Document:

Exhibit 10.37

 

XG SCIENCES, INC.

 

SUBSCRIPTION AGREEMENT

 

Ladies/Gentlemen:

 

XG Sciences, Inc., a Michigan
corporation (the "Company") is selling in this offering (this “Offering”) up to $24,000,000
in shares of its common stock, no par value per share, at $8 per share (the “Shares”) to investors pursuant
to that certain registration statement on Form S-1, as filed with the Securities and Exchange Commission and effective as of _____________
__, 2016.

 

1.           Subscription.

 

1.1           The
undersigned hereby subscribes for the number of Shares set forth on the signature page below at a purchase price of $8.00 per Share.

 

1.2           If
the undersigned is paying with a check or money order, enclosed is a check or money order payable to the order of XG Sciences,
Inc., in the amount set forth on the signature page below as payment in full of the total purchase price of the Shares subscribed
for.

 

1.3           If
the undersigned in paying by wire transfer, the understand shall effect a wire transfer in the amount set forth on the signature
page below as payment in full of the total purchase price of the Shares subscribed for to the bank account set forth in and in
accordance with the wire instructions detailed in Exhibit A.

 

1.4           The
Company expects to utilize the subscription funds received from this Offering to fund general corporate expenses of approximately
$11.44 million over the next two years, working capital increases of approximately $3.5 million, and to expand capacity. If the
Company sells only 25% of the shares, it will use the majority of the net proceeds from the Offering to fund general corporate
expenses.

 

2.           Subscriber’s
Acknowledgments and Agreements.

 

The undersigned understands,
acknowledges and agrees that:

 

2.1           This
subscription may be accepted or rejected in whole or in part by the Company, in its sole discretion. The Company may also terminate
the Offering at any time, and may increase or decrease the size of the offering at its sole discretion.

 

2.2           Except
as provided under applicable securities laws, this subscription is and shall be irrevocable except that (a) the undersigned’s
execution and delivery of this Subscription Agreement will not constitute an agreement between the Company and the undersigned
until this Subscription Agreement is accepted on behalf of the Company and, if not so accepted, the undersigned’s subscription
and obligations hereunder will terminate and (b) the undersigned can, at any time prior to acceptance of this Subscription Agreement,
request in writing that the undersigned be released from the obligations hereunder (and the Company may, but need not, in its discretion,
elect to release the undersigned from the subscription and from such obligations).

 

2.3           No
U.S. federal or state agency has made any finding or determination as to the fairness of the terms of this Offering. These securities
have not been recommended or endorsed by any U.S. federal or state securities commission or regulatory agency.

 

2.4 The undersigned is
aware that any resale inconsistent with the Securities Act of 1934, as amended (the “Securities Act”) may create
liability on the undersigned’s part and/or the part of the Company, and agrees not to assign, sell, pledge, transfer or otherwise
dispose of or transfer any such Shares unless registered under the Securities Act and applicable U.S. state securities laws, or
an opinion is given by counsel satisfactory to the Company that such registration is not required.

 

    	Page 1 

     

    

 

2.5     The
Company has made available to the undersigned (a) the Company’s Articles of Incorporation and Bylaws, each as amended to
date (collectively, the “Company Organizational Documents”), (b) the Shareholder Agreement dated March 18, 2013,
as amended on February 26, 2016 (as amended, the “Shareholder Agreement”), and (c) the Voting Agreement dated
January 15, 2014 (the “Voting Agreement”). The undersigned also acknowledges that the undersigned has had a
reasonable opportunity to examine the Company Organizational Documents, the Shareholder Agreement and the Voting Agreement. The
undersigned further acknowledges and agrees that the undersigned will be bound by the Company Organizational Documents until such
time as those agreements have been terminated according to their terms therein.

 

3.           Subscriber’s
Representations and Warranties.

 

The undersigned hereby
represents and warrants as follows:

 

3.1     The
undersigned is acquiring the Shares for the undersigned’s own account for investment, not for the interest of any other person,
not for resale to any other person and not with a view to or in connection with a sale or distribution.

 

3.2     The
undersigned has sufficient knowledge and experience in financial and business matters so that he is capable of evaluating the merits
and risks of an investment in the Shares and of protecting his interests in connection with such investment, or he has obtained
the advice of an attorney, a certified public accountant, or an investment advisor registered under the Investment Advisors Act
of 1940 or under the Michigan Uniform Securities Act of 2002, with respect to the merits and risks of an investment in the Shares
and the protection of his interests.

