Document:

Vertex Energy, Inc. 8-K

 

Exhibit 10.3

 

 

 

FORM OF GUARANTY AND SECURITY
AGREEMENT

 

Dated as of February 1, 2017

 

among

 

VERTEX ENERGY OPERATING,
LLC,

BANGO OIL LLC,

VERTEX REFINING
NV, LLC, 

VERTEX REFINING OH, LLC, 

VERTEX MERGER SUB, LLC, 

VERTEX REFINING LA, LLC, 

VERTEX II GP, LLC,

VERTEX
ACQUISITION SUB, LLC, 

CEDAR MARINE TERMINALS, LP, 

VERTEX RECOVERY, L.P.,

GOLDEN STATE LUBRICANTS
WORKS, LLC, 

CROSSROAD CARRIERS, L.P.,

VERTEX RECOVERY
MANAGEMENT, LLC 

VERTEX RECOVERY MANAGEMENT LA, LLC 

H & H OIL, L.P., and

VERTEX ENERGY, INC.

 

and

 

Each Other Grantor

From Time to Time Party
Hereto

 

and

 

ENCINA BUSINESS CREDIT, LLC,

as Agent

 

 

 

    i 

     

    

 

TABLE OF CONTENTS

 

	 	 	 	Page
	 	 	 	 
	ARTICLE I DEFINED TERMS	2
	Section 1.1	 	Definitions	2
	Section 1.2	 	Certain Other Terms	5
	 	 	 	 
	ARTICLE II GUARANTY	6
	Section 2.1	 	Guaranty	6
	Section 2.2	 	Limitation of Guaranty	7
	Section 2.3	 	Contribution	7
	Section 2.4	 	Authorization; Other Agreements	7
	Section 2.5	 	Guaranty Absolute and Unconditional	8
	Section 2.6	 	Waivers	9
	Section 2.7	 	Reliance	9
	 	 	 	 
	ARTICLE III GRANT OF SECURITY INTEREST	9
	Section 3.1	 	Collateral	9
	Section 3.2	 	Grant of Security Interest in Collateral	10
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES	10
	Section 4.1	 	Title; No Other Liens	11
	Section 4.2	 	Perfection and Priority	11
	Section 4.3	 	Jurisdiction of Organization; Chief Executive Office	11
	Section 4.4	 	Locations of Inventory, Equipment and Books and Records	12
	Section 4.5	 	Pledged Collateral	12
	Section 4.6	 	Instruments and Tangible Chattel Paper Formerly Accounts	12
	Section 4.7	 	Intellectual Property	12
	Section 4.8	 	Commercial Tort Claims	13
	Section 4.9	 	Specific Collateral	13
	Section 4.10	 	Enforcement	13
	 	 	 	 
	ARTICLE V COVENANTS	14
	Section 5.1	 	Maintenance of Perfected Security Interest; Further Documentation and Consents	14
	Section 5.2	 	Changes in Locations, Name, Etc	15
	Section 5.3	 	Pledged Collateral	15
	Section 5.4	 	Accounts	16
	Section 5.5	 	Commodity Contracts	16
	Section 5.6	 	Delivery of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper	16
	Section 5.7	 	Intellectual Property	17
	Section 5.8	 	Notices	18
	Section 5.9	 	Notice of Commercial Tort Claims	18
	Section 5.10	 	Controlled Securities Account	19

 

    ii 

     

    

 

TABLE OF CONTENTS

(continued)

 

Page

 

	ARTICLE VI REMEDIAL PROVISIONS	19
	Section 6.1	Code and Other Remedies	19
	Section 6.2	Accounts and Payments in Respect of General Intangibles	22
	Section 6.3	Pledged Collateral	23
	Section 6.4	Proceeds to be Turned over to and Held by Agent	24
	Section 6.5	Sale of Pledged Collateral	25
	Section 6.6	Deficiency	25
	 	 	 
	ARTICLE VII THE AGENT	26
	Section 7.1	Agent’s Appointment as Attorney-in-Fact	26
	Section 7.2	Authorization to File Financing Statements	27
	Section 7.3	Authority of Agent	28
	Section 7.4	Duty; Obligations and Liabilities	28
	 	 	 
	ARTICLE VIII MISCELLANEOUS	29
	Section 8.1	Reinstatement	29
	Section 8.2	Release of Collateral	29
	Section 8.3	Independent Obligations	30
	Section 8.4	No Waiver by Course of Conduct	30
	Section 8.5	Amendments in Writing	30
	Section 8.6	Additional Grantors; Additional Pledged Collateral	30
	Section 8.7	Notices	31
	Section 8.8	Successors and Assigns	31
	Section 8.9	Counterparts	31
	Section 8.10	Severability	31
	Section 8.11	Governing Law	31
	Section 8.12	Waiver of Jury Trial	31

 

    iii 

     

    

 

ANNEXES AND SCHEDULES

 

	 	Annex 1	Form of Pledge Amendment
	 	Annex 2	Form of Joinder Agreement
	 	Annex 3	Form of Intellectual Property Security Agreement
	 	 	 
	 	Schedule 1	Commercial Tort Claims
	 	Schedule 2	Filings
	 	Schedule 3	Jurisdiction of Organization; Chief Executive Office
	 	Schedule 4	Location of Inventory and Equipment
	 	Schedule 5	Pledged Collateral
	 	Schedule 6	Intellectual Property

 

    iv 

     

    

 

GUARANTY
AND SECURITY AGREEMENT, dated as of February 1, 2017, by VERTEX ENERGY, INC., a Nevada corporation (“Holdings”),
VERTEX ENERGY OPERATING, LLC, a Texas limited liability company, BANGO OIL LLC, a Nevada limited liability company, VERTEX REFINING
NV, LLC, a Nevada limited liability company, VERTEX REFINING OH, LLC, an Ohio limited liability company, VERTEX MERGER SUB, LLC,
a California limited liability company, VERTEX RECOVERY MANAGEMENT, LLC, a Texas limited liability company, VERTEX RECOVERY MANAGEMENT
LA, LLC, a Louisiana limited liability company, VERTEX REFINING LA, LLC, a Louisiana limited liability company, VERTEX II GP, LLC,
a Nevada limited liability company, VERTEX ACQUISITION SUB, LLC, a Nevada limited liability company, CEDAR MARINE TERMINALS, LP,
a Texas limited partnership, VERTEX RECOVERY, L.P., a Texas limited partnership, GOLDEN STATE LUBRICANTS WORKS, LLC, a Delaware
limited liability company, CROSSROAD CARRIERS, L.P., a Texas limited partnership, and H & H OIL, L.P., a Texas limited partnership
(individually each a “Borrower” and, collectively, “Borrowers”), and each of the other entities
listed on the signature pages hereof or that becomes a party hereto pursuant to Section 8.6 (together with Holdings and
the Borrowers, the “Grantors”), in favor of Encina Business Credit, LLC (“Encina”), as administrative
agent and collateral agent (in such capacity, together with its successors and permitted assigns, the “Agent”)
for the Lenders and each other Credit Party (each as defined in the Credit Agreement referred to below).

 

W I T N E S S E T H:

 

WHEREAS,
pursuant to the [ABL] Credit Agreement dated as of February 1, 2017 (as the same may be amended, restated, supplemented
and/or modified from time to time, the “Credit Agreement”) among Holdings, the Borrowers, the Lenders, the
Agent and the other Credit Parties, the Lenders have severally agreed to make extensions of credit to the Borrowers upon the
terms and subject to the conditions set forth therein;

 

WHEREAS,
Holdings has agreed to guaranty the Obligations (as defined in the Credit Agreement) of each Borrower and each Borrower has agreed
to guaranty the Obligations of each other Borrower;

 

WHEREAS,
each Grantor will derive substantial direct and indirect benefits from the making of the extensions of credit under the Credit
Agreement; and

 

WHEREAS,
it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrowers under
the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Agent;

 

NOW,
THEREFORE, in consideration of the premises and to induce the Lenders and the Agent to enter into the Credit Agreement and to induce
the Lenders to make their respective extensions of credit to the Borrowers thereunder, each Grantor hereby agrees with the Agent
as follows:

 

    

     

    

 

ARTICLE I

 

DEFINED TERMS

 

Section 1.1             Definitions.
(a) Capitalized terms used herein without definition are used as defined in the Credit Agreement.

 

(b)          The
following terms have the meanings given to them in the UCC and terms used herein without definition that are defined in the UCC
have the meanings given to them in the UCC (such meanings to be equally applicable to both the singular and plural forms of the
terms defined): “account”, “account debtor”, “as-extracted collateral”,
“certificated security”, “chattel paper”, “commercial tort claim”, “commodity
contract”, “deposit account”, “electronic chattel paper”, “equipment”,
“farm products”, “fixture”, “general intangible”, “goods”,
“health-care-insurance receivable”, “instruments”, “inventory”, “investment
property”, “letter-of-credit right”, “proceeds”, “record”, “securities
account”, “security”, “supporting obligation” and “tangible chattel paper”.

 

 (c)          The following terms shall have the following meanings:

 

“Account
Control Agreement” means, with respect to any deposit account, securities account, commodity account, securities entitlement
or commodity contract, an agreement, in form and substance reasonably satisfactory to Agent, among Agent, the financial institution
or other Person at which such account is maintained or with which such entitlement or contract is carried (if applicable, any holder
of any other Lien, or any representative therefor) and the Loan Party maintaining such account or owning such entitlement or contract,
effective to grant “control” (within the meaning of Articles 8 and 9 under the applicable UCC) over such account to
Agent (and, if applicable, such holder or representative).

 

“Agreement” means this Guaranty
and Security Agreement.

 

“Applicable
IP Office” means the United States Patent and Trademark Office, the United States Copyright Office or any similar office
or agency within or outside the United States.

 

“Cash
Collateral Account” means a deposit account or securities account subject, in each instance, to an Account Control Agreement.

 

“Collateral” has the meaning specified
in Section 3.1.

 

“Controlled
Securities Account” means each securities account (including all financial assets held therein and all certificates and
instruments, if any, representing or evidencing such financial assets) that is the subject of an effective Account Control Agreement.

 

    2

     

    

 

“Excluded
Accounts” means deposit accounts maintained specially and exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for any Borrower’s or its Subsidiaries’ employees.

 

“Excluded
Equity” means any voting stock in excess of 65% of the outstanding voting stock of any Foreign Subsidiary, which, pursuant
to the terms of the Credit Agreement, is not required to guaranty the Obligations. For the purposes of this definition, “voting
stock” means, with respect to any issuer, the issued and outstanding shares of each class of Stock of such issuer entitled
to vote (within the meaning of Treasury Regulations § 1.956-2(c)(2)).

 

“Excluded
Property” means, collectively, (i) Excluded Equity, (ii) Excluded Accounts, and (iii) any governmental permit or any
license, contract or agreement to the extent that the collateral assignment thereof or the creation of a security interest therein
would constitute a breach of its terms, or would permit the applicable governmental authority or any such party to such agreement
to terminate such permit, license, contract or agreement, except to the extent that the applicable requirement of law or the term
in such contract, permit, license or agreement is ineffective under Section 9- 406, 9-407, 9-408 or 9-409 of the UCC (or any successor
provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code of the United
States) or principles of equity; provided, however, that a security interest shall attach immediately at such time
as such requirement of law is not effective or applicable, or such prohibition, breach, default or termination is no longer applicable
or is waived, and to the extent severable, and shall attach immediately to any portion of the Collateral that does not result in
such consequences; and provided, further, that “Excluded Property” shall not include any proceeds, products,
substitutions or replacements of Excluded Property (unless such proceeds, products, substitutions or replacements would otherwise
constitute Excluded Property).

 

“Guaranteed Obligations” has the
meaning set forth in Section 2.1.

 

“Guarantor”
means (x) each Grantor (other than the Borrowers) and (y) each Borrower with respect to each other Borrower’s Obligations.

 

“Guaranty”
means the guaranty of the Guaranteed Obligations made by the Guarantors as set forth in this Agreement.

 

“Internet
Domain Name” means all right, title and interest (and all related IP Ancillary Rights) arising under any Laws in or relating
to Internet domain names.

 

“IP
Ancillary Rights” means, with respect to any Intellectual Property, as applicable, all foreign counterparts to, and
all divisionals, reversions, continuations, continuations-in-part, reissues, reexaminations, renewals and extensions of, such
Intellectual Property and all income, royalties, proceeds and liabilities at any time due or payable or asserted under or with
respect to any of the foregoing or otherwise with respect to such Intellectual Property, including all rights to sue or recover
at law or in equity for any past, present or future infringement, misappropriation, dilution, violation or other impairment thereof,
and, in each case, all rights to obtain any other IP Ancillary Right.

 

    3

     

    

 

“Material
Intellectual Property” means Intellectual Property that is owned by or licensed to a Grantor and material to the conduct
of any Grantor’s business.

 

“Pledged
Certificated Stock” means all certificated securities and any other Stock or Stock Equivalent of any Person evidenced
by a certificate, instrument or other similar document (as defined in the UCC), in each case owned by any Grantor, and any distribution
of property made on, in respect of or in exchange for the foregoing from time to time, including all Stock and Stock Equivalents
listed on Schedule 5. Pledged Certificated Stock excludes any Excluded Property and any cash equivalents that are not held
in Controlled Securities Accounts to the extent permitted by Section 5.10 hereof.

 

“Pledged
Collateral” means, collectively, the Pledged Stock and the Pledged Debt Instruments.

 

“Pledged
Debt Instruments” means all right, title and interest of any Grantor in instruments evidencing any Indebtedness or other
obligations owed to such Grantor or other obligations, and any distribution of property made on, in respect of or in exchange for
the foregoing from time to time, including all Indebtedness described on Schedule 5, issued by the obligors named therein.
Pledged Debt Instruments excludes any Excluded Property and cash equivalents that are not held in Controlled Securities Accounts
to the extent permitted by Section 5.10 hereof.

 

“Pledged
Investment Property” means any investment property of any Grantor, and any distribution of property made on, in respect
of or in exchange for the foregoing from time to time, other than any Pledged Stock or Pledged Debt Instruments. Pledged Investment
Property excludes any cash equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section
5.10 hereof.

 

“Pledged
Stock” means all Pledged Certificated Stock and all Pledged Uncertificated Stock.

 

“Pledged
Uncertificated Stock” means any Stock or Stock Equivalent of any Person that is not Pledged Certificated Stock, including
all right, title and interest of any Grantor as a limited or general partner in any partnership not constituting Pledged Certificated
Stock or as a member of any limited liability company, all right, title and interest of any Grantor in, to and under any Organization
Document of any partnership or limited liability company to which it is a party, and any distribution of property made on, in
respect of or in exchange for the foregoing from time to time, including in each case those interests set forth on Schedule
5, to the extent such interests are not certificated. Pledged Uncertificated Stock excludes any Excluded Property and any
cash equivalents that are not held in Controlled Securities Accounts to the extent permitted by Section  5.10
hereof.

