Document:

Exhibit 10.1

 

Paycheck
Protection Program Term Note

 

 
	$1,203,900.00	April 17, 2020

 

FOR VALUE RECEIVED, INNOVATIVE SOLUTIONS
AND SUPPORT, LLC (the “Borrower”), with an address at 720 PENNSYLVANIA DRIVE, EXTON, PENNSYLVANIA 19341-1129,
promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION (the “Bank”), in lawful money of the
United States of America in immediately available funds at its offices located at 222 Delaware Avenue, Wilmington, Delaware 19801,
Attn: Business Banking, or at such other location as the Bank may designate from time to time, the principal sum of $1,203,900.00
(the “Facility”), together with interest accruing on the outstanding principal balance from the date hereof,
all as provided below. This Note is being issued pursuant to the Coronavirus Aid, Relief, and Economic Security Act’s (the
“CARES Act”) (P.L. 116-136) Paycheck Protection Program (the “Program”).

 

1.           
Rate of Interest. Amounts outstanding under this Note will bear interest at a rate per annum (“Fixed Rate”)
which is at all times equal to 1.00%. Interest will be calculated based on the actual number of days that principal is outstanding
over a year of 360 days. In no event will the rate of interest hereunder exceed the maximum rate allowed by law.

 

2.           
Structure; Payment Terms. During the period (the “Deferral Period”) beginning on the date of this
Note and ending on the 6 month anniversary of the date of this Note (the “Deferral Expiration Date”), interest
on the outstanding principal balance will accrue at the Fixed Rate, but neither principal nor interest shall be due and payable
during the Deferral Period. On the Deferral Expiration Date, the outstanding principal of the Facility that is not forgiven under
the Program (the “Conversion Balance”) shall convert to an amortizing term loan payable as set forth below.

 

On the 15th day of the 7th
month following the date of this Note (the “First Payment Date”), all accrued interest that is not forgiven
under the Program shall be due and payable. Additionally, on the First Payment Date, and continuing on the 15th day of each month
thereafter until the 2nd anniversary of the date of this Note (the “Maturity Date”), equal installments
of principal shall be due and payable, each in an amount determined by dividing the Conversion Balance by 18 (the “Monthly
Principal Amount”). Interest shall be payable at the same times as the Monthly Principal Amount. Any outstanding principal
and accrued interest shall be due and payable in full on the Maturity Date.

 

If any payment under this Note shall become
due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time
shall be included in computing interest in connection with such payment. “Business Day” shall mean any day other
than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business
in the State of Delaware. The Borrower hereby authorizes the Bank to charge the Borrower’s deposit account at the Bank for
any payment when due. Payments received will be applied to charges, fees and expenses (including attorneys’ fees), accrued
interest and principal in any order the Bank may choose, in its sole discretion.

 

3.            Forgiveness of the Facility. All or a portion
of this Facility may be forgiven in accordance with the Program requirements. The amount of forgiveness shall be calculated (and
may be reduced) in accordance with the requirements of the Program, including the provisions of Section 1106 of the CARES Act.
Not more than 25% of the amount forgiven can be attributable to non-payroll costs.

 

 

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4.           
Late Payments; Default Rate. If the Borrower fails to make any payment of principal, interest or other amount coming
due pursuant to the provisions of this Note within fifteen (15) calendar days of the date due and payable, the Borrower also shall
pay to the Bank a late charge equal to the lesser of five percent (5%) of the amount of such payment or $100.00 (the “Late
Charge”). Such fifteen (15) day period shall not be construed in any way to extend the due date of any such payment.
Upon maturity, whether by acceleration, demand or otherwise, and at the Bank’s option upon the occurrence of any Event of
Default (as hereinafter defined) and during the continuance thereof, each advance outstanding under this Note shall bear interest
at a rate per annum (based on the actual number of days that principal is outstanding over a year of 360 days) which shall be
five percentage points (5.00%) in excess of the interest rate in effect from time to time under this Note but not more than the
maximum rate allowed by law (the “Default Rate”). The Default Rate shall continue to apply whether or not judgment
shall be entered on this Note. Both the Late Charge and the Default Rate are imposed as liquidated damages for the purpose of
defraying the Bank’s expenses incident to the handling of delinquent payments, but are in addition to, and not in lieu of,
the Bank’s exercise of any rights and remedies hereunder, under the other Loan Documents (as defined below) or under applicable
law, and any fees and expenses of any agents or attorneys which the Bank may employ. In addition, the Default Rate reflects the
increased credit risk to the Bank of carrying a loan that is in default. The Borrower agrees that the Late Charge and Default
Rate are reasonable forecasts of just compensation for anticipated and actual harm incurred by the Bank, and that the actual harm
incurred by the Bank cannot be estimated with certainty and without difficulty. As used in this Note, “Loan Documents”
means, individually and collectively, this Note, together with all other agreements and documents executed and/or delivered in
connection with this Note or referred to in this Note, as amended, modified or renewed from time to time.

 

5.             Prepayment. The Borrower shall have the right
to prepay any amounts outstanding under this Note at any time and from time to time, in whole or in part, without penalty.

 

6.           
Increased Costs; Yield Protection. On written demand, together with written evidence of the justification therefor,
the Borrower agrees to pay the Bank all direct costs incurred, any losses suffered or payments made by the Bank as a result of
any Change in Law (hereinafter defined), imposing any reserve, deposit, allocation of capital or similar requirement (including
without limitation, Regulation D of the Board of Governors of the Federal Reserve System) on the Bank, its holding company or
any of their respective assets relative to the Facility. “Change in Law” means the occurrence, after the date
of this Note, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any
governmental authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force
of law) by any governmental authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities,
in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.

 

7.            Representations, Warranties and Covenants.

 

(a) The Borrower hereby represents and warrants
that, if not a natural person, the Borrower is duly organized, validly existing and in good standing under the laws of the state
of its incorporation or organization and has the power and authority to own and operate its assets and to conduct its business
as now or proposed to be carried on, and is duly qualified, licensed and in good standing to do business in all jurisdictions where
its ownership of property or the nature of its business requires such qualification or licensing. The Borrower further hereby represents
and warrants that it was duly organized, validly existing and in good standing as of February 15, 2020 and had employees for whom
it paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC.

 

(b) The Borrower certifies, acknowledges
and agrees that the certifications contained in the Paycheck Protection Program Certification and the Program application delivered
to the Bank are true and correct, which certifications are hereby incorporated herein by this reference as if set forth herein.

 

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(c) The Borrower covenants and agrees that
the Borrower will do all things necessary to (i) maintain, renew and keep in full force and effect its organizational existence
and all rights, permits and franchises necessary to enable it to continue its business as currently conducted; (ii) continue in
operation in substantially the same manner as at present, to the extent permitted by applicable law (including without limitation
any statute, ordinance, rule or regulation relating to employment practices, pension benefits or environmental, occupational and
health standards and controls); and (iii) comply with all laws applicable to the Borrower and to the operation of its business
(including without limitation any statute, ordinance, rule or regulation relating to employment practices, pension benefits or
environmental, occupational and health standards and controls).

 

(d) The Borrower represents and warrants
that (i) the Borrower has full power and authority to enter into the transactions provided for in this Note and the other Loan
Documents; (ii) all necessary action to authorize the execution and delivery of this Note and the other Loan Documents has been
properly taken; (iii) this Note and the other Loan Documents, when executed and delivered by the Borrower, will constitute the
legal, valid and binding obligations of the Borrower enforceable in accordance with their terms; (iv) the Borrower is and will
continue to be duly authorized to perform all of the terms and provisions of this Note and the other Loan Documents; (v) there
does not exist, either before or after giving effect to the terms of this Note, any default or violation by the Borrower of or
under any of the terms, conditions or obligations of any of its governing documents; and (vi) the Borrower does not require the
consent of any party with respect to this Note, the other Loan Documents or the Facility except for such consents that have been
obtained.