 

3.3     The
undersigned has had an opportunity to ask questions of and receive answers from representatives of the Company with respect to
this Offering. The Company has provided the undersigned with all documents requested and has provided answers to all of the undersigned’s
questions relating to an investment in the Company. In addition, the undersigned has had an opportunity to discuss this investment
with representatives of the Company and to ask questions of them.

 

3.4     The
undersigned is acquiring the Shares and has been furnished with the Company Organizational Documents, the Shareholder Agreement,
the Voting Agreement and has access to the registration statement. The undersigned has not been furnished with any prospectus or
other offering literature.

 

3.5     The
undersigned understands that an investment in the Company is speculative and involves a high degree of risk, and the undersigned
has carefully reviewed and is aware of all of the risk factors related to the purchase of the Shares.

 

3.6     The
undersigned understands that there is no market for the Shares, and it is not anticipated that such a market will develop.

 

3.7     If
this Subscription Agreement is executed and delivered on behalf of a partnership, trust, corporation or other entity: the undersigned
has been duly authorized to execute and deliver this Subscription Agreement and all other documents and instruments (if any) executed
and delivered on behalf of such entity in connection with its purchase of Shares subscribed for.

 

3.8     The
Company and the other purchasers are relying on the truth and accuracy of the declarations, representations and warranties herein
made by the undersigned. Accordingly, the foregoing representations and warranties and undertakings are made by the undersigned
with the intent that they may be relied upon in determining his/her suitability as a purchaser. The undersigned agrees that such
representations and warranties shall survive the acceptance of the undersigned as a purchaser, and the undersigned indemnifies
and agrees to hold harmless, the Company and each other purchaser from and against all damages, claims, expenses, losses or actions
resulting from the untruth of any of the warranties and representations contained in this Subscription Agreement.

 

    	Page 2 

     

    

 

3.9     The
foregoing representations and warranties are true as of the date of this Subscription Agreement and shall be true as of the date
the Company issues and sells Shares to the undersigned. If such representations and warranties shall not be true in any respect
prior to such date, the undersigned will give prompt written notice of such fact to the Company.

 

4           Governing
Law; Arbitration; Venue.

 

4.1     This
Subscription Agreement and all rights and obligations hereunder shall be deemed to be made under and governed by the laws of the
State of Michigan applicable to agreements made and to be performed entirely within such State, without reference to such State's
laws regarding the conflict of laws.

 

4.2     Any
dispute or difference with respect to any matter arising out of or in connection with this Subscription Agreement and the Offering
shall first be submitted for arbitration to the American Arbitration Association.

 

4.3     Any
litigation arising hereunder shall be instituted only in Ingham County or the state courts of the State of Michigan sitting in
Ingham County. All parties agree that venue shall be proper in Ingham County for all such legal or equitable proceedings.

 

4.4     Failure
of any party to exercise any right or remedy under this Subscription Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.

 

4.5     All
pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

 

4.6     The
headings of this Subscription Agreement are for convenience of reference and shall not form part of, or affect the interpretation
of, this Subscription Agreement.

 

4.7     If
any provision of this herein shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Subscription Agreement or the validity or enforceability of this
Subscription Agreement in any other jurisdiction.

 

[Remainder of page intentionally
left blank. Signatures to follow]

 

    	Page 3 

     

    

 

Date: _____________________________________________________________

 

Number of Shares Subscribed For: _______________________________________

 

Purchase Price Per Share: $8.00

 

Aggregate Purchase Price: $___________________________________________

 

	
        _________________________

        Taxpayer I.D. Number

         

        As (check one) Individual _____ Tenants in

        Common _____ Existing
        Partnership _____ Joint

        Tenants _____ Corporation _____ Trust _____

        Minor with Adult Custodian under UGMA _____

         

        Subscriber’s name and business

        address (please type or print)

        ____________________________

        ____________________________

        _____________________________
	
         

        __________________________

        Signature of Subscriber

         

         

        Capacity in which signed:

         

         

        Subscriber’s mailing address

        (if different than business address)

        ____________________________

        ____________________________

        ____________________________

	
         

        ____________________________

        Taxpayer I.D. Number of Co-Subscriber

         

        Co-Subscriber’s name and business

        address (please type or print)

        _____________________________

        _____________________________

        _____________________________
	
         

        ____________________________

        Signature of Co-Subscriber

         

        Co-Subscriber’s mailing address

        (if different than business address)

        _____________________________

        _____________________________

        _____________________________

 

	Accepted:	 	 	 
	 	 	 	 
	XG SCIENCES, INC.	 	 	 
	 	 	 	 
