Document:

vkin_ex108.htm

EXHIBIT 10.8
  
 RESTRICTED STOCK AGREEMENT
  
 This Restricted Stock Agreement (this “Agreement”) is entered into as of April 1, 2018 (the “Effective Date”) by and between Viking Energy Group, Inc., a Nevada corporation (the “Company”) and Timothy R. Swift (the “Grantee”).
  
 RECITALS
  
 A. The Company desires to issue shares of the Company’s common stock, par value $.001 per share (“Common Stock”) to Grantee as an incentive to maximize the value of the Company and its Affiliates in connection with the performance of Grantee’s future services to the Company and its Affiliates. 
  
 NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and as an inducement to the Company to issue Restricted Shares to Grantee, Grantee and the Company hereby covenant and agree as follows:
  
 1. Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings set forth in Exhibit A attached to this Agreement.
  
 2. Issuance of Restricted Shares. On and subject to the terms of this Agreement, the Company hereby issues Grantee 1,000,000 shares of Common Stock (“the “Restricted Shares”). 
  
 3. Terms of Issuance. 
  
 (a) Grantee’s Restricted Shares and Grantee’s rights as a stockholder of the Company are subject to the Organizational Documents of the Company in all respects. 
  
 (b) Grantee shall (i) make a timely election under Section 83(b) of the Code with respect to the Restricted Shares that, as of the Effective Date, are subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Internal Revenue Code and the Treasury Regulations promulgated thereunder and (ii) consult with the Grantee’s tax advisor to determine the tax consequences of filing such an election under Section 83(b) of the Code. It is the Grantee’s sole responsibility, and not the responsibility of the Company or any of its Affiliates, to timely file an election under Section 83(b) of the Code even if the Grantee requests the Company or any of its Affiliates or any of their respective managers, directors, officers, employees, agents or authorized representatives (including attorneys, accountants, consultants, bankers, lenders, prospective lenders or financial representatives) to assist in making such filing and even if any of such Persons agree to do so. For the avoidance of doubt, the Grantee shall be solely responsible for any tax liability that may result from any failure to make a timely election under Section 83(b) of the Code with respect to the Restricted Shares described in clause (i) of this Section 3(b). 
  
  	 
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 4. Vesting of Restricted Shares. 
  
 (a) On the Effective Date, fifty percent (50%) of the Restricted Shares shall be “Vested Restricted Shares” for purposes of this Agreement. Fifty percent (50%) of the Restricted Shares issued pursuant to this Agreement shall initially be “Unvested Restricted Shares” for purposes of this Agreement. Unvested Restricted Shares shall be subject to all of the restrictions specified in this Agreement. Unvested Restricted Shares shall become Vested Restricted Shares (as defined below) in accordance with the provisions of this Section 4.
  
 (b) Grantee may not Transfer all or any portion of the Unvested Restricted Shares without the prior written consent of the Company. 
  
 (c) Except as otherwise provided in this Section 4, the Unvested Restricted Shares shall become Vested Restricted Shares on October 1, 2018 unless on or prior to such date Grantee has resigned from his employment with the Company, or is terminated for cause, in which case the Grantee shall forfeit any rights to the Unvested Restricted Shares. For greater certainty, if the Company terminates the Grantee’s employment without cause before October 1, 2018 the Unvested Restricted Shares shall become Vested Restricted Shares on October 1, 2018.
  
 (d) Notwithstanding anything to the contrary in this Agreement, all Unvested Restricted Shares shall become Vested Restricted Shares immediately prior to a Change of Control. 
  
 (e) Vested Restricted Shares shall (i) no longer be subject to the restrictions on Unvested Restricted Shares specified in this Agreement (but shall remain subject to the restrictions on Restricted Shares in general) and (ii) carry all of the rights conferred on shares of Common Stock.
  
 (f) The Company shall use reasonable efforts to include any Vested Restricted Shares in any registration statement filed by the Company with the Securities and Exchange Commission concerning the resale of any of the Company’s securities, subject to any restrictions imposed by law or any existing agreements to which the Company is a party.
  
 5. Certain Representations. Grantee hereby represents and warrants to the Company that:
  
 (a) Grantee is: (i) an “accredited investor” as defined in Rule 501 under the Securities Act by reason of meeting the criteria he has initialed on Exhibit A to this Agreement, and by reason of Grantee’s business and financial experience has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of an investment in the Common Stock and making an informed investment decision with respect thereto; (ii) acquiring the Restricted Shares solely for its own account and not with a view to any distribution or disposition thereof; and (iii) Grantee has obtained or had access to all information he considers necessary to weigh the merits and risks of an investment in the Common Stock and has had the opportunity to ask, and has received answers to, questions about the Company and the Common Stock from Company management. 
  
  	 
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 (b) Grantee understands and acknowledges that the Restricted Shares: (i) have not been registered under the Securities Act of 1933, as amended, or registered or qualified under any applicable state securities laws in reliance upon specific exemptions therefrom; and (ii) may not be Transferred or sold except in accordance with the terms of this Agreement and pursuant to a transaction registered under the Securities Act of 1933, as amended, and any applicable state securities laws or in the opinion of counsel satisfactory to the Company is exempt from registration thereunder. All certificates evidencing the Restricted Shares shall bear a restrictive legend setting forth the restrictions described in this Section 6. 
  
 6. Employment. Nothing in this Agreement shall be deemed to: (a) create any employment agreement between Grantee and the Company or any of their respective Affiliates; (b) prevent Grantee, the Company or their Affiliates from terminating Grantee’s employment or engagement at any time, for any reason (including without Cause) or for no reason; (c) give Grantee any right to be retained in employment by the Company for any period of time; or (d) give Grantee any right to any compensation, remuneration or benefits other than as expressly set forth herein. The Company makes no representation or warranty concerning the value of the Restricted Shares.
  
 7. Notices. All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be deemed to have been duly given when delivered by email, in person, by nationally recognized overnight courier, or mailed by United States certified mail, return receipt required, postage prepaid, addressed as follows:
  
  	 If to the Company to: 
	  
	 Viking Energy Group, Inc.
 1330 Avenue of the Americas, Suite 23A
 New York, New York 10019
 Email: jdoris@vikingenergygroup.com

	  
	  
	  

	 with a copy to:
	  
	 Fishman Haygood, L.L.P.
 201 St. Charles Avenue, Suite 4600
 New Orleans, Louisiana 70170
 Attention: Maureen B. Gershanik
 Email: mgershanik@fishmanhaygood.com

	  
	  
	  

	 If to Grantee to:
	  
	 Timothy R. Swift
 33 Fieldstone Cir.
 Stanford, Connecticut 06902
 Email: tim_swift@hotmail.com

   
 8. Governing Law. The provisions of this Agreement shall be construed in accordance with the substantive local law of the State of Delaware, without consideration of the conflicts of law provisions thereof. 
  
 9. Remedies. Each party acknowledges that the other party will have no adequate remedy at law if the first party violates certain of the terms of this Agreement, and that the other party shall have the right, to the extent permitted by applicable law, in addition to any other rights or remedies it may have, to obtain from any court of competent jurisdiction, injunctive relief to restrain any breach or threatened breach hereof or otherwise to specifically enforce the provisions hereof.
  
  	 
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 10. Waiver. No waiver of any obligation, right or remedy under this Agreement shall be effective, unless such waiver is made in writing, specifying the terms of this Agreement. Any such waiver by either party of any of its rights or remedies hereunder on any occasion shall not be a bar to the exercise of the same right or remedy on any subsequent occasion or of the exercise of any other right or remedy at any time.
  
 11. Integration and Amendments. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes any prior agreement or understanding, whether written or oral, relating to such subject matter. No modification or amendment to this Agreement shall be effective or binding unless in writing, specifying such modification or amendment, executed by both of the parties hereto.
  
 12. Compliance with Section 409A of the Code. The Company and Grantee intend that any amounts or benefits payable or provided under this Agreement comply with the provisions of Section 409A of the Code and the Treasury Regulations relating thereto so as not to subject Grantee to the payment of the tax, interest and any tax penalty which may be imposed under Section 409A; provided, however, that nothing in this Agreement shall be interpreted or construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with Section 409A) from the Grantee to the Company or to any other individual or entity. The provisions of this Agreement shall be interpreted in a manner consistent with such intent. In furtherance thereof, to the extent that any provision hereof would otherwise result in Grantee being subject to payment of tax, interest and tax penalty under Section 409A, the Company and Grantee agree to amend this Agreement in a manner that brings this Agreement into compliance with Section 409A and preserve to the maximum extent possible the economic value of the relevant payment or benefit under this Agreement to Grantee. Any taxable reimbursement shall be paid no later than December 31 of the year after the year in which the expense is incurred and shall comply with Treas. Reg. § 1.409A-3(i)(1)(iv).
  
 13. Severability. If any provision, paragraph or subparagraph of this Agreement is adjudged by any court to be void or unenforceable, in whole or in part, such an adjudication shall not be deemed to affect the validity of the remainder of the Agreement, and all other provisions, sections and subsections of this Agreement shall be severable from every other provision, section or subsection and each constitutes a separate and distinct covenant.
  
 14. Reimbursement for Expenses. If litigation or other action is commenced between the parties concerning any dispute arising out of or relating to this Agreement, the prevailing party in the action will be entitled, in addition to any other award that may be made, to recover all court costs or other official costs and all reasonable expenses associated with the action, including without limitation reasonable attorney’s fees and expenses.
  
 15. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same instrument, respectively. Executed copies of the signature pages of this Agreement sent by facsimile or transmitted electronically in Portable Document Format (“PDF”) shall be treated as originals, fully binding and with full legal force and effect, and the Parties waive any rights they may have to object to such treatment. Any party delivering an executed counterpart of this Agreement by facsimile or PDF also may deliver a manually executed counterpart of this Agreement, but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.
  
 (Signature Page Follows)
  
  	 
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 IN WITNESS WHEREOF, the parties have executed this Restricted Stock Agreement effective as of the Effective Date above.
  
  	 	VIKING ENERGY GROUP, INC.	
	 	 	 	 
		By:	/s/ James A. Doris 	
	  
	  
	James A. Doris, President and Chief Executive Officer 
	 
	 	 		 
	 	GRANTEE: 	 
	  
	  
	  
	  

	  
	  
	 Name: Timothy R. Swift 
	  

  
  	 
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 EXHIBIT A
 DEFINED TERMS
  
 The following terms, as used in this Agreement and in any correspondence or other communications between the parties in performing or in connection with this Agreement, shall have the meaning ascribed as follows:
  
 (a) “Affiliates” means with respect to any Person, (a) any Person directly or indirectly controlling, controlled by or under common control with such Person; (b) any Person owning or controlling fifty percent (50%) or more of the outstanding voting securities or interests of such Person; (c) any officer, director, member, manager, trustee or (limited or general) partner of such Person or of any Person specified in (a) or (b) above; and (d) any Person in which any officer, director, member, manager, trustee or (limited or general) partner of any Person specified in (c) above is an officer, director, member, manager, trustee, or (limited or general) partner. For purposes of this definition, “control” (including, with correlative meaning, controlled by and under common control with) of a Person means the direct or indirect possession of the power to direct or cause the direction of management or policies of such Person through any means. 
  
 (b) “Cause,” shall mean by reason of such Grantee’s: (A) conviction of, or plea of nolo contendere to, any felony or to any crime or offense causing substantial harm to the Company or its Affiliates or involving acts of theft, fraud, dishonesty, embezzlement, moral turpitude, or similar conduct, (B) repeated intoxication by alcohol or drugs during the performance of such Grantee’s duties in a manner that materially and adversely affects the Grantee’s performance of such duties, (C) malfeasance, in the conduct of such Grantee’s duties, including, but not limited to, (1) misuse or diversion of funds of the Company or its Affiliates, (2) embezzlement, or (3) misrepresentations or concealments on any written reports submitted to or on behalf of the Company or its Affiliates, (D) violation of any provision of this Agreement, or (E) failure to perform the duties of such Grantee’s employment or service relationship with the Company or its Affiliates after the Grantee shall have been informed, in writing, of such material failure and given a period of not less than 30 days to remedy the same, or (F) failure to follow or comply with the reasonable and lawful written directives or policies of the Company or any Affiliate of the Company by which such Grantee is employed or in a service relationship with.
  
 (c) “Change in Control” shall mean that any one of the following applies:
  
 (i) The acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of 40% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”). For purposes of this paragraph (i) the following acquisitions by a Person will not constitute a Change in Control: (A) any acquisition directly from the Company; (B) any acquisition by the Company; or (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company.
  
 (ii) If James A. Doris ceases to be an officer or director of the Company.
  
  	 
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 (iii) The consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless following such Business Combination: (i) the individuals and entities who were the beneficial owners, respectively, of the outstanding common stock of the Company and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions to one another as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 40% or more of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the Board of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or
  
 (iv) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
  
 (d) “Code” means the Internal Revenue Code of 1986, as amended.
  
 (e) “Organizational Documents” means (a) in the case of a Person that is a corporation, its articles or certificate of incorporation and its by-laws, regulations, shareholders agreement, or similar governing instruments required by the laws of its jurisdiction of formation or organization; (b) in the case of a Person that is a partnership, its articles or certificate of partnership, formation or association, and its partnership agreement (in each case, limited, limited liability, general or otherwise); (c) in the case of a Person that is a limited liability company, its articles or certificate of formation or organization, and its limited liability company agreement or operating agreement; and (d) in the case of a Person that is none of a corporation, partnership (limited, limited liability, general or otherwise), limited liability company or natural person, its governing instruments as required or contemplated by the laws of its jurisdiction of organization.
  
 (f) “Person” means and includes any individual, corporation, partnership, association, limited liability company, trust, estate, joint venture, or other entity.
  
 (g) “Transfer” means, when used as a noun, any direct or indirect sale, gift, mortgage, hypothecation, pledge, granting of a security interest, assignment, attachment, or other Transfer; and, when used as a verb, means, to sell, give, hypothecate, pledge, grant a security interest, assign, or otherwise Transfer, in either case whether voluntary or involuntary. The terms “Transferee,” “Transferor,” “Transferred,” and other forms of the word “Transfer” shall have the correlative meanings.
  
  
  	 7Exhibit
10.10

 

 

 

 

 

 

SENIOR
SECURED CREDIT FACILITY AGREEMENT

 

IN
THE MAXIMUM AMOUNT OF US$6,000,000

 

BY
AND AMONG

 

PACIFIC
VENTURES GROUP, INC. and ROYALTY FOODS PARTNERS, LLC,

collectively, as Borrower,

 

SNOBAR
HOLDINGS, INC., SNOBAR TRUST, INTERNATIONAL PRODUCTION IMPEX CORP.

and MAS GLOBAL DISTRIBUTORS, INC.,

as
Joint and Several Guarantors,

  

AND

 

TCA
GLOBAL CREDIT MASTER FUND, LP,

as Lender

 

 

 

 

 

 

 

Dated
as of June 30, 2017

 

Effective
as of April __, 2018

  

     

     

    

 

SENIOR
SECURED CREDIT FACILITY AGREEMENT

 

This
SENIOR SECURED CREDIT FACILITY AGREEMENT (as amended, restated, modified or supplemented from time to time, this “Agreement”),
dated as of June 30, 2017 and made effective as of April __, 2018 (the “Effective Date”), is executed
by and among: (i) PACIFIC VENTURES GROUP, INC., a corporation incorporated under the laws of the State of Delaware and
ROYALTY FOODS PARTNERS, LLC, a limited liability company organized under the laws of the State of Florida (collectively,
the “Borrower”); (ii) SNOBAR HOLDINGS, INC., a corporation incorporated under the laws of the
State of Delaware, SNOBAR TRUST, INTERNATIONAL PRODUCTION IMPEX CORP., a corporation incorporated under the laws
of the State of California, and MAS GLOBAL DISTRIBUTORS, INC., a corporation incorporated under the laws of the State of
California (collectively, the “Corporate Guarantors”); (iii) any Person to hereafter become a Subsidiary
of the Borrower pursuant to Section 3.20 hereof, and any Person that from time to time may hereafter become liable for
the Obligations, or any part thereof, as joint and several guarantors (collectively, the “Additional Guarantors”)(the
Corporate Guarantors, and the Additional Guarantors together, jointly and severally, the “Guarantors”
and together with the Borrower, the “Credit Parties”); and (iv) TCA GLOBAL CREDIT MASTER FUND, LP,
a limited partnership organized and existing under the laws of the Cayman Islands, as lender (the “Lender”).

 

WHEREAS,
Borrower has requested that Lender extend a senior secured credit facility to Borrower of up to Six Million and No/100 United
States Dollars (US$6,000,000.00) for working capital financing for Borrower and its Subsidiaries, and for any other purposes permitted
hereunder; and for these purposes, Lender is willing to make certain loans and extensions of credit available to Borrower of up
to such amount and upon the terms and conditions set forth herein; and

 

WHEREAS,
as a material inducement for Lender to make loans and extensions of credit to Borrower pursuant to the terms and conditions set
forth herein: (i) the Guarantors have, inter alia, agreed to execute Guaranty Agreements in favor of Lender, whereby each Guarantor
shall jointly and severally guarantee any and all of the Borrower’s Obligations owed under this Agreement and under any
other Loan Document; (ii) the Credit Parties have, inter alia, agreed to execute Security Agreements in favor of Lender, whereby
each Credit Party shall grant to the Lender a first priority security interest in and lien upon all of its existing and after-acquired
tangible and intangible assets, as security for the payment and performance of any and all Obligations owed under this Agreement
and under any other Loan Document; and (iii) the Borrower and the Corporate Guarantors have agreed to execute Pledge Agreements
in favor of Lender, whereby the Borrower and the Corporate Guarantors shall pledge to the Lender all of its right, title and interest
in and to, and provide a first priority lien and security interest on, all of its issued and outstanding shares and/or membership
interests of the Corporate Guarantors, as applicable, as security for the payment and performance of any and all Obligations owed
under this Agreement and under any other Loan Document;

  

    	 	1	 

     

    

 

NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:

 

1. DEFINITIONS.

 

1.1 Defined
Terms. For the purposes of this Agreement, the following capitalized words and phrases shall have the meanings set forth below.

 

(a) “Account”
shall mean, individually, and “Accounts” shall mean, collectively, any and all accounts (as such term
is defined in the UCC) of any Credit Party.

 

(b) “ACH”
shall have the meaning given to it in Section 2.4(c) hereof.

 

(c) “Additional
Closings” means any closings hereunder after the First Closing, pursuant to which Lender makes Additional Loans
to Borrower under the terms of this Agreement.

 

(d) “Additional
Guarantors” shall have the meaning given to such term in the preamble hereof.

 

(e) “Additional
Loans” means each advance, and the aggregate of all such advances, made by Lender to Borrower under and pursuant
to this Agreement or any other Loan Documents after the Initial Loan.

 

(f)
“Affiliate” (a) of Lender shall mean: (i) any entity which, directly or indirectly, Controls or is Controlled
By or is under common Control with Lender; and (ii) any entity administered or managed by Lender, or an Affiliate or investment
advisor thereof and which is engaged in making, purchasing, holding or otherwise investing in commercial loans; and (b) of any
Credit Party shall mean any entity which, directly or indirectly, Controls or is Controlled By or is under common Control with
any Credit Party.

 

(g) “Agreement”
shall mean this Senior Secured Credit Facility Agreement by and among the Credit Parties and the Lender.

 

(h)
“Borrower” shall have the meaning given to such term in the preamble hereof. The term Borrower shall
mean each Borrower, individually, and both Borrowers, collectively, as the context requires.

 

(i) “Business
Day” shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are authorized or required
to be closed for the conduct of commercial banking business in the State of Nevada.

 

(j) “BSA”
shall have the meaning given to it in Section 14.22 hereof.

 

(k) “Capital
Expenditures” shall mean expenditures (including Capital Lease obligations which should be capitalized under GAAP)
for the acquisition of fixed assets which are required to be capitalized under GAAP.

  

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(l) “Capital
Lease” shall mean, as to any Person, a lease of any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible, by such Person as lessee that is, or should be, in accordance with Financial Accounting Standards
Board Statement No. 13, as amended from time to time, or, if such Statement is not then in effect, such statement of GAAP as may
be applicable, recorded as a “capital lease” on the balance sheets of any Credit Party prepared in accordance with
GAAP.

 

(m) “Change
in Control” shall mean any sale, conveyance, assignment or other transfer, directly or indirectly, of any ownership
interest of any Credit Party, which results in any change in the identity of the individuals or entities in Control of such Credit
Party as of the Effective Date or the grant of a security interest in any ownership interest of any Person, directly or indirectly
Controlling the Credit Parties, which could result in a change in the identity of the individuals or entities in Control of such
Credit Party as of the Effective Date.

 

(n) “Closings”
means, collectively, the First Closing, and any Additional Closings, if any, under this Agreement.

 

(o)
“Collateral” shall mean any and all assets and property of each of the Credit Parties, of any kind or
description, tangible or intangible, wheresoever located and whether now existing or hereafter arising or acquired, including
all “Collateral” as defined in the Security Agreements, and if there is more than one Security Agreement, it shall
mean, as the context so requires, the “Collateral” for each individual Credit Party, as such term is defined in the
Security Agreement for such applicable Credit Party, and all of the “Collateral,” in the aggregate, for all Credit
Parties, collectively, under each of the Security Agreements.

 

(p) “Common
Stock” shall mean the common stock of Pacific Ventures Group, Inc., par value $0.001 per share.

 

(q) “Compliance
Certificate” shall mean the covenant compliance certificate, the form of which is attached hereto as Exhibit
“A”.

 

(r) “Contingent
Liability” and “Contingent Liabilities” shall mean, respectively, each obligation and
liability of the Credit Parties and all such obligations and liabilities of the Credit Parties incurred pursuant to any agreement,
undertaking or arrangement by which any Credit Party either: (i) guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise
to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend, obligation or other liability
of any other Person in any manner (other than by endorsement of instruments in the course of collection), including without limitation,
any indebtedness, dividend or other obligation which may be issued or incurred at some future time; (ii) guarantees the payment
of dividends or other distributions upon the shares or ownership interest of any other Person; (iii) undertakes or agrees (whether
contingently or otherwise): (A) to purchase, repurchase, or otherwise acquire any indebtedness, obligation or liability of any
other Person or any property or assets constituting security therefor; (B) to advance or provide funds for the payment or discharge
of any indebtedness, obligation or liability of any other Person (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain solvency, assets, level of income, working capital or other financial condition of
any other Person; or (C) to make payment to any other Person other than for value received; (iv) agrees to lease property or to
purchase securities, property or services from such other Person with the purpose or intent of assuring the owner of such indebtedness
or obligation of the ability of such other Person to make payment of the indebtedness or obligation; (v) to induce the issuance
of, or in connection with the issuance of, any letter of credit for the benefit of such other Person; or (vi) undertakes or agrees
otherwise to assure or insure a creditor against loss. The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum permitted principal amount, if larger) of the indebtedness,
obligation or other liability guaranteed or supported thereby.

  

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(s) “Control,”
“Controlling,” “Controlled By,” or words of similar import shall mean the
possession, directly or indirectly, of the power to direct, or cause the direction of, the management and policies of a Person
by contract, voting of securities, or otherwise.

 

(t) “Conversion
Shares” shall have the meaning given to it in Section 2.5(f) hereof.

 

(u)
“Corporate Guarantors” shall have the meaning given to such term in the preamble hereof.

 

(v)
“Credit Party(ies)” shall have the meaning given to such term in the preamble hereof.

 

(w) “Credit
Party Leases” shall have the meaning given to it in Section 7.18 hereof.

 

(x) “Default
Rate” shall mean a per annum rate of interest equal to the highest non-usurious rate permitted by applicable law,
and if there is no such rate under applicable law, then twenty-two percent (22%) per annum.

 

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

 

(z) “Effective
Date” shall have the meaning given to it in the preamble hereof.

 

(aa)“Eligible
Accounts” means, as applicable for each Credit Party:

 

(A) all
sales of the Credit Parties arising from Point-of-Sale Transactions which meet each of the criteria set forth below (any sale
that fails to meet the criteria below can still be deemed an Eligible Account, in Lender’s sole discretion):

 

(i) are
genuine in all respects and have arisen in the Credit Parties’ Ordinary Course of Business from the sale of goods or performance
of services by Credit Parties, which delivery of goods has occurred or performance of services have been fully performed;

 

(ii) payment
for the sale has been made in full at the time of the sale, and such sale is not subject to any chargeback, credit, setoff, allowance,
adjustment, repurchase or return agreement or obligation of any kind;

  

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(iii) the
Person obligated on the sale is not a Subsidiary or a director, officer, employee, agent, parent or Affiliate of any Credit Party;
and

  

(iv) the
proceeds from the sale are subject to a perfected, first priority Lien in favor of Lender and not subject to any Lien whatsoever,
other than the Lien of Lender and except for Permitted Liens.

