out-of-pocket expenses.

 

    	8

    	 

    

 

(v)
Seller agrees that immediately upon becoming aware of any development or other information outside the ordinary course of business
and excluding matters of a general economic, financial or political nature which would reasonably be expected to have a material
adverse effect the properties, business, financial condition or prospects of Seller it shall give to FGI telephonic notice specifying
the nature of such development or information and such anticipated effect. In addition, such verbal communication shall be confirmed
by written notice thereof to FGI on the same day such verbal communication is made or the next business day thereafter.

 

(w)
Seller will immediately notify FGI in writing in the event that Seller becomes a party to or obtains any rights with respect to
any Commercial Tort Claim. Such notification shall include information sufficient to describe such Commercial Tort Claim, including,
but not limited to, the parties to the claim, the court in which the claim was commenced, the docket number assigned to such claim,
if any, and a detailed explanation of the events that gave rise to the claim. Seller shall execute and deliver to FGI all documents
and/or agreements necessary to grant FGI a security interest in such Commercial Tort Claim to secure the Obligations. Seller authorizes
FGI to file (without Seller’s signature) initial financing statements or amendments, as FGI deems necessary to perfect its
security interest in the Commercial Tort Claim.

 

(x)
Seller shall provide FGI with written notice of any letters of credit for which Seller is the beneficiary. Seller shall execute
and deliver (or cause to be executed or delivered) to FGI, all documents and agreements as FGI may require in order to obtain
and perfect its security interest in such Letter of Credit Rights.

 

(y)
Seller shall not engage in any transaction or series of related transactions pursuant to which (A) a Person or group of Persons
acquire (i) voting securities of Seller constituting greater than 50% of the issued and outstanding voting securities of Seller
and/or entitling such Person(s) to elect a majority of Seller’s board of directors or similar governing body (whether by
merger, consolidation, recapitalization, division, conversion or otherwise) or (ii) all or substantially all of the Seller’s
assets determined on a consolidated basis, or (B) Seller is dissolved or liquidated or otherwise ceases to be in existence in
the form as of the date hereof.

 

(z)
Excepting the endorsement in the ordinary course of business of negotiable instruments for deposit or collection, Seller shall
not become or be liable, directly or indirectly, primary or secondary, matured or contingent, in any manner, whether as guarantor,
surety, accommodation maker, or otherwise, for the existing or future Indebtedness of any kind of any Person.

 

(aa)
Seller shall not: (i) declare or pay or make any forms of distribution or dividend to holders of Seller’s capital stock,
membership interest or other equity interest; (ii) declare or pay any bonus compensation to its officers if an Event of Default
exists or would result from the payment thereof; or (iii) hereafter incur or become liable for any indebtedness other than (A)
indebtedness secured solely by equipment owned by Seller as of the date of this Agreement or indebtedness incurred to finance
the acquisition of any other equipment secured solely by such equipment, provided the aggregate amount of indebtedness incurred
under this clause (A) shall not exceed $800,000 in the aggregate and or (B) any other indebtedness incurred by Seller with the
prior written consent of FGI (which consent will not be unreasonably withheld, delayed or conditioned).

 

(bb)
Seller shall not make or have outstanding loans, advances, extensions of credit or capital contributions to, or investments in,
any Person.

 

(cc)
Seller shall not use FGI’s name in connection with any of its business operations. Nothing herein contained is intended
to permit or authorize Seller to make any contract on behalf of FGI.

 

(dd)
Seller shall not become or be a party to any contract or agreement which at the time of becoming a party to such contract or agreement
materially impairs Seller’s ability to perform under this Agreement, or under any other instrument, agreement or document
to which Seller is a party or by which it is or may be bound.

 

(ee)
Seller shall not amend any license agreements with respect to Inventory without the prior written consent of FGI and which consent
shall not be unreasonably withheld or delayed.

 

Section
5. Notice of Purchase. Seller authorizes FGI to file, and Seller shall execute and deliver to FGI and/or file at such times
and places as FGI may designate, such financing statements, continuations and amendments thereto as are necessary or desirable
to give notice of FGI’s purchase of the Purchased Accounts under the UCC in effect in any applicable jurisdiction and to
perfect FGI’s security interest in Seller’s Collateral as provided in Section 6 below.

