Document:

Exhibit

Exhibit  4.02

SUPPLEMENTAL INDENTURE
(First Mortgage Bonds)

SOUTHWESTERN PUBLIC SERVICE COMPANY

TO

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

	
					
	 
	 
	 
	 
	 

This Instrument Grants A Security Interest By A Utility.

This Instrument Contains After-Acquired Property Provisions.

The following addresses for the parties to this Supplemental Indenture No. 4 are set out in Section 108 of the Indenture hereinafter referred to:

Trustee:    Company:

U.S. Bank National Association    Southwestern Public Service Company
U.S. Bank Corporate Trust Services    Tyler at Sixth Street
60 Livingston Avenue, EP-MN-WS3C    Amarillo, Texas  79101
St. Paul, MN  55107-2292
Facsimile No. 651-495-8097
Attention: Joshua A. Hahn
	
					
	 
	 
	 
	 
	 

Supplemental Indenture No. 4

Dated as of August 1, 2016

Supplemental to the Indenture
dated as of August 1, 2011

Filed as Texas Utility Security Instrument File No. 11-0022610194
as supplemented by Supplemental Indentures filed with the Texas Secretary of State

Filed with New Mexico Secretary of State on August 2, 2011, as Public Utility Filing No. 599,
as supplemented by Supplemental Indentures filed with the New Mexico Secretary of State
	
					
	 
	 
	 
	 
	 

Establishing the Securities of Series No. 4,
Designated 3.40% First Mortgage Bonds, Series No. 4 due 2046

SUPPLEMENTAL INDENTURE NO. 4, dated as of August 1, 2016 between SOUTHWESTERN PUBLIC SERVICE COMPANY, a corporation duly organized and existing under the laws of the State of New Mexico (hereinafter sometimes called the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as trustee (hereinafter sometimes called the “Trustee”) under the Indenture, dated as of August 1, 2011 (hereinafter called the “Original Indenture”), as previously supplemented and as further supplemented by this Supplemental Indenture No. 4.  The Original Indenture and any and all indentures and all other instruments supplemental thereto are hereinafter sometimes collectively called the “Indenture.”

Recitals of the Company

The Original Indenture was authorized, executed and delivered by the Company to provide for the issuance from time to time of its Securities (such term and all other capitalized terms used herein without definition having the meanings assigned to them in the Original Indenture), to be issued in one or more series as contemplated therein, and to provide security for the payment of the principal of and premium, if any, and interest, if any, on the Securities.  The Original Indenture has been filed in the office of the Secretary of State of the State of New Mexico and in the office of the Secretary of State of the State of Texas, and notices with respect to such filings have been recorded in each county in New Mexico and each county in Texas in which the Company owns real property that is used or intended to be used in or in connection with the Electric Utility Business, as more fully set forth in Schedule A hereto.

The Company has heretofore executed and delivered to the Trustee the Supplemental Indentures referred to in Schedule B for the purpose of establishing a series of securities.

The Company desires to establish a new series of Securities to be designated “3.40% First Mortgage Bonds, Series No. 4 due 2046,” such series of Securities to be hereinafter sometimes called “Series No. 4.”

The Company has duly authorized the execution and delivery of this Supplemental Indenture No. 4 to establish the Securities of Series No. 4 and has duly authorized the issuance of such Securities; and all acts necessary to make this Supplemental Indenture No. 4 a valid agreement of the Company, and to make the Securities of Series No. 4 valid obligations of the Company, have been performed.

Granting Clauses

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE NO. 4 WITNESSETH, that, in consideration of the premises and of the purchase of the Securities by the Holders thereof, and in order to secure the payment of the principal of and premium, if any, and interest, if any, on all Securities from time to time Outstanding and the performance of the covenants contained therein and in the Indenture and to declare the terms and conditions on which such Securities are secured, the Company hereby grants, bargains, sells, releases, conveys, assigns, transfers, mortgages, pledges, sets over and confirms to the Trustee, and grants to the Trustee a security interest in and lien on, the following:

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Granting Clause First

All right, title and interest of the Company, as of the date of the execution and delivery of this Supplemental Indenture No. 4, in and to all property (other than Excepted Property), real, personal and mixed, located in the State of Texas or in the State of New Mexico and used or intended to be used in or in connection with the Electric Utility Business (whether or not such use is the sole use of such property), including all right, title and interest of the Company in and to the following property (other than Excepted Property) so located and so used or intended to be so used:  (a) all real property owned in fee, easements, servitudes, rights of way and other rights and interests in or relating to real property used or intended to be used in or in connection with the Electric Utility Business or relating to the occupancy or use of such real property, including but not limited to that described in Schedule C hereto; (b) all plants, generators, turbines, engines, boilers, fuel handling and transportation facilities, air and water pollution control and sewage and solid waste disposal facilities, whether or not control or disposal of such substances is the exclusive function or purpose of such facilities, and other machinery and facilities for the generation of electric energy; (c) all switchyards, lines, towers, substations, transformers and other machinery and facilities for the transmission of electric energy; (d) all lines, poles, conduits, conductors, meters, regulators and other machinery and facilities for the distribution of electric energy; (e) all buildings, offices, warehouses and other structures used or intended to be used in or in connection with the Electric Utility Business; (f) all pipes, cables, insulators, ducts, tools, computers and other data processing and/or storage equipment and other equipment, apparatus and facilities used or intended to be used in or in connection with the Electric Utility Business; (g) any or all of the foregoing properties in the process of construction; and (h) all other property, of whatever kind and nature, ancillary to or otherwise used or intended to be used in conjunction with any or all of the foregoing or otherwise, directly or indirectly, in furtherance of the Electric Utility Business;

Granting Clause Second

Subject to the applicable exceptions permitted by Section 709(d), Section 1203 and Section 1205 of the Original Indenture, all right, title and interest of the Company in and to all property (other than Excepted Property) of the kind and nature described in Granting Clause First which may be hereafter acquired by the Company, it being the intention of the Company that all such property acquired by the Company after the date of the execution and delivery of this Supplemental Indenture No. 4 shall be as fully embraced within and subjected to the Lien hereof as if such property were owned by the Company as of the date of the execution and delivery of this Supplemental Indenture No. 4;

Granting Clause Third

All other property of whatever kind and nature subjected or required to be subjected to the Lien of the Indenture by any of the provisions thereof;

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Excepted Property

Expressly excepting and excluding, however, from the Lien and operation of the Indenture all Excepted Property of the Company, whether now owned or hereafter acquired;

TO HAVE AND TO HOLD all such property, real, personal and mixed, unto the Trustee, its successors in trust and their assigns forever;

SUBJECT, HOWEVER, to (a) Existing Liens, (b) Acquisition Liens, (c) Retained Interests and (d) any other Permitted Liens;

IN TRUST, NEVERTHELESS, for the equal and ratable benefit and security of the Holders from time to time of all Outstanding Securities without any priority of any such Security over any other such Security;

PROVIDED, HOWEVER, that the right, title and interest of the Trustee in and to the Mortgaged Property shall cease, terminate and become void in accordance with, and subject to the conditions set forth in, Article Eight of the Original Indenture; otherwise the Indenture, and the estate and rights thereby granted shall be and remain in full force and effect; and

THE PARTIES HEREBY FURTHER COVENANT AND AGREE as follows:

ARTICLE ONE

Securities of Series No. 4

There are hereby established the Securities of Series No. 4, which shall have the terms and characteristics set forth below (the lettered subdivisions set forth below corresponding to the lettered subdivisions of Section 301 of the Original Indenture):

(a)the title of the Securities of Series No. 4 shall be “3.40% First Mortgage Bonds, Series No. 4 due 2046”;

(b)the Securities of Series No. 4 shall initially be authenticated and delivered in the aggregate principal amount of $300,000,000.  The Securities of Series No. 4 may be reopened and additional Securities of Series No. 4 may be issued in excess of the amount initially authenticated and delivered, provided that such additional Securities of Series No. 4 will contain the same terms (including the Stated Maturity and interest rate), except for the public offering price and issue date, as the other Securities of Series No. 4. Any such additional Securities of Series No. 4, together with the Securities of Series No. 4 initially authenticated, shall constitute a single series for purposes of the Indenture and shall be limited to an aggregate principal amount of $800,000,000;

(c)interest on the Securities of Series No. 4 shall be payable to the Persons in whose names such Securities (or one or more Predecessor Securities) are registered at the close of 

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business on the Regular Record Date for such interest, except as otherwise expressly provided in the form of such Securities attached as Exhibit A hereto;

(d)the principal of the Securities of Series No. 4 shall be payable on August 15, 2046, the Stated Maturity for Series No. 4;

(e)the Securities of Series No. 4 shall bear interest at a rate of 3.40% per annum; interest shall accrue on the Securities of Series No. 4 from August 12, 2016 or the most recent date to which interest has been paid or duly provided for; the Interest Payment Dates for such Securities shall be February 15 and August 15 in each year, commencing February 15, 2017 and the Regular Record Dates with respect to the Interest Payment Dates for such Securities shall be February 1 and August 1 in each year, respectively (whether or not a Business Day);

(f)the Corporate Trust Office of U.S. Bank National Association in New York, New York shall be the place at which (i) the principal of, premium, if any, and interest, if any, on the Securities of Series No. 4 shall be payable, (ii) registration of transfer of such Securities may be effected, (iii) exchanges of such Securities may be effected and (iv) notices and demands to or upon the Company in respect of such Securities and the Indenture may be served; and U.S. Bank National Association shall be the Security Registrar for such Securities; provided, however, that the Company reserves the right to change, by one or more Officer’s Certificates, any such place or the Security Registrar; and provided, further, that the Company reserves the right to designate, by one or more Officer’s Certificates, its office in Minneapolis, Minnesota as any such place or itself as the Security Registrar;

(g)the Securities of Series No. 4 shall be redeemable at the option of the Company at any time prior to their maturity at the redemption prices specified in the form of such Securities attached as Exhibit A hereto;

(h)not applicable;

(i)the Securities of Series No. 4 shall be issuable in denominations of $1,000 and multiples of $1,000 in excess thereof;

(j)not applicable;

(k)not applicable;

(l)not applicable;

(m)not applicable;

(n)not applicable;

(o)not applicable;

(p)not applicable;

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(q)the Securities of Series No. 4 are to be initially registered in the name of Cede & Co., as nominee for The Depository Trust Company (the “Depositary”).  Such Securities shall not be transferable or exchangeable, nor shall any purported transfer be registered, except as follows:

		
	(i)
	such Securities may be transferred in whole, and appropriate registration of transfer effected, if such transfer is by such nominee to the Depositary, or by the Depositary to another nominee thereof, or by any nominee of the Depositary to any other nominee thereof, or by the Depositary or any nominee thereof to any successor securities depositary or any nominee thereof; and

		
	(ii)
	such Securities may be exchanged for definitive Securities registered in the respective names of the beneficial holders thereof, and thereafter shall be transferable without restriction, if:

		
	(A)
	the Depositary, or any successor securities depositary, shall have notified the Company and the Trustee that it is unwilling or unable to continue to act as securities depositary with respect to such Securities or the Depositary has ceased to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, and the Trustee shall not have been notified by the Company within ninety (90) days of the identity of a successor securities depositary with respect to such Securities; or

		
	(B)
	the Company shall have delivered to the Trustee a Company Order to the effect that such Securities shall be so exchangeable on and after a date specified therein; or

		
	(C)
	(1)  an Event of Default shall have occurred and be continuing, (2) the Trustee shall have given notice of such Event of Default pursuant to Section 1002 of the Original Indenture and (3) there shall have been delivered to the Company and the Trustee an Opinion of Counsel to the effect that the interests of the beneficial owners of such Securities in respect thereof will be materially impaired unless such owners become Holders of definitive Securities;

(r)not applicable;

(s)no service charge shall be made for the registration of transfer or exchange of the Securities of Series No. 4; provided, however, that the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with the exchange or transfer;

(t)not applicable; and

		
	(u)
	(i)  If the Company shall have caused the Company’s indebtedness in respect of any Securities of Series No. 4 to have been satisfied and discharged prior to the 

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Maturity of such Securities, as provided in Section 801 of the Original Indenture, the Company shall, promptly after the date of such satisfaction and discharge, give a notice to each Person who was a Holder of any of such Securities on such date stating (A)(1) the aggregate principal amount of such Securities and (2) the aggregate amount of any money (other than amounts, if any, deposited in respect of accrued interest on such Securities) and the aggregate principal amount of, the rate or rates of interest on, and the aggregate fair market value of, any Eligible Obligations deposited pursuant to Section 801 of the Original Indenture with respect to such Securities and (B) that the Company will provide (and the Company shall promptly so provide) to such Person, or any beneficial owner of such Securities holding through such Person (upon written request to the Company sent to an address specified in such notice), such other information as such Person or beneficial owner, as the case may be, reasonably may request in order to enable it to determine the federal income tax consequences to it resulting from the satisfaction and discharge of the Company’s indebtedness in respect of such Securities.  Thereafter, the Company shall, within forty-five (45) days after the end of each calendar year, give to each Person who at any time during such calendar year was a Holder of such Securities a notice containing (X) such information as may be necessary to enable such Person to report its income, gain or loss for federal income tax purposes with respect to such Securities or the assets held on deposit in respect thereof during such calendar year or the portion thereof during which such Person was a Holder of such Securities, as the case may be (such information to be set forth for such calendar year as a whole and for each month during such year) and (Y) a statement to the effect that the Company will provide (and the Company shall promptly so provide) to such Person, or any beneficial owner of such Securities holding through such Person (upon written request to the Company sent to an address specified in such notice), such other information as such Person or beneficial owner, as the case may be, reasonably may request in order to enable it to determine its income, gain or loss for federal income tax purposes with respect to such Securities or such assets for such year or portion thereof, as the case may be.  The obligation of the Company to provide or cause to be provided information for purposes of income tax reporting by any Person as described in the first two sentences of this paragraph shall be deemed to have been satisfied to the extent that the Company has provided or caused to be provided substantially comparable information pursuant to any requirements of the Internal Revenue Code of 1986, as amended from time to time (the “Code”) and United States Treasury regulations thereunder.

		
	(ii)
	Notwithstanding the provisions of subparagraph (i) above, the Company shall not be required to give any notice specified in such subparagraph or to otherwise furnish any of the information contemplated therein if the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Securities will not recognize income, gain or loss for federal income tax purposes as a result of the satisfaction and discharge of the Company’s indebtedness in respect of such Securities and such Holders will be subject to federal income taxation on 

7

the same amounts and in the same manner and at the same times as if such satisfaction and discharge had not occurred.

		
	(iii)
	Anything in this clause (u) to the contrary notwithstanding, the Company shall not be required to give any notice specified in subparagraph (i) or to otherwise furnish the information contemplated therein or to deliver any Opinion of Counsel contemplated by subparagraph (ii) if the Company shall have caused Securities of Series No. 4 to be deemed to have been paid for purposes of the Indenture, as provided in Section 801 of the Original Indenture, but shall not have effected the satisfaction and discharge of its indebtedness in respect of such Securities pursuant to such Section.

The Securities of Series No. 4 shall be substantially in the form attached hereto as Exhibit A and shall have such further terms as are set forth in such form.

ARTICLE TWO

Miscellaneous Provisions

This Supplemental Indenture No. 4 is a supplement to the Original Indenture.  As previously supplemented and further supplemented by this Supplemental Indenture No. 4, the Original Indenture is in all respects ratified, approved and confirmed, and the Original Indenture, all previous supplements thereto and this Supplemental Indenture No. 4 shall together constitute one and the same instrument.

If any provision of this Supplemental Indenture No. 4 limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act through operation of Section 318(c), such imposed duties shall control.

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture No. 4 to be duly executed as of the day and year first above written.

    
	
			
	 
	 
	SOUTHWESTERN PUBLIC SERVICE

	 
	 
	COMPANY

	 
	 
	 

	 
	By:
	/s/ Brian J. Van Abel

	 
	 
	Name:   Brian J. Van Abel

	 
	 
	Its:         Vice President and Treasurer

	 
	 
	 

STATE OF MINNESOTA        )
) ss.
COUNTY OF HENNEPIN        )

This instrument was acknowledged before me on the 3rd day of August 2016, by Brian J. Van Abel, the Vice President and Treasurer of Southwestern Public Service Company, a New Mexico corporation, on behalf of said corporation.

	
			
	 
	 
	/s/ Sharon M. Quellhorst

	 
	 
	Name:   Sharon M. Quellhorst

	 
	 
	Notary Public, State of Minnesota

	 
	 
	My commission expires: January 31, 2020

    

(Seal, if any)

9

	
			
	 
	 
	U.S. BANK NATIONAL ASSOCIATION,

	 
	 
	  Trustee

	 
	 
	 

	 
	By:
	/s/ Joshua A. Hahn

	 
	 
	Name:  Joshua A. Hahn

	 
	 
	Its:       Vice President

	 
	 
	 

STATE OF MINNESOTA    )
) ss.
COUNTY OF RAMSEY    )

This instrument was acknowledged before me on the 2nd day of August 2016, by Joshua A. Hahn, a Vice President of U.S. Bank National Association, a national banking association, on behalf of said national banking association.

	
			
	 
	 
	/s/ Judy A. Galberth

	 
	 
	Name:   Judy A. Galberth

	 
	 
	Notary Public, State of Minnesota

	 
	 
	My commission expires: January 31, 2021

    
(Seal, if any)

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EXHIBIT A

FORM OF SECURITY

(See legend at the end of this Security for
restrictions on transfer)

SOUTHWESTERN PUBLIC SERVICE COMPANY
3.40% First Mortgage Bond, Series No. 4 due 2046

	
				
	Original Interest Accrual Date:
	 
	[                   ]
	 

	Interest Rate:
	 
	3.40% per annum
	 

	Stated Maturity:
	 
	August 15, 2046
	 

	Interest Payment Dates:
	 
	February 15 and August 15
	 

	Regular Record Dates:
	 
	February 1 and August 1
	 

	CUSIP No.:
	 
	845743BQ5
	 

This Security is not a Discount Security
within the meaning of the within-mentioned Indenture

__________________________

	
			
	Principal Amount
	 
	Registered No.

	 
	 
	 

	$
	 
	 

SOUTHWESTERN PUBLIC SERVICE COMPANY, a corporation duly organized and existing under the laws of the State of New Mexico (herein called the “Company,” which term includes any successor corporation under the Indenture referred to below), for value received, hereby promises to pay to

, or registered assigns, the principal sum of

Dollars on the Stated Maturity specified above, and to pay interest thereon from the Original Interest Accrual Date specified above or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on the Interest Payment Dates specified above in each year, commencing February 15, 2017 and at Maturity, at the Interest Rate per annum specified above, until the principal hereof is paid or duly provided for.  The interest so payable, and paid or duly provided for, on any Interest Payment Date shall, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date specified above (whether or not a Business Day) next preceding such Interest Payment Date.  Notwithstanding the foregoing, interest payable at Maturity shall be paid to the Person to whom principal shall be paid.  Except as otherwise provided in said Indenture, any such interest not so paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice of which shall be given to 

Holders of Securities of this series not less than 15 days prior to such Special Record Date, or be paid in such other manner as permitted by the Indenture.

Payment of the principal of this Security and interest hereon at Maturity shall be made upon presentation of this Security at the Corporate Trust Office of U.S. Bank National Association in New York, New York, or at such other office or agency as may be designated for such purpose by the Company from time to time.  Payment of interest on this Security (other than interest at Maturity) shall be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, except that if such Person shall be a securities depositary, such payment may be made by such other means in lieu of check as shall be agreed upon by the Company, the Trustee and such Person.  Payment of the principal of and interest on this Security, as aforesaid, shall be made in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and issuable in one or more series under and equally secured by an Indenture, dated as of August 1, 2011 (such Indenture as originally executed and delivered and as supplemented or amended from time to time thereafter, together with any constituent instruments establishing the terms of particular Securities, being herein called the “Indenture”), between the Company and U.S. Bank National Association as trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the property mortgaged, pledged and held in trust, the nature and extent of the security and the respective rights, limitations of rights, duties and immunities of the Company, the Trustee and the Holders of the Securities thereunder and of the terms and conditions upon which the Securities are, and are to be, authenticated and delivered and secured.  The acceptance of this Security shall be deemed to constitute the consent and agreement by the Holder hereof to all of the terms and provisions of the Indenture.  This Security is one of the series designated above.

If any Interest Payment Date, any Redemption Date or the Stated Maturity shall not be a Business Day (as hereinafter defined), payment of the amounts due on this Security on such date may be made on the next succeeding Business Day; and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on such amounts for the period from and after such Interest Payment Date, such Redemption Date or Stated Maturity, as the case may be, to such Business Day.

This Security shall be redeemable at the option of the Company at any time prior to February 15, 2046, in whole or in part, at a “make whole” redemption price equal to the greater of (1) 100% of the principal amount of this Security being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on this Security, or portion hereof, being redeemed (excluding the portion of any such interest accrued to but excluding the Redemption Date), discounted to but excluding the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 20 basis points plus, in each case, accrued and unpaid interest thereon to but excluding the Redemption Date.  This Security shall be redeemable at the option of the Company at any time 

Exhibit A-2

on or after February 15, 2046, in whole or in part, at 100% of the principal amount of this Security being redeemed plus accrued and unpaid interest thereon to but excluding the Redemption Date.

“Comparable Treasury Issue” means the U.S. Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of this Security that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of this Security.

“Comparable Treasury Price” means (1) the average of the Reference Treasury Dealer Quotations for the Redemption Date, after excluding the highest and lowest Reference Treasury Dealer Quotations for the Redemption Date, or (2) if the Trustee obtains fewer than four Reference Treasury Dealer Quotations, the average of all of the Reference Treasury Dealer Quotations.

“Independent Investment Banker” means Keybanc Capital Markets Inc., Mizuho Securities USA Inc. or U.S. Bancorp Investments, Inc., or their respective successors or, if such firms or successors are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee after consultation with the Company.

“Primary Treasury Dealer” means any primary U.S. Government securities dealer in the United States.

“Reference Treasury Dealer” means (1) Mizuho Securities USA Inc., a primary treasury dealer designated by each of Keybanc Capital Markets Inc. and U.S. Bancorp Investments, Inc. and any other Primary Treasury Dealer designated by, and not affiliated with, Keybanc Capital Markets Inc., Mizuho Securities USA Inc. or U.S. Bancorp Investments, Inc., or their respective successors, provided, however, that if any of the foregoing or any of their respective designees ceases to be a Primary Treasury Dealer, the Company will appoint another Primary Treasury Dealer as a substitute and (2) any other Primary Treasury Dealer selected by the Company after consultation with an Independent Investment Banker.

“Reference Treasury Dealer Quotations” means, for any Reference Treasury Dealer and any Redemption Date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by the Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding the Redemption Date.

“Treasury Yield” means, for any Redemption Date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under 

Exhibit A-3

the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the remaining term, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue will be determined and the Treasury Yield will be interpolated or extrapolated from such yields on a straight line basis, rounding to the nearest month); or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.  The Treasury Yield will be calculated on the third Business Day preceding the Redemption Date.

If an Event of Default shall occur and be continuing, the principal of this Security may be declared due and payable in the manner and with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as therein provided, the Trustee to enter into one or more supplemental indentures for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of all series then Outstanding under the Indenture, considered as one class; provided, however, that if there shall be Securities of more than one series Outstanding under the Indenture and if a proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such series, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series so directly affected, considered as one class, shall be required; and provided, further, that if the Securities of any series shall have been issued in more than one Tranche and if the proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all Tranches so directly affected, considered as one class, shall be required; and provided, further, that the Indenture permits the Trustee to enter into one or more supplemental indentures for limited purposes without the consent of any Holders of Securities.  The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities then Outstanding, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

As provided in the Indenture and subject to certain limitations therein set forth, this Security or any portion of the principal amount hereof will be deemed to have been paid for all purposes of the Indenture and to be no longer Outstanding thereunder, and, at the election of the Company, the Company’s entire indebtedness in respect thereof will be satisfied and discharged, if there has been irrevocably deposited with the Trustee or any Paying Agent (other than the Company), in trust, money in an amount which will be sufficient and/or Eligible Obligations, the 

Exhibit A-4

principal of and interest on which when due, without regard to any reinvestment thereof, will provide moneys which, together with moneys so deposited, will be sufficient to pay when due the principal of and interest on this Security when due.

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the corporate office of U.S. Bank National Association in New York, New York, or such other office or agency as may be designated by the Company from time to time, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series of authorized denominations and of like tenor and aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities of this series are issuable only as registered Securities, without coupons, and in denominations of $1,000 and multiples of $1,000 in excess thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of the same series, of any authorized denominations, as requested by the Holder surrendering the same, and of like tenor upon surrender of the Security or Securities to be exchanged at the office of U.S. Bank National Association in New York, New York, or such other office or agency as may be designated by the Company from time to time.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

The Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York (including without limitation Section 5-1401 of the New York General Obligations Law or any successor to such statute), except to the extent that the Trust Indenture Act of 1939, as then in effect or any successor statute shall be applicable and except to the extent that the law of any jurisdiction wherein any portion of the property mortgaged pursuant to the Indenture or any indenture supplemental thereto is located shall mandatorily govern the attachment, perfection, priority or enforcement of the lien of the Indenture and all indentures supplemental thereto with respect to such portion of the mortgaged property.

As used herein, “Business Day” means any day, other than a Saturday or Sunday, that is not a day on which the offices of the Trustee in The City of New York, New York, or other city in which is located any office or agency maintained for the payment of principal or interest on this Security, are generally authorized or required by law or executive order to remain closed.  

Exhibit A-5

All other terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

As provided in the Indenture, no recourse shall be had for the payment of the principal of or premium, if any, or interest on any Securities, or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under the Indenture, against, and no personal liability whatsoever shall attach to, or be incurred by, any incorporator, shareholder, officer or director, as such, past, present or future of the Company or of any predecessor or successor corporation (either directly or through the Company or a predecessor or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that the Indenture and all the Securities are solely corporate obligations and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of the Indenture and the issuance of the Securities.

Unless the certificate of authentication hereon has been executed by the Trustee or an Authenticating Agent by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

Exhibit A-6

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
	
			
	 
	 
	SOUTHWESTERN PUBLIC SERVICE

	 
	 
	COMPANY

	 
	 
	 

	 
	By:
	 

	 
	Name:
	 

	 
	Its:
	 

	 
	 
	 

CERTIFICATE OF AUTHENTICATION

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

Dated: 

	
			
	 
	 
	US BANK NATIONAL ASSOCIATION

	 
	 
	as Trustee

	 
	 
	 

	 
	By:
	 

	 
	 
	Authorized Officer

	 
	 
	 

	 
	 
	 

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York Corporation (“DTC”), to the Company or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

This Security may not be transferred or exchanged, nor may any purported transfer be registered, except (i) this Security may be transferred in whole, and appropriate registration of transfer effected, if such transfer is by Cede & Co., as nominee for DTC (the “Depositary”), to the Depositary, or by the Depositary to another nominee thereof, or by any nominee of the Depositary to any other nominee thereof, or by the Depositary or any nominee thereof to any successor securities depositary or any nominee thereof; and (ii) this Security may be exchanged for definitive Securities registered in the respective names of the beneficial holders hereof, and thereafter shall be transferable without restrictions 

Exhibit A-7

if:  (A) the Depositary, or any successor securities depositary, shall have notified the Company and the Trustee that it is unwilling or unable to continue to act as securities depositary with respect to the Securities and the Trustee shall not have been notified by the Company within ninety (90) days of the identity of a successor securities depositary with respect to the Securities; or (B) the Company shall have delivered to the Trustee a Company Order to the effect that the Securities shall be so exchangeable on and after a date specified therein or (C) (1) an Event of Default shall have occurred and be continuing, (2) the Trustee shall have given notice of such Event of Default pursuant to Section 1002 of the Original Indenture and (3) there shall have been delivered to the Company and the Trustee an Opinion of Counsel to the effect that the interests of the beneficial owners of such Securities in respect thereof will be materially impaired unless such owners become Holders of definitive Securities.

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto

	
			
	[please insert social security or other identifying number of assignee]

	 
	 
	 

	 
	 
	 

	[please print or typewrite name and address of assignee]

the within Security of SOUTHWESTERN PUBLIC SERVICE COMPANY and does hereby irrevocably constitute and appoint              , Attorney, to transfer said Security on the books of the within-mentioned Company, with full power of substitution in the premises.

Dated:                         

Notice: The signature to this assignment must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatsoever.