 

    4

     

    

 

“Secured Obligations” has the meaning
specified in Section 3.2.

 

“Software”
means (a) all computer programs, including source code and object code versions, (b) all data, databases and compilations of data,
whether machine readable or otherwise, and (c) all documentation, training materials and configurations related to any of the foregoing.

 

“Stock”
means (a) all shares of capital stock (whether denominated as common stock or preferred stock), equity interests, beneficial, partnership
or membership interests, joint venture interests, participations or other ownership or profit interests in or equivalents (regardless
of how designated) of or in a Person (other than an individual), whether voting or non-voting; and (b) all securities convertible
into or exchangeable for any other Stock and all warrants, options or other rights to purchase, subscribe for or otherwise acquire
any other Stock, whether or not presently convertible, exchangeable or exercisable.

 

“Stock
Equivalents” means all securities convertible into or exchangeable for Stock or any other stock equivalent and all warrants,
options or other rights to purchase, subscribe for or otherwise acquire any Stock or any other stock equivalent, whether or not
presently convertible, exchangeable or exercisable.

 

“UCC”
means the Uniform Commercial Code as from time to time in effect in the State of Illinois; provided, however, that,
in the event that, by reason of mandatory provisions of any applicable Laws, any of the attachment, perfection or priority of the
Agent’s or any other Credit Party’s security interest in any Collateral is governed by the Uniform Commercial Code
of a jurisdiction other than the State of Illinois, “UCC” shall mean the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes
of the definitions related to or otherwise used in such provisions.

 

“Vehicles” means all vehicles covered
by a certificate of title law of any state.

 

Section 1.2             Certain Other Terms.

 

(a)          The
meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The terms
“herein”, “hereof” and similar terms refer to this Agreement as a whole and not to any particular Article,
Section or clause in this Agreement. References herein to an Annex, Schedule, Article, Section or clause refer to the appropriate
Annex or Schedule to, or Article, Section or clause in this Agreement. Where the context requires, provisions relating to any Collateral
when used in relation to a Grantor shall refer to such Grantor’s Collateral or any relevant part thereof.

 

    5

     

    

 

		(b)	Other Interpretive Provisions.

 

(i)           Defined
Terms. Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the defined meanings given
herein when used in any certificate or other document made or delivered pursuant hereto.

 

(ii)          Certain
Common Terms. The term “including” is not limiting and means “including without limitation.”

 

(iii)         Performance;
Time. Whenever any performance obligation hereunder shall be stated to be due or required to be satisfied on a day other than
a Business Day, such performance shall be made or satisfied on the next succeeding Business Day. In the computation of periods
of time from a specified date to a later specified date, the word “from” means “from and including”; the
words “to” and “until” each mean “to but excluding”, and the word “through” means
“to and including.” If any provision of this Agreement refers to any action taken or to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be interpreted to encompass any and all means, direct or indirect,
of taking, or not taking, such action.

 

(iv)         Contracts.
Unless otherwise expressly provided herein, references to agreements and other contractual instruments, including this Agreement
and the other Loan Documents, shall be deemed to include all subsequent amendments, thereto, restatements and substitutions thereof
and other modifications and supplements thereto which are in effect from time to time, but only to the extent such amendments and
other modifications are not prohibited by the terms of any Loan Document.

 

(v)          Laws.
References to any statute or regulation are to be construed as including all statutory and regulatory provisions related thereto
or consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

 

ARTICLE II

 

GUARANTY

 

Section
2.1 Guaranty. To induce the Lenders to make the Loans and each other Credit Party to make credit available to or for the benefit
of one or more Grantors, each Guarantor hereby, jointly and severally, absolutely, unconditionally and irrevocably guarantees,
as primary obligor and not merely as surety, the full and punctual payment when due, whether at stated maturity or earlier, by
reason of acceleration, mandatory prepayment or otherwise in accordance with any Loan Document, of all the Obligations of any
Borrower whether existing on the date hereof or hereinafter incurred or created (the “Guaranteed Obligations”);
provided, that for the avoidance of doubt, the Guaranteed Obligations of any Guarantor shall not include any Excluded Swap Obligations
of such Guarantor. This Guaranty by each Guarantor hereunder constitutes a guaranty of payment and not of collection.

 

    6

     

    

 

Section
2.2 Limitation of Guaranty. Any term or provision of this Guaranty or any other Loan Document to the contrary notwithstanding,
the maximum aggregate amount for which any Guarantor shall be liable hereunder shall not exceed the maximum amount for which such
Guarantor can be liable without rendering this Guaranty or any other Loan Document, as it relates to such Guarantor, subject to
avoidance under applicable Laws relating to fraudulent conveyance or fraudulent transfer (including the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act and Section 548 of title 11 of the United States Code or any applicable provisions of
comparable Laws) (collectively, “Fraudulent Transfer Laws”). Any analysis of the provisions of this Guaranty
for purposes of Fraudulent Transfer Laws shall take into account the right of contribution established in Section 2.3 and, for
purposes of such analysis, give effect to any discharge of intercompany debt as a result of any payment made under the Guaranty.

 

Section
2.3 Contribution. To the extent that any Guarantor that is a Subsidiary of a Borrower shall be required hereunder to pay any
portion of any Guaranteed Obligation exceeding the greater of (a) the amount of the value actually received by such Guarantor and
its Subsidiaries from the Loans and other Obligations and (b) the amount such Guarantor would otherwise have paid if such Guarantor
had paid the aggregate amount of the Guaranteed Obligations (excluding the amount thereof repaid by the Borrowers) in the same
proportion as such Guarantor’s net worth on the date enforcement is sought hereunder bears to the aggregate net worth of
all the Guarantors on such date, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such excess,
pro rata, based on the respective net worth of such other Guarantors on such date.

 

Section
2.4 Authorization; Other Agreements. The Credit Parties are hereby authorized, without notice to or demand upon any Guarantor
and without discharging or otherwise affecting the obligations of any Guarantor hereunder and without incurring any liability hereunder,
from time to time, to do each of the following:

 

(a)          subject
to compliance, if applicable, with Section 10.01 of the Credit Agreement, (i) modify, amend, supplement or otherwise change, (ii)
accelerate or otherwise change the time of payment or (iii) waive or otherwise consent to noncompliance with, any Guaranteed Obligation
or any Loan Document;

 

(b)          apply
to the Guaranteed Obligations any sums by whomever paid or however realized to any Guaranteed Obligation in such order as provided
in the Loan Documents;

 

(c)          refund
at any time any payment received by any Credit Party in respect of any Guaranteed Obligation;

 

    7

     

    

 

(d)          (i)
sell, exchange, enforce, waive, substitute, liquidate, terminate, release, abandon, fail to perfect, subordinate, accept, substitute,
surrender, exchange, affect, impair or otherwise alter or release any Collateral for any Guaranteed Obligation or any other guaranty
therefor in any manner, (ii) receive, take and hold additional Collateral to secure any Guaranteed Obligation, (iii) add, release
or substitute any one or more other Guarantors, makers or endorsers of any Guaranteed Obligation or any part thereof and (iv) otherwise
deal in any manner with the Borrowers and any other Guarantor, maker or endorser of any Guaranteed Obligation or any part thereof;
and

 

(e)          settle,
release, compromise, collect or otherwise liquidate the Guaranteed Obligations.

 

Section
2.5 Guaranty Absolute and Unconditional. Each Guarantor hereby waives and agrees not to assert any defense (other than the
payment in full in cash of Guaranteed Obligations), whether arising in connection with or in respect of any of the following or
otherwise, and hereby agrees that its obligations under this Guaranty are irrevocable, absolute and unconditional and shall not
be discharged as a result of or otherwise affected by any of the following (which may not be pleaded and evidence of which may
not be introduced in any proceeding with respect to this Guaranty, in each case except as otherwise agreed in writing by the Agent):

 

(a)          the
invalidity or unenforceability of any obligation of the Borrowers or any other Guarantor under any Loan Document or any other agreement
or instrument relating thereto (including any amendment, consent or waiver thereto), or any security for, or other guaranty of,
any Guaranteed Obligation or any part thereof, or the lack of perfection or continuing perfection or failure of priority of any
security for the Guaranteed Obligations or any part thereof;

 

(b)          the
absence of (i) any attempt to collect any Guaranteed Obligation or any part thereof from the Borrowers or any other Guarantor or
other action to enforce the same or (ii) any action to enforce any Loan Document or any Lien thereunder;

 

(c)          the
failure by any Person to take any steps to perfect and maintain any Lien on, or to preserve any rights with respect to, any Collateral;

 

(d)          any
workout, insolvency, bankruptcy proceeding, reorganization, arrangement, liquidation or dissolution by or against the Borrowers,
any other Guarantor or any of a Borrower’s other Subsidiaries or any procedure, agreement, order, stipulation, election,
action or omission thereunder, including any discharge or disallowance of, or bar or stay against collecting, any Guaranteed Obligation
(or any interest thereon) in or as a result of any such proceeding;

 

(e)          any
foreclosure, whether or not through judicial sale, and any other sale or other disposition of any Collateral or any election following
the occurrence of an Event of Default by any Credit Party to proceed separately against any Collateral in accordance with such
Credit Party’s rights under any applicable Laws; or

 

    8

     

    

 

(f)          any
other defense, setoff, counterclaim or any other circumstance that might otherwise constitute a legal or equitable discharge of
any Borrower, any other Guarantor or any of a Borrower’s other Subsidiaries, in each case other than the payment in full
of the Guaranteed Obligations.

 

Section
2.6 Waivers. Each Guarantor hereby unconditionally and irrevocably waives and agrees not to assert any claim, defense, setoff
or counterclaim based on diligence, promptness, presentment, requirements for any demand or notice hereunder including any of the
following: (a) any demand for payment or performance and protest and notice of protest; (b) any notice of acceptance; (c) any presentment,
demand, protest or further notice or other requirements of any kind with respect to any Guaranteed Obligation (including any accrued
but unpaid interest thereon) becoming immediately due and payable; and (d) any other notice in respect of any Guaranteed Obligation
or any part thereof, and any defense arising by reason of any disability or other defense of any Borrower or any other Guarantor.
Each Guarantor further unconditionally and irrevocably agrees, until such time as all Secured Obligations have been indefeasibly
paid in full in cash and the Commitments have been terminated (or, in the case of contingent reimbursement obligations with respect
to Bank Products (other than Swap Contracts), cash collateralized), not to (x) enforce or otherwise exercise any right of subrogation
or any right of reimbursement or contribution or similar right against any Borrower or any other Guarantor by reason of any Loan
Document or any payment made thereunder or (y) assert any claim, defense, setoff or counterclaim it may have against any other
Loan Party or set off any of its obligations to such other Loan Party against obligations of such Loan Party to such Guarantor.
No obligation of any Guarantor hereunder shall be discharged other than by complete performance.

 

Section
2.7 Reliance. Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of each Borrower,
each other Guarantor and any other guarantor, maker or endorser of any Guaranteed Obligation or any part thereof, and of all other
circumstances bearing upon the risk of nonpayment of any Guaranteed Obligation or any part thereof that diligent inquiry would
reveal, and each Guarantor hereby agrees that no Credit Party shall have any duty to advise any Guarantor of information known
to it regarding such condition or any such circumstances. In the event any Credit Party, in its sole discretion, undertakes at
any time or from time to time to provide any such information to any Guarantor, such Credit Party shall be under no obligation
to (a) undertake any investigation not a part of its regular business routine,

 

(b)          disclose
any information that such Credit Party, pursuant to accepted or reasonable commercial finance or banking practices, wishes to maintain
confidential or (c) make any future disclosures of such information or any other information to any Guarantor.

 

ARTICLE III

 

GRANT OF SECURITY INTEREST

 

Section 3.1          Collateral.
For the purposes of this Agreement, all of the following property now owned or at any time hereafter acquired by a Grantor or
in which a Grantor now has or at any time in the future may acquire any right, title or interests is collectively referred to
as the “Collateral”:

 

    9

     

    

 

(a)          all
accounts, chattel paper, deposit accounts, documents (as defined in the UCC), equipment, general intangibles, instruments, inventory,
investment property, letter of credit rights and any supporting obligations related to any of the foregoing;

 

(b)          the
commercial tort claims described on Schedule 1 and on any supplement thereto received by the Agent pursuant to Section 5.9;

 

(c)          all
books and records pertaining to the other property described in this Section 3.1;

 

(d)          all
property of such Grantor held by any Credit Party, including all property of every description, in the custody of or in transit
to such Credit Party for any purpose, including safekeeping, collection or pledge, for the account of such Grantor or as to which
such Grantor may have any right or power, including but not limited to cash;

 

(e)          all
other goods (including but not limited to fixtures) and personal property of such Grantor, whether tangible or intangible and wherever
located;

 

(f)          all
Pledged Collateral; and

 

(g)          to
the extent not otherwise included, all proceeds of the foregoing. Notwithstanding the foregoing, Collateral does not include any
Excluded Property.

 

Section
3.2 Grant of Security Interest in Collateral. Each Grantor, as collateral security for the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise) of the Obligations of such Grantor (the “Secured
Obligations”), hereby mortgages, pledges and hypothecates to the Agent for the benefit of the Credit Parties, and grants
to the Agent for the benefit of the Credit Parties a Lien on and security interest in, all of its right, title and interest in,
to and under the Collateral of such Grantor; provided, however, notwithstanding the foregoing, no Lien or security
interest is hereby granted on any Excluded Property; provided, further, that if and when any property shall cease
to be Excluded Property, a Lien on and security in such property shall be deemed granted therein.

 

    10

     

    

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Lenders and the
Agent to enter into the Loan Documents, each Grantor hereby represents and warrants each of the following to the Agent, the Lenders,
and the other Credit Parties:

 

Section
4.1 Title; No Other Liens. Except for the Lien granted to the Agent pursuant to this Agreement and other Permitted Encumbrances
under any Loan Document (including Section 4.2), such Grantor owns each item of the Collateral free and clear of any and all Liens
or claims of others. Such Grantor (a) is the record and beneficial owner of the Collateral pledged by it hereunder constituting
instruments or certificates and (b) has rights in or the power to transfer each other item of Collateral in which a Lien is granted
by it hereunder, free and clear of any other Lien, other than permitted encumbrances.

