Document:

Exhibit 10.41

 

LEASE AGREEMENT

 

STATE OF GEORGIA

COUNTY OF CHEROKEE

 

This Lease Agreement, made and entered
into by and between Fowler Crossing Partners, LP, hereinafter referred to as "Landlord", and Sonoma
Pharmaceuticals, Inc. hereinafter referred to as "Tenant";

 

W I T N E S S E T H:

 

1.                  
Premises and Term. In consideration of the obligation of Tenant to pay rent as herein provided, and in consideration
of the other terms, provisions and covenants hereof, Landlord hereby demises and Leases to Tenant, and Tenant hereby takes from
Landlord certain premises situated within The Park at Fowler Crossing (the "Park") located in the County of Cherokee,
City of Woodstock, State of Georgia, more particularly described as follows:

 

Office space for a total of approximately
4,100 rentable square feet located in a building (the "Building") of 19,200 square feet total and more
commonly known as 645 Molly Lane, Suite 150 Cherokee County, Georgia and further described by the Site Plan - Exhibit
"A", Floor Plan - Exhibit "B", attached hereto and incorporated herein.

 

Together with all rights, privileges, easements,
appurtenances and immunities belonging to or in any way pertaining to the said premises and together with the Building and other
improvements erected upon said premises (the said real property and the Building and improvements thereon being hereinafter referred
to as the "Premises").

 

To Have and to Hold the same for a term
commencing on or about October 1, 2018 (subject to completion of improvements and receipt of a certificate of occupancy)
and ending at 12:00 Midnight on or about November 30, 2023 or (62 complete months of occupancy in 645 Molly
Lane, Suite 150 Woodstock, GA). If this Lease is executed before the Premises are available and ready for occupancy Tenant
agrees to accept possession of the Premises at such time as Landlord is able to tender the same; and Landlord hereby waives payment
of rent covering any period prior to the tendering of possession of the Premises to Tenant hereunder.

 

2.                  
Rent and Security Deposit. Tenant agrees to pay to Landlord rent, without notice, demand, deduction, or set off,
for the entire term hereof for said Premises in monthly installments as set forth in Paragraph 29A hereof. The first monthly installment
in the sum of Five thousand forty dollars and 00/100 ($5,040.00) shall be due upon execution of this Lease Agreement,
and a like monthly installment shall be due and payable without demand on or before the same day of each succeeding month during
the hereby demised term, as set forth in Section 29A of the Addendum hereto; provided that if the said commencement date should
be a date other than the first day of a calendar month, there shall be due and payable on the said commencement date as rent for
the balance of the calendar month during which the said commencement date shall fall a sum equal to that proportion of the rent
for a full month as herein provided which the number of days from the said commencement date to the end of the calendar month during
which the said commencement date shall fall bears to the total number of days in such month, and all succeeding installments of
rent shall be payable on or before the first day of each succeeding calendar month during the hereby demised term as first above
provided. In addition, Tenant agrees to deposit with Landlord upon execution of this lease agreement the sum of Five thousand
six hundred seventy-two dollars and 00/100 ($5,672.00) which sum shall be held by Landlord, without obligation for interest,
as security for the performance of Tenant’s covenants and obligations under this Lease, it being expressly understood and
agreed that such deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default.
Upon the occurrence of any event of default by Tenant, Landlord may, from time to time, without prejudice to any other remedy provided
herein or provided by law, use such fund to the extent necessary to make good any arrears of rent and any other damage, injury,
expense or liability caused by such event of default; and Tenant shall pay to Landlord on demand the amount so applied in order
to restore the security deposit to its original amount. If Tenant is not then in default hereunder, any remaining balance of such
deposit shall be returned within 14 days of lease expiration by Landlord to Tenant upon termination of this Lease.

 

 

 

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3.                  
Use. The Premises shall be used only for the purpose of General Office and for such other lawful purposes
as may be incidental thereto; subject, however, to the Rules and Regulations set forth in Exhibit "D" attached
hereto and incorporated herein. Tenant shall at its own cost and expense obtain any and all licenses and permits necessary for
any such use. Tenant shall comply with all governmental laws, ordinances and regulations applicable to the use of the Premises,
and shall promptly comply with all governmental orders and directives for the correction, prevention and abatement of nuisances
in, upon, or connected with the Premises, all at Tenant’s sole expense. Without Landlord’s prior written consent, Tenant
shall not receive, store or otherwise handle any product, material or merchandise which is explosive or highly flammable. Tenant
will not permit the Premises to be used for any purpose which would render the insurance thereon void or the insurance risk more
hazardous.

 

4.                  
Real Estate Taxes:

 

       Tenant’s Participation
in Real Estate Taxes:

       Base tax year: 2018

 

(a)                 
Tenant’s Taxes:

Tenant covenants and agrees to pay promptly
when due all taxes imposed upon its business operations and its Personal property situated in the Premises.

 

(b)                  Tenant’s
Participation in Real Estate Taxes:

Landlord will pay in the first instance
all real property taxes, including extraordinary and/or special assessments (and all costs and fees incurred in contesting the
same), hereinafter collectively referred to as Real Estate Taxes, which may be levied or assessed by the lawful tax authorities
against the land and Building 645 Molly Lane, Woodstock, GA 30189) and all other improvements relating to 645 Molly Lane.

 

Tenant, for each Lease Year or Partial
Lease Year, during the term of this Lease or any renewal thereof, shall pay to Landlord its proportionate share, as hereinafter
defined, of the amount by which the annual Real Estate Taxes assessed or levied against the land, Building and all other improvements
relating to 645 Molly Lane exceed the Real Estate Taxes for the Base Tax Year specified above. Tenant’s proportionate share
for said Real Estate Taxes for each Lease Year or Partial Lease Year of the term of this Lease or any renewal thereof shall by
determined by dividing the total number of square feet in the Premises by the total number of square feet of all rentable Building
space. Any payments due by Tenant hereunder shall be made during each Lease Year or Partial Lease Year of the term of the Lease
or any renewal thereof within thirty (30) days after Tenant’s receipt of Landlord’s written certification of the amount
due. Tenant’s share shall be prorated in the event Tenant is required to make such payment of a Partial Lease Year. In addition,
should the taxing authorities include in such Real Estate Taxes the value of any improvements made by Tenant, not to include the
Landlord’s work in Exhibit “B”, or include machinery, equipment, fixtures, inventory or other personal property
or assets of the Tenant, then Tenant shall also pay 100% of the Personal Property Taxes and Real Estate Taxes for such items.

 

If the Lease expires during a Partial Lease
Year, Landlord shall bill Tenant, not more than sixty (60) days prior to the expiration date of the Lease, for its estimated pro-rata
share of Real Estate Taxes for the Partial Lease Year. Tenant shall remit full payment to Landlord within ten (10) business days
of such bill. If Tenant fails to remit such full payment to Landlord, Landlord in its sole discretion, may deduct the amount due
from Tenant’s security deposit and be entitled to all other rights and remedies thereunder for Tenant’s default.

 

Should any governmental taxing authority,
acting under any present or future law, ordinance or regulation, levy, assess or impose a tax, excise and/or assessment (other
than income or franchise tax) upon or against or in any way related to the land, Building and all other improvements relating to
645 Molly Lane either by way of substitution or in addition to any existing tax on land and Building or otherwise, Tenant shall
be responsible for and shall pay to Landlord its proportionate share as set forth above of such tax, excise and/or assessment.

 

 

 

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5.                  
Landlord’s Repairs. Landlord shall at his expense maintain only the roof, foundation and the structural soundness
of the exterior walls of the Building in good repair, reasonable wear and tear excepted. Tenant shall repair and pay for any damage
caused by the negligence of Tenant, or Tenant’s employees, agents or invitees, or caused by Tenant’s default hereunder.
The term "walls" as used herein shall not include windows, glass or plate glass, doors or special storefronts. Tenant
shall immediately give Landlord written notice of any defect or need for repairs, after which Landlord shall have reasonable opportunity
to repair same or cure such defect. Landlord’s liability hereunder shall be limited to the cost of such repairs or curing
such defect. Landlord shall not be liable for any business interruption if Landlord makes repairs within a reasonable period of
time. In the event the Premises has a heating, ventilation, and air-conditioning system installed therein on the date of this Lease,
then Landlord represents that on the commencement date of this Lease such heating, ventilation, and air-conditioning system shall
be in good operating condition.

 

6.                  
Tenant’s Repairs. Tenant shall at its own cost and expense keep in good repair all other parts of the Premises,
including but not limited to, windows, glass and plate glass, doors, any special store front, interior walls and finish work, floors
and floor covering, heating and air-conditioning systems, plumbing work and fixtures, and shall take good care of the Premises
and its fixtures and suffer no waste, normal wear and tear accepted. Tenant shall at its own cost and expense maintain the heating,
ventilation, and air conditioning system(s) in good operating condition and shall enter into an HVAC Maintenance Agreement with
a mutually agreed upon service company to include not less than the manufacturers recommended Service Schedule. Landlord shall
deliver existing HVAC systems in good working order and shall warrant for twelve (12) months from Tenant’s Lease Commencement.
Tenant shall make all necessary repairs and replacements and upon termination of this Lease shall deliver such system to Landlord
in good operating condition. So long as Tenant has maintained the foregoing preventative Maintenance Contract, Tenant’s Obligation
for the cost of any required repairs to each HVAC unit serving the Premises shall be limited to $500 per HVAC unit per occurrence,
and an aggregate per annum maximum obligation of $1,500 per HVAC unit for any required repairs or replacement. Tenant will keep
the parking areas, driveways and alleys and the whole of the Premises in a clean and sanitary condition. Tenant shall not be obligated
to repair any damage caused by fire, tornado or other casualty covered by items set forth under the extended coverage provisions
of Landlord’s fire insurance policy.

