Document:

ex10-1.htm

Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

 

BY AND BETWEEN:

 

 

AMERCIA RESOURCES EXPLORATION INC., a Nevada corporation having an office in the Tempe, Arizona (hereinafter referred to as the “Corporation”);

 

ZHENG XIANGWU, an individual residing in China (hereinafter referred to as the “Owner”);

- And -

 

NELACO OPERATING INC., a Texas corporation having offices in Abilene, Texas (hereinafter referred to as “Nelaco”)

 

 

                            

 

ASSET PURCHASE AGREEMENT

                            

 

 

 

Dated as of June 10, 2015

 

  

  

  

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of the 10th day of June 2015, by and between AMERICA RESOURCES EXPLORATION INC., a Nevada corporation (the “Corporation”), ZHENG XIANGWU, an individual residing in the Province of Guang Dong, China (“Owner”) and NELACO OPERATING, INC., a Texas corporation having offices in Abilene, Texas (“Nelaco”).

WHEREAS, Nelaco has acquired, on behalf of and in trust for, the Owner one hundred percent interest in certain leases located in Atascosa and Frio Counties, Texas (referred to herein as the “Burns and Rogers Leases”);

WHEREAS, the Corporation is a publicly reporting company whose stock trades on OTC Markets:Pink Sheets under the trading symbol “AREN” and is interested in entering into the oil and gas business by purchasing interests in properties located Texas as well as other jurisdictions in the United States, and is also interested in acquiring companies that owns such properties, specifically the Rogers and Burns Leases;

WHEREAS, the Corporation has agreed with the Owner to issue Four Million (4,000,000) shares of the Corporation’s common stock (the “AREN Shares”) to the Owner in exchange for assignment of the Burns and Rogers Leases to the Corporation, on the terms and conditions set forth herein;

NOW THEREFORE in consideration of the mutual covenants, representations and warranties, which are to be made and performed by the respective Parties, it is hereby agreed as follows:

ARTICLE I

INTERPRETATION

Section 1.01. Definitions. The following terms when used in this Agreement shall have the meanings hereby assigned to them:

“Business Day” shall mean any day other than a day which is a Saturday, a Sunday or a statutory holiday in Tempe, Arizona;

“Effective Date” shall mean June 10, 2015;

“Effective Time” shall mean 12:01 a.m. MST on the Effective Date;

“Encumbrance” shall mean any mortgage, charge, pledge, lien, (otherwise than arising by statute or operation of law), equities, hypothecation or other encumbrance, priority or security interest, pre-emptive right deferred purchase, title retention, leasing, sale-and-repurchase or sale-and-leaseback arrangement whatsoever over or in any property, assets or rights of whatsoever nature and includes any agreement for any of the same and reference to “Encumbrances” shall be construed accordingly;

  

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“Escrow” shall mean the holding of the AREN Shares pending completion of the transactions set forth herein.

“Escrow Holder” shall mean Booth Udall Fuller PLC, a professional law corporation with offices located in Tempe, Arizona.

“Exchange Act” shall mean the US Securities Exchange Act of 1934;

“Governmental Entity” shall mean any court or tribunal in any jurisdiction or any federal, state, municipal or other governmental body, agency, authority, department, commission, board or instrumentality;

“Party” shall mean a Person, which is bound by this Agreement;

“Person” shall mean any individual, firm, company, government, state or agency of a state or any joint venture, association or partnership (whether or not having separate legal personality);

“Regulations” shall mean all statutes, laws, codes, treaties, ordinances, decrees, rules, orders and regulations in effect from time to time and made by governments or Governmental Entities having jurisdiction over the Corporation, the Owner, or the Partnership.

“Securities Act” shall mean the US Securities Act of 1933;

“SEC” shall mean the US Securities and Exchange Commission; and

“US” shall mean United States of America.

ARTICLE II

ASSET PURCHASE

Section 2.01. Agreement of Asset Purchase. By execution of this Agreement, and pursuant to the terms hereof, the Corporation agrees to issue the AREN Shares to the Owner and the Owner agree to cause the Burns and Rogers Leases to be assigned to the Corporation (the “Asset Purchase”) as follows:

(a) Upon execution of this Agreement, (1) the Corporation shall cause the AREN Shares, to be placed into Escrow with the Escrow Holder pending full and complete performance of all of Owner’s obligations under this Agreement and (2) the Owner shall cause the Burns and Rogers Leases to be assigned into the name of the Corporation (the “Assignment”)..

(b) Upon completion of the Assignment, the Escrow Holder shall release the AREN Shares to the Owner.

  

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(c)  In the event that either party does not fulfill its obligations set forth herein, then the AREN Shares shall be released from Escrow and returned to the Corporation for cancellation and return to treasury.

Section 2.02. Corporate Governance.  The Corporation and the Owner agree that on the Effective Date, or as soon as practical thereafter, there shall be three (3) members of the board of directors of the Corporation with two (2) directors designated by the Owner, and one (1) director designated by the Corporation.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.01. Each Party represents and warrants to the other Party that each of the warranties it makes is accurate in all respects and not misleading as at the date of this Agreement.

Section 3.02. Each Party undertakes to disclose in writing to the other Party anything which is or may constitute a breach of or be inconsistent with any of the warranties immediately upon the same coming to its notice at the time of and after Completion.

Section 3.03. Each Party agrees that each of the warranties it makes shall be construed as a separate and independent warranty and (except where expressly provided to the contrary) shall not be limited or restricted by reference to or inference from the terms of any other warranty or any other term of this Agreement.

Section 3.04. Each Party acknowledges that the restrictions contained in Section 6.07 (Public Notices) shall continue to apply after the Completion under this Agreement without limit in time.

Section 3.05. All representations, warranties, covenants and agreements contained in this Agreement on the part of each of the Parties shall survive the Effective Date, the issuance and delivery of the AREN Shares and the Assignment. If no claim shall have been made under this Agreement against a Party with respect to any incorrectness in or breach of any representation or warranty made by that Party in this Agreement within six months following the Effective Date, that Party shall have no further liability with respect to the representation or warranty.

Section 3.06.  The representations and warranties contained in clauses 3.1 and 3.2 herein of this Agreement shall be deemed to apply to all and shall not merge or diminish as a result of the Asset Purchase as contemplated hereunder.

 

Section 3.07. The Owner specifically acknowledges, agrees and accepts the inherent risk associated with investing and operating in public companies (including, without limitation, companies whose stock trades on the OTC:Pinks).

 

  

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE CORPORATION

Section 4.01. Organization, Standing and Authority; Foreign Qualification. The Corporation is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as presently conducted and as proposed to be conducted and is duly qualified or licensed as a foreign corporation in good standing in each jurisdiction in which the character of its properties or the nature of its business activities require such qualification.

Section 4.02. Corporate Authorization. The execution, delivery and performance by the Corporation of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action of the Corporation, and this Agreement constitutes a valid and binding agreement of the Corporation. The AREN Shares to be issued in accordance with this Agreement shall be duly authorized and, upon such issuance, will be validly issued, fully paid and non-assessable.

Section 4.03. Capitalization.  The Corporation’s authorized capital stock consists solely of 300,000,000 shares of common stock, of which 125,400,000 shares of common stock are issued and outstanding as of the date hereof; all of such issued and outstanding shares of the Corporation’s common stock are duly authorized, validly issued, fully paid and non-assessable. There are no outstanding options, warrants, agreements or rights to subscribe for or to purchase, or commitments to issue, shares of the Corporation’s common stock or any other security of the Corporation or any plan for any of the foregoing.

Section 4.04 Subsidiaries. The Corporation does not have any subsidiaries.

Section 4.05. SEC Filings. (a) The Corporation has delivered to the Owner (i) the Corporation’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014, containing the Corporation’s consolidated balance sheet at March 31, 2014 and March 31, 2014 and statements of income, changes in shareholders' equity and cash flows of the Corporation for the period from January 24, 2014 (date of inception) to March 31, 2014, along with a copy of the audit report of Harris & Gillespie CPA’s, PLLC, independent auditors; (ii) quarterly reports on Form 10-Q for the three (3) quarters ended June 30, September 30, and December 31, 2014, respectively; and (iii) all current reports on Form 8-K filed by the Corporation since August 28, 2014 (collectively, “the Corporation’s Reports”). To the best of the Corporation’s knowledge and belief, all of the Corporation’s Reports as of their respective dates (i) comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC thereunder, (ii) do not contain any untrue statement of a material fact, and (iii) do not omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) All documents which the Corporation is responsible for filing with the SEC or any regulatory agency in connection with this Agreement will comply as to form in all material respects with the requirements of applicable law, and all of the information relating to the Corporation in any document filed with the SEC or any other regulatory agency in connection with this Agreement or the transactions otherwise contemplated hereby shall be true and correct in all material respects.

 

  

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Section 4.06. Certificate of Incorporation and By-Laws. The Corporation has heretofore delivered to the Owner true, correct and complete copies of its Certificate or Articles of Incorporation (certified by the Secretary of State of the State of Nevada and By-laws, certified by the Corporation’s corporate secretary thereof).

Section 4.07. No Conflict.  The execution, delivery and performance of this Agreement and the completion of the transactions contemplated herein will not:

	
(a)  

	
Violate any provision of the Articles or Certificate of Incorporation, By-laws or other charter or organizational document of the Corporation;

	
(b)  

	
Violate, conflict with or result in the breach of any of the terms of, result in any modification of the effect of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both) a default under any contract to which the Corporation is a party or by or to which its assets or properties may be bound or subject;

	
(c)  

	
Violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, or any agreement with, or condition imposed by, any governmental or regulatory body, foreign or domestic, binding upon the Corporation or upon the securities, assets or business of the Corporation;

	
(d)  

	
Violate any statute, law or regulation of any jurisdiction as such statute, law or regulation relates to the Corporation or to the securities, properties or business of the Corporation; or

	
(e)  

	
Result in the breach of any of the terms or conditions of, constitute a default under, or otherwise cause an impairment of, any permit or license held by the Corporation.

Section 4.08. Litigation. There is no litigation, suit, proceeding, action or claim at law or in equity, pending or to the Corporation 's best knowledge threatened against or affecting the Corporation or involving any of the Corporation’s property or assets, before any court, agency, authority or arbitration tribunal, including, without limitation, any product liability, workers' compensation or wrongful dismissal claims, or claims, actions, suits or proceedings relating to toxic materials, hazardous substances, pollution or the environment. Except as set forth in such Schedule 4.10 hereto, the Corporation is not subject to or in default with respect to any notice, order, writ, injunction or decree of any court, agency, authority or arbitration tribunal.

Section 4.09. Compliance with Laws. To the best knowledge of the Corporation, it has complied with all laws, municipal bylaws, regulations, rules, orders, judgments, decrees and other requirements and policies imposed by any governmental authority applicable to it, its properties or the operation of its business, except where the failure to comply will not have a material adverse effect on the business, properties, financial condition or earnings of the Corporation.

 

  

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Section 4.10. True and Correct Copies. All documents furnished or caused to be furnished to the Owner by the Corporation are true and correct copies, and there are no amendments or modifications thereto except as set forth in such documents.

Section 4.11. Compliance with Securities Act. (a) To the best of the Corporation’s knowledge, no one authorized to act on its behalf has taken, or will take, any action that would subject the issuance or sale of the AREN Shares hereunder to the registration requirements of Section 5 of the Securities Act; provided however, the availability of an exemption from the registration requirements of Section 5 is based upon the accuracy and completeness of the representations and warranties of the Owner, on which the Corporation will rely. In connection with the offer and sale of the AREN Shares, the Corporation has not conducted any form of general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio, the Internet or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

(b) The Corporation, in connection with the transaction contemplated by this Agreement, has complied with the provisions of, and restrictions contained in Regulation D, promulgated by the SEC under the Securities Act.