 

Section
4.2 Perfection and Priority. The security interest granted pursuant to this Agreement constitutes a valid and continuing perfected
security interest in favor of the Agent in all Collateral subject, for the following Collateral, to the occurrence of the following:
(i) in the case of all Collateral in which a security interest may be perfected by filing a financing statement under the UCC,
the completion of the filings and other actions specified on Schedule 2 (which, in the case of all filings and other documents
referred to on such schedule, have been delivered to the Agent in completed and duly authorized form), (ii) with respect to any
deposit account, the execution of Account Control Agreements, (iii) in the case of all copyrights, trademarks and patents for
which UCC filings are insufficient, all appropriate filings having been made with the United States Copyright Office or the United
States Patent and Trademark Office, as applicable, (iv) in the case of letter-of-credit rights that are not supporting obligations
of Collateral, the execution of a Contractual Obligation granting control to the Agent over such letter-of-credit rights, (v)
in the case of electronic chattel paper, the completion of all steps necessary to grant control to the Agent over such electronic
chattel paper and (vi) in the case of Vehicles, the actions required under Section 5.1(e). Such security interest shall be prior
to all other Liens on the Collateral except for Permitted Encumbrances having priority over the Agent’s Lien by operation
of law or permitted pursuant to clause (d) of the definition of “Permitted Encumbrance” in the Credit Agreement upon
(i) in the case of all Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property, the delivery thereof
to the Agent of such Pledged Certificated Stock, Pledged Debt Instruments and Pledged Investment Property consisting of instruments
and certificates, in each case properly endorsed for transfer to the Agent or in blank, (ii) in the case of all Pledged Investment
Property not in certificated form, the execution of Account Control Agreements with respect to such investment property and (iii)
in the case of all other instruments and tangible chattel paper that are not Pledged Certificated Stock, Pledged Debt Instruments
or Pledged Investment Property, the delivery thereof to the Agent of such instruments and tangible chattel paper. Except as set
forth in this Section 4.2, all actions by each Grantor necessary or desirable to protect and perfect the Lien granted hereunder
on the Collateral have been duly taken or will, on the Closing Date, be taken.

 

Section
4.3 Jurisdiction of Organization; Chief Executive Office. Such Grantor’s jurisdiction of organization, legal name
and organizational identification number, if any, and the location of such Grantor’s chief executive office or
principal place of business, in each case as of the date hereof, is specified on Schedule 3 and such Schedule 3 also lists
all jurisdictions of incorporation or organization, legal names and locations of such Grantor’s chief executive office
or sole place of business for the five years preceding the date hereof.

 

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Section 4.4
Locations of Inventory, Equipment and Books and Records. On the date hereof, such Grantor’s inventory and equipment (other
than inventory or equipment in transit, items out for repair and equipment in possession of employees in each case, in the ordinary
course of business) and books and records concerning the Collateral are kept at the locations listed on Schedule 4.

 

Section
4.5 Pledged Collateral. (a) The Pledged Stock pledged by such Grantor hereunder (a) is listed on Schedule 5 and constitutes
that percentage of the issued and outstanding equity of all classes of each issuer thereof as set forth on Schedule 5, as such
Schedule 5 may be updated from time to time by a supplement delivered to Agent; and (b) has been duly authorized, validly issued
and is fully paid and nonassessable (other than Pledged Stock in limited liability companies and partnerships) and (c) constitutes
the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms.

 

(b)          As
of the Closing Date, all Pledged Collateral (other than Pledged Uncertificated Stock) and all Pledged Investment Property consisting
of instruments (other than checks received in the ordinary course of business) and certificates has been delivered to the Agent
in accordance with Section 5.3(a).

 

(c)          Subject
to Section 6.3, upon the occurrence and during the continuance of an Event of Default, the Agent shall be entitled to exercise
all of the rights of the Grantor granting the security interest in any Pledged Stock, and a transferee or assignee of such Pledged
Stock shall become a holder of such Pledged Stock to the same extent as such Grantor and be entitled to participate in the management
of the issuer of such Pledged Stock and, upon the transfer of the entire interest of such Grantor, such Grantor shall, by operation
of law, cease to be a holder of such Pledged Stock.

 

Section
4.6 Instruments and Tangible Chattel Paper Formerly Accounts. No amount payable to such Grantor under or in connection with
any account is evidenced by any instrument (other than checks in the ordinary course of business) or tangible chattel paper that
has not been delivered to the Agent, properly endorsed for transfer, to the extent delivery is required by Section 5.6(a).

 

Section 4.7             Intellectual Property.

 

(a)          Schedule
6 sets forth a true and complete list of the following Intellectual Property such Grantor owns, licenses or otherwise has
the right to use: (i) Intellectual Property that is registered or subject to applications for registration, (ii) Internet
Domain Names and (iii) Material Intellectual Property and material Software, separately identifying that owned and licensed
to such Grantor and including for each of the foregoing items (1) the owner, (2) the title, (3) the jurisdiction in which
such item has been registered or otherwise arises or in which an application for registration has been filed, (4) as
applicable, the registration or application number and registration or application date and (5) any intellectual property
licenses or other rights (including franchises) granted by the Grantor with respect thereto.

 

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(b)          On
the Closing Date, all Material Intellectual Property owned by such Grantor is valid, in full force and effect, subsisting, unexpired
and enforceable, and no Material Intellectual Property has been abandoned. No breach or default of any material intellectual property
licenses shall be caused by any of the following, and none of the following shall limit or impair the ownership, use, validity
or enforceability of, or any rights of such Grantor in, any Material Intellectual Property: (i) the consummation of the transactions
contemplated by any Loan Document or (ii) any holding, decision, judgment or order rendered by any Governmental Authority. As of
the Closing Date, there are no pending (or, to the knowledge of such Grantor, threatened) actions in writing, investigations, suits,
proceedings, audits, claims, demands, orders or disputes challenging the ownership, use, validity, enforceability of, or such Grantor’s
rights in, any Material Intellectual Property of such Grantor. To such Grantor’s knowledge, no Person has been or is infringing,
misappropriating, diluting, violating or otherwise impairing any Intellectual Property of such Grantor. Such Grantor, and to such
Grantor’s knowledge each other party thereto, is not in material breach or default of any material intellectual property
licenses.

 

Section
4.8             Commercial Tort Claims. The only commercial tort claims of any Grantor existing on the date hereof in which the
amount claimed is, or in which the amount recoverable (if the plaintiff prevails) could reasonably be expected to be in excess
of $100,000 individually or $250,000 in the aggregate (regardless of whether the amount, defendant or other material facts can
be determined and regardless of whether such commercial tort claim has been asserted, threatened or has otherwise been made known
to the obligee thereof or whether litigation has been commenced for such claims) are those listed on Schedule 1, which sets forth
such information separately for each Grantor.

 

Section
4.9 Specific Collateral. None of the Collateral is or is proceeds or products of farm products, as-extracted collateral, health-care-insurance
receivables or timber to be cut.

 

Section
4.10 Enforcement. No permit, notice to or filing with any Governmental Authority or any other Person or any consent from any
Person is required for the exercise by the Agent of its rights (including voting rights) provided for in this Agreement or the
enforcement of remedies in respect of the Collateral pursuant to this Agreement, including the transfer of any Collateral, except
as may be required in connection with the disposition of any portion of the Pledged Collateral by laws affecting the offering and
sale of securities generally or any approvals that may be required to be obtained from any bailees or landlords to collect the
Collateral.

 

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ARTICLE V

 

COVENANTS

 

Each
Grantor agrees with the Agent to the following, as long as any Obligation or Commitment remains outstanding (other than contingent
indemnification obligations to the extent no claim giving rise thereto has been asserted):

 

Section
5.1 Maintenance of Perfected Security Interest; Further Documentation and Consents. (a) Generally. Such Grantor shall
(i) not use or permit the Collateral to be used unlawfully or in violation of any provision of any Loan Document, any Laws or any
policy of insurance covering the Collateral and (ii) not enter into any Contractual Obligation or undertaking restricting the right
or ability of such Grantor or the Agent to sell, assign, convey or transfer any Collateral if such restriction would reasonably
be expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

(b)          Such
Grantor shall maintain the security interest created by this Agreement as a perfected security interest having at least the priority
described in Section 4.2 and shall defend such security interest and such priority against the claims and demands of all Persons,
other than holders of Permitted Encumbrances.

 

(c)          Such
Grantor shall furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral
and such other documents in connection with the Collateral as the Agent may reasonably request, all in reasonable detail and in
form and substance reasonably satisfactory to the Agent.

 

(d)          At
any time and from time to time, upon the written request of the Agent, such Grantor shall, for the purpose of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted, (i) promptly and duly execute and deliver, and
have recorded, such further documents, including an authorization to file (or, as applicable, the filing) of any financing statement
or amendment under the UCC (or other filings under similar Laws) in effect in any applicable jurisdiction with respect to the security
interest created hereby and (ii) take such further action as the Agent may reasonably request, including (A) using its commercially
reasonable efforts to secure all approvals necessary for the collateral assignment to or for the benefit of the Agent of any Contractual
Obligation, including any intellectual property license, held by such Grantor in each case that is part of the Collateral and to
enforce the security interests granted hereunder and (B) executing and delivering any Account Control Agreements with respect to
deposit accounts and securities accounts (other than Excluded Accounts).

 

(e)          If
requested by the Agent, the Grantor shall arrange for the Agent’s security interest to be noted on the certificate of title
of each Vehicle and shall file any other necessary documentation in each jurisdiction that the Agent shall deem advisable to perfect
its security interests in any Vehicle.

 

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Section
5.2 Changes in Locations, Name, Etc. Except upon 30 days’ prior written notice to the Agent (or such shorter period as
Agent may permit in its sole discretion) and delivery to the Agent of (a) all documents reasonably requested by the Agent to maintain
the validity, perfection and priority of the security interests provided for herein and (b) if applicable, a written supplement
to Schedule 4 showing any additional locations at which inventory or equipment shall be kept, such Grantor shall not do any of
the following:

 

(i)          permit
any inventory or equipment to be kept at a location other than those listed on Schedule 4, except for inventory or equipment in
transit, items out for repair and equipment in the possession of employees (including laptops and cell phones) and equipment with
a fair market value not to exceed $100,000 in the aggregate of all such locations, in each case, in the ordinary course of business;

 

(ii)         change
its jurisdiction of organization, its chief executive office or its principal place of business, in each case from that referred
to in Section 4.3; or

 

(iii)        change
its legal name or organizational identification number, if any, or corporation, limited liability company, partnership or other
organizational structure to such an extent that any financing statement filed in connection with this Agreement would become misleading.

 

Section 5.3
Pledged Collateral. (a) Delivery of Pledged Collateral. Such Grantor shall (i) deliver to the Agent, in suitable form
for transfer and in form and substance satisfactory to the Agent, (A) all Pledged Certificated Stock, (B) all Pledged Debt Instruments
and (C) all certificates and instruments evidencing Pledged Investment Property and (ii) maintain all other Pledged Investment
Property in a Controlled Securities Account.

 

(b)          Event
of Default. During the continuance of an Event of Default, the Agent shall have the right, at any time in its discretion and
without notice to the Grantor, to (i) transfer to or to register in its name or in the name of its nominees any Pledged Collateral
or any Pledged Investment Property and (ii) exchange any certificate or instrument representing or evidencing any Pledged Collateral
or any Pledged Investment Property for certificates or instruments of smaller or larger denominations.

 

(c)          Cash
Distributions with respect to Pledged Collateral. Except as provided in Article VI and subject to the limitations set forth
in the Credit Agreement, such Grantor shall be entitled to receive all cash distributions paid in respect of the Pledged Collateral.

 

(d)          Voting
Rights. Except as provided in Article VI, such Grantor shall be entitled to exercise all voting, consent and corporate, partnership,
limited liability company and similar rights with respect to the Pledged Collateral; provided, however, that no
vote shall be cast, consent given or right exercised or other action taken by such Grantor that would impair the Collateral in
any material respect or result in any violation of any provision of any Loan Document.

 

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Section 5.4             Accounts.

 

(a)          Such
Grantor shall not, other than in the ordinary course of business or otherwise permitted in the Credit Agreement, (i) grant any
extension of the time of payment of any account, (ii) compromise or settle any account for less than the full amount thereof, (iii)
release, wholly or partially, any Person liable for the payment of any account, (iv) allow any credit or discount on any account
or (v) amend, supplement or modify any account in any manner that would materially adversely affect the value thereof.

 

(b)          In
connection with periodic audits conducted by Agent and at any time when an Event of Default is continuing, the Agent shall have
the right to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable,
and such Grantor shall furnish all such assistance and information as the Agent may reasonably require in connection therewith.
So long as an Event of Default is continuing, upon the Agent’s reasonable request, such Grantor shall cause independent public
accountants or others satisfactory to the Agent to furnish to the Agent reports showing reconciliations, aging and test verifications
of, and trial balances for, the accounts; provided, however, that unless an Event of Default shall be continuing,
the Agent shall request no more than four such reports during any calendar year.

 

Section
5.5 Commodity Contracts. Except as set forth on Schedule 7, such Grantor shall not have any commodity contract unless
subject to an Account Control Agreement.

 

Section
5.6 Delivery of Instruments and Tangible Chattel Paper and Control of Investment Property, Letter-of-Credit Rights and Electronic
Chattel Paper. (a) If any amount in excess of $100,000 payable under or in connection with any Collateral owned by such Grantor
shall be or become evidenced by an instrument or tangible chattel paper other than such instrument delivered in accordance with
Section 5.3(a) and in the possession of the Agent, such Grantor shall mark all such instruments (other than the checks received
in the ordinary course of business) and tangible chattel paper with the following legend: “This writing and the obligations
evidenced or secured hereby are subject to the security interest of Encina Business Credit, LLC, as Agent” and, at the request
of the Agent, shall promptly deliver such instrument or tangible chattel paper to the Agent, duly indorsed in a manner reasonably
satisfactory to the Agent.

 

(b)          Such
Grantor shall not grant “control” (within the meaning of such term under Article 9-106 of the UCC) over any
investment property to any Person other than the Agent.

 

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(c)          If
such Grantor is or becomes the beneficiary of a letter of credit that is (i) not a supporting obligation of any Collateral and
(ii) in excess of $100,000, such Grantor shall promptly, and in any event within 10 Business Days after becoming a beneficiary,
notify the Agent thereof and use commercially reasonable efforts to enter into a Contractual Obligation with the Agent, the issuer
of such letter of credit or any nominated person with respect to the letter-of-credit rights under such letter of credit. Such
Contractual Obligation shall assign such letter-of-credit rights to the Agent and such assignment shall be sufficient to grant
control for the purposes of Section 9-107 of the UCC (or any similar section under any equivalent UCC). Such Contractual Obligation
shall also direct all payments thereunder to a Cash Collateral Account. The provisions of the Contractual Obligation shall be in
form and substance reasonably satisfactory to the Agent.