 

    	9

    	 

    

 

Section
6. Collateral. In order to secure the payment of all indebtedness and obligations of Seller to FGI (including the Obligations),
in addition to the sale of Purchased Accounts, Seller hereby grants to FGI a security interest in and lien upon all of Seller’s
right, title and interest in and to all of Seller’s Collateral. Seller agrees to comply with all appropriate laws in order
to perfect FGI’s security interest in and to the Collateral and to execute such documents as FGI may, from time to time,
require and to deliver to FGI a list of all locations of its Inventory, Equipment and Goods. Seller shall provide written notice
to FGI of any change in the locations at which it keeps its Inventory, Equipment and Goods at least thirty (30) days prior to
any such change. The occurrence of any Event of Default shall entitle FGI to all of the default rights and remedies (without limiting
the other rights and remedies exercisable by FGI either prior or subsequent to an Event of Default) as available to a Secured
Party under the UCC in effect in any applicable jurisdiction.

 

Section
7. Collection.

 

(a)
Seller shall notify all Account Debtors and take other necessary or appropriate means to insure that all of Seller’s Account(s),
whether or not purchased by FGI, shall be paid directly to FGI at the remittance address or by the wire instructions set forth
below. FGI shall have the right at any time, either before or after the occurrence of an Event of Default and without notice to
Seller, to notify any or all Account Debtors of the assignment to FGI and to direct such Account Debtors to make payment of all
amounts due or to become due to Seller directly to FGI. As to any Account proceeds that do not represent Purchased Accounts, and
so long as no Event of Default has occurred, FGI shall be deemed to have received any such proceeds of Accounts as a pure pass-through
for and on account of Seller; provided, however, FGI may retain, in its sole and absolute discretion, any such amounts as additional
reserves in the Reserve Account. Unless otherwise required by FGI, all invoices of all of Seller’s Accounts shall plainly
state on their face: “All amounts owing under this invoice have been assigned to Faunus Group International, Inc. d/b/a
FGI Finance and all such amounts payable hereunder are payable to Faunus Group International, Inc. d/b/a FGI Finance at the remittance
address or by the wire instructions set forth below:

 

	Wire
    Instructions:	Mailing
    Address:
	Citizens
    Bank	80
    Broad Street
	ABA/Routing
#:	22nd
    Floor
	Swift:	New
    York, NY 10004
	Beneficiary:
    [MamaMancini’s Inc.]	 
	Account
    #: _______	 

 

(b)
FGI, as the sole and absolute owner of the Purchased Accounts, shall have the sole and exclusive power and authority to collect
each such Purchased Account, through legal action or otherwise, and FGI may, in its sole discretion, settle, compromise, or assign
(in whole or in part) any of such Purchased Accounts, or otherwise exercise, to the maximum extent permitted by applicable law,
any other right now existing or hereafter arising with respect to any of such Purchased Accounts.

 

(c)
Notwithstanding anything to the contrary contained herein and without prejudice to FGI’s rights pursuant to this Agreement,
FGI hereby appoints Seller as the agent of FGI, with respect of Purchased Accounts under and in accordance with this Agreement
until notice from FGI to the contrary and for the purpose of administering the accounts of Account Debtors and procuring the collection
of Purchased Accounts for the benefit of FGI. Seller hereby accepts such appointment and undertakes (i) to act promptly and efficiently
in carrying out the tasks in relation to which it is FGI’s agent; (ii) not to hold itself out as an agent of FGI for any
other purpose; and (iii) to adhere to the debt collection procedures of Seller in force at, and notified to and approved by FGI,
on or before the date hereof and to obtain the prior written consent of FGI to any proposed variations to such procedures. FGI
may by notice to Seller withdraw the agency appointment made in this Section 7(c).

 

    	10

    	 

    

 

Section
8. Payments Received by Seller. Should Seller receive payment of all or any portion of any Purchased Account, Seller shall
promptly notify FGI in writing of the receipt of the payment, hold said payment in trust for FGI separate and apart from Seller’s
own property and funds, and shall deliver said payment to FGI within two (2) business days in the identical form in which received
with all necessary endorsements. Should Seller receive any check or other payment instrument with respect to a Purchased Account
or after default any Account and fail to surrender and deliver to FGI said check or payment instrument within two (2) business
days following the date of receipt by Seller, FGI shall be entitled to charge Seller a Misdirected Payment Fee to compensate FGI
for the additional administrative expenses that the parties acknowledge is likely to be incurred as a result of such breach. In
the event any Goods, the sale of which gave rise to a Purchased Account, are returned to or repossessed by Seller, such Goods
shall be held by Seller in trust for FGI, separate and apart from Seller’s own property and subject to FGI’s sole
direction and control.