 

7.                  
Alterations. Tenant shall not make any alterations, additions or improvements to the Premises without the prior written
consent of Landlord, which consent shall not be unreasonably withheld. Tenant may, without the consent of Landlord, but at its
own cost and expense and in a good workmanlike manner make such minor alterations, additions or improvements or erect, remove or
alter such partitions, or erect such shelves, bins, machinery and trade fixtures as it may deem advisable, without altering the
basic character of the Building or Premises and without overloading or damaging such Building or Premises, and in each case complying
with all applicable governmental laws, ordinances, regulations, and other requirements. At the termination of this Lease, Tenant
shall, if Landlord so elects, remove all alterations, additions, improvements and partitions erected by Tenant and restore the
Premises to their original condition; otherwise such improvements shall be delivered up to the Landlord with the Premises. All
shelves, bins, machinery and trade fixtures installed by Tenant may be removed by Tenant at the termination of this Lease if Tenant
so elects, and shall be removed if required by Landlord. All such removals and restoration shall be accomplished in a good workmanlike
manner so as not to damage the primary structure or structural qualities of the Building and other improvements situated on the
Premises.

 

8.                  
Signs. Tenant shall have the right to install signs upon the exterior glass and doors of said Building only when
first approved in writing by Landlord, which approval shall not be unreasonably withheld, and subject to any applicable governmental
laws, ordinances, regulations and other requirements. Tenant shall remove all such signs at the termination of this Lease. Such
installations and removals shall be made in such manner as to avoid injury or defacement of the Building and other improvements.

 

9.                  
Inspection. Landlord and Landlord’s agents and representatives shall have the right to enter and inspect the
Premises at any time during reasonable business hours, upon prior notice to Tenant, for the purpose of ascertaining the condition
of the Premises or in order to make repairs as may be required to be made by Landlord under the terms of this Lease. Landlord will
use best efforts to have any work that is disruptive to Tenant’s use of the Premises will be schedule with Tenant in advance.
During the period that is 90 days prior to the end of term hereof, Landlord and Landlord’s agents and representatives shall
have the right to enter the Premises at any time during reasonable business hours for the purpose of showing the Premises and shall
have the right to erect on the Premises a suitable sign indicating the Premises is available.

 

 

 

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10.                
Utilities. Landlord agrees to provide at its cost water, electricity, gas and telephone service connections into
the Premises; but Tenant shall pay all charges incurred for any utility services, except for water and sewer, used on or from the
Premises and any maintenance charges for utilities and shall furnish all replacement electric light bulbs and tubes. Landlord shall
in no event be liable for any interruption or failure of utility services on the Premises.

 

11.                
Assignment and Subletting. Tenant shall not have the right to assign this Lease or to sublet the whole or any part
of the Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld; notwithstanding
any permitted assignment or subletting, Tenant shall at all times remain fully responsible and liable for the payment of the rent
herein specified and for compliance with all of its other obligations under the terms, provisions and covenants of this Lease.
Upon the occurrence of an "event of default" as hereinafter defined, if the Premises or any part thereof is then assigned
or sublet, Landlord, in addition to any other remedies herein provided, or provided by law, may at its option collect directly
from such assignee or subtenant all rents becoming due to Tenant under such assignment or Sublease and apply such rent against
any sums due to it by Tenant hereunder, and no such collection shall be construed to constitute a novation or a re-lease of Tenant
from the further performance of its obligations hereunder. Landlord shall have the right to assign any of its rights under this
Lease.

 

12.                 
Fire and Casualty Damage.

 

(a)       If
the Building should be damaged or destroyed by fire, tornado, or other casualty, Tenant shall give immediate written notice thereof
to Landlord.

 

(b)       If
the Building should be totally destroyed by fire, tornado or other casualty, or if they should be so damaged that rebuilding or
repairs cannot be completed within one hundred eighty (180) days after the date upon which Landlord is notified by Tenant of such
damage, this Lease shall terminate and the rent shall be abated during the unexpired portion of this Lease, effective upon the
date of the occurrence of such damage.

 

(c)       If
the Building should be damaged by fire, tornado or other casualty, but only to such extent that rebuilding or repairs can be completed
within one hundred eighty (180) days after the date upon which Landlord is notified by Tenant of such damage, this Lease shall
not terminate, but Landlord shall at its sole cost and expense proceed with reasonable diligence to rebuild and repair such Building,
to substantially the condition in which they existed prior to such damage, except that Landlord shall not be required to rebuild,
repair or replace any part of the partitions, fixtures and other improvements which may have been placed on the Premises by Tenant.
If the Premises is untenantable in whole or in part following such damage, the rent payable hereunder during the period in which
they are untenantable shall be abated so long as space is untenantable. In the event that Landlord should fail to complete such
repairs and rebuilding within one hundred eighty (180) days after the date upon which Landlord is notified by Tenant of such damage,
Tenant may at its option terminate this Lease by delivering written notice of termination to Landlord as Tenant’s exclusive
remedy, whereupon all rights and obligations hereunder shall cease and determine. Notwithstanding the above if the building is
damaged during the last nine (9) months of the Lease, Tenant, at its option, may terminate.

 

(d)       Notwithstanding
anything herein to the contrary, in the event the holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant, whereupon all rights and obligations hereunder shall cease and
determine.

 

(e)       Any
insurance which may be carried by Landlord or Tenant against loss or damage to the Building and other improvements situated on
the Premises shall be for the sole benefit of the party carrying such insurance and under its sole control.

 

 

 

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(f)        Each
of Landlord and Tenant hereby releases the other from any and all liability or responsibility to the other or anyone claiming through
or under them by way of subrogation or otherwise for any loss or damage to property caused by fire or any of the extended coverage
casualties covered by the insurance maintained hereunder, even if such fire or other casualty shall have been caused by the fault
or negligence of the other party, or anyone for whom such party may be responsible; provided, however, that this release shall
be applicable and in force and effect only with respect to loss or damage occurring during such times as the releasor’s policies
shall contain a clause or endorsement to the effect that any release shall not adversely affect or impair said policies or prejudice
the right of the releasor to recover thereunder. Each of Landlord and Tenant agrees that it will request its insurance carriers
to include in its policies such a clause or endorsement. If extra cost shall be charged therefor, each party shall advise the other
thereof and of the amount of the extra cost, and the other party, at its election, may pay the same, but shall not be obligated
to do so.

 

(g)       Landlord
covenants and agrees to maintain standard fire and extended coverage insurance covering the Building and all other improvements
in the Park in an amount not less than eighty percent (80%) of the replacement cost thereof, and comprehensive general liability
insurance covering the Park. If during the second full Lease year after the commencement date of this Lease, or during any subsequent
year of the primary term or any renewal or extension, the insurance premiums for the fire and extended insurance, and comprehensive
general liability insurance covering the Park carried by Landlord shall exceed the premium for such insurance for the base tax
year defined in Paragraph 4 hereof, Tenant shall pay to Landlord on demand Tenant's proportionate share of such excess determined
in the same manner as Tenant's proportionate share of Real Estate Taxes set forth in Paragraph 4 hereof; and the failure to pay
such proportionate share upon demand shall be treated in the same manner as a default in the payment of rent hereunder when due.

 

13.                 
Liability. Landlord shall not be liable to Tenant or Tenant’s employees, agents, patrons or visitors, or to
any other person whomsoever, for any injury to person or damage to property on or about the Premises, caused by the negligence
or misconduct of Tenant, its agents, servants or employees, or of any other person entering upon the Premises under express or
implied invitation of Tenant, or caused by the Building and improvements located in the Park becoming out of repair, or caused
by leakage of gas, oil, water or steam or by electricity emanating from the Premises, or due to any cause whatsoever, and Tenant
agrees to indemnify Landlord and hold it harmless from any loss, expense or claims, including attorneys’ fees, arising out
of any such damage or injury; except that any injury to person or damage to property caused by the negligence of Landlord or by
the failure of Landlord to repair and maintain that part of the Premises which Landlord is obligated to repair and maintain after
the receipt of written notice from Tenant of needed repairs or of defects shall be the liability of Landlord and not of Tenant,
and Landlord agrees to indemnify Tenant and hold it harmless from any and all loss, expense or claims, including attorneys’
fees, arising out of such damage or injury.

 

a)        
Notwithstanding anything herein to the contrary, Tenant shall not be liable to Landlord or Landlord’s employees, agents,
patrons, invitees, or mortgagees, or any person whomsoever, for any injury to person or damage to property caused by negligence
or misconduct of Landlord, its employees or agents, and Landlord agrees to indemnify Tenant and hold it harmless from any loss,
claim, damage, cost or expense, including reasonable attorney’s fees, suffered or incurred by Tenant by reason of any damage
or injury.

 

b)     
  Landlord hereby agrees to indemnify, defend and hold harmless Tenant, its partners, officers, employees, agents, and lenders
and each of their respective successors and assigns from and against any and all costs (including reasonable attorney’s fees
and the fees of other expert consultants) fines, penalties, claims, auctions, demands, expenses and judgements for loss, damage
or injury to property or person resulting from or occurring by reason of (i) any breach by Landlord of his obligations set forth
in the Lease, or (ii) the presence of or suspected presence of any Hazardous Materials in, on, under or about the Leased Premises
resulting from Landlord’s or other owners’, operators’ or parties’ (other than Tenant’s, its partners’,
officers’, employees’, agents’ and contractors’) use or activities on or about the Leased Premises.

 

14.              
  Condemnation.

 

(a)       If
the whole or any substantial part of the Premises should be taken for any public or quasi-public use under governmental law, ordinance
or regulation, or by right of eminent domain, or by private purchase in lieu thereof, this Lease shall terminate and the rent shall
be abated during the unexpired portion of this Lease, effective when the physical taking of said Premises shall occur.