Exhibit A-8

SCHEDULE A

The Indenture dated as of August 1, 2011, granted by Southwestern Public Service Company to U.S. Bank National Association, Trustee, was filed with the Secretary of State of the State of Texas on August 2, 2011 as Utility Security Instrument No. 11-0022610194.
In accordance with Texas Business and Commerce Code Section 261.011, a Notice of Utility Security Instrument Affecting Real Property was thereafter recorded in each Texas county in which any of the Mortgaged Property consisting of real property was located as of the Effective Date of such Indenture. The following table sets forth recording information relating to the recordation, in each of the specified Texas counties, of such Notice of Utility Security Instrument Affecting Real Property:

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	 
	 
	 
	 
	 

	Andrews
	8/3/11
	112770
	N/A
	N/A

	Armstrong
	8/3/11
	2011276
	53
	790

	Bailey
	8/3/11
	201100016286
	N/A
	N/A

	Borden
	8/3/11
	111124
	N/A
	N/A

	Briscoe
	8/3/11
	11271
	N/A
	N/A

	Carson
	8/3/11
	1100000862
	N/A
	N/A

	Castro
	8/3/11
	59278
	335
	796

	Cochran
	8/3/11
	13897
	N/A
	N/A

	Cottle
	8/3/11
	2011-291
	194
	708

	Crosby
	8/3/11
	235843
	N/A
	N/A

	Dallam
	8/2/11
	164351
	149
	384

	Deaf Smith
	8/3/11
	1493
	N/A
	N/A

	Ector
	8/3/11
	201100011005
	N/A
	N/A

	Floyd
	8/3/11
	110857
	N/A
	N/A

	Foard
	8/3/11
	68419
	247
	71

	Gaines
	8/3/11
	20113945
	N/A
	N/A

	Garza
	8/3/11
	111229
	N/A
	N/A

Schedule A-1

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	Gray
	8/3/11
	19194
	N/A
	N/A

	Hale
	8/3/11
	2011002855
	N/A
	N/A

	Hansford
	8/3/11
	78454
	382
	511

	Hartley
	8/3/11
	100087
	N/A
	N/A

	Hemphill
	8/3/11
	59371
	N/A
	N/A

	Hockley
	8/3/11
	2996
	N/A
	N/A

	Hutchinson
	8/3/11
	343845
	1664
	137

	Lamb
	8/3/11
	1442
	N/A
	N/A

	Lipscomb
	8/3/11
	N/A
	502
	782

	Lubbock
	8/3/11
	2011026116
	N/A
	N/A

	Lynn
	8/3/11
	20112298
	N/A
	N/A

	Midland
	8/3/11
	15266
	N/A
	N/A

	Moore
	8/2/11
	176902
	702
	18

	Motley
	8/3/11
	N/A
	102
	237

	Ochiltree
	8/3/11
	95434
	N/A
	N/A

	Oldham
	8/3/11
	11429
	N/A
	N/A

	Parmer
	8/3/11
	51211
	N/A
	N/A

	Potter
	8/2/11
	1200092
	N/A
	N/A

	Randall
	8/2/11
	2011012189
	N/A
	N/A

	Roberts
	8/3/11
	44416
	N/A
	N/A

	Sherman
	8/3/11
	23551
	297
	756

	Swisher
	8/3/11
	2011-0678
	392
	314

	Terry
	8/3/11
	252458
	N/A
	N/A

	Wheeler
	8/3/11
	N/A
	640
	738

Schedule A-2

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	Wilbarger
	8/3/11
	112766
	636
	602

	Yoakum
	8/3/11
	20111463
	N/A
	N/A

Schedule A-3

The Indenture dated as of August 1, 2011, granted by Southwestern Public Service Company to U.S. Bank National Association, Trustee, was filed with the Secretary of State of the State of New Mexico on August 2, 2011 under the Public Utility Act, receiving Public Utility Filing No. 599. Concurrently with such filing, a Uniform Commercial Code financing statement, to which a copy of such Indenture was appended as an exhibit, was filed in the Uniform Commercial Code records of the Secretary of State of the State of New Mexico on August 2, 2011 as UCC Filing No. 20110012866J.
In accordance with New Mexico Statutes Annotated, 1978, Section 62‐13‐11, a Notice of Filing of Indenture with New Mexico Secretary of State, to which a copy of such Indenture was appended as an exhibit, was thereafter recorded in each New Mexico county in which any of the Mortgaged Property consisting of real property was located as of the Effective Date of such Indenture. The following table sets forth recording information relating to the recordation, in each of the specified New Mexico counties, of such Notice of Filing of Indenture with New Mexico Secretary of State:

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	 
	 
	 
	 
	 

	Chaves
	8/3/11
	340593
	N/A
	N/A

	Curry
	8/3/11
	110005245
	N/A
	N/A

	Eddy
	8/3/11
	1107879
	N/A
	N/A

	Lea
	8/3/11
	33578
	N/A
	N/A

	Quay
	8/3/11
	201108030006
	N/A
	N/A

	Roosevelt
	8/3/11
	20112258
	N/A
	N/A

Schedule A-4

The following table sets forth recording information relating to the recordation, in each of the specified New Mexico counties, of a Notice of Filing of Supplemental Indenture with the New Mexico Secretary of State with respect to Supplemental Indenture No. 1:

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	 
	 
	 
	 
	 

	Chaves
	8/8/11
	340698
	N/A
	N/A

	Curry
	8/8/11
	110005352
	N/A
	N/A

	Eddy
	8/8/11
	1107998
	N/A
	N/A

	Lea
	8/8/11
	33734
	N/A
	N/A

	Quay
	8/8/11
	201108080003
	N/A
	N/A

	Roosevelt
	8/8/11
	20112316
	N/A
	N/A

The following table sets forth recording information relating to the recordation, in each of the specified New Mexico counties, of a Notice of Filing of Supplemental Indenture with the New Mexico Secretary of State with respect to Supplemental Indenture No. 2:

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	 
	 
	 
	 
	 

	Chaves
	6/18/14
	389726
	N/A
	N/A

	Curry
	6/18/14
	157778190
	N/A
	N/A

	Eddy
	6/18/14
	1824479
	N/A
	N/A

	Lea
	6/18/14
	39612
	N/A
	N/A

	Quay
	6/18/14
	20149266515
	N/A
	N/A

	Roosevelt
	6/18/14
	20141875
	N/A
	N/A

Schedule A-5

The following table sets forth recording information relating to the recordation, in each of the specified New Mexico counties, of a Notice of Filing of Supplemental Indenture with the New Mexico Secretary of State with respect to Supplemental Indenture No. 3:

	
					
	COUNTY
	DATE
	RECEPTION NUMBER
	BOOK/FILM
	PAGE

	 
	 
	 
	 
	 

	Chaves
	6/18/14
	389727
	N/A
	N/A

	Curry
	6/18/14
	157778191
	N/A
	N/A

	Eddy
	6/18/14
	1824480
	N/A
	N/A

	Lea
	6/18/14
	39613
	N/A
	N/A

	Quay
	6/18/14
	20149266516
	N/A
	N/A

	Roosevelt
	6/18/14
	20141876
	N/A
	N/A

Schedule A-6

SCHEDULE B

	
							
	Date of Supplemental Indenture
	 
	

Series of Bonds
	 
	Principal Amount Issued
	 
	Principal Amount Outstanding

	 
	 
	 
	 
	 
	 
	 

	August 3, 2011
	 
	1
	 
	$400,000,000
	 
	$400,000,000

	June 1, 2014
	 
	2
	 
	$250,000,000
	 
	$250,000,000

	June 1, 2014
	 
	3
	 
	$350,000,000
	 
	$350,000,000

Schedule B-1

SCHEDULE C

DESCRIPTION OF PROPERTY

The property referred to in Granting Clause Second of the Indenture includes, without limitation, the Company’s right, title and interest in and to the Lands and Water Rights in the State of Texas and the State of New Mexico described below, together with all property related, used or appurtenant thereto of the kind and nature described in Granting Clause First (other than Excepted Property). 

THE FOLLOWING PROPERTIES ARE IN THE STATE OF TEXAS.

		
	1.
	Lands.  The following described real property (the “Lands”) acquired by the Company in the years 2014, 2015 and 2016 or acquired by the Company in prior years and not previously identified and described in the Indenture:

Andrews County, Texas

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5205

	

Andrews Substation
	

Document No. 14-6868, Deed Records, Andrews County, Texas executed by Waste Control Specialist, LLC, dated Dec. 16, 2014 and recorded Dec. 30, 2014 

as to the following property:

a 40.001+ acre tract of land out of Section 5, Block A-39, Public School Land Survey, Andrews County, Texas, further being out of a tract of land being described in that certain instrument recorded in Volume 986, Page 702 et seq., Deed Records, as filed in the Office of the County Clerk of Andrews County, Texas, said 40.00+ acre tract of land having been surveyed on the ground by Furman Land Surveyors, Inc. July 24, 2014 and being described by metes and bounds as follows:

(Bearings and Distances are Grid UTM Coordinate System-Zone 13N, NAD (1983) using GPS relative positioning techniques based on OPUS on July 8, 2014, Combined Scale Factor = 0.99984888)

COMMENCING at a galvanized bolt in a stone mound found for the Northeast corner of said Section 5, from whence a 1/2” iron rod with cap stamped “FURMAN RPLS” set for the Southeast corner of said Section 5 bears, S. 00° 53’ 07” E. (Base Line) 5290.60 feet.

Schedule C-1

THENCE, S. 00° 53’ 07” E. 2982.10 feet along the East line of said Section 5 to a point on the South right-of-way line of RM 87, being described in that certain instrument recorded in Volume 47, Page 77, as filed in the Office of the County Clerk of Andrews County, Texas;

THENCE, S. 89° 00’ 57” W. 3485.81 feet along said South right-of-way line to a 1/2” iron rod with cap stamped “FURMAN RPLS” set for the Northeast and BEGINNING CORNER of this tract of land;

THENCE, S. 01° 00’ 54” E. 1319.90 feet to a 1/2” iron rod with cap stamped “FURMAN RPLS” set for the Southeast corner of this tract of land;

THENCE, S. 89° 00’ 57” W. 1319.90 feet to a 112” iron rod with cap stamped “FURMAN RPLS” set for the Southwest corner of this tract of land, same being a point on the East line of a Southwestern Public Service Company easement being described in that certain instrument recorded in Volume 638, Page 449, as filed in the Office of the County Clerk of Andrews County, Texas; THENCE, N. 01° 00’ 54” W. 1319.90 feet along the East line of said easement to a 1/2” iron rod with cap stamped “FURMAN RPLS” set for the Northwest corner of this tract of land;

THENCE, N. 89° 00’ 57” E. 1319.90 feet along said South right-of-way line to the POINT OF BEGINNING, 

containing 40.00 acres, more or less.

Carson County, Texas

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5204
	

Martin Substation

	

Document No. 2014-00000822, Volume 614, Page 20 et seq.,  Official Public Records, Carson County, Texas, executed by Andy McCathern, Independent Executor, et al., dated May 21, 2008 and recorded June 24, 2014

Schedule C-2

as to the following property:

an 8.26 acre (360,000 square foot) tract of land lying in the Northwest corner of Section 55, Block T. B. S. & F. Survey, Carson County, Texas, being more particularly described by metes and bounds as follows:

BEGINNING at a 3/8” iron rod with cap marked “HBD” set for the Northwest corner of said Section 55 and of this tract, whence a 3/8” iron rod with cap marked “HBD” set for reference near a fence line bears North 00° 00’ 53” West, 30.00 feet;

THENCE, North 89° 19’ 07” East, along the North line of said Section 55, a distance of 600.00 feet to the Northeast corner of this tract;

THENCE, South 00° 08’ 55” East, parallel with the West line of said Section 55, at a distance of 30.00 feet pass a 3/8” iron rod with cap marked “HBD” set for reference, continue for a total distance of 600.00 feet to a 3/8” iron rod with cap marked “HBD” set for the Southeast corner of this tract;

THENCE, South 89° 19’ 07” West, parallel with the North line of said Section 55, at a distance of 570.00 feet pass a 3/8” iron rod with cap marked “HBD” set for reference, continue for a total distance of 600.00 feet to a point on the West line of said Section 55, the Southwest corner of this tract;

THENCE, North 00° 08’ 55” West, along the West line of said Section 55, a distance of 600.00 feet to the POINT OF BEGINNING;

containing 8.26 acres (360,000 square feet), more or less.

Deaf Smith County, Texas

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5220

	

Deaf Smith Interchange
Parcel 2
	

Document No. 15-1153, Official Public Records, Deaf Smith County, Texas executed by BEJS Feeders, Inc. and dated June 29, 2015 and recorded July 15, 2015

Schedule C-3

as to the following property:

A 15.68 acre tract of land, more or less, out of Section 41, Block K-3, SK & K Survey, Deaf Smith County, Texas, further being out of that certain 101.627 acre tract of land described in that certain instrument recorded in Clerk’s File No. 02-1333 as filed in the Official Public Records of Deaf Smith County, Texas, said 15.68 acre tract of land having been surveyed on the ground by Furman Land Surveyors, Inc. on October 13, 2014 and being described by metes and bounds as follows:

COMMENCING at a railroad spike found for the Northeast corner of said Section 41, same being the Northeast corner of said 101.627 acre tract of land, from whence a railroad spike found for the Northwest corner of said Section 41 bears South 9°10’ 52” West 5280.54 feet;

THENCE, South 89° 10’ 52” West 1354.05 feet along the North line of said Section 91 to a “X” in concrete set for the BEGINNING CORNER of this tract of land;

THENCE, South 28° 51’ 01” West 1040.57 feet to a 1⁄2 inch iron rod with cap stamped “Furman RPLS” set; 

THENCE, South 89° 10’ 52” West 897.48 feet to a 1⁄2 inch iron rod with cap stamped “Furman RPLS” set;

THENCE, North 00° 45’ 16” West 357.33 feet to a point being the Southwest corner of that certain 7.818 acre tract of land described in that certain instrument recorded in Volume 236, Page 179 as filed in the Official Public Records of Deaf Smith County, Texas, from whence a 3/8 inch iron rod with cap found on the West line of said 7.818 acre tract of land bears North 00° 46’ 16” West 58.00 feet;

THENCE, North 89° 13’ 44” East 660.09 feet to a 3/8 inch iron rod with cap found for the Southeast corner of said 7.818 acre tract of land;

THENCE, North 00° 46’ 16” West at 516.07 feet pass a 1⁄2 inch iron road found for the Northeast corner of said 7.818 acre tract of land, continuing a total distance of 547.37 feet to a point being on the north line of said Section 41; and

THENCE, North 89° 10’ 52” East 751.70 feet along the North line of said Section 41 to the POINT OF BEGINNING

containing 15.68 acres, more or less.

Schedule C-4

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5219
	

La Plata Substation
	Document No. 15-2118, Official Public Records, Deaf Smith County, Texas executed by City of Hereford, Texas and dated December 16, 2015 and recorded December 30, 2015

as to the following property:

A 2.497 acre tract of land, more or less, lying in Section 82, Block K-3, Deaf Smith County, Texas and being further described by metes and bounds as follows:

BEGINNING at a point in the North line of Section 82, whence a 3/8 inch iron pipe found for the Northeast corner of Section 82 bears North 89 degrees 16 minutes 34 seconds East, 239.13 feet;

THENCE, South 00 degrees 43 minutes 26 seconds East, at a distance of 20.0 feet pass a 1/2 inch iron rod with cap marked “HBD” set for reference in the South physical right of way of Fifteenth Street, continue for a total distance of 370.00 feet to a 1/2 inch iron rod with cap marked “HBD” set for corner;

THENCE, South 89 degrees 16 minutes 34 seconds West, a distance of 294.00 feet to a 1/2 inch iron rod with cap marked “HBD” set for corner;

THENCE, North 00 degrees 43 minutes 26 seconds West, at a distance of 350.0 feet pass a 1/2 inch iron rod with cap marked “HBD” set for reference in the South physical right of way of Fifteenth Street, continue for a total distance of 370.00 feet to a 1/2 inch iron rod with cap marked “HBD” set for corner in the North line of Section 82; and

THENCE, North 89 degrees 16 minutes 34 seconds East, along the North line of Section 82, a distance of 294.00 feet to the POINT OF BEGINNING.

Schedule C-5

Gaines County, Texas

	
			
	SPS Id. No. 

	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	313
	Flanagan Substation

	Volume 145, Page 286 et seq., Deed Records, Gaines County, Texas, executed by Guy McGill and Katherine McGill dated May 17, 1955 and recorded May 17, 1955; and at Clerk’s File No. 2005-1367, Official Public Records, Gaines County, Texas, executed by Utility Engineering Corporation dated April 6, 2005, and recorded April 7, 2005

as to the following property:

A tract of land a part of Section 4, Block A-22, Public School Lands, Gaines County, Texas, said tract being more particularly described as follows:

BEGINNING at a 3/4” iron pipe set under fence in North line of Section 4, Block A-22, 40 feet from NE corner of Section 4. Said pipe is 2 feet North of East-West Utility pole line; 11.5 feet East of North-South Utility pole line and 11 feet South of the fence going West;

THENCE, S. 74° 11’ W. 100 feet to a 3/4” iron pipe;

THENCE, S. 15° 49’ E. 150 feet to a 3/4” iron pipe;

THENCE, 74° 11’ E. 100 feet to a 3/4” iron pipe under fence; and

THENCE, N. 15° 49’ W. 150 feet to the PLACE OF BEGINNING.

Schedule C-6

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5203

	

Higg East Substation
	

Document No. 2014-4726, Official Public Records, Gaines County, Texas, executed by XTO Energy, dated July 11, 2014 and recorded August 4, 2014

as to the following property:

a 4.70+  acre tract of land out of Sections 453 and 454, Block G, C. C. S. D. & R .G. N. G. R.R. Co. Survey, Gaines County, Texas, further being out of a tract of land described in that certain instrument recorded in Instrument #2006-1695, of the Official Public Records of Gaines County, Texas, said 4.70+ acre tract of land having been surveyed on the ground by Furman Land Surveyors, Inc., May 27, 2014 and, being more particularly described by metes and bounds as follows:

(Bearings and Distances are Grid Texas State Plane Coordinate System-North Central Zone, NAD (1983) based on GPS relative positioning techniques on an OPUS on August 29, 2013. Combined Scale Factor = 0.99970976)

COMMENCING at a 3/4 inch iron rod with aluminum cap stamped “Furman Land Surveyors Section Corner Firm #100924” set for the-Southwest corner of said Section 454, from whence a 100# nail found for the Northwest corner of said Section 454 bears N. 02° 22’ 20” E. (Base line) 5300.88 feet;

THENCE, N. 02° 22’.20” E. 40.71 feet along the West line of said Section 454 to a point in the Northeasterly Right-of-Way line of F. M. Road 1757;

THENCE, S. 42° 43’ 35” E 35.37 feet along said Northeasterly Right-Of-Way line to a 1/2 inch iron rod with cap stamped “Furman RPLS” set for the Southwest corner and BEGINNING CORNER of this tract of land;

THENCE, N. 44° 31’ 20” E. 583.91 feet to a 1/2 inch iron rod with cap stamped “Furman RPLS” set for the Northwest corner of this tract of land;

THENCE, S. 88° 40’ 25” E. 302.56 feet to a 1/2 inch iron rod with cap stamped “Furman RPLS” set for the Northeast corner of this tract of land;

THENCE, S. 02° 22’ 20” W. 415.12 feet to a 1/2 inch iron rod with cap stamped “Furman RPLS” set for the Southeast corner of this tract of land;

Schedule C-7

THENCE, N. 87° 38’ 49” W. 586.63 feet to a 1/2 inch iron rod with cap stamped “Furman RPLS” set for an interior jog corner of this tract of land;

THENCE, S. 47° 16’ 25” W. 92.42 feet passing the common line of said Section 454 and 453 to a 1/2 inch iron rod with cap stamped “Furman RPLS” set for the most Southerly corner of this tract of land in the Northeasterly Right-of-Way line of said F. M. Road 1757; and

THENCE, N. 42° 43’ 35” W: 60.00 feet along said Northeasterly Right-of-Way line passing the common line of said Sections 453 and 454 to the PLACE OF BEGINNING and 

containing 4.70 acres, more or less.

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5214

	

Gaines County Generation Plant
	

Tract 1:  Document No. 2015-4403, Official Public Records, Gaines County, Texas executed by A.L.H.M., Inc. and dated August 3, 2015 and recorded August 4, 2015;

Tract 2:  Document No. 2015-4405, Official Public Records, Gaines County, Texas executed by F.A.C.E., Inc. and dated August 3, 2015 and recorded August 4, 2015;

Tract 3:  Document No. 2015-4404, Official Public Records, Gaines County, Texas executed by 3 JK’s, Inc., Inc. and dated August 3, 2015 and recorded August 4, 2015;

Tract 4:  Document No. 2015-4407, Official Public Records, Gaines County, Texas executed by J.D.C. Farms and dated August 3, 2015 and recorded August 4, 2015; and

Schedule C-8

	
			
	 
	 
	Tract 5:  Document No. 2015-4406, Official Public Records, Gaines County, Texas executed by A.J.K., Inc. and dated August 3, 2015 and recorded August 4, 2015

as to the following property:

Tract 1:  The Southwest one-fourth (SW/4) and the Southwest One-half of the Southeast One-Fourth (SW/2 of SE/4) of Section 6, Block A-12, Public School Land, Gaines County, Texas.

Tract 2:  The Northwest One-fourth (NW/4) of Section 6, Block A-12, Public School Land, Gaines County, Texas.

Tract 3: The Northeast One-fourth (NE/4) and the Northeast One-half of the Southeast One-fourth (NE/2 of SE/4) of Section 6, Block A-12, Public School Land, Gaines County, Texas.

Tract 4:  The West One-half (W/2) of Section Seven (7), Block A-12, Public School Land, Gaines County, Texas.

Tract 5: The East One-half (E/2) of Section Seven (7), Block A-12, Public School Land, Gaines County, Texas.

Schedule C-9

Gray County, Texas

	
			
	SPS Id. No. 

	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	

362

1200

	

Kirby Substation
Parcel 1

Parcel 2
  
	

Parcel 1:  Volume 721, Page 455 et seq., Deed Records, Gray County, Texas, dated September 29, 1997 and recorded September 30, 1997 (“Parcel 1”); and 

Parcel 2:  Volume 721, Page 453 et seq., Deed Records, Gray County, Texas, executed by Leon Schaffer dated September 29, 1997 and recorded September 30, 1997 (“Parcel 2”)

as to the following property:

Parcel 1:  Parcel acquired by deed in Volume 721, Page 453 et seq., Deed Records, Gaines County, Texas, executed by Leon Schaffer dated September 29, 1997 and recorded September 30, 1997, and containing 1.102 acres, more or less.

Parcel 2: A tract of land located in the northeast part of Section Number 106, Block B-2 of the H&GN RR Co. lands, Gray County, Texas, and being more particularly described as follows:

Beginning at the northeast corner of said Section No. 106, a point in the center of FM 2477 from which a found concrete monument highway right of way marker bears S 0° 21’ 14” E along the east line of said Section 106, 50.00 feet;

THENCE, S 0° 21’ 14” E along the east line of said Section No. 106 a distance of 240.00 feet to a set 1/2’ rebar with aluminum cap the southeast corner of this tract; 

THENCE, S 89° 27 ‘00” W along a line parallel to the north line of said Section No. 106 a distance of 58.00 feet to a set 1/2’ rebar with aluminum cap the southwest corner of this tract;

Schedule C-10

THENCE, N 0° 21’ 14” W along a line parallel to the east line of said Section No. 106 a distance of 240,00 feet to a point in the center of FM 2477 from which a witness corner a set 1/2’ rebar with aluminum cap bears S 0° 21’ 14” E, 50.00 feet; and

THENCE, N 89° 27’ 00” E along the north line of said Section 106 a distance of 58.00 feet to the point of beginning,

containing 0.320 acres, more or less.

Hale County, Texas

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5202
	

Tuco Plant Deed 6
	

Document No. 2014-002963, Official Public Records, Hale County, Texas, executed by Mark W. Laney, dated April 26, 2013 and recorded August 28, 2014

as to the following property:

A tract of land being, more or less, 8.6 acres of the NE part of the NE/4 of Section Nine (9), Block C-2, Abstract 445, Hale County, Texas, being more particularly described in a Warranty Deed dated January 23, 2006, in Volume 1029, Page 253 of the Deed Records in Hale County, Texas.

Hutchinson County

	
			
	SPS Id. No. 

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

492

	

Riverview Plant
	

Volume 92, Page 286 et seq., executed by Panhandle Power & Light Company dated September 17, 1942, and recorded September 18, 1942, Deed Records,  Hutchinson County, Texas,

Schedule C-11

as to the following property:

Part of Section Sixty-Eight (68), Block Forty-Six (46), Original Grantee, H. & T. C. Railway Company, particularly described by metes and bounds as follows:

BEGINNING at a point on the West line of said Section 68, Block 46, Hutchinson County, Texas, which point is 3665 feet in a Northerly direction from the Southwest corner of said Section 68;

THENCE, East a distance of 1200 feet;

THENCE, North a distance of 600 feet;

THENCE, West a distance of 1200 feet to the West Line of said Section 68; and

THENCE, South along the West line of said Section 68 a distance of 600 feet to the PLACE OF BEGINNING, and 

containing 16.53 acres, more or less.

	
			
	SPS Id. No. 

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

509
	

Pringle Interchange
	

Volume 531, Page 302 et seq., executed by Oliver Woodville Jarvis and Vern B. Jarvis dated June 18, 1986, and recorded June 18, 1986, Deed Records,  Hutchinson County, Texas

as to the following property:

A tract of land in Hutchinson County, Texas described as follows:

BEGINNING at the Southeast corner of Section 93, Block 5-T, T & NO RR Co. Survey, Hutchinson County, Texas; 

THENCE, North 40 feet to the place of beginning of this tract;

THENCE, North 0° 58’ 56” East 722.99 feet to the Northeast corner of this tact;

THENCE, North 88° 57’ 37” West 722.99 feet to the Northwest corner of this tract;

Schedule C-12

THENCE, South 0° 58’ 56” 722.99 feet to the North right of way line for County road and the Southwest corner of this tract; and

THENCE, South 88° 57’ 37” East 722.99 feet along the North right of way line of the County road to the PLACE OF BEGINNING.

Lamb County, Texas

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5225

	

Rocky Ford Substation
	

Document No. 00064, Vol. 741, Page 248 et seq., Official Public Records, Lamb County, Texas, executed by John W. Synatschk and Carla S. Synatschk, dated April 6, 2016 and recorded April 6, 2016

as to the following property:

A 5.00± acre tract of land out of Section 20, Block T-1, T. A. Thompson Survey, Lamb County Texas, also being out of that certain 585.88 acre tract of land being described in that certain instrument recorded in Volume 420, Page 931 as filed in the Official Public Records of Lamb County, Texas, said 5.00± acre tract of land having been surveyed on the ground by Furman Land Surveyors, Inc. on May 20, 2015 and being described by metes and bounds as follows:

(Bearings and Distances are Grid UTM Coordinate System-Zone 13 N, NAD (1983) using GPS relative positioning techniques based on an OPUS on April 2, 2015. Combined Scale Factor = 1.0001897)

COMMENCING at a point being the most Easterly Northeast corner of said 585.88 acre tract of land, same being a point in the West Right-of-Way line of U.S. Highway 385 and also being a point on the common line of said Section 20 and Section 16, Block T-I, T. A. Thompson Survey, Lamb County, Texas, from whence a 1⁄2 inch iron rod found for a jog comer of said 585.88 acre tract of land bears S. 89°13’19” W. 994.52 feet, and from whence a 1⁄2 inch iron pipe found in the East Right-of-Way line of said U.S. Highway 385, also being a point on the common line of said Section 20 and Section 16 bears N. 89°13’19” E. 100.02 feet, and from whence a 5/8 inch iron rod found for the common corner of Sections 15, 16, 21 and 22, Block T-1, T. A. Thompson Survey, Lamb County, Texas bears N. 89°13’19” E. (Base Line) 5331.49 feet;

Schedule C-13

THENCE S. 00°48’02” E, 1802.97 feet along the East line of said 585.88 acre tract of land, same being the West Right-of-Way line of said U.S. Highway 385 to a 1⁄2 inch iron rod with cap stamped “FURMAN RPLS” set for the Northeast and BEGINNING CORNER of this tract of land; 

THENCE S. 00°48’02” E. 566.00 feet continuing along the East line of said 585.88 acre tract of land, same being the West Right-of-Way line of said U.S. Highway 385 to a 1⁄2 inch iron rod with cap stamped “FURMAN RPLS” set for the Southeast corner of this tract of land;

THENCE N. 70°50’23” W. 478.76 feet to a 1⁄2 inch iron rod with cap stamped “FURMAN RPLS” set for the Southwest corner of this tract of land;

THENCE N. 00°48’02” W. 402.56 feet to a 1⁄2 inch iron rod with cap stamped “FURMAN RPLS” set for the Northwest corner of this tract of land;

THENCE N. 89°11’58” B. 450.00 feet to the POINT OF BEGINNING, and 

containing 5 acres, more or less.

Lipscomb County, Texas

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5200
	

Lipscomb Substation
	

Document No. 59682, Vol. 538, Page 338, et seq., Official Public Records, Lipscomb County, Texas, executed by J.D. Latham, dated May 12, 2014 and recorded May 29, 2014

as to the following property:

A 6.03 acre tract of land out of Section 118, Block 10, H. T. & B. R. R. Co. Survey, Lipscomb County, Texas, further being out of Lot 14, Out Lots Lying Adjacent to Booker, Lipscomb County, Texas, according to the recorded map or plat thereof recorded in Volume 25, Page 586 et seq., of the Deed Records of Lipscomb County, Texas, said 6.03 acre tract of land having been surveyed on the ground by Furman Land Surveyors, Inc. September 7, 2013 and being more particularly described by metes and bounds as follows:

Schedule C-14

COMMENCING at a mag nail found for the Northeast corner of said Section 118, from whence a nail with shiner found for the Southeast corner of said Section 118 bears S. 00° 14’ 49” E. (Base Line) 5279.71 feet;

THENCE, S. 00° 14’ 49” E. 2038.30 feet along the East line of said Section 118 to a point;

THENCE, S. 89° 37’ 58” W. 50.00 feet to a 1/2 iron rod with cap stamped “Furman RPLS” set in the West Right-of-Way line of F. M. Road 23 for the Northeast and BEGINNING CORNER of this tract of land;

THENCE, S. 00° 14’ 49” E. 466.70 feet along said West Right-of-Way line to a point in the common line of said Lot 14 and a 30 foot parcel of land as shown on said plat of Out Lots Lying Adjacent to Booker, in said Volume 25, Page 586 for the Southeast corner of this tract of land;

THENCE, S. 89° 37’ 58” W. 562.47 feet along said common line to a 1/2 inch iron rod with cap stamped “Furman RPLS” set in the common line of said Lot 14 and the East line of Golden Spread Addition to the City of Booker, Lipscomb County, Texas, according to the recorded map of plat thereof recorded in Volume 220, Page 874, of the Deed Records of Lipscomb County, Texas, for the Southwest corner of this tract of land; 

THENCE, N. 00° 21’ 54” W. 466.70 feet along said common line to a 1/2 inch iron rod with cap stamped “Furman RPLS” set for the Northwest corner of this tract of land; and

THENCE, N. 89° 37’ 58” E. 563.44 feet to the PLACE OF BEGINNING and

containing 6.03 acres, more or less.

Parmer County, Texas

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

839
(5505)

	

Cargill Substation
	

Volume 265, Page 274 et seq., dated October 15, 1998, and recorded November 3, 1998, Deed or Official Public Records,  Parmer County, Texas,

as to the following property:

Schedule C-15

An undivided 25% interest in and to a parcel of land, located in the NE 1/4 of the NE 1/4 of Section 23, Township 3 South, Range 3 East, Capitol Syndicate Subdivision, being part of a tract conveyed to David and Rene’ Hough as recorded in Volume 260, Page 259 of the Parmer County records, and being more particularly described as follows:

COMMENCING at the northeast corner of said Section 23, a found 2” iron pipe;

THENCE, S. 88° 53’ 18” W., along the north line of said Section 23, a distance of 30.01 feet to a set 1/2” rebar with an aluminum cap, on the west right-of-way line of County Road No. 17, the true POINT OF BEGINNING of this survey, said point being the northeast corner of said surveyed parcel;

THENCE, S. 0° 01’ 00” W., along the west right-of-way line of said County Road No 17, a distance of 850.00 feet to a set 1/2” rebar with an aluminum cap, the southeast corner of said surveyed parcel;

THENCE, S. 88° 53’ 18” W., parallel with the north line of said Section 23, a distance of 280.00 feet to a set 1/2” rebar with an aluminum cap, the southwest corner of said surveyed parcel;

THENCE, N. 00° 01’ 00”  E., parallel with the west right-of-way line of said County Road No. 17, a distance of 850.00 feet to a set 1/2” rebar with an aluminum cap, the northwest corner of said surveyed parcel;    and

THENCE, N. 88° 53’ 18”  E., along the north line of said Section 23, a distance of 280.00 feet to the POINT OF BEGINNING, 

containing 5.463 acres, more or less.

	
			
	SPS Id. No. 

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5216

	

Distribution Guy Line
	

Volume 114, Page 543 et seq., Deed or Official Public Records,  Parmer County, Texas, dated January 18, 1960, and recorded February 8, 1961, and corrected by Deed dated November 3, 1961, and recorded November 15, 1961, in Volume 117, Page 310 et seq., Deed or Official Public Records,  Parmer County, Texas,

Schedule C-16

as to the following property:

A tract of land out of the N.W. corner of Section 15, Township 7 south of the Capitol Syndicate Subdivisions in Parmer County, Texas, and being a tract out of the west part of a tract of land owned by the Gulf Oil Corporation. 

BEGINNING at an iron pin in the south right of way line for the P. & S.F. R.R. and at the N.E. corner of the Townsite of Bovina, and also being the N.W. corner of Section 15, Township 7 South; 

THENCE, S. 39° 49’ E. along the East line of said Bovina Townsite, 31.7 feet to an iron pin at the back of a curb set for the paving along North Street;

THENCE, N. 57° 47’ E. along the back of said curb, 40.35 feet to an iron pin;

THENCE, N. 39° 49’ W. 37.0 feet to an iron pin in the said south right of way line; and

THENCE, S. 50° 11’ W. along said right of way, 40.0 feet to the PLACE OF BEGINNING. 