 

(e) The Borrower covenants and agrees to
take all such additional actions and promptly provide to the Bank all additional documents, statements and information as the Bank
may require from time to time, in its discretion, in connection with the SBA’s requirements or requests under or in respect
of the Program or the general standard operating procedures of the SBA.

 

(f) The Borrower authorizes and directs
the Bank to disburse the proceeds of the Facility and to direct payments due under the Facility in accordance with the Disbursement
and Payment Authorization Instructions attached to this Note as Exhibit A.

 

8.            Other Loan Documents. Notwithstanding any provision
to the contrary in any Loan Document or any other collateral security documents that may have been or may in the future be executed
and delivered to the Bank, or an agent acting on behalf of the Bank, to secure any obligations of the Borrower to the Bank, this
Note is not intended to be secured by real property, and the applicability of any lien on such real property to secure this Note
is expressly disclaimed by the Bank.

 

9.            Events of Default. The occurrence of any of
the following events will be deemed to be an “Event of Default” under this Note: (i) the nonpayment of any principal,
interest or other indebtedness under this Note when due; (ii) the occurrence of any event of default or any default and the lapse
of any notice or cure period, or the Borrower’s failure to observe or perform any covenant or other agreement, under or contained
in any Loan Document; (iii) the filing by or against the Borrower of any proceeding in bankruptcy, receivership, insolvency, reorganization,
liquidation, conservatorship or similar proceeding (and, in the case of any such proceeding instituted against the Borrower, such
proceeding is not dismissed or stayed within 30 days of the commencement thereof, provided that the Bank shall not be obligated
to advance additional funds hereunder during such period); (iv) any assignment by the Borrower for the benefit of creditors, or
any levy, garnishment, attachment or similar proceeding is instituted against any property of the Borrower held by or deposited
with the Bank; (v) the commencement of any foreclosure or forfeiture proceeding, execution or attachment against any collateral
securing the obligations of the Borrower to the Bank; (vi) the entry of a final judgment against the Borrower and the failure of
the Borrower to discharge the judgment within ten (10) days of the entry thereof; (vii) any change in the Borrower’s equity
ownership, or any merger, consolidation, division or other reorganization of, with or by the Borrower, or the sale or other transfer
of all or any substantial part of the Borrower’s property or assets, except as otherwise permitted by the Bank; (viii) any
change in the Borrower’s business, assets, operations, financial condition or results of operations that has or could reasonably
be expected to have any material adverse effect on the Borrower; (ix) the Borrower ceases doing business as a going concern; (x)
any representation or warranty made by the Borrower to the Bank in any Loan Document or any
other documents now or in the future evidencing or securing the obligations of the Borrower to the Bank, is false, erroneous or
misleading in any material respect; (xi) the death, incarceration, indictment or legal incompetency of any individual Borrower
or, if the Borrower is a partnership or limited liability company, the death, incarceration, indictment or legal incompetency of
any individual general partner or member; or (xii) failure of the Borrower to notify the Bank within ten (10) days of any change
of the Borrower’s address.

 

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Upon the occurrence of an Event of Default: (a) the Bank shall
be under no further obligation to make advances hereunder; (b) if an Event of Default specified in clause (iii) or (iv) above shall
occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder
shall be immediately due and payable without demand or notice of any kind; (c) if any other Event of Default shall occur, the outstanding
principal balance and accrued interest hereunder together with any additional amounts payable hereunder, at the Bank’s option
and without demand or notice of any kind, may be accelerated and become immediately due and payable; (d) at the Bank’s option,
this Note will bear interest at the Default Rate from the date of the occurrence of the Event of Default; and (e) the Bank may
exercise from time to time any of the rights and remedies available under the Loan Documents or under applicable law. The Borrower
acknowledges that upon the occurrence of an Event of Default, SBA, as defined below, may be required to pay the Lender under the
SBA guarantee, and SBA may then seek recovery on the Facility (to the extent any balance remains after loan forgiveness).

 

10.         
Right of Setoff. In addition to all liens upon and rights of setoff against the Borrower’s money, securities
or other property given to the Bank by law, the Bank shall have, with respect to the Borrower’s obligations to the Bank
under this Note and to the extent permitted by law, a contractual possessory security interest in and a contractual right of setoff
against, and the Borrower hereby grants the Bank a security interest in, and hereby assigns, conveys, delivers, pledges and transfers
to the Bank, all of the Borrower’s right, title and interest in and to, all of the Borrower’s deposits, moneys, securities
and other property now or hereafter in the possession of or on deposit with, or in transit to, the Bank or any other direct or
indirect subsidiary of The PNC Financial Services Group, Inc., whether held in a general or special account or deposit, whether
held jointly with someone else, or whether held for safekeeping or otherwise, excluding, however, all IRA, Keogh, and trust accounts.
Every such security interest and right of setoff may be exercised without demand upon or notice to the Borrower. Every such right
of setoff shall be deemed to have been exercised immediately upon the occurrence of an Event of Default hereunder without any
action of the Bank, although the Bank may enter such setoff on its books and records at a later time.

 

11.          Financial and Other Information. Within forty
five (45) days after the Bank’s request, the Borrower agrees to deliver any financial and other business and ownership information
concerning the Borrower that the Bank may request from time to time, such as annual and interim financial statements (all of which
shall be prepared in accordance with generally accepted accounting principles), federal income tax returns. The Borrower also agrees
to deliver to the Bank, promptly upon the Bank’s request, certification(s) of beneficial owners in the form requested by
the Bank (as executed and delivered to the Bank on or prior to the date of this Note and updated from time to time, the “Certification
of Beneficial Owners”). If the Borrower was required to execute and deliver to the Bank a Certification of Beneficial
Owners, (a) the Borrower represents and warrants, as of the date of this Note and as of the date each updated Certification of
Beneficial Owners is provided to the Bank, that the information in the Certification of Beneficial Owners is true, complete and
correct, and (b) the Borrower agrees to provide confirmation of the accuracy of the information set forth in the Certification
of Beneficial Owners, or deliver a new Certification of Beneficial Owners in form and substance acceptable to the Bank, as and
when requested by the Bank and/or when any individual identified on the most recent Certification of Beneficial Owners provided
to the Bank as a controlling party and/or a direct or indirect individual owner has changed. The Borrower further agrees to provide
such other information and documentation as may reasonably be requested by the Bank from time to time for purposes of compliance
by the Bank with applicable laws (including without limitation the USA PATRIOT Act and other “know your customer” and
anti-money laundering rules and regulations), and any policy or procedure implemented by the Bank to comply therewith. Additionally,
the Borrower will keep books and records in a manner satisfactory
to the Bank and allow the Bank and SBA to inspect and audit books, records and papers relating to the Borrower’s financial
or business condition.

 

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12.          Anti-Money Laundering/International Trade Law Compliance.
The Borrower represents and warrants to the Bank, as of the date of this Note, the date of each advance of proceeds under the
Facility, the date of any renewal, extension or modification of the Facility, and at all times until the Facility has been terminated
and all amounts thereunder have been indefeasibly paid in full, that: (a) no Covered Entity (i) is a Sanctioned Person; (ii) has
any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person; or (iii) does business
in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Country or Sanctioned
Person in violation of any law, regulation, order or directive enforced by any Compliance Authority; (b) the proceeds of the Facility
will not be used to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country
or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority; (c) the funds
used to repay the Facility are not derived from any unlawful activity; and (d) each Covered Entity is in compliance with, and no
Covered Entity engages in any dealings or transactions prohibited by, any laws of the United States, including but not limited
to any Anti-Terrorism Laws. Borrower covenants and agrees that it shall immediately notify the Bank in writing upon the occurrence
of a Reportable Compliance Event.