 

 

 

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(b)       If
less than a substantial part of the Premises shall be taken for any public or quasi-public use under any governmental law, ordinance
or regulation, or by right of eminent domain, or by private purchase in lieu thereof, this Lease shall not terminate, but the rent
payable hereunder during the unexpired portion of this Lease shall be reduced to such extent as may be fair and reasonable under
all of the circumstances.

 

(c)       In
the event of any such taking or private purchase in lieu thereof, Landlord and Tenant shall each be entitled to receive and retain
such separate awards and/or portion of lump sum awards as may be allocated to their respective interests in any condemnation proceedings.

 

15.                
Holding Over. Should Tenant, or any of its successors in interest, hold over the Premises, or any part thereof, after
the expiration of the term of this Lease, unless otherwise agreed in writing, such holding over shall constitute and be construed
as tenancy from month to month only, at a rental equal to the rental payable for the last month of the term of this Lease plus
fifty (50%) percent of such. The inclusion of the preceding sentence shall not be construed as Landlord’s permission
for Tenant to hold over.

 

16.                
Quiet Enjoyment. Landlord covenants that it now has, or will acquire before Tenant takes possession of the Premises,
good title to the Premises, free and clear of all liens and encumbrances, excepting only the lien for current taxes not yet due,
such mortgage or mortgages as are permitted by the terms of this Lease, zoning ordinances and other building and fire ordinances
and governmental regulations relating to the use of such property, and easements, restrictions and other conditions of record.
In the event this Lease is a sublease, then Tenant agrees to take the Premises subject to the provisions of the prior Leases. Landlord
represents and warrants that it has full right and authority to enter into this Lease and that Tenant, upon paying the rental herein
set forth and performing its other covenants and agreements herein set forth, shall peaceably and quietly have, hold and enjoy
the Premises for the term hereof without hindrance or molestation from Landlord subject to the terms and provisions of this Lease.

 

Landlord hereby represents
and warrants to Tenant as of the date of delivery of possession of the Premises to Tenant as follows:

 

		a)	Landlord has good and marketable title to the Building;

		b)	All taxes with regard to the Building have been paid except for the current year which are not
yet due and payable;

		c)	There are no liens on the Premises which would prevent Tenant from using the Premises for Tenant’s
intended use (as defined herein);

		d)	All fixtures and electrical and mechanical systems are in good working order, including without
limitation plumbing and gas;

		e)	The Premises are in compliance with all applicable federal, state and local laws, ordinances, orders,
rules regulations and other requirements of governmental authorities relating to the use, condition and occupancy of the Premises;

		f)	The Building is free from structural defects and the roof is water tight;

		g)	The intended use of Tenant may be conducted on the Premises.

 

Landlord agrees, throughout
the term of this Lease and any extension thereof, to modify the Premises as necessary for the Premises to remain in compliance
with all applicable building and zoning codes as they may be amended or modified.

 

17.                
Events of Default. The following events shall be deemed to be events of default by Tenant under this Lease:

 

(a)       Tenant
shall fail to pay any installment of the rent hereby reserved when due, and such failure shall continue for a period of ten (10)
days from the date such installment was due.

 

(b)       Tenant
shall become insolvent, or shall make a transfer in fraud of creditors, or shall make an assignment for the benefit of creditors.

 

(c)       Tenant
shall file a petition under any section or chapter of the National Bankruptcy Act, as amended, or under any similar law or statute
of the United States or any State thereof; or Tenant shall be adjudged bankrupt or insolvent in proceedings filed against Tenant
thereunder.

 

 

 

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(d)       A
receiver or trustee shall be appointed for all or substantially all of the assets of Tenant.

 

(e)       Tenant
shall desert or vacate any substantial portion of the Premises.

 

(f)        Tenant
shall fail to comply with any term, provision or covenant of this Lease (other than the foregoing in this Paragraph 17), and shall
not cure such failure within thirty (30) days after written notice thereof to Tenant.

 

(g)       Tenant
shall be prohibited from recording Lease.

 

18.                
Remedies. Upon the occurrence of any of such events of default in Paragraph 17 hereof, Landlord shall have the option
to pursue any one or more of the following remedies without any notice or demand whatsoever:

 

(a)      
Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails so
to do, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and
take possession of the Premises and expel or remove Tenant and any other person who may be occupying such Premises or any part
thereof, by force if necessary, without being liable for prosecution or any claim of damages therefor; and Tenant agrees to pay
to Landlord on demand the amount of all loss and damage which Landlord may suffer by reason of such termination, whether through
inability to relet the Premises on satisfactory terms or otherwise.

 

(b)     
Enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying such
Premises or any part thereof, by force if necessary, without being liable for prosecution or any claim for damages therefor, and
relet the Premises and receive the rent therefor; and Tenant agrees to pay to the Landlord on demand any deficiency that may arise
by reason of such reletting.

 

(c)      
Enter upon the Premises by force if necessary without being liable for prosecution or any claim for damages therefor, and
do whatever Tenant is obligated to do under the terms of this Lease; and Tenant agrees to reimburse Landlord on demand for any
expenses which Landlord may incur in thus effecting compliance with Tenant’s obligations under this Lease, and Tenant further
agrees that Landlord shall not be liable for any damages resulting to the Tenant from such action, whether caused by the negligence
of Landlord or otherwise.

 

Pursuit of any of the foregoing remedies
shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided by law, nor shall pursuit
of any remedy herein provided constitute a forfeiture or waiver of any rent due to Landlord hereunder or of any damages accruing
to Landlord by reason of the violation of any of the terms, provisions and covenants herein contained. No waiver by Landlord of
any violation or breach of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute
a waiver of any other violation or breach of any of the terms, provisions and covenants herein contained. Landlord’s acceptance
of the payment of rental or other payments hereunder after the occurrence of an event of default shall not be construed as a waiver
of such default, unless Landlord so notifies Tenant in writing. Forbearance by Landlord to enforce one or more of the remedies
herein provided upon an event of default shall not be deemed or construed to constitute a waiver of such default. If, on account
of any breach or default by Tenant in Tenant’s obligations under the terms and conditions of this Lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney concerning or to enforce or defend any of Landlord’s
rights or remedies hereunder. Tenant agrees to pay any reasonable attorney’s fees, based upon custom hourly rates for time
actually spent. No act or thing done by the Landlord or its agents during the term hereby granted shall be deemed an acceptance
of the surrender of the Premises, and no agreement to accept a surrender of said Premises shall be valid unless in writing signed
by Landlord. The receipt by Landlord of rent with knowledge of the breach of any covenant or other provision contained in this
Lease shall not be deemed or construed to constitute a waiver of any other violation or breach of any of the terms, provisions
and covenants contained herein.

 

 

 

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19.                
Landlord’s Lien. In addition to any statutory lien for rent in Landlord’s favor, Landlord shall have
and Tenant hereby grants to Landlord a continuing security interest in all rentals and other sums of money becoming due hereunder
from Tenant, upon all goods, wares, equipment, fixtures, furniture, inventory, accounts, contract rights, chattel paper and other
personal property of Tenant situated on the Premises, and such property shall not be removed therefrom without the consent of Landlord
until all arrearages in rent as well as any and all other sums of money then due to Landlord hereunder shall first have been paid
and discharged. In the event of a default under this Lease, Landlord shall have in addition to any other remedies herein or by
law, all rights and remedies under the Uniform Commercial Code, including without limitation the right to sell the property described
in this Paragraph 19 at public or private sale upon five (5) days’ notice to Tenant. Tenant hereby agrees to execute such
financing statements and other instruments necessary or desirable in Landlord’s discretion to perfect the security interest
hereby created. Any statutory lien for rent is not hereby waived, the express contractual lien herein granted being in addition
and supplementary thereto.

 

20.                
Mortgages. This Lease shall be subordinate to any mortgage, deed to secure debt or similar security instrument hereafter
executed by Landlord and constituting a lien or charge upon the Premises or the improvements situated thereon; provided, however,
that if any mortgagee or holder of any such security instrument shall so require, Tenant will, at any time hereafter, on demand
execute and deliver any instruments, releases or other documents which may be required by any mortgagee or security instrument
holder for the purpose of subjecting and subordinating this Lease to the lien and/or security title of any such mortgage, deed
to secure debt or similar security instrument.

 

21.                
Landlord’s Default. In the event Landlord should become in default in the performance of its obligations under
this Lease, Tenant shall have such remedies as are provided by Georgia law or in equity.

 

22.                
Mechanic’s Liens. Tenant shall have no authority, express or implied, to create or place any lien or encumbrance
of any kind or nature whatsoever upon, or in any manner to bind, the interest of Landlord in the Premises or to charge the rentals
payable hereunder for any claim in favor of any person dealing with Tenant, including those who may furnish materials or perform
labor for any construction or repairs, and each such claim shall affect and each such lien shall attach to, if at all, only the
Leasehold interest granted to Tenant by this instrument. Tenant covenants and agrees that it will pay or cause to be paid all sums
legally due and payable by it on account of any labor performed or materials furnished in connection with any work performed on
the Premises on which any lien is or can be validly and legally asserted against its Leasehold interest in the Premises or the
improvements thereon and that it will save and hold Landlord harmless from any and all loss, cost or expense based on or arising
out of asserted claims or liens against the Leasehold estate or against the rights, titles and interest of the Landlord in the
Premises or under the terms of this Lease.