Potter County, Texas

	
			
	SPS Id. No. 

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

881

	

Highland Park Substation
	

Volume 1218, Page 447 et seq., executed by Bernice Beville and P. A. Beville  dated March 20, 1974, and recorded April 5, 1974, Deed Records,  Parmer County, Texas,

Volume 1218, Page 451 et seq., executed by  Helen Taggart dated March 28, 1974, and recorded April 5, 1974, Deed Records,  Parmer County, Texas,

Volume 1218, Page 451 et seq., executed by Della Longstreth et al  dated March 

Schedule C-17

	
			
	 
	 
	20, 1974, and recorded April 5, 1974, Deed Records,  Parmer County, Texas,

Volume 1218, Page 454 et seq., executed by Gladys Dickson et al dated March 20, 1974, and recorded April 5, 1974, Deed Records,  Parmer County, Texas,

Volume 3590, Page 264 et seq., executed by Utility Engineering Corporation  dated April 6, 2005, and recorded April 7, 2005, Official Public Records,  Parmer County, Texas

as to the following property:

A tract of land out of Section 26, Block 2, AB & M Survey, Potter County, Texas, and being described by metes and bounds as follows:

BEGINNING at a copper rod in the West R.O.W. line of Masterson Road and the North R.O.W. line of the Santa Fe Railroad, whence the Northeast corner of Section 26 bears North 69° 19’ 20” East, 37.40 feet and North 00° 02’ 36” West 4749.46 feet;

THENCE, S. 69° 19’ 20” W., along the Northerly R.O.W. line of the Santa Fe Railroad, a distance of 327.74 feet to a copper road;

THENCE, N. 20° 40’ 40” W., 220.0 feet to a copper rod, the Northwest corner of this tract;

THENCE, 69° 19’ 20” E. parallel with the North R.O.W. line of the Santa Fe Railroad, a distance of 410.56 feet to a copper rod, in the West R.O.W. line of Masterson Road;

THENCE, S. 00° 02’ 56” E., 235.07 feet to the BEGINNING CORNER of this tract and

containing 1.8644 acres, more or less.

Schedule C-18

Randall County, Texas

	
			
	SPS Id. No. 

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

1201

	

Spring Draw Substation
	

County Clerk’s File No. 2005026112, executed by Latham & Company dated December 8, 2005, and record December 13, 2005,

as to the following property:

A tract of 1.50 acres out of that certain tract or parcel of land as conveyed to Latham & Company by instrument recorded in Volume 197, Page 335 et seq., Deed Records of Randall County, Texas, being situated in Section 34, Block 1, T. T. R.R. Survey, Randall County, Texas, being further described by metes and bounds as follows:

BEGINNING at an 1⁄2” rebar with red plastic cap marked “Apex 5275-5718” (such type rebar hereafter being referred to as an APEX cap) set for the Southeast corner of this tract, whence the Northeast corner of Section 34 bears S. 89° 46’ 55” E. - 1832.7 feet and N. 00° 04’ 00” E. - 2648.3 feet;

THENCE, N. 89° 46’ 55” W. for a distance of 255.62 feet to an Apex cap set for the Southwest corner of this tract, whence a Keys cap found for the Southwest corner of that certain tract of parcel as conveyed to Linda S. Acton by instrument as recorded in Clerk’s File No. 01 19751, Official Public Records of Randall County, Texas, bears N. 89° 46’ 55” W. - 3046.61 feet;

THENCE, N. 00° 13’ 05” E. for a distance of 255.62 feet to an Apex cap set for the Northwest corner of this tract;

THENCE, S. 89° 46’ 55” E. for a distance of 255.62 feet to an Apex cap set for the Northeast corner of this tract;

THENCE, S. 00° 13’ 05” W. for a distance of 255.62 feet to the POINT OF BEGINNING,

containing 1.50 acres of land, more or less.

Schedule C-19

	
			
	SPS Id. No. 

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

1202

	

Amarillo South ROW
	

County Clerk’s File No. 20024839, Official Public Records, Randall County, Texas executed by  Laura Janet SoRelle Woolsey and Charles Arthur SoRelle dated March 5, 2002, and recorded March 7, 2002

as to the following property:

All of that portion of the north one-half of Section 180, that lies west of the railroad, being in Block 2, AB & M Railroad Company Survey, Randall County, Texas, being 10.316 acres more or less, further described by metes and bounds as follows:

BEGINNING at a 5/8” iron rod, the Northwest corner of Section 180, Block 2, AB & M Survey, Randall County, Texas, the Northwest and beginning corner of this survey;

THENCE, North 89o 57’ 12” East along the North line of Section 180 a distance of 523.58 feet to a 1⁄2” iron rod in the West R.O.W. line of the Santa Fe Railroad, the Northeast corner of this survey;

THENCE, South 16o 50’ 19” West along said R.O.W. 1793.4 feet to a 1⁄2” iron rod in the West line of Section 180, the most Southerly point of this survey; and

THENCE, North 00o 08’ 13” West along the West line of Section 180 a distance of 1716.09 feet to the PLACE OF BEGINNING, and 

containing 10.316 acres, more or less.

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5228

	

Canyon Service Center
	

Document No. 2016002948, Official Public Records, Randall County, Texas, executed by Chris Cabbiness, dated February 22, 2016 and recorded February 25, 2016

Schedule C-20

as to the following property:
A 9.74 acre± tract of land out of the Northwest portion of Section 111, Block 6, I. & G. N. Railroad Company Survey, Randall County, Texas and being a portion of a tract of land as described in that certain instrument of conveyance recorded in Volume 433, Page 116 of the Deed Records of Randall County, Texas, said 9.74 acre± tract of land having been surveyed on the ground by Furman Land Surveyors, Inc. on May 1, 2015 and being more particularly described by metes and bounds as follows:
COMMENCING - at a 1/2 inch iron rod with cap stamped “1912” found at the Northwest corner of said Section 111;
THENCE, North 89° 53’ 55” East (base line) along the North line of said Section 111, at 77.11 feet passing a highway right-of-way monument found as called for in the Easterly right-of-way line of Interstate Highway No. 27, at the Northwest corner of a 5.449 acre tract of land as described in that certain instrument of conveyance recorded under Clerk’s File No. 2011005579 (Tract 2) of the Official Public Records of Randall County, Texas, continuing for a total distance of 645.31 feet to a 1/2 inch iron rod with cap stamped “HDB” found as called for at the Northeast corner of said 5.449 acre tract of land, same point being the Northwest and BEGINNING CORNER of the herein described tract of land;
THENCE, North 89° 53’ 55” East continuing along the North line of said Section 111, a distance of 375.90 feet to a 1/2 inch iron rod with cap stamped “1912” found as called for at the Northwest corner of a 15.11 acre tract of land as described in that certain instrument of conveyance recorded under Clerk’s File No. 2015001409 of the Official Public Records of Randall County, Texas, same point being the Northeast corner of this tract of land, from whence a 5/8 inch iron rod found as called for at the Northeast corner of said Section 111 bears North 89° 53’ 55” East, 4373.35 feet;
THENCE, South 00° 19’ 41” West, 1401.37 feet along the West line of said 15.11 acre tract of land, to a 1/2 inch iron rod with cap stamped “1912” found as called for in the Easterly right-of-way line of said Interstate Highway No. 27 at the Southwest corner of said 15.11 acre tract of land, same point being the Southeast corner of this tract of land;
THENCE, North 33° 46’ 25” West, 680.23 feet along the Easterly right-of-way line of said Interstate Highway No. 27 to a 1/2 inch iron rod with cap stamped “HDB” found as called for at the Southeast corner of said 5.449 acre tract of land, same point being the Southwest corner of this tract of land;
THENCE, North 00° 42’ 16” East, 835.31 feet along the East line of said 5.449 acre tract of land to the PLACE OF BEGINNING, and 
containing 9.74 acres, more or less.

Schedule C-21

Sherman County, Texas

	
			
	SPS Id. No. 

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5225

	

Texhoma Property
	

Volume 81, Page 214 et seq., executed by  F. D. Mason Jr. And Ila B. Mason dated October 3, 1949, and record October 6, 1949

as to the following property:

That portion of Block 37, Texhoma, Texas that lays within the following boundaries: 

BEGINNING in the Southwest corner of Block 37 where Moorman Street joins Highway 54, 

THENCE, due East along North side Moorman Street a distance of Seventy Five feet (75’); 

THENCE, due North a distance of Forty Four and Four Tenths feet (44.4’); and 

THENCE,  due West Thirteen feet (13’),Thence southwest along the south right-of-way line of Highway 54 to the POINT OF BEGINNING.

Terry County, Texas

	
			
	SPS Id. No. 

	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	

5213

	

Prentice Substation
	

Volume 319, Page 129 et seq.,
Deed Records, dated February 12, 1970, and filed for record March 2, 1970 Terry County, Texas, and Volume 658, Page 472 et seq., Deed Records, dated December 31, 2000, and recorded January 9, 2001 Terry County, Texas

as to the following property:

Schedule C-22

A tract of land in the Northeast corner of Section 22, Block K. Public School Land, Terry County, Texas, said tract  being more particularly described as follows:

BEGINNING at a point lying 382.7 feet South and 50.0 feet West of the Northeast corner of said Section 22, said point being the intersection of the South line of farm-to-market road FM 2196 as now located and the West line of a North-South county road along the East side of said Section 22 as now located and being marked by a pipe;

THENCE, South 89 deg. 48 min. 34 sec. West, a distance of 174.24 feet to an iron pipe;

THENCE, South 0 deg, 03 min. 15 sec. West, a distance of 250.0 feet to a point;

THENCE, North 89 deg, 48 min. 34 sec. East, a distance of 174.24 feet to an iron pipe; and

THENCE, North 0 deg, 03 min. 15 sec. East, a distance of 250.0 feet to the PLACE OF BEGINNING,

containing one acre, more or less.

Yoakum County, Texas

	
			
	SPS Id. No. 

	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	

5215

	

Denver City Vacant Land

	

Parcel 1:  Volume 70, Page 113 et seq., Deed Records, executed by Texas-New Mexico Utilities Company dated September 17, 1942, and recorded December 3, 1947 Yoakum County, Texas (“Parcel 1”); and 

Parcel 2:  Volume 88, Page 432 et seq., Deed Records, executed by Elias Ivey and Ore Ivey dated December 6, 1946, and recorded March 7, 1947, Yoakum County, Texas (“Parcel 2”)

Schedule C-23

as to the following property:

Parcel 1:  Lots 22 and 23, Block 27, Original Town of Denver City, Yoakum County, Texas; and
Parcel 2:  Lots 24 and 25, Block 27, Original Town of Denver City, Yoakum County, Texas

SAVE AND EXCEPT the South 75’ of each Lot.

CORRECTIONS:  The following are corrections to the description of the Mortgaged Property:

Bailey County, Texas

The Indenture incorrectly included as part of the property identified in the Indenture as SPS Id. No. 5069, called by the Company the “Tolk Railroad Parcel 1”,  property that the Company had previously conveyed.  The Indenture is corrected to delete and release from the Lien of the Indenture the property conveyed by Southwestern Public Service Company to the City of Muleshoe by deed dated April 28, 1986, and recorded in Volume 163, Page 819 et seq., Deed Records, Bailey County, Texas.

Crosby County, Texas

The description in the Indenture of the property identified as SPS Id. No. 113 and called by SPS the “Ralls Substation” erroneously referred to the recording information of the vesting deed into Southwestern Public Service Company as being recorded at Volume 44, Page 417, Deed Records, Crosby County, Texas, which is the recording information of the Deed into Texas Utilities Company, a predecessor in title to Southwestern Public Service Company.  The description of this property in the Indenture is corrected to read as follows:

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

113
	

Ralls Substation
	

Volume 62, Page 118 et seq.,
Deed Records, Crosby County, Texas executed by Texas New Mexico Utilities Company, dated September 12, 1942 and recorded September 17, 1942

as to the following property:

Lot Seven (7), Block One Hundred Eighty-Five (185), Crosby County, Texas.

Schedule C-24

Deaf Smith County, Texas

The description in the Indenture of the property identified as SPS Id. No. 113 and called by SPS the “Hereford Substation” erroneously referred to the recording information of the vesting deed into Southwestern Public Service Company as being recorded under County Clerk’s Document No. 200103, Deed Records, Deaf Smith County, Texas.  The correct recording reference for this deed is Volume 90, Page 101 et seq., Deed Records, Deaf Smith County, Texas.  The description of this property in the Indenture is corrected to read as follows:

	
			
	SPS Id. No.

	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

162
	

Hereford Substation 

	

Volume 90, Page 101 et seq., 
Deed Records, Deaf Smith County, Texas dated September 17, 1942 and recorded September 17, 1942

as to the following property:

Lots One (1), Two (2), Three (3), Four (4), Five (5), Six (6), Seven (7), Eight (8), Nine (9), Ten (10), Eleven (11) and Twelve (12), Block Six (6) in the Original Town of Hereford, Deaf Smith County, Texas.

Gaines County, Texas

The Indenture includes in the description of the Mortgaged Property the property in Gaines County, Texas identified as SPS Id. No. 473, which is called by SPS the “Doss Substation & Seminole Warehouse.”  In error the description in the Indenture described this Mortgaged Property as a Parcel of 2.07 acres, more or less.  The description of this Mortgaged Property should have included an additional Parcel of 4.72 acres, more or less.  The Indenture is hereby corrected to describe this Mortgaged Property as follows:

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	

312 
(22-04)
	

Doss Substation & Seminole Warehouse

	

Parcel 1: Volume 97, Page 636 et seq., Deed Records, Gaines County, Texas, dated March 7, 1949 and recorded March 19, 1949 (“Parcel 1” of 2.07 acres); and

Schedule C-25

	
			
	 
	 
	Parcel 2: Volume 375, Page 654 et seq., Deed Records, Gaines County, Texas dated June 7, 1976 and recorded July 22, 1976 (“Parcel 2” of 4.72 acres)

as to the following property:

Parcel 1.  A tract of land out of the Northeast corner of Section 193, Block G, W. T. R.R. Co. Survey, Gaines County, Texas, said tract being more particularly described as follows:

BEGINNING at the N.E. corner of said Section One Hundred Ninety-Three (193); 

THENCE, West along the North line of Section One Hundred Ninety-Three (193) a distance of 350 feet to a point;

THENCE, South parallel with the East line of Section One Hundred Ninety-Three (193), a distance of 258 feet to a point;

THENCE, East parallel to the North line of Section One Hundred Ninety-Three (193), 350 feet to a point in the East line of said Section One Hundred Ninety-Three (193); and

THENCE, North along the East line of Section One Hundred Ninety-Three (193) to the PLACE OF BEGINNING, 

containing 2.07 acres, more or less.

Parcel 2.  A tract of land out of Section 193, Block G, W. T. R.R. Co Survey, Gaines County, Texas, said tract being more particularly described as follows: 

BEGINNING at a 3/8” iron rod set for the North-Northeast corner of this tract, whence the     Northeast corner of Section 193, Block G, bears North 40.0 feet and East 350.0 feet;

THENCE, South 218.0 feet to a found 3/4” iron pipe set for an “L” corner of this tract;
    
THENCE, East 300.0 feet to a 3/8” iron rod, the South-Northeast corner of this tract; 

    

Schedule C-26

THENCE, South 63.7 feet to a 3/8” iron rod set in the West R.O.W. line of Farm Road 181, for a      corner of this tract; 

THENCE, South 44° 02’ West along the West R.O.W. line of Farm Road 181, a     distance of     331.33 feet to a 3/8” iron rod set for the Southeast corner of this tract;

THENCE, North 79° 00” West 376.61 feet to a 3/8” iron rod set for the Southwest corner of this     tract; and

THENCE, North 448.0 feet to a 3/8” iron rod set in the South R.O.W. line of Southwest Avenue G, for the Northwest corner of this tract; and

THENCE East 300.0 feet to the PLACE OF BEGINNING,   

containing 4.72 acres, more or less.

Hansford County, Texas

The Indenture includes in the description of the Mortgaged Property a property in Hansford County, Texas identified therein as SPS Id No. 5154, which is called by SPS the “Hitchland Substation,” and described as being a 5.560 acre tract described by metes and bounds.  The Indenture also includes in the description of the Mortgaged Property a property in Hansford County, Texas identified therein as SPS Id No. 5211 called by SPS “Hitchland Substation Parcel 2” and described as being a 26.08 acre tract described by metes and bounds.  The Company has determined that the 26.08 acre description includes within its boundaries all of the 5.560 acre tract.  The Indenture is hereby corrected to consolidate the references and descriptions of this Mortgaged Property as follows:

	
			
	SPS Id. No.
	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	

5211

	

Hitchland Substation
Parcel 2
	

County Clerk’s File No. 74866 and in Volume 361, at Page 707 et seq., Official Public Records, Hansford County, Texas dated May 19, 2011 and recorded July 22, 2014  as to a 26.08 acre parcel,  which parcel includes within its boundaries a Parcel of 5.560 acres acquired by Deed recorded at County Clerk’s File No. 74866 and in Volume 361, at Page 707 

Schedule C-27

	
			
	 
	 
	et seq., Official Public Records, Hansford County, Texas dated December 23, 2008 and recorded April 16, 2009 

as to the following property:

A tract of land out of Section 10, Public Free School Land, Block Number 1, Hansford County, Texas, further being a portion of that tract of land designated as Tract 3 in that certain instrument recorded in Volume 285, Page 800, of the Deed Records of Hansford County, Texas, said tract of land having been surveyed on the ground by Furman Land Surveyors, Inc. July 20, 2008 and being described by metes and bounds as follows:

COMMENCING at a 1/2” iron rod with cap found in the South line of said Section Number 10, for the Northwest corner of Section 30, Block P, H. & G. N. R.R. Co. Survey;

THENCE, South 89° 38’ 04” East (Base line) 3721.03 feet along the common line of said Sections 10 and 30 to a point from whence a 1 1/4 inch iron pipe found for the Southeast corner of said Section 10, bears South 89° 38’ 04” East 1453.22 feet;

THENCE, North 2372.74 feet to a 1/2 inch iron rod with cap stamped “Furman RPLS” set for the Southwest and BEGINNING CORNER of this tract of land;

THENCE, North 1420.00 feet to a 1/2” iron rod with cap stamped “Furman RPLS” set for the Northwest corner of this tract of land;

THENCE, East 800.00 feet to a 1/2” iron rod with cap stamped “Furman RPLS” set for the Northeast corner of this tract of land;

THENCE, South 1420.00 feet to a 1/2” iron rod with cap stamped “Furman RPLS” set for the Southwest corner of this tract of land; and

THENCE, West 800.00 feet to the PLACE OF BEGINNING, 

containing 26.08 acres, more or less.

Hockley County, Texas

The Indenture includes in the description of the Mortgaged Property the property in Hockley County identified as SPS ID No. 473, which is called by SPS the “Sundown Switch Station.”  In error the description in the Indenture described this Mortgaged Property as a parcel of 5.20 acres, more or less.  The description of this Mortgaged Property should have included an additional 

Schedule C-28

parcel of land of 8.48 acres, more or less.  The Indenture is hereby corrected to describe this Mortgaged Property as follows:

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	

473 
(29-11)
	

Sundown Switch Station
	

Parcel 1:  Volume 272, Page 129 et seq. Deed Records, Hockley County, Texas, dated March 23, 1970 and recorded April 6, 1970 as to a parcel of 5.20 acres, more or less (“Parcel 1”); and

Parcel 2:  Volume 215, Page 604 et seq. Deed Records, Hockley County, Texas, dated February 26, 1964 and recorded March 3, 1964 as to a parcel of 8.48 acres, more or less  (“Parcel 2”)

as to the following property:

Parcel 1:  A tract of land in Tract Two (2), Wilson Sanford Subdivision out of League Forty-One (41) Maverick County School Land, Hockley County, Texas, and being further described by metes and bounds as follows:

BEGINNING at the Southwest corner of said Tract Two (2):

THENCE, N. 0° 59’ 48” E., along the West line of said Tract Two (2) a distance of 405.0 feet to a point;

THENCE, S. 89° 02’ E., parallel with the South line of said Tract Two (2), a distance of 560.0 feet to a point;

THENCE, S. 0° 59’ 48” W., parallel with the West line of said Tract Two (2), a distance of 405.0 feet to a point in the South line of said Tract Two (2); and

THENCE, N. 89° 02’ W., a distance of 560.0 feet to the PLACE OF BEGINNING, 

containing 5.20 acres, more or less.

Schedule C-29

Parcel 2:  A tract of land in Tract Two (2), Wilson Sanford Subdivision out of League Forty-one (41), Maverick County School Land, Hockley County, Texas, containing 8.48 acres of land and being further described by metes and bounds as follows:

BEGINNING at a point in the West line of said Tract 2, lying 405.0 feet North of the Southwest corner of said Tract 2;

THENCE, North 0 deg. 59’ 48” E, along the West line of Tract 2 a distance of 660.0 feet to a point;

THENCE, South 89 deg. 02’ E, parallel with the South line of said Tract 2, a distance of 560.0 feet to a point;

THENCE, South 0 deg. 59’ 48” W, parallel with the West line of said Tract 2 a distance of 660.0 feet to a point; and

THENCE, North 89 deg. 02’ W, parallel to the South line of said Tract 2 a distance of 560.0 feet to the PLACE OF BEGINNING,

containing 8.48 acres, more or less.

Lamb County, Texas

The Indenture includes in the description of the Mortgaged Property the property in Lamb County, Texas identified as SPS Id No. 529, which is called by SPS the “Littlefield Substation.”  In error the description of this Mortgaged Property did not include the name of the addition in which the lots comprising this Mortgaged Property is located.  The Indenture is hereby corrected to describe this Mortgaged Property as follows: 

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	

529 
(31-18)
	

Littlefield Substation
	

Volume 232, Page 28 et seq.,
Deed Records, Lamb County, Texas, dated August 24, 1962, and recorded August 24, 1962, and 

Correction Deed in Volume 232, Page 242 et seq., Deed Records, Lamb County, Texas, recorded September 12, 1962

Schedule C-30

as to the following property:

Lots Six (6), Seven (7), Eight (8), Nine (9), Ten (10) and Twelve (12), Block Eighteen (18), College Heights Addition, City of Littlefield, Lamb County, Texas.

The Indenture incorrectly included as part of the Mortgaged Property the property identified in the Indenture as SPS Id. No. 5153 called by the Company the “Lamb County ROW” in Lamb County, Texas.  This property was conveyed by Southwestern Public Service Company to Olton Grain Co-op, Inc. by deed dated April 3, 2002, and recorded in Volume 539, Page 1 et seq., Deed Records, Lamb County Texas.  The Indenture is corrected to delete and release the following described property from the Indenture:

	
			
	SPS Id. No.
	Common Name
	Deed into Southwestern Public Service Company Recorded in

	

5153
	

Lamb County ROW
	

Volume 451, at Page 399 et seq., Official Public Records, Lamb County, Texas dated June 23, 1994

as to a 16.38 acre tract of land out of the west part of Section 25, Block 0-2, D. & S.E. RR Co. Survey, Lamb County, Texas:
BEGINNING at a steel rod at the N.W. Corner of Section 25, Block 0-2, Lamb County, Texas;
THENCE, South along the west line of Section 25, 5,223.3 feet to the north right-of-way line of U.S. Highway No. 70;
THENCE, East 128.0 feet along the north right-of-way line of said highway to a 1-inch pipe;
THENCE, North parallel and 128.0 feet east of the West line of Section 25, 4,923.3 feet to a 3/8-inch steel rod;
THENCE, East, 150.0 feet to a 3/8-inch steel rod;
THENCE, North, 300.0 feet to a 3/8-inch steel rod on the north line of Section 25;

THENCE, West 278.0 feet to the PLACE OF BEGINNING and containing 16.38 acres.

Lubbock County, Texas

The Indenture includes in the description of the Mortgaged Property the property identified in Lubbock County, Texas identified as SPS Id No. 710, which is called by SPS “Slaton Substation Parcel 1.”  In error the description of this Mortgaged Property did not include Lot 15.  The Indenture is hereby corrected to describe this Mortgaged Property as follows:

Schedule C-31

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

710 
(32-28)
	

Slaton Substation Parcel 1

	

Volume 269, Page 108 et seq.
Deed Records, Lubbock County, Texas dated September 17, 1942, and recorded September 18, 1942,

as to the following property:

Lots Fifteen (15) and Sixteen (16), Block “B”, Original Town of Slaton, Lubbock County, Texas, according to the map, plat and/or dedication deed thereof, recorded in Volume 79, Page 345 of the Deed Records of Lubbock County, Texas.

Ochiltree County

The following property known as the “Whippo Substation Site” has been conveyed by the Company by Quitclaim Deed to Gloria Griggs Revocable Trust dated December 4, 2015 and recorded under Ochiltree County Clerk’s File No. 2015-2527, and is hereby released from the Lien of the Indenture:

	
			
	SPS Id. No.
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

820
	

Whippo Substation Site
	

Volume 538, Page 82 et seq.,
Official Public Records,  Ochiltree County, Texas

as to the following property:

A tract of land in the Northeast corner of Section Three (3), Block Twelve (12), H. & G.N. R.R. Co. Survey in Ochiltree County, Texas, save and excepting the public roads at the Northeast corner of said Section Three (3), Block Twelve (12), described by metes and bounds as follows: 

BEGINNING at brass capped rod marked “CPS” the N.E. and beginning corner of this tract, from which a nail and bottle cap set in E-W black top road same being the common corner of Section Two (2) and Three (3) in Block Twelve (12) bears East 30 feet and N. 0o 12’ W. 60 feet; 

Schedule C-32

THENCE, S. 0o 12’ E. 295.16 feet along the W. right-of-way of a 60 feet N-S graded public road same being 30 feet from and parallel with the E. section line to brass capped rod marked “CPS” the S.E. corner of this tract from which a 1 1⁄4” iron pipe the common corner of Sections Two (2), Three (3), Fourteen (14) and Fifteen (15) in Block Twelve (12) bears S. 4935.24 feet and East 30 feet;

THENCE, West 295.16 feet to brass capped rod marked “CPS” the S.W. corner of this tract; 

THENCE, N. 0o 12’ W. 295.16 feet to brass capped rod marked “CPS” the N.W. corner of this tract same being set in the South right-of-way of E-W black top road No. 192, from which center line of said road No. 192 same being the N. line of Section Three (3) in Block Twelve (12) bears N. 0o 12’ W. 60 feet, from which the common corner of Section Three (3) and Four (4) in Block Twelve (12) bears West 4961.5 feet and N. 0o 12’ W. 60 feet; and

THENCE, East 295.16 ft. along the S. right-of-way of road No. 192 same being 60 feet from and parallel with the N. section line to the PLACE OF BEGINNING of this tract, and containing 2 acres of land, more or 1ess.

Potter County, Texas

The Indenture describes the Mortgaged Property identified as SPS 940 and referred to as the “Pole Yard Parking” and the Mortgaged Property identified as SPS 5122 and referred to as the “Service Building Northeast” by a metes and  bounds description.  This property has been replatted and its description is corrected to be as follows:

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	

940 and 5122
(3715) and (3722)
	

Pole Yard Parking and
Service Building Northeast
called
Potter County Service Center
	

Volume 315, Page 299 et seq.,
Deed Records,  Potter County, Texas dated May 6, 1942 and recorded June 16, 1942,  and

Volume 554, Page 119 et seq.,
Deed Records,  Potter County, Texas, dated March 16, 1951 and recorded in July 11, 1951
 

as to the following property:

Lot 1, Block 1, S.P.S. Subdivision # 1, an addition to the City of Amarillo, according to the plat thereof recorded in the Deed Records, Potter County, Texas.

Schedule C-33

Randall County, Texas

The Indenture describes the Mortgaged Property identified as SPS 927 and referred to as the “Amarillo (Estacado) Substation” by a metes and bounds description.  This property has been replatted and its description is corrected to be as follows:

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

927 
(3820)
	

Amarillo (Estacado) Substation
	

Volume 707, Page 213 et seq.,
Deed Records, Randall County, Texas dated February 19, 1980, and recorded March 31, 1980

 
as to the following property:

Lot 1, Block 1, Unit No. 1 of S.P.S. Estacado Subdivision, an addition to the City of Amarillo, according to the plat thereof recorded in Volume 1006, Page 120, Deed Records, Randall County, Texas.

The Indenture describes the Mortgaged Property identified as SPS 983 and referred to in Indenture as “Amarillo (34th Street) Substation” by a metes and bounds description.  This property has been replatted and its description is corrected to be as follows:

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

983 
(3819)
	

Amarillo (34th Street) Substation
	

Volume 655, Page 81 et seq.,
Deed Records, Randall County, Texas dated August 4, 1978, and recorded August 16, 1978

as to the following property:

Lot 22, Block 87, Unit No. 45 of Olsen Park Addition to the City of Amarillo, according to the plat thereof recorded in Volume 651, Page 699, Deed Records, Randall County, Texas.

Schedule C-34

The Indenture describes the Mortgaged Property identified as SPS 988 and referred to in Indenture as “Hillside Substation” by a metes and bounds description.  This property has been replatted and its description is corrected to be as follows:

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

988 
(3826)
	

Hillside Substation
	

Document No. 2005001314, Official Public Records, Randall County, Texas, dated September 2004, and recorded January 28, 2005

as to the following property:

Lot 178, Block 5, Hillside Terrace Estates Unit No. 15, an addition to the City of Amarillo, according to the plat thereof recorded under Clerk’s Document No. 2011015246, Randall County, Texas.

The Indenture describes the Mortgaged Property identified as SPS 5073 and referred to in Indenture as “Randall County Transmission Line” by a metes and bounds description.  This property has been replatted and its description is corrected to be as follows:

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5073 
(3822)
	

Randall County Transmission Line
	

Volume 364, Page 157 et seq.,
Deed Records, Randall County, Texas, dated December 2, 1965, and recorded December 2, 1965
 

as to the following property:

Lot 31, Block 5, Osage Acres Unit No. 4, an addition to the City of Amarillo, according to the plat thereof recorded in Volume 1724, Page 106, Deed Records, Randall County, Texas.

The Indenture describes the Mortgaged Property identified as SPS 5127 and referred to in Indenture as “Service Center Southwest” by a metes and bounds description.  This property has been replatted and its description is corrected to be as follows:

Schedule C-35

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5127 
(3809)
	

Service Center Southwest
	

Volume 334, Page 216 et seq.,
Deed Records, Randall County, Texas, dated May 20, 1964, and recorded June 4, 1964

as to the following property:

Lot 1, Block 1, SPS Addition Unit No. 1, an addition to the City of Amarillo, according to the plat thereof recorded in Volume 665 Page 401, Official Real Property Records, Randall County, Texas; and Lot 2, Block 1 SPS Addition Unit No. 2, an addition to the City of Amarillo, according to the plat thereof recorded in Volume 824 Page 377 et seq., Official Real Property Records, Randall County, Texas.

The Indenture describes the Mortgaged Property identified as SPS 5128 and referred to in Indenture “Puckett West Substation” by a metes and bounds description.  This property has been replatted and its description is corrected to be as follows:

	
			
	SPS Id. No. 
(RS Id. No.)
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5128 
(3821)
	

Puckett West Substation
	

Volume 724, Page 513 et seq.,
Deed Records, Randall County, Texas, dated September 4, 1980, and recorded November 5, 1980
  

as to the following property:

Lot 18, Block 27, Puckett West Unit No. 10, an addition to the City of Amarillo, according to the plat thereof recorded in Volume 722, Page 463, Deed Records, Randall County, Texas.