 

(d)          If
any amount in excess of $100,000 payable under or in connection with any Collateral owned by such Grantor shall be or become evidenced
by electronic chattel paper, such Grantor shall take all steps necessary to grant the Agent control of all such electronic chattel
paper for the purposes of Section 9-105 of the UCC (or any similar section under any equivalent UCC) and all “transferable
records” as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National
Commerce Act.

 

Section
5.7 Intellectual Property. (a) Within 45 days after any change to Schedule 6 for such Grantor, such Grantor shall provide the
Agent notification thereof and the short-form intellectual property agreements and assignments as described in this Section 5.7
and other documents that the Agent reasonably requests with respect thereto.

 

(b)          Such
Grantor shall (and shall use commercially reasonable efforts to cause all its licensees to) (i) (1) continue to use each
trademark included in the Material Intellectual Property in order to maintain such trademark in full force and effect with
respect to each class of goods for which such trademark is currently used, free from any claim of abandonment for non-use,
except where such abandonment for non-use is deemed prudent in the good faith business judgment of such Grantor, (2) maintain
at least the same standards of quality of products and services offered under such trademark as are currently maintained, (3)
use such trademark with the appropriate notice of registration and all other notices and legends required by applicable Laws,
(4) not adopt or use any other trademark that is confusingly similar or a colorable imitation of such trademark unless the
Agent shall obtain a perfected security interest in such other trademark pursuant to this Agreement and (ii) not knowingly do
any act or omit to do any act whereby (w) such trademark (or any goodwill associated therewith) may become destroyed,
invalidated, impaired or harmed in any way except where it is deemed prudent in the good faith business judgment of such
Grantor, (x) any patent included in the Material Intellectual Property may reasonably be expected to become forfeited,
misused, unenforceable, abandoned or dedicated to the public except where it is deemed prudent in the good faith business
judgment of such Grantor, (y) any portion of the copyrights included in the Material Intellectual Property may become
invalidated, otherwise impaired or fall into the public domain except where it is deemed prudent in the good faith business
judgment of such Grantor or (z) any trade secret that is Material Intellectual Property may become publicly available or
otherwise unprotectable.

 

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(c)          Such
Grantor shall notify the Agent promptly if it knows, or has reason to know, that any application or registration relating to any
Material Intellectual Property may become forfeited, misused, unenforceable, abandoned or dedicated to the public, or of any materially
adverse determination or development regarding the validity or enforceability or such Grantor’s ownership of, interest in,
right to use, register, own or maintain any Material Intellectual Property (including the institution of, or any such determination
or development in, any proceeding relating to the foregoing in any Applicable IP Office). Such Grantor shall take all actions that
are necessary in its business judgment or reasonably requested by the Agent to maintain and pursue each application (and to obtain
the relevant registration or recordation) and to maintain each registration and recordation included in the Material Intellectual
Property, except where such Grantor in its good faith business judgment deems it prudent to abandon.

 

(d)          Such
Grantor shall not knowingly do any act or omit to do any act to infringe, misappropriate, dilute, violate or otherwise impair the
Intellectual Property of any other Person. In the event that any Material Intellectual Property of such Grantor is or has been
infringed, misappropriated, violated, diluted or otherwise impaired by a third party, such Grantor shall take such action as it
reasonably deems appropriate under the circumstances in response thereto, including promptly bringing suit and recovering all damages
therefor.

 

(e)          Such
Grantor shall execute and deliver to the Agent in form and substance reasonably acceptable to the Agent and suitable for (i) filing
in the Applicable IP Office the short-form intellectual property security agreements in the form attached hereto as Annex 3 for
all copyrights, trademarks, patents and intellectual property licenses of such Grantor and (ii) upon reasonable request of Agent,
recording with the appropriate Internet domain name registrar, a duly executed form of collateral assignment for all Internet Domain
Names of such Grantor (together with appropriate supporting documentation as may be reasonably requested by the Agent).

 

Section
5.8 Notices. Such Grantor shall promptly notify the Agent in writing of its acquisition of any interest hereafter in Collateral
that is of a type where a security interest or Lien must be or may be registered, recorded or filed under, or notice thereof given
under, any federal statute or regulation, that has not already been registered, recorded or filed, to grant or perfect a Lien on
such Collateral to the extent required hereunder or reasonably deemed appropriate by the Agent; provided, that, in the case of
Vehicles, such Grantor shall provide the Agent with notice on a monthly basis of any Vehicles acquired in the immediately preceding
month.

 

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Section
5.9 Notice of Commercial Tort Claims. Such Grantor agrees that, if it shall acquire any interest in any commercial tort claim
(whether from another Person or because such commercial tort claim shall have come into existence), (i) such Grantor shall, promptly
upon such acquisition, deliver to the Agent, in each case in form and substance reasonably satisfactory to the Agent, a notice
of the existence and nature of such commercial tort claim and a supplement to Schedule 1 containing a specific description of
such commercial tort claim, (ii) Section 3.1 shall apply to such commercial tort claim and (iii) such Grantor shall execute and
deliver to the Agent, in each case in form and substance reasonably satisfactory to the Agent, any document, and take all other
action, deemed by the Agent to be reasonably necessary or appropriate for the Agent to obtain, on behalf of the Lenders, a perfected
security interest having at least the priority set forth in Section 4.2 in all such commercial tort claims. Any supplement to
Schedule 1 delivered pursuant to this Section 5.9 shall, after the receipt thereof by the Agent, become part of Schedule 1 for
all purposes hereunder other than in respect of representations and warranties made prior to the date of such receipt.

 

Section 5.10       Controlled
Securities Account. Each Grantor shall deposit all of its cash equivalents in securities accounts that are Controlled Securities
Accounts.

 

ARTICLE VI

 

REMEDIAL PROVISIONS

 

Each Grantor covenants and agrees with the Agent
and the other Credit Parties that, from and after the date of this Agreement, subject to the terms of the Intercreditor Agreement:

 

Section
6.1 Code and Other Remedies. (a) UCC Remedies. During the continuance of an Event of Default, the Agent may exercise,
in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing,
evidencing or relating to any Secured Obligation, all rights and remedies of a secured party under the UCC or any other applicable
law.

 

(b)          Disposition
of Collateral. Without limiting the generality of the foregoing, the Agent may, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or
upon any Grantor or any other Person (all and each of which demands, defenses (other than a defense of payment in full in
cash of the Guaranteed Obligations), advertisements and notices are hereby waived), during the continuance of any Event of
Default (personally or through its Agents or attorneys), (i) enter upon the premises where any Collateral is located, without
any obligation to pay rent (except to the extent set forth in any applicable collateral access agreement), through self-help
(to the extent permitted by law), without judicial process, without first obtaining a final judgment or giving any Grantor or
any other Person notice or opportunity for a hearing on the Agent’s claim or action, except as may be required by
applicable non-waivable Law, (ii) collect, receive, appropriate and realize upon any Collateral and (iii) sell, assign,
convey, transfer, grant option or options to purchase and deliver any Collateral (enter into Contractual Obligations to do
any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or
office of any Credit Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of any credit risk, in each case, subject to
applicable non-waivable Law. The Agent shall have the right, upon any such public sale or sales and, to the extent permitted
by the UCC and other applicable Laws, upon any such private sale, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption of any Grantor, which right or equity is hereby waived and released.

 

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(c)          Management
of the Collateral. Each Grantor further agrees, that, during the continuance of any Event of Default, (i) at the Agent’s
request, it shall assemble the Collateral and make it available to the Agent at places that the Agent shall reasonably select,
whether at such Grantor’s premises or elsewhere, (ii) without limiting the foregoing, the Agent also has the right to require
that each Grantor store and keep any Collateral pending further action by the Agent and, while any such Collateral is so stored
or kept, provide such guards and maintenance services as shall be necessary to protect the same and to preserve and maintain such
Collateral in good condition, (iii) until the Agent is able to sell, assign, convey or transfer any Collateral, the Agent shall
have the right to hold or use such Collateral to the extent that it deems appropriate for the purpose of preserving the Collateral
or its value or for any other purpose deemed appropriate by the Agent and (iv) the Agent may, if it so elects, seek the appointment
of a receiver or keeper to take possession of any Collateral and to enforce any of the Agent’s remedies (for the benefit
of the Credit Parties), with respect to such appointment without prior notice or hearing as to such appointment. The Agent shall
not have any obligation to any Grantor to maintain or preserve the rights of any Grantor as against third parties with respect
to any Collateral while such Collateral is in the possession of the Agent.

 

(d)          Application
of Proceeds. The Agent shall apply the cash proceeds of any action taken by it pursuant to this Section 6.1, after deducting
all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any
Collateral or in any way relating to the Collateral or the rights of the Agent and any other Credit Party hereunder, including
reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Secured Obligations, as set forth
in the Credit Agreement, and only after such application and after the payment by the Agent of any other amount required by any
Laws, need the Agent account for the surplus, if any, to any Grantor.

 

(e)          Direct
Obligation. Neither the Agent nor any other Credit Party shall be required to make any demand upon, or pursue or exhaust any
right or remedy against, any Grantor, any other Loan Party or any other Person with respect to the payment of the Obligations
or to pursue or exhaust any right or remedy with respect to any Collateral therefor or any direct or indirect guaranty thereof.
All of the rights and remedies of the Agent and any other Credit Party under any Loan Document shall be cumulative, may be exercised
individually or concurrently and not exclusive of any other rights or remedies provided by any Laws. To the extent it may lawfully
do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert
against the Agent or any Lender, any valuation, stay, appraisement, extension, redemption or similar laws and any and all rights
or defenses (other than a defense of payment in full in cash of the Guaranteed Obligations) it may have as a surety, now or hereafter
existing, arising out of the exercise by them of any rights hereunder. If any notice of a proposed sale or other disposition of
any Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such
sale or other disposition.

 

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(f)          Commercially
Reasonable. To the extent that applicable Laws impose duties on the Agent to exercise remedies in a commercially reasonable
manner, each Grantor acknowledges and agrees that it is not commercially unreasonable for the Agent to do any of the following:

 

(i)           fail
to incur significant costs, expenses or other liabilities reasonably deemed as such by the Agent to prepare any Collateral for
disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition;

 

(ii)          fail
to obtain permits, or other consents, for access to any Collateral to sell or for the collection or sale of any Collateral, or,
if not required by other Laws, fail to obtain permits or other consents for the collection or disposition of any Collateral;

 

(iii)        fail
to exercise remedies against account debtors or other Persons obligated on any Collateral or to remove Liens on any Collateral
or to remove any adverse claims against any Collateral;

 

(iv)         advertise
dispositions of any Collateral through publications or media of general circulation, whether or not such Collateral is of a specialized
nature, or to contact other Persons, whether or not in the same business as any Grantor, for expressions of interest in acquiring
any such Collateral;

 

(v)          exercise
collection remedies against account debtors and other Persons obligated on any Collateral, directly or through the use of collection
agencies or other collection specialists, hire one or more professional auctioneers to assist in the disposition of any Collateral,
whether or not such Collateral is of a specialized nature, or, to the extent deemed appropriate by the Agent, obtain the services
of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition
of any Collateral, or utilize Internet sites that provide for the auction of assets of the types included in the Collateral or
that have the reasonable capacity of doing so, or that match buyers and sellers of assets to dispose of any Collateral;

 

		(vi)	dispose of assets in wholesale rather than retail markets;

 

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(vii)          disclaim
disposition warranties, such as title, possession or quiet enjoyment; or

 

(viii)         purchase
insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of any Collateral or to provide
to the Agent a guaranteed return from the collection or disposition of any Collateral.

 

Each Grantor acknowledges
that the purpose of this Section 6.1 is to provide a non-exhaustive list of actions or omissions that are commercially
reasonable when exercising remedies against any Collateral and that other actions or omissions by the Credit Parties shall not
be deemed commercially unreasonable solely on account of not being indicated in this Section 6.1. Without limitation upon
the foregoing, nothing contained in this Section 6.1 shall be construed to grant any rights to any Grantor or to impose
any duties on the Agent that would not have been granted or imposed by this Agreement or by applicable Laws in the absence of this
Section 6.1.

 

(g)          Intellectual
Property Licenses. Solely for the purpose of enabling the Agent to exercise rights and remedies under this Section 6.1
(including in order to take possession of, collect, receive, assemble, process, appropriate, remove, realize upon, sell, assign,
convey, transfer or grant options to purchase any Collateral) at such time as the Agent shall be lawfully entitled to exercise
such rights and remedies, each Grantor hereby grants to the Agent, for the benefit of the Credit Parties, (i) an irrevocable,
nonexclusive, worldwide license (exercisable without payment of royalty or other compensation to such Grantor), including in such
license the right to sublicense, use and practice any Intellectual Property now owned or hereafter acquired by such Grantor and
access to all media in which any of the licensed items may be recorded or stored and to all Software and programs used for the
compilation or printout thereof and (ii) an irrevocable license (without payment of rent or other compensation to such Grantor)
to use, operate and occupy all real property owned, operated, leased, subleased or otherwise occupied by such Grantor.

 

Section
6.2 Accounts and Payments in Respect of General Intangibles. (a) In addition to, and not in substitution for, any similar requirement
in the Credit Agreement, if required by written notice from the Agent at any time during the continuance of an Event of Default,
any payment of accounts or payment in respect of general intangibles, when collected by any Grantor, shall be promptly (and, in
any event, within 2 Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Agent,
in a Cash Collateral Account, subject to withdrawal by the Agent as provided in Section 6.4. Until so turned over, such payment
shall be held by such Grantor in trust for the Agent, segregated from other funds of such Grantor. Each such deposit of proceeds
of accounts and payments in respect of general intangibles shall be accompanied by a report identifying in reasonable detail the
nature and source of the payments included in the deposit.

 

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(b)          At
any time during the continuance of an Event of Default:

 

(i)           each
Grantor shall, upon the Agent’s request, deliver to the Agent all original (or, to the extent not available, a copy thereof)
and other documents evidencing, and relating to, the Contractual Obligations and transactions that gave rise to any account or
any payment in respect of general intangibles, including all original (or, to the extent not available, a copy thereof) orders,
invoices and shipping receipts and notify account debtors that the accounts or general intangibles have been collaterally assigned
to the Agent and that payments in respect thereof shall be made directly to the Agent;

 

(ii)          the
Agent may, without notice, at any time during the continuance of an Event of Default, limit or terminate the authority of a Grantor
to collect its accounts or amounts due under general intangibles or any thereof and, in its own name or in the name of others,
communicate with account debtors to verify with them to the Agent’s reasonable satisfaction the existence, amount and terms
of any account or amounts due under any general intangible. In addition, the Agent may, to the extent not prohibited by applicable
non-waivable Law, at any time enforce such Grantor’s rights against such account debtors and obligors of general intangibles;
and

 

(iii)         each
Grantor shall take all actions, deliver all documents and provide all information necessary or reasonably requested by the Agent
to ensure any Internet Domain Name is registered.