	By:	 	 	 	 
	Name:	 	 	Date:	 	 
	Title:	 	 	 	 

 

    	Page 4 

     

    

 

EXHIBIT A

 

[COMPANY WIRE INSTRUCTIONS]

 

    	Page 5Exhibit 10.1

 

FIFTH
AMENDMENT TO

LOAN AND SECURITY
AGREEMENT AND WAIVER

 

This
Fifth Amendment to Loan and Security Agreement and Waiver (this “Amendment”) is entered into as of March 9,
2016, by and among MODERN SYSTEMS CORPORATION, a Delaware corporation, formerly known as BluePhoenix Solutions USA, Inc., a Delaware
corporation (“Modern”) and MS MODERNIZATION SERVICES, INC., a Texas corporation, formerly known as Sophisticated
Business Systems, Inc., successor by merger to BP-AT Acquisition LLC, a Delaware limited liability company f/k/a BP-AT Acquisition
Corporation, a Delaware corporation (“MS”, and collectively with Modern, “Borrowers”, and
each individually, a “Borrower”), and COMERICA BANK (“Bank”).

 

RECITALS

 

Borrowers
and Bank are parties to that Loan and Security Agreement dated October 2, 2013, as it may be amended from time to time, including
without limitation by that certain First Amendment to Loan and Security Agreement, Joinder, and Modification to Loan Documents
dated September 25, 2014, that certain Omnibus Modification to Loan Documents and Consent dated January 8, 2015, that certain Third
Amendment to Loan and Security Agreement, Modification to Loan Documents and Consent dated May 1, 2015, and that certain Fourth
Amendment to Loan and Security Agreement dated May 11, 2015 (as amended, the “Agreement”). The parties desire
to amend the Agreement in accordance with the terms of this Amendment and Borrowers have requested that Bank waive the occurrence
of certain Events of Default.

 

NOW, THEREFORE, the parties agree as
follows:

 

1.                   
Borrowers failed to comply with (a) Section 6.2(ix) by failing to deliver an intellectual property report as of December 31, 2015,
(b) Section 6.7(a) of the Agreement (Minimum Liquidity) for the testing periods ended September 30, 2015 and December 31, 2015
and (c) Section 6.7(b) of the Agreement (New Equity Event) as of December 31, 2015 (collectively, the “Borrower Covenant
Violations”). In addition, (i) Prescott Group Aggressive Small Cap Master Fund (“Prescott”) failed
to comply with Section 13(b) of the Guaranty executed by Prescott by failing to deliver to Bank a compliance certificate for the
period ended December 31, 2015, and (ii) Columbia Pacific Opportunity Fund, L.P. (“Columbia”) failed to comply
with Section 13(b) of the Guaranty executed by Columbia by failing to deliver to Bank a compliance certificate for the period ended
December 31, 2015 (collectively, the “Guarantor Covenant Violations”, and collectively with the Borrower Covenant
Violations, the “Covenant Violations”). Borrower, Prescott, and Columbia requested that Bank waive the Covenant
Violations. Bank hereby waives the Covenant Violations. This waiver is specific as to content and time, shall be limited precisely
as written, and shall not constitute a waiver of any other current or future Default or Event of Default or breach of any covenant
contained in the Agreement or the terms and conditions of any other Loan Documents. Bank expressly reserves all of its various
rights, remedies, powers and privileges under the Agreement and the other Loan Documents due to any other Default, Event of Default
or breach not waived herein.

 

2.                  Exhibit A of the Agreement is amended by amending and restating the following defined terms to read in their entireties as
follows:

 

“Consolidated Net
Income (or Deficit)” means the consolidated net income (or deficit) of any Person and its Subsidiaries, after deduction of
all expenses, taxes, and other proper charges, determined in accordance with GAAP, after eliminating therefrom all extraordinary
nonrecurring items of income.

 

“Consolidated Total
Interest Expense” means with respect to any Person for any period, the aggregate
amount of interest required to be paid or accrued by a Person and its Subsidiaries during such period on all Indebtedness of such
Person and its Subsidiaries outstanding during all or any part of such period, whether
such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest
in respect of any capitalized lease or any synthetic lease, and including commitment fees, agency fees, facility fees, balance
deficiency fees and similar fees or expenses in connection with the borrowing of money.