Sherman County

The Indenture incorrectly included as part of the Mortgaged Property the following property as part of the property identified in the Indenture as SPS Id. No. 1040 called by the Company the “Sherman Substation” in Sherman County, Texas:

Schedule C-36

Lots One (1), Two (2), and Three (3), in Block One Hundred Nineteen (119) in the Town of Stratford, Sherman County, Texas, as shown by the recorded map and plat thereof

which property was conveyed by Southwestern Public Service Company to H. L. McMahen by deed dated August 15, 1962, and recorded in Volume 162, Page 463 et seq., Deed Records, Sherman County Texas.  The Indenture is corrected to delete and release the above described property from the Indenture.  The balance of the property identified in the Indenture as SPS Id. No. 1040 as the “Sherman Substation” in Sherman County, Texas is not hereby released.

2.    Water Rights.  The following described water rights acquired by the Company and described in the following Deeds into the Company (the “Water Rights”): 

Gaines County, Texas

	
			
	SPS Id. No.
	Common Name
	Deeds into Southwestern Public Service Company Recorded at

	

5214
	

Gaines County Generation Plant
	

Tract 1:  Document No. 2015-4408, Official Public Records, Gaines County, Texas executed by A.L.H.M., Inc. and dated August 3, 2015 and recorded August 4, 2015;

Tract 2:  Document No. 2015-4412, Official Public Records, Gaines County, Texas executed by F.A.C.E., Inc. and dated August 3, 2015 and recorded August 4, 2015;

Tract 3:  Document No. 2015-4410, Official Public Records, Gaines County, Texas executed by 3 JK’s, Inc., Inc. and dated August 3, 2015 and recorded August 4, 2015;

Tract 4:  Document No. 2015-4411, Official Public Records, Gaines County, Texas executed by J.D.C. Farms and dated August 3, 2015 and recorded August 4, 2015; and

Schedule C-37

	
			
	 
	 
	Tract 5:  Document No. 2015-4409, Official Public Records, Gaines County, Texas executed by A.J.K., Inc. and dated August 3, 2015 and recorded August 4, 2015

as all ground water and ground water rights as to the following property:

Tract 1:  The Southwest one-fourth (SW/4) and the Southwest One-half of the Southeast One-Fourth (SW/2 of SE/4) of Section 6, Block A-12, Public School Land, Gaines County, Texas.

Tract 2:  The Northwest One-fourth (NW/4) of Section 6, Block A-12, Public School Land, Gaines County, Texas.

Tract 3: The Northeast One-fourth (NE/4) and the Northeast One-half of the Southeast One-fourth (NE/2 of SE/4) of Section 6, Block A-12, Public School Land, Gaines County, Texas.

Tract 4:  The West One-half (W/2) of Section Seven (7), Block A-12, Public School Land, Gaines County, Texas.

Tract 5: The East One-half (E/2) of Section Seven (7), Block A-12, Public School Land, Gaines County, Texas.
Lamb County, Texas

	
			
	SPS Id. No.
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5207
	

Water Rights
Rose Tract 1

	

Document No. 2074, Volume 723, Page 7 et seq., Official Records, Lamb County, Texas and dated October 28, 2014 and recorded November 13, 2014

as to all groundwater and groundwater rights to the Ogallala Aquifer in and to the following property:

A tract of land containing the East part of Section 3, all of Section 4, and approximately 4.8 acres in the Northwest part of Section 5, all in Block B, R. M. Thomson Survey,

Schedule C-38

Lamb County, Texas, and being a part of the lands surveyed by Carl Williams in 1976 (copy of record in Cause Number 7815, District Clerk’s Office, Lamb County, Texas) this tract being more particularly described by metes and bounds as follows: 

BEGINNING at a 1-1/4 inch iron pipe found in the South line of Block B and the North line of Block T, T. A. Thomson Survey, as found marking the Southeast corner of Section 4, Block B, R. M. Thomson Survey, Lamb County, Texas, the Southeast corner of this tract;

THENCE, North 87° 5’ 11’’ West (bearings referenced to the Texas Coordinate System, North Central Zone, NAD 83), 5280.43 feet to a 1-1/4 inch steel shaft found marking the Southwest corner of Section 4 and the Southeast corner of Section 3, Block B, and the Northeast corner of Section 3, Block T;

THENCE, North 87° 2’ 59” West, 2632.07 feet along the South line of Section 3, Block B to a one inch iron pipe set for the Southwest corner of this tract;

THENCE, North 2° 50’ 21” East, 4924.66 feet to a 1-1/4 inch iron pipe found in the North line of Section 3, Block B for the Northwest corner of this tract;

THENCE, South 87° 59’ 56” East, 2631.46 feet to a 1-1/4 inch steel shaft found marking the Northeast corner of Section 3 and the Northwest corner of Section 4, Block B;

THENCE, South 88° 3’ 49” East, 5283.10 feet to a 3/4 inch steel shaft found marking the Northeast corner of Section 4 and the Northwest corner of Section 5, Block B;

THENCE, South 88° 2’ 17” East, 82.27 feet along the North line of Section 5 Block B to a one inch iron pipe set for the Northeast of a tract sometimes referred to as a 4.8 acre tract for the Northeast corner of this tract;

THENCE, South 2° 51’ 7” West, parallel to the East line of Section 4 a distance of 2529.61 feet to a one inch iron pipe found, marking the Southeast corner of the tract sometimes referred to as 4.8 acres;

THENCE, North 86° 59’ West, 82.26 feet to a one inch iron pipe set in the East line of Section 4 for a corner of this tract; and

THENCE, South 2° 51’ 7” West, 2530.24 feet along the East line of Section 4 to the PLACE OF BEGINNING.

containing 911.45 acres, more or less. 

Schedule C-39

	
			
	SPS Id. No.
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5208
	

Water Rights 
Rose Tract 2

	

Document No. 2072, Volume 722, Page 873 et seq., Official Records, Lamb County, Texas and dated October 28, 2014 and recorded November 13, 2014

as to all groundwater and groundwater rights to the Ogallala Aquifer in and to the following property:

A tract of land containing the Northeast quarter of Section 2 and the North half of Section 3, all in Block T, T. A. Thomson Survey, Lamb County, Texas, and being a part of the lands surveyed by Carl Williams in 1976 (copy of record in Cause Number 7815, District Clerk’s Office, Lamb County, Texas) this tract being more particularly described by metes and bounds as follows:

BEGINNING at a 1-1/4 inch steel shaft found in the South line of Block B, and the North line of Block T, T. A. Thomson Survey, as found marking the Southeast corner of Section 3, Block B, R. M. Thomson Survey, and the Northeast corner of Section 3, Block T, T. A. Thomson Survey, Lamb County, Texas, the Northeast corner of this tract;

THENCE South 2° 44’ 33” West (bearings referenced to the Texas Coordinate System, North Central Zone, NAD 83), 2964.53 feet along the East line of Section 3 to a one inch iron pipe set for the Southeast corner of the Northeast quarter of Section 3, Block T for the Southeast corner of this tract, from this point a 1/2 inch iron rod found with a cap marked “Newton” bears South 2° 44’ 33” West, 2964.53 feet;

THENCE North 87° 6’ 45” West, 5285.47 feet to a 1-1/4 inch iron pipe found marking the Southeast corner of the Northeast quarter of Section 2 and the Southwest corner of the North half of Section 3 for a corner of this tract;

THENCE North 87° 0’ 14” West, 2649.01 feet to a +3 inch iron pipe found for the Southwest corner of the Northeast quarter of Section 2 for the Southwest corner of this tract; 

THENCE North 2° 52’ 6” East, 2964.63 feet to a 1-1/4 inch iron pipe found for the Northwest corner of the Northeast quarter of Section 2 for the Northwest corner of this tract; 

Schedule C-40

THENCE South 87° 7’ 35” East, 2642.70 feet to a one inch iron pipe set for the Northeast corner of Section 2; and

THENCE South 87° 2’ 59” East, at 2653.20 feet pass a one inch iron pipe set, at a total distance of 5285.27 feet to the PLACE OF BEGINNING.

contains 540.30 acres, more or less.

	
			
	SPS Id. No.
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5209
	

Water Rights 
Rose Tract 3

	

Document No. 2073, Volume 723, Page 1 et seq., Official Records, Lamb County, Texas and dated October 29, 2016 and recorded November 13, 2014

as to all groundwater and groundwater rights to the Ogallala Aquifer in and to the following property:

A tract of land containing a portion of the South half of Section 18, Block B, D. & S.E. Railroad Company Survey, and the West part of Section 3, Block B, R. M. Thomson Survey (this portion surveyed by Carl Williams in 1976, copy of survey of record in Cause Number 7815, District Clerk’s Office Lamb County Texas), all in Lamb County, Texas and being more particularly described by metes and bounds as follows:

BEGINNING at a one inch iron pipe set at the remains of a five gallon can in the North line of Block B, R. M. Thomson Survey, the Southwest corner of Section 18, Block B, D. & S.E. Railroad Company Survey, Lamb County, Texas, the Southwest corner of this tract;

THENCE, North 2° 1’ 16” East (bearings referenced to the Texas Coordinate System, North Central Zone, NAD 83), 2640.10 feet along the West line of Section 18 to a one inch iron pipe set at the midpoint of the West line of Section 18 for the Northwest corner of this tract, from this point a 3/4 inch iron pipe found for the Northwest corner of Section 18 bears North 2° 1’ 16” East, 2640.10 feet;

THENCE, South 87° 59’ 58” East 3814.46 feet to a 3/8 inch iron rod with cap stamped “HBD” set;

THENCE, South 02° 00’ 02” West, a distance of 295.16 feet to a 3/8 inch iron rod with cap stamped “HBD” set;

Schedule C-41

THENCE, South 87° 59’ 58” East, a distance of 295.16 feet to a 3/8 inch iron rod with cap stamped “HBD” set;

THENCE, North 02° 00’ 02” East, a distance of 295.16 feet to a 3/8 inch iron rod with cap stamped “HBD” set;

THENCE, South 87° 59’ 58” East, a distance of 1168.38 feet to a point, the midpoint of the East line of Section 18 for the Northeast corner of this tract, from this point a 1/2 inch iron rod found marking the Northeast corner of Section 18 bears North 1° 59’ 14” East, 2639.10 feet;

THENCE, South 1° 59’ 14” West, 2639.09 feet along the East line of Section 18 to an old split one inch iron pipe found in the North line of Block B, R. M. Thomson Survey, the Southeast corner of Section 18 and the Southeast corner of this tract,

THENCE, South 87° 59’ 56” East, 618.93 feet to a 1-1/4 inch iron pipe as found marking the Northeast corner of the West part of Section 3 for a Northeast corner of this tract;

THENCE, South 2° 50’ 21” West 4924.66 feet to a one inch iron pipe set in the South line of Section 3, Block B and in the North line of Section 3, Block T, T.A. Thomson Survey for the Southeast corner of this tract;

THENCE, North 87° 2’ 59” West, 2653.20 feet to a one inch iron pipe set at the Southwest corner of Section 3, Block B, and the Northwest corner of Section 3 Block T for a Southwest corner of this tract,

THENCE, North 2° 51’ 51” East, 4880.34 feet along the West line of Section 3, Block B to a point in the South line of Section 18, Block B for the Northwest corner of Section 3, from this point a 1-1/4 inch iron pipe found bears North 3° East, 2.90 feet; and

THENCE, North 88° 0’ 37” West, 3247.15 feet along the South line of Section 18 to the PLACE OF BEGINNING.

containing 616.37 acres, more or less.

	
			
	SPS Id. No.
	Common Name
	Deed into Southwestern Public Service Company Recorded at

	

5210
	

Water Rights 
Rose Tract 4

	

Document No. 2071, Volume 722, Page 865 et seq., Official Records, Lamb County, Texas and dated October 29, 2014 

Schedule C-42

	
			
	 
	 
	and recorded November 13, 2014

as to all groundwater and groundwater rights to the Ogallala Aquifer in and to the following property:

A tract of land containing the Northeast quarter of Section 1, the West half and the Southeast quarter of Section 2, and the North half of Section 11, all in Block T, T. A. Thomson Survey, Lamb County, Texas, and being a part of the lands surveyed by Carl Williams in 1976 (copy of record in Cause Number 7815; District Clerk’s Office, Lamb County, Texas) this tract being more particularly described by metes and bounds as follows:

BEGINNING at a 1-1/4 inch iron pipe found in the South line of Block B and the North line of Block T, T. A. Thomson Survey, as found marking the Southwest corner of Section 2, Block B, R. M. Thomson Survey, and the Northeast corner of Section 1, Block T, T. A. Thomson Survey, Lamb County, Texas, a corner of this tract;

THENCE, South 87° 4’ 47” East (bearings referenced to the Texas Coordinate System, North Central Zone, NAD 83), 2642.18 feet to a 1-1/4 inch iron pipe found marking the Northeast corner of the Northwest quarter of Section 2, Block T for a corner of this tract from this point a one inch iron pipe set for the Northeast corner of Section 2, Block T bears South 87° 7’ 35” East, 2642.7 feet;

THENCE, South 2° 52’ 6” West, 2964.63 feet to a +3 inch iron pipe as found marking the Southeast corner of the Northwest quarter of Section 2, at the corner of fences to the North and East for a corner of this tract;

THENCE, South 87° 0’ 14” East, 2649.01 feet to a 1-1/4 inch iron pipe found for the Southeast corner of the Northeast quarter of Section 2 for a corner of this tract;

THENCE, South 2° 53’ 5” West, 2960.92 feet to a 1-1/4 inch iron pipe found for the Southeast corner of the Southeast quarter of Section 2 for a corner of this tract;

THENCE, South 2° 44’ 46” West, 2629.89 feet to a one inch iron pipe set for the Southeast corner of the Northeast quarter of Section 11 for a corner of this tract;

THENCE, North 87° 2’ 53” West, at 2646.91 feet pass a 1-1/4 inch iron pipe found in the top of a large wood gatepost, continuing for a total distance of 5297.38 feet to a one inch iron pipe set for the Southwest corner of the Northwest quarter of Section 11 for a corner of this tract, from this point a tall 1-1/4 inch iron 

Schedule C-43

pipe found marking the Southwest corner of Section 11 bears South 2° 53’ 34” West, 2642.73 feet;

THENCE, North 2° 53’ 34” East, 2630.17 feet to a tall 3/4 inch iron pipe found for the Northwest corner of Section 11 and the Southwest corner of Section 2;

THENCE, North 2° 51’ 59” East, 2964.32 feet to a 1-1/4 inch iron pipe found marking the Southeast corner of the Northeast quarter of Section 1, Block T for a corner of this tract; 

THENCE, North 86° 59’ 9” West, 2642.19 feet to a 1-1/4 inch iron pipe found marking the Southwest corner of the Northeast quarter of Section 1, Block T for a corner of this tract; 

THENCE, North 2° 54’ 18” East 2968.56 feet to a 1-1/4 inch iron pipe found marking the Northwest corner of the Northeast quarter of Section 1, Block T for a corner of this tract; and 

THENCE, South 86° 50’ 0” East, 2640.74 feet to the PLACE OF BEGINNING. 

contains 1039.05 acres, more or less. 

[New Mexico properties on following pages]

Schedule C-44

THE FOLLOWING PROPERTIES ARE IN THE STATE OF NEW MEXICO.

EDDY COUNTY, NEW MEXICO:

North Loving Substation
SPS Id No: 5201

Tract 1 of the NORTH LOVING SUBSTATION PLAT OF SURVEY, being part of Tracts 3, 5, and 6, KIMBLEY WATER SALE #3, in the NW/4 of Section 19, Township 23 south, Range 28 East, N.M.P.M., Eddy County, New Mexico, as shown on the official plat thereof on file in the office of the County Clerk of Eddy County, New Mexico.

EXCEPTING HEREFROM, all oil, gas and other minerals.

South Loving Substation
SPS Id No: 5222

[continued on following page]

Schedule C-45

LEA COUNTY, NEW MEXICO:

Cardinal Substation
SPS Id No: 5223

The following described real estate in Lea County, New Mexico:

Pearl Substation
SPS Id No: 5221

[continued on following page]

Schedule C-46

ROOSEVELT COUNTY, NEW MEXICO:

Kilgore Substation
SPS Id No: 5206

A tract of land out of the North Half of the Northeast Quarter of the Southeast Quarter (N/2NE/4SE/4) and the Southeast Quarter of the Northeast Quarter (SE/4NE/4) of Section Thirty-six (36), Township One(1) South, Range Thirty-four (34) East, NMPM, Roosevelt County, New Mexico, described by metes and bounds as follows:  Commencing at a 1 inch iron pipe found for the reputed Southwest corner of the Northeast Quarter of the Southeast Quarter (NE/4SE/4) of Section Thirty-six (36), Township One (1) South, Range Thirty-four (34) East, NMPM, Roosevelt County, New Mexico, whence the Northwest corner of the Northeast Quarter of the Northeast Quarter (NE/4NE/4) bears N 00°37’14” W3984.38 feet and the Southeast corner of said section bears N 88°36’46” E 1320.29 feet and S 00°33’40” E 1329.63 feet;
thence, N 00°37’14” W along the West line of the Northeast Quarter of the Southeast Quarter (NE/4SE/4) of said section, 667.21 feet to a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set for the Southwest corner of the North Half of the Northeast Quarter of the Southeast Quarter (N/2NE/4SE/4) of said section and also being the Southwest and beginning corner of this tract;
thence, continuing N 00°37’14” W along the West line of the Northeast Quarter of the Southeast Quarter (NE/4SE/4) of said section, 146.70 feet to a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set in the South monumented line of Oakwood Manor Estates as shown by the plat thereof of record as Document No.20091329 and Document No. 20101285, Clerk’s Records;
thence, N 88L038’49” E along-the South monumented line of Oakwood Manor Estates, 8.86 feet to a 1/2 inch iron rod found for the Southeast corner of said Oakwood Manor Estates;
thence, N 00°00’12” East along the East monumented line of Oakwood Manor Estates, 1176.16 feet to a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set for the Northeast corner of said Oakwood Manor Estates; thence, S 88°29’16” W along the North monumented line of Oakwood Manor Estates, 21,67 feet to a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set in the West line of the Southeast Quarter of the Northeast Quarter (SE/4NE/4) of said section whence a 1/2 inch iron rod found bears S 88°29’16” West 2.68 feet; 
thence, N 00°37’14” W 665.84 feet to a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set for the Northwest corner of the Southeast Quarter of the Northeast Quarter (SE/4NE/4) of said section whence a 1/2 inch iron rod bears S 88°32’06” W 1.23 feet;
thence, N 88°32’06”, E along the North line of the Southeast Quarter of the Northeast Quarter (SE/4NE/4) of said section, 70.01 feet to a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set for corner;
thence, S 02°29’08” E 666.13 feet to a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set for corner;
thence, S 01°17’05” E 853.16 feet a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set for corner;
thence, N 88°42’55” E 369.60 feet to a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set for corner;
thence, S 01°17’05” E 399.35 feet to a 1/2 inch rod with plastic cap stamped “NMPLS 15514” set for corner;

Schedule C-47

thence, N 88°42’55” E 845.22 feet to a 1/2 inch rod with plastic cap stamped “NMPLS 15514” set in the East line of said section;
thence, S 00°33’40” E along the East line of said section, 70.01 feet to a 1/2 inch iron rod with plastic cap stamped “NMPLS 15514” set for the Southeast corner of the North Half of the Northeast Quarter of the Southeast Quarter (N/2NE/4SE/4) of said section;
thence, S 88°42’55” W along the South line of the North Half of the Northeast Quarter of the Southeast Quarter (N/2NE/4SE/4) of said section, at 30.07 feet pass a 1/2 inch iron rod found, at 1313.69 feet pass a 1/2 inch iron rod found and at a total distance of 1320.95 feet the place of beginning.

Schedule C-48Exhibit 10.1

 

LOAN AND SECURITY AGREEMENT

 

This Loan and Security
Agreement (as amended, restated, supplemented, or otherwise modified from time to time, this “Agreement”) is
made and entered into as of August 5, 2016, by and between Llama Productions LLC, a California limited liability company (the “Borrower”),
and Bank Leumi USA, a New York banking corporation (the “Lender”).

 

RECITALS

 

This Agreement is entered
into in reference to the following facts:

 

The Borrower has requested
that the Lender make a loan to the Borrower of up to $5,275,000, the proceeds of which shall be used to pay a portion of the expenses
of producing, completing and delivering fifteen (15) episodes of a premium pay animated children’s television series tentatively
entitled Llama Llama and to pay interest, fees, costs and other amounts related thereto. The Lender is willing to make such
a loan to the Borrower on the terms contained herein.

 

NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the parties hereby agree as follows.

 

ARTICLE
1 -DEFINITIONS

 

1.1.         
Defined Terms. Initially capitalized terms used herein shall have the following meanings:

 

“Affiliate”
means, as to any Person, any other Person who directly or indirectly, controls, is controlled by, or is under common control with
such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.

 

“Agreement”
means this Loan and Security Agreement, as amended, restated, supplemented, or otherwise modified from time to time after the Closing
Date.

 

“Attorney Costs”
means all reasonable fees of Babok & Robinson, LLP, the external legal counsel engaged by the Lender to negotiate and close
the Loan evidenced by this Agreement, and any reasonable related out-of-pocket disbursements, filing, courier, messenger, copying
and other fees and expenses incurred by such counsel.

 

“Available Commitment”
means, as of any date, (a) the Commitment, minus (b) the sum of: (i) the unpaid balance of all outstanding Loans and other
Obligations; (ii) the aggregate amount of requested, but unfunded, Loans, prior to such date; and (iii) the Interest and Fee Reserve.

 

“Borrowing Certificate”
means a certificate substantially in the form attached hereto as Exhibit “A.”

 

“Budget”
means the final budget for the Series, dated July 28, 2016, in the amount of $5,647,266, which has been identified as such in the
Completion Guaranty.

 

“Business Day”
means: (a) any day that is not a Saturday, Sunday, or a day on which banks in Los Angeles, California or New York, New York, are
required or permitted to be closed, and (b) with respect to all notices, determinations, fundings and payments in connection with
LIBOR or LIBOR Loans, any day that is a Business Day pursuant to clause “(a)” above and that is also a day on which
trading is carried on by and between banks in the London interbank market.

 

“Capital Adequacy
Regulation” means any guideline, request or directive of any central bank or other governmental authority, or any other
law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.

 

“Cash Collateral
Account” means account number           , in the name of the Borrower,
maintained at the Lender’s branch located at                              , Attention:             ;                     ; Swift Code:             ;
Attention:                ; or such other bank accounts or addresses as the Lender may hereafter designate.

 

 

 

    	 	1	 

     

    

 

“Cash Flow Schedule”
means the cash flow schedule for the Series, dated July 28, 2016, in the amount of $5,647,266, which has been identified as such
in the Completion Guaranty.

 

“Chain-of-Title
Documents” means the documents listed in Schedule 1 hereto.

 

“Change of Control”
means, Genius Brands ceases to have both beneficial ownership and voting control of 100% of the voting interest of the Borrower.

 

“Closing Date”
means the date on which all conditions precedent to the initial Loan specified in Article 5 hereof have been satisfied.

 

“Collateral”
has the meaning assigned thereto in Section 7.1 hereof.

 

“Collateral
Proceeds” means all proceeds of the Collateral, including all amounts acquired or paid to or derived by or payable directly
and indirectly to the Borrower or any third Persons or any of their respective Affiliates on account of the sale, lease, licensing,
exchange, distribution, exploitation, or other disposition of the Collateral, including, without limitation, the Netflix License
Fee, money, royalties, fees, commissions, charges, payments, proceeds of any letter of credit, advances, income, profit and other
forms of payment, and proceeds of any insurance for any of the Collateral, and any sums payable to the Borrower and any third Persons
or any of their respective Affiliates under the Netflix License Agreement.

 

“Collection
Account” means account number            , in the name
of the Borrower, maintained at the Lender’s branch located at
                               ,
Attention:                  ;                      ; Swift Code:           ; Attention:                ; Reference:
               , or such other bank accounts or addresses as the Lender may hereafter designate.

 

“Commitment”
means five million two hundred seventy-five thousand Dollars ($5,275,000).

 

“Completion
Agreement” means the Completion Agreement dated concurrently herewith, among the Completion Guarantor and the Borrower
for the Series and any amendments, supplements, modifications, extensions, renewals or replacements thereto.

 

“Completion
Sums” means all sums advanced or expended by the Completion Guarantor pursuant to the Completion Agreement and/or the
Completion Guaranty to cover costs, expenses, claims, demands, and losses incurred by the Completion Guarantor to complete and
deliver the Series under the terms thereof.

 

“Completion
Guarantor” means Film Finances, Inc., a California corporation.

 

“Completion
Guaranty” means the Completion Guaranty for the Series, dated concurrently herewith, issued by the Completion Guarantor
in favor of the Lender, and any amendments, supplements, modifications, extensions, renewals or replacements thereto, pursuant
to which the Completion Guarantor has guaranteed to the Lender, inter alia, that the Series will be duly and timely completed
and delivered to Netflix and providing for a strike price (the “Strike Price”) which, after the application
of all credits for all other third party funds, does not exceed the Commitment minus the Interest and Fee Reserve calculated
on the Closing Date.

 

“Copyright Mortgage”
means the Copyright Mortgage, dated concurrently herewith, from the Borrower, in a form approved by the Lender and suitable for
filing in the United States Copyright Office, pursuant to which the Borrower granted to the Lender a Lien in its rights in the
Series to secure the satisfaction of its obligations under the Loan Documents.

 

“Default”
means any event or condition specified in Section 11.1 that, with notice, the passage of time, the happening of any other
condition or event, or any combination thereof, would constitute an Event of Default.

 

“Default Rate”
means a per annum interest rate at all times equal to the sum of the otherwise applicable interest rate plus three percent
(3%). Each Default Rate shall be adjusted simultaneously with any change in the applicable interest rate.

 

 

 

    	 	2	 

     

    

 

“Delivery”
means “Delivery” or the equivalent phrase, as defined in the Netflix Notice of Assignment.

 

“Delivery Materials”
means the materials that must be delivered and/or made available to Netflix as specified in, and in accordance with the terms of,
the Netflix Notice of Assignment.

 

“Deposit Account
Control Agreement” means the Deposit Account Control Agreement for the Cash Collateral Account, dated on or about the
date hereof, by and between the Borrower and the Lender, in a form approved by the Lender and its counsel.

 

“Dollars”
or “$” means the lawful currency of the United States of America.

 

“Episodes”
collectively means each episode of the Series, and “Episode” means any of the Episodes.

 

“Equity Interests”
means shares of the capital stock, partnership interests, membership interests in a limited liability company, beneficial interests
in a trust or other equity interests in any Person or any warrants, options or other rights to acquire such interests.

 

“Event of Default”
has the meaning specified in Section 11.1 hereof.

 

“Forum”
has the meaning assigned therein in Subsection 13.4(b) hereof.

 

“Genius Brands”
means Genius Brands International, Inc., a Nevada corporation.

 

“Guild Subordination
Agreements” means the subordination agreement(s), the terms of which have been approved by the Lender, subordinating
any Lien which any applicable union or guild may have in the Collateral, which is subject to the Lender’s Lien hereunder.

 

“Interest and
Fee Reserve” means $478,619.

 

“Interest Payment
Due Date” means (a) with respect to LIBOR Loans, the last Business Day of the Interest Period of such LIBOR Loan; provided,
however, if such Interest Period has a duration of more than three (3) months, then on each day which occurs during such
Interest Period every three (3) months from the first day of such Interest Period, but in each case no later than the Maturity
Date, and (b) with respect to Prime Rate Loans, the first day of each month hereafter.

 

“Interest Period”
means, as to any LIBOR Loan, the period commencing on the funding date of a Loan or on the date such Loan is converted into or
continued as a LIBOR Loan, and ending on a date which is one (1), three (3) or six (6) months thereafter, provided, that:
(i) in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the day on which
the next preceding Interest Period expires; (ii) if any Interest Period would otherwise expire on a day which is not a Business
Day, the Interest Period shall be extended to expire on the next succeeding Business Day; provided, however, if the
next succeeding Business Day occurs in the following calendar month, then such Interest Period shall expire on the immediately
preceding Business Day; (iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business
Day of the calendar month at the end of such Interest Period; (iv) the Borrower may not select an Interest Period for any LIBOR
Loan, which Interest Period expires later than the Maturity Date; and (v) there shall be no more than six (6) Interest Periods
in effect at any one time.

 

“Interest Rate”
means the interest rates, including the Default Rate, set forth in Section 3.1.

 

“LIBOR”
means for any Interest Period for LIBOR Loans, the rate of interest per annum (rounded to the nearest whole multiple of 1/100th
of 1.0%) equal to the quotient of the following (a) the LIBOR Base Rate divided by (b) one minus the Reserve Requirement.

 

 

 

    	 	3	 

     

    

 

“LIBOR Base
Rate” means for any day, the per annum rate of interest determined on the basis of: (a) the rate for deposits in United
States Dollars having a maturity comparable to applicable Interest Period, appearing on Page BBAM of the Bloomberg Financial Markets
Information Service as of 11:00 a.m., Pacific Time (or as soon thereafter as practical), on such day, or if such day is not a Business
Day, on the immediately preceding Business Day, or (b) if that such rate does not appear on Page BBAM of the Bloomberg Financial
Markets Information Service (or otherwise on such service) on any day, then the rate for such day shall be determined by reference
to such other publicly available service for displaying Eurodollar rates as may be reasonably selected by the Lender, or (c) in
the absence of such other service, the “LIBOR” for such day shall, instead, be determined based upon the average of
the rates at which the Lender is offered dollar deposits at or about 11:00 a.m., Pacific Time (or soon thereafter as practical),
on such day, or if such day is not a Business Day, on the immediately preceding Business Day, in the interbank Eurodollar market
in an amount comparable to the principal amount outstanding hereunder and for a period of one (1) month.

 

“LIBOR Loans”
means, collectively, the Loans on which interest is calculated based on LIBOR.

 

“LIBOR Margin”
means three and one-quarter percent (3.25%).

 

“Lien”
means any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute, or contract, and including without limitation, a security interest, charge,
claim, or lien arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement,
security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes, or other security
device or arrangement of any kind or nature whatsoever (including, without limitation, any financing or similar statement or notice
filed under the UCC, as in effect from time to time in the relevant jurisdiction, or any other similar recording or notice statute,
and any lease having substantially the same effect as any of the foregoing).

 

“Literary Property”
means all general intangibles and rights in copyright and all other rights of every kind and nature (including, without limitation,
copyrights) now or hereafter acquired by the Borrower under all Chain-of-Title Documents, the Teleplays, and any other literary,
musical, dramatic or other literary material of any kind or nature upon which, in whole or in part, the Series is or may be based,
or from which it is or may be adapted or inspired or which may be or has been used or included in the Series including, without
limitation, all scripts, scenarios, screenplays, bibles, stories, treatments, novels, outlines, books, titles, concepts, manuscripts
or other properties or materials of any kind or nature in whatever state of completion and all drafts, versions and variations
thereof.

 

“Loan Documents”
means this Agreement, the Note, the Copyright Mortgage, the Completion Guaranty, the Power of Attorney, the Guild Subordination
Agreements (as applicable), the Netflix Notice of Assignment, the Pledge Agreement, the Deposit Account Control Agreement and all
other agreements, instruments and documents heretofore, now or hereafter evidencing, securing, guaranteeing, or otherwise relating
to the Obligations, the Collateral, the Lender’s Lien therein, or any other aspect of the transactions contemplated by this
Agreement.