Section 4.12 Contracts.  (a) The Corporation is not a party to any:

	
(i)  

	
Contracts with any current or former officer, director, employee, consultant, agent or other representative having more than three (3) months to run from the date hereof or providing for an obligation to pay and/or accrue compensation of $200,000 or more per annum, or providing for the payment of fees or other consideration in excess of $200,000 in the aggregate to any officer or director of the Corporation, or to any other entity in which the Corporation has an interest;

	
(ii)  

	
Contracts for the purchase or sale of equipment or services that contain an escalation, renegotiation or re-determination clause or that can be cancelled without liability, premium or penalty only on ninety (90) days’ or more notice;

	
(iii)  

	
Contracts for the sale of any of its assets or properties or for the grant to any person of any preferential rights to purchase any of its or their assets or properties;

	
(iv)  

	
Contracts (including, with limitation, leases of real property) calling for an aggregate purchase price or payments in any one (1) year of more than $200,000 in any one case (or in the aggregate, in the case of any related series of contracts);

	
(v)  

	
Contracts relating to the acquisition by the Corporation of any operating business of, or the disposition of any operating business by, any other person;

  

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(vi)  

	
Executory contracts relating to the disposition or acquisition of any investment or of any interest in any person;

	
(vii)  

	
Joint venture contracts or agreements;

	
(viii)  

	
Contracts under which the Corporation agrees to indemnify any party, other than in the ordinary course of business or in amounts not in excess of $200,000, or to share tax liability of any party;

	
(ix)  

	
Contracts containing covenants of the Corporation not to compete in any line of business or with any person in any geographical area or covenants of any other person not to compete with the Corporation in any line of business or in any geographical area;

	
(x)  

	
Contracts for or relating to computers, computer equipment, computer software or computer services; or

	
(xi)  

	
Contracts relating to the borrowing of money by the Corporation or the direct or indirect guarantee by the Corporation of any obligation for, or an agreement by the Corporation to service, the repayment of borrowed money, or any other contingent obligations in respect of indebtedness of any other Person, including, without limitation:

	
(1)       

	
any contract with respect to lines of credit;

	
(2)      

	
any contract to advance or supply funds to any other person other than in the ordinary course of business;

	
(3)      

	
any contract to pay for property, products or services of any other person even if such property, products or services are not conveyed, delivered or rendered;

	
(4)      

	
any keep-well, make-whole or maintenance of working capital or earnings or similar contracts; or

	
(5)      

	
any guarantee with respect to any lease or other similar periodic payments to be made by any other person; and

	
(xii)  

	
Any other material contract whether or not made in the ordinary course of business.

Section 4.13. Operations of the Corporation.  Except as contemplated by this Agreement, since the latest filing date of the Corporation’s Reports, the Corporation has not:

	
(a)  

	
Amended its Certificate or Articles of Incorporation or By-laws or merged with or into or consolidated with any other person or entity, subdivided or in any way reclassified any shares of its capital stock or changed or agreed to change in any manner the rights of its outstanding capital stock or the character of its business;

	
(b)  

	
Issued, reserved for issuance, sold or redeemed, repurchased or otherwise acquired, or issued options or rights to subscribe to, or entered into any contract or commitment to issue, sell or redeem, repurchase or otherwise acquire, any shares of its capital stock or any bonds, notes, debentures or other evidence or indebtedness;

  

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(c)  

	
Incurred any indebtedness for borrowed money or incurred or assumed any other liability in excess of $500,000 in any one case (or, in the aggregate, in the case of any related series of occurrences) or $1 million in the aggregate;

	
(d)  

	
Declared or paid any dividends or declared or made any other distributions of any kind to its shareholders;

	
(e)  

	
Made any change in its accounting methods or practices or made any change in depreciation or amortization policies, except as required by law or GAAP;

	
(f)  

	
Made any loan or advance to any of its shareholders or to any of its directors, officers or employees, consultants, agents or other representatives, or made any other loan or advance, otherwise than in the ordinary course of business;

	
(g)  

	
Entered into any lease (as lessor or lessee) under which it is obligated to make or would receive payments in any one (1) year of $200,000 or more;

	
(h)  

	
Sold, abandoned or made any other disposition of any of its assets or properties;

	
(i)  

	
Granted or suffered any lien on any of its assets or properties;

	
(j)  

	
Entered into or amended any contracts to which it is a party, or by or to which it or its assets or properties are bound or subject which, if existing on the date hereof, would be required to be disclosed in Schedule 4.12;

	
(k)  

	
Made any acquisition of all or a substantial part of the assets, properties, securities or business of any other person or entity;

	
(l)  

	
Paid, directly or indirectly, any of its material liabilities before the same became due in accordance with its terms or otherwise than in the ordinary course of business;

	
(m)  

	
Terminated or failed to renew, or received any written threat (that was not subsequently withdrawn) to terminate or fail to renew, any contract that is or was material to the assets, liabilities, business, property, operations, prospects, results of operations or condition (financial or otherwise) of the Corporation; or

	
(n)  

	
Entered into any other contract or other transaction that materially increases the liabilities of the Corporation.

Section 4.14.  Absence of Certain Changes.  Since the date of the Corporation’s Financial Statements, there has been no event, change or development, which could have a material adverse effect on the Corporation.

Section 4.15.  Material Information.  This Agreement, the Schedules attached hereto and all other information provided, in writing, by the Corporation or representatives thereof to the Owner, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary to make any statement contained herein or therein not misleading.  There are no facts or conditions which have not been disclosed to the Owner in writing which, individually or in the aggregate, could have a material adverse effect on the Corporation or a material adverse effect on the ability of the Corporation to perform any of its obligations pursuant to this Agreement.

  

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Section 4.16.  Brokerage.  No broker or finder has acted, directly or indirectly, for the Corporation nor did the Corporation incur any finder’s fee or other commission, in connection with the transactions contemplated by this Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE OWNER AND NELACO

The Owner and Nelaco represent and warrant to the Corporation as follows:

Section 5.01. Organization, Standing and Authority; Foreign Qualification. Nelaco is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas and has all requisite corporate power and authority to own, transfer and assign the Burns and Rogers Leases and to conduct its business as presently conducted and as proposed to be conducted and is duly qualified or licensed as a foreign corporation in good standing in each jurisdiction in which the character of its properties or the nature of its business activities require such qualification.

Section 5.02. Authorization. The execution, delivery and performance the Owner of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Owner and all necessary action on the part of each of the Owner. The Owner has duly executed and delivered this Agreement and this Agreement constitutes a valid and binding agreement of the Owner. Ownership of the Burns and Rogers Leases to be transferred to the Corporation in accordance with this Agreement has been duly authorized and validly issued, fully paid and non-assessable and no Encumbrance whatsoever exists thereon.

Section 5.03. Title to Burns and Rogers Leases. Upon completion of the Assignment, the Corporation shall be the beneficial and record holder of the Burns and Rogers Leases, without any Encumbrances.

Section 5.04. Restriction on AREN Shares. Owner consents to the Corporation making a notation on its records or giving instructions to any transfer agent of the AREN Shares in order to implement the restriction on transfer set forth and described herein. Nelaco has been independently advised as to, and are aware of, the restrictions with respect to trading in the AREN Shares pursuant to the applicable securities laws and further agrees that it is solely responsible for compliance with all such restrictions as set forth in Schedule B.

Section 5.05. Investment Risk.  Owner understands that an investment in the Corporation includes a high degree of risk, have such knowledge and experience in financial and business matters, investments, securities and private placements as to be capable of evaluating the merits and risks of their investment in the AREN Shares, are in a financial position to hold the AREN Shares for an indefinite period of time, and are able to bear the economic risk of, and withstand a complete loss of such investment in the AREN Shares.

  

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Section 5.06. Cooperation. If required by applicable securities laws or order of a securities regulatory authority, stock exchange or other regulatory authority, Owner will execute, deliver, file and otherwise assist the Corporation in filing such reports, undertakings and other documents as may be required with respect to the issuance of the AREN Shares.

Section 5.07.Tax Advice. Owner is responsible for obtaining such legal, including tax, advice as it considers necessary or appropriate in connection with the execution, delivery and performance by it of this Agreement and the transactions contemplated herein.

Section 5.08. Investment Representations. All of the acknowledgements, representations, warranties and covenants set out in Schedule B hereto are true and correct as of the date hereof and as of the Closing Date. 

Section 5.09. Investment Purpose. Owner, or its assigns, is acquiring the AREN Shares as principal for its own account to be held for investment purposes only, not for the benefit of any other person and not with a view to the resale, distribution or other disposition of all or any of the AREN Shares and are delivering concurrently with this Agreement, a Certificate in the form attached to this Agreement as Schedule B.

Section 5.10No Conflict.  The execution, delivery and performance of this Agreement and the completion of the transactions contemplated herein will not:

(a) Violate any provision of the Articles or Certificate of Incorporation, By-laws or other charter or organizational document of Nelaco or the terms and conditions of the Burns and Rogers Leases;

(b) Violate, conflict with or result in the breach of any of the terms of, result in any modification of the effect of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a default under, any contract to which Owner or Nelaco is a party or by or to which either of its assets or properties, including the Burns and Rogers Leases, may be bound or subject;

(c) Violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, or any agreement with, or condition imposed by, any governmental or regulatory body, foreign or domestic, binding upon Owner, Nelaco or upon the Burns and Rogers Leases;

(d) Violate any statute, law or regulation of any jurisdiction as such statute, law or regulation relates to Owner, Nelaco or to the Burns and Rogers Leases; or

(e) Result in the breach of any of the terms or conditions of, constitute a default under, or otherwise cause an impairment of, any permit or license held by Nelaco or the Burns and Rogers Leases.

  

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Section 5.11. Compliance with Laws.  To the best of Nelaco’s knowledge, Nelaco is not in violation of any applicable order, judgment, injunction, award or decree nor is it in violation of any federal, state, local or foreign law, ordinance or regulation or any other requirement of any governmental or regulatory body, court or arbitrator, other than those violations which, in the aggregate, would not have a material adverse effect on Nelaco or the Burns and Rogers Leases and Nelaco has not received written notice that any violation is being alleged.

Section 5.12. Material Information.  This Agreement, the Schedules attached hereto and all other information provided, in writing, by Owner or Nelaco or representatives thereof, to the Corporation, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary to make any statement contained herein or therein not misleading.  There are no facts or conditions which have not been disclosed to the Corporation in writing which, individually or in the aggregate, could have a material adverse effect on Owner or Nelaco or a material adverse effect on the ability of Owner to perform any of its obligations pursuant to this Agreement or on the ability of Nelaco to operate the Burns and Rogers Leases.

Section 5.13. Actions and Proceedings. There are no outstanding orders, judgments, injunctions, awards or decrees of any court, governmental or regulatory body or arbitration tribunal against or involving Nelaco.  There are no actions, suits or claims or legal, regulatory, administrative or arbitration proceedings pending or, to the knowledge of Nelaco, threatened against or involving Nelaco, its assets or the Burns and Rogers Leases.

Section 5.14. Operating Statements.  (a) Owner has, or will have prior to the Closing Date, provided to the Corporation financial or operating statements pertaining to the Burns and Rogers Leases for the last three (3) fiscal years ended immediately prior to the date of this Agreement that are an accurate portrayal of the operations of the Burns and Rogers Leases (the “Operating Statements”).

(b) The Operating Statements shall be true, correct and complete in all material respects and fairly present the financial condition of Burns and Rogers Leases.

Section 5.15. Status of Burns and Rogers Leases. The Burns and Rogers Leases are, and at the time of the Asset Purchase shall be, in good standing and free from any Encumbrances whatsoever..

Section 5.16. Brokerage.  No broker or finder has acted, directly or indirectly, for Owner nor has Owner incurred any obligation to pay any brokerage, finder’s fee or other commission in connection with the transactions contemplated by this Agreement.