 

As used herein: “Anti-Terrorism Laws” means
any laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering, or bribery,
all as amended, supplemented or replaced from time to time; “Compliance Authority” means each and all of the
(a) U.S. Treasury Department/Office of Foreign Assets Control, (b) U.S. Treasury Department/Financial Crimes Enforcement Network,
(c) U.S. State Department/Directorate of Defense Trade Controls, (d) U.S. Commerce Department/Bureau of Industry and Security,
(e) U.S. Internal Revenue Service, (f) U.S. Justice Department, and (g) U.S. Securities and Exchange Commission; “Covered
Entity” means the Borrower, its affiliates and subsidiaries, all guarantors, pledgors of collateral, all owners of the
foregoing, and all brokers or other agents of the Borrower acting in any capacity in connection with the Facility; “Reportable
Compliance Event” means that any Covered Entity becomes a Sanctioned Person, or is indicted, arraigned, investigated
or custodially detained, or receives an inquiry from regulatory or law enforcement officials, in connection with any Anti-Terrorism
Law or any predicate crime to any Anti-Terrorism Law, or self-discovers facts or circumstances implicating any aspect of its operations
with the actual or possible violation of any Anti-Terrorism Law; “Sanctioned Country” means a country subject
to a sanctions program maintained by any Compliance Authority; and “Sanctioned Person” means any individual
person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred
person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection
of transactions), under any order or directive of any Compliance Authority or otherwise subject to, or specially designated under,
any sanctions program maintained by any Compliance Authority.

 

13.         
Indemnity. The Borrower agrees to indemnify each of the Bank, each legal entity, if any, who controls, is controlled
by or is under common control with the Bank, and each of their respective directors, officers and employees (the “Indemnified
Parties”), and to defend and hold each Indemnified Party harmless from and against any and all claims, damages, losses,
liabilities and expenses (including all fees and charges of internal or external counsel with whom any Indemnified Party may consult
and all expenses of litigation and preparation therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party by any person, entity or governmental authority (including any person or entity claiming derivatively on
behalf of the Borrower), in connection with or arising out of or relating to the matters referred to in this Note or in the other
Loan Documents or the use of any advance hereunder, whether (a) arising from or incurred in connection with any breach of a representation,
warranty or covenant by the Borrower, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental
investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before
any court or governmental authority; provided, however, that the foregoing indemnity agreement shall not apply to
any claims, damages, losses, liabilities and expenses solely attributable to an Indemnified Party’s gross negligence or
willful misconduct. The indemnity agreement contained in this Paragraph shall survive the termination of this Note, payment of
any advance hereunder and the assignment of any rights hereunder. The Borrower may participate at its expense in the defense of
any such action or claim.

 

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14.         
Miscellaneous. All notices, demands, requests, consents, approvals and other communications required or permitted hereunder
(“Notices”) must be in writing (except as may be agreed otherwise above with respect to borrowing requests
or as otherwise provided in this Note) and will be effective upon receipt. Notices may be given in any manner to which the parties
may agree. Without limiting the foregoing, first-class mail, postage prepaid, facsimile transmission and commercial courier service
are hereby agreed to as acceptable methods for giving Notices. In addition, the parties agree that Notices may be sent electronically
to any electronic address provided by a party from time to time. Notices may be sent to a party’s address as set forth above
or to such other address as any party may give to the other for such purpose in accordance with this paragraph. No delay or omission
on the Bank’s part to exercise any right or power arising hereunder will impair any such right or power or be considered
a waiver of any such right or power, nor will the Bank’s action or inaction impair any such right or power. The Bank’s
rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Bank may have under other
agreements, at law or in equity. No modification, amendment or waiver of, or consent to any departure by the Borrower from, any
provision of this Note will be effective unless made in a writing signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. Notwithstanding the foregoing, the Bank may modify
this Note for the purposes of completing missing content or correcting erroneous content, without the need for a written amendment,
provided that the Bank shall send a copy of any such modification to the Borrower (which notice may be given by electronic mail).
The Borrower agrees to pay on demand, to the extent permitted by law, all costs and expenses incurred by the Bank in the enforcement
of its rights in this Note and in any security therefor, including without limitation reasonable fees and expenses of the Bank’s
counsel. If any provision of this Note is found to be invalid, illegal or unenforceable in any respect by a court, all the other
provisions of this Note will remain in full force and effect. The Borrower and all other makers and indorsers of this Note hereby
forever waive presentment, protest, notice of dishonor and notice of non-payment. The Borrower also waives all defenses based
on suretyship or impairment of collateral. If this Note is executed by more than one Borrower, the obligations of such persons
or entities hereunder will be joint and several. This Note shall bind the Borrower and its heirs, executors, administrators, successors
and assigns, and the benefits hereof shall inure to the benefit of the Bank and its successors and assigns; provided, however,
that the Borrower may not assign this Note in whole or in part without the Bank’s written consent and the Bank at any time
may assign this Note in whole or in part.

 

This Note has been delivered to and accepted by the Bank and
will be deemed to be made in the State of Delaware. THIS NOTE WILL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE BANK AND THE BORROWER DETERMINED IN ACCORDANCE WITH (I) FEDERAL REGULATIONS, AND (II) TO
THE EXTENT NOT PREEMPTED BY FEDERAL LAWS OR REGULATIONS, THE LAWS OF THE STATE OF DELAWARE, EXCLUDING ITS CONFLICT OF LAWS RULES,
INCLUDING WITHOUT LIMITATION THE ELECTRONIC TRANSACTIONS ACT (OR EQUIVALENT) IN EFFECT IN THE STATE OF DELAWARE (OR, TO THE EXTENT
CONTROLLING, THE LAWS OF THE UNITED STATES OF AMERICA, INCLUDING WITHOUT LIMITATION THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL
COMMERCE ACT). The Borrower hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the
State of Delaware; provided that nothing contained in this Note will prevent the Bank from bringing any action, enforcing any
award or judgment or exercising any rights against the Borrower individually, against any security or against any property of
the Borrower within any other county, state or other foreign or domestic jurisdiction. The Borrower acknowledges and agrees that
the venue provided above is the most convenient forum for both the Bank and the Borrower. The Borrower waives any objection to
venue and any objection based on a more convenient forum in any action instituted under this Note.

 

15.          Commercial Purpose. The Borrower represents
that the indebtedness evidenced by this Note is being incurred by the Borrower solely for the purpose of acquiring or carrying
on a business, professional or commercial activity, and not for personal, family or household purposes.

 

16.          USA PATRIOT Act Notice. To help the government
fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify
and record information that identifies each Borrower that opens an account. What this means:
when the Borrower opens an account, the Bank will ask for the business name, business address, taxpayer identifying number and
other information that will allow the Bank to identify the Borrower, such as organizational documents. For some businesses and
organizations, the Bank may also need to ask for identifying information and documentation relating to certain individuals associated
with the business or organization.