 

     

     

    

 

“EBITDA” means
with respect to any fiscal period an amount equal to the sum of (a) Consolidated Net Income of the Parent and its Subsidiaries
for such fiscal period, plus (b) in each case to the extent deducted in the calculation of the Parent’s Consolidated Net
Income and without duplication, (i) depreciation and amortization for such period, plus (ii) income tax expense for such
period, plus (iii) Consolidated Total Interest Expense paid or accrued during such period, plus (iv) non-cash employee
compensation expense, plus (v) non-cash expenses approved in writing by Bank in its sole discretion for such period, minus
(vi) to the extent added in computing Consolidated Net Income, and without duplication, all extraordinary and non-recurring
revenue and gains (including income tax benefits) for such period, all as determined in accordance with GAAP.

 

“Non-Formula Revolving Line Maturity
Date” means June 30, 2017.

 

“Revolving Line Maturity Date” means June 30,
2017.

 

3.                   
Subparagraph (d) of the definition of “Eligible Accounts” in Exhibit A of the Agreement is amended and restated to
read in its entirety as follows:

 

“(d)
Accounts with respect to an account debtor, including Subsidiaries and Affiliates, whose total obligations to Borrower exceed twenty-five
percent (25%) of all Accounts (‘Concentration Limit’), to the extent such obligations exceed the aforementioned percentage,
except as approved in writing by Bank; provided, however, the Concentration Limit for (i) IBM Corporation, (ii) Jetro, (iii) Xerox,
(iv) New York Times, (v) Lockheed Martin, (vi) Dell, and (vii) Fujitsu shall be sixty percent
(60%);”

 

 4.                   
 New Section 6.7(c) is added to the Agreement to read in its entirety as follows:

 

“(c)
EBITDA. Tested monthly, EBITDA of Parent, measured on a trailing six (6) month basis ending on the date of determination,
of not less than the following amounts on the following dates:

 

	Testing Dates	 	Minimum EBITDA	 
	December 31, 2015	 		($1,575,000)	
	January 31, 2016	 		($1,400,000)	
	February 29, 2016	 		($1,000,000)	
	March 31, 2016	 		($700,000)	
	April 30, 2016	 		($500,000)	
	May 31, 2016	 		($200,000)	
	June 30, 2016	 		$50,000	 
	July 31, 2016	 		$50,000	 
	August 31, 2016	 		($200,000)	
	September 30, 2016,	 		$50,000	 
	October 31, 2016 and the last day of each month thereafter	 	 	$500,000”	 

 

 5.                   
  Section 7.12 of the Agreement is amended and restated to read in its entirety as follows:

 

“7.12Transfers
to Parent. Transfer to Parent funds in excess of $450,000, in
the aggregate, during any fiscal year of Borrower.”

 

    	 	2	 

     

    

 

 6.                  
  New Sections 13.10 and 13.11 are added to the Agreement to read in their entireties as follows:

 

“13.10
Withholding Tax. All payments to be made by Borrowers, or either of them under this Agreement or any of the other Loan Documents
shall be made without set-off or counterclaim and without deduction for or on account of any present or future withholding or other
taxes of any nature imposed by any governmental authority or of any political subdivision thereof or any federation or organization
of which such governmental authority may at the time of payment be a member, unless the applicable Borrower(s) is (are) compelled
by law to make payments subject to such tax. In such event, such Borrower(s) shall pay to Bank, for the account of Bank, such additional
amounts as may be necessary to ensure that Bank receives a net amount equal to the full amount which would have been receivable
under this Agreement had payment not been made subject to such tax.

 

13.11
Judgment Currency. The obligation of Borrowers to make payments of the principal of and interest on the Obligations and
any other amounts payable hereunder in the currency specified for such payment herein shall not be discharged or satisfied by any
tender, or any recovery pursuant to any judgment, which is expressed in or converted into any other currency, except to the extent
that such tender or recovery shall result in the actual receipt by Bank of the full amount of the particular currency expressed
to be payable herein. The obligation of Borrowers to make payments in the applicable currency shall be enforceable as an alternative
or additional cause of action solely for the purpose of recovering in the applicable currency the amount, if any, by which such
actual receipt shall fall short of the full amount of the currency expressed to be payable
herein.”