 

Section
9. Power of Attorney. Seller grants to FGI an irrevocable power of attorney, which grant is coupled with an interest and
with full power of substitution, authorizing and permitting FGI, at its option, with or without notice to Seller to do any or
all of the following: (a) receive, take, assign, deliver, accept and deposit, in the name of FGI or Seller, and endorse the name
of Seller on any and all cash, checks, commercial paper, drafts, remittances or other evidences of payment whatsoever that may
come into the possession of FGI regarding Purchased Accounts or Collateral, including checks received by FGI pursuant to Section
9 hereof; (b) receive, open and dispose of any mail addressed to Seller and put FGI’s address on any statements mailed to
Account Debtors; (c) pay, settle, compromise, prosecute or defend any action, claim, conditional waiver and release, or proceeding
relating to Purchased Accounts or Collateral; (d) upon the occurrence of an Event of Default, notify in the name of the Seller,
the U.S. Post Office to change the address for delivery of mail addressed to Seller to such address as FGI may designate, however,
FGI shall turn over to Seller all such mail not relating to Purchased Accounts or Collateral; (e) file any financing statement
deemed necessary or appropriate by FGI to protect FGI’s interest in and to the Purchased Accounts or Collateral, or under
any provision of this Agreement; (f) effect debits to any demand deposit or other deposit account that Seller maintains at any
bank for any sums due to or from the Seller under this Agreement; and (g) to do any and all other things necessary and proper
in order to carry out the purpose and intent of this Agreement. The authority granted to FGI herein is irrevocable until this
Agreement is terminated and all Obligations are fully satisfied.

 

Section
10. Default and Remedies. An Event of Default shall be deemed to have occurred hereunder and FGI may immediately exercise
its rights and remedies with respect to the Purchased Accounts and the Collateral under this Agreement, upon the happening of
one or more of the following: (a) Seller shall fail to pay as and when due any amount owed to FGI; (b) (i) the commencement of
any action for the dissolution or liquidation of Seller, or the commencement of any proceeding to avoid any transaction entered
into by Seller, or the commencement of any case or proceeding for reorganization or liquidation of Seller’s debts under
the federal bankruptcy code or any other state or federal law, now or hereafter enacted for the relief of debtors, whether instituted
by or against Seller; provided however, that Seller shall have thirty (30) days to obtain the dismissal or discharge
of involuntary proceedings filed against it, it being understood that, notwithstanding the discretionary nature of the facility
described herein, during such thirty (30) day period, FGI shall have no obligations to accept Seller’s offer to sell, assign,
transfer, convey or deliver to FGI all of Seller’s right, title and interest in and to Seller’s Accounts or otherwise
advance any funds hereunder, (ii) Seller makes or proposes in writing, an assignment for the benefit of creditors generally, offers
a composition or extension to creditors, or makes or sends notice of an intended bulk sale of any business or assets now or hereafter
owned or conducted by Seller, or (iii) the appointment of a receiver, liquidator, custodian, trustee or similar official or fiduciary
for Seller or for Seller’s property; (c) Seller shall become insolvent in that its debts are greater than the fair value
of its assets, or Seller is generally not paying its debts as they become due; (d) any involuntary lien, garnishment, attachment
or the like shall be issued against or shall attach to the Purchased Accounts, the Collateral or any portion thereof and the same
is not released within ten (10) days; (e) Seller suffers the entry against it for a final judgment for the payment of money in
excess of $50,000, unless the same is discharged within thirty (30) days after the date of entry thereof or an appeal or appropriate
proceeding for review thereof is taken within such periods and a stay of execution pending such appeal is obtained; (f) Seller
shall breach any covenant, warranty or representation set forth herein or same shall be untrue when made; (g) any report, certificate,
schedule, financial statement, profit and loss statement or other statement furnished by Seller, or by any other person on behalf
of Seller, to FGI is not true and correct in any material respect; (h) Seller shall have a federal or state tax lien filed against
any of its properties, or shall fail to pay any federal or state tax when due (including extensions), or shall fail to file any
federal or state tax form as and when due (including extensions); (i) if a Seller otherwise defaults under the terms of any such
indebtedness if the effect of such default is to enable the holder of such indebtedness to accelerate the payment of Sellers’
obligations, which are the subject thereof, prior to the maturity date or prior to the regularly scheduled date of payment; or
(j) a material adverse change shall have occurred in Seller’s financial conditions, business, operations or prospects (as
determined by FGI

 

    	11

    	 

    

