Document:

EXHIBIT 10.1

 

FACTORING
AND SECURITY AGREEMENT

 

This
Factoring and Security Agreement is dated for purposes of reference June ___, 2016 is by and between the undersigned, Quest Solution,
Inc. which has its offices and principal place of business at 12272 Monarch Street, Garden Grove, CA, 97402, Quest Marketing,
Inc. which has its offices and principal place of business at 12272 Monarch Street, Garden Grove, CA, 97402, Bar Code Specialties,
Inc. which has its offices and principal place of business at 12272 Monarch Street, Garden Grove, CA, 97402 (hereinafter each
referred to as “CLIENT” and collectively taken together referred to as “CLIENT”) and ACTION CAPITAL CORPORATION
(hereinafter, “ACTION”), which has its executive office and principal place of business at 230 Peachtree St. NW, Suite
1910, Atlanta, GA 30303. CLIENT and ACTION agree as follows:

 

	I.	PURPOSE
    OF AGREEMENT

 

CLIENT
desires to obtain short-term financing by selling and assigning to ACTION acceptable accounts receivable. The purpose of this
financing is commercial in nature, and not for household, family, and/or personal use. In the event CLIENT and ACTION are currently
operating under an earlier Agreement, this Agreement is and shall be a modification and continuation of such earlier Agreement
and in the event of any inconsistencies or contradictions within the Agreements, CLIENT and ACTION agree that the terms of this
Agreement shall control.

 

	II.	DEFINITIONS
	 	 
	2.1	“ACCOUNT”
    means both present and future accounts, contract rights and other forms of obligations for the payment of money arising
    out of the sale by CLIENT of goods or the performance by CLIENT of services.
	 	 
	2.2	“ACCEPTABLE
    ACCOUNT” means an ACCOUNT offered by CLIENT to ACTION for sale which ACCOUNT ACTION has reviewed and has, in its
    sole discretion, approved for purchase in whole or in part, and which ACCOUNT conforms to the warranties and terms set forth
    herein and in the Agreement for the Sale and Assignment of Invoices form accompanying each offer to sell.
	 	 
	2.3	“AFFILIATE”
    means any entity that CLIENT or any officer, shareholder, director or other principal of CLIENT or any spouse or other
    familial relative of such person shall have the power to direct the management and policies of such entity, directly or indirectly,
    whether through ownership of voting securities or otherwise.
	 	 
	2.4	“CUSTOMER”
    means CLIENT’s customer or the account debtor.
	 	 
	2.5	“INVOICE”
    means the document evidencing any ACCOUNT referenced in and made subject to any Agreement for the Sale and Assignment
    thereof entered into between the CLIENT and ACTION.
	 	 
	2.6	“RESERVE
    ACCOUNT” means a bookkeeping account on the books of ACTION representing the unpaid portion of an ACCEPTABLE ACCOUNT
    sold and assigned hereunder by CLIENT to ACTION or any ACCOUNT that is subject to the security hereunder granted to ACTION
    by CLIENT or otherwise coming into the possession or control of ACTION.
	 	 
	III.	WARRANTIES
    AND COVENANTS BY CLIENT
	 	 
	3.1	To
    the best of CLIENT’s knowledge, CLIENT’s business is solvent, and CLIENT ispresently paying its debts as they
    become due. To the best of CLIENT’s knowledge, CLIENT has never filed for bankruptcy under federal or state law or had
    an involuntary bankruptcy petition filed against it to the best of its knowledge. To the best of CLIENT’s knowledge,
    CLIENT has made and shall continue to make timely payment of all required taxes to the best of its knowledge. To the best
    of CLIENT’s knowledge and based on CLIENT’s reasonable business practices, each CUSTOMER is solvent.

 

    	 		 

    	 		 

    

 

	3.2	Each
    ACCOUNT offered for sale to ACTION hereunder is and shall be, as of the time of such offer, a bona fide and existing obligation
    of CLIENT’s CUSTOMER for the payment of money arising out of the sale by CLIENT of goods or the performance by CLIENT
    of services, which is owed to CLIENT, free from any liens, claims, disputes, off-sets or equities of third parties, that CLIENT
    is the lawful owner of and has good and undisputed title to the ACCOUNTs offered for sale to ACTION hereunder, and that no
    ACCOUNT offered or to be offered for sale to ACTION hereunder represents consigned or guaranteed sales, and that no ACCOUNT
    offered or to be offered for sale and assignment shall be due from an AFFILIATE. 
	 	 
	3.3	CLIENT
    has not transferred, pledged or granted a security interest in CLIENT’s ACCOUNTs to any other party except as otherwise
    disclosed to ACTION and CLIENT will not transfer, pledge or grant a security interest to any other party in said ACCOUNTs
    for the term of this agreement and for as long as CLIENT is indebted to ACTION hereunder. Additionally, CLIENT will not sell
    or assign ACCOUNTs except to ACTION for the period of this agreement, and/or for as long as any indebtedness whatsoever remains
    owing by CLIENT to ACTION. 
	 	 
	3.4	FINANCIAL
    INFORMATION: CLIENT will furnish ACTION financial statements as reasonably required by ACTION from time to time and will furnish
    ACTION, satisfactory proof of payment and/or compliance with all Federal, State and/or local tax requirements. ACTION will
    keep any information it receives with respect to the financial or other records of CLIENT or CLIENT’s CUSTOMERS strictly
    confidential. This covenant of confidentially survives this Agreement.
	 	 
	3.5	All
    financial records, statements, books or other documents shown to ACTION by CLIENT at any time, either before or after the
    signing of this Agreement, are true and accurate to the best of CLIENT’s belief.
	 	 
	3.6	 ACTION
    or any person designated by ACTION shall have the right at any reasonable time with reasonable notice to inspect, audit, check
    and make copies or extracts from CLIENT’s books, records, journals, orders, receipts, and other correspondence and other
    data relating to CLIENT’s business and any other transaction between ACTION and CLIENT without hindrance or delay, provided
    that such activities will not be disruptive to Quest’s overall operations. 
	 	 
	3.7	CLIENT
    will not, under any circumstances or in any manner whatsoever, interfere with any of ACTION’s rights under this Agreement.
	 	 
	3.8	CLIENT
    will promptly notify ACTION in writing of any change in the location of CLIENT’s place(s) of business, name, identity,
    legal entity, corporate structure, officers, principals, partners, and/or owners.
	 	 
	3.9	CLIENT
    has full power and authority to execute, deliver and perform this Agreement.
	 	 
	IV.	FURTHER
    PROMISES
	 	 
	4.1
    	SECURITY
    INTEREST/COLLATERAL: CLIENT gives to ACTION, as collateral for the repayment of any and all obligations and liabilities whatsoever
    of CLIENT to ACTION, a security interest, under the Uniform Commercial Code, in the following described property (hereinafter
    collectively called “Collateral”): All presently existing or hereafter arising, now owned or hereafter acquired
    accounts, accounts receivable, contract rights, chattel paper, documents, instruments, general intangibles, reserves, reserve
    accounts, rebates, and all books and records (including without limitation, customer lists, computer programs, print outs,
    and other computer material and records) pertaining to the foregoing and all proceeds of the foregoing property. CLIENT agrees
    to not assign or grant a security interest in the collateral described herein to any other person.