  

(B) all
Accounts of the Credit Parties which meet each of the criteria set forth below (an Account that fails to meet the criteria below
can still be deemed an Eligible Account, in Lender’s sole discretion):

  

(i) are
genuine in all respects and have arisen in the Credit Parties’ Ordinary Course of Business from the sale of goods or performance
of services by Credit Parties, which delivery of goods has occurred or performance of services have been fully performed;

  

(ii) are
evidenced by an invoice delivered to the Person obligated under such Account, are due and payable within thirty (30) days after
the date of the invoice, and are not more than ninety (90) days outstanding past the invoice date;

  

(iii) do
not arise from a “sale on approval”, “sale or return”, “consignment”, “guaranteed sale”
or “bill and hold”, or are subject to any other repurchase or return agreement;

  

(iv) have
not arisen in connection with a sale to a Person obligated under such Account who is not a resident or citizen of, or an entity
organized in, and is principally located within, the United States of America;

 

(v) are
not due from a Person obligated under such Account which is a Subsidiary or a director, officer, employee, agent, parent or Affiliate
of any Credit Party;

 

(vi) do
not arise out of contracts with the United States or any Governmental Authority thereof, unless the a Credit Party has assigned
its right to payment of such Account to Lender pursuant to the Federal Assignment of Claims Act of 1940 (or analogous statute),
and evidence (satisfactory to Lender) of such assignment has been delivered to Lender;

  

(vii) do
not arise in connection with a sale to a Person obligated under such Account who is located within a state or jurisdiction which
requires any Credit Party, as a precondition to commencing or maintaining an action in the courts of that state or jurisdiction,
either to: (A) receive a certificate of authority to do business and be in good standing in such state or jurisdiction; or (B)
file a notice of business activities or similar report with such state’s or jurisdiction’s taxing authority, unless:
(I) the applicable Credit Party has taken one of the actions described in clauses (A) or (B); (II) the failure to take one of
the actions described in either clause (A) or (B) may be cured retroactively by the applicable Credit Party at its election; or
(III) the applicable Credit Party has proven to the satisfaction of Lender that it is exempt from any such requirements under
such state’s or jurisdiction’s laws;

  

    	 	5	 

     

    

 

(viii)do
not arise out of a contract or order which, by its terms, forbids or makes void or unenforceable the assignment to Lender of the
Account arising with respect thereto and are not assignable to Lender for any other reason;

 

(ix) are
the valid, legally enforceable and unconditional obligation of the Person obligated under such Account, are not the subject of
any setoff, counterclaim, credit, allowance or adjustment by the Person obligated under such Account, or of any claim by the Person
obligated under such Account denying liability thereunder in whole or in part, and the Person obligated under such Account has
not refused to accept and/or has not returned or offered to return any of the goods or services which are the subject of such
Account;

  

(x) are
subject to a perfected, first priority Lien in favor of Lender and not subject to any Lien whatsoever, other than the Lien of
Lender and except for Permitted Liens;

  

(xi) no
Proceedings are pending or threatened against the Person obligated under such Account which might result in any material adverse
change in its financial condition or in its ability to pay any Account in full;

  

(xii) if
the Account is evidenced by chattel paper or an instrument, the originals of such chattel paper or instrument shall have been
endorsed and/or assigned and delivered to Lender or, in the case of electronic chattel paper, shall be in the control of Lender,
in each case in a manner satisfactory to Lender; and

  

(xiii)there
is no bankruptcy, insolvency or liquidation Proceeding pending by or against the Person obligated under such Account, nor has
the Person obligated under such Account gone out of or suspended business, made a general assignment for the benefit of creditors
or failed to pay its debts generally as they come due, and/or no condition or event has occurred having a Material Adverse Effect
on the Person obligated under such Account which would require the Accounts of such Person to be deemed uncollectible in accordance
with GAAP.

  

A
sale or Account which is an Eligible Account shall cease to be an Eligible Account whenever it ceases to meet any one of the foregoing
requirements. In addition, any sale or Account that otherwise meets each of the criteria above for an Eligible Account, may nonetheless
be deemed not to be an Eligible Account, or may be deemed as an Eligible Account for a discounted value, all in Lender’s
sole and absolute discretion.

  

If
Accounts representing Fifty Percent (50%) or more of the unpaid net amount of all Accounts from any one Person fail to qualify
as Eligible Accounts, including because such Accounts are unpaid more than ninety (90) days after the due date of such Accounts,
then all Accounts relating to such Person shall cease to be Eligible Accounts.  If Accounts owed by a single Person
exceed Fifty Percent (50%) of all Eligible Accounts, then all Accounts relating to such Person in excess of such amount shall
cease to be Eligible Accounts.

 

(bb)“Employee
Plan” includes any pension, stock bonus, employee stock ownership plan, retirement, disability, medical, dental
or other health plan, life insurance or other death benefit plan, profit sharing, deferred compensation, stock option, bonus or
other incentive plan, vacation benefit plan, severance plan or other employee benefit plan or arrangement, including, without
limitation, those pension, profit-sharing and retirement plans of the Credit Parties described from time to time in the consolidated
financial statements of the Credit Parties and any pension plan, welfare plan, Defined Benefit Pension Plans (as defined in ERISA)
or any multi-employer plan, maintained or administered by the Credit Parties or to which is the Credit Parties are a party or
may have any liability or by which the Credit Parties are bound.

  

    	 	6	 

     

    

 

(cc)“Environmental
Laws” shall mean all federal, state, district, local and foreign laws, rules, regulations, ordinances, and consent
decrees relating to health, safety, hazardous substances, pollution and environmental matters, as now or at any time hereafter
in effect, applicable to the Credit Parties’ business or facilities owned or operated by the Credit Parties, including laws
relating to emissions, discharges, releases or threatened releases of pollutants, contamination, chemicals, or hazardous, toxic
or dangerous substances, materials or wastes in the environment (including ambient air, surface water, land surface or subsurface
strata) or otherwise relating to the generation, manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials.

 

(dd)“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

(ee)“Event
of Default” shall mean any of the events or conditions set forth in Section 12 hereof.

 

(ff)“Financial
Statements” shall have the meaning given to it in Section 7.10 hereof.

 

(gg)“First
Closing” means the closing of the Initial Loan hereunder, which shall take place on the Effective Date.

 

(hh)“Funded
Indebtedness” shall mean, as to any Person, without duplication: (i) all indebtedness for borrowed money of such
Person (including principal, interest and, if not paid when due, fees and charges), whether or not evidenced by bonds, debentures,
notes or similar instruments; (ii) all obligations to pay the deferred purchase price of property or services; (iii) all obligations,
contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’
acceptances and similar obligations issued for the account of such Person (including the Letters of Credit), and all unpaid drawings
in respect of such letters of credit, bankers’ acceptances and similar obligations; and (iv) all indebtedness secured by
any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided,
however, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall
be deemed to be in an amount equal to the fair market value of the property subject to such Lien at the time of determination).
Notwithstanding the foregoing, Funded Indebtedness shall not include trade payables and accrued expenses incurred by such Person
in accordance with customary practices and in the Ordinary Course of Business of such Person.

  

    	 	7	 

     

    

 

(ii) “GAAP”
shall mean United States generally accepted accounting principles set forth from time to time in the opinions and pronouncements
of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the date of determination; provided, however,
that interim financial statements or reports shall be deemed in compliance with GAAP despite the absence of footnotes and fiscal
year-end adjustments as required by GAAP.

 

(jj)“Governmental
Authority” means any foreign, federal, state or local government, or any political subdivision thereof, or any court,
agency or other body, organization, group, stock market or exchange exercising any executive, legislative, judicial, quasi-judicial,
regulatory or administrative function of government.

 

(kk)“Guarantors”
shall have the meaning given to it in the preamble hereof.

 

(ll)“Guaranty
Agreement(s)” shall mean the guaranty agreements executed by each Guarantor in favor of the Lender, pursuant to
which the Guarantors shall each guarantee all of the Obligations of the Borrower, the form of which is attached hereto as Exhibit
“B”.

 

(mm)“Hazardous
Materials” shall mean any hazardous, toxic or dangerous substance, materials and wastes, including hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation,
radioactive materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type
of pollutants or contaminants (including, without limitation, materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or any other similar substances, materials or wastes that are or become regulated under any Environmental
Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

 

(nn)“Income
Projections” shall have the meaning given to it in Section 10.8 hereof.

 

(oo)
“Initial Loan” means the initial loan contemplated to be made by Lender to the Borrower at the First
Closing in the amount of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000).

 

(pp)“Insurance
Policies” shall have the meaning given to it in Section 7.23 hereof.

 

(qq)“Interest
Rate” shall mean a fixed rate of interest equal to Sixteen and one-half percent (16.5%) per annum, calculated on
the actual number of days elapsed over a 360-day year.

 

(rr)“Investment
Banking Services Agreement” means that certain Investment Banking Services Agreement between Borrower and Lender
in the form attached hereto as Exhibit “H”, as same may be amended from time to time.

 

(ss)“IP
Rights” shall have the meaning given to it in Section 7.21 hereof.

  

    	 	8	 

     

    

 

(tt)“Irrevocable
Transfer Agent Instructions” shall mean the Irrevocable Transfer Agent Instructions to be entered into by and among
the Lender, the Borrower and the Borrower’s transfer agent, the form of which is attached hereto as Exhibit “C”.

 

(uu)
“Lender” shall have the meaning given to it in the preamble hereof.

 

(vv)“Lender
Indemnitee(s)” shall have the meaning given to it in Section 14.19 hereof.

 

(ww)“License
Agreements” shall have the meaning given to it in Section 7.21 hereof.

 

(xx) “Lien”
shall mean, with respect to any Person, any mortgage, pledge, hypothecation, judgment lien or similar legal process, title retention
lien, or other lien, security interest or encumbrance of any nature or kind granted by such Person or arising by judicial process
or otherwise, including the interest of a vendor under any conditional sale or other title retention agreement and the interest
of a lessor under a lease of any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible,
by such Person as lessee that is, or should be, a Capital Lease on the balance sheet of such Person prepared in accordance with
GAAP.

 

(yy)“Loan”
or “Loans” means, collectively, the Initial Loan, and all Additional Loans, if any, made by Lender to
Borrower from time to time hereunder.

 

(zz)“Loan
Documents” shall mean those documents listed in Sections 3.1, 3.2 and 3.3 hereof, and any other documents
or instruments executed in connection with this Agreement or the Loans contemplated hereby, and all renewals, extensions, future
advances, modifications, substitutions, or replacements thereof.

 

(aaa)“Material
Adverse Effect” shall mean: (i) a material adverse change in, or a material adverse effect upon, the assets, business,
prospects, properties, financial condition or results of operations of any Credit Party; (ii) a material impairment of the ability
of any Credit Party to perform any of its Obligations under any of the Loan Documents; or (iii) a material adverse effect on:
(A) any material portion of the Collateral; (B) the legality, validity, binding effect or enforceability against any Credit Party
of any of the Loan Documents; (C) the perfection or priority (subject to Permitted Liens) of any Lien granted to Lender under
any Loan Document; (D) the rights or remedies of Lender under any Loan Document; or (E) the Lender’s ability to sell, without
limitation or restriction, if applicable, any shares of Common Stock issued to the Lender upon a conversion pursuant to the Promissory
Note or otherwise issued under any Loan Documents. For purposes of determining whether any of the foregoing changes, effects,
impairments, or other events have occurred, such determination shall be made by Lender, in its sole and absolute discretion.

  

    	 	9	 

     

    

 

(bbb)“Material
Contract” shall mean any contract or agreement to which any Credit Party is a party or by which any Credit Party
or any of its assets are bound and which: (i) must be disclosed to the SEC, the Principal Trading Market, or any other Governmental
Authority pursuant to the Securities Act, the Exchange Act, the rules and regulations of the SEC, or any other laws, rules or
regulations of any Governmental Authority or the Principal Trading Market; (ii) involves aggregate payments of Twenty-Five Thousand
and No/100 United States Dollars (US$25,000.00) or more to or from any Credit Party; (iii) involves delivery, purchase, licensing
or provision, by or to any Credit Party, of any goods, services, assets or other items having a value (or potential value) over
the term of such contract or agreement of Twenty-Five Thousand and No/100 United States Dollars (US$25,000.00) or more or is otherwise
material to the conduct of the Credit Party’s business as now conducted and as contemplated to be conducted in the future;
(iv) involves a Credit Party Lease; (v) imposes any guaranty, surety or indemnification obligations on any Credit Party; or (vi)
prohibits any Credit Party from engaging in any business or competing anywhere in the world.

 

(ccc)“Material
Shareholder” shall have the meaning given to it in Section 7.31 hereof.

 

(ddd)“Maturity
Date” shall mean the earlier of: (i) January ___, 2020; (ii) upon prepayment of the Promissory Note by Borrower
(subject to Section 2.4(b)); or (iii) the occurrence of an Event of Default and acceleration of the Promissory Note pursuant
to this Agreement, unless the date in clause (i) shall be extended by Lender pursuant to any modification, extension or renewal
note executed by Borrower and accepted by Lender in its sole and absolute discretion in substitution for the Promissory Note.

 

(eee)“Obligations”
shall mean, whether now existing or hereafter arising, created or incurred: (i) all Loans, advances (whether of principal or otherwise)
and other financial accommodations (whether primary, contingent or otherwise) made by Lender to Borrower under any Loan Documents;
(ii) all interest accrued thereon (including interest which would be payable as post-petition in connection with any bankruptcy
or similar Proceeding, whether or not permitted as a claim thereunder); (iii) any and all fees, charges or other amounts due to
Lender under this Agreement or the other Loan Documents; (iv) any and all expenses incurred by Lender under, or in connection
with, this Agreement or the other Loan Documents; (v) any and all other liabilities and obligations of any of the Credit Parties
to Lender under this Agreement and any other Loan Documents; and (vi) the performance by the Credit Parties of all covenants,
agreements and obligations of every nature and kind on the part of any of the Credit Parties to be performed under this Agreement
and any other Loan Documents.

 

(fff)“OFAC”
shall have the meaning given to it in Section 14.22 hereof.

 

(ggg)“Ordinary
Course of Business” means the Ordinary Course of Business of the Person in question consistent with past custom
and practice (including with respect to quantity, quality and frequency).

 

(hhh)“Payment
Account” shall have the meaning given to it in Section 2.4(c) hereof.

  

    	 	10	 

     

    

 

(iii) “Permitted
Liens” shall mean: (i) Liens for Taxes, assessments or other governmental charges not at the time delinquent
or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which
adequate reserves are maintained in accordance with GAAP and in respect of which no Lien has been filed; (ii) Liens of carriers,
warehousemen, mechanics and materialmen arising in the Ordinary Course of Business; (iii) Liens in the form of deposits or pledges
incurred in connection with worker’s compensation, unemployment compensation and other types of social security (excluding
Liens arising under ERISA or in connection with surety bonds, bids, performance bonds and similar obligations) for sums not overdue
or being contested in good faith by appropriate Proceedings and not involving any advances or borrowed money or the deferred purchase
price of property or services, which do not in the aggregate materially detract from the value of the property or assets of the
Credit Parties taken as a whole or materially impair the use thereof in the operation of the Credit Parties’ business and,
in each case, for which adequate reserves are maintained in accordance with GAAP and in respect of which no Lien has been filed;
(iv) Liens described in the Financial Statements and acceptable to Lender in its sole and absolute discretion, and the replacement,
extension or renewal of any such Lien upon or in the same property subject thereto arising out of the extension, renewal or replacement
of the indebtedness secured thereby (without increase in the amount thereof and without expansion of such Liens upon any other
property); (v) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding Fifty Thousand and No/100
United States Dollars (US$50,000.00) arising in connection with court Proceedings, provided the execution or other enforcement
of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate
Proceedings, and only to the extent such judgments or awards do not otherwise constitute an Event of Default; (vi) zoning and
similar restrictions on the use of property and easements, rights of way, restrictions, minor defects or irregularities in title
and other similar Liens not interfering in any material respect with the ordinary conduct of the business of the Credit Parties;
(vii) Liens arising in connection with Capital Leases (and attaching only to the property being leased); (viii) Liens that constitute
purchase money security interests on any property securing indebtedness incurred for the purpose of financing all or any part
of the cost of acquiring such property, provided that any such Lien attaches to such property within sixty (60) days of
the acquisition thereof and attaches solely to the property so acquired; (ix) Liens granted to Lender hereunder and under
the Loan Documents; (x) any interest or title of a lessor, sublessor, licensor or sublicensor under any lease or non-exclusive
license permitted by this Agreement; (xi) Liens arising from precautionary uniform commercial code financing statements filed
under any lease permitted by this Agreement; and (xii) banker’s Liens and rights of set-off of financial institutions arising
in connection with items deposited in accounts maintained at such financial institutions and subsequently unpaid and unpaid fees
and expenses that are charged to the Credit Parties by such financial institutions in the Ordinary Course of Business of the maintenance
and operation of such accounts.

 

(jjj)“Permit”
means any license, permit, approval, waiver, order, authorization, right or privilege of any nature whatsoever, granted, issued,
approved or allowed by any Governmental Authority.

 

(kkk)“Person”
shall mean any individual, partnership, limited liability company, limited liability partnership, corporation, trust, joint venture,
joint stock company, association, unincorporated organization, government or agency or political subdivision thereof, or other
entity.

 

(lll)“Pledge
Agreement(s)” shall mean the pledge agreements executed by the Borrower, the Corporate Guarantors, and certain principal
shareholders of the Borrower in favor of the Lender, pursuant to which the Borrower, the Corporate Guarantors, and such principal
shareholders grant a first priority lien and security interest in and to all of the shares or membership interests (as applicable)
owned by the Borrower, the Corporate Guarantors, and such principal shareholders in each of the Borrower, the Corporate Guarantors,
and all Subsidiaries to the Lender, the form of which is attached hereto as Exhibit “D”.

  

    	 	11	 

     

    

 

(mmm)“Point-of-Sale
Transactions” means any sale transactions by any Credit Parties whereby the purchase price for the sale transaction
is paid in full by the Person undertaking such sale transaction, at the time of the sale transaction.

 

(nnn)“Preferred
Stock” shall have the meaning given to it in Section 7.4 hereof.

 

(ooo)
“Prepayment Penalty” shall have the meaning given to it in Section 2.4(b) hereof.

 

(ppp)“Principal
Trading Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market,
the OTCQX, the OTCQB, the OTC Pink, the NYSE Euronext or the New York Stock Exchange, whichever is at the time the principal trading
exchange or market for the Common Stock.

 

(qqq)“Proceeding”
means any demand, claim, suit, action, litigation, investigation, audit, study, arbitration, administrative hearing, or any other
proceeding of any nature whatsoever.

 

(rrr)“Promissory
Note(s)” means any promissory notes issued by the Borrower to Lender from time to time under this Agreement which
evidence the Initial Loan or any Additional Loans, which promissory notes shall be substantially in the form and substance attached
hereto as Exhibit “E”.

 

(sss)“Public
Documents” shall have the meaning given to it in Section 7.11 hereof.

 

(ttt)
“Real Property” means any real estate, land, building, structure, improvement, fixture or other real
property of any nature whatsoever, including, but not limited to, fee and leasehold interests, and specifically including the
real property listed on Schedule 7.18.

 

(uuu)“Rule
144” shall mean Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto).

 

(vvv)“Rule
144 Certificate” shall have the meaning given to it in Section 10.20 hereof.

 

(www)“Rule
144 Opinion” shall have the meaning given to it in Section 10.20 hereof.

 

(xxx) “Sale
Reconciliation” shall have the meaning given to it in Section 2.5(f) hereof.

 

(yyy)“SEC”
shall mean the United States Securities and Exchange Commission.

  

    	 	12	 

     

    

 

(zzz)
“Securities Act” shall mean the Securities Act of 1933, as amended.

 

(aaaa)“Securities
Being Sold” shall have the meaning given to it in Section 10.20 hereof.

 

(bbbb)“Security
Agreement(s)” shall mean the security agreements executed by the Credit Parties in favor of Lender, pursuant to
which each of the Credit Parties grant a first priority lien and security interest in and to all of their respective Collateral
as security for the Obligations, the forms of which are attached hereto as Exhibit “F-1” and Exhibit
“F-2”.

 

(cccc)“Share
Reserve” shall have the meaning given to it in Section 10.21 hereof.

 

(dddd)“Shell
Company” shall have the meaning given to it in Section 10.20 hereof.

 

(eeee)
“Subsidiary” and “Subsidiaries” shall mean, respectively, each and all
such corporations, partnerships, limited partnerships, limited liability companies, limited liability partnerships or other entities
of which or in which a Person owns, directly or indirectly, fifty percent (50%) or more of: (i) the combined voting power of all
classes of stock having general voting power under ordinary circumstances to elect a majority of the board of directors of such
entity if a corporation; (ii) the management authority and capital interest or profits interest of such entity, if a partnership,
limited partnership, limited liability company, limited liability partnership, joint venture or similar entity; or (iii) the beneficial
interest of such entity, if a trust, association or other unincorporated organization.

 

(ffff)“Transfer
Agent” shall have the meaning given to it in Section 2.5(g) hereof, or any successor transfer agent for the
Borrower from time to time.

 

(gggg)
“UCC” shall mean the Uniform Commercial Code in effect in Nevada from time to time.

 

(hhhh)“Use
of Proceeds Confirmation” shall have the meaning given to it in Section 9.8 hereof.

 

(iiii)“Validity
Certificates” shall mean the Validity Certificates executed by certain officers and directors of the Borrower, the
form of which is attached hereto as Exhibit “G”.

  

    	 	13	 

     

    

 

1.2 Accounting
Terms. Any accounting terms used in this Agreement which are not specifically defined herein shall have the meanings customarily
given them in accordance with GAAP. Calculations and determinations of financial and accounting terms used and not otherwise specifically
defined hereunder and the preparation of financial statements to be furnished to Lender pursuant hereto shall be made and prepared,
both as to classification of items and as to amount, in accordance with GAAP as used in the preparation of the financial statements
of Borrower on the date of this Agreement. If any changes in accounting principles or practices from those used in the preparation
of the financial statements are hereafter occasioned by the promulgation of rules, regulations, pronouncements and opinions by
or required by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or any successor
thereto or agencies with similar functions), which results in a material change in the method of accounting in the financial statements
required to be furnished to Lender hereunder or in the calculation of financial covenants, standards or terms contained in this
Agreement, the parties hereto agree to enter into good faith negotiations to amend such provisions so as equitably to reflect
such changes to the end that the criteria for evaluating the financial condition and performance of Borrower will be the same
after such changes as they were before such changes; and if the parties fail to agree on the amendment of such provisions, Borrower
will furnish financial statements in accordance with such changes but shall provide calculations for all financial covenants,
perform all financial covenants and otherwise observe all financial standards and terms in accordance with applicable accounting
principles and practices in effect immediately prior to such changes. Calculations with respect to financial covenants required
to be stated in accordance with applicable accounting principles and practices in effect immediately prior to such changes shall
be reviewed and certified by Borrower’s accountants.

 

1.3 Other
Terms Defined in UCC. All other words and phrases used herein and not otherwise specifically defined shall have the respective
meanings assigned to such terms in the UCC, as amended from time to time, to the extent the same are used or defined therein.

 

1.4 Other
Definitional Provisions; Construction. Whenever the context so requires, the neuter gender includes the masculine and feminine,
the single number includes the plural, and vice versa. In addition: (i) the words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement, and references to Article, Section, Subsection, Annex, Schedule, Exhibit and like
references are references to this Agreement unless otherwise specified; (ii) wherever the word “include,” “includes”
or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation;”
(iii) an Event of Default shall “continue” or be “continuing” until such Event of Default has been cured
in Lender’s sole and absolute discretion, or waived by Lender in accordance with Section 14.3 hereof; (iv) any reference
to the Credit Parties shall mean and refer to all the Credit Parties, collectively, and to each Credit Party, individually, and
accordingly, each representation, warranty, covenant, obligation or other agreement, term or provision in this Agreement or any
other Loan Documents, to the extent applicable to the Credit Parties, shall be deemed to be applicable and effective as to all
Credit Parties, collectively, and to each Credit Party, individually, as the context may so require, regardless of the gender,
singular, plural, or other tense used in the applicable provision; (v) references in this Agreement to any party shall include
such party’s successors and permitted assigns; and (vi) references to any “Section” shall be a reference to
such Section of this Agreement unless otherwise stated. To the extent any of the provisions of the other Loan Documents are inconsistent
with the terms of this Agreement, the provisions of this Agreement shall govern.

 

2. LOANS.

 

2.1 Initial
Loan. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, the Lender shall make the Initial
Loan to Borrower at the First Closing.

 

2.2 Additional
Loans.

  

    	 	14	 

     

    

 

(a) At
any time after the First Closing, but prior to the Maturity Date or earlier termination of this Agreement, the Borrower may request
that Lender make Additional Loans hereunder at Additional Closings by written notice to Lender. Any such Additional Loans shall
be subject to Lender’s prior written approval, and Lender shall have the absolute right to withhold, deny or condition approval
of any such requests for any such Additional Loans in Lender’s sole and absolute discretion, however, at a minimum, the
following conditions must be satisfied, in Lender’s sole and absolute discretion: (i) no Event of Default shall have occurred
or be continuing; (ii) Borrower shall have executed and delivered a new or revised Promissory Note; (iii) after giving effect
to such increase, the amount of the aggregate outstanding principal balance of all Loans shall not be in excess of the maximum
amount of credit available under this Agreement; (iv) Lender shall have reviewed and accepted, in its sole and absolute discretion,
the revenues, income, Collateral, and other financial or other underwriting criteria required for the increase; and (v) Lender
shall have received any and all documents or agreements as it shall require in its sole and absolute discretion. If Lender approves
any request for such Additional Loans, then subject to the satisfaction (or waiver) of the terms and conditions of this Agreement,
Lender shall make such Additional Loans to Borrower in such amounts and at such Additional Closings as Lender and the Borrower
may mutually agree. Borrower may only request Additional Loans if, in Lender’s sole and absolute discretion, no default
or “Event of Default” (as such term is defined in any of the Loan Documents) shall have occurred or be continuing
under this Agreement or any other Loan Documents, and no event shall have occurred that, with the passage of time, the giving
of notice, or both, would constitute a default or an Event of Default hereunder or thereunder.