 

(c)          Anything
herein to the contrary notwithstanding, each Grantor shall remain liable under each account and each payment in respect of general
intangibles to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise thereto. No Credit Party shall have any obligation or liability under any agreement
giving rise to an account or a payment in respect of a general intangible by reason of or arising out of any Loan Document or the
receipt by any Credit Party of any payment relating thereto, nor shall any Credit Party be obligated in any manner to perform any
obligation of any Grantor under or pursuant to any agreement giving rise to an account or a payment in respect of a general intangible,
to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts that may have been assigned to it or to which it may be entitled at any time or times.

 

Section 6.3
Pledged Collateral. (a) Voting Rights. During the continuance of an Event of Default, upon notice by the Agent to the
relevant Grantor or Grantors, the Agent or its nominee may exercise (A) any voting, consent, corporate and other right pertaining
to the Pledged Collateral at any meeting of shareholders, partners or members, as the case may be, of the relevant issuer or issuers
of Pledged Collateral or otherwise and (B) any right of conversion, exchange and subscription and any other right, privilege or
option pertaining to the Pledged Collateral as if it were the absolute owner thereof (including the right to exchange at its discretion
any Pledged Collateral upon the merger, amalgamation, consolidation, reorganization, recapitalization or other fundamental change
in the corporate or equivalent structure of any issuer of Pledged Stock, the right to deposit and deliver any Pledged Collateral
with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Agent
may determine), all without liability except to account for property actually received by it; provided, however,
that the Agent shall have no duty to any Grantor to exercise any such right, privilege or option and shall not be responsible
for any failure to do so or delay in so doing.

 

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(b)          Proxies.
In order to permit the Agent, during the continuance of an Event of Default, to exercise the voting and other consensual rights
that it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions that it may be entitled
to receive hereunder, (i) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Agent
all such proxies, dividend payment orders and other instruments as the Agent may from time to time reasonably request and (ii)
without limiting the effect of clause (i) above, such Grantor hereby grants to the Agent an irrevocable proxy to vote all or any
part of the Pledged Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged
Collateral would be entitled (including giving or withholding written consents of shareholders, partners or members, as the case
may be, calling special meetings of shareholders, partners or members, as the case may be, and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Collateral
on the record books of the issuer thereof) by any other person (including the issuer of such Pledged Collateral or any officer
or agent thereof) during the continuance of an Event of Default and which proxy shall only terminate upon the payment in full in
cash of the Secured Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has
been asserted).

 

(c)          Authorization
of Issuers. Each Grantor hereby expressly irrevocably authorizes and instructs, without any further instructions from such
Grantor, each issuer of any Pledged Collateral pledged hereunder by such Grantor to (i) comply with any instruction received by
it from the Agent in writing that states that an Event of Default is continuing and is otherwise in accordance with the terms of
this Agreement and each Grantor agrees that such issuer shall be fully protected from liabilities to such Grantor in so complying
and (ii) unless otherwise expressly permitted hereby or the Credit Agreement, pay any dividend or make any other payment with respect
to the Pledged Collateral directly to the Agent.

 

Section
6.4 Proceeds to be Turned over to and Held by Agent. Unless otherwise expressly provided in the Credit Agreement or this
Agreement, at any time during the continuance of an Event of Default, proceeds of any Collateral received by any Grantor
hereunder in cash or cash equivalents shall be held by such Grantor in trust for the Agent and the other Credit Parties,
segregated from other funds of such Grantor, and shall, promptly upon receipt by any Grantor, be turned over to the Agent in
the exact form received (with any necessary endorsement). All such proceeds of Collateral and any other proceeds of any
Collateral received by the Agent in cash or cash equivalents shall be held by the Agent in a Cash Collateral Account. All
proceeds being held by the Agent in a Cash Collateral Account (or by such Grantor in trust for the Agent) shall continue to
be held as collateral security for the Secured Obligations and shall not constitute payment thereof until applied as provided
in the Credit Agreement.

 

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Section
6.5 Sale of Pledged Collateral. (a) Each Grantor recognizes that the Agent may be unable to effect a public sale of any Pledged
Collateral by reason of certain prohibitions contained in the Securities Laws and applicable state or foreign securities laws or
otherwise or may determine that a public sale is impracticable, not desirable or not commercially reasonable and, accordingly,
may resort to one or more private sales thereof to a restricted group of purchasers that shall be obliged to agree, among other
things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof.
Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such
sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Agent shall be under no obligation to delay a sale of any Pledged Collateral for
the period of time necessary to permit the issuer thereof to register such securities for public sale under the Securities Laws
or under applicable state securities laws even if such issuer would agree to do so.

 

(b)          Each
Grantor agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to
make such sale or sales of any portion of the Pledged Collateral pursuant to Section 6.1 and this Section 6.5 valid and binding
and in compliance with all applicable Laws. Each Grantor further agrees that a breach of any covenant contained herein will cause
irreparable injury to the Agent and other Credit Parties, that the Agent and the other Credit Parties have no adequate remedy at
law in respect of such breach and, as a consequence, that each and every covenant contained herein shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert any defense against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred under the Credit Agreement or that all Secured Obligations
have been paid in full in cash. Each Grantor waives any and all rights of contribution or subrogation upon the sale or disposition
of all or any portion of the Pledged Collateral by Agent.

 

Section
6.6 Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of any
Collateral are insufficient to pay the Secured Obligations and the reasonable and documented fees and disbursements of any attorney
employed by the Agent or any other Credit Party to collect such deficiency pursuant to the terms of the Credit Agreement.

 

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ARTICLE VII

 

THE AGENT

 

Section
7.1 Agent’s Appointment as Attorney-in-Fact. (a) Each Grantor hereby irrevocably constitutes and appoints the Agent and
any Related Party thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power
and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name, for the purpose of carrying
out the terms of the Loan Documents, to take any appropriate action and to execute any document or instrument that may be reasonably
necessary or desirable to accomplish the purposes of the Loan Documents, and, without limiting the generality of the foregoing,
each Grantor hereby gives the Agent and its Related Parties the power and right, on behalf of such Grantor, without notice to or
assent by such Grantor, to do any of the following when an Event of Default shall be continuing:

 

(i)          in
the name of such Grantor, in its own name or otherwise, take possession of and indorse and collect any check, draft, note, acceptance
or other instrument for the payment of moneys due under any account or general intangible or with respect to any other Collateral
and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the
Agent for the purpose of collecting any such moneys due under any account or general intangible or with respect to any other Collateral
whenever payable;

 

(ii)          in
the case of any Intellectual Property (other than Excluded Property) owned by or licensed to the Grantors, execute, deliver and
have recorded any document that the Agent may request to evidence, effect, publicize or record the Agent’s security interest
in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;

 

(iii)         pay
or discharge taxes and Liens levied or placed on or threatened against any Collateral, effect any repair or pay any insurance called
for by the terms of the Credit Agreement (including all or any part of the premiums therefor and the costs thereof);

 

(iv)        execute,
in connection with any sale provided for in Section 6.1 or Section 6.5, any document to effect or otherwise reasonably necessary
or appropriate in relation to evidence the sale of any Collateral; or

 

    26

     

    

 

(v)         (A)
direct any party liable for any payment under any Collateral to make payment of any moneys due or to become due thereunder directly
to the Agent or as the Agent shall direct, (B) ask for or demand, and collect and receive payment of and receipt for, any moneys,
claims and other amounts due or to become due at any time in respect of or arising out of any Collateral, (C) sign and indorse
any invoice, freight or express bill, bill of lading, storage or warehouse receipt, draft against debtors, assignment, verification,
notice and other document in connection with any Collateral, (D) commence and prosecute any suit, action or proceeding at law
or in equity in any court of competent jurisdiction to collect any Collateral and to enforce any other right in respect of any
Collateral, (E) defend any actions, suits, proceedings, audits, claims, demands, orders or disputes brought against such Grantor
with respect to any Collateral, (F) settle, compromise or adjust any such actions, suits, proceedings, audits, claims, demands,
orders or disputes and, in connection therewith, give such discharges or releases as the Agent may deem appropriate, (G)  assign
any Intellectual Property owned by the Grantors or any intellectual property licenses of such Grantor to the extent not constituting
Excluded Property throughout the world on such terms and conditions and in such manner as the Agent shall in its sole discretion
determine, including the execution and filing of any document necessary to effectuate or record such assignment and (H)  generally,
sell, assign, convey, transfer or grant a Lien on, make any Contractual Obligation with respect to and otherwise deal with, any
Collateral as fully and completely as though the Agent were the absolute owner thereof for all purposes and do, at the Agent’s
option, at any time or from time to time, all acts and things that the Agent deems necessary to protect, preserve or realize upon
any Collateral and the Credit Parties’ security interests therein and to effect the intent of the Loan Documents, all as
fully and effectively as such Grantor might do.

 

(b)          If
any Grantor fails to perform or comply with any Contractual Obligation contained herein, the Agent, at its option, but without
any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such Contractual Obligation.

 

(c)          The
reasonable expenses of the Agent incurred in connection with actions undertaken as provided in this Section 7.1, together with
interest thereon at a rate equal to the Default Rate, from the date of payment by the Agent to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Agent on demand.

 

(d)          Each
Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue of this Section 7.1. All powers,
authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is
terminated and the security interests created hereby are released.

 

Section
7.2 Authorization to File Financing Statements. Each Grantor authorizes the Agent and its Related Parties, at any time and
from time to time, to file or record financing statements, amendments thereto, and other filing or recording documents or instruments
with respect to any Collateral in such form and in such offices as the Agent reasonably determines appropriate to perfect the
security interests of the Agent under this Agreement, and such financing statements and amendments may describe the Collateral
covered thereby as “all assets of the debtor”. A photographic or other reproduction of this Agreement shall
be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction.
Such Grantor also hereby ratifies its authorization for the Agent to have filed any initial financing statement or amendment thereto
under the UCC (or other similar laws) in effect in any jurisdiction if filed prior to the date hereof.

 

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Section
7.3 Authority of Agent. Each Grantor acknowledges that the rights and responsibilities of the Agent under this Agreement with
respect to any action taken by the Agent or the exercise or non-exercise by the Agent of any option, voting right, request, judgment
or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Agent and the
other Credit Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time
to time among them, but, as between the Agent and the Grantors, the Agent shall be conclusively presumed to be acting as agent
for the Credit Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation
or entitlement to make any inquiry respecting such authority.

 

Section
7.4 Duty; Obligations and Liabilities. (a) Duty of Agent. The Agent’s sole duty with respect to the custody, safekeeping
and physical preservation of the Collateral in its possession shall be to deal with it in the same manner as the Agent deals with
property for its own account. The powers conferred on the Agent hereunder are solely to protect the Agent’s interest in the
Collateral and shall not impose any duty upon the Agent to exercise any such powers. The Agent shall be accountable only for amounts
that it receives as a result of the exercise of such powers, and neither it nor any of its Related Parties shall be responsible
to any Grantor for any act or failure to act hereunder, except for their own bad faith, gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction. In addition, the Agent shall not be liable or responsible for any loss
or damage to any Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehousemen,
carrier, forwarding agency, consignee or other bailee if such Person has been selected by the Agent in good faith.

 

(b)
Obligations and liabilities with respect to Collateral. No Credit Party and no Related Parties thereof shall be liable for failure
to demand, collect or realize upon any Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard
to any Collateral. The powers conferred on the Agent hereunder shall not impose any duty upon any other Credit Party to exercise
any such powers. The other Credit Parties shall be accountable only for amounts that they actually receive as a result of the exercise
of such powers, and neither they nor any of their respective officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own bad faith, gross negligence or willful misconduct as finally
determined in a non- appealable judgment by a court of competent jurisdiction.

 

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ARTICLE VIII

 

MISCELLANEOUS

 

Section
8.1 Reinstatement. Each Grantor agrees that, if any payment made by any Loan Party or other Person and applied to the Secured
Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise
required to be refunded or repaid, or the proceeds of any Collateral are required to be returned by any Credit Party to such Loan
Party, its estate, trustee, receiver or any other party, including any Grantor, under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such liability
shall be and remain in full force and effect, as fully as if such payment had never been made. If, prior to any of the foregoing,
(a) any Lien or other Collateral securing such Grantor’s liability hereunder shall have been released or terminated by virtue
of the foregoing or (b) any provision of the Guaranty hereunder shall have been terminated, cancelled or surrendered, such Lien,
other Collateral or provision shall be reinstated in full force and effect and such prior release, termination, cancellation or
surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of any such Grantor in respect of
any Lien or other Collateral securing such obligation or the amount of such payment.

 

Section
8.2 Release of Collateral. Subject to the terms of the Intercreditor Agreement, (a) At the time provided in subsection 9.10(a)(i)
of the Credit Agreement, the Collateral shall be released from the Lien created hereby and this Agreement and all obligations (other
than those expressly stated to survive such termination) of the Agent and each Grantor hereunder shall terminate, all without delivery
of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors. Each Grantor
(or its designee) is hereby authorized to file UCC amendments, other release documents and, if necessary, appropriate filings with
any applicable IP Office, and other documents at such time evidencing the termination of the Liens so released. At the request
of any Grantor following any such termination, the Agent shall promptly deliver to such Grantor any Collateral of such Grantor
held by the Agent hereunder and execute and deliver to such Grantor such documents (including termination statements and intellectual
property filing terminations) as such Grantor shall reasonably request to evidence such termination.

 

(b)          If
the Agent shall be directed or permitted pursuant to subsection 9.10(a) of the Credit Agreement to release any Lien or any Collateral,
such Collateral shall be released from the Lien created hereby to the extent provided under, and subject to the terms and conditions
set forth in, such subsection. In connection therewith, the Agent, at the request of any Grantor, shall execute and deliver to
such Grantor such documents (including termination statements and intellectual property filing terminations) as such Grantor shall
reasonably request to evidence such release.

 

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(c)          At
the time provided in subsection 9.10(b) of the Credit Agreement and at the request of any Borrower, a Grantor shall be
released from its obligations hereunder in the event that all the Stock and Stock Equivalents of such Grantor shall be sold
to any Person that is not an Affiliate of any Borrower and a Subsidiary of any Borrower in a transaction permitted by the
Loan Documents.

 

Section
8.3 Independent Obligations. The obligations of each Grantor hereunder are independent of and separate from the Secured Obligations
and the Guaranteed Obligations. If any Secured Obligation or Guaranteed Obligation is not paid when due, or upon any Event of Default,
the Agent may, at its sole election, proceed directly and at once, without notice, against any Grantor and any Collateral to collect
and recover the full amount of any Secured Obligation or Guaranteed Obligation then due, without first proceeding against any other
Grantor, any other Loan Party or any other Collateral and without first joining any other Grantor or any other Loan Party in any
proceeding.

