Document:

Exhibit 10.26

 

LOAN AND SECURITY AGREEMENT

 

This Loan and Security
Agreement (this “Agreement”) is executed by and between Triumph Community Bank, N.A., dba Triumph Healthcare
Finance, 10300 SW Greenburg Rd., Ste. 465, Portland, OR 97223 (“Lender”), and Main Avenue Pharmacy Inc, a New
Jersey corporation (“Borrower”), effective as of December 8, 2014. Lender and Borrower hereby agree as follows:

 

Section
1.DEFINITIONS

 

Section
1.1Definitions. When used in this Agreement,
the capitalized terms set forth below shall have the definitions assigned to such terms below:

 

“ACH”
means automated clearing house.

 

“Accounts”
means all accounts, including, without limitation, all health care receivables, all governmental health care receivables, and health
care insurance receivables, and all other forms of obligations owing to Borrower, whether billed or unbilled, arising out of the
provision of services or the sale, lease, license, or assignment of goods or other property, including all receivables, and all
proceeds of the foregoing.

 

“Account
Debtor” means a Person who is obligated on an Account.

 

“Advance”
means any advance of funds by Lender to Borrower under this Agreement.

 

“Advance
Rate” means the percentages specified in Schedule A of Eligible Accounts and unbilled Accounts.

 

“Advance
Request” means a written request by Borrower for an Advance signed by an Authorized Representative in the form of Exhibit
C, which may be updated from time to time by Lender.

 

“Affiliate”
of a Person means another Person which, directly or indirectly, controls, is controlled by, or is under common control with, such
former Person, including without limitation any subsidiary of Borrower. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlled by” and “under common control with”), as used
with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting securities or partnership or other interests, by contract
or otherwise.

 

“Annual Facility
Fee” means the amount shown on Schedule A charged by Lender for the Facility.

 

“Authorized
Representative” means any officer or employee of Borrower designated by Borrower for purposes of giving and receiving
notices hereunder, requesting and repaying Loans, agreeing to rates of interest and otherwise transacting business with Lender
hereunder.

 

“Base Rate”
means the per annum rate of interest that is the greater of the Prime Rate or the Floor Rate as specified on Schedule
A. The Base Rate will be set by Lender on the last day of each calendar month or more frequently at Lender’s discretion.
Any change in the Base Rate shall become effective on the day such change occurs. If The Wall Street Journal stops publication
of the Prime Rate, then Lender shall, in its sole and absolute discretion, substitute the Prime Rate published in another leading
business publication. Such rate may not necessarily be the lowest or best rate actually charged to any customer of such commercial
bank.

 

“Benefit
Plan” means a defined benefit plan as defined in Section 3(35) of ERISA (other than a Multiemployer Plan) in respect
of which a Person or any Related Company is, or within the immediately preceding six (6) years was, an “employer” as
defined in Section 3(5) of ERISA, including such plans as may be established after the date hereof.

 

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“Borrowing
Base” means, as of any date, the amount determined by Lender equal to (a) an amount equal to Eligible Accounts
multiplied by the applicable NCV by payor class, multiplied by the Advance Rate for Eligible Accounts, minus (b) the
Reserve. In Lender’s sole discretion, the Borrowing Base may be increased to include an amount equal to estimated
unbilled Accounts multiplied by the applicable NCV by payor class, multiplied by the Advance Rate for unbilled Accounts.

 

“Borrowing
Base Certificate” means a certificate in the form of Exhibit A attached hereto.

 

“Business
Associate Agreement” means a business associate agreement in form and content acceptable to Lender executed by Borrower
and Lender pursuant to the requirements of HIPAA.

 

“Capital Expenditures”
means, with respect to any Person, expenditures made and liabilities incurred for the acquisition of assets, whether financed or
unfinanced, which are required to be capitalized in accordance with GAAP, including (without limitation) expenditures incurred
in connection with any lease that is required to be capitalized in accordance with GAAP.

 

“Capitated Contracts”
means all of Borrower’s contracts whether presently existing or hereafter executed between Borrower and various health maintenance
organizations and all proceeds therefrom.

 

“Capitated Contract Rights”
means all of Borrower’s rights to payment of any kind arising from or out of Capitated Contracts or any other contracts or
rights to payment from health service contracts whether presently existing or hereafter executed between Borrower and various health
maintenance organizations.

 

“Change of
Control” means the time at which:

 

(a)Any
Person (other than a Person who is or becomes a Borrower or guarantor hereunder) who on the Closing Date does not have voting
control subsequently obtains voting control, either directly or through proxy, of Borrower;

 

(b)The
guarantors hereunder (collectively) shall cease to own, directly or indirectly, beneficially and of record, all of the outstanding
capital stock of the Borrower;

 

(c)There
shall be consummated any consolidation or merger of Borrower pursuant to which Borrower’s stock or membership interest would
be converted into cash, securities, or other property, other than a merger or consolidation of Borrower (i) with or into a Person
who becomes a Borrower hereunder, or (ii) in which the holders of such stock or membership interest immediately prior to the merger
have the same proportionate ownership, directly or indirectly, of stock or membership interest of the surviving corporation or
limited liability company immediately after the merger as they had of the Borrower’s stock or membership interest immediately
prior to such merger;

 

(d)All
or substantially all of Borrower’s assets shall be sold, leased, conveyed, or otherwise disposed of as an entirety or substantially
as an entirety to any Person (other than a Person who is or becomes a Borrower or guarantor hereunder) in one or a series of transactions;
or 

 

(e)Any
Person active in the day-to-day management of the Borrower on the Closing Date becomes inactive whether by reason of death, disability,
resignation, action by the board of directors, shareholders, members, or manager of Borrower, or otherwise, and such inactivity
causes Lender to reasonably believe that the prospect of payment or performance by Borrower under any of the Loan Documents or
any of the Collateral is or may become impaired.

 

“Closing Date”
(or “Closing”) means the date (or day) on which each of the conditions set forth in Section 4.1 are satisfied
and Lender funds the initial Loan(s) hereunder.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time.

 

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“Collateral”
means and includes all of Borrower’s now owned or hereafter acquired assets, whether tangible or intangible, including without
limitation all of Borrower’s right, title, and interest in and to each of the following, wherever located and whether now
existing or hereafter arising or acquired, including, without limitation, all of the following:

 

all Accounts;

 

all contract rights, including all Capitated
Contract Rights and all proceeds therefrom;

 

all rights to payment for services rendered
or work performed, but not yet billed;

 

all Patient Lists;

 

all inventory;

 

all equipment and fixtures;

 

all federal, state, and local tax refunds;

 

all general intangibles, including without
limitation payment intangibles and software;

 

all Intellectual Property;

 

all Deposit Accounts, cash, drafts, certificates
of deposit, and general and special deposits;

 

all investment property and financial assets
(other than margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System);

 

all instruments;

 

all chattel paper, including, without limitation,
electronic chattel paper;

 

all goods and all accessions thereto;

 

all documents;

 

all letter of credit rights;

 

all insurance and certificates of insurance
pertaining to any and all items of Collateral;

 

all books and records;

 

all files, correspondence, computer programs,
tapes, disks, and related data processing software and other media which contain information identifying or pertaining to any of
the Collateral or any Account Debtor or showing the amounts thereof or payments thereon or otherwise necessary or helpful in the
realization thereon or the collection thereof;

 

all cash deposited with any Lender or any
Affiliate of Lender;

 

those commercial tort claims, if any, described
on Schedule 1.1 hereto;

 

any and all products and replacements of
the foregoing; and

 

all cash and non-cash proceeds of the foregoing
(including, but not limited to, any claims to any items referred to in this definition and any claims against third parties for
loss of, damage to, or destruction of any or all of the Collateral or for proceeds payable under or unearned premiums with respect
to policies of insurance) in whatever form.

 

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“Collateral
Monitoring Fee” means the amount shown on Schedule A due from Borrower on a monthly basis.

 

“Collecting
Bank” means Triumph Community Bank, pursuant to which a Lockbox Account has been established under a Lockbox Agreement.

 

“Collection
Clearance Days” means the number of days shown on Schedule A. Interest on the Loans accrues during the Collection
Clearance Days.

 

“Cross-Age
Percentage” shall mean the percent specified on Schedule A of the aggregate delinquent balance of all Accounts
owing by a particular Account Debtor.

 

“Current
Ratio” means the sum of current assets divided by current liabilities determined in accordance with GAAP. Amounts due
to or from Affiliates, shareholders of Borrower, or Affiliates of shareholders are excluded from the calculation if such amounts
have been recorded as “current” on Borrower’s financial statements.

 

“Cut-Off
Date” means the number of days specified on Schedule A after the date of invoice.

 

“Debt Service
Coverage Ratio” means the ratio determined as of the end of each quarterly period for the twelve consecutive months then
ending of Borrower’s (a) EBITDA for such period; minus the sum of (i) cash Capital Expenditures in such period; (ii)
cash taxes paid in such period; and (iii) Owner Distributions in such period; and plus (iv) equity contributions to Borrower
from shareholders, to (b) the sum of (i) interest, and fees paid on the Loans during such period; (ii) principal and interest paid
on capital leases during such period; and (iii) principal and interest paid on other Indebtedness during such period.

 

“Default”
means any of the events specified in Section 10.1 that, with the passage of time or giving of notice or both, would constitute
an Event of Default.

 

“Default
Rate” means the annual rate of interest amount shown on Schedule A, which is added to the Interest Rate on Default.

 

“Deposit
Account” means any demand, Lockbox, time, savings, passbook, or similar account now or hereafter maintained by or for
the benefit of Borrower, with an organization that is engaged in the business of banking (including, without limitation, banks,
savings banks, savings and loan associations, credit unions, and trust companies), and all funds and amounts therein, whether or
not restricted or designated for a particular purpose, including without limitation, all “deposit accounts” as defined
in the UCC.

 

“Deposit Account
Control Agreement” means any blocked account or deposit account control agreement in form and content acceptable to Lender
granting to Lender control over Borrower’s Deposit Accounts executed by Borrower, Lender and any of Borrower’s depository
banks holding any of Borrower’s Deposit Accounts. With respect to any Deposit Accounts into which proceeds of governmental
healthcare receivables are deposited, such Deposit Account Control Agreements shall be construed to reserve to Borrower the requisite
control and non-assignment provisions required by any Health Care Law.

 

“Dollar”
and “$” means freely transferable United States dollars.

 

“Early Termination
Fee” means the amount shown on Schedule A due from Borrower if this Agreement terminates for any reason prior
to the Termination Date.

 

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“EBITDA”
means, for any period, the sum of (a) Net Income (or Net Loss) (including gains and losses from the sales of assets in the ordinary
course of business) for such period, (b) the interest expense for such period, (c) the provision for income taxes allocable to
such period, and (d) any depreciation or amortization expenses incurred in determining Net Income (or Net Loss) for such period
(where the items set forth in (a) – (d) above are determined without duplication and on a consolidated basis and,
where applicable, in accordance with GAAP).

 

“Eligible
Accounts” shall mean all Accounts of Borrower which are deemed by Lender in the exercise of its sole and absolute discretion
to be eligible for inclusion in the calculation of the Borrowing Base, net of any and all interest, finance charges, sales tax,
fees, returns, discounts, claims, credits, charges, contra accounts, exchange contracts or other allowances, offsets and rights
of offset, deductions, counterclaims, disputes, rejections, shortages, or other defenses, and all credits owed or allowed by Borrower
upon any of its Accounts and further reduced by the aggregate amount of all reserves, limits, and deductions provided for in this
definition and elsewhere in this Agreement. In no event shall Eligible Accounts include the following:

 

Accounts which remain unpaid in whole or
in part after the Cut-Off Date;

 

Accounts with respect to which the Account
Debtor is an Affiliate of Borrower;

 

Accounts with respect to which the obligation
of payment by the Account Debtor is or may be conditional for any reason whatsoever, including, without limitation, accounts arising
with respect to goods that were (i) not sold on an absolute basis, (ii) sold on a bill-and-hold sale basis, (iii) sold on a consignment
sale basis, (iv) sold on a guaranteed sale basis, (v) sold on a sale or return basis, or (vi) sold on the basis of any other similar
understanding;

 

Accounts with respect to which the Account
Debtor is not a resident or citizen of, or otherwise located in, the continental United States of America, or with respect to which
the Account Debtor is not subject to service of process in the continental United States of America, unless such Accounts are backed
in full by irrevocable letters of credit or credit insurance in form and substance satisfactory to Lender issued or confirmed by
a domestic commercial bank acceptable to Lender and which, if a letter of credit, is in the possession of Lender and which, if
credit insurance, is payable to Lender;

 

Accounts
with respect to which the Account Debtor is the United States of America or any other federal governmental body unless:
(i) such Accounts are duly assigned to Lender in compliance with all applicable governmental requirements (including, without limitation,
the Federal Assignment of Claims Act of 1940, as amended, if applicable); or (ii) the funds
underlying such Accounts are swept to Lender pursuant to the Loan Documents.

 

Accounts (i) with respect to which Borrower
is or may be liable to the Account Debtor for goods sold or services rendered by such Account Debtor, but only to the extent of
such liability to such Account Debtor or (ii) with respect to which such Account Debtor disputes the amount owed but only that
portion of such Accounts which such Account Debtor disputes;

 

Accounts with respect to which the goods
giving rise thereto have not been shipped and delivered to and accepted as satisfactory by the applicable Account Debtor or with
respect to which the services performed giving rise thereto have not been completed and accepted as satisfactory by the applicable
Account Debtor;

 

Accounts which are not invoiced within
thirty (30) days after the date of service or the date of shipment of the goods giving rise to the account;

 

Accounts which are not subject to a first
priority perfected security interest in favor of Lender;

 

All Accounts with respect to an Account
Debtor where the account balance of Accounts aged more than 90 days exceeds the Cross-Age Percentage;

 

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Accounts which represent a progress billing;

 

Accounts associated with Capitated Contracts;
and

 

Capitated Accounts;

 

That portion of Eligible Account that are
subject to credits in favor of the Obligors aged more than ninety (90) days; and

 

Accounts that Lender, in its good faith
credit judgment, has determined to be ineligible.

 

“Environmental
Laws” means all federal, state, local, and foreign laws now or hereafter in effect relating to pollution or protection
of the environment, including laws relating to emissions, discharges, releases, or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic, or hazardous substances or wastes or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, removal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic,
or hazardous substances or wastes, and any and all regulations, notices, or demand letters issued, entered, promulgated, or approved
thereunder.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as in effect from time to time, and any successor statute, and any rule
or regulation issued thereunder.

 

“Event of
Default” means any of the events specified in Section 10.1.

 

“Expenses
and Fees” means all expenses and fees invoiced by Lender that arise out of or under this Agreement and the Loans shown
on Schedule A and including, without limitation, (i) the reasonable fees and expenses of counsel in connection with the
negotiation, preparation, execution, delivery, amendment, enforcement, and termination of this Agreement and each of the other
Loan Documents, (ii) the out-of-pocket costs and expenses incurred in connection with the administration and interpretation of
this Agreement and the other Loan Documents, (iii) the costs and expenses of appraisals of the Collateral, (iv) the costs and expenses
of lien searches, and of perfecting Lender’s security interest in the Collateral, (v) all stamp, registration, recordation,
and similar taxes, fees, or charges related to the Collateral and charges of filing financing statements and continuations and
the costs and expenses of taking other actions to perfect, protect, and continue the security interest of Lender, (vi) costs and
expenses related to the preparation, execution, and delivery of any waiver, amendment, supplement, or consent by Lender relating
to this Agreement or any of the Loan Documents, (vii) sums paid or obligations incurred in connection with the payment of any amount
or taking any action required of Borrower under the Loan Documents that Borrower fails to pay or take, (viii) costs of inspections
and verifications of the Collateral, plus out-of-pocket expenses for travel, lodging, and meals arising in connection with inspections
and verifications of the Collateral and Borrower’s operations and books and records by Lender’s employees and agents,
(ix) costs and expenses of forwarding Loan proceeds, collecting checks and other items of payment, and establishing and maintaining
each account of Borrower maintained with Lender or owned by Lender for the benefit of Borrower and each Lockbox, (x) costs and
expenses of preserving and protecting the Collateral, (xi) audit fees charged by Lender for audits by Lender or a third-party’s
auditor of Borrower, (xii) costs and expenses related to consulting with and obtaining opinions and appraisals from one or more
Persons, including personal property appraisers, accountants, and lawyers, concerning the value of any Collateral for the Obligations
or related to the nature, scope, or value of any right or remedy of Lender hereunder or under any of the Loan Documents, including
any review of factual matters in connection therewith, which expenses shall include the fees and disbursements of such Persons,
(xiii) Lender’s administrative fees arising from or associated with the maintenance and administration of Lockboxes, audits
and other ancillary services, and (xiv) costs and expenses paid or incurred to obtain payment of the Obligations, enforce the security
interest of Lender, sell or otherwise realize upon the Collateral, and otherwise enforce the provisions of the Loan Documents,
or to prosecute or defend any claim in any way arising out of, related to, or connected with, this Agreement or any of the Loan
Documents, which expenses shall include the reasonable fees and disbursements of counsel and of experts and other consultants retained
by Lender.