 

23.                
Notices. Each provision of this instrument or of any applicable governmental laws, ordinances, regulations and other
requirements with reference to the sending, mailing or delivery of any notice or the making of any payment by Landlord to Tenant
or with reference to the sending, mailing or delivery of any notice or the making of any payment by Tenant to Landlord shall be
deemed to be complied with when and if the following steps are taken:

 

(a)      
All rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at the address
hereinbelow set forth or at such other address as Landlord may specify from time to time by written notice delivered in accordance
herewith.

 

(b)     
All payments required to be made by Landlord to Tenant hereunder shall be payable to Tenant at the address hereinbelow set
forth, or at such other address within the continental United States as Tenant may specify from time to time by written notice
delivered in accordance herewith.

 

 

 

    	 	8	 

     

    

 

(c)      
Any notice or document required or permitted to be delivered hereunder shall be deemed to be delivered whether actually
received or not on the earlier of the date of receipt or the third business day after the date same was deposited in the United
States Mail, postage prepaid, Certified or Registered Mail, addressed to the parties hereto at the respective addresses set out
opposite their names below, or at such other address as they have theretofore specified by written notice delivered in accordance
herewith:

 

	Landlord:	Tenant:
	Thomas Hall Fowler	Sonoma Pharmaceuticals, Inc.
	Fowler Crossing Partners, LP	1129 North McDowell Blvd
	P. O. Box 532	Petaluma, Ca. 94954
	Woodstock, GA 30188	Attn:  Jim Schutz
	Phone: 770-926-3195	Phone:  707-283-0550
	 	 
	Landlord Agent:	Tenant Agent:
	SK Commercial Realty	Joel and Granot Commercial Real Estate
	900 Circle 75 Parkway	633 Antone St.
	Suite 720	Atlanta, Ga. 30342
	Atlanta, Ga. 30339	Attn: Bill Ward
	Attn:  Furman Wood	Phone:  404-869-2600
	Phone:  404-252-1200	 

 

If and when included within the term "Landlord",
as used in this instrument, there is more than one person, firm or corporation, all shall jointly arrange among themselves for
their joint execution of such a notice specifying some individual at some specified address for the receipt of notices and payments
to Landlord; if and when included within the term "Tenant", as used in this instrument, there is more than one person,
firm or corporation, all shall jointly arrange among themselves for their joint execution of such a notice specifying some individual
at some specific address within the continental United States for the receipt of notices and payments to Tenant. All parties included
within the terms "Landlord" and "Tenant", respectively, shall be bound by notices given in accordance with
the provisions of this paragraph to the same effect as if each had received such notice.

 

24.                
Miscellaneous.

 

(a)                
Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular
number shall be held to include the plural, unless the context otherwise requires.

 

(b)                
The terms, provisions and covenants and conditions contained in this Lease shall apply to, inure to the benefit of, and
be binding upon, the parties hereto and upon their respective heirs, legal representatives, successors and permitted assigns, except
as otherwise herein expressly provided.

 

(c)                
The captions are inserted in this Lease for convenience only and in no way define, limit, or describe the scope or intent
of this Lease, or any provision hereof, nor in any way affect the interpretation of this Lease.

 

(d)                
Tenant agrees, within ten (10) business days after request of Landlord, to deliver to Landlord, or Landlord’s designee,
an estoppel certificate stating that this Lease is in full force and effect, the date to which rent has been paid, the unexpired
term of this Lease and such other matters pertaining to this Lease as may be reasonably requested by Landlord.

 

(e)                
This Lease may not be altered, changed or amended except by an instrument in writing signed by Landlord and Tenant.

 

 

 

    	 	9	 

     

    

 

25.                
Insurance:

 

(a)       Tenant,
at its sole cost and expense, shall, during the term of this Lease, cause all improvements at any time located in the Premises
(other than the building standard tenant improvements) and all equipment, machinery and fixtures from time to time used or intended
to be used in connection with the operation and maintenance of the Premises, to be insured for the mutual benefit of Landlord and
Tenant against loss or damage by fire and against loss or damage by other risks now or hereafter included in the standard form
of all-risk insurance policy, in an amount equal to the full insurable value thereof. Proceeds from such insurance shall be used
for the repair and replacement of such improvements, equipment and fixtures.

 

(b)       Notwithstanding
any other provisions of this Lease, Tenant, at its own expense, shall maintain the following insurance coverage. All coverage shall
be primary and non-contributory over any insurance the Landlord may elect to provide on its behalf. At the commencement of the
Lease Term, and upon renewal of such coverage, Tenant shall deliver to the Landlord an original certificate of such insurance from
the insurer providing a minimum of thirty (30) day prior written notice of cancellation. All policies of insurance required to
be carried by Tenant under this paragraph shall be in a form satisfactory to Landlord, shall be issued by responsible insurance
companies which are licensed to do business in the State of Georgia, have Best’s rating of at Lease "A".

 

1)       
Worker’s Compensation. Tenant shall maintain Worker’s Compensation insurance to comply with all state and/or
federal laws which may be applicable.

 

2)       
Comprehensive General Liability. Tenant shall maintain a comprehensive general liability policy including all those coverages
normally provided by the extended liability endorsement. Such policies shall specifically name the Landlord as additional insured.
Landlord may, at its discretion, request evidence of products insurance.

 

The minimum limits of liability acceptable
are:

 

	 	a)	One million dollars ($1,000,000.00) for property damage, and
		b)	Three million dollars ($3,000,000.00) per occurrence for personal injuries or deaths of persons
in or about the Premises.

 

26.                
Intentionally Deleted.

 

27.                
Extrinsic Evidence: It is expressly agreed by Tenant, as a material consideration for the execution of this Lease
Agreement, that this Lease with the specific references to written extrinsic documents, is the entire agreement of the parties;
that there are, and were, no verbal representations, understandings, stipulations, agreements or promises pertaining to this Lease
Agreement or the expressly mentioned written extrinsic documents not incorporated in writing in this Lease Agreement. It is likewise
agreed that this Lease may not be altered, waived amended or extended except by an instrument in writing, signed by both Landlord
and Tenant.

 

28.                
Late Charges: Other remedies for nonpayment of rental notwithstanding, time is of the essence of this Lease and if
Landlord elects to accept rent on or after the tenth (10th) day of the month, a late charge equal to the greater of
ten percent (10%) of the monthly rent or Two Hundred Dollars ($200.00) will be due as additional rent. Tenant agrees to tender
all late rents by cashier’s check, certified check, or money order. In the event Tenant’s rent check is dishonored
by the bank, Tenant agrees to pay Landlord $25.00 as a handling charge and, if applicable, the late charge, and Tenant shall deliver
said monies to Landlord as specified in Paragraph 3. Dishonored checks must be replaced by cashier’s check, certified check
or money order. In the event more than one check is dishonored, Tenant agrees to pay all future rents and charges in the form of
cashier’s check, certified check, or money order. Any other amounts payable to Landlord under this Lease, with the exception
of rent, shall be considered past due 30 days from Landlord’s billing date and Tenant shall pay a monthly service charge
of 5% of the amount past due for that and each subsequent month that the amount remains past due. The parties agree that such charges
represent a fair and reasonable estimate of the costs the Landlord will incur by reason of such late payment and/or returned check.

 

29.                
Special Stipulations. [SEE ADDENDUM ATTACHED HERETO AND INCORPORATED HEREIN.]

 

 

 

    	 	10	 

     

    

 

	EXECUTED the _____ day of August 2018	 
	 	 
	 	LANDLORD
	 	 
	 	Fowler Crossing Partners,
LP
	 	a Georgia Limited Partnership
	 	 
	____________________________	By: /s/
Thomas Hall_____________________
	Witness	Thomas
Hall Fowler, President
	 	The Fowler Group Inc.,
	 	It’s General Partner
	 	 
	 	 
	 	 
	 	 
	 	TENANT
	 	 
	 	Sonoma Pharmaceuticals,
Inc.
	 	 
	____________________________	BY:
/s/ Robert Miller__________
	Notary Public	 
	 	Name: Robert Miller
	 	 
	 	Title: CFO

 

 

 

 

 

 

 

 

    	 	11	 

     

    

 

ADDENDUM TO LEASE BETWEEN

Fowler
Crossing Partners, LP AND

 

SONOMA
PHARMACEUTICALS, INC.

 

645 MOLLY LANE, SUITE 150

CHEROKEE COUNTY, GEORGIA

 

 

(These Special Stipulations prevail if
there is any conflict with the printed form)

 

SPECIAL STIPULATIONS

 

29A.       Rent is payable to:

 

The Park at Fowler Crossing

P. O. Box 532

Woodstock, GA 30188

 

Rent schedule as follows:

 

 

	Months	PSF Rate	Monthly Base Rent
	 	 	 
	1-2	$14.75	$5,040.00*
	3-14	$14.75	$5,040.00 
	15-26	$15.19	$5,191.00 
	27-38	$15.65	$5,346.00 
	39-50	$16.12	$5,507.00 
	51-62	$16.60	$5,672.00 

 

and is due on the 1st
of each month.

 

 

* Notwithstanding the foregoing rent schedule, Tenant shall
be entitled to an abatement of fifty percent (50%) of the Base Rent for the Premises for the initial two (2) months of the Term
(the “Abatement Period”), in the amount of $2,520.00 per month, for a total of $5,040 (the “Abatement”).

 

 

	29B.	The Premises, at the expense of the
Landlord, will be finished per the attached
	 	Exhibit A - Site Plan
	 	Exhibit B - Floor Plan -
	 	Exhibit C - Permit
Drawings

 

 

 

    	 	12	 

     

    

 

29C.        Landlord will pay the base
fire and extended coverage and comprehensive general liability insurance premiums on the Land and Building 645 Molly Lane, Woodstock,
GA 30189) and all other improvements relating to 645 Molly Lane. Any increases in insurance will be paid by the Tenant, provided
the insurance coverage and the premiums charged for said insurance are competitive by industry standards, and provided said increase
amount is prorated per Tenant occupancy within the Building (645 Molly Lane, Woodstock, GA 30189) which is 21%, Landlord
will provide adequate documentation.