 

    	 		 

    	 		 

    

 

	4.2
    	NOTIFICATION:
    ACTION will, at its discretion, notify any CUSTOMER to make payments directly to ACTION for any ACCOUNT using the form of
    notification attached hereto as Exhibit A.
	 	 
	4.3	ASSIGNMENT:
    CLIENT shall from time to time at CLIENT’s option, sell, transfer and assign ACCEPTABLE ACCOUNTs to ACTION, to be identified
    on a form known as ACTION’s Agreement for Sale and Assignment of Invoices together with an original INVOICE and all
    supporting documents appropriate to CLIENT’s business.
	 	 
	4.4
    	PURCHASE
    PRICE: Each ACCEPTABLE ACCOUNT purchased by ACTION hereunder shall be purchased for a price equal to the net amount of such
    ACCEPTABLE ACCOUNT. As used herein, the “net amount” of an ACCEPTABLE ACCOUNT means the face amount thereof less
    discounts or allowances of any nature, calculated on the basis of the shortest selling terms provided. 
	 	 
	4.5	INTEREST
    AND FEES: ACTION agrees to provide financing to CLIENT for the fees as indicated below:

 

	 	(a)	with
    respect to the daily average balance of unpaid advances outstanding hereunder (computed on a monthly basis), interest at a
    per annum rate equal to the “Prime Rate” of Wells Fargo Bank N.A. (as such rate is announced from time
    to time with changes in such rate to be effected on the first day of each month based on the Prime Rate in effect as of the
    last business day of the prior month) plus two percent (Prime + 2.0%), plus a monthly fee equal to three-quarters of
    one percent (0.75%) of such average outstanding balance. All interest and fees hereunder shall be billed monthly in arrears
    with payment due on the billing date. All calculations of interest shall be computed on the basis of a 360 day year, for actual
    days elapsed. 
	 	 	 
	 	(b)	all
    other costs incurred by ACTION including all bank fees for wire transfers, lien search fees, lien recording fees.

 

	4.6	DATE
    OF ADVANCE: ACTION will buy ACCEPTABLE ACCOUNTs at the net amount less any specified reserve which will be advanced to CLIENT
    at the time the ACCOUNT is accepted.
	 	 
	4.7	RESERVE:
    ACTION will reserve and withhold an amount in a reserve account equal to ten percent (10%) of the face amount of each ACCOUNT
    purchased hereunder. The reserve account may be held by ACTION and applied against charge-backs or any obligations of CLIENT
    to ACTION, known or anticipated, and the reserve account shall not be due and payable to CLIENT until any and all obligations
    of CLIENT to ACTION are fully paid and/or satisfied. Notwithstanding the foregoing, as each ACCOUNT is paid in full, the reserve
    associated with the paid ACCOUNT will be paid to CLIENT provided, however, there does not then exist an event or condition
    of default and further provided, however, that in no event at any time shall the aggregate balance in the reserve account
    be less than ten percent (10%) of CLIENT’s then unpaid ACCEPTABLE ACCOUNTs purchased by ACTION.
	 	 
	4.8	RECOURSE:
    ACTION shall have full recourse against CLIENT when an ACCOUNT is not paid by CUSTOMER when due, including without limitation,
    the right to charge-back or sell back any such ACCOUNT, if not paid within 90 days of the date of purchase. 
	 	 
	4.9
    	DISPUTED
    ACCOUNTS: CLIENT will immediately notify ACTION and accept back (repurchase) from ACTION any ACCOUNT subject to a dispute
    between CUSTOMER and CLIENT of any kind whatsoever.
	 	 
	4.10	HOLD
    IN TRUST: CLIENT will hold in trust and safekeeping, as the property of ACTION, and immediately turn over to ACTION the identical
    check or other form of payment received by CLIENT, whenever any payment on any ACCOUNT comes into CLIENT’s possession;
    any failure by CLIENT in this regard constitutes a default under this Agreement (pursuant to SECTION V hereinbelow) and may
    result in civil and/or criminal actions against CLIENT and /or the person(s) responsible for such failure.

 

    	 		 

    	 		 

    

 

	4.11
    	RESPONSIBILITY
    FOR TAXES: All taxes and governmental charges with respect to goods or services represented by ACCOUNTs purchased by ACTION
    shall be the obligation and responsibility of CLIENT. CLIENT has no obligation for ACTION’s income or property taxes
    or any other taxes with respect to ACTION’s business.
	 	 
	4.12
    	NOTICE
    OF LEVY: CLIENT will promptly notify ACTION of any material attachment, tax assessment or other legal process levied against
    CLIENT or any of CLIENT’s CUSTOMERS.
	 	 
	4.13
    	BOOK
    ENTRY: CLIENT will, immediately upon sale of ACCOUNTs to ACTION, make proper entries on its books and records disclosing the
    absolute sale of said ACCOUNTs to ACTION subject to the terms and conditions of this Agreement.
	 	 
	4.14
    	LEGAL
    FEES: Except as is prohibited by law, CLIENT shall pay to ACTION all reasonable costs and expenses, including without limitation
    attorney’s fees and expenses, and costs incurred by ACTION in the prosecution or enforcement of any of ACTION’s
    rights, claims or courses of action which arise out of, relate to or pertain to this Agreement.
	 	 
	4.15
    	POWER
    OF ATTORNEY: CLIENT hereby names, appoints, and constitutes ACTION and its designees as CLIENT’s true and lawful attorney-in-fact,
    and does hereby request, authorize, empower and direct ACTION or its designee, for and in the name and instead of CLIENT,
    either in CLIENT’s name or ACTION’s name to:

 

	 	(a)	compromise,
    adjust or settle any claim of a CUSTOMER with respect to an ACCOUNT;
	 	 	 
	 	(b)	demand,
    sue for, collect and give release for any and all monies due or to become due on ACCOUNTs;
	 	 	 
	 	(c)	make
    any and all corrections or completions on any of the invoices or other documents constituting the ACCOUNTS;
	 	 	 
	 	(d)	endorse
    CLIENT’s name an any checks, drafts, instruments or other evidences of payment with respect to any ACCOUNT or to otherwise
    collect the same;
	 	 	 
	 	(e)	receive,
    open and dispose of all mail addressed to CLIENT with respect to any ACCOUNT; and
	 	 	 
	 	(f)	do
    all other acts and things necessary to carry out the purpose and intent of this Agreement. All acts of ACTION as attorney-in-fact
    are hereby ratified and approved and ACTION shall not be liable for any errors of commission or omission nor for any error
    of or mistake of law or fact excepting acts constituting gross negligence or willful misconduct. This power of attorney in
    coupled with an interest and is irrevocable for so long as CLIENT is indebted to ACTION. The authority granted ACTION shall
    remain in full force and effect until all assigned accounts are paid in full and any indebtedness of CLIENT to ACTION is discharged.

 

	4.16	ACH
    AUTHORIZATION: In order to satisfy any of the obligations to ACTION under this Agreement, CLIENT hereby authorizes ACTION
    to initiate electronic debit or credit entries through the Automated Clearing House system to any bank account maintained
    by CLIENT wherever located.