 

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“Facility
Availability” means, as of any date, the difference between (i) the Borrowing Base on such date and (ii) the outstanding
principal amount of the Loans, together with all accrued interest, fees, costs and any other amounts then due from Borrower under
this Agreement on such date.

 

“Facility
Limit” means the maximum amount of the Loan to be made under this Agreement. The Facility Limit amount is specified on
Schedule A, and a potential increase to the Facility Limit is referenced in Section 2.1.

 

“Fiscal Year-End”
means Borrower’s fiscal year-end specified on Schedule 5.1.

 

“Floor Rate”
means the per annum rate of interest specified on Schedule A.

 

“GAAP”
means generally accepted accounting principles and practices consistently applied.

 

“Health Care
Law” means any and all federal, state, and local laws and regulations governing (i) the manufacture, testing, distribution,
possession, assembly, repackaging, sale, administration, or dispensing of health care or medical devices, equipment or supplies,
products, biologicals, drugs, or goods, or (ii) the rendering, provision, delivery, or supply of health care services, or (iii)
the ownership or operation of a health care facility or business, or assets used in connection therewith, or (iv) the billing or
submission of claims, or the collection, deposit, control or handling of accounts receivable (including governmental healthcare
receivables), the handling of Protected Health Information, and underwriting the cost of, or provision of management or administrative
services in connection with any and all of the foregoing, by Borrower and its subsidiaries, including, but not limited to, laws
and regulations under HIPAA and the Privacy Rule, and laws and regulations relating to practice of medicine and other health care
professions, professional fee splitting, tax-exempt organization and charitable trust law applicable to health care organizations,
certificates of need, certificates of operations and authority, fraud and abuse, kickbacks and rebates, false claims, physician
self-referral arrangements, fraudulent billing practices, payment under the Medicare and Medicaid programs, and the federal Food,
Drug & Cosmetic Act.

 

“HIPAA”
means the Health Insurance Portability and Accountability Act of 1996, Pub. L. No. 104-191 and any revisions and amendments.

 

“Indebtedness”
means, without duplication, (a) all obligations for Money Borrowed or for the deferred purchase price of property or services or
in respect of reimbursement obligations under letters of credit, (b) all obligations represented by bonds, debentures, notes, and
accepted drafts that represent extensions of credit, (c) Capital Expenditures, (d) all obligations (including, during the noncancellable
term of any lease in the nature of a title retention agreement, all future payment obligations under such lease discounted to their
present value in accordance with GAAP) secured by any Lien to which any property or asset owned or held by a Person is subject,
whether or not the obligation secured thereby shall have been assumed by such Person, (e) all obligations of other Persons which
such Person has guaranteed, including, but not limited to, all obligations of such Person consisting of recourse liability with
respect to Accounts sold or otherwise disposed of by such Person, and (f) in the case of Borrower, the Loans.

 

“Intellectual
Property” means, as to any Person, all of such Person’s then owned and existing and future acquired or arising
patents, patent rights, copyrights, works which are the subject of copyrights, trademarks, service marks, trade names, trade styles,
patent, trademark and service mark applications, and all licenses and rights related to any of the foregoing, and all rights to
sue for past, present, and future infringements of any of the foregoing.

 

“Interest
Rate” means the Base Rate plus Margin.

 

“Investment”
means any investment, whether by means of share purchase, loan, advance, purchase of debt instrument, extension of credit (other
than (i) accounts receivable arising from the sale of goods or services in the ordinary course of business, and (ii) notes, accepted
in the ordinary course of business, evidencing overdue accounts receivable arising in the ordinary course of business), capital
contribution, or otherwise, in or to any Person, the guaranty of any Indebtedness of any Person, or the subordination of any claim
against any Person to other indebtedness of such Person.

 

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“Lender’s
Office” means the office of Lender designated as Lender’s address for notices in Section 11.1(b), or
such other office as Lender may designate from time to time.

 

“Liabilities”
means all liabilities of a Person determined in accordance with GAAP.

 

“Lien”
means, with respect to any Person, any security interest, chattel mortgage, charge, mortgage, deed to secure any debt, deed of
trust, lien, pledge, conditional sale or other title retention agreement, or other security interest or encumbrance of any kind
in respect of any property of such Person or upon the income or profits therefrom.

 

“Loan”
or “Loans” means all Advances and loans made to Borrower by Lender under this Agreement.

 

“Loan Documents”
means, collectively, this Agreement, each agreement or document now or hereafter executed and delivered by any Person to evidence
or secure the Obligations, and each other instrument, agreement, and document now or hereafter executed and delivered in connection
with this Agreement or the Loans.

 

“Lockbox”
or “Lockbox Account” means one or more lockbox accounts maintained with a bank specified by Lender into
which collections from Accounts and other Collateral, including governmental healthcare receivables, are to be deposited.

 

“Lockbox
Agreement” means one or more agreements among Borrower, Lender, and a Collecting Bank concerning the collection of payments
which represent the proceeds of Accounts or of any other Collateral.

 

“Margin”
means the percent per annum specified on Schedule A and which is added to the Base Rate.

 

“Material
Adverse Change” means any act, omission, event, or undertaking which would, singly or in the aggregate, have a materially
adverse effect upon (a) the business, assets, properties, liabilities, condition (financial or otherwise), results of operations,
or business prospects of Borrower or any of its subsidiaries, (b) Borrower’s prospect of fully and completely paying or performing
all of its Obligations to Lender under the Loan Documents, (c) the ability of Borrower or any of its subsidiaries to perform any
obligations under this Agreement or any other Loan Document to which it is a party, or (d) the legality, validity, binding effect,
enforceability, or admissibility into evidence of any Loan Document or the ability of Lender to enforce any rights or remedies
under or in connection with any Loan Document.

 

“Maximum
Rate” means the maximum nonusurious interest rate, if any, that at any time, or from time to time, may be contracted
for, taken, reserved, charged, or received on the Loans under the laws which are presently in effect of the United States and the
State of Oregon applicable to Lender and such indebtedness or, to the extent permitted by law, under such applicable laws of the
United States and the State of Oregon (or if applicable, the laws of any other state) which may hereafter be in effect and which
allow a higher maximum nonusurious interest rate than applicable laws now allow. To the extent federal law (including, without
limitation, 12 U.S.C. Section 85, as now enacted or hereafter amended) permits Lender to contract for, charge, or receive a higher
rate of interest or permits Lender to contract for, charge, or receive interest at a higher rate permitted by the laws of another
jurisdiction, such federal law (and, if appropriate, the law of such other jurisdiction) will be applicable in determining the
Maximum Rate, instead of the laws of the State of Oregon.

 

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“Minimum
Current Ratio” means Borrower’s minimum Current Ratio shown on Schedule A, measured quarterly.

 

“Minimum
Debt Service Coverage Ratio” means Borrower’s minimum Debt Service Coverage Ratio shown on Schedule A, measured
quarterly.

 

“Minimum
Tangible Net Worth” means Borrower’s Tangible Net Worthin an amount no less than the amount shown on Schedule
A.

 

“Money Borrowed”
means Indebtedness (i) that is represented by notes payable, drafts accepted, bonds, debentures, or similar instruments that represent
extensions of credit, (ii) upon which interest charges are customarily paid (other than trade Indebtedness), (iii) that was issued
or assumed as full or partial payment for property, or (iv) that is evidenced by a guarantee (but only if the obligations guaranteed
would otherwise qualify as Money Borrowed).

 

“Multiemployer
Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which Borrower or a Related
Company is required to contribute or has contributed within the immediately preceding six (6) years.

 

“Net Collectible
Value” or “NCV” means the percentage by payor class, as determined by Lender from time to time to
be applied against Eligible Accounts. The initial NCV for each payor class is shown on Schedule A.

 

“Net Income”
or “Net Loss” means, with respect to any Person, the net income or net loss of such Person for the period in
question (after provision for income taxes) determined in accordance with GAAP, provided that the impact of any extraordinary
gains, determined in accordance with GAAP, shall be excluded from the determination of “Net Income” and “Net
Loss.”

 

“Net Worth”
of any Person means the total shareholders’ book equity (including capital stock, additional paid-in capital, and retained
earnings, after deducting treasury stock) which would appear as such on a balance sheet of such Person prepared in accordance with
GAAP.

 

“Obligations”
shall mean (i) all Loans or Advances made by Lender to Borrower pursuant to this Agreement or otherwise, and interest thereon;
(ii) all future advances or other value, of whatever class or for whatever purpose, at any time hereafter made or given by Lender
to Borrower, whether or not the advances or value are given pursuant to a commitment and whether or not Borrower is indebted to
Lender at the time of such advance; (iii) any and all other debts, liabilities and obligations of every kind and character of Borrower
to Lender, whether now or hereafter existing, and regardless of whether such present or future debts, liabilities, or obligations
are direct or indirect, primary or secondary, joint, several, or joint and several, fixed, or contingent, and regardless of whether
such present or future debts, liabilities or obligations may, prior to their acquisition by Lender, be or have been payable to,
or be or have been in favor of, some other Person or have been acquired by Lender in a transaction with one other than Borrower
(it being contemplated that Lender may make such acquisitions from others), howsoever such debts, liabilities, or obligations shall
arise or be incurred or evidenced; (iv) any and all other debts, liabilities, and obligations of every kind and character of Borrower
to any Affiliate of Lender, whether now or hereafter existing, and regardless of whether such present or future debts, liabilities,
or obligations are direct or indirect, primary or secondary, joint, several, or joint and several, fixed, or contingent, and regardless
of whether such present or future debts, liabilities, or obligations may, prior to their acquisition by such Affiliate, be or have
been payable to, or be or have been in favor of, some other Person or have been acquired by such Affiliate in a transaction with
one other than Borrower (it being contemplated that Affiliates of Lender may make such acquisitions from others), howsoever such
debts, liabilities, or obligations shall arise or be incurred or evidenced; (v) all costs, fees, and expenses payable by Borrower
to Lender or any Affiliate of Lender pursuant to any of the Loan Documents; and (vi) any and all renewals, extensions, modifications,
and increases of the debts, liabilities, and obligations set forth above, or any part thereof.

 

    	Loan and Security Agreement - Page 9

    	 

    

“Obligors”
means Borrower, each guarantor of the Obligations, and all other Persons obligated to Lender in respect of the Obligations, and
“Obligor” means any of them.

 

“Operating
Account” means the Deposit Account designated by Borrower for the deposit of Advances.

 

“Operating
Lease” means any lease for any real or personal property, other than a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP as a Capital Expenditure.

 

“Origination
Fee” means the amount shown on Schedule A due from Borrower on the Closing Date.

 

“Owner Distributions”
means Borrower’s payments to Borrower’s members for profits, bonuses, and any other payment or distributions to Borrower’s
shareholders or members.

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any successor agency.

 

“Patient Lists” means
all records, documents, lists, electronic media, or any other method of recordation that shows in any way any Person to whom Borrower
supplies medical services, medical supplies, or medication, the name and mailing address of such Person, a complete and accurate
description of such medical services, supplies, or medication that is supplied to such Person, the physician at whose direction
such medical services, supplies, or medication is delivered, and all other information Borrower uses in the course of Borrower’s
ordinary course of business to supply such Person.

 

“Permitted
Indebtedness” means the sum of (i) Capital Expenditures and Operating Leases in amounts not to exceed the amounts shown
on Schedule A, plus (ii) the Indebtedness described on Schedule 5.1 attached hereto and made a part hereof,
plus (iii) ordinary course business and trade debt incurred in the normal course of Borrower’s business none of which
shall be past due, plus (iv) the Obligations.

 

“Permitted
Liens” means: (a) unrecorded or unfiled Liens securing taxes, assessments, and other governmental charges or levies,
or the claims of materialmen, mechanics, carriers, warehousemen, or landlords for labor, materials, supplies, or rentals incurred
in the ordinary course of business, but in all cases, only if (i) no amount of the Lien is, or at any time shall have been, past
due, and no action is taken by the lien claimant to perfect or enforce any such Lien, or (ii) such Lien has been waived or subordinated
to the security interest of Lender in a manner satisfactory to Lender; (b) the Liens described on Schedule 5.1 attached
hereto and made a part hereof; and (c) Liens in favor of Lender.

 

“Person”
means an individual, corporation, limited liability company, partnership, joint venture, association, trust, or unincorporated
organization or a government or any agency or political subdivision thereof.

 

“Prime Rate”
means, on any date of determination, the Prime Rate, as published by The Wall Street Journal in the Money Rates Section
(or other commercially available, generally recognized financial information source providing quotations of the Prime Rate as determined
by Lender from time to time).

 

“Privacy Rule”
means 45 CFR Part 160 and Part 164, Subparts A and E, which implement certain provisions of HIPAA and any revision, amendments,
or updates.

 

“Prohibited
Distribution” by any Person means (a) the retirement, redemption, purchase, or other acquisition for value of any capital
stock or other equity, securities, membership, or partnership interests issued by such Person, (b) the declaration or payment of
any dividend or distribution on or with respect to any such equity or securities interest (excluding distributions made solely
in shares of stock of the same class) or partnership interests, (c) any loan or advance by such Person to, or other Investment
by such Person in, any other Person, and (d) any other payment by such Person in respect of such equity, securities or partnership
interests.

 

    	Loan and Security Agreement - Page 10

    	 

    

“Prohibited
Payment” means (a) any redemption, repurchase, or prepayment or other retirement, prior to the stated maturity thereof
or prior to the due date of any regularly scheduled installment or amortization payment with respect thereto, of any Indebtedness
of a Person (other than the Obligations and trade debt), (b) the payment by any Person of the principal amount of or interest on
any Indebtedness (other than trade debt) owing to an Affiliate of such Person, and (c) any payment with respect to any Subordinated
Indebtedness that is made in violation of the subordination agreement relating thereto.

 

“Protected
Health Information” means protected health information subject to the HIPAA Privacy Rule.

 

“Related Company”
means, as to any Person, any (a) corporation which is a member of the same controlled group of corporations (within the meaning
of Section 414(b) of the Code) as such Person, (b) partnership or other trade or business (whether or not incorporated) under common
control (within the meaning of Section 414(c) of the Code) with such Person, or (c) member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as such Person or any corporation described in clause (a) above or any
partnership, trade, or business described in clause (b) above.

 

“Requirements of Law”
means, any and all laws, regulations, codes, or ordinances applicable to any Person, or any Person’s assets, including, without
limitation, the Securities Act, the Securities Exchange Act, Regulations T, U, and X of the Federal Reserve Board, ERISA, the Fair
Labor Standards Act, the Worker Adjustment and Retraining Notification Act, Americans with Disabilities Act of 1990, the Social
Security Act, Environmental Laws, Health Care Law, and any certificate of occupancy, zoning ordinance, building, environmental,
or land use requirement or permit, or any other environmental, labor, employment, occupational safety, or health law, rule, or
regulation.

 

“Reserve”
at any time shall mean an amount from time to time established by Lender in its sole and absolute discretion as a reserve in reduction
of the Borrowing Base in respect of contingencies or other potential factors (such as, without limitation, rebates, sales taxes,
property taxes, installation and delivery expenses, and warranties) which could adversely affect or otherwise reduce the anticipated
amount of timely collections in payment of Eligible Accounts. The “Reserve,” if any from time to time, does not represent
cash funds. The initial amount of the Reserve is shown on Schedule A.