 

in
its commercially reasonable discretion). Upon the occurrence of an Event of Default, all obligations owing to FGI (including the
Obligations) shall become immediately due and owing at the option of FGI (provided upon the occurrence of an Event of Default
under clause (b) above, all such amounts shall become immediately due and payable without further notice or demand) and FGI shall
be entitled to any form of equitable relief that may be appropriate without having to establish any inadequate remedy at law or
other grounds other than to establish that its Collateral is subject to being improperly used, moved, dissipated or withheld from
FGI. FGI shall be entitled to freeze, debit and/or effect a set-off against any fund or account Seller may maintain with any Bank.
In the event FGI deems it necessary to seek equitable relief, including, but not limited to, injunctive or receivership remedies,
as a result of an Event of Default, Seller waives any requirement that FGI post or otherwise obtain or procure any bond. Alternatively,
in the event FGI, in its sole and exclusive discretion, desires to procure and post a bond, FGI may procure and file with the
court a bond in an amount up to and not greater than $10,000 notwithstanding any common or statutory law requirement to the contrary.
Upon FGI’s posting of such bond it shall be entitled to all benefits as if such bond was posted in compliance with state
law. Seller also waives any right it may be entitled to, including an award of attorney’s fees or costs, in the event any
equitable relief sought by and awarded to FGI is thereafter, for whatever reason(s), vacated, dissolved or reversed. All post-judgment
interest shall bear interest at either the contract rate, 18% per annum or such higher rate as may be allowed by law.

 

Section
11. Cumulative Rights; Waivers. All rights, remedies and powers granted to FGI in this Agreement, or in any other instrument
or agreement given to Seller to FGI or otherwise available to FGI in equity or at law, are cumulative and may be exercised singularly
or concurrently with such other rights as FGI may have. These rights may be exercised from time to time as to all or any part
of the Purchased Accounts purchased hereunder or the Collateral as FGI in its sole and absolute discretion may determine. In the
event that any part of this transaction between Seller and FGI is construed to be a loan from FGI to Seller, any advances or payments
made as the Purchase Price for all Purchased Accounts shall be secured by the Purchased Accounts and the Collateral and FGI shall
have all rights and remedies available to FGI in addition to its rights and remedies hereunder. FGI may not be held to have waived
its rights and remedies unless the waiver is in writing and signed by FGI. A waiver by FGI of a right, remedy or default under
this Agreement on one occasion is not a waiver of any right, remedy or default on any subsequent occasion. Any failure by FGI
to exercise, or any delay by FGI of such right or any other right, nor in any manner impair the subsequent exercise by FGI of
any of its rights.

 

Section
12. Notices. Any notice or communication with respect to this Agreement shall be given in writing, sent by (i) personal
delivery, or (ii) expedited delivery service with proof of delivery, or (iii) United States mail, postage prepaid, registered
or certified mail, or (iv) facsimile, addressed to each party hereto at its address set forth below or to such other address or
to the attention of such other person as hereafter shall be designated in writing by the applicable party sent in accordance herewith.
Any such notice or communication shall be deemed to have been given either at the time of personal delivery or, in the case of
delivery service or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or in the
case of facsimile, upon receipt.

 

	FGI
    Finance	MamaMancini’s
    Inc.
	80
    Broad Street	25
    Branca Road
	22nd
    Floor	 
	New
    York, NY 10004	East
    Rutherford, NJ 07073
	Fax:
    (212) 248-3404	Fax:
    201-531-1172

 

Section
13. Term. The Original Term of this Agreement shall be thirty six (36) months from the date of this Agreement, provided
that this Agreement shall be extended automatically for an additional one (1) year for each succeeding term unless written notice
of termination is given by one party hereto to the other party hereto at least sixty (60) days, but not more than ninety (90)
days, prior to the end of the Original Term or any extension thereof. In recognition of among other things, Seller’s indemnification
obligations and FGI’s right to have its attorneys’ fees and other expenses incurred in connection with this Agreement
secured by the Collateral, any such notice of termination, however, and notwithstanding payment in full of all Obligations by
Seller, is conditioned on Seller’s delivery, to FGI, of a general release in a form reasonably satisfactory to FGI in its
sole discretion. Seller understands that this provision constitutes a waiver of its rights under § 9-513 of the UCC. FGI
shall not be required to record any terminations or satisfactions of any of FGI’s liens on the Collateral unless and until
Seller has executed and delivered to FGI said general release and Seller shall have no authority to do so without FGI’s
express written consent. In the event Seller terminates this Agreement within the first 12 months following the commencement of
this Agreement, Seller shall pay to FGI a Termination Fee in the amount of 3.00% of the Facility Amount. In the event that Seller
terminates this Agreement after the first 12 months, but within the first 24 months following the commencement of