 

“Loan Fee”
means the sum of thirty-seven thousand seventeen Dollars ($37,017).

 

“Loan(s)”
has the meaning assigned thereto in Section 2.1 hereof.

 

“Maturity Date”
means November 5, 2019.

 

“Maximum Legal
Rate” has the meaning assigned thereto in Section 3.2 hereof.

 

“Netflix”
means Netflix, Inc., a Delaware corporation.

 

“Netflix License
Agreement” means that certain License Agreement entered into as of March 29, 2016 between Netflix and Genius Brands which
was assigned by Genius Brands to the Borrower pursuant to a Joinder to License Agreement and Assignment of Rights dated July 22,
2016.

 

 

 

    	 	4	 

     

    

 

“Netflix License
Fee” means the License Fee payable by Netflix as more particularly described in the Netflix Notice of Assignment.

 

“Netflix Notice
of Assignment” means the Notice of Assignment, dated concurrently herewith, in a form approved by the Lender, by and
among the Borrower, Netflix, the Completion Guarantor and the Lender.

 

“Non-Technical
Specifications” has the meaning set forth in the Netflix Notice of Assignment.

 

“Note”
means the Note, issued by the Borrower in favor of the Lender in the original principal amount equal to the Commitment evidencing
the Obligations.

 

“Notice of Conversion/Continuation”
means the Notice of Conversion/ Continuation in the form attached hereto as Exhibit “B.”

 

“Notice to Insurer”
means a Notice to Insurer of even date herewith from the Borrower and the Lender, in a form approved by the Lender, pursuant to
which the insurance company identified therein receives notice of the Lender’s Lien in the insurance policies obtained by
the Borrower pursuant to Section 10.5 hereof.

 

“Obligations”
collectively means all present and future loans, advances, liabilities, obligations, covenants, duties, and indebtedness owing
by the Borrower to the Lender in connection with the Series, whether or not arising under this Agreement or any of the other Loan
Documents, whether or not evidenced by any note, or other instrument or document, whether arising from an extension of credit,
opening of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect (including,
without limitation, those acquired by assignment from others, and any participation by the Lender in any of Borrower’s and/or
any such other Person’s debts owing to others), absolute or contingent, due or to become due, primary or secondary, as principal
or guarantor, and including, without limitation, all principal, interest (including interest accruing prior to or after the initiation
of insolvency proceedings, whether or not allowed), charges, expenses, fees, reasonable outside attorneys’ fees and costs,
filing fees and any other sums chargeable to the Borrower hereunder or under any other Loan Document.

 

“Other Taxes”
has the meaning assigned thereto in Subsection 13.8(a) hereof.

 

“Permitted Liens”
means (a) the Lender’s Lien under this Agreement and the other Loan Documents; (b) the Completion Guarantor’s Lien
granted to it under the terms of the Completion Agreement provided that the Lien is subject to an agreement between the
Lender and the Completion Guarantor making that Lien subject and subordinate to the Lender’s Lien and repayment of the Obligations;
(c) the rights granted to Netflix under the Netflix License Agreement, which shall be subject and subordinate to the Lender’s
Lien with respect to the Series; and (d) the Liens of any guilds so long as such Liens are subject to a Guild Subordination Agreement.

 

“Person”
means any natural person, corporation (including a business trust), partnership, limited liability company, joint venture, association,
trust, other business entity, or unincorporated organization or any other judicial entity, or a nation, state, government entity
or any agency or political subdivision thereof.

 

“Physical Properties”
means all physical properties of every kind or nature of or relating to the Series or any of the Episodes in whatever state of
completion and all versions thereof, including, without limitation, all physical properties relating to the development, production,
completion, delivery, exhibition, distribution or other exploitation of the Series, or any of the Episodes, and all versions thereof
or any part thereof, including, without limitation, the Literary Property and all Preprint Materials.

 

“Pledge Agreement”
means the Pledge Agreement from Genius Brands in favor of the Lender with respect to 100% of the Borrower’s Equity Interests
owned by Genius Brands, in a form approved by the Lender, dated concurrently herewith, as any such agreement may be amended, restated,
modified, supplemented, renewed or replaced from time to time.

 

 

 

    	 	5	 

     

    

 

“Power of Attorney”
means the power of attorney, in the form approved by the Lender, granted by the Borrower to the Lender to exercise any and all
of its rights in connection with the Series, subject to the terms set forth in the Loan Documents.

 

“Preprint Materials”
means all physical elements of each Episode of the Series, including without limitation, any video digital recordings and HDTV
format recordings and any and all other physical properties of every kind and nature relating to each Episode in whatever state
of completion, and all duplicates, drafts, versions, variations and copies of each thereof.

 

“Prime Rate”
means the variable rate of interest, per annum, published in the “Money Rates” column or section of The Wall Street
Journal (Western Edition) (the “WSJ”) as the “prime rate.” In the event two prime rates are published,
the higher rate shall be used. The Prime Rate is an index for determining the interest rate payable under the terms of this Agreement.
The Prime Rate is not necessarily the lowest rate offered by the banks that establish the rate or by the Lender. In the event the
WSJ ceases to publish the Prime Rate, the Lender, in its reasonable judgment, may substitute any similar index for the Prime Rate.
Any change in the Prime Rate shall take effect on the date of publication in the WSJ. Each determination of the Prime Rate by the
Lender shall be conclusive and final in the absence of manifest error.

 

“Prime Rate
Loan” means, collectively, the Loans on which interest is calculated by reference to the Prime Rate.

 

“Prime Rate
Margin” means one percent (1.0%).

 

“Production
Bank Account” means account number           , in the name of the
Borrower, maintained at the Lender’s branch located at
          
                      , Attention:                ;                       ;
Swift Code:           ; Attention:                   ; Reference:                  .

 

“Production
Schedule” means, collectively, the Production Schedule and Post-Production Schedule dated July 26, 2016.

 

“Regulation
D” means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

 

“Regulatory
Change” means, with respect to the Lender, any change on or after the date of this Agreement in United States Federal,
state or foreign laws or regulations, including Regulation D, as in effect from time to time, or the adoption or making on or after
such date of any interpretations, directives or requests applying to a class of banks, including the Lender, of or under any United
States Federal or state, or any foreign, laws or regulations (whether or not having the force of law) by any court or governmental
or monetary authority charged with the interpretation or administration thereof.

 

“Reserve Requirement”
means, for any Interest Period, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves)
are required to be maintained during such Interest Period under Regulation D against “Eurocurrency liabilities” (as
such term is used in Regulation D) by banks. Without limiting the effect of the foregoing, the Reserve Requirement shall reflect
any other reserves required to be maintained by the Lender by reason of any Regulatory Change against (i) any category of liabilities
which includes deposits by reference to which the LIBOR is to be determined as provided in the definition of “LIBOR Base
Rate” or (ii) any category of extensions of credit or other assets which include the Loans.

 

“Rules”
has the meaning assigned thereto in Subsection 13.4(a) hereof.

 

“Series”
means the premium pay animated children’s television series consisting of fifteen (15) twenty-two minute episodes (some or
all of which may consist of two (2) 11 minute segments if requested by Netflix), tentatively entitled Llama Llama, by whatever
title such series is now or may hereafter become known.

 

 

 

    	 	6	 

     

    

 

“Taxes”
has the meaning assigned thereto in Subsection 13.8 hereof

 

“Technical Specifications”
has the meaning set forth in the Netflix Notice of Assignment.

 

“Teleplays”
collectively means the final teleplays for each Episode, and “Teleplay” means any of the Teleplays.

 

“Termination
Date” means the earliest to occur of (a) the Maturity Date, (b) the date the credit facility provided hereunder is terminated
by the Lender pursuant to Section 11.2, and (c) the date this Agreement is otherwise terminated for any reason whatsoever.

 

“UCC”
means the Uniform Commercial Code (or any successor statute) of the state of California or of any other state the laws of which
are required by Sections 9301-9306 thereof to be applied in connection with the issue of perfection of Liens.

 

1.2.         
Approval. The words “approval” and “approved” as used herein with reference to an approval
right granted to the Lender means that the Lender shall have the right in the Lender’s sole discretion to approve or to withhold
approval of the subject matter with respect to which the approval is required.

 

ARTICLE
2 -LOANS

 

2.1.         
Commitment to Lend. Subject to satisfaction of all of the terms and conditions of this Agreement, including the conditions
precedent in Article 5, the Lender agrees, upon the request of the Borrower made from time to time during the period from
the Closing Date to the Termination Date, to make loans (each of which is hereinafter referred to as a “Loan”)
to the Borrower in an amount not to exceed at any time the Available Commitment, the proceeds of which are to be used to pay a
portion of the expenses of producing, completing and delivering the Series, except that no Loans will be made if a Default or Event
of Default exists except as determined by the Lender in its sole discretion. Any portion of the Loan that has been repaid may not
be reborrowed.

 

2.2.         
Loan Procedure.

 

(a)            
Whenever the Borrower desires a Loan, the Borrower shall deliver to the Lender a Borrowing Certificate, signed by an authorized
officer of the Borrower, and which has been approved in writing by the Completion Guarantor, no later than (i) 11:00 a.m. (Pacific
Time) one (1) Business Day before the requested funding date in the case of requests for Prime Rate Loans, or (ii) 11:00 a.m. (Pacific
Time) three (3) Business Days in advance of the requested funding date in the case of requests for LIBOR Loans; provided,
however, the Lender shall have no obligation to make more than one (1) Loan in any four (4) Business Day period.

 

(b)            
The Borrowing Certificate shall specify (i) the requested funding date (which shall be a Business Day), (ii) the aggregate
amount of the requested Loans, (iii) whether the Loans requested are to be Prime Rate Loans or LIBOR Loans, and (iv) if the requested
Loans are to be LIBOR Loans, the requested Interest Period. Any Borrowing Certificate made pursuant to Subsection 2.2(a)
hereof shall be irrevocable and the Borrower shall be bound to borrow the funds requested therein in accordance therewith.

 

(c)            
The Lender shall make each such Loan available to the Borrower by wire transfer to the Production Bank Account specified
in the Borrowing Certificate in the amount of such Loan in same day funds (except for any part thereof paid by the Lender to third
Persons or to itself as permitted hereunder or under any of the Loan Documents). Notwithstanding anything to the contrary contained
in this Agreement, the Lender shall not be required to purchase Dollar deposits in the London Interbank market or the applicable
LIBOR market to fund any LIBOR Loans, and the provisions hereof shall be deemed to apply as if the Lender had purchased such deposits
to fund the LIBOR Loans.

 

(d)            
Subject to the terms of this Agreement, the Lender shall be obligated to make Loans hereunder, only for the following purposes
and in the following amounts, all in connection with the acquisition, production, completion, and distribution of the Series, and
effecting Delivery to Netflix, and the proceeds thereof shall not be available for any other purpose: (i) to pay a portion of the
direct production costs of the Series, which shall not exceed the Available Commitment; (ii) the payment of interest; (iii) the
payment of the Attorney Costs and the Loan Fee; (iv) the bond fee due to the Completion Guarantor for the Completion Guaranty to
the extent included in the Budget and not previously paid; and (v) the payment of the insurance premium for the insurance required
under Section 10.5 hereof to the extent not paid before the Closing Date.

 

 

 

    	 	7	 

     

    

 

2.3.         
Loans. The Lender shall be deemed to have made Loans in accordance with Section 2.2 hereof on behalf of the
Borrower and the Lender may apply the proceeds of such Loan as follows:

 

(a)            
Notwithstanding anything to the contrary contained in this Subsection 2.3(a), if the Completion Guarantor or any
Person acceptable to the Lender takes over the production of the Series pursuant hereto or pursuant to agreements between the Completion
Guarantor or such other Person and the Borrower, the Lender may make Loans up to the amount of the Available Commitment and provide
the proceeds thereof directly to the Completion Guarantor or such other party. Payment of such proceeds may be made into an account
over which the Completion Guarantor or such other party may have sole dominion and control, to be used to finance the production
of the Series and Delivery to the Lender and to Netflix, and that such Loans shall constitute Loans hereunder; and

 

(b)            
If a Default or Event of Default shall have occurred, the Lender may make Loans up to the amount of the Available Commitment
and pay the proceeds thereof directly to the Persons providing rights, services, facilities, locations and materials in connection
with the production of the Series and Delivery to Netflix.

 

2.4.         
Initial Loan. The Borrower hereby authorizes and directs the Lender on the Closing Date to make Loans for the account
of the Borrower, to pay the following Persons the indicated amounts: (a) the Loan Fee to the Lender; (b) the Attorney Costs to
the Lender’s counsel; (c) if unpaid, the bond fee due to the Completion Guarantor for the Completion Guaranty; (d) if unpaid,
the premium to the insurance company providing the insurance required under Section 10.5 hereof to pay the amount due
in connection therewith on the Closing Date; (e) the appropriate draw down for production costs of the Series for the next week
to the extent included in the Budget; and (f) reimbursement to the Borrower or such other Person(s) for certain production costs
incurred prior to the Closing Date to the extent such production costs are included in the Budget and the Completion Guarantor
credits such expenses to the Strike Price.

 

2.5.         
Conversion or Continuation.

 

(a)            
The Borrower may, upon irrevocable written notice to the Lender in accordance with Subsection 2.5(b) elect, as of
any Business Day, to convert all or any part of the Prime Rate Loans, in either case in a minimum amount of $250,000 and in integral
multiples of $100,000 in excess thereof, into LIBOR Loans; or (ii) elect, as of the last day of the applicable Interest Period,
to continue any LIBOR Loans having Interest Periods expiring on such day or any part thereof, in either case in the minimum amount
and in integral multiples as specified above; provided, however, that if at any time the aggregate amount of LIBOR
Loans in respect of any LIBOR Loan is reduced, by payment, prepayment, or conversion of part thereof to be less than $250,000 such
LIBOR Loan shall at the Lender’s election convert into Prime Rate Loans, and on and after such date the right of the Borrower
to convert such Loans into LIBOR Loans shall terminate.

 

(b)            
Whenever the Borrower elects to convert or continue Loans under this Section 2.5, the Borrower shall deliver to the
Lender a Notice of Conversion/Continuation, signed by an authorized officer or signatory of the Borrower (i) no later than 11:00
a.m. (Pacific Time) one (1) Business Day in advance of the requested conversion date, in the case of a conversion into Prime Rate
Loans, and (ii) no later than 11:00 a.m. (Pacific Time) three (3) Business Days in advance of the requested conversion or continuation
date, in the case of a conversion into, or continuation of, LIBOR Loans. The Notice of Conversion/Continuation shall specify (1)
the conversion or continuation date (which shall be a Business Day), (2) the amount and type of the Loans to be converted or continued,
(3) the nature of the requested conversion or continuation, and (4) in the case of a conversion into, or continuation of, LIBOR
Loans, the requested Interest Period. If the Borrower fails to provide a Notice of Conversion/Continuation for any LIBOR Loans
as provided above, such Loans shall convert to Prime Rate Loans on the last day of the Interest Period therefor.

 

(c)            
Any Notice of Conversion/Continuation made pursuant to this Section 2.5 shall be irrevocable and the Borrower shall
be bound to continue or convert the Loan specified therein in accordance therewith.

 

2.6.         
Special Provisions Governing LIBOR Loans. Notwithstanding any other provisions of this Agreement to the contrary,
the following provisions shall govern with respect to LIBOR Loans.

 

(a)            
If the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for the Lender to perform its obligations hereunder to make LIBOR
Loans or to fund or maintain LIBOR Loans hereunder, (i) the obligation of the Lender to make, or to convert Loans into or to continue
Loans as, LIBOR Loans shall be suspended until the Lender notifies the Borrower that the circumstances causing such suspension
no longer exist, and (ii) the Borrower shall on the termination of the Interest Period then applicable thereto, or on such earlier
date required by law, prepay in full all LIBOR Loans then outstanding together with accrued interest thereon, or convert all such
LIBOR Loans into Prime Rate Loans in accordance with Section 2.5 and pay to the Lender all other amounts payable by the
Borrower hereunder (including, without limitation, any amount payable in connection with a prepayment pursuant to Subsection
2.6(b)). The Lender shall promptly notify the Borrower if the terms of this Subsection 2.6(a) become applicable.

 

 

 

    	 	8	 

     

    

 

(b)            
After the occurrence of and during the continuance of any Event of Default, unless otherwise permitted by the Lender in
its sole discretion the Borrower may not borrow Loans as LIBOR Loans or elect to have any Loans continued as, or converted to,
LIBOR Loans after the expiration of any Interest Period then in effect for such Loans.

 

(c)            
If for any reason (including voluntary or mandatory prepayment or acceleration), the Lender receives all or part of the
principal amount of a LIBOR Loan prior to the last day of the Interest Period for such Loan, the Borrower shall immediately notify
the Lender and, on demand by the Lender, pay the Lender the amount (if any) by which (i) the additional interest which would have
been payable on the amount so received had it not been received until the last day of such Interest Period exceeds the interest
which would have been recoverable by the Lender by placing the amount so received on deposit in the certificate of deposit markets
or the offshore currency interbank markets or United States Treasury investment products, as the case may be, for a period starting
on the date on which it was so received and ending on the last day of such Interest Period at the interest rate determined by the
Lender in its reasonable discretion or (ii) the excess, if any, of the greater of the Lender’s cost of funds rate or the
LIBOR, over the reinvestment rate for those funds then available to the Lender, for a period starting on the date on which such
payment was so received and ending on the last day of such Interest Period. The Lender’s determination as to such amount
shall, absent manifest error, constitute rebuttably presumptive proof thereof.

 

(d)            
The Borrower shall pay to the Lender, upon demand, such amounts as the Lender may determine to be necessary to compensate
it for any costs incurred or a reduction in amounts receivable by the Lender that the Lender determines are attributable to its
making or maintaining any LIBOR Loans, in each case resulting from any Regulatory Change that: changes the basis of taxation of
any amounts payable to the Lender in respect of any LIBOR Loans (other than changes which affect taxes measured by or imposed on
the overall net income of the Lender by the jurisdiction in which the Lender has its principal office); or imposes or modifies
any reserve, special deposit or similar requirements relating to any extensions of credit or other assets of, or any deposits with
or other liabilities of the Lender (including any Loans or any deposits referred to in the definition of “LIBOR Base Rate”);
or imposes any other condition affecting the LIBOR Loans (or any of such extensions of credit or liabilities). The Lender shall
notify the Borrower of any event occurring after the date of this Agreement that will entitle the Lender to compensation pursuant
to this section as promptly as practicable after it obtains knowledge thereof and determines to request such compensation. The
Lender shall furnish the Borrower with a statement setting forth the basis and amount of each request by the Lender for compensation
under this Subsection 2.6(d). Determinations and allocations by the Lender for purposes of this Subsection 2.6(d)
of the effect of any Regulatory Change on its costs of maintaining its obligations to make Loans or of making or maintaining Loans
or on amounts receivable by it in respect of Loans, and of the additional amounts required to compensate the Lender in respect
of any additional costs shall, absent manifest error, constitute rebuttably presumptive proof thereof.

 

(e)            
If the Lender determines that the adoption or implementation of any Capital Adequacy Regulation, or compliance by the Lender
(or its applicable lending office) with any Capital Adequacy Regulation has or would have the effect of reducing the rate of return
on capital of the Lender or any person or entity controlling the Lender (a “Parent”) as a consequence of its
obligations hereunder to a level below that which the Lender (or its Parent) could have achieved but for such adoption, change
or compliance (taking into consideration its policies with respect to capital adequacy) by an amount deemed by the Lender to be
material, then from time to time, upon demand by the Lender, the Borrower shall pay to the Lender such additional amount or amounts
as will compensate the Lender for such reduction. The Lender shall furnish the Borrower with a statement setting forth the basis
and amount of each request by the Lender for compensation under this Subsection 2.6(e). A statement of the Lender claiming
compensation under this section and setting forth the additional amount or amounts to be paid to it hereunder shall, absent manifest
error, constitute rebuttably presumptive proof thereof.

 

(f)             
The Borrower shall pay to the Lender, upon the request of the Lender, an amount sufficient (determined in the sole good
faith opinion of the Lender) to compensate it for any loss, costs or expense incurred by it as a result of any failure by the Borrower
to borrow a LIBOR Loan on the date for such borrowing specified in the relevant Borrowing Certificate, including, without limitation,
any such loss, cost or expense incurred in obtaining, liquidating, employing or redeploying deposits from third parties, whether
or not the Lender shall have funded or committed to fund such Loan.

 

 

 

    	 	9	 

     

    

 

(g)            
If at any time the Lender, in its sole and absolute discretion, determines that: (i) the amount of the LIBOR Loans for periods
equal to the corresponding Interest Periods are not available to the Lender in the offshore currency interbank markets, or (ii)
the LIBOR does not accurately reflect the cost to the Lender of lending the LIBOR Loan, then the Lender shall promptly give notice
thereof to the Borrower, and upon the giving of such notice the Lender’s obligation to make the LIBOR Loans shall terminate,
unless the Lender and the Borrower agree in writing to a different interest rate applicable to LIBOR Loans.

 

ARTICLE
3 -INTEREST, FEES, AND OTHER CHARGES

 

3.1.         
Interest Rates.

 

(a)            
All outstanding Obligations shall bear interest on the unpaid principal amount thereof (including, to the extent permitted
by law, on interest thereon not paid when due) from the date made until paid in full in cash at a rate determined by reference
to the Prime Rate or the LIBOR and clauses “(i)” or “(ii)” of this section, as applicable, but not to exceed
the Maximum Legal Rate described in Section 3.2. Any of the Loans may be converted into, or continued as, Prime Rate Loans
or LIBOR Loans in the manner provided in Section 2.5. If at any time Loans are outstanding with respect to which
notice has not been delivered to the Lender in accordance with the terms of this Agreement specifying the basis for determining
the interest rate applicable thereto, then those Loans shall be Prime Rate Loans and shall bear interest at a rate determined by
reference to the Prime Rate until notice to the contrary has been given to the Lender and such notice has become effective. Except
as otherwise provided herein, the outstanding Obligations shall bear interest as follows: (i) for all Prime Rate Loans, at a fluctuating
per annum rate equal to the Prime Rate Margin plus the Prime Rate; and (ii) for all LIBOR Loans, at a per annum rate equal
to the LIBOR Margin plus the LIBOR determined for the applicable Interest Period.

 

(b)            
Each change in the Prime Rate shall be reflected in the interest rate applicable to Prime Rate Loans as of the effective
date of each such change. All interest charges shall be computed on the basis of a year of 360 days and actual days elapsed. Except
as otherwise provided herein, all interest shall be payable in arrears on each Interest Payment Due Date hereafter.

 

3.2.         
Maximum Rate. No provision of this Agreement or the Note shall be deemed to establish or require the payment of interest
of a rate in excess of the maximum rate permitted by applicable law (the “Maximum Legal Rate”). If the interest
required to be paid under this Agreement or the Note exceeds the Maximum Legal Rate, the interest required to be paid hereunder
or under the Note shall be automatically reduced to the Maximum Legal Rate. If any interest paid exceeds the then applicable interest
rate, the excess of such interest over the maximum amount of interest permitted to be charged shall automatically be deemed to
reduce the accrued and unpaid fees and expenses due to the Lender under this Agreement, if any; then to reduce the accrued and
unpaid interest, if any; and then to reduce principal of the Loan; the balance of any excess interest remaining after the application
of the foregoing, if any, shall be refunded to the Borrower.

 

3.3.         
Default Interest. If any of the Obligations are not paid when due (whether by acceleration or otherwise), then all
of the Obligations shall, without any notice, election or any other action by the Lender, bear interest at the Default Rate applicable
thereto until so paid, and if any other Default or Event of Default occurs, then at the election of the Lender, while any such
Default or Event of Default is outstanding, all of the Obligations shall bear interest at the Default Rate applicable thereto.

 

3.4.         
Late Payment. Any default in the payment of principal, interest, costs or any other sum due hereunder or under any
of the other Loan Documents will result in additional losses and expenses to the Lender which are difficult to quantify. If the
Borrower fails to make any payment of principal, interest, costs or any other sum due hereunder or under any of the other Loan
Documents within ten (10) Business Days after receipt of written notice that the same is due and payable, then, in addition
to any and all other rights and remedies of the Lender hereunder, under the Loan Documents or otherwise at law or in equity, the
Borrower shall also pay to the Lender a late payment charge equal to three percent (3%) of the then overdue amount in question
as a reasonable estimate of the Lender’s losses and expenses due as a result of such overdue amount which late payment charge
shall not bear interest if paid within ten (10) Business Days after the date of such written notice. The assessment and collection
of each such late charge shall be without prejudice to all other rights of the Lender, other than damages to the extent covered
by such late payment charge.

 

 

 

 

    	 	10	 

     

    

 

3.5.         
Attorney Costs. On the Closing Date, the Borrower shall pay to the Lender, for payment to the Lender’s counsel,
the Attorney Costs.

 

3.6.         
Loan Fee. On the Closing Date, the Borrower shall pay to the Lender the Loan Fee.

 

ARTICLE
4 -PAYMENTS AND REPAYMENTS

 

4.1.         
Repayment of Loans. The Borrower shall repay the outstanding principal balance of the Loans and all other Obligations
in full, plus all accrued but unpaid interest thereon, on the Maturity Date or such earlier date as specified herein.

 

4.2.         
Mandatory Prepayments. The Borrower shall prepay, without penalty or premium, the Obligations by the following amounts,
as and when received by or as payable to the Borrower: (a) all Collateral Proceeds; (b) any insurance proceeds to the extent and
as provided in Section 10.5 hereof; and (c) as otherwise provided hereunder.

 

4.3.         
Voluntary Prepayments. Upon at least two (2) Business Days prior notice to the Lender, the Borrower may at its option
prepay the Obligations in whole or in part, without penalty or premium. Once such notice of prepayment has been given, the principal
amount of the Loan(s) specified in such notice shall become due and payable on the date specified in the notice; provided,
however, that if prior to such prepayment date the Borrower advises the Lender in writing that it wishes to cancel such prepayment
notice, the Borrower’s sole liability shall be for any and all increased costs and expenses incurred by the Lender, if any,
as the result of the receipt of such notice. All prepayments shall include payment of accrued interest on the principal amount
so prepaid and shall be applied to payment of interest before application to principal. With respect to any LIBOR Loans prepaid
prior to the expiration date of the Interest Period applicable thereto whether on the Maturity Date or otherwise, the Borrower
shall pay to the Lender the amounts described in Subsection 2.6(b).

 

4.4.         
Payments and Computations.

 

(a)            
All payments to be made by the Borrower shall be made without reduction, reserve, discount, withholding, credit, set-off,
recoupment or counterclaim, and irrespective of any claim which the Borrower may have against the Lender. Except as otherwise expressly
provided herein, all payments made by the Borrower shall be made to the Collection Account and shall be made in Dollars and in
immediately available funds, no later than 1:00 p.m. (Pacific Time) on the day specified herein. Any payment received later than
1:00 p.m. (Pacific Time) shall be deemed to have been received on the following Business Day and any applicable interest or fee
shall continue to accrue.

 

(b)            
Subject to the provisions set forth in the definition of “Interest Period” herein, whenever any payment is due
on a day that is not a Business Day, such payment shall be made on the following Business Day, without being subject to the assessment
of a late charge, and such extension of time shall be included in the computation of interest or fees thereon, as the case may
be.

 

4.5.         
Reserve Charges; Payments as Loans. At the option of the Lender, subject only to the terms of this Section 4.5,
the Attorney Costs, the Loan Fee, interest, costs, fees, reimbursement obligations in connection with fees, taxes (if any), and
fees, expenses, and other sums payable hereunder, may be paid from the proceeds of Loans, whether made following a request by the
Borrower pursuant to Section 2.2 or a deemed request as provided in this Section 4.5. The Borrower irrevocably authorizes
the Lender to charge the Borrower’s loan account for the purpose of paying the Attorney Costs, the Loan Fee, interest, reimbursement
obligations, fees, premiums, and other sums payable hereunder, including reimbursing expenses pursuant to Section 13.7.
All such amounts charged shall constitute Loans and all such Loans so made shall be deemed to have been requested by the Borrower
pursuant to Section 2.2. It shall not be necessary for any such Loan to be processed through the Production Bank Account.
Interest shall be charged up to the limits thereof in the Interest and Fee Reserve. The Lender will give the Borrower notice of
any Loan under this Section 4.5; provided, however, the failure to do so shall not relieve the Borrower of
any of the Obligations with respect thereto. Interest, costs, fees, expenses and other sums charged to the Interest and Fee Reserve
shall be added to the unpaid principal balance of the Loan as and when charged to the Interest and Fee Reserve. Upon making any
Loan for interest, the Attorney Costs, the Loan Fee, or any other costs, fees, and expenses payable hereunder, the Interest and
Fee Reserve, if any, shall thereupon be decreased by the amount of such Loan. If the amount of such costs, fees, interest, and
reimbursement obligations in connection with fees, taxes (if any), and other sums payable hereunder, exceeds the amount of any
remaining Interest and Fee Reserve therefor (if any), then the Borrower shall pay to the Lender, on demand, the amount of such
excess in cash.

 

 

 

 

    	 	11	 

     

    

 

4.6.         
Apportionment, Application and Reversal of Payments. All payments not constituting payment of specific fees and all
Collateral Proceeds received by the Lender shall be applied, subject to the provisions of this Agreement, first, to pay any fees,
expense reimbursements or indemnities (other than interest and principal) then due to the Lender from the Borrower; second, to
pay interest due in respect of all Loans; third, to pay principal of the Loans and fourth, to the payment of any other Obligations
due to the Lender. Notwithstanding any provision of this or any of the other Loan Documents to the contrary, if the Lender determines
at any time that the Interest and Fee Reserve will be less than the total amount of interest accruing on the Loan before repayment
thereof in full, then the Lender may retain proceeds in the Collection Account, in an amount determined by the Lender in its reasonable
discretion to pay interest, at the interest rates provided for under this Agreement, owing on the Obligations on a current basis
as a cash reserve to be applied by the Lender to interest as and when due hereunder. The Lender shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Obligations in such order as
the Lender may determine in its sole and absolute discretion.

 

4.7.         
Indemnity for Returned Payments. If, after receipt of any payment of, or proceeds applied to the payment of, all
or any part of the Obligations, the Lender is for any reason compelled to surrender such payment or proceeds to any Person, because
such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a
preference, impermissible setoff, or a diversion of trust funds, or for any other reason, then the Obligations or part thereof
intended to be satisfied shall be revived and continue and this Agreement shall continue in full force as if such payment or proceeds
had not been received by the Lender, and the Borrower shall be liable to pay to the Lender, and hereby does indemnify the Lender
and hold the Lender harmless for, the amount of such payment or proceeds surrendered. The provisions of this Section 4.7
shall be and remain effective notwithstanding any contrary action which may have been taken by the Lender in reliance upon such
payment or application of proceeds, and any such contrary action so taken shall be without prejudice to the Lender’s rights
under this Agreement and shall be deemed to have been conditioned upon such payment or application of proceeds having become final
and irrevocable. The provisions of this Section 4.7 shall survive the termination of this Agreement.