 

(b) It
is expressly agreed and acknowledged by each of the Credit Parties that, notwithstanding that this Agreement provides for the
opportunity for Additional Loans as hereby provided: (i) Lender has no obligation of any nature or kind whatsoever to make any
such Additional Loans to the Credit Parties; (ii) the Credit Parties did not enter into this Agreement based on any promise, express
or implied, by Lender or any of its agents or representatives, or based on any expectation by any of the Credit Parties, that
Additional Loans beyond the Initial Loan would be made or provided after the Effective Date; and (iii) each of the Credit Parties
hereby fully and unconditionally waives any and all claims, counterclaims, and defenses any of them may have based on any argument
that Lender had any obligation or otherwise promised to fund or make Additional Loans beyond the Initial Loan, or any argument
or implied covenant of fair dealing and good faith that may in any way imply an obligation upon Lender to make such Additional
Loans.

 

2.3 Form
of Payment; Documents Delivered. Each Closing shall be undertaken between the Credit Parties and Lender through the use of
overnight mails and subject to escrow instructions from Lender and its counsel. Any violation or breach of any such escrow instructions,
whether by any Credit Parties or counsel for any Credit Parties, shall constitute an Event of Default hereunder. Subject to such
escrow instructions and the satisfaction (or waiver) of the terms and conditions of this Agreement, at each Closing: (i) the Lender
shall deliver to the Borrower, to a Borrower account designated by the Borrower, the aggregate proceeds of the applicable Loan
being funded at such Closing, minus the fees to be paid directly from the proceeds of such Closing as set forth in this Agreement,
in the form of wire transfers of immediately available Dollars; and (ii) the Credit Parties shall deliver to Lender the Promissory
Note evidencing the Loan made at such Closing (or a consolidated Promissory Note for all Loans, in Lender’s discretion),
as well as all other documents required to be delivered pursuant to this Agreement or otherwise required by Lender and its counsel,
duly executed on behalf of the Credit Parties, as applicable.

  

    	 	15	 

     

    

 

2.4 Payment
of Loans.

 

(a) Loan
Interest and Payments. Except as otherwise provided in this Section, the outstanding principal balance of the Loans and all
other Obligations shall be repaid on or before the Maturity Date. The principal amount of the Loans outstanding from time to time
shall bear interest at the Interest Rate. All Obligations shall be paid in accordance with the payment terms set forth in this
Agreement and the Promissory Note. Any amount of principal or interest on the Obligations which is not paid when due, whether
at stated maturity, by acceleration or otherwise, shall at Lender’s option bear interest payable on demand at the Default
Rate.

 

(b) Optional
Prepayments. Borrower may from time to time prepay the Loans, in whole or in part, provided, however, that if
the Borrower prepays the Obligations in full within ninety (90) days following the Effective Date, Borrower shall pay to Lender
as liquidated damages and compensation for the costs of being prepared to make funds available hereunder an amount equal to five
percent (5.0%) of the Initial Loan (the “Prepayment Penalty”).

 

(c) Manner
of Payments.

 

(i) ACH
Payment. The Credit Parties agree that all payments due and owing under this Agreement or any other Loan Documents shall be
made by wire transfer to an account designated by Lender to Borrower from time to time, or at Lender’s election, shall be
made through automated clearing house (“ACH”) transfers from the Borrower’s designated operating
account (the “Payment Account”) directly to Lender. In this regard, if the Lender elects to receive
payments through ACH, the Borrower hereby agrees to execute and deliver to Lender an authorization agreement for direct payments
whereby, among other things, Lender shall be irrevocably authorized to initiate ACH transfers from the Payment Account to Lender
in the amounts required or permitted under this Agreement and all other Loan Documents, including for scheduled payments of principal
and interest due under the Promissory Note, and payment of all other fees or charges due under this Agreement or any other Loan
Documents. Lender’s authorization for direct ACH transfers as hereby provided shall be irrevocable and such ACH transfers
shall continue until all Obligations are paid in full. For so long as any Obligations remain outstanding, Borrower shall: (i)
not revoke Lender’s authority to initiate ACH transfers as hereby contemplated; (ii) not change, modify, close or otherwise
affect the Payment Account; (iii) deposit all revenues of any nature or kind whatsoever relating to Credit Parties or their business
only into the Payment Account; and (iv) be responsible for all costs, expenses or other fees and charges incurred by Lender as
a result of any failed or returned ACH transfers, whether resulting from insufficient sums being available in the Payment Account,
or otherwise. The Credit Parties hereby agree to undertake any and all required actions, execute any required documents, instruments
or agreements, or to otherwise do any other thing required or requested by Lender in order to effectuate the requirements of this
Section 2.4(c).

  

    	 	16	 

     

    

 

(d) Power
of Attorney. It is intended that all revenues of any nature or kind whatsoever relating to Credit Parties or their business,
and all other checks, drafts, instruments and other items of payment or proceeds of Collateral at any time received, due or owing
to the Credit Parties from any Person, or otherwise, shall be deposited directly into the Payment Account, and if not deposited
directly into the Payment Account, shall be immediately remitted or endorsed by the Credit Parties into the Payment Account, and,
if that remittance or endorsement of any such item shall not be immediately made for any reason, Lender is hereby irrevocably
authorized to remit or endorse the same on Credit Parties’ behalf. For purpose of this Section, the Credit Parties irrevocably
hereby make, constitute and appoint Lender (and all Persons designated by Lender for that purpose) as the Credit Parties’
true and lawful attorney and agent-in-fact: (A) to endorse the Credit Parties’ name upon items of payment and/or proceeds
of Collateral and upon any chattel paper, document, instrument, invoice or similar document or agreement relating to any revenues
of the Credit Parties; (B) to take control in any manner of any item of payment or proceeds thereof; (C) to have access to the
Credit Parties’ operating accounts, through the Credit Parties’ online banking system, or otherwise, to make remittances
of any revenues deposited therein into the Payment Account or otherwise as required hereby; (D) to have access to any lock box
or postal box into which any of the Credit Parties’ mail is deposited, and open and process all mail addressed to the Credit
Parties and deposited therein; and (E) direct and otherwise deal with all Persons to insure that all revenues are remitted to
the Payment Account or as otherwise hereby contemplated.

 

(e) Rights
Upon Default. Lender may, at any time and from time to time after the occurrence and during the continuance of an Event of
Default, whether before or after the maturity of any of the Obligations: (A) enforce collection of any Accounts or other
amounts owed to the Credit Parties by suit or otherwise; (B) exercise all of the rights and remedies of the Credit Parties with
respect to Proceedings brought to collect any Accounts or other amounts owed to the Credit Parties; (C) surrender, release or
exchange all or any part of any Accounts or other amounts owed to the Credit Parties, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness thereunder; (D) sell or assign any Account of the Credit
Parties, or other amount owed to the Credit Parties, upon such terms, for such amount and at such time or times as Lender deems
advisable; (E) prepare, file and sign any Credit Parties’ name on any proof of claim in bankruptcy or other similar document
against any Person obligated to the Credit Parties; and (F) do all other acts and things which are necessary, in Lender’s
sole discretion, to fulfill the Credit Parties’ obligations under this Agreement and the other Loan Documents and to allow
Lender to collect the Accounts, or other amounts owed to the Credit Parties. In addition to any other provision hereof, Lender
may at any time after the occurrence and during the continuance of an Event of Default, at the Credit Parties’ expense,
notify any parties obligated on any of the Accounts to make payment directly to Lender of any amounts due or to become due thereunder.

 

(f) Statement.
From time to time, Lender may deliver to Borrower an invoice and or an account statement showing all Loans, charges and payments,
which shall be deemed final, binding and conclusive upon Borrower, unless Borrower notifies Lender in writing, specifying any
error therein, within thirty (30) days of the date such account statement is sent to Borrower and any such notice shall only constitute
an objection to the items specifically identified.

 

(g) View
Access To Accounts. On the Effective Date, the Credit Parties shall undertake all required actions, including providing Lender
with proper sign-in or log-in credentials, user names, passwords, and other required information, to provide Lender with, and
to allow Lender to have, view-only access, through the Credit Parties’ online banking system or otherwise, to any and all
of the Credit Parties’ bank accounts listed on Schedule 7.28, and any additional bank accounts of the Credit
Parties as may exist from time to time. Credit Parties shall not undertake any action that prevents or impairs Lender’s
ability to have view-only access of all of the bank accounts of the Credit Parties as contemplated by this Section.

  

    	 	17	 

     

    

 

2.5 Fees.

 

(a) Intentionally
Left Blank.

 

(b) Transaction
Advisory Fee. The Borrower agrees to pay to Lender a transaction advisory fee equal to one percent (1.0%) of the amount of
the Initial Loan, and one percent (1.0%) on the amount of any Additional Loan, which shall be due and payable on the First Closing
and at each Additional Closing.

 

(c) Due
Diligence Fees. Borrower agrees to pay a due diligence fee equal to Seventeen Thousand Five Hundred and No/100 United States
Dollars (US$17,500.00), which shall be due and payable in full on the First Closing, or any remaining portion thereof shall be
due and payable on the First Closing if a portion of such fee was paid upon the execution of any term sheet related to this Agreement.

 

(d) Document
Review and Legal Fees. Borrower agrees to pay a document review and legal fee equal to Twenty Five Thousand and No/100 United
States Dollars (US$25,000.00) which shall be due and payable in full on the First Closing, or any remaining portion thereof shall
be due and payable on the First Closing if a portion of such fee was paid upon the execution of any term sheet related to this
Agreement.

 

(e) Other
Fees. Borrower also agrees to pay to the Lender (or any designee of the Lender), upon demand, or to otherwise be responsible
for the payment of, any and all other costs, fees and expenses, including the reasonable fees, costs, expenses and disbursements
of counsel for the Lender and of any experts and agents, which the Lender may incur or which may otherwise be due and payable
in connection with: (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver,
subordination, or other modification or termination of this Agreement or any other Loan Documents (provided that there shall be
no fees for the preparation and negotiation of this Agreement other than as specifically set forth in the closing or settlement
statement executed by Borrowers and Lender on the First Closing); (ii) any documentary stamp taxes, intangibles taxes, recording
fees, filing fees, or other similar taxes, fees or charges imposed by or due to any Governmental Authority in connection with
this Agreement or any other Loan Documents; (iii) the priority or perfection of any of Lender’s Liens on any Collateral;
(iv) the exercise or enforcement of any of the rights of the Lender under this Agreement or the Loan Documents; or (v) the
failure by the Credit Parties to perform or observe any of the provisions of this Agreement or any of the Loan Documents. Included
in the foregoing shall be the amount of all expenses paid or incurred by Lender in consulting with counsel concerning any of its
rights under this Agreement or any other Loan Document or under applicable law. All such costs and expenses, if not so immediately
paid when due or upon demand thereof, shall bear interest from the date of outlay until paid, at the Default Rate. All of such
costs and expenses shall be additional Obligations of the Credit Parties to Lender secured under the Loan Documents. The provisions
of this Subsection shall survive the termination of this Agreement.

  

    	 	18	 

     

    

 

(f) Investment
Banking Services Fees. The obligations of the Borrower set forth in the Investment Banking Services Agreement are additional
Obligations under this Agreement.

 

(g) Right
to Approve Transfer Agent. The Borrower hereby represents and warrants that the Borrower’s current Transfer Agent is
Action Stock Transfer (the “Transfer Agent”), whose contact information is as follows: 2469 E. Fort
Union Blvd., Suite 214, Salt Lake City, UT 84121. The Borrower hereby agrees that it shall not change the Transfer Agent, unless
the Lender first approves the proposed new Transfer Agent, such approval to be in Lender’s sole and absolute discretion.

 

(h) Matters
with Respect to Common Stock.

 

(i) Issuance
of Conversion Shares. The parties hereto acknowledge that pursuant to the terms of the Promissory Note, Lender has the right,
after the occurrence of an Event of Default, to convert amounts due under the Promissory Note into Common Stock in accordance
with the terms of the Promissory Note. In the event, for any reason, the Borrower fails to issue, or cause the Transfer Agent
to issue, any portion of the Common Stock issuable upon conversion of the Promissory Note (the “Conversion Shares”)
to Lender in connection with the exercise by Lender of any of its conversion rights under the Promissory Note, then the parties
hereto acknowledge that Lender shall irrevocably be entitled to deliver to the Transfer Agent, on behalf of itself and the Borrower,
a “Conversion Notice” (as defined in the Promissory Note) requesting the issuance of the Conversion Shares then issuable
in accordance with the terms of the Promissory Note, and the Transfer Agent, provided they are the acting transfer agent for the
Borrower at the time, shall, and the Borrower hereby irrevocably authorizes and directs the Transfer Agent to, without any further
confirmation or instructions from the Borrower, issue the Conversion Shares applicable to the Conversion Notice then being exercised,
and surrender to a nationally recognized overnight courier for delivery to Lender at the address specified in the Conversion Notice,
a certificate of the Common Stock of the Borrower, registered in the name of Lender or its designee, for the number of Conversion
Shares to which Lender shall be then entitled under the Promissory Note, as set forth in the Conversion Notice.

 

(ii) Issuance
of Additional Common Stock. The parties hereto acknowledge that the Borrower has agreed to issue, either under this Agreement
or other Loan Documents, certain shares of the Borrower’s Common Stock. In the event, for any reason, the Borrower fails
to issue, or cause its Transfer Agent to issue, any portion of the Common Stock issuable to Lender hereunder or thereunder, either
now or in the future, then the parties hereto acknowledge that Lender shall irrevocably be entitled to deliver to the Transfer
Agent, on behalf of itself and the Borrower, a written instruction requesting the issuance of the shares of Common Stock then
issuable, and the Transfer Agent, provided they are the acting transfer agent for the Borrower at the time, shall, and the Borrower
hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Borrower,
issue such shares of the Borrower’s Common Stock as directed by Lender, and surrender to a nationally recognized overnight
courier for delivery to Lender at the address specified in the Lender’s notice, a certificate of the Common Stock of the
Borrower, registered in the name of Lender, for the number of shares of Common Stock issuable to Lender in accordance herewith
and therewith.

  

    	 	19	 

     

    

 

(iii) Removal
of Restrictive Legends. In the event that Lender has any shares of the Borrower’s Common Stock bearing any restrictive
legends, and Lender, through its counsel or other representatives, submits to the Transfer Agent any such shares for the removal
of the restrictive legends thereon, whether in connection with a sale of such shares pursuant to any exemption to the registration
requirements under the Securities Act, or otherwise, and the Borrower and or its counsel refuses or fails for any reason to render
an opinion of counsel or any other documents, certificates or instructions required for the removal of the restrictive legends,
then: (A) to the extent such legends could be lawfully removed under applicable laws, Borrower’s failure to provide the
required opinion of counsel or any other documents, certificates or instructions required for the removal of the restrictive legends
shall be an immediate Event of Default under this Agreement and all other Loan Documents; and (B) the Borrower hereby agrees and
acknowledges that Lender is hereby irrevocably and expressly authorized to have counsel to Lender render any and all opinions
and other certificates or instruments which may be required for purposes of removing such restrictive legends, and the Borrower
hereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Borrower,
issue any such shares without restrictive legends as instructed by Lender, and surrender to a common carrier for overnight delivery
to the address as specified by Lender, certificates, registered in the name of Lender or its designees, representing the shares
of Common Stock to which Lender is entitled, without any restrictive legends and otherwise freely transferable on the books and
records of the Borrower.

 

(iv) Authorized
Agent of the Borrower. The Borrower hereby irrevocably appoints the Lender and its counsel and its representatives, each as
the Borrower’s duly authorized agent and attorney-in-fact for the Borrower for the purposes of authorizing and instructing
the Transfer Agent to process issuances, transfers and legend removals upon instructions from Lender, or any counsel or representatives
of Lender, as specifically contemplated herein. The authorization and power of attorney granted hereby is coupled with an interest
and is irrevocable so long as any Obligations of the Borrower under this Agreement or any other Loan Documents remain outstanding,
and so long as the Lender owns or has the right to receive, any shares of the Borrower’s Common Stock hereunder or under
the Promissory Note. In this regard, the Borrower hereby confirms to the Transfer Agent and the Lender that it can NOT
and will NOT give instructions, including stop orders or otherwise, inconsistent with the terms of this Agreement with
regard to the matters contemplated herein, and that the Lender shall have the absolute right to provide a copy of this Agreement
to the Transfer Agent as evidence of the Borrower’s irrevocable authority for Lender and Transfer Agent to process issuances,
transfers and legend removals upon instructions from Lender, or any counsel or representatives of Lender, as specifically contemplated
herein, without any further instructions, orders or confirmations from the Borrower.

 

(v) Injunction
and Specific Performance. The Borrower specifically acknowledges and agrees that in the event of a breach or threatened breach
by the Borrower of any provision of this Section 2.5(h), the Lender will be irreparably damaged and that damages at law
would be an inadequate remedy if this Agreement were not specifically enforced.  Therefore, in the event of a breach or threatened
breach of any provision of this Section 2.5(h) by the Borrower, the Lender shall be entitled to obtain, in addition to
all other rights or remedies Lender may have, at law or in equity, an injunction restraining such breach, without being required
to show any actual damage or to post any bond or other security, and/or to a decree for specific performance of the provisions
of this Section.

  

    	 	20	 

     

    

 

2.6 Interest
and Fee Computation; Collection of Funds. Interest accrued hereunder shall be payable as set forth in this Agreement and the
Promissory Note. Except as otherwise set forth herein, all interest and fees shall be calculated on the basis of a year consisting
of 360 days and shall be paid for the actual number of days elapsed. Principal payments submitted in funds not immediately available
shall continue to bear interest until collected. If any payment to be made by Borrower hereunder or under the Promissory Note
shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension
of time shall be included in computing any interest in respect of such payment. Any Obligations which are not paid when due (subject
to applicable grace periods) shall bear interest at the Default Rate.

 

2.7 Automatic
Debit. In order to effectuate the timely payment of any of the Obligations when due, Borrower hereby authorizes and directs
Lender, at Lender’s option, to: (i) debit, or cause or instruct the debit of, the amount of the Obligations to any ordinary
deposit account of Borrower; or (ii) make an Additional Loan hereunder to pay the amount of the Obligations.

 

2.8 Discretionary
Disbursements. Lender, in its sole and absolute discretion, may immediately upon notice to Borrower, disburse any or all proceeds
of the Loans made or available to Borrower pursuant to this Agreement to pay any fees, costs, expenses or other amounts required
to be paid by Borrower hereunder and not so paid. All monies so disbursed shall be a part of the Obligations, payable by Borrower
on demand from Lender.

 

2.9 US
Dollars; Currency Risk. All revenues collected by any Credit Parties and deposited into the Payment Account or any other accounts
of any Credit Parties will be in Dollars. In the event any such revenues are not in Dollars, Borrower shall bear the risk of Lender’s
currency losses, and if Lender suffers a currency loss and the result is to increase the cost to Lender or to reduce the amount
of any sum received or receivable by Lender under this Agreement or under the Promissory Note with respect thereto, then after
demand by Lender (which demand shall be accompanied by a certificate setting forth reasonably detailed calculations of the basis
of such demand), Borrower shall pay to Lender such additional amount or amounts as will compensate Lender for such increased cost
or such reduction.

 

3. CONDITIONS
OF BORROWING.

 

Notwithstanding
any other provision of this Agreement, the obligation of Lender to disburse or make all or any portion of any Loans is subject
to satisfaction of all of the following conditions precedent (unless a condition is waived in writing by Lender) contained in
this Article 3.

 

3.1 Loan
Documents to be Executed by Credit Parties. As a condition precedent to Lender’s disbursal or making of the Loans pursuant
to this Agreement, Credit Parties shall have executed or cause to be executed and delivered to Lender all of the following documents,
each of which must be satisfactory to Lender and Lender’s counsel in form, substance and execution:

   

(a) Credit
Agreement. An original of this Agreement, duly executed by Borrower and consented and agreed to by the Guarantors;

  

    	 	21	 

     

    

 

(b) Promissory
Note. An original Promissory Note, duly executed by Borrower and consented and agreed to by the Guarantors;

 

(c) Security
Agreement. An original of the Security Agreements, duly executed by the Credit Parties;

 

(d) Guaranty
Agreement. An original of the Guaranty Agreements, duly executed by the Corporate Guarantors;

 

(e) Validity
Certificates. An original of each Validity Certificate, duly executed by such officers and directors of Borrower as Lender
shall require;

 

(f) ACH
Agreement. An original of the ACH authorization agreement, duly executed by Borrower;

 

(g) Pledge
Agreements. An original of the Pledge Agreements, duly executed by the pledgors;

 

(h) Irrevocable
Transfer Agent Instructions. An original of the Irrevocable Transfer Agent Instructions, duly executed by the Borrower and
the Borrower’s Transfer Agent;

 

(i) Investment
Banking Services Agreement. An original of the Investment Banking Services Agreement duly executed by Borrower;

 

(j) Closing
Statement. An original of a closing or settlement statement, duly executed by the Borrower; and

 

(k) Additional
Documents. Such other agreements, documents, instruments, certificates, financial statements, schedules, resolutions, opinions
of counsel, notes and other items which Lender shall require in connection with this Agreement.

 

3.2 Organizational
and Authorization Documents. A certificate of the corporate secretary, manager, members or other officer, partner, manager
or equivalent authorized Person of each Credit Party certifying and attaching: (i) copies of each Credit Parties’ respective
articles of incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership
agreement, certificate of organization or other applicable formation or governing documents; (ii) resolutions of the board of
directors, managers, members, general partners or other Persons with proper authority to manage the affairs of, and otherwise
bind, each Credit Party, approving and authorizing the execution, delivery and performance of the Loan Documents to which it is
party and the transactions contemplated thereby; (iii) resolution of the Guarantors’ shareholders or members (if applicable),
approving and authorizing the execution, delivery and performance of the Loan Documents to which it is party and the transactions
contemplated thereby; and (iv) the signatures and incumbency of the officers, managers, members, partners or other authorized
Persons of each Credit Party executing any of the Loan Documents, each of which Borrower hereby certifies to be true and complete,
and in full force and effect without modification, it being understood that Lender may conclusively rely on each such document
and certificate until formally advised by Borrower of any changes therein.

  

    	 	22	 

     

    

 

3.3 Certificates
of Good Standing. Copies of certificates of good standing with respect to each Credit Party, issued by the Secretary of State
of the state of incorporation of each Credit Party, dated such a date as is reasonably acceptable to Lender, evidencing the good
standing thereof.

 

3.4 Search
Results. Copies of UCC search reports dated such a date as is reasonably acceptable to Lender, listing all effective financing
statements which name each Credit Party, under its present name and any previous names, as debtors, together with copies of such
financing statements.

 

3.5 Insurance.
Within thirty (30) days of the Effective Date, evidence satisfactory to Lender of the existence of insurance required to be maintained
pursuant to this Agreement and the Security Agreement, together with evidence that Lender has been named as additional insured
and lender’s loss payee, as applicable, on all related insurance policies.

 

3.6 Use
of Proceeds. A detailed summary of the Borrower’s use of the proceeds being funded hereunder.

 

3.7 Certificates.
Originals of certificates evidencing the shares and/or membership interests, as applicable, to be pledged in connection with the
Pledge Agreement.

 

3.8 Income
Statement / Profit and Loss Statement. An income statement or a profit and loss statement showing the consolidated revenues,
expenses, profits and losses of the Credit Parties for the twelve (12) month period ending the Effective Date, as well as a reasonable
projection of the consolidated revenues, expenses, profits and losses of the Credit Parties for the twelve (12) month period immediately
following the Effective Date.

 

3.9 Opinion
of Counsel. A customary opinion of Borrower’s counsel, in form satisfactory to Lender.

 

3.10 Perfection
of Lien on Collateral. The Credit Parties shall have duly authorized, executed and delivered any other related documentation
necessary or advisable to perfect the Lien on the Collateral in the jurisdiction of incorporation of the Credit Parties, including
such UCC-1 Financing Statements and any and all documents necessary to complete any filings which Lender shall require in connection
with this Agreement.

 

3.11 Payment
of Fees. Borrower shall have paid to Lender all fees, costs and expenses, including due diligence expenses, attorney’s
fees, search fees, title fees, documentation and filing fees (including documentary stamps and taxes payable on the face amount
of the Promissory Note).

 

3.12 Press
Release Authorization. Evidence satisfactory to the Lender that the Borrower has authorized the Lender to publish such press
releases with respect to this Agreement and the instant transaction, including a copy of an e-mail delivered to Marketwire.com
by the Borrower whereby the Borrower authorizes the Lender to use its name and, if applicable, stock symbol, in connection with
current or future press releases.