 

    	 		 

    	 		 

    

 

	V.	DEFAULT
	 	 
	5.1
    	EVENTS
    OF DEFAULT: Any one or more of the following shall be a default hereunder:

 

	 	(a)	CLIENT’s
    breach of any promise, covenant or warranty under this Agreement or any other Agreements between CLIENT and ACTION or obligation
    of CLIENT to ACTION, including without limitation, payment of any indebtedness to ACTION when due;
	 	 	 
	 	(b)	the
    appointment of any receiver or trustee of all or a substantial portion of the assets of CLIENT; insolvency or inability to
    pay debts as they mature; a general assignment for the benefit of creditors; the voluntary or involuntary filing of a petition
    for relief under any bankruptcy or similar law;
	 	 	 
	 	(c)	issuance
    of any levies of attachment, executions, tax assessments or similar process against the Collateral;
	 	 	 
	 	(d)	CLIENT’s
    tender to ACTION of information that is false or incorrect in any material respect.

 

	5.2	REMEDIES
    AFTER DEFAULT: In the event of any default, ACTION may do any one or more of the following:

 

	 	(a)	declare
    any indebtedness including outstanding ACCOUNTS purchased by ACTION, immediately due and payable;
	 	 	 
	 	(b)	notify
    any CUSTOMER of CLIENT to make payments directly to ACTION with respect to any and all ACCOUNTS of CLIENT;
	 	 	 
	 	(c)	require
    CLIENT to send copies of records and files pertaining to ACCOUNTs to ACTION and, with reasonable notice, enter the premises
    of CLIENT and make copies of the COLLATERAL and the records pertaining to the ACCOUNTs and any other COLLATERAL;
	 	 	 
	 	(d)	hold
    CLIENT liable for any deficiency.

 

	VI.	MISCELLANEOUS
	 	 
	6.1	MAXIMUM
    ACCOUNT: The outstanding amount of CLIENT’s account with ACTION (that is, at any time, the unpaid and owing principal
    amount of advances made by ACTION to CLIENT) shall not exceed Five Million U.S. Dollars ($5,000,000.00).
	 	 
	6.2.1	TERMINATION:
    This Agreement shall continue in full force and effect until terminated by written notice by either party, such notice shall
    require written notice 30 days prior to termination effective date. In the case of an Event of Default which is continuing
    and uncured, and notice of such default has been provided to CLIENT, Termination notice provided to CLIENT shall be effective
    immediately.
	 	 
	6.3
    	POST-TERMINATION:
    After termination CLIENT shall be liable to ACTION for the full and prompt payment of the full amount of ACCOUNTs which have
    been sold and assigned to ACTION and are then outstanding and unpaid, disputed or undisputed, as well as any other indebtedness
    whatsoever. ACTION shall continue to have a security interest in the COLLATERAL of CLIENT until any existing indebtedness
    of CLIENT to ACTION is paid in full.
	 	 
	6.4
    	APPLICABLE
    LAW: This Agreement shall be governed by and construed in accordance with the laws of the State of Georgia and shall be binding
    upon the successors, assigns and representatives of the parties hereto. CLIENT and ACTION hereby agree that any suit, action,
    or proceeding arising out the subject matter hereof, or the interpretation, performance or breach of this Agreement shall
    be instituted in the Superior Court of the State of Georgia located in Atlanta, Fulton County, Georgia (hereinafter, “Fulton
    County Superior Court”). CLIENT and ACTION hereby agree that Fulton County Superior Court is convenient to each party
    hereto and CLIENT and ACTION irrevocably submit to such jurisdiction, irrevocably agree to be bound by any judgment rendered
    thereby in connection with this Agreement, and forever waive any and all objections to jurisdiction or venue that each party
    may have under the laws of the State of Georgia or otherwise in those courts in any such suit, action or proceeding. If any
    such proceeding is initiated in any other jurisdiction, CLIENT hereby waives any right to oppose any motion or application
    made by ACTION as a consequence of such proceeding having been commenced in a jurisdiction other than Fulton County Superior
    Court

 

    	 		 

    	 		 

    

 

	6.5
    	ENTIRE
    AGREEMENT-AMENDMENT: This document contains the entire Agreement between the parties as of the date specified below. This
    Agreement may be modified only by a written instrument executed by the parties hereto.

 

Executed
and accepted this _____ day of June, 2016.

 

	 	 	CLIENT:
    QUEST SOLUTION, INC.
	 	 	 	 
	 	 	By:	/s/
    Gilles Normand Gaudreault
	 	 	Name:	Gilles
    Normand Gaudreault
	 	 	Title:	Chief
    Executive Officer
	 	 	 	 
	Attested
    by:	 	 	 
	 	 	 	 
	/s/
    Tom Miller	 	 	 
	Tom
    Miller	 	 	 
	President	 	 	 
	 	 	 	 
	Affix
    Corporate Seal	 	 	 
	 	 	 	 
	 	 	CLIENT:
    QUEST MARKETING, INC.
	 	 	 	 
	 	 	By:	/s/
    Gilles Normand Gaudreault
	 	 	Name:	Gilles
    Normand Gaudreault
	 	 	Title:	Chief
    Executive Officer
	 	 	 	 
	Attested
    by:	 	 	 
	 	 	 	 
	/s/
    Tom Miller	 	 	 
	Tom
    Miller	 	 	 
	President	 	 	 
	 	 	 	 
	Affix
    Corporate Seal	 	 	 
	 	 	 	 
	 	 	CLIENT:
    BAR CODE SPECIALTIES, INC.
	 	 	 	 
	 	 	By:	/s/
    Gilles Normand Gaudreault
	 	 	Name:	Gilles
    Normand Gaudreault
	 	 	Title:	Chief
    Executive Officer
	 	 	 	 
	Attested
    by:	 	 	 
	 	 	 	 
	/s/
    Tom Miller	 	 	 
	Tom
    Miller	 	 	 
	President	 	 	 
	 	 	 	 
	Affix
    Corporate Seal	 	 	 
	 	 	 	 
	 	 	ACTION:
    Action Capital Corporation
	 	 	 	 
	 	 	By:	/s/
    Patrick A. Thom
	 	 	Name:	Patrick
    A. Thom
	 	 	Title:	PresidentEXHIBIT 10.2

 

PLEDGE
AND SECURITY AGREEMENT

 

This
Pledge and Security Agreement (this “Agreement”), dated as of July 1, 2016, is entered into among Quest
Solution, Inc., a Delaware corporation (“Quest Solution”), Bar Code Specialties, Inc., a California
corporation (“Bar Code”), Quest Marketing, Inc., an Oregon corporation (“Quest Marketing”),
Quest Solution Canada Inc., a Canadian corporation (“Quest Solution Canada”), and Quest Exchange Ltd.,
a Canadian corporation (“Quest Exchange” and, together with Quest Solution, Bar Code, Quest Marketing,
and Quest Solution Canada, the “Debtors” and individually, a “Debtor”), in
favor of ScanSource, Inc., a South Carolina corporation (“Secured Party”), acting on behalf of each
of the Credit Parties referred to below.