 

    	12

    	 

    

 

this
Agreement, Seller shall pay to FGI a Termination Fee in the amount of 2.00% of the Facility Amount. In the event that the Seller
terminates this Agreement after the first 24 months but prior to the end of the Original Term of this Agreement then Seller shall
pay to FGI a Termination Fee in the amount of 1.50% of the Facility Amount. Any termination of this Agreement shall not affect
FGI’s security interest in the Collateral and FGI’s ownership of the Purchased Accounts, and this Agreement shall
continue to be effective, until all transactions entered into and obligations incurred hereunder have been completed and satisfied
in full. Notwithstanding anything to the contrary, and assuming no default by Seller in which event FGI may terminate without
notice, FGI may terminate this Agreement at any time by giving not less than thirty (30) days notice in which event, Seller shall
not be obligated to pay any Termination Fee. Subject to the terms of this Section 13 and in accordance with the terms of this
Agreement, Seller reserves the right to terminate this Agreement upon at least thirty (30) days prior written notice to FGI and
at such time repay all outstanding Obligations and repurchase all but not less than all of the Purchased Accounts outstanding
on FGI’s books.

 

Section
14. Expenses. At closing and from time to time thereafter, Seller will pay upon demand of FGI all reasonable costs, fees
and expenses of FGI in connection with (i) the analysis, negotiation, preparation, execution, administration, delivery and termination
of this Agreement and the documents and instruments referred to herein, and any amendment, amendment and restatement, supplement,
waiver or consent relating hereto or thereto, whether or not any such amendment, amendment and restatement, supplement, waiver
or consent is executed or becomes effective, including search costs, the reasonable fees, expenses and disbursements of counsel
for FGI, reasonable charges of any expert consultant to FGI and reimbursement for premiums incurred by FGI to insure against nonpayment of
the Accounts or other insurable losses to the Collateral, (ii) the enforcement of FGI’s rights hereunder, or the collection
of any payments owing from, Seller under this Agreement or the protection, preservation or defense of the rights of FGI hereunder,
(iii) the enforcement of FGI’s rights with respect to the Accounts, including the collection of any payments owing from
any account debtors with respect to the Accounts (including the reasonable fees, expenses and disbursements of counsel for FGI)
and reimbursement for premiums incurred by FGI to insure against non-payment of any Accounts or other insurable losses to the
Collateral, and (iv) any refinancing or restructuring of the arrangements provided under this Agreement in the nature of a “work-out”
or of any insolvency or bankruptcy proceedings, or otherwise (including the reasonable fees and disbursements of counsel for FGI).
Seller hereby authorizes FGI, at FGI’s sole discretion, to deduct such fees, costs and expenses from the Reserve Account
or may make demand therefore.

 

Section
15. Indemnity. Seller releases
and shall indemnify, defend and hold harmless FGI and its respective officers, shareholders, employees and agents, of and from
any claims, demands, liabilities, obligations, judgments, injuries, losses, damages and costs and expenses (including, without
limitation, reasonable legal fees) resulting from (i) acts or conduct of Seller under, pursuant or related to this Agreement,
(ii) Seller’s breach or violation of any representation, warranty, covenant or undertaking contained in this Agreement,
(iii) Seller’s failure to comply with any or all laws, statutes, ordinances, governmental rules, regulations or standards,
whether federal, state or local, or court or administrative orders or decrees and (iv) any claim by any third party, including
any other creditor of Seller, against FGI arising out of any transaction whether hereunder or in any way related to this Agreement
and all costs, expenses, fines, penalties or other damages resulting therefrom, unless resulting solely from acts or conduct of
FGI constituting willful misconduct or gross negligence.

 

Section
16. Severability. Each and every provision, condition, covenant and representation contained in this Agreement is, and
shall be construed to be, a separate and independent covenant and agreement. If any term or provision of this Agreement shall
to any extent be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby.

 

Section
17. Parties in Interest. All grants, covenants and agreements contained in this Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and assigns; provided, however, that Seller may not delegate or assign any
of its duties or obligations under this Agreement without the prior written consent of FGI. FGI reserves the right to assign its
rights and obligations under this agreement in whole or in part to any person or entity.