 

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17.          Authorization to Obtain Credit Reports. By
signing below, each person, who is signing in his or her individual capacity, requests and provides written authorization to the
Bank or its designee (and any assignee or potential assignee hereof) to obtain such individual’s personal credit profile
from one or more national credit bureaus. This authorization extends to obtaining a credit profile in (i) considering an application
for credit that is evidenced, guaranteed or secured by this document, (ii) assessing creditworthiness and (iii) considering extensions
of credit, including on an ongoing basis, as necessary for the purposes of (a) update, renewal or extension of such credit or additional
credit, (b) reviewing, administering or collecting the resulting account and (c) reporting on the repayment and satisfaction of
such credit obligations. By signing below, such individual further ratifies and confirms his or her prior requests and authorizations
with respect to the matters set forth herein. For the avoidance of doubt, this provision does not apply to persons signing below
in their capacities as officers or other authorized representatives of entities, organizations or governmental bodies.

 

18.          Electronic Signatures and Records. Notwithstanding
any other provision herein, the Borrower agrees that this Note, the Loan Documents, any amendments thereto, and any other information,
notice, signature card, agreement or authorization related thereto (each, a “Communication”) may, at the Bank’s
option, be in the form of an electronic record. Any Communication may, at the Bank’s option, be signed or executed using
electronic signatures. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use
or acceptance by the Bank of a manually signed paper Communication which has been converted into electronic form (such as scanned
into PDF format) for transmission, delivery and/or retention.

 

19.          Depository. Unless the Bank otherwise agrees,
the Borrower will establish and maintain with the Bank the Borrower’s primary depository accounts.

 

20.          Federal Law. When the U.S. Small Business
Administration (“SBA”) is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations.
The Bank or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and
other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or
liability. As to this Note, the Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat
any claim of SBA, or preempt federal law.

 

21.          DISPUTE RESOLUTION.

 

(a)            WAIVER OF JURY TRIAL. FOR
ANY DISPUTE THAT IS NOT ARBITRATED, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER AND THE BANK IRREVOCABLY WAIVES
ANY AND ALL RIGHTS THE BORROWER OR THE BANK MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING
TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS NOTE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

 

(b)            ARBITRATION OF DISPUTES. The
Borrower or the Bank may elect to submit any and all disputes arising out of or relating to the Loan Documents or any breach thereof
(a “Dispute”) to binding arbitration

 

(i)             Arbitration.
Any arbitration shall be conducted pursuant to and in accordance with the AAA Commercial Arbitration Rules and, where
applicable, the Supplementary Rules for Large, Complex Commercial Disputes, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. Such arbitration shall be conducted in a mutually
acceptable location.

 

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Except as expressly set forth below, the procedures specified
herein shall be the sole and exclusive procedures for the resolution of Disputes; provided, however, that the Borrower or the Bank
may seek provisional or ancillary remedies, such as preliminary injunctive relief, from a court having jurisdiction, before, during
or after the pendency of any arbitration proceeding. The institution and maintenance of any action for such judicial relief, or
pursuit of provisional or ancillary remedies, shall not constitute a waiver of the right or obligation of any party to submit any
claim or dispute to arbitration. Nothing herein shall in any way limit or modify any remedies available to the Bank under the Loan
Documents or otherwise at law or in equity.

 

(ii)           Motion Practice. In any arbitration
hereunder, the arbitrator(s) shall decide any prehearing motions which are substantially similar to pre-hearing motions to dismiss
for failure to state a claim or motions for summary adjudication.

 

(iii)          Discovery. Discovery shall
be limited to the pre-hearing exchange of all documents which the Borrower and the Bank intend to introduce at the hearing and
any expert reports prepared by any expert who will testify at the hearing.

 

(iv)         Sequential Hearing Days. At
the administrative conference conducted by the AAA, the Borrower and the Bank and the AAA shall determine how to ensure that the
hearing is started and completed on sequential hearing days. Potential arbitrators shall be informed of the anticipated length
of the hearing and they shall not be subject to appointment unless they agree to abide by the parties’ intent that, absent
exigent circumstances, the hearing shall be conducted on sequential days.

 

(v)           Award. The award of the arbitrator(s)
shall be accompanied by a statement of the reasons upon which such award is based.

 

(vi)          Fees and Expenses. The Borrower
and the Bank shall each bear equally all fees and costs and expenses of the arbitration, and each shall bear its own legal fees
and expenses and the costs of its experts and witnesses; provided, however, that if the arbitration panel shall award to a party
substantially all relief sought by such party, then, notwithstanding any applicable governing law provisions, the other party shall
pay all costs, fees and expenses incurred by the prevailing party and such costs, fees and expenses shall be included in such award.

 

(vii)        
Confidentiality of Disputes. The entire procedure shall be confidential and none of the parties nor arbitrator(s) may disclose
the existence, content, or results of any arbitration hereunder without the written consent of all parties to the Dispute, except
(i) to the extent disclosure is required to enforce any applicable arbitration award or may otherwise be required by law and (ii)
that either party may make such disclosures to its regulators, auditors, accountants, attorneys and insurance representatives.
No conduct, statements, promises, offers, views, or opinions of any party involved in an arbitration hereunder shall be discoverable
or admissible for any purposes in litigation or other proceedings involving the parties to the Dispute and shall not be disclosed
to anyone not an agent, employee, expert, witness, or representative for any of such parties.

 

(viii)        CLASS ACTION WAIVER. THE
BORROWER HEREBY WAIVES, WITH RESPECT TO ANY DISPUTE: (I) THE RIGHT TO PARTICIPATE IN A CLASS ACTION, PRIVATE ATTORNEY GENERAL ACTION
OR OTHER REPRESENTATIVE ACTION IN COURT OR IN ARBITRATION, EITHER AS A CLASS REPRESENTATIVE OR CLASS MEMBER; AND (II) THE RIGHT
TO JOIN OR CONSOLIDATE CLAIMS WITH CLAIMS OF ANY OTHER PERSON. The foregoing waiver is referred to herein as the “class
action waiver”. The Bank and the Borrower agree that no arbitrator shall have authority to conduct any arbitration in
violation of the class action waiver or to issue any relief that applies to any person or entity other than the Borrower and/or
the Bank individually. The parties acknowledge that this class action waiver is material and essential to the arbitration of any
claims and is non-severable from this Dispute Resolution section. If the class action waiver is voided, found unenforceable, or limited
with respect to any claim for which the Borrower seeks class-wide relief, then this Dispute Resolution section (except for this
sentence) shall be null and void with respect to such claim, subject to the right to appeal the limitation or invalidation of the
class action waiver. However, this Dispute Resolution section shall remain valid with respect to all other claims and Disputes.
The parties acknowledge and agree that under no circumstances will a class action be arbitrated.

 

(ix)          Applicability of Federal Arbitration
Act. This Note evidences transaction(s) in interstate commerce, and thus the Federal Arbitration Act governs the interpretation
and enforcement of this Dispute Resolution section.

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

PPP - Term Note April 2020

 

    - 8 -

     

    

 

If the Borrower is a legal entity,
the undersigned certifies to the Bank that the undersigned (individually and collectively if more than one, the “Authorized
Representative”) is and was authorized and directed to (i) execute and deliver, including to electronically execute and
deliver, in the name of and on behalf of the Borrower, this Note and any other documents executed in connection with this Note
or the Facility, all in such form as may be requested by the Bank or required under the Program and any of which may contain a
provision waiving the right to trial by jury; (ii) execute and deliver to or in favor of, including to electronically execute
and deliver to or in favor of, the Bank any amendments, modifications, renewals or supplements of or to any of the foregoing agreements,
documents or instruments; (iii) take any other action requested, required or deemed advisable by the Bank in order to effectuate
the foregoing; and (iv) delegate the foregoing duties to other representatives of the Borrower. The undersigned further certifies
that the Authorized Representative holds the office, title or status with the Borrower specified below the Authorized Representative’s
signature.