 

“Schedule
of Accounts” means a detailed schedule of Accounts delivered by Borrower to Lender in a form acceptable to Lender that
shall contain account balance and aging information listed by Account Debtor name, class and type, together with a reconciliation
of the Schedule of Accounts to the Borrowing Base Certificate for the most recent month end, and any other information concerning
Borrower’s Accounts as Lender may request from time to time.

 

“Solvent”
means, when used in connection with any Person, that such Person has assets of a fair value which exceeds the amount required to
pay its debts (including contingent, subordinated, unmatured, and unliquidated liabilities) as they become absolute and matured,
and that such Person is able to, and anticipates that it will be able to, meet its debts as they mature and has adequate capital
to conduct the business in which it is or proposes to be engaged.

 

“Subordinated
Indebtedness” means Indebtedness of Borrower to a third Person (i) that has been approved in writing by Lender and (ii)
that has been subordinated to the payment of the Obligations pursuant to a written subordination agreement executed by Lender and
the holder of such Indebtedness containing terms acceptable to Lender in its sole and absolute discretion.

 

“Tangible
Net Worth” means (a) the Net Worth of Borrower at the time in question, less (b) the amount of all intangible
items, and all other items which should properly be treated as intangibles in accordance with GAAP, less (c) amounts due
to from Affiliates, shareholders of Borrower, or Affiliates of shareholders and less (d) deferred tax assets.

 

    	Loan and Security Agreement - Page 11

    	 

    

“Termination
Date” means the date on which the Loan shall terminate and the entire outstanding balance of the Loan and all Obligations
shall be due and payable. The Termination Date is shown on Schedule A.

 

“Termination
Event” means (a) a “Reportable Event” as defined in Section 4043 of ERISA, but excluding any such event as
to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days
of the occurrence of such event, provided however, that a failure to meet the minimum funding standard of Section 412 of the Code
and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement
in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code, (b) the filing of a notice of intent to terminate
a Benefit Plan or the treatment of a Benefit Plan amendment as a termination under Section 4041 of ERISA, or (c) the institution
of proceedings to terminate a Benefit Plan by the PBGC under Section 4042 of ERISA or the appointment of a trustee to administer
any Benefit Plan.

 

“TTM”
means trailing twelve months.

 

“UCC”
means the Uniform Commercial Code as in effect from time to time in the State of Oregon, including, without limitation, any amendments
thereto which are effective after the date hereof.

 

“Unfunded
Vested Liabilities” shall mean the amount (if any) by which (i) the actuarial present value of accumulated benefits under
a Benefit Plan which are vested exceeds (ii) such Benefit Plan’s net assets available for benefits (all as determined in
connection with the filing of the Borrower's most recent Annual Report on Form 5500) but only to the extent such excess would,
if such Benefit Plan were to terminate as of such date, represent a liability of the Borrower or any ERISA Affiliate to the PBGC
under Title IV of ERISA. In each case the foregoing determination shall be made as of the most recent date prior to the filing
of said Annual Report as of which such actuarial present value of accumulated Plan benefits is determined.

 

“Unused Line
Fee” means the amount shown on Schedule A due from Borrower on a monthly basis.

 

“Validity
Certificate” means the Validity Certificate in form and content acceptable to Lender to be executed by Jeff Andrews and
Robert Schneiderman in favor of Lender.

 

Section
1.2UCC Terms. Terms defined in the UCC (such as,
but not limited to, accounts, chattel paper, commercial tort claims, contract rights, deposit account, documents, equipment, financial
assets, general intangibles, goods, instruments, investment property, inventory, and proceeds), as and when used (without being
capitalized) in this Agreement or the Loan Documents, shall have the meanings given to such terms in the UCC.

 

Section
1.3Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters
hereunder shall be made, and all financial statements and all other certificates and reports as to any financial matters required
to be furnished to the Lender hereunder shall be prepared in accordance with GAAP applied on a consistent basis.

 

    	Loan and Security Agreement - Page 12

    	 

    

Section
2.REVOLVING CREDIT FACILITY

 

Section
2.1Loan. Subject to the terms and conditions
of this Agreement, and on the express condition that there exists no Event of Default, then prior to the Termination Date Lender
will make Advances to Borrower under the Loan in an amount not to exceed outstanding at any time the lesser of (a) the Facility
Limit, and (b) the Borrowing Base. Borrower may borrow, repay, and reborrow the principal of the Loan in accordance with the terms
of this Agreement. The parties agree and acknowledge that Borrower may in the future request an increase to the Facility Limit
in the amount of $2,000,000, and Lender may increase the Facility Limit in accordance with this request in the sole and absolute
discretion of Lender.

 

Section
2.2Advances under the Loan. Borrower may request
an Advance under the Loan by making an Advance Request. Advances made available by Lender will be deposited by wire transfer into
Borrower’s Operating Account. Advances will be made available by Lender no earlier than the first business day following
an Advance Request received by Lender prior to 10:00 a.m. Pacific Time and two (2) business days following an Advance Request received
after 10:00 a.m. Pacific Time. Any change in Borrower’s wiring instructions shall be made in writing at least three (3) business
days prior to the date of an Advance. Any updates to the Collateral affecting the amount of Borrower’s Advance Request must
be completed two (2) business days prior to submission of the Advance Request. For purposes of calculating amounts available for
Advances, collections into the Lockbox Accounts will be credited the business day following receipt, and effective as of the date
of receipt. However, for purposes of calculating the actual outstanding balance of the Loans, and interest due on the Loans, collections
into the Lockbox Accounts shall be applied after the Collection Clearance Days. Interest on the Loans accrues during the Collection
Clearance Days.

 

Section
2.3Repayment of the Loan. The Loan shall
be repaid as follows: (a) unless accelerated in accordance with the terms hereof, the outstanding principal amount of, and all
accrued and unpaid interest on, the Loan is due and payable, without demand, on the Termination Date; (b) if at any time the principal
of, and interest upon, the Loan exceeds the lesser of (i) the Facility Limit or (ii) the Borrowing Base, Borrower shall immediately
repay the Loan in the amount of such excess; and (c) Borrower hereby instructs Lender to repay the Loan on any day in an amount
equal to the amount received by Lender on such day pursuant to Section 6.2.

 

Section
2.4Disbursement of Loans. Borrower hereby irrevocably
authorizes Lender to disburse the proceeds of Loans requested, or deemed to be requested, pursuant to this Section 2 as
follows: (a) each Advance requested shall be disbursed by the Lender in lawful money of the United States of America in immediately
available funds, (b) in the case of the initial Advance under the Loan, in accordance with the written instructions from Borrower
to Lender, and (c) in the case of each subsequent Advance, to a Deposit Account designated in writing by Borrower to Lender.

 

Section
2.5Authorized Representatives. Borrower shall act
hereunder through the Authorized Representatives designated from time to time by Borrower, and all notices and requests to be given
and received by Borrower, including requests for Loans, shall be given by and directed to such Authorized Representatives. Lender
may rely on the authority or apparent authority of any officer or employee of Borrower whom Lender in good faith believes to be
an Authorized Representative unless Borrower expressly notifies Lender that such officer or employee has been terminated or is
otherwise no longer an Authorized Representative.

 

    	Loan and Security Agreement - Page 13

    	 

    

Section
3.GENERAL LOAN PROVISIONS; FEES AND EXPENSES

 

Section
3.1Interest.

 

(a)Loans.
Borrower shall pay interest on the unpaid principal amount of the Obligations at a rate per annum equal to the sum of the Base
Rate plus the Margin (or, if such amount were ever to exceed the Maximum Rate, then the Maximum Rate) payable monthly in
arrears on the first day of each calendar month and on the Termination Date. Any change in the rate of interest resulting from
a change in the Base Rate shall become effective on the day such change in the Base Rate is published.

 

(b)Minimum
Interest. In monthly periods where the average daily loan balance is less than $1,000,000.00, Lender shall impose a minimum
interest payment equal to the Interest Rate (or Default Rate, if applicable) payable on an average monthly balance equal to $1,000,000.00.

 

(c)Default
Rate. From and after the occurrence of an Event of Default, the unpaid principal amount of all Obligations and all accrued
interest thereon shall, at the option of Lender, bear interest until paid in full (or, if earlier, until such Event of Default
is cured or waived in writing by Lender) at a rate per annum equal to the lesser of (i) the Default Rate, or (ii) the Maximum Rate.

 

(d)Computation
of Interest. Interest shall be computed on the basis of a year of 360 days and the actual number of days elapsed. Interest
on the Loans accrues during the Collection Clearance Days.

 

Section
3.2Fees and Expenses.

 

(a)Origination
Fee. In consideration for Lender’s agreement to make the Loan in accordance with the terms of this Agreement and in order
to compensate Lender in part for the costs associated with the Loan, Borrower shall pay to Lender on the Closing Date an origination
fee in the amount shown on Schedule A. Such fee is in addition to the expenses that Borrower has agreed to pay elsewhere
in this Agreement. 

 

(b)Unused
Line Fee. Borrower shall pay to Lender an Unused Line Fee for the period from the date hereof through the Termination Date
calculated as shown on Schedule A. The parties hereto agree that such Unused Line Fee constitutes reasonable consideration
for Lender’s taking of appropriate actions to be able to make available to Borrower the amount of the Facility Limit for
such period.

 

(c)Collateral
Monitoring Fee. Lender shall be entitled to charge Borrower, and, if so charged, Borrower agrees to pay, a monthly Collateral
Monitoring Fee in the amount shown on Schedule A. The Collateral Monitoring Fee for each calendar month shall be due and
payable on the first day of the next calendar month. The Collateral Monitoring Fee is fully earned at Closing.

 

(d)Annual
Facility Fee. Borrower shall pay to Lender an Annual Facility Fee in the amount shown on Schedule A. The Annual Facility
Fee is fully earned at Closing.

 

(e)Early
Termination Fee. If this Agreement terminates for any reason prior to the Termination Date, Borrower acknowledges that such
termination would result in the loss to Lender of the benefits of this Agreement and, as a result thereof, Borrower shall pay to
Lender the Early Termination Fee in the amount shown on Schedule A. 

 

(f)Expenses
and Fees. All Expenses and Fees shall be paid by Borrower. Lender may cause such Expenses and Fees to be paid by debiting Borrower’s
Loan by increasing the principal amount of the Loan, or deducting from Borrower’s accounts maintained with any Affiliate
of Lender, the amount of any Expenses and Fees. At Lender’s discretion, Lender may invoice Borrower for such Expenses and
Fees and Borrower shall pay such invoice within five (5) days after the date of the invoice.

 

    	Loan and Security Agreement - Page 14

    	 

    

Section
3.3Manner of Payment.

 

(a)Timing.
Each payment by Borrower on account of the principal of or interest on the Loans or of any fee or other amount payable to Lender
shall be made not later than 12:00 p.m. (Pacific Time) on the applicable due date (or if such day is not a business day, the next
succeeding business day, provided that interest shall continue to accrue until such payment is made). All payments shall
be made to Lender at Lender’s Office or by wire transfer to an account designated by Lender in Dollars in immediately available
funds, and shall be made without any setoff, counterclaim, or deduction whatsoever.

 

(b)Charging
Accounts. Borrower hereby irrevocably authorizes Lender and each Affiliate of Lender to charge any account of Borrower maintained
with Lender or such Affiliate with such amounts as may be necessary from time to time to pay any Obligations which are not paid
when due.

 

(c)Termination
Reserve. The amount of the Termination Reserve, less any and all fees, costs, interest, or other charges incurred by Lender
in the performance of this Agreement after Borrower’s payment of all amounts described above, shall be returned to Borrower
within thirty (30) days following such payment.

 

Section
3.4Termination of Agreement.

 

(a)Required
Payments. On the Termination Date and upon any early termination of this Agreement, Borrower shall pay to Lender (i) the principal
of, and accrued and unpaid interest on, all Loans outstanding on such date, (ii) all fees accrued and unpaid, (iii) any amounts
payable to Lender pursuant to the other provisions of this Agreement or any other Loan Document, (iv) the amount of the Termination
Reserve provided in Schedule A, and (v) any and all other Obligations then outstanding.

 

(b)Early
Termination. Borrower shall give thirty (30) days’ prior written notice to Lender of Borrower’s intention to terminate
this Agreement prior to the Termination Date specified in Schedule A.

 

Section
3.5Evidence of Indebtedness.

 

(a)At
the request of Lender, the Loans shall be evidenced by one or more promissory notes.

 

(b)Lender
shall maintain accounts in which it will record (i) the amount of each Loan extended hereunder, (ii) the amount of any principal
or interest due and payable or to become due and payable from Borrower to Lender hereunder, and (iii) the amount of any sum received
by Lender hereunder from Borrower.

 

(c)The
entries in the accounts maintained pursuant to subsection (b) above shall be prima facie evidence of the existence and amounts
of the Obligations therein recorded, provided, however, that the failure of the Lender to maintain such accounts or any
error therein shall not in any manner affect the obligation of Borrower to repay the Obligations in accordance with their terms.

 

Section
3.6Adjustments by Lender. Lender may in its sole
and absolute discretion change from time to time the NCV, Advance Rate, Cross-Age Percentage and Reserve, and may revise Schedule
A accordingly. Lender will promptly provide notice to Borrower of any such changes.

 

Section
3.7Application of Payments. Lender may, in its discretion,
apply payments as follows:

 

(a)First,
to all fees and costs incurred by Lender for which Borrower is responsible to reimburse Lender under this Agreement or any of the
Loan Documents;

 

(b)next,
to any accrued but unpaid interest on the Loan;

 

    	Loan and Security Agreement - Page 15

    	 

    

(c)next,
to the outstanding principal balance due on the Loan; and

 

(d)next,
to any other amounts due Lender under this Agreement or any other agreement between Lender and Borrower.

 

Section
3.8Maximum Interest. Borrower and Lender intend
to strictly comply with any applicable usury laws. Accordingly, in no event shall Borrower or any Obligor be obligated to pay,
or Lender have any right or privilege to reserve, receive, or retain, any interest in excess of the Maximum Rate. On each day,
if any, that the interest rate charged under this Agreement (the “Stated Rate”) exceeds the Maximum Rate, the
rate at which interest shall accrue shall automatically be fixed by operation of this sentence at the Maximum Rate for that day,
and shall remain fixed at the Maximum Rate for each day thereafter until the total amount of interest accrued equals the total
amount of interest which would have accrued if there were no such ceiling rate as is imposed by this sentence. Thereafter, interest
shall accrue at the Stated Rate unless and until the Stated Rate again exceeds the Maximum Rate when the provisions of the immediately
preceding sentence shall again automatically operate to limit the interest accrual rate. 