 

RECITALS:

 

Secured
Party and its subsidiaries and affiliates (each individually, a “Credit Party” and collectively, the
“Credit Parties”) have and may in the future, from time to time, extend credit to one or more Debtors,
including the extension of credit in the form of sales of inventory and equipment on account. As a condition to the extensions
of such credit, the Credit Parties are requiring that the Debtors execute this Agreement.

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.
Security Interest. Each Debtor grants to Secured Party, for the benefit of each of the Credit Parties, a security interest
in all of such Debtor’s right, title and interest in and to the items of collateral shown on Exhibit A attached hereto
and all proceeds thereof (the “Collateral”). All capitalized terms within Exhibit A are defined terms
used throughout this Agreement.

 

2.
Purchase Money Security Interest. To the extent any portion of the Collateral is purchased from any Credit Party, Secured
Party’s security interest shall be a purchase money security interest.

 

3.
Obligations Secured. This Agreement, and the Collateral, secure the payment and performance in full of all indebtedness, obligations
and liabilities of any Debtor or any of their respective subsidiaries and affiliates (collectively with the Debtors, the “Obligors”)
to each of the Credit Parties, arising on or after the date hereof (but not any such indebtedness, obligations and liabilities
existing or arising prior to the date hereof), including but not limited to amounts arising from the sale of goods and services
on or after the date hereof by any Credit Party to any Obligor, and all costs and expenses of Secured Party in collecting any
such obligations or enforcing its rights or remedies hereunder (collectively, the “Obligations”).

 

4.
Change of Name/Status and Notice of Changes. Without the prior written consent of the Secured Party’s Vice President,
Worldwide Reseller Financial Services or Senior Vice President, Finance and Principal Accounting Officer (individually, “Authorized
Representative”), which consent shall not be unreasonably withheld, no Debtor shall change its name, change its corporate
form, principal place of business or jurisdiction of organization, use any trade name, or engage in any business not reasonably
related to its business as presently conducted. To the extent possible, each Debtor shall provide an advance notice of at least
five (5) business days to Secured Party of (i) any material change in the Collateral, (ii) the intent to change any Debtor’s
name, trade name, corporate form, principal place of business or jurisdiction of organization, (iii) a material change in any
material matter warranted or represented by any Debtor in this Agreement, or in any other agreement, document or instrument furnished
to Secured Party or any Credit Party pursuant to or in connection with this Agreement, and (iv) the occurrence of an event of
default described in Section 10 hereof. Each Debtor agrees that from time to time, at the expense of Debtors, such Debtor will
promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security interest granted or purported to be granted hereby
or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral. 

 

    	 		 

    	 		 

    

 

5.
Creation/Formation of New Entity. In the event that any of the Debtors creates or forms any new entity, whether a direct or
indirect subsidiary, any and all existing and future agreements between Debtor and Secured Party shall be amended to extend to
the new entity.

 

6.
Filing, Continuations and Amendments. Secured Party is authorized to prepare and file such financing statements and amendments
as Secured Party deems necessary to perfect, continue or assure its security interest in the Collateral (including, without limitation,
financing statements describing the Collateral as “all assets” or the like) and each Debtor hereby ratifies any financing
statement filed previously by Secured Party. Each Debtor will deliver such instruments of future assignment or assurance, and
such other agreements, as Secured Party may from time to time request to carry out the intent of this Agreement, and will join
with Secured Party in executing any documents in form satisfactory to Secured Party, and hereby authorizes Secured Party to sign
for such Debtor, or to file without signature, any financing statements, amendments and other documents and instruments from time
to time as Secured Party may deem advisable, and pay any cost of filing the same, including all recordation, transfer, indebtedness
and other taxes and fees, deemed advisable by Secured Party.

 

7.
Maintenance and Insurance. Each Debtor shall maintain the Collateral in good condition and repair and shall pay and timely
discharge all taxes, levies, and other impositions levied thereon, and all rent due on premises where any of the Collateral may
be located. Each Debtor shall maintain insurance on all Collateral against any loss damage in amounts which are commercially reasonable.
All proceeds of such insurance shall be applied to reduce the Obligations secured hereunder. All insurance policies must name
Secured Party as an additional insured and loss payee thereof, as Secured Party’s interests may appear, and must provide
that the insurer will give Secured Party at least 15 days written notice of intended cancellation or non-renewal. At Secured Party’s
request, each Debtor must furnish Secured Party with evidence satisfactory to Secured Party that the required insurance coverage
is in effect.

 

8.
Inspection and Reports. Upon five (5) days advance written notice, and at any time after any default, each Debtor shall allow
Secured Party, by or through any of its agents, to examine and inspect during regular business hours the Collateral wherever located
and all books, records and documentation with respect thereto, and to make copies or extracts from such books, records and documentation
as Secured Party, at its own expense, may deem to be advisable.

 

In
addition to the above:

 

a.
Annual Financial Statements. Debtors shall deliver to Secured Party, within one hundred twenty (120) days after the
end of each fiscal year, Certified Public Accountant prepared and audited financial statements reflecting its operations during
such fiscal year, which shall include, without limitation, a balance sheet, profit and loss statement, and a statement of cash
flow, with supporting schedules and management notes, all prepared on a consolidated and consolidating basis, in reasonable detail,
and in conformity with Generally Accepted Accounting Principles (“GAAP”) and certified to its correctness by the Debtors’
principal financial officer.

 

b.
Annual Monthly Budgeted Financial Statements. Debtors shall deliver to Secured Party, within sixty (60) days after
the end of each fiscal year, management prepared budgeted financial statements with respect to Debtors and their subsidiaries
and/or affiliates reflecting their consolidated projected monthly operations for the current fiscal year, which shall include,
without limitation, a balance sheet, profit and loss statement, and a statement of cash flow, with supporting schedules, all prepared
on a consolidated and consolidating basis, in reasonable detail, and in conformity with GAAP.

 

    	 	2	 

    	 		 

    

 

c.
Quarterly Financial Statements. Debtors shall deliver to Secured Party, within forty-five (45) days after the end of
each fiscal quarter, management prepared and reviewed financial statements reflecting its operations during such fiscal quarter,
which shall include, without limitation, a balance sheet, profit and loss statement, and a statement of cash flow, with supporting
schedules, all prepared on a consolidated and consolidating basis, in reasonable detail, and in conformity with GAAP and certified
to its correctness by the Debtors’ principal financial officer.

 

d.
Monthly Financial Statements. Debtors shall deliver to Secured Party, within thirty (30) days after the end of each
fiscal month, management prepared and unaudited financial statements reflecting its operations during such fiscal month, which
shall include, without limitation, a balance sheet, profit and loss statement, and a statement of cash flow, with supporting schedules,
all prepared on a consolidated and consolidating basis, in reasonable detail, and in conformity with GAAP and certified to its
correctness by the Debtors’ principal financial officer.

 

e.
Collateral Reports. Upon written request by Secured Party, Debtors shall submit to Secured Party an aged summary of
its accounts receivable and inventory detail, certified by a principal financial officer of Debtors.