  

    	 	23	 

     

    

 

3.13 Event
of Default. No Event of Default, or event which, with notice or lapse of time, or both, would constitute an Event of Default,
shall have occurred and be continuing.

 

3.14 Adverse
Changes. There shall not have occurred any Material Adverse Effect.

 

3.15 Litigation.
No pending claim, investigation, litigation or other Proceeding shall have been instituted against any Credit Party or any of
their respective officers, shareholders, members, managers, partners, or other principals of any Credit Party.

 

3.16 Representations
and Warranties. No representation or warranty of any of the Credit Parties contained herein or in any Loan Documents shall
be untrue or incorrect in any material respect as of the date of any Loans as though made on such date, except to the extent such
representation or warranty expressly relates to an earlier date.

 

3.17 Due
Diligence. The business, legal and collateral due diligence review performed by Lender, including a review of the Credit Parties’
historical performance and financial information, must be acceptable to Lender in its sole discretion. Lender reserves the right
to increase any and all aspects of its due diligence in Lender’s sole discretion.

 

3.18 Key
Personnel Investigations. Lender shall be satisfied, in its sole discretion, with results from background investigations conducted
on key members of Borrower’s principals and management teams.

 

3.19 Repayment
of Outstanding Indebtedness. The Credit Parties shall have repaid in full all outstanding indebtedness secured by Collateral,
other than indebtedness giving rise to Permitted Liens.

 

3.20 Loan
Documents to be Executed by any Subsidiary following the Effective Date. Within ten (10) days of any entity becoming a Subsidiary
of any Credit Party, the following documents shall have executed or cause to be executed and delivered to Lender, each of which
must be satisfactory to Lender and Lender’s counsel in form, substance and execution:

 

(a) Consent
and Agreement. An original of a Consent and Agreement duly executed by such Subsidiary, pursuant to which such Subsidiary
consents and agrees to become a “Credit Party” hereunder and to be bound by the terms and conditions of this Agreement
and all other Loan Documents;

 

(b) Security
Agreement. An original of a Security Agreement, duly executed by such Subsidiary;

 

(c) Guaranty
Agreement. An original of a Guaranty Agreement, duly executed by such Subsidiary;

 

(d) Pledge
Agreement. An original of a Pledge Agreement, duly executed by the parent of the Subsidiary;

  

    	 	24	 

     

    

 

(e) Organizational
and Authorization Documents. A certificate of the corporate secretary, manager, members or other officer, partner, manager
or equivalent authorized Person of such Subsidiary certifying and attaching: (i) copies of such Subsidiary’s articles of
incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement,
certificate of organization or other applicable formation or governing documents; (ii) resolutions of the board of directors,
managers, members, general partners or other Persons with proper authority to manage the affairs of, and authorizing the execution,
delivery and performance of the Loan Documents to which it is party and the transactions contemplated thereby; (iii) resolution
of the Subsidiary’s shareholders (if applicable), approving and authorizing the execution, delivery and performance of the
Loan Documents to which it is or will become a party and the transactions contemplated thereby; and (iv) the signatures and incumbency
of the officers, managers, members, partners or other authorized Persons of such Subsidiary executing any of the Loan Documents,
each of which Borrower hereby certifies to be true and complete, and in full force and effect without modification, it being understood
that Lender may conclusively rely on each such document and certificate until formally advised by Borrower of any changes therein.

 

(f) Additional
Documents. Such other agreements, documents, instruments, certificates, financial statements, schedules, resolutions, opinions
of counsel, notes and other items which Lender shall require in connection with this Agreement and the other Loan Documents.

 

3.21 Loan
Documents to be Executed by each Credit Party Upon Each Subsequent Advance. As a condition precedent to Lender’s disbursal
or making of additional advances of principal pursuant to this Agreement following the Effective Date, the Credit Parties shall
have executed or caused to be executed and delivered to Lender all of the documents in this Section 3 applicable thereto,
and such documents shall remain in full force and effect as of the date of the subsequent principal advance.

 

4. NOTES
EVIDENCING LOANS.

 

4.1
Promissory Note. The Loans shall be evidenced by the Promissory Note (together with any and all renewal, extension, modification
or replacement notes executed by Borrower and delivered to Lender and given in substitution therefor) duly executed by Borrower,
and consented and agreed to by the Guarantors (if applicable), and payable to the order of Lender. At the time of the disbursement
of the Initial Loan and at each time an Additional Loan shall be requested hereunder or a repayment made in whole or in part thereon,
an appropriate notation thereof shall be made on the books and records of Lender. All amounts recorded shall be, absent demonstrable
error, conclusive and binding evidence of: (i) the principal amount of the Loans advanced hereunder; (ii) any unpaid interest
owing on the Loans; and (iii) all amounts repaid on the Loans. The failure to record any such amount or any error in recording
such amounts shall not, however, limit or otherwise adversely affect the obligations of Borrower under the Promissory Note to
repay the principal amount of the Loans, together with all other Obligations.

 

5. INTENTIONALLY
LEFT BLANK.

  

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6. SECURITY
FOR THE OBLIGATIONS.

 

6.1 Security
Agreement. To secure the payment and performance by Borrower of the Obligations hereunder, each of the Credit Parties grants,
under and pursuant to the Security Agreement executed by the Credit Parties dated as of the Effective Date, to Lender, its successors
and assigns, an unconditional, continuing, first-priority, perfected Lien and security interest in, and does hereby assign, transfer,
mortgage, convey, pledge, hypothecate and set over to Lender, its successors and assigns, all of the right, title and interest
of the Credit Parties in and to the Collateral, whether now owned or hereafter acquired, and all proceeds (including all insurance
proceeds) and products of any of the Collateral. At any time upon Lender’s request, the Credit Parties shall execute and
deliver to Lender any other documents, instruments or certificates requested by Lender for the purpose of properly documenting
and perfecting the security interests of Lender in and to the Collateral granted hereunder, including any additional security
agreements, mortgages, control agreements, and financing statements. The Security Agreements executed by the Credit Parties shall
terminate following the full payment and performance of all of the Obligations hereunder and under any Loan Document and upon
Lender’s express written acknowledgement of such full payment and performance being received by the Borrower.

 

6.2 Pledge
Agreements. To secure the payment and performance by Borrower of the Obligations hereunder, the Borrower, the Corporate Guarantors,
and certain principal shareholders of the Borrower (as determined by Lender in its sole discretion) shall grant, under and pursuant
to the Pledge Agreements executed by the Borrower, the Corporate Guarantors, and such principal shareholders, dated as of the
Effective Date, to Lender, its successors and assigns, a continuing, first-priority security interest in, and assignment, transference,
mortgage, conveyance, pledge, hypothecation and set over to Lender, its successors and assigns, all of the right, title and interest
of the Borrower, the Corporate Guarantors, and such principal shareholders, in and to all of the shares and/or membership interests,
as applicable, of Borrower and each Corporate Guarantor. At any time upon Lender’s request, the Borrower, the Corporate
Guarantors, and such principal shareholders shall execute and deliver to Lender any other documents, instruments or certificates
requested by Lender for the purpose of properly documenting and perfecting the security interests of Lender in and to the shares
of capital stock or membership interests of the Borrower and each Corporate Guarantor granted hereunder, including any additional
pledge agreements and financing statements. The Pledge Agreement executed by the Borrower, the Corporate Guarantors, and such
principal shareholders shall terminate following the full payment and performance of all of the Obligations hereunder and under
any Loan Document and upon Lender’s express written acknowledgement of such full payment and performance being received
by the Borrower.

 

7. REPRESENTATIONS
AND WARRANTIES OF THE CREDIT PARTIES.

 

To
induce Lender to make the Loans, the Credit Parties make the following representations and warranties to Lender, each of which
shall be true and correct in all material respects as of the date of the execution and delivery of this Agreement and as of the
date of each Loan made hereunder, except to the extent such representation expressly relates to an earlier date, and which shall
survive the execution and delivery of this Agreement:

 

7.1 Subsidiaries.
A list of all of the Borrower’s Subsidiaries and each of the Corporate Guarantors’ Subsidiaries (if applicable) are
listed on Schedule 7.1 hereto. All of such Subsidiaries are wholly-owned Subsidiaries of the Borrower or a Corporate
Guarantor, as applicable, and except for such Subsidiaries as listed on Schedule 7.1, no Borrower or Guarantor has
any Control over, any other Person.

  

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7.2 Borrower
Organization and Name. The Borrower and each Corporate Guarantor (if applicable) is a corporation, limited liability company,
or other form of legally recognized entity, as applicable, duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has the full power and authority and all necessary Permits to: (i) enter into and execute
this Agreement and the Loan Documents and to perform all of its obligations hereunder and thereunder; and (ii) own and operate
its assets and properties and to conduct and carry on its business as and to the extent now conducted. The Borrower and each Corporate
Guarantor (if applicable) is duly qualified to transact business and is in good standing as a foreign corporation, company or
other entity in each jurisdiction where the character of its business or the ownership or use and operation of its assets or properties
requires such qualification. The exact legal names of each of the Borrower and each Corporate Guarantor is as set forth in the
first paragraph of this Agreement, and neither the Borrower nor any Corporate Guarantor currently conduct, nor have the Borrower
or any Corporate Guarantor conducted, during the last five (5) years, business under any other name or trade name.

 

7.3 Authorization;
Validity. Each Credit Party has full right, power and authority to enter into this Agreement, to make the borrowings and execute
and deliver the Loan Documents as provided herein and to perform all of its duties and obligations under this Agreement and the
Loan Documents and no other action or consent on the part of the Credit Parties, its board of directors, stockholders, members,
managers, partners, or any other Person is necessary or required by the Credit Parties to execute this Agreement and the Loan
Documents, consummate the transactions contemplated herein and therein, and perform all of its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Loan Documents will not, nor will the observance or performance of any of
the matters and things herein or therein set forth, violate or contravene any provision of law or of the Credit Parties’
articles of incorporation, bylaws, operating agreement, partnership agreement, or other governing documents. All necessary and
appropriate action has been taken on the part of the Credit Parties to authorize the execution and delivery of this Agreement
and the Loan Documents and the issuance of the Promissory Note. This Agreement and the Loan Documents are valid and binding agreements
and contracts of the Credit Parties, enforceable against the Credit Parties in accordance with their respective terms, except
to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws enacted
for the relief of debtors generally and other similar laws affecting the enforcement of creditors’ rights generally or by
equitable principles which may affect the availability of specific performance and other equitable remedies. The Credit Parties
do not know of any reason why the Credit Parties cannot perform any of its obligations under this Agreement, the Loan Documents
or any related agreements.

  

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7.4 Capitalization.
The authorized capital stock or other capitalization of each Credit Party, as applicable, is as set forth in Schedule 7.4(a)
attached hereto. Schedule 7.4(a) shall specify, for each Credit Party, the total number of authorized shares
of capital stock or other securities (or functional equivalents thereof in the applicable jurisdiction), and of such authorized
shares or securities, the number which are designated as Common Stock, the number designated as preferred stock (the “Preferred
Stock”), or any other applicable designations. Schedule 7.4(a) shall also specify, for each Credit
Party, as applicable, as of the date hereof, the number of shares of Common Stock issued and outstanding and the number of shares
of Preferred Stock issued and outstanding, or, if applicable, the number and classes of other securities issued and outstanding,
and the names and amounts of such stock other securities owned by each Person who is a stockholder or owner of other securities
in any Credit Party. All of the outstanding shares of capital stock or other securities of each Credit Party are validly issued,
fully paid and non-assessable, have been issued in compliance with all foreign, federal and state securities laws and none of
such outstanding shares or other securities were issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. As of the date of this Agreement, no shares of capital stock or other securities of any Credit Party are
subject to preemptive rights or any other similar rights or any Liens suffered or permitted by any Credit Parties. The Common
Stock is currently quoted by the Principal Trading Market on the OTC “Pink” under the trading symbol “PACV”.
The Borrower has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for
quotation on the Principal Trading Market, and the Borrower has maintained all requirements on its part for the continuation of
such quotation. Except for the securities to be issued pursuant to this Agreement, and except as set forth in Schedule 7.4(b),
as of the date of this Agreement: (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock or other securities
of any Credit Party, or contracts, commitments, understandings or arrangements by which any Credit Party is or may become bound
to issue additional shares of capital stock or other securities of any Credit Party, or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital
stock or other securities of any Credit Party; (ii) there are no outstanding debt securities, notes, credit agreements, credit
facilities or other contracts or instruments evidencing Funded Indebtedness of any Credit Party, or by which any Credit Party
is or may become bound; (iii) there are no outstanding registration statements with respect to any Credit Party or any of
its securities and there are no outstanding comment letters from any Governmental Authority with respect to any securities of
any Credit Party; (iv) there are no agreements or arrangements under which any Credit Party is obligated to register the
sale of any of its securities under the Securities Act or any other laws of any Governmental Authority; (v) there are no financing
statements or other security interests or Liens filed with any Governmental Authority securing any obligations of any Credit Party,
or filed in connection with any assets or properties of any Credit Party; (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by this Agreement or any related agreement or the consummation of the
transactions described herein or therein; and (vii) there are no outstanding securities or instruments of any Credit Party which
contain any redemption or similar provisions, and there are no contracts or agreements by which any Credit Party is or may become
bound to redeem a security of any Credit Party. Borrower has furnished to the Lender true, complete and correct copies of, as
applicable, each Credit Parties’ respective articles of incorporation (including any certificates of designation, is applicable),
bylaws, operating agreement, partnership agreement, certificate of organization or similar organizational and governing documents.
Except for the documents delivered to Lender in accordance with the immediately preceding sentence, there are no other shareholder
agreements, voting agreements, operating agreements, or other contracts or agreements of any nature or kind that restrict, limit
or in any manner impose obligations, restrictions or limitations on the governance of any Credit Party.

  

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7.5 No
Conflicts; Consents and Approvals. The execution, delivery and performance of this Agreement and the Loan Documents, and the
consummation of the transactions contemplated hereby and thereby, including the issuance of the Promissory Note, will not: (i)
constitute a violation of or conflict with the any Credit Parties’ respective articles of incorporation (including any certificates
of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of organization or similar governing
or organizational documents; (ii) constitute a violation of, or a default or breach under (either immediately, upon notice, upon
lapse of time, or both), or conflicts with, or gives to any other Person any rights of termination, amendment, acceleration or
cancellation of, any provision of any contract or agreement to which any Credit Party is a party or by which any of its or their
assets or properties may be bound; (iii) constitute a violation of, or a default or breach under (either immediately, upon notice,
upon lapse of time, or both), or conflicts with, any order, writ, injunction, decree, or any other judgment of any nature whatsoever;
(iv) constitute a violation of, or conflict with, any law, rule, ordinance or other regulation (including foreign and United States
federal and state securities laws); or (v) result in the loss or adverse modification of, or the imposition of any fine, penalty
or other Lien, claim or encumbrance with respect to, any Permit granted or issued to, or otherwise held by or for the use of,
any Credit Party or any of its assets. The Credit Parties are not in violation of any Credit Parties’ respective articles
of incorporation (including any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement,
certificate of organization or similar governing or organizational documents, as applicable, and the Credit Parties are not in
default or breach (and no event has occurred which with notice or lapse of time or both could put any Credit Party in default
or breach) under, and the Credit Parties have not taken any action or failed to take any action that would give to any other Person
any rights of termination, amendment, acceleration or cancellation of, any contract or agreement to which any Credit Party is
a party or by which any property or assets of any Credit Party are bound or affected. No business of any Credit Party is being
conducted, and shall not be conducted, in violation of any law, rule, ordinance or other regulation. Except as specifically contemplated
by this Agreement, the Credit Parties are not required to obtain any consent or approval of, from, or with any Governmental Authority,
or any other Person, in order for it to execute, deliver or perform any of its obligations under this Agreement or the Loan Documents
in accordance with the terms hereof or thereof. All consents and approvals which any Credit Party is required to obtain pursuant
to the immediately preceding sentence have been obtained or effected on or prior to the Effective Date.

 

7.6 Issuance
of Securities. Any shares issued in accordance with the Investment Banking Services Agreement are duly authorized and, upon
issuance in accordance with the terms hereof, shall be duly issued, fully paid and non-assessable, and free from all Liens, claims,
charges, taxes, or other encumbrances with respect to the issue thereof, and will be issued in compliance with all applicable
United States federal and state securities laws and the laws of any foreign jurisdiction applicable to the issuance thereof. Any
shares issuable upon conversion of the Promissory Note, in accordance with the terms of the Promissory Note, are duly authorized
and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and non-assessable, and free from all
Liens, claims, charges, taxes, or other encumbrances with respect to the issue thereof, and will be issued in compliance with
all applicable United States federal and state securities laws and the laws of any foreign jurisdiction applicable to the issuance
thereof. The issuance of the Promissory Note, any shares issuable pursuant to the Promissory Note and any shares issuable pursuant
to the Investment Banking Services Agreement are and will be exempt from: (i) the registration and prospectus delivery requirements
of the Securities Act; (ii) the registration and/or qualification provisions of all applicable state and provincial securities
and “blue sky” laws; and (iii) any similar registration or qualification requirements of any foreign jurisdiction
or other Governmental Authority.

  

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7.7 Compliance
With Laws. The nature and transaction of the Credit Parties’ business and operations and the use of its properties and
assets, including the Collateral or any real estate owned, leased, or occupied by the Credit Parties, do not and during the term
of the Loans shall not, violate or conflict with any applicable law, statute, ordinance, rule, regulation or order of any kind
or nature, including the provisions of the Fair Labor Standards Act or any zoning, land use, building, noise abatement, occupational
health and safety or other laws, any Permit or any condition, grant, easement, covenant, condition or restriction, whether recorded
or not, except to the extent such violation or conflict would not result in a Material Adverse Effect.

 

7.8 Environmental
Laws and Hazardous Substances. Except to the extent that any of the following would not have a Material Adverse Effect (including
financial reserves, insurance policies and cure periods relating to compliance with applicable laws and Permits) and are used
in such amounts as are customary in the Ordinary Course of Business in compliance with all applicable Environmental Laws, the
Credit Parties represent and warrant to Lender that, to the best knowledge of each of the Credit Parties: (i) the Credit Parties
have not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials,
on or off any of the premises of the Credit Parties (whether or not owned by the Credit Parties) in any manner which at any time
violates any Environmental Law or any Permit, certificate, approval or similar authorization thereunder; (ii) the operations of
the Credit Parties comply in all material respects with all Environmental Laws and all Permits certificates, approvals and similar
authorizations thereunder; (iii) there has been no investigation, Proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other Person, nor is any of same pending or, to Credit Parties’ knowledge, threatened;
and (iv) the Credit Parties do not have any liability, contingent or otherwise, in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Material.

 

7.9 Collateral
Representations. No Person other than the Credit Parties, owns or has other rights in the Collateral, and the Collateral is
valid and genuine Collateral, free from any Lien of any kind, other than the Lien of Lender and Permitted Liens.

 

7.10 Financial
Statements. The Borrower has delivered to the Lender unaudited Balance Sheets as of November 30, 2017 and unaudited Statements
of Income and Cash Flow Statements for the twelve months ended December 31, 2017 (collectively, together with any financial statements
filed by the Borrower with the SEC, any Principal Trading Market, or any other Governmental Authority, if applicable, the “Financial
Statements”). The Financial Statements have been prepared in accordance with GAAP, consistently applied, during
the periods involved (except: (i) as may be otherwise indicated in such Financial Statements or the notes thereto; or (ii) in
the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements),
and fairly and accurately present in all material respects the consolidated financial position of the Credit Parties as of the
dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). To the best knowledge of the Credit Parties, no other information
provided by or on behalf of the Credit Parties to the Lender, either as a disclosure schedule to this Agreement, or otherwise
in connection with Lender’s due diligence investigation of the Credit Parties, contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under
which they are or were made, not misleading.

  

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7.11 Public
Documents. The Common Stock of the Borrower is registered pursuant to Section 12 of the Exchange Act and the Borrower is subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act. The Borrower has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC, the Principal Trading Market, or any other Governmental
Authority, as applicable (all of the foregoing filed within the two (2) years preceding the date hereof or amended after the date
hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference
therein, being hereinafter referred to as the “Public Documents”). The Borrower is current with its
filing obligations with the SEC, the Principal Trading Market, or any other Governmental Authority, as applicable, and all Public
Documents have been filed on a timely basis by the Borrower. The Borrower represents and warrants that true and complete copies
of the Public Documents are available on the SEC website or the Principal Trading Market website, as applicable (www.sec.gov,
or www.otcmarkets.com) at no charge to Lender, and Lender acknowledges that it may retrieve all Public Documents from such websites
and Lender’s access to such Public Documents through such website shall constitute delivery of the Public Documents to Lender;
provided, however, that if Lender is unable to obtain any of such Public Documents from such websites at no charge, as result
of such websites not being available or any other reason beyond Lender’s control, then upon request from Lender, the Borrower
shall deliver to Lender true and complete copies of such Public Documents. The Borrower shall also deliver to Lender true and
complete copies of all draft filings, reports, schedules, statements and other documents required to be filed with the requirements
of the Principal Trading Market that have been prepared but not filed with the Principal Trading Market as of the date hereof.
None of the Public Documents, at the time they were filed with the SEC, the Principal Trading Market, or other Governmental Authority,
as applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
None of the statements made in any such Public Documents is, or has been, required to be amended or updated under applicable law
(except for such statements as have been amended or updated in subsequent filings prior the date hereof, which amendments or updates
are also part of the Public Documents). As of their respective dates, the consolidated financial statements of the Borrower and
its Subsidiaries included in the Public Documents complied in all material respects with applicable accounting requirements and
any published rules and regulations of the SEC and Principal Trading Market with respect thereto.

 

7.12 Absence
of Certain Changes. Since the date of the most recent of the Financial Statements, none of the following have occurred:

 

(a) There
has been no event or circumstance of any nature whatsoever that has resulted in, or could reasonably be expected to result in,
a Material Adverse Effect; or

  

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(b) Any
transaction, event, action, development, payment, or any other matter of any nature whatsoever entered into by the Credit Parties
other than in the Ordinary Course of Business of the Credit Parties.

 

7.13 Litigation
and Taxes. There is no Proceeding pending, or to the best knowledge of the Credit Parties, threatened, against any Credit
Party or its officers, managers, members, shareholders or other principals, or against or affecting any of its assets. In addition,
there is no outstanding judgments, orders, writs, decrees or other similar matters or items against or affecting the Credit Parties,
its business or assets. The Credit Parties have not received any material complaint from any Customer, supplier, vendor or employee.
The Credit Parties have duly filed all applicable income or other tax returns and has paid all income or other taxes when due.
There is no Proceeding, controversy or objection pending or threatened in respect of any tax returns of the Credit Parties.

 

7.14 Event
of Default. No Event of Default has occurred and is continuing, and no event has occurred and is continuing which, with the
lapse of time, the giving of notice, or both, would constitute such an Event of Default under this Agreement or any of the other
Loan Documents, and the Credit Parties are not in default (without regard to grace or cure periods) under any contract or agreement
to which it is a party or by which any of their respective assets are bound.

 

7.15 ERISA
Obligations. To the best knowledge of each of the Credit Parties, all Employee Plans of the Credit Parties meet the minimum
funding standards of Section 302 of ERISA, where applicable, and each such Employee Plan that is intended to be qualified within
the meaning of Section 401 of the Internal Revenue Code of 1986 is qualified. No withdrawal liability has been incurred under
any such Employee Plans and no “Reportable Event” or “Prohibited Transaction” (as such terms are defined
in ERISA), has occurred with respect to any such Employee Plans, unless approved by the appropriate Governmental Authority. To
the best knowledge of each of the Credit Parties, the Credit Parties have promptly paid and discharged all obligations and liabilities
arising under the ERISA of a character which if unpaid or unperformed might result in the imposition of a Lien against any of
its properties or assets.

 

7.16 Adverse
Circumstances. No condition, circumstance, event, agreement, document, instrument, restriction, litigation or Proceeding (or
threatened litigation or Proceeding or basis therefor) exists which: (i) could adversely affect the validity or priority of the
Liens granted to Lender under the Loan Documents; (ii) could adversely affect the ability of the Credit Parties to perform its
obligations under the Loan Documents; (iii) would constitute a default under any of the Loan Documents; (iv) would constitute
such a default with the giving of notice or lapse of time or both; or (v) would constitute or give rise to a Material Adverse
Effect.

 

7.17 Liabilities
and Indebtedness of the Borrower. The Credit Parties do not have any Funded Indebtedness or any liabilities or obligations
of any nature whatsoever, except: (i) as disclosed in the Financial Statements; or (ii) liabilities and obligations incurred in
the Ordinary Course of Business since the date of the last Financial Statements which do not or would not, individually or in
the aggregate, exceed Ten Thousand and No/100 United States Dollars (US$10,000.00) or otherwise have a Material Adverse Effect.

  

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7.18 Real
Estate.

 

(a) Real
Property Ownership. Except for the Credit Party Leases and as otherwise disclosed in Schedule 7.18, Borrower
does not own any Real Property.