 

Section 4.CONDITIONS PRECEDENT

 

Section
4.1Conditions Precedent. Lender
shall not be obligated to make any Loan or Advance hereunder (including the first) until all of the following have been fully performed
or satisfied to Lender’s satisfaction as determined in its sole discretion:

 

(a)Borrower
has executed and delivered to Lender this Agreement and a promissory note evidencing the Loan;

 

(b)Borrower
has executed and delivered to Lender the Business Associate Agreement;

 

(c)Borrower
has submitted certificates executed by the President and the Secretary of Borrower certifying (i) the names and signatures of the
officers of such Person authorized to execute Loan Documents, (ii) the resolutions duly adopted by the Board of Directors of such
Person authorizing the execution of this Agreement and the other Loan Documents, as appropriate, and (iii) correctness and completeness
of the copy of the bylaws, and articles of incorporation;

 

(d)Borrower
has submitted a certificate regarding the due formation, valid existence, and good standing of Borrower in the state of its organization
issued by the appropriate governmental authorities in such jurisdiction and copies of its organizational documents certified by
such authorities;

 

(e)Borrower
has executed in favor of Lender and submitted to Lender an authorization to file financing statements;

 

(f)Borrower
has submitted to Lender a payoff letter executed by any Person to whom Borrower owes money and designated by Lender;

 

(g)Borrower
has caused to be executed a landlord’s or mortgagee’s waiver in a form acceptable to Lender with respect to the premises
located at 1094A Main Avenue, Clifton, NJ;

 

(h)Borrower
has submitted to Lender endorsements naming Lender as an additional insured and lenders’ loss payee on all liability insurance
and all property insurance policies of Borrower; 

 

(i)Borrower
has submitted to Lender an opinion of counsel for Borrower in form and content acceptable to Lender covering such matters as Lender
may request; 

 

(j)Borrower
has caused the judgments and liens listed in Schedule 4.1 to have been paid in full; 

 

    	Loan and Security Agreement - Page 16

    	 

    

(k)Borrower
has established a Lockbox Account for receipts of proceeds of Collateral, and a Lockbox Account for the receipt of any governmental
healthcare receivables; 

 

(l)Borrower
has submitted to Lender Lockbox Agreements and Deposit Account Control Agreements in form and content acceptable to Lender;

 

(m)Borrower
has prepared and sent to each Account Debtor written notice in form and content acceptable to Lender as shown on Exhibit D
directing each Account Debtor to send to the Lockbox address specified by Lender all remittances with respect to all amounts payable
by the Account Debtors, and copies of such notices have been submitted to Lender;

 

(n)the
Reserve shall be no less than the amount shown on Schedule A;

 

(o)no
Default or Event of Default shall have occurred;

 

(p)Borrower
has submitted to Lender in form and content acceptable to Lender all documents evidencing or relating to Subordinated Indebtedness
as Lender may request;

 

(q)Borrower
has submitted a guaranty executed by each of Implex Corporation and ScripsAmerica, Inc. in form and content acceptable to Lender;

 

(r)Borrower
has submitted to Lender Subordination Agreements executed by Andrea Schneiderman and Jim and Joanne Speers in form and content
acceptable to Lender; 

 

(s)Jeff
Andrews and Robert Schneiderman shall each have executed and delivered to Lender the Validity Certificate; and

 

(t)Borrower
shall have delivered to Lender an executed IRS Form 8821 Tax Information Authorization; and

 

(u)Borrower
has submitted or executed such other documents, certificates, opinions, and information that Lender may require.

 

Section
4.2Conditions to Subsequent Advances. The
obligation of Lender to make any Advance subsequent to the initial Advance on the Loan is subject to the following conditions precedent:

 

(a)Conditions
to First Advance. All of the conditions precedent set forth in Section 4.1 have been satisfied.

 

(b)Borrowing
Base Certificate. Lender shall have received from Borrower a Borrowing Base Certificate acceptable to Lender executed by an
Authorized Representative prior to the date of the requested Advance.

 

(c)Representations
and Warranties. The representations and warranties contained in each of the Loan Documents shall be true in all material respects
with the same force and effect as though made on and as of such date.

 

(d)Defaults
and Events of Default. No Default or Event of Default shall have occurred and be continuing.

 

(e)Adverse
Change. No Material Adverse Change (or event or condition that could reasonably be expected to cause or have a Material Adverse
Change) has occurred since the date of the Borrower’s most recently submitted financial statements.

 

(f)Legal
Restriction. The Advance shall not be prohibited by any law or regulation or any order of any court or governmental agency
or authority.

 

    	Loan and Security Agreement - Page 17

    	 

    

(g)No
Repudiation. Neither Borrower nor any Obligor shall have repudiated or made any anticipatory breach of any of its obligations
under any Loan Document.

 

Section
5.REPRESENTATIONS AND WARRANTIES OF BORROWER

 

Section
5.1Representations and Warranties.
Borrower represents and warrants to Lender as follows:

 

(a)Organization;
Power; Qualification. Borrower is duly organized, validly existing, and in good standing under the laws of its state of organization
and is authorized to do business in each state in which the nature of its properties or its activities requires such authorization.

 

(b)Authorization;
Enforceability. Borrower has the power and authority to, and is duly authorized to, execute and deliver the Loan Documents
to be executed by Borrower. All of the Loan Documents to which Borrower is a party constitute the legal, valid, and binding obligations
of Borrower, enforceable in accordance with their terms, except as limited by bankruptcy, insolvency, or similar laws of general
application relating to the enforcement of creditors’ rights generally.

 

(c)Subsidiaries;
Ownership. Except as shown on Schedule 5.1, Borrower does not have any subsidiaries. The outstanding stock or membership
interests of Borrower have been duly and validly issued and are fully paid and nonassessable, and the number and owners of such
shares of capital stock or membership interests are set forth on Schedule 5.1.

 

(d)Conflicts.
Neither the execution and delivery of the Loan Documents, nor consummation of any of the transactions therein contemplated nor
compliance with the terms and provisions thereof, will contravene any provision of law or any judgment, decree, license, order,
or permit applicable to Borrower or will conflict with, or will result in any breach of, any agreement to which Borrower is a party
or by which Borrower may be bound or subject, or violate any provision of the organizational documents of Borrower.

 

(e)Consents,
Governmental Approvals, Etc. No governmental approval nor any consent or approval of any third Person (other than those which
have been obtained prior to the date hereof) is required in connection with the execution, delivery, and performance by Borrower
of the Loan Documents. Borrower is in compliance with all applicable governmental approvals and all applicable laws.

 

(f)Borrower
Information. Borrower has delivered to Lender a completed form of Schedule 5.1, and all of the information contained
in Schedule 5.1 is complete, correct, accurate, and does not fail to state a material fact necessary for Lender to complete
its due diligence with respect to Borrower.

 

(g)Title;
Liens. Except for items described in Schedule 5.1 and for Permitted Liens, all of the owned properties and assets of
Borrower are free and clear of all Liens, and Borrower has good and marketable title to such properties and assets. Each Lien granted,
or intended to be granted, to Lender pursuant to the Loan Documents is a valid, enforceable, perfected, first priority Lien and
security interest.

 

(h)Indebtedness
and Guaranties. Set forth on Schedule 5.1 is a complete and correct listing of all of Borrower’s (i) Indebtedness
for Money Borrowed, and (ii) guaranties and other contingent obligations.

 

(i)Litigation,
Suits, Actions, Etc. Except as disclosed on Schedule 5.1, no litigation, arbitration, governmental investigation, proceeding,
or inquiry is pending or, to the knowledge of Borrower, threatened against Borrower or that could affect any of the Collateral.

 

    	Loan and Security Agreement - Page 18

    	 

    

(j)Tax
Returns and Payments. All tax returns required to be filed by Borrower in any jurisdiction have been filed and all taxes (including
property taxes) have been paid prior to the time that such taxes could give rise to any lien.

 

(k)Financial
Condition. Borrower has delivered to Lender copies of Borrower’s (i) consolidated and consolidating balance sheet and
Borrower’s subsidiaries as of the most recent Fiscal Year-End and the related consolidated and consolidating statements of
income, shareholders’ equity and cash flow, and (ii) unaudited consolidated and consolidating balance sheet and Borrower’s
subsidiaries as of the most recently completed month and the related consolidated and consolidating statements of income, shareholders’
equity and cash flow. The financial statements submitted shall fairly present the financial condition of Borrower as of the respective
dates and shall have been prepared in accordance with GAAP (except, with respect to the unaudited statements, for the presentation
of footnotes and for applicable normal year-end audit adjustments). There is no Indebtedness of Borrower which is not reflected
in the financial statements, and no event or circumstance has occurred since the date of the financial statements which has had
or could have or result in a Material Adverse Change.

 

(l)ERISA.
Neither Borrower nor any Related Company maintains or contributes to any Benefit Plan other than those listed on Schedule 5.1.
Further, (i) no Reportable Event (as defined in ERISA) has occurred and is continuing with respect to any Benefit Plan, and (ii)
the PBGC has not instituted proceedings to terminate any Benefit Plan. The Borrower and each Related Company has satisfied the
minimum funding standards under ERISA with respect to its Benefit Plans and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code, and has not incurred any liability to the PBGC or a Benefit Plan under Title
IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA.

 

(m)Capitalization.
Borrower’s capital stock issued (or membership information) is correctly listed on Schedule 5.1.

 

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

 

(o)Borrowing
Base Reports. All Accounts included in any Borrowing Base Certificate constitute Eligible Accounts, except as disclosed in
such Borrowing Base Certificate.

 

(p)Payroll
Taxes. Borrower has made all payroll tax deposits for all of its employees on or before the date when due.

 

(q)Solvency.
Borrower is Solvent. No transfer of property is being made by Borrower and no obligation is being incurred by Borrower in connection
with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either
present or future creditors of Borrower.

 

Section
5.2Survival of Representations. All representations
and warranties by Borrower herein shall be deemed to have been made on the date hereof and the date of each Advance of a Loan.

 

    	Loan and Security Agreement - Page 19

    	 

    

Section
6.SECURITY INTEREST AND COLLATERAL COVENANTS

 

Section
6.1Security Interest. To secure
the payment and performance of the Obligations, Borrower hereby mortgages, pledges, and assigns to Lender for itself, and as agent
for its Affiliates, all of the Collateral and grants to Lender for itself, and as agent for its Affiliates, a security interest
and Lien in and upon all of the Collateral.

 

Section
6.2Collection of Accounts.

 

(a)If
Borrower receives any monies, checks, notes, drafts, and other payments relating to or constituting proceeds of Accounts or of
any other Collateral, Borrower shall immediately deposit all such items in kind in the appropriate Lockbox Account or Deposit Account,
fully endorsed. Borrower shall advise each Account Debtor that remits amounts payable on the Accounts or any other Person that
remits amounts to Borrower in respect of any of the Collateral by wire transfer or ACH to make such remittances directly to the
Lockbox Account or Deposit Account.

 

(b)Borrower
shall enter into Deposit Account Control Agreements for all of Borrower’s Deposit Accounts. 

 

(c)Borrower
shall enter into Lockbox Agreements and shall cause all moneys, checks, notes, drafts, and other payments relating to or constituting
proceeds of Accounts, including all governmental healthcare receivables, or of any other Collateral, to be forwarded to a Lockbox
Account or Deposit Account for deposit.

 

(d)Deposits
in the Lockbox Accounts or Deposit Account shall be credited, subject to final payment, to the payment of the Obligations after
receipt and deposit into the Lockbox Accounts plus the Collection Clearance Days shown on Schedule A. The delay in applying
funds held in the Lockbox Accounts to the Obligations shall in all respects be limited so that interest on the Obligations is at
all times less than interest calculated at the Maximum Rate.

 

(e)Any
payments which are received by Borrower (including any payment evidenced by a promissory note or other instrument) shall be held
in trust for Lender and shall be (i) deposited in the Lockbox Accounts, or (ii) delivered to Lender, as promptly as possible in
the exact form received, together with any necessary endorsements.

 

Section
6.3Disputes, Returns and Adjustments.

 

(a)Borrower
shall provide Lender with prompt written notice of amounts in excess of the amount shown on Schedule A that are in dispute
between any Account Debtor and Borrower.

 

(b)Borrower
shall notify Lender promptly of all returns and credits in respect of any Account, which notice shall specify the Accounts affected
and be included in the Borrowing Base Certificate delivered to Lender. Borrower shall notify Lender promptly of any pending return
or credit in excess of the amount shown on Schedule A, and shall specify the Account affected, the related
Account Debtor, and the goods to be returned.

 

(c)Borrower
may, in the ordinary course of business and prior to a Default or an Event of Default, grant any extension of time for payment
of any Account or compromise, compound, or settle the same for less than the full amount thereof or release wholly or partly any
Person liable for the payment thereof or allow any credit or discount whatsoever thereon, provided that (i) Borrower shall not
have taken any such action that results in the reduction of more than the amount shown on Schedule A with respect to any
account or more than the amount shown on Schedule A with respect to all Accounts of Borrower in any fiscal year, and (ii)
Borrower shall promptly notify Lender (but not less often than ten (10) days after the end of each month) of the amount of such
adjustments and the Account(s) affected thereby.

 

    	Loan and Security Agreement - Page 20

    	 

    

Section
6.4Verification and Notice. Lender shall
have the right at any time at Borrower’s expense and in Lender’s own name, Borrower’s name, or an assumed name
(a) to verify the validity, amount, or any other matter relating to any Accounts, and (b) to notify Account Debtors to make payment
of all amounts directly to Lender and enforce collection of any such Accounts and to adjust, settle, or compromise the amount or
payment thereof, in the same manner as Borrower.

 

Section
6.5Ownership; Defense of Title.

 

(a)Borrower
shall defend its title in and to the Collateral and shall defend the security interest of Lender in the Collateral against the
claims and demands of all Persons.

 

(b)Borrower
shall (i) protect and preserve all properties material to its business, including Intellectual Property, and maintain all tangible
property in good and workable condition in all material respects, with reasonable allowance for wear and tear, and (ii) from time
to time make or cause to be made all needed and appropriate repairs, renewals, replacements, and additions to such properties necessary
for the conduct of its business.

 

Section
6.6Location of Offices and Collateral; Organizational
Information. Borrower shall not change the location of its place of business (or, if it has more than one place of business,
its chief executive office) or the place where it keeps its books and records relating to the Collateral or change its name, identity,
corporate structure, or jurisdiction of organization without giving Lender at least thirty (30) days’ prior written notice
thereof. All inventory, other than inventory in transit to any such location, shall at all times be kept by Borrower at one or
more of the locations set forth in Schedule 5.1.

 

Section
6.7Records Relating to Collateral. Borrower
shall at all times keep and maintain (i) complete and accurate records of Accounts on a basis consistent with past practices of
Borrower, (ii) complete and accurate records of all other Collateral, (iii) Patient Lists containing the names, addresses, and
phone numbers of Borrower’s patients or other Persons that owe Borrower money for any goods or medical services rendered
by Borrower, (iv) a list of all other Persons that owe Borrower money, and (v) a current list of all salesmen and employees of
Borrower. Data bases containing the foregoing shall at all times be accessible and available to Lender.

 

Section
6.8Inspection. Lender (by any of its officers,
employees, or agents) shall have the right at any time or times to (a) visit the properties of Borrower, inspect the Collateral
and the other assets of Borrower, and inspect and make extracts from the books and records of Borrower, all during customary business
hours, (b) discuss Borrower’s business, financial condition, results of operations, and business prospects with Borrower’s
(i) principal officers, (ii) independent accountants and other professionals providing services to Borrower, and (iii) any other
Person (except that any such discussion with any third parties shall be conducted only in accordance with Lender’s standard
operating procedures relating to the maintenance of confidentiality of confidential information of Borrower), (c) verify the amount,
quantity, value, and condition of, or any other matter relating to, any of the Collateral and, in this connection, review, audit,
and make extracts from all records and files related to any of the Collateral, and (d) access and copy the records, lists, reports,
and data bases referred to in Section 6.7. Borrower will deliver to the Lender upon request any instrument necessary to
authorize an independent accountant or other professional to have discussions of the type outlined above with the Lender or for
the Lender to obtain records from any service bureau maintaining records on behalf of Borrower. Lender will make reasonable efforts
to conduct any Collateral inspection under this Section 6.8 in a manner not unreasonably disruptive to the business activities
of Borrower during any such inspection.

 

Section
6.9Maintenance. Borrower shall maintain all
equipment of Borrower in good and working order and condition, reasonable wear and tear excepted.

 

Section
6.10Power of Attorney. Borrower hereby appoints
Lender as its attorney, with power (a) to endorse the name of Borrower on any checks, notes, acceptances, money orders, drafts,
or other forms of payment or security that may come into Lender’s possession, and (b) to sign the name of Borrower on any
invoice or bill of lading relating to any Accounts, inventory, or other Collateral. Borrower also authorizes Lender to file financing
statements, without Borrower’s signature, covering part or all of the Collateral in such jurisdictions as Lender shall determine
to be advisable.

 

    	Loan and Security Agreement - Page 21

    	 

    

Section
7.AFFIRMATIVE COVENANTS

 

Section 7.1So
long as this Agreement shall be in effect or any of the Obligations shall be outstanding, Borrower covenants and agrees as follows:

 

Section
7.2Preservation of Corporate Existence and
Similar Matters. Borrower shall preserve and maintain its existence as a corporation or limited liability company, as the case
may be, and qualify and remain qualified as a foreign entity authorized to do business in each jurisdiction in which the character
of its properties or the nature of its business requires such qualification or authorization.