 

    	13

    	 

    

 

Section
18. Governing Law: Submission to Process and Venue. This agreement shall be deemed a contract made under the laws of the
State of New York and shall be construed and enforced, along with all matters arising hereunder or related hereto, in accordance
with and governed by the internal laws of the State of New York, without reference to the rules thereof relating to conflicts
of law. Seller hereby irrevocably submits itself to the non-exclusive jurisdiction of the state and federal courts located in
New York, and agrees and consents that service of process may be made upon it in any legal proceeding relating to this agreement,
the purchase of Accounts or any other relationship between FGI and Seller by any means allowed under state or federal law. Any
legal proceeding arising out of or in any way related to this Agreement, the purchase of Accounts or any other relationship between
FGI and Seller shall be brought and litigated in any of the state or federal courts located in the State of New York in any county
in which FGI has a business location, the selection of which shall be in the exclusive discretion of FGI. Seller hereby waives
and agrees not to assert, by way of motion, as a defense or otherwise, that any such proceeding, is brought in any inconvenient
forum or that the venue thereof is improper.

 

Section
19. Complete Agreement. This Agreement, the written documents executed pursuant to this Agreement, if any, and the acknowledgment
delivered in connection herewith set forth the entire understanding and agreement of the parties hereto with respect to the transactions
contemplated herein and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties.
No modification or amendment of or supplement to this Agreement shall be valid or effective unless the same is in writing and
signed by the party against whom it is sought to be enforced.

 

Section
20. Miscellaneous.

 

(a)
Seller acknowledges that there is no, and it will not seek or attempt to establish any, fiduciary relationship between FGI and
Seller, and Seller waives any right to assert, now or in the future, the existence or creation of any fiduciary relationship between
FGI and Seller in any action or proceeding (whether by way of claim, counterclaim, cross claim or otherwise) for damages.

 

(b)
This Agreement shall be deemed to be one of financial accommodation and not assumable by any debtor, trustee or debtor-in-possession
in any bankruptcy proceeding without FGI’s express written consent and may be suspended in the event a petition in bankruptcy
is filed by or against Seller.

 

(c)
In the event Seller’s principals, officers or directors form a new entity, whether corporate, partnership, limited liability
company or otherwise, similar to that of Seller during the term of this Agreement, such entity shall be deemed to have expressly
assumed the obligations due FGI by Seller under this Agreement. Upon the formation of any such entity, FGI shall be deemed to
have been granted an irrevocable power of attorney with authority to execute, on behalf of the newly formed successor business,
a new UCC-1 or UCC-3 financing statement and have it filed with the appropriate secretary of state or UCC filing office. FGI shall
be held-harmless and be relieved of any liability statement or the resulting perfection of a lien in any of the successor entity’s
assets. In addition, FGI shall have the right to notify the successor entity’s account debtors of FGI’s lien rights,
its right to collect all Accounts, and to notify any new FGI or lender who has sought to procure a competing lien of FGI’s
right is in such successor entity’s assets.

 

(d)
Seller expressly authorizes FGI to access the systems of and/or communicate with any third party with respect to the status of
any Goods regarding a Purchased Account, including without limitation warehousemen, bailees, shipping or trucking company in order
to obtain or verify tracking, shipment or delivery status of any Goods regarding a Purchased Account.

 

(e)
Seller acknowledges that the duty to accurately complete each Schedule of Accounts is critical to this Agreement and as such all
obligations with respect thereto must be fulfilled by an authorized representative of Seller and are non-delegable. Seller acknowledges
that it shall remain fully responsible for the accuracy of each Schedule of Accounts delivered to FGI regardless of who is delegated
the responsibility to prepare and/or complete such Schedule of Accounts.

 

(f)
Seller shall indemnify FGI from any loss arising out of the assertion of any Avoidance Claim. Seller shall notify FGI within two
business days of it becoming aware of the assertion of an Avoidance Claim.

 

    	14

    	 

    

 

(g)
Seller agrees to execute any and all forms (i.e. Forms 8821 and/or 2848) that FGI may require in order to enable FGI to obtain
and receive tax information issued by the Department of the Treasury, Internal Revenue Service, or receive refund checks.

 

(h)
Seller will cooperate with FGI in obtaining a control agreement in form and substance satisfactory to FGI with respect to Collateral
consisting of: Deposit Accounts; Investment Property; Letter-of-credit rights; and Electronic chattel paper.

 

(i)
Whenever Seller shall be required to make any payment, or perform any act, on a day which is not a business day, such payment
may be made, or such act may be performed, on the next succeeding business day. Time is of the essence in Seller’s performance
under all provisions of this Agreement and all related agreements and documents.