 

Section
8.4 No Waiver by Course of Conduct. No Credit Party shall by any act (except by a written instrument pursuant to Section 8.5),
delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default. No failure to exercise, nor any delay in exercising, on the part of any Credit Party, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any Credit
Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that such Credit
Party would otherwise have on any future occasion.

 

Section
8.5 Amendments in Writing. None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise
modified except in accordance with Section 10.01 of the Credit Agreement and the terms of the Intercreditor Agreement; provided,
however, (a) that schedules to this Agreement may be supplemented (but no existing provisions may be modified and no Collateral
may be released) through Pledge Amendments and Joinder Agreements or through other documents acceptable to Agent, in substantially
the form of Annex 1 and Annex 2, respectively, in each case duly executed by the Agent and each Grantor directly affected thereby
and (b) any Grantor may supplement the schedules hereto to the extent necessary to disclose new or changed facts after the Closing
Date.

 

Section
8.6 Additional Grantors; Additional Pledged Collateral. (a) Joinder Agreements. If, at the option of any Borrower or as required
pursuant to Section 6.11 of the Credit Agreement, the Borrowers shall cause any Subsidiary that is not a Grantor to become a Grantor
hereunder, such Subsidiary shall execute and deliver to the Agent a Joinder Agreement substantially in the form of Annex 2 (each,
a “Joinder Agreement”) and shall thereafter for all purposes be a party hereto and have the same rights, benefits
and obligations as a Grantor party hereto on the Closing Date as required hereunder or pursuant to the other Loan Documents.

 

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(b)
Pledge Amendments. To the extent any Pledged Collateral has not been delivered as of the Closing Date, such Grantor shall
deliver a pledge amendment duly executed by the Grantor in substantially the form of Annex 1 (each, a “Pledge Amendment”).
Such Grantor authorizes the Agent to attach each Pledge Amendment to this Agreement.

 

Section
8.7 Notices. All notices, requests and demands to or upon the Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.02 of the Credit Agreement; provided, however, that any such notice, request or demand
to or upon any Grantor shall be addressed to the Borrowers’ notice address set forth in such Section 10.02.

 

Section
8.8 Successors and Assigns. This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure
to the benefit of each Credit Party and their successors and assigns; provided, however, that no Grantor may assign,
transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Agent.

 

Section
8.9 Counterparts. This Agreement may be executed in any number of counterparts and by different parties in separate counterparts,
each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same
agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of
an executed signature page of this Agreement by facsimile transmission or by Electronic Transmission shall be as effective as delivery
of a manually executed counterpart hereof.

 

Section
8.10 Severability. Any provision of this Agreement being held illegal, invalid or unenforceable in any jurisdiction shall not
affect any part of such provision not held illegal, invalid or unenforceable, any other provision of this Agreement or any part
of such provision in any other jurisdiction.

 

Section
8.11 Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed
and interpreted in accordance with, the law of the State of Illinois.

 

Section
8.12 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
WITH RESPECT TO, OR DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, ANY LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREIN OR RELATED THERETO (WHETHER FOUNDED IN CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO OTHER PARTY AND NO RELATED PARTY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
8.12.

 

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EACH GRANTOR
AGREES TO BE BOUND BY THE PROVISIONS OF SECTION 10.14 OF THE CREDIT AGREEMENT.

 

Section
8.1 Intercreditor Agreement. Notwithstanding anything herein to the contrary, the Lien and security interest granted
pursuant to this Agreement and the exercise of any right or remedy hereunder are subject to the provisions of the
Intercreditor Agreement. To the extent the terms of this Agreement conflict with the terms contained in the Intercreditor
Agreement, the Intercreditor Agreement will prevail, except to the extent that such interpretation contravenes the
parties’ mutual intent to create a validly existing and attached security interest. Without limiting the generality of
the foregoing, and notwithstanding anything herein to the contrary, until the Discharge of [Term/Revolving] Loan Debt (as
defined in the Intercreditor Agreement), any obligation of any Grantor hereunder or under any other Security Document with
respect to the delivery of any [Term/Revolving] Loan Priority Collateral shall be deemed to be satisfied by delivery of such [Term/Revolving]  Loan
Priority Collateral to the [Term/Revolving]  Loan Agent pursuant to the [Term/Revolving]  Loan Documents (each as defined in the Intercreditor
Agreement).

 

[SIGNATURE PAGES FOLLOW]

 

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IN
WITNESS WHEREOF, each of the undersigned has caused this Guaranty and Security Agreement to be duly executed and delivered as
of the date first above written. 

 

VERTEX ENERGY, INC.

 

	By:		 	 
	 	      Name:  		 
	 	      Its:	 	 

 

VERTEX ENERGY OPERATING, LLC

 

	By:	 		 
	 	      Name:  	 	 
	 	      Its:	 	 

 

	BANGO
    OIL LLC	 	VERTEX RECOVERY
    MANAGEMENT, LLC 
	 	 	 
	By:	 	 	By:	
	 	      Name:	 	 	 	      Name:	 
	 	      Its:	 	 	 	 	      Its:	 	 

 

	VERTEX
    REFINING NV, LLC	 	VERTEX REFINING
    LA, LLC
	 	 	 
	By:	 	 	By:	
	 	      Name:	 	 	 	      Name:	 
	 	      Its:	 	 	 	 	      Its:	 	 

 

	VERTEX REFINING OH, LLC	 	VERTEX II GP, LLC
	 	 	 
	By:	 	 	By:	
	 	      Name:	 	 	 	      Name:	 
	 	      Its:	 	 	 	 	      Its:	 	 

 

[Signature
Page to Guaranty and Security Agreement]

 

     

     

    

 

	VERTEX
    MERGER SUB, LLC	 	VERTEX ACQUISITION SUB, LLC 
	 	 	 
	By:	 	 	By:	 
	 	      Name:		 	 	      Name:	 
	 	      Its:	 	 	 	 	      Its:	 	 

 

	CEDAR MARINE TERMINALS, LP	 	CROSSROAD CARRIERS, L.P.
	 	 	 
	By:	 	 	By:	 
	 	      Name:	 	 	 	      Name:	 
	 	      Its:	 	 	 	 	      Its:	 	 

	VERTEX RECOVERY, L.P.	 	H & H OIL, L.P.
	 	 	 
	By:	 	 	By:	 
	 	      Name:	 	 	 	      Name:	 
	 	      Its:	 	 	 	 	      Its:	 	 

 

	GOLDEN STATE LUBRICANTS
        WORKS, LLC	 	VERTEX RECOVERY MANAGEMENT LA,
        LLC
	 	 	 
	By:	 	 	By:	 
	 	      Name:	 	 	 	      Name:	 
	 	      Its:	 	 	 	 	      Its:	 	 

 

[Signature
Page to Guaranty and Security Agreement]

 

     

     

    

 

	
        ACCEPTED AND AGREED

        as of the date first above written:
	 
	 	 
	ENCINA BUSINESS CREDIT, LLC, as Agent	 
	 	 
	 	 
	By:	 	 
	Name:	 	 
	Title:	Duly Authorized Signatory	 

 

[Signature
Page to Guaranty and Security Agreement]

 

     

     

    

 

ANNEX
1

TO 

GUARANTY
AND SECURITY AGREEMENT1

 

FORM
OF PLEDGE AMENDMENT

 

This
Pledge Amendment, dated as of_____________     , 20   , is delivered pursuant to Section 8.6 of the Guaranty and Security Agreement,
dated as of February 1, 2017, by VERTEX ENERGY, INC., a Nevada corporation (“Holdings”), VERTEX ENERGY OPERATING,
LLC, a Texas limited liability company, BANGO OIL LLC, a Nevada limited liability company, VERTEX REFINING NV, LLC, a Nevada limited
liability company, VERTEX REFINING OH, LLC, an Ohio limited liability company, VERTEX MERGER SUB, LLC, a California limited liability
company, VERTEX RECOVERY MANAGEMENT, LLC, a Texas limited liability company, VERTEX RECOVERY MANAGEMENT LA, LLC, a Louisiana limited
liability company, VERTEX REFINING LA, LLC, a Louisiana limited liability company, VERTEX II GP, LLC, a Nevada limited liability
company, VERTEX ACQUISITION SUB, LLC, a Nevada limited liability company, CEDAR MARINE TERMINALS, LP, a Texas limited partnership,
VERTEX RECOVERY, L.P., a Texas limited partnership, GOLDEN STATE LUBRICANTS WORKS, LLC, a Delaware limited liability company,
CROSSROAD CARRIERS, L.P., a Texas limited partnership, and H & H OIL, L.P., a Texas limited partnership (individually each
a “Borrower” and, collectively, “Borrowers”), the undersigned Grantor and the other Affiliates
of the Borrowers from time to time party thereto as Grantors in favor of ENCINA BUSINESS CREDIT, LLC, as Agent for the Credit
Parties referred to therein (the “Guaranty and Security Agreement”). Capitalized terms used herein without
definition are used as defined in the Guaranty and Security Agreement.

 

The
undersigned hereby agrees that this Pledge Amendment may be attached to the Guaranty and Security Agreement and that the Pledged
Collateral listed on Annex 1- A to this Pledge Amendment shall be and become part of the Collateral referred to in the
Guaranty and Security Agreement and shall secure all Obligations of the undersigned.

 

The
undersigned hereby represents and warrants that each of the representations and warranties contained in Sections 4.1, 4.2,
4.5 and 4.10 of the Guaranty and Security Agreement is true and correct and as of the date hereof as if made on
and as of such date.

 

	 	[GRANTOR]
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

 

To
be used for pledge of Additional Pledged Collateral by existing Grantor.

 

    	A1-1 

    	 

    

 

Annex
1-A

 

PLEDGED
    STOCK

 

	ISSUER	 	CLASS	 	CERTIFICATE 

NO(S).	 	PAR 

VALUE	 	NUMBER

OF 

SHARES, 

UNITS OR 

INTERESTS

 

PLEDGED
    DEBT INSTRUMENTS

 

	ISSUER	 	DESCRIPTION OF 

DEBT	 	CERTIFICATE 

NO(S).	 	FINAL 

MATURITY	 	PRINCIPAL 

AMOUNT

 

    	A1-2 

    	 

    

 

	ACKNOWLEDGED AND AGREED 

as of the
    date first above written:	 
	 	 	 
	ENCINA BUSINESS CREDIT, LLC, as
    Agent	 
	 	 	 
	By: 	 	 
	 	Name:	 
	 	Title: Duly Authorized Signatory	 

 

    	A1-3 

    	 

    

 

ANNEX
2

TO

GUARANTY
AND SECURITY AGREEMENT

 

FORM
OF JOINDER AGREEMENT

 

This
JOINDER AGREEMENT, dated as of ________ ___, 20__, is delivered pursuant to Section 8.6 of the Guaranty and Security Agreement,
dated as of February 1, 2017, by VERTEX ENERGY, INC., a Nevada corporation (“Holdings”), VERTEX ENERGY OPERATING,
LLC, a Texas limited liability company, BANGO OIL LLC, a Nevada limited liability company, VERTEX REFINING NV, LLC, a Nevada limited
liability company, VERTEX REFINING OH, LLC, an Ohio limited liability company, VERTEX MERGER SUB, LLC, a California limited liability
company, VERTEX RECOVERY MANAGEMENT, LLC, a Texas limited liability company, VERTEX RECOVERY MANAGEMENT LA, LLC, a Louisiana limited
liability company,, VERTEX REFINING LA, LLC, a Louisiana limited liability company, VERTEX II GP, LLC, a Nevada limited liability
company, VERTEX ACQUISITION SUB, LLC, a Nevada limited liability company, CEDAR MARINE TERMINALS, LP, a Texas limited partnership,
VERTEX RECOVERY, L.P., a Texas limited partnership, GOLDEN STATE LUBRICANTS WORKS, LLC, a Delaware limited liability company,
CROSSROAD CARRIERS, L.P., a Texas limited partnership, and H & H OIL, L.P., a Texas limited partnership (individually each
a “Borrower” and, collectively, “Borrowers”) and the Affiliates of the Borrowers from time
to time party thereto as Grantors in favor of ENCINA BUSINESS CREDIT, LLC, as Agent for the Credit Parties referred to therein
(as such agreement may be amended, restated, supplemented and/or otherwise modified from time to time, the “Guaranty
and Security Agreement”). Capitalized terms used herein without definition are used as defined in the Guaranty and Security
Agreement.

 

By
executing and delivering this Joinder Agreement, the undersigned, as provided in Section 8.6 of the Guaranty and Security
Agreement, hereby becomes a party to the Guaranty and Security Agreement as a Grantor and a Guarantor thereunder with the same
force and effect as if originally named as a Grantor and a Guarantor therein and, without limiting the generality of the foregoing,
as collateral security for the prompt and complete payment and performance when due (whether at stated maturity, by acceleration
or otherwise) of the Secured Obligations of the undersigned, hereby mortgages, pledges and hypothecates to the Agent for the benefit
of the Credit Parties, and grants to the Agent for the benefit of the Credit Parties a lien on and security interest in, all of
its right, title and interest in, to and under the Collateral of the undersigned and expressly assumes all obligations and liabilities
of a Grantor and a Guarantor thereunder. The undersigned hereby agrees to be bound as a Grantor and a Guarantor for the purposes
of the Guaranty and Security Agreement.

 

    	A2-1 

    	 

    

 

The
information set forth in Annex 1-A is hereby added to the information set forth in Schedules 1 through 6
to the Guaranty and Security Agreement. By acknowledging and agreeing to this Joinder Agreement, the undersigned hereby agree
that this Joinder Agreement may be attached to the Guaranty and Security Agreement and that the Collateral listed on Annex
1-A to this Joinder Amendment shall be and become part of the Collateral referred to in the Guaranty and Security Agreement
and shall secure all Secured Obligations of the undersigned.

 

The
undersigned hereby represents and warrants that each of the representations and warranties contained in Article IV of the
Guaranty and Security Agreement applicable to it is true and correct on and as the date hereof as if made on and as of such date.

 

    	A2-2 

    	 

    

 

IN
WITNESS WHEREOF, THE UNDERSIGNED HAS CAUSED THIS JOINDER AGREEMENT TO BE DULY EXECUTED AND DELIVERED AS OF THE DATE FIRST ABOVE
WRITTEN.