 

Section
7.3Compliance with Requirements of Law.
Borrower shall continuously comply with all Requirements of Law.

 

Section
7.4Conduct of Business. Borrower shall
engage only in substantially the same businesses conducted by Borrower on the date hereof.

 

Section
7.5Payment of Taxes and Claims. Borrower
shall pay or discharge when due (a) all taxes, assessments, and governmental charges imposed upon it or its properties and (b)
all lawful claims which, if unpaid, might become a Lien on any properties of Borrower, except that this Section 7.4 shall
not require the payment or discharge of any such tax, assessment, charge, levy, or claim which is being contested in good faith
by appropriate proceedings and for which adequate reserves have been established on the appropriate books of Borrower.

 

Section
7.6Accounting Methods and Financial Records.
Borrower shall maintain a system of accounting, and keep such books, records and accounts (which shall be true and complete), as
may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP consistently applied.

 

Section
7.7Use of Proceeds. Borrower shall (a)
use the proceeds of the Loan for the repayment of certain Indebtedness to Affiliates,
and for working capital and general business purposes, and (b) not use any part of such proceeds to purchase or carry, or to reduce
or retire or refinance any credit incurred to purchase or carry, any margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System) or for any other purpose which would violate Regulation U or Regulation T or X of such
Board of Governors or for any other purpose prohibited by law or by the terms and conditions of this Agreement.

 

Section
7.8Hazardous Waste and Substances; Environmental
Requirements. Borrower shall comply with all occupational health and safety laws and Environmental Laws.

 

Section
7.9Accuracy of Information. All written
information, reports, statements, and other papers and data furnished to Lender shall be, at the time the same is so furnished,
complete and correct in all material respects.

 

Section
7.10Revisions or Updates to Schedules.
Should any of the information or disclosures provided on any of the Schedules attached hereto become outdated or incorrect in any
material respect, Borrower shall provide promptly to Lender such revisions or updates to such Schedule(s) as may be necessary or
appropriate to update, or correct and update, such Schedule(s). Notwithstanding the foregoing, the delivery to Lender of a revised
or updated schedule shall not constitute a waiver of, or consent to, any Default or Event of Default arising as a result of any
erroneous or incorrect information provided in any Schedule previously delivered to Lender.

 

    	Loan and Security Agreement - Page 22

    	 

    

Section
7.11ERISA. Borrower shall provide to Lender,
as soon as possible and in any event within thirty (30) days after the date that (a) any Termination Event with respect to a Benefit
Plan has occurred or will occur, (b) the aggregate present value of the Unfunded Vested Liabilities under all Benefit Plans has
increased to an amount in excess of $0, or (c) Borrower is in “default” (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan required by reason of its complete or partial withdrawal (as described in Section
4203 or 4205 of ERISA) from such Multiemployer Plan, a certificate of the president or the chief financial officer of Borrower
setting forth the details of such of the events described in clauses (a) through (c) as applicable and the action
which is proposed to be taken with respect thereto and, simultaneously with the filing thereof, copies of any notice or filing
which may be required by the PBGC or other agency of the United States government with respect to such of the events described
in clauses (a) through (c) as applicable.

 

Section
7.12Insurance.

 

(a)Borrower
shall keep or cause to be kept adequately insured by financially sound and reputable insurers all of its property usually insured
by Persons engaged in the same or similar businesses. Without limiting the foregoing, Borrower shall insure the Collateral of Borrower
against loss or damage by fire, theft, burglary, pilferage, loss in transit, business interruption, and such other hazards as usual
and customary in Borrower’s industry or as Lender may specify in amounts and under policies by insurers acceptable to Lender,
and all premiums thereon shall be paid by Borrower and copies of the policies delivered to Lender. Each policy of insurance covering
the Collateral shall provide that at least ten (10) days’ prior written notice of cancellation or notice of lapse must be
given to Lender by the insurer. All insurance policies required under this Section 7.11 shall name Lender as an additional
named insured and as a lender’s loss payee. Any proceeds of insurance referred to in this Section 7.11 which are paid
to Lender shall be, at the option of Lender in its sole and absolute discretion, either (i) applied to rebuild, restore, or replace
the damaged or destroyed property, or (ii) applied to the payment or prepayment of the Obligations.

 

(b)Warning.
Unless Borrower provides Lender with evidence of the insurance coverage as required by this Agreement, Lender may purchase insurance
at Borrower's expense to protect Lender’s interest. This insurance may, but need not, also protect Borrower's interest.
If the Collateral becomes damaged, the coverage Lender purchases may not pay any claim Borrower makes or any claim made against
Borrower. Borrower may later cancel this coverage by providing evidence that Borrower has obtained property coverage elsewhere.
Borrower is responsible for the cost of any insurance purchased by Lender. The cost of this insurance may be added to Borrower’s
Loan balance. If the cost is added to Borrower’s Loan balance, the interest rate on Loan will apply to this added amount.
The effective date of coverage may be the date Borrower’s prior coverage lapsed or the date Borrower failed to provide proof
of coverage. The coverage Lender purchases may be considerably more expensive than insurance Borrower can obtain on its own and
may not satisfy any need for property damage coverage or any mandatory liability insurance requirements imposed by applicable law.

 

Section
7.13Payroll Taxes. Borrower shall at all
times make all payroll tax deposits for all of its employees on or before the date when due.

 

Section
7.14Notice of Litigation, Claims Against the
Collateral, and Other Matters. Borrower shall promptly provide to Lender written notice of any of the following:

 

(a)the
commencement, to the extent Borrower is aware of the same, of all actions and proceedings in any court against Borrower or any
of the Collateral; 

 

(b)any
Lien, material claim, attachment, or material legal process asserted or levied against Borrower or any Collateral;

 

(c)the
commencement against any Obligor of any audit, investigation, judicial or administrative proceeding, or any criminal or civil investigation
initiated, claim filed, or disclosure required of any Obligor by the Office of Inspector General, the Department of Justice, Center
for Medicare and Medicaid Services (CMS) (formerly HCFA), or any other governmental authority, or any claim filed under the False
Claims Act or any other Requirement of Law; 

 

    	Loan and Security Agreement - Page 23

    	 

    

(d)any
amendment of any of the organizational documents of Borrower, including, but not limited to, articles of incorporation, bylaws.
articles of organization, or Operating Agreement; 

 

(e)any
change in the business, financial condition, results of operations, or business prospects of Borrower; 

 

(f)any
change in the executive officers or managers of Borrower; 

 

(g)copies
of all reports and statements that Borrower sends to or receives from any governmental authority;

 

(h)any
Default or Event of Default, or event that would constitute a default or event of default by Borrower under any material agreement
(other than this Agreement) to which Borrower is a party; and 

 

(i)the
occurrence of any other event which could reasonably be expected to have a Material Adverse Change.

 

Section
7.15Notice of Healthcare Matters. Borrower
shall promptly provide to Lender written notice of any of the following:

 

(a)any
investigation or pending or threatened proceedings relating to any violation by Borrower, any Affiliate of Borrower, or any health
care facility to which Borrower or Affiliate provides services, of any Health Care Laws (including, without limitation, any investigation
or proceeding involving violation of any of the Medicare and/or Medicaid fraud and abuse provisions);

 

(b)copies
of any written recommendation from any governmental authority or other regulatory body that Borrower, any Affiliate of Borrower,
or any Obligor to which Borrower or any Affiliate of Borrower provides services should have its licensure or accreditation revoked,
or have its eligibility to participate in the Civilian Health and Medical Program of the Uniformed Services (“CHAMPUS”),
Medicare or Medicaid or to accept assignments or rights to reimbursement under CHAMPUS, Medicaid or Medicare regulations revoked;

 

(c)notice
of any claim to recover any alleged material overpayments with respect to any receivables including, without limitation, payments
received from CHAMPUS, Medicare, Medicaid or from any private insurance carrier;

 

(d)notice
of termination of eligibility of Borrower, Affiliate of Borrower, or any health care facility to which Borrower provides services
to participate in any reimbursement program of any private insurance carrier or other Obligor applicable to it;

 

(e)notice
of any material reduction in the level of reimbursement expected to be received with respect to any receivables;

 

(f)notice
of any reimbursement payment contract or process that results or may result in any claim against Borrower or Affiliate of Borrower
(including on account of overpayments, settlement payments, appeals, repayment plan requests); and

 

(g)copies
of any report or communication from any governmental authority in connection with any inspection of any facility of Borrower or
any Affiliate of Borrower.

 

    	Loan and Security Agreement - Page 24

    	 

    

Section
7.16Post-Closing Obligations. Within thirty
(30) days after the Closing Date, Borrower shall ____________________.

 

Section
8.FINANCIAL AND COLLATERAL REPORTING

 

So long as this
Agreement shall be in effect or any of the Obligations shall be outstanding, Borrower covenants and agrees as follows:

 

 

 

Section
8.1Financial Statements.

 

(a)Audited
Year-End Financial Statements. As soon as available, but in any event within ninety (90) days after Borrower’s Fiscal
Year-End, Borrower shall furnish to Lender copies of Borrower’s Fiscal Year-End audited consolidated and consolidating balance
sheet of Borrower and its subsidiaries as of the Fiscal Year-End and the related audited consolidated and consolidating statements
of income, shareholders’ equity and cash flow for such fiscal year, in each case setting forth in comparative form the figures
for the previous year of Borrower and its subsidiaries, together with an unqualified audit report certified by independent certified
public accountants selected by Borrower and acceptable to Lender. In addition, on or before such date, Borrower shall provide Lender
with copies of all management reports received from its certified public accountants.

 

(b)Quarterly
Financial Statements. As soon as available, but in any event within forty-five (45) days after the end of each quarterly period,
Borrower shall furnish to Lender copies of the unaudited consolidated and consolidating balance sheet of Borrower and its subsidiaries
as of the end of such quarterly period and the related unaudited consolidated and consolidating income statement and statement
of cash flow of Borrower and its subsidiaries for such quarterly period and for the portion of the fiscal year of Borrower through
the end of such quarterly period, certified by the chief financial officer of Borrower as presenting fairly the financial condition
and results of operations of Borrower and its subsidiaries as of the date thereof and for the periods ended on such date, subject
to normal year-end adjustments.

 

(c)Monthly
Financial Statements. As soon as available, but in any event within thirty (30) days after the end of each month, Borrower
shall furnish to Lender copies of the unaudited consolidated and consolidating balance sheet of Borrower and its subsidiaries as
of the end of such month and the related unaudited consolidated and consolidating income statement and statement of cash flow of
Borrower and its subsidiaries for such month and for the portion of the fiscal year of Borrower through such month, certified by
the chief financial officer of Borrower as presenting fairly the financial condition and results of operations of Borrower and
its subsidiaries as of the date thereof and for the periods ended on such date, subject to normal year-end adjustments.

 

(d)Guarantor
Financial Statements. Borrower shall cause to be furnished to Lender within ninety (90) days after the end of each year, the
unaudited consolidated and consolidating balance sheets of any guarantor as of the end of such year and the related unaudited consolidated
and consolidating income statement and statement of cash flow of any guarantor for such year.

 

(e)Projected
Financial Statements. As soon as available, but in any event within thirty (30) days after the end of each quarterly period,
Borrower shall furnish to Lender forecasted financial statements, prepared by Borrower, consisting of consolidated and consolidating
balance sheets, cash flow statements and income statements of Borrower and its subsidiaries, reflecting projected borrowing hereunder
and setting forth the assumptions on which such forecasted financial statements were prepared, covering the one-year period beginning
at the end of such quarterly period.

 

All such financial
statements shall be complete and correct in all material respects and all such financial statements referred to in clauses (a),
(b), (c) and (d) shall be prepared in accordance with GAAP (except, with respect to interim financial statements, for
the omission of footnotes) applied consistently throughout the periods reflected therein. Further, all such financial statements
shall be in a form acceptable to Lender.

 

    	Loan and Security Agreement - Page 25

    	 

    

Section
8.2Compliance Certificate. Together with
each delivery of financial statements required by Sections 8.1(a), (b) and (c), Borrower shall furnish to Lender
a certificate of Borrower’s president or chief financial officer in the form of Exhibit B.

 

Section
8.3Collateral Information and Reports.

 

(a)Schedules
of Accounts. Within ten (10) days after the end of each month, Borrower shall furnish to Lender a Schedule of Accounts. Lender
must receive the Schedule of Accounts no later than 5:00 p.m. Pacific Time at least two (2) business days prior to the receipt
of the Borrowing Base Certificate for purposes of determining the amount of any Advance.

 

(b)Schedules
of Accounts Payable. Within ten (10) days after the end of each month, Borrower shall furnish to Lender a schedule of accounts
payable of Borrower and aging information as of the last business day of such month setting forth (i) a detailed aged trial balance
of all of Borrower’s then existing accounts payable, specifying the name of and the balance due to each creditor, and (ii)
a reconciliation to the schedule of accounts payable to Borrower’s general ledger as of such month end. 

 

(c)Borrowing
Base Certificate. Not less often than monthly or such other period of time as specified by Lender, Borrower shall furnish to
Lender a Borrowing Base Certificate, along with supporting documentation, in form and substance satisfactory to Lender (including
but not limited to information on sales, credits, collections, adjustments, and Accounts).

 

(d)Reconciliation.
Contemporaneously with Borrower’s submission of monthly financial statements specified above at Section 8.1(b), Borrower
shall submit to Lender a reconciliation of the most recently submitted Borrowing Base Certificate to the Borrower’s most
recently submitted month-end unaudited consolidated and consolidating balance sheet of Borrower and its subsidiaries.

 

(e)Tax
Returns. Borrower and each guarantor shall within fifteen (15) days after filing, provide Lender copies of all federal, state
and local income tax returns, all payroll tax returns, all sales tax returns or any other tax returns or filings filed by Borrower,
guarantor, or any Affiliate of Borrower.

 

(f)Other
Information. Lender may, in its sole and absolute discretion, from time to time require Borrower to deliver the schedules and
certificates described in Section 8.3 more or less often and on different schedules than specified in such Section. Borrower
shall also furnish to Lender such other additional information as Lender may from time to time request.

 

(g)Certification.
Each of the schedules and certificates delivered to Lender by Borrower pursuant to this Section 8.3 shall be in a form acceptable
to Lender and shall be signed and certified by the president, chief financial officer, or treasurer of Borrower to be true, correct,
and complete as of the date indicated thereon. In the event any of such schedules or certificates are delivered electronically
or without signature, such schedules and/or certificates shall, by virtue of their delivery, be deemed to have been signed and
certified by the president of Borrower to be true, correct, and complete as of the date indicated thereon.

 

Section 9.NEGATIVE COVENANTS

 

So long as this Agreement
shall be in effect or any of the Obligations shall be outstanding, Borrower covenants and agrees as follows:

 

Section
9.1Financial Covenants.

 

(a)Minimum
Tangible Net Worth. Borrower shall at all times continuously maintain the Minimum Tangible Net Worth amount shown on Schedule
A.

 

(b)Debt
Service Coverage Ratio. Borrower’s Minimum Debt Service Coverage Ratio as of the end of each quarterly period shall be
in the ratio amount shown on Schedule A.

 

(c)Current
Ratio. Borrower’s Minimum Current Ratio as of the end of each quarterly period shall be in the ratio amount shown on
Schedule A.

 

(d)Minimum
Liquidity. Borrower shall maintain: (i) Facility Availability plus (ii) cash at all times in an aggregate amount of no less
than $500,000. 

 

Section
9.2Prohibited Distributions and Payments, Etc. Borrower
shall not, directly or indirectly, declare or make any Prohibited Distribution or Prohibited Payment, except, on the express condition
that if there is no Default or Event of Default that has occurred or that would result therefrom, Borrower may make the following
payments: 

 

(a)Borrower
may pay to ScripsAmerica, Inc. that portion of documented operational expenses incurred by ScripsAmerica, Inc. that are reasonably
allocable to Borrower using sound accounting principles; 

 

(b)Borrower
may pay to ScripsAmerica, Inc. that portion of consolidated income tax allocable to Borrower each period, provided that such payments
shall be included in the minimum Debt Service Coverage Ratio as “cash taxes paid” in the period in which such payment
is made; and

 

    	Loan and Security Agreement - Page 26

    	 

    

(c)In
addition to the distributions set forth in Section 9.2(a) above, Borrower may make Owner Distributions of operating profits
only with the prior written consent of Lender.