 

The Borrower acknowledges that it has
read and understands all the provisions of this Note, including the waiver of jury trial, arbitration and class action waiver,
and has been advised by counsel as necessary or appropriate, or has elected not to seek the advice of counsel.

 

WITNESS the due execution hereof
as a document under seal, as of the date first written above, with the intent to be legally bound hereby.

 

	  	INNOVATIVE SOLUTIONS AND SUPPORT, LLC
	 	 
	 	By: E-SIGNED by Shahram Askarpour
	 	on 05-04-2020 11:26:57 EDT
	 	(SEAL)
	 	Shahram Askarpour, President
	 	 
	 	By: E-SIGNED by Relland M. Winand
	 	on 05-04-2020 11:30:15 EDT
	 	(SEAL)
	 	Relland M. Winand, Chief Financial Officer

 

PPP - Term Note April 2020

 

    - 9 -

     

    

 

EXHIBIT A

TO PAYCHECK PROTECTION
PROGRAM TERM NOTE

 

DISBURSEMENT AND PAYMENT AUTHORIZATION
INSTRUCTIONS 

 

Loan Disbursement Authorization:

 

Borrower authorizes and directs the Bank to disburse the proceeds
of the Facility as directed below. Each authorized representative of the Borrower is authorized to make this request, the Bank
is entitled to rely conclusively on the below instructions to make disbursements in the amount and manner specified.

 

Disbursements

 

Disburse the proceeds of the Facility into the Borrower’s
demand deposit account with PNC Bank, Account No. 1006795363.

 

Automatic Payment Authorization Under Facility:

 

The Borrower irrevocably authorizes and directs the Bank to
charge any deposit account identified above and maintained at the Bank (or such other account at the Bank as the undersigned may
designate to the Bank in writing from time to time) for all payments of principal and interest due or fees on the Facility, and
to debit such account for the amount of such payments on the date each payment is due. The Borrower acknowledges and agrees that,
to the extent there are insufficient funds in any such account to pay the required amounts when due, the Borrower shall immediately
pay to the Bank all sums remaining unpaid. This authorization supplements, and does not limit, the Bank’s rights under the
promissory note(s) and other documents evidencing or securing the Facility. The Bank is entitled to rely conclusively on this authorization
until this authorization is terminated by the Bank or the Borrower, and the Bank has had a reasonable time to act thereon.

 

PPP - Term Note April 2020

 

    - 10 -

     

    

 

Paycheck Protection Program Certification

 

April 17, 2020

 

INNOVATIVE SOLUTIONS AND SUPPORT, LLC
(the “Borrower”) has applied to PNC Bank, National Association (the “Bank”) for a Small
Business Association (“SBA”) 7(a) Paycheck Protection Program loan (the “PPP Loan”).

 

The below signer understands that the statements made in this
certification are part of the agreement with the Bank and that the Bank will rely on these statements when deciding whether or
not to make the PPP Loan.

 

I certify, acknowledge and agree that I am an authorized officer
of the Borrower and am authorized on behalf of the Borrower to certify to the statements provided in this certification, and that
the following are true and correct statements:

 

		1.	The Borrower was in operation on February 15, 2020 and,
if Borrower is not a self-employed worker or independent contractor, had employees for whom it paid salaries and payroll taxes
or paid independent contractors, as reported on a Form 1099-MISC.

 

		2.	The uncertainty of current economic conditions makes
necessary the PPP Loan request to support the ongoing operations of the Borrower.

 

		3.	The proceeds of the PPP Loan will be used to retain workers
and maintain payroll or make mortgage interest payments, lease payments, and utility payments; and at least 75 percent of the
proceeds of the PPP Loan will be used for payroll expenses. If the funds are knowingly used for unauthorized purposes, the federal
government may hold the undersigned and the Borrower legally liable such as for charges of fraud.

 

		4.	Documentation verifying the number of full-time equivalent
employees on the Borrower’s payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments,
covered rent payments, and covered utilities for the eight week period following the disbursement of the PPP Loan will be provided
to the Bank.

 

		5.	The Borrower understands and agrees that loan forgiveness
may be provided if the Borrower uses all of the loan proceeds for documented payroll costs, covered mortgage interest payments,
covered rent payments, and covered utilities. The actual amount forgiven will be determined in accordance with the requirements
of the Program, including the provisions of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
(P.L. 116-136), and in no event may more than 25 percent of the forgiven amount be attributable to non-payroll costs.

 

		6.	The Borrower does not have any other PPP Loan applications
pending and will not apply for another PPP Loan. During the period beginning on February 15, 2020 and ending on December 31, 2020
Borrower has not received and will not receive another PPP Loan.

 

		7.	The Borrower shall notify the Bank if the Borrower
received an SBA Economic Injury Disaster Loan (“EIDL”) between January 31, 2020 and April 3, 2020 and the proceeds
of such EIDL were or are used to retain workers and maintain payroll; in such circumstances the proceeds of the PPP Loan must
be used to refinance any such EIDL.

 

		8.	The information provided in the PPP Loan application
and the information provided in all supporting documents and forms is true and accurate in all material respects. The Borrower
and the undersigned understand that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under
the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under
15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a federally
insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.

 

Paycheck Protection Program Certification
April 2020

 

    - 1 -

     

    

 

		9.	The Borrower acknowledges that the Bank will confirm the eligible PPP Loan amount using the Borrower’s information that
it has submitted, including without limitation, tax returns and tax transcripts (collectively, the “Tax Information”).
The Borrower affirms that the Tax Information is identical to that submitted to the Internal Revenue Service. The Borrower
also understands, acknowledges, and agrees that the Bank can share the Borrower’s Tax Information with (i) the SBA’s
authorized representatives, including authorized representatives of the SBA Office of Inspector General, (ii) the Bank’s
affiliates, and its and their respective directors, officers, employees, agents and advisors (the “Representatives”),
and (iii) any actual or potential owners of a credit facility extended by the Bank or its Representatives to the Borrower,
any acquirers of any beneficial or other interest in such credit facility, guarantor, servicers or service providers for such parties,
and their successors and/or assigns (the “Other Loan Participants”) for the purpose of (w) compliance with SBA
loan program requirements and all SBA reviews, (x) originating, maintaining, managing, monitoring, servicing, selling, insuring,
and securitizing a credit facility; (y) enforcing any of its rights or remedies under the loan documents applicable to such credit
facility (including, without limitation, in connection with any collection action related thereto) or (z) as otherwise permitted
by applicable laws, including state and federal privacy and data security laws, or if required to do so by legal process, regulation
or law, or in defense of any claims or causes of action against the Bank or any of its Representatives.