 

f.
Collateral Base Certificate. Beginning October 1, 2016, Debtors shall submit to Secured Party, no later than the fifteenth
(15th) day after the end of each fiscal month, and at such other times as requested by Secured Party, a certificate
in the form of Exhibit B attached hereto, certified by a principal financial officer of Debtors.

 

9.
Financial Covenants. Until such time as the Obligations are paid in full:

 

	 	i.	Tangible
    Net Worth. At all times, Debtors shall maintain a Tangible Net Worth of not less than negative Thirty-Seven Million and
    00/100 Dollars ($37,000,000.00).
	 	 	 
	 	ii.	Total
    Liabilities. Debtors shall not create, incur, assume or suffer to exist or otherwise become liable in respect of any Liabilities
    in excess of Fifty-Six Million and 00/100 Dollars ($56,000,000.00) in the aggregate. As used herein, “Liabilities”
    means any and all obligations to pay an amount in money, goods, or services to any internal or external party, as reflected
    in the Debtors’ balance sheet, prepared on a consolidated and consolidating basis, in reasonable detail, including,
    without limitation, any and all liabilities (contingent or otherwise) and in conformity with GAAP.
	 	 	 
	 	iii.	Preservation
    of Existence. Each Debtor shall preserve its legal existence and shall not, in one transaction or a series of related
    transactions, merge into or consolidate with any other entity, or sell all or substantially all of its assets.
	 	 	 
	 	iv.	Collateral
    Base. Beginning October 1, 2016, if, at any time the amount of Credit Party Debt exceeds the Collateral Base, Debtor shall,
    on demand, repay the Credit Party Debt in an amount sufficient to reduce the Credit Party Debt by an amount equal to such
    excess.
	 	 	 
	 	 	For
    purposes of this Section 9, Debtors’ rights and obligations in respect of Key Man life insurance policies shall be excluded
    from such covenant and Collateral Base calculations.
	 	 	 
	 	For
    purposes of this Section 9, the following terms are used with the meanings set forth below:

 

“Collateral
Base” means an amount equal to: (i) Eighty-Five percent (85%) of Eligible Accounts plus (ii) Fifty percent (50%)
of Eligible Inventory minus (iii) the aggregate amount of any indebtedness for borrowed money (including guarantees thereof)
owed to any senior secured creditor approved by Secured Party.

 

    	 	3	 

    	 		 

    

 

“Eligible
Accounts” means those accounts receivable of Debtors in which Secured Party, for the benefit of itself and the other
Credit Parties, has a first priority security interest under the terms of this Agreement and that Secured Party, in its reasonable
credit judgment, deems to be an Eligible Account. Without limiting the generality of the foregoing, no account receivable shall
be an Eligible Account unless (i) the account receivable arose in the ordinary course of a Debtor’s business, (ii) the right
to payment has been fully earned by completed performance and, if inventory is involved, such inventory has been shipped by a
Debtor (or if not shipped by a Debtor, is held by a Debtor under a “bill and hold” arrangement approved in writing
by Secured Party in its sole discretion), (iii) the account receivable includes only that portion which is not subject to any
offset, defense, counterclaim, credit, allowance or adjustment, (iv) a Debtor’s title to the account receivable is absolute
and is subject to no prior assignment, claim, lien or security interest, (v) the full amount reflected on a Debtor’s books
and on any invoice or statement delivered to Secured Party related to the account receivable is owing to a Debtor and no partial
payment has been made on the account receivable, (vi) the account receivable is due and payable not more than thirty (30) days
from invoice date and no more than ninety (90) days (or such other period as Secured Party may by written notice from an Authorized
Representative to a Debtor approve) have elapsed from invoice date, (vii) the account receivable did not arise out of a contract
or purchase order containing provisions prohibiting assignment thereof or the creation of a security interest therein, and no
Debtor has received a note, trade acceptance, draft or other instrument with respect to such receivable or in payment of such
account, (viii) no Debtor has received notice of the death of the account debtor or of the dissolution, termination of existence,
insolvency, bankruptcy, appointment of a receiver for any part of the property of, or assignment for the benefit of creditors
made by, the account debtor, (ix) the account receivable is not payable by any foreign person (provided that persons present in
possessions of the United States of America shall not be considered foreign persons), unless it is payable in the full amount
of its face value in United States dollars and is supported by an irrevocable letter of credit in form and substance acceptable
to Secured Party and issued by a bank satisfactory to Secured Party (and, if requested by Secured Party, such letter of credit
or the proceeds thereof, as Secured Party shall require, have been assigned to Secured Party), (x) the account receivable is not
payable by the United States of America or any political subdivision or agency thereof, unless Secured Party and the applicable
Debtor have complied with the Assignment of Claims Act with respect to the account receivable, (xi) the account debtor is not
located in the State of New Jersey unless the applicable Debtor has filed a Notice of Business Activities Report with the New
Jersey Division of Taxation for the then current year, (xii) the account receivable is not payable by any person who is the account
debtor for other accounts receivable and who is past due (as provided in (vi) above) with regard to fifty percent (50%) or more
of the aggregate amount of such other accounts receivable, (xiii) the account receivable is not, at the discretion of Secured
Party, deemed doubtful for collection for whatever reason, (xiv) the account receivable is not a contra account, (xv) the account
receivable is not an account in dispute for any reason, (xvi) the account receivable does not represent a commission or expense
receivable, (xvii) the account receivable does not represent a retainage associated with an account receivable, and (xviii) the
account receivable does not represent an amount due for which Secured Party or any other Credit Party has advanced credit and
which is subject to a joint purchase order or a lease.

 

“Eligible
Inventory” means the inventory of Debtors, consisting of new, used and refurbished products as reflected in the most
recent collateral report delivered to Secured Party pursuant to Section 8(c) hereof, that (i) is in a Debtor’s possession,
(ii) is in good, saleable and new condition, (iii) is subject to Secured Party’s duly perfected, first priority security
interest, and (iv) is deemed by Secured Party, in its reasonable credit judgment, to be Eligible Inventory.

 

“Credit
Party Debt” means, at any time, all outstanding indebtedness for borrowed money (including outstanding principal and
accrued but unpaid interest, and including all amounts constituting the deferred purchase price for the sale of goods) then owing
by the Debtors and their subsidiaries and affiliates to the Credit Parties, or any of them.

 

    	 	4	 

    	 		 

    

 

“Tangible
Net Worth” means the amount by which total assets, less goodwill and other intangible assets, exceed total liabilities
as determined in accordance with generally accepted accounting principles in the United States, as in effect from time to time,
applied on a consistent basis throughout the period involved.