 

(b) Real
Property Leases. Except for ordinary leases for office space from which the Credit Parties conduct its business (the “Credit
Party Leases”), the Credit Parties do not lease any other Real Property. With respect to each of the Credit Party
Leases: (i) the Credit Parties have been in peaceful possession of the property leased thereunder and neither the Credit Parties
nor the landlord is in default thereunder; (ii) no waiver, indulgence or postponement of any of the obligations thereunder has
been granted by the Credit Parties or landlord thereunder; and (iii) there exists no event, occurrence, condition or act known
to the officers or directors of the Credit Parties which, upon notice or lapse of time or both, would be or could become a default
thereunder or which could result in the termination of the Credit Party Leases, or any of them, or have a Material Adverse Effect.
The Credit Parties have not violated nor breached any provision of any such Credit Party Leases, and all obligations required
to be performed by the Credit Parties under any of such Credit Party Leases have been fully, timely and properly performed. The
Credit Parties have delivered to the Lender true, correct and complete copies of all Credit Party Leases, including all modifications
and amendments thereto, whether in writing or otherwise. The Credit Parties have not received any written or oral notice to the
effect that any of the Credit Party Leases will not be renewed at the termination of the term of such Credit Party Leases, or
that the Credit Party Leases will be renewed only at higher rents.

 

7.19 Material
Contracts. An accurate, current and complete copy of each of the Material Contracts has been furnished to Lender, and each
of the Material Contracts constitutes the entire agreement of the respective parties thereto relating to the subject matter thereof.
There are no outstanding offers, bids, proposals or quotations made by any Credit Party which, if accepted, would create a Material
Contract with any Credit Party. Each of the Material Contracts is in full force and effect and is a valid and binding obligation
of the parties thereto in accordance with the terms and conditions thereof. To the best knowledge of each Credit Party, all obligations
required to be performed under the terms of each of the Material Contracts by any party thereto have been fully performed by all
parties thereto, and no party to any Material Contracts is in default with respect to any term or condition thereof, nor has any
event occurred which, through the passage of time or the giving of notice, or both, would constitute a default thereunder or would
cause the acceleration or modification of any obligation of any party thereto or the creation of any Lien, claim, charge or other
encumbrance upon any of the assets or properties of any Credit Party. Further, no Credit Party has received any notice, nor does
any Credit Party have any knowledge, of any pending or contemplated termination of any of the Material Contracts and, no such
termination is proposed or has been threatened, whether in writing or orally.

 

7.20 Title
to Assets. The Credit Parties have good and marketable title to, or a valid leasehold interest in, all of its assets and properties
which are material to its business and operations as presently conducted, free and clear of all Liens, claims, charges or other
encumbrances or restrictions on the transfer or use of same. Except as would not have a Material Adverse Effect, the assets and
properties of each Credit Party are in good operating condition and repair, ordinary wear and tear excepted, and are free of any
latent or patent defects which might impair their usefulness, and are suitable for the purposes for which they are currently used
and for the purposes for which they are proposed to be used.

  

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7.21 Intellectual
Property. The Credit Parties own or possess adequate and legally enforceable rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and all other intellectual property rights necessary to conduct its business as now
conducted (collectively, the “IP Rights”). All IP Rights, and any federal, state, local or foreign patent
and trademark office, or functional equivalent thereof where any such IP Rights may be filed or registered, is set forth in Schedule
7.21. All of the IP Rights are owned by the Credit Parties, except for IP rights licensed by the Credit Parties, which
licensed IP Rights are specifically outlined and described in Schedule 7.21. If any IP Rights are licensed by any
Credit Party, the underlying license agreement or other agreement pursuant to which such IP Rights are licensed (collectively,
the “License Agreements”), permits Lender to encumber such License Agreements without any further consent
or approval of any other Person, including the underlying owner of such IP Rights, such that if there was an Event of Default
and Lender foreclosed on all Collateral, Lender would have the right to use such IP Rights under the License Agreements, subject
only to Lender’s obligation to comply with the terms of such License Agreements. The Credit Parties do not have any knowledge
of any infringement by any Credit Party of any IP Rights of others, and, to the knowledge of the Credit Parties, there is no claim,
demand or Proceeding, or other demand of any nature being made or brought against, or to any Credit Party’s knowledge, being
threatened against, any Credit Party regarding IP Rights or other intellectual property infringement; and is the Credit Parties
are not aware of any facts or circumstances which might give rise to any of the foregoing.

 

7.22 Labor
and Employment Matters. The Credit Parties are not involved in any labor dispute or, to the knowledge of the Credit Parties,
is any such dispute threatened. To the knowledge of the Credit Parties and its officers, none of the employees of any Credit Party
is a member of a union and the Credit Parties believe that its relations with its employees are good. To the knowledge of the
Credit Parties and its officers, the Credit Parties have complied in all material respects with all laws, rules, ordinances and
regulations relating to employment matters, civil rights and equal employment opportunities.

 

7.23 Insurance.
The Credit Parties are each covered by valid, outstanding and enforceable policies of insurance which were issued to it by reputable
insurers of recognized financial responsibility, covering its properties, assets and business against losses and risks normally
insured against by other corporations or entities in the same or similar lines of businesses as the Credit Parties are engaged
and in coverage amounts which are prudent and typically and reasonably carried by such other corporations or entities (the “Insurance
Policies”). Such Insurance Policies are in full force and effect, and all premiums due thereon have been paid. None
of the Insurance Policies will lapse or terminate as a result of the transactions contemplated by this Agreement. The Credit Parties
have complied with the provisions of such Insurance Policies. The Credit Parties have not been refused any insurance coverage
sought or applied for and the Credit Parties do not have any reason to believe that it will not be able to renew its existing
Insurance Policies as and when such Insurance Policies expire or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the
earnings, business or operations of the Credit Parties.

  

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7.24 Permits.
The Credit Parties possess all Permits necessary to conduct its business, and the Credit Parties have not received any notice
of, or is otherwise involved in, any Proceedings relating to the revocation or modification of any such Permits. All such Permits
are valid and in full force and effect and the Credit Parties are in full compliance with the respective requirements of all such
Permits.

 

7.25 Lending
Relationship. The Credit Parties acknowledge and agree that the relationship hereby created with Lender is and has been conducted
on an open and arm’s length basis in which no fiduciary relationship exists and that Borrower has not relied, nor is relying
on, any such fiduciary relationship in executing this Agreement and in consummating the Loans.

 

7.26 Compliance
with Regulation U. No portion of the proceeds of the Loans shall be used by Borrower, or any Affiliates of Borrower, either
directly or indirectly, for the purpose of purchasing or carrying any margin stock, within the meaning of Regulation U as adopted
by the Board of Governors of the Federal Reserve System.

 

7.27 Governmental
Regulation. The Credit Parties are not, nor after giving effect to any Loan, will be, subject to regulation under the Public
Utility Holding Borrower Act of 1935, the Federal Power Act or the Investment Company Act of 1940 or to any federal or state statute
or regulation limiting its ability to incur indebtedness for borrowed money.

 

7.28 Bank
Accounts. Schedule 7.28 sets forth, with respect to each account of the Credit Parties with any bank, broker,
or other depository institution: (i) the name and account number of such account; (ii) the name and address of the institution
where such account is held; (iii) the name of any Person(s) holding a power of attorney with respect to such account, if any;
and (iv) the names of all authorized signatories and other Persons authorized to withdraw funds from each such account.

 

7.29 Places
of Business. The principal place of business of each of the Credit Parties is set forth on Schedule 7.29 and
the Credit Parties shall promptly notify Lender of any change in such location. The Credit Parties will not remove or permit the
Collateral to be removed from such locations without the prior written consent of Lender, except for: (i) certain heavy equipment
kept at third party sites when conducting business or maintenance; (ii) vehicles, containers and rolling stock; (iii) Inventory
sold or leased in the Ordinary Course of Business of the Credit Parties; and (iv) temporary removal of Collateral to other locations
for repair or maintenance as may be required from time to time in each instance in the Ordinary Course of Business of the Credit
Parties.

 

7.30 Illegal
Payments. Neither the Credit Parties, nor any director, officer, member, manager, agent, employee or other Person acting on
behalf of the Credit Parties has, in the course of his actions for, or on behalf of, the Credit Parties: (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made
any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

  

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7.31 Related
Party Transactions. Except for arm’s length transactions pursuant to which the Credit Parties make payments in the Ordinary
Course of Business of the Credit Parties upon terms no less favorable than the Credit Parties could obtain from third parties,
none of the officers, directors, managers, or employees of the Credit Parties, nor any stockholders, members or partners who own,
legally or beneficially, five percent (5%) or more of the ownership interests of the Credit Parties (each a “Material
Shareholder”), is presently a party to any transaction with the Credit Parties (other than for services as employees,
officers and directors), including any contract providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from, any officer, director or such employee or Material
Shareholder or, to the best knowledge of the Credit Parties, any other Person in which any officer, director, or any such employee
or Material Shareholder has a substantial or material interest in or of which any officer, director or employee of Borrower or
Material Shareholder is an officer, director, trustee or partner. There are no claims, demands, disputes or Proceedings of any
nature or kind between the Credit Parties and any officer, director or employee of the Credit Parties or any Material Shareholder,
or between any of them, relating to the Credit Parties.

 

7.32 Internal
Accounting Controls. The Credit Parties maintain a system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.

 

7.33 Brokerage
Fees. Except as set forth in Schedule 7.33, there is no Person acting on behalf of any Credit Party who is entitled
to or has any claim for any brokerage or finder’s fee or commission in connection with the execution of this Agreement or
the consummation of the transactions contemplated hereby. Any brokerage, finder fees, or commissions shall be due and payable
solely by Borrower pursuant to a separate agreement, but only if such separate agreement and payment of fees has been previously
approved by Lender, and only if such Person receiving such fees is properly licensed to receive and accept such fees.

 

7.34 Acknowledgment
Regarding Lender’s Loans. The Credit Parties acknowledge and agree that Lender is acting solely in the capacity of an
arm’s length lender with respect to this Agreement and the transactions contemplated hereby. The Credit Parties further
acknowledge that Lender is not acting as a financial advisor or fiduciary of the Credit Parties (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and any advice given by Lender or any of its representatives
or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the making of the
Loans hereunder by Lender. The Credit Parties further represent to Lender that the Credit Parties’ decision to enter into
this Agreement has been based solely on the independent evaluation by the Credit Parties and its representatives.

  

    	 	36	 

     

    

 

7.35 Seniority.
No Funded Indebtedness or other equity or debt security of the Credit Parties is senior to the Obligations in right of payment,
whether with respect to interest or upon liquidation or dissolution, or otherwise.

 

7.36 No
General Solicitation. Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or issuance of the Promissory Note.

 

7.37 No
Integrated Offering. Neither the Credit Parties, nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of the Promissory Note under the Securities Act or any similar laws of any foreign jurisdiction,
or cause this offering of such securities to be integrated with prior offerings by the Credit Parties for purposes of the Securities
Act or any similar laws of any foreign jurisdiction.

 

7.38 Private
Placement. Assuming the accuracy of the Lender’s representations and warranties set forth in Section 8 below,
no registration under the Securities Act or the laws, rules or regulation of any other Governmental Authority is required for
the issuance of the Promissory Note.

 

7.39 Complete
Information. This Agreement and all financial statements, schedules, certificates, confirmations, agreements, contracts, and
other materials submitted to Lender in connection with or in furtherance of this Agreement by or on behalf of the Credit Parties
fully and fairly states the matters with which they purport to deal, and do not misstate any material fact nor, separately or
in the aggregate, fail to state any material fact necessary to make the statements made not misleading.

 

7.40 Interpretation;
Reliance; Survival. Each warranty and representation made by the Credit Parties in this Agreement or pursuant hereto, or in
any other Loan Documents, is independent of all other warranties and representations made by the Credit Parties in this Agreement
or pursuant hereto, or in any other Loan Documents (whether or not covering identical, related or similar matters) and must be
independently and separately satisfied. Exceptions or qualifications to any such warranty or representation shall not be construed
as exceptions or qualifications to any other warranty or representation. Notwithstanding any investigation made by Lender or any
of its agents or representatives, or any rights to conduct such investigations, and notwithstanding any knowledge of facts determined
or determinable by Lender as a result of such investigation or right of investigation, the Lender has the unqualified right to
rely upon the representations and warranties made by the Credit Parties in this Agreement and in the Schedules attached hereto
or pursuant hereto, or in any other Loan Documents. Each and every representation and warranty of the Credit Parties made herein,
pursuant hereto, or in any other Loan Documents has been relied upon by Lender, and is material to the decision of the Lender
to enter into this Agreement and to make the Loans contemplated herein. All representations and warranties of the Credit Parties
made in this Agreement or pursuant hereto, or in any other Loan Documents, shall survive the Effective Date, the consummation
of any Loans made hereunder, and any investigation, and shall be deemed and construed as continuing representations and warranties.

  

    	 	37	 

     

    

 

8. REPRESENTATIONS
AND WARRANTIES OF LENDER.

 

Lender
makes the following representations and warranties to the Borrower, each of which shall be true and correct in all material respects
as of the date of the execution and delivery of this Agreement and as of the date of each Loan made hereunder, except to the extent
such representation expressly relates to an earlier date, and which shall survive the execution and delivery of this Agreement:

 

8.1 Investment
Purpose. Lender is acquiring the Promissory Note for its own account, for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under
the Securities Act.

 

8.2 Accredited
Investor Status. Lender is an “Accredited Investor” as that term is defined in Rule 501 of Regulation D promulgated
under the Securities Act.

 

8.3 Reliance
on Exemptions. Lender understands that the Promissory Note is being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that Borrower is relying in part upon
the truth and accuracy of, and Lender’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of Lender set forth herein in order to determine the availability of such exemptions and the eligibility of Lender
to acquire such securities.

 

8.4 Information.
Lender has been furnished with all materials it has requested relating to the business, finances and operations of the Credit
Parties and information deemed material by Lender to making an informed investment decision regarding the Promissory Note. Lender
has been afforded the opportunity to ask questions of the Credit Parties and its management. Neither such inquiries nor any other
due diligence investigations conducted by Lender or its representatives shall modify, amend or affect Lender’s right to
rely on the Credit Parties’ representations and warranties contained in Article 7 above or elsewhere in this Agreement
or in any other Loan Documents. Lender understands that its investment in the Promissory Note involves a high degree of risk.
Lender is in a position regarding the Credit Parties, which, based upon economic bargaining power, enabled and enables Lender
to obtain information from the Credit Parties in order to evaluate the merits and risks of this investment. Lender has sought
such accounting, legal and tax advice, as it has considered necessary to make an informed investment decision with respect to
the Promissory Note.

 

8.5 No
Governmental Review. Lender understands that no United States federal or state agency or any other Governmental Authority
has passed on or made any recommendation or endorsement of the Promissory Note, or the fairness or suitability of the investment
in the Promissory Note, nor have such authorities passed upon or endorsed the merits of the offering of the Promissory Note.

 

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8.6 Transfer
or Resale. Lender understands that: (i) the Promissory Note has not been and is not being registered under the Securities
Act or any other foreign or state securities laws, and may not be offered for sale, sold, assigned or transferred unless: (A)
subsequently registered thereunder; or (B) such securities to be sold, assigned or transferred may be sold, assigned or transferred
pursuant to an exemption from such registration requirements; and (ii) neither the Credit Parties nor any other Person is under
any obligation to register such securities under the Securities Act or any foreign or state securities laws or to comply with
the terms and conditions of any exemption thereunder, except as otherwise set forth in this Agreement.

 

8.7 Authorization,
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of Lender and is a valid
and binding agreement of Lender enforceable in accordance with its terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

8.8 Due
Formation of Lender. Lender is an entity that has been formed and validly exists and has not been organized for the specific
purpose of purchasing the Promissory Note and is not prohibited from doing so.

 

8.9 No
Legal Advice from Credit Parties. Lender acknowledges that it had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and investment and tax advisors. Lender is relying solely on
such counsel and advisors and not on any statements or representations of the Credit Parties or any of its representatives or
agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or
the securities laws of any jurisdiction; provided, however, the foregoing shall not modify, amend or affect Lender’s right
to rely on the Credit Parties’ representations and warranties contained in Article 7 above or in any other Loan Documents.

 

9. NEGATIVE
COVENANTS.

 

9.1 Indebtedness.
The Credit Parties shall not, either directly or indirectly, create, assume, incur or have outstanding any Funded Indebtedness
(including purchase money indebtedness), or become liable, whether as endorser, guarantor, surety or otherwise, for any debt or
obligation of any other Person, except:

 

(a) the
Obligations;

 

(b) endorsement
for collection or deposit of any commercial paper secured in the Ordinary Course of Business of the Credit Parties;

 

(c) obligations
for taxes, assessments, municipal or other governmental charges; provided, the same are being contested in good faith by
appropriate Proceedings and are insured against or bonded over to the satisfaction of Lender;

 

(d) obligations
for accounts payable, including any such obligations for any new Credit Party Leases entered into after the Effective Date, other
than for money borrowed, incurred in the Ordinary Course of Business of the Credit Parties; provided that any fees or other sums,
other than salary accrued in the Credit Parties’ Ordinary Course of Business, payable by the Credit Parties to any officer,
director, member, manager, principal, or Material Shareholder, shall be fully subordinated in right of payment to the prior payment
in full of the Obligations hereunder;

  

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(e) unsecured
intercompany Funded Indebtedness incurred in the Ordinary Course of Business of the Credit Parties;

 

(f) Funded
Indebtedness existing on the Effective Date and set forth in the Financial Statements, including any extensions or refinancings
of the foregoing, which do not increase the principal amount of such Funded Indebtedness as of the date of such extension or refinancing;
provided such Funded Indebtedness is subordinated to the Obligations owed to Lender pursuant to a subordination agreement, in
form and content acceptable to Lender in its sole discretion, which shall include an indefinite standstill on remedies and payment
blockage rights during any default;

 

(g) Funded
Indebtedness consisting of Capital Lease obligations or secured by Permitted Liens of the type described in clause (vii) of the
definition thereof not to exceed Fifty Thousand and No/100 United States Dollars (US$50,000.00) in the aggregate at any time;

 

(h) Contingent
Liabilities arising with respect to customary indemnification obligations in favor of purchasers in connection with dispositions
permitted hereunder;

 

(i) Contingent
Liabilities incurred in the Ordinary Course of Business with respect to surety and appeal bonds, performance bonds and other similar
obligations; and

 

(j) Contingent
Liabilities arising under indemnity agreements to title insurers to cause such title insurers to issue to Lender title insurance
policies.

 

9.2 Encumbrances.
The Credit Parties shall not, either directly or indirectly, create, assume, incur or suffer or permit to exist any Lien or charge
of any kind or character upon any asset of the Credit Parties, whether owned at the date hereof or hereafter acquired, except
Permitted Liens or as otherwise authorized by Lender in writing.

 

9.3 Investments.
The Credit Parties shall not, either directly or indirectly, make or have outstanding any new investments (whether through purchase
of stocks, obligations or otherwise) in, or loans or advances to, any other Person, or acquire all or any substantial part of
the assets, business, stock or other evidence of beneficial ownership of any other Person, except following:

 

(a) The
stock or other ownership interests in a Subsidiary existing as of the Effective Date;

 

(b) investments
in direct obligations of the United States or any state in the United States;

 

(c) trade
credit extended by the Credit Parties in the Ordinary Course of Business of the Credit Parties;

  

    	 	40	 

     

    

 

(d) investments
in securities of Customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency
of such Customers;

 

(e) investments
existing on the Effective Date and set forth in the Financial Statements;

 

(f) Contingent
Liabilities permitted pursuant to Section 9.1; or

 

(g) Capital
Expenditures permitted under Section 9.5.

 

9.4 Transfer;
Merger. The Credit Parties shall not, either directly or indirectly, permit a Change in Control, merge, consolidate, sell,
transfer, license, lease, encumber or otherwise dispose of all or any part of its property or business or all or any substantial
part of its assets, or sell or discount (with or without recourse) any of its Notes (as defined in the UCC), Chattel Paper, Payment
Intangibles or Accounts; provided, however, that the Credit Parties may:

 

(a) sell
or lease Inventory and Equipment in the Ordinary Course of Business of the Credit Parties;

 

(b) upon
not less than three (3) Business Days’ prior written notice to Lender, any Subsidiary of Borrower may merge with (so long
as the Borrower remains the surviving entity), or dissolve or liquidate into, or transfer its property to Borrower;

 

(c) dispose
of used, worn-out or surplus equipment in the Ordinary Course of Business of the Credit Parties;

 

(d) discount
or write-off overdue Accounts for collection in the Ordinary Course of Business of the Credit Parties;

 

(e) sell
or otherwise dispose (including cancellation of Funded Indebtedness) of any Investment permitted under Section 9.3 in the
Ordinary Course of Business of the Credit Parties; and

 

(f) grant
Permitted Liens.

 

9.5 Capital
Expenditures. Without Lender’s prior written consent, the Credit Parties shall not make or incur obligations for any
Capital Expenditures.

 

9.6 Issuance
of Stock. The Credit Parties shall not, either directly or indirectly, issue or distribute any capital stock or other securities
(including any securities convertible or exercisable into capital stock or other securities) of any Credit Party without the prior
written consent of Lender.

  

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9.7 Distributions;
Restricted Payments; Change in Management. The Credit Parties shall not: (i) purchase or redeem any shares of its capital
stock or other securities, or declare or pay any dividends or distributions, whether in cash or otherwise, set aside any funds
for any such purpose, or make any distribution of any kind to its shareholders, partners, or members, make any distribution of
its property or assets, or make any loans, advances or extensions of credit to, or investments in, any Persons, including such
Credit Parties’ Affiliates, officers, directors, members, managers, principals, Material Shareholders, or employees, without
the prior written consent of Lender; (ii) make any payments of any Funded Indebtedness other than as specifically permitted under
the Use of Proceeds Confirmation and as otherwise permitted hereunder; (iii) increase the annual salary paid to any officers of
the Credit Parties as of the Effective Date, unless any such increase is part of a written employment contract with any such officers
entered into prior to the Effective Date, a copy of which has been delivered to and approved by the Lender; or (iv) add, replace,
remove, or otherwise change any officers, managers, senior management positions or Persons with authority to bind the Borrower
and Corporate Guarantor from the officers, managers, senior management positions, or other such Persons existing as of the Effective
Date, unless approved by Lender in writing.

 

9.8 Use
of Proceeds. The Credit Parties shall not use any portion of the proceeds of the Loans, either directly or indirectly, for
the purpose of purchasing any securities underwritten by any Affiliate of Lender. In addition, the Credit Parties shall not use
any portion of the proceeds of the Loans, either directly or indirectly, for any of the following purposes: (i) to make any payment
towards any Funded Indebtedness of the Credit Parties or any Affiliates thereof, except as specifically permitted under the Use
of Proceeds Confirmation; (ii) to pay any taxes of any nature or kind that may be due by the Credit Parties or any Affiliates
thereof; (iii) to pay any obligations or liabilities of any nature or kind due or owing to any managers, officers, directors,
employees, members, principals, or Material Shareholders of the Credit Parties or any Affiliates thereof. The Credit Parties shall
only use the proceeds of the Loans (or any portion thereof) for the purposes set forth in a “Use of Proceeds Confirmation”
to be executed by Borrower on the Effective Date, unless Borrower obtains the prior written consent of Lender to use proceeds
of Loans for any other purpose, which consent may be granted or withheld by Lender in its sole and absolute discretion.

 

9.9 Business
Activities; Change of Legal Status and Organizational Documents. The Credit Parties shall not: (i) engage in any line of business
other than the businesses engaged in on the date hereof and business reasonably related thereto; (ii) change its name, its type
of organization, its jurisdictions of organization or other legal structure; or (iii) permit its articles of incorporation (including
any certificates of designation, is applicable), bylaws, operating agreement, partnership agreement, certificate of organization
or similar governing or organizational documents to be amended or modified in any way which could reasonably be expected to have
a Material Adverse Effect.

 

9.10 Transactions
with Affiliates. The Credit Parties shall not enter into any transaction with any of its Affiliates, except in the Ordinary
Course of Business of the Credit Parties and upon fair and reasonable terms that are no less favorable to the Credit Parties than
it would obtain in a comparable arm’s length transaction with a Person not an Affiliate of the Credit Parties.

 

9.11 Bank
Accounts. The Credit Parties shall not maintain any bank, deposit or credit card payment processing accounts with any financial
institution, or any other Person, for the Credit Parties or any Affiliate of the Credit Parties, other than the accounts of the
Credit Parties listed in the attached Schedule 7.28.

  

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10. AFFIRMATIVE
COVENANTS.

 

10.1 Compliance
with Regulatory Requirements. Upon demand by Lender, Borrower shall reimburse Lender for Lender’s additional costs and/or
reductions in the amount of principal or interest received or receivable by Lender if at any time after the date of this Agreement
any law, treaty or regulation or any change in any law, treaty or regulation or the interpretation thereof by any Governmental
Authority charged with the administration thereof or any other authority having jurisdiction over Lender or the Loans, whether
or not having the force of law, shall impose, modify or deem applicable any reserve and/or special deposit requirement against
or in respect of assets held by or deposits in or for the account of the Loans by Lender or impose on Lender any other condition
with respect to this Agreement or the Loans, the result of which is to either increase the cost to Lender of making or maintaining
the Loans or to reduce the amount of principal or interest received or receivable by Lender with respect to such Loans. Said additional
costs and/or reductions will be those which directly result from the imposition of such requirement or condition on the making
or maintaining of such Loans.