 

	  	INNOVATIVE SOLUTIONS AND SUPPORT, LLC
	 	 
	 	By: E-SIGNED by Shahram Askarpour
	 	on 05-04-2020 11:27:06 EDT
	 	(SEAL)
	 	Shahram Askarpour, President
	 	 
	 	BY:
    E-SIGNED by Relland M. Winand
	 	on 05-04-2020 11:30:47 EDT
	 	(SEAL)
	 	Relland M. Winand, Chief Financial Officer

 

Paycheck Protection Program Certification
April 2020

 

    - 2 -Exhibit 10.1

 

 

Promissory
Note

 

	Date	 	Loan Amount	 	 	Interest Rate after Deferment Period	 	Deferment Period
	April 29, 2020	 	$	5,973,138.00	 	 	1.00% fixed per annum	 	6 months

 

This
Promissory Note (“Note”) sets forth and confirms the terms and conditions of a term loan to Pacific Ethanol, Inc. (whether
one or more than one, “Borrower”) from Bank of America, NA, a national banking association having an address of P.O.
Box 15220, Wilmington, DE 19886-5220 (together with its agents, affiliates, successors and assigns, the “Bank”) for
the Loan Amount and at the Interest Rate stated above (the “Loan”). The Loan is made pursuant to the Paycheck Protection
Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The funding of the Loan is conditioned
upon approval of Borrower’s application for the Loan and Bank’s receiving confirmation from the SBA that Bank may proceed with
the Loan. The date on which the funding of the Loan takes place is referred to as the “Funding Date”. If the Funding
Date is later than the date of this Note, the Deferment Period commences on the Funding Date and ends six months from the Funding
Date. After sixty (60) days from the date the Loan is funded, but not more than ninety (90) days from the date the Loan is funded,
Borrower shall apply to Bank for loan forgiveness. If the SBA confirms full and complete forgiveness of the unpaid balance of
the Loan, and reimburses Bank for the total outstanding balance, principal and interest, Borrower’s obligations under the Loan
will be deemed fully satisfied and paid in full. If the SBA does not confirm forgiveness of the Loan, or only partly confirms
forgiveness of the Loan, or Borrower fails to apply for loan forgiveness, Borrower will be obligated to repay to the Bank the
total outstanding balance remaining due under the Loan, including principal and interest (the “Loan Balance”), and in
such case, Bank will establish the terms for repayment of the Loan Balance in a separate letter to be provided to Borrower, which
letter will set forth the Loan Balance, the amount of each monthly payment, the interest rate (not in excess of a fixed rate of
one per cent (1.00%) per annum), the term of the Loan, and the maturity date of two (2) years from the funding date of the Loan.
No principal or interest payments will be due prior to the end of the Deferment Period. Borrower promises, covenants and agrees
with Bank to repay the Loan in accordance with the terms for repayment as set forth in that letter (the “Repayment Letter”).
Payments greater than the monthly payment or additional payments may be made at any time without a prepayment penalty but shall
not relieve Borrower of its obligations to pay the next succeeding monthly payment.

 

In
consideration of the Loan received by Borrower from Bank, Borrower agrees as follows:

 

		1.	DEPOSIT
ACCOUNT/USE OF LOAN PROCEEDS: Borrower is required to maintain a deposit account with Bank of America, N.A. (the “Deposit
Account”) until the Loan is either forgiven in full or the Loan is fully paid by Borrower. Borrower acknowledges and agrees
that the proceeds of the Loan shall be deposited by Bank into the Deposit Account. The Loan proceeds are to not be used by Borrower
for any illegal purpose and Borrower represents to the Bank that it will derive material benefit, directly and indirectly, from
the making of the Loan.

 

		2.	DIRECT
DEBIT. If the Loan is not forgiven and a Loan Balance remains, Borrower agrees that on the due date of any amount due as set forth
in the Repayment Letter, Bank will debit the amount due from the Deposit Account established by Borrower in connection with this
Loan. Should there be insufficient funds in the Deposit Account to pay all such sums when due, the full amount of such deficiency
be shall be immediately due and payable by Borrower.

 

		3.	INTEREST
RATE: Bank shall charge interest on the unpaid principal balance of the Loan at the interest rate set forth above under “Interest
Rate” from the date the Loan was funded until the Loan is paid in full.

 

    1

     

    

 

		4.	REPRESENTATIONS,
WARRANTIES AND COVENANTS. (1) Borrower represents and warrants to Bank, and covenants and agrees with Bank, that: (i) Borrower
has read the statements included in the Application, including the Statements Required by Law and Executive Orders, and Borrower
understands them. (ii) Borrower was and remains eligible to receive a loan under the rules in effect at the time Borrower submitted
to Bank its Paycheck Protection Program Application Form (the “Application”) that have been issued by the SBA implementing
the Paycheck Protection Program under Division A. Title I of the CARES Act (the “Paycheck Protection Program Rule”).
(iii) Borrower (a) is an independent contractor, eligible self-employed individual, or sole proprietor or (b) employs no more
than the greater of 500 employees or, if applicable, the size standard in number of employees established by the SBA in 13 C.F.R.
121.201 for Borrower’s industry. (iv) Borrower will comply whenever applicable, with the civil rights and other limitations
in the Application. (v) All proceeds of the Loan will be used only for business-related purposes as specified in the Application
and consistent with the Paycheck Protection Program Rule. (vi) To the extent feasible, Borrower will purchase only American-made
equipment and products. (vii) Borrower is not engaged in any activity that is illegal under federal, state or local law. (viii)
Borrower certifies that any loan received by Borrower under Section 7(b)(2) of the Small Business Act between January 31, 2020
and April 3, 2020 that will remain outstanding after funding of this Loan was for a purpose other than paying payroll costs and
other allowable uses loans under the Paycheck Protection Program Rule. (ix) Borrower was in operation on February 15, 2020 and
had employees for whom Borrower paid salaries and payroll taxes or paid independent contractors (as reported on Form(s) 1099-MISC).
(x) The current economic uncertainty makes the request for the Loan necessary to support the ongoing operations of Borrower. (xi)
All proceeds of the Loan will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments,
and utility payments, as specified under the Paycheck Protection Program Rule and Borrower acknowledges that if the funds are
knowingly used for unauthorized purposes, the federal government may hold Borrower and/or Borrower’s authorized representative
legally liable, such as for charges of fraud. (xii) Borrower has provided Bank true, correct and complete information demonstrating
that Borrower had employees for whom Borrower paid salaries and payroll taxes on or around February 15, 2020. (xiii) Borrower
has provided to Bank all documentation available to Borrower on a reasonable basis verifying the dollar amounts of average monthly
payroll costs for the calendar year 2019, which documentation shall include, as applicable, copies of payroll processor records,
payroll tax filings and/or Form 1099-MISC. (xiv) Borrower will promptly provide to Bank (a) any additional documentation that
Bank requests in order to verify payroll costs and (b) documentation verifying the number of full-time equivalent employees on
payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered
utilities for the eight week period following the Loan. (xv) Borrower acknowledges that (a) loan forgiveness will be provided
by the SBA for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities,
and not more than 25% of the Forgivable Amount may be for non-payroll costs (xvi) During the period beginning on February 15,
2020 and ending on December 31, 2020, Borrower has not and will not receive any other loan under the Paycheck Protection Program.
(xvii) Borrower certifies that the information provided in the Application and the information that Borrower provided in all supporting
documents and forms is true and accurate in all material respects. Borrower acknowledges that knowingly making a false statement
to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not
more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine
of not more than $5,000; and, if submitted to a Federally insured institution, under 18 USC 1014 by imprisonment of not more than
thirty years and/or a fine of not more than $1,000,000. (xviii) Borrower understands, acknowledges and agrees that Bank can share
any tax information received from Borrower or any Owner with SBA’s authorized representatives, including authorized representatives
of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.
(xix) Neither Borrower nor any Owner, is presently suspended, debarred, proposed for debarment, declared ineligible, voluntarily
excluded from participation in this transaction by any Federal department or agency, or presently involved in any bankruptcy.
(xx) Neither Borrower, nor any Owner, nor any business owned or controlled by any of them, ever obtained a direct or guaranteed
loan from SBA or any other Federal agency that is currently delinquent or has defaulted in the last 7 years and caused a loss
to the government. (xxi) Neither Borrower, nor any Owner, is an owner of any other business or has common management with any
other business, except as disclosed to the Bank in connection with the Borrower’s Application. (xxii) Borrower did not receive
an SBA Economic Injury Disaster Loan between January 31, 2020 and April 3, 2020, except as disclosed to the Bank in connection
with the Borrower’s Application. (xxiii) Neither Borrower (if an individual), nor any individual owning 20% or more of the
equity of Borrower (each, an “Owner”), is subject to an indictment, criminal information, arraignment, or other means
by which formal criminal charges are brought in any jurisdiction, or presently incarcerated, on probation or parole. (xxiv) Neither
Borrower (if an individual), nor any Owner, has within the last 5 years been convicted; pleaded guilty; pleaded nob contendere;
been placed on pretrial diversion; or been placed on any form of parole or probation (including probation before judgment) for
any felony. (xxv) The United States is the principal place of residence for all employees of Borrower included in Borrower’s
payroll calculation included in the Application. (xxvi) The Borrower correctly indicated on its Application whether it is a franchise
that is listed in the SBA’s franchise directory. (xxvii) If Borrower is claiming an exemption from all SBA affiliation rules
applicable to Paycheck Protection Program loan eligibility under the religious exemption to the affiliation rules, Borrower has
made a reasonable, good faith determination that it qualifies for such religious exemption under 13 C.F.R. 121.103(b)(10), which
provides that “[t]he relationship of a faith-based organization to another organization is not considered an affiliation
with the other organization...if the relationship is based on a religious teaching or belief or otherwise constitutes a part of
the exercise of religion.” (2) At all times during the term the of the Loan, Borrower represents and warrants to the Bank,
that (i) if Borrower is anything other than a natural person, it is duly formed and existing under the laws of the state or other
jurisdiction where organized; (ii) this Note, and any instrument or agreement required under this Note, are within Borrower’s
powers, have been duly authorized, and do not conflict with any of its organizational papers; (iii) the information included in
the Beneficial Ownership Certification most recently provided to the Bank, if applicable, is true and correct in all respects;
and (iv) in each state in which Borrower does business, it is properly licensed, in good standing, and, where required, in compliance
with fictitious name (e.g. trade name or d/b/a) statutes. IF THE FUNDING DATE IS AFTER THE DATE OF THIS NOTE, BORROWER AGREES
THAT BORROWER SHALL BE DEEMED TO HAVE REPEATED AND REISSUED, IMMEDIATELY PRIOR TO THE FUNDING ON THE FUNDING DATE, THE REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS SET FORTH ABOVE IN THIS PARAGRAPH