 

(j)
All warranties, representations, and covenants made by Seller herein, or in any agreement referred to herein or on any certificate,
document or other instrument delivered by it or on its behalf under this Agreement, shall be considered to have been relied upon
by FGI regardless of any investigation made by FGI or on its behalf. All statements in any such certificate or other instrument
prepared and/or delivered for the benefit of FGI shall constitute warranties and representations by FGI hereunder. Except as otherwise
expressly provided herein, all covenants made by Seller hereunder or under any other agreement or instrument shall be deemed continuing
until all Obligations are satisfied in full. All indemnification obligations under this Agreement shall survive the termination
of this Agreement and payment of the Obligations.

 

(k)
FGI, in its sole discretion, shall have the right to announce and publicize the arrangement established hereunder, as it deems
appropriate, by means and media selected by FGI. Such publication may include all pertinent information relating to such arrangement.
The form and content of the published information shall be in the sole discretion of FGI and shall be considered the sole and
exclusive property of FGI. All expenses related to publicizing the financing shall be the sole responsibility of FGI.

 

(l)
The word “including” (and its various forms) means “including without limitation” whenever the context
may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.

 

Section
21. Waiver of Jury Trial, Punitive and Consequential Damages, Etc. Seller and FGI hereby (a) irrevocably waive any right
either may have to a trial by jury in respect of any litigation directly or indirectly at any time arising out of, under or in
connection with this Agreement or any transaction contemplated hereby or associated herewith; (b) Seller and FGI irrevocably waive,
to the maximum extent not prohibited by law, any right it may have to claim or recover in any such litigation any special, exemplary,
punitive or consequential damages, or damages other than, or in addition to, actual damages and Seller hereby releases and exculpates
FGI, its officers, employees and designees, from any liability arising from any acts under this Agreement or in furtherance thereof
whether of omission or commission, and whether based upon any error of judgment or mistake of law or fact, except for willful
misconduct; (c) and Seller certifies that no party hereto nor any representative or agent or counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in the event of litigation, seek to enforce the foregoing
waivers; and (d) Seller acknowledges that FGI has been induced to enter into this Agreement and the transactions contemplated
hereby, in part, as a result of the mutual waivers and certifications contained in this Section.

 

Section
22. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns
of each of the parties. Seller may not transfer, assign or delegate any of its duties or obligations hereunder. Seller acknowledges
and agrees that FGI may at any time, and from time to time, (a) sell participating interests in FGI’s rights hereunder,
and (b) sell, transfer, or assign FGI’s rights hereunder without notice to or the consent of Seller. No rights are intended
to be created hereunder, or under any related agreements or documents for the benefit of any third party donee, creditor or incidental
beneficiary of Seller. Nothing contained in this Agreement shall be construed as a delegation to FGI of Seller’s s duty
of performance, including, without limitation, Seller’s duties under any account or contract with any other Person.

 

    	15

    	 

    

 

Section
23. Delivery by Electronic Means. This Agreement, the agreements referred to herein, and each other agreement or instrument
entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the
extent signed and delivered by electronic means, including by means of unalterable files attached to e-mail communications or
by facsimile, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have
the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party
hereto or to any such agreement or instrument, each other party hereto or thereto shall reexecute original forms thereof and deliver
them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of electronic means to deliver
a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of electronic
means as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

 

Section
24. Interpretation of Agreement. The parties hereto acknowledge and agree that this Agreement and the agreements or instruments
entered into in connection herewith have been negotiated at arm’s-length and among parties equally sophisticated and knowledgeable
in the matters dealt with in this Agreement or in such agreements or instruments. Accordingly, any rule of law or legal decision
that would require interpretation of any ambiguities in this Agreement or the agreements or instruments entered into in connection
herewith against the party that has drafted it is not applicable and is waived. The provisions of this Agreement and the agreements
and instruments entered into in connection herewith shall be interpreted in a reasonable manner to effect the intent of the parties
as set forth herein or therein.

 

SIGNATURES
ON FOLLOWING PAGE

 

    	16

    	 

    

 

In
Witness Whereof, the parties have set their hands and seals on the
day and year first hereinabove written.

 

FGI:

 

	Witness:	 	 	FAUNUS
    GROUP INTERNATIONAL, INC.
	Name:	 	 	 	 
	 	 	 	By:	 
	 	 	 	Name:	David
    M. DiPiero
	 	 	 	Title:	President
	 	 	 	 	 
	SELLER:	 	 	 
	 	 	 	 
	Witness:	 	 	MamaMancini’s
    Inc.
	Name:	 	 	 	
	 	 	 	By:	 
	 	 	 	Name:	Carl
    Wolf
	 	 	 	Title:	Chief
    Executive Officer

 

	STATE
    OF	 	 
	COUNTY
    OF	 	 

 

I
HEREBY CERTIFY that on this day personally appeared before me, officers duly authorized to administer oaths and take acknowledgements,
______________________, as ______________ of Mamamancini’s Inc., a ____________ ____________ who has produced the following
identification: _____________ or ( ) who is personally known to me, and who acknowledged before me that he executed the same for
the purposes therein expressed, as the act and deed of said entity.