 

 7.                  
   Exhibit E of the Agreement is replaced with Exhibit E attached to this Amendment.

 

8.                  

Borrowers and Bank agree that the Fourth Amendment to Loan and Security Agreement dated May 11, 2015 (“Fourth Amendment”)
contains a typographical error because it incorrectly provides that the Agreement was dated March 24, 2014. The incorrect reference
to “March 24, 2014” in the Fourth Amendment is amended to read “October 2,
2013.”

 

9.                  
Borrowers acknowledge and agree that within thirty (30) days after the date of this Amendment they (a) shall execute, or
cause to be executed, and deliver to Bank all documents and agreements requested by Bank to cause (i) Parent to become an
unsecured guarantor of the Obligations and (ii) BluePhoenix Solutions UK Ltd to become a secured guarantor of the Obligations
and to grant a first priority lien on its assets to secure the Obligations and its guaranty, together  with
any other documents or information requested by Bank in connection therewith and (b) deliver, or cause to be delivered, to
Bank an original fully executed Affirmation of Guaranties, executed by Columbia
and Prescott.

 

10.                
Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement,
as amended hereby, shall be and remains in full force and effect in accordance with its terms and hereby is ratified and confirmed
in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate
as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date
hereof.

 

11.                
Borrowers represent and warrant that the representations and warranties contained in the Agreement are true and correct in all
material respects as of the date of this Amendment, and that, other than the Covenant Violations, no Event of Default has occurred
and is continuing.

 

12.                
As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the
following:

 

(a)             this Amendment, executed by Borrowers;

 

(b)             Corporation Resolutions and Incumbency Certifications: Authority to Procure Loans, executed by Borrowers;
and

  

(c)             all reasonable Bank Expenses incurred through the date of this Amendment, which may be debited from any of Borrowers’
accounts.

 

13.               
This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one instrument.

  

[Remainder of Page Intentionally Left
Blank]

 

    	 	3	 

     

    

 

IN WITNESS WHEREOF, Borrowers
and Bank have executed and delivered this Fifth Amendment to Loan and Security Agreement and Waiver as of the date first set forth
above.

 

	 	MODERN
    SYSTEMS CORPORATION, a Delaware corporation, formerly known as BluePhoenix Solutions USA, Inc.
	 	 	 
	 	By:	/s/
    Matthew Bell

 

	 	Printed Name:	Matthew
    Bell

 

	 	Title:

        
	CEO

 

MS
MODERNIZATION SERVICES, INC., a Texas corporation, formerly known as Sophisticated Business Systems, Inc., successor by merger
to BP-AT Acquisition LLC, formerly known as BP-AT Acquisition Corporation 

 

	 	By:	/s/
    Matthew Bell

 

	 	Printed Name:	Matthew
    Bell

 

	 	Title:

        
	CEO

 

	 	COMERICA
    BANK 
	 	 	 
	 	By:	/s/
    Walter     Weston

 

	 	Printed Name:	Walter
Weston

 

	 	Title:

        
	VP

 

[Signature Page to Fifth Amendment to Loan
and Security Agreement and Waiver (8555258)]

 

    	 	4	 

     

    

 

EXHIBIT
E

 

COMPLIANCE
CERTIFICATE

 

	Please
    send all Required Reporting to:	Comerica
    Bank
	 	Technology
    & Life Sciences Division
	 	Loan
    Analysis Department
	 	250
    Lytton Avenue
	 	3rd
    Floor, MC 4240
	 	Palo
    Alto CA 94301
	 	Phone:
    (650) 462-6060
	 	Fax:
    (650) 462-6061

 

FROM:
Modern Systems Corporation and MS Modernization Services, Inc.

 

The
undersigned authorized Officer of Modern Systems Corporation and MS Modernization Services, Inc. (individually and collectively,
“Borrower”), hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending __________,
201   with all required covenants, including without limitation the ongoing registration of intellectual property rights
in accordance with Section 6.8, except as noted below and (ii) all representations and warranties of Borrower stated in the Agreement
are true and correct in all material respects as of the date hereof; provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all material respects as of such date. Attached herewith
are the required documents supporting the above certification (“Supporting Documents”). The Officer further certifies
the Supporting Documents are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently
applied form one period to the next except as explained in an accompanying letter or footnotes.