 

10.
Events of Default. Debtors shall be in default under this Agreement if: (a) any Debtor or any other Obligor shall fail to
pay, or perform any of the Obligations, as and when due, owing from any Obligor to Secured Party or any Credit Party; (b) there
shall be any default under any covenant, term or condition of this Agreement or of any other contract or agreement between any
Debtor or any other Obligor and any Secured Party or Debtor and any Credit Party, in any case as in effect at any time, including,
without limitation, the Notes, (c) any Debtor or any other Obligor breaches any representation or warranty in this Agreement or
any other such contract or agreement; (d) there is a substantial change in any fact warranted or represented in this Agreement;
(e) there is the filing of a petition either by or against any Debtor or any other Obligor under the United States Bankruptcy
Code or any similar state or federal law or regulation relating to insolvency or debtor relief or the application by or against
any Debtor or any other Obligor for the appointment of a receiver, trustee or custodian for the Collateral or any other of the
such Debtor’s or Obligor’s assets; (f) there is the dissolution or other termination of any Debtor’s or any
other Obligor’s existence or business operations; (g) there is the merger or consolidation of any Debtor or any other Obligor
with another entity; (h) there is substantial loss, theft, destruction, sale, reduction in value, encumbrance of, damage to, or
change in the Collateral; (i) there is a material modification of, or breach of, any contract, the rights to which are part of
the Collateral; (j) there is a levy on, seizure, or attachment of the Collateral; (k) there is a judgment against any Debtor or
any other Obligor for the payment of money which is not covered by insurance or as to which the applicable insurer disputes coverage;
(l) there is the filing of any authorized financing statement with regard to the Collateral (other than in favor of the Secured
Party); (m) there is any seizure, vesting or intervention by or under authority of a government by which the management of any
Debtor or any other Obligor is displaced or its authority in the control of its business is curtailed; (n) any Debtor or any other
Obligor (or any of their subsidiaries or affiliates) defaults or otherwise fails to comply (beyond any applicable notice or cure
periods) with any of the payment or other provisions of any other agreement under which any loan or other extension of credit
is made by any other person or entity to such Debtor or other Obligor (or any of its subsidiaries or affiliates); (o) it is the
Secured Party’s reasonable and documented belief that the prospect of payment of any part of the Obligations balance or
the performance of any part of this Agreement is impaired; or (p) (i) any subordination or intercreditor agreement in favor of
any Credit Party with respect to any of the Obligations shall for any reason be revoked or invalidated, or otherwise cease to
be in full force and effect (other than in accordance with its terms), (ii) any Debtor or any other Obligor shall contest in any
manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, (iii) the Collateral
securing the Obligations, for any reason shall not have the priority contemplated by any such subordination or intercreditor agreement,
or (iv) any other party (other than a Credit Party) to any subordination or intercreditor agreement fails to perform or observe,
in any material respect, any material term, covenant or agreement contained therein. Nothing herein shall prevent Secured Party
and the Credit Parties from canceling or suspending further extensions of credit to any Debtor or any other Obligor pursuant to
any contract, agreement or other arrangement in effect at any time between Secured Party and the Credit Parties, or any of them,
on one hand, and any Debtor or any other Obligor, on the other hand, in the event of a default by any Debtor under this Agreement.

 

    	 	5	 

    	 		 

    

 

11.
Remedies. If an event of default under this Agreement shall have occurred and be continuing, Secured Party, without any other
notice to or demand upon any Debtor, shall have in any jurisdiction in which enforcement hereof is sought, in addition to all
other rights and remedies, the rights and remedies of a secured party under the New York Uniform Commercial Code (“Code”)
and any additional rights and remedies which may be provided to a secured party in any jurisdiction in which Collateral is located,
including, without limitation, (i) the right to notify an account debtor or other person obligated on collateral to make payment
or otherwise render performance to or for the benefit of Secured Party and (ii) the right to take possession of the Collateral,
and for that purpose Secured Party may, so far as a Debtor can give authority therefor, enter upon any premises on which the Collateral
may be situated and remove the same therefrom. Secured Party may in its discretion require any Debtor to assemble all or any part
of the Collateral at such location or locations within the jurisdiction(s) of any Debtor’s principal office(s) or at such
other locations as Secured Party may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Secured Party shall give to Debtors by an Authorized Representative
at least ten (10) days prior written notice of the time and place of any public sale of Collateral or of the time after which
any private sale or any other intended disposition is to be made. Debtors hereby acknowledge and agree that ten (10) days prior
written notice of such sale or sales shall be reasonable notice. In addition, each Debtor waives any and all rights that it may
have to a judicial hearing in advance of the enforcement of any of Secured Party’s rights and remedies hereunder, including,
without limitation, its right following an event of default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.

 

If
an event of default under this Agreement shall have occurred and be continuing, (i) each Debtor will promptly upon request of
Secured Party instruct all account debtors to remit all payments in respect of Accounts to a mailing location selected by the
Secured Party and (ii) Secured Party shall have the right to enforce any Debtor’s rights against its customers and account
debtors, and Secured Party or its designee may notify any Debtor’s customers and account debtors that the Accounts of such
Debtor have been assigned to Secured Party or of the Secured Party’s security interest therein, and may (either in its own
name or in the name of a Debtor or both) demand, collect (including without limitation by way of a lockbox arrangement), receive,
take receipt for, sell, sue for, compound, settle, compromise and give acquittance for any and all amounts due or to become due
on any Account, and, in Secured Party’s discretion, file any claim or take any other action or proceeding to protect and
realize upon the security interest of the Secured Party in the Accounts. Each Debtor acknowledges and agrees that the Proceeds
of its Accounts remitted to or on behalf of Secured Party in accordance with the provisions hereof shall be solely for Secured
Party’s own convenience and that such Debtor shall not have any right, title or interest in such Accounts or in any such
other amounts except as expressly provided herein. Secured Party shall not have any liability or responsibility to any Debtor
for acceptance of a check, draft or other order for payment of money bearing the legend “payment in full” or words
of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any remittance.
Furthermore, if an event of default under this Agreement shall have occurred and be continuing, (i) Secured Party shall have the
right, but not the obligation, to make test verifications of the Accounts in any manner and through any medium that it reasonably
considers advisable, and Debtors shall furnish all such assistance and information as Secured Party may require in connection
with such test verifications, (ii) upon Secured Party’s request and at the expense of the Debtors, the Debtors shall cause
independent public accountants or others satisfactory to Secured Party to furnish to Secured Party reports showing reconciliations,
aging and test verifications of, and trial balances for, the Accounts and (iii) Secured Party in its own name or in the name of
others may communicate with account debtors on the Accounts to verify with them to Secured Party’s satisfaction the existence,
amount and terms of any Accounts.

 

Debtors
shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to
pay the Obligations and the reasonable expenses of retaking, holding, preparing for disposition, processing, and disposing the
Collateral, including without limitation, reasonable attorney’s fees and legal expenses incurred by Secured Party under
this Agreement.

 

    	 	6	 

    	 		 

    

 

12.
Remedies Cumulative. Secured Party shall not, by any act, delay, omission or otherwise, be deemed to have waived any of its
rights or remedies hereunder. No failure to exercise nor any delay in exercising on the part of Secured Party of any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege. Except to the
extent that Secured Party and any applicable Credit Party have specifically and expressly waived such remedies in writing, the
rights and remedies of Secured Party and the other Credit Parties hereunder and under any other agreement, contract, document
or instrument, are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided
by law. Secured Party may resort to and realize on the Collateral simultaneously with any acts or proceedings initiated by Secured
Party and the Credit Parties in their sole and conclusive discretion to resort to or realize upon any other sources of repayment
of the Obligations, including, but not limited to, collateral granted by other security agreements and the liability of the Debtor.
Secured Party and the Credit Parties shall be entitled to apply the proceeds of any Collateral to such of the Obligations and
in such order as they may determine in their sole and absolute discretion.