 

4.8.         
Increased Capital. If the Lender determines that compliance by the Lender with any guideline or request from any
central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital
required or expected to be maintained by the Lender, or any corporation controlling the Lender, and the Lender reasonably determines
that the amount of such capital is increased by or based upon its commitment to lend hereunder or its making or maintaining Loans
hereunder or to otherwise extend credit to the Borrower hereunder, and other commitments of this type, then, upon demand by the
Lender, the Borrower shall immediately pay to the Lender, from time to time as specified by the Lender, additional amounts sufficient
to compensate the Lender in the light of such circumstances, to the extent that (a) the Lender reasonably determines such increase
in capital to be allocable to the Lender’s commitment to make Loans hereunder, and (b) the Lender’s other similarly
situated borrowers are required to make such payments and provided that any such allocation of payments shall be made on
a basis no less favorable than the basis applied to other similarly situated borrowers. If the Lender increases the loan charges
pursuant to the terms of this Section 4.8, then the Borrower may, within ten (10) Business Days after being notified of
such increased charges, prepay all Obligations in full without penalty or premium or the increased loan charges. After the expiration
of the ten (10) Business Day period, the Borrower may repay the Obligations, which repayment shall include the increased charges
resulting from the changed capital requirements effective as of the first day of change, but otherwise without penalty or premium.

 

4.9.         
Lender’s Books and Records. The Lender’s books and records showing the Obligations and the transactions
pursuant to this Agreement and the other Loan Documents shall be admissible in any action or proceeding arising therefrom, and
shall, absent manifest error, constitute rebuttably presumptive proof thereof, irrespective of whether any Obligation is also evidenced
by a promissory note or other instrument. If the Lender provides to the Borrower a statement of Loans, payments and other transactions
pursuant to this Agreement, then such statement shall, absent manifest error, be deemed correct, accurate and binding on the Borrower
and an account stated (except for reversals and reapplications of payments made as provided in Section 4.6 hereof and corrections
of errors discovered by the Lender), unless the Borrower notifies the Lender in writing to the contrary within sixty (60) days
after such statement is received by the Borrower. If the Borrower gives the Lender a timely notice of objections, then
only the items to which exception is expressly made will be considered to be disputed by the Borrower.

 

 

 

    	 	12	 

     

    

 

ARTICLE
5 -LENDING CONDITIONS

 

The obligation of the
Lender to make any Loan hereunder shall be subject to satisfaction of all of the conditions of this Article 5 being satisfied
at the time thereof

 

5.1.         
Conditions Precedent to Initial Loan. The obligation of the Lender to make the initial Loan is subject to the following
conditions precedent having been satisfied in a manner satisfactory to the Lender:

 

(a)            
The Lender’s receipt of fully executed documentation, including the Chain-of-Title Documents, evidencing that the
Borrower owns all rights in and to the Series, in perpetuity, throughout the world and all rights in connection therewith, including,
without limitation, the rights which are the subject of the Netflix License Agreement, and that all payments for such rights have
been paid and all reversionary rights, if any, have been fully, finally and unconditionally terminated;

 

(b)            
All appropriate documents (including Form PA or Form CO) evidencing the Borrower’s rights in and to the Literary Property,
have been duly submitted to and accepted for recordation in all appropriate governmental offices, including the United States Registrar
of Copyrights, accompanied by the required filing fees;

 

(c)            
All appropriate documents evidencing that the Lender’s Lien in the Collateral and evidencing all other Liens granted
to the Lender in connection herewith, including the Copyright Mortgages, have been duly submitted to and accepted for recordation
in all appropriate governmental offices, including the United States Registrar of Copyrights and the Secretary of State of California,
accompanied by the required filing fees;

 

(d)            
An examination of the records of the United States Copyright Office and the Secretary of State of California, and any other
appropriate governmental office, and a copyright and title search report on the Series approved by the Lender and its counsel,
reveals no interest of any Person which is contrary to the rights granted to the Lender hereunder or under any other Loan Documents;

 

(e)            
The Lender shall have received this Agreement and all of the items listed in Schedule 5 hereto, together with all
exhibits, attachments and supplementary documents that are not elsewhere identified in this Section 5.1, all in form and
substance approved by the Lender, and executed and delivered by all parties thereto when the nature of such items so requires;

 

(f)             
The Borrower shall have performed and complied with all covenants, agreements and conditions contained herein and the other
Loan Documents that are required to be performed or complied with by any such Person before or on the Closing Date, and all representations
and warranties made by any such Person hereunder and/or in the other Loan Documents shall be true and correct as of the Closing
Date as if made on such date;

 

(g)            
No Default or Event of Default shall exist on the Closing Date, or would exist after giving effect to the Loans to be made
on such date;

 

(h)            
The Borrower shall have paid (or shall have provided for such payments in the initial Loan) all Attorney Costs, the Loan
Fee, and all other fees and expenses of the Lender incurred in connection with any of the Loan Documents due hereunder to the Lender
and to other Persons on or prior to the Closing Date;

 

(i)             
There shall exist no action, suit, investigation, litigation or proceeding affecting the Borrower, Genius Brands, Netflix
or the Completion Guarantor pending or threatened before any court, governmental agency, or arbitrator that might reasonably be
expected to have a material adverse effect upon the business, operations, property, prospects or condition (financial or otherwise)
of the Borrower, Genius Brands, Netflix or the Completion Guarantor or upon the creditworthiness of any such Person or that purport
to affect the legality, validity, or enforceability of this Agreement or any other Loan Document or the consummation of the transactions
contemplated hereby and, upon request, the Lender shall have received a certificate of a manager or authorized officer of the Borrower,
Genius Brands, Netflix or the Completion Guarantor (as appropriate) to such effect;

 

 

 

 

    	 	13	 

     

    

 

(j)             
The Borrower has opened the Collection Account and the Production Bank Account;

 

(k)            
The Borrower has opened the Cash Collateral Account and has deposited $1,000,000 therein;

 

(l)             
The Completion Guarantor has issued the Completion Guaranty which specifies a Strike Price, which, after all credits thereto,
does not exceed the Available Commitment, calculated as of the Closing Date;

 

(m)          
The Lender shall have received fully signed copies of the Netflix License Agreement and the Netflix License Notice of Assignment,
the terms of which are acceptable to the Lender and its counsel;

 

(n)            
Each of the individual producers, directors and actors shall have executed his/her actor’s, director’s and producer’s
agreement, as appropriate and as required by the Completion Guarantor;

 

(o)            
All proceedings taken in connection with the execution of this Agreement and all other Loan Documents, and all documents
and papers relating thereto shall be satisfactory in form, scope, and substance to the Lender;

 

(p)            
Receipt and satisfactory review by the Lender of all information required to complete the Lender’s know your customer
process; and

 

(q)            
Such other documents as the Lender may reasonably request in order to effect fully the purposes of this Agreement and the
other Loan Documents.

 

The acceptance by the Borrower of any Loans
made on the Closing Date shall be deemed to be a representation and warranty made by the Borrower to the effect that all of the
conditions to the making of such Loans set forth in Subsections 5.1(a) - (q) have been satisfied, with the same effect
as delivery to the Lender of a certificate signed by an authorized officer or signatory of the Borrower, dated the Closing Date,
to such effect.

 

5.2.         
Conditions Precedent to Loans. The obligation of the Lender to make each Loan, including the initial Loan shall be
subject to the further conditions precedent that on and as of the date of any such extension of credit:

 

(a)            
The Lender shall have received a duly executed Borrowing Certificate as and when required pursuant to Section 2.2
hereof;

 

(b)            
The following statements shall be true, and the acceptance by the Borrower of any extension of credit shall be deemed to
be a statement to the effect set forth in clauses (i) and (ii), with the same effect as the delivery to the Lender of a certificate
signed by an authorized r of the Borrower, dated the date of such extension of credit, stating that:

 

(i)             
The representations and warranties contained in this Agreement and the other Loan Documents are correct in all material
respects on and as of the date of such extension of credit as though made on and as of such date (except with respect to any representation
or warranty that is stated to be made as of a specific date which shall be deemed repeated as of such date); and

 

(ii)           
No event has occurred, or would result from such extension of credit, which constitutes a Default or an Event of Default;

 

(c)            
The Lender shall have received such other approvals, opinions or documents as the Lender may reasonably request;

 

(d)            
No order, judgment or decree of any governmental authority and no law, rule or regulation applicable to the Lender shall
purport by its terms to enjoin, restrain or otherwise prohibit the making of such Loan; and

 

(e)            
Since the Closing Date, there shall not have occurred any material adverse change in the property, business, operations,
or financial condition of (i) the Borrower (and upon request the Lender shall have received a certificate of the Borrower’s
authorized officer to such effect), (ii) the Completion Guarantor, (iii) Netflix and (iv) and any Person issuing indemnity insurance
to Completion Guarantor for the purpose of assuring that the Completion Guarantor can satisfy its obligations to the Lender under
the Completion Guaranty.

 

 

 

    	 	14	 

     

    

 

ARTICLE
6 -SERIES PRODUCTION, COMPLETION, DELIVERY AND DISTRIBUTION

 

The Borrower
hereby warrants, represents, covenants and agrees to the Lender as follows.

 

6.1.         
Budget; Cash Flow; Teleplays; Production Schedule.

 

(a)            
True and complete copies of the Budget, the Cash Flow Schedule, each Teleplay, the Production Schedule, and, upon request
of the Lender, any agreements with any Person whose services are a requirement of any such agreements, have been or will be furnished
to the Lender. Such services agreements, the Budget, the Cash Flow Schedule, the Teleplays and the Production Schedule are in form
and substance consistent with the provisions of the Completion Guaranty;

 

(b)            
The Borrower, the Completion Guarantor and any other Person having approval rights with respect thereto have approved, or
with respect to each Teleplay will approve prior to production, the Budget, the Cash Flow Schedule, each Teleplay and the Production
Schedule, and all elements with respect to which they have approval rights under the Completion Guaranty;

 

(c)            
The Budget includes provisions for all expenses necessary for the production of the Delivery Materials in accordance with
the terms of this Agreement and the Netflix Notice of Assignment, including, but not limited to, any and all costs of music, including
all worldwide licenses and rights as and to the extent required by the Netflix License Agreement; and

 

(d)            
The service agreements required by the Completion Guarantor for the Series have been or will be approved by the Completion
Guarantor and such agreements are in full force and effect and (to the knowledge of the Borrower) no party to any such agreement
is in material default thereunder or has any accrued right of termination thereunder.

 

6.2.         
Series Production.

 

(a)            
The Borrower shall produce the Series and the Delivery Materials all in accordance with the Budget, the Teleplays, the Production
Schedule and the Cash Flow Schedule, and in a manner consistent with the provisions of this Agreement and the Netflix License Agreement.
The Borrower shall not make or permit to be made any material changes, modifications, or revisions to the Budget, the Teleplays,
the Production Schedule or the Cash Flow Schedule without the express authorization of the Completion Guarantor and any other Persons
that have approval thereof.

 

(b)            
The Borrower shall not make any change in the Budget that would increase, in the aggregate, the amount thereof or any other
changes therein without the prior approval of the Lender, the Completion Guarantor and any other Person having approval rights
with respect to such changes.

 

(c)            
The Borrower shall cause the Series and the Delivery Materials, as appropriate, to strictly conform to all of the Technical
and Non-Technical Specifications.

 

6.3.         
Element Changes. Except as expressly permitted by the terms of this Agreement and the Netflix Notice of Assignment,
the Borrower shall not make, agree to make, or permit to be made any variation or modification in any of the elements of the Series
that are subject to approval or consent pursuant to the Netflix Notice of Assignment, the Completion Guaranty or this Agreement,
without the prior consent of the Lender, the Completion Guarantor and Netflix, respectively.

 

6.4.         
Series Credits; Print Advertising. Subject to the prior approval of Netflix, the Borrower shall accord the Lender
credit as production financier in each Episode’s end titles in all positive prints thereof, provided that any casual
or inadvertent failure to accord such credit shall not constitute a breach of this Agreement, all in a size of type customary for
such credits. Unless the Lender notifies the Borrower otherwise, the form of the Lender’s credit in the Series’ end
titles shall be substantially as follows: “Production Financing Provided by Bank Leumi — David Henry.” Subject
to the Borrower’s prior consent for uses other than in a traditional tombstone, the Lender may use the Borrower’s names
in advertising and promotional material. Additionally, the Borrower shall accord the Lender’s counsel, Babok & Robinson,
LLP, with credit as legal counsel for the production financier in the Episodes’ end titles in all positive prints thereof.
The form of the Lender’s counsel credit in the Episodes’ end titles shall be substantially as follows: “Legal
Counsel to Bank Leumi — Babok & Robinson, LLP.” Borrower’s failure to accord credit in accordance with the
provisions of this paragraph shall not be deemed a breach of this Agreement; provided, however, upon the Lender’s
or Lender’s counsel’s, as the case may be, written notice, Borrower shall cure on a prospective basis any material
defect in the Lender’s or Lender’s counsel’s credit in prints issued or controlled by the Borrower. The Borrower
shall use reasonable efforts to notify its subdistributors of the credit obligations set forth herein, but the Borrower shall not
be responsible or liable for the failure of any such subdistributor to comply with the same.

 

 

 

 

    	 	15	 

     

    

6.5.         
Stop Date; Contingent Compensation; Fees.

 

(a)            
The Borrower represents, warrants, and covenants that no actor shall be granted a “stop date” (as that term
is understood in the motion picture industry) in connection with such actor’s engagement for the Series unless permitted
by the Completion Guarantor.

 

(b)            
The Borrower shall not enter into any agreement to pay any Person from the Collateral Proceeds any residuals, profit participations,
deferred compensation, contingent compensation, whether computed on the basis of the Collateral Proceeds, net receipts from exploitation
of the Series or otherwise (whether in a fixed amount or computed on a percentage basis), unless all such payments are subordinated
and subject to the rights of the Lender under the Loan Documents or otherwise consented to by the Lender and the Borrower shall
not pay (and shall not allow the payment of) any such payments from the Collateral Proceeds until all Obligations have been satisfied
in full. The Lender shall not have any obligation to pay any such payments to any Person.

 

6.6.         
Exhibition. If prohibited by the Netflix License Agreement, the Borrower shall not exhibit the Series (or any Episode)
for any Person other than Persons involved in the production of the Series, the Completion Guarantor, Netflix and the Lender or
their authorized representatives, without the Lender’s prior approval, which approval will not be unreasonably withheld.

 

6.7.         
Performance and Amendment of Agreements, Etc.

 

(a)            
The Borrower shall effect Delivery to Netflix. The Borrower shall perform all of its obligations under the Netflix License
Agreement and the Netflix Notice of Assignment and shall enforce all of its rights and remedies thereunder as it deems appropriate
in its business judgment, except that the Borrower shall not take any action or fail to take any action with respect to the Netflix
License Agreement or the Netflix Notice of Assignment that would result in a waiver or other loss of any material right or remedy
of the Borrower or Netflix, respectively, thereunder. Under no circumstances shall the Lender be obligated to effect Delivery to
Netflix.

 

(b)            
The Borrower shall not, without the Lender’s prior approval, modify, amend, supplement, compromise, satisfy, release,
terminate, or discharge the Netflix License Agreement, the Netflix Notice of Assignment, the Completion Agreement, any collateral
securing the same, any Person liable directly or indirectly with respect thereto, or any agreement relating to the Netflix License
Agreement, the Netflix Notice of Assignment, the Completion Agreement, or the collateral therefor. Without limiting the generality
of the foregoing, the Borrower shall not, without the Lender’s prior consent, amend or modify in any way the amount or payment
due date(s) or the conditions of payment of the Netflix License Fee.

 

6.8.         
Enforcement of Agreements.

 

(a)            
The Borrower shall notify the Lender promptly after the Borrower becomes aware thereof, of any event or fact which could
give rise to a breach of any of the Chain-of-Title Documents or the Netflix License Agreement, and shall diligently pursue such
right and report to the Lender on all further developments with respect thereto.

 

(b)            
Until all Obligations have been indefeasibly paid and performed in full, the Borrower shall, at its expense, take all reasonable
action to enforce the Chain-of-Title Documents and the Netflix License Agreement, and make collection and take all appropriate
legal action necessary to enforce collection, of all Collateral Proceeds, as and when due, which may be owing by Netflix under
the Netflix License Agreement or from any other Person pursuant to any other agreement entered into by the Borrower with respect
to the Collateral, and shall remit all sums so collected to the Collection Account. If the Borrower fails after the Lender’s
demand to pursue diligently any right under the Netflix License Agreement or any other agreement entered into by the Borrower with
respect to the Collateral, or if an Event of Default then exists, the Lender may directly enforce such right in its own or the
Borrower’s name and may enter into such settlements or other agreements with respect thereto as the Lender shall determine.

 

(c)            
In any suit, proceeding, arbitration, or action brought by the Lender under the Netflix License Agreement, the Completion
Agreement, or other agreement, for any sum owing thereunder or to enforce any provision thereof, the Borrower shall indemnify and
hold the Lender harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaims,
recoupment, or reduction of liability whatsoever of Netflix or the Completion Guarantor or other obligor thereunder arising out
of a breach by the Borrower of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any
time owing from the Borrower to or in favor of such obligor or its successors.

 

 

 

 

    	 	16	 

     

    

 

6.9.         
Related Agreements. The Borrower represents and warrants to the Lender that:

 

(a)            
it has obtained and has delivered or will deliver to the Lender as of the Closing Date true and complete fully executed
copies of the Chain-of-Title Documents, the Netflix License Agreement and the Completion Agreement; (b) the Chain-of-Title Documents,
the Netflix License Agreement, the Netflix Notice of Assignment, the Completion Agreement, and all other agreements, certificates,
exhibits, attachments, and other documents entered into in connection therewith and related thereto are valid, binding, and subsisting
agreements, enforceable against the parties thereto in accordance with their respective terms except to the extent that such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors’
rights generally and by general principles of equity; and (c) each of the foregoing agreements has been duly executed and delivered
by all parties thereto and all are and will be in full force and effect.

 

ARTICLE
7 -COLLATERAL

 

7.1.         
Grant of Security Interest. As security for all of the Obligations, the Borrower hereby grants to the Lender a continuing
security interest in, Lien on, and right of set-off against, all of the Borrower’s assets, whether now owned or hereafter
acquired or arising and regardless of where located and whether or not in possession of the Borrower (collectively, the “Collateral”),
which includes without limitation, all of the Borrower’s right, title and interest in the Chain-of-Title Documents, the Teleplays,
the Literary Property, the Series, the Physical Properties, the Collection Account, the Production Bank Account, the Cash Collateral
Account, all accounts, deposit accounts, equipment, general intangibles, intellectual property rights, inventory, investment property,
letter of credit rights, chattel paper, documents, instruments and other negotiable collateral, supporting obligations, and all
other personal property of the Borrower and the proceeds of the foregoing, and each and all of the following particular rights
and properties of the Series:

 

(a)            
The Series and all collateral, allied, ancillary, subsidiary and merchandising rights therein, and all properties and things
of value pertaining thereto and all products and proceeds thereof whether now in existence or hereafter made, acquired or produced
(as used in this Article 7, the term the “Series” means and includes the Series and all Episodes, and
all of the aforesaid rights and the rights and property set forth in Sections 7.1(a)(i) through (xx) below) including
without limitation:

 

(i)             
The Literary Property;

 

(ii)           
The Physical Properties;

 

(iii)         
All Preprint Materials;

 

(iv)          
All rights of the Borrower of every kind or nature in and to any and all music and musical compositions created for, used
in or to be used in connection with the Series including, without limitation, all copyrights therein and all rights to perform,
copy, record, re-record, produce, publish, reproduce or synchronize any or all of said music and musical compositions as well as
all other rights to exploit such music including record, soundtrack recording, and music publishing rights;

 

(v)            
All collateral, allied, ancillary, subsidiary, publishing and merchandising rights and all properties and things of value,
whether now in existence or hereafter made, acquired or produced by the Borrower of every kind and nature, in each case pertaining
to or derived from, appurtenant to or related to the Series or the Literary Property, including, without limitation, all production,
exploitation, reissue, remake, sequel, serial or series production rights by use of film, tape or any other recording devices now
known or hereafter devised, whether based upon, derived from or inspired by the Series, the Literary Property or any part thereof;
all rights to use, exploit and license others to use or exploit any and all novelization, publishing, commercial tie-ups and merchandising
rights of every kind and nature, including, without limitation, all novelization, publishing, merchandising rights and commercial
tie-ups arising out of or connected with or inspired by the Series or the Literary Property, the title or titles of the Series
or of any Episode, the characters appearing in the Series or the Literary Property and/or the names or characteristics of said
characters, and including further, without limitation, any and all commercial exploitation in connection with or related to the
Series, all remakes or sequels thereof and/or the Literary Property;

 

(vi)          
All rights of the Borrower of every kind or nature, present and future, in and to all agreements relating to the development,
production, completion, delivery and exploitation of the Series, including, without limitation, all agreements for personal services,
including the services of writers, directors, cast, producers, special effects personnel, personnel, animators, cameramen and other
creative, artistic and technical staff and agreements for the use of studio space, equipment, facilities, locations, animation
services, special effects services and laboratory contracts;

 

(vii)        
All insurance and insurance policies heretofore or hereafter placed upon the Series or the insurable properties thereof
and/or any Person or Persons engaged in the development, production, completion, delivery or exploitation of the Series and the
proceeds thereof;

 

 

 

 

    	 	17	 

     

    

 

(viii)      
All copyrights, rights in copyrights, interests in copyrights and renewals and extensions of copyrights, domestic and foreign,
heretofore or hereafter obtained by the Borrower upon the Series or the Literary Property or any part thereof, and the right (but
not the obligation) to make publication thereof for copyright purposes, to register a claim under copyright, and the right (but
not the obligation) to renew and extend such copyrights, and the right (but not the obligation) to sue in the name of the Borrower
or in the name of the Lender for past, present and future infringements of such copyrights;

 

(ix)          
All rights of the Borrower to produce, acquire, release, sell, distribute, subdistribute, lease, sublease, market, license,
sublicense, exhibit, broadcast, transmit, reproduce, publicize or otherwise exploit the Series, the Literary Property and any and
all rights therein (including, without limitation, the rights referred to in Section 7.1(a)(iv) above) in perpetuity, without
limitation, in any manner and in any media whatsoever throughout the universe, including, without limitation, by projection, radio,
all forms of television (including, without limitation, free, pay, toll, cable, sustaining subscription, sponsored and direct satellite
broadcast), in theaters, non-theatrically, on cassettes, cartridges and discs and by any and all other scientific, mechanical or
electronic means, methods, processes or devices now known or hereafter conceived, devised or created;

 

(x)            
All rights of the Borrower of any kind or nature, direct or indirect, to acquire, produce, develop, reacquire, finance,
release, sell, distribute, subdistribute, lease, sublease, market, license, sublicense, exhibit, broadcast, transmit, reproduce,
publicize, or otherwise exploit the Series, or any rights in the Series, including, without limitation, pursuant to agreements
between the Borrower and any Affiliate of the Borrower that relate to the ownership, production or financing of the Series;

 

(xi)          
All contract rights and general intangibles that may arise in connection with the creation, production, completion, delivery,
financing, ownership, possession or exploitation of the Series or which grant to any Person any right to acquire, produce, develop,
reacquire, finance, release, sell, distribute, subdistribute, lease, sublease, market, license, sublicense, exhibit, broadcast,
transmit, reproduce, publicize, or otherwise exploit the Series or any rights in the Series and all collateral, allied, ancillary,
subsidiary and merchandising rights therein, and all properties and things of value pertaining thereto and all products and proceeds
thereof whether now in existence or hereafter made, acquired or produced and the rights and property set forth in Sections 7.1(a)(i)
through (xix) below, including, without limitation, all of the Borrower’s rights under the Netflix License Agreement,
and all such rights pursuant to agreements between the Borrower and any Affiliate of the Borrower which relate to the ownership,
production or financing of the Series;

 

(xii)        
All rent, revenues, income, compensation, products, increases, proceeds (including the proceeds of letters of credit) and
profits or other property obtained or to be obtained by the Borrower from the production, release, sale, distribution, subdistribution,
lease, sublease, marketing, licensing, sublicensing, exhibition, broadcast, transmission, reproduction, publication, ownership,
exploitation or other uses or disposition of the Series and the Literary Property (or any rights therein or part thereof), in any
and all media, including without limitation, the properties thereof and of any collateral, allied, ancillary, merchandising and
subsidiary rights therein and thereto, and amounts recovered as damages by reason of unfair competition, the infringement of copyright,
breach of any contract or infringement of any rights, or derived therefrom in any manner;

 

(xiii)      
Any and all documents, receipts or books and records, including, without limitation, documents or receipts of any kind or
nature issued by any pledgeholder, warehouseman or bailee with respect to the Series and any element thereof;

 

(xiv)      
All of the Borrower’s right, title and interest in, to and under accounts, contract rights, investment property and
general intangibles (as such terms are defined in the UCC) in connection with or relating to the Series and to the Physical Properties,
including all rights to receive the payment of money under present or future contracts or agreements (whether or not earned by
performance) from the sale, distribution, exhibition, disposition, leasing, subleasing, licensing, sublicensing and other exploitation
of the Series or the Literary Property or any part thereof or any rights therein in any medium, whether now known or hereafter
developed, by any means, method, process or device in any market;

 

(xv)        
All of the Borrower’s right, title and interest in, to and under the Netflix License Agreement including the Borrower’s
rights to receive payments thereunder, and all other rights to receive film rentals, license fees, distribution fees, producer’s
shares, royalties and other amounts of every description including, without limitation, from (1) theatrical exhibitors, non-theatrical
exhibitors, television networks and stations and airlines, cable television systems, pay television operators, whether on a subscription,
per program charge basis or otherwise, and other exhibitors, (2) distributors, subdistributors, lessees, sublessees, licensees
and sublicensees (including any subsidiary of the Borrower) and (3) any other Person that distributes, exhibits or exploits the
Series or the Literary Property or elements or components of the Series or the Literary Property or rights relating thereto;

 

 

 

 

    	 	18	 

     

    

 

(xvi)      
All of the Borrower’s right, title and interest in and to any and all sums paid or payable to the Borrower now due
or which hereinafter may become due to the Borrower by any state, federal, provincial, or other governmental body or authority
directly or indirectly as a tax credit, tax refund, tax subsidy, production credit or similar government benefit, or by any tax
shelter, or pursuant to any sale and leaseback transaction, any co-production structure, or any similar transaction, and any and
all allied, ancillary and subsidiary rights therein;

 

(xvii)     
All title or titles of the Series and any Episode and all of the Borrower’s rights to the exclusive use thereof including
rights protected pursuant to trademark, service mark, unfair competition and/or other laws, rules or principles of law or equity;

 

(xviii)   
All inventions, processes, formulae, licenses, patents, patent rights, trademarks, trademark rights, service marks, service
mark rights, trade names, trade name rights, logos, indicia, corporate and the Borrower names, business source or business identifiers
and renewals and extensions thereof, domestic and foreign, whether now owned or hereafter acquired, and the accompanying good will
and other like business property rights relating to the Series or any Episode, and the right (but not the obligation) to register
claims under trademark or patent and to renew and extend such trademarks or patents and the right (but not the obligation) to sue
in the name of the Borrower or in the name of the Lender for past, present or future infringement of trademark or patent;

 

(xix)      
Any other property of any kind of the Borrower in the possession or under the control of the Lender or a bailee of the Lender
or any of the Lender’s affiliates; and

 

(xx)        
All accessions to, substitution for, and replacements, proceeds, and proceeds of proceeds of any of the foregoing, including,
without limitation, proceeds of any insurance policies, claims against third Persons, with respect to the foregoing.

 

7.2.         
Perfection and Protection of the Lender’s Lien. The Borrower shall at its expense, perform all steps reasonably
requested by the Lender at any time to perfect, maintain, protect, and enforce the Lender’s Lien in the Collateral and the
priority thereof (i.e., a first priority Lien subject only to Permitted Liens), including, without limitation: (a) executing, filing,
recording, and railing such financing statements, continuation statements, copyright mortgages, Form PAs or COs, and copyright
assignments herewith and (b) taking such other steps herewith as the Lender may deem necessary or appropriate and wherever required
or permitted by law in order to perfect or preserve the Lender’s first priority Lien in the Collateral and the priority thereof
The Borrower shall do such further acts and things and execute and deliver to the Lender such additional conveyances, assignments,
agreements, and instruments consistent herewith as the Lender may reasonably require or deem advisable to carry into effect the
purposes of this Agreement or to better assure and confirm to the Lender its rights, powers, and remedies hereunder. The Borrower
appoints the Lender as the Borrower attorney-in-fact to: (i) file or record financing statements and amendments thereto (including
filing such statements and amendments by electronic means with or without a signature as authorized or required by applicable law
or filing procedures), Form PAs or COs, copyright mortgages, copyright assignments, and any other documents in all appropriate
governmental offices, including the United States Registrar of Copyrights, accompanied by the required filing fees, relative to
all or any part of the Collateral; (ii) take all other steps necessary or desirable in the Lender’s judgment to perfect,
protect, enforce, preserve, or continue the first priority Lien granted herein without the signature of the Borrower where permitted
by law; and (iii) do such further acts and things and execute such additional conveyances, assignments, agreements, and instruments
as the Lender may require or deem advisable to carry into effect the purposes of this Agreement or to better assure and confirm
to the Lender its rights, powers, and remedies hereunder.

 

7.3.         
Assignment of Rights Only. The Lender shall have under this Agreement and the other Loan Documents an assignment
of and Lien on only the benefits of and rights under the Completion Agreement, the Netflix License Agreement and the other Collateral.
The Lender has not assumed any obligations or duties thereunder. All such obligations and duties of the Borrower under the Completion
Agreement, the Netflix License Agreement and the other Collateral, shall be and remain enforceable only against the Borrower and
shall not be enforceable against the Lender. Notwithstanding any provision hereof to the contrary, the Borrower shall at all times
remain liable to observe and perform all of its duties and obligations under the Completion Agreement, the Netflix License Agreement
and the other Collateral, and the Lender’s exercise of any of their rights with respect to the Collateral shall not release
the Borrower from any of such duties and obligations. The Lender shall not be obligated to perform or fulfill any of the Borrower’s
duties or obligations under the Completion Agreement or the Netflix License Agreement, or to make any payment thereunder, or to
make any inquiry as to the nature or sufficiency of any payment or property received by it thereunder or the sufficiency of performance
by any party thereunder, or to present or file any claim, or to take any action to collect or enforce any performance, any payment
of any amounts, or any delivery of any property.

 

 

 

 

    	 	19	 

     

    

 

7.4.         
Jurisdiction of Organization. The Borrower represents and warrants to the Lender that the Borrower’s books
and records are located at the address specified in Section 13.9 hereof. If (a) the jurisdiction of organization or name
of the Borrower, or the title or titles of the Series or any Episode is to be changed or modified in any manner, or (b) there is
proposed to be a change in location or name of any laboratory, special effects studio, sound studio, other processing or storage
entity or any sound studio, other processing or storage entity or any bailee which holds, or which is expected to process, any
Preprint Materials, then the Borrower shall so notify the Lender and, before making any such change or modification, shall
execute and deliver to the Lender such further documents related thereto and do such other acts and things as the Lender may reasonably
request in order to carry out the purposes of this Agreement including, without limitation, the execution and delivery of financing
statements, amendments, copyright assignments and mortgages, and laboratory agreements, necessary or desirable to continue and/or
perfect the Lender’s Lien in the Collateral.