  

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ARTICLE VI

 

NOTICE

 

Section 6.01. Service of Notice

 

All notices, requests, consents and other communications required or permitted hereunder shall be deemed to be served properly if served (i) when delivered if delivered personally (including by courier); (ii) on the third day after mailing, if mailed postage prepaid, by registered or certified mail (return receipt requested); (iii) on the day after mailing if sent by a nationally recognized overnight delivery service which maintains records of the time, place and recipient of delivery; or (iv) upon receipt of a confirmed transmission, if sent by telecopy or facsimile transmission, in each case to the parties at the following addresses.

 

Section 6.02. Addresses for Notices

 

The address for service of notices hereunder of each of the Parties shall be as follows:

 

Corporation:      America Resources Exploration Inc.

1255 W. Rio Salado Parkway, Suite 215

Telephone: 480-830-2700

Owner:             Zheng Qiangwu

Hao Kai Sha Jing Road 1, Door 51

Long Tian Town, Chao Nan District

Shan Tou City, Guang Dong Province

China

 

       Nelaco:            Nelaco Operating, Inc.

2925 Robertson Dr.

Abilene, Texas 79606

Section 6.03. Right to Change Address

 

A Party may change its address for service by notice to the other Parties, and such changed address for service thereafter shall be effective for all purposes of this Agreement.

 

ARTICLE VII

 

MISCELLANEOUS PROVISIONS

 

Section 7.01. Assignment

 

The rights of the Parties shall not be assignable without the prior written consent of the other Party, which assignment shall not be unreasonably withheld.

 

  

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Section 7.02. Expenses. Each Party to this Agreement will pay its own expenses in connection with the negotiation of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated herein.

 

Section 7.03. Governing Law.  This Agreement shall be subject to and be interpreted, construed and enforced in accordance with the laws in effect in the State of Arizona applicable therein to the exclusion of any conflicts of laws rules, which would refer the matter to the laws of another jurisdiction.  Each Party accepts the exclusive jurisdiction of the courts of the State of Arizona and all courts of appeal there from.

 

Section 7.04. Time.  Time shall be of the essence in this Agreement.

 

Section 7.05. No Amendment Except in Writing.  This Agreement may be amended only by written instrument executed by all of the Parties hereto.

 

Section 7.06.  Further Assurances.  The Parties shall with reasonable diligence do all things and provide all reasonable assurances as may be required to consummate the transactions contemplated by this Agreement, and each Party shall provide such further documents or instruments required by any other Party as may be reasonably necessary or desirable to effect the purpose of this Agreement and to carry out its provisions, whether before or after the Effective Date.

 

Section 7.07.  Notices. The Parties agree that all notices to third parties and all other publicity concerning the transactions contemplated by this Agreement shall be jointly planned and coordinated and no Party shall act unilaterally in this regard without the prior approval of the others, such approval not to be unreasonably withheld.

IN WITNESS WHEREOF the Parties have executed this Asset Purchase Agreement on the date first above written.

	
AMERICA RESOURCES EXPLORATION

	
OWNER

	
INC., a Nevada corporation

	  
	  	  
	 	 
	
By: /s/ HUANG YU               

	
/s/ ZHENG XIANGWU               

	
Name: Huang Yu

	
Zheng Xiangwu

	
Title:  CEO

	  
	  	  
	
NELACO OPERATING INC.,

	  
	
a Texas corporation

	  
	  	  
	  	  
	
By: /s/ JOE M. SEABOURN           

	  
	
Name: Joe M. Seabourn

	  
	
Title:  President

	  

 

  

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Schedule “A”

Identification Burns and Rogers Leases

1. Roger f Theo “A” and “D” Lease: 335 acres of land, more or less, being all of the Leopold Menetrier Survey No. 1347, A-510 and A-583, Frio and Atascosa Counties, Texas, more commonly referred to as the Rogers “A” Lease, Wells #3, #7 and #8 and the Rogers “D” Lease, Well #9, as to and only as to those rights from the surface down to 100 feet below the base of the Olmos-D-Reservoir as encountered at the subsurface depth of 3,566 feet in The Texaco Jane Burns “B” Well No. 28; Subject to Oil, Gas and Mineral Lease, dated November 2, 1946, from K.T. Tidwell and wife Olga Tidwell and Theo Rogers and wife Veta Rogers to Shell Oil Co., recorded in Volume 184, page 358, Deed Records of Atascosa County, Texas, as amended by instrument dated July 27, 1951, recorded in Volume 208, page 511 of the Deed Records of Atascosa County, Texas.

2. Rogers, Theo “C”: 219 acres of land, more or less, being all of the Irene L. Menetrier Survey No. 1346, A-584, Cert 48 , Pat 330 Vol. 29, Atascosa County, Texas, more commonly referred to as the Rogers “C” Lease, Well #5, as to and only as to those rights from the surface down to 100 feet below the base of the Olmos-D-Reservoir as encountered at the subsurface depth of 3,566 feet in The Texaco Jane Burns “B” Well No. 28, save and except the northeast 102.4 acres thereof, the southwest line of which is parallel with the northeast line of said survey; Subject to Oil, Gas and Mineral Lease, dated July 27, 1951, from Theo Rogers and wife Veta Rogers, and K.T. Tidwell and wife Olga Tidwell and to Miller Royalty Company and C.C. Dauchy, recorded in Volume 209, page 581, Deed Records of Atascosa County, Texas.

3. Jane Burns “C” Lease: 160 acres of land, more or less, being the north 160 acres, in the form of a square, of the Francis Oerelling Survey No. 1336, A-532 and A-654, Frio and Atascosa Counties, Texas, and the northeast and northwest lines of this 160-acre tract lying upon the northeast and northwest lines respectively of said survey, and the southeast and southwest lines of the 160-acre tract being parallel with the northwest and northeast lines respectively of said survey, as to and only as those rights from the surface down to 100 feet below the base of the Olmos-D-Reservoir as encountered at the subsurface depth of 3,566 feet in The Texaco Jane Burns “B” Well No. 28, recorded January 29, 1947 at Volume 184, pages 427-434 of the Official Records of Atascosa County, Texas.

  

14

  

SCHEDULE "B"

 

CERTIFICATE OF ACCREDITED INVESTOR

 

The Owner, by initially one of the categories below, represents and warrants to the Issuer that it is an “accredited investor” as defined in Regulation D (please place your initials on the appropriate line(s); if no categories are applicable, please do not place your initials beside any category):

 

	  	 	
Category 1.

	
A bank, as defined in Section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or

	 	 	 	 
	  	 	
Category 2.

	
A savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or

	 	 	 	 
	  	 	
Category 3.

	
A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or

	 	 	 	 
	  	 	
Category 4.

	
An insurance company as defined in Section 2(13) of the U.S. Securities Act; or

	 	 	 	 
	  	 	
Category 5.

	
An investment company registered under the Investment Issuer Act of 1940; or

	 	 	 	 
	  	 	
Category 6.

	
A business development company as defined in Section 2(a)(48) of the Investment Issuer Act of 1940; or

	 	 	 	 
	  	 	
Category 7.

	
A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or

	 	 	 	 
	  	 	
Category 8.

	
A plan established and maintained by a state, its political subdivision or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with assets in excess of US$5,000,000; or

	 	 	 	 
	  	     	
Category 9.

	
An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan with total assets in excess of US$5,000,000 or, if a self-directed plan, the investment decisions are made solely by persons who are accredited investors; or

	 	 	 	 

 

 

  

15

  

 

 

	  	 	
Category 10.

	
A private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940; or

	 	 	 	 
	  	 	
Category 11.

	
An organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of US$5,000,000; or

	 	 	 	 
	  	 	
Category 12.

	
A director, executive officer or general partner of the Issuer; or

	 	 	 	 
	  	 	
Category 13.

	
A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of this purchase exceeds US$1,000,000; or

	 	 	 	 
	  	 	
Category 14.

	
A natural person who had an individual income in excess of US$200,000 in each year of the two most recent years or joint income with that person’s spouse in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

	 	 	 	 
	  	 	
Category 15.

	
A trust, with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the Securities offered, whose purchase is directed by a sophisticated person as described in SEC Rule 506(b)(2)(ii); or

	 	 	 	 
	  	 	
Category 16.

	
An entity in which each of the equity owners meets the requirements of one of the above categories.

June 10, 2015                                

Date

ZHENG XIANGWU

  

16Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

LOAN AND SECURITY AGREEMENT

 

dated as of February 26, 2015

 

among

 

PULMATRIX INC.

as Borrower,

 

and

 

the
financial institutions and individuals listed on Annex A, as Lenders

 

 

 

 

 

 

 

 

 

 

    	 

    	 

    

 

TABLE OF CONTENTS

 

Page

 

	ARTICLE I DEFINITIONS AND
    ACCOUNTING TERMS	1
	 	 
	SECTION 1.01.   Certain
    Defined Terms	1
	SECTION 1.02.   Times of
    Day	4
	SECTION 1.03.   Principles
    of Construction	4
	 	 
	ARTICLE II AMOUNTS AND TERMS OF THE
    ADVANCES	5
	 	 
	SECTION 2.01.   The Loan	5
	SECTION 2.02.   Reserved.	5
	SECTION 2.03.   Repayment
    of Loan.	5
	SECTION 2.04.   Interest.	5
	SECTION 2.05.   Maximum
    Interest.	6
	SECTION 2.06.   Prepayments
    of Loan.	6
	SECTION 2.07.   Evidence
    of Debt.	6
	SECTION 2.08.   Payments
    and Computations.	6
	 	 
	ARTICLE III CONDITIONS OF LENDING	7
	 	 
	SECTION 3.01.   Conditions
    Precedent	7
	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES	7
	 	 
	SECTION 4.01.   Representations
    and Warranties	7
	 	 
	ARTICLE V COVENANTS OF BORROWER	9
	 	 
	SECTION 5.01.   Affirmative
    Covenants	9
	SECTION 5.02.   Negative
    Covenants	10
	 	 
	ARTICLE VI SECURITY INTEREST	11
	 	 
	SECTION 6.01.   Granting
    of Security Interest	11
	SECTION 6.02.   Proceeds	12
	SECTION 6.03.   Delivery
    of Certain Collateral.	12
	SECTION 6.04.   Authorization
    to File Financing Statements.	12
	 	 
	ARTICLE VII EVENTS OF DEFAULT	13
	 	 
	SECTION 7.01.   Events
    of Default	13
	SECTION 7.02.   Rights
    and Remedies.	14
	 	 
	ARTICLE VIII CONVERSION	15
	 	 
	SECTION 8.01.   Conversion
    of Term Loans.	15
	SECTION 8.02.   Additional
    Event of Default.	16
	SECTION 8.03.   Conversion
    Limitation.	16

 

    	i

    	 

    

 

	ARTICLE IX Indemnification	16
	 	 
	SECTION 9.01.   Indemnification.	16
	 	 
	ARTICLE X MISCELLANEOUS	16
	 	 
	SECTION 10.01.   Amendments.	16
	SECTION 10.02.   Notices;
    Effectiveness; Electronic Communications.	16
	SECTION 10.03.   Waiver.	17
	SECTION 10.04.   Equal
    Treatment of Lenders.	17
	SECTION 10.05.   Costs
    and Expenses.	17
	SECTION 10.06.   Governing
    Law; Submission to Jurisdiction.	18
	SECTION 10.07.   Severability	18
	SECTION 10.08.   Counterparts;
    Integration; Effectiveness; Electronic Execution.	18
	SECTION 10.09.   Confidentiality	19
	SECTION 10.10.   Cumulative
    Remedies	19
	SECTION 10.11.   Wire Instructions	19
	SECTION 10.12.   Entire
    Agreement	20

 

 

Annex
A Lenders

 

Annex
B Subordinated Lenders

 

Annex
C Rights, Responsibilities and Immunities of the Agent

 

    	ii

    	 

    

   

LOAN AND SECURITY
AGREEMENT

 

This LOAN AND SECURITY
AGREEMENT dated as of February __, 2015, among PULMATRIX INC.,
a Delaware corporation (“Borrower”) and the financial institutions and individuals listed
on Annex A (collectively, the “Lenders” and each a, “Lender”).