 

Please
indicate compliance status by circling Yes/No under “Complies” or “Applicable” column,

 

	REPORTING
    COVENANTS	 	REQUIRED	 	COMPLIES
	Company
    Prepared Monthly F/S	 	Monthly,
    within 30 days	 	YES	 	NO
	Compliance
    Certificate	 	Monthly,
    within 30 days	 	YES	 	NO
	CPA
    Audited, Unqualified F/S for Parent	 	Annually,
    within 150 days of FYE	 	YES	 	NO
	Company Prepare Annual Consolidating F/S for Parent	 	Annually, within 150 days of FYE (commencing 2014 FY)	 	YES	 	NO
	Company
    Prepared Annual F/S	 	Annually,
    within 150 days of FYE	 	YES	 	NO
	Borrowing
    Base Cert, A/R & A/P Agings	 	Monthly,
    within 30 days	 	YES	 	NO
	Annual
    Business Plan	 	Annually,
    on or before 1/31	 	YES	 	NO
	Intellectual
    Property Report	 	Quarterly
    within 30 days	 	YES	 	NO
	Audit	 	Semi-annual	 	YES	 	NO
	 	 	 	 	 	 	 
	If
    Public:	 	 	 	 	 	 
	10-Q	 	Quarterly,
    within 5 days of SEC filing (50 days)	 	YES	 	NO
	10-K	 	Annually,
    within 5 days of SEC filing (95 days)	 	YES	 	NO
	 	 	 	 	 	 	 
	Total
    amount of Borrower’s cash and investments	 	Amount:
    $ _______________	 	YES	 	NO
	Total
    amount of Borrower’s cash and investments maintained with Bank	 	Amount:
    $ _______________	 	YES	 	NO
    

 

	 	DESCRIPTION	 	APPLICABLE
	Legal
    Action > $250,000 (Sect. 6.2(iv))	Notify
    promptly upon notice __________	 	YES	NO
	Inventory
    Disputes> $250,000 (Sect. 6.3)	Notify
    promptly upon notice __________	 	YES	NO
	Mergers
    & Acquisitions> $250,000 (Sect. 7.3)	Notify
    promptly upon notice __________	 	YES	NO
	Cross
    default with other agreements >$250,000 (Sect. 8.6)	Notify
    promptly upon notice __________	 	YES	NO
	Judgments/Settlements
    > $250,000 (Sect. 8.8)	Notify
    promptly upon notice __________	 	YES	NO

 

	FINANCIAL
    COVENANTS	 	REQUIRED	 	ACTUAL	 	COMPLIES
	 	 	 	 	 	 	 	 
	Bank
    Debt Liquidity Ratio (tested monthly commencing on the Revolving Line Increase Effective Date)	 	1.10:1.00	 	____:1.00	 	YES	NO
	New
    Equity	 	See
    Sec. 6.7(b)	 	$____________	 	YES	NO
	Minimum
    EBITDA	 	See
    Sec. 6.7(c)	 	$____________	 	YES	NO

  

     

     

    

 

	FINANCIAL
    COVENANTS	 	REQUIRED	 	ACTUAL	 	COMPLIES
	 	 	 	 	 	 	 	 
	Permitted
    Indebtedness for equipment leases	 	<$250,000	 	$_____________	 	YES	NO
	Permitted
    Investments for stock repurchase	 	<$250,000	 	$_____________	 	YES	NO
	Permitted
    Investments for subsidiaries	 	<$250,000	 	$_____________	 	YES	NO
	Permitted
    Investments for employee loans	 	<$250,000	 	$_____________	 	YES	NO
	Permitted
    Investments for joint ventures	 	<$250,000	 	$_____________	 	YES	NO
	Permitted
    Liens for equipment leases	 	<$250,000	 	$_____________	 	YES	NO
	Permitted
    Transfers	 	<$250,000	 	$_____________	 	YES	NO
	Cash
    Transfer to Parent	 	<$450,000	 	$_____________	 	YES	NO

 

Please
Enter Below Comments Regarding Violations

 

The
undersigned further acknowledges that at any time Borrower is not in compliance with all the terms set forth in the Agreement,
including, without limitation, the financial covenants, no Credit Extensions will be made.

 

Very
truly yours,

 

MODERN
SYSTEMS CORPORATION, for itself and on behalf of MS Modernization Services, Inc.

 

Authorized
Signer

 

Name

 

Title

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