 

                Base Insurance Year:     2018

 

Tenant agrees to comply with reasonable
loss prevention recommendations of Landlord and/or Tenant's insurance companies.

 

29D.        Tenant agrees to execute
any reasonable estoppel certificates relating to the status of the Lease within 10 business days.

 

29E.        Brokerage: Pursuant
to the Official Code of Georgia, § 10-6A-4, SK Commercial Realty (SKCR) hereby discloses that it represents the Landlord in
this transaction and not the Tenant and that Joel and Granot Commercial Real Estate represents the Tenant and not the Landlord
in this transaction and that Landlord and Tenant each warrant and represent to the other that they have dealt with no real estate
broker in connection with this Lease other than SKCR and Joel and Granot Commercial Real Estate and that no other broker is entitled
to any commission on account of this Lease. Each party shall hold the other party harmless from and against any and all costs (including
reasonable attorneys’ fees), expense or liability for any compensation, commissions and charges claimed by any other broker
through contacts or claimed contacts the indemnifying party had with such other broker with respect to this Lease. Landlord shall
pay the brokerage commissions pursuant to a separate agreement.

 

29F.        Restrictions on Use - No
portion of the Premises shall be used for any of the following purposes: a billiard parlor, a night club, an adult type bookstore
or other establishment selling or exhibiting pornographic materials, any business selling or serving alcoholic beverages excepting
sales by grocery and drugstore tenants for off premises consumption and by restaurants deriving more than half of their gross sales
by serving food, massage parlor, mobile home or trailer court, labor camp, junk yard or stock yard, landfill, garbage dump, or
other facility for the dumping, disposing, incineration or reduction of garbage, or for manufacturing, distillation, refining,
smelting, or industrial, agricultural, drilling, or mining operation. No portion of the Premises shall be used for any purpose
which would violate the following exclusive use rights of other tenants of the Park: [List exclusive use rights of other tenants
or insert "None".]

 

29G.        Rules and Regulations -
Tenant shall abide by the Rules and Regulations attached hereto as Exhibit "C" and incorporated herein as the
same may be amended from time to time.

 

29H.        Landlord will pay the base
year common area maintenance fees on the building and The Park at Fowler Crossing. Any increases in the common area maintenance
will be paid by the Tenant, provided the common area maintenance fees charged for said maintenance are competitive by industry
standards, and provided said increase amount is prorated per Tenant occupancy within the building (645 Molly Lane, Woodstock, GA
30189), which is 21%, Landlord will provide adequate documentation.

 

 Common Area Maintenance
to include the following:

 

 Landscaping maintenance,
mowing of grass, trash removal, water and sewer charges associated with normal landscaping and exterior building maintenance, cleaning
of parking lot, monitoring and maintenance of sprinkler system, cleaning of exterior building, etc. and general upkeep of the Park.
Landlord agrees that controllable operating expenses shall not increase by more than ten percent (10.0%) in the aggregate in any
one-year period.

 

29I.         Landlord will grant the
use of 4/1000 parking to office space ratio. There will be no reserved parking spaces other than those required by the ADA for
Handicapped parking.

 

29J.        Signage will be uniform
for all Tenants.

 

29K.        Landlord agrees to Turnkey
the Tenants interior improvements per the attached “Exhibit C”. The materials used shall be similar to or above the
standard paint, carpet, finishes and fixtures used in the existing buildings at The Park at Fowler Crossing.

 

 

 

    	 	13	 

     

    

 

EXHIBIT A

 

SITE PLAN

 

645 Molly Lane, Suite 150 (The Park at Fowler
Crossing)

 

 

To be attached prior to Lease Execution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	14	 

     

    

 

 

EXHIBIT B

 

FLOOR PLAN

 

645 Molly Lane, Suite 150 (The Park at Fowler
Crossing)

 

 

To be attached prior to Lease Execution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	15	 

     

    

 

EXHIBIT C

 

PERMIT DRAWINGS

 

645 Molly Lane, Suite 150 Woodstock, Ga.
30189

 

 

(To be attached upon completion by Robillard
Architects prior to execution)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	16	 

     

    

 

EXHIBIT D

RULES AND REGULATIONS

 

1.                  
All loading and unloading of goods shall be done only at such times in the areas and through the entrances designated for
such purposes by Landlord.

 

2.                  
The delivery or shipping of the merchandise, supplies and fixtures to and from the Premises shall be subject to such rules
and regulations as in the judgement of Landlord are necessary for the proper operation of the Premises or the Park.

 

3.                  
Tenant will not utilize any unethical method of business operation nor shall any space in the Premises be used for living
or sleeping quarters, whether temporary or permanent.

 

4.                  
Tenant shall have full responsibility for protecting the Premises and the property located therein from theft and robbery
and shall keep all doors and windows securely fastened when not in use.

 

5.                  
No aerial shall be erected on the roof or exterior walls of the Premises or on the grounds without, in each instance, the
written consent of the Landlord. Any aerial so installed without such written consent shall be removed without notice at any time
without liability to Landlord and the expenses involved in said removal shall be charged to and paid by Tenant upon demand.

 

6.                  
No loudspeaker, television, phonographs, radios or other devices shall be used in a manner so as to be heard or seen outside
of the Premises without the prior written consent of Landlord.

 

7.                  
Tenant shall maintain the inside of the Premises at a temperature sufficiently high to prevent freezing of water in pipes
and fixtures inside the Premises.

 

8.                  
The plumbing facilities shall not be used for any other purpose than that for which they are constructed and no foreign
substance of any kind shall be deposited therein. The expense of any breakage, stoppage or damage resulting from a violation of
this provision shall be borne by Tenant.

 

9.                  
Tenant shall not burn any trash or garbage of any kind in or about the Premises, the Park or within one mile of the outside
property line of the Park.

 

10.              
Tenant shall not cause or permit any unusual or objectionable odors not commonly associated with Tenant’s current
operating process to be produced upon or permeated from the Premises nor shall Tenant vent any cooking fumes or odors into the
interior of the Building.

 

11.              
Tenant shall not permit, allow or cause any public or private auction, "going out of business", bankruptcy, distress
or liquidation sale in the Premises. It is the intent of the preceding sentence to prevent the Tenant from conducting his business
in any manner that would give the public the impression that he is about to cease operation and Landlord shall be the sole judge
as to what shall constitute a "distress type" sale.

 

12.              
The sidewalk, entrances, passages, quarters or halls shall not be obstructed or encumbered by any Tenant or used for any
purpose other than ingress or egress to and from the Premises.

 

13.              
No sales tables, merchandise displays, signs or other articles shall be put in front of or affixed to any part of the exterior
Building nor placed in the halls, common passageways, corridors, vestibule or parking area without the prior written consent of
the Landlord.

 

 

 

    	 	17	 

     

    

 

14.              
Tenant shall not erect or maintain any barricade or scaffolding which may obscure the signs, entrances or show window of
any other Tenant in the Park or tend to interfere with any such other Tenant’s business.

 

15.              
Tenant shall not create or maintain, nor allow others to create or maintain, any nuisances, including with limiting the
foregoing general language, loud noises, sound effects, bright lights, changing, flashing, flickering or lighting devices or similar
devices, smoke or dust, the effect of which will be visible from the exterior of the Premises.

 

16.              
No additional locks shall be placed on the doors of the Premises by Tenant, nor shall any existing lock be changed unless
Landlord is immediately furnished with two keys thereto. Landlord will without charge furnish Tenant with two keys for each lock
existing upon the entrance doors when Tenant assumes possession with the understanding that at the termination of the Lease these
keys shall be returned.

 

17.              
Tenant will refer all contractors, contractor’s representatives and installation technicians, rendering any service
on or to the Premises for Tenant to Landlord’s approval and supervision before performance of any contractual service. This
provision shall apply to all work performed in the Building including installation of telephones, telegraph equipment, electrical
devices and attachments and installation of any nature affecting floors, walls, woodwork, trim, windows, ceilings, equipment or
any other physical portion of the Building.

 

18.              
Tenant shall not place, install or operate on Premises or in any part of Building, any engine, stove or machinery or conduct
mechanical operations or cook thereon or therein, or place or use in or about Premises any explosives, gasoline, kerosene, oil
acids, caustics, or any other inflammable, explosive or hazardous material without written consent of Landlord.

 

19.              
Landlord will not be responsible for lost or stolen personal property, equipment, money or jewelry from Tenant’s area
or public rooms regardless of whether such loss occurs when area is locked against entry or not.

 

20.              
Tenant shall not at any time display a "For Rent" sign upon the Premises for rent.

 

21.              
Landlord will not permit entrance to Tenant’s offices by use of pass key controlled by Landlord, to any person at
any time without written permission by Tenant, except employees, contractors, or service personnel directly supervised by Landlord.

 

22.              
None of the entries, passages, doors, or hallways shall be blocked or obstructed, or any rubbish, litter, trash, or material
of any nature placed, emptied or thrown into these areas, including any alleyways to the rear of the Leased Premises, or such areas
being used at any time except for ingress or egress by Tenant, Tenant’s agents, employees or invitees.

 

23.              
No vehicle shall be stored in the Building. No animal shall be brought into the Building.

 

24.              
No sign, tag, label, picture, advertisement, or notice (other than price tags of customary size used in marking samples)
shall be displayed, distributed, inscribed, painted or affixed by Tenant on any part of the outside or inside or the Building or
of the Premises without the prior written consent of the Landlord.

 

25.              
Tenant shall not do or permit to be done within the Premises anything which would unreasonably annoy or interfere with the
right of other Tenants of the Building.