 

For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION
1.01.               Certain
Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

 

“Affiliate”
means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, “controls”
or is “controlled by” or is “under common control with” the Person specified.

 

“Agent”
has the meaning specified in Section 6.07.

 

“Agreement”
means this Loan and Security Agreement.

 

“Applicable
Rate” means the rate equal to five percent (5%) per annum.

 

“Bankruptcy
Code” means the Federal Bankruptcy Code of 1978, Title 11 of the United States Code, as amended from time to
time.

 

“Borrower”
has the meaning specified in the preamble hereto.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under
the Laws of, or are in fact closed in New York City, New York.

 

“Closing
Date” means the earliest date on which the conditions precedent set forth in Section 3.01 shall
have been satisfied or waived in accordance with Section 10.01 of this Agreement.

 

“Code”
means the U.S. Internal Revenue Code of 1986.

 

“Collateral”
has the meaning specified in Section 6.01.

 

“Company
Intellectual Property” has the meaning specified in Section 4.01(i).

 

“Debt”
means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness
or liabilities in accordance with GAAP, (a) all obligations of such Person for borrowed money; (b) all direct or contingent
obligations of such Person arising under letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar
instruments; (c) all obligations of such Person to pay the deferred purchase price of property or services (other than trade
accounts payable in the ordinary course of business and not past due); (d) indebtedness secured by a Lien on property owned
by such Person (including conditional sales or other title retention agreements, whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse; (e) capital leases and synthetic lease obligations; (f) all obligations
of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any equity interest in such Person
or any other Person; and (g) all Guarantees of such Person in respect of any of the foregoing.

 

    	1

    	 

    

  

“Debtor
Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, bankruptcy, moratorium, receivership,
insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions.

 

“Default”
means any event or condition that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

 

“Dollars”
and “$” mean the lawful money of the United States.

 

“Events
of Default” has the meaning specified in Section 7.01.

 

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

 

“Facility
Documents” means, collectively, this Agreement, the Subordination Agreement and each other agreement or instrument
executed or delivered in connection herewith or therewith.

 

“GAAP”
means generally accepted accounting principles in the United States.

 

“Governmental
Authority” means the government of the United States of America or any other nation, or of any political subdivision
thereof.

 

“Guarantee”
means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect
of guaranteeing any Debt or other obligation payable or performable by another Person (the “primary obligor”)
in any manner, whether directly or indirectly, or (b) any Lien on any assets of such Person securing any Debt or other obligation
of any other Person, whether or not such Debt or other obligation is assumed by such Person (or any right, contingent or otherwise,
of any holder of such Debt to obtain any such Lien).

 

“Information”
has the meaning specified in Section 10.09.

 

“Intellectual
Property” means the collective reference to all rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United States Copyright Office, (ii) all letters patent
of the United States, any other country or any political subdivision thereof, all reissues and extensions thereof, and all applications
for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof,
(iii) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade dress, service
marks, logos, domain names and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country
or any political subdivision thereof, or otherwise, and all common law rights related thereto, (iv) all trade secrets arising under
the laws of the United States, any other country or any political subdivision thereof, (v) all rights to obtain any reissues, renewals
or extensions of the foregoing, (vi) all licenses for any of the foregoing, and (vii) all causes of action for infringement of
the foregoing.

 

    	2

    	 

    

  

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of equity interests of another Person, (b) a loan, advance or capital contribution to, guarantee or assumption
of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all
or a substantial part of the business of, such Person. For purposes of covenant compliance, the amount of any Investment shall
be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

“Law”
means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances,
codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether
or not having the force of law.

 

“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or
nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance
on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

 

“Material
Adverse Effect” means (a) a material impairment of the ability of Borrower to perform any of its obligations
under any of the Facility Documents, (b) a material adverse effect upon the legality, validity, binding effect or enforceability
of any provision of any Facility Document, (c) a material adverse change in, or a material adverse effect upon, the business,
properties, liabilities (actual or contingent), or financial condition of Borrower or (d) a material adverse change in, a
material adverse effect upon, or a material impairment of, (i) the priority of the Lenders’ security interest in a material
portion of the Collateral or (ii) the rights, remedies and benefits available to, or conferred upon, the Lenders under any Facility
Document or the Lenders’ ability to foreclose on the Collateral at the times and in the manner contemplated herein, in each
case with respect to the foregoing clauses (a) to (d), as determined by the Required Lenders in their
sole discretion.

 

“Maturity
Date” means, the earlier of: (a) the Stated Maturity Date; and (b) the date on which the Term Loans are
accelerated pursuant to Section 7.01.

 

“Maximum
Lawful Rate” has the meaning specified in Section 2.05.

 

“Necessary
Endorsement” means undated stock powers endorsed in blank or other proper instruments of assignment duly executed
and such other instruments or documents as the Agent may reasonably request.

 

“Obligations”
means the Term Loans to, and all debts, liabilities, obligations, covenants, indemnifications, and duties of, Borrower arising
at any time and from time to time, whether matured or unmatured, fixed or contingent, liquidated or unliquidated, under any Facility
Document, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become
due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against Borrower
of any proceeding under any Debtor Relief Laws naming Borrower as the debtor in such proceeding, regardless of whether such interest
and fees are allowed claims in such proceeding.

 

    	3

    	 

    

  

“Organization
Documents” means, as applicable, for any Person, such Person’s articles or certificate of incorporation, by-laws,
memorandum and articles of association, partnership agreement, trust agreement, certificate of limited partnership, articles of
organization, certificate of formation, shareholder agreement, voting trust agreement, operating agreement, subscription agreement,
side letters, if any, limited liability company agreement and/or analogous documents.

 

“Person”
means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.

 

“Required
Lenders” means Lenders representing at least 51% of the outstanding principal amount of the Term Loans.

 

“Securities
Act” means the United States Securities Act of 1933, as amended.

 

“Stated
Maturity Date” means February 26, 2016.

 

“Subordination
Agreement” means the Subordination Agreement, dated as of even date hereof, among the Borrower, the subordinated
lenders listed on Annex B hereto, and Barry Honig, as agent for the Lenders.

 

“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority
of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body
(other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially
owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries”
shall refer to a Subsidiary or Subsidiaries of Borrower.

 

“Taxes”
means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments,
fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Term Loans”
means the term loans made pursuant to Section 2.01(a).

 

“UCC”
means Uniform Commercial Code in effect in the State of New York and any other applicable jurisdiction.

 

SECTION
1.02.                   
Times of Day. Unless otherwise specified, all references herein to times of day shall be references to local time
in New York City, New York.

 

SECTION
1.03.                   
Principles of Construction. The definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined. The words “include,” “includes” and “including” shall be deemed to be
followed by the phrase “without limitation.” Unless the context requires otherwise, (i) any definition of or
reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein or in any other Facility Document), (ii) except
to the extent consent of the Required Lenders is required as provided herein, any reference herein to any Person shall be construed
to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,”
and words of similar import when used in any Facility Document, shall be construed to refer to such Facility Document in its entirety
and not to any particular provision thereof, (iv) all references in a Facility Document to Articles, Sections, Preliminary
Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits
and Schedules to, the Facility Document in which such references appear, and (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or
regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to
time.

 

    	4

    	 

    

  

(b)              
In the computation of periods of time from a specified date to a later specified date, the word “from” means
“from and including;” the words “to” and “until” each mean “to but excluding;”
and the word “through” means “to and including.”

 

(c)               
Section headings herein and in the other Facility Documents are included for convenience of reference only and shall not
affect the interpretation of this Agreement or any other Facility Document.

 

(d)              
When used herein the terms Accessions, Account, Certificated Securities, Chattel Paper, Commercial Tort Claim, Commodity
Account, Commodity Contract, Deposit Account, Document, Electronic Chattel Paper, Equipment, General Intangibles, Goods, Instrument,
Inventory, Investment Property, Letter-of-Credit Rights, Payment Intangible, Proceeds, Promissory Notes, Securities Account, Security
Entitlement, Supporting Obligations and Uncertificated Securities have the meaning provided in Article 8 or Article 9, as applicable,
of the UCC. Letter of Credit has the meaning provided in Section 5-102 of the UCC.

 

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

 

SECTION
2.01.                   
The Loan.

 

Subject to the terms
and conditions set forth herein, each Lender, severally and not jointly, agrees to make a loan in Dollars to Borrower on the Closing
Date in the amount set forth opposite such Lender’s name on Annex A (the “Term Loans”),
by wire transfer in immediately available funds to the account as set forth in Section 10.11. The aggregate original
principal amount of the Term Loans shall be equal to $4,500,000. Amounts borrowed hereunder and repaid or prepaid may not be reborrowed.

 

SECTION
2.02.                   
Reserved.

 

SECTION
2.03.                    Repayment
of Loan. Borrower shall repay to the Lenders on the Maturity Date the principal amount of the Term Loans outstanding on such
date, accrued but unpaid interest thereon and all other outstanding Obligations unless earlier converted in accordance with Article
VIII.

 

SECTION
2.04.                   
Interest.

 

    	5

    	 

    

  

(a)   
Ordinary Interest. Borrower shall pay interest on the unpaid principal amount of the Term Loans, from the Closing
Date until such principal amount shall be paid in full, at a rate per annum equal to the Applicable Rate. Interest shall be payable
in arrears on the Maturity Date unless earlier converted in accordance with Article VIII hereof. Interest shall be
computed on a year of 360 days and actual days elapsed in the period for which interest is payable. Interest (including the default
interest set forth below) shall be due and payable before and after judgment or the commencement of any proceeding under any Debtor
Relief Law.

 

(b)  
Default Interest. If any Event of Default shall have occurred, Borrower shall pay interest on the Term Loans at a
rate per annum equal at all times to fifteen percent (15%), from the day of such Event of Default, payable on demand (and in any
event in arrears on the date such amount shall be paid in full).

 

SECTION
2.05.                   
Maximum Interest.

 

In no event shall the
interest charged with respect to the Term Loans or any other obligations of Borrower hereunder exceed the maximum amount permitted
under the Laws of the State of New York or of any other applicable jurisdiction. In no event shall the total interest received
by the Lenders exceed the amount which the Lenders could lawfully have received had the interest been calculated for the full term
hereof at the highest rate of interest permitted under any applicable Law to be charged by the Lenders (the “Maximum
Lawful Rate”). If the Lenders have received interest hereunder in excess of the Maximum Lawful Rate, such excess
amount shall be applied to the reduction of the principal balance of the Term Loans or to other amounts (other than interest) payable
hereunder, and if no such principal or other amounts are then outstanding, such excess or part thereof remaining shall be paid
to Borrower.

 

SECTION
2.06.                   
Prepayments of Loan.

 

Borrower may not prepay
all or any portion of the outstanding principal amounts of the Term Loans or the accrued and unpaid interest without the prior
written consent of the Required Lenders.

 

SECTION
2.07.                   
Evidence of Debt.

 

(a)   
The records maintained by the Lenders regarding the Term Loans shall be prima facie evidence of the existence and amounts
of the obligations therein recorded; provided, however, that the failure of the Lenders to maintain such records
or any error therein shall not in any manner affect the obligation of Borrower to repay such obligations in accordance with their
terms.

 

(b)  
No promissory note shall be required to evidence the Term Loans. Upon the request of the Required Lenders, Borrower shall
execute and deliver to each Lender a promissory note, which shall evidence the Team Loans in addition to such records.

 

SECTION
2.08.                   
Payments and Computations.

 

(a)   
Borrower shall make each payment hereunder not later than 5:00 PM on the day when due in Dollars to the Lenders in
immediately available funds. All payments received by the Lenders after 5:00 PM shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue. All payments shall be made pro rata among the Lenders
based on the outstanding principal amount of the Term Loans made by each Lender.