 

7.5.         
Title to and Liens on the Collateral.

 

(a)            
Except for Permitted Liens, the Borrower represents and warrants to the Lender and agrees with the Lender that: (i) all
of the Collateral is and will continue to be owned by the Borrower free and clear of all Liens; (ii) the Lender’s Lien in
the Collateral will not be subject to any prior Lien except with respect to Permitted Liens, which by law or the Lender’s
agreement, are prior to the Lender’s Lien in the Collateral; and (iii) the Borrower will not sell, offer to sell, hypothecate
or otherwise dispose of any of the Collateral, or any part thereof or interest therein, at any time, without the prior consent
of the Lender.

 

(b)            
The Borrower will appear in, contest and defend against any action or proceeding purporting to affect title to or any other
interest in any portion of the Collateral or the rights or powers of the Lender, its successors or assigns, or the right or interest
of the Lender, legal or beneficial, in any portion of the Collateral; and will pay all reasonable costs and expenses, including
costs of evidence of title and outside attorneys’ fees, in any such action or proceeding in which the Lender may appear.

 

7.6.         
Access and Examination. Until all of the Obligations have been indefeasibly paid in full and the Lender’s commitment
to Borrower hereunder has terminated, the Lender shall have the right and the Borrower shall permit the Lender to, at all times
upon two (2) Business Days’ notice (and at any time, without any notice, when a Default or Event of Default exists), during
normal business hours, (i) to examine, audit, make extracts from or copies of and inspect any and all of the Borrower’s books,
records, files concerning or mentioning the Collateral and/or the Collateral Proceeds, (ii) to discuss the Borrower’s affairs
with the Borrower’s officers and management (iii) be given access, during normal business hours, to any and all of the Borrower’s
computer hardware or software, whether maintained by the Borrower, or third Persons on the Borrower’s behalf, that pertains
to or reflects, such records and (iv) permit the Lender to inspect the Collateral or any part thereof at such place as the Collateral
may be held or located or at such other reasonable place. At such time or times as the Lender may request, the Borrower will, at
its cost and expense, prepare a list or lists in such form as shall be satisfactory to the Lender, certified by a duly authorized
officer/manager of the Borrower, describing in such reasonable detail as the Lender shall require, the Collateral, and specifying
the location of the Collateral and the Borrower records pertaining thereto.

 

7.7.         
Attorney-in-Fact.

 

(a)            
The Borrower hereby constitutes and appoints the Lender as its true and lawful attorney-in-fact, in its place and stead
and with full power of substitution, either in the Lender’s own name or in the name of the Borrower to do the following after
an Event of Default, to the extent the Borrower has such right:

 

(i)             
Endorse any notes, checks, drafts, money orders, or other evidences of payment payable to the Borrower relating to the Collateral
that may come into the possession of the Lender and obtain, take possession of, substitute the Lender or any designee of the Lender
for the Borrower as the owner of, or signatory on, and otherwise apply in any manner, all deposit accounts, cash or cash equivalents,
instruments and general intangibles of, relating to or derived from the Series or any other Collateral, and all proceeds thereof
including, but not limited to, interest, chattel paper, notes, certificates, writings, distributions, dividends, profits, rights,
benefits, premiums and other payments and rights to payment, held by any Person for or in the name of the Borrower;

 

(ii)           
Enforce all of the Borrower’s rights under and pursuant to all agreements with respect to the Collateral, all for
the sole benefit of the Lender, and to enter into such other agreements as may be necessary to complete the production, distribution,
and exploitation of the Series;

 

 

 

 

    	 	20	 

     

    

 

(iii)         
Enter into and perform such agreements as may be necessary in order to carry out the terms, covenants, and conditions of
this Agreement and the other Loan Documents that are required to be observed or performed by the Borrower;

 

(iv)          
Execute such other and further mortgages, pledges, and assignments of the Collateral as the Lender may reasonably require
solely for the purpose of protecting, maintaining, or enforcing the Lien granted to the Lender by this Agreement and the other
Loan Documents;

 

(v)            
Take over and complete production of the Series or any Episode (including, but not limited to completing post-production
and editing and locking the Series or any Episode);

 

(vi)          
Sign and deliver documents required or appropriate to reduce or eliminate any foreign withholding taxes;

 

(vii)        
Lease, license, sell or otherwise dispose of the Series and/or such distribution rights in and to the Series and such other
rights therein as have not been disposed of by the Borrower or any Person on behalf of the Borrower (or to engage others to do
so with the costs and expenses thereof to be recoupable by the Lender as provided herein);

 

(viii)      
Renegotiate the Netflix License Agreement or such other agreements as the Lender has a Lien in pursuant to the terms hereof
as the Lender in its sole and exclusive discretion deems proper;

 

(ix)          
Require, demand, collect, receive, settle, adjust, compromise and to give acquittances and receipts for the payment of any
and all money payable pursuant to the Netflix License Agreement, or such other agreements included in the Collateral and such licenses
and agreements as the Lender may enter into as aforesaid;

 

(x)            
Prepare and file documents required or appropriate in order to qualify for withholding tax exemptions, and file any claims
and/or proofs of claim, and commence, maintain or discontinue any actions, suits or other proceedings deemed by the Lender advisable
for the purpose of collecting or enforcing payment of any money owing under the terms of the Collateral;

 

(xi)          
Execute any and all such instruments, agreements or documents, and do all things as may be necessary or desirable to carry
out the purposes of this Agreement;

 

(xii)        
Apply any receipts so derived from the Lender’s exercise of this power-of-attorney to the Obligations as herein provided;

 

(xiii)      
Settle, compromise, prosecute or defend any action, claim or proceeding with respect thereto and to sell, assign, pledge,
transfer and make any agreement respecting or otherwise deal with, the same;

 

(xiv)      
Effect Delivery to Netflix; and

 

(xv)        
Do any and all other acts necessary and proper to carry out the intent of this Agreement;

 

(b)            
Nothing herein contained shall be construed as requiring or obligating the Lender to make any demand, or to make any inquiry
as to the nature or sufficiency of any payment received by it, or to present or file any claim or notice or take any action with
respect to any of the Collateral or the money due or to become due thereunder or the property covered thereby, and no action taken
or omitted to be taken by the Lender with respect to any of the Collateral shall give rise to any defense, counterclaim or setoff
in favor of the Borrower or to any claim or action against the Lender. Neither the Lender nor its attorneys will be liable for
any acts or omissions or for any error of judgment or mistake of fact or law. The Borrower ratifies and confirms all acts taken
by the Lender as such attorney-in-fact or its substitutes by virtue of this power of attorney. This power, being coupled with an
interest, is irrevocable until this Agreement has been terminated and the Obligations have been fully satisfied.

 

 

 

 

    	 	21	 

     

    

 

7.8.         
Lender’s Rights, Duties and Liabilities. The Borrower assumes all responsibility and liability arising from
or relating to the use, sale or other disposition of the Collateral. To the extent that the Lender has taken possession of any
of the Collateral pursuant to its rights under this Agreement, neither the Lender nor any of its officers, directors, employees
or agents shall be liable or responsible in any way for the safekeeping of any of the Collateral, or for any loss or damage thereto,
or for any diminution in the value thereof, or for any act of default of any carrier, forwarding agency or other Person whomsoever,
all of which shall be at the Borrower’s sole risk. The Obligations shall not be affected by any failure of the Lender to
take any steps to perfect the Lender’s Liens or to collect or realize upon the Collateral, nor shall loss of or damage to
the Collateral release the Borrower from any of the Obligations. The Lender may (but shall not be required to), without notice
to or consent from the Borrower, sue upon or otherwise collect, extend the time for payment of, modify or amend the terms of, compromise
or settle for cash, credit, or otherwise upon any terms, grant other indulgences, extensions, renewals, compositions, or releases,
and take or omit to take any other action with respect to the Collateral, any security therefor, any agreement relating thereto,
any insurance applicable thereto, or any Person liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of the Borrower for the Obligations or under this Agreement or any other agreement
now or hereafter existing between the Lender and the Borrower.

 

7.9.         
Authority to Collect. The Borrower shall take and shall direct other Persons to take all steps necessary to cause
all Collateral Proceeds, including the Netflix License Fee, to be paid (as directed by the Lender) directly by Netflix or other
obligor thereof to the Collection Account or to the Lender for deposit into the Collection Account to be applied by the Lender
to the repayment of the Obligations. All collections received in the Collection Account or directly by the Borrower or its Affiliates
or the Lender, and all funds in any other account to which such collections are deposited, shall, be the sole property of the Lender
and subject to the Lender’s sole control.

 

7.10.      
Remittances. If, notwithstanding the Borrower’s direction to pay all Collateral Proceeds directly to, as appropriate,
the Collection Account or to the Lender, any Collateral Proceeds, including the Netflix License Fee, are paid to the Borrower or
any other Person, then the Borrower shall and shall direct each such other Person to: (i) segregate and hold in trust all
of such receipts that it receives; and (ii) remit such receipts in the form received directly to the Collection Account (as more
fully set forth in the Netflix Notice of Assignment), or to the Lender for deposit to the Collection Account, not later than the
Business Day following the day of its receipt thereof. The Borrower shall not commingle any of the Collateral Proceeds with its
funds or the funds of any other Person.

 

7.11.      
Copyrights. As soon as each Episode may be copyrighted, the Borrower shall , as promptly as practicable, take any
and all actions necessary to copyright each such Episode and to register such copyright in the name of the Borrower for the United
States in conformity with the laws of the United States, and contemporaneously therewith shall execute and record a copyright mortgage
and assignment and power of attorney in favor of the Lender, granting to the Lender a Lien thereon for the purpose of securing
the Obligations, and immediately deliver to the Lender written evidence of any and all such copyright registrations and mortgages.

 

7.12.      
Control of Preprint Materials. The Borrower shall not deliver or deposit any of the Preprint Materials in any film
or sound laboratory without first obtaining and delivering to the Lender a fully executed laboratory agreement approved by the
Lender and the Completion Guarantor. Except as required to effect Delivery in accordance with the Netflix Notice of Assignment,
no print, preprint, sound or other Preprint Materials shall be deposited at any laboratory or maintained at any place without the
prior consent of the Lender and the Completion Guarantor and compliance with the requirements of this Section 7.11.

 

7.13.      
Cash Collateral Account and Payment to the Lender. The Borrower shall deposit into the Cash Collateral Account one
million Dollars ($1,000,000) as additional security for the payment and performance of all Obligations of the Borrower hereunder.
The Borrower agrees that all amounts held in the Cash Collateral Account shall be paid to the Lender and applied to the payment
of the Obligations without any offset or deduction upon Delivery to Netflix or upon the occurrence of an Event of Default.

 

 

 

    	 	22	 

     

    

 

ARTICLE
8 -BOOKS; RECORDS; FINANCIAL REPORTING; AND NOTICES

 

8.1.         
Books and Records.

 

(a)            
The Borrower shall maintain a system of accounting established and administered in accordance with customary standards of
the television industry in Los Angeles, California, to the production of first-class television programs and keep adequate records
and books of account in which complete entries in accordance with such accounting principles will be made.

 

(b)            
The Borrower shall maintain, at all times, correct and complete books and records, in all material respects, with respect
to the Collateral that are as complete and comprehensive as those customarily maintained by others engaged in the production of
first class television programs, including all books, records, contracts, production notes and all other information and data of
every kind relating to the Series, the Collateral, and the production, distribution, or exploitation thereof.

 

8.2.         
Financial Information. The Borrower shall promptly furnish to the Lender all financial and other information relating
to the production of the Series, business, properties, condition, operations and affairs of the Borrower, financial or otherwise,
as the Lender shall reasonably request. Without limiting the generality of the foregoing, the Borrower shall furnish to the Lender,
in such detail as the Lender shall request, the following:

 

(a)            
Monthly, but in any event not later than fifteen (15) days after the last Business Day of each month, a copy of the Budget
showing the then cost to complete each line item;

 

(b)            
Within five (5) days of delivery to the Completion Guarantor copies of all periodic statements of the costs of production
of the Series in the same form as supplied to the Completion Guarantor;

 

(c)            
As soon as available, but in any event within thirty (30) days after the Series has been completed, a copy of a statement
of the final cost of production of the Series (detailed in accordance with the categories in the Budget);

 

(d)            
As soon as available, but in any event not later than fifteen (15) days after the last Business Day of each month, copies
of all invoices (if any) for payments due under the Netflix License Agreement sent to Netflix by the Borrower since the date such
invoices were last delivered to the Lender; and

 

(e)            
As soon as available, but in any event within five (5) Business Days after being sent to or received from Netflix, copies
of all invoices and other correspondence between the Borrower and. Netflix concerning or mentioning the Netflix License Fee.

 

8.3.         
Notice of Certain Events. The Borrower shall promptly notify the Lender in writing of the following matters after
obtaining knowledge thereof: (a) any Event of Default or Default; (b) any material default under the Netflix License Agreement,
the Completion Agreement and any other agreement material to the business, financial condition or results of operations of the
Borrower to which the Borrower is a party or by which the Borrower or any of its respective properties may be bound; (c) immediately
after becoming aware thereof, any pending or threatened action, suit, proceeding, or counterclaim by any Person, or any pending
or threatened investigation by a governmental authority, which action, suit, proceeding, counterclaim or investigation seeks damages
in excess of $10,000 (which amount shall not be fully covered by insurance), or which may otherwise materially and adversely affect
the Collateral, the repayment of the Obligations, the Lender’s rights under the Loan Documents, or the Borrower’s property,
business, operations, or financial condition; and (d) immediately after becoming aware thereof, any pending or threatened strike,
work stoppage, unfair labor practice claim, or other labor dispute affecting the Borrower in a manner that could reasonably be
expected to have a material adverse effect on the Series.

 

 

 

    	 	23	 

     

    

 

ARTICLE
9 -GENERAL REPRESENTATIONS AND WARRANTIES

 

The Borrower warrants
and represents to the Lender and (except with respect to any representation or warranty which is stated to be made as of a specific
date which shall be deemed repeated as of such date), the Borrower shall be deemed to have repeated each such representation and
warranty on each date that any Obligations remain outstanding, as follows.

 

9.1.         
Authorization, Validity, and Enforceability.

 

(a)            
The Borrower has the power and authority to execute, deliver and perform this Agreement, the other Loan Documents to which
it is a party, and to incur the Obligations, and to grant to the Lender a Lien upon and in the Collateral. The Borrower has taken
all necessary organizational action (including without limitation, obtaining approval of its members if necessary) to authorize
the execution, delivery, and performance of this Agreement and the Loan Documents. No consent, approval, or authorization of, or
declaration or filing with, any governmental authority, and no consent of any other Person, is required in connection with Borrower’s
execution, delivery and performance of this Agreement and the other Loan Documents, except for those already duly obtained.

 

(b)            
This Agreement and the other Loan Documents have been duly executed and delivered by the Borrower and constitute the legal,
valid and binding obligation of the Borrower enforceable against it in accordance with its terms without defense, setoff or counterclaim,
except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other similar laws affecting creditors’ rights generally and by general principles of equity.

 

(c)            
The Borrower’s execution, delivery, and performance of, as applicable, this Agreement, the other Loan Documents and
the Netflix License Agreement, do not and will not conflict with, or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien (other than Permitted Liens) upon the property of the Borrower by reason
of the terms of (i) any contract, mortgage, lease, agreement, indenture, or instrument to which the Borrower is a party or which
is binding upon the Borrower, (ii) any judgment, law, statute, rule or governmental regulation applicable to the Borrower, or (iii)
the organizational documents of the Borrower.

 

9.2.         
Validity and Priority of Liens. The provisions of this Agreement and the other Loan Documents create a legal and
valid Lien on all the Collateral in favor of the Lender and such Lien constitutes a perfected and continuing Lien on all the Collateral,
having priority over all other Liens on the Collateral except for those Permitted Liens that, by agreement of the Lender, are senior
to the Lender’s Lien therein, securing all the Obligations, and enforceable against the Borrower and all other Persons.

 

9.3.         
Organization and Qualification. The Borrower is: (a) duly formed and organized and validly existing in good standing
under the laws of the jurisdiction of its organization, (b) qualified to do business in the jurisdiction of its organization,
and (c) has all requisite power and authority to conduct its business and to own its property.

 

9.4.         
Financial Information. Financial information, and other data furnished by the Borrower to the Lender in connection
with the Borrower’s application for credit hereunder, if any, are, in all material respects, accurate and correct.

 

9.5.         
Solvency. The Borrower is solvent prior to and after giving effect to the Loans on the Closing Date and shall remain
solvent during the term hereof.

 

9.6.         
Rights in the Series and Collateral.

 

(a)            
The Borrower owns or controls all rights in the Series and in the other Collateral necessary to enable the Borrower to fully
perform all of its obligations, representations, warranties and agreements under this Agreement, the Loan Documents, the Netflix
Notice of Assignment and the Netflix License Agreement, as applicable.

 

(b)            
The Borrower has acquired, now owns and will own during production of the Series and continuing through satisfaction of
all Obligations, subject only to those rights granted pursuant to the Netflix License Agreement, (i) all right, title and interest,
including copyrights in and to the Literary Property, including each Teleplay, and the Series; (ii) all right, title and interest
necessary to produce, make, distribute, exhibit and otherwise exploit the Series worldwide, including, without limitation, all
rights in the literary, musical or other property or ideas used therein, (iii) the right to exhibit the Series and each Episode
on television, through subscription video-on-demand, by means of video cassettes and videodisks or in any other media or manner,
by any means now known or unknown, and (iv) the sole right to exploit all ancillary rights in and to the Series, including, without
limitation, all rights granted pursuant to the Netflix License Agreement, subject to the Chain-of-Title Documents and payment of
necessary performing rights fees in respect of the music in the Series.

 

 

 

    	 	24	 

     

    

 

(c)            
As soon as the Teleplays have been approved by Netflix and the Completion Guarantor, the Borrower shall file the Teleplays
with the United States Copyright Office and provide the Lender with one or more Copyright Mortgages covering the Lender’s
Lien in the Teleplays so that the Lender can file such Copyright Mortgages with the United States Registrar of Copyrights.

 

(d)            
All material or matter used in or in connection with the Series, including dialogue, characters, titles, episodes and events,
shall be original and owned by or licensed to the Borrower, or in the public domain, and will not infringe any copyrights, statutory
or common law, or constitute a libel, slander or invasion of privacy of any Person, or otherwise infringe on or violate the rights
or any other Person whomsoever, in any fashion whatsoever.

 

(e)            
Neither the Borrower nor any Person acting on the Borrower’s behalf shall enter into an agreement relating to music
rights in connection with the Series unless such agreement grants all rights with respect thereto for such media and/or duration
as such rights are required under the Netflix License Agreement. The Borrower shall deliver copies of all such agreements to the
Lender for its review (but not approval) upon the Lender’s written request.

 

9.7.         
Required Payments. All rents, royalties and other amounts due and payable by the Borrower under contracts, leases,
license agreements and other instruments relating to the Collateral, including without limitation contracts, leases or agreements
relating to the Literary Property, the Chain-of-Title Documents, the services of all persons or entities rendering services in
connection with the Series, and the furnishing of goods, processing, equipment and materials used in connection with the Series
have been paid if due, or will be paid when due, if by reason of nonpayment thereof the value of any part of the Collateral or
the Lien of the Lender therein may be impaired, and the Borrower is not in default under any such contract, lease, license agreement
or other instrument so that such impairment has now occurred.

 

9.8.         
Litigation. There are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against
or affecting the Borrower or before any court or governmental agency, arbitrator or instrumentality, domestic or foreign, relating
to the Teleplays, the Series, the Literary Property, the Netflix License Agreement, or rights therein or thereto or otherwise,
that if determined adversely to the Borrower would have a material adverse effect on the Collateral or the financial condition,
other properties or operations of the Borrower, or that would materially and adversely affect the rights and Lien of the Lender
granted to the Lender hereunder.

 

9.9.         
No Defaults. The Borrower is not in default under the Netflix License Agreement, the Completion Agreement or any
of the other Loan Documents to which it is a party.

 

9.10.      
Taxes. The Borrower has filed all tax returns and other reports that it was required by law to file on or prior to
the date hereof and has paid all taxes, assessments, fees, and other governmental charges, and penalties and interest, if any,
against it or its property, income, or franchise, that are due and payable (except to the extent that (a) any such taxes, assessments,
fees, and other governmental charges, and penalties and interest are diligently contested in good faith by appropriate proceedings
and proper reserves are established on the books of the Borrower as provided in applicable accounting standards and (b) a stay
of enforcement of any Liens arising from the nonpayment thereof when due is in effect).

 

9.11.      
No Material Adverse Change. Since the Closing Date, no material adverse change has occurred in the property, business
operations or conditions of the Borrower, Genius Brands and to the best of the Borrower’s knowledge, Netflix.

 

9.12.      
Material Agreements. The Borrower has furnished to the Lender copies of all material agreements, indentures, and
other instruments relating to the Series, or pursuant to which the Borrower has incurred or may be obligated, whether directly
or indirectly, for borrowed money.

 

9.13.      
Completion Guarantor Payments. Neither the Borrower nor any of its Affiliates and the Completion Guarantor have entered
into an agreement or understanding pursuant to which the Completion Guarantor will pay to the Borrower or to any of its respective
Affiliates any rebates, commissions, or any other payment, regardless of what that payment is called or styled, in connection with
or in any way related to the Series other than as specified in the Completion Agreement.

 

9.14.      
Survival of Warranties. All covenants, agreements, representations and warranties made under this Agreement or in
any of the other Loan Documents shall survive the execution and delivery of this Agreement, the making of the Loans hereunder,
and the execution and delivery of the Note and shall continue in full force and effect until the full and final payment and performance
of all the Obligations.

 

 

 

    	 	25	 

     

    

 

9.15.      
Margin Stock; Investment Company; and Public Utility Holding Company. The Borrower shall use the proceeds of the
Loan to pay the direct production costs of the Series, and the fees and costs expressly identified herein, and for no other purpose.
The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States), and no part of the
proceeds of any Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing
or carrying any margin stock. The Borrower is not an “investment company” nor an “affiliated person” of,
or “promoter” or “principal underwriter” for, an -investment company,” as such terms
are defined in the Investment Company Act of 1940, as amended (15 U.S.C. §§80(a)(1), et seq.). The Borrower
is not a “holding company” or a “subsidiary company” of a “holding company” or an affiliate
of a “holding company” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

 

ARTICLE
10 -AFFIRMATIVE AND NEGATIVE COVENANTS

 

The Borrower covenants
to the Lender that so long as any of the Obligations remain outstanding or this Agreement is in full effect as follows.

 

10.1.      
Taxes and Other Liabilities. The Borrower shall pay and discharge, before the same become delinquent and before penalties
accrue thereon, all taxes, assessments and governmental charges upon or against it or upon its income or profits or upon any of
its properties, and all its other liabilities at any time existing, except to the extent and so long as: (a) the same are being
contested in good faith and by appropriate proceedings in such manner as not to cause any materially adverse effect upon its financial
condition or the loss of any right of redemption from any sale thereunder; and (b) it shall have set aside on its books reserves
(segregated to the extent required by generally accepted accounting principles) adequate with respect thereto; and further to pay
all governmental charges or taxes (except income, franchise or other similar taxes on the Lender) at any time payable or ruled
to be payable in respect of the existence, execution or delivery of this Agreement or the other Loan Documents by reason of any
existing or hereafter enacted federal or state statute.

 

10.2.      
Legal Rights and Facilities. The Borrower shall maintain and preserve its legal existence and all rights, privileges,
franchises and other authority necessary for the conduct of its business.

 

10.3.      
Compliance. The Borrower shall comply with all laws, rules and regulations relating to, and shall pay or shall cause
to be paid prior to delinquency all license fees, registration fees, taxes, guild or union pension, health and welfare payments,
supplemental market, reuse and other required payments and assessments, and all other charges, including without limitation non-governmental
levies or assessments, that may be levied upon or assessed against, or that may become a Lien on, the ownership, operation, possession,
maintenance, exploitation, exhibition or use of, the Collateral or which create or may create a Lien upon the Collateral, or any
part thereof. The Borrower shall pay prior to delinquency all required guild or union residual payments arising prior to Delivery
to Netflix, and the Borrower shall pay or cause Netflix to pay prior to delinquency all required guild or union residual payments
arising after Delivery to Netflix.

 

10.4.      
Maintenance. The Borrower shall maintain the Collateral in good order and repair (normal wear and tear excepted),
conduct its business in an orderly manner without interruption, and refrain from any material change in the nature of its business.

 

10.5.      
Insurance.

 

(a)            
At all times while the Obligations are outstanding, at its sole cost and expense, the Borrower shall maintain insurance
against loss or damage to the Collateral with responsible and reputable insurance companies or associations approved by the Lender
in such amounts and covering such risks as are usually carried by companies engaged in similar businesses and owning similar property
in the same general area as the area in which such property is located including, without limitation, fire, public liability, property
damage, miscellaneous equipment, pre-production, production, extra expense, domestic comprehensive general and automobile liability,
foreign comprehensive general liability, domestic workers’ compensation and employer’s liability, foreign workers’
compensation, guild accident insurance, errors and omissions, cast insurance in an amount which is not less than the amount of
the Budget, negative insurance in an amount which is not less than the amount of the Budget and projected interest, director, soundtrack,
and interruption of business and political risk insurance.

 

 

 

    	 	26	 

     

    

 

(b)            
Without limiting the generality of the foregoing, the Borrower shall (i) maintain errors and omissions insurance, covering,
among other things, the legal liability and defense of the Borrower against lawsuits alleging the unauthorized use of title, format,
ideas, characters, plots, plagiarism, copyright infringement and unfair competition, and (ii) protect against alleged libel, slander,
defamation of character and invasion of privacy and (iii) comprehensive general liability insurance covering the Borrower against,
among other things, all claims for bodily injury, personal injury or property damage which may arise in connection with the Series,
including, without limitation, coverage for all owned, non-owned and hired vehicles (both on and off camera) with a minimum liability
limits of $1,000,000. The errors and omissions policy shall be in a minimum amount of $3,000,000 per occurrence and $5,000,000
in the aggregate, with a deductible of not more than $25,000, and a period of coverage of approximately not less than three (3)
years from the Closing Date (plus such longer periods as such coverage is required to be in effect pursuant to the Netflix
License Agreement).

 

(c)            
All such insurance policies covering the Collateral shall name the Borrower as named insured and shall name the Lender as
additional insured without the Lender being liable for premiums or other costs or expenses. Each such policy shall bear a standard
first mortgagee endorsement in favor of the Lender and shall provide for all losses to be paid to the Borrower, and for losses
to be adjusted with the insurer by the Borrower; provided that, if the insurer shall have received written notice from the
Lender that an Event of Default has occurred and is continuing unremedied, any such payment for loss or destruction of or damage
to the Collateral shall be paid directly to the Lender and any such adjustments shall be made solely by the Lender. All such insurance
payments received by the Lender while an Event of Default shall have occurred and be continuing unremedied shall be held or applied
by the Lender as provided in Subsection 10.5(11).

 

(d)            
At least thirty (30) days prior to the expiration of each such policy, the Borrower shall furnish the Lender with evidence
satisfactory to the Lender of the payment of premium and the reissuance of a policy continuing insurance in force as required by
this Agreement. All such policies or certificates shall contain a provision that such policies will not be canceled or materially
amended, which term shall include any reduction in the scope or limits of coverage, without at least thirty (30) days’ prior
written notice by such insurer to the Lender (or ten (10) days with respect to payment of premiums when due). If the Borrower fails
to provide, maintain, keep in force or deliver and furnish to the Lender the policies of insurance required by this Section
10.5, then the Lender may, but shall not be obligated to, procure such insurance or single interest insurance for such risks
covering the Lender’s interest, and the Borrower will pay all premiums thereon promptly upon demand by the Lender, together
with interest thereon at the rate then applicable to the Loans made to the Borrower hereunder from the date of expenditure by the
Lender until reimbursement by the Borrower.

 

(e)            
All policies of insurance (other than errors and omissions insurance) required to be furnished by the Borrower pursuant
to this Section 10.5 shall have attached thereto a lender’s loss payable endorsement or its equivalent, or a loss
payable clause acceptable to the Lender, for the benefit of the Lender.

 

(f)             
The Borrower shall observe and comply with the requirements of all policies of insurance required to be maintained hereunder
and shall so perform and satisfy the requirements thereof so that the insurance policies are at all times in full force and effect.

 

(g)            
Upon request by the Lender, the Borrower shall furnish the Lender a certificate of an officer/manager of the Borrower containing
a detailed list of the insurance policies of the Borrower required by or referred to in this Section 10.5 then outstanding
and in force.

 

(h)            
All insurance money received by the Lender shall be held by the Lender to secure the performance by the Borrower of the
Obligations and shall be applied against and reduce such Obligations.

 

(i)             
Notwithstanding any provisions of this Agreement, the Completion Agreement, the Completion Guaranty or the Netflix License
Agreement to the contrary, if any claim should arise under any of the policies of insurance to be provided under said agreements,
with respect to which the insurer is to make a payment to the Borrower (as distinguished from a payment to a third Person) such
payment shall be made to the Production Bank Account and shall be disbursed as follows:

 

 

 

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(x)            
If the Series has been completed or the production abandoned (e.g., for purposes of this paragraph only, the Series
shall be deemed abandoned if a cast insurance claim is made and thereafter the role with respect to which cast insurance reimbursement
is sought is not subsequently photographed, such proceeds shall first be paid to the Lender and applied to the repayment of the
Obligations until the Obligations have been repaid in full, any balance shall then be applied and paid to the Completion Guarantor
so that the Completion Guarantor may recoup any sums advanced (plus interest thereon) for the production of the Series or
under the Completion Guaranty and finally any balance shall be paid to the Borrower; and

 

(y)            
If the Series has not been completed or abandoned, such proceeds, to the extent necessary, shall be used to pay production
costs of the Series; provided, however, and notwithstanding anything contained herein to the contrary, if the Completion
Guarantor has advanced funds for the production of the Series for any reason, the proceeds of such insurance for such loss shall
be paid to the Completion Guarantor up to the amount of said advance(s) and interest and thereafter in accordance with the first
part of this sentence. The balance, if any, remaining after the Completion Guarantor has been reimbursed in full, shall be paid
to the Borrower.

 

10.6.      
Related Agreements. The Borrower shall perform and observe, in all material respects, all material agreements, covenants,
representations and warranties of the Borrower under the Netflix License Agreement, its agreements with any guilds concerning the
Series, the Completion Agreement, and any other document or agreement entered into in connection with or related to the production,
completion, Delivery, or exploitation of the Series (including, without limitation, any document or agreement entered into in connection
with or related to the Literary Property).

 

10.7.      
Approvals. The Borrower shall obtain from time to time, all approvals, permits and consents necessary to allow the
Borrower to remit payments to the Lender in Dollars from any and all appropriate governmental authorities having jurisdiction thereof.

 

10.8.      
Indebtedness. The Borrower shall not incur any indebtedness, other than pursuant to this Agreement or in the ordinary
course of producing the Series (e.g., credit arrangements for equipment).

 

10.9.      
Dissolution and Sale of Assets. The Borrower shall not wind up, liquidate or dissolve its affairs, or sell, lease,
license, transfer, or otherwise dispose of or grant an interest in all or a substantial part of the Collateral or, except upon
thirty (30) days prior written notice to the Lender, change its legal or trade name.

 

10.10.   
Use of Proceeds. The Borrower shall not use the proceeds of any Loan made by the Lender hereunder for any purpose
or thing other than the items set forth in Subsection 2.2(a) hereof.

 

10.11.   
Transactions with Affiliates. The Borrower shall not, except as previously approved in writing by the Lender, effect
any transaction with any Affiliate.