 

26.              
During the ninety days prior to the expiration of the Lease, Landlord may show the Premises to prospective tenants and may
place upon the windows or doors thereon one or more "For Rent" signs of reasonable dimensions.

 

27.              
Landlord reserves the right to waive any rule in any particular instance or as to any particular person or occurrence and
further, Landlord reserves the right to amend or rescind any of these rules or make, amend and rescind new rules to the extent
Landlord, in its sole judgement deems suitable for the safety, care and cleanliness of the Park and the conduct of high standards
of merchandising and services therein. Tenant agrees to conform to such new or amended rules upon receiving written notice of the
same.

 

28.              
Parking facilities supplied by Landlord for Tenants shall be used for vehicles that may occupy a standard parking area only
(i.e. 8’x13’). Moreover, the use of such parking facilities shall be limited to normal business parking and shall not
be used for a continuous parking of any vehicle or trailer regardless of size.

 

 

 

    	 	18Exhibit 10.1

    

    FIRST MODIFICATION AGREEMENT

    This FIRST MODIFICATION AGREEMENT (the “Agreement”) is made effective as of July 8, 2020, by and among FRANKLIN COVEY CO., a Utah corporation (“Borrower”), each undersigned Guarantor (together with Borrower, each a “Loan Party” and collectively, the “Loan Parties”), and JPMORGAN CHASE BANK, N.A., a national banking association (“Lender”).

    RECITALS:

    A. Lender has previously extended to Borrower one or more loans (collectively, the “Loan”)
        pursuant to a Credit Agreement dated as of August 7, 2019 by and among the Loan Parties and Lender (as amended and modified from time to time, the “Credit
          Agreement”). Capitalized terms used herein without definition shall have the meanings given to such terms in the Credit Agreement.

    B. Repayment of the Loan is guaranteed by FRANKLIN DEVELOPMENT CORPORATION,
        a Utah corporation, FRANKLIN COVEY TRAVEL, INC., a Utah corporation, and FRANKLIN COVEY CLIENT SALES, INC., a Utah corporation (individually and collectively, as the context requires, and jointly and severally, “Guarantor”) pursuant to the Credit Agreement.

    C. The Loan is secured by, among other things, the Collateral Documents identified in the Credit Agreement.

    D. The Credit Agreement, Collateral Documents and all other agreements, documents, and instruments governing, evidencing, securing, guaranteeing or otherwise relating to the Loan,
        as modified from time to time, including, without limitation, in this Agreement, are sometimes referred to individually and collectively as the “Loan
          Documents.”

    E. Subject to the terms and conditions contained herein, the Loan Parties and Lender now desire to
          modify the Credit Agreement as set forth herein.

    AGREEMENT:

    For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
      hereto agree as follows:

    1. ACCURACY OF RECITALS. Each of the Loan Parties acknowledges the
        accuracy of the Recitals which are incorporated herein by reference.

    2. MODIFICATION OF CREDIT AGREEEMNT. The Credit Agreement is modified
        and amended as of the date hereof as follows:

    (a) New Definitions. Section 1.01 of the Credit Agreement is hereby amended by adding the
        following new definitions in their appropriate alphabetical order:

    “Adjusted EBITDA”
      means, for any period, EBITDA, plus 85% of the change in deferred revenue.

    “Benchmark
          Transition Event” means the occurrence of one or more of the following events with respect to the LIBO Rate:

     

    

    
      1

      
        

    

    

    

    (a) a public statement or publication of information by or on behalf of the administrator of the LIBO Screen Rate announcing that
        such administrator has ceased or will cease to provide the LIBO Screen Rate, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the LIBO Screen
        Rate;

    (b) a public statement or publication of information by the regulatory supervisor for the administrator of the LIBO Screen Rate, the
        U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for the LIBO Screen Rate, a resolution authority with jurisdiction over the administrator for the LIBO Screen Rate or a court or an entity with similar
        insolvency or resolution authority over the administrator for the LIBO Screen Rate, which states that the administrator of the LIBO Screen Rate has ceased or will cease to provide the LIBO Screen Rate permanently or indefinitely, provided that, at
        the time of such statement or publication, there is no successor administrator that will continue to provide the LIBO Screen Rate; or

    (c) a public statement or publication of information by the regulatory supervisor for the administrator of the LIBO Screen Rate
        announcing that the LIBO Screen Rate is no longer representative.

    “Consolidated
          Cash Balance” means, at any time, (a) the aggregate amount of cash and cash equivalents, marketable securities, treasury bonds and bills, certificates of deposit, investments in money market funds, and commercial paper, in each case,
      held or owned by (either directly or indirectly), credited to the account of or would otherwise be required to be reflected as an asset on the balance sheet of such Person, in each case maintained with Lender or its Affiliates, less (b) Excluded
      Cash.

    “Excluded Cash”
      means (a) any restricted cash or cash equivalents to pay royalty obligations, working interest obligations, suspense payments, severance taxes, payroll, payroll taxes, other taxes, employee wage and benefit payments and trust and fiduciary
      obligations or other obligations of such Person to third parties and for which such Person has issued checks or have initiated wires or ACH transfers (or, in such Person’s discretion, will issue checks or initiate wires or ACH transfers within five
      (5) Business Days) in order to pay, (b) any cash or cash equivalents constituting purchase price deposits held in escrow by an unaffiliated third party pursuant to a binding and enforceable purchase and sale agreement with an unaffiliated third party
      containing customary provisions regarding the payment and refunding of such deposits, and (c) any cash or cash equivalents maintained in an account located outside of the U.S.

    “First Modification
          Date” means July 8, 2020.

    “Liquidity”
      means the sum of (i) the Consolidated Cash Balance plus (ii) the Availability.

    (b) Amended Definitions. Section 1.01 of the Credit Agreement is hereby further amended by
        amending and restating each of the following definitions in its entirety to read as follows:

    “Applicable Rate”
      means, for any day, with respect to any Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Revolving Commitment CBFR Spread”, “Revolving Commitment
      Eurodollar Spread”, “Term Loan CBFR Spread”, “Term Loan Eurodollar Spread” or “Commitment Fee Rate”, as the case may be:

     

    

    
      2

      
        

    

    

    

    	
            Revolving Commitment CBFR Spread

          	
            Revolving Commitment Eurodollar Spread

          	
            Term Loan CBFR Spread

          	
            Term Loan Eurodollar Spread

          	
            Commitment Fee Rate

          
	
            0.00%

          	
            3.00%

          	
            0.00%

          	
            3.00%

          	
            0.50%

          

    

    

    “Interpolated
          Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Lender (which determination shall be conclusive and binding absent manifest
      error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available) that is shorter than the Impacted Interest Period and (b) the LIBO
      Screen Rate for the shortest period (for which the LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time; provided that, if any Interpolated Rate shall be less than 0.50%, such rate shall be deemed to be
      0.50% for purposes of this Agreement.

    “LIBO Screen
          Rate” means, for any day and time, with respect to any Eurodollar Borrowing for any Interest Period or for any CBFR Borrowing, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that
      takes over the administration of such rate for Dollars) for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does
      not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Lender in
      its reasonable discretion); provided that, if the LIBO Screen Rate as so determined would be less than 0.50%, such rate shall be deemed to be 0.50% for the
      purposes of this Agreement; provided further that, notwithstanding the foregoing, with respect to the definition of “Adjusted One Month LIBOR Rate” only, if
      the LIBO Screen Rate as so determined would be less than zero, such rate shall be deemed to be zero.

    “Restricted
          Payment” means (i) any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other
      property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests or any option, warrant or other right to acquire any such Equity
      Interests and (ii) any payment of an earn-out or other contingent payment amount constituting the payment of a deferred purchase price with respect to any acquisition by a Loan Party of another Person or any other similar arrangement.

    (c) Interest Rates; LIBOR Notification. Section 1.05 of the Credit Agreement is amended
        and restated in its entirety to read as follows:

    Section 1.05     Interest Rates; LIBOR Notification. The interest rate on Eurodollar Loans is determined by reference to the LIBO Rate,
        which is derived from the London interbank offered rate (“LIBOR”).  LIBOR is intended to represent the rate at which contributing banks may obtain short-term
        borrowings from each other in the London interbank market.  In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate submissions to the ICE
        Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA setting LIBOR.  As a result, it
        is possible that commencing in 2022, LIBOR may no longer be available or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on Eurodollar Loans.  In light of this 

      

     

      

    
      3

      
        

    

     

    

    eventuality, public and private sector industry initiatives are currently underway to identify new or alternative
      reference rates to be used in place of LIBOR.  In the event a Benchmark Transition Event occurs, Section 2.12(c) of this Agreement provides a mechanism for determining an alternative rate of interest. The Lender will notify the Borrower, pursuant to
      Section 2.12(c), in advance of any change to the reference rate upon which the interest rate of Eurodollar Loans is based.  However, the Lender does not warrant or accept any responsibility for, and shall not have any liability with respect to, the
      administration, submission or any other matter related to LIBOR or other rates in the definition of “LIBO Rate” or with respect to any alternative, successor
      rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence
      of the LIBO Rate or have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability.

    (d) Alternate Rate of Interest; Illegality. Section 2.12 of the Credit Agreement is
        amended and restated in its entirety to read as follows:

    Section 2.12             Alternate Rate of Interest; Illegality.