 

Section
9.3Indebtedness. Except as disclosed on Schedule
5.1, Borrower shall not, directly or indirectly, create, assume, or otherwise become or remain obligated in respect of, or
permit or suffer to exist or to be created, assumed, or incurred or to be outstanding, any Indebtedness, except for Permitted Indebtedness.

 

Section
9.4Liens. Borrower shall not, directly or indirectly,
create, assume, or permit or suffer to exist or to be created or assumed any Lien on any of the property or assets of Borrower,
real, personal or mixed, tangible or intangible, except for Permitted Liens or the liens identified on Schedule 5.1.

 

Section
9.5Loans. Borrower shall not make any loans or advances
to or for the benefit of any officer, director, manager, shareholder, member, or partner of Borrower except advances for routine
expense allowances in the ordinary course of business. Borrower shall not make or suffer to exist any loans or advances to or for
the benefit of any Affiliate of Borrower. Borrower shall not make any payment on any obligation owing to any officer, director,
manager, shareholder, member, partner, or Affiliate of Borrower, except payments of salary and payments to the holder of any Subordinated
Indebtedness, if any, in accordance with the terms of the subordination agreement among such subordinated creditor, Borrower, and
Lender.

 

Section
9.6Intercompany Debt. Borrower may incur Intercompany
debt as follows:

 

(a) Borrower may increase the aggregate
balance of loans receivable from ScripsAmerica, Inc. in an amount not to exceed $100,000 per month, provided that Borrower provides
Lender with evidence of pro forma financial covenant compliance before any such increases; and

 

 

 

(b) Borrower may increase the aggregate
balance of loans receivable from ScripsAmerica, Inc. beyond the amounts permitted by Section 9.6(a) above only with the
prior written consent of Lender, which consent shall be given or reasonably withheld by Lender in its reasonable credit judgment.

 

 

 

Section
9.7Related Party Loans. An Affiliate may make a
loan or advance to or for the benefit of Borrower so long as such loan or advance has been subordinated to the payment of the Obligations
pursuant to a written subordination agreement executed by Lender and the holder of such Indebtedness containing terms acceptable
to Lender in its sole and absolute discretion.

 

    	Loan and Security Agreement - Page 27

    	 

    

Section
9.8Merger, Consolidation, Sale of Assets, Acquisitions.
Borrower shall not, directly or indirectly, merge or consolidate with any other Person or sell, lease, or transfer or otherwise
dispose of any assets to any Person (other than sales of inventory in the ordinary course of business) or acquire all or substantially
all of the assets of any Person or the assets constituting the business or a division or operating unit of any Person, except with
the prior written consent of Lender, which consent shall be given or reasonably withheld by Lender in its reasonable credit judgment.

 

 

 

Section
9.9Transactions with Affiliates. Borrower shall
not, directly or indirectly, effect any transaction with any Affiliate on a basis less favorable to Borrower than would be the
case if such transaction had been effected with a Person not an Affiliate, provided that Borrower shall not enter into any
lease with any Affiliate.

 

Section
9.10Deposit Accounts. Borrower shall not establish
any Deposit Account other than those described on Schedule 5.1.

 

Section
9.11Guaranties. Borrower shall not, directly or
indirectly, become or remain liable with respect to any guaranty of any obligation of any other Person.

 

Section
9.12Benefit Plans. Borrower shall not, directly
or indirectly, permit, or take any action which would cause, the Unfunded Vested Liabilities under all Benefit Plans of Borrower
to exceed $0.

 

Section
9.13Sales and Leasebacks. Borrower shall not, directly
or indirectly, enter into any arrangement with any Person providing for the leasing from such Person of real or personal property
which has been or is to be sold or transferred, directly or indirectly, by Borrower to such Person.

 

Section
9.14Executive Compensation. Borrower shall not make
any payment of management, consulting or other fees or similar services, or any other payment to any officer, employee, shareholder,
director or Affiliate of Borrower except reasonable compensation for services in the ordinary course of Borrower’s business.
Without limiting the generality of the foregoing, Borrower shall not pay or commit to pay total compensation to any member of Borrower’s
senior managers in an amount in any fiscal year in excess of 110% of the aggregate cash compensation paid in the prior fiscal year.

 

Section
9.15Amendments. Borrower shall not amend or modify,
or permit any amendment or modification to, whether orally, in writing, or otherwise, any agreement evidencing or relating to Subordinated
Indebtedness.

 

Section
9.16USA Patriot Act. Borrower shall not (a) be or
become subject at any time to any law, regulation, or list of any government agency (including, without limitation, the U.S. Office
of Foreign Asset Control list) that prohibits or limits Lender from making any advance or extension of credit to Borrower or from
otherwise conducting business with Borrower, or (b) fail to provide documentary and other evidence of Borrower’s or its corporate
officers’ identities as may be requested by Lender at any time to enable Lender to verify Borrower’s identity or to
comply with any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C.
§5318.

 

Section 10.DEFAULT

 

Section
10.1Events of Default. Each
of the following events shall constitute an Event of Default:

 

(a)Borrower
fails to pay any of the Obligations when due and payable;

 

(b)Borrower
fails to continuously observe, meet, or perform any term, covenant obligation, or duty contained in this Agreement or any of the
Loan Documents and such failure continues for ten (10) days after the earlier of (i) notice of such failure by Lender or (ii) Borrower
becoming aware of such failure;

 

    	Loan and Security Agreement - Page 28

    	 

    

(c)Any
Obligor fails to timely perform properly any covenant in this Agreement or in any of the other Loan Documents and such failure
continues for ten (10) days after the earlier of (i) notice of such failure by Lender or (ii) Borrower becoming aware of such failure;

 

(d)Any
Deposit Account Control Agreement or Lockbox Agreement is breached or terminated;

 

(e)There
is an occurrence of any default or event of default under any of the other Loan Documents;

 

(f)Borrower
defaults under any other agreement with Lender;

 

(g)Any
representation or warranty contained herein or in any of the other Loan Documents is false or misleading in any material respect
when made or deemed made;

 

(h)Borrower
shall (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor, or liquidator of Borrower or of
all or a substantial part of Borrower’s assets, (ii) file a voluntary petition in bankruptcy, (iii) admit in writing that
Borrower is unable to pay its debts as they become due, (iv) make a general assignment for the benefit of creditors, (v) file a
petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy or insolvency
proceeding, or (vi) take corporate, company, or partnership action for the purpose of effecting any of the foregoing; 

 

(i)Either
(i) an involuntary petition or complaint shall be filed against Borrower seeking bankruptcy or reorganization of Borrower or the
appointment of a receiver, custodian, trustee, intervenor, or liquidator of Borrower, or of all or substantially all of Borrower’s
assets or (ii) an order, order for relief, judgment, or decree shall be entered by any court of competent jurisdiction or other
competent authority approving a petition or complaint seeking reorganization of Borrower or appointing an intervenor or liquidator
of Borrower, or of all or substantially all of Borrower’s assets; 

 

(j)Any
Obligor other than Borrower shall (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor, or
liquidator of such Obligor or of all or a substantial part of such Obligor’s assets, (ii) file a voluntary petition in bankruptcy,
(iii) admit in writing that such Obligor is unable to pay its debts as they become due, (iv) make a general assignment for the
benefit of creditors, (v) file a petition or answer seeking reorganization or an arrangement with creditors or to take advantage
of any bankruptcy or insolvency proceeding, or (vi) take corporate, company, or partnership action for the purpose of effecting
any of the foregoing; 

 

(k)An
involuntary petition or complaint shall be filed against any Obligor other than Borrower seeking bankruptcy or reorganization of
such Obligor or the appointment of a receiver, custodian, trustee, intervenor, or liquidator of such Obligor, or of all or substantially
all of such Obligor’s assets; or an order, order for relief, judgment, or decree shall be entered by any court of competent
jurisdiction or other competent authority approving a petition or complaint seeking reorganization of such Obligor or appointing
an intervenor or liquidator of such Obligor, or of all or substantially all of such Obligor’s assets;

 

(l)Any
money judgment is rendered against Borrower that is not paid within thirty (30) days, or the failure, within a period of ten (10)
days after the commencement thereof, to have discharged any attachment, sequestration, or similar proceedings against Borrower’s
assets;

 

(m)There
is any default under any agreement concerning Subordinated Indebtedness;

 

    	Loan and Security Agreement - Page 29

    	 

    

(n)Lender
shall cease to have a valid, perfected, and first priority Lien on any of the Collateral, except as otherwise expressly permitted
herein or consented to in writing by Lender;

 

(o)Lender
reasonably believes that the prospect of payment or performance by Borrower under any of the Loan Documents is or may be impaired
or any of the Collateral is or may be in jeopardy, becomes unsafe or insecure, or its value is or may become otherwise impaired;

 

(p)There
shall be any Material Adverse Change;

 

(q)There
shall be any Change of Control; 

 

(r)Any
guarantor of the Obligations, or such guarantor’s successors, heirs, or personal representatives, shall (i) default under
the terms of its guaranty to Lender, (ii) repudiate its or his/her obligations under, or commit an anticipatory breach of, its
or his/her guaranty executed for the benefit of Lender or (iii) attempt to terminate such guaranty, or (iv) commence any legal
proceeding to terminate or hold invalid in any respect such guaranty; or

 

(s)There
is any default under the Validity Certificate.

 

Section
10.2Remedies.

 

(a)Automatic
Acceleration and Termination of Facilities. Upon the occurrence of an Event of Default, (i) the principal of and the accrued
interest on the Loans at the time outstanding, the Early Termination Fee, and all other amounts owed to Lender under this Agreement
or any of the Loan Documents and all other Obligations, shall thereupon become due and payable without presentment, demand, protest,
notice of protest and non-payment, notice of default, notice of acceleration or intention to accelerate, or other notice of any
kind, all of which are expressly waived, anything in this Agreement or any of the Loan Documents to the contrary notwithstanding,
and (ii) the commitment of Lender to make Loans hereunder shall immediately terminate.

 

(b)Other
Remedies. Without limiting the terms of Section 10.2(a) above, if any Event of Default shall have occurred and be continuing,
Lender, in its sole and absolute discretion, may: 

 

(i)declare
the principal of and accrued interest on the Loans at the time outstanding, and all other amounts owed to Lender under this Agreement
or any of the Loan Documents and all other Obligations, to be forthwith due and payable, whereupon the same shall immediately become
due and payable without presentment, demand, protest, notice of protest and non-payment, notice of default, notice of acceleration
or intention to accelerate, or other notice of any kind, all of which are expressly waived, anything in this Agreement or the Loan
Documents to the contrary notwithstanding; 

 

(ii)terminate
any commitment of Lender to make Loans hereunder; 

 

(iii)enter
upon any premises where Collateral is located and take possession of the Collateral;

 

(iv)collect
any Accounts from any Account Debtor; 

 

(v)require
Borrower to assemble the Collateral and make it immediately available to Lender. Without limiting the generality of the foregoing
with respect to that portion of the Collateral that is comprised of Patient Lists, Borrower shall make immediately available all
Patient Lists to Lender;

 

(vi)sell
all or any part of the Collateral at either a public or private sale or both, by way of one or more contracts or transactions,
for cash or on terms, in such manner and at such places (including Borrower’s premises) as Lender determines is commercially
reasonable; 

 

    	Loan and Security Agreement - Page 30

    	 

    

(vii)collect,
foreclose, receive, appropriate, set off, and realize upon any and all Collateral; 

 

(viii)without
notice to Borrower (such notice being expressly waived), and without constituting an acceptance of any Collateral in satisfaction
of an obligation (within the meaning of the UCC or any successor statute or law of similar effect), set off and apply to the Obligations
any and all balances and deposits of Borrower held by Lender (including any amounts received in the Lockboxes), or indebtedness
at any time owing to or for the credit or the account of Borrower held by Lender; 

 

(ix)obtain
the appointment of a receiver, trustee, or similar official over Borrower to manage all of Borrower’s affairs and to effect
all transactions contemplated by this Agreement, realize upon the Collateral, or as is otherwise necessary to perform or enforce
this Agreement;

 

(x)declare
a default on any other contract or agreement between Borrower and Lender; and

 

(xi)exercise
any or all rights and remedies available under the Loan Documents, at law and/or in equity including, without limitation, the rights
and remedies of a secured party under the UCC (whether or not the UCC is applicable). Borrower agrees that, to the extent notice
of sale shall be required by law, at least ten (10) days’ notice to Borrower of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable notice, but notice given in any other reasonable
manner or at any other reasonable time shall also constitute reasonable notice.

 

Section
10.3Application of Proceeds. All proceeds from each
sale of, or other realization upon, all or any part of the Collateral following an Event of Default shall be applied to the payment
of the Obligations (with Borrower remaining liable for any deficiency) in any order which Lender may elect with the balance (if
any) paid to Borrower or to whomsoever is entitled thereto.

 

Section
10.4Power of Attorney. Borrower hereby irrevocably
designates, makes, constitutes, and appoints Lender (and all Persons designated by Lender from time to time) as Borrower’s
true and lawful attorney and agent in fact to act in the name of Borrower to effectuate any term in this Agreement after the occurrence
and during the continuation of any Event of Default. Without limiting the generality of the foregoing, Borrower’s power of
attorney to Lender authorizes Lender to:

 

(a)demand
payment of the Accounts, enforce payment thereof by legal proceedings or otherwise, settle, adjust, compromise, extend, or renew
any or all of the Accounts or any legal proceedings brought to collect the Accounts, discharge and release the Accounts or any
of them, and exercise all of Borrower’s rights and remedies with respect to the collection of Accounts;

 

(b)prepare,
file, and sign the name of Borrower on any proof of claim in bankruptcy or any similar document against any Account Debtor or any
notice of Lien, assignment, or satisfaction of Lien or similar document in connection with any of the Collateral;

 

(c)use
the stationery of Borrower, open Borrower’s mail, notify the post office authorities to change the address for delivery of
Borrower’s mail to an address designated by Lender, and sign the name of Borrower to verifications of the Accounts and on
any notice to the Account Debtors; and

 

(d)use
the information recorded on or contained in any data processing equipment and computer hardware and software relating to the Accounts,
inventory, or other Collateral.

 

    	Loan and Security Agreement - Page 31

    	 

    

Section
10.5Additional Provisions Concerning Rights and Remedies.

 

(a)Time
Essence. Time is of the essence of all of Borrower’s obligations under this Agreement.

 

(b)Rights
Cumulative. The rights and remedies of Lender under the Loan Documents shall be cumulative and not exclusive of any rights
or remedies which it would otherwise have. In exercising such rights and remedies, Lender may be selective and no failure or delay
by Lender in exercising any right shall operate as a waiver of such right nor shall any single or partial exercise of any power
or right preclude its other or further exercise or the exercise of any other power or right.

 

(c)Waiver
of Marshaling. Borrower hereby waives any right to require any marshaling of assets and any similar right.

 

Section
10.6Trademark License. All trademarks, patents,
copyrights, service marks and licenses owned by Borrower, and all trademarks, patents, copyrights, service marks, and software
licensed by Borrower, are listed on Schedule 5.1. Borrower hereby grants to Lender the nonexclusive right and license to
use all of Borrower’s trademarks, patents, copyrights, service marks, and licenses and any other trademarks, patents, copyrights,
service marks, and licenses now or hereafter used by Borrower to realize on the Collateral and to permit any purchaser of any portion
of the Collateral through a foreclosure sale or any other exercise of Lender’s rights and remedies under the Loan Documents
to use, sell, or otherwise dispose of the Collateral bearing any such trademarks, patents, copyrights, service marks, and licenses.
Such right and license is granted free of charge, without the requirement that any monetary payment whatsoever be made to Borrower
or any other Person by Lender.

 

Section
11.MISCELLANEOUS

 

Section
11.1Notices.