 

10.12.   
Consolidation or Merger. The Borrower shall not consolidate with or merge into any other Person.

 

10.13.   
Liens. The Borrower shall not directly or indirectly create, incur or suffer to exist, and shall promptly discharge
or cause to be discharged, any Lien on or with respect to the Collateral, other than Permitted Liens.

 

10.14.   
Further Assurances. The Borrower shall, at any time or from time to time upon the request of the Lender, execute
and deliver such further documents and do such other acts and things as the Lender may reasonably request in order to effect fully
the purposes of this Agreement the other Loan Documents and to provide for the payment and performance of the Obligations of the
Borrower in accordance with the terms of this Agreement and the other Loan Documents.

 

10.15.   
Negative Pledge. The Borrower shall not enter into or suffer to exist any agreement prohibiting or conditioning the
creation or assumption of any Lien upon any of its property or assets, other than as contemplated by this Agreement or the other
Loan Documents.

 

10.16.   
Bank Accounts. After the date hereof, the Borrower shall not open or maintain any bank account other than: (a) the
Production Bank Account, (b) accounts maintained at the Lender, or (c) accounts maintained at another financial institution approved
by the Lender.

 

 

 

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ARTICLE
11

 

ARTICLE
12 -EVENTS OF DEFAULT; REMEDIES

 

12.1.      
Events of Default. It shall constitute an event of default (“Event of Default”) if any one or
more of the following shall occur for any reason:

 

(a)            
Failure of the Borrower to pay the principal of or interest on any of the Obligations when the same becomes due;

 

(b)            
Failure by the Borrower to pay any fees, expenses, or any other Obligation not otherwise specified in the foregoing clause
“(a)” within five (5) Business Days following the date such item is due, whether upon demand or otherwise;

 

(c)            
Any representation or warranty made by the Borrower in this Agreement or by the Borrower or Genius Brands in any of the
other Loan Documents, in each case to which it is a party, any financial statement, or report furnished by the Borrower at any
time to the Lender shall prove to be untrue in any material respect as of the date on which made or furnished;

 

(d)            
Failure of the Borrower to comply with any other covenants on its part to be performed under the terms of this Agreement
or the other Loan Documents, and, if the Lender determines (in its sole discretion) that such failure may be cured so that the
Lender has not suffered and will not suffer any material adverse effect, is not cured within ten (10) Business Days after notice
thereof by the Lender to the Borrower or such other party (with a copy to the Borrower), as applicable, and in the event such cure
cannot be affected within such ten (10) Business Days period the Borrower commences within such ten (10) Business Days period steps
to affect a cure and such steps remain continuing;

 

(e)            
Failure of the Borrower, Genius Brands, Netflix, or the Completion Guarantor to perform or observe any material agreement,
material covenant, representation or warranty under the Netflix License Agreement or any other Loan Documents to which such Person
is a party, respectively, or any other document or agreement entered into by the Borrower, Netflix, or the Completion Guarantor
in connection with or related to the Series (including, without limitation, any document or agreement entered into in connection
with or related to the Literary Property) within five (5) Business Days after written notice to the Borrower by the Lender of such
failure;

 

(f)             
The Borrower, Genius Brands, Netflix, or the Completion Guarantor shall become insolvent; or admit in writing its inability
to pay its debts as they mature; or make an assignment for the benefit of creditors; or apply for or consent to the appointment
of a receiver or trustee for it or for a substantial part of its property or business, or if such a receiver or trustee otherwise
shall be appointed;

 

(g)            
Any money, judgment, writ or warrant of attachment, or similar process involving an amount in excess of $50,000 shall be
entered or filed against the Borrower, $250,000 shall be entered or filed against Genius Brands or $500,000 shall be entered or
filed against the Completion Guarantor or any material portion of their respective assets and shall remain unvacated, unbonded
or unstayed for a period of thirty (30) days or in any event later than five (5) days prior to the date of any proposed sale thereunder;

 

(h)            
An involuntary bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be instituted against the Borrower, Genius Brands, Netflix, or the Completion
Guarantor, and such proceeding shall not be dismissed within ninety (90) days after its commencement or an order for relief against
the Borrower, Genius Brands, Netflix, or the Completion Guarantor, shall have been entered in such proceeding, or any order, judgment
or decree shall be entered against the Borrower, Genius Brands, Netflix, or the Completion Guarantor decreeing its dissolution
or division;

 

(i)             
A bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any bankruptcy
law or any law for the relief of debtors shall be instituted by the Borrower, Genius Brands, Netflix, or the Completion Guarantor;

 

(j)             
Any sale of, or agreement to sell, any of the Collateral or any material portion of the other assets of the Borrower with
regards to the Series, without the Lender’s approval;

 

(k)            
This Agreement, the Netflix License Agreement, any other Loan Document, or any other material instrument delivered hereunder
or thereunder shall at any time after its execution and delivery and for any reason cease to be in full force and effect, or shall
be declared to be null and void, or the validity or enforceability thereof shall be contested by any party thereto other than the
Lender, or any party other than the Lender shall deny that it has any further obligation under this Agreement, the Netflix License
Agreement, any other Loan Documents or any other material instrument delivered hereunder or thereunder, which could result in a
material adverse effect, as determined by the Lender in its sole discretion;

 

 

 

    	 	29	 

     

    

 

(1)The Completion
Guarantor or Netflix fail to, or fail to confirm in writing, upon request by the Lender, to the Lender that it shall, perform or
observe any material covenant or agreement contained in the Completion Guaranty, the Netflix License Agreement, or any other Loan
Documents to which any such Person is a party, which could result in a material adverse effect;

 

(l)             
Any Person with which the Completion Guarantor is insured for the purpose of assuring that the Completion Guarantor will
satisfy its obligations to the Lender under the Completion Guaranty denies any of its obligations to the Completion Guarantor or
the Lender;

 

(m)          
The abandonment of production of the Series;

 

(n)            
Any guaranty, if any, of the Obligations shall be terminated, revoked, or declared void or invalid or there is a failure
to perform any material covenant thereunder;

 

(o)            
Any Default or Event of Default occurs under any of the other Loan Documents; or

 

(p)            
A Change of Control occurs.

 

12.2.      
Remedies.

 

(a)            
If a Default or Event of Default exists, the Lender may, in its discretion, without notice to or demand on the Borrower,
restrict the amount of or refuse to make Loans. If an Event of Default exists, the Lender may, in its discretion, do one or more
of the following in addition to the actions described in the preceding sentence, at any time or times and in any order, without
notice to or demand on the Borrower: (i) terminate this Agreement; (ii) declare any or all Obligations to be immediately due and
payable; and (iii) pursue its other rights and remedies under the Loan Documents and applicable law. The foregoing shall not be
construed to limit the discretion of the Lender to take any actions described above at any other time.

 

(b)            
If any Event of Default exists the Lender shall have, in addition to all other rights of the Lender hereunder, the rights
and remedies of a secured party under the UCC. The Lender may require the Borrower to assemble the Collateral and make it available
to the Lender at a place or places to be designated by the Lender.

 

(c)            
If any Event of Default exists the Lender may, in its sole discretion, in its name or in the name of the Borrower, or otherwise,
demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for, or
make any compromise or settlement deemed desirable with respect to, any of the Collateral, but shall be under no obligation so
to do, or the Lender may extend the time of payment, arrange for payment in installments, or otherwise modify the term of, or release,
any of the Collateral, without thereby incurring responsibility to, or discharging or otherwise affecting the liability of, the
Borrower. The Lender will not be required to take any steps to preserve any rights against prior parties to the Collateral. If
the Borrower or Netflix fail to make payment or take any action required under the Netflix License Agreement, the Netflix Notice
of Assignment, any other Loan Document or the Completion Agreement, the Lender may make such payments and take all such actions
as the Lender deems necessary to protect the Lender’s Lien in the Collateral and/or the value thereof The Lender is hereby
authorized (without limiting the general nature of the authority hereinabove conferred) to pay, purchase, contest or compromise
any Liens which the Lender believes appear to be equal to, prior to or superior to the Lien of the Lender in the Collateral.

 

(d)            
If any Event of Default exists the Lender may, without notice or demand or legal process, enter upon any premises, or wherever
any portion of the Collateral may be, and take possession of the Collateral together with all additions and accessories thereto,
demand and receive such possession from any person who has possession thereof, remove, keep and store the Collateral or any portion
thereof, or put a custodian in charge thereof, and take such other measures as it may deem reasonably necessary or proper for the
care or protection thereof

 

 

 

    	 	30	 

     

    

 

(e)            
If any Event of Default exists the Lender may, with or without taking possession thereof, sell, lease, license, or cause
to be sold, or otherwise disposed of, at such price or prices as the Lender shall in its sole and absolute discretion so determine,
and for cash or on credit or for future delivery, without assumption of any credit risk, and in a commercially reasonably manner,
all or any portion of the Collateral, at any public or private disposition thereof, without demand of performance or notice of
intention to sell or of time or place of sale; provided, however, that unless the Collateral in the Lender’s
possession is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the
Lender shall give the Borrower notice of the time and place of any public disposition thereof or of the time after which any private
disposition thereof is to be made. The requirement of notice shall be met if notice of disposition is delivered or mailed, by certified
mail, postage prepaid, to the Borrower as set forth in Section 13.9 hereof or such other address as the Borrower may by
notice have furnished the Lender in writing for such purpose, at least ten (10) days prior to the time of such disposition. Each
acquirer at any such disposition (including, if applicable, the Lender) shall hold the property acquired absolutely free from any
claim or right of whatever kind including any equity of redemption and the Borrower hereby waives (to the extent permitted by law)
all rights of redemption, stay and/or appraisal which it now has or may have at any time in the future under any rule of law or
statute now existing or hereafter enacted. Any public or private disposition of the Collateral or any part thereof shall be held
at such time or times within ordinary business hours and at such place or places as the Lender may fix in the notice of disposition.
At any such disposition, the Collateral, or any portion thereof, to be disposed of may be disposed of in one lot as an entirety
or in separate parcels, as the Lender may (in its sole discretion) determine and, if permitted by law, the Lender may bid (which
bid may be, in whole or in part, in the form of cancellation of indebtedness) for and purchase the Collateral or any portion thereof
for the account of the Lender. The Lender shall not be obligated to make any disposition of the whole or any part of the Collateral
if it shall determine not to do so, regardless of the fact that notice of disposition of the Collateral may have been given. The
Lender may by announcement at the time and place fixed for disposition, without prior notice or publication, adjourn any public
or private disposition of the Collateral or cause the same to be adjourned from time to time, and such disposition may, without
further notice, be made at the time and place to which the same was so adjourned. In case a disposition of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may be retained by the Lender until the sale price
is paid by the purchaser or purchasers thereof, but the Lender shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Collateral so disposed of and, in case of any such failure, such Collateral may be sold again
upon like notice.

 

(f)             
Any laboratory that has possession of any of the Collateral is hereby constituted and appointed by the Borrower as pledgeholder
for the Lender. The Lender may authorize each such pledgeholder to sell all or any portion of the Collateral upon the order and
direction of the Lender, and the Borrower hereby waives any and all claims for damages, or otherwise, for any action taken by such
pledgeholder.

 

(g)            
If any Event of Default exists, the Lender shall be entitled to the appointment of a receiver to take possession of all
or any portion of the Collateral and to exercise such powers as the court shall confer upon the receiver. The Borrower, to the
fullest extent permitted by law, hereby waives notice and the right to receive notice of any application by the Lender for such
appointment; provided, however, that, notwithstanding any such application or appointment, the Lender shall be entitled
to apply, without notice to the Borrower, any cash or cash items constituting Collateral in the possession of the Lender to payment
of the Obligations under this Agreement, the Note and the other Loan Documents.

 

(h)            
If any Event of Default exists, the Lender may, but shall not be obligated to, take over the production of the Series and
at the option of the Lender, in its sole discretion, fund the remaining unpaid balance of the Strike Price from the proceeds of
Loans, whether made following a request by the Borrower pursuant to Section 2.2 or a deemed request as provided in this
Section 11.2(h). The Borrower hereby irrevocably authorizes the Lender to charge the Borrower’s loan account for the
purpose of paying the Strike Price. If the Lender takes over production of the Series, subject to the Completion Agreement and
other existing third party agreements, the Lender may substitute personnel, cut, edit, score and make such changes in the Series
as it may desire, abandon production of the Series, and be free of any obligation to make any payment in any such event of any
fee payable to the Borrower in connection with the production of the Series. The Borrower hereby agrees to waive any right to claim
that it sustained any loss or damage by reason or as a result of any action taken by the Lender pursuant to this Subsection
1 1.2(11).

 

 

 

 

    	 	31	 

     

    

 

(i)             
Upon any disposition of any item of Collateral by the Lender hereunder (whether by virtue of the power of attorney herein
granted, pursuant to judicial process or otherwise), the receipt of the Lender or the officer making the disposition shall be a
sufficient discharge to the purchaser or purchasers of such item or items of Collateral so sold and such purchaser or purchasers
shall not be obligated to see to the application of any part of the purchase money paid over to the Lender or such officer or be
answerable in any way for the misapplication or non-application thereof

 

(j)             
If any Event of Default exists, the Lender is hereby authorized at any time and from time to time, without notice to the
Borrower (any such notice being expressly waived by the Borrower), to setoff and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held, including amounts in the Production Bank Account and the Collection Account,
any certificate of deposit, and any other indebtedness at any time owing by the Lender to or for the credit or the account of the
Borrower against any and all of the Obligations, irrespective of whether or not the Lender shall have made any demand under this
Agreement, the Note or any other Loan Document. The Lender agrees promptly to notify the Borrower after any such setoff and application.
The rights of the Lender under this Subsection 11.2(j) are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Lender may have.

 

12.3.      
Cumulative Remedies; No Prior Recourse to the Collateral. The enumeration herein of the Lender’s rights and
remedies is not intended to be exclusive, and such rights and remedies are in addition to and not by way of limitation of any other
rights or remedies that the Lender may have under the UCC or other applicable law. The Lender shall have the right, in its sole
discretion, to determine which rights and remedies are to be exercised and in which order. The exercise of one right or remedy
shall not preclude the exercise of any others, all of which shall be cumulative. The Lender may, without limitation, proceed directly
against the Borrower to collect the Obligations without any prior recourse to the Collateral.

 

12.4.      
Failure or Indulgence Not Waiver. No failure or delay on the part of the Lender or any holder of the Note in the
exercise of any power, right, remedy or privilege under this Agreement, the Note or any of the other Loan Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power, right, remedy or privilege preclude any other
or further exercise thereof or of any other right, power, remedy or privilege. All rights and remedies existing under this Agreement,
the Note and the other Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

12.5.      
Performance of the Obligations by the Lender. If the Borrower shall fail to do any act or thing which they have covenanted
to do hereunder, under any other Loan Document, or if any representation or warranty of the Borrower under any such agreement shall
be breached, the Lender may (but shall not be obligated to) perform such act or thing on behalf of the Borrower or cause it to
be done or remedy any such breach, and there shall be added to the liabilities of the Borrower secured hereunder the cost or expense
incurred by the Lender in so doing, and any and all amounts expended by the Lender in taking any such action shall be repayable
to it upon demand being made to the Borrower therefor and shall bear interest at the rate of interest then applicable to the Loans
made to the Borrower hereunder from and including the date advanced to the date of repayment.

 

ARTICLE
13 -TERM AND TERMINATION

 

13.1.      
Termination. The Lender may terminate this Agreement without notice upon the occurrence of an Event of Default. Upon
the effective date of termination, all Obligations shall become immediately due and payable in full. Notwithstanding such termination,
the Borrower shall remain bound by all of the terms and conditions of this Agreement until all Obligations have been paid in full
in cash, and the Lender shall retain all rights and remedies hereunder (including, without limitation, a Lien on and all rights
and remedies with respect to the Collateral). This Agreement shall also terminate when all Obligations have been fully and indefeasibly
paid and performed. Upon the indefeasible payment in full of all Obligations and the termination of this Agreement, the Lender
shall, at the Borrower’s request and expense, assign and deliver to the Borrower, and the Borrower shall provide a receipt
for, all Collateral in which the Lender shall have any interest hereunder or which shall then be held by the Lender or in its possession
and, if requested by the Borrower, the Lender shall execute and deliver to the Borrower at the Borrower’s expense, for filing
in each office in which any financing statement relative to the Collateral, or any part thereof, shall have been filed, termination
statements under the UCC and a quitclaim and assignment of the Lender’s rights under the Copyright Mortgages releasing the
Lender’s Lien therein and reassigning to the Borrower and other Persons, as appropriate, the Lender’s rights under
the Copyright Mortgages, all without recourse upon or warranty by the Lender and at the sole cost and expense of the Borrower.

 

 

 

    	 	32	 

     

    

 

ARTICLE
14 -MISCELLANEOUS

 

14.1.      
Severability. In case any provision of this Agreement, the Note or of any other Loan Document shall be invalid, illegal
or unenforceable in any jurisdiction then, as to such jurisdiction only, such provision shall to the extent of such prohibition
or unenforceability be deemed severed from the remainder of such agreement and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

 

14.2.      
Governing Law. This Agreement, the other Loan Documents and all other documents provided for therein and the rights
and obligations of the parties thereto shall be governed by and construed and enforced in accordance with the laws of the State
of California without reference to its conflict or choice of law principles.

 

14.3.      
Jurisdiction. Except as otherwise provided in Section 13.4 hereof, any legal action or proceeding with respect
to this Agreement, the other Loan Documents or any other agreement, document or other instrument executed in connection herewith
or therewith, or any action or proceeding to execute or otherwise enforce any judgment obtained against the Borrower or any of
its properties, may be brought in the courts of the State of California in Los Angeles County, California, or in the federal courts
of the United States for the Central District of California, as the Lender may elect, provided always that suit also may
be brought in the courts of any country or place where the Borrower or any of its assets may be found, and, by execution and delivery
of this Agreement, the Borrower irrevocably submits to each such jurisdiction. The Borrower irrevocably waives any objection which
it may now or hereafter have to the venue of any suit, action or proceeding, arising out of or relating to this Agreement, the
other Loan Documents or any other agreement, document or other instrument executed in connection herewith brought in the courts
of the State of California in Los Angeles County, California, or in the federal courts of the United States for the Central District
of California, and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.

 

14.4.      
Arbitration.

 

(a)            
Except as otherwise provided in the Netflix Notice of Assignment, all controversies, claims, disputes, or counterclaims
between the parties hereto concerning, based in any way upon, arising under, relating to, or arising in connection with this Agreement,
or any resulting transaction, including, but not limited to, their respective obligations hereunder, a disagreement about the meaning,
interpretation, application performance, breach, termination, enforceability, or validity of this Agreement, and whether based
on statute, tort, contract, common law or otherwise, shall be subject to and resolved by binding arbitration conducted under the
auspices of the Independent Film & Television Alliance in effect as of the date the request for arbitration is filed and its
rules (the “Rules”) and, to the extent not otherwise covered above, the arbitration shall be conducted in accordance
with Title 9 of the U.S. Code.

 

(b)            
Each of the parties may initiate such an arbitration pursuant to the Rules. The arbitration shall be held in Beverly Hills
or Los Angeles, California (such site being herein referred to as the “Forum”). The Borrower and the Lender
shall abide by any decision rendered in such arbitration, and that any court having jurisdiction may enforce such a decision.

 

(c)            
The arbitration award shall also provide for payment by the losing party (i.e., the party or parties against whom an arbitration
award is issued) of: (i) the fees and costs incurred in connection with said arbitration, as well as outside attorneys’ fees
and costs incurred by the prevailing parties (i.e., all parties to the arbitration other than the losing party), and (ii) shall
further provide for the payment by the losing party of interest on said award at the same interest rate payable by the Borrower
to the Lender hereunder. The arbitrator shall immediately upon conclusion of the arbitration proceedings, render and issue a written
decision.

 

(d)            
Each of the parties hereto submits to the non-exclusive personal jurisdiction of the courts of the Forum as an appropriate
place for compelling arbitration or giving legal confirmation of any arbitration award, and irrevocably waives any objection which
it may now or hereafter have to the venue of any such enforcement proceeding brought in any of said courts and any claim of inconvenient
forum. Service of process for all arbitration proceedings may be made in accordance with the Rules. Service of process in any judicial
or other proceeding (including proceedings to judicially confirm any arbitration award) may be made in the manner provided in Section
13.9 hereof and shall be deemed effective as provided therein.

 

(e)            
Any claim or action of any kind (including, but not limited to, any claims for breach of contract), against the Lender arising
out of or connected with this Agreement shall be barred and waived unless asserted by the commencement of an arbitration proceeding
within one (1) year after the accrual of the action or claim. This section and the foregoing limitation shall survive termination
of this Agreement.

 

(f)             
Nothing in this section shall prejudice the right of the Lender to exercise their non-judicial foreclosure rights and remedies
in respect of the Collateral, or prejudice the right of either party to obtain provisional relief or other equitable remedies as
shall otherwise be available judicially pending the resolution of an arbitration proceeding provided in this Section.

 

 

 

 

    	 	33	 

     

    

14.5.      
Waiver of Jury Trial, Etc. TO THE EXTENT PERMITTED BY LAW, THE BORROWER AND THE LENDER HEREBY WAIVE ANY RIGHT TO
TRIAL BY JURY. THE BORROWER FURTHER WAIVES ANY RIGHTS OF SETOFF, AND THE RIGHT TO IMPOSE COUNTERCLAIMS (OTHER THAN THOSE RIGHTS
OF SETOFF AND COUNTERCLAIMS ARISING SOLELY AND DIRECTLY FROM THE SERIES OR THIS AGREEMENT) IN ANY LITIGATION IN ANY COURT WITH
RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL,
OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO, OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN THE
BORROWER, ON THE ONE HAND, AND THE LENDER ON THE OTHER HAND. Each of the parties expressly agrees that service of process in any
judicial or other proceeding (including proceedings to judicially confirm any arbitration award) may be made in accordance with
the provisions of Section 13.9 hereof and shall be deemed effective as provided therein.

 

14.6.      
Waiver With Respect to Damages. THE LENDER HAS NO FIDUCIARY RELATIONSHIP WITH, OR FIDUCIARY DUTY TO, THE BORROWER
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND THE RELATIONSHIP BETWEEN THE LENDER AND THE
BORROWER IN CONNECTION THEREWITH IS SOLELY THAT OF CREDITOR AND DEBTOR. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER
SHALL NOT ASSERT, AND THE BORROWER HEREBY WAIVES, ANY CLAIMS AGAINST THE LENDER ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF,
THIS AGREEMENT, ANY OTHER FUNDAMENTAL DOCUMENT, ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

14.7.      
Expenses and Fees. The Borrower shall pay on demand all reasonable actual out-of-pocket costs and expenses, including
reasonable outside attorneys’ fees and court costs, incurred by the Lender in connection with the negotiation, preparation
and filing of this Agreement, the other Loan Documents and the other agreements and documents referred to herein up to the limits
of the Attorney Costs, and shall pay all reasonable actual out-of-pocket costs and expenses, including reasonable outside attorneys’
fees and court costs, incurred by the Lender after the Closing Date in connection with this Agreement, the other Loan Documents
and the Series, including, without limitation, amendments thereof, costs and expenses of preserving and protecting the Collateral,
costs and expenses (including reasonable outside attorneys’ and paralegals’ fees and disbursements) paid or incurred
to obtain payment of the Obligations, enforce the Lender’s Liens, sell or otherwise realize upon the Collateral and otherwise
enforce the provisions of the Loan Documents or to defend any claims made or threatened against the Lender arising out of the transactions
contemplated hereby, and in connection with the enforcement of the rights of the Lender thereunder or in connection with the realization
upon any Collateral.

 

14.8.      
Taxes.

 

(a)            
Any and all payments (including payments of principal, interest and all fees) by the Borrower hereunder shall be made free
and clear of and without deduction for any and all present or future non-US taxes and other taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, taxes imposed on the Lender’s and Lender’s
income or measured by the overall net income or gross receipts of the Lender, and franchise taxes imposed on it, by the jurisdiction
under the laws of which the Lender are organized or any political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”). If the Borrower
or Netflix, shall be required by law to deduct any Taxes (other than with regard to foreign withholding taxes) from or in respect
of any sum payable hereunder to the Lender, (i) the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable under this Section 13.8) the Lender receives
an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with
applicable law.

 

 

 

 

    	 	34	 

     

    

 

(b)            
In addition, the Borrower shall pay any present or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Documents (hereinafter referred to as “Other Taxes”).

 

(c)            
The Borrower will indemnify the Lender for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this Section 13.8) paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. This indemnification shall be made within thirty (30) days from the date the Lender makes written
demand therefor. The Lender shall, at the time of any written demand for indemnification under this subsection (b), provide to
the Borrower a receipt for, or other evidence of the payment of, the Taxes or Other Taxes for which indemnification is sought.

 

(d)            
Within thirty (30) days after the date of any payment of Taxes, the Borrower will furnish to the Lender, at its address
referred to in Section 13.9, the original or a certified copy of a receipt evidencing payment thereof. If no Taxes are payable
in respect of any payment hereunder with respect to which a claim for indemnity has been made hereunder, the Borrower will furnish
to the Lender, at such address, a certificate from each appropriate taxing authority, or an opinion of counsel acceptable to the
Lender, in either case stating that such payment is exempt from or not subject to Taxes.

 

(e)            
Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this Section 13.8 shall survive the payment in full of principal and interest hereunder.

 

14.9.      
Notices. In order to be effective under the terms hereof, any notice, approval, authorization, consent, request,
demand or other communication provided for hereunder or under any of the other Loan Documents to be given shall be (a) given in
writing and (b) delivered either personally (which includes delivery by FedEx, DHL or other similar service), by certified mail,
return receipt requested, postage prepaid, or by transmission by a telecommunications device (e.g., e-mail or facsimile transmission).
Any such notice, waiver, approval, demand or other communication shall be deemed to have been received, and shall be effective
(a) on the day when personally served, including delivery by overnight mail and courier service, (b) on the third day after its
deposit in the United States mail, and (c) on the Business Day of confirmed transmission by telecommunications device. The addresses
of the parties hereto (until notice of a change thereof is served as provided in this Section 13.9) shall be as follows:

 

	To the Borrower:

Llama Productions LLC

301 North Canon Drive, Suite 305

Beverly Hills, California 90210

Attention:  Rebecca Hershinger

Fax No.:  (310) 273-4202

Email:  rebecca@gnusbrands.com	With a copy to:

Blank Rome LLP

2029 Century Park East, 6th Floor

Los Angeles, California 90067

Attention:  Mark Greenfield

Fax No.:  (424) 239-3437

Email:  greenfield@blankrome.com

And to

Genius Brands International, Inc.

301 North Canon Drive, Suite 305

Beverly Hills, California  90210

Attention:  Gregory B. Payne

Fax No.:  (310) 273-4202

Email:  greg@gnusbrands.com
	 	 
	To the Lender:

Bank Leumi USA

555 West 5th Street, Suite 3300

Los Angeles, California 90013

Attention:  David Henry

Fax No.:  (213) 452-8630

Email:  David.Henry@leumiusa.com	With a copy to:

Babok & Robinson LLP

9201 Wilshire Boulevard, Suite 303

Beverly Hills, California  90210

Attention:  Barry Babok, Esq.

Fax No.:  (310) 860-1218

Email:  barry@babokrobinson.com

 

 

 

    	 	35	 

     

    

 

14.10.   
Waiver of Notice. Unless otherwise expressly provided herein, the Borrower waives presentment, protest and notice
of demand or dishonor and protest as to any instrument, as well as any and all other notices to which it might otherwise be entitled.
No notice to or demand on the Borrower which the Lender may elect to give shall entitle the Borrower to any further notice or demand
in the same, similar or other circumstances.

 

14.11.   
Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors and
assigns, and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that
the Borrower may not assign its rights or delegate its duties hereunder or any interest herein without the prior written consent
of the Lender and any such purported assignment or delegation shall be null and void.

 

14.12.   
Indemnification. The Borrower shall, at all times, defend and indemnify and hold the Lender (which for the purposes
of this paragraph shall include the shareholders, officers, directors, employees, representatives and agents of the Lender) harmless
from and against any and all liabilities, claims, demands, causes of action, losses, damages, settlements, judgments or recoveries
resulting from any alleged or actual breach of the warranties, agreements or covenants made by the Borrower herein, and from any
suit or proceeding of any kind or nature whatsoever against the Lender arising from or connected with the transactions contemplated
by this Agreement, the other Loan Documents or any of the documents, instruments or agreements to be executed pursuant hereto or
any of the rights and properties assigned to the Lender hereunder, and from any suit or proceeding that the Lender may, in the
good faith exercise of its business judgment, reasonably deem necessary or advisable to institute against any other person or the
Borrower for any reason whatsoever to protect the rights of the Lender hereunder or under the other Loan Documents, or any rights
otherwise granted to the Lender, including reasonable outside attorneys’ fees and costs and expenses incurred by the Lender,
all of which shall be charged to and paid by the Borrower and shall be secured by the Collateral hereunder; provided, however,
the Borrower shall have no obligation under this Section 13.12 with respect to any such event resulting from the Lender’s
gross negligence or willful misconduct.

 

14.13.   
Amendments and Waivers. No amendment or modification of any provision of this Agreement or any other Loan Document
shall be effective without the written agreement of the Lender and the Borrower. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. Any amendment, modification,
waiver or consent effected in accordance with this Section 13.3 shall be binding on the Lender, and if signed by the Borrower,
on the Borrower.

 

14.14.   
USA Patriot Act Notice. The Lender notifies the Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), the Lender is required to obtain, verify
and record information that identifies the Borrower, which information includes the name and address of the Borrower and other
information that will allow the Lender to identify the Borrower in accordance with the Act. In particular:

 

To help the government
fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person or entity that opens an account.

 

14.15.   
Final Agreement. This Agreement and the other Loan Documents are intended by the Borrower and the Lender to be the
final, complete, and exclusive expression of the agreement by and among them. This Agreement and the other Loan Documents supersede
any and all prior oral or written agreements relating to the subject matter hereof.

 

 

 

 

    	 	36	 

     

    

 

14.16.   
Counterparts. This Agreement and the other Loan Documents may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and
the same instrument, respectively. Delivery of any executed counterpart of this Agreement by facsimile or transmitted electronically
in either a Tagged Image Format File (“TIFF”) or Portable Document Format (“PDF”) shall be equally effective
as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart by facsimile TIFF,
or PDF shall also deliver a manually executed counterpart of this Agreement, but failure to do so shall not affect the validity,
enforceability or binding effect of this Agreement.

 

14.17.   
Section Headings. The various headings used in this Agreement are inserted for convenience of reference only and
shall not affect the meaning or interpretation of this Agreement or any provision hereof.

 

14.18.   
No Beneficiaries. The parties hereto do not intend by the inclusion of references to various third Person agreements
to create any third Person beneficiary rights herein or under any of those agreements.

 

[Remainder of page intentionally left
blank; signature page follows.]

 

 

 

 

 

 

 

 

 

    	 	37	 

     

    

 

IN WITNESS WHEREOF,
each of the parties have executed this Agreement as of the date first above written.

 

	
        “BORROWER”

        Llama Productions LLC

         

         

        By:    /s/ Gregory B. Payne                    

        Gregory B. Payne, Vice President
	
        “LENDER”

        Bank Leumi USA

         

         

        By:   /s/
David K. Henry                    

Name: David K. Henry

Its: First Vice President

         

         

        By:    /s/ G de Chalendar                    

        Name: G de Chalendar

        Its: Senior Vice President

 

 

 

 

 

 

 

 

 

 

    	 	38

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