 

WITNESS
my hand and official seal in the County and State last aforesaid on this ______ day of ________________, 2013.

 

	 	 	 
	 	Notary
    Public, State of _____________	 
	 	My
    Commission Expires	 

 

    	17

    	 

    

 

Schedule
1

 

Schedule
of Accounts Sold/Bill of Sale

 

	Client’s
Name: MamaMancini’s Inc.	Schedule Number ___________

  

Page
____ of _____                Date ________ 20__

 

	Invoice

        Date
	 	Invoice

        Number
	 	Name
    of Account Debtor	 	Location	 	Invoice

        Amount
	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 

 

ASSIGNMENT:

 

KNOW
ALL MEN BY THESE PRESENTS, that the undersigned for value received has sold transferred and assigned and does hereby sell, transfer
and assign to Faunus Group International, Inc. (hereinafter called the “Buyer”), its successors and assigns, in accordance
with the provision of that certain Sale of Accounts and Security Agreement heretofore duly executed and delivered by the undersigned
and duly accepted by the Buyer, and any amendments thereto (hereinafter called the “Agreement”), each Account, listed
hereon, and all right, title and interest of the undersigned in and to such Account(s) and in and to all merchandise, the sale
of which shall have given rise to such Account(s), including all of the undersigned’s right of stoppage in transit replevin
and reclamation as an unpaid vendor. Each Account is made a part hereof as if attached or incorporated herein for specific terms,
conditions, provisions and description of said Account(s).

 

For
the purpose of inducing the Buyer to purchase such Account(s), the undersigned hereby reaffirms all warranties under the Agreement
applicable to such Account(s) and account debtors. In the event of any breach of any such warranty, the Buyer, its successors
and assigns, shall have such rights, inter alia, as are provided in the Agreement.

 

The
undersigned in his/her business capacity warrants and represents that, with respect to each Account, since the last sale of Accounts
by the undersigned to the Buyer, no merchandise has been returned or rejected, no defense, dispute, claim, offset or counterclaim
has developed or has been asserted with respect to any Account heretofore sold, transferred and assigned by the undersigned to
the Buyer, which has not been or is not contemporaneously being reported in writing by the undersigned to the Buyer.

 

in
witness whereof, the undersigned has hereunto set its hand and seal
this __ day of _____________, 2013.

 

	By:	 	 	Print
    Name:	 	 	Title:	 
	 	(Signature)	 	 	 	 	 	 

 

    	 

    	 

    

 

Schedule
2

 

 

 

Re:
MamaMancini’s Inc.

 

Ladies
and Gentlemen:

 

We
are pleased to advise that to enable MamaMancini’s Inc. to better service its customers, MamaMancini’s Inc., has assigned
its present and future accounts to FGI Finance (“FGI”).

 

To
the extent that you are now indebted or may in the future become indebted to MamaMancini’s Inc., on an account (i.e., invoices)
or a general intangible, payment thereof is to be delivered and made payable only to the account and address listed below. Payment
in any other way will not constitute payment and will not discharge your obligation.

 

The
payments should be wired in USD only the following instructions:

 

	 	Bank
    Name:
	 	Swift
    Address:
	 	ABA:
	 	Credit
    Account #:
	 	Beneficiary:

 

All
checks must be payable to MamaMancini’s Inc. and mailed to the below address:

 

	 		 
	 		 
	 		 

 

This
letter may only be revoked by a writing signed by one of FGI’s officers whose signature may only be relied on if acknowledged
before a notary public.

 

Please
sign and fax a copy of this letter to us at +01 212 248 3404 to verify your receipt and acceptance. You may also
email a signed copy to notification@fgifinance.com.

 

Very
truly yours,

 

FGI
Finance

 

	 	 
	By:	David
    M. DiPiero	 
	Title:	President	 

 

	APPROVED
    AND AGREED TO BY:	 	ASSIGNMENT
    CONFIRMED:
	 	 	 
	MAMAMANCINI’S
    INC.	 	Company:
	 	 	 	 	 
	Signature:	 	Signature:	 
	By:	Carl
    Wolf	 	Print
    Name:	 
	Title:	Chief
    Executive Officer	 	Title:	 
	Date:	 	 	Date:

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