 

(a)Method
of Communication. All notices and the communications hereunder and thereunder shall be in writing. Notices in writing shall
be delivered personally or sent by overnight courier service, first class mail, postage pre-paid, e-mail, or by facsimile transmission,
and shall be deemed received, in the case of personal delivery, when delivered, in the case of overnight courier service, on the
next business day after delivery to such service, in the case of mailing, on the third day after mailing (or, if such day is a
day on which deliveries of mail are not made, on the next succeeding day on which deliveries of mail are made) and, in the case
of e-mail or facsimile transmission, upon transmittal.

 

(b)Addresses
for Notices. Notices to any party shall be sent to it at the following addresses, or any other address of which all the other
parties are notified in writing.

 

	 	If
to Borrower:	See Schedule 5.1 for Borrower’s address and

contact information.
	 	 	 
	 	If
to Lender:	Triumph Healthcare Finance

10300
SW Greenburg Rd., Ste. 465

Portland,
OR 97223

 

Attention:
Jennifer Sheasgreenor Jonathan Kott

Facsimile
No.: 503-764-9760

jsheasgreen@triumphhf.com

jkott@triumphhf.com

 

    	Loan and Security Agreement - Page 32

    	 

    

 

Section
11.2Press Releases. Lender may make press releases
or other public disclosure concerning this Agreement, including without limitation the execution of this Agreement, and a description
of the amount of credit facilities made available to Borrower. Borrower authorizes Lender to use any of Borrower’s trademarks,
trade names or logos in such press releases or other public disclosure.

 

Section
11.3Setoff. In addition to any rights now or hereafter
granted under applicable law, and not by way of limitation of any such rights, upon and after the occurrence of any Event of Default,
Lender and any participant with Lender in the Loans are hereby authorized, but only to the extent permitted by Requirements of
Law (including without limitation, any Health Care Law governing prohibiting setoff of certain governmental healthcare receivables),
at any time or from time to time, without notice to Borrower or to any other Person, any such notice being hereby expressly waived,
to setoff and to appropriate and to apply any and all deposits (general or special, time or demand, including, but not limited
to, indebtedness evidenced by certificates of deposit, whether matured or unmatured), but exclusive of any governmental healthcare
receivables that are not subject to setoff under Requirements of Law, and any other indebtedness at any time held or owing by Lender
or any participant to or for the credit or the account of Borrower against and on account of the Obligations, irrespective or whether
or not (a) Lender shall have made any demand under this Agreement or any of the Loan Documents, or (b) Lender shall have declared
any or all of the Obligations to be due and payable as permitted by Section 10.2 and although such Obligations shall be
contingent or unmatured.

 

Section
11.4Venue; Service of Process. BORROWER HEREBY
IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN MULTNOMAH COUNTY, OREGON, and
agrees and consents that service of process may be made upon it in any legal proceeding relating to this Agreement, any borrowing
hereunder, or any other relationship between Lender and Borrower by any means allowed under state or federal law. Any legal proceeding
arising out of or in any way related to this Agreement, any borrowing hereunder, or any other relationship between Lender and Borrower
may be brought and litigated in any one of the state or federal courts located in Multnomah County, Oregon. Borrower and Lender
waive and agree not to assert, by way of motion, as a defense or otherwise, that any such proceeding is brought in an inconvenient
forum or that the venue thereof is improper. Nothing herein shall limit the right of the Lender to bring proceedings against Borrower
in the courts of any other jurisdiction. Any judicial proceeding by Borrower against the Lender involving, directly or indirectly,
any matter in any way arising out of, related to, or in connection with this Agreement shall be brought only in a court in Portland,
Oregon. Borrower expressly waives personal service of the summons and complaint or other process or papers issued therein and
agrees that service of such summons and complaint or other process or papers may be made by registered or certified mail addressed
to Borrower at the address referenced in Section 11.1, which service shall be deemed to have been made on the date that
receipt is deemed to have occurred for registered or certified mail as provided in Section 11.1.

 

Section
11.5Assignment; Participation. All the provisions
of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns,
except that Borrower may not assign or transfer any of its rights or obligations under this Agreement. Lender may assign to one
or more Persons, or sell participations to one or more Persons in, all or a portion of its rights and obligations hereunder and
under this Agreement and any promissory notes issued pursuant hereto and, in connection with any such assignment or sale of a participation,
may assign its rights and obligations under the Loan Documents. Borrower agrees that Lender may provide any information that Lender
may have about Borrower or about any matter relating to this Agreement to any of its Affiliates or their successors, or to any
one or more purchasers or potential purchasers of any of its rights under this Agreement or any one or more participants or potential
participants.

 

Section
11.6Amendments. Any term, covenant, agreement, or
condition of this Agreement or any of the other Loan Documents may be amended or waived, and any departure therefrom may be consented
to if, but only if, such amendment, waiver, or consent is in writing signed by Lender and, in the case of an amendment, by Borrower.
Unless otherwise specified in such waiver or consent, a waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.

    	Loan and Security Agreement - Page 33

    	 

    

 

Section
11.7Further Cooperation. Borrower shall further
cooperate with Lender’s requests for additional documents Lender reasonably deems necessary or desirable to effectuate the
Loans, the security interest in the Collateral, or any other term of this Agreement. 

 

Section
11.8Expenses and Fees Earned when Paid. Expenses
and Fees paid by Borrower shall be earned by Lender when paid or charged to the Loans. 

 

Section
11.9Performance of Borrower’s Duties. If Borrower
shall fail to do any act or thing which it has covenanted to do under this Agreement or any of the Loan Documents, Lender may (but
shall not be obligated to) do the same or cause it to be done either in the name of Lender or in the name and on behalf of Borrower,
and Borrower hereby irrevocably authorizes Lender so to act.

 

Section
11.10Indemnification. Borrower shall reimburse Lender
and its Affiliates and their officers, employees, directors, shareholders, agents, and legal counsel (collectively, the “Indemnified
Parties” and individually, an “Indemnified Party”) for all reasonable costs and expenses, including
legal fees and expenses, incurred and shall indemnify and hold the Indemnified Parties harmless from and against all losses suffered
by any Indemnified Party, other than losses resulting from an Indemnified Party’s gross negligence or willful misconduct,
in connection with (a) the exercise by Lender or any of its Affiliates of any right or remedy granted to it under this Agreement
or any of the Loan Documents or at law, (b) any claim, and the prosecution or defense thereof, arising out of or in any way connected
with this Agreement or any of the Loan Documents, except in the case of a dispute between Borrower and Lender in which Borrower
prevails in a final unappealed or unappealable judgment, and (c) the collection or enforcement of the Obligations or any of them.
BORROWER AND LENDER EXPRESSLY INTEND THAT THE FOREGOING INDEMNITY SHALL COVER, AND THAT BORROWER SHALL INDEMNIFY AND HOLD THE
INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST, COSTS, EXPENSES, AND LOSSES SUFFERED AS A RESULT OF THE NEGLIGENCE (OTHER THAN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) OF ANY INDEMNIFIED PARTY.

 

Section
11.11All Powers Coupled with Interest. All powers
of attorney and other authorizations granted to Lender and any Persons designated by Lender pursuant to any provisions of this
Agreement or any of the Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the
Obligations remain unpaid or unsatisfied or Lender has any obligations to make Advances hereunder.

 

Section
11.12Severability of Provisions; Requirements of Law.
The parties intend for this Agreement and all of the Loan Documents to comply with all Requirements of Law. However, in the event
any provision of this Agreement or any other Loan Document is prohibited or unenforceable in any jurisdiction, such provision shall
as to such jurisdiction be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder
of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in
any other jurisdiction. The parties will thereafter remedy or revise such prohibited or unenforceable provision to the extent required
to make the affected Loan Document compliant with the Requirements of Law and effectuate the parties’ rights and obligations
under this Agreement.

 

Section
11.13Governing Law. This Agreement and the promissory
notes issued pursuant hereto shall be construed in accordance with and governed by the laws of the State of Oregon other than its
conflict of laws principles.

 

Section
11.14Jury Waiver. BORROWER AND LENDER HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY, AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER
BASED UPON CONTRACT, TORT, OR OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER AND LENDER’S AFFILIATES ARISING OUT OF OR IN
ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWER OR BETWEEN BORROWER
AND ANY AFFILIATE OF LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN
THE OTHER LOAN DOCUMENTS.

    	Loan and Security Agreement - Page 34

    	 

    

 

Section
11.15Attorney Fees and Costs. The prevailing party
in any litigation arising under or related to this Agreement shall be entitled to recover from the non-prevailing party all of
the prevailing party’s reasonable attorney fees incurred in connection with such litigation, together with all costs, deposition
costs, court fees and other costs and expenses of such litigation.

 

Section
11.16Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall
constitute one and the same agreement. A facsimile or digital copy of any signed Loan Document, including this Agreement, shall
be deemed to be an original thereof.

 

Section
11.17Patriot Act Notice. IMPORTANT INFORMATION ABOUT
PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money- laundering activities, Federal
law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens
an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services
product. What this means for Borrower: When Borrower opens an account, if Borrower is an individual, Lender will ask for Borrower’s
name, residential address, date of birth, and other information that will allow Lender to identify Borrower, and if Borrower is
not an individual, Lender will ask for Borrower’s name, employer identification number, business address, and other information
that will allow Lender to identify Borrower. Lender may also ask, if Borrower is an individual, to see Borrower’s driver’s
license or other identifying documents, and if Borrower is not an individual, to see Borrower’s legal organizational documents
or other identifying documents.

 

Section
11.18Statutory Disclaimer. UNDER OREGON LAW, MOST
AGREEMENTS, PROMISES, AND COMMITMENTS MADE BY A LENDER AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH
ARE NOT FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S RESIDENCE, MUST BE IN WRITING, EXPRESS
CONSIDERATION, AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.

 

[Signature Page to Follow]

 

    	Loan and Security Agreement - Page 35

    	 

    

 

THIS WRITTEN LOAN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

 

MAIN AVENUE PHARMACY INC.

 

 

By: /s/ Jeffrey J. Andrews

Name: Jeffrey J. Andrews

Title: President

 

 

TRIUMPH COMMUNITY BANK, N.A. dba Triumph Healthcare Finance

 

 

By: /s/ Jennifer Sheasgreen

Name: Jennifer Sheasgreen

Title: President

 

 

 

EXHIBITS AND SCHEDULES

 

	EXHIBIT A	FORM OF BORROWING BASE CERTIFICATE
	EXHIBIT B	FORM OF COVENANT AND COMPLIANCE CERTIFICATE
	EXHIBIT C	FORM OF ADVANCE REQUEST
	EXHIBIT D	FORM OF NOTICE TO OBLIGORS 
	 	 
	 	 
	 	 
	SCHEDULE A	Supplemental Terms and Conditions
	 	 

 

	SCHEDULE 1.1	Commercial Tort Claims
	SCHEDULE 4.1	Required Payoffs and Judgments and Liens
	SCHEDULE 5.1	Borrower Information, Liens, Indebtedness for Money Borrowed, Guaranties, Litigation, ERISA Benefit Plans

 

 

 

 

 

    	Loan and Security Agreement - Page 36Exhibit 10.1

 

THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

Third Amended and Restated Employment Agreement, dated as of December 10, 2014 (this “Agreement”), by and between OTELCO INC., a Delaware corporation (“Otelco” or the “Company”), and ROBERT SOUZA (the “Employee”).

 

WHEREAS, the Employee and the Company have entered into that certain Second Amended and Restated Employment Agreement, dated as of May 1, 2014 (the “Prior Agreement”).

 

WHEREAS, the Company and the Employee desire to amend and restate the terms of the Prior Agreement.

 

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

 

SECTION 1.          Effective Date.

 

This Agreement shall become effective on January 1, 2015 (the “Effective Date”).

 

SECTION 2.          Employment Period.

 

Subject to Section 4, the Company hereby agrees to employ the Employee, and the Employee hereby agrees to be employed by the Company, in accordance with the terms and provisions of this Agreement, for the period from the Effective Date through the Termination Date (the “Employment Period”).

 

SECTION 3.          Terms of Employment.

 

(a)           Duties and Position. During the Employment Period, the Employee shall serve as the Chief Executive Officer and President of the Company and certain of its subsidiaries (collectively, the “Company Entities”) and shall report to the Board of Directors of the Company (the “Board”) and each such subsidiary. The Employee shall have supervision and control over, and responsibility for, the management and operational functions of the Company Entities and shall have such other powers and duties (consistent with the customary powers and duties of a chief executive officer) as may from time to time be prescribed by the Board.

 

(b)           Full Time. During the Employment Period, and excluding any periods of vacation and sick leave to which the Employee is entitled, the Employee agrees to devote his full business time and efforts, to the best of his ability, experience and talent, to the business and affairs of the Company. During the Employment Period, it shall not be a violation of this Agreement for the Employee to serve on corporate, civic or charitable boards or committees or manage personal investments (including serving as a member of boards of directors or similar bodies of entities not engaged in competition with the Company Entities (as determined by the Board in its reasonable discretion)), in each case, so long as such activities do not interfere with the 

 

    	  

    	 

    
 

 

performance of the Employee’s responsibilities as an employee of the Company in accordance with this Agreement.

 

(c)           Compensation.

 

(i)           Base Salary. During the Employment Period, the Employee shall receive an annual base salary of $350,000, subject to increase by the Board, which annual base salary shall be further subject to annual increase by an amount equal to at least the increase in the cost of living, if any, between the date of the immediately preceding increase and the date of each such adjustment, based upon the Consumer Price Index for Urban Consumers, or, if that index is discontinued, a similar index prepared by a department or agency of the United States government (as so increased and adjusted, the “Annual Base Salary”). The Annual Base Salary shall be paid in accordance with the customary payroll practices of the Company, subject to withholding and other payroll taxes.

 

(ii)          Bonus. For each fiscal year during the Employment Period, the Employee shall be entitled to receive a bonus (the “Bonus”). The Bonus shall be based upon the Company achieving operating and/or financial goals to be established by the Board or any duly appointed committee thereof in good faith, in its sole discretion.

 

(iii)         Benefits. During the Employment Period, the Employee shall be entitled to participate in all incentive (including any long term incentive plan), savings and retirement plans, practices, policies and programs applicable generally to other executives of the Company and shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company to the extent applicable generally to other executives of the Company.

 

(iv)        Automobile. During the Employment Period, the Company shall provide the Employee with the use of a Company automobile (or, at the Company’s option, shall lease an automobile for the Employee’s use) and shall reimburse the Employee for all reasonable expenses incurred by the Employee in connection with the use and maintenance of such automobile.

 

(v)         Expenses. The Employee shall be entitled to receive reimbursement for all reasonable expenses incurred by the Employee during the Employment Period in connection with the performance of his duties hereunder, in accordance with the policies, practices and procedures of the Company as in effect from time to time.

 

(vi)        Vacation and Holidays. During the Employment Period, the Employee shall be entitled to paid holidays and vacation in accordance with the policies of the Company generally applicable to other executives of the Company generally.

 

SECTION 4.          Termination of Employment.

 

(a)           Death or Disability. The Employee’s employment shall terminate automatically upon the Employee’s death. If the Company intends to terminate the Employee’s employment due to Disability, the Company shall give to the Employee written notice of its intention to 

 

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terminate the Employee’s employment. In such event, the Employee’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Employee if, within the 30 days after such receipt, the Employee shall not have returned to full-time performance of the Employee’s duties. For purposes of this Agreement, “Disability” shall mean the Employee’s inability to perform his duties and obligations hereunder for any 90 days during a period of 180 consecutive days due to mental or physical incapacity as determined by a physician selected by the Company or its insurers.

 

(b)           Termination by the Employee. The Employee may terminate his employment with the Company at any time upon at least 60 days prior written notice thereof.

 

(c)           Termination by the Company. The Company may terminate the Employee’s employment with the Company at any time, for Cause or Without Cause. “Cause” will mean that any of the following will have occurred: (i) the Employee has been convicted of a felony, stolen funds or otherwise engaged in fraudulent conduct; (ii) the Employee has engaged in willful misconduct or has been grossly negligent, in each case, which has been materially injurious to the Company; (iii) the Employee has failed or refused to comply with directions of the Board that are reasonably consistent with the Employee’s current position; or (iv) the Employee has breached the terms of this Agreement. “Without Cause” shall mean a termination by the Company of the Employee’s employment during the Employment Period for any reason other than a termination based upon Cause, death or Disability.