 

	 	[Additional
Grantor]
	 	 	 
	 	By: 	 
	 	 	Name:
	 	 	Title:

 

    	A2-3 

    	 

    

 

	ACKNOWLEDGED AND AGREED 

as of the
    date first above written:	 
	 	 	 
	[EACH
GRANTOR PLEDGING ADDITIONAL COLLATERAL]	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title:	 

 

	ENCINA
BUSINESS CREDIT, LLC, as Agent	 
	 	 	 
	By:	 	 
	 	Name:	 
	 	Title: Duly Authorized Signatory	 

 

    	A2-4 

    	 

    

 

ANNEX
3

TO

GUARANTY
AND SECURITY AGREEMENT

 

FORM
OF INTELLECTUAL PROPERTY SECURITY AGREEMENT1

 

THIS
[COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT, dated as of _________ ___, 20__, is made by _________________, [“__________”],
__________________[“___________________”]                              and
__ [“________”] (each a “Grantor” and, collectively, the “Grantors”), in favor
of Encina Business Credit, LLC (“Encina”), as agent (in such capacity, together with its successors and permitted
assigns, the “Agent”) for the Lenders, and the other Credit Parties (each as defined in the Credit Agreement
referred to below).

 

W
I T N E S S E T H:

 

WHEREAS,
pursuant to the [ABL] Credit Agreement, dated as of February 1, 2017 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among Holdings, the Borrowers, the other
Loan Parties, and the Lenders from time to time party thereto and the Agent, the Lenders have severally agreed to make
extensions of credit to the Borrowers upon the terms and subject to the conditions set forth therein;

 

WHEREAS,
each Grantor has agreed, pursuant to a Guaranty and Security Agreement of even date herewith in favor of the Agent (the “Guaranty
and Security Agreement”), to guarantee the Obligations (as defined in the Credit Agreement) of the Borrowers; and

 

WHEREAS,
all of the Grantors are party to the Guaranty and Security Agreement pursuant to which the Grantors are required to execute and
deliver this [Copyright] [Patent] [Trademark] Security Agreement;

 

NOW,
THEREFORE, in consideration of the premises and to induce the Lenders and the Agent to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrowers thereunder, each Grantor hereby agrees with
the Agent as follows:

 

Section
1. Defined Terms. Capitalized terms used herein without definition are used as defined in the Guaranty and Security Agreement.

 

Section
2. Grant of Security Interest in [Copyright] [Trademark] [Patent] Collateral. Each Grantor, as collateral security for the
prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured
Obligations of such Grantor, hereby mortgages, pledges and hypothecates to the Agent for the benefit of the Credit Parties, and
grants to the Agent for the benefit of the Credit Parties a Lien on and security interest in, all of its right, title and interest
in, to and under
the following Collateral of such Grantor (the “[Copyright] [Patent] [Trademark] Collateral”):

 

 

1
Separate agreements should be executed relating to each Grantor’s respective Copyrights, Patents, and Trademarks.

 

    	A3-1 

    	 

    

 

(a)          [all
of its copyrights and all intellectual property licenses providing for the grant by or to such Grantor of any right under any
copyright, including, without limitation, those referred to on Schedule 1 hereto;

 

(b)          all renewals, reversions and extensions
of the foregoing; and

 

(c)          all
income, royalties, proceeds and liabilities at any time due or payable or asserted under and with respect to any of the foregoing,
including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement,
misappropriation, dilution, violation or other impairment thereof.]

 

or

 

(a)          [all
of its patents and all intellectual property licenses providing for the grant by or to such Grantor of any right under any patent,
including, without limitation, those referred to on Schedule 1 hereto;

 

(a)         all
reissues, reexaminations, continuations, continuations-in-part, divisionals, renewals and extensions of the foregoing; and

 

(b)         all
income, royalties, proceeds and liabilities at any time due or payable or asserted under and with respect to any of the foregoing,
including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement,
misappropriation, dilution, violation or other impairment thereof.]

 

or

 

(a)         [all
of its trademarks and all intellectual property licenses providing for the grant by or to such Grantor of any right under any
trademark, including, without limitation, those referred to on Schedule 1 hereto;

 

(c)         all renewals and extensions of the foregoing;

 

(d)         all
goodwill of the business connected with the use of, and symbolized by, each such trademark; and

 

(e)         all
income, royalties, proceeds and liabilities at any time due or payable or asserted under and with respect to any of the foregoing,
including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement,
misappropriation, dilution, violation or other impairment thereof.]

 

    	A3-2 

    	 

    

 

Section
3. Guaranty and Security Agreement. The security interest granted pursuant to this [Copyright] [Patent] [Trademark]
Security Agreement is granted in conjunction with the security interest granted to the Agent pursuant to the Guaranty and
Security Agreement and each Grantor hereby acknowledges and agrees that the rights and remedies of the Agent with respect to
the security interest in the [Copyright] [Patent] [Trademark] Collateral made and granted hereby are more fully set forth in
the Guaranty and Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set
forth herein.

 

Section
4. Grantor Remains Liable. Each Grantor hereby agrees that, anything herein to the contrary notwithstanding, such Grantor
shall assume full and complete responsibility for the prosecution, defense, enforcement or any other necessary or desirable actions
in connection with their [Copyrights] [Patents] [Trademarks] and intellectual property licenses subject to a security interest
hereunder.

 

Section
5. Counterparts. This [Copyright] [Patent] [Trademark] Security Agreement may be executed in any number of counterparts and
by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts
and attached to a single counterpart.

 

Section
6. Governing Law. This [Copyright] [Patent] [Trademark] Security Agreement and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the law of the State of Illinois.

 

[SIGNATURE
PAGES FOLLOW]

 

    	A3-3 

    	 

    

 

IN
WITNESS WHEREOF, each Grantor has caused this [Copyright] [Patent] [Trademark] Security Agreement to be executed and delivered
by its duly authorized officer as of the date first set forth above.

 

	 	Very
truly yours,
	 	 
	 	[GRANTOR]
	 	 as
Grantor
	 	 	 
	 	By: 	 
	 	 	Name:
	 	 	Title:

 

	ACCEPTED AND AGREED 

as of the
    date first above written:	 
	 	 	 
	ENCINA
BUSINESS CREDIT, LLC, as Agent	 
	 	 	 
	By: 	 	 
	 	Name:	 
	 	Title: Duly Authorized Signatory	 

 

[SIGNATURE
PAGE TO [COPYRIGHT] [PATENT] [TRADEMARK] SECURITY AGREEMENT]

 

    	A3-4 

    	 

    

 

SCHEDULE
I

TO

[COPYRIGHT]
[PATENT] [TRADEMARK] SECURITY AGREEMENT

 

[Copyright]
[Patent] [Trademark] Registrations

 

1.          REGISTERED
[COPYRIGHTS] [PATENTS] [TRADEMARKS]

 

[Include Registration Number and Date]

 

2.          [COPYRIGHT]
[PATENT] [TRADEMARK] APPLICATIONS

 

[Include Application Number and Date]

 

3.          Intellectual
Property Licenses [Include complete legal description of agreement (name of agreement, parties and date)]

 

     

     

    

 

Execution
Copy

 

Schedule
1

 Commercial Tort Claims

 

Vertex
Refining NV, LLC v. National Union Fire Insurance Company of Pittsburgh, PA and Assurance Agency, Ltd, Case No. 16-cv-03498 (U.S.
District Court for the Northern District of Illinois).

 

Schedule
1

Commercial Tort Claims

 

     

     

    

 

Schedule
2

 Filings

 

	Grantor	Filing Type	Jurisdiction	Filing Office
	Vertex Energy Operating, LLC	UCC-1	Texas	Secretary of State
	Vertex Energy, Inc.	UCC-1	Nevada	Secretary of State
	Vertex
Refining NV, LLC
	UCC-1 

        (all
assets) 
	Nevada
	Secretary
of State 

	Vertex
Refining NV, LLC
	UCC-1 

        (tort) 
	Nevada
	Secretary
of State

	Vertex Refining LA, LLC	UCC-1	Louisiana	Jefferson Parish
	Vertex Refining OH, LLC	UCC-1	Ohio	Secretary of State
	Vertex II GP, LLC	UCC-1	Nevada	Secretary of State
	Vertex Merger Sub, LLC	UCC-1	California	Secretary of State
	Vertex Acquisition Sub, LLC	UCC-1	Nevada	Secretary of State
	Cedar Marine Terminals, LP	UCC-1	Texas	Secretary of State
	Crossroad Carriers, L.P.	UCC-1	Texas	Secretary of State
	Vertex Recovery, L.P.	UCC-1	Texas	Secretary of State
	H & H Oil, L. P.	UCC-1	Texas	Secretary of State
	Golden State Lubricants Works, LLC	UCC-1	Delaware	Secretary of State
	Bango Oil LLC	UCC-1	Nevada	Secretary of State
	Vertex Recovery Management, LLC	UCC-1	Texas	Secretary of State
	Vertex Recovery Management LA, LLC	UCC-1	Louisiana	Jefferson Parish

 

Schedule
2 

Filings

 

     

     

    

 

Schedule
3

Jurisdiction
of Organization; Chief Executive Office

 

	Full
    Legal Name	Jurisdiction
    of Organization	Organization
    I.D.#
	Vertex Energy, Inc.	Nevada	NV20081229119
	Vertex Energy Operating, LLC	Texas	801959969
	Vertex Refining NV, LLC	Nevada	N20141170447
	Vertex Refining LA, LLC	Louisiana	41456232K
	Vertex II GP, LLC	Nevada	NV20121491058
	Vertex Merger Sub, LLC	California	200814410055
	Vertex Acquisition Sub, LLC	Nevada	NV20111698674
	Cedar Marine Terminals, LP	Texas	0800533829
	Crossroad Carriers, L.P.	Texas	0800854831
	Vertex Recovery, L.P.	Texas	0800095940
	H & H Oil, L.P.	Texas	0800848980
	Golden State Lubricants Works, LLC	Delaware	4940256
	Vertex Refining OH, LLC	Ohio	2322821
	Vertex Recovery Management, LLC	Texas	802263407
	Vertex Recovery Management LA, LLC	Louisiana	42264973K
	Bango Oil LLC	Nevada	NV20051740705

 

Each
Grantor’s chief executive office is located at 1331 Gemini Street, Suite 250, Houston, TX 77058 and has been located at such location
for the five years preceding the date hereof.

 

Schedule
3

Jurisdiction
of Organization; Chief Executive Office

 

     

     

    

 

Schedule
4

Location of Inventory and Equipment

 

	Grantor	Property Location
	Vertex Acquisition Sub, LLC	20909
FM 685 

        Pflugerville,
TX 78660 (Travis County) 

	 	 
	Vertex Acquisition Sub, LLC	7311
Decker Drive 

        Baytown,
TX 77520 (Harris County) 

	 	 
	Vertex Recovery, L.P.	7941
Recycle Drive 

        Corpus
Christi, TX 78409 (Nueces County) 

	 	 
	Vertex Refining OH, LLC	4021
East 5th Avenue 

        Columbus,
OH 43219 (Franklin County) 

	 	 
	Vertex Refining OH, LLC	4001
East 5th Avenue 

        Columbus,
OH 43219 (Franklin County) 

	 	 
	Vertex Refining OH, LLC	4560
West Pike St. 

        Zanesville,
OH 43701 (Muskingum County) 

	 	 
	Vertex Refining OH, LLC	714
Keen Street 

        Zanesville,
OH 43701 (Muskingum County) 

	 	 
	Vertex Energy Operating, LLC	1331
Gemini St. 

        Suite
250, Houston, TX 77058 (Harris County) 

	 	 
	Cedar Marine Terminals, LP	200
Atlantic Pipeline Rd. 

        Baytown,
TX 77520 (Chambers County) 

	 	 
	Vertex Refining LA, LLC	5000
River Rd. 

        Marrero,
LA 70072 (Jefferson Parrish) 

	 	 
	Vertex Refining LA, LLC	278
E. Ravenna Road 

        Myrtle
Grove, LA 70037 (Plaquemines Parish) 

	 	 
	H & H Oil, L.P.	11626
Old Corpus Christi Hwy 

        San
Antonio, TX 78223 (Bexar County) 

	 	 
	Vertex Refining OH, LLC	4376
State Route 601 

        Norwalk,
OH 44857 (Huron County) 

 

Schedule 4 

Location of Inventory and
Equipment 

 

     

     

    

 

	Vertex Refining OH, LLC	1749
Moxahala Avenue 

        Zanesville,
OH 43701 (Muskingum County) 

	 	 
	Vertex Refining OH, LLC	481
Adena Drive 

        Mount
Sterling, KY 40353 (Montgomery County) 

	 	 
	Vertex Refining OH, LLC	5330
Point Pleasant Road 

        Ravenswood,
WV 26164 (Jackson County) 

  

Schedule 4

Location of Inventory and Equipment

 

     

     

    

 

Schedule
5

Pledged Collateral

 

Pledged
LLC Interests:

 

	Grantor

        
	Limited
                                         Liability Company

        
	Certificated
                                         

(Y/N)

        
	Certificate
                                         No. (if any)

        
	No.
                                         of

 Pledged 

Units

        
	%
                                         of Outstanding LLC Interests of the Limited Liability Company

        

	Vertex
    Energy, Inc.	Vertex
    Energy Operating, LLC	No	N/A	N/A	100%
	Vertex
    Energy Operating, LLC	Vertex
    Refining NV, LLC	No	N/A	N/A	100%
	Vertex
    Energy Operating, LLC	Vertex
    Refining LA, LLC	No	N/A	N/A	100%
	Vertex
    Energy Operating, LLC	Vertex
    II GP, LLC	No	N/A	N/A	100%
	Vertex
    Energy Operating, LLC	Vertex
    Merger Sub, LLC	No	N/A	N/A	100%
	Vertex
    Energy Operating, LLC	Vertex
    Acquisition Sub, LLC	No	N/A	N/A	100%
	Vertex
    Refining NV, LLC	Golden
    State Lubricants Works, LLC	No	N/A	N/A	100%
	Vertex
    Energy Operating, LLC	Vertex
    Refining OH, LLC	No	N/A	N/A	100%
	Vertex
    Refining NV, LLC	Bango
    Oil LLC	No	N/A	N/A	100%
	Vertex
    Energy Operating, LLC	Vertex
    Recovery Management, LLC	No	N/A	N/A	100%
	Vertex
    Recovery Management, LLC	Vertex
    Recovery Management LA, LLC	No
	N/A
	N/A
	51% 

 

Schedule
5

 Pledged Collateral

    	 

     

    

 

Pledged
Partnership Interests:

 

	Grantor

        
	Partnership

        
	Type
                                         of Partnership Interests (e.g., general or limited)

        
	Certificated

(Y/N)

        
	Certificate 

No. (if any)

        
	%
                                         of Outstanding 

Partnership Interests of 

the Partnership

        

	Vertex
    Acquisition Sub, LLC	Cedar
    Marine Terminals, LP	Partnership
    Interests	No	N/A	100%
	Vertex
    Acquisition Sub, LLC	Crossroad
    Carriers, L.P.	Partnership
    Interests	No	N/A	100%
	Vertex
    Acquisition Sub, LLC	Vertex
    Recovery, L.P.	Partnership
    Interests	No	N/A	100%
	Vertex
    Recovery, L.P.	H
    & H Oil, L.P.	Partnership
    Interests	No	N/A	100%

  

Pledged
Debt Instruments:

 

None.