 

    	6

    	 

    

  

(b)  
Whenever any payment hereunder would be due on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or
any fees, as the case may be.

 

(c)   
All payments (including prepayments and any other amounts received hereunder and payments and amounts received in connection
with the exercise of the Lenders’ rights after an Event of Default) made by or on behalf of Borrower under any Facility Document
shall be applied in the following order: (i) to any expenses and indemnities payable by Borrower to the Lenders; (ii) to
any accrued and unpaid interest and fees due; (iii) to principal payments on the outstanding Term Loans; and (iv) to
the extent of any excess, to the payment of all other Obligations.

 

ARTICLE III

CONDITIONS OF LENDING

 

SECTION
3.01.                   
Conditions Precedent. The obligation of each Lender to make the Term Loans is subject to satisfaction of the following
conditions precedent:

 

(a)   
Each Lender shall have received duly executed counterparts of this Agreement.

 

(b)  
The execution and delivery of the Subordination Agreement.

 

(c)   
Each other Lender shall have funded the amount set forth opposite each such other Lender’s name on Annex A
in accordance with Section 2.01.

 

The acceptance of the
Term Loans shall be deemed to be a representation and warranty by Borrower that the conditions specified in Section 3.01
have been satisfied on and as of the Closing Date.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

SECTION
4.01.                   
Representations and Warranties. Borrower represents and warrants to the Lenders that:

 

(a)   
Borrower (i) is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization,
(ii) is duly qualified and in good standing in each other jurisdiction in which the conduct of its business requires it to
so qualify or be licensed and where, in each case, failure so to qualify and be in good standing could have a Material Adverse
Effect, and (iii) has all requisite company power and authority to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted.

 

(b)  
The execution, delivery and performance by Borrower of this Agreement and the other Facility Documents to which Borrower
is a party (when delivered) and the consummation of the transactions contemplated under the Facility Documents are within its company
powers, have been duly authorized by all necessary company action, and do not and will not (i) contravene Borrower’s
Organization Documents, (ii) contravene any contractual restriction binding on it or require any consent under any agreement
or instrument to which it is a party or by which any of its properties or assets is bound, (iii) result in or require the
creation or imposition of any material Liens upon any property or assets of Borrower, or (iv) violate any Law (including,
but not limited to, the Securities Act and the Exchange Act and the regulations thereunder) or writ, judgment, injunction, determination
or award, except, with respect to clauses (ii) – (iv), such conflicts, contraventions, violations, and Liens that would not
reasonably be expected to result in a Material Adverse Effect.

 

    	7

    	 

    

 

(c)   
Except for any filings to perfect the Lenders’ security interest in the Collateral and such consents that have been
obtained, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption
or waiver by, any Governmental Authority or any other third party, is required to authorize, or is required in connection with,
(i) the execution, delivery and performance by Borrower of any Facility Document, (ii) the creation or perfection of the security
interest in the Collateral granted to the Lenders hereunder or (iii) the legality, validity, binding effect or enforceability
of any Facility Document by the Lenders.

 

(d)  
Borrower is in compliance with the requirements of all Laws and all material orders, writs, injunctions and decrees applicable
to it or to its properties, except in such instances in which (i) such requirement of Law or order, writ, injunction or decree
is being contested in good faith by appropriate proceedings diligently conducted or (ii) the failure to comply therewith, either
individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(e)   
This Agreement and the other Facility Documents that Borrower is party to are, and will be, legal, valid and binding obligations
of Borrower enforceable against Borrower in accordance with their respective terms. The security interest in the Collateral granted
herein is a valid and binding security interest in the Collateral subject to no other liens or security interests other than Liens
that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or are otherwise of
an immaterial nature.

 

(f)   
No Default or Event of Default has occurred and is continuing.

 

(g)   
Borrower owns all of the Collateral free and clear of Liens, other than Liens that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or are otherwise of an immaterial nature.

 

(h)  
 The Company has delivered to each Lender its audited financial statements as of December 31, 2013 and December 31, 2012
for the fiscal year ended December 31, 2013 and December 31, 2012 and its unaudited financial statements (including balance sheet,
income statement and statement of cash flows) as of December 31, 2014 and for the fiscal year ended December 31, 2014 (collectively,
the “Financial Statements”). The Financial Statements have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods indicated, except that the unaudited Financial Statements may not contain all footnotes
required by GAAP. The Financial Statements fairly present in all material respects the financial condition and operating results
of the Company as of the dates, and for the periods, indicated therein, subject in the case of the unaudited Financial Statements
to normal year-end audit adjustments. Except as set forth in the Financial Statements, the Company has no material liabilities
or obligations, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to December
31, 2014; (ii) obligations under contracts and commitments incurred in the ordinary course of business; and (iii) liabilities and
obligations of a type or nature not required under GAAP to be reflected in the Financial Statements, which, in all such cases,
individually and in the aggregate would not have a Material Adverse Effect. The Company maintains and will continue to maintain
a standard system of accounting established and administered in accordance with GAAP.

 

    	8

    	 

    

  

(i)    
The Company owns or possesses or believes it can acquire on commercially reasonable terms sufficient legal rights to all
Intellectual Property that is owned or used by as is necessary to the Company in the conduct of the Company’s business as
now conducted and as presently proposed to be conducted (“Company Intellectual Property”) without any
known conflict with, or infringement of, the rights of others. To the Company’s knowledge, no product or service marketed
or sold (or proposed to be marketed or sold) by the Company violates or will violate any license or infringes or will infringe
any intellectual property rights of any other party. Other than with respect to commercially available software products under
standard end-user object code license agreements, there are no outstanding options, licenses, agreements, claims, encumbrances
or shared ownership interests of any kind relating to the Company Intellectual Property, nor is the Company bound by or a party
to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any other Person. The Company has not received any communications
alleging that the Company has violated, or by conducting its business, would violate any of the patents, trademarks, service marks,
tradenames, copyrights, trade secrets, mask works or other proprietary rights or processes of any other Person.

 

ARTICLE V

COVENANTS OF BORROWER

 

SECTION
5.01.                   
Affirmative Covenants. On and after the Closing Date and so long as any Obligations have not been indefeasibly paid
in full or converted pursuant to Article VIII:

 

(a)   
Existence. Borrower shall preserve renew and maintain in full force and effect its legal existence and good standing
under the Laws of the jurisdiction of its organization.

 

(b)  
Use of Proceeds. Borrower will use the proceeds of the Term Loans for working capital and general corporate purposes
in the ordinary course of business.

 

(c)   
Payment of Obligations. Borrower shall pay and discharge as the same shall become due and payable, all its obligations
and liabilities, including: (i) all material Taxes, assessments, claims and governmental charges or levies imposed upon it or upon
its property; provided, however, that Borrower shall not be required to pay or discharge any such tax, assessment, claim or charge
that is being diligently contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained;
(ii) all material lawful claims which, if unpaid, would become a Lien on its property; and (iii) all material Debt, as and when
due and payable.

 

(d)  
Inspection Rights. Borrower shall, at any reasonable time during normal business hours and upon reasonable prior
notice, from time to time permit the Lenders and their agents and representatives (in each case, subject to Section 10.09)
to (i)  discuss the affairs, finances, assets and accounts of Borrower with any of Borrower’s officers, directors or
other representatives and independent certified public accountants and (ii) examine and make copies of and abstracts from their
records and books of account, all at the expense of Borrower.

 

    	9

    	 

    

  

(e)   
Compliance with Laws. Borrower shall comply with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its business or property, except in such instances in which (i) such requirement of Law
or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (ii) the
failure to comply therewith would not reasonably be expected to result in a Material Adverse Effect.

 

(f)   
Information Rights. Borrower shall promptly deliver to the Lenders any information relating to the financial condition,
business, prospects, or corporate affairs of the Company, including any audited and unaudited balance sheet and statements of income
and of cash flows, as any the Lenders may from time to time reasonably request.

 

(g)   
Security Interest. Borrower shall at all times maintain the Liens and security interest in the Collateral granted
to the Lenders hereunder as valid and perfected first priority Liens and security interests in the Collateral in favor of the Lenders.
Borrower hereby agrees to defend the same against the claims of any and all Persons and entities. Borrower shall safeguard and
protect all Collateral for the account of the Lenders.

 

(h)  
Further Assurances. Borrower agrees to execute and/or deliver any additional agreements, documents and instruments,
and take such further actions as may be reasonably requested by the Required Lenders from time to time to carry out the intent
of the Facility Documents. At the request of the Agent, Borrower will sign and deliver to the Agent on behalf of the Lenders at
any time or from time to time one or more financing statements pursuant to the UCC in form reasonably satisfactory to the Agent
and will pay the cost of filing the same in all public offices wherever filing is, or is deemed by the Agent to be, necessary or
desirable to effect the rights and obligations provided for herein. Without limiting the generality of the foregoing, Borrower
shall pay all fees, taxes and other amounts necessary to make any filing required hereunder, including without limitation, any
financing statements pursuant to the UCC, continuation statements, partial releases and/or termination statements related thereto
or any expenses of any searches, and to maintain the Collateral and the security interest in the Collateral granted to the Lenders
hereunder, and Borrower shall obtain and furnish to the Agent from time to time, upon demand, such releases and/or subordinations
of claims and liens which may be required to maintain the priority of the security interest in the Collateral granted to the Lenders
hereunder. Borrower shall promptly execute and deliver to the Agent such further deeds, mortgages, assignments, security agreements,
or other instruments, documents, certificates and assurances and take such further action as the Agent may from time to time request
and may in its sole discretion deem necessary to perfect, protect or enforce the Lenders’ security interest in the Collateral.

 

SECTION
5.02.                   
Negative Covenants. So long as any Obligations have not been indefeasibly paid in full or converted pursuant to Article
VIII, without the prior written consent of the Required Lenders:

 

(a)   
Additional Debt. Borrower shall not, directly or indirectly, create, incur or assume any Debt, other than Debt created
under the Facility Documents.

 

    	10

    	 

    

  

(b)  
Liens. Borrower shall defend the Collateral against all claims and demands of all persons at any time claiming any
interest therein adverse to the Lenders. Borrower shall not, directly or indirectly, create, incur or assume any Lien upon any
Collateral, whether now owned or hereafter acquired, except Liens created under the Facility Documents and Liens that would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or are otherwise of an immaterial nature.

 

(c)   
Mergers, Etc. Without the prior consent of the Lenders, Borrower shall not, directly or indirectly, merge or consolidate
with or into, or convey, transfer, lease or otherwise dispose of, whether in one transaction or in a series of transactions, all
or substantially all of the property and assets (whether now owned or hereafter acquired) of Borrower to any Person.

 

(d)  
Investments. Borrower shall not hold any material Investments except Investments by Borrower outstanding on the date
hereof.

 

(e)   
Transaction with Affiliates. Borrower shall not enter into any material transaction of any kind with any Affiliate
of Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable
to Borrower as would be obtainable by Borrower at the time in a comparable arm’s length transaction with a Person other than
an Affiliate.

 

(f)   
Prepay Debt. Borrower shall not prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any subordination terms of, any indebtedness of Borrower.

 

(g)   
Change Name, Status, Jurisdiction, Tradename. Borrower shall not change its name, change its corporate status or
jurisdiction, or use any trade name without delivering written notice to the Lenders at least twenty (20) days prior to the effectiveness
of such change or use.

 

(h)  
Disposition of Assets. Borrower shall not, and shall not permit any of its direct or indirect Subsidiaries to, sell,
license, transfer or otherwise dispose of any interest in any Collateral, except for sales of inventory in the ordinary course
of business, licenses or sublicenses of rights in intellectual property on a non-exclusive or other limited basis in the ordinary
course of business and sales of obsolete equipment.