 

10.2 Corporate
Existence. The Credit Parties shall at all times preserve and maintain its: (i) existence and good standing in the jurisdiction
of its organization; and (ii) its qualification to do business and good standing in each jurisdiction where the nature of its
business makes such qualification necessary (other than such jurisdictions in which the failure to be qualified or in good standing
could not reasonably be expected to have a Material Adverse Effect), and shall at all times continue as a going concern in the
business which Borrower is presently conducting.

 

10.3 Maintain
Property. The Credit Parties shall at all times maintain, preserve and keep its plants, properties and equipment, including,
but not limited to, any Collateral, in good repair, working order and condition, normal wear and tear excepted, and shall from
time to time, as Borrower deems appropriate in its reasonable judgment, make all needful and proper repairs, renewals, replacements,
and additions thereto so that at all times the efficiency thereof shall be fully preserved and maintained. The Credit Parties
shall permit Lender to examine and inspect such plant, properties and equipment, including any Collateral, at all reasonable times
upon reasonable notice during business hours. During the continuance of any Event of Default, Lender shall, at the Credit Parties’
expense, have the right to make additional inspections without providing advance notice.

 

10.4 Maintain
Insurance. The Credit Parties’ shall at all times insure and keep insured with insurance companies acceptable to Lender,
all insurable property owned by the Credit Parties which is of a character usually insured by companies similarly situated and
operating like properties, against loss or damage from environmental, fire and such other hazards or risks as are customarily
insured against by companies similarly situated and operating like properties; and shall similarly insure employers’, public
and professional liability risks. Prior to the date of the funding of any Loans under this Agreement, Borrower shall deliver to
Lender a certificate setting forth in summary form the nature and extent of the insurance maintained pursuant to this Section.
All such policies of insurance must be satisfactory to Lender in relation to the amount and term of the Obligations and type and
value of the Collateral and assets of the Credit Parties, shall identify Lender as sole/lender’s loss payee and as an additional
insured. In the event the Credit Parties fail to provide Lender with evidence of the insurance coverage required by this Section
or at any time hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay any premium
in whole or in part relating thereto, then Lender, without waiving or releasing any obligation or default by Borrower hereunder,
may at any time (but shall be under no obligation to so act), obtain and maintain such policies of insurance and pay such premium
and take any other action with respect thereto, which Lender deems advisable. This insurance coverage: (i) may, but need not,
protect the Credit Parties’ interest in such property, including, but not limited to, the Collateral; and (ii) may not pay
any claim made by, or against, the Credit Parties in connection with such property, including, but not limited to, the Collateral.
The Credit Parties may later cancel any such insurance purchased by Lender, but only after providing Lender with evidence that
the insurance coverage required by this Section is in force. The costs of such insurance obtained by Lender, through and including
the effective date such insurance coverage is canceled or expires, shall be payable on demand by the Credit Parties to Lender,
together with interest at the Default Rate on such amounts until repaid and any other charges by Lender in connection with the
placement of such insurance. The costs of such insurance, which may be greater than the cost of insurance which the Credit Parties
may be able to obtain on its own, together with interest thereon at the Default Rate and any other charges by Lender in connection
with the placement of such insurance may be added to the total Obligations due and owing to the extent not paid by the Credit
Parties.

  

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10.5 Tax
Liabilities.

 

(a) The
Credit Parties shall at all times pay and discharge all property, income and other taxes, assessments and governmental charges
upon, and all claims (including claims for labor, materials and supplies) against the Credit Parties or any of its properties,
Equipment or Inventory, before the same shall become delinquent and before penalties accrue thereon, unless and to the extent
that the same are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with
GAAP are being maintained.

 

(b) Borrower
shall be solely responsible for the payment of any and all documentary stamps and other taxes in connection with the execution
of the Loan Documents.

 

10.6 ERISA
Liabilities; Employee Plans. The Credit Parties shall: (i) keep in full force and effect any and all Employee Plans which
are presently in existence or may, from time to time, come into existence under ERISA, and not withdraw from any such Employee
Plans, unless such withdrawal can be effected or such Employee Plans can be terminated without liability to the Credit Parties;
(ii) make contributions to all of such Employee Plans in a timely manner and in a sufficient amount to comply with the standards
of ERISA, including the minimum funding standards of ERISA; (iii) comply with all material requirements of ERISA which relate
to such Employee Plans; (iv) notify Lender immediately upon receipt by the Credit Parties of any notice concerning the imposition
of any withdrawal liability or of the institution of any Proceeding or other action which may result in the termination of any
such Employee Plans or the appointment of a trustee to administer such Employee Plans; (v) promptly advise Lender of the occurrence
of any “Reportable Event” or “Prohibited Transaction” (as such terms are defined in ERISA), with respect
to any such Employee Plans; and (vi) amend any Employee Plan that is intended to be qualified within the meaning of Section 401
of the Internal Revenue Code of 1986 to the extent necessary to keep the Employee Plan qualified, and to cause the Employee Plan
to be administered and operated in a manner that does not cause the Employee Plan to lose its qualified status.

  

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10.7 Financial
Statements. The Credit Parties shall at all times maintain a system of accounting capable of producing its individual and
consolidated financial statements in compliance with GAAP (provided that monthly financial statements shall not be required to
have footnote disclosure, are subject to normal year-end adjustments and need not be consolidated), and shall furnish to Lender
or its authorized representatives such information regarding the business affairs, operations and financial condition of the Credit
Parties as Lender may from time to time request or require, including, but not limited to:

 

(a) If
the Maturity Date is extended beyond the original term, as soon as available, and in any event, within ninety (90) days after
the close of each fiscal year, a copy of the annual audited consolidated financial statements of each of the Credit Parties, including
balance sheet, statement of income and retained earnings, statement of cash flows for the fiscal year then ended, in reasonable
detail, prepared and reviewed by an independent certified public accountant reasonably acceptable to Lender, containing an unqualified
opinion of such accountant;

 

(b) as
soon as available, and in any event, within thirty (30) days after the close of each fiscal quarter, a copy of the quarterly unaudited
consolidated financial statements of each of the Credit Parties, including balance sheet, statement of income and retained earnings,
statement of cash flows for the fiscal year then ended, in reasonable detail, prepared and certified as accurate in all material
respects by the President, Chief Executive Officer or Chief Financial Officer of the Credit Parties; and

 

(c) as
soon as available, and in any event, within ten (10) days following the end of each calendar month, a consolidated cash flow report
of the Borrower for the month then ended, in reasonable detail, prepared and certified as accurate in all material respects by
the President, Chief Executive Officer or Chief Financial Officer of Borrower.

 

No
change with respect to such accounting principles shall be made by the Credit Parties without giving prior notification to Lender.
The Credit Parties represent and warrant to Lender that the financial statements delivered to Lender at or prior to the execution
and delivery of this Agreement and to be delivered at all times thereafter accurately reflect and will accurately reflect the
financial condition of the Credit Parties in all material respects. Lender shall have the right at all times (and on reasonable
notice so long as there then does not exist any Event of Default) during business hours to inspect the books and records of the
Credit Parties and make extracts therefrom.

 

Borrower
agrees to advise Lender immediately, in writing, of the occurrence of any Material Adverse Effect, or the occurrence of any event,
circumstance or other happening that could be reasonably expected to lead to or become a Material Adverse Effect.

  

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10.8 Additional
Reporting Requirements. Borrower shall provide the following reports and statements to Lender as follows:

 

(a) On
or prior to the Effective Date, Borrower shall provide to Lender an income statement or profit and loss statement showing actual
results of the Borrower’s consolidated operations for the prior twelve (12) months, as well as an income statement projection
showing, in reasonable detail, the Borrower’s consolidated income statement projections for the twelve (12) calendar months
following the Effective Date (the “Income Projections”). In addition, on the first (1st)
day of every calendar month after the Effective Date, the Borrower shall provide to Lender a report comparing the Income Projections
to actual results. Any variance in the Income Projections to actual results that is more than ten percent (10%) (either above
or below) will require the Borrower to submit to Lender written explanations as to the nature and circumstances for the variance.

 

(b) On
the first (1st) day of every calendar month after the Effective Date, the Borrower shall provide to Lender a report
comparing the use of the proceeds of the Loans set forth in the Use of Proceeds Confirmation, with the actual use of such proceeds.
Any variance in the actual use of such proceeds from the amounts set forth in the approved Use of Proceeds Confirmation will require
the Borrower to submit to Lender written explanations as to the nature and circumstances for the variance.

 

(c) Borrower
shall submit to Lender true and correct copies of all bank statements (and statements from any other depository accounts, brokerage
accounts, or accounts with any Payment Processing Companies) received by the Credit Parties within five (5) days after the Credit
Parties’ receipt thereof from its bank.

 

(d) Promptly
upon receipt thereof, Borrower shall provide to Lender copies of interim and supplemental reports, if any, submitted to Borrower
by independent accountants in connection with any interim audit or review of the books of the Credit Parties.

 

10.9 Aged
Accounts/Payables Schedules. Upon request of Lender, Borrower shall promptly deliver to Lender an aged schedule of the Accounts
of the Credit Parties, listing the name and amount due from each customer and showing the aggregate amounts due from: (i) 0-30
days; (ii) 31-60 days; (iii) 61-90 days; (iv) 91-120 days; and (v) more than 120 days, and certified as accurate by the Chief
Financial Officer or the President of Borrower. Upon request by Lender, Borrower shall promptly deliver to Lender an aged schedule
of the accounts payable of the Credit Parties, listing the name and amount due to each creditor and showing the aggregate amounts
due from: (v) 0-30 days; (w) 31-60 days; (x) 61-90 days; (y) 91-120 days; and (z) more than 120 days, and certified as accurate
by the Chief Financial Officer or the President of Borrower.

 

10.10 Failure
to Provide Reports. If at any time during the term of this Agreement, Borrower shall fail to timely provide any reports required
to be provided by any Credit Party to Lender under this Agreement or any other Loan Document, in addition to all other rights
and remedies that Lender may have under this Agreement and the other Loan Documents, Lender shall have the right to require, at
each instance of any such failure, upon written notice to Borrower, that the Borrower redeem 2.5% of the aggregate amount of shares
of Common Stock then owned by Lender, which cash redemption payment shall be due and payable by ACH transfer from the Payment
Account or by wire transfer of Dollars to an account designated by Lender, at Lender’s sole discretion within five (5) Business
Days from the date the Lender delivers such redemption notice to the Borrower.

 

10.11 Covenant
Compliance. Borrower shall, within thirty (30) days after the end of each calendar month, deliver to Lender a Compliance Certificate
showing compliance by Borrower with the covenants therein, and certified as accurate by the President or Chief Executive Officer
of the Borrower.

 

 

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10.12 Continued
Due Diligence/Field Audits. Borrower acknowledges that during the term of this Agreement, Lender and its agents and representatives
undertake ongoing and continuing due diligence reviews of the Credit Parties and its business and operations. Such ongoing due
diligence reviews may include, and the Credit Parties do hereby allow Lender, to conduct site visits and field examinations of
the office locations of the Credit Parties and the assets and records of the Credit Parties, the results of which must be satisfactory
to Lender in Lender’s sole and absolute discretion. In this regard, in order to cover Lender’s expenses of the ongoing
due diligence reviews and any site visits or field examinations which Lender may undertake from time to time while this Agreement
is in effect, the Borrower shall pay to Lender, within five (5) Business Days after receipt of an invoice or demand therefor from
Lender, a fee of up to Ten Thousand and No/100 Dollars (US$10,000.00) per year (based on four (4) expected filed audits and ongoing
due diligence of Two Thousand Five Hundred and No/100 Dollars (US$2,500.00) per audit) to cover such ongoing expenses. Failure
to pay such fee as and when required shall be deemed an Event of Default under this Agreement and all other Loan Documents. The
foregoing notwithstanding, from and after the occurrence of an Event of Default or any event which with notice, lapse of time
or both, would become an Event of Default, Lender may conduct site visits, field examinations and other ongoing reviews of the
Credit Parties’ records, assets and operations at any time, in its sole discretion, without any limitations in terms of
number of site visits or examinations and without being limited to the fee hereby contemplated, all at the sole expense of Borrower,
provided, however that Lender shall give the Borrower four (4) Business Days advance notice prior to conducting any site visit
or field examinations and all site visits and field examinations will be conducted during normal business hours.

 

10.13 Notice
and Other Reports. Borrower shall provide prompt written notice to Lender if at any time the Credit Parties fail to comply
with any of the covenants in Section 11 herein. In addition, Borrower shall, within such period of time as Lender may reasonably
specify, deliver to Lender such other schedules and reports as Lender may reasonably require.

 

10.14 Collateral
Records. The Credit Parties shall keep full and accurate books and records relating to the Collateral and shall mark such
books and records to indicate Lender’s Lien in the Collateral including placing a legend, in form and content reasonably
acceptable to Lender, on all Chattel Paper created by the Credit Parties indicating that Lender has a Lien in such Chattel Paper.

 

10.15 Notice
of Proceedings. Borrower shall, promptly, but not more than five (5) days after knowledge thereof shall have come to the attention
of any officer of the Credit Parties, give written notice to Lender of all threatened or pending actions, suits, and Proceedings
before any Governmental Agency or other administrative agency, or before or involving any other Person, which may have a Material
Adverse Effect.

 

10.16 Notice
of Default. Borrower shall, promptly, but not more than five (5) days after the commencement thereof, give notice to Lender
in writing of the occurrence of an Event of Default or of any event which, with the lapse of time, the giving of notice or both,
would constitute an Event of Default hereunder.

  

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10.17 Environmental
Matters. If any release or threatened release or other disposal of Hazardous Substances shall occur or shall have occurred
on any real property or any other assets of the Credit Parties or any Subsidiary or Affiliate of the Credit Parties, the Credit
Parties shall cause the prompt containment and/or removal of such Hazardous Substances and the remediation and/or operation of
such real property or other assets as necessary to comply with all Environmental Laws and to preserve the value of such real property
or other assets. Without limiting the generality of the foregoing, the Credit Parties shall comply with any Federal or state judicial
or administrative order requiring the performance at any real property of the Credit Parties of activities in response to the
release or threatened release of a Hazardous Substance. To the extent that the transportation of Hazardous Substances is permitted
by this Agreement, Borrower shall dispose of such Hazardous Substances, or of any other wastes, only at licensed disposal facilities
operating in compliance with Environmental Laws.

 

10.18 Subsidiaries.
Any Subsidiary which is formed or acquired or otherwise becomes a Subsidiary of the Credit Parties following the date hereof,
within five (5) Business Days of such event, shall become an additional the Credit Party hereto, and the Borrower shall take any
and all actions necessary or required by Lender to cause said Subsidiary to execute a counterpart to this Agreement and any and
all other documents which the Lender shall require, including causing such party to execute those documents contained in Section
3.12 hereof.

 

10.19 Reporting
Status; Listing. So long as this Agreement remains in effect, and for so long as Lender owns, legally or beneficially, any
shares of Common Stock, the Borrower shall: (i) file in a timely manner all reports required to be filed with the Principal Trading
Market, and, to provide a copy thereof to the Lender promptly after such filing; (ii) if required by the rules and regulations
of the Principal Trading Market, promptly secure the listing of shares of the Borrower’s Common Stock issuable to Lender
under any Loan Documents upon the Principal Trading Market (subject to official notice of issuance) and, take all reasonable action
under its control to maintain the continued listing, quotation and trading of its Common Stock on the Principal Trading Market,
and the Borrower shall comply in all respects with the Borrower’s reporting, filing and other obligations under the bylaws
or rules of the Principal Trading Market and governmental authorities, as applicable. The Borrower shall promptly provide to Lender
copies of any notices it receives from the SEC or any Principal Trading Market, to the extent any such notices could in any way
have or be reasonably expected to have a Material Adverse Effect.

 

10.20 Rule
144. With a view to making available to Lender the benefits of Rule 144 under the Securities Act (“Rule 144”),
or any similar rule or regulation of the SEC that may at any time permit Lender to sell shares of Common Stock issuable to Lender
under any Loan Documents to the public without registration, the Borrower represents and warrants that: (i) Borrower is not an
issuer defined as a “Shell Company” (as hereinafter defined); and (ii) if Borrower has, at any time, been an issuer
defined as a “Shell Company,” Borrower has not been an issuer defined as a Shell Company for at least twelve (12)
months prior to the Effective Date. For the purposes hereof, the term “Shell Company” shall mean an
issuer that meets the description defined under Rule 144. In addition, so long as Lender owns, legally or beneficially, any securities
of Borrower, Borrower shall, at its sole expense:

 

(a) Make,
keep and ensure that adequate current public information with respect to Borrower, as required in accordance with Rule 144, is
publicly available;

  

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(b) furnish
to the Lender, promptly upon reasonable request: (A) a written statement by Borrower that it has complied with the reporting requirements
of Rule 144; and (b) such other information as may be reasonably requested by Lender to permit the Lender to sell any shares of
Common Stock acquired hereunder, under the Promissory Note, or any other Loan Documents pursuant to Rule 144 without limitation
or restriction; and

 

(c) promptly
at the request of Lender, give Borrower’s Transfer Agent instructions to the effect that, upon the Transfer Agent’s
receipt from Lender of a certificate (a “Rule 144 Certificate”) certifying that Lender’s holding
period (as determined in accordance with the provisions of Rule 144) for any portion of shares of Common Stock issuable to Lender
under any of the Loan Documents which Lender proposes to sell (or any portion of such shares which Lender is not presently selling,
but for which Lender desires to remove any restrictive legends applicable thereto) (the “Securities Being Sold”)
is not less than the required holding period pursuant to Rule 144, and receipt by the Transfer Agent of the “Rule 144 Opinion”
(as hereinafter defined) from Borrower or its counsel (or from Lender and its counsel as permitted below), the Transfer Agent
is to effect the transfer (or issuance of a new certificate without restrictive legends, if applicable) of the Securities Being
Sold and issue to Lender or transferee(s) thereof one or more stock certificates representing the transferred (or re-issued) Securities
Being Sold without any restrictive legend and without recording any restrictions on the transferability of such shares on the
Transfer Agent’s books and records. In this regard, upon Lender’s request, Borrower shall have an affirmative obligation
to cause its counsel to promptly issue to the Transfer Agent a legal opinion providing that, based on the Rule 144 Certificate,
the Securities Being Sold may be sold pursuant to the provisions of Rule 144, even in the absence of an effective registration
statement, or re-issued without any restrictive legends pursuant to the provisions of Rule 144, even in the absence of an effective
registration statement (the “Rule 144 Opinion”). If the Transfer Agent requires any additional documentation
in connection with any proposed transfer (or re-issuance) by Lender of any Securities Being Sold, Borrower shall promptly deliver
or cause to be delivered to the Transfer Agent or to any other Person, all such additional documentation as may be necessary to
effectuate the transfer (or re-issuance) of the Securities Being Sold and the issuance of an unlegended certificate to any such
Lender or any transferee thereof, all at Borrower’s expense. Any and all fees, charges or expenses, including, without limitation,
attorneys’ fees and costs, incurred by Lender in connection with issuance of any such shares, or the removal of any restrictive
legends thereon, or the transfer of any such shares to any assignee of Lender, shall be paid by Borrower, and if not paid by Borrower,
the Lender may, but shall not be required to, pay any such fees, charges or expenses, and the amount thereof, together with interest
thereon at the highest non-usurious rate permitted by law, from the date of outlay, until paid in full, shall be due and payable
by Borrower to Lender immediately upon demand therefor, and all such amounts advanced by the Lender shall be additional Obligations
due under this Agreement and the Promissory Note and secured under the Loan Documents. In the event that the Borrower and/or its
counsel refuses or fails for any reason to render the Rule 144 Opinion or any other documents, certificates or instructions required
to effectuate the transfer (or re-issuance) of the Securities Being Sold and the issuance of an unlegended certificate to any
such Lender or any transferee thereof, then: (A) to the extent the Securities Being Sold could be lawfully transferred (or re-issued)
without restrictions under applicable laws, Borrower’s failure to promptly provide the Rule 144 Opinion or any other documents,
certificates or instructions required to effectuate the transfer (or re-issuance) of the Securities Being Sold and the issuance
of an unlegended certificate to any such Lender or any transferee thereof shall be an immediate Event of Default under this Agreement
and all other Loan Documents; and (B) the Borrower hereby agrees and acknowledges that Lender is hereby irrevocably and expressly
authorized to have counsel to Lender render any and all opinions and other certificates or instruments which may be required for
purposes of effectuating the transfer (or re-issuance) of the Securities Being Sold and the issuance of an unlegended certificate
to any such Lender or any transferee thereof, and the Borrower hereby irrevocably authorizes and directs the Transfer Agent to,
without any further confirmation or instructions from the Borrower, transfer or re-issue any such Securities Being Sold as instructed
by Lender and its counsel.

  

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10.21 Reservation
of Shares. Borrower shall take all action reasonably necessary to at all times have authorized, and reserved for the purpose
of issuance, such number of shares of Common Stock as shall be necessary to effect the full conversion of the Promissory Note
in accordance with its terms (the “Share Reserve”). If at any time the Share Reserve is insufficient
to effect the full conversion of the Promissory Note then outstanding, Borrower shall increase the Share Reserve accordingly.
If Borrower does not have sufficient authorized and unissued shares of Common Stock available to increase the Share Reserve, Borrower
shall call and hold a special meeting of the shareholders within forty-five (45) days of such occurrence, or take action by the
written consent of the holders of a majority of the outstanding shares of Common Stock, if possible, for the sole purpose of increasing
the number of shares authorized. Borrower’s management shall recommend to the shareholders to vote in favor of increasing
the number of shares of Common Stock authorized.

 

10.22 Debt-Exchange.
If at any time: (i) the Borrower is in an “Over-Advance” (as such term is hereinafter defined); (ii) there is an Event
of Default; or (ii) if there is an event which has occurred that, with the passage of time, the giving of notice, or both, would
constitute an Event of Default, the Lender shall have the option to sell the Obligations, or a portion thereof, to a debt buyer
approved by Lender, which debt buyer shall then convert such debt into equity through a debt exchange under Section 3(a)(9) or
3(a)(10) of the Securities Act (the “Debt Exchange”). The Credit Parties agree to enter into the Debt
Exchange upon Lender’s demand, and the Credit Parties shall execute and deliver any and all agreements or documents related
to such Debt Exchange, as may be required by Lender or such debt buyer, and to otherwise cooperate in any other respect to accomplish
the Debt Exchange.

 

11. FINANCIAL
COVENANTS.

 

11.1 Revenue
Covenant. For each calendar quarter while this Agreement remains in effect, the Credit Parties shall have sales revenues for
such calendar quarter that are not less than seventy-five percent (75%) of the sales revenues shown for the corresponding calendar
quarter on the most recent of the Financial Statements (i.e. comparing third quarter results to the prior years’ third quarter
results).

  

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11.2 Loan
to Value Ratio. The aggregate outstanding principal balance of all Loans hereunder shall never exceed the lesser of: (i) eighty
percent (80%) of the then existing Eligible Accounts; or (ii) eighty percent (80%) of the value of all Collateral, as determined
by Lender in its sole and absolute discretion (the “Loan Availability”). In the event at any time the
aggregate outstanding principal balance of all Loans hereunder exceeds the Loan Availability (an “Over-advance”),
Borrower shall be obligated to eliminate such Over-advance as follows: (A) if the Over-advance exists as of the Effective Date,
then: (I) Lender shall determine the amount of the Over-advance, as well as the estimated amount of a payment (“Estimated
Over-advance Payment”) to be made by Borrower at such payment intervals as Lender may determine, to be applied against
the principal balance of the outstanding Loans, such that the Over-advance would be eliminated over a one hundred twenty (120)
day period from the Effective Date (Lender shall have the right to modify the amount of the Estimated Over-advance Payment from
time to time upon notice to Borrower as necessary to cause the elimination of the Over-advance over the one hundred twenty (120)
day period contemplated hereby); and (II) Lender shall notify Borrower of the amount of the Estimated Over-advance Payment, and
on each payment interval selected by Lender, Borrower shall make the Estimated Over-Advance Payment to Lender; or (B) if an Over-advance
should occur after the Effective Date and during the term of this Agreement, then: (I) Lender shall determine, in its sole discretion,
whether: (1) the Over-advance needs to be paid immediately; or (2) the Over-advance can be cured during a period of time as determined
by Lender, in its sole discretion, and if so, what other conditions Lender may impose in connection with such cure period. If
Lender elects option (1), then Borrower shall, upon notice or demand from Lender, immediately make such repayments of the Loans
or take such other actions as shall be necessary to immediately eliminate such Over-advance in full. If Lender elects option (2)
above, then Lender shall determine the amount of the Over-advance, the cure period available to Borrower in which to eliminate
the Over-advance, and any other conditions to be satisfied by Borrower in connection with the cure period selected by Lender for
elimination of the Over-advance, as well as the Estimated Over-advance Payment to be made by Borrower at such payment intervals
as Lender may determine, to be applied against the principal balance of the outstanding Loans, such that the Over-advance would
be eliminated over whatever cure period shall have been elected by Lender, in its sole discretion (Lender shall have the right
to modify the amount of the Estimated Over-advance Payment from time to time upon notice to Borrower as necessary to cause the
elimination of the Over-advance over the cure period selected by Lender); and (II) Lender shall notify Borrower of the amount
of the Estimated Over-advance Payment, the cure period selected by Lender during which the Over-advance must be eliminated, and
any other conditions applicable thereto, and on each payment interval selected by Lender, Borrower shall make the Estimated Over-Advance
Payment to Lender, such that the Over-advance is eliminated in full in the period of time selected by Lender therefor. Credit
Parties shall also satisfy whatever other conditions may be imposed by Lender as conditions to allowing Credit Parties a cure
period to eliminate the Over-advance.