Schedule
5

Pledged Collateral

    	 

     

    

 

Schedule
6

Intellectual
Property

 

		(i)	Intellectual
                                         Property that is registered or subject to applications for registration:

 

Patents

 

	Document
    No.	Document
    Title	Grantor	Applicable Dates

                                                                                

	US
                                         Patent No.

        

        5,306,419

         
	Used
    Lubricating 

Oil Reclaiming	Vertex
    

Refining LA, 

LLC	Patent
    issued on April 26, 1994 from an application filed on August 5, 1993
	US
                                         Patent No.

        

        5,447,628

         
	Reconstituting
    

Lubricating Oil	Vertex
    

Refining LA, 

LLC	Patent
    issued on September 5, 1995 from an application filed on November 15, 1993
	U.S.
    Patent No.

 8,613,838	System
    for 

Making a Usable 

Hydrocarbon 

Product from Used 

Oil	Vertex
    

Energy 

Operating, 

LLC	Patent
    issued on December 24, 2013 from application filed on July 28, 2010.
	U.S.
    Patent No. 

8,398,847	Method
    for

 Making a Usable

 Hydrocarbon 

Product from Used 

Oil	Vertex
    

Energy 

Operating, 

LLC	Patent
    issued on March 19, 2013 from application filed on July 28, 2010.

 

Trademarks

 

	Mark/Grantor	Reg.
    No./ Serial No.	Filing
    Date	Expiration Date

                                                                                

	VERTEX

                                                                                                                                  

        

        Vertex
        Energy Operating, LLC

         
	5007123/86829344	November
23, 2015

         
	November
23, 2025

         

	PRODUCING
                                         TOMORROW’S ENERGY

                                                                                                                                  

        

        Vertex
        Energy Operating, LLC

         
	86829417	November
23, 2015

         
	November
23, 2025

         

	VTX

                                                                                                                                  

        

        Vertex
        Energy Operating, LLC

        
	86829394

                                                                               

        

        Intent-to-Use
        Application

        
	November
23, 2015

         
	November
23, 2025

         

	 	 	 	 
	

         

        Vertex
        Energy Operating, LLC

         
	86829368	November
23, 2015

        
	November
23, 2025

        

 

Schedule
6 

Intellectual Property

    	 

     

    

 

		(ii)	Internet
                                         Domain Names:

 

ARROWRECYCLING.NET

BANGONV.COM

BESTSANDKTRANS.COM

CROSSROADCARRIERS.NET

ESOURCEHOLDINGS.COM

HH-OIL-RECYCLING.COM

HHRECYCLING.COM

OIL-RECYCLING-AUSTIN.COM

OIL-RECYCLING-BAYTOWN.COM

OIL-RECYCLING-EDINBURG.COM

OIL-RECYCLING-HOUSTON.COM

OIL-RECYCLING-SAN-ANTONIO.COM

OIL-RECYCLING-TEXAS.COM

OMEGA-HOLDINGSLLC.COM

OMEGA-REFINING.COM

OMEGAHOLDINGSLLC.CO

OMEGAHOLDINGSLLC.NET

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SANDKTRANS.COM

VERTEX-PENTHOL.COM

VERTEX-PENTHOL.NET

VERTEX-PENTHOL.US

VERTEXCOMPANIES.NET

VERTEXENERGY.COM

VERTEXGREEN.COM

 

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VERTEXHOLDINGS.NET

VERTEXLUBRICANT.COM

VERTEXLUBRICANTS.COM

VERTEXLUBRICANTS.INFO

VERTEXLUBRICANTS.NET

VERTEXLUBRICANTS.ORG

VERTEXMARINE.COM

VERTEXMARINE.INFO

VERTEXMARINE.NET

VERTEXMARINE.ORG

VERTEXPENTHOL.COM

VERTEXRECLAMATION.COM

VERTEXRECOVERY.COM

VERTEXRECYCLING.NET

VRMWASTEHELP.COM

VTXLUBRICANT.COM

VTXLUBRICANTS.COM

HEARTLAND-PETROLEUM.COM

VERTEXENERGY.ASIA

VERTEXENERGY.TW

VERTEXENERGY.HK

VERTEXENERGY.CN

 

		(iii)	Material
                                         Intellectual Property and material Software: 

 

The
Grantors use the following common law trademark:

 

 

 

The
Grantors license the following material Software:

 

		●	Genesis

 

		●	Desert
                                         Micro

 

		●	Depreciation
                                         Works

 

		●	Time
                                         Clock Plus

 

		●	IFTA

 

    	5 

     

    

 

Schedule
7 

Commodity Contracts

 

2002
ISDA Master Agreement dated May 27, 2015 between Macquarie Bank and Holdings

 

Schedule
7

Commodity
ContractsExhibit

Exhibit 4.1

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

VICTORY ENERGY CORPORATION

12% UNSECURED PROMISSORY NOTE

	
		
	US $320,000
	February 3, 2017

FOR VALUE RECEIVED, Victory Energy Corporation, a Nevada corporation (the “Company”), promises to pay to Visionary Private Equity Group I, LP (the “Holder”), the principal sum of THREE HUNDRED TWENTY THOUSAND DOLLARS ($320,000) (the “Principal”) in lawful money of the United States of America, with interest payable thereon at the rate of twelve percent (12%) per annum.  The principal amount hereof and all accrued but unpaid interest thereon shall be paid in full to the Holder on the earlier to occur of (a) the six (6) month anniversary of the date of this Note or (b) the date that the Company consummates a material business combination transaction with any third party (the “Maturity Date”).  

Capitalized terms used herein but not defined herein shall have the meaning ascribed to them in that certain Securities Purchase Agreement, dated of even date herewith (the “SPA”), pursuant to which the Holder is acquiring this 12% Unsecured Promissory Note (this “Note”). 

The following is a statement of the rights of the Holder of this Note and the terms and conditions to which this Note is subject, and to which the Holder, by acceptance of this Note, agrees:
 
1.Principal Repayment.  The outstanding principal amount of this Note shall be paid in full on the Maturity Date.

2.Interest.  

(a)Computation.  Interest (the “Interest”) shall accrue on the unpaid principal amount of this Note from the date hereof until such principal amount is repaid in full at the rate of twelve percent (12%) per annum.  Accrued, but unpaid, Interest shall be paid in full on the Maturity Date.  All computations of the Interest rate hereunder shall be made based on a 360-day year of twelve 30-day months.  In the event that any Interest rate provided for herein shall be determined to be unlawful, such Interest rate shall be computed at the highest rate permitted by applicable law.  

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Any payment by the Company of any Interest amount in excess of that permitted by law shall be considered a mistake, with the excess being applied to the principal of this Note without prepayment premium or penalty.  

(b) Taxes, Charges, and Expenses.  The Company, at its own cost, shall report interest income, if any, to the IRS and/or other applicable tax authorities and to the Holder on a Form 1099-INT or other appropriate form in accordance with applicable law.  The Company shall bear sole responsibility for any costs or fees in connection with the payment of Interest with respect to this Note, including, but not limited to, wire transfer fees, bank check fees and escrow agent fees.
 
3.No Security.   This Note is not secured by any assets of the Company.
 
4.Events of Default.  In the event that any of the following (each, an “Event of Default”) shall occur:

(a)Non-Payment.  The Company shall default in the payment of the principal of, or accrued interest on, this Note as and when the same shall become due and payable, whether by acceleration or otherwise; or

(b)Default in Covenants.  The Company shall default in any material manner in the observance or performance of the affirmative or negative covenants or agreements set forth in the SPA, this Note, or any other Transaction Document (as defined in the SPA) (collectively, the “Transaction Documents”); or

(c)Breach of Representations and Warranties.  The Company materially breaches any representation or warranty contained in the Transaction Documents; or

(d)Judgments.  Any final, non-appealable judgment, decree or order for the payment of money is entered against any of the Company or the Company’s subsidiaries, if any, in an amount equal to $100,000 or more and the same remains unsatisfied or unbonded for more than thirty (30) days; or

(e)Illegality of Notes.  Any court of competent jurisdiction issues an order declaring the Notes or any provision thereunder to be illegal; or

(f)Bankruptcy.  The Company shall: (i) admit in writing its inability to pay its debts as they become due; (ii) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Company or any of its property, or make a general assignment for the benefit of creditors; (iii) in the absence of such application, consent or acquiesce in, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Company or for any part of its property; or (iv) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Company, and, if such case or proceeding is not commenced by the Company or converted 

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to a voluntary case, such case or proceeding shall be consented to or acquiesced in by the Company or shall result in the entry of an order for relief; 

then, and so long as such Event of Default is continuing for a period of thirty (30) business days (and the event which would constitute such Event of Default, if curable, has not been cured), by written notice to the Company from the Holder (or from any collateral agent acting on behalf of the Holder), all obligations of the Company under this Note shall be immediately due and payable without presentment, demand, protest or any other action nor obligation of the Holder of any kind, all of which are hereby expressly waived, and Holder may exercise any other remedies the Holder may have at law or in equity; provided, however, that in the case of an Event of Default described in Section 4(f) acceleration shall be automatic and the Holder shall not be required to deliver any notice to the Company and, provided, further, that in the case of an Event of Default described in Section 4(a) the thirty (30) day grace period described above shall not apply.  

5.Covenants of the Company.  The Company hereby agrees that, so long as the Note remains outstanding and unpaid, or any other amount is owing to the Holder hereunder, the Company will:

(a)Corporate Existence and Qualification.  Take the necessary steps to preserve its corporate existence and its right to conduct business in all states in which the nature of its business requires qualification to do business;

(b)Books of Account.  Keep its books of account in accordance with good accounting practices;

(c)Compliance with Law.  Comply with the charter and bylaws or other organizational or governing documents of the Company, and any law, treaty, rule or regulation, or determination of an arbitrator or a court or other governmental authority, in each case applicable to or binding upon the Company or any of its property or to which each of the Company or any of its properties is subject;

(d)Taxes.  Duly pay and discharge all taxes or other claims, which might become a lien upon any of its property except to the extent that any thereof are being in good faith appropriately contested with adequate reserves provided therefore;

(e)Reservation of Shares.  At all times have authorized, and reserved for the purpose of issuance, a sufficient number of shares of Common Stock to issue upon the exercise of the Warrants; and

(f)Notice of Known Events of Default.  The Company shall furnish to the Holder a notice of any occurrence of an Event of Default, and what action the Company is taking or proposes to take with respect thereto, promptly after such Event of Default becomes known to the Company.  

(g)Further Assurances.  The Company shall execute and deliver any and all such further documents and take any and all such other actions as may be reasonably necessary or 

3

appropriate to carry out the intent and purposes of this Note and to consummate the transactions contemplated herein.

6.Holder Not Deemed a Stockholder.  The Holder of this Note shall not be entitled to vote or receive dividends or be deemed the holder of shares of the Company for any purpose, nor shall anything contained in this Note be construed to confer upon the Holder hereof, as such, any of the rights at law of a stockholder of the Company.

7.Mutilated, Destroyed, Lost or Stolen Notes.  If this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note certificate.  In the case of a mutilated or defaced Note certificate, the Holder shall surrender such Note certificate to the Company.  In the case of any destroyed, lost or stolen Note certificate, the Holder shall furnish to the Company: (i) evidence to its satisfaction of the destruction, loss or theft of such Note certificate and (ii) such security or indemnity (which shall not include the posting of any bond) as may be reasonably required by the Company to hold the Company harmless.  

8.Waiver of Demand, Presentment, etc.  The Company hereby expressly waives demand and presentment for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder.  The Company agrees that, in the event of an Event of Default, to reimburse the Holder for all reasonable costs and expenses (including reasonable legal fees of one counsel) incurred in connection with the enforcement and collection of this Note.

9.Payment.  All payments with respect to this Note shall be made in lawful money of the United States of America, at the address of the Holder as of the date hereof or as designated in writing by the Holder from time to time.  The receipt by the Holder of immediately available funds shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Note to the extent of the sum represented by such payment.  Payment shall be credited first to the accrued interest then due and payable and the remainder applied to principal.   

10.Assignment.  The rights and obligations of the Company and the Holder of this Note shall be binding upon, and inure to the benefit of, the successors and permitted assigns of the parties hereto.  To complete an assignment or transfer this Note, the Holder shall deliver a completed and executed Form of Assignment attached hereto as Exhibit A and surrender and deliver this Note, duly endorsed, to the Company’s office or such other address which the Company shall designate, upon receipt of which a new Note, in substantially the form of this Note (any such new Note, a “New Note”), evidencing the portion of this Note so transferred shall be issued to the transferee and a New Note evidencing the remaining portion of this Note not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Note by the transferee thereof shall 

4

be deemed the acceptance by such transferee of all of the rights and obligations in respect of the New Note that the Holder has in respect of this Note.  Interest and principal are payable only to the registered Holder of this Note set forth on the books and records of the Company.

11.Waiver and Amendment.  Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.

12.Notices. Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been duly given if given in accordance with the provisions of the SPA. 

13.Governing Law; Arbitration.  All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced solely and exclusively in accordance with the laws of the state of Texas without regard to any statutory or common-law provision pertaining to conflicts of laws. The Parties agree to submit to the personal jurisdiction of state and federal courts within the State of Texas.  The Parties further agree that the mailing of any process shall constitute valid and lawful process against each Party hereto.  The Parties waive any claim that any of the foregoing courts is an inconvenient forum. EACH PARTY HERETO (INCLUDING ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 

14.Severability.  If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in accordance with its terms.

15.Headings.  Section headings in this Note are for convenience only, and shall not be used in the construction of this Note.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the date first above written.

VICTORY ENERGY CORPORATION 

By:  /s/ Kenneth Hill
       Name: Kenneth Hill
       Title:  Chief Executive Officer

Exhibit A

FORM OF ASSIGNMENT
TO:    VICTORY ENERGY CORPORATION

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ___________________ (name), __________________________________________ (address), US$____________ of 12% Unsecured Promissory Notes (“Notes”) of Victory Energy Corporation (the “Company”), including any and all accrued and unpaid interest owing thereon, registered in the name of the undersigned on the records of the Company represented by the within certificate, and irrevocably appoints ___________________ the attorney of the undersigned to transfer the said securities on the books or register with full power of substitution.

DATED this ________ day of, __________________, 20 ____.

	
	
	

_______________________________    
(Signature of Registered Note Holder)

________________________________    
(Print name of Registered Note Holder)

Instructions:
		
	1.
	Signature of Holder must be the signature of the person appearing on the face of the Note.

		
	2.
	If the transfer of Note is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a fiduciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Company.

6

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