 

    2

     

    

 

		5.	EVENTS
                                         OF DEFAULT: If the Loan is not forgiven and a Loan Balance remains, then from the date
                                         the Repayment Letter is sent to Borrower until the Loan Balance is fully paid, the occurrence
                                         and continuation of any of the following events shall constitute a default hereunder:
                                         (i) insolvency, bankruptcy, dissolution, issuance of an attachment or garnishment against
                                         Borrower; (ii) failure to make any payment when due under the Loan or any or all other
                                         loans made by Bank to Borrower, and such failure continues for ten (10) days after it
                                         first became due; (iii) failure to provide current financial information promptly upon
                                         request by Bank; (iv) the making of any false or materially misleading statement on any
                                         application or any financial statement for the Loan or for any or all other loans made
                                         by Bank to Borrower, (v) Bank in good faith believes the prospect of payment under the
                                         Loan or any or all other loans made by Bank to Borrower is impaired; (vi) Borrower under
                                         or in connection with the Loan or any or all other loans made by Bank to Borrower fails
                                         to timely and properly observe, keep or perform any term, covenant, agreement, or condition
                                         therein; (vii) default shall be made with respect to any other indebtedness for borrowed
                                         money of Borrower, if the default is a failure to pay at maturity or if the effect of
                                         such default is to accelerate the maturity of such indebtedness for borrowed money or
                                         to permit the holder or obligee thereof or other party thereto to cause any such indebtedness
                                         for borrowed money to become due prior to its stated maturity; (viii) the Bank in its
                                         sole discretion determines in good faith that an event has occurred that materially and
                                         adversely affects Borrower; (ix) any change shall occur in the ownership of the Borrower;
                                         (x) permanent cessation of Borrower’s business operations; (xi) Borrower, if an
                                         individual, dies, or becomes disabled, and such disability prevents the Borrower from
                                         continuing to operate its business; (xii) Bank receives notification or is otherwise
                                         made aware that Borrower, or any affiliate of Borrower, is listed as or appears on any
                                         lists of known or suspected terrorists or terrorist organizations provided to Bank by
                                         the U.S. government under the USA Patriot Act of 2001; and (xiii) Borrower fails to maintain
                                         the Deposit Account with the Bank.

 

		6.	REMEDIES:
                                         If the Loan is not forgiven and a Loan Balance remains, then from the date the Repayment
                                         Letter is sent to Borrower, upon the occurrence of a default, all or any portion of the
                                         entire amount owing on the Loan, and any and all other loans made by Bank to Borrower,
                                         shall, at Bank’s option, become immediately due and payable without demand or notice.
                                         Upon a default, Bank may exercise any other right or remedy available to it at law or
                                         in equity. All persons included in the term “Borrower” are jointly and severally
                                         liable for repayment, regardless of to whom any advance of credit was made. Borrower
                                         shall pay any costs Bank may incur including without limitation reasonable attorney’s
                                         fees and court costs should the Loan and/or any and all other loans made by Bank to Borrower
                                         be referred to an attorney for collection to the extent permitted under applicable state
                                         law. EACH PERSON INCLUDED IN THE TERM BORROWER WAIVES ALL SURETYSHIP AND OTHER SIMILAR
                                         DEFENSES TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW.

 

		7.	CREDIT
                                         INVESTIGATION: If the Loan is not forgiven and a Loan Balance remains, then from the
                                         date the Repayment Letter is sent to Borrower until the Loan Balance is fully paid, Borrower
                                         authorizes Bank and any of its affiliates at any time to make whatever credit investigation
                                         Bank deems is proper to evaluate Borrower’s credit, financial standing and employment
                                         and Borrower authorizes Bank to exchange Borrower’s credit experience with credit
                                         bureaus and other creditors Bank reasonably believes are doing business with Borrower.
                                         Borrower also agrees to furnish Bank with any financial statements Bank may request at
                                         any time and in such detail as Bank may require.

 

		8.	NOTICES:
                                         Borrower’s request for Loan forgiveness, and the documentation that must accompany
                                         that request, shall be submitted to Bank by transmitting the communication to the electronic
                                         address, website, or other electronic transmission portal provided by Bank to Borrower.
                                         Otherwise, all notices required under this Note shall be personally delivered or sent
                                         by first class mail, postage prepaid, or by overnight courier, to the addresses on the
                                         signature page of this Note, or sent by facsimile to the fax number(s) listed on the
                                         signature page, or to such other addresses as the Bank and the Borrower may specify from
                                         time to time in writing (any such notice a “Written Notice”). Written
                                         Notices shall be effective (i) if mailed, upon the earlier of receipt or five (5) days
                                         after deposit in the U.S. mail, first class, postage prepaid, (ii) if telecopied, when
                                         transmitted, or (iii) if hand-delivered, by courier or otherwise (including telegram,
                                         lettergram or mailgram), when delivered. In lieu of a Written Notice, notices and/or
                                         communications from the Bank to the Borrower may, to the extent permitted by law, be
                                         delivered electronically (i) by transmitting the communication to the electronic address
                                         provided by the Borrower or to such other electronic address as the Borrower may specify
                                         from time to time in writing, or (ii) by posting the communication on a website and sending
                                         the Borrower a notice to the Borrower’s postal address or electronic address telling
                                         the Borrower that the communication has been posted, its location, and providing instructions
                                         on how to view it (any such notice, an “Electronic Notice”). Electronic
                                         Notices shall be effective when presented to the Borrower, or is sent to the Borrower’s
                                         electronic address or is posted to the Bank’s website. To retain a copy for your
                                         records, please download and print or save a copy to your device.