 

12. EVENTS
OF DEFAULT.

 

Credit
Parties, without notice or demand of any kind (except as specifically provided in this Agreement), shall be in default under this
Agreement upon the occurrence of any of the following events (each an “Event of Default”):

 

12.1 Nonpayment
of Obligations. Any amount due and owing on the Promissory Note or any of the Obligations, whether by its terms or as otherwise
provided herein, is not paid on the date such amount is due.

 

12.2 Misrepresentation.
Any written warranty, representation, certificate or statement of the Credit Parties in this Agreement, the Loan Documents or
any other agreement with Lender shall be false or misleading in any material respect when made or deemed made.

  

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12.3 Nonperformance.
Any failure to perform or default in the performance of any covenant, condition or agreement contained in this Agreement (not
otherwise addressed in this Article 12), which failure to perform or default in performance continues for a period of ten
(10) days after any Credit Party receives notice from Lender of such failure to perform or default in performance (provided that
if the failure to perform or default in performance is not capable of being cured, in Lender’s reasonable discretion, then
the cure period set forth herein shall not be applicable and the failure or default shall be an immediate Event of Default hereunder).

 

12.4 Default
under Loan Documents. Any failure to perform or default in the performance by any Credit Party that continues after applicable
grace and cure periods under any covenant, condition or agreement contained in any of the other Loan Documents or any other agreement
with Lender, all of which covenants, conditions and agreements are hereby incorporated in this Agreement by express reference.

 

12.5 Default
under Other Obligations. Any default by Borrower in the payment of principal, interest or any other sum for any other obligation
beyond any period of grace provided with respect thereto or in the performance of any, other term, condition or covenant contained
in any agreement (including any capital or operating lease or any agreement in connection with the deferred purchase price of
property), the effect of which default is to cause or permit the holder of such obligation (or the other party to such other agreement)
to cause such obligation or agreement to become due prior to its stated maturity, to terminate such other agreement, or to otherwise
modify or adversely affect such obligation or agreement in a manner that could have a Material Adverse Effect on any Credit Party.

 

12.6 Assignment
for Creditors. Any Credit Party makes an assignment for the benefit of creditors, fails to pay, or admits in writing its inability
to pay its debts as they mature; or if a trustee of any substantial part of the assets of the Credit Parties is applied for or
appointed, and in the case of such trustee being appointed in a Proceeding brought against any of the Credit Parties, the Credit
Parties, by any action or failure to act indicates its approval of, consent to, or acquiescence in such appointment and such appointment
is not vacated, stayed on appeal or otherwise shall not have ceased to continue in effect within sixty (60) days after the date
of such appointment.

 

12.7 Bankruptcy.
Any Proceeding involving any of the Credit Parties, is commenced by or against any of the Credit Parties under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law or statute of the federal government
or any state government, and in the case of any such Proceeding being instituted against any of the Credit Parties: (i) the Credit
Parties, by any action or failure to act, indicates its approval of, consent to or acquiescence therein; or (ii) an order shall
be entered approving the petition in such Proceedings and such order is not vacated, stayed on appeal or otherwise shall not have
ceased to continue in effect within sixty (60) days after the entry thereof.

 

12.8 Judgments.
The entry of any judgment, decree, levy, attachment, garnishment or other process, or the filing of any Lien against the property
of any of the Credit Parties, unless such judgment or other process shall have been, within sixty (60) days from the entry
thereof: (i) bonded over to the satisfaction of Lender and appealed; (ii) vacated; or (iii) discharged.

  

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12.9 Material
Adverse Effect. A Material Adverse Effect shall occur.

 

12.10 Change
in Control. Except as permitted under this Agreement, any Change in Control shall occur; provided, however, a Change in Control
shall not constitute an Event of Default if: (i) it arises out of an event or circumstance beyond the reasonable control of the
Credit Parties (for example, but not by way of limitation, a transfer of ownership interest due to death or incapacity); and (ii)
within sixty (60) days after such Change in Control, the Credit Parties provide Lender with information concerning the identity
and qualifications of the individual or individuals who will be in Control, and such individual or individuals shall be acceptable
to Lender, in Lender’s sole discretion.

 

12.11 Collateral
Impairment. The entry of any judgment, decree, levy, attachment, garnishment or other process, or the filing of any Lien against,
any of the Collateral or any collateral under a separate security agreement securing any of the Obligations, and such judgment
or other process shall not have been, within thirty (30) days from the entry thereof: (i) bonded over to the satisfaction of Lender
and appealed; (ii) vacated; or (iii) discharged, or the loss, theft, destruction, seizure or forfeiture, or the occurrence of
any material deterioration or impairment of any of the Collateral or any of the Collateral under any security agreement securing
any of the Obligations, or any material decline or depreciation in the value or market price thereof (whether actual or reasonably
anticipated), which causes the Collateral, in the sole opinion of Lender acting in good faith, to become unsatisfactory as to
value or character, or which causes Lender to reasonably believe that it is insecure and that the likelihood for repayment of
the Obligations is or will soon be impaired, time being of the essence. The cause of such deterioration, impairment, decline or
depreciation shall include, but is not limited to, the failure by the Credit Parties to do any act deemed reasonably necessary
by Lender to preserve and maintain the value and collectability of the Collateral.

 

12.12 Adverse
Change in Financial Condition. The determination in good faith by Lender that a material adverse change has occurred in the
financial condition or operations of the any of the Credit Parties, or the Collateral, which change could have a Material Adverse
Effect, or otherwise adversely affect the prospect for Lender to fully and punctually realize the full benefits conferred on Lender
by this Agreement, or the prospect of repayment of all Obligations.

 

12.13 Adverse
Change in Value of Collateral. The determination in good faith by Lender that the security for the Obligations is or has become
inadequate.

 

12.14 Prospect
of Payment or Performance. The determination in good faith by Lender that the prospect for payment or performance of any of
the Obligations is impaired for any reason.

  

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13. REMEDIES.

 

(a) Upon
the occurrence and during the continuance of an Event of Default, Lender shall have all rights, powers and remedies set forth
in the Loan Documents, in any written agreement or instrument (other than this Agreement or the Loan Documents) relating to any
of the Obligations or any security therefor, or as otherwise provided at law or in equity. Without limiting the generality of
the foregoing, Lender may, at its option, upon the occurrence and during the continuance of an Event of Default, declare its commitments
to Borrower to be terminated and all Obligations to be immediately due and payable; provided, however, that upon
the occurrence of an Event of Default under either Section 12.6, “Assignment for Creditors”, or Section
12.7, “Bankruptcy”, all commitments of Lender to Borrower shall immediately terminate and all Obligations shall
be automatically due and payable, all without demand, notice or further action of any kind required on the part of Lender. The
Credit Parties hereby waive any and all presentment, demand, notice of dishonor, protest, and all other notices and demands in
connection with the enforcement of Lender’s rights under the Loan Documents, and hereby consents to, and waives notice of
release, with or without consideration, of the Credit Parties or of any Collateral, notwithstanding anything contained herein
or in the Loan Documents to the contrary.

 

(b) No
Event of Default shall be waived by Lender, except and unless such waiver is in writing and signed by Lender. No failure or delay
on the part of Lender in exercising any right, power or remedy hereunder shall operate as a waiver of the exercise of the same
or any other right at any other time; nor shall any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or remedy hereunder. There shall be no obligation
on the part of Lender to exercise any remedy available to Lender in any order. The remedies provided for herein are cumulative
and not exclusive of any remedies provided at law or in equity. The Credit Parties agree that in the event that Borrower fails
to perform, observe or discharge any of its Obligations or liabilities under this Agreement, the Promissory Note, and other Loan
Documents, or any other agreements with Lender, no remedy of law will provide adequate relief to Lender, and further agrees that
Lender shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual
damages.

 

14. MISCELLANEOUS.

 

14.1 Obligations
Absolute. None of the following shall affect the Obligations of the Credit Parties to Lender under this Agreement or Lender’s
rights with respect to the Collateral:

 

(a) acceptance
or retention by Lender of other property or any interest in property as security for the Obligations;

 

(b) release
by Lender of all or any part of the Collateral or of any party liable with respect to the Obligations (other than Borrower);

 

(c) release,
extension, renewal, modification or substitution by Lender of the Promissory Note, or any note evidencing any of the Obligations;
or

 

(d) failure
of Lender to resort to any other security or to pursue the Credit Parties or any other obligor liable for any of the Obligations
before resorting to remedies against the Collateral.

 

14.2 Entire
Agreement. This Agreement and the other Loan Documents: (i) are valid, binding and enforceable against the Credit Parties
and Lender in accordance with its provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire
agreement between the parties; and (iii) are the final expression of the intentions of the Credit Parties and Lender. No promises,
either expressed or implied, exist between the Credit Parties and Lender, unless contained herein or in the Loan Documents. This
Agreement and the Loan Documents supersede all negotiations, representations, warranties, commitments, offers, contracts (of any
kind or nature, whether oral or written) prior to or contemporaneous with the execution hereof.

  

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14.3 Amendments;
Waivers. No amendment, modification, termination, discharge or waiver of any provision of this Agreement or of the Loan Documents,
or consent to any departure by the Credit Parties therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender, and then such waiver or consent shall be effective only for the specific purpose for which given.

 

14.4 WAIVER
OF DEFENSES. THE CREDIT PARTIES WAIVE EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE
CREDIT PARTIES MAY HAVE AS OF THE DATE HEREOF TO ANY ACTION BY LENDER IN ENFORCING THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
THE CREDIT PARTIES WAIVE ANY IMPLIED COVENANT OF GOOD FAITH AND RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO PURSUANT TO THE TERMS
OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AS OF THE DATE OF THIS AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER
GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER.

 

14.5 WAIVER
OF JURY TRIAL. LENDER AND CREDIT PARTIES, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE, IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON,
OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE PROMISSORY NOTE, ANY LOAN DOCUMENT OR ANY OF THE OBLIGATIONS,
THE COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE
OF CONDUCT OR COURSE OF DEALING IN WHICH LENDER AND CREDIT PARTIES ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR LENDER GRANTING ANY FINANCIAL ACCOMMODATION TO BORROWER.

 

14.6 MANDATORY
FORUM SELECTION.  TO INDUCE LENDER TO MAKE THE LOANS, CREDIT PARTIES IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER,
RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR
INCIDENTAL TO THIS AGREEMENT ANY OTHER LOAN DOCUMENT, OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT
OR TORT) SHALL, EXCEPT AS HEREINAFTER PROVIDED, BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL
COURTS LOCATED IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, LENDER MAY, AT LENDER’S SOLE OPTION, ELECT TO BRING ANY ACTION
IN ANY OTHER JURISDICTION.  THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED
BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW. BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE
OR FEDERAL COURT HAVING ITS SITUS IN SAID COUNTY (OR TO ANY OTHER JURISDICTION OR VENUE, IF LENDER SO ELECTS), AND WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS. CREDIT PARTIES HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER, AS SET FORTH HEREIN
OR IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.

  

    	 	55	 

     

    

 

14.7 Usury
Savings Clause. Notwithstanding any provision in this Agreement or the other Loan Documents, the total liability for payments
of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums
which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing
this Agreement or any other applicable law. In the event the total liability of payments of interest and payments in the nature
of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest,
shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period
exceeds the limit imposed by the usury laws of the jurisdiction governing this Agreement, all sums in excess of those lawfully
collectible as interest for the period in question shall, without further agreement or notice by, between, or to any party hereto,
be applied to the reduction of the outstanding principal balance of this Agreement immediately upon receipt of such sums by the
Lender, with the same force and effect as though the Borrower had specifically designated such excess sums to be so applied to
the reduction of such outstanding principal balance and the Lender hereof had agreed to accept such sums as a penalty-free payment
of principal; provided, however, that the Lender may, at any time and from time to time, elect, by notice in writing to the Borrower,
to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest rather than accept such
sums as a prepayment of the outstanding principal balance. It is the intention of the parties that the Borrower do not intend
or expect to pay nor does the Lender intend or expect to charge or collect any interest under this Agreement greater than the
highest non-usurious rate of interest which may be charged under applicable law.

 

14.8 Assignability.
Lender may at any time assign Lender’s rights in this Agreement, the Promissory Note, any Loan Documents, the Obligations,
or any part thereof, and transfer Lender’s rights in any or all of the Collateral, all without the Credit Parties’
consent or approval, and Lender thereafter shall be relieved from all liability with respect to such instrument or Collateral
so transferred. In addition, Lender may at any time sell one or more participations in the Loans, all without the Credit Parties’
consent or approval. The Credit Parties may not sell or assign this Agreement, any Loan Document or any other agreement with Lender,
or any portion thereof, either voluntarily or by operation of law, nor delegate any of its duties of obligations hereunder or
thereunder, without the prior written consent of Lender, which consent may be withheld in Lender’s sole and absolute discretion.
This Agreement shall be binding upon Lender and the Credit Parties and their respective legal representatives, successors and
permitted assigns. All references herein to a Credit Party shall be deemed to include any successors, whether immediate or remote.
In the case of a joint venture or partnership, the term “Borrower” or “Credit Party” shall be deemed to
include all joint venturers or partners thereof, who shall be jointly and severally liable hereunder.

  

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14.9 Confidentiality.
Each of the Credit Parties shall keep confidential any information obtained from Lender (except information publicly available
or in Credit Parties’ domain prior to disclosure of such information from Lender, and except as required by applicable laws)
and shall promptly return to the Lender all schedules, documents, instruments, work papers and other written information without
retaining copies thereof, previously furnished by it as a result of this Agreement or in connection herewith.

 

14.10 Publicity.
Lender shall have the right to approve, before issuance, any press release or any other public statement with respect to the transactions
contemplated hereby made by the Credit Parties; provided, however, that the Credit Parties shall be entitled, without the prior
approval of Lender, to issue any press release or other public disclosure with respect to such transactions required under applicable
securities or other laws or regulations. Notwithstanding the foregoing, the Credit Parties shall use its best efforts to consult
Lender in connection with any such press release or other public disclosure prior to its release and Lender shall be provided
with a copy thereof upon release thereof. Lender shall have the right to make any press release with respect to the transactions
contemplated hereby without the Credit Parties’ approval. In addition, with respect to any press release to be made by Lender,
Borrower hereby authorizes and grants blanket permission to Lender to include the Borrower’s stock symbol, if any, in any
press releases. Borrower shall, promptly upon request, execute any additional documents of authority or permission as may be requested
by Lender in connection with any such press releases.

 

14.11 Binding
Effect. This Agreement shall become effective upon execution by the Credit Parties and Lender.

 

14.12 Governing
Law. Except in the case of the Mandatory Forum Selection Clause in Section 14.6 above, which clause shall be governed
and interpreted in accordance with Florida law, this Agreement, the Loan Documents and the Promissory Note shall be delivered
and accepted in, and shall be deemed to be contracts made under and governed by, the internal laws of the State of Nevada, and
for all purposes shall be construed in accordance with the laws of the State of Nevada, without giving effect to the choice of
law provisions of such State. The governing law provisions of this Section 14.12 are a material inducement for Lender to
enter into this Agreement, and the Borrower hereby agrees, acknowledges and understands that the Lender would not have entered
into this Agreement, nor made or provided the Loans, without the full agreement and consent of the Credit Parties, with full knowledge
and understanding, that except in the case of the Mandatory Forum Selection Clause in Section 14.6 above, which clause
shall be governed and interpreted in accordance with Florida law, this Agreement, and each of the Loan Documents, shall be governed
by the internal laws of the State of Nevada, and for all purposes shall be construed in accordance with the laws of the State
of Nevada, without giving effect to the choice of law provisions. In this regard, each of the Credit Parties hereby acknowledges
that it has reviewed this Agreement and all Loan Documents, and specifically, this Section 14.12, with competent counsel
selected by the Credit Parties, and in that regard, each of the Credit Parties fully understands the choice of law provisions
set forth in this Section. In addition, each of the Credit Parties agrees, and acknowledges that it has had an opportunity to
negotiate the terms and provisions of this Agreement and the other Loan Documents with and through its counsel, and that the Credit
Parties have sufficient leverage and economic bargaining power, and have used such leverage and economic bargaining power, to
fairly and fully negotiate this Agreement and the other Loan Documents in a manner that is acceptable to the Credit Parties. Moreover,
because of the material nature of this choice of law provision in inducing Lender to enter into this Agreement and to make the
Loans to the Credit Parties, each of the Credit Parties hereby fully and absolutely waives any and all rights to make any claims,
counterclaims, defenses, to raise or make any arguments (including any claims, counterclaims, defenses, or arguments based on
grounds of public policy, unconscionability, or implied covenants of fair dealing and good faith), or to otherwise undertake any
litigation strategy or maneuver of any nature or kind that would result in, or which otherwise seeks to, invalidate this choice
of law provision, or that would otherwise result in or require the application of the laws of any other State other than the State
of Nevada in the interpretation or governance of this Agreement or any other Loan Documents (except for the Mandatory Forum Selection
clause in Section 14.6 hereof). Each of the Credit Parties has carefully considered this Section 14.12 and has carefully
reviewed its application and effect with competent counsel, and in that regard, fully understands and agrees that Lender would
not have entered into this Agreement, nor made the Loans, without the express agreement and acknowledgement of each of the Credit
Parties to this choice of law provision, and the express waivers set forth herein.

  

    	 	57	 

     

    

 

14.13 Enforceability.
Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such provision
shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity, without invalidating
the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

 

14.14 Survival
of Borrower’s Representations. All covenants, agreements, representations and warranties made by the Credit Parties
herein shall, notwithstanding any investigation by Lender, be deemed material and relied upon by Lender and shall survive the
making and execution of this Agreement and the Loan Documents and the issuance of the Promissory Note, and shall be deemed to
be continuing representations and warranties until such time as the Credit Parties have fulfilled all of its Obligations to Lender,
and Lender has been indefeasibly paid in full. Lender, in extending financial accommodations to Borrower, is expressly acting
and relying on the aforesaid representations and warranties.

 

14.15 Extensions
of Lender’s Commitment and the Promissory Note. This Agreement shall secure and govern the terms of any extensions or
renewals of Lender’s commitment hereunder and the Promissory Note pursuant to the execution of any modification, extension
or renewal note executed by Borrower, consented and agreed to by the Guarantors, and accepted by Lender in its sole and absolute
discretion in substitution for the Promissory Note.

 

14.16 Time
of Essence. Time is of the essence in making payments of all amounts due Lender under this Agreement and in the performance
and observance by the Credit Parties of each covenant, agreement, provision and term of this Agreement.

 

14.17 Execution.
This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and
the same Agreement. In the event that any signature of this Agreement or any other Loan Documents is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format file or other similar format file, such signature shall be deemed an original
for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as
if such facsimile or “.pdf” signature page was an original thereof. Notwithstanding the foregoing, Lender shall not
be obligated to accept any document or instrument signed by facsimile transmission or by e-mail delivery of a “.pdf”
format file or other similar format file as an original, and may in any instance require that an original document be submitted
to Lender in lieu of, or in addition to, any such document executed by facsimile transmission or by e-mail delivery of a “.pdf”
format file or other similar format file.

  

    	 	58	 

     

    

 

14.18 Notices.
Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must
be in writing and in each case properly addressed to the party to receive the same in accordance with the information below, and
will be deemed to have been delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly
addressed to the address below, then three (3) Business Days after deposit of same in a regularly maintained U.S. Mail receptacle;
or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, overnight delivery, then one
(1) Business Day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered,
then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a Business Day. Any notice hand delivered
after 5:00 p.m., EST, shall be deemed delivered on the following Business Day. Notwithstanding the foregoing, notice, consents,
waivers or other communications referred to in this Agreement may be sent by facsimile, e-mail, or other method of delivery, but
shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written
confirmation) that the notice has been received by the other party.  The addresses and facsimile numbers for such communications
shall be as set forth below, unless such address or information is changed by a notice conforming to the requirements hereof.
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:

 

	If
    to any Credit Party:	Pacific
    Ventures Group, Inc.
	 	117
    West 9th Street, #316
	 	Los
    Angeles, CA 90015
	 	Attention: 	Shannon
    Masjedi, CEO
	 	E-Mail:	Shannon@pacvgroup.com 

	 	 	 
	With
    a copy to:	Law
    Offices of Gary L. Blum
	 	3278
    Wilshire Blvd., Suite 603
	 	Los
    Angeles, California 90010
	 	Attention:
        Gary Blum, Esq.

         

        E-mail:
        gblum@gblumlaw.com

	 	 
	If
    to the Lender:	TCA
    Global Credit Master Fund, LP
	 	3960
    Howard Hughes Parkway, Suite 500
	 	Las
    Vegas, Nevada 89169
	 	Attention:	Robert
    Press, Director
	 	E-Mail:	bpress@tcaglobalfund.com
	 	 
	With
    a copy to:	TCA
    Global Credit Master Fund, LP
	 	19950
    W. Country Club Dr., First Floor
	 	Aventura,
    FL 33180
	 	Attention:
    Robert Press, Director
	 	E-Mail:
    bpress@tcaglobalfund.com
	 	 
	With
    a copy to:	David
    Kahan, P.A.
	 	6420
    Congress Ave., Suite 1800
	 	Boca
    Raton, FL 33487
	 	Attention: 	David
    Kahan, Esq.
	 	E-Mail:	david@dkpalaw.com

  

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14.19 Indemnification.
As a material inducement for Lender to enter into this Agreement, the Credit Parties agree to defend, protect, indemnify and hold
harmless Lender, and its parent companies, Subsidiaries, Affiliates, divisions, and their respective attorneys, officers, directors,
agents, shareholders, members, partners, employees, and representatives, and the predecessors, successors, assigns, personal representatives,
heirs and executors of each of them (including those retained in connection with the transactions contemplated by this Agreement)
(each, a “Lender Indemnitee” and collectively, the “Lender Indemnitees”) from
and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, Proceedings, suits, claims,
costs, expenses and distributions of any kind or nature (including the disbursements and the reasonable fees of counsel and paralegals
for each Lender Indemnitee thereto throughout all trial and appellate levels, bankruptcy Proceedings, mediations, arbitrations,
administrative hearings and at all other levels and tribunals), which may be imposed on, incurred by, or asserted against, any
Lender Indemnitee (whether direct, indirect or consequential and whether based on any federal, state or local laws or regulations,
including securities, Environmental Laws and commercial laws and regulations, under common law or in equity, or based on contract,
tort, or otherwise) in any manner relating to or arising out of this Agreement or any of the Loan Documents, or any act, event
or transaction related or attendant thereto, the preparation, execution and delivery of this Agreement and the Loan Documents,
including the making or issuance and management of the Loans, the use or intended use of the proceeds of the Loans, the enforcement
of Lender’s rights and remedies under this Agreement, the Loan Documents, the Promissory Note, any other instruments and
documents delivered hereunder, or under any other agreement between Borrower and Lender. To the extent that the undertaking to
indemnify set forth in the preceding sentence may be unenforceable because it violates any law or public policy, the Credit Parties
shall satisfy such undertaking to the maximum extent permitted by applicable law. Any liability, obligation, loss, damage, penalty,
cost or expense covered by this indemnity shall be paid to each Lender Indemnitee on demand, and, failing prompt payment, shall,
together with interest thereon at the Default Rate from the date incurred by each Lender Indemnitee until paid by Borrower, be
added to the Obligations of Borrower and be secured by the Collateral. The provisions of this Section shall survive the satisfaction
and payment of the other Obligations and the termination of this Agreement.

 

14.20 Release.
In consideration of the mutual promises and covenants made herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, each Credit Party hereby agrees to fully,
finally and forever release and forever discharge and covenant not to sue the Lender Indemnitees, and each one of them, from any
and all debts, fees, attorneys’ fees, liens, costs, expenses, damages, sums of money, accounts, bonds, bills, covenants,
promises, judgments, charges, demands, claims, causes of action, Proceedings, suits, liabilities, expenses, obligations or contracts
of any kind whatsoever, whether in law or in equity, whether asserted or unasserted, whether known or unknown, fixed or contingent,
under statute or otherwise, from the beginning of time through the Effective Date, including any and all claims relating to or
arising out of any financing transactions, credit facilities, notes, debentures, security agreements, and other agreements, including
each of the Loan Documents, entered into by the Credit Parties with Lender and any and all claims that the Credit Parties
do not know or suspect to exist, whether through ignorance, oversight, error, negligence, or otherwise, and which, if known, would
materially affect their decision to enter into this Agreement or the related Loan Documents. The provisions of this Section shall
survive the satisfaction and payment of the other Obligations and the termination of this Agreement.

  

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14.21 Interpretation.
If any provision in this Agreement requires judicial or similar interpretation, the judicial or other such body interpreting or
construing such provision shall not apply the assumption that the terms hereof shall be more strictly construed against one party
because of the rule that an instrument must be construed more strictly against the party which itself or through its agents prepared
the same. The parties hereby agree that all parties and their agents have participated in the preparation hereof equally.