 

ARTICLE VI

SECURITY INTEREST

 

SECTION
6.01.                   
Granting of Security Interest. Borrower hereby pledges, assigns and grants to the Lenders a first priority security
interest in and lien on, and a right of set-off against, the following property and assets, whether now or hereafter existing,
owned or acquired by Borrower (collectively, the “Collateral”), to secure the payment and the performance
of all the Obligations:

 

(a)             
Accounts;

 

(b)             
Chattel Paper;

 

(c)             
Commercial Tort Claims;

 

    	11

    	 

    

  

(d)             
Deposit Accounts;

 

(e)             
Documents;

 

(f)              
General Intangibles;

 

(g)             
Goods;

 

(h)             
Inventory;

 

(i)               
Equipment;

 

(j)               
Instruments;

 

(k)             
Intellectual Property;

 

(l)               
Investment Property;

 

(m)           
Letter-of-Credit Rights and Letters of Credit;

 

(n)             
Supporting Obligations;

 

(o)             
all books, records, writings, databases, information and other property relating to, used or useful in connection
with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section 6.01;

 

(p)             
all Accessions to and Proceeds of the foregoing and, to the extent not otherwise included, (i) all payments under
insurance (whether or not the Agent is the loss payee thereof) and (ii) all tort claims; and

 

(q)             
all other property and rights of every kind and description and interests therein.

 

SECTION
6.02.                   
Proceeds. Except as permitted to be distributed to Borrower pursuant to the terms herein, (a) any property received
by Borrower, which shall comprise of such additions, substitutes and replacements for, or proceeds of, the Collateral, shall,
after the occurrence and during the continuance of an Event of Default, be held in trust for the Lenders, and (y) any cash proceeds
of the Collateral shall, after the occurrence and during the continuance of an Event of Default, be held in trust for the Lenders.

 

SECTION
6.03.                   
Delivery of Certain Collateral. Contemporaneously or prior to the execution of this Agreement, Borrower shall deliver
or cause to be delivered to the Agent any and all certificates and other instruments or documents representing the Collateral,
in each case, together with all Necessary Endorsements.

 

SECTION
6.04.                   
Authorization to File Financing Statements. Borrower hereby authorizes the Agent to file financing statements or take
any other action required to perfect the Lenders’ security interests in the Collateral, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect the Lenders’ interest or rights under the Facility Documents, including
a notice that any disposition of the Collateral, except to the extent permitted by the terms of this Agreement, by Borrower, or
any other Person, shall be deemed to violate the rights of the Lenders under the UCC.

 

    	12

    	 

    

  

SECTION 6.05                   Appointment
of Collateral Agent. The Lenders hereby appoint Barry Honig to act as their agent (the “Agent”)
for purposes of exercising any and all rights and remedies of the Lenders hereunder. Such appointment shall continue until revoked
in writing by the Required Lenders, at which time the Required Lenders shall appoint a new Agent. The Agent shall have the rights,
responsibilities and immunities set forth in Annex C hereto.

 

ARTICLE VII

EVENTS OF DEFAULT

 

SECTION
7.01.                   
Events of Default. If any of the following events (“Events of Default”) shall occur:

 

(a)   
Borrower shall fail to pay when due (i) any of the outstanding principal of the Term Loans, or (ii) accrued interest
on the Term Loans or other amounts or fees owing pursuant to any of the Facility Documents; or

 

(b)  
Borrower shall fail to perform or observe in any material respect any term, covenant, or agreement contained in Article
V and such failure shall continue for ten (10) days after receipt of written notice thereof from the Required Lenders;
or

 

(c)   
 (i) any Facility Document, at any time after its execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder, ceases to be in full force and effect; (ii) Borrower contests in any manner the validity or enforceability
of any Facility Document; or (iii) Borrower denies that it has any or further liability or obligation under any Facility Document;
or

 

(d)  
 (i) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part
of the property of Borrower and is not released, vacated or fully bonded within sixty (60) days after its issue or levy; (ii) Borrower
institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit
of creditors, or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator
or similar officer for it or for all or any material part of its property; (iii) any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the application or consent of Borrower and the appointment continues
undischarged or unstayed for sixty (60) calendar days; (iv) any proceeding under any Debtor Relief Law relating to Borrower or
to all or any material part of its property is instituted without the consent of Borrower and continues undismissed or unstayed
for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or (v) Borrower shall take any action to
authorize any of the actions set forth above in this Section 7.01(d);

 

(e)   
the Lenders cease to have a first priority perfected Lien in a material portion of the Collateral; or

 

(f)   
there is entered against the Borrower (i) one or more final judgments or orders for the payment of money in an aggregate
amount exceeding $50,000 (as to all such judgments or orders), and (A) enforcement proceedings are commenced by any creditor upon
such judgment or order, or (B) there is a period of thirty (30) consecutive days during which a stay of enforcement of such judgment,
by reason of a pending appeal or otherwise, is not in effect; or (ii) any one or more non-monetary final judgments that have,
or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

    	13

    	 

    

  

then, and in any such
event, the Required Lenders may declare the Term Loans, all accrued interest thereon, all fees and all other accrued amounts payable
under this Agreement and the other Facility Documents to be forthwith due and payable, whereupon the (i) Term Loans, (ii) all such
interest and fees and (iii) all such other amounts hereunder plus (iv) an additional amount equal to 125% of the outstanding principal
amount of the Term Loans (the sum of (i) – (iv), the “Default Amount”) shall become and be forthwith
due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by Borrower;
provided, however, that upon the occurrence of any event in Section 7.01(d),  the Default Amount
shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which
are hereby expressly waived by Borrower.

 

SECTION
7.02.                   
Rights and Remedies.

 

(a)   
Following acceleration of the Term Loans pursuant to Section 7.01 after the occurrence of an Event of Default,
the Lenders, acting through the Agent, may exercise in respect of the Collateral, in addition to other rights and remedies provided
for herein or otherwise available to them, all the rights and remedies of a Secured Party (as defined in Article 9 of the UCC)
on default under the UCC (whether or not the UCC applies to the affected Collateral) and also may:

 

(i)                
take possession of any Collateral not already in the possession of a Lender without demand and without legal process;

 

(ii)              
require Borrower to, and Borrower hereby agrees that it will, at its expense and upon request of the Agent forthwith, assemble
all or part of the Collateral as directed by the Agent and make it available to the Agent at a place to be designated by the Agent
that is reasonably convenient to both Borrower and the Agent;

 

(iii)            
enter onto the property where any Collateral is located and take possession thereof without demand and without legal process;

 

(iv)            
without notice except as specified below, lease, license, sell or otherwise dispose of the Collateral or any part thereof
in one or more parcels at public or private sale, at the Agent’s office or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Agent may deem commercially reasonable. Borrower agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days’ prior notice to Borrower of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable notification. The Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place
to which it was so adjourned.

 

(b)  
All cash proceeds received by the Agent in respect of any sale of, collection from, or other realization upon, all or any
part of the Collateral shall be applied to the Term Loans in the order set forth in Section 2.08(c).

 

    	14

    	 

    

  

(c)   
The Agent may:

 

(i)                
transfer all or any part of the Collateral into the name of the Lenders, with or without disclosing that such Collateral
is subject to the Lien hereunder;

 

(ii)              
notify the parties obligated on any of the Collateral to make payment to the Lenders or an agent of the Lenders of any amount
due or to become due thereunder;

 

(iii)            
withdraw, or cause or direct the withdrawal, of all funds from any Deposit Account or Securities Account of Borrower;

 

(iv)            
enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature
of any party with respect thereto;

 

(v)              
endorse any checks, drafts, or other writings in Borrower’s name to allow collection of the Collateral;

 

(vi)            
take control of any proceeds of the Collateral;

 

(vii)          
use, license or sublicense following an Event of Default, any Intellectual Property now owned or hereafter acquired by Borrower;
and

 

(viii)        
execute (in the name, place and stead of Borrower) endorsements, assignments, stock powers and other instruments of conveyance
or transfer with respect to all or any of the Collateral.

 

ARTICLE VIII

CONVERSION

 

SECTION
8.01.                   
Conversion of Term Loans. Subject to the other terms and provisions of this Article VIII, upon the consummation
of that currently contemplated merger or combination between the Borrower and a publicly traded biopharmaceutical company focused
on prophylactic anti-infective drugs for use during invasive surgeries (“PubCo” and such merger or combination,
the “Acquisition Transactions”), all outstanding principal and accrued but unpaid interest under the
Term Loans shall automatically convert into such number of shares (the “Conversion Shares”) of common
stock of PubCo (“Common Stock”) equal to a fraction, the numerator of which is the aggregate dollar
value of such outstanding principal and accrued but unpaid interest under the Term Loans and the denominator of which is $2.75
(subject to adjustment upon the occurrence of certain events of PubCo, including in the case of stock splits, subdivisions, reclassifications
or combinations of the Common Stock). The Conversion Shares shall be apportioned among the Lenders on a pro rata basis based on
the outstanding principal and accrued but unpaid interest due and owing to each such Lender under the Term Loans immediately preceding
the completion of Acquisition Transactions.  In the event that there is any material departure from the terms of the
Acquisition Transactions contemplated by Borrower and PubCo that results from any Lender’s or PubCo’s failure to perform
any obligations required to be performed by such Lender or PubCo or any other failure by such Lender or PubCo to take any action
that was necessary or appropriate for such Lender to take in order to complete the Acquisition Transactions on substantially the
terms contemplated by PubCo and Borrower, then the Lenders, PubCo and Borrower shall negotiate different conversion terms in good
faith.

 

    	15

    	 

    

  

SECTION
8.02.                   
Additional Event of Default. In the event that a merger or combination with and into PubCo or a wholly-owned Subsidiary
of PubCo is not completed on substantially the terms currently contemplated by PubCo and Borrower by the Stated Maturity Date,
such event shall, at the election of the Required Lenders, be deemed to be an Event of Default for purposes of Article VII
of this Agreement.  Notwithstanding the foregoing, such event shall not be deemed to be an Event of Default if any
Lender or PubCo failed to perform any obligations required to be performed by such Lender or PubCo or such Lender or PubCo otherwise
failed to take any action that was necessary or appropriate for such Lender or PubCo to take in order to complete such merger
and the other Acquisition Transactions.

 

SECTION
8.03.                   
Conversion Limitation. Notwithstanding Section 8.01, in no event shall any portion of the Obligations
due and owing to a Lender convert into Common Stock if it would cause such Lender’s “beneficial ownership” (within
the meaning of Section 13(d) of the Exchange Act), when taken together with other securities of PubCo owned by such Lender, to
exceed, at the written election of such Lender, either 4.99% or 9.99% of the outstanding Common Stock (the “Beneficial
Ownership Limitation”). In such event, the portion of the Obligations that would cause such Lender to exceed the
Beneficial Ownership Limitation, shall instead be converted into a “common stock equivalent” preferred stock which
shall have terms customary for “common stock equivalent” preferred stock, including, convertibility into a number
of shares of Common Stock that such Lender would have received under this Article VIII but for the Beneficial Ownership Limitation,
a Section 13(d) conversion blocker, participation rights with respect to dividends and distributions on the Common Stock, and
customary anti-dilution adjustments for stock splits, reverse splits, stock dividends and similar events.

 

ARTICLE IX

Indemnification

 

SECTION
9.01.                   
Indemnification. Borrower agrees to indemnify and hold Lenders and the Agent and their officers, directors, employees,
agents, in-house attorneys, representatives and shareholders (each, including Lender, an “Indemnified Party”)
harmless from and against any and all claims, costs, expenses, damages and liabilities (including such claims, costs, expenses,
damages and liabilities based on liability in tort, including strict liability in tort), including reasonable attorneys’
fees and disbursements and other costs of investigation or defense (including those incurred upon any appeal), that may be instituted
or asserted against or incurred by any Indemnified Party as the result of credit having been extended, suspended or terminated
under this Agreement and the other Facility Documents or the administration of such credit, or in connection with or arising out
of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith, or arising
out of the disposition or utilization of the Collateral, excluding in all cases claims to the extent resulting from the gross
negligence or willful misconduct of any Indemnified Party.