 

		9.	CHOICE
                                         OF LAW; JURISDICTION; VENUE. (1) At all times that Bank is the holder of this Note, except
                                         to the extent that any law of the United States may apply, this Note shall be governed
                                         and interpreted according to the internal laws of the state of Borrower’s principal
                                         place of business (the “Governing Law State”), without regard to any choice
                                         of law, rules or principles to the contrary. However, the charging and calculating of
                                         interest on the obligations under this Note shall be governed by, construed and enforced
                                         in accordance with the laws of the state of North Carolina and applicable federal law.
                                         Nothing in this paragraph shall be construed to limit or otherwise affect any rights
                                         or remedies of Bank under federal law. Borrower and Bank agree and consent to be subject
                                         to the personal jurisdiction of any state or federal court located in the Governing Law
                                         State so that trial shall only be conducted by a court in that state. (2) Notwithstanding
                                         the foregoing, when SBA is the holder, this Note will be interpreted and enforced under
                                         federal law, including SBA regulations. Lender or SBA may use state or local procedures
                                         for filing papers, recording documents, giving notice, foreclosing liens, and other purposes.
                                         By using such procedures, SBA does not waive any federal immunity from state or local
                                         control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert
                                         against SBA any local or state law to deny any obligation, defeat any claim of SBA, or
                                         preempt federal law.

 

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		10.	MISCELLANEOUS.
                                         The Loan may be sold or assigned by Bank without notice to Borrower. Borrower may not
                                         assign the Loan or its rights hereunder to anyone without Bank’s prior written
                                         consent. If any provision of this Note is contrary to applicable law or is found unenforceable,
                                         such provision shall be severed from this Note without invalidating the other provisions
                                         thereof. Bank may delay enforcing any of its rights under this Note without losing them,
                                         and no failure or delay on the part of Bank in exercising any right, power or privilege
                                         hereunder shall operate as a waiver thereof; nor shall any single or partial exercise
                                         of any right, power or privilege hereunder preclude any other or future exercise thereof
                                         or the exercise of any other right, power or privilege. Bank, by its acceptance hereof,
                                         and the making of the Loan and Borrower understand and agree that this Note constitutes
                                         the complete understanding between them. This Note shall be binding upon Borrower, and
                                         its successors and assigns, and inure to the benefit of Bank and its successors and assigns.

 

		11.	BORROWING
AUTHORIZED. The signer for Borrower represents, covenants and warrants to Bank that he or she is certified to borrow for the Borrower
and is signing this Note as the duly authorized sole proprietor, owner, sole shareholder, officer, member, managing member, partner,
trustee, principal, agent or representative of Borrower, and further acknowledges and confirms to Bank that by said signature
he or she has read and understands all of the terms and provisions contained in this Note and agrees and consents to be bound
by them. This Note and any instrument or agreement required herein, are within the Borrower’s powers, have been duly authorized,
and do not conflict with any of its organizational papers. The individuals signing this Agreement on behalf of each Borrower are
authorized to sign such documents on behalf of such entities. For purposes of this Note only, the Bank may rely upon and accept
the authority of only one signer on behalf of the Borrower, and for this Note, this resolution supersedes and replaces any prior
and existing contrary resolution provided by Borrower to Bank.

 

		12.	ELECTRONIC
COMMUNICATIONS AND SIGNATURES. This Note and any document, amendment, approval, consent, information, notice, certificate, request,
statement, disclosure or authorization related to this Note (each a “Communication”), including Communications required
to be in writing, may, if agreed by the Bank, be in the form of an Electronic Record and may be executed using Electronic Signatures,
including, without limitation, facsimile and/or .pdf. The Borrower agrees that any Electronic Signature (including, without limitation,
facsimile or .pdf) on or associated with any Communication shall be valid and binding on the Borrower to the same extent as a
manual, original signature, and that any Communication entered into by Electronic Signature, will constitute the legal, valid
and binding obligation of the Borrower enforceable against the Borrower in accordance with the terms thereof to the same extent
as if a manually executed original signature was delivered to the Bank. Any Communication may be executed in as many counterparts
as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Communication.
For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Bank
of a manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format), or an
electronically signed Communication converted into another format, for transmission, delivery and/or retention. The Bank may,
at its option, create one or more copies of any Communication in the form of an imaged Electronic Record (“Electronic
Copy”), which shall be deemed created in the ordinary course of the Bank’s business, and destroy the original
paper document. All Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original
for all purposes, and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything
contained herein to the contrary, the Bank is under no obligation to accept an Electronic Signature in any form or in any format
unless expressly agreed to by the Bank pursuant to procedures approved by it; provided, further, without limiting the foregoing,
(a) to the extent the Bank has agreed to accept such Electronic Signature, the Bank shall be entitled to rely on any such Electronic
Signature without further verification and (b) upon the request of the Bank any Electronic Signature shall be promptly followed
by a manually executed, original counterpart. For purposes hereof, “Electronic Record” and “Electronic
Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time
to time.

 

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		13.	CONVERSION
TO PAPER ORIGINAL. At the Bank’s discretion the authoritative electronic copy of this Note (“Authoritative Copy”)
may be converted to paper and marked as the original by the Bank (the “Paper Original”). Unless and until the Bank
creates a Paper Original, the Authoritative Copy of this Agreement: (1) shall at all times reside in a document management system
designated by the Bank for the storage of authoritative copies of electronic records, and (2) is held in the ordinary course of
business. In the event the Authoritative Copy is converted to a Paper Original, the parties hereto acknowledge and agree that:
(1) the electronic signing of this Agreement also constitutes issuance and delivery of the Paper Original, (2) the electronic
signature(s) associated with this Agreement, when affixed to the Paper Original, constitutes legally valid and binding signatures
on the Paper Original, and (3) the Borrower’s obligations will be evidenced by the Paper Original after such conversion.

 

		14.	BORROWER
ATTESTATION. Borrower attests and certifies to Bank that it has not provided false or misleading information or statements to
the Bank in its application for the Loan, and that the certifications, representations, warranties, and covenants made to the
Bank in this Note and elsewhere relating to the Loan are true, accurate, and correct. Borrower further attests and certifies to
Bank that it is has read, understands, and acknowledges that the Loan is being made under the CARES Act, and any use of the proceeds
of the Loan other than as permitted by the CARES Act, or any false or misleading information or statements provided to the Bank
in its application for the Loan or in this Note may subject the Borrower to criminal and civil liability under applicable state
and federal laws and regulations, including but not limited to, the False Claims Act, 31 U.S.C. Section 3729, et. seq. Borrower
further acknowledges and understands that this Note is not valid and effective until and unless Borrower’s application for
the Loan is approved and Bank’s receiving confirmation from the SBA that Bank may proceed with the Loan.

 

IN
WITNESS WHEREOF, I, the authorized representative of the Borrower, hereto have caused this Promissory Note to be duly executed
as of the date set forth below.

 

	BORROWER:
    Pacific Ethanol, Inc.	 
	 	 
	/s/
    Michael Kramer	 
	Signature of Authorized
    Representative of Borrower 	 
	 	 
	Michael Kramer	 
	Print Name	 
	 	 
	Authorized Representative	 
	Title	 

 

STREET
ADDRESS: 400 Capitol Mall Suite 2060 

 

CITY/STATE/ZIP
CODE: Sacramento, CA, 95814

 

 

5

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