 

13.
Expenses. Unless contested in good faith, each Debtor will upon demand promptly pay to Secured Party the amount of any and
all costs and expenses, including the reasonable fees and expenses of its outside counsel and the reasonable fees and expenses
of any experts and agents which Secured Party may incur in connection with (i) any action, suit or other proceeding affecting
the Collateral or any part thereof commenced, in which action, suit or proceeding Secured Party is made a party or participates
or in which the right to use the Collateral or any part thereof is threatened, or in which it becomes necessary in the judgment
of Secured Party to defend or uphold the lien hereof, (ii) the collection of the Obligations, (iii) the enforcement and administration
hereof, (iv) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral,
(v) the exercise or enforcement of any of the rights of Secured Party or (vi) the failure by any Debtor to perform or observe
any of the provisions hereof. All amounts expended by Secured Party and payable by any Debtor under this Section 13 shall be due
upon demand therefor and shall be part of the Obligations. Each Debtor’s obligations under this Section 13 shall survive
the termination hereof and the discharge of such Debtor’s other obligations under this Agreement.

 

14.
Secured Party as Agent for the Credit Parties. Each Credit Party that makes any loans or extends trade credit or otherwise
extends any credit to the Debtor shall be deemed to have extended such credit in reliance upon this Agreement and the grant of
security hereunder, and further shall be deemed to have appointed Secured Party as its agent hereunder and authorizes Secured
Party to take such actions on its behalf and to exercise such powers as may be necessary or appropriate as Secured Party may determine
to carry out the intent of this Agreement. Secured Party hereby agrees to act as agent for each of the Credit Parties for all
purposes hereunder. In its capacity as agent for the Credit Parties, Secured Party is a “representative” of the Credit
Parties within the meaning of the term “secured party” as defined in the Code. By accepting the benefits of this Agreement,
each Credit Party authorizes Secured Party to enter into this Agreement and to take all action contemplated by this Agreement
and any related agreement, document or instrument.

 

15.
No Obligation to Extend Credit. This Agreement shall not be construed to impose any obligation on Secured Party to extend
or continue to extend any credit at any time.

 

16.
Choice of Law. This Agreement shall be governed and construed in all respects in accordance with the internal laws of the
of the State of New York, exclusive of its choice of laws principles which would apply the laws of any jurisdiction other than
New York, and each Debtor hereby irrevocably submits and consents to the personal jurisdiction of the federal and state courts
located in New York with respect to matters arising out of or related to this Agreement and consents to, and agrees not to challenge,
venue in any such court.

 

17.
WAIVER OF JURY TRIAL. EACH DEBTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

    	 	7	 

    	 		 

    

 

18.
Successor in Interest. This Agreement shall be binding upon the Debtors, their successors and assigns, and the benefits hereof
shall inure to Secured Party, its successors and assigns. Notwithstanding the foregoing, no Debtor shall assign such Debtor’s
rights or obligations under this Agreement without Secured Party’s prior written consent by an Authorized Representative.

 

19.
Miscellaneous. (a) The captions of the paragraphs of this Agreement are for convenience only and shall not be deemed to constitute
a part hereof or used in construing the intent of the parties. (b) If any part of any provision of this Agreement shall be invalid
or unenforceable under applicable law, such part shall be ineffective to the extent of such invalidity only, without in any way
affecting the remaining parts of such provision or the remaining provisions of this Agreement. (c) This Agreement shall not be
modified or amended except in a writing signed by Debtors and an Authorized Representative of Secured Party. (d) This Agreement
may be executed in several counterparts, each of which shall be deemed an original, but such counterparts together shall constitute
one and the same instrument. (e) All terms as defined herein shall include both the plural and singular, where applicable. (f)
All notices or communications given to any Debtor or Secured Party pursuant to the terms of this Agreement shall be in writing
and given to such Debtor and Secured Party at the address set forth below. Such written notices and communications shall be delivered
by hand or overnight courier service, or mailed by first class mail, postage prepaid, addressed to the parties hereto at the addresses
referred to herein or to such other addresses as either party may designate to the other party by a written notice given in accordance
with the provisions of this Agreement. (g) This Agreement is in addition to and not in replacement of any other agreement between
any Debtor and Secured Party.

 

Executed
as of the day and year first above written.

 

[Signature
Page to Follow]

 

    	 	8	 

    	 		 

    

 

	DEBTOR:	 	Quest
    Solution, Inc.	 	SECURED
    PARTY:	 	ScanSource,
    Inc.
	 	 	 	 	 	 	 
	By:	 	/s/
    Gilles Normand Gaudreault	 	By:	 	/s/
    Cleveland McBeth, Jr.
	Name:	 	Gilles
    Normand Gaudreault	 	Name:	 	Cleveland
    McBeth, Jr.
	 	 	Chief
    Executive Officer	 	 	 	Vice
                                         President, Worldwide

                                                         Reseller
                                         Financial Services

	 	 	 	 	 	 	 
	Address:	 	860
    Conger Street	 	Address:	 	6
    Logue Court
	 	 	Eugene,
    OR 97402	 	 	 	Greenville,
    SC 29615
	 	 	 	 	 	 	 
	DEBTOR:	 	Bar
    Code Specialties, Inc.	 	DEBTOR:	 	Quest
    Marketing, Inc.
	 	 	 	 	 	 	 
	By:	 	/s/
    Gilles Normand Gaudreault	 	By:	 	/s/
    Gilles Normand Gaudreault
	Name:	 	Gilles
    Normand Gaudreault	 	Name:	 	Gilles
    Normand Gaudreault
	 	 	Chief
    Executive Officer	 	 	 	Chief
    Executive Officer
	 	 	 	 	 	 	 
	Address:	 	860
    Conger Street	 	Address:	 	860
    Conger Street
	 	 	Eugene,
    OR 97402	 	 	 	Eugene,
    OR 97402
	 	 	 	 	 	 	 
	DEBTOR:	 	Quest
    Solution Canada Inc.	 	DEBTOR:	 	Quest
    Exchange Ltd.
	 	 	 	 	 	 	 
	By:	 	/s/
    Gilles Normand Gaudreault	 	By:	 	/s/
    Gilles Normand Gaudreault
	Name:	 	Gilles
    Normand Gaudreault	 	Name:	 	Gilles
    Normand Gaudreault
	 	 	Chief
    Executive Officer	 	 	 	Chief
    Executive Officer
	 	 	 	 	 	 	 
	Address:	 	860
    Conger Street	 	Address:	 	860
    Conger Street
	 	 	Eugene,
    OR 97402	 	 	 	Eugene,
    OR 97402

 

    	 	9	 

    	 		 

    

 

EXHIBIT
A

COLLATERAL
DESCRIPTION

 

The
“Collateral” means, and shall consist of, all of each Debtor’s right, title and interest in and to all (i) Accounts
and Other Rights to Payment, (ii) Inventory, (iii) Equipment, (iv) General Intangibles, (v) Fixtures, (vi) letter-of-credit rights
(whether or not the letter of credit is evidenced by a writing), commercial tort claims, insurance claims and proceeds, (vii)
Records and Deposits, and (viii) products and proceeds of the foregoing (in whatever form and including, without limitation, Proceeds),
in each case now owned and hereafter acquired and wherever located. References to the “UCC” shall mean the Uniform
Commercial Code as adopted in the State of New York.