 

ARTICLE X

MISCELLANEOUS

 

SECTION
10.01.               
Amendments. No amendment of any provision of this Agreement or any other Facility Document shall be effective unless
in writing signed by the Required Lenders and Borrower.

 

SECTION
10.02.               
Notices; Effectiveness; Electronic Communications.

 

(a)   
Notices Generally. All notices and other communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices
and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number,
as follows:

 

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		(i)	if to Borrower, to Pulmatrix, Inc., 99 Hayden Avenue, Suite 390, Lexington, MA 02421, Phone: 781-357-2333,
e-mail:info@pulmatrix.com; and

 

		(ii)	if to a Lender, as set forth on Annex A.

 

Notices and other communications
sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received;
notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if not given during
normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day
for the recipient).

 

(b)  
Telephonic Communications. All telephonic notices to and other telephonic communications with the Lenders may be
recorded by a Lender, and each of the parties hereto hereby consents to such recording.

 

SECTION
10.03.               
Waiver. No waiver of any provision of this Agreement or any other Facility Document and no consent to any departure
by Borrower therefrom shall be effective unless in writing signed by the Required Lenders and Borrower, as the case may be, and
each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No
waiver or consent by any party shall operate or be construed as a waiver or consent in respect of any failure, breach or default
not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or
after that waiver. No failure on the part of a Lender to exercise, and no delay in exercising any right hereunder or under any
other Facility Document shall operate as a waiver thereof nor shall the single or partial exercise of any such right preclude
any other or further exercise thereof or the exercise of any other right. No notice to or demand on Borrower in any case shall
entitle Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights
of a Lender to any other or further action in any circumstances without notice or demand.

 

SECTION
10.04.               
Equal Treatment of Lenders. No consideration (including any modification of any Facility Documents) shall be
offered or paid to any Person to amend or consent to a waiver or modification of any provisions related to the Term Loans and
Facility Documents unless the same consideration is also offered to all Lenders. All payments hereunder shall be made pro rata
among the Lenders based on the portion of the Term Loans funded by each Lender as set forth on Annex A.

 

SECTION
10.05.               
Costs and Expenses. Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Lenders and their
Affiliates (including the reasonable fees, charges and disbursements of counsel) in connection with the credit facilities provided
for herein, the preparation, negotiation, execution, delivery and administration of the Facility Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), and (ii) all out-of-pocket expenses incurred by the Lenders (including the fees, charges and disbursements
of any counsel), in connection with the enforcement or protection of its rights in connection with this Agreement and the other
Facility Documents, including their rights under this Section 10.05, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of the Term Loans. Borrower will also, upon demand, pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Agent, for the benefit of the Lenders, may incur in connection with (a) the enforcement of this Agreement, (b)
the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral, or (c) the
exercise or enforcement of any of the rights of the Lenders under the Facility Documents.

 

    	17

    	 

    

  

SECTION
10.06.               
Governing Law; Submission to Jurisdiction.

 

(a)   
Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of New
York, without giving effect to its conflict of laws provisions.

 

(b)  
Submission to Jurisdiction. The parties irrevocably and unconditionally submits to the exclusive jurisdiction of
the United States District Court of the Southern District of the State of New York, and all appropriate appellate courts or, if
jurisdiction in such court is lacking, any New York State court of competent jurisdiction sitting in New York (and all appropriate
appellate courts), in any action or proceeding arising out of or relating to this Agreement or any other Facility Document.

 

(c)   
Waiver of Venue. Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable
Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating
to this Agreement or any other Facility Document in any court referred to in clause (b) of this Section. Each
of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable Law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(d)  
WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER FACILITY DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FACILITY DOCUMENTS
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.06(d).

 

SECTION
10.07.               
Severability. In case any provision in this Agreement or any other Facility Document shall be held to be invalid, illegal
or unenforceable, such provision shall be severable from the rest of this Agreement or such other Facility Document, as the case
may be, and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired
thereby.

 

SECTION
10.08.               
Counterparts; Integration; Effectiveness; Electronic Execution. This Agreement may be executed in counterparts (and
by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Agreement and the other Facility Documents constitute the entire contract among
the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by telecopier
shall be effective as delivery of a manually executed counterpart of this Agreement.

 

    	18

    	 

    

 

SECTION
10.09.               
Confidentiality. Each Lender agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to such Lender’s Affiliates and to its and its Affiliates’ respective partners,
directors, officers, employees, agents, trustees, advisors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential),
(b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory
authority), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to
any other party hereto, (e) in connection with the exercise of any remedies under any Facility Document or any action or
proceeding relating to any Facility Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 10.09, to (i) any assignee of or participant
in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (ii) any actual
or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower or the Obligations, (g) with
the consent of Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result
of a breach of this Section or (ii) becomes available to such Lender, or any of its Affiliates on a nonconfidential basis
from a source other than Borrower.

  

For purposes of this
Section, “Information” means all information received from Borrower hereof relating to Borrower or its
business, other than any such information that is available to the Lenders on a nonconfidential basis prior to disclosure by Borrower,
provided that, in the case of information received from Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this
Section 10.09 shall be considered to have complied with its obligation to do so if such Person has exercised
the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential
information.

 

SECTION
10.10.               
Cumulative Remedies. The remedies herein provided are cumulative and are in addition to and not exclusive of any remedies
provided by Law.

 

SECTION
10.11.               
Wire Instructions. The Term Loans by wire transfer shall be delivered in immediately available funds to the account
as follows

 

	 	Pulmatrix Inc. - wiring instructions Beneficiary Bank Information: 
	 	Comerica Bank
	 	226 Airport Parkway
	 	San Jose, CA 95110 
	 	Phone 800-269-9050
	 	ABA# 121 137 522
	 	Swift Code: MNBDUS33
	 	 
	 	Beneficiary Information: 
	 	Account name: Pulmatrix Inc. 
	 	Account number: 1893954030
	 	 
	 	Pulmatrix Inc.
	 	99 Hayden Avenue
	 	Lexington, MA 02421

 

    	19

    	 

    

 

	 	 
	 	Company Contact:
	 	Michelle Siegert
	 	Director, Finance and Accounting
	 	781-357-2356
	 	msiegert@pulmatrix.com

 

 

SECTION
10.12.               
Entire Agreement. THIS AGREEMENT AND THE OTHER
FACILITY DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[END OF TEXT]

 

    	20

    	 

    

  

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers or representatives
thereunto duly authorized, as of the date first above written.

 

 

 

	 	BORROWER:
	 	 	 
	 	PULMATRIX INC.,
	 	as Borrower
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	By:	/s/ Robert W. Clarke, Ph.D.
	 	 	 
	 	Name:	Robert W. Clarke, Ph.D.
	 	 	 
	 	Title:	CEO

 

 

 

[Signature pages of Lenders follow]

 

 

 

 

 

Signature Page to Loan and Security
Agreement

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: 2004
Leon Scharf Irrevocable Trust FBO Rachel Deer or Descendants_

 

Signature of Authorized
Signatory of Lender: /s/ Willy Beer_________________________

 

Name of Authorized
Signatory: Willy Beer_________________________

 

Title of Authorized
Signatory: _Investment Trustee_________________________

 

Principal Amount: _$137,500_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Alpha
Capital Anstalt_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Konrad Ackermann_________________________

 

Name of Authorized
Signatory: Konrad Ackermann_________________________

 

Title of Authorized
Signatory: _Director_________________________

 

Principal Amount: _$350,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Archer
Diversified Investments, LLC_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Devon D. Archer_________________________

 

Name of Authorized
Signatory: Devon D. Archer_________________________

 

Title of Authorized
Signatory: Managing Member_________________________

 

Principal Amount: _$250,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Biscayne
Biotech Holdings, LLC_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Glenn L. Halpryn_________________________

 

Name of Authorized
Signatory: Glenn L. Halpryn _________________________

 

Title of Authorized
Signatory: Manager_________________________

 

Principal Amount: _$500,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Brio
Capital Master Fund Ltd._______________________

 

Signature of Authorized
Signatory of Lender: /s/ Shaye Hirsch_________________________

 

Name of Authorized
Signatory: Shaye Hirsch_________________________

 

Title of Authorized
Signatory: Director_________________________

 

Principal Amount: _$200,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Nicholas
Carosi III_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Nicholas Carosi III_________________________

 

Name of Authorized
Signatory: _________________________

 

Title of Authorized
Signatory: Self_________________________

 

Principal Amount: _$150,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Chicago
Holdings Ltd._______________________

 

Signature of Authorized
Signatory of Lender: /s/ Douglas Ooi_________________________

 

Name of Authorized
Signatory: Douglas Ooi_________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$82,500_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Robert
S. Colman Trust UDT 3/13/85_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Robert Colman_________________________

 

Name of Authorized
Signatory: Robert S. Colman_________________________

 

Title of Authorized
Signatory: Trustee_________________________

 

Principal Amount: _$250,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: CPA
Trust_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Sitimon D. Atlas_________________________

 

Name of Authorized
Signatory: Sitimon D. Atlas_________________________

 

Title of Authorized
Signatory: Trustee_________________________

 

Principal Amount: _$100,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Crystalia
Investments LTD_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Wendy Yap_________________________

 

Name of Authorized
Signatory: Wendy Yap_________________________

 

Title of Authorized
Signatory: Director_________________________

 

Principal Amount: _$370,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Distinct
Concept Limited_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Tan Joon Yang_________________________

 

Name of Authorized
Signatory: Tan Joon Yang_________________________

 

Title of Authorized
Signatory: Director_________________________

 

Principal Amount: _$100,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Edward
Karr_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Edward Karr_________________________

 

Name of Authorized
Signatory: _________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$110,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Joseph
Hoch_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Joseph Hoch_________________________

 

Name of Authorized
Signatory: Joseph Hoch_________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$50,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Horberg
Enterprises LP_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Howard Todd Horberg_________________________

 

Name of Authorized
Signatory: Howard Todd Horberg_________________________

 

Title of Authorized
Signatory: President_________________________

 

Principal Amount: _$53,250_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: JSL
Kids Partners_______________________

 

Signature of Authorized
Signatory of Lender: /s/ John S. Lemak_________________________

 

Name of Authorized
Signatory: John S. Lemak_________________________

 

Title of Authorized
Signatory: Manager_________________________

 

Principal Amount: _$49,500_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Louis
J. Pappas_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Louis J. Pappas_________________________

 

Name of Authorized
Signatory: _________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$100,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Manuel
Scharf_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Manuel Scharf_________________________

 

Name of Authorized
Signatory: Manuel Scharf_________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$275,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Robert
McCumsey_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Robert McCumsey_________________________

 

Name of Authorized
Signatory: _________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$20,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Morris
Fuchs_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Morris Fuchs_________________________

 

Name of Authorized
Signatory: _________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$50,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Daryl
Olsen_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Daryl Olsen_________________________

 

Name of Authorized
Signatory: Daryl Olsen_________________________

 

Title of Authorized
Signatory: Self/Owner_________________________

 

Principal Amount: _$20,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: One
Moore Holdings Inc._______________________

 

Signature of Authorized
Signatory of Lender: /s/ Chad Moore_________________________

 

Name of Authorized
Signatory: Chad Moore_________________________

 

Title of Authorized
Signatory: President_________________________

 

Principal Amount: _$100,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Peter
Kearns_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Peter Kearns_________________________

 

Name of Authorized
Signatory: Peter Kearns_________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$50,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Pinnacle
Family Office Investments, L.P._______________________

 

Signature of Authorized
Signatory of Lender: /s/ Barry M. Kitt_________________________

 

Name of Authorized
Signatory: Barry M. Kitt_________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$275,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Point
Capital, Inc._______________________

 

Signature of Authorized
Signatory of Lender: /s/ Richard A. Brand_________________________

 

Name of Authorized
Signatory: Richard A. Brand_________________________

 

Title of Authorized
Signatory: CEO/Chairman_________________________

 