 

(d)           Notice of Termination. Any termination by the Company for Cause or Without Cause or by the Employee for any reason shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provisions in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated and (iii) if the date of termination is other than the date of receipt of such notice, specifies the termination date (the “Termination Date”).

 

(e)           Separation from Service. The term “termination” or “termination of employment” when used in this Agreement shall mean a “Separation from Service” as such term is defined using the default rules in Treasury Regulation Section 1.409A-1(h).

 

SECTION 5.          Obligations of the Company upon Termination.

 

(a)           Without Cause; Death or Disability. If, during the Employment Period, the Company shall terminate the Employee’s employment Without Cause or due to death or Disability, then the Company will provide the Employee with the following severance payments and/or benefits:

 

(i)           The Company shall pay to the Employee a lump sum in the amount of the Employee’s accrued but unpaid Annual Base Salary through the Termination Date (“Accrued Obligations”);

 

(ii)          To the extent the Employee and, if applicable, members of his family participate in any medical, prescription drug, dental, vision or other “group health plan” 

 

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of the Company immediately prior to the Termination Date, the Company shall pay to the Employee a lump sum in the amount equal to twenty-four (24) times the monthly premium cost to the Employee of continued coverage for the Employee and, if applicable, members of his family that would be incurred for continuation coverage under such plans in accordance with Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of Title 1 of the Employee Retirement Income Security Act of 1974, as amended;

 

(iii)         The Company shall pay to the Employee a lump sum in an amount equal to 1.5 times his Annual Base Salary within six (6) months following termination but not later than March 14 of the calendar year following termination; and

 

(iv)         The Company shall pay to the Employee a lump sum amount equal to the Bonus the Employee would have received had he remained employed by the Company through the end of the fiscal year in which the termination occurred, pro rated for the number of days the Employee was employed by the Company during such fiscal year, to be paid at the same time that similar bonuses are paid to the Company’s other employees.

 

(b)           Cause; by the Employee. If the Employee’s employment shall be terminated by the Company for Cause or by the Employee for any reason, then the Company shall have no further payment obligations to the Employee (or his heirs or legal representatives) other than for (i) payment of Accrued Obligations and (ii) the continuance of the Employee’s and, if applicable, members of his family’s participation in the Company’s welfare and benefit plans through the Termination Date.

 

(c)           Condition; Release. The Employee acknowledges and agrees that the Company’s obligations to make payments under Section 5(a) will be conditioned on the Employee executing and delivering a customary general release in form and substance reasonably satisfactory to the Company. Commencement of separation payments under this Agreement shall begin on the first payroll date that occurs in the month that begins at least 60 days after the date of Employee’s Separation from Service (the “Starting Date”), provided that the Employee has satisfied the requirement to sign a release of claims. The first payment on the Starting Date shall include those payments that would have been previously paid if the payments of the severance compensation had begun on the first payroll date following the date of the Employee’s Separation from Service. The Company shall provide to the Employee a form of release of claims no later than three days following the Employee’s date of Separation from Service. The Employee must execute and deliver the release of claims within 50 days after the Employee’s date of Separation from Service. If the Employee does not timely execute and deliver to the Company such release, or if the Employee does so, but then revokes it if permitted by and within the time required by applicable law, the Company will have no obligation to pay severance compensation to the Employee.

 

(d)           Delay for Specified Employees. If the Employee is a “Specified Employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and determined pursuant to procedures adopted by the Company at the time of the Employee’s Separation from Service and any amount that would be paid to the Employee during the six-month period following Separation from Service constitutes deferred 

 

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compensation (within the meaning of Section 409A), such amount shall not be paid to the Employee until six months following the Employee’s Separation from Service. On the first regular payroll date following the expiration of such six-month period (or if the Employee dies during the six-month period, the first payroll date following death), all payments that were delayed pursuant to the preceding sentence shall be paid to the Employee in a single lump sum and thereafter all payments shall be made as if there had been no such delay. In addition, if the Employee becomes entitled to severance compensation, such payments shall be considered, and are hereby designated as, a series of separate payments for purposes of Section 409A. Further, all severance compensation payable under this Agreement shall be paid by, and no further severance compensation shall be paid or payable after, December 31 of the second calendar year following the year in which the Employee’s Separation from Service occurs.

 

(e)           Section 409A Compliance. To the extent applicable, it is intended that the compensation arrangements under this Agreement be in full compliance with Section 409A. This Agreement shall be construed in a manner to give effect to such intention. In no event whatsoever shall the Company or any of its affiliates be liable for any tax, interest or penalties that may be imposed on the Employee under Section 409A. Neither the Company nor any of its affiliates have any obligation to indemnify or otherwise hold the Employee harmless from any or all such taxes, interest or penalties, or liability for any damages related thereto.

 

SECTION 6.          Nondisclosure and Nonuse of Confidential Information.

 

(a)          The Employee shall not disclose or use at any time, either during the Employment Period or thereafter, any Confidential Information (as hereinafter defined) of which the Employee is or becomes aware as a consequence of or in connection with his employment with the Company, whether or not such information is developed by him, except (i) to the extent that such disclosure or use is in furtherance of the Employee’s performance in good faith of his duties as the Company’s President or (ii) to the extent required by law or legal process; provided that (A) the Employee agrees to provide the Company with prompt written notice of any such law or legal process and to assist the Company, at the Company’s expense, in asserting any legal challenges to or appeals of such law or legal process that the Company in its sole discretion pursues, and (B) in complying with any such law or legal process, the Employee shall limit his disclosure only to the Confidential Information that is expressly required to be disclosed by such law or legal process. The Employee will take all commercially reasonable steps to safeguard Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. The Employee shall deliver to the Company on the Termination Date, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the Work Product (as hereinafter defined) of the Company Entities which the Employee may then possess or have under his control.

 

(b)          The Employee agrees that all Work Product belongs in all instances to the Company Entities. The Employee will promptly disclose such Work Product to the Board and perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm the Company Entities’ ownership of the Work Product (including, without limitation, the execution and delivery of assignments, consents, powers of attorney and other instruments) and to provide reasonable assistance to the Company Entities 

 

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(whether during or after the Employment Period), at the Company’s sole expense, in connection with the prosecution of any applications for patents, trademarks, trade names, service marks or reissues thereof or in the prosecution or defense of interferences relating to any Work Product. The Employee recognizes and agrees that the Work Product, to the extent copyrightable, constitutes works for hire under the copyright laws of the United States.

 

(c)           “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by the Company Entities in connection with their business, including, but not limited to, information, observations and data obtained by the Employee while employed by the Company or any predecessors thereof (including those obtained prior to the date of this Agreement) concerning (i) the business or affairs of Otelco and its Affiliates (including the Company Entities) and (ii) products, services, fees, costs, pricing structures, analyses, drawings, photographs and reports, computer software (including operating systems, applications and program listings), data bases, accounting and business methods, inventions, devices, new developments, methods and processes (whether patentable or unpatentable and whether or not reduced to practice), customers and clients and customer and client lists, all technology and trade secrets, and all similar and related information in whatever form. Confidential Information will not include any information that (A) is or becomes generally available to the public other than through disclosure by the Employee in violation of this Section 6, (B) was provided to the Employee prior to the date hereof on a non-confidential basis from a Person who was not otherwise bound by a confidentiality agreement or duty to Otelco or its Affiliates (including the Company Entities) or (C) becomes available to the Employee on a non-confidential basis from a Person who is not otherwise bound by a confidentiality agreement with or duty to Otelco or its Affiliates (including the Company Entities) or is not otherwise prohibited from transmitting the information to the Employee.

 

(d)           “Work Product” means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, trade dress, logos and all similar or related information (whether patentable or unpatentable) which relates to a Company Entity’s actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by the Employee (whether or not during usual business hours and whether or not alone or in conjunction with any other Person) during the Employment Period together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing.

 

SECTION 7.          Non-Compete and Non-Solicit.

 

(a)          The Employee acknowledges that, in the course of the Employee’s employment with the Company, the Employee has become familiar, or will become familiar, with Otelco’s and its Affiliates’ (including the Company Entities’) trade secrets and with other Confidential Information concerning Otelco and its Affiliates (including the Company Entities) and that his services have been and will be of special, unique and extraordinary value to Otelco and its Affiliates (including the Company Entities). Therefore, the Employee agrees that, during the Employment Period and for eighteen (18) months thereafter (the “Restricted Period”), the Employee shall not directly or indirectly (i) engage, within the Restricted Territory, in any 

 

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telephone or communications business, including, but not limited to, incumbent local exchange carrier, long distance telephone business, cable television, Internet access, or other business that Otelco or any of its Affiliates (including the Company Entities) is engaged in during the Employee’s employment by the Company (the “Company Business”), (ii) compete or participate as agent, employee, consultant, advisor, representative or otherwise in any enterprise engaged in a business which has any operations engaged in the Company Business within the Restricted Territory or (iii) compete or participate as a stockholder, partner, member or joint venturer, or have any direct or indirect financial interest, in any enterprise which has any material operations engaged in the Company Business within the Restricted Territory; provided, however, that nothing contained herein will prohibit the Employee from (A) owning, operating or managing any business, or acting upon any business opportunity, after obtaining approval of a majority of the Board or (B) owning no more than five percent (5%) of the equity of any publicly traded entity with respect to which the Employee does not serve as an officer, director, employee, consultant or in any other capacity other than as an investor. The term “Restricted Territory” means all states within the United States in which Otelco or any of its Affiliates (including the Company Entities) conducts or is pursuing or analyzing plans to conduct Company Business as of the Termination Date.

 

(b)          As a means reasonably designed to protect Confidential Information, the Employee agrees that, during the period commencing on the Effective Date and ending on the expiration of the Restricted Period, the Employee will not (i) solicit or make any other contact with, directly or indirectly, any customer of Otelco or any of its Affiliates (including the Company Entities) as of the date that the Employee ceases to be employed by the Company with respect to the provision of any service to any such customer that is the same or substantially similar to any service provided to such customer by Otelco or any of its Affiliates (including the Company Entities) or (ii) solicit or make any other contact with, directly or indirectly, any employee of Otelco or any of its Affiliates (including the Company Entities) on the date that the Employee ceases to be employed by the Company (or any Person who was employed by Otelco or any of its Affiliates (including the Company Entities) at any time during the three-month period prior to the Termination Date) with respect to any employment, services or other business relationship.

 

SECTION 8.          Remedies.

 

The Employee acknowledges that irreparable damage would occur in the event of a breach of the provisions of Section 6 or Section 7 by the Employee. It is accordingly agreed that, in addition to any other remedy to which it is entitled at law or in equity, the Company will be entitled to an injunction or injunctions to prevent breaches of such sections of this Agreement and to enforce specifically the terms and provisions of such sections.

 

SECTION 9.          Definitions.

 

“Accrued Obligations” has the meaning set forth in Section 5(a)(i).

 

“Affiliate” means, with respect to any Person, any other Person that is controlled by, controlling or under common control with, such Person. Notwithstanding anything to the contrary contained herein, with respect to Otelco, the term “Affiliate” will include, without 

 

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limitation, each Person with an ownership interest in Otelco (and each member, stockholder or partner of each such Person) and each Person in which any stockholder of Otelco (and each member, stockholder or partner of each such Person) holds or has the right to acquire, collectively, more than 10% of the voting equity interests.

 

“Agreement” has the meaning set forth in the Caption.

 

“Annual Base Salary” has the meaning set forth in Section 3(c)(i).

 

“Board” has the meaning set forth in Section 3(a).

 

“Bonus” has the meaning set forth in Section 3(c)(ii).

 

“Business Day” means any day that is not a Saturday, Sunday, legal holiday or other day on which banks are required to be closed in New York, New York.

 

“Cause” has the meaning set forth in Section 4(c).

 

“Company” has the meaning set forth in the Caption.

 

“Company Business” has the meaning set forth in Section 7(a).

 

“Company Entities” has the meaning set forth in Section 3(b).

 

“Confidential Information” has the meaning set forth in Section 6(c).

 

“Disability” has the meaning set forth in Section 4(a).

 

“Effective Date” has the meaning set forth in Section 1.

 

“Employee” has the meaning set forth in the Caption.

 

“Employment Period” has the meaning set forth in Section 2.

 

“Otelco” has the meaning set forth in the Caption.

 

“Notice of Termination” has the meaning set forth in Section 4(d).

 

“Person” means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof.

 

“Prior Agreement” has the meaning set forth in the Recitals.

 

“Restricted Period” has the meaning set forth in Section 7(a).

 

“Restricted Territory” has the meaning set forth in Section 7(a).

 

“Section 409A” has the meaning set forth in Section 5(d).

 

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“Separation from Service” has the meaning set forth in Section 4(e).

 

“Starting Date” has the meaning set forth in Section 5(c).

 

“Termination Date” has the meaning set forth in Section 4(d).

 

“Without Cause” has the meaning set forth in Section 4(c).

 

“Work Product” has the meaning set forth in Section 6(d).

 

SECTION 10.        General Provisions.

 

(a)           Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

 

(b)           Entire Agreement. This Agreement amends, restates and supersedes the Prior Agreement and embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof. This Agreement supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

(c)           Survival. Notwithstanding anything to the contrary contained herein, the provisions of Section 6, Section 7 and Section 8 shall survive the termination of this Agreement.

 

(d)           Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

(e)           Successors and Assigns; Beneficiaries. This Agreement is personal to the Employee and without the prior written consent of the Company shall not be assignable by the Employee other than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Employee’s heirs and legal representatives and the successors and assigns of the Company. The Company reserves the right to assign this Agreement in whole or in part to any of its Affiliates and upon any such assignment, the term “Company” will be deemed to be such Affiliate.

 

(f)           Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION 

 

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OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

 

(g)           Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF.

 

(h)           Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Employee and the Company and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

 

(i)            Notices. All notices, requests, demands, claims, consents and other communications which are required or otherwise delivered hereunder shall be in writing and shall be deemed to have been duly given if (i) personally delivered or transmitted by electronic mail, (ii) sent by nationally recognized overnight courier, (iii) mailed by registered or certified mail with postage prepaid, return receipt requested, or (iv) transmitted by facsimile (with a copy of such transmission concurrently transmitted by registered or certified mail with postage prepaid, return receipt requested), to the parties hereto at the following addresses (or at such other address for a party as shall be specified by like notice):

 

If to the Board or the Company, to:

 

Otelco Inc.

505 Third Avenue East

Oneonta, Alabama 35121

Attention: Curtis L. Garner, Jr.

Telephone No: (205) 625-3571

Facsimile No: (205) 274-8999

Electronic Mail: curtis@otelcotel.com

 

with a copy to:

 

Dorsey & Whitney LLP

51 West 52nd Street

New York, New York 10019

Attention: Steven Khadavi, Esq.

Telephone No: (212) 415-9376

Facsimile No: (646) 390-6549

Electronic Mail: khadavi.steven@dorsey.com

 

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If to the Employee to:

 

Robert Souza

12 Colonial Drive

Durham, Maine 04222

Telephone No: (207) 353-7395

Electronic Mail: rob.souza@ottcommunications.com

 

or to such other address as the party to whom such notice or other communication is to be given may have furnished to each other party in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (i) when delivered, if personally delivered or transmitted by electronic mail, with receipt acknowledgment by the recipient by return electronic mail, (ii) when sent, if sent by facsimile on a Business Day during normal business hours (or, if not sent on a Business Day during normal business hours, on the next Business Day after the date sent by facsimile), (iii) on the next Business Day after dispatch, if sent by nationally recognized, overnight courier guaranteeing next Business Day delivery and (iv) on the fifth (5th) Business Day following the date on which the piece of mail containing such communication is posted, if sent by mail.

 

(j)           Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

 

(k)           Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

 

(l)           Nouns and Pronouns. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice-versa.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Third Amended and Restated Employment Agreement as of the date first written above.

 

	 	 
OTELCO INC.

	 	 	 
	
 

	
By: 

	 
/s/ Curtis L. Garner, Jr.

	 	 	Name:  Curtis L. Garner, Jr.
	 	 	 
Title:    Chief Financial Officer

	 	 	 
	 	 
EMPLOYEE

	 	 	 
	 	 	 
/s/ Robert Souza

	 	 	 
Robert Souza

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