    (a) If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

    (i) the Lender determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable
        means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable (including, without limitation, by means of an Interpolated Rate or because the LIBO Screen Rate is not available or published on a current basis) for such
        Interest Period; provided that no Benchmark Transition Event shall have occurred at such time; or

    (ii) the Lender determines the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and
        fairly reflect the cost to the Lender of making or maintaining its Loans (or Loan) included in such Borrowing for such Interest Period; provided that no Benchmark Transition Event shall have occurred at such time;

    then the Lender shall give notice thereof to the Borrower by telephone, fax or through an Electronic System as
      provided in Section 8.01 as promptly as practicable thereafter and, until the Lender notifies the Borrower that the circumstances giving rise to such notice no longer exist, (A) any Interest Election Request that requests the conversion of any
      Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and any such Eurodollar Borrowing shall be repaid or converted into a CBFR Borrowing on the last day of the then current Interest Period applicable
      thereto, and (B) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as a CBFR Borrowing.

    (b) If the Lender determines that any Requirement of Law has made it unlawful, or if any Governmental Authority has asserted that it
        is unlawful, for the Lender or its applicable lending office to make, maintain, fund or continue any Eurodollar Borrowing, or any Governmental Authority has imposed material restrictions on the authority of the Lender to purchase or sell, or to
        take deposits of, dollars in the London interbank market, then, on notice thereof by the Lender to the Borrower, any obligations of the Lender to make, maintain, fund or continue Eurodollar Loans or to convert CBFR Borrowings to Eurodollar
        Borrowings will be suspended until the Lender notifies the Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrower will upon demand from the Lender, either prepay or convert all
        Eurodollar Borrowings of the Lender to CBFR Borrowings, either on the last day of the Interest Period therefor, if the Lender may lawfully continue to maintain such Eurodollar Borrowings to such day, or immediately, if the Lender may not lawfully
        continue to maintain such Loans.  Upon any such prepayment or conversion, the Borrower will also pay accrued interest on the amount so prepaid or converted.

     

      

    
      4

      
        

    

    

    

    (c) If a Benchmark Transition Event occurs, then the Lender may, by notice to Borrower, select an alternate rate of interest for the
        LIBO Rate that gives due consideration to the then-evolving or prevailing market convention for determining a rate of interest for loans in US Dollars at such time (the “Alternate
            Rate”); Borrower acknowledges that the Alternate Rate may include a mathematical adjustment using any then-evolving or prevailing market convention or method for determining a spread adjustment for the replacement of the LIBO Rate.
        For avoidance of doubt, all references to the LIBO Rate shall be deemed to be references to the Alternate Rate when the Alternate Rate becomes effective in accordance with this section. In addition, the Lender will have the right, from time to time
        by notice to Borrower to make technical, administrative or operational changes (including, without limitation, changes to the definition of “CB Floating Rate”, the definition of “Interest Period”, timing and frequency of determining rates and
        making payments of interest and other administrative matters) that the Lender decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of the Alternate Rate. The Alternate Rate, together with all such
        technical, administrative and operational changes as specified in any notice, shall become effective at the later of (i) the fifth Business Day after the Lender has provided notice to the Borrower (the “Notice Date”) and (ii) a date specified by the Lender in the notice, without any further action or consent of the Borrower, so long as Lender has not received, by 5:00pm Eastern time on the Notice
        Date, written notice of objection to the Alternate Rate from the Borrower. Any determination, decision, or election that may be made by the Lender pursuant to this section, including any determination with respect to a rate or adjustment or the
        occurrence or non-occurrence of an event, circumstance or date, and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from the
        Borrower. Until an Alternate Rate shall be determined in accordance with this section, the interest rate shall be equal to the sum of (a) the greater of (x) Prime Rate and (y) 2.50%, plus (b) the Applicable Rate with respect to the appropriate
        “CBFR Spread” specified within such Applicable Rate definition.  In no event shall the Alternate Rate be less than 0.50%.

    (e) Anti-Hoarding. Section 4.02 of the Credit Agreement is amended by adding a new
        subsection (e) to read as follows:

    (e) The Consolidated Cash Balance of Borrower on and as of the date of such Borrowing or the date of the issuance, increase, or
        extension of such Letter of Credit does not exceed $5,000,000, before and after giving effect to such Borrowing or to the issuance, increase, or extension of such Letter of Credit and to the application of the proceeds therefrom on or around such
        date, but in any event, not to exceed two Business Days after such date.

    (f) Restricted Payments. Section 6.08(a) of the Credit Agreement is amended and restated
        in its entirety to read as follows:

    (a) No Loan Party will, nor will it permit any Subsidiary to, declare or make, or agree to declare or make, directly or indirectly,
        any Restricted Payment, or incur any obligation (contingent or otherwise) to do so; provided, however, (i) the Loan Parties may make earn-out payments or other contingent payments constituting the payment of a deferred purchase price with respect
        to any acquisition by a Loan Party of another Person or any other similar arrangement or agreement entered into by the Loan Parties prior to the First Modification Date,

     

      

    
      5

      
        

    

     

    

    and (ii) the Borrower may make Restricted Payments in common stock or other equity to, and cash tax payments
      payable to applicable tax authorities in respect of (1) the exercise of stock options by option holders pursuant to and in accordance with stock options held by the option holders, and (2) the vesting or settlement of other equity awards, in each
      case pursuant to the Borrower’s omnibus incentive plans or other benefit plans for management or employees of the Borrower and its Subsidiaries existing prior to the First Modification Date, in each case, provided that (A) no Event of Default has
      occurred and is continuing or would occur as a result of such Restricted Payment and (B) upon giving effect to such Restricted Payment, the Loan Parties are in pro forma compliance with the financial covenants set forth in Section 6.12 based upon the
      most recent financial statements delivered to the Lender pursuant to Section 5.01. Notwithstanding the foregoing, after the Loan Parties have been in full compliance with the financial covenants set forth in Sections 6.12(b)(i) and (ii) for any two
      consecutive fiscal quarters of Borrower following the Covenant Relief Period, (i) the Borrower may declare and pay dividends with respect to its common stock payable solely in additional shares of its common stock, and, with respect to its preferred
      stock, payable solely in additional shares of such preferred stock or in shares of its common stock, (ii) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (iii) the Borrower may make Restricted Payments in
      common stock pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, (iv) the Borrower may make other Restricted Payments provided that (A) no Event of Default has
      occurred and is continuing or would occur as a result of such Restricted Payment and (B) upon giving effect to such Restricted Payment, the Loan Parties are in pro forma compliance with the financial covenants set forth in Section 6.12 based upon the
      most recent financial statements delivered to the Lender pursuant to Section 5.01, and (v) the Borrower may make repurchases of the outstanding stock of the Borrower within twelve (12) months after the Effective Date in an amount not to exceed
      $15,000,000 from the proceeds of the Term Loan and an additional $5,000,000 derived from cash of foreign Subsidiaries (“Special Stock Repurchases”), provided that (A) no Event of Default has occurred and is continuing or would occur as a result of
      such Special Stock Repurchases and (B) upon giving effect to such Special Stock Repurchases, the Loan Parties are in pro forma compliance with the financial covenants set forth in Section 6.12 based upon the most recent financial statements delivered
      to the Lender pursuant to Section 5.01.

    (g) Financial Covenants. Section 6.12 of the Credit Agreement is amended and restated in
        its entirety to read as follows:

    Section 6.12             Financial Covenants

    (a) Each of the following financial covenants shall be in effect during the fiscal quarters ending August 31, 2020 through May 31,
        2021 (the “Covenant Relief Period”):

    (i) Minimum Liquidity.  The Borrower and all domestic
        Subsidiaries on a consolidated basis shall maintain Liquidity during the fiscal quarters of Borrower set forth below of not less than the amount set forth below opposite such quarter:

    

    

    	
            Quarter Ending

          	
            Amount

          
	
            August 31, 2020 through February 28, 2021

          	
            $13,000,000

          
	
            May 31, 2021

          	
            $8,000,000

          

    

    

    

    

    
      6

      
        

    

    

    

    (ii) Minimum Adjusted EBITDA.  The Borrower
        shall have Adjusted EBITDA for each fiscal quarter of Borrower set forth below of not less than the amount set forth below opposite such quarter:

    	
            Quarter Ending

          	
            Amount

          
	
            August 31, 2020

          	
            $11,000,000

          
	
            November 30, 2020

          	
            $8,500,000

          
	
            February 28, 2021

          	
            $5,000,000

          
	
            May 31, 2021

          	
            $15,000,000

          

    

    

    (iii) Capital Expenditures.  The Borrower
        will not, nor will it permit any Subsidiary to, incur or make any Capital Expenditures, inclusive of curriculum development costs, but excluding Capital Expenditures incurred for the repair of the Adams building located at the Borrower’s
        headquarters and made with insurance proceeds from damage to the Adams building, in an amount exceeding $8,500,000 in the aggregate during any fiscal year of the Borrower.

    (b) Each of the following financial covenants shall be in effect at all times other than the Covenant Relief Period:

    (i) Funded Indebtedness to Adjusted EBITDAR Ratio. 
        The Borrower will not permit the Funded Indebtedness to Adjusted EBITDAR Ratio, on the last day of any fiscal quarter of the Borrower, to be greater than 3.00 to 1.00.

    (ii) Fixed Charge Coverage Ratio.  The
        Borrower will not permit the Fixed Charge Coverage Ratio, for any period of four consecutive fiscal quarters ending on the last day of any fiscal quarter, to be less than 1.15 to 1.00.

    (iii) Capital Expenditures.  The Borrower
        will not, nor will it permit any Subsidiary to, incur or make any Capital Expenditures, exclusive of curriculum development costs, in an amount exceeding $8,000,000 in the aggregate during any fiscal year of the Borrower.

    (iv) Asset Coverage Test.  The Borrower
        will not permit the aggregate amount of the accounts receivable of the Borrower and the Guarantors to be less than 150% of the Revolving Exposure at any time, measured no less than once each fiscal quarter of the Borrower.