Principal Amount: _$100,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Sandor
Capital Master Fund_______________________

 

Signature of Authorized
Signatory of Lender: /s/ John S. Lemak_________________________

 

Name of Authorized
Signatory: John S. Lemak_________________________

 

Title of Authorized
Signatory: Manager_________________________

 

Principal Amount: _$448,250_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Simpson
VIII, LLC_______________________

 

Signature of Authorized
Signatory of Lender: /s/ William E. Richards_________________________

 

Name of Authorized
Signatory: William E. Richards_________________________

 

Title of Authorized
Signatory: Trustee/Administrator_________________________

 

Principal Amount: _$100,000_________________________

 

    	 

    	 

    

  

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: William
D. Smithburg_______________________

 

Signature of Authorized
Signatory of Lender: /s/ William D. Smithburg_________________________

 

Name of Authorized
Signatory: William D. Smithburg_________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$110,000_________________________

 

    	 

    	 

    

 

[SIGNATURE PAGE OF LENDERS TO LOAN AND SECURITY
AGREEMENT]

 

 

 

Name of Lender: Lawrence
J. Wert_______________________

 

Signature of Authorized
Signatory of Lender: /s/ Lawrence J. Wert_________________________

 

Name of Authorized
Signatory: _________________________

 

Title of Authorized
Signatory: _________________________

 

Principal Amount: _$100,000_________________________

 

    	 

    	 

    

  

Annex A

 

	Lender	Amount	Address
	2004 Leon Scharf Irrevocable Trust	$137,500	3839 Flatlands Ave. Suite 201, Brooklyn, NY 11234
	Alpha Capital Anstalt	$350,000	Lettstrasse 32 Fl-9490 Vaduz Furstentums Liechtenstein
	Archer Diversified Investments, LLC	$250,000	152 West 57th Street, 47th Floor, New York, NY 10019
	Biscayne Biotech Holdings, LLC	$500,000	4400 Biscayne Boulevard, Suite 950 Miami, FL 33137
	Brio Capital Master Fund Ltd.	$200,000	100 Merrick Road, Suite 401W, Rockville Center, N.Y. 11570
	Chicago Holdings Ltd.	$82,500	1 Sime Park Hill, Singapore 288325
	CPA Trust	$100,000	83-15 Lefferts Blvd Kew Gardens, NY 11413
	Crystalia Investments Ltd.	$370,000	16-03 Shaw Center, Singapore 228208
	Daryl Olsen	$20,000	1128 N. Main Centerville UT, 84014
	Distinct Concept Limited	$100,000	9 Queen Astrid Park Singapore 266799
	Edward Karr	$110,000	
        19 Blvd. Georges-Favon,
        CH-1204 Geneva, Switzerland 

	Horberg Entreprises LP	$52,250	209 Prospect Avenue Highland Park IL 62035
	Joseph Hoch	$50,000	125-10 Queens Blvd. 224, Kew Gardens, NY 11415
	JSL Kids Partners	$49,500	2828 Routh St, Suite 500 Dallas, TX 75201
	Lawrence J. Wert	$100,000	170 Nuttall Road Riverside IL 60546
	Louis J. Pappas	$100,000	39 Mohring Bay Court Bayville, NY 11709
	Manuel Scharf	$275,000	1575-50th Street Suite #201 Brooklyn NY 11219
	Morris Fuchs	$50,000	1109 East 22 St., Brooklyn NY 11210
	Nicholas Carosi III	$150,000	13800 Dawson Beach Rd Woodbridge VA 22191
	One Moore Holdings Inc.	$100,000	95 Almondell Circle The Woodland TX 77354
	Peter Kearns	$50,000	270 Wendover Drive Princeton NJ 08701
	Pinnacle Family Office Investments	$275,000	4965 Preston Park Blvd STE 240 Plano, TX 75093
	Point Capital, Inc.	$100,000	285 Grand Av. Bld 5 2nd Floor Englewood, NJ 07631
	Robert McCumsey	$20,000	79000 Citrus, LA Quinta CA 92253
	Robert S. Colman Trust UDT 3/13/85	$250,000	PO Box 7370 Ketchum, ID 83340
	Sandor Capital Master Fund	$448,250	2828 Routh St, Suite 500 Dallas, TX 75201
	Simpson VIII, LLC.	$100,000	20 North Wacker Drive Suite 1416 Chicago IL 60606
	William D. Smithburg	$110,000	676 N Michigan Ave Suite 3860 Chicago IL 60611

 

    	 

    	 

    

 

Annex B

   

	Name of Subordinated Lender	Principal Amount of Subordinated Debt ($) on the date of this Agreement
	Polaris Venture Partners V, L.P.	12,512,728.87 
	Polaris Venture Partners Entrep. Fund V, L.P.	243,873.09 
	Polaris Venture Partners Founders' Fund V, L.P.	85,712.19 
	Polaris Venture Partners Special Founders' Fund V, L.P.	125,127.29 
	Polaris Venture Partners IV, L.P.	2,996,801.92 
	Polaris Venture Partners Entrep. IV, L.P.	56,180.99 
	5AM Ventures LLC	3,669,514.78 
	5AM Co-Investors LLC	519,826.28 
	Arch Venture Fund VII, L.P.	8,742,638.39 
	Gabrielson, Mark	136,092.99 

 

    	 

    	 

    

 

Annex C

 

to 

 

Loan and Security Agreement

 

THE AGENT

 

1.Appointment. The Lenders (all
capitalized terms used herein and not otherwise defined shall have the respective meanings provided in the Loan and Security Agreement
to which this Annex C is attached (the “Agreement”)), by their acceptance of the benefits of the Agreement,
hereby designate Barry Honig (the “Agent”) as the Agent to act as specified herein and in the Agreement. Each
Lender shall be deemed irrevocably to authorize the Agent to take such action on its behalf under the provisions of the Agreement
and any other Facility Documents and to exercise such powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto.
The Agent may perform any of its duties hereunder by or through its agents or employees.

 

2.Nature of Duties. The Agent
shall have no duties or responsibilities except those expressly set forth in the Agreement. Neither the Agent nor any of its partners,
members, shareholders, officers, directors, employees or agents shall be liable for any action taken or omitted by it as such under
the Agreement or hereunder or in connection herewith or therewith, be responsible for the consequence of any oversight or error
of judgment or answerable for any loss, unless caused solely by its or their gross negligence or willful misconduct as determined
by a final judgment (not subject to further appeal) of a court of competent jurisdiction. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of the Agreement or any other Facility Documents a fiduciary relationship
in respect of any Borrower or any Lender; and nothing in the Agreement or any other Facility Documents, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations in respect of the Agreement or any other Facility
Documents except as expressly set forth herein and therein.

 

3.Lack of Reliance on the Agent.
Independently and without reliance upon the Agent, each Lender, to the extent it deems appropriate, has made and shall continue
to make (a) its own independent investigation of the financial condition and affairs of Borrower in connection with such Lender’s
investment in Borrower, the creation and continuance of the Obligations, the transactions contemplated by the Facility Documents,
and the taking or not taking of any action in connection therewith, and (b) its own appraisal of the creditworthiness of Borrower,
and of the value of the Collateral from time to time, and the Agent shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Lender with any credit, market or other information with respect thereto, whether coming into
its possession before any Obligations are incurred or at any time or times thereafter.

 

The Agent shall not be responsible to Borrower
or any Lender for any recitals, statements, information, representations or warranties herein or in any document, certificate or
other writing delivered in connection herewith, or for the execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of the Agreement or any other Facility Documents, or for the financial condition of Borrower
or the value of any of the Collateral, or be required to make any inquiry concerning either the performance or observance of any
of the terms, provisions or conditions of the Agreement or any other Facility Documents, or the financial condition of Borrower,
or the value of any of the Collateral, or the existence or possible existence of any default or Event of Default under the Agreement
or any of the other Facility Documents.

 

    	 

    	 

    

  

4.Certain Rights of the Agent.
The Agent shall have the right to take any action with respect to the Collateral, on behalf of all of the Lenders. To the extent
practical, the Agent shall request instructions from the Lenders with respect to any material act or action (including failure
to act) in connection with the Agreement or any other Facility Documents, and shall be entitled to act or refrain from acting in
accordance with the instructions of the Required Lenders; if such instructions are not provided despite the Agent’s request
therefor, the Agent shall be entitled to refrain from such act or taking such action, and if such action is taken, shall be entitled
to appropriate indemnification from the Lenders in respect of actions to be taken by the Agent; and the Agent shall not incur liability
to any person or entity by reason of so refraining. Without limiting the foregoing, (a) no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the terms of
the Agreement or any other Facility Documents, and Borrower shall have no right to question or challenge the authority of, or the
instructions given to, the Agent pursuant to the foregoing and (b) the Agent shall not be required to take any action that the
Agent believes (i) could reasonably be expected to expose it to personal liability or (ii) is contrary to this Agreement, the Facility
Documents or applicable law.

 

5.Reliance. The Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, statement, certificate, telex,
teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by the
proper person or entity, and, with respect to all legal matters pertaining to the Agreement and the other Facility Documents and
its duties thereunder, upon advice of counsel selected by it and upon all other matters pertaining to this Agreement and the other
Facility Documents and its duties thereunder, upon advice of other experts selected by it. Anything to the contrary notwithstanding,
the Agent shall have no obligation whatsoever to any Lender to assure that the Collateral exists or is owned by Borrower or is
cared for, protected or insured or that the liens granted pursuant to the Agreement have been properly or sufficiently or lawfully
created, perfected, or enforced or are entitled to any particular priority.

 

6.Indemnification. To the extent
that the Agent is not reimbursed by Borrower, the Lenders will jointly and severally reimburse and indemnify the Agent, in proportion
to their respective principal amounts of the Term Loans, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder or under the Agreement or any other Facility Documents,
or in any way relating to or arising out of the Agreement or any other Facility Documents except for those determined by a final
judgment (not subject to further appeal) of a court of competent jurisdiction to have resulted solely from the Agent’s own
gross negligence or willful misconduct. Prior to taking any action hereunder as Agent, the Agent may require each Lender to deposit
with it sufficient sums as it determines in good faith is necessary to protect the Agent for costs and expenses associated with
taking such action.

 

7.Resignation by the Agent.

 

(a)The Agent may resign from the
performance of all its functions and duties under the Agreement and the other Facility Documents at any time by giving thirty (30)
days’ prior written notice to Borrower and the Lenders. Such resignation shall take effect upon the appointment of a successor
Agent pursuant to clauses (b) and (c) below.

 

(b)Upon any such notice of resignation,
the Required Lenders shall appoint a successor Agent hereunder.

 

(c)If a successor Agent shall not
have been so appointed within said 30-day period, the Agent shall then appoint a successor agent who shall serve as Agent until
such time, if any, as the Lenders appoint a successor agent as provided above. If a successor agent has not been appointed within
such 30-day period, the Agent may petition any court of competent jurisdiction or may interplead Borrower and the Lenders in a
proceeding for the appointment of a successor Agent, and all fees, including, but not limited to, extraordinary fees associated
with the filing of interpleader and expenses associated therewith, shall be payable by Borrower on demand.

 

    	 

    	 

    

  

8.Rights with respect to Collateral.
Each Lender agrees with all other Lenders and the Agent (a) that it shall not, and shall not attempt to, exercise any rights with
respect to its security interest in the Collateral, whether pursuant to any other agreement or otherwise (other than pursuant to
this Agreement), or take or institute any action against the Agent or any of the other Lenders in respect of the Collateral or
its rights hereunder (other than any such action arising from the breach of this Agreement) and (b) that such Lender has no other
rights with respect to the Collateral other than as set forth in this Agreement and the other Facility Documents.

 

Upon the acceptance of any appointment
as the Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent and the retiring Agent shall be discharged from its duties and obligations
under the Agreement. After any retiring Agent’s resignation or removal hereunder as the Agent, the provisions of the Agreement
including this Annex C shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the
Agent.

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