 

Defined
Terms:

 

a.
Accounts and Other Rights to Payment. Each and every account, chattel paper, general intangible and instrument (including
promissory notes), as those terms are defined in the UCC, and all other rights of any Debtor to the payment of money of every
nature, type and description, whether now owing to such Debtor or hereafter arising, and all monies and other proceeds (cash or
non-cash), including, without limitation, the following: all accounts, accounts receivable, health-care-insurance receivables,
book debts, securities, instruments, chattel paper (whether tangible or electronic), books of account and records of such Debtor,
deposit accounts, notes, drafts, acceptances, rents, guest room receipts, payments under leases or sales of Equipment or Inventory
and other forms of obligations now or hereafter received by or belonging or owing to such Debtor for goods sold or leased and/or
services rendered by it, and all of such Debtor’s rights in, to and under all purchase orders, instruments and other documents
now or hereafter received by it evidencing obligations for and representing payment for goods sold or leased and/or services rendered,
and all monies due or to become due to such Debtor under all contracts for the sale or lease of goods and/or the performance of
services by it, now in existence or hereafter arising, including, without limitation, the right to receive the proceeds of said
purchase orders and contracts; all contracts, leases, instruments, undertakings, documents or other agreements in or under which
such Debtor may now or hereafter have any right, title or interest; all customer lists; all tax refunds due such Debtor from any
governmental agency; and any and all proceeds of any of the above.

 

b.
Inventory. All inventory, as such term is defined in the UCC, now owned or hereafter acquired by any Debtor, of every nature,
type and description, wherever located, including, without limitation, all of such Debtor’s goods or personal property held
for lease or sale or being processed for lease or sale, all raw materials, work in progress, finished goods, packaging materials,
goods held for display or demonstration, goods on lease or consignment, returned and repossessed goods and all other materials
or supplies used or consumed or to be used or consumed in such Debtor’s business or in the processing, packaging or shipping
of the same, excluding any toxic, hazardous or radioactive material or any other material which may be disposed of lawfully only
pursuant to a special permit or at a government approved facility, all documents including, without limitation, documents of title,
warehouse receipts and bills of lading covering all or any portion of such inventory, and all customer lists and any and all proceeds
and products of any of the above.

 

c.
Equipment. All equipment, as such term is defined in the UCC, now owned or hereafter acquired or leased by any Debtor, including,
without limitation, any equipment described on a schedule attached hereto, all tools and items of machinery and equipment of any
kind, nature and description whether affixed to real property or not, as well as trucks and vehicles of every description, trailers,
handling and delivery equipment, furnishings, leasehold improvements, fixtures and office furniture and all other tangible personal
property of any Debtor of every nature, type and description, and any and all additions to, substitutions for and replacements
of or accessions to and property similar to any of the foregoing, wherever located, together with all attachments, components,
parts (including spare parts), equipment and accessories installed thereon or affixed thereto and all fuel for any thereof; and
any and all proceeds of any of the above.

 

    	 	10	 

    	 		 

    

 

d.
General Intangibles. All general intangibles and payment intangibles, as those terms are defined in the UCC, now owned or
hereafter acquired by any Debtor or in which any Debtor now has or hereafter acquires any right, title or interest, including,
without limitation, (i) all of such Debtor’s choses in action, suits, actions, causes of action and claims of every kind
and nature, whether at law or in equity, (ii) all condemnation awards and insurance proceeds, (iii) all tax refunds, rights and
claims thereto and other payments from any local, state or federal government authority or agency, (iv) all contract rights, licenses,
permits, zoning approvals, rights, agreements and all other private or governmental documents of every kind or character whatsoever
and (v) all customer lists, servicing rights, patents and patent rights (whether or not registered), licenses, permits, certificated
and uncertificated securities, investment property, trade marks, service marks, trade names, logos, copyrights, computer programs
and software, goodwill and any and all proceeds of any of the above.

 

e.
Fixtures. All fixtures, as such term is defined in the UCC.

 

f.
Records; Deposits. All instruments, documents, securities, cash, property, books and records, computer storage media and ledger
books arising out of or related in any way to any of the foregoing, owned by any Debtor or in which any Debtor has an interest,
which now or hereafter are at any time in the possession or control of Secured Party or any Credit Party or in transit by mail
or carrier to or from Secured Party or any Credit Party or in the possession of any third party acting on behalf of Secured Party
or any Credit Party, without regard to whether Secured Party received the same in pledge, for safekeeping, as agent for collection
or transmission or otherwise or whether Secured Party had conditionally released the same, and any deposit accounts of any Debtor
with Secured Party or any Credit Party against which Secured Party or any Credit Party may exercise its right of setoff.

 

g.
Proceeds. All proceeds (including proceeds of proceeds) of the foregoing Collateral including all: (a) rights, benefits, distributions,
premiums, profits, dividends, interest, cash, instruments, documents of title, accounts, contract rights, inventory, equipment,
general intangibles, payment intangibles, deposit accounts, chattel paper, and other property from time to time received, receivable,
or otherwise distributed in respect of or in exchange for, or as a replacement of or a substitution for, any of the foregoing
Collateral, or proceeds thereof; (b) “proceeds,” as such term is defined in §9-102(a)(64) of the UCC; (c) proceeds
of any insurance, indemnity, warranty, or guaranty (including guaranties of delivery) payable from time to time with respect to
any of the foregoing Collateral, or proceeds thereof; and (d) other amounts from time to time paid or payable under or in connection
with any of the foregoing Collateral, or proceeds thereof.

 

    	 	11	 

    	 		 

    

 

EXHIBIT
B

COLLATERAL
BASE CERTIFICATE

 

Month:_________________

 

	1.	Eligible
    Receivables (< 90 Days Old)	 	 	 	 
	 	 	 	 	 	 	 	 
	 	CURRENT	 	30
    - 60	 	60
    - 90	 	TOTAL
	 	 	 	 	 	 	 	 

 

	2.	Percentage
    of Receivables Available for Collateral (85%)	85%
	 	 	 
	3.	Eligible
    Receivables Base for Collateral	 
	 	 	(Line
    1 X Line 2)
	 	 	 
	4.	Total
    Inventory	 
	 	 	 
	5.	Percentage
    of Inventory Available for Collateral (50%)	50%
	 	 	 
	6.	Eligible
    Inventory Base for Collateral	 
	 	 	(Line
    4 X Line 5)
	 	 	 
	7.	Total
    Collateral Base	 
	 	 	 
	8.	Balance
    on Bank Line of Credit / Senior debt	 
	 	 	 
	9.	Collateral
    Available to Secure Trade Credit Extension	 
	 	 	(Line
    7 - Line 8)

 

This
certificate is true, accurate and complete to the best of my knowledge.

 

	Company
    Name / signature of Officer/ Date	 	 	 

 

    	 	12

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