    (h) Conforming Modifications. Each of the Loan Documents is modified to be consistent
        herewith and to provide that it shall be a default or an event of default thereunder if any Loan Party shall fail to comply with any of the covenants of any Loan Party contained herein or if any representation or warranty by any Loan Party
        contained herein or in the documents delivered in connection herewith by any Loan Party is materially incomplete, incorrect, or misleading as of the date hereof. In order to further effect certain of the foregoing modifications, Borrower and
        Guarantor agree to execute and deliver such other documents or instruments as Lender reasonably determines are necessary or desirable.

     

      

    
      7

      
        

    

    

    

    (i) References. Each reference in the Loan Documents to any of the Loan Documents shall be
        a reference to such document as modified herein or as modified on or about the date hereof.

    3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL. The Loan Documents
        are ratified and affirmed by Borrower and shall remain in full force and effect as modified herein. Any property or rights to or interests in property granted as security in the Loan Documents shall remain as security for the Loan and the
        obligations of Borrower in the Loan Documents.

    4. FEES AND EXPENSES.

    (a) Fees and Expenses. In consideration of Lender’s agreement to amend the Loan Documents
        as set forth herein, and in addition to any other fees or amounts payable by Borrower hereunder, Borrower has agreed to pay to Lender (i) all legal fees and expenses incurred by Lender in connection herewith; and (ii) all other costs and expenses
        incurred by Lender in connection with executing this Agreement and otherwise modifying the Loan Documents. Borrower acknowledges and agrees that such fees are fully earned and nonrefundable as of the date this Agreement is executed and delivered by
        the parties hereto.

    (b) Method of Payment. Such fees shall be paid by Borrower to Lender on the date hereof or
        at such later date as such fees, costs and expenses are incurred by Lender. Borrower and Lender agree and acknowledge that the foregoing shall not relieve Borrower of its obligation to make future monthly payments of interest and other amounts as
        required under the terms of the Loan.

    5. BORROWER AND GUARANTOR REPRESENTATIONS AND WARRANTIES. Each of
        Borrower and Guarantor represents and warrants to Lender:  (a) No default or event of default under any of the Loan Documents as modified herein, nor any event, that, with the giving of notice or the passage of time or both, would be a default or
        an event of default under the Loan Documents as modified herein has occurred and is continuing; (b) There has been no material adverse change in the financial condition of Borrower or Guarantor or any other person whose financial statement has been
        delivered to Lender in connection with the Loan from the most recent financial statement received by Lender; (c) Each and all representations and warranties of Borrower and Guarantor in the Loan Documents are accurate on the date hereof (except to
        the extent such representations and warranties expressly relate to a particular date, in which case such representations and warranties are true and correct as of such date); (d) Neither Borrower nor Guarantor has any claims, counterclaims,
        defenses, or set-offs with respect to the Loan or the Loan Documents as modified herein; (e) The Loan Documents as modified herein are the legal, valid, and binding obligation of Borrower and Guarantor, enforceable against Borrower and Guarantor in
        accordance with their terms; (f) Each of Borrower and each Guarantor is validly existing under the laws of the State of its formation or organization, has not changed its legal name as set forth above, and has the requisite power and authority to
        execute and deliver this Agreement and to perform the Loan Documents as modified herein; (g) The execution and delivery of this Agreement and the performance of the Loan Documents as modified herein have been duly authorized by all requisite action
        by or on behalf of Borrower and Guarantor; and (h) This Agreement has been duly executed and delivered on behalf of Borrower and Guarantor.

    6. BORROWER AND GUARANTOR COVENANTS. Each of Borrower and Guarantor
        covenants with Lender:

     

      

    
      8

      
        

    

    

    

    (a) Each of Borrower and Guarantor shall execute, deliver, and provide to Lender such additional agreements, documents, and instruments as reasonably required by Lender to
        effectuate the intent of this Agreement.

    (b) Each of Borrower and Guarantor fully, finally, and forever releases and discharges Lender and its successors, assigns, directors, officers, employees, agents, and
        representatives from any and all actions, causes of action, claims, debts, demands, liabilities, obligations, and suits, of whatever kind or nature, in law or equity, that either Borrower or Guarantor has or in the future may have, whether known or
        unknown, (i) in respect of the Loan, the Loan Documents, or the actions or omissions of Lender in respect of the Loan or the Loan Documents and (ii) arising from events occurring prior to the date of this Agreement.

    (c) Contemporaneously with the execution and delivery of this Agreement, Borrower has paid to Lender all of the internal and external costs and expenses incurred by Lender in
        connection with this Agreement (including, without limitation, inside and outside attorneys, appraisal, appraisal review, processing, title, filing, and recording costs, expenses, and fees).

    (d) On or prior to the execution and delivery of this Agreement, each of Borrower and Guarantor shall have executed and delivered, or caused to be executed and delivered, to Lender,
        each in form and substance satisfactory to Lender, such other documents, instruments, resolutions, subordinations, and other agreements as Lender may require in its sole discretion.

    7. EXECUTION AND DELIVERY OF AGREEMENT BY LENDER. Lender shall not be
        bound by this Agreement until (a) Lender has executed and delivered this Agreement to Borrower and Guarantor, (b) each of Borrower and Guarantor has performed all of the obligations of Borrower and Guarantor under this Agreement to be performed
        contemporaneously with the execution and delivery of this Agreement, if any, (c) Borrower has paid all fees and costs required under Section 4
        hereof, and (d) each Guarantor has executed and delivered to Lender a Consent and Agreement of Guarantor in form and content acceptable to Lender.

    8. CONSENT AND AGREEMENT OF GUARANTORS. Each Guarantor (a) consents to
        the modification of the Credit Agreement and all other matters in this Agreement; (b) reaffirms its Guarantee pursuant to the Credit Agreement and any other agreements, documents and instruments securing or otherwise relating to the Loan (as
        modified hereby) executed by such Guarantor, including, without limitation, any Collateral Documents executed by such Guarantor (collectively, the “Guarantor
          Documents”); (c) acknowledges that the Guarantor Documents continue in full force and effect, remain unchanged, except as specifically modified hereby, and are valid, binding and enforceable in accordance with their respective terms;
        (d) agrees that all references, if any, in the Guarantor Documents to any of the Loan Documents are modified to refer to those documents as modified hereby; and (e) agrees that it has no offset, defense or counterclaim to the enforcement against it
        of the provisions of the Guarantor Documents.

    9. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
        The Loan Documents as modified herein contain the complete understanding and agreement of Borrower, Guarantor and Lender in respect of the Loan and supersede all prior representations, warranties, agreements, arrangements, understandings, and
        negotiations. No provision of the Loan Documents as modified herein may be changed, discharged, supplemented, terminated, or waived except in a writing signed by the parties thereto.

    10. BINDING EFFECT. The Loan Documents, as modified herein, shall be
        binding upon and shall inure to the benefit of Borrower, Guarantor and Lender and their successors and assigns; provided, however, neither
        Borrower nor Guarantor may assign any of its rights or delegate any of its obligations under the Loan Documents and any purported assignment or delegation shall be void.

    11. INTENTIONALLY OMITTED.

     

      

    
      9

      
        

    

    

    

    12. GOVERNING LAW. THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES. THE PARTIES
        AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF SALT LAKE, STATE OF UTAH OR, AT THE SOLE OPTION
        OF LENDER, IN ANY OTHER COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF THE PARTIES WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
        RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.

    13. COUNTERPART EXECUTION; EFFECTIVENESS.

    (a) This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when
        taken together shall constitute a single contract.  Except as provided in Sections 6 and 7, this Agreement shall become effective when it shall have been executed by Lender and when Lender shall have received counterparts hereof which, when taken together, bear the signatures of each
        of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

    (b) Delivery of an executed counterpart of a signature page of this Agreement or any other Loan Document by fax, emailed pdf. or any other electronic means that reproduces an image
        of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement or such other Loan Document.  The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or
        relating to any  document to be signed in connection with this Agreement or any other Loan Document and the transactions contemplated hereby or thereby shall be deemed to include electronic signatures (which, for purposes of this Section means an
        electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record), deliveries or the keeping of records in electronic
        form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in
        any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

    [Remainder of Page Intentionally Left Blank]

     

    

    
      10

      
        

    

     

    

    DATED as of the date first above stated.

    “Borrower”

    FRANKLIN COVEY CO.

    a Utah corporation

    
      	
              By:

            	  /s/ Stephen  D. Young

            
	
              Name:

            	
              Stephen D. Young

            
	
              Title:

            	
              Executive Vice President and Chief Financial Officer

            

    

    

    

     “Guarantors”

    FRANKLIN DEVELOPMENT CORPORATION

    a Utah corporation

    
      	
              By:

            	  /s/ Stephen D. Young

            
	
              Name:

            	
              Stephen D. Young

            
	
              Title:

            	
              President

            

    

    

    

    FRANKLIN COVEY TRAVEL, INC.

    a Utah corporation

    
      	
              By:

            	  /s/ Stephen D. Young

            
	
              Name:

            	
              Stephen D. Young

            
	
              Title:

            	
              President

            

    

    

    

    FRANKLIN COVEY CLIENT SALES, INC.

    a Utah corporation

    
      	
              By:

            	  /s/ Stephen D. Young

            
	
              Name:

            	
              Stephen D. Young

            
	
              Title:

            	
              President

               

              

               

              

               

              

            

    

    
      11

      
        

    

     

    

    “Lender”

    

    

    JPMORGAN CHASE BANK, N.A.

    a national banking association

    
      	
              By:

            	  /s/ Kristin Gubler

            
	
              Name:

            	
              Kristin Gubler

            
	
              Title:

            	
              Authorized Officer

            

    

    

    

    

    

    

    

    

    

    

    

  

  12

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