 

14.22 Compliance
with Federal Law. The Credit Parties shall: (i) ensure that no Person who owns a controlling interest in or otherwise controls
the Credit Parties is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists
maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury, included
in any Executive Orders or any other similar lists from any Governmental Authority; (ii) not use or permit the use of the proceeds
of the Loans to violate any of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating
thereto, or any other similar national or foreign governmental regulations; and (iii) comply with all applicable Lender Secrecy
Act (“BSA”) laws and regulations, as amended. As required by federal law and Lender’s policies
and practices, Lender may need to obtain, verify and record certain customer identification information and documentation in connection
with opening or maintaining accounts or establishing or continuing to provide services.

 

14.23 Consents.
With respect to any provisions of this Agreement or any other Loan Documents which require the consent or approval of Lender,
unless expressly otherwise provided in any such provision, such consent or approval may be granted, conditioned, or withheld by
Lender in its sole and absolute discretion. In any event, when any consent or approval of Lender is required under this Agreement
or any other Loan Documents, the Credit Parties shall not be entitled to make any claim for, and the Credit Parties hereby expressly
waives any claim for, damages incurred by the Credit Parties by reason of Lender’s granting, conditioning or withholding
any such consent or approval, and the Credit Parties’ sole and absolute remedy with respect thereto shall be an action for
specific performance. To the extent any consent or approval is given by Lender under any provision hereunder or under any other
Loan Documents, such consent or approval shall only be applicable to the specific instance to which it relates and shall not be
deemed to be a continuing or future consent or approval, and any such consent or approval shall not impose any liability or warranty
obligation on the Lender.

 

14.24 Non-U.S.
Status. THE LENDER IS A NON-U.S. PERSON AS THAT TERM IS DEFINED IN THE UNITED STATES INTERNAL REVENUE CODE. IT IS HEREBY AGREED
AND UNDERSTOOD THAT THE OBLIGATIONS HEREUNDER MAY BE SOLD OR RESOLD ONLY TO NON-U.S. PERSONS. THE INTEREST PAYABLE HEREUNDER IS
PAYABLE ONLY OUTSIDE THE UNITED STATES. ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAW.

  

    	 	61	 

     

    

 

14.25 Escrows
for Certain Outstanding Obligations.

 

(a) The
Credit Parties have disclosed to Lender that the Credit Parties have certain outstanding obligations or other matters as follows:
(i) an outstanding wage claim obligation in favor of Tara Spencer for approximately $30,000, as evidenced by Certificate of Lien
recorded by the California Labor Commission in the Official Records, Los Angeles County, California, under Lien Number 20160711288
(the “Spencer Lien”) and which wage claim is the subject of outstanding litigation between certain Credit
Parties and Tara Spencer (the “Spencer Obligations”); (ii) an outstanding tax lien obligation by Mas
Global Distributors, Inc. in favor of the State of California under Lien Number 20170281255 (the “Mas Lien”)
for an approximate amount of $2,401.54 (the “Mas Global Tax Lien Obligations”) (iii) an outstanding
UCC-1 Financing Statement filed against Mas Global Distributors, Inc. by Merchant Capital Group, LLC with the California Secretary
of State under filing number 147414415809 (such lien the “Merchant Capital Lien” and such obligations,
the “Merchant Capital Obligations”); and (iv) an outstanding Settlement Agreement and General Release
(the “JRS26 Settlement Agreement”) with regards to outstanding litigation filed by JRS26, LLC against
certain of the Credit Parties and a UCC financing statement filed by JRS26, LLC against certain of the Credit Parties with the
California Secretary of State under filing number 14743560659 (such lien the “JRS26 Lien” and such obligations,
the “JRS26 Obligations”) (the Spencer Obligations, the Mas Global Tax Lien Obligations, the Merchant
Capital Obligations, and the JRS26 Obligations hereinafter collectively referred to as the “Credit Party Obligations”).
In this regard, in connection with the funding of the Initial Loan hereunder on the Effective Date, the Lender shall fund and
disburse the full amount of the Initial Loan; provided, however, the Escrow Agent shall withhold, from the Initial Loan proceeds,
an amount on account of the Spencer Obligations of $30,000 (the “Spencer Withheld Amount”), an amount
on account of the Mas Global Tax Lien Obligations of $1,600 (the “Mas Global Tax Lien Withheld Amount”)
an amount on account of the Merchant Capital Obligations of $6,000 (the “Merchant Capital Withheld Amount”),
and an amount on account of the JRS26 Obligations of $150,000 (the “JRS26 Withheld Amount,” and together
with the Spencer Withheld Amount, the Mas Global Tax Lien Withheld Amount, and the Merchant Capital Withheld Amount, the “Withheld
Amounts”). The Withheld Amounts shall be held by David Kahan, P.A., as “Escrow Agent”
hereunder, and shall only be released in accordance with the terms and provisions set forth in this Section 14.25 and Section
14.26 below. The Credit Parties acknowledge and agree that the Withheld Amounts shall be deemed to be disbursed as of the
Effective Date and shall thus accrue interest as of the Effective Date in accordance with this Agreement and the other Loan Documents.

   

(b) The
Withheld Amounts shall be released as follows:

 

(i) With
regards to the Spencer Obligations, the Credit Parties shall have ninety (90) days from the Effective Date in which to provide
the Lender with evidence, acceptable to Lender in Lender’s sole discretion, that: (a) the outstanding litigation against
the Credit Parties has been finally adjudicated; (b) any payment that needs to be made to Tara Spencer pursuant to the outstanding
litigation and the wage claim has been paid; and (c) the Spencer Lien has been released and such release has been filed in the
appropriate jurisdiction of record (all such evidence, the “Spencer Evidence”). Within the time frames
required hereby, the Credit Parties shall provide to Lender and Escrow Agent the Spencer Evidence. Upon Lender’s receipt
of the Spencer Evidence, so long as no Event of Default under this Agreement or any other Loan Documents exists, and so long as
no event has occurred that, with the passage of time, the giving of notice, or both, would constitute an Event of Default under
this Agreement or any other Loan Documents, Lender shall then direct and authorize Escrow Agent to release the Spencer Withheld
Amount directly to the Borrower. In the event the Credit Parties fail to provide the Spencer Evidence to Lender and Escrow Agent
as required hereby, then such failure shall constitute an Event of Default under this Agreement, and in any such event, the Lender
may, in its sole discretion, use and pay the Spencer Withheld Amount directly, or elect to apply same to the Obligations hereunder.

 

(ii) With
regards to the Mas Global Tax Lien Obligations, the Credit Parties shall provide the Lender and the Escrow Agent with a filed/stamped
release of the Mas Lien filed in the appropriate jurisdiction of record (the “Mas Lien Release”). Upon
Lender’s receipt of the Mas Lien Release, so long as no Event of Default under this Agreement or any other Loan Documents
exists, and so long as no event has occurred that, with the passage of time, the giving of notice, or both, would constitute an
Event of Default under this Agreement or any other Loan Documents, Lender shall then direct the Escrow Agent to release the Mas
Global Tax Lien Withheld Amount directly to the Borrower. In the event the Credit Parties fail to provide the Mas Lien Release
to Lender and Escrow Agent as required hereby, then such failure shall constitute an Event of Default under this Agreement, and
in any such event, the Lender may, in its sole discretion, use and pay the Mas Global Tax Lien Withheld Amount directly, or elect
to apply same to the Obligations hereunder.

 

(iii) With
regards to the Merchant Capital Obligations, the Credit Parties shall have ninety (90) days from the Effective Date in which to
provide the Lender with a filed/stamped release of the Merchant Capital Lien filed in the appropriate jurisdiction of record (the
“Merchant Capital Lien Release”). Within the time frames required hereby, the Credit Parties shall provide
to Lender and Escrow Agent the Merchant Capital Lien Release. Upon Lender’s receipt of the Merchant Capital Lien Release,
so long as no Event of Default under this Agreement or any other Loan Documents exists, and so long as no event has occurred that,
with the passage of time, the giving of notice, or both, would constitute an Event of Default under this Agreement or any other
Loan Documents, Lender shall then direct and authorize Escrow Agent to release the Merchant Capital Withheld Amount directly to
the Borrower. In the event the Credit Parties fail to provide the Merchant Capital Lien Release to Lender and Escrow Agent as
required hereby, then such failure shall constitute an Event of Default under this Agreement, and in any such event, the Lender
may, in its sole discretion, use and pay the Merchant Capital Withheld Amount directly, or elect to apply same to the Obligations
hereunder.

 

(iv) With
regards to the JRS26 Obligations, the Credit Parties shall provide the Lender with evidence, acceptable to Lender in Lender’s
sole discretion, that: (a) the outstanding litigation against the Credit Parties has been finally adjudicated; (b) any payment
that needs to be made to JRS26, LLC pursuant to the JRS26 Settlement Agreement has been paid; and (c) the JRS26 Lien has been
released and such release has been filed in the appropriate jurisdiction of record (all such evidence, the “JRS26
Evidence”). The Credit Parties shall provide to Lender and Escrow Agent the JRS26 Evidence. Upon Lender’s
receipt of the JRS26 Evidence, so long as no Event of Default under this Agreement or any other Loan Documents exists, and so
long as no event has occurred that, with the passage of time, the giving of notice, or both, would constitute an Event of Default
under this Agreement or any other Loan Documents, Lender shall then direct and authorize Escrow Agent to release the JRS26 Withheld
Amount directly to the Borrower. In the event the Credit Parties fail to provide the JRS26 Evidence to Lender and Escrow Agent
as required hereby, then such failure shall constitute an Event of Default under this Agreement, and in any such event, the Lender
may, in its sole discretion, use and pay the JRS26 Withheld Amount directly, or elect to apply same to the Obligations hereunder.

  

    	 	62	 

     

    

 

(v) Until
the Withheld Amounts are each fully disbursed to the applicable Persons in accordance with this Section 14.25, all Withheld
Amounts shall be additional security for all Obligations of the Credit Parties to Lender under this Agreement and all other Loan
Documents, and be secured by the Security Agreements and other applicable Loan Documents, and in that regard, in the event, prior
to disbursement of the Withheld Amounts as hereby contemplated, if an Event of Default shall occur under this Agreement or any
other Loan Documents, then notwithstanding anything to the contrary contained in this Section 14.25, Lender may, in its
sole discretion, direct the Escrow Agent to disburse the Withheld Amounts, or any portion thereof then in Escrow Agent’s
possession, to Lender to be applied against the Obligations hereunder. In addition, in the event: (A) the Credit Party Obligations
are not resolved as contemplated above in this Section 14.25 within the time frames required hereby; or (B) at any time,
any action is taken or commenced by any of the holders of the Credit Party Obligations to enforce any rights they may have in
connection with such Credit Party Obligations, any such event shall constitute an Event of Default under this Agreement, and in
any such event, the Lender may, in its sole discretion, use and pay the Withheld Amounts, and elect to apply same to the Obligations
hereunder, or otherwise to pay same, or any portion thereof as Lender may negotiate, in its sole and absolute discretion, to any
of the holders of the Credit Party Obligations in satisfaction of same. In addition, if the requirements to disburse any Withheld
Amounts, as applicable, are satisfied hereunder, and the applicable Withheld Amount thereof is disbursed by Escrow Agent hereunder,
and such Withheld Amount disbursed is less than the Withheld Amount held by Escrow Agent hereunder, then any such excess, as applicable
with respect to each Withheld Amount, shall be disbursed to the Credit Parties provided the underlying obligation for which the
Withheld Amount was withheld has been paid and satisfied in full, and only so long as no Event of Default under this Agreement
or any other Loan Documents exists, and so long as no event has occurred that, with the passage of time, the giving of notice,
or both, would constitute an Event of Default under this Agreement or any other Loan Documents.

 

14.26 Matters
Relating to Escrow Agent.

 

(a) The
Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no implied duties or obligations shall
be read into this Agreement against the Escrow Agent. Escrow Agent agrees to hold the Withheld Amounts (the “Escrowed
Property”) in a non-interest bearing account and to release same only in accordance with the terms and conditions
set forth in this Agreement and only upon a written direction from Lender.

  

    	 	63	 

     

    

 

(b) The
Escrow Agent may act in reliance upon any writing or instrument (including e-mail) or signature which it, in good faith, believes
to be genuine, may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and
may assume that any Person purporting to give any writing, notice, advice or instructions in connection with the provisions hereof
has been duly authorized to do so. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to
form, manner, and execution, or validity of any instrument deposited in this escrow or given to Escrow Agent under this Agreement,
nor as to the identity, authority, or right of any Person executing the same; and its duties hereunder shall be limited to the
safekeeping of the Escrowed Property, and for the disposition of the same in accordance with this Agreement. Escrow Agent shall
not be deemed to have knowledge of any matter or thing unless and until Escrow Agent has actually received written notice of such
matter or thing and Escrow Agent shall not be charged with any constructive notice whatsoever.

 

(c) Escrow
Agent shall hold in escrow, pursuant to this Agreement, the Escrowed Property actually delivered and received by Escrow Agent
hereunder, and Escrow Agent shall not be obligated to ascertain the existence of (or initiate recovery of) any other property
other than property actually received by Escrow Agent. If all or any portion of the Escrowed Property is in the form of a check
or in any other form other than cash, Escrow Agent shall deposit same as required but shall not be liable for the nonpayment thereof,
nor responsible to enforce collection thereof. Escrow Agent shall not be liable for failure of any financial institution where
the Escrowed Property is deposited.

 

(d) In
the event instructions from Lender, any Credit Parties, or any other Person would require Escrow Agent to expend any monies or
to incur any cost, Escrow Agent shall be entitled to refrain from taking any action until it receives payment for such costs.
It is agreed that the duties of Escrow Agent are purely ministerial in nature and shall be expressly limited to the safekeeping
of the Escrowed Property and for the disposition of same in accordance with this Agreement. The Credit Parties and Lender, jointly
and severally, each hereby indemnifies Escrow Agent and holds it harmless from and against any and all claims, actions, liabilities,
costs and other expenses of any nature or kind, which it may incur or with which it may be threatened, directly or indirectly,
including all attorneys’ fees and costs of litigation, arising from or in any way connected with this Agreement or which
may result from Escrow Agent’s following of instructions from Lender in accordance with this Agreement, except those arising
as a result of Escrow Agent’s gross negligence or willful misconduct. Escrow Agent shall be vested with a lien on all Escrowed
Property under the terms of this Agreement, for indemnification, attorneys’ fees, court costs and all other costs and expenses
arising from any such claims or expenses, interpleader or otherwise, or other expenses, fees or charges of any character or nature,
which may be incurred by Escrow Agent by reason of disputes arising between the Lender and the Credit Parties, or any other Person,
as to the correct interpretation of this Agreement, and instructions given to Escrow Agent hereunder, or otherwise, with the right
of Escrow Agent, regardless of the instruments aforesaid and without the necessity of instituting any proceeding, to hold any
property hereunder until and unless said additional expenses, fees and charges shall be fully paid. Any fees and costs charged
by the Escrow Agent for serving hereunder shall be paid by the Credit Parties.

  

    	 	64	 

     

    

 

(e) In
the event Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands
from Lender, the Credit Parties or from any other Person with respect to the Escrowed Property, which, in Escrow Agent’s
sole opinion, are in conflict with each other or with any provision of this Agreement, Escrow Agent shall be entitled to refrain
from taking any action until it shall be directed otherwise in writing by Lender and the Credit Parties and said other Persons,
if any, or by a final order or judgment of a court of competent jurisdiction. If any of the parties shall be in disagreement about
the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by the
Escrow Agent hereunder, the Escrow Agent may, at its sole discretion, deposit the Escrowed Property with a court having jurisdiction
over this Agreement, and, upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall
fully cease and terminate. The Escrow Agent shall be indemnified by the Lender and the Credit Parties for all costs, including
reasonable attorneys’ fees, in connection with the aforesaid proceeding, and shall be fully protected in suspending all
or a part of its activities under this Agreement until a final decision or other settlement in the proceeding is received. In
the event Escrow Agent is joined as a party to a lawsuit by virtue of the fact that it is holding the Escrowed Property, Escrow
Agent shall, at its sole option, either: (i) tender the Escrowed Property in its possession to the registry of the appropriate
court; or (ii) disburse the Escrowed Property in its possession in accordance with the court’s ultimate disposition of the
case, and Lender and the Credit Parties hereby, jointly and severally, indemnify and hold Escrow Agent harmless from and against
any damages or losses in connection therewith including, but not limited to, reasonable attorneys’ fees and court costs
at all trial and appellate levels.

 

(f) The
Escrow Agent may consult with counsel of its own choice (and the costs of such counsel shall be paid by the Credit Parties and
Lender) and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good
faith and in accordance with the opinion of such counsel. The Escrow Agent shall not be liable for any mistakes of fact or error
of judgment, or for any actions or omissions of any kind, unless caused by its willful misconduct or gross negligence.

 

(g) The
Escrow Agent may resign upon ten (10) days’ written notice to the parties in this Agreement. If a successor Escrow Agent
is not appointed by the Lender and Credit Parties within this ten (10) day period, the Escrow Agent may petition a court of competent
jurisdiction to name a successor.

 

(h) Conflict
Waiver. The Credit Parties hereby acknowledge that the Escrow Agent is counsel to the Lender in connection with the
transactions contemplated and referred herein. The Credit Parties agree that in the event of any dispute arising in connection
with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein, the Escrow
Agent shall be permitted to continue to represent the Lender and the Credit Parties will not seek to disqualify such counsel and
waives any objection the Credit Parties might have with respect to the Escrow Agent acting as the Escrow Agent pursuant to this
Agreement. The Lender and the Credit Parties acknowledge and agree that nothing in this Agreement shall prohibit Escrow Agent
from: (i) serving in a similar capacity on behalf of others; or (ii) acting in the capacity of attorneys for one or more of the
parties hereto in connection with any matter.

  

[REMAINDER
OF PAGE LEFT BLANK, SIGNATURE PAGE FOLLOWS]

 

    	 	65	 

     

    

 

IN
WITNESS WHEREOF, Borrower and Lender have executed this Credit Agreement as of the date first above written.

 

	BORROWER:	 
	 	 	 
	PACIFIC VENTURES GROUP, INC.,
    a Delaware corporation	 
	 	 	 
	By:	       	 
	Name:	 	 
	Title:	 	 

 

STATE
OF ____________  )

SS.

COUNTY
OF ____________)

 

The
foregoing instrument was acknowledged before me this ___ day of ___________, 2018 by _______________, who is the _________________
of Pacific Ventures Group, Inc., a Delaware corporation, on behalf of such entity. He/She is personally known to me or has produced
__________________________ as identification.

 

My
Commission Expires:

 

	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed

 

    	 	66	 

     

    

 

IN
WITNESS WHEREOF, Borrower and Lender have executed this Credit Agreement as of the date first above written.

 

	BORROWER:	 
	 	 	 
	ROYALTY FOODS PARTNERS, LLC,
    a Florida	 
	limited liability company	 
	 	 	 
	By:	       	 
	Name:	 	 
	Title:	 	 

 

STATE
OF ____________  )

SS.

COUNTY
OF ____________)

 

The
foregoing instrument was acknowledged before me this ___ day of ___________, 2018 by _______________, who is the _________________
of Royalty Foods Partners, LLC, a Florida limited liability company, on behalf of such entity. He/She is personally known to me
or has produced __________________________ as identification.

 

My
Commission Expires:

 

	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed

 

	LENDER:	 
	 	 	 
	TCA GLOBAL CREDIT MASTER FUND,
    LP	 
	 	 	 
	By:	TCA Global Credit Fund GP, Ltd.	 
	Its:	General Partner	 
	 	 	 
	By:		 
	Name:	Robert Press	 
	Title:	Director	 

 

    	 	67	 

     

    

 

CONSENT
AND AGREEMENT

 

The
undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees
to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated
thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled
and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same
extent as if the undersigned were a party to said senior secured credit facility agreement.

 

	GUARANTOR:	 
	SNOBAR HOLDINGS, INC., a
    Delaware corporation
	 	 	 
	By:	         	 
	Name:	 	 
	Title:	 	 

  

STATE
OF ____________  )

SS.

COUNTY
OF ____________)

 

The
foregoing instrument was acknowledged before me this ___ day of ___________, 2018 by _________________, who is the _________________
of Snobar Holdings, Inc. a Delaware corporation, on behalf of such entity. He/She is personally known to me or has produced __________________________
as identification.

 

My
Commission Expires:

 

	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed

 

    	 	68	 

     

    

 

CONSENT
AND AGREEMENT

 

The
undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees
to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated
thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled
and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same
extent as if the undersigned were a party to said senior secured credit facility agreement.

 

	GUARANTOR:	 
	SNOBAR TRUST
	 	 	 
	By:	        	 
	Name:	 	 
	Title:	 	 

 

STATE
OF ____________   )

SS.

COUNTY
OF ____________)

 

The
foregoing instrument was acknowledged before me this ___ day of ___________, 2018 by _________________, who is the _________________
of Snobar Trust, on behalf of such entity. He/She is personally known to me or has produced __________________________ as identification.

 

My
Commission Expires:

 

	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed

 

    	 	69	 

     

    

 

CONSENT
AND AGREEMENT

 

The
undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees
to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated
thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled
and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same
extent as if the undersigned were a party to said senior secured credit facility agreement.

 

	GUARANTOR:	 
	INTERNATIONAL PRODUCTION IMPEX
    CORP.,
	a California corporation	 
	 	 	 
	By:	    	 
	Name:	       	 
	Title:	 	 

 

STATE
OF ____________  )

SS.

COUNTY
OF ____________)

 

The
foregoing instrument was acknowledged before me this ___ day of ___________, 2018 by _________________, who is the _________________
of International Production Impex Corp., a California corporation, on behalf of such entity. He/She is personally known to me
or has produced __________________________ as identification.

 

My
Commission Expires:

 

	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed

 

    	 	70	 

     

    

 

CONSENT
AND AGREEMENT

 

The
undersigned, referred to in the foregoing senior secured credit facility agreement as a guarantor, hereby consents and agrees
to said senior secured credit facility agreement and to the payment of the amounts contemplated therein, documents contemplated
thereby, representations and warranties made therein, and to the provisions contained therein relating to conditions to be fulfilled
and obligations to be performed by it pursuant to or in connection with said senior secured credit facility agreement to the same
extent as if the undersigned were a party to said senior secured credit facility agreement.

 

	GUARANTOR:	 
	MAS GLOBAL DISTRIBUTORS, INC.,	 
	a California corporation	 
	 	 	 
	By:	             	 
	Name:	 	 
	Title:	 	 

 

STATE
OF ____________)

SS.

COUNTY
OF ____________)

 

The
foregoing instrument was acknowledged before me this ___ day of ___________, 2018 by _________________, who is the _________________
of MAS Global Distributors, Inc. a California corporation, on behalf of such entity. He/She is personally known to me or has produced
__________________________ as identification.

 

My
Commission Expires:

 

	 	 
	 	Notary Public
	 	 
	 	 
	 	Name of Notary typed or printed

 

    	 	71	 

     

    

 

	INDEX OF EXHIBITS
	 	 	 
	Exhibit A	 	Form of Compliance Certificate
	Exhibit B	 	Form of Corporate Guaranty Agreement
	Exhibit C	 	Form of Irrevocable Transfer Agent Instructions
	Exhibit D	 	Form of Pledge Agreement
	Exhibit E	 	Form of Promissory Note
	Exhibit F-1	 	Form of Security Agreement (Borrower)
	Exhibit F-2	 	Form of Security Agreement (Corporate Guarantor)
	Exhibit G	 	Form of Validity Certificate
	Exhibit H	 	Investment Banking Services Agreement
	 	 	 
	INDEX OF SCHEDULES
	 	 	 
	Schedule 7.1	 	Subsidiaries
	Schedule 7.4	 	Capitalization
	Schedule 7.18	 	Real Property
	Schedule 7.21	 	IP Rights
	Schedule 7.28	 	Bank Accounts and Deposit Accounts
	Schedule 7.29	 	Places of Business

 

    	 	72	 

     

    

 

Exhibit
A

 

Form
of Compliance Certificate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	73	 

     

    

 

Exhibit
B

 

Form
of Corporate Guaranty Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	74	 

     

    

 

Exhibit
C

 

Form
of Irrevocable Transfer Agent Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	75	 

     

    

 

Exhibit
D

 

Form
of Pledge Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	76	 

     

    

 

 

Exhibit
E

 

Form
of Promissory Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	77	 

     

    

 

 

Exhibit
F-1

 

Form
of Security Agreement (Borrower)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	78	 

     

    

 

Exhibit
F-2

 

Form
of Security Agreement (Corporate Guarantor)

  

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	79	 

     

    

 

Exhibit
G

 

Form
of Validity Certificate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	80	 

     

    

 

Exhibit
H

 

Investment
Banking Services Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	81	 

     

    

 

Schedule
7.1

 

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	82	 

     

    

 

Schedule
7.4

 

Capitalization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	83	 

     

    

 

Schedule
7.18

 

Real
Property

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	84	 

     

    

 

Schedule
7.21

 

IP
Rights

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	85	 

     

    

 

Schedule
7.28

 

Bank
Accounts and Deposit Accounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	86	 

     

    

 

Schedule
7.29

 

Places
of Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	87

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